80% Uley 2 design complete as Quantum Graphite reports 1.33 quarters of funding

Uley 2 engineering reaches 80% completion

Quantum Graphite Limited (ASX:QGL) has moved its Uley 2 graphite project deeper into engineering, but the quarter also exposed the funding pressure sitting behind the development schedule. About 80% of the concentrator process plant design is complete and the associated capital and operating cost review has reached 75%, according to the September quarterly report.

The design work includes process flow diagrams, piping and instrumentation drawings and a three-dimensional plant layout. The company says the FEED program remains on schedule and is intended to establish the engineering definition, cost estimates and construction timetable needed before project execution and procurement bids can be negotiated.

The plant’s location and layout were revisited after the company signed its 20-year supply agreement, which consolidated its downstream processing and refining structure with Sunlands Pure Group. Quantum says the selected arrangement is intended to allow expansion without interrupting operations, reduce short-term resource sterilisation and preserve access to resources on its freehold land.

Oman refinery moves towards site preparation

At Al Buraimi in Oman, LIDAR surveys and other preparatory works are scheduled for a 2.6 million-square-metre refinery site. The surveys will produce three-dimensional mapping before land, hydrology and geotechnical work proceeds. Lease negotiations with Oman’s industrial land agency, Madayn, are described as well progressed, with potential incentives to be included in the final terms.

The refinery is part of the company’s two-node downstream plan, alongside a concentrator near the Uley 2 mine in South Australia. Quantum describes the Oman precinct as a self-reliant operating ecosystem, although hydrofluoric acid remains an external dependency subject to a diversified sourcing strategy with in-country suppliers. The environmental approval milestone reported in June preceded the current site-preparation phase.

Financing structure finalised as cash falls sharply

The company says its revised Uley 2 financing structure has been finalised following the ore supply agreement and downstream integration. Its electronic data room has been substantially refreshed, with renewed financier access expected within 10 days of the report.

The immediate balance-sheet figures are less comfortable. Appendix 5B records A$1.221 million of net operating cash outflow and A$51,000 of investing outflow for the quarter, leaving A$1.272 million in relevant outgoings. Against A$50,000 of quarter-end cash and A$1.642 million of unused facilities, the company calculates 1.33 quarters of available funding.

Quantum says it does not expect cash flows to remain at the current level because it can reduce or defer spending while maintaining key activities. It also says support from Chimaera Capital and Pershing Nominees, together with a potential equity raising, could fund operations. The filing does not provide terms, timing or an amount for any proposed equity issue, so the next financing step remains material to the project’s progress.

Updated project metrics remain based on earlier studies

The report repeats Phase 1 metrics including A$152.7 million of capital expenditure, planned production of 100,000 dry metric tonnes a year and a total undiscounted cash flow of A$990.4 million. It also lists an average life-of-mine product cost of US$401.14 per dry metric tonne and an ex-works product price of US$1,225 per dry metric tonne.

Those figures are presented as updated feasibility summary metrics rather than the outcome of a newly completed feasibility study. The company says the cost review is updating its December 2023 Definitive Feasibility Study, while the resource and reserve schedules rely on earlier JORC 2012 estimates.

There are also two cash disclosures that do not match exactly: the corporate section reports A$80,233.82 in cash at bank as at 30 October, while the Appendix 5B reports A$50,000 in call deposits at 30 September. The financing table likewise requires careful reconciliation, showing A$11.608 million drawn against facilities and A$1.642 million unused. Until those figures are clarified, the headline project milestones sit alongside an unusually important accounting and funding question.