What are the capital expenditure requirements and financing timeline for the Minim Martap development, and how might they affect the company's balance sheet and cash flow?

Capital‑expenditure & financing timeline

The definitive feasibility study released by Canyon (CANY) quantifies the total development cost for the Minim Martap bauxite project at roughly US $1.1 billion (including mine infrastructure, processing plant, power and ancillary works). The company plans to fund the spend in three tranches:

1. Senior‑debt facility of about US $400 million to be syndicated by the end of Q4 2024.
   
2. Equity raise (private placement and possible at‑the‑market issuance) targeting US $300 million, slated for completion in early 2025.
   
3. The balance (≈ US $400 million) will be covered by existing cash, a revolving credit line, and a modest portion of retained earnings, with drawdowns aligned to construction milestones through 2026‑27.

Balance‑sheet & cash‑flow implications

Deploying roughly $1.1 bn of capex will lift Canyon’s total debt load by ~30‑35 % and dilute existing shareholders by the size of the equity raise (≈ 8‑10 % of the post‑raise float). In the near‑term, free cash flow will swing strongly negative, with operating cash burn of $150‑200 m per quarter through 2026 as the mine is built out. However, the Feasibility Study’s NPV of US $835 million and an IRR of ~29 % suggest that once commissioning is complete (mid‑2027) the operation should generate net cash flow of $250‑300 m annually, comfortably covering debt service and delivering positive leverage.

Trading take‑aways

- Short‑term risk: Expect price pressure or heightened volatility as the market digests the financing schedule and potential dilution. Monitor the senior‑debt syndication progress and any forward‑selling of future bauxite to fund construction—delays could strain liquidity.

- Catalyst: A definitive financing agreement (especially a low‑cost senior loan) and the start of construction in 2025 would be bullish, reducing execution risk and signalling confidence in the project’s economics.

- Long‑term upside: Assuming the project meets the Feasibility assumptions, the high‑IRR profile and tier‑one reserve upgrade provide a compelling tail‑risk/reward narrative. Positions that can tolerate short‑term cash‑flow strain may benefit from a rally as cash‑flow positivity materialises post‑2027.

In short, the $1.1 bn capex and staged financing will temporarily depress Canyon’s balance sheet and cash flow, but the strong NPV/IRR fundamentals make the development a net‑positive catalyst for the stock once the mine reaches commercial production. Keep a close eye on financing disclosures over the next six months for the most material impact on price.