Why Did Quinbrook Walk Away from ASQ’s 17Mt Quartz Hill Project?

Background and Resource Overview

Australian Silica Quartz Group Limited (ASQ) has provided an important update on its 100% owned Quartz Hill Metallurgical Grade Silicon Quartz (MGSi) Project in Far North Queensland. The project boasts a substantial JORC 2012-compliant mineral resource of 17.3 million tonnes at an average silica (SiO2) grade of 99.04%, positioning it as a potentially significant supplier of high-purity quartz for the emerging silicon manufacturing sector.

Located approximately 300 kilometres northwest of Townsville, the Quartz Hill deposit lies within ASQ’s Mount Surprise tenure and is characterized by a 1,300-metre-long quartz ridge. The resource is classified as 7.6Mt indicated and 9.7Mt inferred, reflecting a solid foundation for further development.

Termination of Key Offtake Agreement

ASQ had been advancing the Quartz Hill project under a Heads of Agreement (HoA) with Quinbrook Infrastructure Partners, a renewable energy infrastructure investor aiming to secure feedstock for a planned polysilicon manufacturing facility in Townsville. Quinbrook contributed $1 million towards exploration and development, with an exclusive right to purchase up to 10 million tonnes of MGSi quartz at a discount to market price.

However, after ASQ delivered a detailed Scoping Study in May 2025, Quinbrook advised that the quartz grades from Quartz Hill did not meet the updated specifications required for 100% of their polysilicon feedstock needs, primarily due to iron and aluminium concentrations. Following a period of discussions, Quinbrook elected not to proceed with funding a Feasibility Study and formally terminated the HoA on 11 June 2025.

Scoping Study Insights and Project Viability

The Scoping Study, prepared with Quinbrook’s support, outlined a project with capital expenditure estimated between AUD 2.44 million and AUD 6.84 million and operating costs around AUD 27.5 million annually. The study projected a net present value (NPV) of approximately AUD 37 million and an internal rate of return (IRR) of 258%, assuming a 20% profit margin on operating costs.

Mining operations were envisaged as conventional truck-and-shovel methods with drill and blast, producing around 350,000 tonnes per annum of MGSi quartz lump product. Processing would involve crushing, screening, and optical ore sorting to reduce impurities, with an expected product recovery rate of 48%. Environmental and native title approvals remain critical milestones, with two potential regulatory pathways identified.

Despite these promising financial indicators, the project faces significant risks. The metallurgical testwork underpinning product quality was based on samples from a single drill hole, raising questions about grade consistency across the resource. Furthermore, the lack of an established market price for MGSi quartz complicates revenue forecasting. The termination of the Quinbrook agreement leaves ASQ without a committed offtake partner, adding uncertainty to the project's commercial outlook.

Next Steps and Exploration Focus

With the Quartz Hill project development now on hold, ASQ is turning its attention to other high-priority MGSi quartz targets within its extensive Queensland portfolio. Notably, the Mount Surprise Quartz Ridge, a 1,500-metre-long quartz body, has yielded rock chip samples with silica grades up to 99.98%, indicating potential for higher-grade feedstock.

Exploration programs targeting these deposits are planned in the coming months, signaling ASQ’s commitment to advancing its MGSi quartz assets despite the setback at Quartz Hill. The company also remains open to future engagement with Quinbrook regarding other quartz sources, though any new arrangement would be subject to fresh negotiations.

ASQ’s management and technical teams face the challenge of securing new offtake agreements and funding to progress these projects through feasibility and development stages. Environmental approvals, native title negotiations, and metallurgical validation will be key focus areas moving forward.