Sheffield Resources reported a 7% decline in ore mined and a 15% drop in concentrate production for the December quarter, while maintaining strong zircon concentrate shipments despite challenging market conditions. The company is advancing loan restructuring efforts and preparing for steady production in early 2026.
- Ore mined down 7% to 2.8 million tonnes due to lower mining productivity and weather
- Concentrate production fell 15% quarter-on-quarter but up 31% year-on-year
- Zircon concentrate shipments remained robust despite market weakness in China
- Senior secured loan restructuring negotiations ongoing with lenders
- Cash reserves at A$1.4 million; divestment of Capital Metals shares raised A$4 million
Operational Performance and Market Challenges
Sheffield Resources Limited has released its quarterly activities report for the period ending 31 December 2025, highlighting a mixed operational performance at its flagship Kimberley Mineral Sands (KMS) joint venture. The Thunderbird Mineral Sands Mine, where Sheffield holds a 50% interest, saw ore mined decline by 7% to 2.8 million tonnes compared to the previous quarter. This reduction was attributed to lower contract mining productivity and seasonal weather disruptions, including impacts from tropical cyclone Hayley on port operations.
Concentrate production also dipped 15% quarter-on-quarter to 212,974 dry metric tonnes, driven by both the lower ore volume and the mining of lower-grade ore zones. Despite this, production remains 31% higher than the same period last year, reflecting ongoing operational improvements. Notably, zircon concentrate shipments reached 53,117 tonnes, the second highest quarterly volume to date, even as the zircon market in China remained challenging.
Financial Position and Loan Restructuring
Financially, Sheffield reported a cash balance of A$1.4 million as at 31 December 2025, with net cash outflows of approximately A$5 million for the quarter. The company’s underlying C1 cash costs increased to A$275 per tonne of concentrate, up from A$201 in the prior quarter, reflecting the impact of lower production volumes and mine productivity.
Sheffield is actively engaged in restructuring its senior secured loan facilities associated with KMS. During the quarter, the joint venture agreed to waivers and deferrals on December 2025 interest and principal repayments, with ongoing negotiations to realign debt repayments to the revised mine plan and market conditions. A notable development was the novation agreement transferring the loan facility from Orion to Sheng Feng, a related entity of joint venture partner Yansteel. However, Sheffield cautions that there is no certainty that amendments to the loan facilities will be finalised in the near term.
Strategic Moves and Outlook
In January 2026, Sheffield divested its 10% interest in Capital Metals Plc, realising approximately A$4 million before costs. This move is expected to bolster liquidity and support ongoing operations at KMS. Meanwhile, the South Atlantic Project in Brazil continues to progress through pre-feasibility and approvals stages, although Sheffield has suspended funding to prioritise resources on KMS.
Looking ahead to the March 2026 quarter, Sheffield anticipates stable ore mining between 2.8 and 3.2 million tonnes, with ilmenite concentrate production forecast between 170,000 and 190,000 tonnes and zircon concentrate between 40,000 and 50,000 tonnes. Concentrate shipments are expected to remain steady, with pricing for zircon concentrate projected to hold near December quarter levels despite ongoing market softness.
Executive Chair Bruce Griffin emphasised the company’s commitment to stabilising Thunderbird production and navigating market headwinds. He noted that while zircon concentrate market conditions remain difficult, there are early signs of stabilisation, and all zircon concentrate produced continues to be sold to a mix of third-party customers and Yansteel.
Bottom Line?
Sheffield Resources faces a pivotal period as it balances operational challenges and market pressures with strategic financial restructuring and growth ambitions.
Questions in the middle?
- Will the senior secured loan restructuring be successfully completed in the near term?
- How will ongoing zircon market weakness impact pricing and profitability through 2026?
- What are the prospects for reactivating funding and advancing the South Atlantic Project?