Northern Minerals Limited - Quarterly Cash Flow Report - 30 June 2024
NORTHERN MINERALS LIMITED (NTU) Share Update July 2024 Tuesday 30th
Northern Minerals Limited Reports Quarterly Cash Flow and Financing Update
Northern Minerals Limited (ASX: NTU) has released its quarterly cash flow report for the period ending 30 June 2024, highlighting substantial cash outflows and recent financing activities.
Instant Summary:
- Total cash outflows from operating activities: $7.3 million.
- Significant expenditures on exploration, evaluation, and development.
- Net cash used in investing activities: $49,000.
- Net cash from financing activities: $107,000.
- Cash and cash equivalents at end of period: $8.25 million.
- Convertible note issuance to Iluka for $15 million.
Operating Activities
In the second quarter of 2024, Northern Minerals Limited reported total cash outflows from operating activities amounting to $7.3 million. Key expenditures included $4.5 million on exploration and evaluation, $2.4 million on development, and $1.1 million on staff costs. The company also received $1.7 million in government grants and tax incentives, which partially offset these outflows.
The company did not generate any cash from production or customer receipts during this period. Interest received amounted to $126,000, while interest and other finance costs paid totaled $4,000.
Investing Activities
Investing activities resulted in a net cash outflow of $49,000. This included payments for property, plant, and equipment totaling $49,000. There were no proceeds from the disposal of assets or other significant investing activities during the quarter.
Financing Activities
Financing activities generated a net cash inflow of $107,000. The company raised $25 million from the issuance of equity securities but incurred $1.5 million in transaction costs related to these issues. Borrowings provided an additional $351,000, while repayments of borrowings amounted to $49,000. Other financing-related outflows totaled $58,000.
Cash Position
As of 30 June 2024, Northern Minerals Limited had cash and cash equivalents totaling $8.25 million, down from $15.7 million at the beginning of the quarter. The company has a convertible note facility with Iluka, fully drawn at $15 million, which is convertible into up to 365.6 million shares at $0.048 per share, maturing on 31 December 2024.
Future Outlook
The company expects operating costs to decrease in the next quarter as the Wolverine Resource Definition Drill Program has been completed. However, Northern Minerals acknowledges the need to raise additional funds for ongoing operations and development programs, particularly for the Browns Range Heavy Rare Earth project.
The significant cash outflows and the need for additional funding may raise concerns among investors about Northern Minerals' financial stability. The company's ability to secure further financing will be crucial for its ongoing operations and development projects. The issuance of the convertible note to Iluka provides some financial stability but also introduces potential dilution for shareholders.
Investor Reaction:
Analysts are likely to have mixed reactions to the report. While the completion of the Wolverine Resource Definition Drill Program may reduce future costs, the substantial cash outflows and the need for additional funding could be seen as red flags. Investors will be closely monitoring the company's ability to raise funds and manage its cash flow effectively.
Conclusion:
Investors should keep a close eye on Northern Minerals Limited's future financial reports and any announcements regarding funding. The company's ability to secure additional financing and manage its cash flow will be critical in determining its long-term viability and success.