Boab Metals has moved Sorby Hills from investment decision to construction, but its A$236 million debt facility is not yet available for project drawdowns. The company ended FY26 with A$60.9 million in cash after raising almost A$117 million, while reporting a wider A$7.2 million loss.
- A$7.2 million FY26 net loss, up from A$3.8 million
- A$116.999 million raised before capital-raising costs
- A$236 million syndicated facility reached contractual close
- Sorby Hills construction commenced with first production targeted for H2 2027
- Financial close remains conditional on mining, cost and security requirements
Sorby Hills reaches construction, but debt drawdowns remain conditional
Boab Metals Limited (ASX:BML) has crossed the most consequential threshold in its development story: Sorby Hills is under construction. The catch is that the project’s A$236 million syndicated loan facility, while contractually closed, had not reached financial close at 30 June 2026 and had provided no construction cash. Drawdowns remain subject to securing a binding mining contract, updating the project’s cost-to-complete estimate and registering security over the Sorby Hills tenements.
The distinction matters because Boab is now spending at development scale. It invested A$28.9 million in Sorby Hills construction during the year and held A$40.6 million in assets under construction at year-end. The company’s latest delivery plan, released after the reporting date, puts total project capital expenditure at A$262 million, with A$205 million still to be spent. First production remains targeted for the second half of 2027.
Capital raising lifts cash while losses widen
Boab raised A$116.999 million before costs through placements and a share purchase plan, taking cash and cash equivalents to A$60.862 million from A$7.529 million a year earlier. The balance includes A$44.6 million in short-term deposits earmarked for construction activity. Cash flow, however, tells the more immediate story: operating activities consumed A$1.6 million and investing activities absorbed A$45.8 million, including the Sorby Hills interest acquisition and project construction.
The group reported a net loss of A$7.222 million, almost double the A$3.841 million loss recorded in FY25. Revenue rose to A$2.237 million, largely reflecting interest income rather than production, while other income contributed A$604,000 through the caravan park business and an R&D rebate. A A$2.797 million fair-value loss on forward exchange contracts, A$1.198 million in share-based payments and higher exploration and corporate costs weighed on the result.
Debt structure introduces foreign exchange and timing risk
The facility is split evenly between Australian-dollar and US-dollar tranches, with a combined limit of A$236 million. It carries fixed interest of 12% a year plus a 2.5% facility fee. The A$6.775 million borrowing liability recorded at year-end represented capitalised upfront fees and related movements, not construction funding drawn into the project.
Boab has entered forward exchange contracts covering US$66.6 million of expected future drawdowns, with an A$93.7 million contract amount. Those contracts economically hedge the anticipated currency exposure, but they do not qualify for hedge accounting, leaving fair-value movements in the income statement. The report’s going-concern assessment assumes the facility conditions are satisfied in the December 2026 quarter and that Sorby Hills is developed and commissioned on schedule and within budget.
Full Sorby Hills ownership and workforce accommodation secured
During FY26, Boab exercised its option to acquire Yuguang’s remaining 25% interest in Sorby Hills, taking ownership to 100%. The transaction involved A$12.5 million paid in cash and deferred consideration with a present value of A$9.3 million, rising to A$9.6 million after the discount unwind. The company also completed the acquisition of Ivanhoe Village Resort in Kununurra for A$4.2 million in cash and A$867,899 in shares, adding accommodation capacity for the Sorby Hills workforce while retaining the resort’s existing operations.
Subsequent events have added useful markers to the construction timetable. Boab signed a binding heads of agreement for mining services on 28 September, increased the Sorby Hills Mineral Resource by 7% to 50.6 million tonnes on 29 September and released the updated A$262 million delivery plan the same day. None of those developments removes the financing conditions still identified in the annual report, or the company’s exposure to construction cost, schedule and contractor performance risk.
Bottom Line?
Boab now has cash, project ownership and a committed headline debt facility; the next test is converting contractual finance into construction drawdowns without losing control of the A$262 million delivery plan.
Questions in the middle?
- When will the remaining conditions for financial close and construction drawdowns be satisfied?
- Can Sorby Hills be delivered with A$205 million of capital still to be spent?
- How will the US-dollar facility and forward contracts affect cash costs as construction accelerates?