Additional Offtake Demand for Arrowsmith North
Released
Released
Announcement PDF
ASX Announcement
20 January 2025
Additional Offtake Demand
for Arrowsmith North
Highlights:
New detailed non-binding offtake term sheets
signed with significant sand importers in South
Korea, Japan and Taiwan
Offtakers supply to sizeable foundry sand end
users who have confirmed superior quality of
Arrowsmith North silica sand for the foundry
industry after comprehensive testing
Adds 440,000 tonnes of offtake interest for
Arrowsmith North silica sand for an aggregate of
640,000 tonnes per year that is expected to grow
Completion of permitting expected Q1 2025,
including environmental and mining approvals
Supports project financing initiatives currently
being explored
VRX Silica Limited (ASX:VRX) (VRX or Company) is pleased
to announce it has entered into additional non-binding offtake
term sheets for the supply of silica sand foundry products
from its Arrowsmith North Silica Sand Project (Arrowsmith
North) into the foundry industries in the Republic of Korea
(South Korea), Japan and Taiwan.
The offtake parties are all significant suppliers in their
respective countries. Namgwang Casting Materials Ind Co.,
Ltd and Woori Corporation, are leading suppliers of sand to
the foundry industry in South Korea. Yamakawa Sangyo Co.,
Ltd is a leading supplier to the foundry industry in Japan.
FarnHwa Enterprise Co., Ltd is a leading supplier of water
filter media and sized dry sand in Taiwan.
The new term sheets follow VRX’s announcement to ASX
earlier this month that the Environmental Protection Authority
of Western Australia has recommended to the Minister for
Environment that the Arrowsmith North development
proposal may be implemented subject to agreed conditions.1
1 ASX announcement “EPA Recommends Arrowsmith North Development Proposal”
dated 9 January 2025
ASX: VRX
Capital Structure
Shares on Issue:
744 million
Listed options:
56 million
Unlisted Options:
35 million
Corporate Directory
Paul Boyatzis
Non-Executive Chairman
Bruce Maluish
Managing Director
Peter Pawlowitsch
Non-Executive Director
David Welch
Non-Executive Director
Ian Hobson
Company Secretary
Silica Sand Projects
Arrowsmith Silica Sand
Projects, 270km north of
Perth, WA.
Muchea Silica Sand
Project, 50km north of
Perth, WA.
Boyatup Silica Sand
Project, 100km east of
Esperance, WA.
Geothermal Energy
Dandaragan Geothermal
Energy Permit, 145km
north of Perth, WA
The Company is actively
assessing other silica sand
and downstream
processing projects in
Australia.
They set out detailed terms and conditions for the supply of an aggregate 440,000 tonnes per
annum of AFS20, 35 and 55 certified foundry sand for a period of four years, with indicative
pricing within the range of the Company’s financial modelling for Arrowsmith North as provided
in the updated bankable feasibility study for the project announced to ASX in March 20242.
Key assumptions for the BFS include a target price range of US$38-43 per dry metric tonne,
dependent on product type, product quality, contract terms and quantity, and a targeted
production schedule of 2.2 million tonnes per annum over the full mine life with a conservative
ramp up from a minimum 800,000 tonnes to 1.1 million tonnes per annum in years 1 and 2.
The Company now has offtake interest under term sheet for an aggregate of 640,000 tonnes,
which includes the 200,000 tonnes sought by Dong A and Dong Nam in South Korea as
previously announced to ASX.3
Extensive testing by potential buyers of Arrowsmith North silica sand foundry product samples
supplied by VRX has confirmed that silica sand from Arrowsmith North will be a sought-after
product for foundry industries in these markets. Organisations are seeking to replace dwindling
volumes from current suppliers with stable long-term supply. The key features for foundry sand
are particle size distribution and grain shape and size. Laboratory results from metallurgical
test work undertaken by the buyers indicate the product from Arrowsmith North is a superior
quality and meets their own stringent specification.
