Boab Metals Limited (ASX: BML) (Boab Metals or the Company) announces its quarterly cash flow report for 30 June 2024. During the reported quarter, the Company made progress on its 75%-owned Sorby Hills Lead-Silver-Zinc Project. Boab Metals completed the project’s Front-End Engineering Design (FEED) Study. Also, it completed a fully underwritten placement to raise A$5.0M at A$0.10 per share.
Sorby Hills Lead-Silver-Zinc Project FEED Study Updates
The FEED Study has demonstrated robust economics for the Sorby Hills Project. Key Base Case Project Metrics include a pre-tax NPV of A$411M, a pre-tax IRR of 37% and an average EBITDA of A$126M.
- The project’s upfront capital expenditure cost is estimated to be A$264M, with an average C1 cost of US$0.36 per pound payable lead (including silver credits).
- Compared to the Definitive Feasibility Study, the project’s pre-tax cash flows over the initial five years of production have improved by A$150M.
- Assuming current spot pricing for Lead, Silver, Exchange Rate, and current Benchmark Lead Treatment and Silver Refining Charges results in an NPV8 of A$596M, pre-tax IRR of 47% and average annual EBITDA of A$160M.
Figure 1: Comparison of FEED Study Result With DFS
Key Project Updates
- Revised pricing for the Processing Plant EPC Contract following the FEED phase, as GR Engineering Services (GRES) provided.
- New metallurgical test work from the Phase VII drilling program informed updated metal recovery estimates for the Norton Deposit.
- Accelerated timeline for mining the Norton Deposit and increasing high-grade silver production.
- New pricing for Mining and Bulk Earthworks Contracts on a bundled basis, adjusted for the optimised site layout and mining schedule.
- Updated tailings disposal strategy to above-ground for the Life of Mine, moving away from the previously planned in-pit deposition.
- Significant progress has been made in planning the Phase VIII drill program to expand mineralisation at the ‘Keep’ target. The drill program is anticipated to commence in the next quarter.
Project Milestones
- FEED Study completion (June 2024)
- Offtake agreements (Q3 2024)
- Financing and Final Investment Decision (December 2024)
- First ore production (December 2026)
- First shipment of lead-silver concentrate (March 2027)
Strategic Advantage and Market Opportunities for Sorby Hills and Adjacent Projects
Figure 2: Map of Sorby Hills And Other 100% Owned Lead-Silver-Zinc Exploration Projects
Sorby Hills Lead-Silver-Zinc Project is independently verified as one of the lowest-cost lead producers globally, placing it in the top 25% (1st quartile) of the Global Lead Cost Curve in 2023. The profit margins are susceptible to silver prices, and earnings are expected to increase significantly if silver prices rise despite stable lead prices.
The Sorby Hills Lead-Silver-Zinc Project, the Manbarrum, and the Eight Mile Creek Projects significantly benefit Boab Metals. By expanding its resource base with these large, near-surface deposits, Boab improves its asset portfolio and establishes an essential presence in the east Kimberley Region of Western Australia.
The Company’s 75% interest in Sorby Hills and partnership with Henan Yuguang Gold & Lead Co. Ltd brings valuable financial support and technical expertise.
The market potential for these projects is vital due to the rising demand for lead, silver, and zinc across various industries, including technology and manufacturing. The growing global market for these commodities and increasing investment interest in the Kimberley Region’s mineral deposits position Boab Metals to benefit from higher prices and expanding opportunities. These factors contribute to a promising outlook for the Company’s projects.
Financial Updates
- Cash Balance: ~AUD 5.7 million on 30 June 2024.
- Funds Raised: AUD 5.0 million via a share placement and entitlement offer. An additional AUD 185,000 was raised through the ATM subscription agreement with Acuity Capital.
Managing Director and CEO of Boab Metals Limited, Mr Simon Noon, stated:
“Following the completion of the DFS, we identified clear opportunities to optimise and derisk the Sorby Hills Project technically and economically. Over the past year, we pursued these opportunities and delivered the results of our study during the quarter.
Our decision to present our base case scenario using the same macroeconomic assumptions as the DFS was essential to demonstrate the material impact of project enhancements alone. Assuming spot metal prices and exchange rates at the time of release results in a pre-tax NPV8 of A$596M, pre-tax IRR of 47%, and average annual EBITDA of A$160M, demonstrating the project’s leverage to metal prices, including Silver.
We look forward to delivering further positive project news flow over the coming quarter as we advance Sorby Hills toward a Final Investment Decision.”
Mr Simon Noon, the MD & CEO of Boab Metals Limited, is a highly experienced mining executive with 15 years of track record managing public resources companies. He has a solid background in strategic management, finance, and capital raising. Notably, he has achieved significant growth, increasing a company’s market capitalisation from $10 million to over $200 million, and has successfully secured joint ventures with major mining companies.
Figure 3: Simon Noon, MD & CEO of Boab Metals Limited
As Managing Director of Sorby Hills, Simon Noon has led the rapid development of the project, resulting in a 50% increase in mineral resources, a definitive feasibility and the latest FEED study.
Investor Outlook
Figure 4: Sorby Hills Project – The Low-Cost Producer on the Global Lead Cost Curve
- The recent FEED Study highlights Sorby Hills as a robust project with a pre-tax NPV of AUD 411 million and an IRR of 37%. With enhanced project parameters, the NPV could rise to AUD 596 million and IRR to 47%.
- Sorby Hills’ cost efficiency and sensitivity to silver prices create a favourable outlook for strong financial performance, mainly when silver market conditions are favourable.
- Boab Metals’ 75% ownership and partnership with Henan Yuguang Gold & Lead Co. Ltd provide valuable financial support and technical expertise, mitigating development risks and enhancing project viability.
- A solid cash balance of approximately AUD 5.7 million and recent fundraises of AUD 5.0 million plus AUD 185,000 through ATM subscription improve the Company’s financial position and ability to advance its projects.
Market Data
- As of 1st August 2024, Boab Metal Limited’s share price traded at AUD 0.094, and its 52-week range was AUD 0.059 to AUD 0.235
- The Company’s market capitalisation was AUD 33.8 million, with 4 million shares issued
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