Special Report: VRX is now solidly within reach of becoming a global silica sand supplier after securing approval for the terms of the key native title agreement.

The agreement, covering the Arrowsmith North and Arrowsmith Central projects, was approved by the working group for the Southern Yamatji people and will now need to be formally signed by all 12 native title applicants.

This will then be submitted along with a state deed, which will provide VRX Silica (ASX:VRX) with a clear pathway for the grant of mining leases for the two projects.

“This is yet another step forward for VRX and its stated aim of becoming a global supplier of high-quality silica sand,” managing director Bruce Maluish said.

High-purity silica sand used for making both flat glass and container glass is in short supply as impurities such as sulphides and iron will cause imperfections.

The purity issues become even more of an issue when the ultra-clear glass is required for solar panels or for use in other high-tech applications such as fibre-optics, LCD panels and LED lights.

 

Becoming a silica sand producer

VRX has previously flagged that its Arrowsmith North project will be the first of three projects to be developed, with Maluish telling Stockhead in June that it could be in production as early as the first quarter of 2021.

It is estimated in a bankable feasibility study to have an impressive net present value (NPV) of $242.3m and an internal rate of return (IRR) of 77 per cent.

NPV and IRR are both measures of a project’s anticipated profitability – the higher they are above zero, the better.

Arrowsmith North is expected to generate total sales of nearly $2.8bn from the mining of 53Mt of silica sand at a rate of 2Mt per annum.

The project has a resource of 771 million tonnes grading 98 per cent SiO2 and an ore reserve of 223Mt at 99.7 per cent SiO2.

However, it is the exceptionally high-quality silica sand from the Muchea project that has potential buyers laying expressions of interest at the company’s door.

Muchea has a current reserve of 18.7Mt grading 99.9 per cent SiO2 that sits within a 208Mt resource grading 99.6 per cent SiO2.

This higher grade resource could deliver NPV of $337.9m, IRR of 96 per cent, and total sales of more than $3.3bn.

 

This story was developed in collaboration with VRX Silica, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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