Investing News NetworkAUSTRALIA
Galena Mining
Overview
Galena Mining Limited (ASX:G1A, Galena) owns 60 percent of the Abra base metals mine located in the Gascoyne region of Western Australia - home to one of the largest lead and silver deposits in the world, set to produce the highest-grade, cleanest lead concentrate available globally. The company is capitalizing on its Tier 1 asset in a Tier 1 jurisdiction, strengthened by and leveraging partnerships with Japan's largest zinc and lead smelter, as well as with one of the top base metals trading firms in the world.
The company also owns 100 percent of the Jillawarra Project, which covers 76 kilometers of strike extension directly to the west of Abra. The Jillawarra Project contains several large-scale analogous exploration targets including the Woodlands Complex, Quartzite Well and Copper Chert areas.
Galena's major partnerships include Toho Zinc (TSE:5707), Japan's largest zinc and lead smelter, and IXM SA, one of the world's top three base metals trading firms. Toho provided AU$90 million project equity and has a long-term agreement to purchase 40 percent of Abra's production; while IXM has entered into a 10-year take-or-pay offtake contract to purchase the remaining 60 percent.
The company's management team brings decades of experience in the mining and base metals industry and has a proven track record of success throughout all stages of exploration, from development to production.
In November 2020, Galena put in place US$110 million in finalized debt facilities arranged by Taurus Funds Management. The facilities include a US$100-million project finance facility plus a US$10-million cost overrun facility.
The project finance facility consists of a 69-month term loan primarily to fund capital expenditures for the development of Abra. Key terms include:
- Fixed interest of 8 percent per annum on drawn amounts, payable quarterly in arrears
- 1.125 percent net smelter return royalty
- No mandatory hedging
- Early repayment allowed without penalty
- 15 quarterly repayments commence on 31 December 2023
The cost overrun facility is a loan to finance identified cost overruns on the project in capital expenditure and working capital. Fixed interest of 10 percent per annum applies to amounts drawn under the cost overrun facility.
The Taurus debt facilities are now fully drawn and are secured against Abra Project assets and over the shares that each of Galena and Toho own in Abra.
Company Highlights
- Positioned to realize value for shareholders:
- Abra mine construction completed in December 2022, on time and on budget
- First in-specification concentrate shipment achieved in March 2023
- Abra is one of the largest and cleanest lead-silver deposits in the world (high-grade, high-value concentrate 1/10th typical deleterious elements).
- Exciting exploration ground and known copper-gold mineralisation below the Abra lead-silver deposit
- JV between Galena (60 percent) and Japan's largest zinc and lead smelter Toho Zinc (40 percent) underpins long mine life (13+ years) in an exciting new mineral province in Western Australia.
- Galena has a 10-year offtake agreement with IXM, one of the world’s largest base metals traders.
- Revised annual steady-state guidance:
- Mill throughput of 1.3 million tonnes per annum (Mtpa) producing 85 to 90 kilo-tonnes per annum (ktpa) lead and 500 to 550 kilo-ounce per annum (kozpa) silver
- Annual average lead C1 direct cash cost of US$0.50 to $0.60/lb
- Annual average EBITDA (earnings before interest, taxes, depreciation, and amortization) of AU$90 to $95 million
- The Abra mine is located in the Gascoyne Region of Western Australia, home to one of the largest undeveloped lead deposits in the world and the highest-grade lead concentrate available, globally.
- The Abra mine carries a JORC estimate of 16.9 million tons (Mt) at 7.4 percent lead and 17 grams per ton (g/t) silver in the indicated category and 17.5 Mt at 7.0 percent lead and 15 g/t silver in the inferred category.
- Abra has been named the world's lowest-cost primary lead mine by Wood Mackenzie, a leading mining research and consultancy group.
- US$110 million of project financing debt facilities from leading mining-specialist lending fund Taurus Funds Management
- Galena's management team brings decades of experience in the mining and base metals industry and has a proven track record of success throughout all stages of exploration, from development to production.
Key Projects
Abra Mine
The Abra Mine is 60-percent-owned by Galena, and is a globally significant lead-silver project located in the Gascoyne region of Western Australia, between the towns of Newman and Meekatharra approximately 110 kilometers from the DeGrussa copper mine owned by Sandfire Resources (ASX: SFR).
Abra mine site (Photo as of January 2023)
The Abra mine carries a JORC mineral resource estimate published in April 2021 of 16.9 Mt at 7.4 percent lead and 17 g/t silver in the indicated category and 17.5 Mt at 7 percent lead and 15 g/t silver in the inferred category.
