Australian Bauxite is on a roll with development of Campbell Town mining centre

Australian Bauxite (ABX) has been swift in developing its first bauxite mining centre near Campbell Town in Tasmania. Australian Bauxite mobilised the construction contractor to the site in December 2014 and was producing its first bauxite within three months.

The new Campbell Town mining centre comprises three bauxite deposits, in Bald Hill, Fingal Rail and Nile. First mining is under way at the Bald Hill deposit, where Australian Bauxite is extracting direct shipping ore (DSO) quality bauxite. The Campbell Town mining centre was developed within a modest capital budget of $5 million and was completed on schedule.

The Bald Hill bauxite deposit hosts a resource of 1.6 million tonnes, with 1.18 million in the indicated category and 0.42 inferred. The Campbell Town mining centre resource totals 3.51 million tonnes categorised into indicated of 1.67 million tonnes and inferred, 1.84 million tonnes. The resource will support an initial mine life of 10 years.

Australian Bauxite's mining plan will see the Bald Hill deposit mined first, followed by the Fingal Rail and Nile deposits. All three deposits appear to host extensions to the known deposit. In the first month of operations at the Campbell Town mining centre, bauxite mining and screening exceeded the 500,000 tonnes annual capacity, hitting a run rate of 900,000 tonnes.

During ramp-up, rail shipments will be a modest 1100 tonnes of DSO bauxite per day, increasing to about 2000 tonnes a day later in the year. Bauxite shipments to customers are expected to begin before the end of the June quarter 2015.

The quality of the DSO bauxite will see mining and screening operating costs come in below the modelled number of $8 a tonne free on board. Australian Bauxite was able to remove an ore crusher from the processing plant, which we estimate will save around $1.50 a tonne in operating costs. Not requiring a crusher in the process flow will have saved, we estimate, up to $1 million in development costs as well.

Australian Bauxite is debt free and had a discretionary cash reserve of $3.5 million.