Perpetual Resources maiden 64 million tonnes silica sand reserve underpins “compelling” robust Beharra PFS

Perpetual Resources Ltd (ASX:PEC) has completed a pre-feasibility study (PFS) that confirms Beharra Silica Sand Project as a compelling low capex and strong free cashflow project underpinned by a 64 million tonnes reserve supporting a 32-year mine life. This PFS and reserve validate the company’s intention for Beharra, southeast of Geraldton in Western Australia’s Mid-West, to become an essential low impurity supplier of high-quality silica sand products to the rapidly growing APAC glass and foundry sand markets. The financial metrics of the PFS, which is the culmination of more than seven months of extensive independent study, demonstrate the robustness of the project which also affords expansion potential and the potential ability to respond to increases in market demand. Outcomes “simply outstanding” Perpetual’s executive chairman Julian Babarczy said: “The finalisation and announcement of the PFS results demonstrate that the Beharra Project can produce the highest known quality silica sand product in the Mid-West region of Western Australia. “After the conclusion of extensive studies across all areas of project focus, the announced outcomes of the Beharra PFS are simply outstanding, and suggest a compelling project, across both financial and operating metrics.” The PFS outlines annual nameplate production capacity of 1.5 million tonnes produced from a Run of Mine (ROM) production of 2 million tonnes. It confirms simple mining and processing with off-the-shelf processing technologies applied and optimal plant configuration sized to allow maximum flexibility and optimal capital cost. Upside potential The PFS reveals the lowest known impurity profile of end product streams in the Mid-West region, ideal for burgeoning APAC markets, and with considerable upside potential through further optimisation of metallurgical circuit. Babarczy said: "In our view, Beharra represents the standout project in the Mid-West region of Western Australia, which looks set to become a dominant supply source for high quality silica sand to the APAC region. "In the Perpetual board’s view, Beharra now sits atop all other projects in the region and we are excited to continue our rapid development as we move towards a subsequent project study and/or a decision to fund later in 2021.” Project features Standout features of the Beharra project include: Exceptionally strong return metrics, with low capital requirements, strong margins and high resultant free cash flows, which offer a compelling financial case; Investment returns anticipated to be of significant interest to both debt and equity investors in the region, once a decision to fund is reached in late 2021; Standout metallurgical testing results confirms Beharra as the pre-eminent Mid-West silica sand project (based on publicly available data on known projects), with attainment of the lowest impurity profile of any known project in the region; No fatal flaws identified throughout any of the studies undertaken, with significant scope for operational and financial optimisation once Feasibility or other studies are commenced; Strong initial engagement with local and regional stakeholders suggests good community interest in development of the Beharra project; Initial inbound and outbound enquiries from potential off-takers and silica sand trading groups, as well as data compiled from independent price forecasters and other industry contacts, demonstrates strong support of Beharra’s ability to achieve robust sales prices in the growing APAC silica sand markets; Regional APAC silica sand pricing for 200-300ppm Fe2O3. Simple, low-cost flow sheet confirmed, with no requirement for the use of harmful chemicals and a very low subsequent environmental impact; Beharra Project can be readily upscaled based on a modular plant configuration, that will assist in achieving the lowest possible capital intensity and substantial project flexibility; Overall, the key objectives of confirming a flexible and low capital project that also delivers compelling financial return metrics and delivers a highly attractive end product to the fast-growing APAC markets, has been achieved; and Significant scope for optimisation at feasibility study (or subsequent development path) level exists, with potential for metallurgical improvements, capital and operating cost reductions, as well as operational simplification programs which will further enhance the already compelling metrics of the Beharra project. Maiden ore reserve The study is underpinned by the maiden probable ore reserve of 64.1 million tonnes at 98.6% SiO2 which provides for an initial 32-year mine life. Beharra probable ore reserve March 2021. This probable reserve is estimated to produce a saleable product of 47.6 million tonnes at 99.6% SiO2 and positions Beharra as the pre-eminent silica sand project in the Mid-West region. It has been calculated from within an indicated resource of 139 million tonnes at 98.6% SiO2 with both prepared by Snowden Mining Consultants. “Pre-eminent silica sand project” PEC’s managing director Robert Benussi said: “The ore reserve estimate is based on saleable products that have been produced as part of the very successful and comprehensive metallurgical test-work program, which was announced on January 29, 2021. "This test-work and the resultant ore reserve estimate clearly demonstrates that the Beharra end product is suitable for sale into the Asia Pacific glass and foundry sand industries, with the product readily positioned in a higher-end segment of the market. "The test work and ore reserve estimate show Beharra can comfortably service the 200 to 300ppm range of the APAC market (in relation to iron oxide, or Fe2O3), which is the key impurity of focus of end-users. "Further, the ore reserve estimate underpins a very long life mine plan of 32 years and enabled the release of a compelling PFS study on Beharra which shows a low capital, high margin mining project that is, in our view, the pre-eminent silica sand project in the Mid-West region of Western Australia.” Reviewing accelerated development Perpetual’s board considers the rigour and detail undertaken in the PFS to be considerable and the company is reviewing potential for an accelerated development path, subject to regulatory and approval processes. Base case planning assumes a subsequent project study and/or a decision to fund in 2021 with first production in late 2022.