Cape Alumina lines up second development project

The Bauxite Hills mine, in Queensland, could deliver some five-million tons a year for ASX-listed Cape Alumina, a prefeasibility study (PFS) has found.

The company reported on Tuesday that the project could likely have a life-of-mine of some ten years, producing from an inferred resource of some 60.2-million tons of bauxite.

The PFS proposed that the Bauxite Hills mine would start production at 2.5-million tons a year of dry beneficiated bauxite, building to an output of five-million tons a year over a two-year period.

Capital costs for the project have been estimated at between A$234-million and A$250-million, depending on the time and development option chosen for the Bauxite Hills project, with operating costs estimated at between A$24/t and A$27/t.

However, Cape Alumina noted that there were opportunities to significantly reduce the capital and operating costs for the project, by employing contractors to operate the mine fleet and capitalising on synergies with the Pisolite Hills project.

Despite the positive project economics, Cape Alumina said on Tuesday that the company’s first priority would be to develop the larger Pisolite Hills mine and port project, which was recently declared as a “significant project” by the Queensland government.

The development of the Pisolite Hills project was put on hold in October 2010 after the previous state government imposed a 500 m buffer zone around waterways in the vicinity of the project area as part of the declaration of the Wenlock River basin as a wild river area.

This reduced the bauxite resource available to the project.

With the award of “significant project” status, Cape Alumina restarted work on the technical and environmental studies for the project, and would also reopen negotiations with traditional landowners and local Aboriginal people to finalise an indigenous land-use agreement.

The project had a mineral resource estimate of some 134.6-million tons of bauxite, with the potential to yield seven-million tons a year of product, over a 15-year life-of-mine.

Cape Alumina said on Tuesday that owing to the extensive work already completed at Pisolite Hills, the project could be fast-tracked, and would reach production sooner than Bauxite Hills.

The company noted that the Bauxite Hills project would be developed after Pisolite Hills, and would incorporate a number of synergies through joint operations, where feasible.