- VRX Silica has made commendable progress at high-grade Muchea Project since its acquisition in 2018.
- Muchea project has outstanding financial metrics and is well positioned to produce high-quality products for the international market.
- Despite COVID-19 delays, VRX Silica is likely to receive consent orders from the National Native Title Tribunal and grant of Mining Lease for Muchea Project in June 2020 quarter.
Silica sands explorer VRX Silica Limited (ASX:VRX) deserves real credit for the pace at which it has continued progress at its Muchea Silica Sand Project since its acquisition in July 2018. Located 50km to the north of Perth, Muchea project is the Company’s most advanced project, capable of producing high-grade silica sand products for the international market.
VRX Silica has received considerable expressions of interest and letters of intent for Muchea products that will command higher prices than products from its other two advanced projects - Arrowsmith North and Central Silica Sand Projects.
Given this backdrop, let us discuss Muchea project’s timeline of significant developments since its acquisition in 2018.
July 2018: Acquisition of Muchea Project
In late July 2018, VRX Silica (formerly known as Ventnor Resources Ltd) entered into new agreements with Australian Silica Pty Ltd and Wisecat Pty Ltd to instantly acquire 100 per cent stake in highly prospective Muchea project, in consideration for the issue of ~8.3 million shares to the Wisecat vendor and 65 million shares and 20 million options to Australian Silica, together with an ongoing net production royalty of 1 per cent, subject to shareholder approval that was obtained in September 2018.
November 2018: Estimated Mineral Resource
On 20th November 2018, VRX Silica reported a maiden Mineral Resource Estimate (MRE) for the Muchea project with a total Indicated and Inferred Mineral Resource of 191 million tonnes @ 99.6% SiO2,, including an Indicated component of 19 million tonnes @ 99.7% SiO2 and an Inferred component of 172 Mt @ 99.6% SiO2 from shallow hand-auger and aircore drilling.
Carried out by CSA Global, the Mineral Resource estimate was based on aircore and hand auger drilling carried out by VRX Silica as a part of its due diligence exercise conducted during the March 2018 quarter, prior to the acquisition of the Muchea Project in July 2018.
January 2019: Submitted Mining Lease Application
On 17 January 2019, the Company announced that a silica sand Mining Lease application (MLA) (M70/1390) had been lodged for the Muchea project having an area of 2,918Ha, while covering part of the Exploration Licence E70/4886 which was granted in March 2017.
The mining lease application included 92 per cent of the total previously announced Resource of 191 Mt @ 99.6% SiO2 and covered the prospective Resource for very long-term future mining.
March 2019: Commenced Drilling
VRX commenced a drilling program at its Muchea project, along with Arrowsmith North and Central Silica Sand Projects in March 2019. At Muchea, a 57-hole aircore drill program for a total of 887m was conducted over a 217ha area, which was closer spaced than the original aircore drilling.
The drilling program was targeted to both increase the tonnage within the area of Indicated Resource and also increase the JORC 2012 confidence within the area of the proposed Mining Lease.
June 2019: Announced Resource Estimate Upgrade
As expected, when the results from the aircore drill program were received, they added substantial value to VRX Silica’s inventory while confirming previous assumptions about the extent and quality of Company’s silica sand projects.
Receipt of the assay results enabled an increase of 9 per cent in total JORC compliant MRE to 208 Mt @ 99.6% SiO2, which included increases of 49 per cent in JORC Indicated Mineral Resource and 4 per cent in JORC Inferred Mineral Resource to 29 Mt @ 99.6% SiO2 and 179 Mt @ 99.6% SiO2, respectively.
October 2019: Completed BFS and Declared Probable Ore Reserve
In October last year, the Company unveiled details of BFS (Bankable Feasibility Study) at Muchea project, reporting outstanding financial metrics with an ungeared NPV10 of $338 million contingent on 25 years of a potential mine life of +100 years. Other key BFS outcomes revealed by the Company include:
Moreover, the Company reported Probable Ore Reserve totalling 18.7 Mt @ 99.9% SiO2 for Muchea in line with the JORC Code 2012 edition, with 14.6 Mt @ 99.9% SiO2 in the Mining Lease application area (M70/1390).
January 2020: Signed Native Title Mining Project Agreement
VRX achieved a remarkable milestone in January this year, signing a Native Title Mining Project Agreement with Wisecat for the Muchea project. The Company entered into an agreement with the Whadjuk People Native Title Claim Applicants and the South West Aboriginal Land & Sea Council Aboriginal Corporation.
As part of the agreement, the Company received consent for the following activities from the Whadjuk People:
- Carrying out silica sand mining operations at Muchea
- Grant of Miscellaneous Licences and Mining Lease for the project within the Native Title claim area.
Undoubtedly, VRX Silica has made commendable progress at its high-grade Muchea project, backed by robust management team and well-capitalized financial position. The Company is now eyeing issue of consent orders from the National Native Title Tribunal and grant of Mining Lease for Muchea Project in the June 2020 quarter.
VRX closed the trading session at $0.115, with a rise of 4.5 per cent on 1st June 2020.
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