0:06
[Music]
0:08
Bruce malish from vrx silica uh we're a
0:12
company that's is looking to develop
0:13
some very long life silica sand projects
0:16
in Western Australia we've got five
0:19
projects uh that we're developing uh
0:22
with a combined resource of about 1.4
0:24
billion tons of silica sand generally
0:27
for export to a
0:30
Asian countries for glass manufacturing
0:34
but also for The Foundry industry and uh
0:37
hopefully long term we'd like to be
0:39
making glass here in Western Australia
0:41
Bruce good to see you thanks very much
0:42
for joining us well seen you since I
0:44
think middle of 2022 now at that time he
0:47
told me hopefully by the end of the year
0:49
get your permits uh environmental
0:51
permits and cracking on with things how
0:53
did he get on uh thanks Matthew it's
0:55
good to chat again um we're probably
0:59
quite a ways be behind from where we
1:00
estimated in
1:02
22 um these days getting environmental
1:05
approvals in particular in Western
1:07
Australia and I might add generally
1:10
Australia is is proving not so much
1:14
difficult as time consuming often uh
1:17
where we used to get responses in weeks
1:20
is now taking months so uh our
1:24
activities are try and keep busy in the
1:26
periods that we're waiting for a
1:28
response from the government and when
1:30
they do ask for more details we put
1:32
those together as quickly as we possibly
1:34
can so most of uh 200 23 was taken up
1:39
with the environmental approvals the
1:43
last document we lodged was in October
1:45
last year and that was a response to
1:49
submissions that had been received under
1:51
the public review period and that's a
1:54
very important stage of the process
1:57
because um it's it's gener generally the
2:00
EPA has has enough detail in there to be
2:04
published it was published there were a
2:06
number of submissions there were only
2:08
eight
2:09
submissions uh two were very positive uh
2:13
and there were a couple of Nos and the
2:14
other ones were government
2:16
departments um so we responded to those
2:21
uh we've been told by the EPA that they
2:24
don't require any more
2:26
information and they will confirm with
2:30
us anytime soon that they have enough
2:34
information to complete the assessment
2:36
at the completion of the assessment
2:38
they'll have a recommendation for the
2:40
minister so we don't we don't see any
2:42
pitfalls in there or major hurdles to
2:45
get over at this point and um we think
2:48
it's a major step forward we just
2:50
expected to do it a lot earlier last
2:53
year why did you expect it I mean you
2:55
must have known what the process was is
2:57
you know is it's the fault at your end
2:58
is the Fault at the end of of you know
3:01
the re well the review process I I'm not
3:04
quite sure what the review process um
3:07
was before what it is now has it changed
3:10
some much we we made our timetable
3:12
estimates based on the uh the
3:15
Department's guidelines so they might
3:18
even meeting their own
3:19
guidelines um which is a bit you know a
3:22
bit frustrating where uh where they tell
3:26
you in a phone call to say well okay
3:28
we're not going to make it even though
3:29
it's say this is when we're supposed to
3:30
respond by they haven't responded but
3:34
it's there's no jumping up and down and
3:36
making a lot of noise it just makes no
3:39
difference so all we can do is make sure
3:42
that when we do respond that we do it um
3:45
as best we possibly can and try
3:48
to uh estimate what issues that the EPA
3:53
may come up with even though you know
3:55
they they're unlikely occurrences if
3:58
they may possibly occur do it we've
4:00
dealt with it okay and then just just
4:02
want to be clear because obiously the
4:03
process as described by you um to me
4:05
about 18 months ago was it's kind of
4:08
sort of sensitive in the sense that
4:10
you're sort of you know moving SC with
4:12
your techn technology moving kind of
4:15
scrub land to access the silica and then
4:16
kind of putting putting it back
4:18
remediating pretty pretty quickly as yes
4:20
he move along there's no issues then
4:23
with environmentalists being concerned
4:25
about that technology this is just a
4:28
process um p the problem is that nobody
4:31
has done this particular Rehabilitation
4:34
method at this scale uh it has been done
4:37
on trial plots by other players in the
4:40
area uh so we had good data to go to uh
4:45
