VRX Silica (ASX: VRX) has provided its quarterly activities report for the period ended 31 March 2025.
HIGHLIGHTS
- EPA finalises assessment report for Arrowsmith North and recommends approval to Minister for Environment
- Completion of permitting expected Q2 2025 despite appeal by Conservation Council, including environmental and mining approvals
- New detailed non-binding offtake term sheets signed with significant sand importers in South Korea, Japan and Taiwan
- Adds 440,000 tonnes of offtake interest for Arrowsmith North silica sand for an aggregate of 640,000 tonnes per year that is expected to grow
Arrowsmith North Environmental Approval
VRX has continued to focus on progressing approvals for the development of the Company’s 100% owned Arrowsmith North Silica Sand Project (Proposal), approximately 270km north of Perth in Western Australia.
On 9 January 2025 the Company announced that the Environmental Protection Authority of Western Australia (EPA) had published its Assessment Report (Report) for the Proposal and recommended to the Minister for Environment that the Proposal may be implemented, subject to conditions that had been accepted by VRX following consultation with the EPA.
Publication of the Report triggered commencement of a three-week review period during which appeals against the content and recommendations in the Report may be submitted to the Office of the Appeals Convenor (OAC).
VRX received notice from the OAC that on 30 January 2025 an appeal was lodged by the Conservation Council of WA (CCWA), containing a number of grounds for appeal in respect of the Report and the Proposal.
The appeal has been investigated by the OAC on behalf of the Minister for Environment, which involves obtaining comments from the EPA, the Company and any other public authorities or individuals with an interest in the subject matter of the appeal. The Company provided its comments in early February 2025 and met with the OAC later that month and again in April 2025.
While there is no statutory timeframe for completion of the appeal process, VRX understands that investigations by the OAC have been completed and a report from the OAC is expected to be provided for the consideration of the Minister for Environment in early May 2025. The Minister will then determine the appeal, the details of which will be communicated to all interested parties and will then consider whether or not to approve the Proposal under Part IV of the Environmental Protection Act 1986.
Other permitting approval processes including from the Department of Climate Change, Energy, the Environment and Water (Federal environmental approval), the Department of Energy, Mines, Industry Regulation and Safety (mining proposal approval) and the Department for Water and Environmental Regulation (Part V works approval), as previously reported by VRX, have run in parallel to the State environmental approval process and decisions in that regard are expected to follow promptly after the State environmental approval decision is handed down by the Minister.
Arrowsmith North has the potential to support a new, long-term industry for Western Australia with substantial benefits to the State and Mid West region including long-term direct and indirect employment opportunities and royalties. The project has considerable support from a range of stakeholders, including local indigenous groups, local shires, the Mid West Development Commission, the Mid West Chamber of Commerce & Industry and State and Federal Governments. It boasts robust economic metrics for the supply of multiple silica sand products for a growing Asian market.
Arrowsmith North Offtake
On 20 January 2025 the Company announced that it had entered into additional non-binding offtake term sheets for the supply of silica sand foundry products from Arrowsmith North into the foundry industries in the Republic of Korea (South Korea), Japan and Taiwan.
The offtake parties are all significant suppliers in their respective countries. Namgwang Casting Materials Ind Co., Ltd and Woori Corporation, are leading suppliers of sand to the foundry industry in South Korea. Yamakawa Sangyo Co., Ltd is a leading supplier to the foundry industry in Japan. FarnHwa Enterprise Co., Ltd is a leading supplier of foundry and glassmaking sand in Taiwan.
The term sheets set out detailed terms and conditions for the supply of an aggregate 440,000 tonnes per annum of AFS20, 35 and 55 certified foundry sand for a period of four years, with indicative pricing within the range of the Company’s financial modelling for Arrowsmith North as provided in the updated bankable feasibility study for the project announced to ASX on 6 March 2024.
Key assumptions for the BFS include a target price range of US$38-43 per dry metric tonne, dependent on product type, product quality, contract terms and quantity, and a targeted production schedule of 2.2 million tonnes per annum over the full mine life with a conservative ramp up from a minimum 800,000 tonnes to 1.1 million tonnes per annum in years 1 and 2.
The Company now has offtake interest under term sheet for an aggregate of 640,000 tonnes, which includes the 200,000 tonnes sought by Dong A and Dong Nam in South Korea.
