Arrowsmith North Faces Permit and Financing Hurdles Despite Offtake Gains
VRX Silica Limited has expanded its Arrowsmith North project’s offtake commitments by 550,000 tonnes annually and appointed Pareto Securities to manage debt financing, reinforcing its path to production.
- Two new binding offtake contracts add 550,000 tonnes per annum
- Total committed offtake now 960,000 tonnes annually for Arrowsmith North
- Offtake partners are established suppliers in China’s foundry and glass sectors
- Pareto Securities appointed to manage fixed income debt financing
- Contracts include fixed pricing for first two years and customary conditions
Offtake Expansion Strengthens Market Position
VRX Silica Limited has taken a significant step forward in commercialising its Arrowsmith North silica sand project by securing two additional binding offtake contracts. These agreements commit to supplying a combined minimum of 550,000 tonnes per annum of premium silica sand products, bringing the total contracted volume to 960,000 tonnes annually. The new customers are reputable and substantial suppliers to China’s foundry and glassmaking industries, underscoring the strong demand for high-quality Australian silica sand in key Asian markets.
These contracts follow extensive product testing that confirmed Arrowsmith North’s silica sand meets stringent specifications prized by foundry and glass manufacturers, including particle size distribution, grain shape, and thermal stability. Such attributes are critical for producing stable moulds in metal casting and high-clarity glass products, reinforcing VRX’s strategy to deliver a unique and sought-after commodity.
Financing and Project Development
Alongside the offtake announcements, VRX appointed Pareto Securities, an international investment bank with expertise in debt capital markets, to manage fixed income financing for the project’s construction phase. This appointment follows a competitive process and reflects strong market interest in Arrowsmith North. The company is working closely with Pareto and its financial adviser Argonaut to advance debt financing arrangements over the coming months.
The contracts are subject to customary conditions precedent, including securing project finance, obtaining remaining permits, finalising logistics and port access, commissioning infrastructure, and delivering an initial trial shipment. Pricing is fixed for the first two years within the range outlined in VRX’s updated bankable feasibility study, which targets production ramp-up from 800,000 tonnes to 1.1 million tonnes per annum in the first two years, with a full mine life production capacity of up to 2.2 million tonnes annually.
Strategic Implications and Market Outlook
VRX’s Managing Director Bruce Maluish highlighted that these binding contracts validate the company’s approach to securing long-term, high-quality customers and provide confidence in revenue generation. The Arrowsmith North project, located 270km north of Perth, boasts a JORC-compliant Ore Reserve of 221 million tonnes at 99.5% silica purity, positioning it as a globally significant source of silica sand for the foundry and glass markets.
With Asia-Pacific regions facing growing supply shortfalls and rising prices for silica sand, VRX’s ability to lock in substantial offtake volumes and progress financing is a crucial milestone. The company’s broader portfolio, including the Muchea and Boyatup projects, further supports its ambition to be a leading supplier of high-grade silica sand for diverse industrial applications.
Bottom Line?
VRX’s expanded offtake and financing progress set the stage for Arrowsmith North’s transition from development to production, but key permits and financing milestones remain to be cleared.
Questions in the middle?
- Who are the undisclosed offtake counterparties and what are their long-term commitments?
- What are the detailed terms and pricing structures beyond the initial two-year fixed period?
- How soon can VRX secure final permits and complete financing to commence commercial production?
