Vimy Resources Limited Annual Report 2016

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FY2016 Annual Report · Vimy Resources Limited

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TABLE OF
CONTENTS

CHAIRMAN’S LETTER

CEO’S REVIEW OF ACTIVITIES

OUTLOOK FOR 2017

OPERATIONS REVIEW

MINERAL RESOURCE AND
ORE RESERVE STATEMENT

TENEMENTS

FINANCIAL REPORT

ADDITIONAL INFORMATION

CORPORATE GOVERNANCE STATEMENT

Vimy Resources Limited Annual Report 2016CHAIRMAN’S
LETTER

Dear shareholders,

The news about the Mulga Rock Project just keeps getting better and this year
has been another significant one for Vimy with a great deal of progress made in
many areas. Mike and his team have worked very hard to advance the Mulga
Rock Project towards production.

Regardless of the world’s economic cycles, the demand for energy is always
growing. While wind, wave and solar energy certainly have their place, there is no
cleaner, cheaper or more efficient source of baseload power than nuclear
energy. Nuclear power is widely recognised as a low-emission energy source
that reduces the world’s reliance on fossil fuels to produce baseload electricity.
In 2015 there were still 1.2 billion people in the world who were without electricity
and another 2.7 billion who have only limited access. Nuclear power, an efficient,
clean energy source, will be an important factor in bringing power to those
underdeveloped communities.

One of the company gifts that Vimy provides at conferences says so much about
the advantages of uranium as an energy source. It is a small, foam ‘stress ball’
and Mike often uses it in his presentations to illustrate the high energy density of
uranium and therefore the ease with which it can be stored and transported. It is
a small cube which measures a bit less than six and a half centimetres on each
side that can be held in one hand and has been printed with some interesting
statistics. The Vimy team calculated that if a cube of that small size was uranium
oxide (UO2) fuel, it would weigh three kilograms. Those three kilograms of UO2 fuel,
if used for power generation, would prevent the use of 400 tonnes of coal and save
900 tonnes of CO2 emissions. Even that small amount could power 150 Australian
homes for a year. The Mulga Rock Project will produce 1,360 tonnes of uranium
concentrate annually which will offset approximately 50 million tonnes of CO2 each
year. This amounts to 10% of all Australia’s CO2 emissions.

These metrics are captured in our Vision, “Mining a cleaner tomorrow”, and I am
very proud of the strong environmental standards that underpin all the activities
of the Vimy team.

I am also very proud of the way in which the Vimy team has delivered on its
promises. The key milestones that were set for the Definitive Feasibility Study
this year have been achieved. These include the excavation of the test pits, an
extensive in-fill drilling program and subsequent resource upgrade at Ambassador
and the good news that the pilot plant has performed as we expected.

The environmental approvals process has also moved forward at a very steady
pace and the Vimy team has done an excellent job of keeping it on track. As
Minister for the Environment of Western Australia in the late 1990s I was involved
with the drafting of the legislation surrounding the approval of mining projects.
I have steadfast faith in the approvals process from the points of view of the
government and proponent, but most importantly for the Western Australian
community. I also have the utmost confidence in the reliability and stability of
Western Australia as a safe host for uranium mining.

I AM ALSO VERY
PROUD OF THE WAY
IN WHICH THE VIMY
TEAM HAS DELIVERED
ON ITS PROMISES.
THE KEY MILESTONES
THAT WERE SET
FOR THE DEFINITIVE
FEASIBILITY STUDY
THIS YEAR HAVE
BEEN ACHIEVED.

Vimy Resources Limited Annual Report 2016The Public Environmental Review process, conducted by the Office of the EPA, is
very thorough. The twelve-week public review period and the subsequent process
of reviews and appeals allows everyone involved to consider the Project from many
perspectives. In August 2016 the EPA prepared an assessment report for the Mulga
Rock Project and recommended its approval by the Minister. We look forward to
receiving the decision of both the State and Federal Ministers before
the end of this calendar year.

The significant progress we have made this year has been possible through the
ongoing commitment of our shareholders. Resource Capital Fund VI L.P. (RCF)
continues to provide strong backing following their $30 million funding package last
year. The recent $6.6 million capital raise includes a further $4 million from RCF
which will be used to see the Definitive Feasibility Study through to completion.
In addition, RCF have agreed to convert $15 million of debt into equity, thereby
strengthening our balance sheet as we move towards project finance. Forrest Family
Investments, Macquarie Bank, Acorn Capital and the founder of Energy and Minerals
Australia, Vimy’s forerunner, Mike Fewster, have continued to show their faith in
the Project and the Vimy team. I would like to thank all our shareholders for their
continued support of the Company.

During the year we welcomed two new members to the Vimy Board. Andy Haslam,
who has a great deal of experience in the development of mining projects, having
held senior positions in junior mining companies and major mining contractors in
Western Australia, joined the Board in April 2016. At the same time Mal James
brought his extensive background in resource project development to the Vimy
Board. He has a very strong focus on uranium, having previously been responsible
for daily operations and finance for an ASX-listed uranium miner. Mal replaced Aaron
Hood on the Vimy Board as the nominee director of Forrest Family Investments and
I would like to thank Aaron for his valuable support and contribution to the Company.
We also welcomed Ron Chamberlain as CFO and Company Secretary. Ron has a
strong background in Australian uranium companies and has been a very welcome
addition to the Vimy team.

I have said before that our people are our greatest asset and I always enjoy joining
the Vimy team for a cup of tea after our board meetings. They are a great group of
people with an enormous amount of enthusiasm and they have all worked very hard
this year. It is their skill and determination that have moved the Mulga Rock Project so
much further towards production. On behalf of the Vimy Board, I would like to thank
each and every one of them.

The Hon. Cheryl Edwardes AM
Chairman

IN AUGUST 2016 THE
EPA PREPARED AN
ASSESSMENT REPORT
FOR THE MULGA ROCK
PROJECT AND IT WAS
RECOMMENDED FOR
APPROVAL BY THE
MINISTER.

Vimy Resources Limited Annual Report 2016CEO’S REVIEW
OF ACTIVITIES

Recently I’ve been saying “it all works” when I talk about the
Mulga Rock Project. The 2016 year has been about making sure all
of the elements of the Project work, and work together. The pace and
volume of our work this year has been quite remarkable. As the de-risking
of the Project – the technical testing in geology, mining and metallurgy –
draws to a close, it is clear there are no technical hurdles. With the
knowledge that “it all works” we believe that we will be the first uranium
mine in Western Australia.

We moved quickly from the Pre-feasibility Study (PFS) and have significantly
advanced the Definitive Feasibility Study (DFS), delivering on key milestones
during this year. The excavation of two test pits at Ambassador, an in-fill drilling
program and resultant Resource upgrade for Ambassador and the successful
metallurgical pilot plant have put us on track for completion of the DFS in the
first quarter of 2017.

The excavation of the two trial test pits at Ambassador was an extremely
worthwhile exercise. One third of Mulga Rock’s operating cost is associated with
removal of the overburden so the trial gave us the opportunity to learn about the
hydrology, geology and rheology of this material. Understanding the cost drivers
for overburden removal was the key reason for the pits, particularly with respect
to hard banks of ‘silcrete’ in the overburden.

The open test pits also gave the Vimy team an indication of how large-scale
overburden excavation and selective ore mining will work at Mulga Rock.
The granting of approvals from the Department of Mines and Petroleum, which
were actual mining approvals, was an efficient process which gave us important
experience for future mining applications. The excavation of the pits also saw the
transition of the Project from an exploration camp to a registered mining operation
with the corresponding step-up of our emergency response capabilities and
operational procedures.

From the results of the test pits, it is now apparent that no blasting will be
required with free dig methods and minor dozer ripping proving very effective.
We also determined that selective ore mining will be successful and learnt about

THERE IS A SINGLE
WORD THAT SUMS
UP THE MULGA ROCK
PROJECT: SIMPLE.
THE GEOLOGY
IS SIMPLE, THE
MINING METHOD IS
SIMPLE, AND THE
METALLURGY IS
SIMPLE. IT JUST ALL
WORKS SO WELL.

Vimy Resources Limited Annual Report 2016the load-bearing capacities of the
layers above the ore zone, and
groundwater levels. The uranium metal
content in the ore from the test pits
was higher than our expectations and
showed that very high-grade uranium
mineralisation occurs immediately
below the reduction-oxidation
weathering boundary.

The pits also had a positive unintended
consequence: they allowed for a
‘hands-on’ inspection by mining
contractors who had participated in a
pre-qualification tender process that
we ran. Being able to walk into the pits
and see the overburden meant that
they could really sharpen their pencils
and provide accurate cost estimates in
their tenders. They could also see how
our concept of using in-pit conveyors
to significantly reduce mining costs
could be a reality. We were amazed
at the quality of the tenders and thank
everyone who participated.

Uranium ore from the test pits was
also used for an integrated, continuous
pilot plant which the metallurgical team
ran in Perth. The process included
beneficiation, acid leach circuit,
resin-in-pulp, uranium elution and
uranium oxide, or ‘yellowcake’
precipitation. Importantly, the pilot
plant used process water trucked
from our dedicated borefield on site.
The yellowcake (UOC concentrate)
produced is a high-value, high-purity
material, a key consideration for our
potential customers.

In keeping with our Vision, “Mining a
cleaner tomorrow”, we will be a low-
impact miner. The mining methods to
be used at Mulga Rock will result in a
low residual impact to the environment.
We plan to use strip-mining techniques
to remove the overburden. Once
mining has started, the mining face
advances up the long-axis of the ore
body, and the waste being removed is
placed in the void behind the mining
front, effectively providing what I call
‘real-time rehabilitation’.

This is an innovative method for
Western Australia and will employ
a highly mechanised fleet and, very

Excavation at the Ambassador East trial test pit

importantly, it will eliminate the need for large waste dumps. In every aspect
of the Project, the Vimy team is focussed on achieving the best environmental
outcome for our activities.

As we progress the DFS, we mean to grow the mine life through increased
Mineral Resources and Ore Reserves. We announced the maiden probable
Ore Reserve of 15.2Mt at 660ppm U3O8 for a total metal content of 22.1Mlb
U3O8 in March 2016. This was followed in June 2016 by a Resource upgrade
for Ambassador which showed that 80% of Ambassador is now classified as
Indicated, totalling 19.8Mt at 720ppm U3O8 for 31.5Mlbs U3O8. We are currently
working on the Ore Reserve for Ambassador and Shogun and expect to
announce another significant increase shortly.

The approvals process has been built on everything we’ve learnt from exploration,
trial mining and our experience in the region and demonstrates that our mining
activities will work at Mulga Rock, with a low residual environmental impact.
The Public Environmental Review (PER) was recommended for approval by the
Environmental Protection Authority (EPA) on 15 August 2016. The public appeals
period closed on 29 August 2016 and of the appeals received, no new information
was presented, with no issues of concern for Vimy. The delivery of such an
outstanding PER document is a credit to the Vimy team and the talented
group of environmental consultants used. The endorsement by the EPA further
shows that the Project works and can be implemented in an environmentally
sustainable manner.

