Metro Mining Ltd (ASX:MMI)'s new binding contract with a major state-owned Chinese aluminum group takes sales of planned bauxite production for 2019 to around 90%.
This contract is for 420,000 wet metric tonnes (wmt) to be delivered in the second half of 2019 from Metro's planned 2019 Bauxite Hills project production of 3.3 to 3.5 million wmt.
The group owns alumina refineries in the Chinese provinces of Shanxi, Shandong, Guangxi and Guizhou with the contract based on market pricing with typical bonus and penalty clauses associated with agreed product specifications.
Under the contract, the bauxite will be delivered to the Shanxi province refinery which is operating below capacity due to reduced bauxite availability.
READ: Metro Mining commissions additional infrastructure to expand Bauxite Hills production
Metro’s managing director Simon Finnis said: “We are delighted to have finalised a new offtake agreement with a major state-owned Chinese aluminum group whom, we believe, has the capacity to be another long-term offtake partner.
“We have now successfully sold about 90% of Metro’s planned 2019 production.
“This agreement highlights the particular interest being seen from refineries located in the inland provinces where supply of domestic bauxite has been hindered by recent mine closures and environmental audits.”
READ: Metro Mining confirms it is getting the job done at today’s AGM
The Shanxi refinery is planning to modify its refining conditions to match the processing requirements of the material from Metro’s Bauxite Hills mine.
Given the scale of the group’s alumina/aluminium operations throughout China, Metro is looking forward to working with this state-owned Group in coming years and building upon this initial contract.
Metro has re-started operations at the Bauxite Hills mine in Far North Queensland for the 2019 operating year and has completed activities relating to the expansion of production.
The installation of duplicate screening infrastructure at the port was on time and integration of new 7,000-tonne barges and triple set trailers has resulted in a demonstratable increase in production levels.
At the company's annual general meeting in May the transition from developer to operator was highlighted along with the expansion plans.
Bauxite production for the 2018 year went as planned, laying a proof-of-operational-concept given production guidance was met even with external challenges such as weather.
READ: Metro Mining unaffected by China refinery audits, working towards 75% more production in 2019
Metro Mining chairman Stephen Everett said at the AGM: “We shipped over 2 million tonnes of bauxite in 2018 and we have announced upgraded production guidance to 3.5 million tonnes for this year.
“I think it is fair to say Metro is on its way.”