VHM Confirms A$807m NPV for Goschen Rare Earths Project
VHM Limited refreshed its Goschen DFS, securing a 33% IRR and A$146m annual EBITDA with a three-year payback period.
Key points
- VHM's refreshed Goschen DFS shows a pre-tax NPV of A$807m and a 33% IRR with a three-year payback period.
- The 18-year mine plan targets A$326m in annual revenue and A$146m in EBITDA, using less than half of the Ore Reserve.
- Heavy mineral concentrate production reduces the effective rare earth operating cost to US$7 per kilogram of oxide.
VHM Limited (ASX: VHM) has finalized a comprehensive refresh of the definitive feasibility study for its Goschen Rare Earths and Mineral Sands Project in Victoria. The updated financial model confirms a pre-tax, pre-corporate net present value of A$807 million at an 8% discount rate, supported by an internal rate of return of 33% and a payback period of three years from the commencement of commercial production.
The study reflects a six-month review of technical, commercial, and financial inputs, including retendered major work packages and cost updates aligned to 2026 market conditions. According to reporting by smallcaps.com.au, the project’s execution capital is estimated at A$283 million, with total funding requirements totaling A$482 million when including pre-production costs, working capital, and environmental bonds.
Life-of-mine revenue and output targets
The 18-year mine plan assumes an annual processing throughput of five million tonnes. This throughput is derived from less than 50% of the current Ore Reserve and less than 12% of the total Mineral Resource, indicating significant long-term optionality. The operation is projected to generate average life-of-mine revenue of A$326 million annually, translating to an EBITDA of A$146 million before corporate costs are deducted.
Production metrics include 8,300 tonnes per annum of rare earth concentrate. This concentrate contains 990 tonnes of neodymium-praseodymium and 115 tonnes of dysprosium and terbium. Additionally, the facility will produce 131,000 tonnes per annum of zircon-titania heavy mineral concentrate, which serves as a secondary revenue stream.
Cost reduction via mineral sands credit
The inclusion of heavy mineral concentrate significantly lowers the effective cost base for the rare earth operation. The unit operating cost for rare earth oxide is US$21 per kilogram before credits. However, the revenue generated from the mineral sands stream reduces the effective operating cost to approximately US$7 per kilogram of rare earth oxide, enhancing the project's competitive position.
Secured funding and offtake agreements
VHM has secured key federal and Victorian approvals, with major contractors shortlisted and an integrated execution schedule established. The revenue model relies on a binding offtake agreement with Iluka Resources, which also provides a A$40 million cornerstone funding package. This agreement utilizes independent Western price forecasts for neodymium, praseodymium, dysprosium, and terbium.
External financing support includes conditional, non-binding support of up to A$75 million from Export Finance Australia and a letter of interest for up to US$200 million from the US Export-Import Bank. VHM is currently focused on completing its financing plan, finalizing preferred contractor arrangements for post-FID award, and progressing critical-path engineering activities.
