Construction is advancing at Develop’s Woodlawn project in New South Wales, which was last month named by Argonaut as one of the best undeveloped projects on the ASX.

Given the project’s status as a (brief) previous producer, the restart has capital costs of just A$42 million.

“We inherited a mine that was already fully built – A$340 million of equity already went into this asset,” Beament told the Resources Rising Stars Summer Series in Sydney this week.

Develop has already spent around A$70 million with the first two years of underground production already fully developed.

“In an open pit sense, it’s like putting two years of open pit dirt on the ROM pad – that’s crazy,” Beament said.

“I’ve never had that in my underground career and that’s been done for a reason. We don’t want mining to be the bottleneck or the risk factor in this project.”

Using metal prices of US$8769 per tonne of copper and US$2688/t of zinc, the project has a pre-tax net present value of A$658 million.

“And if you throw in today’s spot prices, that NPV goes well north of A$1 billion,” Beament said.

Beament, who has been on site this week showing institutional investors around, said the project was more than 50% complete and on budget.

“We’re well ahead of schedule,” he said. “We’ve told the market we’ll be commissioning in June. I think there’s a little bit of upside to that. So very close to getting cashflow and production, and that will happen in the June quarter, which is not far away.”

Develop has A$342 million of tax losses, which means the company probably won’t pay tax on Woodlawn for several years.

Debt deal as good as done

Global commodities trader Trafigura has agreed to provide a A$100 million facility to help fund Woodlawn.

“The ink is about to dry on this so we’re very, very close to actually signing final documents, and then we draw down on that A$100 million within five days,” Beament said.

The Trafigura partnership also includes a five-year offtake agreement, which Beament said had “amazing terms”.

“When you play in base metals, you want someone that takes your product in good and bad times. You don’t want the ship rocking up and not taking your product.”

Beament said treatment and refining costs in copper were currently zero and zinc smelters were paying miners to take their concentrates, which was “unheard of”.

“[Trafigura], the second biggest zinc trader in the world, just bought half the LME warehouse of zinc in one foul swoop and they’ve got more information than everyone in this room about what’s going to happen,” he said.

“So they’re the warning signs I look at and go, holy shit, I need to be in zinc production very soon.”

‘Supercharge’ organic growth

HSBC is also assisting Develop with a potential selldown of up to 20% of Woodlawn.

“And why would we do that? Well, it will supercharge the organic growth in our portfolio,” Beament said.

Along with cashflow from Develop’s mining services division and Woodlawn, a selldown would fund the development of the shovel-ready Sulphur Springs copper-gold project in the Pilbara.

“I really love this project. This is an amazing greenfields discovery in the Pilbara,” said Beament.

“This is actually better than Woodlawn, but it’s a greenfields project and it needs capex.”

Beament suggested Develop could start on the underground decline in mid-2025.

“We put this decline down in Sulphur springs, 18 months later, we literally have the whole mine plan in an underground sense, sitting above us. We have nine years, over 10 million tonnes of ore sitting above us for A$30 million capital,” he said.

“It’s taken me my whole career to work out how to build an underground mine but putting in that capital development ahead of ore production is the panacea of running an underground mine.”

The June 2023 definitive feasibility study delivered a post-tax NPV of A$523 million.

“When you start looking at this project, once it’s up and running, at spot prices today, it spits out around about A$200-250 million free cashflow a year,” Beament said.

“It is a A$300 million capex bill, but once it’s up and running, it pays it back pretty quickly.”

Beament said Develop would reassess the mine plan and apply the latest treatment and refining costs into the economics.

“When we did this mid last year, we used US$230 a tonne treatment cost and they were negative six weeks ago, and we’ve locked in US$60 next year, so that is a huge delta to the bottom line,” he said.

“So the economics of this project are escalating very, very quickly, so it is now really up on our radar screen.”