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Group 6 Metals Receives Funding Boost for Dolphin Ramp Up

3 November 2023 09:32
ASX: G6M

Group 6 Metals‘ (ASX:G6M) has received binding commitments from four of its major shareholders to provide a bridge finance facility totalling $8 million to aid in its production ramp up at the Dolphin Tungsten Mine, located on King Island, Tasmania.

The Bridge Finance Facility

The Bridge Finance Facility provides vital funding to the Company at a crucial stage of its exploration as it addresses initial challenges resulting from lower-than-expected plant utilisation in the September quarter, affecting average monthly production.

The Bridge finance plays a crucial role in meeting cash flow needs while the Company awaits an expected cash refund through the Research & Development Tax Incentive Scheme.

This scheme offers an 18.5% refundable tax offset on qualifying R&D expenses for companies with aggregated turnover below $20 million, and since Group 6 Metals is in a tax loss position as of the end of June this year, the refundable offset will be received as a $14.1 million cash refund upon the successful completion of the pre-issue review.

While anticipating the crucial cash injection, the Company is bolstered by the bridge finance facility from major shareholders Abex Limited, CJRE Maritime Pty Ltd, Elphinstone Holdings Pty Ltd, and D.A.CH.S Capital AG, which significantly supports the expansion of its operations at the Dolphin Tungsten Mine.

Group 6 Metals has laid out plans to repay the Bridge Finance Facility, along with interest accrued at a minimum monthly BBSY rate of 2.50% per annum, plus a 10% per annum margin, within 72 hours of receiving the expected R&D refund by the end of March 2024.

Group 6 Metals Chairman Johann Jacobs said that the Company appreciates the support of its shareholders during this time.

“It is impossible to imagine where the Company would be without the on-going support of our major shareholders,” he said.

“Their commitment has been demonstrated from the beginning and continues despite the initial challenges faced in ramping up a recently commissioned project. We have every confidence in our executive team in developing and executing a pathway to steady state operations.”

Dolphin Tungsten Mine

The Company continues to charge ahead at its Dolphin Tungsten Mine, located in Tasmania, trying to facilitate increased plant efficiency and performance optimisation activities.

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Figure 1: Dolphin Tungsten Mine

In August, Group 6 Metals successfully delivered its second shipment of high-grade tungsten concentrate, its first tungsten concentrate delivery in July, processing 12,500 tonnes of 0.28% WO3 low-grade ore.

While the Company recognises the most recent quarter has been characterised by challenges in terms of plant utilisation and reliability, it does report plant performance is showing steady improvement with specific focus on supervision, training and plant maintenance.

The on-site team remains dedicated to enhancing production rates from higher-grade ore, having completed defect rectification work and intensifying production to meet the rising demand for tungsten.

Group 6 Metals’ Managing Director & Chief Executive Officer, Keith McKnight, acknowledges the pivotal role of tungsten across various applications, including steelmaking, mining, construction, electronics, and defence.

“The Albanese government have just re-iterated their pledge to support critical minerals production in Australia, and as Tungsten is ranked highest for economic development,” he said.

“We look forward to working with the Federal Government on ensuring long term primary tungsten production in Australia and pursuing exciting opportunities for downstream processing to produce higher value tungsten products in the future.”

G6m Tungsten End Use Growth 2021

Figure 2: Tungsten uses. Source SMR.

CEO Outlook

Group 6 Metals Managing Director & Chief Executive Officer, Keith McKnight commented on the Bridge Facility Funding.

“While the ramp up activities have been slower than forecast for the September quarter, the site team has made significant progress in establishing mining in the Dolphin pit, stabilising the process plant operation, resulting in more consistent production of concentrate. This facility will provide support for the Company’s cashflow while we work with the ATO to finalise our R&D cash refund,” he said.

“We are very thankful for the continued support of our major shareholders from the start of this journey, and even more so as we transition to steady state operations over the coming months.”

G6M’s Australian Stock Exchange-listed share price is currently trading at $0.099 today (9:00 am UTC+ 8 hours).

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