VHM has slashed 30 per cent off the capital expenditure (capex) for the Goschen rare earths and mineral sands project in Victoria.

The company estimates Phase 1 of the mine to cost $337 million to develop, down from the $483 million presented as part of the definitive feasibility study (DFS) in March 2023.

Goschen Phase 1 consists of a five-million-tonne-per-annum throughput project to produce a rare-earth mineral concentrate containing neodymium, praseodymium, dysprosium and terbium, and a zircon-titania heavy mineral concentrate.

The most significant price reductions were seen for non-process infrastructure (down from $191.7 million to $117.1 million) and pre-production mining and other ancillary costs (down from $106.8 million to $51.1 million). The cost of the processing plant also reduced from $184.6 million to $168.8 million.

VHM reviewed project capex in parallel with the completion of initial engineering design for the base plant, the selection of a mining services partner, and early contractor involvement for key offsite infrastructure. Major cost reductions were seen in civil works, road and pipeline construction.

“The development process of detail design and early contractor involvement to optimise our approach has delivered capital benefits which indicate that Goschen is one of the lowest capital-cost rare earth projects in Australia,” VHM chief executive officer Ron Douglas said.

“Optimisation of capital costs is a normal part of asset management. We are in an environment where fiscal discipline is the first line of defence to cyclic trends and DFS stage estimates will always be refined once foundation plant design inputs, and principal mining services are in place.

“While this is one of the most challenging markets to construct and operate in recent years, the reduction of our capital costs ensure that this project is competitive and at the bottom of the cost curve.”

VHM expects a shortlisting of engineering, procurement and construction management tenders to be complete in the second half of 2024.

The company recently entered into a memorandum of understanding (MoU) with Yellow Iron Fleet for mining services at Goschen, with the two parties expected to enter into a mining partnership agreement during the six-month MoU period.

A mining partnership agreement would extend for a period equal to the life of mine of the company’s Area 1 – set to be in excess of seven years.

The Inquiry and Advisory Committee’s (IAC) public hearing for the Goschen project concluded on April 30, with the IAC having 40 days to prepare and issue their recommendation report to the Victorian Minister for Planning.

The Minister will then determine whether to grant approval for the Goschen project.


Published by Australian Resources & Investment