Metro Mining (ASX:MMI) to commence construction at Bauxite Hills Mine


by Carolyn Herbert

Metro Mining Limited (ASX:MMI) Managing Director and CEO, Simon Finnis discusses the development of the company’s Bauxite Hills Mine project in Cape York.

Metro Mining Limited (ASX:MMI) is a bauxite focused company. We have a DSO bauxite resource up on Cape York, which is in development phase. And we’re currently looking to develop that this year and be in production next year.

Bauxite Hills has about a 90 million tonne reserve of bauxite, of DSO bauxite. So direct shipment ore, 145 million tonne resource, which obviously the reserve is part of that resource. And it’s a great little project, very simple, as I’ve said direct shipment ore, so no real processing. It delivers a very cheap capital entry and gets us into business very quickly. I think the direct shipment ore part of it is the part that makes it unique. So as I’ve said, no processing required. The other thing that really helps us out is our location, so we’re located in far north Queensland. So it’s close to the Chinese market as you can get really and top of that, the Weipa bauxite is a very well-known product in the Chinese market.

So we’re in the development phase of our project, we released a bankable feasibility study a few months ago. And the project, we’ll start off at two million tonnes a year, we’ll ramp up to six million tonnes a year over four years. It has a 17-year mine life, so it’s a very significant project for that area. We’re in the financing stage, so we’re very close to finalising terms for debt and we look to put that to bed fairly soon, with production early 2018. So it’s a very short construction period.

We have very strong offtake partners. We have a long-term binding contract with a company called Xinfa, one of the biggest integrated aluminium companies in China. They have agreed to purchase seven million tonnes over four years, so a million tonnes in year one and then two million tonnes, for the three years thereafter. That is a contract that’s fixed to an Alumina Index. And on top of that, we have a letter of interest, or a letter of intent sorry, with a company called Lubei Chemicals; it’s a big chemicals company. They also import several million tonnes of bauxite a year and we’re hoping to finalise that contract, in the next month or so.

Our outlook for bauxite is that it remains strong. It is a low value commodity, but we don’t see it getting any lower. There is strong demand for bauxite driven by the Chinese market. They’ve restructured the market so that they actually require imported bauxite, to maintain their alumina aluminium business. So we see that continuing, in fact most of the pundits suggest that the bauxite demand in the next ten years, will double.

We want to deliver the project. So our aim is to deliver the project, getting into operation, run the project profitably, which it will, it runs extremely well. Because not many people in the market understand the bauxite market itself, we see that value will be delivered once we’re in production, delivering on the promises we’ve made and making money. And that really is what we’re all about. We’re going to deliver the project, build it, do what we say we’re going to do and then we’ll see the value in the market.


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