VRX Managing Director Bruce Maluish said: “Increasing interest in our Arrowsmith North silica
sand foundry products is demonstrated by these additional term sheets and we expect more
to follow. These companies are established leaders in their industry and VRX is pleased they
have signed up as we expect them to be long term buyers.”
“The South Korean and Japanese foundry industries in particular are an extensive support
service for the automobile and marine industries. VRX’s engagement with these buyers will
expand awareness of the quality of our product in these large and important Asian markets
and will lead to further inquiries from parties keen to secure long term supplies of Arrowsmith
North silica sand.
“Importantly, these term sheets further vindicate VRX’s strategy to ensure production of a
unique Australian highly sought-after product and to secure the right customers for our silica
sand products. Market demand for the high-quality foundry sand we can produce remains very
strong and, having signed up now five reputable partners, will only further strengthen our
credibility and position in the marketplace.
“We will focus on converting these non-binding term sheets into binding offtake agreements to
support our capital funding requirements and continue to progress talks with other parties
involved in the foundry sand and glass-making industries.”
Permitting for Arrowsmith North is expected to finalise by the end of Q1 2025, including
environmental and mining approvals. The Company is exploring project financing alternatives
including engaging with prospective debt financiers who have expressed an interest in
providing funding for the project.
2 See the updated bankable feasibility study released to ASX in 2024
(ASX announcement “Arrowsmith North Updated BFS” dated 6 March 2024)
3 ASX announcement “Arrowsmith North Offtake” dated 10 November 2021
2
Offtake is subject to final permitting, port clearances and formal documentation, including final
agreement on pricing. Delivery of product will be FOB (Incoterms 2020) via the Port of
Geraldton. The term sheets sets out provisions for quality and quantity of product (including an
increase of volume if the ramp-up period is accelerated by the Company), other delivery terms
(including for stowage, laycan, loading and demurrage), passing of title and risk, payment
terms, weighing, sampling and moisture analysis, and other provisions that are customary for
a commercial transaction of this nature.
VRX cautions that the term sheets are non-binding and subject to conditions. Detailed testing
of sample product, negotiations to-date and expected completion of permitting for Arrowsmith
North give VRX a reasonable basis to believe binding offtake agreements will be entered into
in the near future, however there can be no certainty that any binding agreement will be
reached. Further, there can be no certainty that any conditions precedent to any such binding
agreements will be satisfied. While today’s announcement of these new term sheets remain a
significant development for the Company, investors are nonetheless cautioned against placing
undue reliance on the term sheets.
This announcement has been authorised for release to ASX by VRX Managing Director, Bruce
Maluish.
Further information:
Bruce Maluish
Managing Director
brucem@vrxsilica.com.au
Peter Klinger
Purple
pklinger@purple.au
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About VRX Silica Limited
VRX Silica Limited (ASX: VRX) is the most advanced pureplay silica sand company listed on the
ASX, developing its 100% owned silica sand projects at Arrowsmith (North, Brand and Central),
Muchea and Boyatup in Western Australia.
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 hightech glass, and foundry casting. It is a
finite resource that is running out, with the
Asia-Pacific region experiencing an evergrowing supply shortfall that is driving up
prices.
Arrowsmith is located 270km north of
Perth. Arrowsmith North boasts a minimum
25-year mine life capable of producing
more than 2Mt tonnes per year of highgrade (99.7% SiO2)* silica sand for export
to the foundry, container glass and flat
glass markets in Asia, with permitting well
advanced, and will lead production.
Muchea, located 50km north of Perth, is an
ultra-high-grade (99.9% SiO2)* silica sand
project capable of producing sand required
for ultra-clear glass for solar panels and
other high-tech glass applications.
Boyatup, located 100km east of Esperance,
is under
development and capable of producing
sand for the glass market.
*Information relating to grades are extracted from releases to ASX on 28 August 2019 and 11 November 2022
(Arrowsmith North) and 18 October 2019 (Muchea). The company is not aware of any new information or data that
materially affects this information.
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