Andromeda Metals has made significant strides in advancing its Great White Project, progressing funding efforts for Stage 1A+ and securing key operational milestones. The company also bolstered its leadership with new board appointments and received a substantial tax refund, positioning it for a critical investment decision.
- Positive progress in securing $90 million funding for Stage 1A+ development
- Procurement and warehousing of major long lead items completed
- Australian Government Advance Finding grants refundable tax offsets up to 43.5%
- Completion of a 1-for-13 pro-rata entitlement offer raising approximately $410,000
- Appointment of two experienced non-executive directors with industrial minerals expertise
Funding Momentum Builds for Stage 1A+
Andromeda Metals Limited (ASX: ADN) has reported encouraging progress in its December 2024 quarterly update, focusing on the advancement of its flagship Great White Project (GWP) in South Australia. Central to this progress is the ongoing funding process for the initial Stage 1A+ development, targeting a $90 million capital raise to underpin a final investment decision. The company is actively engaging with potential financiers, aiming for a debt-to-equity ratio of approximately two-thirds debt to one-third equity, with alternative structures such as royalties also under consideration.
Supporting this funding effort are four binding offtake agreements covering the sale of Great White CRM™ and Great White KCMTM90 products, which have undergone extensive validation. These agreements provide a solid commercial foundation for the Stage 1A+ production capacity of 90,000 wet metric tonnes per annum. While a previously announced term sheet with IMCD for Great White HRM™ expired due to funding timing conditions, Andromeda remains in discussions with IMCD for future opportunities, and other binding agreements for HRM™ sales remain unaffected.
Operational Readiness and Procurement Progress
Operationally, Andromeda has made significant headway in preparing for Stage 1A+ production. The majority of long lead items, including fluidised bed dryers, thickeners, and drum washers, have been fabricated and warehoused, ready for shipment to site. Preparations for factory acceptance testing of the filter press are underway, with engineering design for the filter cake feeder complete and fabrication scheduled post-final investment decision. These steps align with the company’s strategy to optimise warranty conditions and align delivery with the development timeline.
Meanwhile, the Streaky Bay Pilot Plant operations were scaled back to conserve cash while continuing to supply samples for customer testing and product validation. Importantly, the company reported no lost time injuries or environmental incidents during the quarter, underscoring a strong safety and compliance culture.
Corporate Developments and Tax Incentives
On the corporate front, Andromeda received an Advance Finding from the Australian Government’s AusIndustry, enabling refundable tax offsets or cash rebates of up to 43.5% on eligible Stage 1A+ expenditures up to approximately $26 million. This incentive is a significant financial boost, reflected in the $2.34 million tax refund received post-quarter related to research and development activities in FY2024.
The company also completed a 1-for-13 pro-rata entitlement offer, raising around $410,000 through entitlements and a top-up facility, with participation from directors and key executives. This capital raising was ratified at a General Meeting in October 2024, which also approved the issuance of listed options as part of the fundraising.
Strategic Board Appointments Strengthen Leadership
Andromeda bolstered its board with the appointments of two seasoned non-executive directors: Miguel J. Galindo, a chemical engineer and industrial minerals expert with over 25 years at Rio Tinto, and Jean-Dominique (JD) Sorel, former COO of Traxys Sarl with 45 years in mining and minerals sectors. These appointments bring deep operational, commercial, and market expertise, particularly in industrial minerals, which is expected to enhance strategic oversight as the company advances its development and funding objectives.
Exploration and Research Progress
Exploration activities continued with a focus on the Eyre Kaolin Project, where Andromeda has earned a 51% interest and can increase to 80% by further expenditure. The company is reassessing historic drillholes for additional commodities, potentially expanding the resource base. Concurrently, research efforts progressed on optimising a novel flowsheet for producing high purity alumina (HPA) from kaolin feedstock, a promising avenue for value addition.
Financial Position and Outlook
Andromeda ended the quarter with $3.2 million in cash, down from $5.4 million the previous quarter, reflecting ongoing investment in capital items and exploration. The company continues to manage costs prudently, including fee reductions and temporary part-time arrangements for staff, while pursuing funding to extend its runway. The receipt of the tax refund and ongoing funding discussions provide a positive financial backdrop as the company approaches a critical investment decision for Stage 1A+.
Bottom Line?
With funding discussions advancing and operational milestones met, Andromeda Metals is poised for a pivotal phase in scaling its Great White Project.
Questions in the middle?
- Will Andromeda secure the full $90 million funding required for Stage 1A+ within the expected timeframe?
- How will the new board members influence the company’s strategic direction and funding negotiations?
- What is the timeline and commercial outlook for the Great White HRM™ product validation and market entry?