VRX Silica Limited (ASX: VRX) today provided its quarterly activities report for the period ended 30 September 2022.
VRX is a Western Australian-based pure-play silica sand exploration and development company with four high-value, advanced, very long-term silica sand projects in Western Australia – Arrowsmith North, Arrowsmith Central (located 270 km north of Perth), Muchea (located 50 km from Perth) and Boyatup (located 100 km east of Esperance).
The Company has multi-decade scale contiguous sand deposits on granted Mining Leases with secure tenure and a combined +1.1Bn tonne Mineral Resource1 of 99.6% to 99.9% SiO2 grade silica sand. Each project can be run independently and supply high-grade silica sand to many diverse markets.
The mining and processing operation is relatively simple and low impact with long-term production expected to commence initially at Arrowsmith North on the 223Mt Probable Ore Reserve @ 99.7% SiO2 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.
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 the continued application of COVID lockdowns in China, 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 is now waiting on VRX final approval to commence procurement of these major items.
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.
A number of gas wellheads are in close proximity to the project area. The Company is evaluating the potential and costs to establish a power supply from locally produced LNG.
Arrowsmith North has access to established infrastructure such as the unused rail line (from Eneabba to Geraldton) which runs adjacent to the Arrowsmith project tenements. The Company is in discussions to finalise its logistics plans with Mid West Ports Authority (for export of silica sand product from Geraldton Port) and with the rail owner, Arc Infrastructure (for transport to port and a dedicated train unloader at the Geraldton Port in the medium to long term).
The Company has access to the adjacent Brand Highway and a 100% detailed road intersection plan has been submitted to Main Roads for approval to enable road transport of silica sand product in the short term.
VRX has conducted extensive environmental studies over the Company’s 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 (DWER) 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 was lodged with the EPA in September 2021 and approved in April 2022.
During May 2022 the Company lodged the Environmental Review Document (ERD) with the EPA for Arrowsmith North. The ERD document is required under the EPA’s public environmental review process and will be released for public review following the review by the EPA and other relevant authorities. The ERD was prepared according to the procedures in the EPA’s Environmental Impact Assessment (EIA; Part IV Divisions 1 And 2) Procedures Manual (EPA, 2021b). 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 on 4 July 2022 and the response was submitted on 12 July 2022. The Company awaits EPA confirmation that the document will been released for public review.
The indicative timetable for the development of Arrowsmith North anticipates final EPA approval in December 2022, with the six-month construction phase scheduled to commence in January 2023 subject to Ministerial Consent.
An important feature of the EPA Proposal is the proposed rehabilitation methos to use the unique VDT method which is estimated to result in the best restoration of the mine area vegetation and habitat.