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POLYMETALS RESOURCES (POL) - Revitalizing the Endeavour Mine: Polymetals Resources' Executive Chairman David Sproule on Strategic Royalties and Partners to Transform Silver-Zinc Production in New South Wales

• Andrew Musgrave

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What if one strategic decision could drastically alter the financial landscape of a mining project? Join us on ASX Briefs as we welcome David Sproule, the Executive Chairman of Polymetals Resources, to unpack the revitalisation of the high-grade Endeavour silver-zinc mine in Cobar, New South Wales. David shares the captivating history of Polymetals, from its origins in 1992 to its current ambitious plans of bringing the Endeavour mine back online. 

Discover how renegotiating a critical silver streaming royalty has transformed the project's economics and extended its life, especially as metal prices surge. David walks us through the strategic partnerships, particularly with Ocean Partners, and the innovative financing solutions that aim to have Polymetals producing concentrate by late 2025. Whether you're keen on mining, finance, or strategic business moves, this episode offers invaluable insights into bringing a dormant project back to life. Don't miss this compelling conversation on ASX Briefs.

Andrew Musgrave:

Welcome back to ASX Briefs, and today we're thrilled to have David Sproule, the Executive Chairman of Polymetals Resources, joining us. Polymetals Resources is actively engaged in the revitalisation of the high-grade Endeavour silver-zinc mine in Cobar, New South Wales. Today we'll dive into the dynamics and moves behind the Endeavour mine's resurgence and the broader implications for the metals market. So, David, thanks for joining us today and welcome to the podcast.

David Sproule:

Thank you, Andrew.

Andrew Musgrave:

Now, if we just want to start, give us an overview of Polymetals, and in particular, the history of the company.

David Sproule:

Yes, certainly Look. Polymetals are a production group. We started in 1992 in the Cobar Basin in New South Wales. In fact, we were initially started processing a tailing from the Endeavour mine way back then at the Mount Boppy gold mine, which was some hundred kilometres from the site. We treated the tailing from the Endeavour mine which we'd purchased from the then owner Pasminco, recovered an amount of silver and gold which set us up for many private mining ventures since that time. So here we are today as a listed company. We're back in our stamping ground, having acquired the Endeavour mine and looking to bring it back online.

Andrew Musgrave:

Very good, and the Endeavour mine restart study showed significant improvement in the project economics. So can you discuss the key factors that have contributed to

David Sproule:

Yes, certainly, look. We're not doing a great deal differently to what was the operation previously. The operation produces a silver lead concentrate and a discrete zinc concentrate, but what occurred in 2005 was a royalty was entered into by the then owner of the project with a royalty company, whereby they needed to raise an amount of funds quickly and they sold 100% of the silver revenue through a silver streaming royalty Now, prior to purchasing the project, we sought leave from the vendor to renegotiate that royalty with the royalty holder, which we did. We reset the 100% silver streaming royalty to a 4% silver lead zinc royalty, which has significantly changed the economics of the project. Certainly, we've seen improvement in base metal prices since that time, after having acquired the project in March 2023. However, it really is the silver royalty that has changed the financial parameters around this project.

Andrew Musgrave:

And with metal prices strengthening, in particular silver, zinc and lead? How has this impacted the operational strategies and the actual financial projections of the mine?

David Sproule:

Look, the financial projections of the mine have improved substantially. We initially produced a mine restart study, which was announced in October 2023. And that has improved about 40% since that time, due mainly to metal price improvement. And look as those metal prices improve. What occurs in the mining industry is that resources, more resources, can be converted to economic ore reserves, so you end up with a longer project life. So the economics have substantially improved, due mainly to metal price improvement over the past 12 months.

Andrew Musgrave:

And can you elaborate on the progress of project financing discussions and any strategic partnerships you're exploring for the support of the Endeavour Project's advancement?

David Sproule:

Certainly Look. This project requires around about $40 million in total in debt, which includes capital and working capital.

David Sproule:

We have a relationship with a group out of the UK called Ocean Partners. We've been involved with the Ocean Partner guys for near on 20 years. We've looked at many projects with them over those years, but the Endeavour project is the first project that we've actually settled on. They've extended a 10 million US dollar prepayment facility concentrate prepayment facility to us, which equates to approximately 15 million Australian dollars. So we're looking to solve for the balance of that $40 million amount, so around about $25 million Australian dollars. It's not a great deal of money when it comes to mining. However, we are speaking to various people at the moment and looking to solve for at least a $30 million Australian dollar debt facility. Hopefully, we should close on our preferred debt provider sometime late July, early August, which means we should be in a position to draw down and recommence in earnest those refurbishment activities required to bring this project back online and be producing concentrate late in the first half of calendar 2025.

Andrew Musgrave:

Now, just at a macro level, how do you assess the current and future market conditions for the metals you're focusing on?

David Sproule:

That's a difficult one. We haven't got a crystal ball in this business, but there's one thing we know for sure, and that is that base metal prices are cyclical, particularly lead and zinc. Silver is in a significant global deficit at the moment, to the tune of about 250 million ounces per annum, mainly due to electric vehicles and solar panel construction. So we see the silver price being very robust into the future. The foundation metals of lead, zinc and copper as well. We see deficits in those areas in the coming years as well, particularly through electrification of the globe. So, all things being equal, we should not see significant decreases in metal prices. But having said that, for us as a hands-on development operations group with a great deal of history behind us, we tend to operate projects far more efficiently than our public company peers. So we'll apply those smarts to this project to ensure that we retain as great a margin as we possibly can for the metals we're producing.

Andrew Musgrave:

And just to close things off, looking ahead, what are some of the major milestones you're looking to achieve in the next sort of 12 to 14 months?

David Sproule:

Yeah look, the first milestone is our debt facility. We have already commenced, based on the equity raising that we completed last week, we've started cleanup activities of the surface infrastructure on site. We're also completing a geotechnical drilling program over what we refer to as the Upper North Load. Now that is a high-grade silver deposit which will be mined in the early stages of the project quite, high-grade silver. The reason we're doing the geotechnical drilling is because in the mine restart study we assumed an expensive and slow cut and fill method for that area of the upper north load. The geotechnical drilling may support a change in the mining method which may allow us to mine that area more quickly and more comprehensively. That is, generating further ore reserves from that high-grade silver area. So, geotechnical drilling, mine optimisation, completion to be announced hopefully toward the end of August.

David Sproule:

Debt facility, hopefully to be drawn down in August. Debt facility, hopefully to be drawn down in August, which will mean that the refurbishment activities and recruitment of key staff will happen in earnest from that time with a view to generating our first concentrates, probably May, June of next calendar year. So plenty on, plenty to do and also following up on our car park exploration which is to the immediate south of the mine, some 150 metres to the south of the existing mine. We are quietly confident that we may end up with a discovery in car park and if we do, mineralisation would be in the upper levels and with easy access from existing mine working. So that will change the dynamics of the project completely. But it is exploration that comes with risk, and watch this space? I guess it's the best advice.

Andrew Musgrave:

Okay, well, david, thanks for your time today. It's been great to get an update on the progress of the company and we look forward to further updates from Polymetals in the coming months.

David Sproule:

Thank you, Andrew.

Andrew Musgrave:

That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.