Boab Metals Limited

Thanks very much. Good afternoon, everyone. Okay, I’m here to talk about Boab Metals. We’re in the middle of building Australia’s next silver mine, which will be in the East Kimberley region of Western Australia. Disclaimer there for everyone to read at their leisure. So Boab, for those that don’t know where the name Boab comes from, it’s that tree right there, and in the East Kimberley region of Western Australia, you get a lot of those trees, say, in and around the project, so that’s where the name comes from.

Boab’s flagship project is the Sorby Hills project. It’s a silver, lead, zinc project. At this stage, we’ll be mining silver and lead and a pretty exciting time to be looking to do so. So we’ve been de-risking this asset now for eight years and we’ve found ourselves in a great position now. Obviously silver’s having an exciting phase. But along that journey it’s been a story of de-risking, reducing costs where possible. We’ve recently acquired the remaining 25% of the project, so we’ve consolidated that 100% ownership.

We’re in an absolute tier one jurisdiction. This is an easy project in that it’s shallow. You’re into economic ore at 20 meters from the surface. So near surface, open pit, soft. Funding is all done, so $350 million in project funding secured. Offtake with Trafigura, with some more offtake to deal later this year at our leisure. We have also reduced capital costs by acquiring the DeGrussa process plant from Sandfire Resources, and I’ll talk a bit later about that. And excitingly, first concentrate second half of next year.

So I think the current market conditions have afforded an opportunity here. We’re currently 40 cents per share, which is where we raised the $117 million of equity last year to build the project. So with the current volatility, we find ourselves with just a $230 mil market cap. And I’ll run you through the latest numbers, which we just published yesterday. So we’ve opted to deliver what we’ve called a project delivery plan, effectively a definitive feasibility standard study. But we’ve done it at a time when we’re obviously mid-construction, so what we’ve managed to do is lock in a lot of both the operating costs and the capital costs, and what that’s delivered is an exceptional result. There’s very few companies, I think, that can point to a reduction in capital two years after your development study. So we’ll run through that a little bit later. But the major shareholder there to note is Franklins, who have joined us as part of the capital raise to build the project. They’ve got just over 7%, as you can see.

Ah, the lovely Lassonde curve. We all love this, don’t we? But I’m pleased to say that we’re on the right side of it now. But you can see there that it’s been a journey. We’ve gone through delineation, a PFS, a DFS, just growing that resource. In that eight years, we’re nearly three times the size now with the resource. We’ve converted a lot of the resource into measured to de-risk those early years of production and that makes it really attractive today and low risk at startup. And then, as I say, yesterday we’ve delivered a project with a billion dollar NPV and 97% IRR there with just $205 million left to spend to complete the project.

I won’t get too much into the commodities. I would imagine everybody in the room is well across lead and silver. But look, silver’s an exciting commodity. It’s certainly a volatile metal, but at the same time it’s a really exciting time. It’s gone through what we see as a structural change over the last 12 months and you’ve obviously got that growing industrial demand driving some of that, but also the current environment that we’re in, obviously, and the store of wealth, following gold. With lead, it doesn’t get a lot of love, lead, but in reality, the lead market’s extremely strong. It’s the most stable metal on the LME, and underpins this project, effectively covers all of the operating costs and leaves equity investors fully exposed to the silver price as a key margin for the project.

It’s a picture on site a couple of weeks ago. We’ve already got some fairly big gear on site now. Bulk earthworks are progressing well. And just as I say at the bottom there, that’s the key here. We’ve got a stable metal underpinning the project. A very historically stable price, and obviously a silver price that’s doubled in the last 12 months.

And this is what sets us apart from, I think, most assets. We’re obviously in the right jurisdiction, but we’ve pushed that out. We’ve had a FEED study that we banked the project on, which was an eight-and-a-half year mine life. Yesterday we’ve announced that that’s pushed out now to ten and a half years, additional two years there. Offtake’s done. It’s a really, really competitive market for a lead silver concentrate in the current environment, and I’ll talk through why that is in a moment. But all the project funding’s secured. And again, we’ve just secured that 100% ownership now and then reduced costs. Everything’s on track for a wet commissioning in June next year, which is very exciting for all of us.

So here’s some of those key outputs from the study we announced yesterday. So to put that into perspective, you can see there our market cap. We’re basically trading at less than one and a half times cash flow for the first year, in a fully permitted, fully de-risked project that’s halfway through construction, which I think is a very, very rare find on the ASX. So look, really strong outputs there. You can see very strong 97% IRR, over a billion dollars NPV, and again, most of the risk gone.

