Sheffield Resources Hits Record Production, Expands Zircon Customer Base
Sheffield Resources reported a record quarterly concentrate production of 198,704 tonnes at its Thunderbird mine, alongside a strategic expansion of its zircon concentrate customer base. Despite strong operational performance, the company faces short-term financial pressures amid restructuring efforts.
- Record quarterly concentrate production of 198,704 tonnes at Thunderbird
- Zircon concentrate shipments expected to grow with 11 approved customers
- C1 cash costs per tonne decreased to A$297, driven by higher production
- US$22 million offtake prepayments secured from joint venture partner Yansteel
- Business improvement initiatives underway, including workforce reductions and mining method changes
Record Production Milestone
Sheffield Resources has delivered a standout performance in the December 2024 quarter, achieving a record 198,704 tonnes of mineral sands concentrate production at its Thunderbird mine in Western Australia. This milestone underscores the operational robustness of the Kimberley Mineral Sands (KMS) joint venture, where Sheffield holds a 50% interest. Mine production remained steady at 2.5 million tonnes of ore, aligning with expectations and supporting sustained throughput rates projected for 2025.
The process plant continues to outperform design specifications, with titanium dioxide (TiO2) and zirconium dioxide (ZrO2) recoveries consistently exceeding targets. This operational efficiency has translated into strong product quality and recovery metrics, reinforcing Thunderbird's position as a high-grade mineral sands operation.
Expanding Zircon Market Reach
Significantly, Sheffield has broadened its zircon concentrate customer base to eleven approved offtakers, a strategic move that diversifies revenue streams and reduces reliance on a limited number of buyers. Zircon concentrate shipments totaled 22,904 tonnes during the quarter, with expectations to increase shipments to between 40,000 and 60,000 tonnes in the March 2025 quarter. This expansion is supported by new Mineral Export Permits secured from the Australian government, enabling access to a wider international market.
Offtake prepayments amounting to US$22 million from Yansteel, Sheffield's joint venture partner, provide near-term working capital support. Yansteel remains a key anchor customer, purchasing ilmenite concentrate under a life-of-mine agreement, with shipments of 185,450 tonnes recorded in the quarter.
Financial and Operational Challenges
Despite operational successes, Sheffield faces financial headwinds. The company reported negative operating cash flow for the quarter, primarily due to lower-than-planned zircon sales and costs associated with a business restructuring. C1 cash costs per tonne produced (excluding inventory movement) improved to A$297 from A$360 in the previous quarter, reflecting higher production volumes. However, underlying cash costs rose to A$273 per tonne from A$188, influenced by inventory growth and restructuring expenses.
The business improvement initiative launched during the quarter aims to reduce costs and enhance productivity. This has included a regrettable 20% reduction in KMS workforce and a transition in waste mining methods from contractor-based to drill and blast operations. These changes are expected to lower mining costs and increase throughput in the medium term.
Outlook and Strategic Development
Looking ahead, Sheffield anticipates stable ore production between 2.5 and 3 million tonnes per quarter, with ilmenite concentrate production forecasted between 160,000 and 180,000 tonnes for the March quarter. Zircon concentrate shipments are expected to continue growing, supported by the expanded customer base and consistent pricing.
Beyond Thunderbird, Sheffield is advancing its portfolio with interests in the South Atlantic Project in Brazil and a 10% stake in Capital Metals Plc, which holds mineral sands projects in Sri Lanka. Progress on the South Atlantic Project includes ongoing resource estimation and environmental approvals, signaling Sheffield’s intent to build a diversified global mineral sands platform.
Bottom Line?
Sheffield’s record production and customer diversification set a strong foundation, but cost control and cash flow management will be critical as restructuring unfolds.
Questions in the middle?
- How will the business improvement initiatives impact production costs and timelines?
- What is the potential upside from expanding the zircon concentrate customer base beyond current approvals?
- How sustainable is the current cash flow position given ongoing restructuring and inventory levels?
