VHM identifies significant capex savings for Goschen rare earths project

VHM Limited (ASX: VHM) has identified significant capital expenditure (capex) saving opportunities for its Goschen rare earths and mineral sands project in Victoria.

A robust optimisation review has resulted in a capex reduction for Phase 1 from $483 million to $337m, placing it among the lowest-cost rare earths developments in Australia.

The review has identified several reasonably easy-to-install cost-saving actions including the introduction of early contractor involvement for key offsite infrastructure and leveraging the capability of VHM’s mining services partner to perform initial site development and selected early works.

Low capital cost

Chief executive officer Ron Douglas said the review of the project’s capital costs was undertaken in conjunction with the completion of initial detailed engineering design for the base plant, early contractor involvement in key offsite infrastructure and selection of a mining services partner.

“The development process of detailed design and early contractor involvement to optimise our approach has delivered capital benefits, which indicate that Goschen is one of the lowest capital cost rare earth projects in Australia,” Mr Douglas said.

“We are in an environment where fiscal discipline is the first line of defence against cyclic trends and definitive feasibility study-stage estimates will always be refined once foundation plant design inputs and principal mining services are in place.”

“While this is one of the most challenging markets to construct and operate in recent years, the reduction of our capital costs ensures that this project is competitive and at the bottom of the cost curve.”

Strategic MoU

In late May, VHM signed a strategic memorandum of understanding (MoU) aimed at helping it fast-track development at Goschen.

The agreement with leading local mining services firm Yellow Iron Fleet will allow VHM to gain an early start in identifying and developing the fleet requirements and mining approach for Goschen.

It will also enable the company to accelerate key pre-mining activities.

Game-changing project

Located 275 kilometres north of Melbourne, Goschen is a game-changer for VHM and the economy of the Loddon Mallee region of Victoria.

Phase 1 of the project consists of a 5 million tonnes per annum throughput project to produce two high-value concentrate products: a zircon-titania heavy mineral concentrate and a rare earth mineral concentrate containing neodymium, praseodymium, dysprosium and terbium.

Buoyed by the results of the review, VHM has issued tender packages to vendors for engineering, procurement and construction management services, with the shortlisting of final vendors expected to be complete in the second half of 2024.

Environment approval

VHM has also welcomed the conclusion of an Inquiry and Advisory Committee (IAC) public hearing for Goschen.

Mr Douglas said this marked an important milestone in the Goschen project’s progress towards a ministerial decision.

The IAC now has 40 business days to prepare and issue their recommendation report to the Victorian minister for planning, after which the minister will determine whether to grant approval for the project.

Upon receipt of a favourable ministerial outcome of the primary planning and environment approvals, the Goschen mining licence application will then be assessed by the earth resources regulator.