Australian Silica Quartz Group Limited announced it has entered into a Memorandum of Understanding Terms Sheet with C&D Logistics Co. Ltd. for the offtake and export of silica sand product ASQ-GWSC1. ASQ will endeavour to secure all necessary government, statutory, and third party required approvals, consents, agreements and licenses that are required to mine, transport and ship the Product.

C&D approached ASQ in 2021 with interest in securing silica sand suitable for supplying the solar glass industry in China. Following receipt of samples of ASQ's sand products, C&D have completed independent quality testing confirming suitability of ASQ-GWSC1 for the intended application. ASQ will supply C&D with ASQ-GWSC1 from the Urban Resources Pty Ltd. ("Urban") Marella Road sand operation located in Bullsbrook, Western Australia.

ASQ-GWSC1 is the washed, density separated and sized product from Marella Road which has an Fe2O3 content of <100ppm, it is understood this is a critical characteristic for sand used in the manufacture of solar panel cover glass. In 2019 the Company executed a binding terms sheet with Urban to jointly exploit Urban's Silica Sand deposit located in Bullsbrook, Western Australia. Urban has operated the mine for the last six years and produced over 1Mt of sand for the domestic market from the deposit in the last two years.

Prior to commencing the exports ASQ and Urban will need to finalise a formal joint venture agreement in accordance with the binding 2019 terms sheet. ASQ have completed a JORC 2012 Inferred Mineral Resource totaling 10.7 million tonnes on the raw sand at Urban's Maralla Road tenement M70/326. ASQ will complete modifications to the Urban sand washing plant including the addition of a gravity separation spirals circuit and sizing screening expected to cost around $3-4 million.

The Terms Sheet sets the FOB pricing structure at a rate that is expected to provide ASQ with payback for the required plant upgrade in under 18 months. Throughout the second and third quarters of 2021 the unusually high international sea freight rates meant shipping silica sand to northern Asian ports from Western Australia was likely sub-economic. The time charter rates for bulk cargo vessels suitable for exports of silica sand from Kwinana dropped significantly in the 4th quarter of 2021.

ASQ has commenced detailed discussions with shipping brokers in preparation for seeking sea freight offers. Ahead of commencing the exports ASQ will need to secure bulk export berth access at the Kwinana port along with near-port stockpile storage facilities.