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Whilst fully respecting your welcome insight on dealmaking oldbutnowisa it doesn't make sense for Sheffield to delay the deal.

The upfront costs pre FID are tiny compared to Sheffield's cash on hand. Have a listen to the Sheffield Resources Q1 presentation below (51mins 25s in). They expect Q2 to be the bottoming out of maximum debt/cash burn on Thunderbird and then positive cash flows Q3 onwards.

Even with the speedy timeframe that CMET has set for FID (Q1 2025) they have plenty of slack for any equity commitment they make now. Quite frankly Q2 2025 is likely the best case on construction start and even then it will be spent over a minimum 12-month period. There is the question of proof for debt financiers but there are ways for Sheffield to overcome this without needing to place significant cash sums into escrow at FID.

So it's a nothing burger compared oto the benefits of getting the processes started towards FID.

Perhaps I haven't been invested long enough to build up such fear but what I see is a deal that gets done 'shortly' (So days or weeks at worst) and one good enough to make the current MC look a joke. Even more so once the drill results begin to land and it is demonstrated that the resource is far bigger and of a better grade than it already is.

In my opinion, the highest grade minerals sands project in the world with even stronger grades to come is not something these entities would want to mess a round on. They will want it tied down under a binding agreement ASAP. Be it for the right deal and that part we are told is already settled.

My guess here is FID costs and a maximum equity contribution with a 50/50 share on any overrun or shortfall. To which stage/production level that is will depend on the PFS outcome. But that doesn't stop Sheffield from committing to an equity contribution especially as it will enable debt finance to start being negotiated.

https://www.youtube.com/watch?v=Y7fWkAZ6p0g

The fact that a second 1,673,334 trade has popped up that was filled just seconds after the first one suggests (if one isn't later cancelled) that this wasn't a sell at all but rather a movement of shares between two parties.

Who is for anyone to guess.

It's a direct quote from the CEO made on 28th May. 2 weeks after the RNS stating that Sheffield was to be the chosen JV partner.

A clear signal from CMET of their confidence that JV closes. Hence why 2 days later the next RNS stated that "Capital Metals expects the transaction to close shortly" with notably no standard market RNS caveats attached.

The Sheffield CEO sits on the CMET BOD. He (and his team) would be well aware of this rig mobilisation and what it is drilling.

Mobilising the rigs is a big positive.

In the last interview the CEO stated "We really want to build the resource and the grade with drilling activity which we are hoping to start within the next few days. We've sort of mobilised our own sonic rig and rented an air core rig and we've got a big programme coming up that we're very excited about and look forward to updating the market on progress as we go."

There was no mention of it being tied to any JV success nor should it given the fact that the negotiations aren't finalised. CMET is in business to progress their project and can always be reimbursed by SheffieldT later when the JV is completed.

Yes, Jollyspeculator you can beat me with my words if you wish but whilst i may have come across a tad pompous that was not my intention.

I also said "But I would never want to be overly dismissive. I have been bitten many times before." Plus "So the funding stop gap if that is what it turns out to be does not need to break the bank or the investment case. Even if worst case scenario it is heavily discounted."

But by all means single out the words that give you the most gratification.

At the end of the day it's a good price in this environment. As I also said yesterday there may be a deal that they can't say no to and that may be what the subscription element has brought out. They are set up now for the next 18 months and can achieve a lot with the time and the funds given the great start they have had to 2024. I remain a happy LTH whatever some may wish to say about AGL or indeed me directly.

As of 31st March Sheffield Resources had c. $20.4m AUD (£10.5m) of cash at the corporate level on hand.

That is separate to the KMS JV available funds which sat at c. $26m AUD as of 31st March.

The JV deal which we are told is imminent should (as a minimum) include a significant contribution towards the CAPEX costs to first production. But as the last presentation demonstrated Sheffield is only going to have to front up the costs required to reach FID which we are told is c. 9 months away. That cost is well within their current cash means. The 9-month process also gives them a solid timeframe in which to ramp up Thunderbird.

