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VRX Silica Forms Strategic Alliance With China Southern Glass, Stock Soars 35% on ASX

Post Time:Jul 12,2019Classify:Industry NewsView:6052

As the world is facing a global sand crisis, VRX Silica Limited (ASX: VRX), formerly known as Ventor Resources Limited, is directing its activities into the silica sand sector in order to tap tremendous opportunity in this space. The sand was identified as a strategic resource by the regional governments of Asia because of the supply deficits in the Asia-Pacific region. The company identified this deficiency as an opportunity for Western Australia. As Western Australia is well placed to meet the increasing demand for silica sand in Asia-Pacific markets, the company spotted significant silica sand projects in WA.

The company’s silica sand projects include Muchea Silica Sand Project, Arrowsmith Silica Sand Project and Boyatup Silica Sand Project (all three located in Western Australia). Apart from these projects, the company holds Warrawanda Project and Biranup Project that are prospective for nickel sulphides, base metals, gold and high purity quartz.

VRX Silica Enters Into An MOU With CSG

In an announcement on the ASX today, the company informed that it has entered into an MOU (memorandum of understanding) with CSG Holding Co Ltd which is the largest architectural glass manufacturer in PRC (Peoples’ Republic of China). Under the MOU, a strategic alliance has been formed between the two companies in connection with the VRX Silica’s Muchea Silica Sand Project.

Under the terms of the agreement, CSG or China Southern Glass will help VRX Silica in determining the logistics requirements and demand for silica sand supply in the Peoples’ Republic of China, including contract supply length, the specification for silica sand products and tonnages, transport alternatives and pricing across a range of specifications.

According to the Managing Director of the company, Mr Bruce Maluish, the strategic alliance supports the company’s assessment of increasing supply constraints of silica sand in the Asia Pacific region. It also underlines the potential for a significant and top-grade silica sand mining operation at Muchea.The company is excited over getting a chance to work with CSG Holding Co Ltd and exploring opportunities in the silica sand market of China.

Objectives of the Strategic Alliance

The strategic alliance has been formed between VRX Silica and CSG to explore:

  • The potential for promotion, marketing and sale of silica sand products in the PRC from the Muchea Project.

  • The potential sources of capital finance for constructing production facilities at the Project.

  • The potential for the development of a high-quality glass manufacturing facility in WA for silica sand products generated from the Project.

Conditions of the MOU

Initially, the MOU is signed for six months, and it will be automatically renewed for an additional period of six months. Any of the party can terminate the MOU by giving at least seven days notice. The MOU is non-exclusive, and VRX Silica has the liberty to continue dealing with other parties related to the MOU’s subject matter. The parties are to act in good faith under the MOU and have fair dealing with each other in a co-operative working relationship. Also, there is no binding commitment by any of the party to take part in any commercial arrangement or transaction.

Huge Demand for VRX Silica’s Silica Sand Products Across the Asia-Pacific Region

VRX Silica received enquiries and expressions of interest for the purchase of substantial tonnages of silica sand products from its key projects – two Arrowsmith Projects and Muchea Project -in April this year. About 20 manufacturers across the Asia-Pacific region, including manufacturers and purchasing agents of the glassmaking industry and few organisations in the foundry industry showed strong interest in purchasing silica sand products from company’s project areas.

Out of the 20 manufacturers, three manufacturers and purchasing agents from China expressed interest for smaller shipments of silica sand product for the glassmaking industry from the company’s project locations. The Chinese glassmaking industry is the most dominant one in the Asia-Pacific region having over 270 glassmaking facilities. From foundry industry, 5 organisations expressed key interest from South Korea, world’s largest foundry market.

The company notified that over 1.6 million tonnes of potential annual silica sand sales for glassmaking and almost 900,000 tonnes for the foundry industry has been identified to-date.

VRX Silica has identified significant silica sand JORC Mineral Resources at its Arrowsmith and Muchea Project, that are further expected to increase.  As per the company, it is capable of satisfying the growing demand for high-quality silica sand by producing large quantities of silica sand from each of its project.

Mineral Resource Estimate Upgraded at Muchea Project

In an announcement on ASX on 17th June 2019, the results of the aircore drill programconcluded at the company’s Muchea Silica Sand Project were announced.

As per the results, there was an upgrade in the MRE (Mineral Resource Estimate) for the Muchea Silica Sand Project to 208 Mt @ 99.6% SiO2. The upgraded MRE incorporated an Indicated Resource estimate of 29 Mt @ 99.6% SiOand an Inferred Resource estimate of 179 Mt @ 99.6% SiO2. The Mineral Resources announced by VRX Silica were in line with the JORC Code 2012.    

An overall MRE increase of 9 per cent to 208 million tonnes @ 99.6% SiO2 from 191 million tonnes @ 99.6% SiO2 was reported by the company. There was an increase of 49 per cent in the Indicated Mineral Resource to 29 Mt @ 99.6% SiO2from 19 Mt @ 99.7% SiO2 and a rise of 4 per cent in the Inferred Mineral Resource to 179 Mt @ 99.6% SiO2 from 172 Mt @ 99.6% SiO2.

Future Work At Muchea Project

The company reported in the 17th June 2019 ASX announcement that a PoW (programme of works) has been submitted to conduct aircore drilling at the area earlier covered by hand auger drilling. The testing of the full depth of high-grade sand will be permitted over the remainder of the tenement if the PoW gets approved. Besides this, a further testwork will be undertaken on the additional coffee colour and discoloured brown sand samples to ascertain the compositions that can be incorporated in future MRE updates. The company expects that this would increase the mineral resources significantly.

Stock Performance

VRX settled the day’s trade higher at AUD 0.155 (on 11th July 2019), up by 34.78 per cent relative to the last closed price. Around 6 million shares were traded today relative to an average annual volume of ~831k (As per ASX). The stock has performed exceptionally well in the last three months, delivering an enormous return of 98.28 per cent.

Source: https://kalkinemedia.comAuthor: shangyi

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