Suvo’s Pittong kaolin operations are already bulking up its coffers
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Suvo’s Pittong hydrous kaolin operations are already generating cash flow with the project on track to achieve EBITDA of $2.1m in 2021.
Pittong has already generated EBITDA (earnings before interest, taxes, depreciation, and amortisation) of $265,000 in January on production of 2,200t of hydrous kaolin.
Significantly, this marks a return to pre-COVID levels thanks to strong demand from both domestic and export markets.
The earnings forecast is based on Pittong’s EBITDA of $2.1m in 2019 when 24,685t of hydrous kaolin products were sold and $2m in 2020 on the sale of 22,392t of hydrous kaolin products.
“The transition of the Pittong operations under Suvo’s ownership has been flawless with operational management, customers and suppliers pleased to be associated with a 100% Australian owned and operated business,” Suvo Strategic Minerals’ (ASX:SUV) chief operating officer Len Troncone said.
“We remain excited about the future prospects of the Pittong operations as we look to draw on the expertise of operational management at Australia’s only hydrous kaolin operation and apply it to our very promising White Cloud kaolin project in Gabbin, Western Australia.”
Branding of the Pittong products under the White Knight label is progressing while the company recently reached a two-year agency and distribution agreement with Imerys.
Suvo acquired the Pittong operations, which consist of three mining leases and a processing plant about 40km from Ballarat, from French multinational Imerys S.A. late last year.
Besides being a proven cash generating business, Pittong also provides the company with access to a pool of experienced personnel that could help develop the 39.5Mt White Cloud project.
The company is not content with just keeping the status quo either.
It believes that there are sufficient resources in the ground to support an upgrade to the existing plant that could expand its size by three to four times.
Suvo recently completed aircore drilling to convert current PERC reserves and resources into their JORC compliant equivalents.
This is also expected to enable the company to plan for future production targets by optimising mining methods from its known kaolin reserves.
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.