Today’s Q&A with Theo Psaros Executive Chairman of Metallica Minerals
Theo Psaros is a respected and highly credentialed Australian Senior Executive and Company Director.
He has more than 35 years of diverse global and local commercial experience in a number of business sectors and industries within a multi-million dollar publicly listed company, private companies and government departments.
Theo’s resource industry experience includes roles as Chief Financial Officer and Chief Operating Officer of ASX-listed MetroCoal Limited, and Chairman of the Surat Basin Coal Alliance. He was also a member of the industry group that assisted with the Queensland Government Department of Natural Resources & Mines to prepare the 30-year strategic plan (ResourcesQ) for the resources industry in Queensland, Australia.
Theo joined the Board of Metallica Minerals as Non-Executive Chairman on 1 February 2019 and was appointed as Executive Chairman on 21 May 2020.
Metallica Minerals is led by a strong and experienced Board and Management Team.
Metallica Minerals Limited (ASX:MLM)
Metallica Minerals (ASX:MLM) is an Australian development company focused on delivering high purity silica sand to a diversified global customer-base.
Metallica’s Cape Flattery Silica Sand Project is being progressed in the world class silica sand region of Cape Flattery. This project is adjacent to Mitsubishi’s mining operations, which are well-established in extracting and exporting high purity silica sand.
Metallica Minerals Question Time….
1. Theo you took on the Executive Chairman role at Metallica Minerals back in May 2020 as Covid-19 was starting to change the world, how did that impact Metallica Minerals?
This was an interesting time for Metallica Minerals. We owned an asset at Cape Flattery that very little was known about. We could not travel to meet the traditional landowners and start any work. From a distance we started negotiations with them for a drilling program and cultural heritage processes. At the first opportunity to travel we did so and met with the respective clan groups. We were then fortunate to commence work on the project, at the time when the market was waking up to the important role that silica sand was playing in the green economy, particularly in solar panel manufacturing.
During that period, we were also able to dispose of unwanted assets that we did not consider were “company makers”.
2. Lets get into the main subject line here, silica sand is a critical mineral! Everyone’s heard of it but not everyone is fully aware of its importance to industry, so can you tell us where Metallica Minerals’ silica sand comes into play?
Silica sand is the world’s second-most used commodity after water. However, many glass manufacturers are looking for the high-grade attributes for which Cape Flattery in Far North Queensland is globally acknowledged. The glass manufacturers who supply the photo voltaic industry (largely solar panel manufacturers) are shoring up sources of silica sand with high levels of silica (SiO2) and low levels of iron (Fe2O3) which makes our product very attractive to the growing Asian market.
3. Solar being one of the main drivers for the silica sand demand, where are you seeing that develop outside of China who have been the dominant player in that market, and what are you doing to diversify reliance on China?
We have been approached by large Korean and Japanese corporations looking to source reliable, high quality silica sand. The supply chain challenges the world is currently facing have led to countries, including Australia, reconsidering how they can mitigate the concentration of solar panel manufacturing largely coming from one source. This reflection will evolve and create new markets for our silica sand. However, our silica sand is likely to remain attractive to a number of Chinese glass manufacturers. With approximately 85% of the world’s solar panels coming from China, we would not be surprised if they came knocking on our door. To date, the knocking has been louder from Korea and Japan.
4. ESG is now an integral part of any mining operation and nowadays you need to get approvals based on plans for the reinstatement of the land post project. Can you talk to the ESG work you are planning at Cape Flattery?
We are very focused on the Environmental, Social and Governance aspects of our operations. Australia has some of the most stringent environmental policies and we are comfortable that our project will adhere to these. From a social perspective, we have built, fostered and grown a very positive relationship with the traditional landowners and the regional councils in the Cape Flattery region. As an ASX-listed company, we have and will continue to maintain high-quality governance policies. ESG will be a critical component of our Definitive Feasibility Study and will also play a part in our continuing discussion with government at all levels and the potential debt/credit providers who we have already engaged.
5. Cape Flattery Silica Sand Project is the key to unlocking the value in silica sands right now, can you talk about who your neighbours are in that area and give a little history on developments there?
We are next door to the world’s largest silica sand operation. For more than 55 years, this project has been exporting silica sand to Asia. Mitsubishi have owned this project for approximately 45 years. Hence the type of operation we are proposing with its minimal impact on the environment is well understood. Importantly, the local communities have a very sound understanding of the activities we plan to develop.
6. Can you tell us how the MOU with Mitsui is a key milestone in the business development for Metallica Minerals?
The MOU with Mitsui is one of the many milestones in Metallica’s development. While an early-stage MOU with a highly regarded global leader is exciting, it also tells us we hold a project whose commodity the world is interested in.
My recent visit to Mitsui management in Tokyo and Singapore reinforced our understanding that we have the potential to partner with a significant corporation.
7. Logistics are typically an issue in many mining operations, but I can see that the Cape Flattery area has had its fair share of that, Mitsubishi has its jetty in the port area and with specific restrictions on building jetties, will Mitsubishi allow you to use their jetty and if not, what is Metallica Minerals doing to overcome this?
Our focus is on the construction of our own, purpose-built, barge loading jetty to allow transshipping. This infrastructure and loading site will be located within the limit of the Port of Cape Flattery. The Queensland Government recently confirmed that the very strict Sustainable Ports Act did not apply to our project. This legislation does not allow the construction of port infrastructure outside existing port limits on the east coast of Queensland. Our project can seek to construct this facility, giving us a significant advantage.
It is highly unlikely that capacity will be available on the jetty that Mitsubishi leases from the Queensland Government. Naturally, if capacity was available, we would capture it.
8. Cape Flattery has a low CAPEX and short return on funds, can you walk us through that achievement?
We published our PFS in March of this year. The financial results from the PFS are very encouraging. With CAPEX of AUD$80m, based on a sales price of AUD$63/t and OPEX of AUD$34/t, we estimate that payback is just under four years. Our PFS used a forward price of US$47.50/t in late 2024. Pricing of silica sand is a challenge to have industry data as it is an opaque commodity. We are comfortable that our forecast price of US$47.50 in achievable in 2025.
9. I like the work you are doing with the traditional landowner on this project, I see documents and an agreement has already been signed, how supportive have they been outside of the legal work? Would be good to get some insights into the personal side of this as many investors today are mindful of giving back to the local communities.
From day one we agreed that we will be a member of the local community and not the reverse. We have continued to operate this way ever since. In addition to employing First Nations people on our drilling, cultural heritage work and water bore monitoring, we have consulted with traditional owners on where infrastructure can be located so that their input is taken into consideration and we have adhered to their advice every time. We continue to negotiate key agreements for the mine to proceed. The negotiations with the two clans have been professional and friendly with a strong willingness from all for the project to succeed.
10. How can people connect with Metallica Minerals to follow for more updates?
Metallica Minerals Limited Contact Details
Terrace Office Park
Level 1 North Tower
527 Gregory Terrace Fortitude Valley QLD 4006
+61 7 3249 3000