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There are two reasons VHM isn’t daunted by current low rare earth prices, executive general manager Carly O’Regan told MiningNews Select Sydney on Monday.
The company is transitioning towards development at its flagship Goschen rare earths and mineral sands project in Victoria, and VHM is comforted by having dual commodities, O’Regan said.
“We’re not just dependent on the rare earths,” she said.
The company was also reassured by forecasts of an uptick in prices starting as early as later this year.
China dominates both the rare earths supply and downstream processing, and oversupply has seen prices tumble.
The two main producers outside China, ASX-listed Lynas Rare Earths and NYSE-listed MP Materials, both recently reported revenue slumps amid “formidable market headwinds”.
“However, the situation is not all bleak,” Benchmark Mineral Intelligence senior analyst Neha Mukherjee told a webinar last week.
“There is a bullish growth in demand expected in the downstream industry very soon.”
VHM is in the approvals process for Goschen, with the public hearing stage regarding the Environment Effects Statement (EES) beginning next week.
Goschen’s mining license application, submitted 12 months ago, depends on the outcome of the EES approvals process.
The company, which had $14 million in cash mid-quarter, was also in financing talks and would welcome funds from the federal government’s critical minerals facility, O’Regan said following her presentation.
VHM struck a binding offtake agreement with Shenghe Resources in January for 60% of forecast rare earth mineral concentrate (REMC) and zircon-titania heavy mineral concentrate (HMC) production for an initial three years.
Goschen is targeting annual production of 9,400t REMC, 134,500t of HMC and 8,500t of mixed rare earth carbonate from the plus-20-year mine.
A definitive feasibility study refresh, released in March 2023 within months of the company listing on the ASX, put the capital cost for Phases 1 and 1A at $606 million, the pre-tax NPV10 at $1.5 billion and IRR at 44%.
VHM shares have ranged between 42-93c over the past year and closed at 50.5c on Monday afternoon, valuing the company at $103 million.
Published by Mining News .Net
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