and we've we've gone to a lot of trouble
4:47
to describe it and we and there is no
4:50
doubt it is a superior method that'll
4:53
give the best possible outcome in
4:55
Rehabilitation and we understood right
4:57
at the very beginning that rehab this
4:59
whole project was about Rehabilitation
5:02
it's a large area it's an extremely
5:05
large resource but ultimately you got to
5:08
hand it back in the same condition that
5:10
you took it in the first place so the
5:13
whole mining method we have is built
5:16
around the
5:17
rehabilitation we were well aware of
5:19
that but there are other features of
5:21
this particular project that uh uh not
5:25
totally unique but there is no waste
5:28
dump there is no Tails down there is no
5:31
pit we're taking the top of a of a a a
5:35
sandune so there's no void so a lot of
5:38
those uh issues that have to be dealt
5:41
with by uh mines department and the EPA
5:45
are not even there so when they go to
5:47
tick a box it there is no box so they
5:52
tended
5:54
to uh spend more time looking at issues
5:57
that were not particularly relevant
6:00
um
6:01
and and quite frankly it's it's
6:05
been um very tiny technicalities that
6:09
we've been dealing with for the last two
6:11
years okay well then talk to me about
6:13
the what you've been doing in the last
6:15
year then obviously you hope to be done
6:17
by end 2022 here we are beginning
6:19
2024 a year has p a year has passed
6:23
since when you thought you'd be able to
6:24
deliver
6:25
this what do you think so well I's talk
6:28
about money first if you don't mind the
6:31
cost environment in that time has
6:33
changed we've had we have Co supply
6:35
chain issues and and all sorts of price
6:37
Rises salaries all those wonderful
6:39
things because of you know shortages of
6:41
Staff in the in certainly worst in
6:43
Australia have you done anything in
6:45
terms of trying to understand whether
6:47
the economics are still there for this
6:49
project yep we do it almost constantly
6:51
uh the one thing we did do um towards
6:55
the end of last year we went out and
6:58
rended for all the major equipment and
7:01
what we did notice since we've lasted
7:04
our
7:05
BFS uh is a significant increase in the
7:08
price of steel uh getting steel
7:11
delivered doesn't seem to be a problem
7:13
but the price of steel is probably
7:16
nearly doubled in the last three years
7:19
and of course the whole plant is still
7:22
um all the uh all the equipment is steel
7:24
and it's all held within a steel frame
7:27
and a bit of concrete on the bottom um
7:30
so yeah there's no doubt there's going
7:32
to be a significant increase in our
7:35
Capital cost in the operating cost now
7:38
very little change uh mainly there's
7:41
been a a couple of good um changes we've
7:46
made we've been able to Source an
7:48
extremely cheap power supply from a
7:51
nearby gas well um so uh it's there's no
7:56
transport cost for the gas uh the power
7:59
station will be at the gas well head and
8:01
Aerials down to us that's a significant
8:05
change um and the equipment at the
8:08
moment is ill still diesel only because
8:10
there's not electric equipment available
8:13
um not not for what we want to do it
8:15
will be I think in the next few years
8:17
but the moment's diesel the price of
8:19
diesel did go up last year but actually
8:22
funny enough the last three months it's
8:24
come down uh and in fact the forecast
8:27
for diesel at the moment is lower the
8:29
estimate I had three years ago so the
8:32
operating costs have in total have
8:35
probably moved up
8:37
5% um the sale price for silica sand has
8:43
probably gone up maybe 10% so the
8:48
outcome is very much the same other than
8:50
the capital cost it it will be
8:52
significantly more but we're amortizing
8:55
this plant over 30 years so um in in the
9:00
in terms of the financial modeling uh
9:03
the capital cost is not it's not hugely
9:06
sensitive to the capital cost okay so
9:08
you protected your margins there um
9:10
silica s you're selling selling higher
9:12
but cost costs have come up and let's
9:14
see what um these these new shipping
9:16
rates which are being created or going
9:18
to do for oil price in the short
9:20
shipping's um shipping's come off as
9:22
well in the last year yes it has I'm I'm
9:25
talking mostly about the kind of um the
9:28
uh
9:29
the some of the re-rooting of ships um
9:31
because of
9:33
some going to Asia so we going do North