The Vimy team recently received consent from the EPA to allow preliminary works
to be undertaken in support of the Mulga Rock Project. These works include an
upgrade to the existing site access road, and construction and development of the
Kakarook North borefield to supply water to the Project. We intend to be shovel
ready when the final approval from the Minister is published, so that our ‘first shovel
in the ground’ can be achieved immediately.

In addition, the approvals for the pre-strip of Princess, and construction of the
accommodation village and airstrip are being prepared for parallel assessment,

Vimy Resources Limited Annual Report 2016CONFIRMING THAT
THE PROJECT
WORKS, ALLOWS
US TO MOVE TO THE
NEXT CRUCIAL STEPS
IN OUR PROCESS.
IN THE YEAR AHEAD,
WITH ALL THE BOXES
TICKED FOR THE
TECHNICAL ASPECTS
OF THE PROJECT,
WE WILL CONTINUE
DISCUSSIONS WITH
UTILITIES AND BANKS
TO SECURE PROJECT
FINANCE.

which will ensure that Vimy will hit the ground running when both State and Federal
approvals are granted.

Vimy has been nominated for the Golden Gecko for our innovative fauna camera
trapping program, which has received praise from the various regulatory agencies,
including the Department of Parks and Wildlife (DPaW), the EPA and Department
of Mines and Petroleum. This camera trapping program represents a new best-
practice for fauna monitoring and has been adopted by DPaW for their regional
fauna study of the Great Victoria Desert. In addition, Vimy has nominated for the
AMEC 2016 Environment Awards, for the environmental benefits of our proposed
rehabilitation practices which will set a new rehabilitation and closure benchmark
for the minerals industry.

The last six months have seen us transition from the study phase into the definitive
engineering phase of the Project. After a very competitive process, in March 2016,
we announced the appointment of GR Engineering Services Limited (ASX: GNG
or GRES) as study manager for the Mulga Rock DFS. GRES is a trusted Western
Australian engineering and consulting firm with an excellent reputation and we
value the opportunity to work with them. We are currently working with them on
the design for a plant and supporting infrastructure to produce three million
pounds of U3O8 p.a.

Confirming that the Project works, allows us to move to the next crucial steps in
our process. In the year ahead, with all the boxes ticked for the technical aspects
of the Project, we will continue discussions with utilities and banks to secure project
finance. The organisations we have spoken to so far have a strong interest in
Australian uranium and a commitment to world’s leading environmental practices
in their chain of supply. Security of supply is a key consideration for the utilities and
this conforms with our Company mission of becoming ‘a reliable and respected
uranium producer’, with a strong emphasis on ‘reliable’.

We have developed a ‘marketing-led’ finance plan, which is to have bankable
offtake contracts with customers in Europe, the United States and the Middle East.
This strategy has some clear advantages as it provides corporate independence
from financiers, allows for geographic diversity of customers, and flexibility with
our engineering and construction contracts.

As I said, “it all works”, and that, more than anything, includes the Vimy team.
Our company name is a salute to my Canadian heritage as it was inspired by the
Canadian troops who triumphed in the 1917 Battle of Vimy Ridge, in the battlefields
of France during WW1. One hundred years later, I believe our team embodies the
same qualities of courage, unity, co-operation, ingenuity, planning and flexibility that
were shown by their Vimy namesakes. Our team was bolstered significantly during
the year with the promotion of Tony Chamberlain to Chief Operating Officer and the
recruitment of Ron Chamberlain as Chief Financial Officer and Company Secretary.
I would like to thank the whole team very much for the enormous effort they have
put in during the year.

As Cheryl has said, we have enjoyed strong support from our shareholders
during the year and I would also like to thank them for their confidence in our
team and the Project.

I am looking forward to the year ahead which I know will be another big one.

Mike Young
Managing Director and CEO
Vimy Resources

6 Vimy Resources Limited Annual Report 2016

Excavation at the Ambassador East trial test pit

Vimy Resources Limited Annual Report 2016

OUTLOOK FOR
2017

ENVIRONMENTAL APPROVALS
The EPA recommended approval of
the Mulga Rock Project on 15 August
2016 and subsequently consented
to Vimy’s request under s.41A(3) of
the EP Act to allow minor preliminary
work to be undertaken. The EPA’s
recommendation was appealed by
24 parties and the Office of the
Appeals Convenor is considering those
appeals on behalf of the Minister for the
Environment. Those investigations are
expected to be completed and a report
sent to the Minister in November, with a
final decision expected to be published
by the Minister shortly thereafter.

The Mulga Rock Project was assessed
under the bilateral agreement between
the State of Western Australia and the
Commonwealth whereby the State
conducts environmental assessments
on behalf of the Commonwealth.
The process of obtaining approval
under the EPBC Act is separate from
the assessment process and we are
awaiting the outcome of the appeals
process, with the Federal Minister
for the Environment expected to
sign off shortly thereafter.

Vimy has continued to push forward
with obtaining all the other required
approvals which are currently being
parallel-processed so that they can be
issued immediately after the Minister for
the Environment publishes his decision
later this year. The approvals currently
being processed cover areas such as
the accommodation village, the airstrip
and communication towers as well
as pre-stripping of the first deposit –
Princess. In the unlikely event that the
appeals process delays final approval
into next year, Vimy will still be in a
position to commence work on the
project early next year on the approved
minor and preliminary works which
involve an upgrade to the existing site
access road and the development of
the Kakarook North borefield.

Once the WA Minister for Environment
publishes an approval, Vimy will
develop the final Environmental
Management Plans consistent with
the conditions associated with the
approval to be ready to have them fully
developed and approved prior to the
commencement of operations.

STUDIES
The Definitive Feasibility Study (DFS)
is expected to be completed before
the end of March 2017. Once it
is completed, engineering work is
planned to transition into the front end
engineering design (FEED) associated
with actual construction.

Vimy Resources Limited Annual Report 2016 Aerial view of Mulga Rock camp and airstrip

URANIUM SPOT PRICE
The current low spot price, and
mid-term contract price, simply
cannot persist. Mine production is
not matching demand growth, and
secondary supply, that makes up this
shortfall, is diminishing. The current
price environment is due largely to
reduced demand in the spot market
on the part of the utilities. This does
not reflect a structural change in the
industry as reactor demand remains
stable and is projected to grow.
Lower demand is due mainly to over-
contracting and temporary oversupply
due to the price rise of 2006-2009
and the idling of Japanese reactors
after Fukushima. In fact, according to
Tradetech, US utilities have rarely been
as uncovered by long-term contracts
as they are now.

An owner of a nuclear reactor, while
keen to keep fuel costs lower, is
more driven by the requirement for
sustainable and reliable fuel supply.
While contract coverage continues to
fall, between 2020 and 2023, utilities
in US and Europe will need to renew
their long-term contracts. China,
Southeast Asia, and India are the major
growth areas and will contribute to
contracting activity.

The lead time between contracts and
first delivery is generally around two
years as the reactors run “comfort

stockpiles” of two years. This means
that demand on the supply side is likely
to start kicking in in 2018.

All of these factors provide strong
support for our view that the uranium
price is due for a rebound in the same
time that we plan to move towards
production.

Our strategy has been steadfastly
committed to being ‘mine ready’ at the
earliest possible time so that we can
be the first new kid off the blocks when
the price inflexion occurs.

URANIUM MARKETING
Vimy has engaged with nuclear utilities
around the world in order to be able
to commence offtake discussions as
project certainty develops. Obtaining
final environmental approvals and
the commencement of initial minor
works will both result in a perceived
reduction in the risks associated with
the development of the project. The
completion of the DFS will be a further
step in reducing perceived risks.

With regulatory approvals obtained,
minor early works commenced and the
likely costs associated with production
established to DFS levels of accuracy,
Vimy expects to be able to move into
the detailed discussions stage of
offtake contract negotiations by the
end of Q1 2017.

BANKING DISCUSSIONS
The primary off-market contract
nature of uranium procurement
provides an inextricable link between
uranium marketing and bank funding
and as a consequence, Vimy has
sought early engagement with banking
institutions will continue to assess
the capabilities of banks for advisory,
arranging and lead management of
funding for for the Project.

This early bank engagement
provides multiple benefits to Vimy,
including quantification of debt
capacity, clarification of uranium
marketing contract requirements,
and input into completion
of the DFS.

The requirement for bankable
offtake contracts is the centrepiece
of our uranium marketing strategy
and bank funding requirements.
For Vimy this is assisted by the
contracting nature of uranium
procurement, the credit-worthy nature
of global utility customers, the large
procurement requirements of leading
utility customers necessitating both
geographical and producer supply
diversification, and encouragement
from the utilities for new producers to
enter the market in order to strengthen
competition.

Vimy Resources Limited Annual Report 2016OPERATIONS
REVIEW

The Mulga Rock Project, 100%
owned and operated by Vimy, is a
large, world-class uranium resource.
It is the third-largest undeveloped
uranium deposit in Australia.

The Mulga Rock Project is located
240km east-northeast of Kalgoorlie
in Western Australia in the Great
Victoria Desert. The Mulga Rock
Project comprises four resources:
Ambassador and Princess, which
form the Mulga Rock East Deposit,
and Emperor and Shogun, which
form Mulga Rock West, approximately
20 kilometres away. There are no
competing land uses to the proposed
mining operation. The Project shares
road access with the Tropicana
Gold Mine.

Results of the Pre-feasibility Study
(PFS) were released in November
2015. The PFS indicated that the
Project will produce three million pounds
of uranium oxide (U3O8) annually.
Operating cash costs were calculated
at around US$30 per pound U3O8, with
total costs, including capital, at US$50
per pound. The mining schedule
determined by the PFS contemplates
mining the Princess deposit first,
followed by Ambassador, Shogun
and then Emperor.

Work on the Definitive Feasibility
Study (DFS) has been ongoing
throughout the year and key
milestones have been achieved.
The most important DFS activities
include the in-fill drilling program at
Ambassador, Shogun and Emperor;
the two open-cut test pits at
Ambassador; and the metallurgical
test work and pilot plant which have all
been successfully completed.

SAFETY
Vimy actively encourages a culture of
safety while emphasising that safety
is everyone’s responsibility. This year
the Vimy EHS team has implemented
the MyOSH electronic safety system
across the operation, which will
enable all hazards and incidents to be
captured, investigated, remedied, and
closed off. This system supports an
integrated framework for Vimy’s EHS
Management System.

IN-FILL DRILLING PROGRAM
The DFS in-fill drilling program, aimed
to improve the Resource classification
for Ambassador and Shogun to
Indicated status, was completed in
February 2016.

At Ambassador, 425 air core and
52 diamond core holes were
completed for a total of 27,350 metres.
The drill results for Mulga Rock East,
released to the market in June 2016,
reaffirm Ambassador as an outstanding
uranium resource with 65 drill holes
returning intercepts above 1,000ppm
(0.10%) U3O8. There was a significant
increase in the proportion of Indicated
Mineral Resource, with greater than
80% of the total contained uranium
metal in the Ambassador Resource
now classified as Indicated.

