Boab Metals Secures DeGrussa Plant, Accelerating Sorby Hills Towards H2 2025 FID
Boab Metals has executed a binding agreement to acquire the DeGrussa Processing Plant, significantly derisking its Sorby Hills Lead-Silver-Zinc Project and setting the stage for a Final Investment Decision in the second half of 2025.
- Binding Sale and Purchase Agreement signed with Sandfire Resources for DeGrussa Plant acquisition at A$10 million
- Acquisition reduces upfront capital costs and equipment procurement risks for Sorby Hills Project
- Ongoing financing discussions to complement US$30 million Trafigura prepayment
- Targeting Final Investment Decision (FID) in H2 2025
- Regulatory approvals progressing with expected federal and state clearances in Q3 2025
Strategic Acquisition Advances Sorby Hills
Boab Metals Limited (ASX: BML) has taken a decisive step forward in the development of its flagship Sorby Hills Lead-Silver-Zinc Project by finalising due diligence and executing a binding Sale and Purchase Agreement (SPA) with Sandfire Resources Ltd to acquire the DeGrussa Processing Plant. The A$10 million acquisition, announced post-quarter end, is a pivotal milestone that materially derisks the project’s execution by securing critical processing infrastructure and reducing the substantial upfront capital expenditure previously earmarked for a new processing plant.
The DeGrussa Processing Plant acquisition includes all major components required to meet the targeted average concentrate production of approximately 103,000 tonnes per annum, along with an extensive inventory of equipment spares. This strategic move builds on Boab’s recent project execution momentum, including securing the remaining 25% interest in the Sorby Hills Joint Venture and locking in a US$30 million prepayment facility with global commodities trader Trafigura.
Financial and Contractual Details
The total purchase price of A$10 million is structured with an initial deposit of A$1.5 million, split between cash and shares at Boab’s discretion, followed by A$6 million payable upon completion, which is contingent on Boab reaching a Final Investment Decision (FID) on Sorby Hills. A further A$2.5 million is due within 12 months of the first concentrate sale from the project. Shares issued to Sandfire will be subject to a voluntary 12-month escrow, underscoring the strategic partnership’s long-term alignment.
Boab’s Managing Director and CEO, Simon Noon, highlighted the acquisition as a “key derisking event” that not only mitigates capital and procurement risks but also strengthens the company’s negotiating position with potential financiers. Discussions are ongoing to complement the Trafigura prepayment with additional senior debt facilities, with the DeGrussa asset serving as tangible collateral to support credit considerations.
Regulatory Progress and Project Outlook
Regulatory approvals continue to advance steadily. Boab has submitted comprehensive documentation under both federal and state environmental frameworks, including the Mining Proposal, Mine Closure Plan, and Works Approval applications. The company anticipates receiving federal Environment Protection and Biodiversity Conservation Act approval and state-level permits in Q3 2025, clearing critical hurdles ahead of the targeted FID in the second half of the year.
The Sorby Hills Project boasts a substantial Mineral Resource of 47.3 million tonnes containing 1.5 million tonnes of lead and 53 million ounces of silver, with an Ore Reserve of 19.1 million tonnes grading 3.5% lead and 39 grams per tonne silver. Previous Front-End Engineering & Design (FEED) studies have demonstrated robust economics, including an estimated pre-production capital cost of A$264 million, of which the processing plant accounted for A$136 million. The DeGrussa acquisition is expected to significantly reduce this capital requirement.
Financial Position and Next Steps
As at 31 March 2025, Boab held approximately A$2.67 million in cash, supplemented by an available A$4.8 million At The Market (ATM) equity facility. Operating cash flows reflected ongoing project development costs, with payments to related parties consistent with normal commercial terms. The company is preparing to conduct a competitive tender process for the relocation, reconstruction, and refurbishment of the DeGrussa Plant, a critical step prior to FID.
Looking ahead, the market will be watching closely for the FID announcement targeted for H2 2025, alongside updates on financing arrangements and regulatory approvals. The DeGrussa acquisition not only enhances project viability but also signals Boab’s commitment to advancing Sorby Hills towards production.
Bottom Line?
Boab’s DeGrussa acquisition sharply reduces execution risk, setting the stage for a pivotal FID and financing breakthrough in H2 2025.
Questions in the middle?
- What are the detailed terms and timeline for the relocation and refurbishment of the DeGrussa Processing Plant?
- How will the potential issuance of shares to Sandfire impact Boab’s capital structure and shareholder dilution?
- What are the prospects and timelines for securing the remaining senior debt financing to complement the Trafigura prepayment?