Sheffield Resources Boosts Thunderbird Output as Zircon Prices Climb

Thunderbird Mine Production Surges

Sheffield Resources Limited (ASX:SFX) has delivered a notable operational turnaround at the Thunderbird Mineral Sands Mine, its 50%-owned Kimberley Mineral Sands (KMS) joint venture. Ore mined jumped 20% to 2.8 million tonnes in the June quarter, driven by higher contract mining productivity and reduced equipment downtime. Concentrate production rose 11% to 205,426 tonnes, reflecting both increased ore volumes and improved plant recoveries following a targeted recovery plan implemented earlier this year.

The Heavy Mineral grade in the plant feed improved to 22.6%, up from 21.8% in the previous quarter, while zircon concentrate production surged to 43,300 tonnes from 28,500 tonnes. Ilmenite output also rose sharply to 159,900 tonnes. These gains came despite the suspension of HiTi concentrate production in April due to weak market demand, with production to resume opportunistically.

Zircon Prices Strengthen on Supply Constraints

Zircon concentrate prices climbed 8% quarter-on-quarter to US$564 per dry metric tonne, buoyed by tightening supply in China amid planned and unplanned production cuts. Sheffield expects this positive pricing trend to continue into the September quarter, with zircon shipments forecast between 45,000 and 55,000 tonnes. Ilmenite concentrate, sold under a fixed-price offtake agreement to joint venture partner Yansteel, maintained steady realised prices of around US$123 per tonne.

HiTi concentrate sales restarted during the quarter but production was halted due to soft demand, highlighting ongoing market uncertainty for this product segment. Total concentrate shipments for the quarter reached 185,842 tonnes.

Financials and Cost Management

Underlying C1 cash costs edged up slightly to A$261 per tonne produced, compared with A$255 in the prior quarter. However, excluding inventory movements, cash costs improved to A$252 per tonne due to higher production volumes and reduced waste mining costs. Mining costs benefited from operational changes including the separation of ore mining and Dry Mining Unit operations, a strategy outlined in previous reports to enhance efficiency and reduce costs.

Despite generating A$60.6 million in receipts from customers, KMS reported net operating cash outflows of A$2.3 million for the quarter, reflecting higher payments to suppliers and employees as the operation ramped up. Finished goods inventory remained substantial, with approximately 121,000 tonnes of ilmenite and 33,000 tonnes of zircon concentrate on hand.

Debt Restructuring Talks Continue Amid Working Capital Support

Sheffield and KMS sponsors remain engaged in ongoing negotiations with senior secured lenders Northern Australia Infrastructure Facility (NAIF) and Sheng Feng to restructure loan facilities. The joint venture secured further waivers and deferrals for interest and principal repayments due through June 2026, but the final outcome remains uncertain. Yansteel provided additional working capital support during the quarter via a US$10.15 million tranche under the Production Linked Loan Note Facility, repayable by year-end either in cash or product delivery. The availability of future funding remains unclear, underscoring financial risks for the operation.

South Atlantic Project Advances While Funding Paused

Sheffield progressed the pre-feasibility study and project approvals for its South Atlantic Mineral Sands Project in Brazil during the quarter. However, consistent with its strategy to prioritise cash flow generation from KMS, Sheffield suspended further funding under its option agreement with RGM, retaining the right to acquire up to 20% of the project by funding US$15 million in total. The project holds significant mineral resources but remains at an early stage compared with the operational Thunderbird Mine.

Executive Chair Bruce Griffin highlighted the operational improvements and positive market dynamics for zircon, noting that the recovery plan has delivered a "significant turnaround" in performance. The company will provide further insights at its upcoming investor webinar on 3 August 2026.