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The company is now upgrading its exploration target to a whopping 300 million tonnes, but the existing 30 million tonne DSO already supports a major bauxite export operation. Queensland Bauxite says it will look to initially ship 5 million tonnes per year, with revenues of between $200 million to $300 million each year, based on current bauxite prices.
Not bad for a company with a current market cap of just $12.7 million!
Direct Shipping Ore (DSO) generally means that the company can just dig the minerals out of the ground and ship them to customers, with very little need for processing. That should mean low production costs, and potentially, substantial profits. Surface deposit bauxite mining is reported to cost around $10 a tonne before transport and port costs.
Bauxite prices have surged to around $60 a tonne recently, after Indonesia implemented a ban on exports of the raw commodity in a move designed to encourage producers to process the raw material at refineries in Indonesia.
But that has opened the window for other countries, including Australia, to ramp up bauxite exports, particularly to China. And it’s potentially why Australian bauxite explorers have soared in recent times, including Cape Alumina Ltd (ASX: CBX), Bauxite Resources Limited (ASX: BAU) and Australian Bauxite Ltd (ASX: ABZ).
Queensland Bauxite says it will now focus on early development of the project and considering bringing in partners to help fund the project."
QBL Price at posting:
2.4¢ Sentiment: None Disclosure: Unspecified
