VRX Silica (ASX: VRX) has released an updated bankable feasiblity study for its flagship Arrowsmith North silica sand project alongside announcing plans for a renounceable rights issue to raise up to $6.2 million.
Arrowsmith North, 270km north of Perth, contains a globally significant deposit of high-quality silica sand underpinning a mining project that will enable long-term production for the foundry, container glass and flat-glass markets in Asia.
The initial BFS was completed in August 2019 and updated in March 2024. This further update follows re-engineering associated with the proposed relocation of the processing plant, with all capital and operating cost components recently re-tendered and re-estimated as the company heads towards a final investment decision in the coming months.
BFS Highlights
- Confirms strong financial outcomes, underpinning the development of a world-class silica sand project.
- Delivers ungeared NPV8 of $179.2 million, based on a 25-year mine life within a resource exceeding 100 years.
- Proved and Probable Ore Reserve of 221Mt at 99.5% SiO₂ supports long-term, high-purity production.
- BFS updated to include revised capital and operating cost estimates.
- Product strategy comprises four distinct silica sand products primarily targeting international foundry and glass manufacturing markets.
- Amended regulatory approvals process for revised offset strategy and relocation of processing plant nearing completion.
Commenting on the updated BFS for Arrowsmith North, VRX Silica chief executive Tony Swiericzuk said:
“The 2026 updated BFS confirms that VRX’s Arrowsmith North silica sand project retains strong economic fundamentals and is positioned to supply up to four silica sand products into a growing Asian market.
“The revised capex estimate incorporates fully engineered process equipment and supporting infrastructure, together with the acquisition of offset land required to complete the approvals process.
“Opex estimates are based on budgeted inputs from established contractors and include application of the company’s proprietary VDT mining and rehabilitation methodology.
“With a Proved and Probable Ore Reserve of 221Mt at 99.6% SiO₂ and a potential mine life exceeding 100 years, Arrowsmith North remains a world-class silica sand project.”
Key Variations to 2024 Updated BFS
The proposed relocation of environmental offset sites together with the processing plant and associated infrastructure to the adjacent Arramall freehold property has delivered capital cost savings, including in areas such as site clearing and road construction. These reductions have been partially offset by higher costs for original equipment manufacturer (OEM) components, copper cabling, concrete and structural steel.
Overall, expected capital expenditure has increased by approximately $8.3 million (including contingencies) relative to the 2024 BFS. Despite this uplift, the project continues to demonstrate strong capital efficiency, with an estimated payback period of approximately 4.6 years.
Prior to finalising the updated capex estimate, the company completed detailed engineering for the relocation of the processing plant, infrastructure and access roads, including geotechnical studies and site selection for the plant, product storage areas, power station, proposed solar farm and administration buildings.
Sale prices for silica sand products have been left unchanged towards the lower end of the range of estimates provided for in the 2024 BFS, despite the growing market for silica sand products in Asia and upward pricing pressures.
This reflects the company’s conservative approach to pricing when modelling the financial metrics for the project as well as providing an additional contingency.
Renounceable rights issue
VRX is undertaking a 1-for-5 renounceable rights issue at 4 cents per share to raise up to approximately $6.2 million (before costs).
For every two new shares subscribed, eligible shareholders will receive one free attaching new option with an exercise price of 10 cents, expiring on 30 June 2028.
Mahe Capital Pty Ltd has been appointed as lead manager and underwriter to the rights issue, which is partially underwritten up to $2 million by Mahe Capital.
The rights issue will close on 19 June 2026 (unless extended). Eligible shareholders can apply for shortfall shares in excess of their entitlement. Shareholders can also trade their rights from 1 June 2026.
The proceeds of the rights issue will be applied towards early works and finalising detailed engineering at Arrowsmith North, funding towards the purchase of Arramall farm, refreshed studies and works at the Muchea silica sand project, working capital and expenses of the rights issue.
Full details on the renounceable right issue can be found in the ASX announcement.
