VHM (ASX:VHM) has outlined a staged approach to production for its Goschen Rare Earths and Mineral Sands Project in Victoria, Australia, which leverages a dual revenue stream to fund expansion.
The strategy includes generating revenue streams of rare earths and heavy mineral concentrate(s) to fund expansion, and builds on the foundation established during the Goschen Definitive Feasibility Study (DFS).
This follows the recent Victorian Minister for Planning endorsement of the Environment Effects Statement (EES).
VHM is started discussions with numerous prospective project financiers and strategic offtake partners for the balance of its offtake.
The company will continue working closely with the government, its partners, contractors, financiers and stakeholders to advance the Goschen Project towards production.
Next key milestones include the mining licence and secondary approvals, financing arrangements, awarding of major contracts, and commencing construction activities whilst continuing our strong community engagement.
As previously announced, VHM intends to commence production at an initial rate of 1.5 million tonnes per annum (Mtpa), with plans to expand to the permitted 5 million tonnes per annum throughput. The initial phase is expected to generate operational cash flow to fund the expansion.
VHM says the development strategy incorporates updated capital expenditure (capex) and operating expenditure (opex) estimates provided by our partner contractors, building on the technical data and flowsheets from the DFS (including the JORC compliant Reserves detailed in the appendices) and outcomes from the EES process.
With first production expected in two years, the project forecasted to have NPV8 of $1.64 billion (combined stages one and two), IRR of ,more than 60%, and payback in about 3.5 years.
The company says the analysis confirms the project’s robust economics and significant value potential. VHM commissioned a review of a staged approach from 1.5 to 5 million tonnes per annum based on the 2023 Goschen Project DFS Refresh, updated for the revised and current capital and operating costs.
Stage one operating costs are expected to be $77 million a year. To minimise the upfront capital, VHM is utilising a modular process plant sized for 1.5Mtpa throughput, simple infrastructure such as transportable buildings, power and water sized for the throughput and all mining capital is included in the mining unit rates. As indicated, the product streams are a rare earth mineral concentrate and heavy mineral concentrate with no further processing.
The same approach is continued with the expansion of the throughput, with additional modular process plant installed adjacent to the existing facilities. This modular approach has delivered capital savings when compared to the previous larger bespoke development originally proposed.
The updated capital cost estimate pricing was developed in Q4 2024 and is in Australian dollars. Pricing was obtained from suppliers and contractors for the process plant and infrastructure.
Write to Adam Orlando at Mining.com.au
Images: VHM
