How Develop Global’s DFS Update Doubles Free Cash Flow at Sulphur Springs

• Pre-tax NPV8% rises 76% to A$921 million
• Free cash flow nearly doubles to A$1.5 billion
• Mine plan revised to bottom-up underground approach at 1.5 Mtpa
• Upfront capital requirement of A$329 million
• All major approvals secured; development activities underway

Sulphur Springs Project Update

Develop Global Limited (ASX – DVP) has released an updated Definitive Feasibility Study (DFS) for its flagship Sulphur Springs Zinc-Copper Project, located in Western Australia's Pilbara region. The refreshed study delivers a substantial uplift in project economics, with the pre-tax net present value (NPV8%) soaring by 76% to A$921 million and free cash flow nearly doubling to approximately A$1.5 billion. This marks a significant milestone, positioning the project for a Final Investment Decision (FID) and subsequent construction phase.

The updated DFS incorporates a new mine plan that adopts a bottom-up underground mining approach, enabling a more aggressive ramp-up to a steady-state production rate of 1.5 million tonnes per annum (Mtpa), up from the previous 1.25 Mtpa. This adjustment, combined with improved metal price assumptions and refined capital and operating cost estimates, underpins the enhanced financial metrics.

Operational and Financial Highlights

The project is forecast to generate life-of-mine revenue of A$3.4 billion and free cash flow of A$1.46 billion over an estimated eight-year mine life. The upfront capital expenditure is estimated at A$329 million, covering the processing plant, site infrastructure, mining pre-production, and associated facilities. The DFS reports an exceptionally strong pre-tax internal rate of return (IRR) of 59% and a payback period of approximately three years.

Ore reserves remain steady at 8.8 million tonnes grading 1.1% copper and 5.4% zinc. The processing plant has been right-sized to handle the increased throughput, and metallurgical flowsheet optimizations have been implemented to improve concentrate quality and operational flexibility. Notably, the zinc regrind stage installation has been accelerated to align with the revised mining schedule.

Project Development and Approvals

All major project approvals are in place, including mining proposals, environmental permits, and native title agreements with the Nyamal Traditional Owners. Surface infrastructure clearing has commenced, and twin declines are progressing towards the bottom of the known orebody, facilitating exploration drilling from underground platforms. Develop plans to advance off-take agreements, project financing, and pre-development activities in the lead-up to FID.

Develop’s Managing Director, Bill Beament, emphasized the project's robust outlook, stating that Sulphur Springs is poised to deliver outstanding financial returns and substantial shareholder value. He highlighted the strategic advantage of early underground infrastructure development to de-risk the project and maximize growth potential through ongoing exploration.

Sustainability and Future Growth

The DFS update also reflects Develop’s commitment to sustainability, with initiatives to minimize environmental impact and engage meaningfully with Indigenous stakeholders. The project footprint has been refined, haul road routes redesigned to address cultural concerns, and heritage surveys updated. Renewable energy options are under assessment to reduce the carbon footprint from the outset.

Exploration upside remains significant, with additional drilling planned at Sulphur Springs and the nearby Kangaroo Caves deposit, which was not included in the current DFS. These efforts aim to extend mine life and enhance project value beyond the current eight-year horizon.

Bottom Line?

With a markedly improved DFS, Develop Global is set to unlock Sulphur Springs’ full potential, but securing off-take agreements and financing will be critical next steps.

Questions in the middle?

• When will Develop finalize off-take agreements for copper and zinc concentrates?
• How will fluctuating commodity prices and exchange rates impact project economics?
• What exploration results can be expected from the Kangaroo Caves deposit and other regional targets?