Expand globally (ASX:DVP) has finalized documentation of a approximately A$100 million loan facility with Trafigura, supporting the restart of its flagship Woodlawn copper-zinc mine in New South Wales. The facility, which includes a five-year offtake agreement, will fund the recommissioning of the mine and accelerate its return to production.
Trafigura Group Pte Ltd, headquartered in Singapore, is a multinational commodities trading company, specializing in the sourcing, storage, transportation and delivery of a wide range of commodities, including oil, petroleum products, metals and minerals.
History of the mine
The Woodlawn copper-zinc mine, located near Tarago, New South Wales, operated from 1978 until its closure in 1998, processing approximately 13.8 million tonnes of ore during this period.
After its initial closure, the mine remained dormant until redeveloped by Heron Resources, which invested approximately A$340 million in the project. Despite this significant investment, the mine was placed on care and maintenance in 2020 due to the COVID-19 pandemic.
In July 2021, Heron Resources entered voluntary administration. Despite exploring various strategic options, including refinancing, joint ventures and potential asset sales, the company was unable to secure the necessary financing.
Develop Global then acquired the project in May 2022.
Loan and direct debit conditions
The loan, amounting to US$65 million and converted into Australian dollars at the time of drawing, has a duration of 4.5 years.
The main features of the loan include:
- Interest: calculated at the bank note swap rate (BBSW) plus a margin of 2%, with interest capitalized for the first 18 months.
- Refund: Refunds will be made via a combination of cash payments and offsets with removal payments. No reimbursement is required for the first 18 months.
- Security: Superior security on key assets of Develop Global subsidiaries, including the Woodlawn mine and associated project lands.
The purchase agreement commits Trafigura to purchase 100% of the copper, zinc and lead/precious metals concentrates produced from the Woodlawn mine. The contract includes a delivery target of at least 650,000 dry metric tons of product. Payment of 90% of the provisional value will be made within five business days of receipt of shipping documents, with final payments based on analyzes and price adjustments.
Restart at Woodlawn
The Develop Global Board of Directors has reached a Final Investment Decision (FID) to support the restart of the Woodlawn Mine, reaffirming the feasibility and commercial potential of the project.
The refurbishment of the Woodlawn copper-zinc processing plant, undertaken by GR Engineering Services, is 50% complete, with production of the first concentrate planned for the June 2025 quarter.
Mining is expected to begin from underground ore sources in the March 2025 quarter, and mining teams are preparing to mobilize to site this month.
Develop Global expects the Woodlawn project to generate pre-tax cash flow of A$1.1 billion over its 10-year plan for the life of the mine. In the first three years following the ramp-up, the company expects to achieve A$375 million in free cash flow, driven by strong copper and zinc prices.
Bill Beament, Managing Director of Develop Global, commented: “Our plan to restart production for Woodlawn is on time and on budget,” he said. “With the financing documentation now finalized, the return to operation of the mine and the transition to positive cash flow status is fully funded. »
Shares of the company closed up 11.31% at $2.46 yesterday.