9:36
okay frantastic okay um let's Okay so so
9:40
so that's on the kind of the margin
9:42
prodection side can you um talk to me a
9:44
little bit about the the market as a
9:46
whole sorry before we go there we've
9:49
referenced it the CeX is is is modest um
9:54
is there a market for you out there
9:57
looking to finance this thing and how do
9:59
you how do you kind of structure that
10:01
the balance of that of that without kind
10:03
of diluting people too much I mean have
10:05
you Advanced conversations there subject
10:07
to you getting this uh this
10:09
environmental permitting through the the
10:11
line yeah certainly yes um we've been
10:14
talking to a number of
10:16
financiers there's some government
10:17
Finance available uh at very attractive
10:21
rates uh we'll take up as much of that
10:23
as we
10:25
can we are fairly confident of being
10:28
able to find Finance more than 60% and
10:31
possibly 80% so there'll be an equity
10:34
component in there but uh it'll be the
10:36
very minimum as far as we can see um you
10:40
the margins are there to be able to pay
10:42
back you know relatively High interest
10:45
rates um you know they they're high at
10:49
the moment but um the margins are there
10:51
to be able to uh to manage that sort of
10:54
financing and and I want to say once you
10:56
kind of get into cash flow you can
10:58
refinance that out at lower rates anyway
11:02
and with regards to the kind of
11:04
constantly um assessing the economics
11:07
around this thing is that going to come
11:08
out in a formal document that people can
11:10
look at uh part of the reason why we
11:12
went out and rended for all the major
11:15
equipment was to see how much it had
11:17
moved in the last year um and we'll
11:20
we'll put in similar sort of increases
11:22
to the components that we have't
11:24
rendered on but uh yes we that'll all
11:28
contribute to a DFS which we're uh we're
11:32
in the process of compiling right now
11:35
what's the T so we expect to have that
11:36
out the next couple of months and that
11:38
also supports the uh our applications
11:41
for financing fantastic fantastic
11:43
fantastic okay um so let's um again I
11:46
was just trying to try to think this in
11:48
terms of what the the barriers to this
11:50
um could be obviously you talk about
11:52
five projects that you've got um clearly
11:54
you've kind of got your Flagship project
11:57
the ramp up time normally if when I'm so
11:59
dealing with kind of you know gold and
12:01
corporate I still understand what this
12:02
ramp up could be given the environmental
12:05
sensitivity around this and you are kind
12:07
of you know it's really relatively new
12:09
technology people on as you say there
12:11
isn't a tick box for it is the ramp up
12:14
period going to be slowed down by that
12:17
um you know when can we expect you know
12:20
after you say let's say you get this
12:21
thing F the Bild period will be what and
12:23
then the kind of how you have to
12:25
demonstrate or um to to The Regulators
12:30
to the environmental um uh
12:34
Regulators how if if this thing is
12:37
working are you kind of sort of going to
12:38
be on a on on watch as it were are
12:40
people going to be looking to you to
12:42
prove that this thing actually does work
12:44
the way you think it is H that's one of
12:46
the joys of uh some unique uh techniques
12:50
that we're using one of the
12:52
rehabilitation it will be hard to
12:54
measure inside 3 Years it'll be sort of
12:57
3 to 5 years when you can and start
12:59
really measuring the effectiveness of it
13:02
so but our ramp up we're looking to put
13:05
in a 2 million ton a year plant that'll
13:08
take 6 to eight months to build and
13:11
we're looking at ways to try and shorten
13:12
that up and will operate at a million
13:16
ton a year so half rate for two
13:19
years I don't think there'll be a
13:21
problem ramping up the
13:23
processing the mining is relatively slow
13:27
compared to many mining operations you
13:30
know we're doing 300 ton an hour um and
13:33
we'll run that two weeks on two weeks
13:34
off for the first couple of years the
13:37
real ramp up will be into the market
13:40
it's a typical industrial mineral you
13:43
have to get the product into the market
13:45
to increase the market you know we have
13:49
very substantial uh potential buyers who
13:53
say to us yes we want to have a look at
13:56
it send 50,000 tons now at the moment
