Resouro Faces Going Concern Risks Despite ASX Listing and Capital Raise

Financial Performance and Capital Raising

Resouro Strategic Metals Inc. (ASX: RAU) released its condensed interim consolidated financial statements for the nine months ending December 31, 2024, reporting a net loss of CAD 5.28 million, nearly doubling the loss from CAD 2.99 million in the prior comparable period. The widening loss primarily stems from intensified exploration activities and increased administrative costs as the company advances its strategic metals projects in Brazil.

Despite the losses, Resouro strengthened its financial position by raising CAD 7.3 million through a private placement coinciding with its successful dual listing on the Australian Securities Exchange (ASX) in June 2024. This capital injection boosted the company’s cash reserves to CAD 2.86 million and improved working capital to CAD 2.7 million, providing a runway for ongoing exploration and corporate activities.

Strategic Asset Acquisition and Project Development

A key highlight of the period was the completion of the acquisition of 100% ownership of TSPS, which holds a 90% interest in TMEL, the entity controlling the Tiros Titanium and Rare Earth Elements Project in Minas Gerais, Brazil. This acquisition consolidated Resouro’s control over one of the largest undeveloped titanium and rare earth deposits globally, with a maiden JORC-compliant resource estimate of 1.7 billion tonnes at 3,900 ppm Total Rare Earth Oxides (TREO) and 12% titanium dioxide.

The company has actively pursued exploration and metallurgical test work at Tiros, including a 12,000-metre drilling campaign and advanced metallurgical studies with partner Altilium Group. These efforts have yielded promising extraction results, with rare earth element recoveries reaching industry-leading levels. Additionally, Resouro expanded its land holdings by acquiring three contiguous tenements to complement the existing Tiros project footprint, signaling a strategic approach to resource consolidation.

Operational and Administrative Expenses

Exploration and evaluation expenditures surged to CAD 2.4 million for the nine months, reflecting the ramp-up in drilling, laboratory testing, and environmental assessments. General and administrative expenses also increased, driven by higher management fees, professional services, and sustainability-related costs aligned with emerging IFRS sustainability disclosure standards.

Share-based compensation expenses declined compared to the prior year, reflecting the vesting and exercise of stock options issued in previous periods. Foreign exchange fluctuations and interest income had a modest impact on the overall loss.

Going Concern and Outlook

While Resouro maintains a working capital surplus, the company continues to operate at a loss and acknowledges material uncertainties regarding its ability to continue as a going concern without additional financing. Management remains confident in its ability to secure further capital to fund exploration and development activities over the next twelve months.

Looking ahead, Resouro plans to advance the Tiros project through further drilling, metallurgical optimization, and preliminary economic assessments. Concurrently, the company will continue exploration at its Novo Mundo gold project and other Brazilian assets, aiming to build a diversified portfolio of strategic metals assets.