In Q1 2024 the Thunderbird project produced c. 100,000 tons of concentrate vs. 130,000 planned but only sold 15,900 tons because it is ramping up. This means they have a significant amount of product ready to be sold which in Q1 was selling for a c. $280 gross margin. Equivalent to 66%. But this was based on just 100,000 tons of production.

As of late May Q2 was running at 85,000 tons vs 148,000 planned but Sheffield reported this,

"The increase in mine production has resulted in increased production of concentrates with approximately

65,000 tonnes of ilmenite produced in the quarter to date, and approximately 37,000 tonnes in the

current month of May. Production of zircon concentrate totalled 20,000 tonnes for the quarter to date,

with approximately 12,000 tonnes produced during the current month of May."

So the run rate in May had already hit c. 49,000 tons of production per month and May wasn't quite completed. Meaning it's moved ahead of guidance and has a current quarterly run rate of c. 150,000 tons. Meaning their cash cost is going to fall.

Yes, Thunderbird's operating costs jumped to between $55-$60m a quarter from c. $45m which is what has likely spooked the market there. But what they are signalling is that 150,000 tons of production is going to cost them around $400/ton to produce. Giving them $300/ton margin. Such that they will be cash breakeven on the project by Q4. That will likely come well ahead of any major CAPEX commitment for the CMET JV because even if they are super efficient and get construction started by Q2 2025 Thunderbird should be stable by that point because production growth is tracking the BFS and it says they will be well north of 200,000 tons production by early 2025.

There are also arguments to be had for staged payments which allow construction to commence earlier (like Thunderbird did) but with less strain on Sheffield's finances front end.

The key here is first and foremost that the deal closes. The bump at Thunderbird does not prevent that and respect needs to be given to the ramp-up phase there and the subsequent profitability of Thunderbird once it is over. So I don't buy the small player angle. Sheffield has done this process once already and is now setting about doing it again with CMET.

With tax credits and £3m in 2024 cost savings in play, AGL is capable of running at sub £6m cash burn per half year even at just £1m in revenues.

They should beat that revenue generation in H1 2024. Meaning the cash burn could be even lower. With £15m in cash on hand at YE23. That signals a minimum Q2 2025 cash runway. Increase revenues even a little along the way and the cash runway gets pushed out again. It's all in the numbers if one is prepared to do the analysis.

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But I would never want to be overly dismissive. I have been bitten many times before but a lot of water can still flow under this particular investment bridge before we need to cross it.

I double down on this with the thought that even with limited further revenue growth AGL requires limited further funding to reach YE2025. Product sales growth aside there is enough momentum to suggest that AGL will have signed deals for multiple trials for multiple pharma customers by that point. So the funding stop gap if that is what it turns out to be does not need to break the bank or the investment case. Even if worst case scenario it is heavily discounted.

On the other side of the coin what if things are going much better than so many wish to fear. One way or the other we find out on Friday.

1/2

Hi Adw198,

Avoiding unnecessary risk is always a good approach so waiting until the results are published doesn't sound like a bad call to me.

What I attempted to demonstrate earlier was the progress that AGL has made on cost-cutting which when coupled with even modest revenue growth shows that the Q2 2025 cash runway is valid. This for me removes the immediate risk of a near-term funding raise that sits outside the company's control.

Releasing their FY results on Friday 7th June whilst later than last year is still full 3 weeks before the deadline. Many companies release their results on or around 30th June without any complaints from investors or indeed bad news attached. So unless someone can provide me with factual evidence as to why a later release is negative then for me it's simply fear-driven.

The same goes for the results date being published on their website and not forewarned via RNS. If they wanted to backdoor the results they surely wouldn't make the date known anywhere at all. So again it is rumour and fear-driven rather than factual.

In terms of the revenue forecast, the current goal is 3x 2023 = £6.6m. As I have hopefully made clear they have built in a buffer such that this goal is not what is required to ensure the Q2 2025 date. Therefore, they can be running behind the goal and still maintain their guidance in the FY report and likely also their going concern statement.