14:00
we're in no position to do that we we
14:02
struggled to send them 50 kilos so you
14:05
can't be in production and you can't
14:07
send those sort of samples until you're
14:09
in production so that we expect the
14:13
market to ramp up over a couple of years
14:16
we've got a list of
14:19
well haven't counted it for a while but
14:22
it's over 70 different companies have
14:24
registered an interest to buy now some
14:27
of those are 20 30 40 50,000 tons a year
14:32
um some of them 1002 200,000 tons a year
14:35
we've signed up 200,000 tons a year now
14:39
and we've got a number of companies that
14:41
are waiting for us to get a little bit
14:43
further down the track with the EPA
14:45
approval for them to sign up um it's not
14:50
terrible that's that it gets delayed
14:52
because the price is slowly going up so
14:55
we've got we've got lots of players
14:57
there that uh will take the product but
15:01
it will take a couple of years to get
15:02
the whole thing into the market we're
15:05
from Aris Smith North we've got you know
15:07
four different Foundry products and
15:11
Foundry products are a function of the
15:13
size and shape of the grains and we've
15:16
got um a glass product as well and
15:19
that's a function of the mineraly so uh
15:22
what we have discovered through more
15:25
more and more test work that we've done
15:27
we can get it extremely consistent
15:29
product and ultimately the buyers are
15:32
looking for long-term Supply and
15:36
consistent Supply the two things we can
15:39
we can do is we're can sign 10year
15:41
contracts you know this first
15:43
environmental approvals for 30 years we
15:46
can sign 10 years because we got we got
15:48
100 Years of product so we can sign very
15:51
long-term contracts and what we've found
15:53
is with the particular resource is that
15:56
it is extremely consistent therefore
15:59
when we process it we get a very
16:01
consistent product it's exactly what
16:03
buyers are looking for right and then
16:05
just just sticking on the money side of
16:06
things a bit which is and you mentioned
16:09
you want to be able to supply the glass
16:11
into the Aussie Aussie Market or Supply
16:13
into the glass Market in Australia um
16:18
probably not the glass Market in
16:19
Australia now it'll be all the glass
16:21
Market will be in
16:24
Asia I thought he said I thought he said
16:27
Aussie Market earlier okay uh in into
16:29
Asia in terms of the financing is there
16:32
because a lot of the North American
16:33
companies are under under pressure to
16:35
not take
16:37
financing um and then Supply into the
16:40
Chinese market is this kind of
16:42
competitive tension thing going on
16:44
critical minerals left right and Center
16:46
obviously the the silic Sands used for
16:49
um not just glass but also cement and a
16:51
bunch bunch of other uses if the the
16:53
better the quality um with the financing
16:57
that you talked about maybe 60 to 80% in
16:59
terms of non-equity where's that money
17:02
going to come from is it going to be out
17:04
of O is it going to be out of Asia are
17:05
you under any pressure not accept Asian
17:08
uh money uh I expect a small portion to
17:10
come out of U either Singapore or Hong
17:13
Kong right uh possibly
17:16
Korea um and or Japan at the moment
17:20
we're not looking for finance out of
17:22
China and the end users we've been
17:26
talking to have been Korea
17:29
Japan
17:30
Taiwan uh Malaysia
17:33
Philippines right okay we but I have to
17:37
admit you know we get weekly requests
17:41
from generally Chinese
17:43
Traders um but you know at the moment
17:47
they're not you know our second million
17:50
ton may go to China but it'll be on spot
17:52
we're not looking to sign any contracts
17:54
in China at the moment okay okay right
17:56
okay thanks for clearing up now the
17:58
other you just said a second ago oh
17:59
we've got 100 years worth of sand now
18:01
that that's a factor of how how quickly
18:02
you get after it or not so um with and
18:06
we talked about the ramp up um period
18:08
and and and and the re the reasons why
18:11
but well I guess last time we spoke 18
18:12
months ago I kind of came away thinking
18:14
relatively simple um process these guys
18:17
got a lot of it and um I thought you
18:20
kind of get in get into it quicker than
18:21
you had I so to say did you but the one
18:25
thought I had was how do they scale this
18:28
