Develop global (ASX:DVP) has completed documentation for a loan of approximately A$100 million with Trafigura, to support the restart of its Woodlawn copper-zinc mine in New South Wales. The facility, which includes a five-year set-aside agreement, will finance the mine’s return to service 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 petroleum, petroleum products, metals and minerals.
History of the mine
The Woodlawn copper-zinc mine, located near Tarago, New South Wales, originally operated from 1978 until its closure in 1998, processing approximately 13.8 million tonnes of ore during that period.
After its initial closure, the mine remained dormant until it was redeveloped by Heron Resources, which invested approximately A$340 million in the project. Despite this significant investment, the mine was placed under 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 subsequently acquired the project in May 2022.
Loan and withdrawal conditions
The loan, denominated in $65 million and converted into Australian dollars at the time of drawdown, has a term of 4.5 years.
The main features of the loan include:
- Interest: calculated at the Bank Bill Swap (BBSW) rate plus a 2% margin, with interest capitalized for the first 18 months.
- Refund: Refunds will be made through a combination of cash payments and offset payments on account. No refunds are required during the first 18 months.
- Security: Senior security on key assets of Develop Global subsidiaries, including the Woodlawn Mine and related project tenements.
The offtake agreement commits Trafigura to purchasing 100% of the copper, zinc and lead/precious metals concentrates produced by the Woodlawn Mine. The contract includes a delivery target of at least 650,000 dry metric tons of product. Payment for 90% of the provisional value will be made within five business days of receipt of shipping documents, with final payments based on price analysis and adjustments.
Starting again from Woodlawn
Develop Global’s 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 renovation of the Woodlawn copper-zinc processing plant, undertaken by GR Engineering Services, is 50% complete, with production of the first concentrate expected in the June quarter of 2025.
Mining is expected to begin from underground sources in the March quarter of 2025, with mining crews preparing to mobilize to the site this month.
Develop Global expects the Woodlawn project to generate pre-tax cash flow of A$1.1 billion over its 10-year mine life plan. For the first three years after startup, the company expects to achieve A$375 million in free cash flow, driven by strong copper and zinc prices.
Bill Beament, CEO of Develop Global, commented: “Our production restart plan for Woodlawn is on time and on budget,” he said. “With the financing documentation now finalized, the mine’s recommissioning and transition to positive cash flow status is fully funded. “
Yesterday, the company’s shares closed up 11.31% at $2.46.