With that being the case they do not need to raise funds now. But as I said earlier a surprise can always come. The right deals offered or a strategic tie-up etc but time to conclude it is running short there.

So that then just leaves the question of what type of funding will it end up being and when will it come. Well, that may begin to unfold over the next few months depending on the vibes they are getting from the various avenues they will be following. I agree that if it is to be straightforward equity through the markets then sooner is better than later. Therefore their wording around this in the report will be worth searching out. But AGL has already had the opportunity this year to raise off the back of news and hasn't taken it. So are they dumb or simply confident?

A counter to the negativity is the prospect of further deals or progress. It should not be forgotten that further clinical trial data on molecular systems remains outstanding and is due at any time. Also, the BioView development programme should be nearing completion and a partner for its rollout was signalled at launch last year. Then there is this halo effect and the 11 potential new customers that are currently under discussion. These sorts of things keep me interested and allow me (with my longer-term hat on) to accept the limited risk on funding which has so far only materialised in investors' heads.

2/2

Because what we haven't yet included is the anticipated £3m in additional cost savings expected in 2024 (see November 2023 trading update once again).

I have left them out until now because it is difficult to ascertain how much will come through in H1 2024. What we do know is that they are expected by YE. So suddenly the guidance into Q2 2025 doesn't look all that stretched. Infact (because it is good practice) it looks very much like they have factored in some cushion that covers a sizeable shortfall on their projected 2024 goal of 3x 2023 revenues.

But with all that said we won't find the June cash position out in the FY report if it does indeed land on Friday because at best they will publish the cash position as of 30th May. However, it is worth noting that AGL doesn't normally give an updated cash position in their FY results. What we will get is a going concern statement and from what I am just demonstrated it very much looks like it will maintain that for the next 12 months everything is covered and the Q2 2025 message remains. Hence why talk of funding shortfalls or a near-term raise is based more on hope for those who would bet against AGL than facts.

Never say never in this game. AGL could well do a strategic investment deal with a big pharma or investment arm like the one EISAI has (brought to my attention by an AGL investor just yesterday) which may lead to new equity. They may also get an equity investment offer that is simply too good to turn down. But they are both a world away from a raise to keep the lights on because right now the numbers say it simply isn't required yet.

AGL has time to push revenues in 2024 and deliver more partnerships. That in turn raises their status and reduces the overall risk profile for investors.

Also, the goal is to reach cash breakeven by YE2025. So on paper, the shortfall is c. 6-9 months. From what I have just demonstrated if the product and pharma business do indeed demonstrate solid growth over the next 12 months then that cash shortfall could be as low as £5-£6m in 2025. That's not a scary sum vs. the current (deflated) MC of c. £48m. Especially when AGL is set up to deliver news flow that should see that valuation settle at a higher level.

Lastly, I would also point out the repeated messaging throughout the two presentations in January/February 2024 on strategic partnerships with milestone payments. They aren't plucking such ideas out of thin air just for the fun of it. So discussions there are likely already in play. Be it a good deal for shareholders still has to be delivered.

I trust this helps some at least.

1/2

Regarding the AGL cash burn question, I would offer some details, facts and a little opinion if I may.

It is important to distinguish between operating losses and actual cash burn.

In their November 2023 update, AGL reported an expected operating loss of £21m for FY23 vs. £10.6m in H1 2023 so fairly even. But H2 will have included 1.2m in one-off charges and non-cash impairments.

However, the actual cash burn for H2 was anticipated to be 'just' £7.15m. This being the difference between the H1 2023 cash position and the 15m anticipated in the November trading update. As I have already said this was achieved with £1.2m in non-recurring charges but also against just £1m in total revenues at a minimum of 62% gross margin.

We know this because H1 2023 revenues were £1.2m vs. £2.2m total year anticipated revenues communicated in November.

Now it is possible that a chunk of the total £3.7m in R&D tax credits was paid out in H2 2023. In the 2023 interims, AGL has these down as current assets. So to be paid in the next 12 months. I would suspect it will be more evenly shared out rather than front-end weighted. So whatever effect this has had on H2 2023 should also be witnessed in H1 2024.

