Adelaide, Aug 24, 2006 AEST (ABN Newswire) - China's largest independent alumina refinery has taken an option to acquire a strategic 10% stake in a Queensland bauxite explorer half owned by Metallica Minerals Limited (ASX: MLM), at a cost of A$4.6 million.
Metallica announced today it had signed the non-transferable option agreement with Chiping Xinfa Huayu Alumina Co Ltd (Xinfa), operator of the Chiping Alumina refinery and aluminium smelter in Shandong Province, China.
The agreement provides the Chinese smelter with a 10% stake in emerging bauxite company - Cape Alumina Pty Ltd, owned 50% by Metallica and 50% by a private resource investment company. If exercised, the agreement will reduce Metallica's direct interest in Cape Alumina to 40%.
Xinfa has paid Metallica an option fee of A$250,000 for the right to purchase 10% of Cape Alumina from Metallica's shareholding for a total price of A$4,625,000. The option must be exercised within 30 days of Cape Alumina achieving a JORC-compliant resource statement, due by December 2006, on the Wenlock bauxite deposit, just east of Weipa on Cape York.
The Wenlock deposit is currently being drilled by Cape Alumina, with 580 holes being planned over a 37 sq km bauxite mineralised plateau area (see Amended ASX Release dated 15 August 2006).
Metallica Minerals' Managing Director, Mr Andrew Gillies, said "should Xinfa exercise its option, then proceeds from the share sale will be applied partly to Metallica's share of ongoing funding of Cape Alumina, and on our flagship NORNICO nickel laterite project, northwest of Townsville in Queensland".
"At current share price levels, it suits Metallica at this time to sell down a portion of one of its many mineral assets rather than further share placements for additional funding," Mr Gillies said.
"The Wenlock deposit, which extends onto an adjoining tenement application also held by Cape Alumina, covers a combined 65 km2 area and is an extension of bauxite mineralisation on adjacent mining leases owned by Alcan and Comalco.
"Over the past two years, Cape Alumina has built up a solid ground position in the Cape York bauxite province with currently one granted tenement and 14 pending applications covering most significant bauxite deposits and occurrences outside the existing Comalco and Alcan Mining leases. The ground position also borders the Aurukun bauxite project currently being evaluated by Aluminium Corp of China (Chalco)".
"Xinfa represents a natural business partner for Cape Alumina, as Xinfa owns and operates a large industrial complex in Shandong province, 380 km south of Beijing, comprising several power stations, a 700ktpa aluminium smelter, carbon anode production facility, alumina refinery and aluminium fabrication enterprises, and a PVC-caustic soda plant under construction. Xinfa is a substantial independent alumina-aluminium enterprise with over US$3.2 billion in capital assets. While it is fully integrated downstream, it does not own its own bauxite, the raw material of its alumina production."
Contact
Kevin Skinner
Senior Consultant
FIELD PUBLIC RELATIONS
231 South Road
MILE END SA 5031
Tel: (08) 8234 9555
Fax: (08) 8234 9566
Mob: 0414 822 631
kevin@fieldpr.com.au
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