When SUVO took over the Pittong operations in 2020, it was a strategic move to capitalise on the fact that they would be the sole producer of hydrous kaolin in the country. Unbeknownst to many, kaolin can be found in a variety of applications; its pearlish white colour makes it ideal for a range of applications like paper coatings and pharmaceutical pills. The increased demand for kaolin follows an upward trend for packaging materials and pharmaceuticals. It is forecasted that the kaolin market will grow by a 4.7% CAGR through to 2025. Besides having complete ownership of its mines, another major advantage SUVO has over its Eastern competitors is the quality of the kaolin they’re able to supply. This appeals to more premium industries like pharmaceuticals, ceramics, and higher-end paint, as they require higher-quality raw materials. The final sales price of kaolin can fluctuate dramatically based on small changes in its unit price. Therefore, selling to companies at a higher premium can generate more revenue at lower volumes. Hence, making it a great complement to accounts that buy in higher volumes, such as those in paper and paint industries. Recently, SUVO signed a three-year sales agreement with a leading pharmaceutical manufacturer in Europe, with a deal totalling AUD$588,4621 (US$382,500).
Importantly, SUVO has a reliable nameplate capacity at Pittong of 60,000 tonnes per annum. Around 18,000 tonnes are being sold consistently throughout the Australian market, of which SUVO owns 90%. To account for the rest of the kaolin at Pittong, SUVO announced ambitious plans to expand across Asia, employing three full-time sales representatives with impressive, decades-long resumes spanning Imerys S.A and BASF. In the last quarter of 2023, SUVO experienced a 14% uptick in revenue from hydrous kaolin sales. This is followed by four new customers signing on in the first quarter of 2024, with the average price hovering around $863 per tonne (a 47% increase from the previous). Historically, SUVO sold primarily to the paint and paper manufacturing industries. The price increase reflects their pursuit of a more diverse clientele, including pharmaceuticals. Canary Capital predicts that the price per tonne of kaolin will steadily increase each year due to rising consumer costs and demand which means more revenue growth across the board. SUVO only needs to sell another 1,500 tonnes to enter into its profitability era, promising robust returns for their investors, and that’s not including the advancement of the low-carbon, geopolymer concrete project, which has promise for mass commercialisation.
The recent oversubscribed Share Purchase Plan (SSP) is a great testament to the strong interest amongst investors in SUVO’s recent sales activities, as well as other emerging projects in the climate tech sector. Early on in the year, SUVO’s price per share hovered around $0.03; it is now sitting at $0.041, with a market capitalisation of $39.62 million. SUVO recently received a placement of $2.5 million, in addition to the $2 million it raised from the SSP. This capital infusion will help ramp up production at Pittong, in preparation for new customers converting in the Asian Pacific region. Currently, there are more than 20 customers in that region testing SUVO’s Pittong samples. As we move forward into Q224, we should anticipate increased production at Pittong, more closing bells, and signals toward profitability.