VRX Silica (ASX: VRX) has provided its quarterly activities report for the three months to 31 December 2021.
Activities were conducted across the company’s portfolio of silica sand projects, including Arrowsmith North, Arrowsmith Central (located 270 km north of Perth), Muchea (located 50 km north of Perth) and Boyatup (located 100 km east of Esperance), all situated in Western Australia.
A Project development pipeline to ensure a disciplined, staged development of world-class assets
The Arrowsmith North silica sand project (Arrowsmith North) will lead a staggered and disciplined development program, followed by the Muchea silica sand project (Muchea) and Arrowsmith Central (Arrowsmith Central) silica sand project. VRX has the most-developed ASX listed company silica sand projects in Australia with planning, Aboriginal heritage, environmental approvals, metallurgical testwork studies and plant engineering well advanced having commenced in 2017.
Mining Leases are granted over these projects as well as various Miscellaneous Licences for access with permitting and infrastructure preparations well-advanced. The scale of the projects provides for a long-term opportunity for silica sand export and potential for glass manufacturing and downstream industries in Western Australia.
Critical Minerals Publication
In December 2022 VRX Silica Limited announced its Arrowsmith North and Muchea Silica Sand projects have been included in the Australian Critical Minerals Prospectus for 2022 published by Austrade and launched by Minister Farrell, the Minister for Trade and Tourism.
The prospectus includes technical, commercial, and geological data to facilitate investment into projects for Australia’s identified critical minerals. To-date, the prospectus has received significant recognition among interested foreign investors and buyers, Australian corporates, and the Australian government for its significant role in marketing opportunities in the Australian and export markets.
The recognition by the Australian Government that silicon and silica sand are a critical mineral and that VRX has significant potential to address anticipated production shortfalls, build supply chain security, and help deliver progress on a net-zero future is an important step forward.
This publication will enable Austrade to actively promote the VRX products to foreign investors and potential buyers.
VRX continues to engage with potential buyers that have received samples of products from Arrowsmith North and Muchea.
Arrowsmith North
The mining and processing operation is relatively simple and low impact with long-term production expected to commence initially at Arrowsmith North on the 221Mt Proved and Probable Ore Reserve (9.2Mt Proved and 212Mt Probable) in 2023, subject to final environmental approvals.
A revised capital estimate is currently underway on a tailored 2Mtpa processing plant with a unique patented custom process circuit.
The results of additional bulk testwork programs undertaken during the March and June 2022 quarters were received in August 2022. These programs produced sufficient final product for the large samples (50-60kg) required for glassmaking furnace testing and foundry resin coating testing. The samples have been forwarded to an extensive list of potential buyers.
The Company has identified long-lead items and has commenced the specification and production of tender documentation of processing equipment for the plant in preparation for the procurement process in order to enable a timely construction program following a decision to mine at Arrowsmith North.
Engineering
The Company has undertaken significant steps to finalise the processing circuit design to produce multiple products and to finalise the detailed engineering required for construction.
The final design phase is progressing to shop detailing of all disciplines – steelwork, mechanicals, pipework, electrical, air, etc.
The execution schedule has been recently updated with revised lead times for major equipment. Well-documented supply-side constraints, including COVID lockdowns in China that have led to a backlog in production, is affecting equipment delivery globally and there is little certainty with quoted lead times. Specification and tendering of long lead time equipment is essentially complete and VRX is awaiting final mining approval and financing to commence procurement of these major items.
Process Water
A process water bore was successfully drilled to access water from the Yarragadee North deep aquifer with aquifer testing to supply data for an abstraction licence application for 0.9Gl of water. Monitoring boreholes for the borefield have been completed. The plant has been designed to operate predominately with recycled water.
VRX has successfully completed a production bore and monitoring bores for abstraction at Arrowsmith Central. Results from the pump testing at Arrowsmith Central will contribute to the assessment modelling for both Arrowsmith North and Central water abstraction.
Power Supply
The Company continues to engage with local power providers to investigate establishing a power supply using locally produced LNG. Initial evaluation indicates that there are significant potential savings to use LNG from the wellhead after it is dewatered and before it is compressed for transport in one of the two gas pipelines adjacent to the project area.This solution eliminates the transport cost for LNG and provides a very long term power supply.
Logistics
The Company is continuing discussions with the Mid West Ports Authority (for export of silica sand product from Geraldton Port) to enable a storage area and shiploading within their Port Maximisation Plan.
The Company has access to the adjacent Brand Highway and an approved road intersection plan from Main Roads enable road transport of silica sand product in the short term.
