Australia’s Metro Mining Limited announced on Tuesday that it has obtained shareholder approval to issue shares to Greenstone Metro Holdings LP. The move is part of Metro’s strategic funding arrangement, allowing it to go forward on its Bauxite Hills project in Queensland.
The US$6.7 million in shares issued to Greenstone makes the firm Metro’s largest shareholder, making it the holder of 19.98% of all outstanding shares. Greenstone will provide strategic support to Metro as it continues to develop Bauxite Hills, and will also provide US$20 million of follow-on equity support for construction at the project site as well.
Greenstone is a private equity fund that specializes in metals and mining. The fund was established three years ago by former senior executives from JP Morgan and Xstrata, an Anglo-Swiss mining company that was bought by Glencore plc in the spring of 2013. The fund is said to have a great deal of professional expertise in matters of bauxite and aluminium. The ten-year fund has invested in other Australian firms like Heron Resources Ltd (nickel and cobalt exploration) and Avanco Resources (copper production).
Bauxite Hills is estimated to have a direct shipping ore total of 65.3 million metric tons, and an expected mine life of at least thirteen years. The Queensland government has named it a project of regional significance. Metro expects production at the mine to commence in the second quarter of 2018. The project has an expected capital expenditure of US$30.1 million, an initial rate of return of up to 150%, and is presumed to have an annual EBITDA of US$100 million over the anticipated thirteen-year life.
Metro Mining is based in Brisbane, and began life when it was spun off from Cape Alumina Ltd. upon its takeover by MetroCoal Ltd in 2014. The firm has exploration rights in over 500 square miles of western Cape York, which is second to only Rio Tinto Alcan.