If H1 2024 revenues were to merely match H2 2023 then based on the above analysis the cash burn would be roughly the same give or take movements in working capital.

Note - The last example of their possible effect is H1 2023 which added £1.1m of cash burn in its 6-month period. But the above also clearly points to this reducing in H2 2023. If it remained the same then the significant overall reduction in overall cash burn vs. H1 2023 points to even better operating cost control in H2 2023. So one way or the other it's another positive).

If we run with the same parameters. £1m in revenues. Shared tax credits distribution. Same margin as H2 2023. Then cash burn would be around £7.15m again and cash as of 30th June would be c. £8m.

However, revenues in H1 2024 will be higher than H2 2023. As of February AGL was owed £600k from the BioView JV and they have secured $900k of work with large pharma already this year be it only the initial payments will be received in H1. But that is the pharma services side alone. Product sales will be the main driver and this year this is being driven by a larger more established distributor network + new products such as the PD-L1 test which was only launched in November 2023.

At +62% gross margin each additional £1m of revenues can add as much as £620k to the AGL coffers.

AGL is targeting c. £6.5m in revenues in 2024. That is a £5.5m jump on H2 2023. At 62% margins that adds around £3.4m to AGL cash which begins to back the belief on their Q2 2025 cash run guidance. Yes, they may come up a little short but even if they fall £2m short it's likely not going to affect their guidance for Q2 2025 and or indeed their going concern statement in the FY report.

Why?

There is nothing wrong with Sheffield commuting to a sum now but with caveats attached to cost savings or indeed overruns. Yansteel got the same from Sheffield. See here under Thunderbird JV. Sorry I am away right now so am on my phone hence the spelling mistakes etc.

https://www.sheffieldresources.com.au/site/pdf/aeeffcb9-03bf-4d39-9e00-b1a93ba1a02e/Sheffield-and-Yansteel-Execute-Binding-JV-Agreements.pdf

Here is the wording from 15th March Sheffield Resources strategic funding RNS,

“The maximum final Project Funding amount will be negotiated during the due diligence period based on the agreed forecast to production, and will comprise two stages:

(i) an amount of funding to be provided at the Project level which is sufficient to reach a Final Investment Decision; and

(ii) the balance of funding to be contributed at the project level to support the Project into production.“

On 14th May this was refined as follows,

“Capital Metals and Sheffield are well advanced in the legal documentation and due diligence; however, the parties require a short period of time to finalise the agreements ("Agreements"), which the parties are targeting for completion at the end of May 2024. It is currently envisaged that Sheffield's funding would comprise two stages:

(i) an amount of funding to be provided at the Project level to fund the work programme to reach a Final Investment Decision ("FID") to enable the commencement of construction; and

(ii) the balance of funding to be contributed at the Project level in stages to be agreed between the parties to fund the capital cost of each agreed stage of production and processing capacity. Further work will be undertaken with Sheffield on the approach to the staging of the Project and therefore the final capex requirements, which will be finalised prior to the FID.“

The essence of the agreement hasn’t changed since March. If anything the wording has improved because “support the project into production“ has been updated to “fund the capital cost of each agreed stage of production and processing capacity.“

The only other significant change is the wording around,

“Further work will be undertaken with Sheffield on the approach to the staging of the Project and therefore the final capex requirements, which will be finalised prior to the FID.”

This is exactly what was discussed in the two interviews so shouldn’t be a surprise.

Furthermore, finalizing the final CAPEX requirements does not prevent Sheffield commiting to an equity share of the costs. Yansteel did the same with caveats that Sheffield cover the first gap above the total presumed costs before any further costs beyond that were then shared 50/50.

Lastly do not forget that the current $81m CAPEX is for all 4 stages of development. The cost for stage 1 is c. $37m only (my calls say $48m when finance costs and overrun budget are included).

A change to the staging could therefore just as easily mean stages 1-2 together or a combination there of and it would still be well below the current $81m budgeted figure.

We can all always be wrong but the evidence says the Sheffirlf deal is following a long set out plan and a deal with maximum equity contribution is being signaled now but with work to be done over the next 9 months to make the plan the most efficient one possible.

