Name of the Project
Urquhart bauxite project.

Location
The project is located on Queensland’s Cape York, in Australia.

Project Owner/s
Cape York HMS & Bauxite Project Joint Venture (JV), which comprises Oresome Australia, a wholly owned subsidiary of Metallica Minerals, and Ozore Resources.

Project Description
An independent prefeasibility study (PFS) has supported the development of the project.

The project consists of two bauxite plateaus – Area A and Area B – that are wholly contained within mining licence 100044.

The project has a targeted production rate of 1.5-million tonnes a year, producing

6 532 t/y of saleable product over a 5.5-year mine life.

The proposed mining operations are very simple, with the deposit being mined in 160-m-wide strips, which will start in the lower strip ratio and higher-grade material Area A. Strips will be mined contiguously to allow for short hauls to the nearby mined-out strip for dumping overburden (predominantly sand cover) back in-pit, resulting in the continuous rehabilitating of mined-out areas. The target bauxite horizon ranges in thickness from 0.5 m to 4 m and averages 1.5 m. Overburden thickness varies and is thinnest in the eastern part of Area A, which is scheduled for initial production. In scenarios 1 and 2, there will be no screening of bauxite material. Scenario 3 allows for stockpiling of transitional material.

Potential Job Creation
The JV will have minimal staff on site to manage contractors and the shipping of direct shipping bauxite to clients.

Net Present Value/Internal Rate of Return
The updated PFS estimates a pretax net present value, at a 10% discount rate, of A$47.3-million, on sales of 6.5-million tonnes of Urquhart’s proven and probable reserves. The project has a post-tax internal rate of return of 364%. Payback is estimated at 2.2 years.

Capital Expenditure
The updated PFS has confirmed startup capital of A$2.2-million.

Planned Start /End Date
The highest-margin bauxite in Area A is slated for first production in 2019.

Latest Developments
Metallica Minerals has decided to divest of its 50% interest in the Urquhart bauxite project to private buyer Clear Logistics Australia.

Under the terms of the agreement, Metallica will receive an initial A$50 000 in cash, with a further A$50 000 payable within 30 days of signing a share sale agreement over Metallica subsidiary Oresome Australia.

A milestone payment of A$100 000 will become due on the shipment of the first one-million tonnes of ore from Urquhart, and an additional A$100 000 on the shipment of the second one-million tonnes of bauxite from the tenement.

Royalties on bauxite and sands produced at the project will also be payable.

“We sought interest from a number of parties, the offer from Clear Logistics was superior to other potential offers,” Metallica executive chairperson Theo Psaros has said.

“The decision to sell Oresome was not taken lightly. In addition to the tough bauxite market conditions, we [strongly believe] that to continue using shareholder funds to maintain a 50% share during such uncertain bauxite market conditions is not in the company’s interest.

“We are encouraged by the progress of our Cape Flattery silica sands project, and subject to finalisation of the traditional land owner agreement, we expect to be drilling in the near future.”

Key Contracts and Suppliers
IMC Mining (updated PFS) and LCR Group (mining and haulage operations at Urquhart).

Contact Details for Project Information
Metallica Minerals, tel +61 7 3249 3000, fax +61 7 3249 3001 or email admin@metallicaminerals.com.au.