Boab Metals Limited (ASX: BML) has executed a binding Heads of Agreement with REGROUP Australia covering mining services at its 100%-owned Sorby Hills silver-lead project in Western Australia’s East Kimberley, adding another major execution contract as the fully funded development moves toward first production in the second half of 2027.
The agreement locks in key commercial terms, scope, mine-planning parameters and mobilisation dates. Site establishment is expected to begin around mid-January 2027, with mining services scheduled to commence by March. The parties are substantially advanced on the definitive mining-services contract, while construction work is already progressing across other areas of the project.
The timing is important because Sorby Hills is transitioning rapidly from financing and study work into physical project delivery. Boab Metals Limited has already contracted GR Engineering Services Limited to relocate and refurbish the former DeGrussa processing plant, leaving mine establishment, plant construction and operational readiness increasingly interconnected as the first-concentrate target approaches.
What will REGROUP Australia do at the Sorby Hills project?
REGROUP Australia will provide the open-pit mining services needed to turn Sorby Hills’ Ore Reserve into plant feed.
The binding agreement establishes commercial terms and key operating parameters before mobilisation begins, giving Boab Metals Limited greater cost and scheduling certainty at a point when mining needs to start early enough to create ore stockpiles ahead of processing-plant commissioning.
Mining is scheduled to begin by March 2027. That timing leaves several months between initial pit activity and targeted first silver-lead concentrate production during the second half of the year, providing a window to establish working faces, build ore stocks and synchronise mining with plant commissioning.
This sequencing reduces the risk that a completed processing plant sits idle because mining is not sufficiently advanced. It also reduces the opposite risk of producing large quantities of ore before the plant is ready to treat them.
A contractor agreement may sound less dramatic than a financing package or resource upgrade, but construction-stage mining projects are frequently won or lost through the quality of this execution detail.
How large is the Sorby Hills silver-lead project?
Sorby Hills is located approximately 50 kilometres from Kununurra and about 150 kilometres by sealed road from Wyndham Port, giving the project access to established regional transport infrastructure. Boab Metals Limited describes it as Australia’s largest undeveloped near-surface silver-lead deposit.
The 2024 front-end engineering and design study contemplated an 18.3-million-tonne mining inventory averaging 3.4% lead and 39 grams per tonne of silver. The processing operation was designed for capacity of up to 2.25 million tonnes annually and average production of approximately 103,000 tonnes of lead-silver concentrate containing around 64,000 tonnes of lead and two million ounces of silver per year.
The study estimated pre-production capital of A$264 million, pre-tax net present value at an 8% discount rate of A$411 million, a 37% pre-tax internal rate of return and average annual EBITDA of A$126 million under its stated assumptions. C1 costs were estimated at US$0.36 per pound of payable lead after silver credits.
Those figures pre-date the project’s current construction configuration and should be treated as study estimates rather than guaranteed operating results, but they illustrate why silver is economically important even though Sorby Hills is commonly described as a lead project.
Why is reusing the DeGrussa processing plant central to Boab Metals Limited’s capital strategy?
Instead of building every component of a new processing facility from scratch, Boab Metals Limited acquired the former DeGrussa processing plant from Sandfire Resources Limited.
GR Engineering Services Limited has been contracted to dismantle, refurbish, relocate and recommission that plant at Sorby Hills. Boab Metals Limited said all conditions for the processing-plant acquisition had been satisfied by May 2026.
Reusing established equipment can reduce procurement lead times and capital costs, particularly when long-lead grinding, flotation and materials-handling equipment would otherwise need to be manufactured specifically for the project.
It does not eliminate execution risk. Equipment has to be removed, transported thousands of kilometres, refurbished, reconstructed and integrated into new infrastructure designed for Sorby Hills ore.
That means the project effectively combines elements of a greenfield mine with a brownfield processing-plant relocation. The potential capital advantage is meaningful, but so is the need for disciplined engineering and schedule management.
How does Boab Metals Limited’s financing reduce Sorby Hills development risk?
Sorby Hills has moved beyond the phase where the company is merely trying to prove that financing might be available.
Boab Metals Limited has said the project is fully funded and under construction, supported by more than A$350 million of debt and equity funding. The financing package has included institutional equity and debt, while Trafigura previously agreed to purchase 75% of concentrate production and provide a US$30 million prepayment facility.
That combination matters because project finance risk and construction risk are different.
A technically attractive development can remain stranded for years if capital cannot be secured. Boab Metals Limited has largely crossed that threshold and is now in the stage where shareholder value depends more directly on delivering the plant, mine, infrastructure and commissioning programme within the available funding envelope.
The REGROUP Australia agreement therefore adds another layer of cost and schedule definition at precisely the point where the project needs fewer unresolved interfaces between contractors.
Could higher silver exposure materially change Sorby Hills economics?
Silver is a major by-product credit at Sorby Hills.
The FEED study assumed a silver price of US$27.40 an ounce and estimated net C1 costs of only US$0.36 per pound of payable lead after incorporating silver credits.
That structure creates substantial commodity-price sensitivity. When silver prices are above study assumptions, additional silver revenue can improve project margins even if lead prices are unchanged.
It also helps explain why drilling outside current pit designs remains economically relevant. Boab Metals Limited reported September drilling results extending silver-lead mineralisation beyond existing designs, creating potential for future resource and mine-life growth if sufficient additional material can be converted into economically mineable reserves.
Those exploration results are not included automatically in the current production schedule. Their value depends on further drilling, resource modelling and mine-plan optimisation.
For investors, this creates two layers of exposure: execution of the funded base project and potential upside from a mineral system that remains open beyond parts of the existing design.
What does Boab Metals Limited’s recent share performance indicate?
Boab Metals Limited closed at approximately A$0.40 on September 25, down from around A$0.52 at the end of August.
The decline suggests the market continues applying a substantial construction and commissioning discount despite financing progress.
That is common among single-project developers. Once financing is secured, investors shift attention immediately to cost overruns, contractor performance, construction delays, commissioning and ramp-up. A project can therefore become fundamentally less risky while its share price remains subdued because the nature of the risk has simply changed.
With a market capitalisation around A$230 million, Boab Metals Limited also remains modestly valued relative to the A$411 million pre-tax NPV reported in the FEED study, although those numbers are not directly comparable because one is an equity-market valuation and the other is a project-level study estimate before tax and subject to assumptions.
What are the remaining milestones before Sorby Hills production?
Completion of the definitive REGROUP Australia mining contract is one near-term step, although the binding Heads of Agreement already establishes the critical commercial framework.
The larger tasks are physical. Boab Metals Limited needs the DeGrussa plant relocation and refurbishment to proceed on schedule, supporting infrastructure to be completed, mining to establish sufficient ore inventory and the processing circuit to commission successfully.
Site establishment for mining in January and mining commencement by March create two clear operational markers before first concentrate production targeted for the second half of 2027.
Once production begins, the focus will shift again toward recovery rates, concentrate quality, throughput, unit costs and the ability to achieve the economics modelled in the development studies.
September 28 therefore moves Sorby Hills another step away from being a financing story and toward becoming an operating-mine story. Boab Metals Limited now has funding, approvals, processing infrastructure under contract, an offtake pathway and a mining-services partner. What remains is the least glamorous but most important part of mine development: making all of those pieces work together on site.
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