PERTH (miningweekly.com) – Junior WA Kaolin has struck a A$7-million sales agreement for its Kwinana property, in Western Australia.
The company on Tuesday reported that it had inked a term sheet with Coogee Chemicals for the property, excluding the plant and equipment on site. The company also struck a lease agreement with the purchaser, facilitating the lease of the Kwinana property for the next three years.
WA Kaolin said that the lease agreement provided stability and continuity for its ongoing operations at the site, which would continue to focus on research and development into new product offerings and value-added products in the kaolin market.
The lease agreement provides for a A$1-a-year rent over the term, in exchange for providing the purchaser with access to park vehicles, tanks and equipment on a section of the property.
The ASX-listed company told shareholders that proceeds from the sale of the property would be used to repay an existing A$5-million debt facility with Boneyard Investments. Additionally, the company has established a new A$3-million three-year debt facility with Boneyard Investments.
The sum total of the sale of the Kwinana property and new debt arrangement yields a net improvement in WA Kaolin’s financial position of A$5-million and will provide the working capital for the ramp-up of operations at its Wickepin project to full production to 200 000 t/y across 2024.
“This is an excellent result for WA Kaolin. As we continue to ramp up our production volumes at Wickepin, to be able to successfully negotiate the sale of our now noncore assets at Kwinana at above our book value, whilst maintaining favourable leaseback terms, focuses the company’s capital towards the generation of cash flow from the production ramp-up,” said WA Kaolin CEO Andrew Sorensen.
“The sale of Kwinana puts the company in a very strong position financially, having reduced our debt significantly and enhancing our working capital position, placing us in a strong position financially as we increase our ramp-up to nameplate production from Wickepin.
“With the sale of the noncore assets and the continued increase in production volumes at Wickepin, it is a very exciting time for WA Kaolin, as the next 12 months will see the company transition into a highly sought-after kaolin production operation.”