WA Kaolin reported $2.7 million in sales for the December quarter, secured a $1.5 million working capital loan, and restructured $20.4 million of debt, while focusing on plant improvements and cost reductions to address negative margins.
- December quarter sales of 13,315 tonnes generating $2.7 million revenue
- Secured $1.5 million working capital facility and restructured $20.4 million debt
- Signed binding 2026 offtake agreement worth approximately A$8.6 million
- Production constrained by delayed maintenance and temporary repairs
- Board renewal completed with new appointments and resignations
Quarterly Sales and Operational Update
WA Kaolin Limited (ASX: WAK) has released its December 2025 quarterly activities report, revealing sales of 13,315 tonnes that generated $2.7 million in revenue. Despite this solid sales performance, production was hampered by multiple short shutdowns for temporary repairs and a delayed scheduled maintenance shutdown, which was postponed to reduce a growing backlog of orders. These operational constraints resulted in lower than forecast production volumes and contributed to ongoing negative operating margins.
The company’s plant improvements, initially planned for December 2025, have been rescheduled to the third and fourth quarters of the 2026 financial year. These upgrades are critical for enhancing throughput and reliability at the Wickepin processing plant, which remains the company’s operational hub.
Financial Position and Debt Restructure
WA Kaolin’s cash position at the end of the quarter stood at $0.774 million, reflecting a cash outflow from operations of $1.7 million. To bolster liquidity, the company secured a $1.5 million working capital facility from Wamco Industries, linked to key executives and major lenders. Additionally, WA Kaolin successfully restructured approximately $20.4 million of existing debt, extending maturities by 12 years to December 2037. This move provides the company with improved balance sheet stability and a longer runway to execute its turnaround strategy.
Strategic Offtake Agreement and Sales Outlook
A highlight of the quarter was the execution of a binding offtake agreement with Dak Tai Trading Limited, part of the Stanco group, valued at around A$8.6 million for calendar year 2026. This contract includes firm ordering commitments and delivery milestones, underpinning revenue visibility and supporting production planning. As of mid-January 2026, WA Kaolin’s forward order book stood at 24,271 tonnes, including a significant backlog of 8,807 tonnes from 2025.
The company’s sales remain heavily reliant on Stanco, which accounted for 76% of total sales in the quarter, with 83% of sales directed to China. WA Kaolin is actively pursuing diversification by expanding into higher-value product lines such as ceramics, paper, coatings, and specialty industrial applications, targeting markets in Southeast Asia and domestically within Australia.
Governance and Operational Challenges
The quarter also saw significant board renewal, with new appointments including Catherine Lynch and Matthew Shackleton, the latter becoming Non-Executive Chairman. Several directors resigned, reflecting a period of governance transition aimed at strengthening oversight during this critical phase.
On the operational front, the Department of Mines, Industry Regulation and Safety issued improvement and prohibition notices related to mining activities, which were addressed to allow resumption of quarrying. The company continues to work on compliance matters and is implementing safety and environmental measures, including improved dust control.
Research and Development Initiatives
WA Kaolin’s R&D efforts are progressing with the development of new product grades such as 'Wickefine,' aimed at paint and paper markets. Trials for super-fine kaolin products continue in China, targeting premium paper coating applications. The company is also exploring relocation of ceramic production equipment to its Wickepin site to meet growing demand for engineered ceramics.
Overall, WA Kaolin is navigating a challenging operating environment marked by cost pressures and production constraints but is supported by strategic contracts, a strengthened balance sheet, and a clear focus on operational improvements and market diversification.
Bottom Line?
WA Kaolin’s next quarters will be pivotal as it seeks to convert operational improvements into sustainable profitability amid ongoing cost and production challenges.
Questions in the middle?
- Will the scheduled plant improvements in FY26 effectively reduce backorders and improve margins?
- How will WA Kaolin diversify its customer base beyond Stanco to mitigate concentration risk?
- What additional funding measures might be necessary if operating cash flows remain negative?