WA Kaolin Sells Kwinana Property For $7m

WA Kaolin’s Wickepin Kaolin Project
WA Kaolin’s Wickepin Kaolin Project

WA Kaolin (ASX:WAK) has strengthened its cash position by $5m after signing a term sheet for the sale of its Kwinana property for $7m.

The sale was made to Coogee Chemicals and consisted of everything on the property, excluding the plant and equipment which remain WA Kaolin’s custody.

As part of the sale, WA Kaolin secured excellent leaseback terms with Coogee Chemicals, allowing the company to use the Kwinana property for the next three years.

This provides WA Kaolin with stability and continuity for its continuing operations at the site which will continue to focus on the research and development of new product offerings.

In exchange for providing Coogee Chemicals access to park vehicles, tanks and equipment on a section of the property, WA Kaolin will receive $1 per year as part of a peppercorn rent.

Chief executive Andrew Sorensen said the sale puts WA Kaolin in a strong position as it transitions into full production of 200ktpa across FY24.

“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,” he said.

“With the sale of the non-core 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.”

WA Kaolin will use the proceeds of the sale to repay the existing $3m debt facility with Boneyard Investments.

The company will now establish a new $3m debt facility with Boneyard. The debt facility can be paid in part during the three-year term with a minimum of $300k per each repayment.

The interest rate is 8% per annum, compounded quarterly, with interest to accrue for the first 18 months, added to the loan and then paid quarterly once the 18 months are up.

The sale of the Kwinana property and debt facility with Boneyard provides WA Kaolin the working capital to increase operations to full production.

Debt also reduces from $25.4m to $23.4m with a weighted average interest rate of 3.2%.