167 air core and 15 diamond drill
holes were drilled at Shogun for a
total of 7,370 metres and 34 air core
and 25 diamond drill holes were
completed at Emperor for a total
of 2,898 metres.

The DFS drilling also included a
diamond twin program to further
quantify the uranium disequilibrium
correction factor at Shogun and
Emperor. As the geological settings

Vimy Resources Limited Annual Report 2016and uranium mineralisation-forming
processes at these deposits are
similar to those at Ambassador,
results are expected to show an
increase in grade in the close-spaced
drilled portion of Shogun.

TEST PITS
At the end of October 2015, work
began on two geotechnical test pits, the
first at the eastern part of Ambassador at
the point where we expect to be mining
in the second year of the PFS mine
schedule and the other 3.7km away in
the western part of Ambassador at year
seven of this schedule. The excavation
work was carried out by Western
Australian firm Piacentini and Son
following a competitive tender process.
The pits were excavated to assess the
hydrology, geology and rheology of the
overburden material and to confirm how
pit slopes and dig rates will contribute to
overall mining costs.

The Ambassador East pit, 200m (L) x
100m (W) x 35m (D), took approximately
55 days to excavate at an average of
3,255 BCM/day. The dig rate exceeded
expectations for most of the excavation
but slowed at the base of the pit due to
its narrow nature, an issue that will not
occur in the actual pits which will be
broader and more open. Approximately
52 tonnes of ore were packaged and
sent to Perth. 58 samples were sent
for geotechnical assessment including
Atterberg limits, triaxial testing, particle
size distribution and particle density.

The western pit, 320m (L) x 100m (W)
x 40m (D), was completed in
49 days. Excavation was at a higher
than expected dig rate; an average
rate of 4,010 BCM/day compared
to a budgeted rate of 3,500 BCM
and concluded in March 2016.

50 tonnes of ore sample were
collected, with 24 tonnes sent to Perth
for the beneficiation pilot plant trial.

The excavation of the pits had many
purposes, including the verification of
geotechnical parameters such as pit
wall angles and rock strengths for final
pit design; confirmation of in-situ wet
bulk densities for waste and ore zones;
the assessment of the load-bearing
capacity of the white kaolinite clay and
silt layer directly above the ore zone;
and, most importantly, the confirmation
of uranium grade distribution and grade
control methods during mining. The
swell factor of the overburden material
after excavation was verified to assist
in the accurate design of full-scale
overburden landforms. Daily production
dig rates confirmed the free digging
nature of the overburden; some ripping
was required but all calcrete and silcrete
layers were excavated without the use
of drill and blast. Each pit was also
excavated into the mineralised zone
providing excellent exposure of the ore
zones as well as bulk samples for the
metallurgical pilot plant program.

The assay results from the bulk ore
samples compared with the estimated
Resource showed 53% greater
contained U3O8 in the bulk sample
than estimated in the Resource model.
Assessment of the test pit bulk samples
confirmed that very high grade uranium
occurs immediately below the reduction-
oxidation boundary as has been seen
in drilling, however the tenor of the
mineralisation in the test pits was above
expectations. A detailed assessment of
the reconciliation concluded that the ore
zones are slightly thinner, but with higher
grades and more contained metal than
is indicated by drilling alone.

PILOT PLANT
Work on the metallurgical pilot plant
in Perth began in late February and
consisted of four stages: an ore
beneficiation circuit; uranium leaching,
resin-in-pulp (RIP) and uranium elution;
uranium precipitation; and base metal
recovery. Work on the leach and RIP
circuits so far verifies approximately
90% metallurgical recoveries. The
pilot plant will generate the final
process design criteria for the DFS
engineering. Uranium extraction is a
more complex process than say, iron
ore or gold. As such, we recognise
that metallurgy is one of the key risks
to the Project. Therefore, we set up an
independent metallurgical peer review
group, comprising three independent
experienced uranium metallurgists to
monitor the metallurgical program, and
report to the Board on a regular basis.
It is pleasing to report that the peer
review group is very impressed with the
calibre of work being done and they
have not identified any issues with the
proposed flow sheet, nor the testwork
done to date. The peer review group
will continue to monitor the program to
its completion.

GEOTECHNICAL INVESTIGATION
A geotechnical drilling program was
completed in January 2016. The
program included diamond holes at the
process plant and the proposed pits at
Princess, Ambassador and Shogun, to
support the subsequent Ore Reserve.

All diamond core samples were
dispatched to a testing laboratory to
undergo various geotechnical tests.
As a result, final pit wall angles have
been determined and civil engineering
requirements for the process plant
have been established and integrated
into the DFS.

Vimy Resources Limited Annual Report 2016Exposing ore at the Ambassador West test pit

Vimy Resources Limited Annual Report 2016report will form the basis of the
Commonwealth Minister’s assessment
and subsequent decision.

GOLDEN GECKO AWARD
The camera trapping protocol
developed by the Vimy team has
been nominated for the prestigious
Golden Gecko award, Western
Australia’s highest environmental
award, recognising leading practice
and innovation in environmental
management. Vimy has worked closely
with the Department of Parks and
Wildlife to develop the protocol which
increases the baseline knowledge of
the small and ultra-small mammals of
the region, with a particular focus on
the Sandhill Dunnart, a highly elusive
small marsupial. The protocol has also
been recommended for adoption for
presence/absence surveys by the
Great Victoria Desert Biodiversity
Trust and hopefully will become an
industry standard in the future.

STUDY MANAGER
The appointment of GR Engineering
Services Limited in March 2016
was another important milestone in
the development of the Mulga Rock
Project. We received a number of very
high calibre proposals for the study
lead and were pleased to appoint a
study manager of this quality.
GR Engineering is a trusted Western
Australian engineering and consulting
company that has delivered a number
of significant projects across a wide
range of commodities in Western
Australia and overseas. The Vimy
team is now working closely with
them on the delivery of the DFS.

MAIDEN ORE RESERVE
In March 2016 the Company
announced another major milestone
for the DFS, the maiden Ore Reserve
for Mulga Rock, comprising 15.2Mt
at 660ppm for a total metal content
of 22.1Mlb U3O8. The Ore Reserve is
derived from Mineral Resources and
optimised pit schedules as reported
in the PFS, which indicated that the
initial six years of production will be
underpinned by the maiden Reserve.
In addition to the Probable Ore
Reserves, an Optimised Mining
Inventory has been identified which
will provide production in Years 7 to
17 of the mining schedule if mined at
currently modelled grades.

At the end of June 2016, a significant
increase to the Ambassador Resource
at Mulga Rock East was announced,
based on the results of the in-fill drilling
program. The Mulga Rock Resource
increased to 66.5Mt at 520ppm
U3O8 for a contained 76.2Mlbs
U3O8. Results showed that more than
80% of Ambassador is now classified
as Indicated, totalling 19.8Mt at
720ppm U3O8 for 31.5Mlbs U3O8.
Good continuity of Indicated material
was also found, which is important for
the continuous strip mining planned
for Mulga Rock.

APPROVALS PROCESS
Following the approval of the
Environmental Scoping Document
in February 2015, Vimy moved
ahead quickly to complete the Public

Environmental Review (PER). The PER
document describes the proposal,
examines the likely environmental
effects and the proposed environmental
management procedures associated
with the proposed development.
It addresses the environmental factors
of flora and vegetation, terrestrial fauna,
subterranean fauna, hydrological
processes, inland waters environmental
quality, air quality and atmospheric
gases, human health, heritage,
rehabilitation and closure and offsets.

The first copy of the PER was provided
to the Office of the Environmental
Protection Authority (OEPA) in June
2015. Following Vimy’s successful
scoping study it was determined that
the life of the Project was likely to be
longer than had been initially believed
and it was necessary to amend Vimy’s
proposal to reflect the longer duration
and larger clearance area associated
with the Project. The Company applied
for approval to amend the proposal
in a manner that was unlikely to
significantly increase any impact on the
environment and approval was received
from the Chairman of the EPA in early
December 2015.

The PER was approved for release for
a twelve-week public review period
starting on 14 December 2015 and
ending on 8 March 2016. Public
submissions were sent to the OEPA
and on 27 April 2016 the Company
submitted responses to the 1,100
comments provided by the OEPA.
In July 2016 these responses were
deemed to be acceptable by the
OEPA and the proposal for the
Mulga Rock Project was put forward
to the EPA for consideration. Following
the end of the reporting period, on
15 August 2016, the EPA
recommended conditional approval
of the Project. They prepared an
assessment report for the WA Minister
for the Environment recommending
that the proposal be implemented
and specifying the conditions and
procedures to which implementation
should be subject as required by the
Western Australian Environmental
Protection Act 1986. The Project is also
being assessed by the Commonwealth
of Australia and the assessment

Vimy Resources Limited Annual Report 2016MINERAL RESOURCE &
ORE RESERVE STATEMENT

AT 30 JUNE 2016

MULGA ROCK PROJECT

OVERVIEW
•

The Mulga Rock Project global uranium Mineral Resource estimate increased by 5% between 1 July 2015 and 30 June
2016, from 72.7Mlbs to 76.2Mlbs (from 59.7Mt at 550ppm U3O8 to 66.5Mt at 520ppm U3O8), all reported in accordance
with the JORC Code 2012.

•

This change was primarily the result of lowering of the Mineral Resource cut-off grade from 200ppm to 150ppm which
generated a small increase in the Ambassador Mineral Resource.

Infill drilling at Ambassador during 2015 and 2016 improved confidence in the Mineral Resource. The Indicated component
of the Ambassador Mineral Resource increased significantly to 19.8Mt at 720ppm U3O8 for 31.5Mlbs U3O8.

The Ambassador and Princess Mineral Resources are grouped to form the Mulga Rock East Deposit.

As at 30 June 2016 the Mulga Rock West Deposit (Emperor and Shogun combined) Resource stood at 32.5Mt at
460ppm U3O8, for a total of 33.0Mlbs, a 6% increase on that reported to the year to 30 June 2015, also as a result
of the change in cut-off grade.

On 30 March 2016, the Company announced a Maiden Probable Ore Reserve for the Mulga Rock Project of 15.2Mt
at 660ppm for a Total Metal content of 22.1Mlb U3O8.

Updates for base metal Resource estimates were reported for the Mulga Rock East Deposit, coincident with the
uranium Resource, underpinned by the Ambassador Resource update.

