ASX Stock on Investors Radar

Team Veye | 31-Oct-2024

One ASX stock, which continues to exhibit high growth prospects in the long term, is Polymetals Resources Limited. With potential to build +20- year operation in the heart of one of Australia’s most prolific mining regions, it is backed by strong financial metrics for initial 10-year mine life supported by favourable offtake terms.

Polymetals Resources Limited (ASX: POL)

Polymetals Resources Limited is making significant strides in developing the Endeavor silver-zinc-lead mine located in New South Wales' Cobar Basin, aiming for first production in the first half of 2025. The completion of the acquisition of the Endeavor mine has been approved, along with a revised 10-year mine plan showcasing a pretax net present value (NPV) of $414 million and an impressive internal rate of return (IRR) of 345%. Financial projections indicate free cash flow of $609 million and an EBITDA of $89 million annually for the first five years, underscoring the project's robust potential for generating shareholder returns.

In terms of financing, Polymetals has secured placements totalling approximately $9.3 million and finalized a $20 million pre-payment/loan facility with Ocean Partners, a global commodity trader. This funding is crucial for ongoing work at the Endeavor mine and supports the planned refurbishment and operational efforts. The partnership with Ocean Partners builds on a 20-year relationship, allowing Polymetals to pursue growth while benefiting from favorable offtake terms. With these financial arrangements in place, the company is focused on ramping up refurbishment work and recruiting key management personnel to ensure a smooth transition to production.

The optimized Endeavor Mine Plan (EMP) reveals even greater financial potential than previous assessments. The updated plan forecasts total revenue of $1.9 billion from the sale of approximately 260,000 tons of zinc, 90,000 tons of lead, and 10.6 million ounces of silver over a decade. With a capital cost of $28 million and a payback period of just 14 months, the project is positioned to deliver outstanding financial returns while also contributing positively to the local Cobar region's economy.

Additionally, Polymetals has initiated near-mine drilling programs, particularly at the Carpark Prospect, which indicates promising geological features. Although no significant ore-grade intercepts were recorded in the latest drilling phase, the results suggest potential for discovering substantial massive sulfide deposits. As the company moves forward, it will continue its focus on refurbishment and exploration efforts, positioning itself for a successful mine restart and future growth opportunities.

(Source: Company’s Report)

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