Metro Mining readies export logistics at growing bauxite project

Metro Mining has further de-risked its developing export business profile by entering into a deal for the provision of transhipment services relating to the Bauxite Hills project in Queensland.

The agreement with Bauxite Transhipment Services (BTS) will allow Metro to minimise capital expenditure as BTS will provide all tugs and barges required for the operation. This move is expected to deliver a low-cost and low-risk transhipment solution that does not require any dredging or bed levelling of the Skardon River.

As a joint venture between Transhipment Services Australia and indigenous ship loading company Dadaru, BTS will represent an opportunity for Metro to maximise the employment of local people. The terms of the agreement provide the flexibility to expand the transhipping operation as production increases. Although details of the contract are commercial in confidence, the rates are believed to be extremely competitive.

Bauxite Hills is located about 95 kilometres north of Weipa on Queensland's Cape York, where Metro controls about 1,300 square kilometres of exploration tenements.

Operating outlook

Progress in establishing Bauxite Hills' transhipment procedure builds on the recent outlining of a significantly stronger operating scenario at the site, with double the production output and a 148% increase in net present value (NPV).

The project is now being contemplated as producing 4 million tonnes per annum of bauxite by employing a 24-hour operational regime. This is expected to deliver substantial economies of scale and underpins an increase in NPV from A$235 million in a previous Definitive Feasibility Study (DFS) to A$582 million

IRR improved about 5% to 156%, with average annual EBITDA estimated at A$134 million and profit after tax coming in at $92 million. By comparison, after-tax net profit under the 2 million tonnes per annum scenario contemplated after-tax net profit at $37.3 million a year.

These improved metrics are expected to be realised for only a modest increase in capital costs, with initial capex now tipped at $40.1 million versus a prior estimate of $33.9 million. This is because increasing bauxite production to 4 million tonnes per annum will only require minor changes to the operational and equipment requirements from the smaller DFS scenario.