VRX Silica (ASX:VRX) Shares Jump on Major Offtake Agreements for Arrowsmith North Silica Sand Project

Highlights

• VRX has secured offtake term sheets with major suppliers in South Korea, Japan, and Taiwan.
• The agreements are for the supply of 440,000 tonnes of silica sand annually from the company’s Arrowsmith North Silica Sand Project.
• Arrowsmith North silica sand has been validated by offtake suppliers for its superior quality, meeting stringent foundry standards.
• Project related permits are expected by Q1 2025, with financing options actively being pursued.

VRX Silica Limited (ASX:VRX) saw over 10% jump in its share price to AU$0.054 during morning trading on 20 January 2025. The share price spike followed the company’s announcement ofnew non-binding offtake term sheets with major sand importers in South Korea, Japan, and Taiwan. The agreements are for the supply of silica sand foundry products from its Arrowsmith North Silica Sand Project.

New Offtake Agreements with Major Sand Suppliers

The newly signed agreements involve key suppliers in their respective countries. In South Korea, Namgwang Casting Materials Ind Co., Ltd and Woori Corporation supply sand to the foundry industry. In Japan, Yamakawa Sangyo Co., Ltd is a major supplier, while in Taiwan, FarnHwa Enterprise Co., Ltd provides water filter media and sized dry sand.

Together, these agreements account for the supply of a total of 440,000 tonnes per annum of AFS20, 35, and 55 certified foundry sand over a four-year period. This brings the total offtake commitments under term sheets to 640,000 tonnes, including 200,000 tonnes sought by Dong A and Dong Nam in South Korea.

Pricing and Financial Projections

The pricing for these agreements falls within VRX’s financial projections for Arrowsmith North, as detailed in its bankable feasibility study (BFS). The BFS outlined an annual production capacity of up to 2.2 million tonnes over the full mine life, with a gradual ramp-up starting at 800,000 to 1.1 million tonnes in the initial years. Projected pricing ranges between US$38 and US$43 per dry metric tonne, depending on product specifications, quality, and contract terms.

Exceptional Product Quality Confirmed

Comprehensive testing of the silica sand foundry products by potential buyers has confirmed the exceptional quality of silica sand from Arrowsmith North, highlighted the company update. The product’s key characteristics such as

• Particle size distribution
• Superior grain size and shape

meet the rigorous standards of the foundry industry. Buyers intend to replace dwindling volumes from existing suppliers with stable long-term supply.

Progress Towards Development and Production

Permitting for the Arrowsmith North project, including environmental and mining approvals, is expected to be concluded by the end of the first quarter of 2025. VRX is also actively exploring financing options, with several debt financiers expressing interest in supporting the project.

It is important to note that the offtake agreements are subject to final permitting, formal documentation, agreement on pricing and port clearances.