VRX makes silica sands key focus with sale of non-core projects
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Special Report: VRX wants to focus all its efforts on the potentially lucrative silica sands market and is selling its non-core Biranup nickel and gold project in Western Australia’s Albany Fraser Orogen.
But VRX Silica (ASX:VRX) will still retain exposure to any potential upside in the nickel and gold project, with the company set to receive 6.25 million shares in the buyer, unlisted public company New Energy Metals (NRG).
The company says NRG is planning to carry out an initial public offering and list on the ASX later this year, adding that its shareholders will be offered priority for IPO applications.
VRX could also receive cash milestone payments of $200,000 if a resource of at least 7.5 million tonnes grading 2 per cent nickel and 0.5 per cent copper is defined, $200,000 on completion of a feasibility study and a further $500,000 on first commercial production.
Biranup covers 393sqkm and is close to IGO’s (ASX:IGO) Nova nickel mine and the 10-million-ounce Tropicana gold deposit.
Previous work by the company has identified the potential for base metal mineralisation, with drilling intersecting copper and nickel sulphides on a structurally controlled geophysical target at the Fire Dragon prospect.
“We are delighted to have reached agreement with NRG on the terms for the sale of the Biranup project which will enable VRX Silica to share in any future exploration success,” managing director Bruce Maluish said.
“The Biranup project tenements have an extensive and comprehensive exploration data base that we have assembled and this will be a great starting point for NRG.”
VRX holds three silica sand projects in Western Australia. The Arrowswmith North project is likely to be the first cab off the rank with a bankable feasibility study already completed on the project.
The company is currently finalising the mining project agreement with native title holders and expects to secure approvals in the September quarter. Production could begin as soon as the first quarter of 2021.
While silica sand is the most abundant mineral on the planet, it is still a finite resource. This is because high purity sand is required for making both flat glass and container glass 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.
And while demand for such high-purity silica sand is rising, supply is increasingly becoming an issue to the point that illegal mining is a problem in some countries, while China has included it on its list of strategic minerals.
Market research firm IMARC Group previously estimated the global silica sand market could grow from $US7bn ($10.1bn) in 2018 to $US20bn in 2024.