WA Kaolin : WAK Quarterly Activities Report and Appendix 5B

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ASX Announcement

31 January 2022

December 2021 Quarterly Activities Report

Highlights

• Stage 1 of the Wickepin Project is on-time/on-budget, despite significant building, infrastructure and equipment scope items for Stage 2 expansion having been implemented during Stage 1 to achieve overall cost efficiencies
• All process equipment is fabricated and on site and all installation and pre- commissioning will be complete by end Q1 CY2022
• Effects of COVID-19 on the Company's supply chain have been well managed and, apart from some increased shipping costs and delays, have caused little concern
• 15-yearwater supply agreement with the Western Australian Water Corporation commences
• Kiln ready for gas connection and commissioning
• First production on track for Q2 CY2022; production to commence at 25 tonne per hour nameplate capacity and steadily increase to ~200,000 tonnes per annum (tpa) rate by the end of CY2022
• Cash on hand of $1.9m at 31 December 2021

WA Kaolin Ltd ("WA Kaolin" or the "Company") (ASX: WAK) is pleased to provide an update on its activities for the December 2021 quarter.

WA Kaolin holds the Wickepin Kaolin Project, 220km south-east of Perth, which contains an Ore Reserve Estimate of 30.5 million tonnes of kaolinised granite included in a 644.5 million tonne Inferred Mineral Resource. WA Kaolin produces kaolin products for tier one customers and the Company aims to expand its production from the Wickepin Project to 400,000tpa in a two-stage strategy.

Chief Executive Officer Andrew Sorensen stated,

"The December quarter saw works continue on track at the Wickepin Project with stage 1 construction 90% completed and on target for completion in Q1 CY2022. While COVID-19 related delays have caused the project timeline a slight delay, we remain positive that first production from Stage 1 will commence in Q2 CY2022 and look forward to keeping the market updated on our progress."

Works on track at Wickepin Project

Building works continue at the Wickepin Project as the Company targets construction and installation to be completed in early 2022. Building works at the Wickepin Project began in 2021, as reported in the September 2021 Quarterly Report (ASX announcement 25th October 2021).

Post quarter, WAK announced that installation is due for completion by the end of February 2022. First production is on track for Q2 CY2022. Production will commence at 25 tonnes per hour nameplate capacity and steadily increase to ~200,000 tonnes per hour rate by the end of CY2022.

WA Kaolin is currently producing kaolin products using ore from Wickepin via its small-scale processing plant in Kwinana, WA, for its tier one customers. WAK has a two-stage ramp up strategy. Stage one will see the production rate optimised up to 200,000tpa by end of CY2022. The second stage will be to expand production to 400,000tpa.

WA KAOLIN LIMITED	[phone]	ABN: 56 083 187 017
Lot 3 Ward Road, East Rockingham,	[e-mail]
www.wakaolin.com.au
Western Australia 6168

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ASX Announcement 31 January 2022

As detailed in Table 1 below and highlighted in WAK's June 2021 Quarterly report (ASX Announcement 27th July 2021), due to the ongoing effects Covid-19 on suppliers and attendance including delays in steel availability, the Stage 1 Work Program commissioning extended into Q1 CY2022.

Installation of the Stantil Engineering kiln delivered in the previous quarter has now occurred. The Stantil Engineering kiln is a central piece of equipment for the Processing Plant and awaits gas connection and commissioning in late February 2022.

Figures 1 and 2. Stantil Engineering Kiln installed onsite.

2021

2022

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Civil

Minor Works

Minor Works

Silos

Procurement and Fabrication

Installation

Commissioning

Bagging

Procurement and Fabrication

Installation

Commissioning

Kiln

Procurement and Fabrication

Installation

Commissioning

Mechanical

Procurement and Fabrication

Installation

Commissioning

Structural

Procurement and Fabrication

Installation

Installation

Electrical

Procurement and Fabrication

Installation

Commissioning

Services

Procurement and Fabrication

Installation

Commissioning

Lighting and SP

Procurement and Fabrication

Installation

Commissioning

K99 Commissioning

Dry Commissioning

Wet and Kaolin Production Commissioning

Table 1. Stage 1 Work Program

To view a short video of the recent progress on site at Wickepin please copy the following link to your browser:

https://www.youtube.com/watch?v=DXojoqEL6FA

Although disruptions and delays in supply chains are wide ranging in the resource sector and not unique to the Company, we are pleased to advise that these issues have been managed carefully with little to no effect on progress to date. The Company acknowledges that there are is always a potential for delay in the building works should a COVID-19 outbreak cause a limit to site access by staff and contractors.

