Ann: Scoping Study for Cape Flattery Silica Sand Project, page-56

"No way they are going to get $200 a tonne. Next door..mitsubishi mine is selling for $25 / t

( To avoid too much tax ? )...on-selling to overseas affiliated company, where higher priced product is resold."


Referring to the MLM Scoping Study I deduce that the extra CAPEX cost to produce a product containing appx.170ppm of iron oxide is once off capital cost of only A$9M .

If Mitsubishi's Australian registered company (Cape Flattery Silica Mines) is selling run of the mill sand for A$25M per ton (close to cost?) then the Aussie company is missing a potential profit before tax and royalties of around A$175 per ton as indicated in the Scoping Study if sold in Japan. If sales are 2M tons per annum then the loss of gross income is up to A$350Mpa.

I would be very surprised if Mitsubishi (as a very responsible Australian corporate player!) would be selling sand to another Mitsubishi company at somewhere near cost. The respective governments, Commonwealth (25% company tax) and State (royalty 5%) might consider the potential loss to Australia of around A$105Mpa a form of tax dodging in the form of transfer pricing which is something I assume they would frown upon?

Looking at royalties it may be that if Metallica is looking at selling 1M Tpa of quality sand( treated and value added) to say, South Korea at A$200M, then the prospect of Qld. mining royalty of around $8Mpa might help facilitate final approval for mining. Josh Frydenberg should also be looking forward to his 25% cut of A$50Mpa so to my mind Metallica's mining application should roar through if ticks all the boxes.

Fingers crossed!