VRX Silica Limited (ASX:VRX) Managing Director, Bruce Maluish provides an update on the company's silica sand projects, the market for silica sand, and timelines.
Rachael Jones: Hello, I'm Rachael Jones for the Finance News Network. Joining me today from VRX Silica (ASX:VRX) is Managing Director Bruce Maluish. Bruce, welcome to FNN.
Bruce Maluish: Thank you, Rachael.
Rachael Jones: Now, first up, Bruce, could you start by giving us an introduction to the company?
Bruce Maluish: VRX Silica was originally floated in 2011 -- ostensibly then to explore a base metals project, which we've since sold. But since 2017, we've been focused on silica sand, and particularly our projects here in Western Australia.
Rachael Jones: Thanks Bruce. Now, before we do talk about your projects, can you tell us about the market for silica sand, where it's used, and what is the outlook for prices?
Bruce Maluish: Well, silica sand, strangely enough is one of those products that you're totally surrounded by all the time, but never think about. But predominantly we're looking at the glass market, and that's flat glass and container glass in Asia. But it's also used in paints, and light globes, LCDs. And, in fact, the screen you're looking at now has got a bank of LCDs in the back of them, which are all made of glass.
There's an unusual situation at the moment, and I guess it also relates back to COVID stimulus spending, that in Asia, the bulk of that spending is involving a lot of concrete. It's creating a significant shortage of sand, and sand that may be beneficiated and may be suitable for glass, which is probably the reason why we're getting so much interest from Asian countries at the moment to buy our sand.
Rachael Jones: Now let's talk about your Arrowsmith Project. Can you tell us more, such as the project's size, and what stage the project is at?
Bruce Maluish: We've got two project areas in the Arrowsmith Project. Arrrowsmith North, it's got a resource of over 700 million tonnes, but we've selected an area that's relatively environmentally benign, and that's where we've applied for our mining lease. It's got about 200 million tonnes. So, that's potentially a plus-100-year project. Arrowsmith Central is a little bit smaller, not quite as good quality either, but it's about 70 million tons. So, between the two of them, extremely long-life projects.
We're at the point now where we have finalised the terms for the native title agreement. So, we expect the mining lease to be granted fairly soon. We've finalised, also, the environmental surveys that are required to get a mining permit. And we've had a number of meetings with the State and Federal Environmental Authorities.
Rachael Jones: And could you tell us, Bruce, about the project economics?
Bruce Maluish: The economics of these projects are very robust, and a big reason for that is the low capex required to start these projects. We need about $30 million to install a two million tonne per year plant. And that's well within reach of a company of our size. The processing of this product is relatively easy. It uses equipment straight out of the mineral sands industry, which is well represented here in Western Australia for engineering. We expect to be able to pull the trigger on the construction of these plants once we put away about a million tonnes per year in offtake. We've got 54 companies now that have expressed an interest. And we're negotiating now with some of the major operators in each of Korea, Japan, Philippines, Malaysia, Thailand, and of course China.
Rachael Jones: Excellent, thanks Bruce. Another project with great potential is your flagship project, Muchea. That's 50 kays north-west of Perth. What does it contain, and what stage is this project at?
Bruce Maluish: We can produce sand there at about 99.9 per cent and about 100 PPMI. Iron is critical when it comes to selling sand into the glass market. So, in fact, this can go into a different market than Arrowsmith. It'll go into the ultra clear glass market. And, of course, you get a better price for that quality sand, and it has better margins.
We're at the point now, we've completed an agreement with the native title claimants, and that agreement is now with the Mines Department here to grant the tenement. We expect that to happen fairly soon. The engineering is quite similar to Arrowsmith. The test work we've done at each of the projects has indicated we could use basically the same plant.
Rachael Jones: Bruce Maluish, thanks so much for the update and congratulations on your progress.
Bruce Maluish: Thank you, Rachael.