Mansoor’s Radar: Silica Sector Overview and VRX’s Arrowsmith Leading from the Front

Silica sand is the most-used commodity on the planet after air and water. It is the main ingredient in all types of glassmaking, including specialty solar panel and high-tech glass. The glass manufacturing industry demand is increasing at 5-6% per year, or about 8-10 million tonnes pa. Around 47% of the world’s glass is manufactured in Asia.  

Silica sand is also an essential component of the foundry and casting industries. The largest foundry industry in Korea dominates the sector, particularly for significant marine parts.  

Silica sand is also the main ingredient in concrete.  

Silica sand is a finite resource that is rapidly being exhausted, and the Asia-Pacific region is currently experiencing increasing demand during a global supply shortfall.  

IN FOCUS: ARROWSMITH NORTH 

VRX Silica’s (ASX: VRX) mining and processing operation and production is expected to commence initially at Arrowsmith North in 2023, subject to final environmental approvals.  

A revised capital estimate is underway on a tailored 2Mtpa processing plant with a unique patented custom process circuit.  

VRX Silica has identified long-lead items and commenced the specification and production of tender documentation of processing equipment for the plant in preparation for the procurement process to enable a timely construction program following a decision to mine at Arrowsmith North.  

VRX Silica, like the rest of the resource sector, is seeing delays in the approvals process in Western Australia. VRX Silica deferred the tender process for significant equipment until a precise commencement date can be established.  

However, previous tenders have identified Original Equipment Manufacturers, which will be requested to supply updated tenders with a firm capex estimate. 

IN FOCUS: ARROWSMITH NORTH OPEX/CAPEX 

A Life of Mine operating margin of A$20/t highlights a robust margin. VRX Silica is working on a revised capital estimate to reflect a staggered capital deployment approach. It is expected that the CAPEX requirement may be lower than previously highlighted.  

With a robust demand side, the price forecast of high-grade silica may remain at a similar level as earlier studies estimate of A$50/t.

Source: VRX Silica Financial Model and VRX Bankable Feasibility Study announced on ASX 18/10/19, 17/09/19, 28/08/19

VRX.AX

VRXSILICA FPO [VRX]

ASX

$0.042

$0.003

7.69%

VRXSILICA FPO [VRX]

Sector: Basic Materials

Industry: Other Industrial Metals & Mining

Employees:

VRX Silica Limited, together with its subsidiaries, engages in the exploration and development of mineral properties in Australia. The company explores for silica. It owns 100% interests in the Arrowsmith and the Muchea silica sand projects located to the north of Perth in Western Australia; and the Boyatup silica sand project located to the east of the port town of Esperance. The company was formerly known as Ventnor Resources Limited and changed its name to VRX Silica Limited in December 2018. VRX Silica Limited was incorporated in 2010 and is headquartered in West Perth, Australia.

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