Galena secures $90m project equity
GALENA Mining has announced that Japanese lead and zinc smelting company, Toho Zinc, will invest $90 million for a 40 per cent stake in its Abra base metals project.
The transaction with Toho would be paid in three tranches; an initial $20m, a further $10m on completion of the Abra Definitive Feasibility Study, and a final $60m tranche paid on confirmation of project financing debt.
The Abra base metals project was a globally significant lead-silver project in the Gascoyne region of WA, about 110km from Sandfire’s DeGrussa project.
The project was expected to have a 14-year mine life producing a high-value, high-grade lead-silver concentrate containing about 91,000 tonnes of lead and 760,000 ounces of silver per year after ramp-up.
“This is a great transaction that provides the equity required to develop Abra, recognising the strategic value of the project,” Galena Mining managing director Alex Molyneux said.
Both Toho and Galena Mining would have the right to off-take their percentage share of Abra production on arms-length, benchmark terms and then on-sell to third-parties.
The transaction would be a key step in providing the equity funding to commence construction, and both Toho and Galena would apply the majority of the first two tranches (together comprising $30 million) to pre-development and early development works at the site - substantially advancing and de-risking the project.
“Toho is a key player in the global lead and zinc industry and an experienced miner so we look forward to the benefits of a true partnership in the development of Abra,” Mr Molyneux said.
Galena anticipated construction to begin in April 2019, initial production by 2021 and the first full-year of steady-state commercial production to be achieved by 2022.
In January the junior announced an updated JORC Mineral Resource estimate (Indicated plus Inferred) at 5 per cent led cut-off of 37.4mt at 7.5 per cent lead and 18 grams per tonnes silver.