540,000mE

550,000mE

560,000mE

570,000mE

580,000mE

590,000mE

600,000mE

Mulga Rock West

Mulga Rock East

Emperor

Yilgarn Craton

Shogun

Princess

Fraser Mobile Belt

Darwin

Jabiluka

Ranger

Ambassador

Phanerozoic
Sedimentary Basin

Uranium Deposits

City/Regional
Centre

Westmoreland

Valhalla

Kintyre

10 kilometres

Wiluna Project

Yeelirrie

MULGA ROCK
PROJECT

Brisbane

Kalgoorlie

Olympic Dam

Four Mile

Perth

Sydney

Adelaide

Melbourne

Hobart

Vimy Resources Limited Annual Report 2016Table 1: Mulga Rock Project Ore Reserves – 29 March 2016

Deposit / Resource

Classification

Cut-off Grade
(ppm U3O8)

Tonnes
(Mt)1,2

U3O8
(ppm)3

Mulga Rock East

Princess

Ambassador

Probable

150

Total Reserve

1.31

13.91

15.21

6401

6601

Total Metal
U3O8
(Mlb)4

1.8

20.2

22.1

1. Tonnages and grades are reported including mining dilution

2. t = dry metric tonnes; Appropriate rounding has been applied, and rounding errors may occur

3. Using cut combined U3O8 composites (combined chemical and radiometric grades)

4. Metallurgical plant recovery factors are not applied to Total Metal content

Aircore drilling at Ambassador West

Vimy Resources Limited Annual Report 2016 Uranium Resource Estimate

Table 2: Mulga Rock Project Total Resource - 30 June 2016 compared to 30 June 2015

Deposit / Resource

Classification

Tonnes
(Mt)3

2016

U3O8
(ppm)

U3O8
(Mlb)

Tonnes
(Mt)

2015

U3O8
(ppm)5

Mulga Rock East

Princess

Ambassador

Mulga Rock West

Emperor

Shogun

Indicated

Inferred

Indicated

Inferred

Sub-Total

Inferred

Sub-Total

Total Resource

1.3

2.5

19.8

10.4

34.1

28.4

4.1

32.5

66.6

690

380

720

330

580

450

550

460

520

1.9

2.1

31.5

7.7

43.2

28.1

4.9

33.0

76.2

1.3

2.5

13.0

15.1

31.9

24.1

3.7

27.8

59.7

690

380

750

480

590

500

590

510

550

U3O8
(Mlb)

1.9

2.1

21.6

15.9

41.5

26.4

4.8

31.2

72.7

Please note that a cut-off grade of 200ppm U3O8 was used for the 2015 calculation, while in 2016 the cut-off grade was 150ppm U3O8.

Table 3: Mulga Rock Project Total Resource 30 June 2016

Deposit / Resource

Classification

Cut-off Grade
(ppm U3O8)

Tonnes
(Mt)3

U3O8
(ppm)4

U3O8
(Mlb)

Mulga Rock East

Princess1

Ambassador

Mulga Rock West

Emperor2

Shogun2

Indicated

Inferred

Indicated

Inferred

150

Sub-Total

150

Sub-Total

Total Resource

1.3

2.5

19.8

10.4

34.1

28.4

4.1

32.5

66.6

690

380

720

330

580

450

550

460

520

1.9

2.1

31.5

7.7

43.2

28.1

4.9

33.0

76.2

1. The Ambassador and Princess Resource estimates at a cut-off grade of 150ppm U3O8 were reviewed by Coffey Mining

and announced to the ASX on 17 September 2015 in accordance with the JORC Code 2012.

2. Coffey Mining prepared the Emperor and Shogun Resource estimates at a cut-off grade of 150ppm U3O8 and released

to the ASX on 17 December 2015 in accordance with the JORC Code 2012.

3. t = dry metric tonnes; Appropriate rounding has been applied, and rounding errors may occur.

4. Using cut combined U3O8 composites (combined chemical and radiometric grades).

Vimy Resources Limited Annual Report 2016

RESOURCE ESTIMATE UPDATES BY DEPOSIT
•

The updated Ambassador Mineral Resource was underpinned by a comprehensive drilling program of the western half
of the deposit, to a nominal 100 x 80m drill spacing, consistent with that achieved at Ambassador East in 2014. Overall
changes in the Ambassador West Resource were minimal, due to limited changes in bulk densities, volumes of mineralised
domains and grades.

•

80% of the Ambassador Mineral Resource is now classified as Indicated, totalling 19.8Mt at 720ppm U3O8 for 31.5Mlbs
U3O8, a 46% increase on 2015.

BY-PRODUCTS RESOURCE ESTIMATES
•

The Mulga Rock East uranium deposit (Princess and Ambassador) also contains a base metal resource. Base metal
mineralisation is associated with uranium but also occurs outside the boundaries of the uranium resource. Base metals
within the uranium mineralisation domains at Mulga Rock East only are reported as Mineral Resources and presented in
Table 4. Base and other metals outside of the uranium domains are currently not economically recoverable and are therefore
not included in the Resource.

•

Previous explorers did not assay for base metals during drilling at the Mulga Rock West deposit (Emperor and Shogun).
Analysis of recent drilling data shows that base metal resource estimation at the Mulga Rock West Deposit (Emperor and
Shogun) is not currently warranted given generally low grades and poor continuity.

The overall increase in the Cu, Zn, Ni and Co Mineral Resources (12%, 28%, 20% and 28% respectively on a contained
metal basis) is largely the result of the increased drill spacing at Ambassador West, with a significant shift from Inferred to
Indicated classification to match that of the corresponding uranium Mineral Resource.

Table 4: Base Metal Resource – Mulga Rock East

Deposit / Resource

Tonnes
(Mt)

Cu
(ppm)1

Zn
(ppm)1

Ni
(ppm)1

Co
(ppm)1

Mulga Rock East – tonnes and grade

Princess - Indicated

Princess - Inferred

Ambassador - Indicated

Ambassador - Inferred

Total

1.3

2.5

19.8

10.4

34.1

Deposit / Resource

Classification

Mulga Rock East

Princess

Ambassador

Indicated

Inferred

Indicated

Inferred

Total

750

270

340

110

280

Cu
(kt)

0.9

0.7

6.8

1.2

9.6

1280

500

1340

320

960

Zn
(kt)

1.6

1.3

26.5

3.3

32.7

440

250

630

250

480

Ni
(kt)

0.6

12.5

2.6

16.3

210

140

310

140

240

Co
(kt)

0.3

0.4

6.1

1.5

8.2

1. The base metal Resource is contained wholly within the uranium Resource. It is reported using the same cut-off grade

of 150ppm U3O8 with no additional base metal grade cut-offs applied.

Vimy Resources Limited Annual Report 2016RESOURCES - OTHER MATERIAL INFORMATION SUMMARY

GEOLOGY AND GEOLOGICAL INTERPRETATION
•

Geological modelling: Updates to the Mulga Rock West geological model resulted in limited changes to block model
volumes overall, with locally significant changes between domains, based on a large infill drilling program at Ambassador
West, testing domains 100, 200, 300 and 400.

•

Low-grade Cretaceous-hosted mineralisation was identified, similar in nature to that identified at Princess and Ambassador
East and paleochannel boundaries and stratigraphic interpretation were validated across the Ambassador West deposit.

• A lithological indicator was used for modelling density, based on a pro rata of lithologies logged.

SAMPLING AND SUB-SAMPLING
•

There are no material changes to report regarding sampling and sub-sampling techniques but recovery of loose material
in sands during diamond drilling was improved through the use of core-tubes, oversized reamers and finger lifters.

SAMPLE ANALYSIS METHOD
•

The correction methodology for secular radiometric disequilibrium was updated, to account for the various mineralised
domains at Ambassador West, where individual factors were derived using polynomial-based correction for equivalent
radiometric grades.

•

Analysis of wet bulk density is based on quality dual-spaced density wireline logging, supported by direct measurements
on diamond drill core. Dry bulk density derived from moisture values is inferred from wet and dry weight measurements.

DRILLING TECHNIQUES
•

There were no material changes to the drilling techniques involved, but a significant number of diamond holes and aircore
twins were used to analyse sampling bias associated with the latter.

ESTIMATION METHODOLOGY
•

An accumulation or grade x thickness estimation method was used for the domains 100 and 200 at Ambassador and
conventional ordinary kriging of U3O8 distribution for domains 300 and 400.

RESOURCE CLASSIFICATION
•

Resource classification criteria were amended to reflect the revised understanding of the longitudinal continuity of the
various domains, and to account for the two Resource estimation methods used.

CUT-OFF GRADE
•

The overall cut-off grade for the project was revised down from 200 to 150ppm U3O8 as a result of input from mining
studies and likely process costs derived from the project’s Pre-feasibility Study.

• Base metal grades reported were not cut but constrained to the uranium mineral Resource domains.

MINING AND METALLURGICAL METHODS AND PARAMETERS AND OTHER MODIFYING
FACTORS CONSIDERED TO DATE
• There were no material changes to report, assuming mining via conventional open pit mining methods.

CORPORATE GOVERNANCE – RESERVES AND RESOURCES CALCULATION
Due to the nature, stage and size of the Company’s existing operations, the Board believes there would be no efficiencies
gained in establishing a separate Mineral Reserve and Resources committee responsible for reviewing and monitoring the
Company’s processes for calculating Mineral Reserve and Resources and for ensuring that the appropriate internal controls
are applies to such calculations.

However, the Company ensures that any Mineral Reserve and Resource calculations are prepared by competent geologists
and are reviewed independently and verified (including estimation methodology, sampling, analytical and test data).
The Company will report any future Mineral Reserve and Resource estimates in accordance with the 2012 JORC Code.

Vimy Resources Limited Annual Report 2016
COMPETENT PERSON’S STATEMENT
The information in this report that relates to the Exploration Results for the Mulga Rock Resource Estimate U3O8 and base
metals, Resource Database, Geology and Bulk Densities is based on information compiled by Xavier Moreau, who is a Member
of the Australian Institute of Geoscientists. Mr Moreau is a full-time employee of Vimy Resources Limited. Mr Moreau has
sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which
is being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the JORC ‘Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Moreau consents to the inclusion in the report of
the matters based on his information in the form and context in which it appears.

The information in this report that relates to the Mulga Rock Mineral Resource estimates U3O8 and base metals is based on
information compiled or reviewed under the supervision of AMC Consultants as consultants to the Company and reviewed
by Ingvar Kirchner, an employee of AMC Consultants. Mr Kirchner consents to the inclusion, form and context of the relevant
information herein as derived from the original resource reports. Mr Kirchner has sufficient experience relevant to the style of
mineralisation and type of deposit under consideration and to the activity which is being undertaken to qualify as a Competent
Person as defined in the 2012 Edition of the JORC ‘Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves’.

Tenements

Tenement

M39/1080

M39/1081

E39/876

E39/877

E39/1148

E39/1149

E39/1150

E39/1551

P39/4877

P39/4878

P39/4879

P39/4880

P39/4881

P39/4882

L39/193

L39/219

L39/239

Ownership

100%

Aerial view of Ambassador East test pit

Vimy Resources Limited Annual Report 2016 2016 FINANCIAL
REPORT
CONTENTS

DIRECTORS’ REPORT
Directors
Principal Activities
Significant Changes in the State of Affairs
Operating and Financial Review
Likely Developments and Business Strategy
Matters Subsequent to the End of the Year
Meetings of Directors
Directors’ Interests in Shares and Options
Share Options
Environmental Regulations and Performance
Remuneration Report (Audited)
AUDITOR’S INDEPENDENCE DECLARATION
FINANCIAL STATEMENTS

Statement of Profit or Loss
and Other Comprehensive Income

Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT

22
24
24
25
25
26
27
27
27
28
28
28
40

41
42
43
44
45
75
76

This financial report covers Vimy Resources Limited as a Group consisting of Vimy Resources Limited
and its subsidiaries. The financial report covers the year ended 30 June 2016 and is presented in
Australian dollars.

