VHM is a rising powerhouse within the local rare earth elements (REE) sector.

Just months after listing on the ASX, VHM Limited (ASX: VHM) has found itself right in the heart of what is looming as one of Australia’s most exciting new critical minerals plays.

The company is a rising powerhouse within the local rare earth elements (REE) sector with new studies building on its impressive suite of critical minerals assets in north-west Victoria.

VHM owns 100% of the world-class Goschen rare earths and mineral sands project, as well as the Cannie and Nowie projects.

The company believes they have the potential to accumulate one of the world’s largest critical mineral inventories.

New Cannie deposit

Newly released inferred mineral resource results from its Cannie critical minerals project have identified an initial 192Mt total heavy mineral at a grade of 3.1%.

Significantly the new results add 176,000 tonnes of rare earths (TREO) +Yttrium, 1.4Mt of zircon, 0.9Mt of rutile and 1.4Mt of leucoxene to the company’s mineral inventory.

To date VHM has identified a resource inventory of 820Mt across its portfolio localised to Victoria’s critical minerals province.

The grades of the rare earth minerals, zircon, rutile, and leucoxene within the Cannie mineral resource are notably higher than most of those at the nearby, and more advanced, Goschen project mineral resource.

The Cannie mineral resource is strategically located just 13.5km south of the company’s flagship Goschen Project, where VHM is already well advanced, with development plans outlined in the definitive feasibility study (DFS) refresh, released in March.

VHM managing director, Graham Howard, said the new Cannie results, along with work undertaken at the company’s Goschen and Nowie projects, has identified a major new critical mineral province stretching over 55km in length.

“The company’s rare earth inventory is now one of the largest in Australia and this is complemented by the significant zircon inventory of 5.1Mt and rutile inventory of 2.7Mt,” he stated.

“We are on track to deliver one of the world’s largest critical mineral deposits which we believe could support several project hubs that once developed feed critical minerals into supply chains to enable decarbonisation of global economies.”

Significant upside at Cannie

To date the Cannie mineral resource has been identified to extend 7.2km north-south and 4.4km east-west and remains open in all directions.

VHM is aiming to release a further Cannie project resource update in the second half of 2023 as it continues to advance further resource work and with additional drilling.

Importantly, the results from the recently updated Goschen project DFS confirm that VHM’s critical mineral deposits are hosted in sand and can be extracted using conventional process technology and deliver minerals of exceptionally high purity with excellent recoveries at a significantly lower cost.

Goschen DFS

The Goschen DFS is based on a 20 year life of mine (100Mt) utilising a 5Mtpa process facility delivering a dual commodity stream.

One stream being the highly sought after rare earth minerals and the other being the traditional zircon and titanium minerals (rutile, leucoxene, and ilmenite).

Studies have confirmed that by-products of zircon and titanium minerals can add significant value to revenue and offset upward of 50% of the rare earth operating costs, leaving the revenue from neodymium, praseodymium, terbium, and dysprosium; four high-value rare earth minerals, to increase profit margins.

The Goschen project DFS is based on a small treatment facility and throughput capacity, delivers a project with $1.5 billion net present value, an Earnings Before Interest Tax Depreciation Amortisation and Exploration Expenses (EBITDAX) of $290 million annually and an internal rate of return of 44%.

Final investment decision for Phases 1 and 1A is scheduled for H2 2023 upon receipt of regulatory approvals and permits.

Global rare earth element demand

The Goschen DFS refresh highlights the project’s potential to add significant economic value to Australia’s supply and trade position in the global critical rare earths markets.

Rare earth elements (REE) are considered a critical mineral by many leading governments around the world, including Australia.

The International Energy Agency (IEA) says REEs are essential for permanent magnets that are vital for wind turbines and EV motors. Electricity networks need a huge amount of copper and aluminium, with copper being a cornerstone for all electricity-related technologies.

The US Government has also identified REEs as necessary for its national defence and domestic markets and has significant plans in place to acquire them from leading REE producing nations and trade partners such as Australia.

Austrade has suggested that demand for critical minerals in the US is set to increase, offering new opportunities for Australia’s critical minerals and REE developers.

Offtake agreements

The company revealed in February that it had entered into a memorandum of understanding (MOU) with Shenghe, a world-class developer, producer and supplier of rare earth resource and relevant products.

VHM said the detailed contract negotiations are ongoing and the parties have agreed to extend the target date by which the formal agreement is to be finalised by 30 June 2023.

VHM is continuing conversations with supply chain participants in Japan, USA and Europe to complement the Shenghe Resources offtake.

Council MOUs secured

In another significant milestone, as VHM moves towards a development decision, the company recently formalised its relationship with Gannawarra and Swan Hill councils.

The MOUs aim to outline a sustainable social and economic future for the communities in the Loddon Mallee Region, where the company’s projects are located.

The details of the MOUs have been negotiated to provide a framework for how the long- term, collaborative partnership will operate between the company and the councils and aim to maximise social and economic investment outcomes for residents in the greater Loddon Mallee Region.

Construction and ongoing operations of the Goschen project are expected to add more than $2.0 billion to the Loddon-Mallee economy and an estimated $1.3 billion to the Victorian economy.

Remarkably, all this success comes just months after VHM listed on the ASX in January.

Published by SmallCaps