Suvo is perfectly placed to catch the kaolin wave

Kaolin demand has been rising due to its widespread use and constraints on existing supply and Suvo is perfectly positioned to capitalise on its growth.

And a significant reason for why is the producing Pittong hydrous kaolin operations in Victoria that it acquired from French multinational Imerys S.A. at the beginning of this year.

Speaking to Stockhead, Executive Chairman Rob Martin expressed how happy Suvo (ASX:SUV) was at the purchase, noting that while the company had initially acquired Pittong for the experienced personnel, it quickly realised that it had a real gem that just needed a little polishing.

“We acquired Pittong from French multinational Imerys for around $1.7m in late December 2020 and we have reported EBITDA of approximately $1.5m for our first six months” he noted.

“To put it into perspective we have basically paid back our investments and picked up a plant that would cost about $100 – $150m to build today”

He added that while the mine was doing very well with current output of about 25,000 tonnes per annum of refined kaolin product the company was already looking to kick off an aggressive upgrade program that will increase production capacity significantly. This expansion is backed by strong demand with Martin saying that the company has been fielding daily calls from both domestic and international clients for kaolin supply based on our unique nature and consistency of our products.

“We are at full capacity running at our current shifts until January next year so we are looking to add further shifts and finalise our upgrade program as soon as possible.

Martin also noted that Suvo was well advanced with their upgrade program with a definitive plan due within the coming months, adding that it will take less than 12 months to complete.

“Fortunately, Imerys had already done all of the engineering work, all the planning and all the drawings, we are just making it a bit bigger” he explained.

Kaolin expertise flowing through

That’s not to say that Pittong has not achieved the original goal that it was purchased for.

Martin pointed out that all the costings used in the scoping study for its White Cloud project in Western Australia were derived from Pittong.

The company also drew on the experience of its Pittong staff on flow sheets, how things worked, packaging costs, etc.

“The other thing about having Pittong is that it gives us an existing processing plant that we can use to process ore from our White Cloud project in western Australia,” Martin added.

“It’s a fantastic position to be in because Suvo is already a kaolin producer and it differentiates us from the other kaolin explorers.”

The company has also signed a cooperation agreement with Lixil a sanitary ware producer with annual turnover of $20bn for the development of new products using kaolin from their White Cloud project for which the Company is progressing environmental approvals, mining licence applications, and proceeding to do a pre-feasibility study in the coming months.

Suvo is also looking at the potential to produce high purity alumina and other high value products.

Experienced personnel

Suvo is lucky to have very experienced staff operating their Pittong facility and producing high quality kaolin products to serve their customers.

Besides the undeniable benefits brought about by having the only producing hydrous kaolin plant in Australia and the expertise that comes from it, Martin also highlighted the contributions of the company’s general manager of global sales Eileen Hao.

“Eileen has worked in this industry for many years, holds a Master of Science in Chemistry, Geology and Material Engineering and is one of the major reasons why we can do what we’re doing,” he noted.

“Sales and marketing are the most difficult parts of this business, particularly given the negative impact COVID-19 has had on travel. We are lucky that based on Eileen’s many years of technical and commercial experience and knowledge in the kaolin and industrial minerals markets, she is able to open the right doors. Eileen has fantastic contacts, she knows products, and she has the respect of the industry which is crucial in being taken serious on a global scale. Eileen has also worked for English China Clay International & Imerys in senior roles throughout China & the rest of the world”

“She is instrumental to our success and we are fortunate to have her as part of the team.” He added that Hao’s influence is demonstrated in how the company transacts on a global scale. “She’s all about honesty, integrity, doing things properly, efficiently and to the best of our ability.”

This article was developed in collaboration with Suvo, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.