A recent analyst report from East Coast Research underscores Boab Metals (ASX:BML) as a compelling investment opportunity, assigning a base-case valuation of AU$0.47 per share and a bull-case valuation of AU$0.51. This assessment reflects the company’s robust fundamentals, particularly in terms of its Sorby Hills lead-silver-zinc project, which boasts a pre-tax NPV8 of A$411 million and an IRR of 37 percent.
The report emphasizes Boab Metals’ strategic advancements, including securing a binding offtake agreement with Trafigura and moving towards full ownership of Sorby Hills, positioning the company for significant growth.
Key Highlights:
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Acquisition of DeGrussa Plant to Reduce Capex: Boab has acquired the DeGrussa processing plant from Sandfire Resources for AU$10 million, payable in tranches. The existing plant will be refurbished and integrated into Sorby Hills, cutting pre-production capex (estimated at AU$264 million) and accelerating development. Sandfire has also taken equity in Boab (~3 percent stake), demonstrating confidence in the project.
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Trafigura Offtake Agreement: Boab Metals has finalized a binding offtake agreement with Trafigura, covering 75 percent of Sorby Hills’ lead-silver concentrate production over seven years. This deal includes a US$30 million prepayment facility with favorable terms, enhancing Boab’s financial flexibility and reducing reliance on equity markets.
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Acquisition of Remaining Interest in Sorby Hills: The company has entered into an option agreement to acquire the remaining 25 percent interest in Sorby Hills from its joint venture partner, Henan Yuguang. This move toward full ownership simplifies operations and enhances Boab’s exposure to the project’s economic potential.
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Project Economics and Development Timeline: The updated FEED Study (June 2024) confirms robust economics, including pre-tax NPV8 of AU$411 million, IRR of 37 percent, C1 cash cost of US$0.36/lb, and average EBITDA of AU$126 million per year. Boab aims to make a final investment decision in the second half of 2025, with production targeted for mid-2027.