Develop completes Woodlawn buy

Develop has completed the acquisition of the Woodlawn zinc-copper mine in New South Wales (reports MiningNews).
26th May 2022

The company paid A$30 million up-front, comprising $15 million cash and the issue of 4.8 million shares at $3.14 each, to secured creditors of collapsed miner Heron Resources.

Up to $70 million of future milestone payments will be due, including $20 million on a final investment decision and $30 million after 18 months of continuous production.

Develop has also reimbursed creditor Orion for $500,000 of care and maintenance costs.

The company raised $50 million at $3.30 per share in February to fund the deal.

Heron invested about $340 million in Woodlawn, developing a new plant and underground mine, but experienced a problematic start-up in 2019, which included a dispute with a contractor, budget overruns and delays, productivity issues and a lack of working capital.

The mine was suspended in early 2020 when metal prices were just $1750 per tonne of zinc and $5000/t of copper - about half of what they are today - and Heron went into administration in July 2021.

Woodlawn was targeted to produce 40,000 tonnes of zinc, 10,000t of copper, 12,000t of lead, 800,000 ounces of silver and 3500oz of gold per annum.

The project has resources of 18.2 million tonnes at 9.8% zinc equivalent and reserves of 12.4Mt at 7.8% zinc equivalent, including an underground reserve of 3.1Mt at 13.1% zinc equivalent.

"This is an outstanding deal which has delivered Develop a world-scale project complete with an underground mine and processing infrastructure," Develop managing director Bill Beament said.

"We have used the three months since we agreed the purchase to devise a full exploration strategy with the aim of converting inferred resources, extending the mineralised lenses, which we know are open at depth, and drill testing the EM conductors identified by leading consultants NewExco.

"Now we can start implementing that strategy."

Develop also holds the advanced Sulphur Springs copper-zinc asset in Western Australia and its own mining services division.

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