Special report: Australia’s next bauxite producer Metallica Minerals has taken an important step on its road to success.

The company announced today it has signed an access agreement that will allow the  building of a haul road to link its Urquhart Bauxite project and the barge loading facilities at the nearby Hey Point in Queensland.

The access agreement was the final barrier standing between Metallica (ASX: MLM) and its efforts to secure a Mining Lease for the haul road.

The company now meets all of the requirements for the granting of the lease and is expecting to commence production in the first half of 2019.

The Queensland government is committed to seeing production from Urquhart as soon as possible.

Bauxite booming

The news comes amid growing demand for bauxite.

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.

Emerging miners in more stable countries such as Australia stand to benefit.

Metallica's project locations
Metallica’s project locations

Metallica’s Urquhart Bauxite deposit on the Cape York Peninsula in far north Queensland is a prime candidate.

No one trick pony

Metallica, however, is not putting all of its eggs into one basket.

It recently announced that it intends to merge with Canadian-listed Melior Resources. Melior have commenced commission its 100% owned the Goondicum ilmenite mine in Queensland.

The merger will make Metallica a diversified Queensland mining company with near-term production and a strong pipeline of future growth opportunities.

Existing infrastructure at the Goondicum ilmenite mine
Metallica’s existing infrastructure at the Goondicum ilmenite mine

Over $120 million has already been invested in developing the Goondicum project by previous owners.

It is expected to be cash-flow positive in the second quarter of next year, generating $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.

 

Metallica Minerals is a Stockhead advertiser.

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