All permits for the Abra project have been obtained from the appropriate Western Australian regulatory bodies. The project is also subject to an existing land use and heritage agreement with the Jidi Jidi Aboriginal Corporation. The Abra property is well-serviced by public roads and highways, and all the necessary infrastructure has been developed to transport lead-sulphide concentrates to the Port of Geraldton, Abra's primary export port.
Abra Processing Plant
A final investment decision to complete the Abra Project was made in June 2021 and construction was completed in December 2022, on time and on budget. Several important milestones were achieved in the March 2023 quarter, including the commissioning of the processing plant, first ore fed into the plant and first concentrate produced in January 2023.
The processing plant achieved in-specification concentrate production from the commencement of concentrate production and during the March 2023 quarter, 135,666 tons of ore was processed and 5,425 tons of lead concentrate was produced. The company successfully achieved its first in-specification concentrate shipment of 5,019 dry metric tons (DMT) on March 27, 2023.
First ore being fed into the mill at Abra (Photo as of January 2023)
Lead-silver concentrate in Abra’s flotation circuit (Photo as of January 2023)
Underground truck at Abra delivering ore to ROM pad (photo as of May 2023)
Ishikawa filter going through cleaning cycle at Abra processing plant (photo as of May 2023)
Qube quad road-train returning to Abra for concentrate pickup (photo as of May 2023)
First concentrate shipment (Photo as of March 2023)
Closeup view of the RotaboxTM system at work with the lifting and transfer of concentrate to the ship hold. Once inside the ship hold, the lifting mechanism rotates the container to place the concentrate in the hold (Photo as of March 2023).
Jillawarra Project
Exploration and growth associated with the 100-percent Galena owned Jillawarra Project covers a highly prospective elongated tenement package covering approximately 76 kilometers of continuous strike length and 508 square kilometers directly to the west of Abra.
Magnetic and gravity anomaly map showing the Abra Project and Jillawarra Project tenements with drill hole results and targets.
The Jillawarra Project hosts many base metals prospects which have had limited shallow exploration work completed since the 1970s by various companies. The bulk of the exploration work was completed by Amoco, Geopeko, Apex Minerals and Abra Mining Limited. The work completed to date has identified several base metals, manganese and gold prospects, of which the Woodlands Complex, Quartzite Well, Manganese Range, Copper Chert, TP and 46-40 were subject to early-stage exploration. Most of the drilling completed within the Jillawarra Project investigated the first 100 to 200-meter depth which, based on recent knowledge of Abra, may not have reached the depths required.
The main prospective corridor within the Jillawarra Project lies within the margins of the Quartzite Well – Lyons River Fault zones which extend east-west along the entire tenement package. Also, the contact between the dolomitic sediments of Irregully Formation and the lower sedimentary unit, polymictic conglomerate, of the Kiangi Creek Formation represents an important marker for the occurrence of base metal mineralisation as seen at Abra.
The Woodlands Complex is an Australian scaled geophysical anomaly which represents a significant target area with the anomaly being 12 kilometers long and 10 kilometers wide. Limited work and technical evaluation have occurred at Woodlands which presents a great opportunity for Galena in the years to come. Ongoing geophysical and exploration drilling will occur concurrently with the development of Abra. The knowledge and understanding of Abra due to its development will provide a significant exploration advantage at Jillawarra.
Management Team
Tony James - Managing Director and CEO
Tony James is a mining engineer with over 30 years’ mine operating and project development experience predominantly in Western Australia. He also has previous experience at managing director level of three ASX-listed companies with two of those companies successfully guided through a merger and takeover process benefiting the shareholders. He has a strong mine operating background (examples being the Kanowna Belle Gold Mine and the Black Swan Nickel Mine) and a strong feasibility study / mine development background (examples being the Pillara Zinc/Lead Mine and the Trident/Higginsville Gold Mine).
Adrian Byass - Non-executive Chairman
Adrian Byass has more than 25 years of experience in the mining industry both in listed and unlisted entities globally. He has served as non-executive and executive director of various listed and unlisted mining entities, which have successfully transitioned to production in bulk, precious and specialty metals around the world. He currently serves on the boards of ASX gold, base metals and lithium companies.
Craig Barnes- Chief Financial Officer
Craig Barnes has over 25 years of experience in senior finance and financial management within the mining industry and previously the financial services industry. He has considerable experience in project financing, mergers and acquisitions, joint ventures, treasury and implementation of accounting controls and systems.
Before joining Galena, Barnes held the position of CFO of Paladin Energy for more than five years and was part of the team that successfully completed the company's capital restructuring in 2018. Prior to that, he was the chief financial officer of DRDGOLD Limited (NYSE and JSE: DRD) and its affiliated subsidiaries for more than seven years.