Vimy Resources Limited is a company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business is: Ground Floor, 10 Richardson Street West Perth,
Western Australia, 6005

The financial report was authorised for issue by the directors on 30 September 2016. The Company
has the power to amend and reissue the financial report.

Through the use of the internet, we have ensured that our corporate reporting is timely, complete, and
available globally at minimum cost to the Company. Public releases are available at asx.com.au by
entering the Company’s ASX code ‘VMY’. Additional information on the Company is available on its
website vimyresources.com.au.

Vimy Resources Limited Annual Report 2016
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

Your directors present their report on Vimy Resources Limited consolidated entity (‘Group’) for the financial year
ended 30 June 2016.

DIRECTORS

The names and details of directors who held office during the year ended 30 June 2016 and up to the date of this
report (unless otherwise stated), are:

The Hon. Cheryl Edwardes AM, LLM, B.Juris, BA
Independent Non-Executive Chairman

Appointed 26 May 2014

A lawyer by training, Mrs Edwardes is a former Minister in the Western Australian Legislative Assembly with
extensive experience and knowledge of WA’s legal and regulatory framework relating to mining projects,
environmental, native title, and heritage and land access. Mrs Edwardes is currently a Non-Executive Director of
Atlas Iron Limited and AusCann Group Holdings Limited. Mrs Edwardes assists the clients of FTI Consulting with a
range of complex statutory approvals required for resources and infrastructure projects. She was the Executive
General Manager for External Affairs for Hancock Prospecting and Special Counsel at Minter Ellison in Perth where
she practised in government relations, climate change and environmental regulation and compliance.

During her political career, Mrs Edwardes held positions including WA Attorney General, Minister for the Environment
and Minister for Labour Relations. She also has broad experience and networks within China’s business community.

Listed company directorships in the last three years: Atlas Iron Limited May 2015 to present and AusCann Group
Holdings Limited May 2016 to present.

Michael (Mike) Young BSc (Hon), MAIG, MAICD
Managing Director and Chief Executive Officer

Appointed 17 April 2013

Mr Young was the first CEO and MD of BC Iron Limited and played an integral role in taking that company to a
position as a significant iron ore producer. Mr Young successfully steered BC Iron through first stage exploration,
definition of resources, feasibility study, the negotiation of development agreements with Fortescue Metals Group
and ultimately the profitable production of iron ore.

Mr Young is a geologist and a graduate of Queens University, Canada with a Bachelor of Science (Honours) degree
in Geological Sciences. His experience includes base metals, iron ore, uranium and gold, with a strong focus on
mine-camp exploration, resource definition, and mine development. Mr Young was a founding director of uranium
developer Bannerman Resources Limited and is the non-executive Chairman and founder of Cassini Resources
Limited.

Listed company directorships in the last three years: BC Iron Limited October 2006 to November 2014, Cassini
Resources Limited January 2012 to present, Ascot Resources Limited June 2015 to December 2015 (delisted).

Julian Tapp BA, MSc
Executive Director

Appointed 18 March 2013

Mr Tapp brings a wealth of experience in regulatory approvals. In his previous role as Head of Government
Relations for Fortescue Metals Group, Mr Tapp was instrumental in overseeing and expediting the approvals process
for Fortescue’s world-class Pilbara iron ore project from conception through to operation.

Mr Tapp trained as an economist before holding a number of high-level roles in companies around the globe,
including as Director of New Business Development for the Middle East for BAeSystems. He is also currently a
non-executive director with the Pilbara Port Authority.

Listed company directorships in the last three years: Nil

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 1

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

David Cornell B.Comm, CA
Independent Non-executive Director

Appointed 17 July 2012

Mr Cornell is a director of Element Capital Pty Ltd and has significant experience providing strategic and corporate
advice to listed companies, with a strong focus on transaction services.

Mr Cornell has assisted several companies, including Vimy Resources Limited, through the listing process and has
raised over a quarter of a billion dollars through debt, equity and hybrid structures for leading resource companies
including Atlas Iron and CopperCo.

Mr Cornell is a Chartered Accountant, gaining his experience with the international accounting firms Arthur Andersen
and Ernst & Young where he specialised in providing corporate and professional services to both Western Australian
junior explorers and international mining companies.

Listed company directorships in the last three years: Nil

Andrew Haslam Grad Dip. Min (Ballarat), GAICD
Non-executive Director

Appointed 1 April 2016

Mr Haslam is a highly experienced mining executive and has been working as a consultant to the Mulga Rock Project
since February 2016. He currently serves as a Non-Executive Director of BC Iron Ltd. He is also an industry
representative on the WA Quarry Managers’ Board of Examiners, a Member of Australian Institute of Company
Directors and a consultant to private company Genmin’s Baniaca Iron Ore Project in Gabon, Africa.

Mr Haslam holds a Graduate Diploma of Mining from the University of Ballarat, Victoria, a Graduate Diploma from the
Australian Institute of Company Directors, Diploma of Extractive Industries Management from SEM College WA and
WA Quarry Manager’s Certificate of Competency.

Listed company directorships in the last three years: BC Iron Limited from August 2011 to present.

Malcolm James B.Bus., FAICD, AusIMM
Non-executive Director

Appointed 1 April 2016

Mr James has an extensive background in finance, accounting and resources with a wealth of experience as a
company director in the mining sector. This includes a focus in uranium, developed over ten years at Peninsula
Energy where he served as Executive Director responsible for the daily operations through to finance. He is currently
the Non-Executive Chairman of Anova Minerals Ltd and Algae.Tec Ltd.

Mr James holds a Bachelor of Business (Accounting) from RMIT University in Melbourne, he is a Fellow
of the Australian Institute of Company Directors (FAICD) and Member Australasian Institute of Mining and Metallurgy
(AusIMM).

Mr James is a representative of the shareholder, Forrest Family Investments Pty Ltd (Peepingee Trust).

Listed company directorships in the last three years: Anova Metals Limited from September 2012 to present; Algae
Tec Limited from September 2014 to present; and Triton Gold from October 2011 to January 2014.

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 2

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

Aaron Hood B.Comm, B.Eng, MBA
Non-executive Director

Appointed 26 May 2015, Resigned 1 April 2016

Mr Hood was the Chief Investment Officer of Minderoo, encompassing the philanthropic and private business
holdings of Andrew and Nicola Forrest.

Prior to joining Minderoo, Mr Hood spent ten years in Sydney and Perth as executive director of a private equity firm
with investments in mining services, oil and gas, manufacturing and retail. He is currently a director of the Scotch
College Foundation (WA) and UWA Business School Ambassadorial Council and Chairman of Harvey Beef.

Mr Hood was a representative of the shareholder, Forrest Family Investments Pty Ltd (Peepingee Trust).

Listed company directorships in the last three years: Impact Minerals Limited from May 2015 to present.

COMPANY SECRETARY

Ronald Chamberlain BCom, FCA
Chief Financial Officer and Company Secretary

Appointed 5 February 2016

Mr Chamberlain has over twenty-five years’ experience in the resources industry as a finance professional, with
significant involvement in all the mine stages from exploration through to mine closure. Mr Chamberlain has held a
number of senior executive roles in the uranium industry, he was the inaugural CFO for Paladin Energy where he
played an integral role in the funding and development of the Langer Heinrich and Kayelekera projects, and then
Acting CFO and subsequently Non-Executive Director for Extract Resources prior to China Guangdong Nuclear
Power's acquisition of the Husab project. Mr Chamberlain has worked on resource project developments and
acquisitions in Australia, Africa, North America and Asia.

Mr Chamberlain holds a Bachelor of Commerce degree from the University of Western Australia and is a Fellow of
the Chartered Accountants Australia and New Zealand.

Shane McBride BBus., FCPA, FGIA, FCSA, MAICD
Chief Financial Officer and Company Secretary

Appointed 30 July 2009, Resigned 5 February 2016

Mr McBride has thirty-five years of commercial management experience, with twenty-eight years’ experience in
senior management roles in the resources industry. His experience has been gained in listed Australian public
companies in the disciplines of corporate management, management and financial accounting, project development
and mine site operations, corporate finance and company secretarial functions.

Mr McBride was the managing director of an Australian copper producer listed on the ASX and has substantial
experience as a public company director.

Mr McBride has a Bachelor of Business degree, is a Fellow of CPA Australia, Fellow of Governance Institute of
Australia and the Institute of Chartered Secretaries and Administrators, and is a Member of the Australian Institute
of Directors.

PRINCIPAL ACTIVITIES

The principal activities of the Group during the year ended 30 June 2016 were exploration and evaluation on the
Mulga Rock Project, with a Pre-feasibility Study completed during the year, and commencement of a Definitive
Feasibility Study.

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 3

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

During the year the following significant events occurred:

•

On 17 August 2015, the Company announced a legally binding agreement with Resource Capital Fund VI L.P.
(“RCF VI”) for the provision of the final $25 million of a $30 million funding package announced on 20 May 2015.
The funding package comprises a $15 million unsecured bridging loan and a $10 million payment in return for a
1.15% royalty on future production from the Mulga Rock Project.

On 3 September 2015, the Company received the royalty payment of $10 million from RCF VI.

On 4 April 2016, the Company completed the first drawdown of funds of $7.5 million from the RCF VI unsecured
bridging loan.

OPERATING AND FINANCIAL REVIEW

OPERATING RESULT

The consolidated operating loss after tax for the year ended 30 June 2016 attributable to members of the Group was
$11,957,825 (2015: operating loss after tax $10,725,302). The loss after tax is mainly attributable to the accounting
policy to expense all exploration and evaluation expenditure as incurred.

Key highlights for the year were as follows:

•

Other income increased to $11,380,804 (2015: $165,655) from both the RCF VI royalty payment of $10 million
and the 2015 Research and Development Tax Incentive grant income of $1.2 million.

Higher exploration and evaluation expenditure of $18,497,411 (2015: $9,033,668) as a consequence of the
focus on Definitive Feasibility studies for the Mulga Rock Project.

DIVIDENDS

No dividends were paid in the current year (2015: $Nil).

REVIEW OF OPERATIONS

The Group’s main asset is the Mulga Rock Project, one of Australia’s largest undeveloped uranium resources,
located 240 kilometres north east of Kalgoorlie in Western Australia. As an exploration and evaluation company,
Vimy Resources Limited is in the high-risk, high-reward sector of the global mining industry. Exploration and
evaluation companies are the critical front-end of the mining industry with the highest risk, and as such the
Company’s business model is specific to this sector.

During the year the following significant events occurred on the Mulga Rock Project:

•

Commercial scale pilot test work confirmed ore beneficiation results.

On 17 November 2015, the Company announced the completion of a Pre-feasibility Study, which reaffirmed that
the Mulga Rock Project is one of the best undeveloped uranium projects in Australia.

On the basis of the Pre-feasibility Study results, the Company initiated a Definitive Feasibility Study (“DFS”).

Release of Public Environmental Review (“PER”) for public comment on 14 December 2015.

Maiden Ore Reserve comprising 15.2Mt at 660ppm U3O8 for a Total Metal content of 22.1Mlb of U3O8.

