Go Lead (Pb), leave 'em for dead.

Lead is rarely thought of as an investment option when one brings up the idea of investing in commodities. It is often outshone by the likes of precious metals (Au, Ag, Pt, Pd), organic derivatives (coal, oil , LNG), rare earths, or by copper and iron ore. While silver is generally a secondary product from VMS systems, it is important that BML is recognized for what it is, a primary lead mine with Ag and potentially Zn byproducts.

The DFS released by the company highlights this, with LOM metrics showing lead generating 258% more revenue than silver.

Additionally, the sensitivity analysis presented by BML shows that company will be more sensitive to movements in Pb than it will be to movements in Ag, for example by a margin of ~33% @ +20% DFS price assumptions.



The DFS also holds the below price assumptions:



Currently lead is priced at $2030 US$/t, or -10% from 5 year averaged DFS price assumptions, representing a wipe of -A$120m from Pb apportioned NPV.

Silver is currently priced at $24.75 US$/Oz, representing a -6% decrease from 5 year averaged DFS price assumptions, representing a wipe of -A$30m from Ag apportioned NPV.

Fortunately for BML, the exchange rate is very much in its favour by a 7% margin. Being the most exposed on the sensitivity analysis, this represents a NPV benefit of ~A$70m. While this is great, it looks like it will not cover the NPV deficit from the currently lower than assumed DFS price assumptions of Pb and Ag (I personally think these long term price assumptions are over-optimistic as well).

And as is obvious, the most efficient way for BML to benefit from any price movements is either from a strengthening USD and/or weakening AUD, a meaningful gain in the Pb price, or a combination of both.

BML have a great summary of Pb on their main page: https://boabmetals.com/lead/
Below are some highlights:

1) The primary smelter (mined) production of lead has remained quite steady, while secondary smelter (recycled) production of lead has been
slowly increasing. Interestingly, 66.5% of lead production is due to secondary (recycled) lead.



While a continuous increase of secondary lead production may provide headwinds, global demand is also expected to steadily increase. Additionally, in ground reserves of Pb (without future discoveries or resource-reserve conversions) are also expected to get tight by 2040 (non-effect but an interesting fact, as Sorby Hills will probably be mined out by then).



And finally, a long term snapshot of the Pb price, because I haven't seen this published anywhere on BML forums for yonks, if it all (disappointing for a potential Pb producer). Price was volatile in the lead-up and immediately following the GFC. It has been 1600-2500 range-bound since 2010, however I think using a $2250 "conservative" DFS price assumption is a bit overkill, similarly to Ag's $26.4 5 year average assumption.



Where will the Pb price go from here? Who knows. Generally, predicting is a fools game. But for BML to attract favourable lending and pull itself out of the current SP hole, lead needs to leave 'em for dead. And the macro-economic environment needs to improve.