Andromeda warns of funding uncertainty despite Great White project progress

Impairment Turns FY26 Loss Into a Funding Test

Andromeda Metals Limited (ASX:ADN) finished FY26 with its flagship Great White Project materially closer to construction, but the balance sheet tells a harsher story. The company reported a statutory loss of $105.0 million for the year ended 30 June 2026, including a $98.9 million impairment of exploration and evaluation assets. Excluding that one-off charge, the net loss was $6.1 million, broadly similar to the prior year’s $6.0 million loss.

The impairment reduced exploration and evaluation assets from $144.0 million to $51.3 million. Andromeda said the write-down followed its assessment that the carrying value of certain assets was unlikely to be recovered through sale or future exploitation, with the Great White Project’s recoverable value assessed on a fair-value-less-costs-of-disposal basis at the end of December 2025.

Great White Reaches Construction Readiness

Operationally, FY26 delivered substantial progress. Andromeda completed mine access works, bulk earthworks for the Stage 1A+ processing plant, geotechnical and grade-control drilling, insurance arrangements and the transport of key long-lead equipment to Australia. Detailed engineering was substantially completed, although less critical design work was placed on hold as a cost-saving measure.

The initial Stage 1A+ development is designed for nominal production of 100,000 wet metric tonnes per annum and is supported by four binding offtake agreements. Andromeda says the project’s 15.1 million-tonne Great White Ore Reserve remains unchanged, while the wider three-stage plan targets eventual production of 330,000 tonnes per annum over a 28-year mine life.

Funding Delay Keeps Final Investment Decision Pending

The immediate problem is not project preparation but project finance. Andromeda estimates it still needs approximately $40 million in equity funding for Stage 1A+, alongside a credit-approved $75 million debt facility from Merricks Capital. The equity estimate is indicative and may change with economic conditions, the funding structure and the proposed Merricks arrangements.

Negotiations with a Middle East-based cornerstone investor reached an advanced stage after due diligence was completed, but geopolitical developments interrupted the process. The company remains engaged while assessing alternative funding, strategic and corporate options, yet it cannot provide a timeframe or assurance that the proposed transaction will complete.

The annual report also includes a material uncertainty related to going concern. Andromeda held $3.2 million in cash at 30 June, after using $5.2 million in operating cash and $11.5 million in investing cash during FY26. A subsequent $3.04 million share purchase plan and placement improved liquidity, but management’s forecast says at least another $2.0 million will be required progressively from June 2027 if further funding is not secured.

HPA Milestone Adds a Second Value Driver

The High Purity Alumina project provides the more immediate technical and commercial encouragement. Andromeda’s continuous pilot plant produced HPA at a measured purity of 99.9986%, above the 99.99% threshold for 4N product, using Great White kaolin as feedstock. Optimisation and testwork remain underway to produce customer samples and evaluate potential co-products including amorphous silica and gallium.

A non-binding Heads of Agreement with Traxys North America sets out a pathway to negotiate a potential five-year sales agency agreement targeting 2,000 tonnes of HPA per annum into the United States. At the indicative price used in the company’s scoping study, that volume would equate to approximately US$40 million in annual sales, although the figure is not contracted and final pricing would depend on market conditions at the time of industrial production.