PERTH (miningweekly.com) – A feasibility study into ASX-listed Metallica Minerals’ Urquhart Point heavy mineral sands project, in Queensland, has placed a A$6.5-million price tag on the project development.

Some 240 000 t/y of ore would be mined from a shallow openpit operation, to produce about 87 000 t/y of concentrate over a five-year mine life. The project currently has a proven and probable reserve of 1.18-million tonnes, at 9.5% heavy minerals.

The feasibility study estimated that the project would have a net present value of some A$4.9-million and an internal rate of return of 69%.

MD Andrew Gillies said that although only a modest mine project compared with 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-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.

Metallica told shareholders on Tuesday that there was also room to enhance the Urquhart Point project, as further exploration opportunities existed to enhance the current mineral resource estimate.

The project was also in close proximity to significant bauxite potential, and there could be an opportunity to use the Urquhart Point infrastructure and existing permits to facilitate bauxite mining in the region, either by Metallica itself or by a third party.

The Urquhart Point project is fully permitted, with Metallica already having received environmental approval from the Queensland government for its mining lease application covering the project.

“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.