VRX Silica Ltd.'s bankable feasibility study for its Arrowsmith North silica sand project in Western Australia 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.
The capital cost to develop an operation with a capacity to produce 2 million tonnes per annum is estimated at A$28.3 million, including a 20% contingency, according to the Aug. 28 release.
Production at Arrowsmith North during a 25-year life of mine is targeted 47.7 million tonnes. The life-of-mine C1 costs, including transport costs and royalties, are estimated at A$30.18 per tonne.
The study is based on a maiden JORC 2012-compliant probable ore reserve of 223 Mt at 99.7% silica, with 204 Mt at 99.7% silica contained within the company's mining lease application.
Total sales from the project are expected at A$2.77 billion, with EBIT estimated at A$1.14 billion.
VRX noted that the bankable feasibility study is based on only 25 years production, but the ore reserve can support a mine life of 102 years.
The company recently updated the resource estimate for the Arrowsmith North project to 771 million tonnes at 98% silicon dioxide.
