Published On: March 15th, 2023
VRX Silica Limited (ASX: VRX or Company) is a mineral exploration company that is developing high-quality silica sand projects. Silica sand is used in various industrial applications, including glassmaking, foundry moulds, and construction. The Company is developing several silica sand projects in Western Australia, with significant tonnes of resources. VRX is committed to sustainable and responsible mining practices and strongly focuses on environmental stewardship and community engagement. This report provides an update on the Company’s financial performance, projects and operations, market analysis, and plans for the first half of the financial year 2023.
Financial Performance
VRX Silica Ltd is a silica sand exploration and development company based in Western Australia. The group divided its operation into two reportable segments, development assets and Exploration and evaluation assets for management purposes. During the first half of 2023, the Company reported revenue of AUD 0.08 million and incurred net losses of AUD 2.62 million.
Figure 1: VRX Silica Ltd Profit or Loss Statement for the half-year period
As of December 31st, 2022, the Company has a strong cash position of AUD 5.10 million with net assets of AUD 19.45 million. In the half year that ended December 31st, 2022, the Company had no development assets.
Figure 2: VRX Silica Ltd Financial Position as of December 31st, 2022
Updates on Cashflow and Changes in Equity
- In reporting six months period, VRX Silica invested AUD 2.36 million in mining interests, along with several more minor investments
- During the period, 2 million ordinary fully paid shares were issued upon the exercise of 4 million unlisted options
Projects and Operations
VRX is a pure-play silica sand exploration and development company with high-value and advanced-stage projects in Western Australia. The Company has four projects in their portfolio.
Arrowsmith North Silica Sand Project
The Arrowsmith North Silica Sand Project is a flagship project of VRX. The project is located in Western Australia. It is expected to produce high-quality silica sand for the construction industry. The Company will build a 2mtpa processing plant and is expected to commence production in 2023, subject to final environmental approvals. A revised capital estimate will be used to seek funds to construct the 2 million tonnes per year capacity processing plant with a unique patented custom process circuit.
Figure 1: Estimated Mineral Resources of Arrowsmith North
Cube Consulting is handling mining engineering work towards a life-of-mine production schedule for Arrowsmith North Project. The production schedule was completed in quarterly increments for the first 7 years, followed by annual increments for the following 38 years. The schedule was aggregated and reported in 5-year increments to the end of the mine’s 111-year life.
On November 11th, 2022, VRX announced an update to the Mineral Resource Estimate (MRE) and Ore Reserve Statement (ORS) for Arrowsmith North.
Figure 2: Estimated Mineral Open Pit Ore Reserve Estimate of Arrowsmith North – November 2022
VRX has now completed all pre-production works related to mining and processing. Also, the production of bulk material for the various final products and detailed engineering design of the planned processing plant is close to completion. The Company is in the final stages of attaining regulatory approval to commence construction once all approvals are in place.
Figure 3: Arrowsmith North Ore Reserve Area
Arrowsmith Central Silica Sand Project:
Arrowsmith Central is also one of the Company’s advanced-stage projects. It has commenced the environmental approval process with the EPA. On June 20th, 2022, VRX Silica lodged the Environmental Scoping Document (ESD) for environmental studies and assessment. Currently the ESD is under assessment, and the Company is not in a position at this stage to set a definitive timeline for the approval process for Arrowsmith Central.
Figure 4: Estimated Reserves and Resources of Arrowsmith Central
Muchea Silica Sand Project:
The Muchea Silica Sand Project is located 50km north of Perth. It is close to bulk transport routes and reliable energy supplies, adjacent to the Brand Highway and a rail connection to the Kwinana Port. The project has a total Indicated and Inferred Mineral Resource of 208 million tonnes at 99.6% SiO2 and an Ore Reserve of 18.7 million tonnes at 99.9% SiO2. The Muchea project needs a low capital expenditure of AUD 40 million to construct 2 million tonnes per annum operations. The project is expected to yield AUD 3.3 billion in revenue over the initial 25-year mine life.
Figure 5: Estimated Reserves and Resources of Muchea Project
Boyatup Silica Sand Project
The Boyatup Silica Sand Project is 125km east of Esperance in Western Australia. The metallurgical test work program is underway on collected samples to determine the potential of products produced from the in-situ sand resource. Samples were collected under March 2022 drilling program.
Figure 6: Estimated Resources of Boyatup Project
Market Analysis
After air and water, silica sand is the most used commodity on planet earth. The global silica sand market is growing continuously, supported by increasing demand from the construction, glassmaking and solar panel industries. It is the main ingredient in all types of glassmaking, including specialty solar panels and high-tech glass. Glass manufacturing is growing at the rate of 5-6% per annum or, in absolute terms, around 8-10 million tonnes per annum. Asia is one of the most significant global manufacturing players of glass, with a contribution of approximately 47%.
Silica sand resources are rapidly being exhausted, and the Asia-Pacific region is experiencing increasing demand during a global supply shortfall. Silica sand is also a vital ingredient in the foundry and casting industries. Korea dominates the foundry industry, particularly for significant marine components.
- The global silica sand market is expected to reach USD 32.1 billion by 2028, growing at a CAGR of 8.1% from 2021 to 2028.
- VRX Silica Limited is well-positioned to benefit from the growing market trend with its high-quality silica sand projects.
Other Highlights of the Report
- Operations: The Company has secured a strategic landholding in the Arrowsmith region of Western Australia, which is estimated to contain significant tonnes of high-quality silica sand. It gives VRX Silica a leading advantage in securing off-take agreements and meeting customer demand.
- Environmental: VRX Silica is working to reduce its environmental footprint by using local gas resources and implementing sustainable mining practices. The Company has partnered with an energy provider to install a LNG fired power system at its Arrowsmith North project. It will help to reduce greenhouse gas emissions and lower operating costs.
- Social: The Company strongly focuses on community engagement and stakeholder relations. It has established early engagement with the Indigenous community to ensure that its mining activities are conducted culturally sensitively and respectfully.
The Company Managing Director: Mr Bruce Maluish
Mr Bruce Maluish, the Managing Director at VRX Silica, has more than 40 years of experience in the mining industry. He holds a bachelor’s degree in Applied Science (B.A.Sc.) in Surveying from the Western Australian Institute of Technology, and a Diploma in Metalliferous Mining.
Figure 2: Managing Director, Mr Bruce Maluish
Before arriving at VRX Silica, Mr Maluish was Managing Director and General Manager for various organisations like Abelle, Matilda Minerals, Hill 50, and Forsyth Mining. He has overseen different administrative and management roles, including setting up and marketing IPOs, commencing exploration to total production, and identifying, developing, and expanding projects.
Commenting on the half-year results, VRX Silica Managing Director, Bruce Maluish, said, “The financial and operational results achieved during the half-year demonstrate our continued focus on progressing the development of our silica sand projects and delivering value to our shareholders. We are pleased to report on the progress we have made in advancing our projects.” Managing Director Bruce Maluish.
Investors Outlook
- As of March 14th, 2023, the VRX Silica Ltd share price stood at AUD 0.108 per share, and the stock volume (4-week average) was 244,692 with a 52-week range of AUD 0.100 to AUD 0.225
- The Company has 560.40 million shares on issue and has a market capitalisation of approximately AUD 60.24 million as of March 14th, 2023
- VRX Silica’s projects are aligned with market demand. Mineral Resource Estimate (MRE) updated in November 2022 for Arrowsmith North Project show the increase in resource confidence in the initial mining years
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