VHM (ASX: VHM) Rallies as Government and US Banks Back Goschen Rare Earths Project

Every once in a while, a small-cap company finds itself at the intersection of policy, technology, and global supply chain realignment. VHM Limited (ASX: VHM) is one of those names right now. With rare earth markets in flux following China’s latest export restrictions, Western nations are scrambling to secure alternative supply chains. Into this tension, VHM’s October 2025 update revealed a major step forward for its Goschen Project in northwestern Victoria a critical minerals hub that could position Australia as a key player in the global transition to clean energy and defence independence.

A Letter of Support from Export Finance Australia for up to A$75 million in project financing, complementing the US$200 million Letter of Interest from the US Export-Import Bank. These developments sent the stock higher and, more importantly, moved the project closer to a Final Investment Decision (FID).

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Funding and Regulatory Milestones Strengthen Bankability

The most material update is the progress on project financing. The combined backing from EFA and EXIM represents potential non-dilutive funding covering 30–40% of Goschen’s Stage 1 capital expenditure, estimated between A$500 million and A$600 million. This support builds confidence not only in the project’s economics but also in its geopolitical relevance within allied critical-minerals strategies.

VHM has also cleared a string of key regulatory hurdles. The Environment Effects Statement was endorsed in December 2024, followed by the Mining Licence in April 2025, and EPBC federal approval in September 2025. Final secondary approvals including the Cultural Heritage Management Plan and Work Plan are now expected before year-end. Collectively, these milestones position VHM as one of the most advanced pre-construction rare earth developers in Australia.

Financially, the company holds a healthy cash balance from earlier raises, giving it flexibility while negotiations continue with export credit agencies and strategic partners. The ability to secure this calibre of institutional and government-backed support is a strong validation of project quality and management credibility.

Offtakes, Partnerships, and Market Tailwinds

On the commercial front, VHM’s dual-product model combining rare earth oxides with mineral sands like zircon and rutile improves revenue stability. The company already has an LOI with Mitsui to purchase 40% of initial heavy mineral concentrate output from July 2025, signalling strong offtake interest well ahead of production.

Market conditions are also increasingly supportive. Since China’s October 2025 export controls on dysprosium and terbium, heavy rare earth prices have risen 20–50% year-to-date. Meanwhile, Western governments have channelled over A$3.5 billion in private capital into new rare earth projects since July, highlighting a surge of investor confidence in non-Chinese supply chains.

For VHM, this geopolitical backdrop could not be better timed. The Goschen Project sits within reach of major infrastructure rail, power, and water and benefits from 100% land ownership, which further de-risks execution. If construction begins in 2026, first production could arrive by 2028, potentially generating A$200–300 million in annual EBITDA based on current rare earth pricing.

The Investors Takeaway for VHM

If financing is finalised and construction stays on track, VHM could become a core Western supplier of both light and heavy rare earths at a time when China’s dominance faces mounting geopolitical risk. However, investors should remain aware of key uncertainties, including capex inflation, potential delays in debt finalisation, and commodity price volatility  all of which could influence project economics and valuation.

Overall, the risk-reward balance looks attractive for those with a medium-to-long-term horizon. The company’s next milestone will be converting these Letters of Support into binding agreements ahead of the 2026 FID. That will be the moment investors truly see whether VHM can evolve from explorer to producer.