Galena Mining Ltd (ASX:G1A) has surged past the 30% completion milestone as it works to bring the Abra Base Metals Mine online.
The explorer and future base metals producer had completed 32% of construction activities on the Gascoyne Region asset in WA by November 30.
Galena’s remaining project development expenditure stands at $156 million as of November 30, 2021 — comprising $122 million in remaining pre-development capital expenditure and $34 million in owners’ costs and contingencies — and is funded by roughly $174 million cash and undrawn facilities.
Nearly all major contracts associated with the project have been awarded, with 95% of the appointments completed to date.
In the meantime, key equipment orders and supply from overseas vendors have been confirmed, with the ball mill, concentrate filter and flotation cells expected to arrive on-site in May, July and August 2022, respectively.
These orders and follow-up form part of Galena’s contract with GR Engineering Services Limited, which has been eager to lock in this equipment for the Abra Project early.
Set up for strong construction year
Speaking on the headway to date, Galena managing director Tony James said: “Construction progress at Abra has reached a milestone at 32% complete.
“Civil works associated with key infrastructure including the new airstrip and the underground decline development have made excellent progress.
“We expect the airstrip and associated infrastructure to be completed in December and the underground development has reached 291 metres from the portal against a plan of 246 metres.
“The decline has progressed through the transitional ground into fresh rock.
“Timing of key equipment supply from overseas has also been confirmed.
“The Abra team and all the contractors who have enabled us to reach this milestone should all be very proud of what we have achieved over the last three months.
“We are set up really well to have a strong construction year in 2022 and we look forward to continuing the excellent progress we are making”.
Pre-development expenditure
The original Abra project feasibility study was completed in July 2019, forecasting pre-production capital expenditure of roughly $170 million.
This study was based on the theoretical assumption at the time for the commencement of mining in November 2019, with a mine development and production plan based on the 2018 mineral resource estimate.
Since work commenced on the Abra project in 2018, several additional drilling programs and mineral resource estimates have been completed, leading to revised project development schedules, mining schedules and operating plans.
Several project delays occurred during the financing stages, which was also impacted on several fronts by the COVID-19 pandemic.
In September 2020 the overall project expenditure requirement was updated to $215 million, incorporating additional owners’ costs and contingencies, increased owners’ costs also occurred during the delay in the final investment decision for the project.
Following review, the company now revises the total project expenditure requirement to $231 million, based on successfully making FID in June 2021 and considering subsequent updates to major contracts.
These include the engineering procurement and construction contract for Abra’s plant and associated infrastructure with GRES and the underground mining services contract with Byrnecut Australia Pty Ltd.
As of November 30, 2021, the remaining project development expenditure stands at $156 million, comprising $122 million in remaining pre-development capital expenditure and $34 million for owners costs and additional contingencies.
Funding available on November 30 totalled around $174 million, comprising $63 million in cash and $111 million in undrawn debt facilities — the AUD equivalent of the US$80 million undrawn under Galena’s Taurus debt facilities.
