Develop Global (ASX:DVP) is on track to deliver a final investment decision (FID) this quarter for the Woodlawn Copper-Zinc Mine in New South Wales, after entering into a term sheet for a loan facility and offtake arrangement with global commodities trader Trafigura.
Through its subsidiaries Woodlawn Mine Holdings, Trafigura will provide US$65 million ($99.95 million) in a facility, which paves the way for a FID and keeps Woodlawn fully funded through to production.
Develop Global, which has a market capitalisation of $588.36 million, says the terms of the prepayment include an interest rate of secured overnight financing rate (SOFR) three months, plus a 2% margin. This reflects the $400 million of equity capital that has been invested in the mine by both Develop and the previous owner.
As part of the facility’s terms, Trafigura will buy all of Woodlawn’s production under a five-year term offtake arrangement.
Under these terms, treatment and refining charges are materially lower than those assumed in the mine’s production restart study. This has resulted in an $80 million improvement to Woodlawn’s net present value which is $728 million.
Develop Global forecasts the pre-tax free cash flow to grow to $1.1 billion, based on a 10-year mine plan.
Managing Director Bill Beament says the competitive facility and arrangement is a “game-changer” for Develop.
“The offtake arrangement underpins Woodlawn’s future, with improved terms relative to those assumed in the project restart study released on 3 April 2024,” Beament says.
“The benefits of the prepayment/loan facility and offtake arrangement for Develop can be seen in the increase in the project’s NPV from $658 million to $728 million. We are now on track to make a FID this quarter, which will set up Woodlawn for first production and cash flow in mid 2025.
“But as well as securing debt and offtake terms, we have established a relationship with one of the world’s biggest commodity traders. This stands Develop in a very good stead for establishing additional projects or opportunities, including Sulphur Springs.”
The production restart has been de-risked, with the first two years of production already fully developed and grade control drilling completed. All underground capital infrastructure has also been installed.
Develop Global adds that an updated study has further confirmed that Woodlawn is going to generate financial returns.
The Woodlawn Mine is a zinc-copper-lead-gold–silver project that lies in the Lachlan Fold Belt of New South Wales.
Develop Global is focused on producing clean metals used in sustainable energy generation and storage. The company owns and operates several mineral projects in Western Australia and New South Wales.
Trafigura is part of a commodities group, focused on connecting vital resources to power and building the world. In Australia, the group is one of the most active commodities traders for base metals.
Write to Aaliyah Rogan at Mining.com.au
Images: Develop Global
