VRX Silica Ltd.'s bankable feasibility study for its Arrowsmith Central silica sand project, part of the Arrowsmith project area in Western Australia, outlined a posttax net present value, discounted at 10%, of A$147.6 million, a 60% internal rate of return and a 2.8-year payback period.
The capital expenditure required to develop a 2 million-tonne-per-annum operation was estimated at A$25.9 million, including a 20% contingency.
Arrowsmith Central is expected to produce 39.6 million tonnes over its first 25 years of operations.
Total sales during the initial mine life are expected at A$2.17 billion with EBIT of A$737 million, the company said Sept. 17.
The study is based on a maiden JORC 2012-compliant probable ore reserve of 18.9 Mt at 99.6% silica at the Arrowsmith Central mining lease, which can support a mine life of 13 to 14 years.
After year 14, the company plans to mine the existing inferred mineral resource of 29.4 Mt at 96.2% silica after converting it to an indicated resource and then to a probable ore reserve.
VRX Silica Managing Director Bruce Maluish said the Arrowsmith Central project will produce alternative products to Arrowsmith North.
"Arrowsmith Central is a smaller resource than Arrowsmith North but has the potential to still be a very long-life project with additional drilling of the inferred resource expected to be sufficient to realize the production target," Maluish said.
A bankable feasibility study in late August for the Arrowsmith North project pegged a posttax net present value, discounted at 10%, of A$242.3 million, a 79% internal rate of return and a 2.4-year payback period.