www.wakaolin.com.au

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ASX Announcement 31 January 2022

Commencement of 15-Year Water Supply Agreement

A 15-Year Water Supply Agreement has commenced, following installation of a metering point by the Western Australian Water Corporation. As reported to the ASX on 9 September 2021 WA Kaolin announced that it had entered into a 15-year agreement for the supply of water to the Company's Wickepin Kaolin Project with the Western Australian Water Corporation.

The supply of fresh water (a new lateral pipeline connection to the existing Water Corporation pipeline running along the Williams - Kondinin Road) is critical for the processing of kaolin, amenities at the mine site, fire management and dust suppression.

Over the period of this agreement, the Water Corporation will make available up to 49kL of water per day or 343kL per week to WA Kaolin. The Company will pay a one-off upfront capacity contribution and then a monthly variable charge depending on volume used (rates subject to annual review) with no minimum monthly requirement.

This agreement is in addition to other key contracts entered into throughout 2021 including a 15-year contract for LNG supply and a bagging solution contract with a leading equipment supplier.

Local Workforce and Sponsorships

WA Kaolin is committed to where possible, building its work force from the local Wickepin and surrounding community. In recent months, the Company has made the following appointments from within the local community:

• Logistics Manager
• Procurement & OHS Officer
• Office Administrator
• Maintenance Supervisor
• Laboratory Technician
• Four Trades Assistants who will transition into production roles once the construction is completed

The Company is also committed to providing sponsorships within the community, with recent examples including St John Country Ambulance Service (donation towards new defibrillator devices for the ambulances), Wickepin Football Club, Wickepin Bowling Club, Upper Great Southern Hockey Association and the Wickepin Car Rally.

Investor presentation

In October, WA Kaolin Chief Executive Officer, Mr Andrew Sorensen, gave a virtual presentation to shareholders and investors at the NWR Resources Series - Mining's Top Microcaps and Midcaps. The presentation can be found on the ASX announcement dated 5 October 2021.

Annual General Meeting

All resolutions put to the annual general meeting of shareholders held on 10 December 2021 passed on a poll with the requisite majority. The Chairman voted all undirected proxies held at his discretion in favour of each resolution.

In accordance with Listing Rule 3.13.2 and section 251AA of the Corporations Act 2011, details of the results and the proxies received in respect of each resolution are set out in the attachment to the ASX announcement dated 10 December 2021.

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ASX Announcement 31 January 2022

Corporate

In accordance with Listing Rule 5.3.5, $209.137 was paid to related parties or their associates during the quarter. The payments comprise the following:

• Director fees and superannuation: $41,682
• Salary, superannuation, vehicle allowance and performance bonus to the daughter of an executive director (per contract of employment as Territory Sales Executive): $19,375
• Reimbursement of expenses relating to the construction of the Company's Wickepin Project to an entity associated with an executive director (at arm's length, no mark-up applied): $26,745
• Payment for contractors supplied at the Company's Wickepin Project by an entity associated with an executive director (per consultancy deed, at cost with 10% mark-up applied): $41,454
• Royalties paid to an entity associated with an executive director (per Royalty Agreement): $2,131
• Landowner compensation for waterline access and water usage at Wickepin paid to an entity associated with an executive director: $7,750
• Fees paid to an executive director: $45,000 (per consultancy deed)
• Loan repayment to an entity associated with an executive director: $25,000

***ENDS***

This announcement was authorised for market release by the Board of WA Kaolin Limited.

For further information, please contact:

Andrew Sorensen	Victoria Humphries
CEO	Investor Relations
[e-mail]	[e-mail]

Project Background

The Company acquired the Wickepin Project in 1999 from Rio Tinto which, through exploration, had discovered and drilled out a Mineral Resource and commissioned engineering and feasibility studies. The acquisition included the tenements covered by the Wickepin Project and all associated engineering and feasibility studies.

