Metro Mining Ltd. signed a nonbinding letter of intent with Shandong Aluminium Co. Ltd., or Lubei, to supply up to 1 million tonnes per year of bauxite from the company's Bauxite Hills mine in Queensland, Australia.
According to a May 30 statement, the agreement is valid for a minimum of three years from 2018, with an option for a one-year extension by mutual agreement. A binding off-take agreement with Lubei is under negotiation.
It follows a similar off-take deal with shareholder Xinfa Group Co. Ltd. and pushes off-take to over 60% during the first four years of production from Bauxite Hills Mine.
Metro Mining expects to commence construction at Bauxite Hills in July, while production is scheduled to begin in April 2018.
A bankable feasibility study for Bauxite Hills pegged an after-tax net present value, discounted at 10%, of A$601 million and an 81% internal rate of return.