Expand globally (ASX:DVP) has completed documentation for an approximately A$100 million financing facility with Trafigura to support the restart of its flagship Woodlawn copper-zinc mine in New South Wales. The facility includes a five-year offtake agreement that will fund the restart of the mine and accelerate its return to production.

Trafigura Group Pte Ltd is a Singapore-based multinational commodity trading company specializing in the sourcing, storage, transportation and distribution of a wide range of raw materials including petroleum, petroleum products, metals and minerals.

mining history

The Woodlawn copper-zinc mine, located near Tarago, New South Wales, originally operated from 1978 until its closure in 1998, during which time it processed approximately 13.8 million tonnes of ore.

After its initial closure, the mine remained inactive until it was redeveloped by Heron Resources, who invested approximately A$340 million in the project. Despite this significant investment, the mine was placed into administration and maintenance in 2020 due to the COVID-19 pandemic.

In July 2021, Heron Resources entered voluntary administration. Despite considering 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 offtake terms

The loan is denominated in US$65 million, converted to Australian dollars at the time of drawdown, and has a term of four and a half years.

The main features of the loan are:

• Interest rate: Calculated at the Bank Bill Swap Rate (BBSW) plus a 2% margin, interest is an asset for the first 18 months.
• Repayments: Repayments are a combination of cash payments and set-offs. No repayments are required for the first 18 months.
• Security: Senior security for major assets of Develop Global subsidiaries, including apartment buildings at Woodlawn Mine and related projects.

The offtake agreement commits Trafigura to purchase 100% of the copper, zinc and lead/precious metal concentrate produced from the Woodlawn Mine. The contract includes a delivery target of at least 650,000 dry tons of product. Payment of 90% of the preliminary price will be made within 5 business days of receipt of shipping documents and final payment will be based on analysis and price adjustments.

Restarting at Woodlawn

Develop Global’s Board of Directors has reached a Final Investment Decision (FID) in favor of restarting the Woodlawn Mine, reaffirming the project’s feasibility and commercial potential.

The refurbishment of the Woodlawn copper and zinc processing plant, carried out by GR Engineering Services, is 50% complete and first concentrate production is scheduled for the June quarter of 2025.

Mining is expected to begin from underground ore sources in the March quarter of 2025, with mining teams ready to mobilize on site this month.

Develop Global expects the Woodlawn project to generate pre-tax cash flow of A$1.1 billion over its planned 10-year lifespan. The company expects free cash flow to reach A$375 million in the first three years due to higher copper and zinc prices.

“Woodlawn’s production restart plan is on schedule and on budget,” said Bill Beament, Development Global Managing Director. “The transition to positive cash flow is fully funded.” ”

The company’s stock closed the previous day at $2.46, an increase of 11.31%.