Metallica, which is hoping to strike an offtake deal with Mitsui that operates a silica sand operation in the area, said Cape Flattery should cost around $165 million to develop, with payback under 2.9 years based on a 1.5 million tonne per annum operation on reserves of 47Mt grading 99.11%.

 

The reserves account for 95% of resources.

 

Metallica said the high-purity silica sand project has a post-tax net present value of $280 million with an internal rate of return 26.6%. 

 

Chair Theo Psaros said with development of a purpose-built jetty within the existing limits of the Cape Flattery port, Metallica's project is positioned as a low-cost, long-life with attractive profit margins.

 

To keep costs down in an inflationary environment plans for installation of wet high intensity magnetic separators have been delayed.

 

Based on total sales of 36Mt, and all-in sustaining costs of $37.90/t compared with a forecast average sales price around $80/t, Metallica expects earnings of $1.68 billion. 

 

The company needs to complete its environmental studies and traditional owner agreements, but hopes to be in production by mid-2027.

 

Aside from Mitsui, Metallica said it had seen inbound interest from other offtake partners.

 

Metallica's DFS comes after similarly promising studies for Diatreme Resources' adjacent Northern and Galalar projects, and the release of the state government's $245 million Queensland Critical Mineral Strategy at the recent World Mining Congress in Brisbane.

 

The silica sand developments on the Cape Yorke Peninsula are expected to benefit with improved communication with the Office of Co-ordinator General in completing baseline environmental studies. 

 

Metallica shares closed up 9% yesterday at 2.5c, valuing it at $24 million.

 

The stock has traded at 2-5.5c over the past year.