Boab Metals strengthens Sorby Hills as construction advances toward 2027

Sorby Hills economics improve without a material capital increase

Boab Metals Limited (ASX:BML) has used its September quarter report to show Sorby Hills moving from an investment decision into the harder, more expensive phase of construction. The updated Project Delivery Plan extends the proposed mine life from 8.5 years to 10.5 years, while retaining total project capital expenditure at A$261.5 million on the company’s figures.

“Mill Foundations at Sorby Hills Figure 4: Floatation Area Footings.”

Under its forward pricing case, the plan sets out a pre-tax NPV8 of up to A$1.06 billion, a 97% internal rate of return, average annual EBITDA of A$184 million and approximately A$1.7 billion of life-of-mine free cash flow. Those forecasts are not market-price guarantees: they depend on commodity prices, exchange rates, recovery assumptions and other variables, and 16% of the production target is based on Inferred Mineral Resources.

Resource growth adds scale to the production base

The Sorby Hills Mineral Resource Estimate rose 7% in tonnes from 2021 to 50.6 million tonnes, grading 3.0% lead, 34 grams per tonne silver and 0.4% zinc. The estimate contains 1.5 million tonnes of lead and 54.66 million ounces of silver, with Measured and Indicated Resources across the Bimota, Omega and Norton deposits increasing by 10% after infill drilling. The update also added about 1.6 million ounces of contained silver through net smelter return modelling.

That resource update preceded the latest growth drilling results and therefore does not include them. The quarter’s 48-hole, 6,765-metre Phase IX program delivered an intercept of 12.62 metres at 204 grams per tonne silver equivalent, including 121 grams per tonne silver and 7.65% lead, at Omega Central. Further assays are expected in the December quarter, leaving the possibility of later resource or reserve changes rather than an immediate increase to the current mine plan. The earlier Sorby Hills resource expansion had reported the same 7% resource-tonnage increase and placed the outstanding Phase IX assays outside the estimate.

Higher Norton recoveries could support early operations

Metallurgical work at the high-grade Norton deposit lifted estimated lead recovery from 83.0% to 88.4% and silver recovery from 78.0% to 83.3% for fresh ore, compared with assumptions used in the FEED Study. Boab said the revised flowsheet, which includes an additional pyrite rougher flotation stage and concentrate regrind circuit, could increase payable metal production and project cash flow.

The improvement is not cost-free, although it is not expected to alter the current construction schedule or headline project capital expenditure. The additional processing equipment and works are expected to require about A$5.0 million in sustaining capital closer to the start of Norton ore processing. Recovery assumptions for the other Sorby Hills deposits remain unchanged.

Mining services and plant relocation move into execution

“Accommodation Camp”

Boab has signed binding commercial terms with RE:GROUP for mining services, covering scope, pricing, mine planning, production requirements and commencement dates. Site establishment is scheduled for January 2027, with mining services due to begin no later than March. The definitive contract, including its detailed schedules and annexures, is expected in the December quarter. The binding mining services agreement had previously been identified as a key operational milestone ahead of 2027 mining.

Meanwhile, dismantling of the DeGrussa Processing Plant is nearing completion, with the mill building and concentrate filter the main remaining areas for disassembly. Equipment and materials are being transported to Sorby Hills, where concrete works are under way around the crushing, mill, flotation and coarse ore bin areas. Boab said bulk earthworks and the 132-room accommodation camp were also progressing to schedule, and it continues to target first concentrate production in Q3 2027.

Cash drawdown highlights the funding execution test

“Key Way Excavation – Evaporation Pond Figure 8: Topsoil Removal.”

Construction progress came with a sharp reduction in liquidity. Cash fell from A$60.9 million at 30 June to A$29.9 million at 30 September, after A$29.2 million of investing outflows and total quarterly cash outflows of A$30.9 million. Major project payments included A$13.0 million for processing plant engineering, procurement and construction, A$7.4 million for bulk earthworks and A$3.9 million for the accommodation camp.

The company says the project is fully funded through construction and commissioning, but that statement remains subject to conditions precedent for first drawdown under the A$236 million syndicated facility. The debt package was undrawn at quarter end, with first drawdown expected in the December quarter. The immediate question is therefore less about whether Sorby Hills has a larger resource than before, and more about how smoothly Boab can convert its committed financing, contracts and relocated plant into a functioning operation before Q3 2027.