PERTH (miningweekly.com) – While increasing the expected development costs of the Bauxite Hills mine, in Queensland, a definitive feasibility study (DFS) into the project also extended the mine life and boosted up the project’s economics.

A February feasibility study (FS) estimated the mine would deliver some two-million tonnes a year of direct shipping ore (DSO) product over a mine life of 21 years.

The FS estimated that the DSO operation was expected to require a capital investment of only A$27.4-million and would deliver an internal rate of return of 88% and a net present value after tax of A$197-million.

However, owner Metro Mining reported on Thursday that the DFS had raised the estimated capital cost to some A$33.9-million to develop the 1.95-million-tonne-a-year DSO project, which was expected to have a project life of at least 25 years.

The DFS estimated that the project would have a net present value of A$235-million and an internal rate of return of 148%.

Metro told shareholders the slightly lower output was considered part of the company’s strategy to develop Bauxite Hills under a streamlined environmental approval process by adopting a sub-two-million-tonne-a-year production profile until the Queensland Department of Environment and Heritage Protection (DEHP) advised the company that a full environmental process would be required for Bauxite Hills.

At the time of the DEHP’s formal advice in September, the key components of the DFS were largely completed and, as such, Metro took the decision to complete the DFS to confirm Bauxite Hills as a standout investment proposition and to assist current studies evaluating an optimised production profile of between four-million and five-million tonnes a year.

“The completion of the DFS within nine months of completing the prefeasibility study is an enormous achievement for the company and a testament to the project team and the quality of the asset,” said Metro CEO Simon Finnis.

“The DFS confirms Bauxite Hills is an attractive project that should deliver strong financial returns.”

Finnis noted that Metro would now work toward obtaining all relevant regulatory approvals to move the project toward a final investment decision, while also undertaking feasibility studies into a larger mining operation.

Metro was hoping to start mining at Bauxite Hills by September 2017.