Australian Bauxite Limited (ASX:ABX) has underlined strong bauxite demand and better than expected production efficiencies in a recent announcement. The small-cap mining company is reporting that its discovery rate is increasing as the company grows its expertise. Mining and screening at the company’s Bald Hill Bauxite Project near Campbell Town, Tasmania exceeded a rate of 900,000 tonnes per year last month. This is a significant improvement over the 500,000 tonnes per year design rate. Australian Bauxite is also reporting a decrease in production costs due to the availability of production equipment. As iron ore prices drop, Australian Bauxite has noticed a surplus in production equipment due to struggling iron ore companies. Production costs have also been reduced because a crushing plant is no longer required due to ore breaking apart naturally.
Australian Bauxite believes they are in a strong financial position, as they remain debt free with available discretionary cash reserves exceeding $3.5m. The company also has an undrawn line of credit available from the Noble Group. Demand for bauxite has remained above expectations and is exceeding A$70 per tonne. Australian Bauxite believes this is due to Chinese alumina refineries purchasing supplies from remote and exotic locations to deal with short-term supply issues. They also underlined the advantageous position of their Tasmania bauxite projects. The Bell Bay Port in Tasmania has proven to be a reliable and long established port without any shipping interruptions due to capacity restraints or significant seasonal events. Shares of ABX are up 2.5c, or 10 per cent, at 27.5c per share near closing hours today.