An independent pre-feasibility study for Metallica Minerals Ltd.'s 50%-owned Urquhart bauxite project in Queensland, Australia, indicates potential to generate revenue of A$295.5 million over its 5.5-year life.

Ozore Resources Pty. Ltd. owns the other half of the project.

The study estimated a posttax net present value, discounted at 10%, of A$53.9 million on sales of 6.5 million dry tonnes of proved and probable reserves and EBITDA of A$81.8 million.

The mine will require about A$1.1 million for startup, targeting a production rate of 1.5 million tonnes per annum by 2019 with a total life-of-mine operating margin of about A$12 per tonne and payback within five months.

First production and shipments from the mine are slated for mid-2017.

The joint venture partners have started discussions with potential off-take partners and will be delivering direct shipping bauxite samples for customer verification before undertaking detailed negotiations.

Metallica expects to secure an off-take contract before mine development starts in the first quarter of 2017.

Urquhart will be developed through a contractor model to minimize startup costs and maximize returns, with ongoing negotiations for a mining and haulage contractor.

"Utilizing contractors to deliver the mining as well as the nearby and operational Hey Point barge loading and transshipping facility delivers a nimble and low capital development with targeted production starting from [the second quarter of 2017]," Metallica CEO Simon Slesarewich said.

Metallica released an initial JORC-compliant resource estimate for Urquhart in November, comprising measured, indicated and inferred resources of 9.5 million tonnes grading 52.8% aluminum oxide.