Metro Mining announecd feasibility study results of its Bauxite Hills project in Queensland. Based on the analysis, which indicated at a healthy production over a 25+ year life with modest costs and a tight payback period, the company valued the project at A$235 million.
Definitive Feasibility Study (DFS) figures for the project have contemplated a simplified operation producing 2 million tonnes per annum (mtpa) of direct shipping ore (DSO) bauxite earning annual EBITDA of $A54.4 million at a low operating cost of $22.5 per tonne before royalties.
Capital expenses came in at only $33.9 million, allowing for a payback period of 1.1 years and an internal rate of return at 148%.
Assuming all regulatory approvals are granted by late 2016 and project funding is obtained prior to the start of project development, mining could begin as early as September 2017. Scoping studies to optimise the operation toward a production rate of 4-5 mtpa are already underway. This will be supported by Bauxite Hill’s resource of 53.6 mt of DSO bauxite and 48.2 mt of marketable DSO bauxite reserves.
As part of its Environmental Impact Study submissions, Metro will submit terms of reference for a 5 mtpa mining operation at the project.
Bauxite Hills project plans
Development of Bauxite Hills represents Metro’s immediate focus. In addition to the additional expansion studies, this work will include near-term recruitment and regulatory protocols followed by seven months of preliminary construction works, pre-striping and equipment mobilisation.
Changing dyamics of bauxite market
Since the Indonesian bans on exportation of raw material, the major Chinese merchant refineries have been working to develop new global bauxite sources in Fiji, Australia, Guinea, Malaysia and other countries.
Despite concerns over the Chinese economy, the demand for aluminium is expected to remain strong with much of the industry forecasting 5 -8 % growth over the decade ahead.
Analysis of Feasibility Study results
Bauxite Hills’ DSO product is considered to have high silica levels that make it suitable for low-temperature Chinese refineries, a critical end-user market. More than 80% of Chinese merchant refinery capacity is for low temperature and there are nine potential Chinese customers available to Metro.
