Metallica Minerals is positioning itself beautifully for commodities with rosy outlooks, with a strategic position in the world class Weipa bauxite province well known to China and sitting in what it believes to be a whole new mineral sands province.

Having been listed now for 10 years, Metallica has been releasing very positive news flow this year, with a positive feasibility study and maiden ore reserve of 1.18 million tonnes announced in June for its Urquhart Point zircon-rutile heavy mineral sands project.

Metallica has a major presence in what it believes will be Australia's next mineral sands province - it has effectively 100% tenure and has a major bauxite upside in arguably the best bauxite region in the world.

Weipa is a massive bauxite province dominated by Rio Tinto and therefore a well-known bauxite ore product for China. It is geographically close to the Asian giant and has been a reliable supplier for a long time.

The Indonesian bauxite ban and India's bauxite export tax hike is a major change in the export bauxite market.

Indonesia exported more than 40Mt to China in 2013 and was by far the largest bauxite supplier to China, which begs the question of where the 40Mt of bauxite is going to come from - hence the opportunity for Metallica. Bauxite demand and price is expected to be particularly strong by early 2015 with the Chinese bauxite stockpile being depleted since early 2014.

"The real kicker in terms of growth and opportunity is the regional play, where we're very confident we'll be able to convert our heavy mineral sands and bauxite targets and prospects into substantial resources and even that would still be only a small part of the region's potential," Metallica managing director Andrew Gillies said.

August 1 saw the company announce a $7.5 million joint venture with a Chinese partner to develop its HMS and bauxite holdings on Cape York. The prospects are fully funded to production and have allowed up to $500,000 for further regional exploration.

Then barely two weeks later Metallica raised $500,000 of company working capital for both Urquhart Point and its scandium-cobalt-nickel (SCONI) project near Townsville.

With the estimated established cost of $6.5 million Urquhart Point project now fully funded, Metallica is focused on its development to get it into production by mid-next year.

Leading up to the time RESOURCESTOCKS readers will see this profile, Metallica will be getting stuck into exploration on the regional mineral sands and bauxite, which occur side by side for the most part.

It means Metallica can get a lot of bang for each buck it spends on it because it is all shallow drilling and Gillies said the company had high confidence in the area.

"We want to get a lot of work done before the end of the dry season and we'll be hitting up the bauxite targets in our Urquhart Point tenement adjoining Rio Tinto's mining lease," he said.

"Then we'll go up to the T16 HMS target and adjoining bauxite targets near Vrilya Point, 160km north of Urquhart Point.

"Up until late 2013, Urquhart Point was the only known HMS deposit in the whole Cape York, which just seems incredulous as it's right beside the town of Weipa where they mined bauxite and there's a huge amount of sand up there, over 300km of coastline - more than what there is between where they have mined HMS in the past from Fraser Island down to Byron Bay, which was very active in the 1960s and ‘70s.

"HMS targets are typically a few kilometres inland from the present coastline, probably ancient coastlines along the bauxite coast and hinterland.

"When we landed a helicopter on one of our regional radiometric targets there - of which we have about 20 - we were able to pan heavy minerals onsite with good visual HMS and sample it and the lab results came back at 3% HM, with the HM assemblage recording over 50% zircon.

"So we went back to drill 35 holes late last year and every one showed significant HM mineralisations and is therefore open in all directions."

Though T16 is a very big target, Gillies said it was important to remember that it was only a small part of the whole prospective area.

"So we're very confident we'll not only find significant mineralisation which will turn into resources at a very high level but we think we could have a new mineral sand province on our hands," he said.

"We have two spots 160km apart on a 300km long target area where we effectively have 100% tenement control and 5000-7000 years ago that mineral sand would have been shallow sandy bottoms or on a beach near the bauxite escarpments, which are also on our tenement.

"So you have these 2-10m escarpments nearby with bauxite which would've been the old coastline, which we'll be drilling for adjoining and nearby bauxite resources at the same time."

Metallica is also interested to see what happens with the large Aurukun deposit held by the Queensland government where the company is strategically positioned with its Urquhart Point mining lease on the north tip of a large sand pit, right by the protected deep water of the Weipa port.

Metallica has submitted a letter of expression of interest to the Queensland government.

"Both of those are within easy tracking distance should we come to some arrangement in the future," Gillies said.

"That's all just upside growth potential and opportunity. We have a lot on our hands and many, many targets for mineral sands and bauxite - and all those areas are close to bargable waters and at Urquhart Point it's adjacent to protected deep water for potential direct ship loading."

With mineral sands prices pretty flat at time of writing, Metallica wants to get into cash flow quickly.

It has a modest resource of just over 3.3Mt of HMS, which are all very shallow with good sizing and just 1% slimes.

Due to relatively flat and low HMS prices, to make it more robust, Metallica has high-graded the resource, at 1.18Mt at 9.5% HM, with this resource processed at about 240,000 tonnes per annum, using simple wet gravity (spirals) concentration, which will provide for a five-year operation with a one-year payback.

While Gillies said he didn't expect the modest-sized Urquhart Point HMS mine itself to re-rate the company, Metallica had its eye on the much bigger picture and stakes.

For now it provides reasonable cash flows to cover the company for at least five years and it is effectively free carried by new JV partner Ozore, earning 50%.

"Urquhart Point also allows infrastructure for adjoining bauxite to be taken out on a barge shipping arrangement, which we'll already have for our HM concentrate of 5000-6000t, instead of barging mineral concentrate out onto a ship once every quarter or so," Gillies said.

"We do it more regularly with direct shipping bauxite on a weekly or monthly basis in 35,000-50,000t loads.

"It's really a start-up or beach head for us to get into production and cash flow, plus it could also show that we run a good operation and have good relationships with traditional owners, for bigger things regionally - both bauxite and heavy mineral sands - and we suspect that those operations will be bigger and deliver higher and long-lasting returns for shareholders."

Regarding the SCONI project, Metallica has mostly completed all the exploration, evaluation, permitting and prefeasibility work, with combined nickel-cobalt-scandium resources of about 80Mt.

All five SCONI deposits - Greenvale, Lucknow, Bell Creek, Minamoolka and Kokomo - are either mining leases or at an advanced permitted stage, with comprehensive pilot plant testwork already undertaken.

The next step remains to secure a formal JV partner.

Metallica is in negotiations and hopes to have a formal JV agreement completed by the end of the year.

"Unless market conditions change substantially it would be very difficult for a company of our size to develop SCONI on our own," Gillies said.

"Our focus there is to get a partner that will free carry us to a decision to mine. We think the outlook for bauxite, nickel and cobalt is fantastic.

"Scandium and its use in aluminium alloys and fuel cells is still an emerging story but it could change very quickly and we just want to be ready for it when it does."

*A version of this report, first published in the September/October 2014 edition of RESOURCESTOCKS magazine, was commissioned by Metallica Minerals.