DFS in-fill resource drilling program at Ambassador, Shogun and Emperor deposits completed.

Bulk ore samples obtained from both Ambassador East and West test pits.

Geotechnical drilling completed.

DFS ore beneficiation pilot plant program awarded and well progressed by 30 June 2016.

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 4

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

•

GR Engineering Limited appointed Study Manager to the DFS.

PER public submissions period closed and the Company completed response to submissions.

Significant Resource upgrade to 66.6Mt at 520ppm U3O8 for 76.2Mlbs contained U3O8.

Bulk samples taken from the Ambassador test pits demonstrated a 53% higher contained U3O8 when compared
to the Resource model.

The Office of the EPA advised that the Company’s response to submissions for the PER were adequate.

Nomination for the Golden Gecko Award for innovative camera trapping protocol was accepted for assessment.

The Company currently has seventeen (17) tenements that all relate to the Mulga Rock Project; two are mining
leases, six are exploration licences, six are prospecting licences, and three are miscellaneous licences. The mining
leases currently include all of the area that the Company anticipates will be incorporated into development of the
Mulga Rock Project.

Financial Position

Net liabilities at 30 June 2016 were $5,298,051 (2015: Net assets of $5,745,119) as a consequence of both the
$7.5 million drawdown from the RCF VI unsecured bridging loan and the accounting policy to expense all exploration
and evaluation expenditure as incurred.

The Group has total borrowing facilities of $15 million as at 30 June 2016 relating to the RCF VI unsecured bridging
loan, with an available facility amount at year end of $7.5 million, and a maturity date of 31 March 2017.

Cash balances at 30 June 2016 totalled $4,572,609 (2015: $6,445,757).

Going Concern

The Group’s ability to continue as a going concern and to capitalise on its exploration and evaluation activities
depends on its ability to obtain additional funding through equity, debt or hybrid financing, joint ventures, production
off-take arrangements, Research and Development Tax Incentive receipts or other means. These circumstances
create material uncertainties as to the ability of the Group to continue as a going concern.

In considering these circumstances, the directors have taken into account:

•

the $7.5 million undrawn bridge facility agreement with RCF VI.

Research and Development Tax Incentive receipts expected from lodging the 2016 Group income tax return.

FIRB and shareholder approval for the full conversion of the RCF VI $15 million unsecured bridge facility
agreement.

the Group’s demonstrated track record in raising equity.

in the unlikely event that additional funding is not able to be obtained, the directors would actively curtail both
project and corporate expenditure in light of the Group’s actual funding.

In view of all the foregoing, the directors are of the view that they have a reasonable expectation that the Group will
have adequate resources to continue to operate for at least the next twelve months. For these reasons, they
continue to adopt the going concern basis in preparing the financial report.

LIKELY DEVELOPMENTS AND BUSINESS STRATEGY

The Group’s strategy is to develop the Mulga Rock Project and to ultimately become a uranium producer. At the
same time the Group is continually looking for exploration opportunities to add to its exploration upside. New assets
will be evaluated on a case by case basis.

The Group’s objectives are to complete the Mulga Rock Project Definitive Feasibility Study, develop the project by
negotiation of offtake contracts and funding facilities, and continue exploration activities on its tenement portfolio.

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 5

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

MATTERS SUBSEQUENT TO THE END OF THE YEAR

Since 30 June 2016 the following significant subsequent events have occurred:

On 15 August 2016 the Office of the Environmental Protection Authority assessed the Company’s proposal and
prepared an Assessment Report that has been sent to the Minister under s44(1) of the Western Australian
Environmental Protection Act (EPA Act). The Assessment Report recommends that the proposal is implemented and
specifies the conditions and procedures to which implementation should be subject, as required by s44(2)(b) of the
EPA Act.

On 15 August 2016 the Company announced the final drawdown of funds of $7.5 million under the RCF VI funding
facility to maintain progress on the Definitive Feasibility Study for the Mulga Rock Project.

On 23 September 2016 the Company announced a $6.6 million placement to new and existing institutions and other
sophisticated investors, conversion of the full $15 million RCF VI funding facility, and a Share Purchase Plan. The
placement is in part subject to FIRB approval, and the loan conversion to equity is subject to both FIRB and
shareholder approval.

MEETINGS OF DIRECTORS

The meetings of the Company’s Board of Directors held during the year ended 30 June 2016, and the number
of meetings attended by each director were:

Full meetings
of directors

Remuneration
Committee

Audit Committee

Directors during the year ended 30 June 2016

C. Edwardes

M. Young

J. Tapp

D. Cornell

A. Haslam

M. James

A. Hood

A = Number of meetings attended in person or electronic means.
B = Number of meetings held during the time that the director held office and for which they were entitled to participate.
* = Not a member of the relevant committee.

DIRECTORS’ INTERESTS IN SHARES AND OPTIONS

Particulars of directors’ interests and of persons connected with them in shares of the Group as at the reporting date
are as follows:
Director

Number of options

Number of shares

C. Edwardes

M. Young

J. Tapp

D. Cornell

A. Haslam
M. James (a)
A. Hood (a)

857,142

3,571,427

2,142,856

(a)

Mr James and Mr Hood represent the Forrest Family Investments Pty Ltd. (Peepingee Trust) which currently holds 57,142,857
ordinary shares (57,142,857 options over ordinary shares in the Company expired on 30 June 2016).

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 6

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

SHARE OPTIONS

Options over ordinary shares of the Group as at the reporting date are as follows:

Date granted

Expiry date

17 December 2014

16 December 2019

17 March 2014

14 June 2013

16 December 2018

14 June 2018

7 February 2012

31 January 2017

Fair value per
option at grant
date

Exercise price

$0.31

$0.35

$0.098

$0.392

$0.80

$1.54

$0.70

$0.35

$1.26

Number
of options

1,428,572

8,714,281

8,714,283

2,857,142

135,712

No option holder has any right under the options to participate in any other share issue of the Group or of any other
controlled entity. No options were exercised during the year ended 30 June 2016.

ENVIRONMENTAL REGULATIONS AND PERFORMANCE

The Group has conducted exploration and evaluation activities on mineral tenements. The right to conduct these
activities is granted subject to environmental conditions and requirements. The Group aims to ensure a high
standard of environmental care is achieved, and as a minimum, to comply with relevant environmental regulations.
There have been no known material breaches of any of the environmental conditions.

REMUNERATION REPORT (AUDITED)

The Directors of the Group present the Remuneration Report of non-executive directors, executive directors and
other key management personnel, prepared in accordance with the Corporation Act 2001 and the Corporation
Regulations 2001.

The Remuneration Report is set out under the following main headings:

A. Principles used to determine the nature and amount of remuneration

B. Details of remuneration

C. Service agreements

D. Share-based compensation

E. Additional information

A. Principles used to determine the nature and amount of remuneration

The objective of the Group’s executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. As an emerging project development company, remuneration levels are
established based on industry standards rather than company performance. These remuneration levels are set to
attract qualified and experienced people to pursue the Group’s stated objectives. The Board, through the
Remuneration Committee, takes advice on industry remuneration standards through consultation with external
agents. During the 2015 and 2016 year no external agents were engaged by the Company.

The Board has established a remuneration charter, administered by the Remuneration Committee, which provides
oversight guidance on remuneration and incentive policies and practices and specific recommendations on
remuneration packages and other terms of employment for executive directors, other senior executives and non-
executive directors.

The Board recognises that future performance will be dependent on the quality of its people. To achieve its financial
and operating objectives, Vimy must be able to attract, retain and motivate highly capable people.

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 7

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

To this end, the Board and management have reviewed and agreed the appropriate people systems required at each
level of company development. These will be implemented over time in order to support the continuing growth and
change of the business.

Non-executive directors

Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities
of, the directors. Non-executive directors’ fees and payments are reviewed periodically by the Board through the
Remuneration Committee. The Chairman does not attend any discussions relating to determination of her own
remuneration. Non-executive directors’ fees are determined within an aggregate directors’ fee pool limit, which is
periodically recommended for approval by shareholders. The maximum fee pool currently stands at $500,000
per annum. There are no retirement allowances for non-executive directors other than statutory superannuation
contributions.

Executive pay

The executive pay and reward framework has three components:

(i) Base pay and benefits, including superannuation

Base pay is structured as a total employment cost package which may be delivered as a combination of cash
and prescribed non-financial benefits at the executives’ discretion.

Employees are offered a competitive base pay that comprises the fixed component of pay and rewards.
External remuneration consultants provide analysis and advice to ensure base pay is set to reflect the market
for a comparable role. Base pay for senior executives is reviewed annually to ensure the executive’s pay
is competitive with the market. An executive’s pay is also reviewed on promotion.

There are no guaranteed base pay increases included in any senior executives’ contracts.

Superannuation contributions are made to employees’ chosen superannuation funds in accordance with
Australian regulatory requirements.

(ii) Short-term performance incentives

The Board, through the Remuneration Committee, is responsible for assessing short term incentives for key
management personnel. Service agreements may establish short-term incentives against key performance
indicators which are assessed by the Board through the Remuneration Committee.

(iii) Long-term incentives

Long-term incentives are provided to employees through the Vimy Employee Share Plan. See section D –
Share-based compensation for further information.

Company performance

The Company is currently focused on exploration and evaluation of its projects and is not expected to generate
profits during this development phase. Share price performance will occur as a result of the success in progressing
project development, quality of the projects, management’s performance and external factors.

Consequences of performance on shareholder wealth

In considering the Group’s performance and benefits for shareholder wealth, the Board have regard to the following
indices in respect of the current financial year and the previous four financial years:

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 8

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

Item

Loss per share (cents)

Dividend (cents per share)

2016

(5.24)

2015

(5.26)

2014 *

(13.72)

2013 *

(27.23)

2012 *

(13.02)

Net loss

Share price ($)

(11,957,825)

(10,725,302)

(8,298,813)

(15,337,969)

(7,218,965)

0.34

0.26

0.35

0.21

0.35

The figures for these years have been retrospectively changed to factor in the consolidation of share capital of the Company
on a basis that every 7 shares were consolidated into 1 share.

B. Details of remuneration

Amounts of remuneration

The key management personnel of the Group are the directors and specified executives. Details of the remuneration
of the key management personnel of the Group for the years ended 30 June 2016 and 2015 are set out in the
following tables.

Short-term benefits

Cash salary
and fees

Cash
bonus

Post-employment
benefits

Share-based
payments

Superannuation

Value of
options /shares

Total

Directors

Non-executive
C. Edwardes

D. Cornell

A. Haslam
from 1 April 2016

M. James (a)
from 1 April 2016

A. Hood (a)
Resigned 1 April 2016

F. Gooding (a)
Resigned 26 May 2015

Executive
M. Young

J. Tapp

Total directors

2016
2015

90,000
90,000

40,000
40,000

10,950
-

32,850
4,200

-
34,149

425,000
422,012

325,000
315,503

934,750
905,864

-
-

8,550
8,550

3,800
3,800

-
-

25,000
24,999

25,000
34,995

62,350
72,344

146,212
77,500

244,762
176,050

-
-

233,391
123,709

612,994
324,918

43,800
43,800

10,950
-

32,850
4,200

-
34,149

683,391
570,720

583,391
474,207

1,610,094
1,303,126

(a)

Payments for Mr James, Mr Hood and Ms Gooding were made to the Forrest Family Investments Pty Ltd (Peepingee Trust)
whom they represent on the Board. Mr Hood commenced on 26 May 2015 and was replaced by Mr James on 1 April 2016.

