Chief executive officer Ian Levy told RESOURCETOCKS a mining start in late 2013 was "ambitious" but results to date from fast track exploration since listing less than 18 months ago showed it was not out of the question.

"I'd like the first sod turned onour first project before the end of 2013," Levy said.

The plan is to identify resources of 200-300 million tonnes of thick, shallow, high grade bauxite within the company's string of prospects covering more than 7500 square kilometres in the newly discovered eastern Australian bauxite province. This province runs down the east coast from Queensland, through New South Wales and into northern Tasmania.

Resources of that magnitude would make Australian Bauxite a mid-tier force in Australia's bauxite industry after global heavyweights Rio Tinto, Alcoa, Alumina and BHP Billiton.

Key to the development strategy is the proximity of the major projects to existing transport, processing and export infrastructure. It is a strategy that envisages 20-year plus projects, producing about 3 million tonnes a year, direct shipping ore for the first five to 10 years.

Exploration to date has outlined five prime targets within the Goulburn district in southern NSW within easy haulage to Port Kembla as the likely first cab off the production rank. The company's Taralga project, north of Goulburn, has a 12Mt bauxite resource (5Mt inferred, 7Mt indicated) from first pass drilling last year that covered less than 20% of known deposits.

Levy said more than half of the resources so far outlined were easily mined DSO grade bauxite suitable for customers that required gibbsite-rich, low silica bauxite, which is the quality of bauxite in highest demand globally.

Drilling has shown the bauxite is typically high quality, with 40-50% alumina (Al2O3), low (3-4%) silica (SiO2) and averaging 4-6m thick, occurring at surface with only a thin soil cover.

A new deposit was recently discovered in the south-east of the Taralga tenement and earlier this year, 225 holes there revealed some exceptionally thick bauxite up to 18m thick, indicating the new deposit was significantly larger than other nearby deposits.



It is hoped that a resource estimate upgrade may be completed in May or June this year.

Levy said the next stage of work would include large-scale sampling for metallurgical testing, possibly leading into a prefeasibility study later this year.

Also well advanced is Australian Bauxite's high grade Binjour project in central Queensland, near a rail link to Gladstone, which has a major port and two world-scaled alumina refineries and an aluminium smelter about 250km away.

Only about 5% of the project area has been tested so far but with a very high success rate.

Levy said the latest 11 of 14 holes yielded exceptionally high quality intercepts, which showed the Binjour bauxite layer might contain large tonnages of superior quality bauxite suitable for sweetening circuits in refineries.

"Binjour may prove to be a very high quality bauxite deposit, shippable in large tonnages to a number of bauxite-alumina refineries that need sweetener-grade bauxite that can be processed at low temperature and with exceptionally low reactive silica contents," he said.

"We've called this bauxite type ‘brown sugar' bauxite and we expected some of our customers to pay quite handsomely for it."

A problem is that the rail line to Gladstone does not have the tonnage capacity Australian Bauxite requires. To that end, the company is part of an industry/state government group working on plans to upgrade the line.

A maiden resource for Binjour is expected in the second half of this year, along with an upgrade for the 36Mt resource (inferred 12Mt, indicated 24Mt) identified from drilling less than 20% of the company's bauxite deposit at Inverell in northern NSW, 350km from aluminium smelting facilities near the port of Newcastle.

This was the company's first drilling prospect and has yielded drill-proven thicknesses of more than 9.5m, with indications that typical thicknesses range from 5-7m of high quality bauxite.

The company has two drill rigs, which were at Inverell and Binjour at the time of writing, one already earmarked for the new work at Taralga.

Australian Bauxite's tenements in Tasmania are similarly well positioned in terms of rail-to-port infrastructure, with nearby ports being Bell Bay, Devonport and Burnie, with a rail line running right through the tenements.

Drilling and surface sampling on grazing and cropping farmland around Campbell Town in the Tasmanian midlands has yielded good grades. Results from the Deloraine prospect are from the edges of the deposit and from some outlier occurrences of bauxite, but Levy said they showed DSO grades occurred in reasonable thicknesses up to 7m of bauxite.

The issue of exploring for minerals on agricultural land is one close to Levy's heart. He understands the need to fully explain the company's operations and rehabilitation plans should mining proceed. "We've got to earn the trust of the local communities and that could take some time," he said.

The positive for Australian Bauxite is that bauxite is not found in prime agricultural areas.

"Bauxite is a barren, sterile rock and we've been able to demonstrate that if the land is prime agricultural land, it is not bauxite," he said.

"If we get approval to extract the bauxite, we expect to be able to leave the land better than we found it."

Levy said preliminary discussions with potential customers had gone well, fuelled by concern about Indonesia's ability to continue supplying a rising market into China's huge alumina refineries.

Indonesia's West Kalimantan bauxite mines - legal and not - supply China with about 23-25Mtpa.

Levy said that next year that was forecast to rise to about 50Mtpa, then decline very rapidly as the easy deposits were depleted and land planted with the more profitable palm oil.

"Future supply is becoming more doubtful as the Indonesian government cracks down on the illegals and restricts bauxite export for its own purposes," he said.

So the path for Australian Bauxite looks reasonably clear. Kick off with simple dig, screen and shipping of DSO for early cash flow, probably from Taralga/Goulburn in NSW, followed soon after by more from Binjour in Queensland, then Tasmania and Inverell.

The option then exists to upgrade to a premium product and perhaps an alumina refinery as the regional targets exceed resources of 200Mt.

*A version of this report, first published in the May 2011 edition of RESOURCESTOCKS magazine, was commissioned by Australian Bauxite