Boab Metals Secures DeGrussa Plant, Slashing Sorby Hills Capital Costs
Boab Metals has inked a A$10 million deal to acquire the DeGrussa Processing Plant from Sandfire Resources, significantly derisking and reducing upfront capital costs for its Sorby Hills Project. Completion hinges on a final investment decision expected in the second half of 2025.
- Binding Sale & Purchase Agreement executed with Sandfire for DeGrussa Processing Plant
- Acquisition price set at A$10 million with mixed cash and share payments
- Deal reduces Sorby Hills Project capital costs and procurement risks
- Completion conditional on Boab’s final investment decision in H2 2025
- Plant is well-suited for Sorby Hills flowsheet and production targets
Strategic Acquisition to Enhance Sorby Hills Project
Boab Metals Limited (ASX: BML) has taken a decisive step forward in developing its Sorby Hills Project by executing a binding sale and purchase agreement with Sandfire Resources Limited (ASX: SFR) to acquire the DeGrussa Processing Plant for A$10 million. This move is a clear strategic play to derisk the project’s execution by securing critical processing infrastructure and reducing the substantial upfront capital outlay originally estimated for a new plant.
The DeGrussa Processing Plant, previously operated by Sandfire at its flagship copper mine until 2024, is a world-class facility that includes key components such as a primary crusher, ball and SAG mills, flotation circuits, and concentrate thickeners. Boab’s due diligence, conducted alongside GR Engineering Services, confirmed the plant’s compatibility with Sorby Hills’ process flowsheet and its capacity to meet the targeted 100,000 tonnes per annum concentrate production rate.
Financial and Contractual Details
The total acquisition price of A$10 million is structured with an initial deposit of A$1.5 million, split between cash and an option to pay in shares at A$0.12 each, followed by A$6 million payable upon completion, and a deferred payment of A$2.5 million due within 12 months of the first concentrate sale. Notably, any shares issued to Sandfire will be subject to a voluntary 12-month escrow, underscoring a commitment to long-term partnership and value alignment.
Completion of the transaction is contingent upon Boab reaching a final investment decision (FID) on Sorby Hills, anticipated in the second half of 2025, as well as obtaining necessary regulatory approvals and agreeing on dismantling and removal schedules for the plant. Until dismantling commences, Boab will assume responsibility for care and maintenance costs, ensuring the plant remains in excellent condition.
Context Within Sorby Hills Development
This acquisition follows a series of critical milestones for Boab, including securing the remaining 25% interest in Sorby Hills from joint venture partner Henan Yuguang, signing a binding offtake agreement with global commodities trader Trafigura backed by a US$30 million prepayment, and receiving amended EPA approval from the Western Australian government to proceed consistent with the FEED study parameters.
The Sorby Hills Project itself boasts robust economics, with a Front-End Engineering & Design (FEED) study released in June 2024 estimating a pre-production capital cost of A$264 million, including A$136 million for a new processing plant. The acquisition of the DeGrussa plant effectively replaces the need for a new build, materially reducing capital intensity and procurement risk.
Implications for Project Financing and Execution
By securing a fit-for-purpose processing plant, Boab not only accelerates its project timeline but also strengthens its negotiating position with financiers. The tangible asset reduces execution risk, a key consideration for lenders and investors assessing the project’s viability. This move signals Boab’s confidence in advancing Sorby Hills toward production, leveraging established infrastructure and permitting advantages in the East Kimberley region.
Looking ahead, Boab plans to integrate the DeGrussa plant into Sorby Hills through detailed design work by GR Engineering Services, followed by a competitive tender process for dismantling, relocation, refurbishment, and rebuild. The company targets a final investment decision in the latter half of 2025, setting the stage for a transformative phase in its development journey.
Bottom Line?
Boab’s acquisition of the DeGrussa plant marks a pivotal derisking milestone, setting Sorby Hills on a clearer path to production and financing.
Questions in the middle?
- Will Boab secure financing and regulatory approvals in time to meet its H2 2025 FID target?
- How will the integration and relocation of the DeGrussa plant impact the project’s development timeline and costs?
- What are the potential market implications if Sorby Hills achieves production with significantly reduced capital expenditure?
