Suvo’s Pittong kaolin operation is proving to be a tasty prize
Link copied to
Suvo’s Pittong hydrous kaolin operation continues to prove its value with EBITDA increasing by 7.6% from the previous quarter to $778,000 for the June quarter.
This increase in earnings before interest, taxes, depreciation, and amortisation is significant given that this is just the second full quarter of operations since the company acquired the project from French multinational Imerys S.A.
Production of refined kaolin products has also increased by 10% to 6,544t while sales of 6,522t of kaolin products is just a little higher than last quarter’s sales of 6,458t.
Adding further interest, Suvo Strategic Minerals (ASX:SUV) has also recorded net cash of $584,000 from its operating activities from revenue of $3.2m in the quarter thanks in large part to a significant reduction in production costs.
The company added that the Pittong sales pipeline remains strong well into the 2022 calendar year and a decision on a major plant upgrade will be made this month.
Additionally, metallurgical testwork is currently being undertaken on sizeable waste stockpiles at Pittong that consists of silica sand containing a kaolin component.
Consultants have been commissioned to design a small standalone plant that would remove the kaolin that will be fed back into the main process plant while also creating a saleable silica sand product that could be sold directly into the local glass markets.
During the June quarter, the company completed a scoping study for its White Cloud kaolin project in Western Australia’s wheatbelt region that has returned some very attractive numbers including projected pre-tax net present value (NPV) and internal rate of return (IRR) of $705m and 113 per cent respectively on for size.
NPV and IRR are both measures of a project’s profitability.
Significant progress has also been made on testing White Cloud ore for its suitability for high-purity alumina use with the company flagging that this work is nearing completion.
Additionally, final sighter testwork from its Nova silica sand project has confirmed that 17.8% of the resource reports to the high-value silica flour range.
Silica flour has very specialised uses and as such it commands a much higher price compared to even high-quality glassmaking and foundry sand.
Suvo also expects to deliver maiden resource estimates for Nova, Pitton and Trawalla in the current quarter.
This article was developed in collaboration with Suvo Strategic Minerals, 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.