Perpetual Resources Ltd (ASX:PEC) has made significant progress with the Beharra direct-shipping-ore (DSO) scoping study, with key internally generated data points now derived, although a number of important externally-derived data points are still pending.
The key information determined to date has provided Perpetual with the minimum DSO product cash cost position on an Australian dollar-per-tonne freight-on-board (FOB) Port of Geraldton basis, as well as an accurate capital cost estimate.
The timeline for the final delivery of the DSO scoping study is dependent on the outcome of commercial discussions with potential offtake partners, with further updates to be provided in due course.
Perpetual will provide further updates once there is clarity on the timelines and discussions.
The company has also been regularly receiving unsolicited inbound inquiries for the immediate delivery of low impurity silica sand, which confirms market interest in high-quality silica sand and the potential for continued strong silica sand pricing.
Solid progress made
PEC executive chairman Julian Babarczy said: “While we have made solid progress in recent months on the key aspects of the DSO Scoping Study over which our project team has direct control, required input from key external stakeholders has taken slightly longer than expected.
“While this has led to an extension for the time for delivery of the DSO Scoping Study, the extra time is allowing this key information to be utilised in ongoing discussions and negotiations with the interested offtake partner.
“While a successful outcome of the DSO Scoping Study remains speculative, engagement with the interested potential joint venture partner remains constructive.”
Final DSO scoping study
Perpetual’s internal team has been working diligently to collate and analyse the various internal workstreams that have enabled an accurate estimation of the capital and operating cost profile of a potential Beharra DSO project.
This specific work is a sub-set of the DSO scoping study and is now largely complete.
Delivery of final DSO scoping study results remain dependent on:
- White-sand-only resource estimation by Snowden Mining Consultants, results of which are expected in coming weeks, and
- Further progression of potential offtake discussions, with recent constructive joint venture partner discussions occurring but definitive discussions ongoing.
Snowden, which has undertaken all resource estimation work previously at the Beharra project, is in the final stages of concluding its resource estimation work.
Inclusion of this necessary work in the DSO scoping study will enable sufficient certainty on potential annual production levels and approximate mine life, two essential inputs into a final DSO scoping study.
Ongoing discussions
Ongoing and constructive discussions continue with the potential offtake partner (although these remain uncertain and incomplete), with the successful conclusion of an economic sharing model currently seen as the most likely outcome to ensure a viable DSO project.
The interested offtake partner has been actively engaged in conducting its own independent metallurgical analysis of the Beharra white sand-only orebody, with further testing and analysis ongoing.
With this additional metallurgical testing and commercial discussions/negotiations continuing, Perpetual is unable to finalise an appropriate sales price estimate, or any other alternative commercial profit-sharing arrangement or joint venture structures, which is one of the remaining key inputs into the final DSO scoping study economic model.
Constructive talks are in progress, and Perpetual hopes to update the market in due course – it is required to hold off finalisation of the DSO scoping study until discussions are finalised.
Perpetual stresses that the outcome of the potential joint venture partnering discussions remains speculative and that no guarantee of a successful economic DSO business case can yet be concluded.
Premium in Asian market
Babarczy added: “Continued unsolicited interest from Asian silica sand buyers has confirmed the high level of ongoing interest and end-user demand from buyers of low impurity silica sand in the region.
“Based on recent test work, Perpetual believes that Beharra shows good potential to produce a very low iron silica sand product, which has potential to attract a premium in the Asian market due to robust demand growth from the fast-growing solar panel cover industry concurrent with more limited supply potential due to the relative uniqueness of silica sand orebodies that can achieve low iron end product using simple gravity and magnetic separation techniques.”
Unsolicited inbound interest
While Perpetual is still in the project development stage and unable to supply these tons at present, it is indicative of general demand for high-quality silica sand, which remains strong, driven by the need for increased tonnage of low impurity, particularly low iron silica sand.
Perpetual remains highly encouraged by this unsolicited interest and confirms its primary intent to focus on very low impurity (circa 100ppm Fe2O3) segment of the Asian glass markets.
Its current bulk sample metallurgical test work is predominantly aimed at determining the individual impurity profile of the upper and lower zones of the white sand horizon at Beharra.
Initial analysis of previous drilling results suggests a much lower impurity product may be possible from the upper zone of the white sand horizon at Beharra, with future announcements aiming to provide more insight into this potential.