Boab Metals takes Sorby Hills into its delivery phase

Sorby Hills enters its construction phase

Boab Metals Limited (ASX:BML) has spent FY26 turning Sorby Hills from a well-studied development into a construction project, with the company now holding 100% of the East Kimberley silver-lead asset. The board approved Final Investment Decision in December 2025, construction began in March 2026 and first concentrate remains targeted for the September quarter of 2027.

The transition was backed by a A$117 million equity raising and a A$236 million syndicated loan facility with Merricks Capital and Davidson Kempner. Boab finished the year with A$60.9 million in cash, compared with A$7.5 million a year earlier, although no construction cash had been drawn from the debt facility by 30 June. The facility carries a fixed interest rate of 12% plus a 2.5% facility fee, making the timing and cost of the next funding step more than a footnote.

The debt package has reached contractual close, but financial close and construction drawdown remain subject to three conditions: a binding mining contract, confirmation of the project’s cost-to-complete estimate and registration of security over the Sorby Hills tenements. Boab says first drawdown is expected in the December quarter of 2026. The report’s going-concern assessment relies on those conditions being satisfied, alongside construction and commissioning proceeding broadly to schedule and budget.

Reserve growth strengthens the mine plan

Boab’s post-year-end resource and reserve work gives the project a larger base to work with. The Ore Reserve rose 20% to 18.3 million tonnes at 3.2% lead and 37.3 grams per tonne silver, containing 22.0 million ounces of silver. The increase came with lower average grades than the previous reserve, but contained silver rose 15% and contained lead increased 10%.

The Mineral Resource increased 7% to 50.6Mt at 3.0% lead, 34g/t silver and 0.4% zinc. The updated figures were released on 29 September, after the 30 June reporting date, and combine newly estimated Bimota, Omega and Norton resources with previously reported estimates for Aprilia, Alpha and Beta. The company says the updated mine plan extends the expected mine life from 8.5 years to 10.5 years and, at base-case forward-curve prices, indicates a pre-tax NPV8 of about A$1.06 billion.

The numbers sit alongside the Sorby Hills economics update, which had extended the projected mine life and reported higher Norton recoveries. They remain project assumptions rather than operating results: Boab has not yet produced or sold concentrate, and the reported value depends on the company delivering the plant, mine, infrastructure and commissioning program.

Plant relocation becomes the immediate execution test

A central piece of that program is the DeGrussa Processing Plant, acquired from Sandfire Resources for total consideration of A$10 million, including a deferred A$2.5 million instalment. Boab has awarded GR Engineering Services a A$109 million EPC contract to dismantle, refurbish, relocate and rebuild the plant at Sorby Hills. The first plant components were expected to move in July 2026, with deconstruction scheduled for completion by 30 September 2026.

Early works, including all-weather access and foundations for the plant and camp, were completed in April. Bulk earthworks and water-management infrastructure are underway, while 130 of the planned 150 accommodation rooms have been installed. The company has also secured a six-year diesel supply agreement and acquired Kununurra’s Ivanhoe Village Resort for A$5.1 million, partly to provide additional workforce accommodation when the site camp reaches capacity.

The report incorporates the RE:GROUP mining HOA, which had established a framework for mining services at Sorby Hills. Boab identifies execution of the definitive mining services contract, debt drawdown, reconstruction of the DeGrussa plant and energising the site power station by March 2027 as key tasks for the year ahead.

Losses rise as construction spending begins

Financially, Boab remains a developer rather than a producer. Revenue rose to A$2.24 million, largely from interest income, while the net loss widened to A$7.22 million from A$3.84 million. The result included a A$2.80 million fair-value loss on forward exchange contracts, A$1.20 million of share-based payments and A$3.22 million of exploration expenditure.

Cash outflow from investing activities reached A$45.8 million, including A$28.9 million spent on Sorby Hills construction and A$12.5 million for the initial payment on Yuguang’s former 25% interest. Total capital expenditure for the project was later assessed at A$262 million, with A$205 million still to be spent as at the 29 September update. That leaves the financing conditions and construction schedule tightly connected: delay in either could alter the timing of the other.

Boab’s FY26 marks a decisive change in status, but the market has not yet seen the harder proof of delivery. The next meaningful checkpoints are financial close and debt drawdown, completion of the mining contract, progress on the relocated processing plant and the targeted start of mining by April 2027. Until then, Sorby Hills is a funded construction plan with substantial execution still ahead, not yet a producing silver-lead operation.