Since then and prior to the Company's IPO in November 2020, WA Kaolin co-founders and owners invested over $42 million to develop and progress the Wickepin Project. Through extensive R&D of product and processes, the Company has spent significant time and funds in optimising its proprietary dry processing method for kaolin ("K99 Process") to build and extend on its success as a kaolin producer and exporter to global markets.

As part of the process, the Company has undertaken trial mining and processing to ensure proof of concept and to produce product for, amongst other things, establishing customer confidence and price discovery.

The project comprises a mining lease, a general-purpose lease, a miscellaneous licence and retention licences. It is one of the largest known remaining kaolin resources in the world, and contains:

• A Probable Ore Reserve of 30.5 million tonnes and a Mineral Resource (reported in 2019) of 109.1 million tonnes in the mining lease which is part of and included in;
• An Inferred Mineral Resource (reported in 2017) of 644.5 million tonnes of high-grade premium kaolinised granite across all tenements.

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ASX Announcement 31 January 2022

WA Kaolin developed a dry processing method, the K99 Process, at its plant in Kwinana, which together with the high-grade Wickepin kaolin resource, produces an ultra-bright,high-quality kaolin product at a low cost, in comparison to other methods which rely on chemical bleaching and multiple wet mechanical and magnetic separation methods.

Estimates and production targets

The Mineral Resources, Ore Reserves and production targets referred to in this announcement were previously reported in the Prospectus dated 11 October 2020 and released to the ASX on 24 November 2020 and the Definitive Feasibility Study announcements released on 24 and 25 November 2020. WA Kaolin confirms that it is not aware of any new information or data that materially affects the information included in the relevant market announcement and that all material assumptions and technical parameters underpinning the estimates, production target or forecast financial information derived from a production target continue to apply and have not materially changed.

Forward Looking Statements

This ASX announcement may include forward-looking statements. These forward-looking statements are not historical facts but rather are based on WAK's current expectations, estimates and assumptions about the industry in which WAK operates, and beliefs and assumptions regarding WAK's future performance. Any forward-looking statements, that are inconsistent with previous forward-looking statements made by the Company supersede those previous statements or prevail to the extent of any inconsistency. Words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "potential" and similar expressions are intended to identify forward-looking statements.

Forward-looking statements are only predictions and are not guaranteed, and they are subject to known and unknown risks, uncertainties and assumptions, some of which are outside the control of WAK. Past performance is not necessarily a guide to future performance and no representation or warranty is made as to the likelihood of achievement or reasonableness of any forward-looking statements or other forecast. Actual values, results or events may be materially different to those expressed or implied in this announcement. Given these uncertainties, recipients are cautioned not to place reliance on forward looking statements. Any forward-looking statements in this announcement speak only at the date of issue of this announcement. Subject to any continuing obligations under applicable law, WAK does not undertake any obligation to update or revise any information or any of the forward-looking statements in this announcement or any changes in events, conditions or circumstances on which any such forward looking statement is based.

About WA Kaolin

WA Kaolin's Wickepin Kaolin Project, 220km south-east of Perth, contains a Mineral Resource (JORC 2012) of

644.5 million tonnes1,2 of high-grade premium kaolinised granite. This world-class resource at Wickepin is one of the largest known remaining premium primary resources of kaolin globally. It is characterised by its purity, quality and brightness, producing kaolin products that typically attract higher prices from a growing collection of top tier customers.

With more than $42 million invested in the project prior to the Company's IPO in November 2021, WA Kaolin has developed a proprietary dry processing method, known as K99, to turn raw material into market suitable feedstock for global customers, and constructed a small-scale commercial processing plant on 3ha of portside industrial land at Kwinana, WA. The Company is focused on increasing production from Wickepin to 400,000 tonnes per annum by 2023 with further modular increases to capacity to be implemented in tune with market demand and funding capability

• The Mineral Resource estimate is inclusive of Ore Reserves and the 2019 Mineral Resource estimate.

• CSA Global Mineral Resource Estimate R280.2017
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