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 9

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

Short-term benefits

Cash salary
and fees

Cash
bonus

Post-employment
benefits

Share-based
payments

Superannuation

Value of
options /shares

Total

Key management personnel
T. Chamberlain
Chief Operating Officer
from 1 November 2015

R. Chamberlain
CFO and Company Secretary
from 5 February 2016

S. McBride
CFO and Company Secretary
Resigned 5 February 2016

M. Fewster

Total key management
personnel

2016
2015

2015

2016
2015

278,933
-

49,400
-

13,012

125,150
-

15,000
-

11,875
-

304,370
292,675

76,875

708,453
369,550

-
-

64,400
-

35,000
34,923

59,887

34,923

136,975
-

9,626
-

33,049
21,317

179,650
21,317

478,320
-

161,651
-

372,419
348,915

76,875

1,012,390
425,790

Annual short-term incentive bonus is a component of the service agreement. Award of incentive bonus is dependent
upon the Group performance in safety, Company share price performance compared to a peer group, and specific
individual project achievements. In 2016 Mr T. Chamberlain received 65% of the maximum annual short-term
incentive bonus (35% forfeited) and Mr R. Chamberlain received 60% of the maximum annual short-term incentive
bonus (40% forfeited) (2015: Not applicable).

The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:

Fixed remuneration

At risk – short term
incentives

At risk – long term
incentives

2016

2015

2016

2015

2016

2015

Directors

Non-executive

C. Edwardes

D. Cornell

A. Haslam

M. James

A. Hood

Executive

M. Young

J. Tapp

Key management personnel

T. Chamberlain

R. Chamberlain

S. McBride

40%

100%

66%

60%

68%

93%

91%

56%

100%

78%

74%

94%

60%

44%

34%

40%

32%

22%

26%

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 10

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

C. Service agreements

Remuneration and other terms of employment for certain key management are formalised in service agreements.
Employees are eligible for long term incentive benefits under the Vimy Employee Share Plan.

Mr M. Young, Chief Executive Officer and Managing Director

•

Base Remuneration - $450,000 inclusive of superannuation.

Term of agreement – The executive service agreement has no fixed completion term.

Termination – The Company may terminate Mr Young’s employment at any time with six months’ written notice
or the payment of six months’ remuneration in lieu of notice. Mr Young must provide six months’ written notice
to terminate the agreement.

The service agreement may be terminated by the Company at any time, without notice to the executive as a
result of misconduct, wilful neglect, material breaches of his duties, the executive being charged with a criminal
offence which brings the Company into serious disrepute, the executive becoming insolvent or becoming
ineligible to hold office as a director.

Mr J. Tapp, Executive Director

•

Base Remuneration - $350,000 inclusive of superannuation.

Term of agreement – The executive service agreement has no fixed completion term.

Termination – The Company may terminate Mr Tapp’s employment at any time with six months’ written notice or
the payment of six months’ remuneration in lieu of notice. Mr Tapp must provide six months’ written notice to
terminate the agreement.

Mr T. Chamberlain, Chief Operating Officer – from 1 November 2015

•

Base Remuneration - $380,000 plus superannuation.

Short Term Incentive – Maximum annual award of 20% of base remuneration.

Term of agreement – The executive service agreement has no fixed completion term.

Termination – The Company may terminate Mr Chamberlain’s employment at any time with four months’ written
notice or the payment of four months’ remuneration in lieu of notice. Mr Chamberlain must provide two months’
written notice to terminate the agreement.

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 11

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

Mr R. Chamberlain, Chief Financial Officer and Company Secretary – Appointed 5 February 2016

•

Base Remuneration - $300,000 plus superannuation.

Short Term Incentive – Maximum annual award of 20% of annual base remuneration.

Term of agreement – The executive service agreement has no fixed completion term.

Termination – The Company may terminate Mr Chamberlain’s employment at any time with six months’ written
notice or the payment of six months’ remuneration in lieu of notice. Mr Chamberlain must provide six months’
written notice to terminate the agreement.

Mr S. McBride, Chief Financial Officer and Company Secretary – Resigned 5 February 2016

•

Term of agreement – The executive service agreement has no fixed completion term.

Termination – The Company may terminate Mr McBride’s employment at any time with six months’ written
notice or the payment of six months’ remuneration in lieu of notice. Mr McBride must provide six months’ written
notice to terminate the agreement.

D. Share-based compensation

During the year the Company granted options and issued shares under the Vimy Employee Share Plan (‘Plan’) to key
management personnel.

The following shares were issued to key management personnel for the period ended 30 June 2016:

•

On 20 November 2015, the Company issued 1,000,000 ordinary shares to Mr Tony Chamberlain. These shares
were purchased by the employee or their associate and funded by a limited recourse loan provided by the
Company. These shares are subject to a voluntary escrow period that ends upon completion of the Mulga Rock
Project definitive feasibility study to the absolute satisfaction of the Remuneration Committee.

On 3 June 2016, the Company issued 500,000 ordinary shares to Mr Ron Chamberlain. These shares were
purchased by the employee or their associate and funded by a limited recourse loan provided by the Company.
These shares are subject to one year voluntary escrow period expiring on 3 June 2017.

The terms of the Plan are detailed below under ‘Loans to Directors and Key Management Personnel’.

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 12

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

E. Additional Information

Shareholdings

The number of ordinary shares in the Company held during the year by each director and key management
personnel, including their personally related entities or associates, are set out below.

Balance at the
start of the period

Granted as
remuneration

Changes on
appointment or
resignation

Balance at the
end of the period

30 June 2016

Directors
C. Edwardes
M. Young
J. Tapp
D. Cornell
A. Haslam
M. James (a)
A. Hood (a)

Key management personnel
T. Chamberlain

R. Chamberlain

S. McBride

857,142
3,571,427
3,571,427
-
-
-
-

7,999,996

-
-
-
-
-
-
-

1,000,000

500,000

142,857

(457,142)

457,142

857,142
3,571,427
3,571,427
-
-
-
-

7,999,996

1,142,857

500,000

1,500,000

(314,285)

1,642,857

(a)

Mr James and Mr Hood are representatives of Forrest Family Investments Pty Ltd (Peepingee Trust) which held 57,142,857
ordinary shares in the Company during the year ended 30 June 2016.

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 13

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

Option holdings

The number of options over ordinary shares in the Company held during the reporting period by each director
and key management personnel, including their personally related entities, are set out below.

Balance at the
start of the period

Granted as
remuneration

Exercised

Changes on
resignation

Balance at the
end of the period

Vested and
exercisable at
30 June 2016

30 June 2016

Directors

C. Edwardes
M. Young
J. Tapp
D. Cornell
A. Haslam
M. James (a)
A. Hood (a)

-
2,142,856
2,142,856
-
-
-
-

4,285,712

Key management personnel
T. Chamberlain
R. Chamberlain
S. McBride

-
-
50,000

50,000

-
-
-
-
-
-
-

-
-
-

-
-
-
-
-
-
-

-
-
-

-
-
-
-
-
-
-

-
-
(50,000)

(50,000)

-
2,142,856
2,142,856
-
-
-
-

-
1,428,571
1,428,571
-
-
-
-

4,285,712

2,857,142

-
-
-

(a)

Mr James and Mr Hood are representatives of Forrest Family Investments Pty Ltd (Peepingee Trust) which held 57,142,857
ordinary shares in the Company during the year ended 30 June 2016.

Loans to Directors and Key Management Personnel

During 2013, shareholders approved an employee share scheme for the Company. As a result the Company
adopted the employee share plan to be known as the Vimy Employee Share Plan (‘Plan’), pursuant to which
employees (including directors) of the Company can be invited to subscribe for shares using financial assistance
provided by the Company.

The Plan provides a mechanism for the Company to invite employees (including the directors) to subscribe for shares
in the Company and to apply for a loan from the Company to pay the subscription price for those shares (‘Plan
Shares’). The Company takes security over the Plan Shares acquired under the Plan until the limited recourse loan
provided for the subscription price for those shares has been repaid in full (‘Limited Recourse Loan’).

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 14

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

A summary of the terms of issue and the Limited Recourse Loan(s) provided is shown below.

Grant Date

Number of
shares acquired

Amount of the loan

Term of the
loan

Directors (or associate)

C. Edwardes

M. Young

J. Tapp

17/12/2014

14/6/2013

17/12/2014

14/6/2013

857,142

714,285

1,428,571

714,285

1,428,571

Key management personnel (or associate)

T. Chamberlain

R. Chamberlain

S. McBride
resigned 5 February 2016

Share based payment

20/11/2015

1,000,000

5/9/2014

3/06/2016

5/9/2014

142,857

500,000

457,142

$357,500

$298,000

$246,753

$298,000

$246,753

$340,800

$69,200

$158,450

$221,440

up to 5 years

As non-interest bearing limited recourse loans were provided to purchase Plan Shares in the Company and these
loans are secured against the same Plan Shares, AASB 2 (share based payments) applies. On this basis, the loan
amount is not recognised in the financial statements.

Loan terms

The key terms of each Limited Recourse Loan provided under the Plan are as follows:

(i)

(ii)

(iii)

the Limited Recourse Loan may only be applied towards the subscription price for the shares issued under
the Plan;

the Limited Recourse Loan will be interest free, provided that if the Limited Recourse Loan is not repaid by the
repayment date set by the Board, the Limited Recourse Loan will incur interest at 9% per annum after that
date (which will accrue on a daily basis and compound annually on the then outstanding loan balance);

by signing and returning an application for a Limited Recourse Loan, the participants of the Plan (each a
Participant):

─

acknowledges and agrees that the Plan Shares will not be transferred, encumbered, otherwise
disposed of, or have a security interest granted over it, by or on behalf of the Participant until the
Limited Recourse Loan is repaid in full to the Company; and

authorises the Company (at its election) either to take such action in the Participant's name or direct
that Participant take such action in relation to the Plan Shares as the Company considers appropriate
which may include but is not limited to the Company undertaking buy-back of the Plan Shares or selling
the Plan Shares;

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 15

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

(iv)

the Limited Recourse Loan becomes repayable on the earliest of:

─

the date which is five years after the grant date of the Limited Recourse Loan (‘Repayment Date’);

one month after the Participant ceases for any reason to be employed by the Company; and

(by the legal personal representative of the Participant) six months after the Participant ceases to be
an employee of the Company due to their death;

(v)

(vi)

notwithstanding paragraph (iv) above and subject to any voluntary escrow conditions entered into by the
individual Participant, the Participant may repay all or part of the loan at any time before the Repayment Date;
and

the Limited Recourse Loan will be limited recourse such that on the repayment date the repayment obligation
under the Limited Recourse Loan will be limited to the lesser of:

─

the outstanding balance of the Limited Recourse Loan; and

the market value of the Plan Shares on that date.

