The study suggested mining of its greenfield bright white kaolinised granite deposit, with the construction of WA's first wet processing plant, would offer a robust, multi-decade operation.

 

Based on only the ground Suvo has access agreements over, it believes using its less than half of its indicated resource of 26.9 million tonnes will support a 25-year mine life, generating life-of-mine revenue of A$3.6 billion, EBITDA of $2.34 billion, and pre-tax cashflows of $2.22 billion.

 

With a net present value of $705 million and internal rate of return of 113%, Suvo believes payback of the $68 million capital costs can be achieved in 12 months from the start of construction.

 

The plan is to develop a 500,000tpa processing plant capable of producing 200,000tpa of refined kaolin products.

 

All-in sustaining costs are estimated at $256/t, with fat margins given an anticipated selling price of $720/t.

 

The company will use a rail siding at Gabbin to ship its product some 230km to the Port of Fremantle for export.

 

The study compares with WA Kaolin's Wickepin operation, which is expected to start dry processing by the end of the year, targeting stage one production of 200,000tpa at costs of $18 million to generate an after-tax profit of $136 million for the first 12 years, with operating costs of $221/t compared with an expected sales price of $316/t. 

 

WAK is initially targeting a larger but lower-value segment of the market, before scaling up and moving towards wet processing.

 

Suvo believes it can leverage its experience in running Victoria's Pittong operation, Australia's only wet processing plant.

 

With the scoping study finalised, Suvo is moving immediately towards a prefeasibility study, with executive chairman Robert Martin saying the company was clearly on the right track, even with just a small portion of the known mineralisation drilled out. 

 

Suvo already has an offtake memorandum with LIXIL ASTJ, one of the largest manufacturers of ceramic products, which is helping Suvo develop tailor-made refined kaolin products for its global manufacturing plants.

 

The company is also developing the Nova silica sand project, less than 100km from White Cloud, where laboratory tests show the potential for creating high-value silica flour products. 

 

Suvo's stock has traded between as low as 2c since listing, and the shares closed up 20% yesterday at 24c, its highest level since recapitalising. At that price, the company was worth $140 million.