Thunderbird Mine Production Falls 17% Amid Loan Restructuring Talks

Operational Challenges Weigh on Thunderbird Output

Sheffield Resources Limited (ASX:SFX) reported a challenging March quarter at its 50% joint venture Kimberley Mineral Sands (KMS), home to the flagship Thunderbird Mineral Sands Mine. Ore mined slid 17% to 2.4 million tonnes, hindered by lower contractor productivity, Dry Mining Unit outages, and seasonal weather disruptions. Concentrate production followed suit, down 13% to 184,574 tonnes, reflecting both reduced ore volumes and lower process plant recoveries.

In response, KMS appointed a new site-based Head of Operations in March and rolled out a recovery plan targeting ore mining performance improvements. Early signs in April suggest some progress, although the company withheld production guidance for the June quarter given ongoing uncertainty.

The operational setbacks echo previous disruptions including equipment repairs and management reshuffles, as detailed in Sheffield’s recent Dry Mining Unit repairs completed and management changes and production guidance withdrawal announcements.

Product Shipments and Market Dynamics

Despite production dips, shipments remained robust with 199,020 tonnes of concentrate dispatched, including 29,931 tonnes of zircon concentrate sold to third-party customers. Zircon prices improved by 12% quarter-on-quarter to US$524 per dry metric tonne, buoyed by stabilising market conditions in China and the absence of FOB sales to Yansteel. Meanwhile, ilmenite concentrate, sold under an offtake agreement to Yansteel, realised a steady price around US$119 per tonne.

Production of HiTi concentrate (formerly leucoxene) increased opportunistically following process plant optimisation, with sales commencing in April subject to market demand.

Financials and Working Capital Support

Underlying C1 cash costs improved slightly to A$255 per tonne produced, down from A$275 previously, helped by lower non-mining production costs offsetting the impact of reduced volumes. Finished goods inventory at quarter-end included approximately 52,000 tonnes of ilmenite and 18,000 tonnes of zircon concentrate ready for shipment.

Net operating cash inflows of A$20.4 million reflected shipment timings and supplier payments. Yansteel continued to provide short-term working capital support, including a US$3.1 million prepayment for ilmenite concentrate. However, Sheffield cautioned there is no certainty these funds will continue to be available.

Debt Restructuring Talks Remain Uncertain

Sheffield and KMS are actively negotiating senior secured loan restructures with lenders Northern Australia Infrastructure Facility (NAIF) and Sheng Feng (Hong Kong) Co., Ltd, a related party of Yansteel. The March quarter saw a novation of loan rights from Orion to Sheng Feng without changes to facility terms or shareholder dilution.

Subsequent to quarter-end, a waiver and deferral arrangement was agreed covering interest and principal repayments due in December 2025 and March 2026, along with various covenant waivers. Despite these measures, the outcome of loan facility amendments remains uncertain, with Sheffield and Yansteel subsidiaries continuing as guarantors. These developments follow Sheffield’s earlier update on debt restructuring negotiations amid operational challenges.

Portfolio Moves and Corporate Updates

Sheffield bolstered liquidity by divesting its 10% stake in Capital Metals Plc for A$4 million in January 2026, realising a gain of A$0.7 million. Meanwhile, the South Atlantic Project in Brazil progressed with pre-feasibility studies and receipt of mining decrees for Central Retiro, although Sheffield has suspended project funding to prioritise KMS operations.

As at 31 March 2026, Sheffield held cash reserves of A$4.4 million. Corporate changes included the appointment of Bruce Franzen as Company Secretary following Mark Di Silvio’s resignation.

Sheffield plans to discuss the quarterly results and outlook in an investor webinar scheduled for 4 May 2026.