thing because I think at the time with
18:30
the with you know one of the projects
18:32
you're talking about maybe you clearing
18:34
20 20 bucks per ton I think it was
18:37
somewhere around that and which might
18:38
generate like 20 million bucks per year
18:42
I was looking to see well how quickly
18:43
can this thing grow how quickly can you
18:45
rra this thing up and is there a market
18:48
if you did for this so have you got a
18:50
sort of sense of how you play this going
18:52
forward in terms of the scaling up in
18:55
the first few years will be just the
18:57
time it's operating so if we're two
18:59
weeks on two weeks off we can go three
19:01
weeks on one week off uh and then
19:03
eventually you know 24/7 it's scalable
19:06
from that point of view but to go sort
19:10
of from 2 million tons a year to 3
19:12
million tons a year actually is quite
19:14
easy because you just add a train um
19:18
it's it's one set of equipment and it's
19:20
a very linear process you just put
19:23
another one in parallel it could be
19:26
scaled up significantly now where we'll
19:29
find ultimately the bottleneck it would
19:32
struggle to get over 4 million ton a
19:34
year out through the Geraldton port at
19:37
the mo there there's a big port
19:39
expansion going on at the moment um the
19:42
state government spending about $350
19:44
million on the Geraldton Port uh part of
19:48
that for us they're actually putting a
19:49
storage shed for us um and then but
19:53
there are a number of different
19:55
uh potential opportunities there for
19:58
operating at the Port but that would be
20:01
ultimately the bottleneck right okay and
20:04
and does that and do all your projects
20:07
sit under that same constraint in a
20:09
sense that you're going to have to go
20:11
through this sequentially even if you
20:12
get up to that 4 million uh number or
20:15
whatever the expansion number allows you
20:16
to get up to or can can you develop them
20:19
all separately or or concurrently um if
20:22
you had the money they're uh they use
20:24
different ports M uses a different port
20:28
project of blap uses uh aspirants and M
20:32
would use quana so yes there's a bottl
20:36
neck at each of them but you know it's
20:40
um there's still a lot to play with you
20:42
know the way we scale this up is to
20:45
bring more and more projects on right uh
20:48
you know further down the development
20:49
and ult ultimately to be in production
20:51
so so what's your in game here see get
20:53
into production show this that it works
20:56
and that it is e ecologically sound um
21:00
uh does that make you attractive to some
21:03
other party uh or do you want to kind of
21:05
run this thing yourselves well the
21:07
company set up that it's not it's not a
21:10
complicated company um but if if it was
21:14
attractive to another company they would
21:17
have to be sort of in the
21:19
business uh it's a very specialized
21:22
industry it's not like I or where you
21:25
can just come into iror and start
21:28
selling it um even though it and if you
21:31
got a lower grade you get a lower
21:32
percentage of the of the published price
21:35
it's with silica sand every single
21:38
deposit is different and often a very
21:40
subtle change will determine which
21:43
Market it goes into and there are
21:45
literally hundreds of markets you know
21:48
we're looking to develop uh at our Musa
21:52
project which is just out of Perth it's
21:53
very high grade we've been doing some
21:56
test work in Germany uh to produce a
21:59
highgrade silica flour which goes into
22:02
the LCD glass Market uh and that the the
22:06
LCD Market's growing at an unbelievable
22:09
rate um but the sand is also suitable
22:12
for making coverglass for solar panels
22:14
which is also a market that is just
22:17
going crazy at the moment so if you can
22:20
either manipulate the sand a little bit
22:23
to meet the market or you it's a bit
22:26
like Aris Smith nor we could produce
22:28
some of the world's best quality Foundry
22:31
sand now it's because what is there we
22:34
can't make it we can go and screen it to
22:37
the right size and get the right product
22:39
but you have to start off with something
22:42
whereas mche doesn't produce
22:43
particularly good um Foundry sand not as
22:48
good as Aros Smith North so little
22:50
changes in the sand will determine which
22:52
Market you get into we're very fortunate
22:54
