Sheffield Resources (ASX:SFX) Research Update

Arrowhead is updating its coverage on Sheffield Resources Limited (Sheffield, SFX, or the company) with a fair value of value of AUD 2.0 per share in the low-bracket scenario and AUD 2.4 per share in the high-bracket scenario (share price on March 12, 2024: AUD 0.58), which was derived using a blended valuation.

• Sheffield Resources is an Australian mineral exploration and development company that aims to create a diverse portfolio of mineral sand assets globally. The company’s primary focus is its flagship project – the Thunderbird Mineral Sands Project.
• SFX achieved the first ore production at the Thunderbird project in October 2023, several weeks ahead of its Final Investment Decision (FID) schedule, within the original capex budget of AUD 484M.
• The company delivered its first and second customer shipments of 300 Mt and 5,100 Mt of bagged non-magnetic (zircon) concentrate in January 2024. Further shipments of magnetic (ilmenite) concentrate and non-magnetic (zircon) concentrate are expected over the coming months as the Thunderbird mine continues to ramp up in 2024.
• During Q2 2024, Sheffield mined 740,593 tonnes of ore with an average heavy mineral (HM) ore mined grade of 13.3%. The company produced a total saleable concentrate of 34,349 tonnes during the quarter including 26,910 tonnes of magnetic concentrate, 7,067 tonnes of non-magnetic concentrate and 472 tonnes of paramagnetic concentrate.
• SFX has secured 80% of its Stage 1 revenue through binding take or pay-offtake agreements for the first five years of production.
• As of December 31, 2023, Sheffield had cash reserves of AUD 23.2M, and is fully funded to execute its proposed work program until the end of FY 2025 with no further equity infusion required for Stage 1 of the Thunderbird project.