Pacific Lime Greenlights Fully Equity-Funded Central Lime Project with 42% Capex Cut
Pacific Lime and Cement Limited has approved the Final Investment Decision for its Central Lime Project, adopting a fully equity-funded approach that slashes upfront capital costs by 42% and secures strong backing from the Papua New Guinea government and local communities.
- Final Investment Decision approved for Central Lime Project
- Upfront capital reduced by 42% to US$61 million through strategic redesign
- Project fully funded from existing equity, eliminating debt reliance
- Strong government and landowner support with PGK 3.73 million community benefits
- Revised plan boosts forecast free cash flow by US$116 million over five years
A Strategic Pivot to Equity-Only Funding
Pacific Lime and Cement Limited (ASX, MRL) has taken a decisive step forward by approving the Final Investment Decision (FID) for its Central Lime Project (CLP) in Papua New Guinea. The company’s board endorsed a strategic redesign that significantly lowers the project's upfront capital expenditure by 42%, bringing it down to US$61 million. This leaner capital requirement enables the entire development to be funded solely through existing equity, removing the need for debt financing and the associated risks.
Financial and Operational Implications
The shift to an equity-only funding model materially de-risks the project’s capital structure. By eliminating debt servicing costs, Pacific Lime anticipates an additional US$116 million in free cash flow over the first five years of production. The revised development plan involves constructing two 600 tonnes per day (tpd) quicklime kilns initially, with a future expansion to five kilns funded organically from operational cash flows. This approach not only preserves financial flexibility but also enhances long-term shareholder value, with the project’s net present value (NPV) rising to US$428 million and an internal rate of return (IRR) improving to 36.8%.
Community and Government Alignment
Strong local and governmental support underpins the project’s progress. Pacific Lime has formalised landowner benefits with payments totaling approximately PGK 3.73 million, shared between the company and the Central Provincial Government. The FID announcement was notably co-launched by Papua New Guinea’s Prime Minister Hon. James Marape MP, reflecting the project’s alignment with national priorities such as import substitution, infrastructure development, and industrialisation. This partnership framework is critical in a region where community and government endorsement can make or break large-scale resource projects.
Optimised Infrastructure and Execution Readiness
The project’s infrastructure has been optimized to reduce costs without compromising operational efficiency. Key elements such as the wharf, access roads, and power infrastructure have been redesigned to achieve savings while maintaining scalability. Notably, certain infrastructure components like solar power and water systems are structured as off-balance sheet capital leases, further improving capital efficiency. Construction is underway with an 18-month timeline to first production, positioning the CLP as Papua New Guinea’s first integrated, export-ready lime facility.
Looking Ahead
With the FID secured and construction progressing, Pacific Lime is poised to deliver a nationally significant project that promises to stimulate local employment, support domestic industries, and contribute to the country’s broader economic development. The company’s flexible offtake strategy and absence of restrictive debt covenants provide commercial agility to navigate market dynamics. However, the path forward will require disciplined execution and ongoing stakeholder engagement to realise the full potential of this strategically important project.
Bottom Line?
Pacific Lime’s equity-only funding decision marks a pivotal moment, setting the stage for a financially robust and community-aligned development in Papua New Guinea’s building materials sector.
Questions in the middle?
- How will Pacific Lime manage potential cost overruns without traditional debt facilities?
- What are the implications of the PNG Government’s proposed minority equity stake in the project?
- How will the revised kiln capacity impact long-term production scalability and market positioning?
