Metro Mining has signed an offtake letter-of-intent with China’s fifth largest bauxite importer, significantly strengthening sales agreements for its Bauxite Hills mine on Cape York.

In an announcement to the ASX today, Metro confirmed Lubei Chemicals had signed the letter-of-intent for an initial 0.5 to 1.0 million tonnes of bauxite per annum for three years from next year.

Metro already has a four-year, seven-million-tonne binding offtake agreement with Chinese aluminium company Xinfa Group.

Metro says existing environmental approvals and mining leases allow for early construction works to commence in July for the Bauxite Hills mine, 95km north of Weipa.

Final environmental approvals are expected mid-year with mining operations and first shipment planned for April 2018.

Metro Mining managing director Simon Finnis said the Lubei agreement was yet another important milestone for Metro.

“Native Title and Land Access Agreements have been finalised. Our Bankable Feasibility Study released in March estimated an ore reserve of 92.2 million tonnes and total mineral resource of 144.8 million tonnes,” he said.

“The BFS estimates a 17-year life-of-mine revenue of $5.7 billion and life-of-mine earnings before interest, tax, depreciation and amortisation (EBITDA) of $2.5 billion.

“Pre-commitment contracts including transshipping, barge loading facility and conveyors, new camp accommodation and marine piles and some vehicles have been let.

“Basic infrastructure including airstrip, haul roads, camp and port location are already in place.”

The Bauxite Hills mine is expected employ up to 200 people when fully operational, with a 30 per cent indigenous workforce target.