VHM Targets 5Mtpa Rare Earths Output with A$160M Initial Capital

A World-Class Critical Minerals Opportunity

VHM Limited (ASX: VHM) has provided a comprehensive update on its Goschen Rare Earths and Mineral Sands Project in Victoria, Australia, outlining a clear, staged pathway to production and expansion. The project, which targets critical minerals essential for the global energy transition, is positioned to deliver significant value with a pre-tax net present value (NPV8) exceeding A$1.5 billion and an internal rate of return (IRR) above 60%.

The company plans to commence initial production at 1.5 million tonnes per annum (Mtpa) by late 2026, with a modular plant design that supports a low upfront capital expenditure of approximately A$160 million. This initial phase is expected to generate operational cash flow to self-fund the expansion to a permitted 5Mtpa throughput by 2029.

Staged Development Strategy and Financial Strength

The staged approach leverages dual revenue streams from Rare Earth Mineral Concentrate (REMC) and Heavy Mineral Concentrate (HMC), reducing project risk and capital intensity. The modular plant and infrastructure design allow for incremental capacity additions, delivering capital savings compared to earlier bespoke plans.

VHM’s financial modelling, updated with current market pricing and contractor estimates, confirms a payback period of just 3.3 years pre-tax and pre-corporate costs. Operating costs are forecast at A$77 million per annum during the initial phase, rising to A$175 million per annum at full 5Mtpa capacity, reflecting the scale-up in mining and processing activities.

Regulatory Progress and Offtake Discussions

Crucially, the project has secured endorsement of its Environment Effects Statement (EES) from the Victorian Minister for Planning, a significant regulatory milestone that de-risks the pathway to mining licence approval. VHM is actively progressing the mining licence application and secondary approvals, targeting completion within 2025 to enable a financial investment decision and project financing.

On the commercial front, VHM is engaged in discussions with multiple potential offtake partners and financiers, reflecting strong market interest in the project’s critical mineral products. The company has already secured a binding offtake agreement with Shenghe Resources, underscoring confidence in the product’s marketability.

Long Mine Life and Exploration Upside

The Goschen Project boasts a long mine life of over 20 years based on proven and probable ore reserves of 98.8 million tonnes at 4.0% total heavy minerals (THM). The project’s mineral resource inventory is substantial, with 892 million tonnes at 3.0% THM, including significant rare earth oxides and heavy mineral concentrates.

Exploration upside exists within the existing leases, offering potential to extend mine life or increase production capacity beyond current plans. The project’s location in a low sovereign risk jurisdiction with established infrastructure further enhances its attractiveness.

Looking Ahead

VHM’s Managing Director Ron Douglas emphasised the project’s strategic importance and robust economics, highlighting the phased development as a low-risk, capital-efficient approach to unlocking value. The company’s next key milestones include securing the mining licence, finalising financing arrangements, awarding major contracts, and commencing construction activities.

While the project’s fundamentals are strong, VHM acknowledges that securing all necessary funding and approvals remains a critical step. The company’s engagement with financiers and offtake partners will be closely watched by investors as the project advances towards production.