Rising Costs and Safety Challenges Shadow WA Kaolin’s Record-Breaking Quarter

Record Sales and Revenue Milestone

WA Kaolin Ltd (ASX – WAK) has delivered a standout performance in the September 2025 quarter, posting record sales volumes of 13,858 tonnes and revenue of A$2.74 million. This represents a remarkable 433% increase in volume and a 585% jump in revenue compared to the same quarter last year, underscoring the company’s rapid growth trajectory.

The surge in sales is underpinned by a successful plant upgrade completed in October, which has improved operational reliability and efficiency by around 20%. This upgrade is part of a broader optimisation program aimed at increasing production capacity from the current nameplate of 200,000 tonnes per annum to 250,000 tonnes by the end of the year.

Operational Enhancements and Cost Efficiencies

Significant operational changes have also contributed to WA Kaolin’s improved performance. The company transitioned from contractor campaign mining to in-house continuous mining in September 2025, enhancing quality control of run-of-mine material and eliminating costly double handling. These changes are expected to reduce production costs over the coming months.

Additionally, the company has addressed wear and tear issues in high abrasion areas of the plant during the recent shutdown, installing more durable linings to extend equipment life. The increased power demand from running two classifiers in parallel has necessitated the addition of a fourth generator, further supporting the ramp-up in production.

Expanding Market Reach and Product Innovation

WA Kaolin is actively broadening its product range and market footprint. New grades such as K999C and K999P have been developed to meet specific customer needs in ceramics and rubber compounding. The company is also advancing its paper-market kaolin products, targeting one of the largest and highest-value segments globally, with first commercial orders anticipated in the December quarter.

Internationally, WA Kaolin has secured shipments to China’s ceramics sector and is progressing trials in Vietnam and Malaysia. Domestically, repeat orders from established customers like Mercol, Midland Brick, Selleys, and Etex Group highlight growing acceptance of WA Kaolin’s premium products.

Financial Position and Forward Outlook

Despite increased production costs totaling approximately A$2.89 million; primarily freight, mining, and energy expenses; WA Kaolin maintains a solid cash position of A$1.47 million at quarter-end, supplemented by available financing facilities. The company anticipates operating cash outflows to reduce as efficiencies from recent upgrades take effect.

Forward orders for the second quarter of FY26 stand at 15,490 tonnes, valued at around A$3.1 million, marking a 12% increase over the previous quarter. WA Kaolin is also engaged in discussions with financiers and its primary offtake partner to bolster working capital if necessary, reflecting prudent financial management amid growth.

Safety and Compliance

Following a lost time injury during the quarter, WA Kaolin is enhancing safety procedures and compliance with the latest workplace health and safety guidelines, signalling a commitment to operational integrity alongside expansion.