Boab Metals Limited (ASX: BML) (“Boab Metals” or “Company”) has announced the Front-End Engineering and Design (FEED) study results for its Sorby Hills Lead-Silver-Zinc (Pb-Ag-Zn) project located in the Kimberley, Western Australia. The FEED study supplements a Definitive Feasibility Study (DFS) that Boab Metals released for the Sorby Hills Project on January 19th, 2023.
Figure 1: Sorby Hills Pb-Ag-Zn Project Location
Highlights of the FEED Study for the Sorby Hills Pb-Ag-Zn Project
As compared to the DFS, the FEED study has delivered the following updates:
- Net cash flow increase of +AUD 73 million
- NPV increase of +AUD 41 million
- Base case project metrics:
- Upfront Capital Expenditure (CAPEX) of AUD 264 million
- C1 Cost of USD 0.36/lb payable lead (incl. Ag credits)
- Pre-tax NPV of AUD 411 million
- Pre-tax IRR of 37%
- Average annual EBITDA of AUD 126 million
- Limited net change to pre-production CAPEX
- Project pre-tax cash flows over the initial five years of production improved by +AUD 150 million, hence indicating a more robust profile that supports debt financing.
- NPV of AUD 596 million, pre-tax IRR of 47%, average annual EBITDA of AUD 160 million, assuming the current (as of May 28th, May 2024) values for spot pricing (Pb and Ag), currency exchange rate and Treatment & Refining Charges (TC/RC).
Figure 2: Comparison of DFS and FEED Study Results
Key FEED Study Updates:
- Post-FEED pricing for the process plant EPC contract has been provided by GREngineering Service (GRES).
- Mining schedule has been brought forward at the high-grade Norton deposit. This is based on new metallurgical test work on the core recovered during the Phase VII drilling program
- Pricing for the mining and earthwork contracts is provided on a bundled basis and is based on the optimised site layout and mining schedule.
- Updated tailings strategy, with above-ground tailings disposal being employed for the Life of Mine, as opposed to in-pit deposition that was initially adopted in the DFS.
Global Demand, the Driving Force behind Boab Metals’ Vision in Western Australia
Lead, silver, and zinc are essential metals that are consumed in key applications that drive the world’s decarbonisation efforts. For instance, lead is primarily used in lead-acid, secondary storage batteries. It is used in telecommunication and uninterruptible power supply (UPS) applications. According to research, the global lead-acid battery market is anticipated to grow from 590 GWh in 2022 to 774 GWh in 2030.
Figure 3: Global Lead-Acid Battery Market, 2010-2030
The global green energy transition is anticipated to increase demand for silver significantly. It is used as a coating for electrical contacts in electric vehicles (EVs). According to the estimates of The Silver Institute, Hybrid EVs use approximately 18-34g silver per vehicle, and battery EVs use approximately 25 to 50g silver per vehicle. This is 1.5 to 2 times more than the amount used in an internal combustion engine vehicle. According to research, global sales of EVs are forecasted to touch about 73 million units in 2040, from 40 million units in 2023.
Figure 4: Global Electric Vehicles Sales Forecast 2040
Silver is also used as a coating in solar photovoltaic (PV) cells. According to another research, global renewable energy capacity from solar photovoltaic sources was 1,412.09 GW in 2023 and witnessed 28.1% CAGR from 2011 to 2023. Prices of solar modules have fallen by about 93% from 2010-2020. Additionally, the global weighted average levelised cost of electricity (LCOE) for utility-scale solar PV projects fell by 85% from 2010-2020. Hence, with the decline in the manufacturing cost of PV panels, solar energy has become very affordable, and its usage is anticipated to rise over the coming years.
Figure 5: Global Solar Energy Capacity (MW), 2011-2023
The above insights on demand for lead and silver indicate immense opportunities for metals exploration by companies such as Boab. Moreover, in Australia, the Government, in its Critical Mineral Strategy 2024-2030, has committed USD 3.9 billion to accelerate the strategically significant projects and strengthen the country’s metallic ore mining capabilities and supply chain.
Boab Metals Limited is a base and precious metals exploration and development Company based in Western Australia. The Company owns projects in Australia and South America. Western Australia-based projects are:
The Sorby Hills Pb-Ag-Zn Project
The Sorby Hills Project is the largest undeveloped, near-surface lead-silver-zinc deposit in Australia. It is a 75%:25% joint venture between Boab and Henan Yuguang Gold & Lead Co. Ltd, China’s largest lead smelter and silver producer. The Project is located 50km from the centre of Kununurra, Kimberly in Western Australia. It is situated 150km from the Wyndham Port, the country’s closest port to Asia.
Figure 6: The Sorby Hills Project Geological Setting
The mineralisation at Sorby Hills is located in about 10-20m of transitional metamorphic facies. It is located between the hanging wall in the Knox Siltstone and the footwall in the Solby Dolomite. It comprises reworked clasts of Sorby Dolomite. The Pb domains comprise resources, namely – Norton, Alpha, Beta, Omega, A and B.
After the DFS in 2021, the Company received assay results from drilling across Phase V, VI, and VII campaigns, comprising 64 Reverse Circulation (RC) drilling and diamond drill holes across and proximal to the Sorby Hills Project. The last and most recent drilling phase VII occurred in June 2023. It comprised 2,634m across 22 drill holes in the Norton deposit mineralisation.
Figure 7: Sorby Hills Mineral Resource Estimate
Replacement-type, stratiform MVT Zn and Pb sulphide layers and disseminated mineralisation were located within favourable structural and stratigraphic settings. This indicates the potential for extensive development of mineralisation.
The FEED Study builds upon the DFS with a crush-mill-float processing circuit to produce an average 103ktpa lead-silver concentrate. The processing plant will initially operate at 1.5Mtpa, and throughput will increase to 2.25Mtpa after a year, with the integration of a ball mill for enhanced flexibility. Preliminary plant designs from the DFS were utilised for the EPC tender, with GRES conducting FEED to refine design and pricing for the EPC contract.
Figure 8: Key Project Milestone Dates
Mr Simon Noon, MD & CEO of Boab Metals Limited, stated, “Following the DFS, we identified clear opportunities to optimise and de-risk the Project both technically and economically. Over the past year, we have pursued these opportunities in conjunction with completing Front End Engineering & Design on our process plant with GRES.
We are pleased to present the results of our work during this period in the form of this FEED study. We now look forward to accelerating our engagement with financiers and further advancing Sorby Hills toward a Final Investment Decision (FID).”
Investor’s Outlook
- Boab Metals’ FEED Study for the Sorby Hills Pb-Ag-Zinc Project demonstrates improved economics and de-risking compared to the DFS, instilling confidence in the Project’s viability.
- Key updates have positively impacted project financials, such as the optimised mining schedule, enhanced metal recoveries at the Norton deposit, and revised pricing for major contracts.
- The Project’s net cash flow has increased compared to the DFS, while pre-tax cash flows over the initial five years have improved, presenting a stronger profile for debt financing.
- With key permitting milestones expected in the coming months and the potential for further optimisation, the Sorby Hills Project presents an attractive investment opportunity in the Australian base metals sector.
- As of June 6th, 2024, Boab Metal Limited’s share price was traded at AUD 0.12, and a 52-week range was AUD 0.059 to AUD 0.235.
- The Company’s market capitalisation was AUD 26.84 million, with 233.4 million shares on issue as of the same date.
