Breakaway Research client, Metallica Minerals Limited, has been featured in the June edition of the Australian Resources and Investment magazine, Volume 9, Number 2, 'Metallica Joins Select Few Junior Explorers Building A New Australian Mine'.
To view this article, visit the Australian Resources and Investment website, and follow the prompts at: http://www.australianresourcesandinvestment.com.au/
As Written By Breakaway Research on Metallica Minerals Limited
(Flash Note dated 20th May 2015):
The recently completed initial resource estimation for Metallica’s 60% held (reducing to 50% in a JV with Ozore) Urquhart Point Bauxite Project supports the Company’s plan to develop an initial 1.5-2.0Mtpa low capital and operating cost DSB operation (i.e. no screening or upgrading required). Results to date indicate that the overall potential direct shipping resource of 7.5Mt (using a 45% Al2O3 lower cut-off) contains at least 4.8Mt of readily marketable bauxite.
As shown in our initiation report, this resource comprises two areas – the northern Area A and southern Area B, with Area A generally being of higher quality. The bauxite stratigraphy is also subdivided between a higher quality lower domain defined by <15% total SiO2 and +48% total Al2O3, and a higher silica upper domain, with lower domain resources shown below.
The quality results from Area A as shown above, which has a more continuous lower domain, indicate a marketable product, with low temperature, 150° C analyses returning an average available alumina (“AAl”) grade of 40.6% and 4.9% reactive silica (“RxSi”), from the lower domain resource of 4Mt grading at 53.3% total Al2O3 and 13.0% SiO2. These results indicate the majority of the silica is in quartz, and not clays.
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About Metallica Minerals Limited:
Metallica Minerals Limited (ASX: MLM) is an Australian zircon-rutile, bauxite and nickel-cobalt and scandium resource development and exploration company.
The company has two main project interests. The Cape York Heavy Mineral Sand and Bauxite Project is located on the west coast of Queensland’s Cape York, and will be held 50% by Metallica Minerals’ wholly owned subsidiary, Oresome Australia Pty Ltd, with a 50% interest being earnt by a private Chinese investor, Ozore Pty Ltd.
The SCONI nickel-cobalt and scandium “Tri-Metal” Project is 100% owned by Metallica Minerals. SCONI is located approximately 3 hours north-west of Townsville. The SCONI project is a unique project which requires strategic partners to fully implement a new and exciting critical metals market.
The Board and Management of Metallica Minerals backed by the Company’s major shareholders remain committed to unlocking the value of our projects.
Metallica Minerals was established in 1997 and listed on the Australian Securities Exchange in 2004.(Source: Metallica Minerals Limited website: http://www.metallicaminerals.com.au).
What is Bauxite?
(Source: Breakaway Research)
Bauxite is the principle aluminium ore, formed by extreme lateritic weathering and the in-situ upgrading of aluminium bearing minerals in the weathering profile. Bauxite deposits are generally shallow and flat-lying, forming easy to mine sheets of mineralisation. Commercial ores generally contain from 30% to 55% alumina (Al2O3).
Globally, the largest deposits are found in tropical areas, with Australia, Guinea and Brazil having the largest resources.
Bauxite is generally a mixture of aluminous minerals, iron oxides, clays and silica. In some deposits the minerals take the form of pisolites, spherical concretions of the minerals.
The key aluminous ore minerals include the tri-hydrate gibbsite <Al(OH)3>, and the mono-hydrate minerals boehmite and diaspore <Al(OH)>. The mineralogy is important in assessing bauxite – gibbsite is preferred given the lower temperatures required to convert the bauxite to alumina in the Bayer process. Mono-hydrate rich bauxites require treatment in the higher cost high temperature plants, and thus will sell at a discount.
Other mineralogical considerations include silica content and characteristics, particularly the amount of reactive silica in the bauxite. Reactive silica is generally silica in clays, and will consume caustic soda in the processing to alumina, thus increasing costs. Reactive silica contents generally should be below 6% for the product to be marketable; however contents up to 8% are accepted, albeit at a discounted price, and the higher reactive silica product will be the first to suffer in a cooling of the bauxite market.
Processing of bauxite to aluminium follows a two stage process, and is very energy intensive. It is no surprise that some call aluminium “congealed electricity”.
The first is the refining of bauxite to alumina through the Bayer Process. This involves the pressure digestion of the bauxite, using caustic soda (sodium hydroxide, NaOH). The aluminium oxide in the bauxite is converted initially into sodium aluminate, which through various reactions is ultimately converted to alumina.
Waste products include red mud, a caustic mixture of solid impurities.
The smelting of alumina to aluminium metal is carried out using the Hall-Heroult process. This involves dissolving alumina in molten cryolite (Na3AlF6), and then electrolysing the molten salt bath to deposit aluminium metal on the cathodes in the electrolytic cell.
Supply and Demand:
Historically there has not been a large seaborne trade in bauxite, with the low value of the material meaning that operations were predominantly vertically integrated, with the higher value products, alumina and aluminium metal being the main traded products. The bauxite trade was dominated by a few large mines, including Gove and Weipa in Australia, Boke in Guinea and Trombetas in Brazil.
This has changed with the rise of China since 2001. It is estimated that the seaborne trade now comprises 35% of global bauxite production of 260mtpa,
with this largely into China.
About Breakaway Research:
Breakaway Research is part of the Breakaway Investment Group, and has been providing thematic and company research on the resources sector for over 9 years. A particular strength of the Breakaway research team is that it combines technical experience with financial expertise. This leads to research reports that are supported by a technical assessment of resource projects along with financial metrics for the company.
An important function of these independent research reports is to provide investors and company shareholders with the identification and quantification of the perceived value drivers within a company, which the company may otherwise find difficult to present. Indeed shareholders are an often overlooked but important target in the distribution of these research reports – with well informed retail investors often creating a stable share register.
Our high research quality stems from the extensive experience of our analysts, combined with a process of extensive interviews with company management
and industry specialists, as well as site visits if appropriate.