That FEED study that we obviously delivered in June ’24, you can see there the key outputs. And what’s changed? Essentially, we’ve banked the project on that study, and in the last two years we’ve moved to detailed design and just optimized various parts of the project. Again, that acquisition of the used process plant from DeGrussa, and that comes with ten million bucks worth of brand-new spares, perfect fit for the project. Everything that we designed, with a few nice to haves as well. But you can see there’s a lot of very positive changes there. Certainly, obviously, the moving silver price, a big driver to a lot of that, of course.

So along with the study yesterday, we also did introduce the essentially upgraded mineral resource. So we’ve now got 50%, sorry, 50 million tonnes, which is a 7% increase in tonnes. We’ve done that just to support that new reserve calculation, and obviously you’re seeing the increases there as well. Just a breakdown of the resource today. So essentially 50 million tonnes at about 60 grams a tonne silver equivalent or around that 100 million ounce equivalent resource. Again, this ten and a half year mine life that we’ve outlined to date, that’s 20 million tonnes of that 50 that you see there in the resource. So lots and lots of upside potential. We’ve continued to drill this every year. We continue to push out those resources and convert into reserves. So it bodes well for the future.

So what you can see there is a breakdown of the resource. As you can see, there’s a big portion of that now in measured. What I would note there, and is very rare in new startups, you’ll see there two-thirds of the reserves have been moved to the proven state. Now, that’s a result of obviously a very shallow ore body. So all the early years of mining essentially have been drilled with 20-meter spacing. So that just takes out all of that risk for early startup, getting the ore to the ROM pad, and just gives us confidence that we can work within the timelines. So you can see there the updated reserve, 18.3 million.

The ore body’s absolutely open in all directions. There’s already well-defined resources that will fall in as the commodity prices move. That’s an outline there of the existing pits, and you can see there that the ore body just dips off gently to the east, being predominantly flat. We’ve got a rig on site at the moment. Interestingly, we’ve recently reported some really, really impressive results that all sit outside the current designs as well. So every year, we continue to get excited about just how far this project will go. And we’ll continue to do so. And obviously once cash flows are there, it will increase those budgets, to look to push out that mine life even further.

So this is what makes this project really interesting. As I said, lead doesn’t get a great deal of attention in the market, but it plays a crucial role in this project in that it covers all your operating costs. It’s a very stable metal, so you can plug in your two thousand bucks a tonne number and have confidence that it’s gonna be in and around there and has been for decades. So when you plug that in as a credit, that just gives you an all-in sustaining cost of about $8.70 an ounce. And obviously, today’s price is in the sixties. So it’s a very, very low-cost silver producer if you look at it like that, and we’ll be producing over two million ounces a year.

That’s the DeGrussa process plant there on the right. On bottom left, you can see our original design, incredibly well-matched to the DeGrussa plant. It was quite unbelievable really just when we went through it, just how well-matched it was for the project. As I say, it was everything that we needed, plus a few nice to haves as well. So what that gave us was a reduction of 20 million in the capital cost for the plant itself. But more importantly, and I guess more difficult to quantify, a reduction of six months in the construction period. And when you’re drawing down debt, building a project in an exciting silver market, that’s really important. And so, as I say, that sees us commission this process plant in June next year, which was very exciting.

So we’ve obviously got a port access agreement. This project is fully permitted. The port’s permitted. Obviously we’re on granted mining tenements. All the environmental approvals are in place. We’re ready to go. We’ll deliver a product. It’ll be around a 65% lead, just over 700 grams a ton silver to produce just under 70,000 tons of lead metal per year and just over two million ounces of silver.

Now, the market for silver-lead concentrates has been extremely tight for some time. In particular, the last eighteen months to two years, we’ve seen very, very discounted treatment charges. As we stand today, the current spot treatment charge for a good quality silver-lead concentrate such as our one is about minus 300 US a ton as we sit today. We did originally sign 75% offtake with Trafigura. That was how much of the project we owned at the time. What we did, though, was build in some terms in there whereby if we didn’t need to take the debt that they’d offered, which was 30 million US, then we had the opportunity to pull them back to 50% of the product, but importantly, also got us exposure to spot treatment charges. And so naturally, in December, that’s exactly what we did. We found additional funding and pulled that back to 50%.

That’s left us in a strong position today, because we’ve just gone out for a tender process on the remaining 50%. And the key aim there is not necessarily just to secure a contract over the product. We don’t need to do that. The lenders are perfectly happy for us just to keep 50% on the sales contract, but it’s to try and lock in those negative TCs. And I can tell you it’s a very, very significant impact to your cash flows if you could lock those in for a year or two. So I’ve just gone out for the first two years of that remaining 50%. So that’s the aim there, to lock that in, and look forward to hopefully closing that process out before the end of the year.

