Safety Incidents and Cash Strains Put Group 6 Metals’ Future Under Pressure

Operational Challenges and Safety Concerns

Group 6 Metals Limited (ASX: G6M) reported a turbulent December 2024 quarter at its Dolphin Tungsten Mine on King Island, Tasmania. The company recorded three lost time injuries (LTIs), a concerning continuation of safety issues attributed primarily to staffing shortages and high employee turnover. In response, management has prioritized recruitment of qualified supervisors and workplace environment improvements, particularly in the processing plant area.

Ore production remained consistent at 125,000 tonnes, maintaining output levels from the previous quarter. However, processing plant throughput declined to 31,717 tonnes due to maintenance backlogs, equipment availability, and insufficient staffing. Despite these challenges, the average feed grade improved to 0.79% WO3, reflecting access to higher-grade ore bodies.

Financial Strains and Recapitalisation Efforts

Financially, Group 6 Metals faced pressure with cash receipts from customers totaling AU$2.7 million for the quarter, while operational costs and maintenance demands weighed heavily. The company drew down AU$14 million in loans from its secured lenders, signaling continued lender confidence amid liquidity constraints. This interim funding is part of a broader recapitalisation plan designed to reduce debt, lower funding costs, and provide the liquidity necessary for a comprehensive business transformation.

The recapitalisation plan, announced in early December 2024, awaits shareholder and regulatory approval, expected by Q3 FY25. It includes a proposed equity raise of AU$5.94 million and secured debt funding of AU$7.5 million from the Tasmanian government, aiming to restore financial stability and operational resilience.

Leadership Restructuring and Strategic Outlook

In tandem with financial restructuring, Group 6 Metals undertook significant leadership changes. Executive Chairman Kevin Pallas replaced Board Chair Johann Jacobs, while Managing Director Keith McKnight and two Non-Executive Directors resigned. New appointments include Non-Executive Director Dale Elphinstone, with Chris Ellis continuing his directorship. The Chief Financial Officer role remains vacant, with an executive search underway.

Kevin Pallas emphasized the urgency of operational improvements, citing delays in process plant upgrades and strained supplier relationships as key obstacles. He highlighted the initiation of a capital improvement program targeting plant maintenance remediation and process optimisation. Early signs of incremental productivity gains offer cautious optimism for the mine’s future viability.

Looking Ahead

Despite the setbacks, mining activities progressed well, with efficient ore delivery and favourable stripping ratios exposing high-grade ore bodies. The company anticipates that shareholder approval of the recapitalisation plan will unlock further business improvement initiatives and secure the Dolphin Tungsten Mine’s operational future.