Special Report: It’s all falling into place for near term producer Metallica Minerals (ASX:MLM), which could have two cash flow producing assets by mid next year.

Its recently announced intended merger with Canadian-listed Melior Resources, is on schedule to export its first shipment of ilmenite from the Goondicum mine in Queensland in the first quarter of 2019.

Ilmenite is the main source of titanium dioxide – which is a white pigment used in paints, fabrics, plastics, paper, sunscreen, food and cosmetics.

The on-site components of the Goondicum construction project have now been completed on schedule and within budget, Melior told investors.

The project has started mineral commissioning, with successful first production of ilmenite and apatite occurring in the last week.

Melior says the newly installed equipment and overall facility are preforming well — the focus is now moving to recruit additional workers as production ramps up to 24/7 operations.

The first ilmenite shipment remains scheduled for the first quarter next year.

Commissioning and ramp-up of the project will extend through the second quarter of 2019 as production and sales gradually increase to full capacity.

Goondicum is expected to generate $US92 million ($129.5 million) over its nine-year life – with $US51 million of that in the first three years of full operation.

There are also significant exploration opportunities surrounding Goondicum which could nearly double the existing mine life.

This, combined with the recently announced haul road access agreement at its Urquhart bauxite project, means Metallica will be in a position to generate cashflow from two financially robust projects in 2019.

On the road to bauxite production

On November 9 Metallica announced it has signed a haul road access agreement for its Urquhart bauxite project – one of the final barriers standing between Metallica and first production.

This crucial agreement means the company can finalise a s316 mining lease that will allow it to build the haul road linking the project and the barge loading facilities at the nearby Hey Point in Queensland.

The company now expects to commence production in the first half of 2019.

Over the initial 5.5 years, Urquhart is expected to produce 6.5 million tonnes of saleable bauxite.

Bauxite demand is booming

The news comes amid growing demand for bauxite – with emerging miners like Metallica in more stable countries set to benefit.

China has been looking to shore up its supply, as its own supplies fall thanks to a crackdown on illegal and environmentally damaging operations.

The country sources half its bauxite from domestic sources and imports the rest.

According to CM Group, Chinese demand for bauxite will increase by 65-70 million tonnes a year over the next five to seven years, thanks to new alumina refining capacity being built and about 60 per cent of that new demand to be met by imported bauxite.

 

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