Metallica makes NQ silica project a better prospect
Metallica Minerals has thrown out a tantalising bait for investors by proposing that its $3 billion silica project in north Queensland could deliver more profitable, more efficient project for an extra $70 million in capital.
Metallica's Theo Psaros said revenue from the project would top $3 billion (Photo: supplied)
The company released its definitive feasibility study for the project, near Cape Flattery, which included a ramped up production of 4 million tonnes a year, almost double the previous forecasts.
That delivers significant benefits including a quicker payback for investors, according to managing director Theo Psaros.
“In essence, it’s a 25 year project or a 15 to 16 year project. The market will tell us if they want 1.5 million tonnes a year or 3 million and we can make a call,” he said.
The DFS also delivered an average cash margin of $53 and an EBITDA of $134 million. Initial construction capex would be $236 million compared with the previous forecast of $165 million. In return there would be 20 per cent increase in the life-of-mine EBITDA and pre-tax net present value would increase from $437 million to $702 million.
The life of mine revenue increased 5 per cent from $2.9 billion to $3.06 billion,
The project, however, remains in limbo while it waits for the Government’s terms of reference for the environmental impact statement.
“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,” Psaros said.
“Our planned timing for production and the potential for increased sales tonnes positions the CFS Project to meet the growth in demand for HPSS and the increasing manufacturing of solar panels in the northern Asian region.”
“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.
“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.”
Metallica’s timeline for a financial investment decision is the second quarter of 2025, but that is dependent on government approvals.
