ASX-listed Coolabah Metals has announced a binding conditional term sheet between Broken Hill Mines and commodities trader Hartree Metals for a $25-million (A$40-million) senior secured offtake financing facility. 

The deal is designed to underpin the continued growth of Broken Hill’s Rasp and Pinnacles silver/lead/zinc operations.

The facility will provide a four-year financing term with an interest rate set at the secured overnight financing rate plus 3.5%. One of the more attractive features of the deal is the 12-month grace period on principal repayments, which will then transition to a straight-line repayment structure. The structure aims to provide financial flexibility, allowing Broken Hill Mines to focus on growth activities in its mining operations.

The agreement also includes a commitment from Hartree to purchase 200 000 t of lead concentrate from the Rasp and Pinnacles mines. The terms of this purchase will be in line with competitive market rates and industry-standard payability for lead and byproduct metals, including silver. This offtake agreement provides Broken Hill Mines with an additional revenue stream.

Completion of the deal is still contingent on the satisfaction of several conditions precedent, including due diligence, regulatory approvals, and the finalisation of long-form documentation. If all goes according to plan, these steps are expected to be completed by July.

The announcement marks the replacement of an earlier financing arrangement with Trafigura Group that was valued at $10-million.

Coolabah said the new arrangement with Hartree not only offers a larger financing package but also positions Broken Hill Mines with a strong partner in the global metals markets.

Hartree, known for its expertise in sourcing, trading, and delivering metals, brings decades of experience and deep knowledge of the physical and financial commodities markets. Since its founding in 1997, Hartree has built a strong reputation, which will likely benefit Broken Hill Mines as it seeks to enhance its position in the mining sector.

In addition to the long-term offtake agreement, Hartree has also executed a spot lead concentrate offtake agreement with Broken Hill Mines, covering lead production from the Rasp operations until June 30, 2025. This agreement is designed to offer immediate flexibility and support for Borken Hill Mine's operations as they continue to ramp up production.