VRX Silica Limited (ASX: VRX) has provided its half-year report for the period ended 31 December 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 half-year to 31 December 2022 continued significant exploration activity.
Critical Minerals Publication
In December 2022 VRX announced its Arrowsmith North and Muchea 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. This publication will enable Austrade to actively promote the VRX products to foreign investors and potential buyers.
VRX believes that long-term production is 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 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, with the execution schedule recently updated with revised lead times for major equipment due to well-documented supply-side constraints, including COVID lockdowns and supply chain delays in China.
Key Plant Equipment
VRX 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.
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.
VRX is continuing discussions with the Mid West Ports Authority to enable a storage area and shiploading within their Port Maximisation Plan.
As per the Procedures Manual, the ERD was distributed for review by relevant government agencies, and subsequently a request for additional information was received in mid-November 2022. VRX lodged a revised ERD (Revision D) and response table to address the requested information in December 2022. The Company now awaits a response.
Arrowsmith North update to the Mineral Resource Estimate (MRE) and Ore Reserve Statement (ORS)
On 11 November 2022 VRX announced an update to the Mineral Resource Estimate (MRE) and Ore Reserve Statement (ORS) for Arrowsmith North. The MRE update was based on an additional 130 close spaced grade control holes, 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.
Arrowsmith Central has moved to the next stage of the environmental approval process with the EPA. On 20 June 2022 the Company lodged an Environmental Scoping Document (ESD) which details the environmental studies that are required to inform the assessment of the project.
On 6 September 2022, the test holes for 2 production water bores which will be the source of water supply for the proposed processing plant at Arrowsmith Central were completed.
Development of Muchea will follow development at Arrowsmith North. VRX has had many offtake enquiries for Muchea silica sand from Asian markets and believes that the consistent production of such high-grade silica sand with a low iron content will be in high demand as raw material for the manufacture of predominately premium ultra-clear glass production, particularly for the burgeoning solar panel manufacturing industry.
Detailed springtime flora and vegetation studies were undertaken during the springtime months on a selected priority area of 450Ha. The final report will form the basis of the EPA Proposal Referral for Muchea.
Muchea Aboriginal Heritage
During October 2022 an Aboriginal Heritage Work Area Clearance Survey was conducted on the Priority Area at the Muchea Silica Sand Project with representatives from the Whadjuk People and VRX managed by Joe Dortch (PhD, Archaeology) with an Ethnographic Survey conducted early November 2022 with representatives from the Whadjuk People and VRX and managed by Dirima Cuthbert (MEnv Des, BSc Hons, Anthropology) and anthropology assistant Jordanna Rebbeck (BA Anthropology, BA Archaeology).
No archaeological heritage sites were identified on the archaeological survey.
The samples from the drill program conducted the previous quarter will undergo metallurgical testwork which will generate further samples for buyer testing following overwhelming interest from potential offtake partners.
A first pass metallurgical testwork program is underway on drill samples from the March 2022 program to determine the specification of the potential products that can be produced from the in-situ sand resource at Boyatup. Once identified, a marketing study will be completed to determine the focus to maximise the economic value of the project.
Geothermal Exploration Permit Applications
VRX made a number of applications for Geothermal Exploration Permits proximal to the Company’s current Arrowsmith North and Arrowsmith Central silica sand holdings. The applications were made as part of VRX’s overall green energy intentions as demonstrated by the hydrogen gas MOU signed with XODUS Energy Pty Ltd.
WA Investment Attraction Fund
In October 2022, VRX lodged a detailed application under Stage 2 of the Western Australian State Government’s Diversity WA scheme.
During the period, VRX issued 2,000,000 ordinary fully paid shares upon the exercise of 4,000,000 unlisted options. The Company also issued 10,000,000 unlisted options under its employee equity incentive scheme, with an expiry date of 31 December 2025, exercisable at 20c.