we our marketing managers been selling
22:57
or buying silica sand for been coming up
23:00
about 19 years we've got him based in KL
23:03
he's a a Korean guy um he knows all
23:07
these markets he could we could do some
23:10
te initial test work we could show him
23:12
the product and he'll go okay if you do
23:14
this and this it can go into this Market
23:17
or what you got could go into this
23:18
market and quite frankly you know we've
23:21
been as a company we've been on a very
23:24
steep learn learning curve learning all
23:26
these different markets and sometimes
23:28
it's just the tiniest little change will
23:31
determine where it goes
23:33
so um I can I can see ultimately at our
23:38
musho project we'll produce probably
23:40
three maybe four different products
23:42
we're already producing five from
23:44
aosmith our esperence project is very
23:47
fine sand it's a completely different
23:50
sand and a different Market down there
23:52
as well so our projects as we develop
23:54
them they're not competing with each
23:56
other okay now understand so basic I'm
23:58
going take there's a no you think you
24:00
can run this yourself because of the you
24:02
need you need um so this is what I'm
24:05
hearing at the moment is a kind of nice
24:08
sort of steady flow of cash once this
24:11
thing is up and running at at full full
24:13
capacity um let's talk about share price
24:17
you you had a little spike in the middle
24:19
of the year so around July sort of time
24:22
what were what were and then it's come
24:23
off a lot since then so what what were
24:24
people expecting to happen around July
24:27
time why why Peak uh I think it was the
24:30
response from the EPA that uh they
24:32
confirmed that it was being published
24:35
right by by the way that confirmation
24:38
came in June they told us in a phone
24:41
call in February that was ready to go in
24:43
February and we didn't get it in writing
24:45
until June so there was four months lost
24:48
last year um but that was everybody I
24:53
think recognized that it was a
24:55
significant step and I think our last
24:59
the share price has sort of hung in
25:00
there a few bit since before Christmas
25:02
because I think people have recognized
25:04
that we've gone to the next step which
25:06
is the response to submissions and
25:08
that's been completed so um if you know
25:12
if we get notification from the EPA next
25:14
I expect a bit of a kick on that uh and
25:17
if we get the final approvals from the
25:19
minister I expect a significant kick on
25:21
that as well there's no doubt a lot of
25:24
people recognize that getting
25:25
environmental approvals for mining
25:28
projects in Australia is very difficult
25:31
and it's a major hurdle to get over if
25:34
you do get over it the good thing about
25:36
Australia is you don't lose it you have
25:38
to do something pretty bad with your
25:41
operation um to lose environmental
25:44
approv yeah i' like I say the world over
25:47
us we
25:49
speak I hear you say the
25:52
world it's worth yeah yeah um look okay
25:56
can you just just to kind of finish off
25:58
here um Brice um talk to me what people
26:01
have got to look you said okay if if if
26:02
you if you get those if you get those
26:04
two announcements you should see um a
26:06
bit of a kick but how do you then take
26:10
advantage of that is it just a case of
26:12
right we we're going to get the DFS out
26:14
the next couple of months two three
26:15
months we are then going to confirm or
26:18
just button down the the the financing
26:20
and get this thing going because it was
26:21
a six-month build I think from memory
26:23
you said to me six months six to eight
26:25
months right um so aely quick so what
26:28
what would you um signpost to people in
26:31
terms of looking in at this thing saying
26:33
right I think this these guys will be
26:34
ready to go what does it look like path
26:36
forward well the sequence will be
26:39
environmental approval um Financial
26:42
Arrangements sta construction complete
26:44
construction commissioning and uh
26:47
shipping so we expect to be shipping
26:50
early next year okay well there we go
26:52
folks uh look appreciate the um the
26:54
update um and stay touch let's know how
26:57
you get on with with all of the above um
27:00
could be exciting here for you guys
27:02
thank you Matthew love it to chat
27:09
again
VRX Price at posting:
10.5¢ Sentiment: Hold Disclosure: Held
