Conico warns funding uncertainty shadows its next exploration phase

• $13.87 million FY2026 loss, versus $2.11 million previously
• $13.07 million share-based payment expense drove most of the loss
• $2.53 million cash balance and no current borrowings at year-end
• Phase 2 Mt Thirsty drilling planned for the second half of 2026
• Going-concern uncertainty remains despite the recapitalisation

A large accounting loss, and a smaller cash burn

Conico Ltd (ASX:CNJ) has reported a $13.87 million loss for the year ended 30 June 2026, but the headline number comes with an important qualifier: $13.07 million was a share-based payment expense. The charge largely reflected shares and options issued in connection with director fees, advisory work, brokerage and underwriting arrangements during the company's recapitalisation.

That accounting cost was not matched by an equivalent cash outflow. Cash used in operating activities was $946,386, while Conico finished the year with $2.53 million in cash, up from $529,628 a year earlier. The company also reported no borrowings at 30 June, after converting $1.43 million of convertible loans into shares and completing the final $356,000 cash payment under its Cartwright Drilling settlement.

Recapitalisation leaves exploration runway, not financial certainty

The balance sheet is cleaner, but the annual report does not present Conico as self-sustaining. Directors disclosed a material uncertainty that may cast significant doubt on the group's ability to continue as a going concern, even as they concluded the accounts could be prepared on that basis and forecast sufficient cash for at least 12 months from signing.

That tension is familiar territory for a pre-revenue explorer. Conico raised $2.9 million in new equity during the year and issued shares to settle a further $1.625 million of liabilities. Its working capital position improved to a $2.53 million surplus, from a $1.06 million deficit, but the company acknowledged that future exploration and corporate activity will require additional funding or tighter control over discretionary spending. The next capital raise, if required, would carry the usual dilution risk.

Mt Thirsty drilling is the central operational catalyst

With no field activities completed at Mt Thirsty during the year, the project's next meaningful test is planned Phase 2 aircore and reverse-circulation drilling in the second half of 2026. The program is intended to assess scandium-bearing mineralisation and support its inclusion in the mineral resource, targeting an upper nickel-cobalt-manganese-scandium zone with intersections above 40 grams per tonne scandium as well as a deeper zone outside the existing resource.

Mt Thirsty is held through a 50:50 joint venture and carries a current resource of 66.2 million tonnes grading 0.06% cobalt, 0.43% nickel and 0.45% manganese. Conico's share of the project's exploration and evaluation assets was carried at $2.68 million at year-end, with no impairment indicator identified for the joint venture. The drilling will therefore need to do more than add geological interest: it is the clearest near-term opportunity to strengthen the case for further funding, development work or an eventual project partner, although the filing does not promise any particular outcome.

Greenland portfolio remains largely untested

Greenland adds scale but, for now, little operational momentum. No field activities were undertaken at the Ryberg or Mestersvig projects, and Conico impaired $203,320 of Greenland exploration and evaluation assets to nil after determining the capitalised costs were unlikely to be recovered in full through development or sale.

The company has applied for licences covering the Kai rare earths project and the Lilloise gold and platinum-group-elements project, which would expand its East Greenland land position to about 6,460 square kilometres if granted. The applications remained pending at 30 June, while discussions on a potential partnership or joint venture continued. That leaves Conico with a broad exploration portfolio, but also a clear allocation question: how much of its limited cash should go towards testing new Greenland targets while Mt Thirsty awaits drilling?

Bottom Line?

Conico has bought time through its recapitalisation, but the investment case now depends on converting a debt-free balance sheet into funded drilling and credible exploration results before the cash runway tightens.

Questions in the middle?

• Will the Phase 2 Mt Thirsty program begin on schedule in the second half of 2026?
• Can scandium be incorporated into the Mt Thirsty resource at grades and scale that support further development work?
• How will Conico fund its exploration commitments and Greenland strategy without materially diluting shareholders?