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Highlights
- Farm-in and joint venture agreement with HXG offers exposure to GEP 44 development.
- The development gives VRX access to a potential alternative energy solution for downstream processing and its silica sand projects.
- HXG can earn up to 90% interest in GEP 44 upon completing agreed project milestones.
- In the project area, VRX retains underlying mineral rights both in hard rock and brine solution.
VRX Silica Limited (ASX: VRX) has executed a farm-in and joint venture agreement with Hydro X Gen Pty Ltd (HXG). The agreement concerns VRX’s granted Geothermal Exploration Permit (GEP) at Dandaragan, near Perth, Western Australia.
Geothermal technology can cater to the Mid-West region of Australia with long-term dispatchable renewable energy. This would benefit the company’s Arrowsmith silica sand projects as well, says VRX.
As per the agreement, HXG can earn up to 90% interest in GEP 44 upon fulfilling certain conditions.
GEP 44, which was granted in July 2023, comprises eight contiguous blocks. The area includes the Walyering gas field, which is under development by a joint venture between Talon Energy (45%) and Strike Energy (55%). The company has an opportunity to work with these energy firms and use historical and current data to identify prospective geothermal power options.
Data source: Company update
Key details of the agreement
To earn an initial 40% interest in GEP 44, HXG is required to complete an exploration and drilling campaign by 31 July 2026. The company can earn a further 30% interest by finalising a feasibility study, which would focus on evaluating the economic viability of the energy production from geothermal sources within the project area by that date.
For another 20% interest, HXG is required to produce energy from geothermal sources within the project area by 31 July 2029.
As per the agreement terms, VRX would not provide funding for the project development and retain underlying mineral rights in the project area both in brine solution and hard rock.
In 2024, HXG plans to conduct an initial public offering and get listed on the ASX as Steam Resources Limited.
VRX shares traded at AU$0.120 apiece at the time of writing on 3 November 2023 with a market cap of AU$75.83 million.
