PERTH (miningweekly.com) – The share price of ASX-listed Metallica Minerals fell by nearly 18% on Wednesday on news that the company had failed to access export facilities for its Urquhart bauxite project, in the Cape York Peninsula, pushing back the start of mining.
Metallica and its joint venture (JV) partner in February this year launched a review of the Urquhart project’s development options, and undertook investigations into access arrangements for a barge-loading facility (BLF) to allow for export of the Urquhart ore.
The investigations included negotiations for a possible priority access to the BLF owned by Green Coast Resources at Hey Point.
However, Metallica on Wednesday said that these negotiations have failed to result in a viable commercial contract that would allow the JV to use the Hey Point infrastructure during 2019.
While the company remained open to further discussions with Green Coast, a commercial outcome to use Hey Point was unlikely to be successful in the immediate future, the company said.
“It is disappointing that the commencement of mining operations communicated prior to the election of the new board has now been further delayed. The new board is focused on exporting the bauxite to market in a more secure way,” said interim CEO Scott Waddell.
“The focus is on developing a logistics option that will maximise returns to shareholders, minimise reliance on third parties and thereby avoid or minimise complications that could threaten the performance of the Urquhart bauxite project.”
Waddell said that the company and its JV partner are continuing to investigate alternative arrangements for shipping the Urquhart product, and initial progress is also being made on studies and designs to build a new BLF that would be controlled by the JV parties, and would likely reduce operating and shipping costs, offsetting the higher up-front capital requirements and time delays.
The results of these studies are expected in the third quarter of this year.
Metallica has estimated that production at Urquhart using one of these alternative BLF options will only start at the end of 2020.
Metallica shares were trading at a low of 1.6c a share on Wednesday, down from a high of 1.9c a share.