VHM's refreshed feasibility study projects an A$807 million pre-tax NPV for its Goschen rare earths and mineral sands project, with approvals and major procurement work substantially advanced. The project still needs financing, lender due diligence and a Final Investment Decision before construction can begin.
- Projected pre-tax NPV8 of A$807 million and 33% IRR
- A$283 million execution capital and A$482 million total funding requirement
- 18-year, 5 Mtpa mine plan with dual revenue streams
- Projected US$7/kg rare earth operating cost after HMC credits
- Financing, HMC offtake and FID remain outstanding
Goschen economics sharpen after 2026 cost refresh
VHM Limited (ASX:VHM) has put a stronger financial case behind Goschen, with its refreshed Definitive Feasibility Study projecting a pre-tax, pre-corporate NPV8 of A$807 million, a 33% internal rate of return and a three-year payback from commercial production. Those figures are projections rather than outcomes, but they give the Victorian rare earths and mineral sands project a substantially defined economic framework as VHM moves towards financing and a Final Investment Decision.
The study estimates average annual revenue of A$326 million and EBITDA before corporate costs of A$146 million over the mine life. Execution capital is estimated at A$283 million, including A$23.5 million of contingency, while the broader funding requirement rises to A$482 million once pre-production mining and processing, corporate costs, start-up working capital and the environmental bond are included.
Dual products underpin projected rare earth costs
Goschen's proposed 18-year operation would process 5 million tonnes of ore a year to produce an average 8,300 tonnes of rare earth concentrate and 131,000 tonnes of zircon-titania heavy mineral concentrate. The second product stream matters to the project economics: VHM reports a life-of-mine operating cost of about US$21 per kilogram of rare earth oxide before heavy mineral concentrate credits, falling to approximately US$7/kg after those credits.
The financial model now applies the pricing and payability methodology in VHM's binding Iluka offtake agreement, using independent Western rare earth price forecasts where available. Average annual production is forecast to include 990 tonnes of contained neodymium-praseodymium and 115 tonnes of contained dysprosium and terbium, giving the project exposure to both light and heavy rare earths. The model assumes real 2026 prices of US$145/kg for Nd-Pr, US$1,980/kg for terbium and US$533/kg for dysprosium.
Approvals are complete, but construction has not started
VHM says all key Federal and Victorian approvals have been secured, while major work packages have been tendered or materially advanced. The company has shortlisted contractors, refreshed the integrated execution schedule and identified critical-path engineering, package interfaces and long-lead requirements. It also says mining and power costs have been retendered, with other operating costs rebuilt from first principles.
That is meaningful progress, but “construction readiness” is not the same as a funded project. VHM's next steps include completing lender due diligence, finalising preferred contractor arrangements for award after FID, advancing vendor data and long-lead equipment planning, and completing heavy mineral concentrate offtake arrangements. Export Finance Australia support of up to A$75 million and a US Export-Import Bank letter of interest for up to US$200 million remain conditional or indicative rather than committed project finance.
Large resource base leaves expansion optionality
The base-case mine plan processes about 93 million tonnes of ore, less than half of Goschen's 220 million-tonne global Ore Reserve and less than 12% of the 890 million-tonne Mineral Resource. VHM has included no value for potential extensions or expansions in the DFS, so the resource scale offers potential optionality without contributing to the headline project valuation today.
The immediate test is therefore less geological than financial and executional. VHM must convert a permitted, market-tested development into definitive funding, contract awards and an FID, while the projected returns remain exposed to rare earth prices, exchange rates, capital costs, construction delivery and operating performance.
Bottom Line?
Goschen now has a clearer economic and permitting profile, but the investment case still turns on whether VHM can secure A$482 million of funding and reach FID without eroding the refreshed returns.
Questions in the middle?
- How much of the A$482 million funding requirement can VHM secure on definitive terms?
- Will final heavy mineral concentrate offtake arrangements preserve the projected US$7/kg net rare earth cost?
- Can contractor awards, long-lead procurement and construction proceed on the refreshed schedule after FID?