- VRX Silica Limited (ASX:VRX) believes that the scale of its silica sand projects could prove a trigger for the long-term opportunity for the glass manufacturing sector in Western Australia.
- The Arrowsmith North project has moved to the next phase of the environmental approval process with the EPA.
- The Muchea project’s development will support a substantial export industry in Western Australia.
VRX Silica Limited (ASX:VRX) is a renowned silica sand explorer based in Australia, which is advancing its three high-grade silica sand projects in Tier 1 mining region – Western Australia. These projects comprise Arrowsmith North, Arrowsmith Central and Muchea Silica Sand Project.
VRX Silica’s projects represent multi-decade-scale-contiguous sand deposits having a combined resource of 1,056Mt, at SiO2 grade of 99.6 per cent to 99.9 per cent. The bankable feasibility studies for these three projects have outlined post-tax NPV10 of AU$728M, capital expenditure of just AU$87M, annual EBIT of AU$137M and IRR of 83 per cent.
The Company believes that the scale of its high-value silica sand projects could prove a trigger for the long-term opportunity for the glass manufacturing sector in Western Australia.
It is worth noting that silica sand is the main ingredient in all types of glassmaking, including high-tech glass and specialty solar panel. As per VRX Silica’s latest presentation, about 47% of the world’s glass is made in Asia, and the glass manufacturing industry is growing at a rate of 5-6% per year or about 8-10Mt.
The Company’s top-notch silica sand projects hold significant potential to meet the growing demand for silica sand in the glass manufacturing industry. Having said that, let us see what lies ahead for the Company’s projects in 2021 and beyond:
Arrowsmith North Project
VRX Silica’s Arrowsmith North project boasts an ore reserve of 223Mt at SiO2 grade of 99.7 per cent and is estimated to have 25-year production life and over 100 years of mine life.
Recently, the Arrowsmith North project has moved to the next phase of the environmental approval process with the Environmental Protection Authority of Western Australia (EPA). The Company expects to obtain EPA and mining approval for the Arrowsmith North project in 2021.
The Company has lately commissioned ProjX Engineering, an experienced sand processing engineers, to carry out a detailed engineering design for its Arrowsmith North processing plant. The processing plant access negotiations are currently underway.
Besides, the silica sand explorer has recently supplied bulk samples for furnace testing to potential offtake partners. VRX Silica intends to finalise its offtake agreements this year. The Company sees robust demand for significant bulk samples ahead of binding offtakes from potential offtake partners in Taiwan, South Korea, and Japan.
The Company has also completed its grade control program at Arrowsmith North and received all assay results and other determinations. These results were in line with the Company’s expectations and will allow it to upgrade the MRE (Mineral Resource Estimate) in the area encompassed by the drilling.
VRX Silica expects the signing of the Memorandum of Understanding (MOU) for Geraldton Port and rail access this year. The Arrowsmith North project is situated adjacent to the Geraldton-Eneabba Railway and the Brand Highway, with a direct rail connection to Geraldton Port.
Following the receipt of all approvals and financing, the Company is looking forward to commencing construction and first production from this project by the end of this year.
The Muchea project is a high-grade, large scale, low-impurity silica sand project, located 50km north of Perth, Western Australia. The project holds access to the premium ultra-clear glass market. The bankable feasibility study for the Muchea project has demonstrated outstanding financial metrics, with a capex of just AU$32.7M.
VRX Silica has already been granted Mining Lease and Miscellaneous Licences for access to the Muchea project. Over the next two years, the Company intends to submit a POW (Programme of Work) application for grade control drilling at the project, finalise and submit EPA referral, secure offtake agreements and sign MOUs for Kwinana Port and rail access.
Following the receipt of all approvals and financing, VRX Silica expects construction and first production to start from the project in 2022 and 2023, respectively. The Muchea project’s development will support a substantial export industry in Western Australia and provide significant financial and employment benefits in the north-eastern corridor of Perth.
As of 1:14 PM AEST, VRX Silica shares are trading at AU$0.235.