Metro Mining (ASX:MMI) Dec Quarter 2018 update

Interviews

by Rachael Jones

Metro Mining (ASX:MMI) Managing Director & CEO, Simon Finnis talks about production from Bauxite Hills Mine, 2019 production upgrade, exploration and prices.

Rachael Jones: Hello I’m Rachael Jones for the Finance News Network. Joining me today from Metro Mining Limited (ASX:MMI) is Managing Director and CEO, Simon Finnis. Simon, welcome back to FNN.

Simon Finnis: Thanks for having me.

Rachael Jones: Bauxite Hills has been in operation for a year now. How is it performing?

Simon Finnis: We’ve had a great year. We started on time, although we were disrupted a little bit by the weather early on and the year went really, really quite well. We reached our guidance, so just over two million tonnes for calendar year 2018. We turn off for the wet season in far north Queensland, so we turned the mine off about the 28th of December. Again, a little bit disrupted at the end of the year by weather, but all in all a very successful year.

Rachael Jones: Now to your most recent quarter. What were the highlights, starting with safety and community?

Simon Finnis: Of course that’s our key priority, safety and making sure our people are well at all times and we had a very good quarter. From the point of view of the community, we continue to have a very good record. We’ve got nearly 40 per cent indigenous employment onsite, most of those traditional owners from the local area and that’s our goal. And really it makes sense for us that they’re our key partner in this business. And employment opportunities are one of the ways to provide economic strength, for those communities. So we’re very happy with that result.

Rachael Jones: What can you tell me about the production and the operations for the quarter?

Simon Finnis: Our production went extremely well for the December quarter. Obviously coming towards the end of the year, we faced the weather prospects of the wet season and we had a slight disruption in December. But we finished the production run on the 28th of December, very late in the year obviously. Our team performed extremely well and we got our production guidance of just over two million tonnes, for the year. So we were very, very pleased with that result, we thought the guys performed extremely well, very safely and did a great job.

Rachael Jones: What can you tell me about the financials?

Simon Finnis: Our financials were great, really much in line with our BFS, so operating costs onsite of around $24. It’s a ramp up year of course, so two million tonnes and this business is really set up to do more tonnes than that. So we expect that to come down quite strongly in 2019. And of course, we’re refreshing the BFS for the expansion of six million tonnes and that of course, will drive those operational efficiency even further.

Rachael Jones: Still on pricing now. What impact, if any, has the slowdown in China had on bauxite?

Simon Finnis: We’re not really seeing any real impact, we’re seeing really really strong demand for bauxite and that’s driven by a lot of different things. But in country, we’re seeing a big move from the inland refiners to import bauxite, and that’s a change to what has historically gone on. So we’re seeing a lot of significant demand out of those inland refiners, so Henan Shanxi. Whereas the traditional demands have been from Shandong Province, which is on the coast.

So these guys are changing the market and that’s really driven by the environmental restrictions in China. Depletion of ore, quality of depletion of Chinese bauxite and we’re seeing very very strong demand for that. So based on that, we’re seeing pricing pretty steady, although there has been an upward trend probably in the last six months. Some of that’s driven by ocean freight, ocean freight around the world has sort of gone up a little bit, in the last six months. So that drives prices up as well, but the slowdown really isn’t impacting us so far. We’re still seeing really, really strong demand for our product.

Rachael Jones: Now to the stage two expansion and exploration. Can you give us an update on that?

Simon Finnis: As we’ve announced, we’re doing an expansion, a small expansion 3.5 million tonnes this year. That’s on track, everything that needs to be installed will be installed by April and we’re on track to start that program. So we’re very confident of 3.5 million this year. We’re doing the DFS, or refreshing our DFS in the first quarter of this year, regarding the expansion of six million tonnes. So once we’ve done that, we’ll go to the Board for approval.

We don’t expect terribly much to change from the original study, but we need to do that to make sure it’s up to date and the Board has the correct information, to make a decision. But really this business will operate much better at six million tonnes. You’ll see reduced operating costs from, not just economies of scale, but also many other efficiencies around the place. So we’re very keen to push the button on that as soon as it’s approved.

With regards to exploration, we really concentrated on near mine exploration this year. And that’s really about resource reserve and it’s about drilling from a grade control point of view. The current years, perhaps we know what we have to mine, but really we focus around Bauxite Hills this year.

Rachael Jones: Last question now Simon. What makes Metro Mining stand out?

Simon Finnis: I think the main thing is we’re a bauxite supplier into the Chinese market, and there’s not many people doing that. We’re an independent company, we’re not refiners, we just sell bauxite into the Chinese market. And we’re doing that very, very successfully and we’re growing. And the other thing that’s really important is that we achieve what we say we’re going to do. We said we’d do two million tonnes last year, we’ve done that. If you compare that to other players, some of them haven’t achieved their goals.

This year now, we’re going to do 3.5 million tonnes. And I think people can believe that with us, when we say we’re going to do something, we will do it.

Rachael Jones: Simon Finnis, thanks for the update.

Simon Finnis: Thanks again.


Ends