DMC Mining Secures $525K Loan Amid Tight Cash Flow and Public Offer Push

• Net cash outflow of $206,000 for the December 2024 quarter
• Cash reserves at quarter-end stood at $33,000
• Secured a $525,000 loan facility from Aries Finance Pty Ltd
• Public offer extended to February 2025 aiming to raise up to $5.5 million
• Company expects to maintain current cash burn until public offer completion

Quarterly Cash Flow Overview

DMC Mining Limited (ASX: DMM) disclosed its quarterly cash flow report for the period ending 31 December 2024, revealing a net cash outflow of $206,000. The company’s cash balance at the end of the quarter was a modest $33,000, underscoring a tight liquidity position as it continues exploration and corporate activities.

Operating cash flows were negative $206,000, driven primarily by staff costs, administration, and corporate expenses. Investing activities also contributed a small outflow of $2,000, reflecting ongoing exploration and evaluation expenditures.

Loan Facility and Funding Strategy

To bolster its financial position, DMC Mining secured a $525,000 secured loan from Aries Finance Pty Ltd. This facility includes a combination of advances and accrued interest, with a high effective interest rate of 10% per quarter and a repayment term extended to March 18, 2025. The loan is specifically intended to cover expenses related to the company’s public offer prospectus and associated costs.

In addition to this loan, the company is in active discussions to secure an additional $100,000 in funding from Aries Finance to further support its public offer expenses. This indicates a proactive approach to managing near-term cash requirements amid constrained liquidity.

Public Offer and Operational Outlook

DMC Mining has lodged a prospectus to raise up to $5 million through the issuance of 100 million shares at $0.05 each, with an option to accept oversubscriptions of up to $500,000. The public offer, initially opened in September 2024, has seen its closing date extended multiple times, most recently to February 7, 2025. The company anticipates that successful completion of this capital raise will enable it to resume normal operations and improve its cash flow position.

Until the public offer is completed, DMC expects to maintain similar levels of net operating cash outflows. The company has also indicated it will adjust expenditures as necessary depending on available funding, reflecting a cautious but flexible financial management stance.

Risks and Considerations

With only 0.16 quarters of funding available based on current cash and outgoings, DMC Mining faces a critical liquidity challenge. The company’s ability to continue operations hinges on the successful completion of its public offer and securing additional funding. The high cost of debt financing and the reliance on external capital markets introduce risks that investors should monitor closely.

Payments to related parties, including executive and non-executive directors, accounted for $99,000 of the operating cash outflows, consistent with existing remuneration arrangements. This transparency aligns with ASX governance expectations but adds to the overall cash burn.

Bottom Line?

DMC Mining’s immediate future depends on its public offer success and securing further funding to navigate a precarious cash position.

Questions in the middle?

• Will DMC Mining successfully close its extended public offer by February 2025?
• How will the company manage its high-interest loan repayments amid limited cash reserves?
• What operational adjustments might DMC implement if additional funding falls short?