Boab Metals Limited [ASX:BML]
Metals & Mining
Funding Secures Sorby Hills’ Development
Boab Metals Limited (ASX: BML) has secured a US$30 million prepayment facility as part of its binding offtake agreement, providing cornerstone financing for the Sorby Hills Lead-Silver-Zinc Project. The facility, structured with a SOFR + 5% interest rate and five-year term, includes an 18-month interest-only period. This funding reduces reliance on equity markets and improves its financial position. Combined with the offtake agreement, it represents a major step towards achieving FID in H2 2025 and progressing Sorby Hills toward production.
Trafigura Offtake Agreement Validates Sorby Hills’ Quality
Boab Metals Limited (BML) has finalised a binding offtake agreement with Trafigura, one of the world’s leading commodities traders, as part of the recently announced US$30 million prepayment facility package. The agreement secures sales for 75% of Sorby Hills’ lead-silver concentrate, covering a minimum of 531,000 tonnes over an initial seven-year term. This deal highlights the premium quality of Sorby Hills’ concentrate, with a high-grade composition of 65.8% lead and 664 g/t silver, further validating the project while ensuring a stable and reliable revenue stream during the early stages of production.
Strong Foundations as Sorby Hills Nears Production
Boab’s move to acquire 100% ownership of Sorby Hills simplifies operations and enhances access to Australian government funding opportunities. This streamlined structure positions the company well for FID in H2 2025 and first production by mid-2027. The project’s low costs, confirmed by C1 cash costs of US$0.36/lb payable lead, and further exploration upside, including the Keep Target, ensure Sorby Hills is well- positioned to deliver value as it moves toward production and beyond.
Valuation range of A$0.47– A$0.51 per share
We update our valuation for Boab Metals (BML) to A$0.47 per share in the base case and A$0.51 in the bull case, reflecting the strong fundamentals of the Sorby Hills Project. The FEED study confirmed Sorby Hills as a low-cost producer with a pre-tax NPV8 of A$411 million and an IRR of 37%. The binding offtake agreement with Trafigura secures concentrate sales and includes a US$30 million prepayment facility, reducing construction funding risks. With silver prices tracking above study assumptions, project cash flows remain strong, and exploration at nearby targets could further enhance value. With FID targeted for H2 2025 and the first production expected by mid-2027, the valuation reflects Boab’s progress while accounting for funding risks. Sorby Hills offers near-term production potential and significant long-term growth opportunities.
Disclaimer: Directors of Shares in Value hold shares in Boab Metals (ASX: BML).