Why Arrowsmith North is a near-term development opportunity for VRX Silica (ASX:VRX)?

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Why Arrowsmith North is a near-term development opportunity for VRX Silica (ASX:VRX)?

VRX Silica’s Arrowsmith North Project
Image source: Company’s Annual Report

Highlights

  • VRX Silica Limited’s (ASX:VRX) Arrowsmith North Project will lead the Company’s staggered and disciplined development program for its world-class assets.
  • Arrowsmith North holds the potential to operate independently and supply raw materials to diverse markets.
  • VRX Silica expects to start Arrowsmith North’s six-month construction period in January 2023.

VRX Silica Limited (ASX:VRX) is a Western Australian based pure-play silica sand exploration company with three high-value, advanced, very long-term silica sand projects in Western Australia, a Tier 1 mining region. One of these high-grade projects is Arrowsmith North, which will lead the Company’s staggered and disciplined development program for its world-class assets.

In March this year, VRX Silica informed that the Environmental Protection Authority of Western Australia has approved its Environmental Scoping Document (ESD) for proposed mining activities at Arrowsmith North. The approval has cemented Arrowsmith North’s position as the Company’s most advanced pure silica sand development opportunity in Western Australia.

Related Article: VRX Silica’s new milestone: EPA approves Environmental Scoping Document for Arrowsmith North

Let us know more about the Company’s Arrowsmith North Project:

Access to established infrastructure

VRX Silica’s Arrowsmith North Project holds access to established infrastructure like the unused rail line (between Eneabba and Geraldton) that runs adjacent to the Company’s Arrowsmith project tenements. Moreover, gas pipelines run adjacent to each of the project areas.

The Company has signed a joint co-operation agreement with Mid West Ports Authority (for export of silica sand product from Geraldton Port). Meanwhile, collaboration has commenced with Arc Infrastructure for a dedicated train unloader at the Geraldton Port. The Company has access to the adjacent Brand Highway, and a road intersection plan has already been submitted to Main Roads to allow road transport of silica sand products in the short term.

Good Read: VRX Silica announces completion of Aboriginal heritage surveys at Arrowsmith projects

VRX Silica’s VDT method for Arrowsmith North project

Image Source: Company Presentation (29 November 2021)

A revised capital estimate is presently underway on a tailored 2 million tonnes per annum processing plant with a unique patented process circuit. It is planned for the processing plant in the medium to long term to run on a hybrid solar and gas power supply after a tender process for power supply contractors.

The Company has also developed a unique and progressive mining method for Arrowsmith North and other silica sand projects to minimise environmental impact from mining - Vegetation Direct Transfer (VDT) method. The made-for-purpose VDT method will help to rehabilitate disturbed flora and ensure a minimal impact on the vegetation at its mine sites.

Water production bore successfully tested

The production of high-grade silica sand requires a reliable water supply. Thus, VRX Silica has successfully completed the construction and testing of its production water bore at Arrowsmith North.

Interestingly, the bores have been constructed to specifications surpassing the Minimal Construction Requirements for Water Bores in Australia and as set out by the Department of Water and Environmental Regulation. Meanwhile, adequate testing has been completed to allow for the Company to apply for an abstraction licence from the Dongara basin deep Yarragadee formation without impacting other users of the superficial water sources.

Do Not Miss: VRX Silica (ASX:VRX) successfully tests water production bore at Arrowsmith North

Test pumping at VRX’s Arrowsmith North project

Analysis of water samples that were taken during controlled test pumping has validated the water is of acceptable quality for use as process water in VRX Silica’s proposed silica sand process plant.

Initial offtake term sheet signed

VRX Silica has signed an initial offtake term sheet for the supply of Arrowsmith North foundry sand products to the South Korean foundry industry. The Company has garnered strong interest from other potential customers in Southeast Asia at a time of dwindling global supply and increasing demand.

The customers, prominent South Korean foundry sand suppliers & users, Dong Nam Corporation (Dong Nam) and Dong A Heung Eop Mining Co. Ltd (Dong A) supply casting and silica sand to Kia, Daewoo, Hyundai, and Samsung Renault. This is a first for VRX Silica and Australia as it is the first and only supply contract for foundry sand from Australia to South Korea.

Also Read: VRX Silica secures first offtake partners for Arrowsmith North Project, shares shine

The scale of VRX Silica’s projects offers a long-term opportunity for silica sand export and potential for glass manufacturing and downstream industries based in Western Australia. The silica sand explorer now expects to commence Arrowsmith North’s six-month construction period in January 2023, based on the indicative timetable now available to the Company.

VRX Silica shares are trading at A$0.185, as of 11:45 AM AEST.

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