Develop Global (ASX: DVP) has announced a substantial upgrade to the economics of its Sulphur Springs copper-zinc project in Western Australia’s Pilbara region. Free cash flow has doubled to $1.5 billion following an updated Definitive Feasibility Study released today.
The pre-tax net present value jumped 76% to $921 million compared to the June 2023 study. Higher metal prices and a revised mine plan drove the improvements.
Managing Director Bill Beament described the results as “outstanding.” He said the study confirms Sulphur Springs will generate “exceptional financial returns” and create substantial shareholder value.
Key Financial Improvements
Percentage movements are based on comparative figures in the original DFS dated 30 June 2023
The updated feasibility study shows project revenue rising 18% to $3.4 billion. Pre-tax internal rate of return climbed 74% to reach 59%.
Average annual pre-tax cash flow excluding capital construction increased 71% to approximately $252 million.
The pre-production capital requirement stands at $329 million, an 11% increase from the previous study. This includes $289 million for a 1.5-million-tonne-per-annum processing plant and $40 million for pre-development activities.
Mine life spans eight years with a payback period of three years.
Bottom-Up Mining Strategy
Develop has adopted a “bottom-up” mining sequence that starts underground development from the outset. The company believes this approach will boost productivity and reduce ore dilution.
Twin declines are already underway to develop to the bottom of the known orebody at 350 metres below surface. This will enable exploration drilling from underground platforms to expand resources and reserves.
“We plan on leveraging the project’s significant untapped geological upside,” Beament said.
The revised strategy mirrors the successful approach used at Develop’s Woodlawn operation in New South Wales.
Sulphur Springs’s mine design (looking north)
Processing Plant Expansion
The processing plant capacity increased to 1.5 million tonnes per annum from the previous 1.25 million tonnes – a 20% boost.
GR Engineering Services refined the flowsheet and equipment selection. Major changes include removing two-stage Jameson cell cleaners and adding a Jameson Cell in a Rougher-Scalper duty at the head of the copper circuit.
The plant will produce zinc concentrate grading 50% and copper concentrate grading 21%.
Life-of-mine recovered metal totals 490,000 tonnes of zinc and 75,000 tonnes of copper.
Strong Copper and Zinc Market Backdrop
The timing aligns favourably with robust base metals market conditions. Copper prices have remained elevated amid supply constraints and rising demand from clean energy infrastructure.
Global copper demand is forecast to grow 2.9% year-over-year in 2025 according to RBC Capital Markets. Most growth comes from outside China as electrification drives consumption.
Zinc markets face supply-side growth in 2025. New mine capacity commissioning could generate upside price risks if smelter curtailments limit refined metal availability.
Treatment and refining charges for both metals have declined significantly since the 2023 study, improving project economics.
Project Status and Next Steps
All major project approvals are in place. The boxcut and twin portals for underground access have been excavated. Surface infrastructure locations are cleared for processing plant construction.
Develop will now pursue off-take agreements, project financing and pre-development activities ahead of a Final Investment Decision.
The ore reserve remains unchanged at 8.8 million tonnes grading 1.1% copper and 5.4% zinc.
Additional exploration targets will be analysed including the Kangaroo Caves satellite deposit. The deposit contains 3.8 million tonnes grading 0.8% copper and 6.0% zinc but was not included in this study.
Strategic Position in Critical Minerals
Sulphur Springs positions Develop alongside its producing Woodlawn mine to capture exposure to the energy transition metals theme.
“Develop now has two projects which give us substantial exposure to what is set to be one of the great investment themes of a generation,” Beament said.
The company produces copper, zinc, lead, gold and silver at Woodlawn. Adding Sulphur Springs would significantly expand its critical minerals footprint.
Western Australia hosts several major copper mining operations and remains a tier-one jurisdiction for base metals development.
Investor’s Outlook
Develop Global shares have responded positively to the company’s strategic progress across its portfolio. The updated Sulphur Springs study adds to the investment thesis for exposure to base metals demand growth.
Average cash operating costs of $128 per tonne and strong margins of $142 per tonne per the study indicate robust economics even at conservative metal price assumptions.
The project used metal price assumptions of USD 3,246 per tonne for zinc and USD 10,790 per tonne for copper over the life of mine. Current spot prices exceed these levels, providing additional upside.
Develop’s mining services division provides operational expertise and cost insights that enhance development confidence. The company has successfully applied this knowledge at Woodlawn.
With permitting complete, infrastructure work advanced, and favourable market conditions, Sulphur Springs is progressing toward construction. The updated study provides investors with enhanced clarity on the project’s substantial value potential in a strengthening base metals market.
Also Read: Osmond Resources Hits Key Stratigraphy in Maiden Drill at Orión EU Critical Minerals Project
FAQs
Q: What is the Sulphur Springs Project?
A: Sulphur Springs is a zinc-copper-silver project located 144km southeast of Port Hedland in Western Australia’s Pilbara region. It will be developed as an underground mine with a 1.5-million-tonne-per-annum processing plant.
Q: How much copper and zinc will Sulphur Springs produce?
A: The project will produce average annual recovered metal for years three to seven of 79,000 tonnes per annum of zinc and 11,500 tonnes per annum of copper. Life-of-mine recovered metal totals 490,000 tonnes of zinc and 75,000 tonnes of copper.
Q: When will production start at Sulphur Springs?
A: Develop Global will make a Final Investment Decision following completion of off-take agreements and project financing. The updated feasibility study provides the technical and economic basis for this decision.
Q: What is the bottom-up mining approach?
A: The bottom-up mining strategy involves developing underground infrastructure to the bottom of the orebody before starting production mining. This enables mining to commence from the deepest, highest-grade zones first, maximising early cash flows and allowing underground drilling to expand resources.
