Boab remains on track towards becoming a lead-silver producer in 2023 with drilling and a fully funded definitive feasibility study currently underway at its Sorby Hills project.
The Sorby Hills project in Western Australia’s Kimberley region is Australia’s largest undeveloped, near-surface lead-silver-zinc deposit with a resource of 44.9 million tonnes grading 3.2% lead, 37 grams per tonne silver and 0.5% zinc.
Boab Metals (ASX:BML) already has a pre-feasibility study in place that demonstrates the potential for the low-risk project to produce 81,000 dry tonnes of 62% lead-silver concentrate annually for 10 years.
This equates to 50,000t of lead and 1.5Moz of silver per annum delivering pre-tax net present value (NPV) and internal rate of return (IRR) of $303m and 46% respectively. Both NPV and IRR are measures of a project’s profitability.
At assumed lead prices of US$2095/t and silver prices of US$21.10/oz, the project is expected to generate earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $75m per annum ($127m per annum in the first two years), enough to pay back its build cost of $183m in just 1.6 years.
Given that lead is currently trading at US$2,130/t while silver is commanding a price of US$25.97/oz, these figures might just be a little conservative.
Both lead and silver have roles to play in the future energy mix. Lead acid batteries are still expected to see significant use in electric vehicles, and uninterruptible power supplies for hospitals, data centres and telcos as well as stationary energy storage for utilities and renewable energy generators.
Likewise, silver’s conductivity makes it ideal for use in solar panels and electrical connections.
Boab is currently carrying out the fifth phase of drilling at Sorby Hills.
The 48-hole program totalling 4,200m is targeting the high impact opportunities identified in the previous program along with the high-silver Alpha and Beta resources that are not presently included in the mine plan.
While Alpha and Beta currently have resources of 2Mt at a 5% lead equivalent and 3.3Mt at 6.3% lead equivalent respectively, they have been left out of the plan due to their location outside the project’s approved environmental development envelope.
The company is also planning to drill its earlier stage Wildcat target as well as regional exploration at its recently acquired and wholly owned Eight Mile Creek project.
Results from the Phase V drilling and the ongoing DFS metallurgical program will act as inputs to an investigation into the potential increase of mine life and expand the proposed processing capacity at Sorby Hills.
This could reduce the payback period while increasing operating margins and cash flow.
Progress has also been made on preparing the project for financing with the company having engaged BurnVoir Corporate Finance to advise on, analyse and arrange a project finance solution.
Boab has also engaged with the Australian government’s Northern Australia Infrastructure Fund and Export Finance Australia.
It has passed through the Stage 1 initial review of NAIF’s updated three-stage debt finance assessment and approval process while the EFA has provided a letter of support with regards to potentially providing direct or indirect financing support for Sorby Hills.
Preliminary soundings of potential offtakers have also confirmed a strong appetite for the Sorby Hills concentrate with initial indicative proposals offering attractive terms.
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.