Metro Mining (MMI) released December Q results with bauxite sales of 743k wet metric tonnes (WMT), bringing the total for CY18 of 2.037Mt within the guidance range of 1.95-2.075Mt (previously announced). MMI recently committed to an expansion to 3.5Mt in CY19, following a solid operational performance in the first year of production and strong market demand. A Definitive Feasibility Study (DFS) is underway to further increase production to 6Mtpa by 2021. Declining reserves and environmentally motivated mine closures in China has led to increasing demand for bauxite imports. Chinese imports increased by an average 25% pa over the past two years reaching ~80Mt in 2018 and are expected to grow to 130-150Mt by 2025. We see MMI as the best positioned ASX listed stock to capitalise on this growing demand. The Company has production growth, an accepted product with established customers and is located in a low sovereign risk jurisdiction, close to China. BUY maintained with a $0.40 target price.
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