Boab Metals Ord Valley Muster

• Ministerial Statement 1097 (May 27, 2019)
• EPA Report 1632 (April 1, 2019)
• Ministerial Statement 964 (April 2, 2014)
• EPA Report 1491 (16 October, 2013)

Since the commencement of exploration and resource delineation work by Boab in 2018, the Company has completed over 374 drill holes for just under 29,000m over six drilling campaigns. 

In the process the Company has reached several critical milestones towards development. The aggressive work schedule has served multiple technical purposes and resulted in the release of three mineral resource statements (MRE).

Boab recently completed the Phase VI drilling program at the Sorby Hills Lead-Silver-Zinc Project and received positive results in key locations for Resources and Reserves growth.

The Phase VI drilling program was designed to enhance value with the later stages of the current Sorby Hills mine plan.

Positive Drilling Results from the Phase VI Program included:

• SHRC_157 (Beta):  7m @ 19.17% PbEq. (16.23% Pb & 82g/t Ag) from 72m

• Incl 3m @ 38% PbEq, (35.26% Pb & 174gt/t Ag) from 72m

• SHRC_136 (Beta):  20m @ 7.39% PbEq. (5.58% Pb & 52g/t Ag) from 65m

• Incl 8m @ 86% PbEq, (10.49% Pb & 96g/t Ag) from 77m

• SHRC_151 (Beta): 5m @ 13% PbEq. (3.70% Pb & 41g/t Ag) from 45m (New Result)
• SHRC_163 (Beta): 13m @ 2.90% PbEq. (2.26% Pb & 18g/t Ag) from 49m (New Result).
• SHRC_149 (Norton N): 2m @ 16.64% PbEq. (10.92% Pb & 163g/t Ag) from 103m (New Result) (hole terminated in mineralisation).
• SHRC_147 (Norton N): 11m @ 5.74% PbEq. (3.84% Pb & 54g/t Ag) from 86m (New Result).
• SHRC_143 (Norton N): 13m @ 4.06% PbEq. (2.82% Pb & 35gt/t Ag) from 95m
  • Incl 5m @ 35% PbEq. (3.91% Pb & 41 g/t Ag) from 95m

Phase VI Overview & Objective

During the Phase VI drilling program a total of +3,020m were drilled across 28 RC holes including some that were pre-collared by mud rotary drilling and completed with RC drilling.

The primary objective of the Phase VI drilling program was to facilitate an increase in the portion of the Beta and the Norton Deposits classified as an Ore Reserve (Figure 1).

• Geological & Resource Model: a new geological and resource model have been constructed using new drilling data together with historic information
• Rock Density: Additional rock density data together with the revised geological model have led to a revised density algorithm and an appropriate density model
• Resource Classification: the improved geological interpretation and the density model have led to a re-classification of the resources and for the first time “Measured” category resources have been declared by the QP
• Resource Expansion: Since Boab has taken over the Sorby Hills Project the Company has been able to expand by 66% on its original resource estimate and the metal content (Pb) by 33%
• Metallurgy: Metallurgical recoveries after geo-metallurgical classification and additional testwork are higher with 84% silver and 94% for lead.

Highlights of the DFS included:

• A$705M net cash flow, NPV8 of A$370M, IRR of 35% and an average annualised EBITDA of A$119M.
• Pre-production Capital Cost of A$245M.
• C1 cash cost of US$0.39/lb payable Pb (including a net Silver credit of US$0.38/lb payable Pb) delivering an average operating margin of 41%.
• High-confidence study with up-to-date tendered pricing for 75% of Capital Costs.
• An updated Mineral Resource Estimate by CSA Global achieving a 78% increase in Measured Resources.
• Production Target underpinned 83% by Ore Reserves, including a 12% increase in overall Reserves and a 53% increase in Proved Ore Reserves.
• Significant pre-production upside potential.

The Sorby Hills DFS was completed against a dynamic economic backdrop and achieved a result that largely withstood the impact of global inflationary pressure.  Approximately 75% of the pre-production capital expenditure and direct mining costs were underpinned by current tendered pricing, thus minimising the risk of substantial cost increases as has been evident in other mining projects.

Over the initial 8.5-year processing period contemplated by the DFS, 18.3Mt of ore will be mined and processed through a simple crush-mill-flotation circuit at an initial rate of 1.5Mtpa expanding to 2.25Mtpa after 1 year of production. Concentrate will be produced at an average 103ktpa, containing 64ktpa of payable Lead and 2Moz p.a. of payable Silver, and transported ~150km by road in sealed half-height containers to Wyndham Port from where it will be shipped to market (Figure 1).

The Project generates A$705M of pre-tax free cash flow over the Life of Mine and an average annualised EBITDA of A$119M per annum during operations (Table 1). Pre-production capital expenditure is estimated at A$245M and net C1 Cash Costs have been calculated to be US$0.39/lb payable Lead (Table 2). The Project generates a pre-tax NPV8 of A$370M and an IRR of 35% (from the start of construction) and a payback period of 2.5 years (from the start of operations).

Boab is of the view that the DFS represents just the starting point for the future of its Lead-Silver operations in the East Kimberley region. The Company has a number of opportunities to increase mine life through a combination of exploration and Resource extension drilling programs which are either already in progress or planned for when mine development occurs across the Project.

