Metallica eyes favourable returns in scaled-up silica plan

Metallica Minerals is looking at a scaled-up version of its Cape Flattery silica sand project after a study backing a lift in saleable product from about 1.45Mtpa to 3Mtpa. The updated definitive feasibility study released today for the far north Queensland project significantly improves forecast project economics. And the company says it is confident that the expanding market for high-purity silica sand can absorb the additional production at an acceptable price. The initial capital cost to develop the 3Mtpa operation is estimated to be $236.7 million, with a payback period of 3.2 years. The updated DFS indicates life-of-project cash revenue of $3.065 billion, a pre-tax net present value of $702.4 million, and an internal rate of return of 37.2 per cent. The average cash margin from the project increases to $53.06 per tonne under the optimised proposal. Metallica said the economies of scale to be delivered by the stepped-up project would be achieved with only a modest increase in capital costs. An additional dry mining unit, process plant, stockpile and stacker are included in the estimate. “The updated DFS strengthens Cape Flattery silica sand’s status as a low-cost, high purity silica sand project that can achieve attractive profit margins," Metallica Minerals executive chairman Theo Psaros said. Metallica Minerals executive chairman Theo Psaros. "Our initial project scope is to start with the July 2023 DFS production tonnage of 1.8mtpa and, subject to end user demand and the capital markets, we can efficiently construct the mine infrastructure to double production. "We have assumed the ramp-up of production from the second processing plant will begin in year three. "We will continue to monitor the expected growth in demand for HPSS as we work our way through the approvals processes at Commonwealth and State level. "The improvement in the project economics from the updated DFS illustrates the benefit of economies of scale, a shorter mine life with no change to the total project footprint and delivery of the same level of economic contribution to the local communities in a shorter timeframe.” The updated study envisages a mine life of 15 years compared to the 25-year span used in the previous DFS. It is based on an ore reserve of 47Mt at 99.11 per cent silicon dioxide, which represents 95 per cent of the mineral resource of 49.5Mt at 99.10 per cent. It does not include the inferred resource for the project's Western Area of EPM 25734, which may represent an additional opportunity to further improve the economics. Metallica said a preliminary funding plan had been prepared for the July DFS saleable production of 1.45mtpa and this plan was still current for the updated DFS given the improved project economics. The company's immediate priority is to start the Environmental Impact Study (EIS). Metallica said it had sought to complete formal negotiations with the Traditional Landowners, namely Hopevale Congress Aboriginal Corporation (Hopevale Congress), as agent for the Nguurruumungu Clan, and Walmbaar Aboriginal Corporation, as agent for the Dingaal Clan. The challenges of seeking a unified response to the outstanding matters have seen it request the assistance of the National Native Title Tribunal to mediate among the parties to assist in obtaining their agreement for the grant of mining lease 100284. Below: Key figures from the updated DFS for the Cape Flattery silica sand project.

Metallica eyes favourable returns in scaled-up silica plan

Industry Queensland

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