Fitzroy River Advances Royalties and Strategic Projects Amid Energy Market Volatility

Royalty Income and Financial Overview

Fitzroy River Corporation Ltd (ASX: FZR) has released its quarterly activities report for the period ending 31 March 2025, revealing a total royalty income of $611,878 for the 12 months to March 2025. This figure reflects a decline from the prior corresponding period’s $716,906, primarily influenced by suspended operations at Buru Energy and fluctuating commodity prices. The company received $141,370 in royalties for the December 2024 quarter, with the March 2025 quarter royalties expected in June.

Cash flow remains positive, with $2.7 million in cash and cash equivalents at quarter-end, supporting ongoing corporate and administrative activities. Fitzroy also announced a planned capital return of 2 cents per share, subject to shareholder approval at the upcoming general meeting on 29 April 2025.

Strategic Developments in Energy Royalties

Significant progress was made in Fitzroy’s energy royalty portfolio during the quarter. Notably, Buru Energy’s Rafael Gas Project reached a milestone with the execution of a Strategic Development Agreement (SDA) with Clean Energy Fuels Australia. This agreement materially derisks the project by assigning CEFA responsibility for financing, building, owning, and operating the LNG and condensate infrastructure, thereby limiting Buru’s upstream financial exposure. The project aims for a Final Investment Decision (FID) in late 2025 and anticipates generating cash flow in the second half of 2027.

However, royalty receipts from Buru remain suspended due to ongoing operational halts, including the Ungani Oilfield, pending renegotiation of native title agreements and regulatory approvals. Fitzroy holds a 2% net wellhead royalty over Canning Basin tenements and a 3% royalty over Lennard Shelf tenements, positioning it to benefit from any resumption of production.

Progress in Mineral Royalties and Project Advancements

On the mineral side, Fitzroy’s royalty interests continue to advance. The Bowdens Silver Project in New South Wales, Australia, owned by Silver Mines Limited, submitted a critical application to the NSW Department of Planning, Housing and Infrastructure (DPHI) to determine whether the project’s transmission line will be considered part of a single development. This step is essential for reinstating development consent and progressing the project’s development application. Fitzroy holds a 2% net smelter return royalty on Bowdens, which hosts one of Australia’s largest undeveloped silver deposits with 71.7 million ounces of silver in reserves.

Meanwhile, Federation Mining’s Snowy River Gold Project in New Zealand is advancing its feasibility study, targeted for completion in April 2025, and preparing for a planned IPO later this year. Fitzroy holds a variable 1-3% overriding royalty on the project, with Federation holding an option to buy out this royalty for approximately A$11.8 million indexed from March 2024. The project boasts a high-grade resource of 785,000 ounces of gold at 24g/t.

Additionally, the Sam’s Creek Gold Project, operated by Siren Gold Limited, continues to hold a substantial mineral resource of 824,000 ounces of gold. Fitzroy maintains a 1% royalty on all product from this project, further diversifying its royalty income streams.

Investment Write-Down and Market Risks

Fitzroy’s investment in Byron Energy Limited, an oil and gas producer operating offshore Louisiana, was written down to nil as of 31 December 2024 due to Byron’s financial difficulties, including a net debt position of US$10.5 million and ongoing restructuring efforts. Fitzroy continues to monitor this investment but has prudently adjusted its carrying value to reflect current market realities.

The company’s risk profile remains largely unchanged, with ongoing volatility in global Brent crude and natural gas prices influenced by geopolitical tensions in the Middle East and the Ukraine conflict. These factors, combined with currency fluctuations and production uncertainties from ExxonMobil and Woodside in the Gippsland Basin, could impact future royalty receipts.

Corporate Governance and Outlook

Fitzroy’s board saw changes during the quarter, with director interest notices filed and a capital return proposal tabled for shareholder approval. The company maintains a conservative cash management approach, balancing administrative costs with royalty income and investment activities.

Looking ahead, key milestones include the outcome of the Bowdens Silver Project planning application, the finalisation of the Snowy River feasibility study and IPO, and the progression of the Rafael Gas Project towards FID. These developments will be critical in shaping Fitzroy’s royalty income trajectory and shareholder value.