Newfield’s $10M Loan Undrawn as Cash Plummets to $553, Sampling Postponed

Loan Facilities and Financial Position

Newfield Resources Limited (ASX: NWF) has provided detailed responses to ASX inquiries regarding its recent financial arrangements and project developments. Central to the disclosures is the $10 million loan agreement executed with Wonder Holdings on 30 September 2024. While the funds are immediately available without conditions, the company has yet to draw down on this facility, preferring to fully utilise the existing $15 million loan facility first, which currently has a remaining balance of $330,000.

This cautious approach reflects Newfield's tight cash position, with an unaudited cash balance of just $553 reported as of 31 December 2024. The company has implemented strict cash controls, requiring pre-approval for all expenses and drawing down loan funds only as necessary. This financial discipline is critical as Newfield navigates ongoing operational and strategic challenges.

Project Development and Sampling Delay

Newfield had planned to commence a four-month bulk sampling program at the Kundu Segment D kimberlite within the Tongo Diamond Mine in January 2025, aiming to generate over 2,000 carats for grade and value estimation. However, this work has been postponed following the engagement of an independent third party to conduct a strategic review of the mine and current mine plan amid a depressed diamond market.

The third-party team, after site visits and due diligence, expressed confidence in the project's quality and proposed a joint development arrangement that could significantly reduce upfront capital and operating costs. Newfield anticipates finalising this arrangement during the March 2025 quarter, with bulk sampling to proceed only after agreement on the best development path.

Ongoing Dispute with Octea Limited

A significant overhang remains the dispute with Octea Limited concerning the Tribute Mining Agreement (TMA) for the Tongo Diamond Mine. Octea issued a default notice in April 2024 citing delays and payment defaults, threatening termination of the agreement. Newfield denies any breach and has paid the bullet payment due in May 2024, proposing a cooperation plan that has yet to be accepted.

Newfield is actively exploring the potential acquisition of Octea's operations, including the mining license, which would render the TMA and default notice obsolete. The company believes that successful joint development and recommencement of mining will satisfy Octea and resolve the dispute. Meanwhile, prudence led Newfield to write down the mine development asset to nil in its 2024 Annual Report.

Compliance and Corporate Governance

Despite these challenges, Newfield confirms full compliance with ASX Listing Rules, including continuous disclosure obligations. The company acknowledged delays in lodging its 2024 Annual and Quarterly Reports due to audit complexities related to going concern assessments and the Octea dispute. These reports were ultimately finalised after the Board decided on a full write-down of capitalised expenditure associated with the TMA.

Staff reductions, particularly among expatriates, have been managed with negotiated pay reductions and settlements, with liabilities covered under existing loan facilities. The Board is overseeing tight cash flow management while a new management team is being appointed to implement enhanced cost controls.

Looking Ahead

Newfield’s strategic focus now hinges on concluding the joint development arrangement and resolving the Octea dispute. The outcomes will be pivotal for unlocking value at the Tongo Diamond Mine and restoring operational momentum. Investors will be watching closely for progress updates in the coming quarters as the company balances financial constraints with project ambitions.