Nex Metals returned to profit in FY2026 after selling its remaining Arika joint venture interest, but the gain did not resolve its underlying funding pressure. The company ended the year with $422,452 in cash, net liabilities of $471,232 and a material uncertainty over its ability to continue as a going concern.
- $1.053 million reported profit driven by a $1.692 million disposal gain
- Operating cash outflow remained negative at $416,094
- Net liabilities narrowed to $471,232 from $1.427 million
- Kookynie test work reached 71% laboratory gold recovery
- WTAC joint venture expanded NME’s Western Australian exploration pipeline
Disposal Gain Drives Return to Profit
Nex Metals Explorations Ltd (ASX:NME) turned a $1.845 million loss in FY2025 into a reported profit before tax of $1.053 million, but the headline recovery was largely the product of a portfolio transaction rather than operating cash generation. The company booked a $1.692 million gain from selling its remaining 20% interest in the Yundamindra and Kookynie joint venture with Arika Resources.
The transaction delivered approximately $500,000 in net cash after up to $2 million of the $2.5 million cash consideration was applied against outstanding joint venture funding obligations. NME also received 70,823,529 Arika shares, valued at $1.771 million at settlement. Those shares were subsequently carried as a financial asset at $1.275 million after a $495,764 unrealised fair-value loss, leaving total comprehensive income at $557,633.
Going Concern Warning Overshadows Improved Balance Sheet
The balance sheet improved, but remains fragile. Net liabilities narrowed from $1.427 million to $471,232, while cash rose from $150,905 to $422,452. Yet NME recorded a $416,094 operating cash outflow and carried $2.242 million of current liabilities against $427,961 of current assets, producing net current liabilities of $1.814 million.
Both the directors and auditor identified a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern. The directors’ case rests on deferred repayment arrangements, including $849,174 in accrued directors’ fees and $617,550 owed to Allens Business Group, a related entity of managing director Kenneth Allen. Allens Business Group has also committed to provide up to $750,000 of additional financial support through 31 December 2027, while NME says it plans to raise capital.
Kookynie Advances, But Remains Laboratory-Stage
The company’s strongest operational marker was the Kookynie Gold Tailings Project, where laboratory testing lifted overall gold recovery from 52% under direct cyanidation to 71% using light grinding followed by carbon-in-leach. Two bulk samples returned head grades of 0.94 grams per tonne and 0.96 grams per tonne, while scheelite was identified in the gravity concentrate at a reported head grade of 0.063% tungsten trioxide.
Those results remain test-work outcomes, not commercial operating recoveries. NME and the Wangkatja Tjungula Aboriginal Corporation are assessing whether project-owned processing infrastructure could be developed, including through a 100-hectare General Purpose Lease application near the tailings project. The application remains subject to approval and the company has not settled on a final processing route.
WTAC Partnership Expands Exploration Pipeline
The broader NME-WTAC joint venture gives NME a way to pursue more projects without carrying all funding obligations itself. WTAC is to hold 60% of the joint venture and provide 100% of its funding as an unsecured loan repayable from operations, while NME holds 40%, leads project identification and execution, and earns a management fee and 40% of distributable net proceeds.
After year end, the partnership assembled a potential Eastern Goldfields land position exceeding 3,000 square kilometres, including the 183.4 square kilometre West Point application and pending applications across Scotia North and the Keith-Kilkenny Trend. That acreage remains prospective rather than proven: applications confer no exploration rights until granted, and the company says geological similarities do not establish the presence of gold mineralisation.
NME’s next test is therefore financial as much as geological. It must convert partner-backed exploration plans, Kookynie metallurgy and the Arika shareholding into enough liquidity to meet obligations, while progressing capital-raising plans and avoiding further dependence on related-party support. The going concern qualification is not a forecast of failure, but it puts a hard limit on how much weight can be placed on the company’s return to accounting profit.
Bottom Line?
The profit is real in the accounts, but liquidity remains the immediate investment question: capital raising, related-party support and operating cash burn will matter more than the headline earnings number.
Questions in the middle?
- Can NME secure the capital funding assumed in its going concern assessment without materially diluting existing shareholders?
- Will Kookynie’s 71% laboratory recovery translate into a commercially viable processing flowsheet and approved operating site?
- How quickly will the WTAC joint venture convert its large pending tenement position into granted ground and funded exploration results?