LA Private

Develop Global finalises $100m loan facility with Trafigura

Develop Global (ASX:DVP) has completed the documentation for a loan facility of approximately A$100m with Trafigura, supporting the restart of its flagship Woodlawn copper-zinc mine in New South Wales. The facility, which includes a five-year offtake agreement, will fund the recommissioning of the mine and accelerate its return to production.

Trafigura Group Pte Ltd, headquartered in Singapore, is a multinational commodities trading company, specialising in the sourcing, storage, transportation and delivery of a wide range of raw materials, including oil, petroleum products, metals and minerals.

History of the mine

The Woodlawn copper-zinc mine, located near Tarago, New South Wales, originally operated from 1978 until its closure in 1998, processing approximately 13.8 million tonnes of ore during that period.

After its initial closure, the mine remained inactive until it was redeveloped by Heron Resources, which invested around A$340 million into the project. Despite this significant investment, the mine was placed into care and maintenance in 2020 due to the COVID-19 pandemic.

In July 2021, Heron Resources entered voluntary administration. Despite exploring various strategic options—including refinancing, joint ventures, and potential asset sales—the company was unable to secure the necessary funding. 

Develop Global subsequently acquired the project in May 2022.

Loan and offtake terms

The loan, denominated as US$65m and converted into Australian dollars at the time of drawdown, has a term of 4.5 years. 

Key features of the loan include:

  • Interest: Calculated at the Bank Bill Swap Rate (BBSW) plus a 2% margin, with interest capitalising for the first 18 months.
  • Repayment: Repayments will be made via a combination of cash payments and set-offs against offtake payments. No repayments are required during the first 18 months.
  • Security: Senior security over key assets of Develop Global’s subsidiaries, including the Woodlawn Mine and related project tenements.

The offtake agreement commits Trafigura to purchase 100% of the copper, zinc, and lead/precious metal concentrates produced from the Woodlawn Mine. The contract includes a delivery target of at least 650,000 dry metric tonnes of product. Payment for 90% of the provisional value will be made within five business days of receipt of shipping documents, with final payments based on assay and pricing adjustments.

Restart at Woodlawn

Develop Global’s Board has reached a Final Investment Decision (FID) to support the restart of the Woodlawn Mine, reaffirming the project’s feasibility and commercial potential.

Refurbishment of the Woodlawn copper-zinc processing plant, undertaken by GR Engineering Services, is 50% complete, with production of the first concentrate expected in the June quarter of 2025.

Mining is scheduled to commence from underground ore sources in the March quarter of 2025, with mining teams preparing to mobilise to the site this month.

Develop Global forecasts that the Woodlawn project will generate a pre-tax cashflow of A$1.1bn over its 10-year life-of-mine plan. For the first three years after ramp-up, the company expects to achieve A$375m in free cashflow, driven by strong copper and zinc prices.

Develop Global Managing Director Bill Beament commented: “Our production re-start plan for Woodlawn is on time and on budget,” he said. “With funding documentation now finalised, the mine recommissioning and the transition to cashflow-positive status is fully funded.”

Shares in the company closed 11.31% higher at $2.46 yesterday.