VRX Silica (ASX:VRX) makes progress in June quarter with an eye on production by 2023

Highlights

• VRX Silica operates three high-grade silica sand projects in Western Australia.
• The company is planning to commence production by mid-2023.
• During the June quarter, most of the company’s operations were concentrated on Arrowsmith North, Arrowsmith Central, Muchea and Boyatup.

Western Australia-based pure-play silica and mining company VRX Silica Limited (ASX:VRX) is progressing its project to target the global silica sand supply chain. Silica sand is crucial to many industries, including infrastructure, glass and foundry.

VRX has a combined mineral resource of more than one billion tonnes, which would be sufficient to support mining operations for several decades. The company operates high-grade, low-impurity four large-scale silica sand projects in WA. The important aspect of VRX’s assets is that they can be run as independent projects, catering to demands of diverse markets.

To know more about VRX, click here.

Let’s look at how VRX performed during the June quarter.

Major operational highlights

Project locations in WA (Image source: VRX website)

VRX has planned to lead a staggered and disciplined development program over the Arrowsmith North Silica Project, followed by the Muchea Silica Project and the Arrowsmith Central Silica Project.

The Arrowsmith North Project has an Ore Reserve of 223Mt at 99.7% SiO₂. Mining and processing operations on the project are relatively simple with low impact on the ground. Currently, VRX is planning the revised capital estimate on a tailored 2Mtpa processing plant which boasts a unique patented process circuit.

The company has sent samples for metallurgical test work during the March and June quarters and the results are pending with the lab.

VRX submitted an Environmental Review Document (ERD) to the Environmental Protection Authority (EPA), the regulatory authority of the WA region, for the Arrowsmith North Project. The ERD review document contains a comprehensive summary of the project’s environmental setting, mine, operations and infrastructure details and their impact on the environment.

Currently, VRX is waiting for confirmation from the regulatory authority for the approval of ERD. The company estimates it may take around six months and expects to receive the confirmation by December 2022, following which a six-month construction phase of the project is scheduled to commence in January next year.

During the reporting period, VRX purchased two major equipment for sand processing and commencing the project capital expenditure for Arrowsmith North.

Schenck screen used in sand processing (image source: VRX update, 28 July 2022)

On Arrowsmith Central, VRX moved to the next stage of the environmental approval process

On the Arrowsmith Central Project, VRX progressed to the next stage of the environmental approval process with the EPA. On 20 June 2022, VRX lodged the Environmental Scoping Document (ESD), which entails environment studies required for the assessment of the project. This is a fundamental step in EPA administration procedures for carrying out the Environmental Impact Assessment (EIA) of the project.

Arrowsmith Central Project location (Image source: VRX update, 28 July 2022)

Muchea development

Muchea project development works will follow development works at Arrowsmith North. Muchea has access to well-established infrastructure, including electricity and rail and road connectivity. A gas pipeline passes along the Project, and water availability is ensured by the Yarraghadi Aquifer.

The company has received several offtake enquiries from the Asian market for Mucha silica sand. VRX believes that there is great demand as it is an important raw material for the production of transparent glass, especially for the production of new-age solar modules.

The company has submitted a Plan of Work (POW) to the Department of Mining Industry Regulation and Safety (DMIRS) to conduct further drilling and sampling on the project tenement. A supplemental application for a Native Vegetation Clearing Permit (NVCP) was also submitted.

Operational highlights of Boyatup

At its Boyatup Silica Sand Project, VRX carried out a 206-hole, 312m, 400m x 800m spaced air core drilling operation. In-situ sand grades up to 99.7% SiO₂ were found in early investigations undertaken by VRX and the previous tenement holder. Additionally, this material has the scope to produce a very low Fe₂O₃ product.

Final assay findings were received in late June 2022 after a 9-day drilling operation. The data is being evaluated to determine the first mineral resource.

Further, drilling has yielded bulk materials for metallurgical tests to ascertain the project's ability to create products of a certain quality. Drilling was done in accordance with a POW approved by the DMIRS. A heritage (site avoidance) survey undertaken by the Esperance Tjaltjraak Native Title Aboriginal Corporation (ETNTAC) cleared the area for the drill program.

Drill targets as well as the nearby plants and habitats were included in the desktop study's vast extensive area. This research will make it possible to organise environmental studies in the future to support mining and environmental applications.

Assessing the Geothermal Energy Potential

Beginning in 2022, DMIRS accepted applications for geothermal exploration permits in 21 regions in WA. VRX submitted several applications for the permit close to the company's Arrowsmith North and Arrowsmith Central silica sand holdings. The hydrogen gas MOU was signed between VRX Silica and XODUS Energy Pty Ltd earlier and now the application for geothermal exploration reflects the company’s aspirations in attaining a sustainable green future. This is also mirrored in the company's ESG statement.

The company anticipates a lot of interest in the competitive bidding process. DMIRS has not stated a date for when the bidders will be chosen.

Successful applicants will be qualified for grants and other incentives as part of the program, subject to an Investment Attraction Fund Financial Assistance Agreement (FAA).

VRX has submitted an application for the scheme's Stage 1, Expressions of Interest, and if accepted, will be invited to move on to Stage 2 and submit a more detailed application.