VHM strikes milestone offtake deal with Shenghe, boosting Goschen prospects

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By Colin Hay - 
VHM ASX offtake deal Shenghe Goschen prospects Victoria rare earths REE

VHM (ASX: VHM) has received a major boost to its plan of becoming a significant rare earth and heavy mineral developer with the execution of a binding offtake agreement for its flagship Goschen project in Victoria.

The agreement with a subsidiary of leading Asian rare earths trading house Shenghe is for an initial three-year term and covers 60% of the rare earth mineral concentrate (REMC) and zircon-titania heavy mineral concentrate (HMC) produced from phase 1 of the Goschen project.

VHM’s chief executive officer Ron Douglas said the agreement highlights the quality of the Goschen resource and the value in the initial products – a REMC containing over 58% total rare earth oxide (TREO) and a zircon-titania HMC comprising high-grade zircon, rutile, leucoxene and ilmenite.

Strong endorsement

“Shenghe is a globally-recognised rare earths and mineral sands processor. This agreement between VHM and Shenghe is a strong endorsement of the world-class rare earths and mineral sands resource and the strategic value of the Goschen project,” Mr Douglas said.

“A binding offtake arrangement for first production provides a favourable influence on the bankability for the project and further distinguishes the staged development approach of Goschen as a viable, de-risked, low capital intensity project.”

VHM will now take the opportunity to increase the value of the remaining 40% production during the first three years of both the REMC and the HMC through spot sales and other commercial arrangements.

Hydromet circuit development

VHM is committed to developing a hydromet circuit to produce a mixed rare earth carbonate as part of a staged development approach.

The hydromet circuit is to be co-located on the Goschen mine footprint alongside the base plant (phase 1) and will bring further capability to Australia’s downstream rare earths processing capabilities.

Discussions have commenced with potential buyers and strategic European, North American and Japanese parties after the successful pilot scale test work generated a sample product containing exceptional recoveries of 97% neodymium–praseodymium, 92% dysprosium and 94% terbium.

Attractive opportunity

Goschen’s dual commodity mix is an attractive economic opportunity to contribute to Australia’s supply and trade position in the global critical minerals markets.

Approximately 70% of Goschen’s revenue will come from rare earth products including those mentioned above, which are critical for manufacturing electric vehicles, energy efficiency and technology.

The offtake agreement with Shenghe is an important step along the road to construction and start-up at Goschen.

This is a remarkable achievement for VHM, coming just a year after the company completed its initial public offer in January 2023.

Subject to favourable government approval outcomes in 2024, first production at Goschen is planned for 2025.