VRX seeks environmental nod for Arrowsmith North

VRX has hit a key milestone with its environmental approval application for the Arrowsmith North silica sand project about 270km north of Perth.

The formal submission of the Environmental Protection Authority referral for the project follows wide-ranging environmental studies undertaken by and for the company over the past three years and extensive pre-referral consultation with the EPA.

VRX Silica (ASX:VRX) managing director Bruce Maluish said the referral is a significant milestone for the project and the company’s goal of becoming a leading supplier of high-quality silica sand to the global market.

“VRX has developed a unique and progressive mining and rehabilitation method specifically for Arrowsmith North and our other silica sand projects to minimise the environmental impact of our activities,” he explained.

“Thorough planning will allow us to deliver our silica sand projects sustainably and efficiently, with a very low carbon footprint.”

Environmental footprint

VRX plans to keep the environmental footprint of the Arrowsmith North project small through the use of the Vegetation Direct Transfer (VDT) method, which lends itself to rapid and extensive regeneration of affected areas based on continuous rehabilitation as silica sand mining progresses.

Root structures in the loose sand at Arrowsmith North are relatively shallow at 200-300mm in depth.

With the VDT method involving the removal of a 400mm deep sod, this preserves the topsoil containing the vast majority of native flora and invertebrate fauna while keeping the near-surface humus and its microbial contents intact.

As a result, the company’s EPA referral, which includes pre-referral feedback received from the EPA in December 2020 in response to a draft referral submitted in September 2020, notes that Arrowsmith North can be developed without significant residual impacts on the environment.

VRX added that it will not use chemicals nor produce any dust while processing the mined silica sand as it will use efficient attritioning to beneficiate the sand to glass-quality product for export.

Preliminary engineering work has also indicated that it will recycle up to 95 per cent of the water used in processing with further work underway to increase this amount.

In addition, the processing plant will be powered by a hybrid wind, solar and gas power system to minimise emissions.

The EPA’s environmental impact assessment will be conducted as an accredited assessment that will see it also assess the proposal on behalf of the Federal Department of Agriculture, Water and Environment.

Arrowsmith North

VRX’s Arrowsmith North project is an advanced project with mining leases in place for the production of 53 million tonnes (Mt) of silica sand over 25 years, or about 2Mt per annum, for total sales of nearly $2.7bn.

This is just the tip of the iceberg with the project boasting an ore reserve of 204Mt grading 99.7 per cent silicon dioxide (SiO₂) while grade control drilling is underway to define a higher confidence proven ore reserve of about 10.2Mt within this area.

A bankable feasibility study has already estimated that the project could generate 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.

Capex is expected to be just $28.26m with payback expected in 2.4 years.

This article was developed in collaboration with VRX Silica, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.