Rey Resources Limited reported a cautious quarterly cash flow with $276,000 in cash and ongoing strategic moves in its oil and gas exploration portfolio, including the surrender of EP458 and preparations for a key 3D seismic survey on EP487.
- Quarter-end cash balance of $276,000 with $7.09 million in unused loan facilities
- Surrender of non-prospective EP458 exploration permit
- Preparations underway for 3D seismic survey on Derby Block (EP487)
- Completion of Gulliver Production disposal with $350,000 received
- Payments of $67,000 to related parties including consulting and director fees
Quarterly Financial Overview
Rey Resources Limited (ASX: REY) closed the December 2024 quarter with a modest cash balance of $276,000, reflecting ongoing operational and investing outflows. The company reported net cash used in operating activities of $913,000 and investing outflows of $346,000 for the quarter. Despite these outflows, Rey maintains access to substantial loan facilities totaling $27 million, with $7.09 million still available, providing a financial buffer as it advances its exploration agenda.
Strategic Portfolio Adjustments
In a notable portfolio move, Rey surrendered its EP458 exploration permit after an internal technical review deemed the area non-prospective for drilling. This decision streamlines the company's focus towards more promising assets, particularly the Fitzroy Blocks and the Derby Block (EP487) in the Canning Basin. The surrender application was lodged in October 2024, signaling a strategic pivot to concentrate resources on higher-potential projects.
Advancing the Derby Block Exploration
The Derby Block, held 100% by Rey through its subsidiaries, remains a key focus. The company is actively preparing for a 3D seismic survey, a critical step towards unlocking the potential of this wet Laurel Basin Centred Gas play. Efforts include refining the work plan and engaging contractors, alongside ongoing consultations with Native Title holders and landowners to secure necessary access. This methodical approach underscores Rey's commitment to advancing its exploration pipeline responsibly and efficiently.
Corporate Developments and Cash Management
During the quarter, Rey completed the disposal of Gulliver Production, receiving the final $350,000 payment. This transaction reduces operational complexity and provides liquidity. The company also disclosed payments totaling approximately $67,000 to related parties, comprising consulting and director fees, reflecting standard corporate governance practices. Rey's capital structure remains robust with over 211 million shares on issue and significant loan facilities from substantial shareholders, including ASF Group Limited and Wanyan Liu, both offering unsecured loans at 12% interest maturing in 2026.
Outlook and Operational Focus
Looking ahead, Rey Resources is positioned to leverage its available funding to sustain exploration activities over the next eight quarters, based on current cash burn rates. The company’s focus on advancing seismic surveys and maintaining stakeholder engagement will be critical in validating its resource potential. However, the relatively low cash balance highlights the importance of prudent financial management and potential future capital raises to support ongoing operations and growth ambitions.
Bottom Line?
Rey Resources’ next moves in seismic exploration and cash management will be pivotal in shaping its path forward.
Questions in the middle?
- How will the results of the upcoming 3D seismic survey on EP487 influence Rey’s exploration strategy?
- What plans does Rey have to bolster its cash reserves beyond existing loan facilities?
- How might the surrender of EP458 impact the company’s overall resource portfolio and investor confidence?