This work by a third-party mining contractor means that the construction by Abra Mining Pty Limited (AMPL), the joint venture company for the project, is 9% complete.
Having completed the box-cut work, the surface mining contractor has demobilised from the site.
“Site is de-risked”
Galena’s managing director Alex Molyneux said: “Abra construction is now 9% complete and site is de-risked for full construction.
“Progress on debt financing has been slowed down by COVID-19 but we’re in robust financial shape and have been careful not to commit beyond our means.”
Abra’s box-cut is about 190 metres long (north-south) to a depth of 25 metres and an average width of about 45 metres (east-west).
The southern wall that is the base of the box-cut is the location of the future main portal for the underground mine decline.
The permanent camp at the Abra project.
Other preparation work
Other work carried out to prepare for full construction includes:
- Site clearing and site roadworks (including topsoil storage);
- Construction of the first stage of the permanent camp, including accommodation units for 80 persons along with a full-sized kitchen and messing facilities; and
- Installation of production water supply facilities and wastewater treatment facility.
Completing this work has reduced the risk of timing, access and synchronisation issues during mobilisation and works undertaken by the engineering construction and procurement (EPC) and underground mining contractors during the full construction phase.
The lead-silver project is around 110 kilometres from Sandfire Resources Limited’s (ASX:SFR) DeGrussa Project.
After the surface mining contractor has demobilised no further immediate action is required and the site will be maintained in suspension with an appropriate supervisory staffing level.
Full construction, inclusive of plant procurement and construction works and underground mine development, will remain on hold until completion of the project financing debt arrangement.
AMPL continues to engage in discussions with a short-listed group of banks regarding a project financing debt facility.
However, COVID-19 related market volatility and practical issues associated with travel/logistics restrictions have delayed the ability to complete credit approvals on a mutually agreed set of terms.
AMPL has also fielded a number of preliminary proposals from non-bank lenders who see the attraction of being able to leverage market conditions to gain exposure to a tier-one project such as Abra.
All options will be considered by AMPL going forward.
As of March 31, 2020, Galena had $19.5 million in cash and no debt, but the company is not committing expenditure beyond its existing financial resources.
The only financial commitment going forward is for the fabrication and delivery of the remainder of the permanent camp, which comprises accommodation units for an additional 200 people and other ancillary buildings.
This involved approximately $5.5 million in remaining costs as of March 31, 2020.
Completion of Abra’s project financing debt will trigger the final $60 million equity investment tranche into AMPL by Toho Zinc Co Ltd of Japan, raising Toho’s partnership stake in AMPL to 40%.
Toho has already invested $30 million since April 2019, with the majority of proceeds used to conduct Abra site construction works completed to date.