Boab and heavyweight JV partner to accelerate operating agreement, fast track production at Sorby Hills
Special Report: Boab moves a step closer to production at Sorby Hills, Australia’s largest undeveloped, near surface lead-silver deposit.
Boab Metals (ASX:BML) is developing the Sorby Hills lead-silver-zinc project in WA with joint venture partner Yuguang, the largest lead smelting company and silver producer in China.
A recent pre-feasibility study confirmed the project’s impressive economics: a pre-tax net present value (NPV) of $303m, pre-tax internal rate of return (IRR) of 46%, and a ~1.6-year payback from start of production.
Boab and Yuguang have now agreed to accelerate finalisation of the development and operations agreement for Sorby Hills, which will replace the existing exploration Joint Venture agreement.
This will simplify conversations with potential project financiers and smooth transition from the Definitive Feasibility Study into project development and construction.
The decision to accelerate the development and operations agreement shows Yuguang – a company which made ~$3.8 billion revenues in 2019 — is committed to bringing Sorby Hills into production.
“The Joint Venture development and operation agreement is an important element of our progress towards bringing Sorby Hills into production,” Boab managing director and chief exec Simon Noon says.
“The Joint Venture’s commitment to advancing the finalisation of this agreement represents a further opportunity to de-risk project financing and execution.
“We are delighted to have a partner of Yuguang’s stature continuing to back the project and look forward to continuing the productive Joint Venture relationship as we move towards project financing and a decision to mine at Sorby Hills.”
Boab has already engaged with the Northern Australia Infrastructure Facility (NAIF) and Export Finance Australia (EFA) regarding potential finance and is aiming to progress discussions with commercial lenders over the coming months.
Concurrently, Boab will undertake a competitive offtake tender process for its 75% share of the Sorby Hills concentrate production.
This article was developed in collaboration with Boab Metals, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.