MARKET ACTION Metro Mining (ASX:MMI) closed 12.5% higher today...

MARKET ACTION

Metro Mining (ASX:MMI) closed 12.5% higher today at A$0.063 as investors digested the company’s signal this week that the Bauxite Hills project in Queensland could deliver a significant profit hike to the company upon the start of production.

The project is now being contemplated as producing 4 million tonnes per annum of bauxite (double the previous estimate) by employing a 24-hour operational regime.

This is expected to deliver substantial economies of scale and underpins a 148% increase in net present value to A$582 million.

IRR improved about 5% to 156%, with average annual EBITDA estimated at A$134 million and profit after tax coming in at $92 million.

By comparison, after-tax net profit under the 2 million tonnes per annum scenario contemplated after-tax net profit at $37.3 million a year.

These improved metrics are expected to be realised for only a modest increase in capital costs, with initial capex now tipped at $40.1 million versus a prior estimate of $33.9 million.

Importantly, the development puts Metro in a better position to attract offtake partners as Bauxite Hills development persists.