The facility is currently running at 50pc capacity at about 30,000t per annum so any increase in production is going to play into Suvo’s hands as economies of sales start to kick in.
The volume growth will also allow the company to spend more on excavating its high-grade product, thereby reducing the need for cheap, lower quality kaolin clay in the final mix.
Quality hydrous kaolin is a key ingredient in manufacturing industries such as paper, coatings, rubber, pharmaceuticals and high-tech ceramics and is in high demand.
Suvo produces four separate products to meet specific customer needs delivered as moisture lump, high solids slurry, moisture powder or moisture pulverised powder.
The solids slurry is used in paper and board manufacturing, while the other products are used in paper, coatings, paint and specialist industries, including rubber and pharmaceutical applications.
The growing global demand for specialty minerals, coupled with Suvo’s ability to scale production at its Pittong mine, highlights the strategic significance of this deal.
With the increased need for ever more specialised end products, management says the company is also working on other product development opportunities to help grow the sales.
In addition to strengthening its kaolin supply agreements, Suvo is also pushing on with plans for a cutting-edge, low carbon geopolymer concrete product.
The company holds an exclusive licence from Murdoch University which enables the production of high-performance, low-carbon concrete – an alternative to conventional ordinary Portland cement to create a lower-carbon alternative.
The extension of this major offtake agreement, the second such deal in a month, seems to suggest that Suvo is starting to build brand recognition in the market for its products.
With an operational EBITDA of $0.51m in the December quarter and accelerating sales growth likely to turn to higher profits – as the hard graft of marketing starts to pay off – Suvo appears to be on the cusp of a company-defining year.
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Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au