Key opportunities include:

• Sorby Hills Mineral Resource and Production Target Development – Potential to improve Mineral Resource Estimate and production target as a result of the final Phase V drilling results and the Phase VI drilling that have not yet been incorporated into the Resource model.
• Norton Deposit Metallurgy – Potential to improve metal recoveries at Norton with additional testwork across the deposit.
• Backup Power Review – Potential to reduce the size of the backup diesel power station to further reduce the cost of power supply. Discussions have commenced with Horizon Powe
• Improved Mining Costs – Investigate opportunities that have come to light late in the process of the DFS to improve the mining costs by adopting a bespoke pricing methodology.
• Further Review of Tendered Pricing – Contracts formally tendered during the DFS were done so at a time considered to be at the height of the inflation curve in the West Australian mining and construction industry. The Company considers there to be a lot of upsides to be gained on the prices already received through workshops and strategy sessions with key proponents.
• Road Haulage – The base case for haulage of concentrate in the DFS is non-concessional loading. Investigations are underway to determine if approval for concessional loading can be obtained, meaning an increased payload in each container.

The primary objective of the DFS Metallurgical Testwork Program was to deliver robust results to underpin the Sorby Hills DFS Process Plant design criteria.

The program comprised a total of 35 HQ diamond drill holes included in the Phase IV and V drilling. From these holes, approximately 1,420kg from 399m of half core was collected, combined and composited into Variability Samples, Schedule Composites and Master Composites. Samples and Composites were utilised for a range of testwork including Flotation, Comminution, Mineralogy, Heavy Liquid Separation, Tailings Thickening, Concentrate Filtration and Concentrate Analysis.

The DFS Metallurgical Testwork Program builds upon a significant body of previous metallurgical testwork undertaken by SMPL since acquiring Sorby Hills in 2018 and others dating back to 1979.

Master Oxide, Fresh and Blended composites were produced for initial flotation optimisation. A total of 34 samples exhibiting a range of head grades, mineralogical compositions and source locations were prepared as Variability Samples. Scheduled-based composites were made to represent the PFS mine schedule for years 1-2, 3-4 and 5+, for each of the Oxidised, Fresh and Fresh-Oxidised Blend ore types. Lower-grade sample material was selected for HLS testing (See Table 1 below).

Table 1: DFS Metallurgical Testwork Program – Sample Summary

Metal recoveries adopted for economic modelling for the Sorby Hills Pre-Feasibility Study were Lead: 94.9% (Fresh Ore) and 84% (Oxidised Ore) and Silver: 78.2% (Fresh Ore) and 94.4% (Oxidised Ore).

Table 2 below presents a summary of the final Sorby Hill DFS Flotation performance estimates. Recovery estimates are based on the Schedule Composite test results, and for the specific deposit estimates, the average Variability Sample test performance for that deposit. These results incorporate modifications based on Locked-Cycle testwork to account for closed circuit performance estimation and, in the case of separate Oxidised and Fresh Ore-only recoveries, adjustments to account for operational inefficiencies associated with campaign-style processing.

Whilst the extensive variability testwork has identified the recovery achieved at Norton was less than that at other deposits, superior results in selected Norton Variability Samples suggests the poorer results are spatially constrained and that the higher performing ore within Norton can be prioritised.

A comprehensive assay was undertaken on Lead-Silver Concentrate produced from each locked cycle test. The results of these assays have been provided to potential offtakers.

Table 2: Sorby Hills DFS Final Flotation Performance Estimates

The DFS Metallurgical Testwork Program further explored Dense Media Separation (DMS). The DFS results for the DMS demonstrated a reduced recovery and highlighted additional process design and operation risk. Therefore, the DMS option is not recommended and was not considered further for DFS.

Flowsheet and Plant Design

The Sorby Hills process plant is designed to treat 2.25Mtpa of ore. In the initial year of operation while head grade is at its highest the process plant throughput rate is at a nominal 1.5Mtpa. This processing rate profile maintains concentrate production as the grade reduces after the first year. Comminution and flotation circuit equipment sizing has been based on providing the required “turn-down” ability to operate at the lower initial throughput capacity. A high-level process diagram is presented below. The design of the processing facilities has been undertaken in accordance with the following philosophy:

• A simple and robust flowsheet using well established methods;
• Well proven equipment;
• Ease of maintainability;
• Best practice OHS&E protection;
• Ten-year life operating continuously 24 hours per day, 365 days per year; and
• An overall plant availability of 91.3% or 8000h/yr.

The crushing plant consists of a single stage jaw crusher with a fully enclosed crushed ore surge bin ahead of the grinding circuit. The grinding circuit consists of a SAG-ball circuit operating in closed circuit with hydrocyclone classification. SAG mill discharge trommel oversize is recirculated to the SAG mill feed via conveyor without pebble crushing. Cyclone overflow passes through a trash screen before entering the flotation circuit.

The flotation circuit consists of two stages of roughing, 1st cleaner, cleaner-scavenger and recleaner banks. Fast floating material from rougher 1 is directed to the recleaner feed. Rougher 2 concentrate feeds cleaner 1, while cleaner 1 concentrate also feeds the recleaner. Cleaner scavenger concentrate recycles to rougher 2 feed, while the cleaner scavenger tailings report to final tailings. Recleaner tails returns to 1st cleaner feed. Two conditioning tanks are provided for initial rougher reagent addition. An additional conditioner is provided for rougher 2 for additional sulphurdisation. A 1st cleaner conditioning tank is also provided. The first rougher conditioning tank also has flow rate stabilisation functionality.

Concentrate is thickened and stored in a filter feed tank before being dewatered in a vertical plate and frame filter press with direct transfer of concentrate into half height shipping containers for transport. Tailings are thickened and sent to the TSF initially and in pit disposal in later years.

Plant services include reagents, water, air, office, workshop, stores and laboratory facilities. The plant is automated with a Programmable Logic Controller (PLC) / Supervisory Control and Data Acquisition (SCADA) type configuration. An on-stream-analysis system is provided for major metals (Pb, Ag, Fe, Zn) in six flotation streams and feed galena / cerussite mineralogy on the feed stream.