Metro Mining lowers cost on Bauxite Hill mine

A new prefeasibility study (PFS) on the Bauxite Hills project, in Queensland, has revealed that the project could deliver some two-million tonnes of direct shipping ore (DSO) product, over a 21-year mine life.

Owner Metro Mining told shareholders on Tuesday that the DSO option allowed for the development of a mine at a lower capital cost and lower operating costs, compared with a mine producing a beneficiated bauxite product.

A PFS by previous owner Cape Alumina found that the Bauxite Hills mine could deliver five-million tonnes a year, over a ten-year life. The study proposed that the Bauxite Hills mine would start production at 2.5-million tonnes a year of dry beneficiated bauxite, building to full capacity over a two-year period.

Capital costs 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, Metro Mining, previously known as Metro Coal, said on Tuesday that the DSO development would reduce infrastructure costs as the need for a large beneficiation plant would be eliminated, while also significantly reducing water, energy and tailings dam requirements.

The DSO operation was expected to require a capital investment of only A$27.4-million, and would deliver an internal rate of return of 88% and a net present value after tax of A$197-million.

Operating costs for the DSO operation have also been estimated at around A$26.70/t free-on-board.

Metro Mining’s mine plan was based on a total resource of 61.5-million tonnes, and included a Joint Ore Reserves Committee-compliant probable reserve of 12.1-million tonnes DSO product.

The ASX-listed company noted that subject to approvals, project construction and mine development could start by the second quarter of 2016, with first production earmarked for the fourth quarter of that year.