Develop Global’s Heavy Borrowing Raises Questions on Debt Servicing

Quarterly Cash Flow Highlights

Develop Global Limited (ASX: DVP) has released its Appendix 5B quarterly cash flow report for the period ending 31 December 2024, revealing a substantial net increase in cash and cash equivalents. The company’s cash position grew by $81.8 million during the quarter, closing at a healthy $112.2 million. This improvement was largely fueled by a surge in financing activities, offsetting the cash outflows from operating and investing activities.

Financing Activities Drive Cash Inflows

The standout feature of the quarter was the $94.7 million net cash inflow from financing activities. This was predominantly due to proceeds from borrowings amounting to $102.4 million, partially offset by repayments and transaction costs. Develop Global’s loan facility with Trafigura Pte Ltd remains a cornerstone of its capital structure, with the $65 million USD facility fully drawn and secured against key assets including the Woodlawn Project. Additionally, equipment financing facilities totaling $92.9 million AUD provide further liquidity, with $45.3 million still available for drawdown.

Operating and Investing Cash Flows

Operating activities generated a positive net cash flow of $10.9 million for the quarter, reflecting receipts from customers and careful management of costs. However, investing activities consumed $23.8 million, driven by payments for property, plant, and equipment ($15.9 million) and exploration and evaluation expenditures ($1.6 million). The company also recorded proceeds of $1 million from the disposal of investments, partially mitigating the outflows.

Financial Position and Future Outlook

With total available funding of $157.6 million, comprising cash reserves and unused financing facilities, Develop Global is well-positioned to support its ongoing operations and development plans. The company’s weighted average interest rate on equipment financing stands at 7.1%, with loan maturities ranging from 30 to 36 months. The Trafigura loan includes an 18-month grace period on repayments, providing additional financial flexibility.

While the report does not detail production or revenue forecasts, the strong cash position and access to capital suggest Develop Global is preparing for continued investment in its mining and exploration activities. The Woodlawn Project remains a key asset underpinning the company’s secured financing arrangements.

Governance and Compliance

The quarterly report was authorised for release by the Managing Director and complies with ASX Listing Rule 19.11A and Australian Accounting Standards. Payments to related parties were minimal and disclosed transparently, reflecting sound governance practices.