VRX Silica (ASX:VRX) secures four binding offtake contracts for Arrowsmith North

VRX Silica Limited (ASX:VRX) has achieved a major commercial milestone with the signing of four binding offtake contracts for its Arrowsmith North Silica Sand Project in Western Australia.

The agreements confirm strong demand for the company’s high-purity silica sand and mark the transition from project development to commercial delivery.

Managing Director Bruce Maluish outlines the significance of these offtake deals, the company’s strategy in building long-term partnerships across Asia, and the next steps toward construction and production at Arrowsmith North, a fully permitted, long-life project located 270 kilometres north of Perth.

What is the significance of these binding offtake contracts for Arrowsmith North?

The execution of four binding offtake contracts represents a key milestone for VRX, securing commitments for a total of 410,000 tonnes per annum of high-quality silica sand.

This volume accounts for close to half of the project’s planned start-up capacity of approximately one million tonnes per year, confirming the strength of market demand for Arrowsmith North’s products.

“We are delighted with the support from our offtake partners as we secure initial binding offtakes for Arrowsmith North. VRX is seen as a reliable supplier of high-grade silica sand products and Australia as a dependable jurisdiction.”

Significantly the customers we have in Korea are multi-generational family companies supplying the automobile industry and have been associated with the largest automobile producers for more than 50 years.

These long-term agreements provide VRX with a solid commercial foundation and the revenue certainty required for securing project finance.

They also validate the company’s marketing strategy of supplying high-purity silica sand from a stable Tier 1 jurisdiction, reinforcing Arrowsmith North’s position as a reliable and enduring source for industrial customers across the region.

Further binding contracts are pending from customers who previously had non-binding indicative agreements.

Who are the customers under these offtake agreements and what industries do they represent?

The offtake partners are four well-established, vetted, reputable companies based in South Korea, Taiwan and the Philippines.

Two are long-standing suppliers to South Korea’s foundry industries, one is a leading supplier of foundry, glassmaking, water filter media and sized dry sand in Taiwan, and the fourth is a glass manufacturer supplier in the Philippines.

Each company operates in industries that require silica sand of exceptional quality and consistency, with strict standards relating to particle size, grain shape and thermal stability.

Testing of Arrowsmith North’s samples by these partners confirmed the product meets the high specifications required by both foundry and glassmaking sectors, ensuring strong demand from multiple applications across Asia.

We have been engaged with these companies for more than 3 years, we have met with the principals of each company and have completed a thorough due diligence on their capabilities to buy our products.

Once we establish this supply chain we expect each to be a long term customer.

“These contracts further vindicate VRX’s strategy to ensure production of a unique Australian highly sought-after product and secure the right customers for our silica sand products for what we expect to be long-term relationships.”

How do these offtake contracts align with VRX’s long-term marketing and production strategy?

The new offtake agreements align directly with VRX’s broader marketing and production objectives, which focus on building a diversified portfolio of long-term supply contracts while maintaining financial stability and flexibility.

Each contract has a four-year term, with pricing fixed for the first two years in line with the company’s financial modelling from the Arrowsmith North Bankable Feasibility Study released in March 2024.

These contracts are conditional which is expected for this type of contract but there is no doubt about the commitment from buyers to buy our products from Arrowsmith North.

This structure of foundation customers provides predictable early revenue and supports a balanced production ramp-up from an initial one million tonnes per annum to more than two million tonnes per annum over time.

The agreements also strengthen VRX’s position with potential lenders, as they demonstrate a clear sales pipeline and confirm the project’s economic robustness.

We expect further interest from potential buyers on the back of these contracts.

By securing multiple customers across different markets and industries, VRX Silica is establishing a stable base for long-term operations while maintaining flexibility to capture new opportunities as the silica sand market continues to grow throughout the Asia-Pacific region particularly around the burgeoning automobile manufacturing support industries.

What are the next steps for VRX at Arrowsmith North following these agreements?

With environmental, works and mining approvals now in place, the company’s immediate focus is progressing project finance and advancing construction readiness.

VRX has appointed Argonaut as its financial adviser and has completed an independent technical review, which has attracted strong interest from potential debt financiers. A shortlist of financing proposals will be evaluated in the coming weeks.

“We remain focused on converting the remaining offtake term sheets and new interest into binding offtake agreements. With key project approvals in place, our marketing team is actively engaging with interested parties involved in the foundry sand and glass-making industries in Asia and responding to a number of new enquiries as our high-quality silica sand products and surety of supply become recognised in the marketplace.”

Once financing is finalised, construction of the processing plant and associated infrastructure is expected to begin in the first half of 2026, with commissioning and first production targeted for late 2026.

Meanwhile, discussions continue with additional potential customers, and further offtake announcements are anticipated later this quarter.

What makes Arrowsmith North’s silica sand products attractive to the market?

Arrowsmith North contains a world class JORC-compliant Proved and Probable Ore Reserve of 221 million tonnes at 99.5% SiO₂, representing one of the highest-quality and most substantial silica sand deposits globally.

Testing conducted by potential buyers demonstrated the product’s ideal combination of particle size distribution, grain shape and thermal stability, all of which are essential for foundry applications where strength and thermal resistance are critical.

In the glassmaking industry, Arrowsmith North’s high purity and uniform grain size ensure clarity, strength and defect-free performance in flat, container and specialty glass products.

These qualities, combined with the project’s scale, location and security of supply from a Tier 1 jurisdiction, position VRX as a long-term, sustainable supplier capable of meeting the growing industrial demand for high-grade silica sand across Asia.

Building a foundation for long-term supply

The completion of four binding offtake contracts represents a pivotal achievement for VRX Silica, confirming both market confidence and the commercial viability of the Arrowsmith North Project.

With a globally significant reserve base, key approvals secured and a growing

portfolio of credible customers, the company is now positioned to advance into the next stage of development with strong financial and operational momentum.

As Managing Director Bruce Maluish notes, these agreements demonstrate that Arrowsmith North is increasingly recognised for its premium product quality and reliable supply chain.

The company’s focus now shifts to finalising project finance, logistics contracts and commencing construction in 2026, and building on this foundation of long-term customer partnerships to deliver sustained growth and value creation for shareholders.

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