Sheffield cuts Thunderbird capex by $101m

Sheffield Resources has trimmed the capex of its Thunderbird mineral sands project by $101 million to $478 million, in order to significantly reduce its equity funding requirements.

The company's updated bankable feasibility study released today revealed that the capex reduction would stem from scrapping plans for a low temperature ilmenite roaster circuit.

The equity portion of the funding will fall from $251 million to $143 million, according to Sheffield.

It has already secured $240 million in debt financing from Taurus Funds Management and a $95 million loan from the Northern Australia Infrastructure Facility.

Sheffield also said it BFS update increased annual average zircon production by 38 per cent to 202,000 tonnes per annum.

The project’s net present value increased from $670 million to $1.13 billion, based on a discount rate of 10 per cent.

Earnings before interest, tax, amortisation and depreciation of $6.87 billion is anticipated over the 37-year mine life.

Sheffield managing director Bruce McFadzean said the removal of the LTR ilmenite circuit, combined with a focus on increased zircon production, delivered lower capital, lower construction risk and a technically stronger project.

“The recent growth in the chloride slag market and Sheffield’s strong relationship with existing ilmenite offtake partner Bengbu has resulted in the signing of a binding seven-year offtake agreement plus a three-year extension option for 100 per cent of Thunderbird’s stage one unroasted primary Ilmenite, further validating our decision to remove the LTR ilmenite circuit from the project,” he said.

“There has been continued strong interest in our zircon products since stage one zircon offtake agreements were executed in 2018.

“This was a further catalyst to re-scope Thunderbird and increase zircon production by almost 40 per cent, most of which is now contracted with binding offtake agreements.”

Sheffield shares were down 4.3 per cent to trade at 67 cents each 3.05pm AEST.