VRX Silica unveils positive BFS for Muchea silica sand project

VRX Silica ASX Bankable Feasibility Study BFS Muchea maiden ore reserve
VRX Silica’s BFS for Muchea estimates $3.34 billion in life of mine revenue.

VRX Silica (ASX: VRX) has unveiled a maiden ore reserve and bankable feasibility study for its Muchea silica sand project in Western Australia – making it the third advanced study to be completed across VRX’s advanced silica sands assets in the region.

The study anticipates revenue of $3.345 billion for the Muchea project compared to $2.773 billion for its recently completed BFS on the Arrowsmith North asset.

This revenue is projected over 25 years, with cashflow and finance after tax predicted of $1.23 billion for the period.

Underpinning the first 10-year mine life are ore reserves of 18.7 million tonnes at 99.9% silica. Of this, 14.6Mt of the ore lies within the mining lease application area.

VRX managing director Bruce Maluish said the reserve was only a small portion of the wider inferred resource estimate for the project, but produces a “very high-grade product” which is currently in demand within Asia’s specialist markets.

The study estimates capital expenditure of $32.82 million would be required to develop a 2Mtpa operation.

Payback is predicted within 2.3-years.

Mr Maluish said Muchea is a “world-class” silica sand project which can support a substantial export industry for WA – offering flow-on benefits to the state and the project’s Muchea-Gingin district.

“We have already had significant interest in the Muchea product that will command higher prices than products from our Arrowsmith North and Central silica sand projects.”

He added the company’s plan was for Muchea to provide alternative high-grade products to Arrowsmith and diversify the company’s available products.

Silica sand

According to VRX, high-grade silica sands such as at Muchea’s is a raw material consumed in construction, glass, metal casting and ceramics sectors.

The sands are sought for their physical and chemical attributes and are also used in water filtration and hydraulic fracturing.

Construction is driving silica sand demand worldwide with the compound annual growth rate hitting 8.7% between 2009 and 2016.

The Asia Pacific region is forecast to remain the largest industrial sand consumer through to 2025 – propped up by a dominant Chinese market.

Additionally, China’s container glass industry is anticipated to consume more silica sand, which is propelled by the growth in glass bottles – particularly for alcoholic beverages.