Approvals
VRX has conducted extensive environmental studies on its silica sand projects over a number of seasons in anticipation of requirements of the State and Federal environmental regulation authorities to undertake approvals assessments. These surveys commenced shortly after the tenements were acquired and the number and extent of these surveys have expanded following further consultation with these authorities. The Company has initially concentrated on gaining approval for development of the Arrowsmith North project.
VRX has received confirmation from the Commonwealth Department of Agriculture, Water and the Environment (now Department of Climate Change, Energy, the Environment and Water) for accredited approval under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act). Accreditation of the Environmental Protection Authority of Western Australia’s (EPA) assessment processes means that the Commonwealth can rely on environmental assessments undertaken by the EPA for the purpose of its approval decisions under the EPBC Act on proposals that are likely to have a significant impact on a matter of national environmental significance. If the EPA assesses a proposal at the level of Public Environmental Review (PER), as is the case for Arrowsmith North, separate assessment by the Commonwealth is not required.
The Environmental Scoping Document (ESD) was lodged with the EPA in September 2021 and approved in April 2022.
During May 2022 the Company lodged the initial Environmental Review Document (ERD) for Arrowsmith North with the EPA. The ERD document is required under the EPA’s public environmental review process and will be released for public review following review and acceptance by the EPA and other relevant authorities. The ERD was prepared according to the EPA’s Administrative Procedures, Procedures Manual and other guidance documents. The ERD is a comprehensive summary of the project environmental setting, the physical elements of the mine and infrastructure, operational elements, the extent of effects on the environment and the proposed rehabilitation and closure plan. The Company received a request from the EPA for further information in early July 2022 and the response was submitted later that month.
As per the Procedures Manual, the ERD was distributed for review by relevant government agencies, subsequently a request for additional information was received in mid-November 2022. The Company lodged a revised ERD (Revision D) and response table to address the requested information in December 2022. The Company now awaits a response and/or acceptance for the ERD for publication, initiating the four week Public Environmental Review of the ERD.
An important feature of the EPA Proposal is the proposed rehabilitation method to use the unique VDT method which is estimated to result in the best restoration of the mine area vegetation and habitat. The VDT methodology can be viewed at: https://vrxsilica.com.au/miningandrehabilitationmethodology/
Key Plant Equipment
VRX has previously announced the start of project capital expenditure for its Arrowsmith North processing plant, with the purchase of two major items of sand processing capital equipment.
VRX has purchased locally a 3m diameter x 8m long RCR-designed feed trommel and a 3.6 x 8.5m Schenck “banana” vibrating screen.
This equipment has been refurbished by Bunbury based workshops. The banana screen has undergone strip, non-destructive testing and refurbishment by the OEM (Original Equipment Manufacturer) and is complete.
VRX will continue to pursue other lead time and cost-saving opportunities to capitalise on its first-mover advantage in Western Australia’s emerging silica sand sector, at a time when there is fast-rising global demand for high-quality, responsibly sourced silica sand volumes.
Arrowsmith North update to the Mineral Resource Estimate (MRE) and Ore Reserve Statement (ORS)
On 11 November 2022 VRX Silica announced an update to the Mineral Resource Estimate (MRE) and Ore Reserve Statement (ORS) for its Arrowsmith North Silica Sand Project, located 270km north of Perth.
The MRE update was based on an additional 130 close spaced grade control holes. These holes were drilled as a pre-production activity to increase the resource confidence in the initial years of mining, and to produce a bulk sample for pilot scale metallurgical testwork and the generation of bulk samples for potential offtake partners.
A pilot plant testwork of a 3.3 tonne bulk metallurgical composite was completed. In combination with market analysis a suite of four saleable products have been determined that will be produced from Arrowsmith North. Process and Engineering design of the proposed Process Plant has been guided by the chemical and physical specifications of these products. The declaration of these four products was used to define the saleable Ore Reserve declared in this release.
This updated Mineral Resource and Ore Reserve is a culmination of significant metallurgical testwork and evaluation of the Resource to determine the premium products VRX can produce.
These products include sought after foundry sand as well as glassmaking sand suitable for flat glass, including automobile glass and also container glass.
Large samples (50-60kg) have been despatched to several foundry and glassmaking companies in Korea, Japan and Taiwan for evaluation and subsequent discussions for offtake.
The creation of this JORC compliant Proved Ore Reserve has led to a high confidence mining and processing schedule of the final products that will be available for sale for the initial 6 years of mining. This will allow for a proactive marketing effort to return the best economic outcomes from the project. Future grade control programs and ore reserve updates will not be required for 5 years from the commencement of mining.
Detailed information on the methodology underpinning the final Mineral Resource Estimate and Ore Reserve Statement is contained in the Company’s ASX Announcement dated 11 November 2022.
