VRX Silica Ltd's (ASX:VRX) bankable feasibility study (BFS) for the Arrowsmith Central Silica Sand Project north of Perth in WA has revealed compelling financial metrics which complement the Arrowsmith North deposit.
The BFS, which is the second for the company’s three advanced silica sand projects, shows an ungeared NPV10 of $147.6 million based on 25 years of a potential mine life of plus-35 years.
Maiden probable reserve
A maiden probable ore reserve has also been released for the project, which is 270 kilometres north of Perth.
This reserve totals 18.9 million tonnes at 99.6% silica oxide with 18.7 million tonnes at 99.6% within the area of the company’s mining lease application.
Managing director Bruce Maluish said: “This reserve estimate is in accordance with our expectations and is complementary to our nearby Arrowsmith North Silica Sand Project.
“Arrowsmith Central is a smaller resource than Arrowsmith North but has the potential to still be a very long-life project with additional drilling of the inferred resource expected to be sufficient to realise the production target.
“Arrowsmith Central will produce alternative products to Arrowsmith North and will add to our available catalogue of products to be produced from our silica sand projects.”
VRX Silica's BFS is based on 25 years production from a more than 35-year mine life and this is mined solely from probable ore reserves during the initial 13-14 years of the project.
The balance is from inferred mineral resources in the proposed mining area, which is 29.4 million tonnes at 96.2% silica oxide, with the company planning to upgrade this resource and mine it from year 14 onwards.
VRX Silica has undertaken sufficient drilling to confirm geological and metallurgical continuity of the sand deposit.
The cost for drilling, assaying and associated studies is estimated to be in the region of $100,000 and will be undertaken within the first 13 years of mining operations.
The company has engaged with the Department of Water and Environmental Regulation following preliminary environmental studies to identify key issues pertaining to the project environmental approvals for mining.
Strong market demand
Globally, silica sand is in a growth phase due to increasing demand from the construction sector, with both volume and value having increased worldwide.
Sales of silica sand experienced a compound annual growth rate of around 8.7% in value terms from 2009 to 2016, with a market value of US$6.3 billion.
This was due to its applications across a range of industries, including glassmaking as well as foundry casting, water filtration, chemicals and metals, along with the hydraulic fracturing process.