Funding Success Removes Trafigura Prepayment, But Spot Charges Pose Risks

Capital Raising Completes Project Funding

Boab Metals Limited (ASX, BML) has announced firm commitments to raise A$60 million through a two-tranche institutional placement priced at A$0.40 per share. This capital raising, combined with a Share Purchase Plan (SPP) capped at A$7 million, aims to complete the funding package for the Sorby Hills Lead-Silver Project in Western Australia. The placement attracted strong support from both new and existing institutional investors, including notable cornerstone participants such as Franklin Templeton and Davidson Kempner.

The funds raised, together with an existing A$236 million debt facility commitment, will fully finance the development of Sorby Hills, enabling Boab to move confidently towards first production. This comprehensive funding package removes the need for a previously planned US$30 million prepayment facility with Trafigura, the project's offtake partner.

Improved Offtake Terms and Strategic Partnerships

With the withdrawal of the Trafigura prepayment, Boab has secured materially improved offtake terms. The company now benefits from exposure to spot Lead Treatment Charges, which currently trade at minus US$135 per tonne of concentrate, significantly lower than the US$125 per tonne benchmark assumed in the project's Front-End Engineering Design (FEED) study. Trafigura remains a key strategic partner, committed to purchasing 50% of Sorby Hills concentrate, ensuring a stable market outlet for the project’s output.

Boab’s Managing Director and CEO, Simon Noon, highlighted the quality of institutional support and the robustness of the project’s technical and economic foundations. He emphasized that the capital raising success reflects confidence in Sorby Hills’ potential to capture value amid evolving silver market dynamics.

Share Purchase Plan Offers Existing Shareholders Participation

In addition to the institutional placement, Boab has launched a Share Purchase Plan allowing existing shareholders in Australia and New Zealand to subscribe for shares at the same price as the placement. The SPP is capped at A$7 million, with individual shareholders able to apply for up to A$30,000 worth of shares. This initiative provides loyal shareholders an opportunity to participate in the final funding round ahead of the anticipated Final Investment Decision (FID).

The placement is structured in two tranches, the first tranche of approximately A$40.4 million will settle and allot shares by late December 2025, while the second tranche of A$19.6 million is subject to shareholder approval at a general meeting scheduled for late January 2026.

Looking Ahead to Final Investment Decision

With funding now secured, Boab is targeting a Final Investment Decision on Sorby Hills in the coming weeks. The company plans to use the proceeds primarily for capital expenditure related to project development and general working capital. The Sorby Hills Project, located near Kununurra in the East Kimberley region, benefits from existing infrastructure including sealed roads and proximity to Wyndham Port, facilitating efficient concentrate transport.

Boab holds a 75% interest in Sorby Hills, with the remaining 25% owned by Henan Yuguang Gold & Lead Co. Ltd. The company also retains an option to acquire the remaining interest upon reaching the FID, potentially increasing its stake in the project.