@PaulFG the reason the Sheffirld deal with Yansteel is so notable is because of its similarity (50/50 JV) and how relatively recent it is.

CMET have a natural reference point from which to say well you asked for XYZ and got it. Plus, if my memory serves me correctly (I am away at the moment) the LB Group MOU ( which we now know involved the same chap) also followed the pattern of the Yansteel deal.

The only big difference I can see is the indication that stage 1 production may increase which could increase CAPEX. But that still doesn’t stop Sheffield making a commitment to an amount of future CAPEX. Plus, Sheffield through that last deal have Orion on board who I like and who can deliver financing on the debt side with Sheffield at the table than CMET on their own. The Yansteel deal eventually landed 55% of total CAPEX as debt/offtakes. Something that should be better appreciated in my view.

I dont know management as well as some here but the percentages say they wouldn’t use such an interview to subtly deliver bad news around the deal. It is just likely that they (perhaps wrongly) assume that investors appreciate what a key milestone this is and so what they say shouldn’t truly matter. Why? Because it is what is in the RNSs that counts.

But as always nobody can ever be 100% sure.

I agree GAZALA69.

The biggest takeaways for me from all of this is that all key details for this deal are agreed which means it’s as good as done.

That this deal gets CMET to at the very least FID and that the drilling is targeting enough resource to ensure that the 50% of ‘lost‘ NPV is replaced through either mine life or mine sizing.

I also struggle to conclude that CMET management would allow a deal to be closed that does not at least commit Sheffield to a minimum CAPEX commitment. After all Sheffield has set a a very easy to find and follow precedent in their deal with Yansteel. There Yansteel committed to $130m with Sheffiekd filling the gap to $143m and then 50/50 share above that. Why would CMET settle for anything less then Sheffield demanded themselves? Of course no two deals are ever the same but precedent is exactly that.

Most important of all is that this deal begins to unlock a large NPV that simply has not been recognized to date. So I for one am looking forward to seeing it close.

2/2

I believe this BOD (even with said saturated PR campaign) is winning the trust of the market such that when the results come, be they in the ground or corporate the share price will react supported by the knowledge that when these guys do go look for more funding it will be done sensibly and through necessity to enhance the assets on hand further and not simply to pay some director's bills.

Patience is required this year but with so many irons in the fire (thanks to the strategy in play) they only need one or two decent hits to completely change the perception of what they hold there down under.

1/2

I don't see anything wrong with the current strategy that ECR is employing and find the criticism rather strange.

Yes we can criticise the saturated PR approach but then we would surely be happier with that than total silence which many good companies have fallen foul of. Could they tone it down a bit? Yes. But they are making the market aware of ECR and its new team which means when news of worthiness arrives it will get noticed.

Any use of historic actions before the appointment of the current BOD as a means to criticise or build a case against them is pointless. The must be judged on their actions alone and as far as I can see they do have a strategy and are giving themselves and us shareholders a very solid chance of success.

Since they came in they have heavily reduced cash burn. Aligned directors with shareholders by taking the majority of their remuneration in shares. Raised funds through asset sales and commenced a broad review and assessment of all assets. In doing so it is sensible to revisit previous results to ensure that all avenues to success have been properly investigated. This takes time.

Having done all of the above they have given themselves a real chance with what is now an exciting exploration campaign across numerous assets which will culminate in 2 drilling campaigns. In addition, the results at Creswick aren't yet complete. Once they are the team will have the chance to review the project and decide how best to move forward vs the other options available. That will first require the completion of the field campaigns this Summer. Otherwise they may commit funds and time to the wrong asset. That makes complete sense to me.

In the background, efforts are being made to enhance the cash on hand through the sale of a property with planning permission + the tax loss asset. This sale may be attached to a license and so may be driving part of the current exploration strategy. Or a JV may be under discussion that requires more concrete exploration results to be concluded. We don't know yet.

