Since its IPO on January 9th, rare earth and critical mineral sands mine development company, VHM Limited (ASX: VHM) has been busy, with some key announcements over the last couple of months.

On Tuesday morning (March 28th), VHM released its definitive feasibility study (DFS) refresh for their flagship Goschen Project in northwest Victoria, which delivered an Net Present Value (NPV) of around A$1.5 billion and Internal Rate of Return (IRR) of 44%. 

This news continues the positive progress of the Goschen Project, demonstrating strong financial returns and high-margin, pre-tax cash flows of A$270 million per year over the first 10 years of the project.

Located in Victoria’s premier mining jurisdiction, the Goschen Project is centred on one of the world’s largest rare earth element (REE) deposits with over 400,000 tonnes of total rare earth oxides (TREO). 

These rare earth oxides will produce “critical minerals” such as zircon and titanium minerals which are important to the green energy transition, having applications in defence too.

Zircon and titania will contribute to the Goschen Project’s mining, processing and logistics costs, making for “low operating costs,” according to VHM’s Managing Director, Graham Howard. 

The Goschen Project has the combined benefit of existing infrastructure, a skilled workforce and strong local and state government support.

VHM also has the backing of the Federal Government, which has given the Goschen Project Major Projects status. 

“This is a nation-building project. That means we are producing commodities that are essential for delivery on the Australian government’s commission to net-zero emissions by 2050,” Howard explained.

The commodities that Howard is referring to include neodymium and praseodymium for permanent magnets used for electric vehicles and wind turbines.

Indeed, electric vehicles and wind turbines are driving the biggest growth in the rare earths space, according to a recent analyst insight by Adamas Intelligence, published on February 3rd. Adamas forecasts passenger EV traction motors will drive over 50% of the value of consumption by 2035, followed by wind power generators, which will propel another 25%. 

Overall, with demand and prices rising for rare earth oxides, the value of consumption is projected to increase 10-fold by 2035, according to Adamas. 

Adamas projects the value of rare earth oxides (consumed by energy-transition-related applications, specifically) to rise at a CAGR of 19.1% from 2022 to 2035. This is a significant increase of a projected $32.4 billion dollars over 13 years. 

After a recent public listing on the ASX, combined with a $30 million IPO, VHM is continuing to look ahead, targeting a final investment decision in the second half of 2023 which, “signifies to the market that we are a near-term project deliverer,” according to Howard. 

This will coincide with the goal to achieve “steady state operations” in 2025. To get there, the company plans on delivering on primary permits and approvals in 2023, before construction is to commence in 2024, with the commissioning of the Goschen treatment facility to begin in the first half of 2025.

DFS refresh at Goschen confirms world-class potential and robust economics

The DFS Refresh describes a well-defined and low-risk project across a number of categories including Mineral Resources, and Ore Reserves, mining methods, processing, land access, capex, life-of-mine, and operating costs.

The DFS is based on mining and processing a total of 98.8Mt Ore Reserves, which is only a subset of the Company’s Ore Reserves of 198.7Mt. 

Commenting on the DFS refresh for the Goschen Project, Howard said the team was pleased to see the study verify the confidence the team has in the Project’s compelling economic scenario. 

“The high-quality and relatively simple processing required to take rare earth and heavy minerals sands through production and into the market from Goschen underpins the excellent economics for the Project. This represents a highly significant step in Goschen’s evolution into a low-risk and high return project.”

Join an online briefing with VHM on Friday 31st March at 11am (AEDT) to hear a company update. Click here to register.

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