Boab Metals Partners with Trafigura for $30 Million Prepayment and Offtake Agreement
BML (BML) Share Update December 2024 Monday 9th
Boab Metals Secures $30 Million Prepayment and Offtake Deal with Trafigura
Boab Metals Limited (ASX: BML) has announced a significant financial agreement with Trafigura Asia Trading Pte. Ltd., securing a $30 million prepayment facility and an offtake agreement for its Sorby Hills Project.
Instant Summary:
- US$30 million prepayment facility with Trafigura.
- Offtake agreement for lead-silver concentrate from Sorby Hills.
- 5-year term with 18-month interest-only period.
- Offtake covers up to 75% of production if financial close is achieved.
Agreement Details
Boab Metals Limited, through its subsidiary Sorby Hills Pty Ltd, has finalized a binding offtake agreement with Trafigura Asia Trading Pte. Ltd. for lead-silver concentrate from the Sorby Hills Project in Western Australia. This agreement is complemented by a $30 million prepayment facility, which will aid in the construction and development of the project.
The prepayment facility, which carries an interest rate of SOFR plus 5% per annum, is structured over a five-year term. The first 18 months are interest-only, followed by 42 monthly instalments. The financial close and drawdown are contingent upon satisfying several conditions, including due diligence and full project funding.
Offtake Agreement Specifics
The offtake agreement stipulates that if financial close on the prepayment facility is achieved, Trafigura will purchase 75% of the lead-silver concentrate produced at Sorby Hills, amounting to a minimum of 531,000 tonnes over approximately seven years based on the FEED Study's production schedule. If financial close is not achieved, the agreement covers 25% of production, with flexibility for SHPL to increase this percentage.
Project Background
Sorby Hills is strategically located near Kununurra in the East Kimberley region and benefits from existing infrastructure, including sealed roads to Wyndham Port. The project holds a significant mineral resource and ore reserve, with a robust economic outlook as demonstrated by the FEED Study, which forecasts strong pre-tax economics and substantial free cash flow.
This agreement with Trafigura is a critical step for Boab Metals, providing essential funding and securing a reliable offtake partner. The financial backing and market access through Trafigura could enhance investor confidence and potentially boost Boab's stock market performance. However, the conditions precedent for the prepayment facility introduce some uncertainty until fully satisfied.
Investor Reaction:
Analysts are likely to view this development positively due to the financial security and strategic partnership with Trafigura, a major player in global commodities trading. However, investors may remain cautious until all conditions for the prepayment facility are met.
Conclusion:
Boab Metals' strategic partnership with Trafigura marks a significant milestone in advancing the Sorby Hills Project. Investors should monitor the progress of conditions precedent and the company's efforts to secure additional financing to fully realize the project's potential.