Sheffield Resources (SFX) Q2 2025 TU earnings summary

Executive summary

• Record concentrate and ilmenite production at Thunderbird, with 198,704 tonnes produced and 208,354 tonnes shipped, including 22,904 tonnes of zircon concentrate.

• Expanded zircon customer base from 4 to 11, improving market flexibility and sales confidence.

• Cash flow was negative in the quarter due to timing of zircon sales and restructuring costs, but is expected to turn positive as sales align with production.

• Business improvement initiatives underway, including a 20% workforce reduction, operational restructuring, and mine plan optimization to enhance productivity and reduce costs.

• Portfolio expansion continues with interests in Brazil's South Atlantic Project and a 10% stake in Capital Metals Plc in Sri Lanka.

Financial highlights

• Record ilmenite production and shipments in Q4; zircon sales resumed, though one shipment slipped into January.

• C1 cash costs per tonne produced (excluding inventory movement) decreased to $297 in December quarter from $360 in September quarter.

• Average realised sales price: US$124/t for ilmenite and US$542/t for zircon concentrate in the December quarter.

• Cash flow negative in Q4, mainly due to lower zircon sales and restructuring costs; prepayments from offtake partner bridged working capital gap.

• Received $22 million in prepayments for ilmenite from Yansteel, to be unwound in H1 2024.

Outlook and guidance

• March 2025 quarter guidance: ilmenite production 160,000–180,000 tonnes, zircon concentrate 40,000–45,000 tonnes.

• Significant increase in zircon sales expected quarter-on-quarter, with strong customer interest and expanded export permissions.

• C1 cash costs per tonne produced expected to range between A$270–A$300 for the March quarter.

• Operating cash flow expected to be positive in the current quarter as sales match production.

• Business improvement plan to be finalized in the current quarter, aiming for higher mine production and lower costs.