VHM Limited (ASX:VHM) Announces Staged Expansion to Critical Minerals Production
Key Highlights
VHM Limited (ASX:VHM) revealed plans for a staged expansion of its Goschen Rare Earths and Mineral Sands Project in Victoria. The project expects first production in approximately two years, with a Net Present Value exceeding A$1.5 billion, an Internal Rate of Return over 60%, and a payback period of less than 3.5 years. The company aims to secure financing, licensing, and permits by the end of 2025 and is in discussions with multiple offtake partners. The expansion to 5 million tonnes per annum (Mtpa) will be largely self-funded following an initial capital investment of A$160 million.
Project Development Strategy
VHM’s development strategy involves leveraging dual revenue streams from Rare Earths and Heavy Mineral Concentrates to fund the expansion. The initial phase will commence production at 1.5 Mtpa, generating operational cash flow to support scaling to 5 Mtpa. The strategy is based on updated capital and operating expenditure estimates and has received endorsement from the Victorian Minister for Planning for the Environment Effects Statement (EES).
Financial Metrics
The combined Stage 1 and Stage 2 development presents a pre-tax Net Present Value of A$1.64 billion and an Internal Rate of Return of 65%, with a payback period of 3.3 years. The project’s total capital expenditure is estimated at A$160 million for the initial 1.5 Mtpa plant, with additional funding required for expansion. VHM anticipates funding through a combination of equity, debt, and pre-paid offtake agreements.
Executive Comments
VHM’s Managing Director, Ron Douglas, stated, “The Goschen Project represents a world-class opportunity to deliver critical minerals essential for the global energy transition. Our phased development strategy ensures a low-risk pathway to production, with strong cash flows from the initial 1.5Mtpa operation funding the expansion to 5Mtpa. The project’s economics include a 65% IRR and a 3.3-year payback period (pre-tax), underscoring its potential to create significant value. With the Environment Effects Statement (EES) now endorsed and key technical and financial parameters confirmed, we are well-positioned to rapidly advance the Goschen Project towards production. In the near term, we are targeting several key milestones including financing and offtake agreements, securing contractors for development and commencing construction. We look forward to keeping the market updated as we progress this exciting project.”
Motley Fool contributor Abbie Stokes has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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