Funding Crunch Looms as Native Mineral Resources Faces Cash Burn Challenges

Quarterly Cash Flow Overview

Native Mineral Resources Holdings Limited (ASX: NMR) has released its quarterly cash flow report for the period ending 31 December 2024, revealing a challenging cash position amid ongoing exploration investments. The company recorded a net cash outflow from operating activities of $1.25 million, reflecting continued expenditure on exploration and corporate costs without offsetting revenue inflows.

Investing activities showed a substantial cash outflow of $19.3 million, largely attributable to payments for exploration and evaluation as well as acquisitions of entities and tenements. This aligns with the company’s strategic focus on expanding its mineral resource footprint, though it places pressure on liquidity.

Funding Initiatives and Financial Position

To address these cash flow pressures, Native Mineral Resources successfully completed a pro-rata non-renounceable entitlement offer during the quarter, raising approximately $4.1 million before costs through the issuance of over 103 million new shares at $0.04 each. This capital injection is critical to sustaining the company’s exploration programs and operational expenses.

Additionally, the company has secured a convertible note facility of $18.6 million from Collins St Convertible Notes Pty Limited, with interest capitalised for the first 14 months and repayments deferred until February 2026. This secured loan, backed by assets acquired in recent transactions, provides a significant liquidity buffer and flexibility for Native Mineral Resources to advance its projects without immediate cash outflows for interest payments.

Further financial support is anticipated from Managing Director Blake Cannavo, who has committed to provide up to $1.2 million via a convertible note facility, pending shareholder approval. This demonstrates management’s confidence in the company’s prospects and willingness to underpin its funding requirements.

Operational Outlook and Market Implications

Despite the tight cash position, ending the quarter with just $501,000 in cash and less than half a quarter of funding available based on current outgoings, the company affirms its expectation to maintain current operating cash flows and meet business objectives. The recent capital raise and funding commitments are expected to provide sufficient runway for ongoing exploration and corporate activities.

However, the reliance on future capital raises and convertible debt facilities introduces execution risk. Investors will be watching closely how effectively Native Mineral Resources manages its cash burn and whether it can convert its exploration assets into value-adding discoveries or partnerships.