But what we do know is that this team is keen to drive PR when they have something. So I take it as a big positive that it isn't being shared yet. Content in the knowledge that it is in this particular BOD's best interests to maximise the SP because they mainly get paid in shares. That their efforts to date demonstrate thinking outside the box and that is likely to continue and is certainly worth backing at such a small MC vs. potential assets on hand.

With rainy seasons etc in play the new BID was never going to be able to simply throw all their eggs in one basket by driving one asset. They need this first full season to get as much exploration done as possible to give themselves the best set of options possible. In doing so they could well deliver one or two results that help demonstrate the vast potential across their land packages and geographies.

I have been through the ECI in much more detail and can confirm that the full processing plant at Coringas is not covered in the November 2023 update.

This means that the license approval process is designed to allow Serabi to increase their transported tonnage only. Not mined remember?

From the 29th Jan RNS,

"The GU permits the transport of up to 50,000 tonnes of ore per annum from Coringa, to be processed at the Palito Complex."

Transport being the key word there which means they can already mine as much as they want to. Meaning no interruption to their development plan. In turn that helps deliver the best-graded sections to the Palito plant but also means that the stockpile at Coringa continues to grow at a pace.

This type of operation has been in place for c. 2 years already. So it is proven through doing. The trial license renewal was approved by all stakeholders including the very public prosecutor and court that called for the ECI to be produced in the first place. That's proves that on the ground the operations are not causing problems for the indigenous people.

I question why we are being told that the license process is for the future full mine when this ECI does not demonstrate that but from a de-risking and valuation point of view, it is a very positive development. At 60 Koz SRB is worth far more than the current valuation and the cash flows at that sort of level open up many more options across the SRB tenements for future growth and/or M&A. Something that the chairman has alluded to in his FY 2023 report statement.

https://x.com/BigBiteNow/status/1792450622165319690

2/2

The development timeline as seen by the Bau indigenous people's representatives can be found on this website below.

https://xingumais.org.br/obra/mineracao-coringa-chapleau

However, the most recent update has accidentally been printed on another mine's page. See below

https://xingumais.org.br/obra/mineracao-onca-puma

Quote.

"On February 8, 2024, the company Chapleau Exploração Mineral LTDA. (“CHAPLEAU”) filed the Study of the Indigenous Component and Basic Environmental Plan (ECI/PBA) of the Mẽbêngôkre-Kayapó people of the Baú indigenous land."

This ties in with the 17th April Serabi Q1 update on Coringa licensing which stated that.

"With respect to progress on the Installation License (LI), the Company along with its environmental consultancy, Araca, have now completed the Plano Basico Ambiental (PBA), a report that defines the community programmes that the Company will undertake over the life of the project. This PBA has been incorporated into the Indigenous Impact Report (ECI) and is now being circulated to all stakeholders before presentation to FUNAI (the federal agency for indigenous communities).."

Since then the FY23 report dated 29th April confirmed that,

"The indigenous consultation process for the award of the full Installation Licence at Coringa continues.. The comments received on the initial draft ECI report have been considered by the consultants undertaking the study and the ECI report updated accordingly. The Group has now engaged with the government agency for the indigenous population (“FUNAI”) to review the final ECI report and complete the indigenous consultation process. This is required before SEMAS can award the LI."

This dmonstrates that the November comments must have been answered along with any further feedback received on the report since November 2023. Note that the trial license was renewed in early February also which indicates very strongly that the feedback was either minor or the content of the update ECI strong enough to deliver support for the trial license extension. Again, thinking logically here the ECI demonstrates the trucking method which has been in production for c. 2 years. Meaning it is tried and tested.

The only outstanding question I have is the full processing plant construction at Coringa because it would be a different set up water usage-wise etc. However, this ECI does not appear to cover that sort of operation. If so (more reading required) then it demonstrates a safe mining method that would allow the signing off of an LI which would remove the limitations on ore transport (50,000 tons) and deliver at least 60Koz per annum. At that stage, Serabi can focus, with what would be substantial cash generation, on Palito plant expansion.

Conclusion the LI license negativity is a red herring and Serab's confidence that they will receive it is well supported.