Calix (ASX: CXL) Secures $10 Million for Green Iron Project as $44.9 Million Grant Moves Closer to Unlocking

Calix Limited (ASX: CXL) has secured a $10 million conditional strategic funding agreement for its Zesty Green Iron Demonstration Project in Western Australia, strengthening its pathway towards commercialising lower-emissions ironmaking technology.

Combined with Rio Tinto's substantial project support and a $44.9 million government grant agreement, the development represents another step towards establishing Zesty as a commercially viable green iron technology.

The opportunity is significant, although securing final project financing and demonstrating competitive production economics will determine its long-term value.

Key Numbers

• $10 million: Conditional strategic funding agreement for the Zesty Green Iron Demonstration Project.
• $44.9 million: ARENA grant agreement, subject to matched funding and project milestones.
• More than $35 million: Rio Tinto's planned financial and in-kind project contributions, subject to milestones.
• $36 million: FY26 product and services revenue, up 28% year-on-year.
• $9.8 million: Cash held at 30 June 2026, before a subsequent $5.7 million payment from PLS.

The Latest Development

Calix has signed a Simple Agreement for Future Equity (SAFE) with an undisclosed strategic backer to contribute $10 million towards its Zesty Green Iron Demonstration Project.

The proposed facility, located in Western Australia's Kwinana-Rockingham Strategic Industrial Area, aims to demonstrate Calix's proprietary lower-emissions iron production technology.

The funding agreement strengthens the project's position in meeting matched funding requirements associated with its Australian Renewable Energy Agency (ARENA) grant.

It also adds another strategic funding participant alongside Rio Tinto, reinforcing commercial interest in Calix's technology.

The contribution remains conditional on full project financing, necessary approvals and a positive final investment decision (FID).

Under the SAFE, the contribution may convert into equity in Zesty Pty Ltd, potentially reducing Calix's direct capital requirements while bringing additional funding partners into the project.

What Stands Out to Us

Calix's Zesty technology combines electric heating and hydrogen reduction to produce lower-emissions direct reduced iron (DRI).

The technology offers potential advantages in processing Australian iron ores while reducing reliance on conventional carbon-intensive ironmaking processes.

Its strategic relevance is supported by growing industry interest in reducing steelmaking emissions.

Importantly, Calix is progressing this opportunity alongside improving financial performance.

FY26 gross profit increased 34% to $14.2 million, while operating costs declined 24% to $30 million.

Operating cash outflow narrowed 60% to $11.4 million, compared with $28.7 million in FY25.

Capital expenditure also declined 80% to $2.1 million.

These improvements suggest stronger financial discipline as Calix advances its commercialisation strategy.

While the company remains loss-making, its improving operating metrics and partnership-based development model provide a more encouraging foundation for future growth.

What the Company Is Doing Now

Calix continues advancing Zesty towards FID while working with Perdaman on hydrogen supply engineering.

Its relationship with Rio Tinto provides technical and financial support for demonstrating the technology's application in lower-emissions ironmaking.

Meanwhile, Calix's established Magnesia business generated $34 million in FY26 product and services revenue, up 40%, providing an expanding commercial foundation.

The company also received $5.7 million from PLS following the June balance date as part of its lithium Mid-Stream Project restructure.

Calix intends to reinvest $3 million of the $11.4 million released through that restructure into accelerating Zesty development.

Management has maintained its expectation of calendar-year 2026 cash flow neutrality, supported partly by anticipated milestone payments and other cash inflows.

Achieving that objective would represent an important improvement in the company's financial position.

Insight: Could Strategic Partnerships Accelerate Calix's Commercial Growth?

We think Calix's expanding strategic partnerships strengthen the credibility of its green iron commercialisation strategy. The latest $10 million agreement adds funding momentum, while Rio Tinto's involvement provides valuable industry expertise and potential market access. Encouragingly, improvements in Magnesia revenue and operating cash flow suggest the broader business is becoming more financially disciplined. Although Zesty's commercial economics and final ownership arrangements require confirmation, the partnership-led model could help Calix advance its technology without independently carrying the full development cost. Successful execution would strengthen its long-term commercial prospects.

What Happens Next?

The immediate priority is securing full project financing and reaching FID for Zesty.

Finalising funding arrangements, progressing regulatory approvals and establishing a clear construction timetable would provide further evidence of commercial progress.

Beyond development milestones, demonstrating competitive production costs and attracting future technology licensing opportunities will be important measures of success.

For Calix, the latest agreement adds momentum to a growing commercialisation pipeline. Combined with improving operating performance and established industry partnerships, it provides an encouraging foundation for the company's next phase of development.