Companies Economy Live July 11, 2025 0 Comments

NMDC’s Australian Lithium exploration draws a blank, looks forward to profits in FY26

The reason for reduction of cash is also attributable to Legacy’s capex commitment towards Mt. Bevan Project and other commitment towards other exploration tenement owned by the miner

India’s lithium find in Australia has hit its first roadblock. Iron-ore miner NMDC Ltd, which was carrying out exploration activities through its island-nation subsidiary, Legacy Iron Ore, has failed to come up with satisfactory results, people in the know said.

The Western Australia-based entity’s operating losses have trebled on a Y-o-Y basis to A$ 29.95 million in FY25, while earnings per share is in the negative too. Cash holdings are down significantly by nearly 85 per cent to A$ 1.49 million. Term deposits are up at A$ 9 million (three times, y-o-y).

Legacy last reported a profit in FY23 at A$ 2 million.

An NMDC spokesperson in response to queries by businessline said, despite the expected early-stage investments causing temporary losses and lower free cash flow, the company has achieved a strong increase in turnover “with the ramp-up of gold production at Mt Celia”.

“While initial lithium exploration at Mt Bevan has not yet uncovered commercially viable deposits, NMDC’s steadfast commitment to innovation, resource diversification, and global partnerships positions it at the forefront of Australia’s dynamic mining sector,” the spokesperson said.

The reason for reduction of cash is also attributable to Legacy’s capex commitment towards Mt. Bevan Project and other commitment towards other exploration tenement owned by the miner.

Lithium Exploration

Five potential targets were identified for drilling in Mt Bevan – one of the flagships projects for iron ore (magnetite) and has potential for mining of other minerals, including lithium.

For lithium mining, a total of 7,731 meters of reverse circulation (that uses compressed air to return rock cutting to the surface) drilling – used in early stage mineral exploration – was completed to test 4 of the identified 5 targets (one target inaccessible due to poor track conditions caused by rain event). Several pegmatites – igneous rock known for their exceptionally large crystals – were intersected, however were found to be “only weakly enriched in lithium”.

“Drill results from the phase one drilling do not provide sufficient information to support definition of an exploration target for lithium, as no significant economic grade were intersected”, Legacy Iron Ore mentioned in its Annual Report for the year.

The company plans to hunt for new lithium-rich areas at its project site. But before committing to more work, it will first check how promising the current exploration results are. It will also decide based on whether lithium prices (through its key mineral, spodumene) stay high enough to make further investment worthwhile.

“Project would seek to generate and test further grass-root targets to identify economic LCT pegmatite mineralisation, based on the review of the exploration results and further funding based on the current spodumene pricing,” it said.

In its operation’s overview, Legacy said, the JV agreement with Hancock for exploration of Other Minerals in the Mount Bevan tenement is “progressing”. “The exploration report for the first phase of exploration activities at the project for Lithium mineralisation was submitted… and is being reviewed to plan the further exploration approach to pursue lithium exploration in the project area,” it said.

The NMDC spokesperson said, the Mount Ida fault, which is spatially related to what is acknowledged as an emerging lithium, cesium, tantalum (LCT) pegmatite corridor. The exploration report for the first phase of exploration activities at the project for Lithium mineralization has been completed by the JV operator (Hancock).

“Additionally, the company will soon undertake further systematic exploration works to generate and identify economic LCT pegmatite mineralization within the emerging pegmatite corridor of Mount Ida fault system,” the spokesperson said.

Losses Widen

Legacy Iron Ore has recorded a loss of A$ 27.95 million for FY25, up nearly 192 per cent as compared to the previous year when losses were around A$9.59 million. Total comprehensive loss (which include fair value of financial assets, net of tax) for the year stood at A$28.17 million.

The company recorded a loss of A$ 1.22 million on the disposal of additional 12.6% interest in the Mount Bevan (Magnetite) joint venture on account of completion of Pre Feasibility Study by Hancock Magentite, it was mentioned.

While mining expenses saw a 200 per cent jump to nearly A$ 26 million y-o-y, and selling expenses saw a 1700 per cent rise to A$32 million on an annual basis. The two segments accounted for nearly 80 per cent of the expenses of A$ 72 million.

“Mining operation started in Nov-23. In FY 25, the mining operation continued for the entire year. Considering the first year of operation, cut back expenditure and increase in mining and processing costs the operation suffered losses,” the NMDC spokesperson said.

However, revenue recorded A$ 43.34 million for FY25, up nearly 2000 per cent y-o-y to A$2.08 million in FY24. The increase in revenue came from sale of ore to Paddinton Gold Pty Ltd under the Ore Purchase Agreement from improved realisations in its gold exploration project at Mt Celia.

Q1 Positions

During the current year, Mt Celia operation was cash-positive in Q1 FY26, generating a net free cash flow of approximately A$0.4 million, NMDC spokesperson said.

In the first quarter (April to June 2025), Legacy reported revenue of approximately A$19 million, and profitability is expected to improve in the coming quarters.

“The Mt. Celia project continues to demonstrate operational viability and is expected to deliver approximately A$12 million in free cash flow for FY26, with Legacy’s attributable share estimated at A$9 million,” the company said.

For the first quarter of FY 26, the overall reduction in the Company’s cash balance is due to strategic investments (Capex contribution) in Mt Bevan and other tenements.

For FY26 (April 2025 to March 2026), the Mt Celia operation is projected to generate revenue exceeding A$130 million, with an expected net cash flow of approximately A$12 million.