Savannah Goldfields Limited reported a net cash outflow in its December 2024 quarter, highlighting ongoing operational cash burn and a heavy reliance on loan facilities to sustain activities. The company’s liquidity position raises questions about its near-term funding strategy.
- Net operating cash outflow of $955,000 in the December quarter
- Total loan facilities of $14 million with $5.6 million unused at quarter end
- Cash and cash equivalents dwindled to just $2,000
- Significant payments towards exploration and administration costs
- Loan facilities include unsecured and secured arrangements with varying interest rates
Quarterly Cash Flow Overview
Savannah Goldfields Limited’s latest Appendix 5B filing for the quarter ending 31 December 2024 reveals a challenging cash flow environment. The company recorded a net cash outflow from operating activities of $955,000, reflecting ongoing expenditure pressures in exploration, evaluation, and corporate overheads. Despite generating $129,000 in receipts from customers year to date, these inflows were insufficient to offset outflows, underscoring the capital-intensive nature of the gold exploration sector.
Liquidity and Financing Facilities
At the end of the quarter, Savannah Goldfields held a mere $2,000 in cash and cash equivalents, a stark indicator of tight liquidity. However, the company has access to $14 million in loan facilities, of which $8.4 million was drawn, leaving $5.6 million available to support ongoing operations. These facilities are provided by a mix of related parties and third-party lenders, with interest rates ranging from 8% to 20% and varying security arrangements. Notably, a $7.5 million unsecured facility from an entity associated with the company’s chairman and a $6 million secured facility from an unrelated third party form the backbone of Savannah’s financing.
Operational Expenditure and Investment
The company’s cash outflows include $823,000 in exploration and evaluation payments and $205,000 in administration and corporate costs during the quarter. Investing activities also saw a net outflow of $30,000, primarily related to exploration and evaluation expenditures. These figures highlight the ongoing investment Savannah Goldfields is making in its projects, despite the constrained cash position.
Funding Runway and Future Outlook
With total relevant outgoings of $985,000 for the quarter and available funding of $5.6 million, Savannah Goldfields estimates it has approximately 5.7 quarters of funding runway. While this suggests a buffer to continue operations in the near term, the company’s reliance on debt facilities and minimal cash reserves could pose risks if operational costs increase or if access to financing tightens. The filing does not elaborate on specific plans to raise additional capital or reduce expenditure, leaving investors to watch closely for forthcoming strategic updates.
Governance and Compliance
The report was authorised by the board and complies with Australian accounting standards and ASX Listing Rules, providing a transparent view of Savannah Goldfields’ financial position. However, the absence of detailed commentary on mitigating liquidity risks or capital raising initiatives invites cautious scrutiny.
Bottom Line?
Savannah Goldfields’ cash flow pressures and heavy reliance on debt facilities signal a critical juncture for its funding strategy in 2025.
Questions in the middle?
- What are Savannah Goldfields’ plans to bolster cash reserves beyond existing loan facilities?
- How sustainable are the company’s current exploration and corporate expenditure levels?
- Could tightening credit conditions impact Savannah’s ability to refinance or extend its loan facilities?