A long term fuel supply deal has lifted the mineral company’s share price today. We take a closer look at the details.
The post Here’s why the WA Kaolin (ASX:WAK) share price is up 16% today appeared first on The Motley Fool Australia. –
At the time of writing, the mineral company’s shares are fetching 21.5 cents, up 16.22%.
What’s pushing the WA Kaolin share price higher?
Investors are snapping up WA Kaolin shares after the company released a positive update.
According to its release, WA Kaolin has signed a massive 15-year contract with Mid-West LNG Pty Ltd, a subsidiary of Clean Energy Fuels Australia (CEFA).
Based in Perth, CEFA is an integrated energy solutions provider, developing small scale LNG infrastructure assets for regional mining, industrial, and commercial energy users.
Under the agreement, WA Kaolin will receive liquefied natural gas (LNG) for its Wickepin kaolin project. The LNG will be used to fire a rotary kiln to dry kaolin ore. It’s the first step in the company’s patented K99 dry processing method.
The deal will officially commence on 1 January 2022 and run for a period of 15 years, with reviews at each 5-year block. The contract includes two options that allow the parties to extend for another 5 years each.
In addition, the agreement includes the supply of commissioning gas from 1 September until 31 December 2021.
The contract value is estimated at around $22 million for the initial 15 years.
Words from the CEO
WA Kaolin CEO Andrew Sorensen welcomed the new deal, saying:
We are thrilled to have entered into a 15 -year contract with CEFA, one of WA’s leading energy solution providers. As we continue to progress our Stage 1 work program towards our target to be producing by year end 2021, it is vital for our development program that we lock in such important long term supplier agreements like this.
The Stage 1 work program at Wickepin continues on track and within budget and I look forward to providing the market with a further update of progression from on-site shortly.
About WA Kaolin
WA Kaolin is a mineral exploration, extraction and processing company aiming to develop kaolin products. The group hopes to market the soft white clay mineral to Asia and global markets.
Kaolin has a variety of applications, including in the paper industry where it serves as a paper coating. The mineral product is also used to make china, porcelain, tableware, rubber, cable insulation, specialty films, and fertilisers.
During the past 12 months, the WA Kaolin share price has fallen by around 14%. However, year-to-date performance has seen the company’s shares climb by more than 23%.
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