Metro Mining has signed a binding off-take agreement with Xinfa Group, one of the largest integrated aluminium companies in China. Metro forecasts total annual production of up to 4 million tonnes from its Bauxite Hills Project in North Queensland.
The agreement has a four-year term and provides for contract tonnage of 1 million tonnes in the first year of operation and 2 million tonnes for each of the following three years.
Xinfa is currently a 4.3% shareholder in Metro and has significant refining and smelting operations in Shandong, Shanxi, Guangxi and Xinjiang provinces.
Metro’s CEO Simon Finnis said, “This agreement shows the strong relationship and exceptional good faith between Xinfa and Metro Mining.”
He said the offtake deal represented approximately half of Metro’s expected annual production over its four-year term, guaranteeing sales during the most important period of the operation, and underpinning the company’s financing efforts.
“It is a strong endorsement of the quality of our bauxite and shows the confidence Xinfa has in our progress towards production. We look forward to continuing to work closely with Xinfa as we further define the project development plans. The first shipment of bauxite is expected in 2018.”
The Bauxite Hills project has a direct shipping ore resource of 65.3 million tonnes and a mine life in excess of 13 years, and has been classified as a project of regional significance by the Queensland Government. Production from Bauxite Hills is expected to commence during Q2 2018.
The project has a low capital expenditure of A$40 million, an internal rate of return (IRR) of over 150% and is forecast to generated average annual EBITDA of A$133 million over 13 years.
Metro’s focus at Bauxite Hills is now on completion of the definitive feasibility study, achieving permitting approvals and undertaking pre-development work.