VRX Silica (ASX VRX) looks set to reap the rewards of its highly profitable Muchea silica sand project north of Perth, according to a bankable feasibility study on the project which was released to the market late this week.
On Friday, Perth-based VRX revealed the BFS for its Muchea project, which highlighted $3.34 billion in sales of the highly sought-after silica sand product over an initial 25-year mining period, and at a capital expenditure cost of only $32.8 million for a 96 per cent internal rate of return and a post-tax net present value (10) of $337.9 million.
Muchea is one of three key advanced silica sand projects owned by VRX, the other two being Arrowsmith North and Arrowsmith Central, for which BFS studies were released in August and September respectively.
The news sent VRX shares soaring by as much as 15 per cent in midday trade on Friday, reaching as high as 15.5 cents a share before resting at 14.5 cents at the close of trade.
Friday’s Muchea BFS was accompanied by a probable ore reserve which totalled 18.7 million tonnes at 99.9 per cent SiO2, with 14.6Mt @ 99.9 per cent SiO2 contained within the area of VRX’s mining lease application for Muchea.
In a statement, VRX managing director Bruce Maluish said the reserve estimate represented just a small portion of the silica sand inferred resource estimate for Muchea, but produced a very high-grade product, which is in high demand in specialist Asian markets.
“We have already had significant interest in the Muchea product that will command higher prices than products from our Arrowsmith North and Central silica sand projects,” Mr Maluish said.
“Muchea is a world-class, high-grade silica sand project which can support a substantial export industry for WA, providing benefits to both the state and the Muchea-Gingin district.
“Muchea will produce alternative high-grade products to Arrowsmith and will add to our available catalogue of products from our silica sand products.”
The Muchea project has the potential to be at the forefront of a new long-term industry for Western Australia, with substantial economic benefits including lengthy employment and royalty periods, with a significant economic contribution to the Muchea-Gingin area.