How Pacific Lime’s Equity-Only Funding Transforms Central Lime Project’s Future

Strategic Shift to Equity-Only Funding

Pacific Lime and Cement Limited (ASX, PLA) 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 has adopted a fully equity-funded development strategy, significantly reducing the project's upfront capital expenditure by 42% to US$61 million. This move eliminates the need for debt financing and the associated servicing costs, thereby materially de-risking the project’s capital structure.

The equity-only approach is underpinned by a successful A$97 million equity raising completed earlier in 2025, which provides sufficient funding to commence full-scale construction without reliance on external debt facilities. This strategic pivot offers greater financial flexibility and enhances forecast free cash flow by an estimated US$116 million over the first five years of production.

Optimised Project Design and Construction Progress

The revised development plan initiates production with two 600 tonnes per day (tpd) quicklime kilns, a reduction from the originally planned 800 tpd kilns but with a future expansion pathway to five kilns funded entirely from operational cash flows. This staged approach maintains an 18-month timeline to first production, with construction already underway, including mining, stockpiling, and wharf infrastructure development.

Significant cost savings have been achieved through design optimisations across multiple facets of the project, including a more compact plant layout, reduced civil earthworks, and off-balance sheet arrangements for key infrastructure such as solar power and water facilities. These efficiencies contribute to a leaner capital deployment while preserving operational scalability.

Strong Stakeholder Alignment and Market Positioning

The Central Lime Project enjoys robust support from the Papua New Guinea Government, which has reaffirmed its Special Economic Zone license and recognized the project as one of state significance. The FID announcement was notably co-launched by PNG Prime Minister Hon. James Marape MP, underscoring the project's strategic importance to national infrastructure and industrial development goals.

Local landowner companies have also received substantial benefit payments, reinforcing community partnerships essential for the project's long-term success. The project aims to supply high-quality lime and cement products to domestic and regional markets, supporting PNG’s construction, mining, and water treatment sectors while aligning with broader decarbonisation initiatives.

Financial Outlook and Future Growth Potential

Financially, the revised strategy enhances shareholder value with a net present value (NPV) uplift to US$428 million and an improved internal rate of return (IRR) of 36.8%. The elimination of debt servicing costs improves margins and cash flow, enabling future expansions to be funded organically without diluting equity or increasing leverage.

Pacific Lime also maintains access to contingent capital sources, including working capital facilities from PNG-based financiers and potential strategic equity participation by the PNG Government. Early rock sales are being explored to accelerate revenue generation and market penetration.