Freehill’s Q3 Sales Drop 30% but Cuts Costs and Raises $700K Capital

Quarterly Financial Performance

Freehill Mining Limited (ASX: FHS) released its quarterly activities report for the period ending 31 March 2025, revealing a mixed financial performance shaped by seasonal market dynamics and operational challenges. Gross sales fell by 30% quarter-on-quarter to $636,000, reflecting a slowdown in construction activity in Chile’s La Serena and Coquimbo regions during the New Year and February holiday period. Cash receipts also declined 16% to $663,000.

Despite the top-line softness, Freehill managed to reduce production costs by 15% to $492,000, which helped narrow net cash used in operating activities to just $51,000, down from $114,000 in the previous quarter. This cost discipline, combined with delayed corporate expenses, contributed to a more stable cash flow position heading into the new quarter.

Strategic Expansion and Capital Raising

In a decisive move to counteract the seasonal dip and position itself for growth, Freehill secured a long-term lease on a new site in the La Serena/Coquimbo region. This site, located near key infrastructure projects and customer delivery points, is expected to be operational by mid-June, with mobilisation starting in mid-May. The new facility aims to enhance sales volumes and margins by expanding processing capacity and broadening the customer base.

Complementing this operational expansion, Freehill completed a $700,000 placement to sophisticated investors in April and announced a forthcoming pro rata non-renounceable entitlement offer to existing shareholders. Both the placement and entitlement offer include free-attaching options exercisable at $0.008, expiring in May 2028, providing investors with additional upside potential.

Growth Prospects in Magnetite and Exploration

Beyond construction materials, Freehill is advancing its higher-value mineral processing ambitions. The company plans to produce a bulk magnetite sample from its Yerbas Buenas project as a foundation for establishing a sustainable magnetite business. Additionally, exploration activities are set to ramp up at the adjacent El Dorado Cu-Au project, with sampling imminent to assess copper and gold mineralisation potential.

Management highlighted that revenues from the expanding materials business will underpin these value-added initiatives, aiming to diversify and strengthen Freehill’s portfolio in Chile’s mining sector. Discussions with third parties regarding production and development opportunities further indicate a strategic push to leverage regional infrastructure demand.

Outlook and Market Positioning

Freehill’s leadership remains confident that the new site and capital injection will catalyse a significant scale-up in operations throughout 2025. Managing Director Paul Davies emphasized the company’s reputation as a reliable supplier to blue-chip customers, which forms the basis for expanding orders and securing new contracts. Chairman Ben Jarvis acknowledged the quarter’s sales volatility but pointed to a positive year-on-year trend driven by infrastructure projects and cement plant demand.

While some lumpiness in quarterly sales is expected, the strategic moves made during the quarter position Freehill to consolidate its market share in Chile’s Region IV and beyond. The company’s dual focus on scaling construction materials and developing higher-value mineral projects could unlock substantial growth if execution proceeds smoothly.