Australian Stock Exchange-listed Metallica Minerals Ltd and
Melior Resources Inc, currently listed on
Toronto’s TSX Venture Exchange, announced a
binding agreement on September 13 under which the two
companies will merge their titanium, zirconium and bauxite
All of the assets to be included are in the north-eastern
Australian state of Queensland. The merger is taking place at a
time when prices for zircon and rutile are high and there is a
bullish outlook on ilmenite from Melior.
Metallica will bring to the deal its 50%-owned Urquhart
heavy mineral sands (HMS) and bauxite projects, as well as its
wholly-owned Cape Flattery silica sands and Esmeralda graphite
projects. Melior will bring its production-ready Goondicum
"Goondicum… has similar attributes to Urquhart
bauxite in that it is fully funded and will be brought into
production relatively quickly," Metallica chairman Peter
Turnbull said in the announcement.
The Urquhart bauxite project is not scheduled to begin
production until after the 2018/19 wet season. This is during
summer in the southern hemisphere, and runs from November to
Goondicum is located further south and is not affected by
the wet/dry seasonality of areas further north. It is set to
commence production in November this year, but is not expected
to begin to generate an income until the second quarter of
The Goondicum project has had three operating phases - in
2007/08, 2012/13 and 2015. On each occasion, the project was
finally put into care and maintenance, with the latest of these
being blamed on poor market conditions. If the project is put
into production again, a key objective will be to maximize
throughput and improve product quality, so as to reduce costs
and increase revenue.
Metallica’s HMS project and
Melior’s Goondicum project are similar in that
they both contain ilmenite. But the Goondicum project is not
strictly a mineral sand deposit; rather, it is a unique
"flat-lying residual oxide deposit of a weathered gabbro
But the ilmenite mineralization at Goondicum is not a hard
rock, because it occurs as "liberated fine grains."
Additionally, while Goondicum’s success depends on
the production of ilmenite and apatite,
Metallica’s HMS project depends on zircon and
Fastmarkets asked Melior’s director and chief
executive officer, Mark McCauley, about the potential synergy
between the HMS project and Goondicum. The HMS project was
"clearly bread-and-butter for Melior," he said, adding that
while it is a small project, there is potential for exploration
and a mining lease has already been granted.
A preliminary economic assessment released in April 2018
gave the project an estimated mine life of nine years, at an
average production rate of 160,000 tonnes per year of
This assessment was calculated by independent consultant TZ
Minerals International (TZMI) with the use of a long-term
ilmenite price forecast of $204 per tonne fob Australia. The
ilmenite being produced at Goondicum would be a sulfate
ilmenite containing around 50% TiO2, and is highly reactive,
This means that the company will look for customers among
sulfate pigment producers in China, where ilmenite prices have
been depressed due to a number of factors.
Fastmarkets assessed the price for ilmenite concentrate,
47-49% TiO2, cif China, at $170-180 per tonne on September 13,
down from $185-195 per tonne on August 16.
While Metallica’s HMS project can begin
production at short notice because it has a mining lease in
place, the company’s website notes that no
production has taken place because of depressed commodity
prices. So far, no start date for production at the HMS project
has been suggested.
This may change, however, with the prices for both zircon
and rutile rising on supply tightness and solid demand.
Fastmarkets assessed the price for zircon, premium grade,
min 66.5% ZrO2, bulk, cif China, at $1,410-1,710 per tonne on
September 13, up from $1,030-1,100 per tonne a year ago.
The price for rutile concentrate, min 95% TiO2, large
volumes for pigment, fob Australia, was assessed at $930-1,050
per tonne on September 13, up from $710-770 per tonne a year