Okay. This just took us through exactly where we’re at with the construction. Diesel supply contract executed. We’re very fortunate in East Kimberley in that Wyndham Port has very, very large strategic fuel reserves as well as its own... So fuel supply is no issue there, and it’s some of the lowest cost fuel in Australia actually. So that contract’s in place. Dismantling of DeGrussa is well and truly underway. ROM pad, tailings facility, everything’s all under construction now. Construction of the evap pond as well is also underway. And we’re just coming to an end of the drill program, which we look forward to announcing some results towards the end of the year as well, which, as I say, bodes well for even more life extension as we move forward.

It’s just project location there. So as I say, we’re in the far, far north of Western Australia, just a couple of kilometers out from the Northern Territory border. Importantly, just 150 Ks from Wyndham Port. So Wyndham Port already ships metal concentrates. It’s Australia’s closest port to Asia. No infrastructure upgrades required there other than a wash bay for our trucks. But there’s an existing hardstand. We will move the product from mine site to the port in rotainers and then ship in bulk. And as you can see there, that puts us among some pretty big names there. We’ll be the fourth-largest producer of silver once operational next year.

So just from a contracting point of view, just in the last couple of days, we’ve announced binding terms have been agreed with a mining contractor. That contractor is Regroup, who are already familiar with the region, operating at Kimberley Mineral Sands. We’ve ordered long lead items. The diesel power plant is all ordered and will be fully operational for when we need it early next year. We are working also with Horizon Power. There’s a great opportunity to secure clean hydropower for the project as a result of the Argyle diamond mine closing. So there’s capacity there. We’re very, very advanced now with Horizon and a contractor to build the power lines out, which is a 52-kilometer stretch from town. But that would see us with lower cost and clean energy for the project, delivered within 12 months of kicking off production. And hoping to close that out before the end of the year as well, and that will just be a value add for the project.

I ran through all the key engineering works. Everything is underway there. Construction on-site is really ramping up over the last few weeks. This is a timeline that sees us to full production in late Q3 next year. And as I say, everything is on track as outlined there in the schedule.

Future growth. This was a photo from just a few weeks ago, just looking at some of the core that’s just coming out of this program. We also own 100% of the Mount Baron project, which sits just 25 kilometers to the east of Sorby Hills, with a lovely highway between the two projects. It has an existing resource, but we like it more for the broader package. It’s the same mineralization as Sorby Hills, so it’s an MVT carbonate-hosted deposit. And we’ve learnt a lot at Sorby as we’ve grown the resource nearly three times over the last seven years. We think we can add a lot of value to that project and are looking forward to really getting stuck into some exploration there. And also to the south of Sorby. Earlier stage there, but in the right rocks to potentially find more of the Sorby Hills mineralization. As well as all that mineralization around the fringes of the existing pits that we’ll be digging over the next few years. So lots and lots of growth opportunity. This will be a much longer project than the initial ten and a half years that we’ve outlined in the study.

Just to recap there on this really strong economics this project’s sitting on now with just $205 million to complete the project. As I say, we’ve not drawn any debt to date. We still had almost 50 million in the bank at the end of last month. So we’re in a really great position. Current price is on the left and then the base case, which is the future curve, on the right there, which produce some pretty impressive numbers and, importantly, all based on locked-in costs. So both operational as well as the CapEx to build the project. So it’s very rare you can read a study with eighty percent of those costs locked in.

What’s to come? I’ve touched on some of this already, but that competitive tender for the remaining offtake is underway. We think we can deliver a really good result there. More resource growth. We’ve obviously drawn a line in the sand with the resource to get these pits optimized, but there’s further opportunity there. And I think we’re in a great market for silver going forward. So earlier next year, you’re gonna see regular construction updates and obviously completion of major work streams as we move towards the commissioning in June. Really exciting time for the project, for the company as a whole. Thank you. And happy to take questions.

Thank you, Simon. We are a little bit squeezed for time. Luke?

Yeah, Simon. Got you, mate. Just curious on that fuel advantage you’ve got. Diesel’s a thing. We’re paying thirty, three bucks a liter in Perth. It’d be quite a large percentage of your cost base, I would’ve thought. That’s obviously a big assistance.

Yeah, absolutely. You might have seen in the news recently, but the state government just did a deal with the Wyndham Port as well to store, I think, another seven million liters of fuel. So it’s a heavily discounted rate up there, with lots of storage. So I think anybody that’s got any issues around future supply of diesel can rest assured we’re in the best spot in the country for that. To give you some idea of costs, what was it now? Three or four months ago, we were at that $3.20. I think we had that fuel supply come out, fill our 400,000 liters of fuel in our tanks for $1.70 that same week. So that’ll move around, but they buy in such large volumes that we’re in a great position there. And I think the opportunity with the hydropower as well, which reduces exposure to diesel, is one that I’m very keen to lock away.

Great. Okay. We’ll leave it there. But thank you very much, Simon.

Thank you. [applause]