- Boab Metals has signed a Heads of Agreement to secure future electricity supply for Its Sorby Hills Project.
- The agreement is for a 10-year period with an option to extend further.
- The clean hydropower will provide better project economics.
Boab Metals Limited (ASX:BML) is in a sweet spot, thanks to the lucrative future potential enjoyed by its 75%-owned Sorby Hills Lead-Silver-Zinc Project in Western Australia’s Kimberley Region.
In a significant development, the Company has entered into a Heads of Agreement (HOA) with Horizon Power for the supply of clean and low-cost electricity for the project.
Boab is currently engaged in completing the Sorby Hills Definitive Feasibility Study (DFS). The project, prospective for lead, silver and zinc, has been turning heads as the Company receives significant interest for offtake offers.
Boab secures power supply for Sorby Hills
The HOA between Boab and Horizon Power will pave the way for a future Power Purchase Agreement for the project.
Horizon Power operates the East Kimberley transmission network. The firm gets its power from the Ord River Hydroelectric Plant, owned and operated by Pacific Hydro Australia.
The 30MW hydro plant is located at a distance of 75Km from the Sorby Hills Project. Electricity from the plant already lights up the townships of Kununurra and Wyndham as well as the Argyle Diamond Mine. As the diamond mine is going through the phase of closure, the Sorby Hills Project will have the opportunity to access the latent capacity from the hydro project.
Location map of Sorby Hills with respect to the hydro plant (Image source: Company update, 22 April 2022)
Commenting on the recent development, Boab’s Managing Director & CEO, Mr Simon Noon said, “The Heads of Agreement represents the culmination of ongoing technical and commercial discussions between Boab and Horizon Power over the past 12 months. We are extremely excited by the prospect of incorporating a one-stop solution that simultaneously provides secure power, positive environmental outcomes and economic benefit to the Sorby Hills Project.
We are committed to working closely with Horizon Power to finalise a formal Power Purchase Agreement ahead of a Decision to Mine at Sorby Hills in mid-2022.”
Key details of the HOA
The Heads of Agreement has been signed between Boab’s fully owned subsidiary Sorby Management Pty Ltd and Horizon Power. The agreement is for the supply of electricity for a period of 10 years with an option for possible extension in the supply period.
The terms of the agreement dictate a firm supply of electricity for the project via a combination of hydropower and an on-site diesel plant. The diesel plant will be used as a backup system in case the hydro plant is unable to meet the full requirements of the power consumption of the project.
The Pre-Feasibility Study conducted on the project in 2020 assumed a BOO diesel arrangement for powering the project would cost around AU$0.24/kWh. A preliminary supply modelling shows that the integrated hydro with backup diesel solution will provide improved pricing. The model includes the capital cost for power line extensions and the purchase of a diesel plant.
The terms and conditions of the HOA are non-binding until both the parties finalise and agree to the terms and conditions laid down in the final Power Purchase Agreement.
Boab expects to execute the formal Power Purchase Agreement prior to the Decision to Mine at Sorby hills.
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