VRX Silica Limited has secured four binding offtake contracts for 410,000 tonnes per annum of silica sand from its Arrowsmith North project, representing nearly half of its initial production capacity and marking a significant commercial milestone.
- Four binding offtake contracts signed with reputable customers in South Korea, Taiwan, and the Philippines
- Contracts cover nearly 50% of Arrowsmith North’s planned start-up capacity of 1Mtpa
- Project has received key environmental, mining, and works approvals enabling construction
- Production targeted to commence in late 2026 following final investment decision
- VRX progressing debt financing with multiple proposals under evaluation
Securing Market Confidence
VRX Silica Limited (ASX, VRX) has taken a decisive step forward in commercialising its Arrowsmith North Silica Sand Project by securing four binding offtake agreements with established customers across South Korea, Taiwan, and the Philippines. These contracts collectively commit to purchasing 410,000 tonnes per annum of high-quality silica sand, accounting for nearly half of the project’s planned initial production capacity of approximately 1 million tonnes per annum.
The customers, described as reputable and substantial suppliers to the foundry, glassmaking, and filter industries, underscore the strategic importance of Arrowsmith North’s product quality and VRX’s positioning as a reliable supplier from a Tier 1 jurisdiction. This milestone follows the granting of critical environmental, mining, and works approvals earlier this year, clearing the path for construction and operation.
Project Readiness and Market Demand
Located 270 kilometres north of Perth, Arrowsmith North boasts a globally significant silica sand deposit with a JORC-compliant Ore Reserve of 221 million tonnes at 99.5% silica purity. The project’s bankable feasibility study, updated in March 2024, envisages a gradual ramp-up from 1Mtpa to over 2Mtpa, supporting a mine life spanning several decades.
Silica sand is a critical raw material for foundry casting and glassmaking industries, with stringent quality requirements around particle size, shape, and thermal stability. VRX’s extensive testing has confirmed that Arrowsmith North’s sand meets these demanding specifications, making it highly sought after in the Asia-Pacific region, where supply shortages are driving long-term price increases.
Financial and Operational Outlook
The binding contracts are structured for four-year terms with fixed pricing for the first two years, providing VRX with revenue certainty that is crucial for securing project financing. The company has mandated Argonaut as its financial advisor and is currently evaluating a shortlist of debt financing proposals, buoyed by increased interest following the project’s key approvals.
VRX aims to commence construction in the first half of 2026, targeting first production by late 2026. The company is actively negotiating additional binding offtake agreements, with further announcements expected within the quarter, reflecting strong inbound interest from multiple market participants.
Strategic Positioning and Future Prospects
VRX’s strategy to secure long-term contracts with reputable partners aligns with its goal to balance price exposure and revenue stability while ramping up production. The company’s portfolio of silica sand projects, including Muchea and Boyatup in Western Australia, positions it well to meet growing demand across various high-value glass and foundry markets.
With foundational commercial agreements in place and regulatory hurdles cleared, VRX is poised to advance Arrowsmith North from development to production, potentially reshaping the silica sand supply landscape in the Asia-Pacific region.
Bottom Line?
As VRX moves toward construction and production, the next wave of offtake contracts and financing decisions will be critical to sustaining momentum.
Questions in the middle?
- Which additional customers will VRX secure binding contracts with this quarter?
- How will VRX structure its debt financing to optimize project economics and risk?
- What impact will evolving silica sand demand and pricing in Asia-Pacific have on VRX’s long-term revenue?