Bauxite Resources Ltd. unit Australian Silica Quartz Pty. Ltd. executed a binding term sheet with Urban Resources Pty. Ltd. to jointly produce high-grade silica sand from the latter's silica sand deposit in Bullsbrook, Western Australia.
The company said Jan. 17 that the current deposit is anticipated to have up to an eight-year mine life at 1 million tonnes per annum.
Urban will operate the mine, while Australian Silica will run the marketing and sales operations and fund additional equipment up to A$1.25 million. The equipment is needed to upgrade the current sand produced to higher grades to meet overseas market requirements. Profits will be divided equally.
The joint venture operation will initially produce about 50,000 tonnes per annum of the high-grade silica sand, and the plant will have the capacity to produce up to 250,000 tonnes per annum.
The additional equipment will take about four months to install, and once the company has secured the customers and the operations have attained reasonable profitability, it will consider additional capacity.
The agreement is subject to procuring an overseas buyer of at least 50,000 tonnes of silica sand at not less than A$70 per tonne and to the parties entering into a formal agreement within 150 days.
Urban has a second mining lease in the vicinity that will supplement the existing operation when it runs out or will be run concurrently depending on logistics and profitability.