A study just released has backed the viability of establishing a new A$6.5 million heavy mineral sands mine 3 km southwest of Weipa on the western side of Queensland’s Cape York Peninsula. The feasibility study – conducted by IMC Mining for the proponent of the Urquhart Point mine project, Brisbane-based Metallica Minerals Ltd (MLM) also found that high grade zones mined early in the mine schedule would allow a project payback within just 12 months.
Subject to the outcome of current project financing and offtake negotiations, Metallica says the Urquhart Point mine can be up and running within 12 months of a decision to mine.
Release of the study’s findings also coincided with the release by Metallica today of the maiden independent ore reserve for the project.
Also undertaken by IMC, this milestone generated Proved and Probable Ore Reserves of 1.18 Mt at 9.5% Heavy Minerals (HM). All of the reserve is contained at surface over average thicknesses of 1.5-2 m. The HM mineral assemblage is estimated to be 11.7% zircon, 13.6% rutile and 13.1% ilmenite.
Metallica proposes a simple shallow (<3 m) dry sand mining operation of around 240,000 t/y of ore using conventional wet gravity separation to produce a total of 87,000 t of mixed heavy mineral concentrate over the five year mine life.
Managing Director, Andrew Gillies, said that although only a modest mine project compared to the company’s more substantial and promising mineral sands tenements further north on the west coast, Urquhart Point nonetheless had demonstrated very robust financial metrics, despite commodity market challenges.
“Urquhart Point now clearly provides a sound basis on which to proceed with financing and development as it should provide reasonable investment returns,” Gillies said.
“The total operating costs of A$12.52/t, inclusive of corporate overheads, equate to between A$2.5 million and A$3.0 million per year, with the study’s modelling showing the concentrate valued over life-of-mine at between $250/t and $330/t free on board, subject to the mineral composition and spot price at the time,” he said.
“Overall, the feasibility study delivered an estimated net cashflow of over A$10 million. As Metallica has around $15 million in carried forward tax losses, the proposed mine’s pre and post tax project returns are effectively the same. We have already been in the market seeking quotes for the processing plant and related equipment alternatives and our negotiations for partnerships, funding and offtake agreements over the project have reached an advanced stage,” Gillies said.
“The company can be on the ground with initial pre-construction site works within two months of finalising funding and we anticipate first production runs approximately a year later,” he said.
The capital cost estimate of A$6.51 million includes the mine’s plant design, construction, commissioning and the training of operational personnel. Some long lead items and off-site construction items are expected to be ordered this calendar year, subject to financing.
Urquhart Point is fully approved, with a granted Mining Lease and Environmental Authority, covering around 366 ha of the broader EPM15268 tenement footprint of 7,675 ha.
Its low-lying sand mass comprises a coastal strandline and sand spit-style HMS deposit with very low slimes (clay) and a HM assemblage composed of zircon, rutile, ilmenite and about 60% iron oxides. The highest grade HM zones are located in the northern and eastern end of the deposit area. An additional Environmental Authority (EA) Mining lease application (20737) covers a small but high grade portion of the deposit. Gillies says no impediments are expected for the conversion of this lease application into a mining lease.
“Our objective with the mine production schedule is to mine Urquhart Point’s pit areas in decreasing value order whilst also maintaining a reasonably contiguous mining sequence and honouring wet season mining constraints,” hes said. “However, we see substantial wider opportunity for Urquhart Point that have not been incorporated into the feasibility study results announced today.”
“These include the fact that two strands in the southern area, Heron and Egret, have been almost entirely excluded from the mine production schedule and the Ore Reserve update, due to the sparsity of mineral assemblage data. Our work to date suggests including this material could add approximately 0.6 Mt or about 2.5 years of ore feed to the plant.
“Results from current and ongoing exploration on another two targets high in zircon and drilled in February this year, were also not ready to be included in the latest resource model – in addition to the potential incusion of outcomes from our suite of other HMS tenements sweeping north of Urquhart Point along the coastline.”
Gillies did also not rule out the potential for a dual bauxite mining operation as Urquhart Point is close to significant bauxite prospective areas, which if mined, could utilise the same barge-ship export infrastructure. In addition to Urquhart Point, Metallica has 2,000 km² of coastal exploration tenure on western Cape York prospective for both mineral sands and bauxite.