Payment of this tranche was triggered by completion of a definitive feasibility study (DFS) for Abra with Toho now holding 13.33% of AMPL and Galena the remainder.
The tranche forms part of an overall agreement for Toho to invest $90 million to acquire a 40% interest in AMPL, providing the equity required for development of the Abra project.
Together with the $10 million payment, Toho has contributed $30 million since the investment agreement was executed in April 2019.
The remaining $60 million is payable on confirmation of project financing debt for the project.
Abra is a globally significant lead-silver project in the Gascoyne region of Western Australia, around 110 kilometres from Sandfire’s DeGrussa project.
The project has a mineral resource of 37.4 million tonnes at 7.5% lead and 18 g/t silver and an ore reserve of 10.3 million tonnes at 8.8% lead and 24 g/t silver.
READ: Galena Mining at project financing stage after Abra lead-silver mine is valued at $553 million
Galena completed a DFS for development of a mine and processing facility with a 16-year life producing a high-value, high-grade lead-silver concentrate containing around 95,000 tonnes of lead and 805,000 ounces of silver per year after ramp-up.
Based on a pre-development capital expenditure estimate of $170 million, the DFS modelled a pre-tax net present value for Abra, at an 8% discount rate, of $553 million and an internal rate of return of 39%.
Compared to the 2018 PFS, mine life has increased by two years, as has lead and silver production, and operating costs have decreased with capex increased.
The study outcomes provide confirmation of technical feasibility with low risk and strong projected economic returns for the development of Abra.
Initial production target
Galena continues to target initial production for Abra in 2021 and the first full year of steady state commercial production in 2022.
Project work is now focused on moving to the construction phase including finalising offtake agreements, project debt financing, development work, and updating the JORC resource and reserve.
A mining-experienced international bank has been appointed to lead the process of structuring and concluding the project financing debt package for the project.
The Abra ore reserve will be reviewed in conjunction with an upcoming update of the JORC resource estimate following completion of the ongoing 2019 project development drilling program.