In addition, where the Participant has elected for the Plan Shares to be provided to the Company in full satisfaction of
the Limited Recourse Loan, the Company must accept the Plan Shares as full settlement of the repayment obligation
under the Limited Recourse Loan.

Rights attaching to Plan Shares

The Plan Shares will rank equally with all other shares on issue in the capital of the Company. Holders of Plan
Shares issued under the Plan will be entitled to exercise all voting rights attaching to the Shares in accordance with
the Constitution. In addition, holders of Plan Shares issued under the Plan will be entitled to participate in dividends
declared and paid by the Company in accordance with the Constitution.

Sale of Plan Shares

Where the Participant has been granted a Limited Recourse Loan to purchase the Plan Shares; and subject to
voluntary escrow, those Plan Shares may only be sold by a Participant when the Limited Recourse Loan has been
repaid proportionately to the number of Plan Shares to be sold. Otherwise any dealing by the Participant in the Plan
Shares is prohibited without the prior written consent of the Company.

If the Limited Recourse Loan becomes due and payable and the Participant has not repaid the amount of the Limited
Recourse Loan in full within one month of the due date, then the Participant will forfeit their interest in the Plan
Shares as full consideration for the repayment of the outstanding loan balance. The Company may either (at its
election) take such action in the Participant's name or direct that Participant take such action in relation to the Plan
Shares as the Company considers appropriate, which may include but is not limited to the Company undertaking buy-
back of the Plan Shares or selling the Plan Shares.

Other transactions with director and key management personnel related entities

Mr Haslam is a director of Hasbar Pty Ltd. Hasbar has provided mining
consulting services on the Mulga Rock Project for which it was paid at
commercial rates. The amount unpaid at 30 June 2016 was $2,000.

Mining Consulting Services

7,600

Consolidated

2016
$

2015
$

End of audited remuneration report.

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 16

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

Auditor

Grant Thornton Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.

NON-AUDIT SERVICES

During the period, the following fees were paid or payable for services provided by the auditor of the Parent entity,
its related practices and non-related audit firms:

Assurance services

Audit services

Grant Thornton Audit Pty Ltd:

Audit of financial reports and other audit work
under the Corporations Act 2001

Non-audit services

Advisory fees

Total remuneration for assurance services

Consolidated

Year ended
30 June 2016
$

Year ended
30 June 2015
$

35,665

32,629

35,665

1,600

34,229

AUDITORS’ INDEMNITIES AND INSURANCE

The Company does not indemnify its auditors for liability to another person’s or the Company that may arise out of
the conduct of the Audit.

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set
out on the page following this Directors’ Report.

OFFICERS’ INDEMNITIES AND INSURANCE

The Company has agreed to indemnify former and current directors and officers of the Company against all liabilities
to another person and the Company that may arise from their position as directors and officers of the Company and
its controlled entities, except where the liability arises out of conduct involving a wilful breach of duty. The agreement
stipulates that the Company will meet the full amount of such liabilities including costs and expenses.

The Company agreed to pay a premium in respect of a contract insuring directors and officers of the Company.
That contract of insurance prohibits the Company disclosing the nature of the liability insured against and the amount
of the premium paid. The liabilities insured include legal costs that may be incurred in defending civil or criminal
proceedings that may be brought against the officers in their capacity as officers of entities in the Group, and any
other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where
such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers
of their position or of information to gain advantage for themselves or someone else or to cause detriment to the
Company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs
and those relating to other liabilities.

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 17

Vimy Resources Limited Annual Report 2016DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ Report
for the Year ended 30 June 2016

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied to the court under section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose
of taking responsibility on behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in or on behalf of the Company with leave of the court under
section 237 of the Corporations Act 2001.

ROUNDING OF AMOUNTS

The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments
Commission, relating to the ‘rounding off’ of amounts in the directors’ report. Amounts in the Directors’ Report have
been rounded off in accordance with the Class Order to the nearest dollar.

This Directors’ Report, incorporating the Remuneration Report, is made in accordance with a resolution of the
directors.

Michael Young
Chief Executive Officer and Managing Director

Dated 28 September 2016

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 18

Vimy Resources Limited Annual Report 2016AUDITOR’S INDEPENDENCE DECLARATION

Vimy Resources Limited Annual Report 2016STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2016

Other Income

Consolidated

Note

2016
$

2015
$

11,380,804

165,655

Exploration and evaluation expenditure

(18,497,411)

(9,033,668)

Corporate and administration expense

Financing expense

Debt forgiveness

Share based payments expense

Loss before income tax

Income tax expense

(3,732,340)

(2,248,161)

(194,223)

(122,379)

1,467,367

(914,655)

(954,116)

(11,957,825)

(10,725,302)

Loss attributable to members of the Company

(11,957,825)

(10,725,302)

Other comprehensive income, net of tax

Total comprehensive loss attributable to members of the Company

(11,957,825)

(10,725,302)

Loss per share from continuing operations attributable to the ordinary

equity holder of the Company:

Cents per
share

Basic and diluted loss per share

(5.24)

(5.26)

The above statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 20

Vimy Resources Limited Annual Report 2016STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016

Statement of Financial Position
as at 30 June 2016

CURRENT ASSETS

Cash and cash equivalents

Trade and other receivables

Prepayments

Total Current Assets

NON-CURRENT ASSETS

Trade and other receivables

Plant and equipment

Total Non-Current Assets

TOTAL ASSETS

CURRENT LIABILITIES

Trade and other payables

Provisions

Loans and borrowings

Total Current Liabilities

NON-CURRENT LIABILITIES

Trade and other payables

Provisions

Other financial liabilities

Total Non-Current Liabilities

TOTAL LIABILITIES

NET (LIABILITIES) / ASSETS

EQUITY

Contributed equity

Employee option plan reserve

Employee share plan reserve

Accumulated losses

TOTAL (DEFICIT) / EQUITY

Consolidated

Note

2016
$

2015
$

4,572,609

6,445,757

386,488

267,631

203,794

75,668

5,226,728

6,725,219

190,506

430,755

621,261

242,954

5,847,989

6,968,173

2,736,083

697,488

7,500,000

971,694

151,447

10,933,571

1,123,141

112,183

79,870

20,416

212,469

99,913

11,146,040

1,223,054

(5,298,051)

5,745,119

67,727,303

1,316,153

1,927,281

1,093,362

1,235,417

(76,268,788)

(64,310,963)

(5,298,051)

5,745,119

The above statement of financial position should be read in conjunction with the accompanying notes

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 21

Vimy Resources Limited Annual Report 2016STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016

Statement of Changes in Equity
for the year ended 30 June 2016

Contributed
equity
$

Accumulated
losses
$

Option
reserve
$

Share
reserve
$

Compound
financial
instruments
$

Total
$

CONSOLIDATED

Balance at 1 July 2014

27,572,593

(57,330,845)

974,663

400,000

3,745,184

(24,638,405)

Issue of ordinary shares
net of issue costs

Loss attributable to
members of the Company

Share based payments
expense

Conversion of compound
financial instruments

40,154,710

(10,725,302)

118,699

835,417

40,154,710

(10,725,302)

954,116

3,745,184

(3,745,184)

Balance at 30 June 2015

67,727,303

(64,310,963)

1,093,362

1,235,417

Balance at 1 July 2015

67,727,303

(64,310,963)

1,093,362

1,235,417

Loss attributable to
members of the Company

Share based payments
expense

(11,957,825)

222,791

691,864

Balance at 30 June 2016

67,727,303

(76,268,788)

1,316,153

1,927,281

5,745,119

(11,957,825)

914,655

(5,298,051)

The above statement of changes in equity should be read in conjunction with the accompanying notes

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 22

Vimy Resources Limited Annual Report 2016STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
Statement of Cash Flows
For the year ended 30 June 2016

Cash Flows from Operating Activities

Interest received

Payments to other suppliers and employees

R&D tax incentive grant income

Other income

Consolidated

Note

2016
$

2015
$

152,596

139,875

(20,178,549)

(10,934,271)

1,215,702

24,095

Net cash used in Operating Activities

(18,810,251)

(10,770,301)

Cash Flows from Investing Activities

Proceeds from sale of royalty

Purchase of plant and equipment

Office security deposit

10,000,000

(372,391)

(190,506)

(158,066)

Net cash from / (used in) Investing Activities

9,437,103

(158,066)

Cash Flows from Financing Activities

Proceeds from issue of ordinary shares

Share issue costs

Proceeds from drawdown of loan

17,000,000

(163,208)

7,500,000

Net cash provided by Financing Activities

7,500,000

16,836,792

Net (decrease) / increase in cash and cash equivalents held

(1,873,148)

5,908,425

Cash and cash equivalents at the beginning of the financial year

6,445,757

537,332

Cash and cash equivalents at the end of the financial year

4,572,609

6,445,757

The above statement of cash flows should be read in conjunction with the accompanying notes

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 23

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
Notes to the Financial Statements
30 JUNE 2016
30 June 2016

TABLE OF CONTENTS

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27.

28.

Critical accounting estimates and judgements

Segment information

Financial risk management

Earnings per share

Directors and key management personnel disclosure

Other income

Loss for the year

Income tax benefit

Cash and cash equivalents

Trade and other receivables

Prepayment

Plant and equipment

Trade and other payables

Provisions

Loans and borrowings

Other financial liabilities

Contributed equity

Employee share and option reserves

Share based payments

Accumulated losses

Expenditure commitments

Controlled entities

Remuneration of auditors

Cash flow information

Contingent liabilities and assets

Parent entity information

Events occurring after reporting date

Summary of significant accounting policies

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 45

Vimy Resources Limited Annual Report 2016

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

REPORTING ENTITY

Vimy Resources Limited (‘the Company’) is a company incorporated and domiciled in Australia. The address of the
Company’s registered office and principal place of business is Ground Floor, 10 Richardson Street, West Perth, WA,
6005, Australia. The consolidated financial statements of the Company as at and for the year ended 30 June 2016
comprise the Company and its subsidiaries, together referred to as the (‘Group’). The Group is a for-profit entity and
primarily involved in uranium project exploration and evaluation.

1. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions
of future events. The key estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:

(i)

Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value is determined by using the
Black-Scholes formula. The accounting estimates and assumptions relating to equity-settled share-
based payments would have no impact on the carrying amounts of assets and liabilities within the next
annual reporting period but may impact expenses and equity.

(ii)

Rehabilitation provision

Significant estimates and assumptions are made in determining the provision for rehabilitation of the
mine as there are numerous factors that will affect the ultimate liability payable.

These factors include estimates of the extent and costs of rehabilitation activities, technological changes,
regulatory changes, cost increases as compared to inflation rates, and changes in discount rates. These
uncertainties may result in future actual expenditure differing from the amounts currently provided.

(iii)

Fair value of financial derivative instruments

The Group assesses the fair value of its derivative instruments in accordance with its accounting policies.
When the fair value of financial assets and financial liabilities recorded in the statement of financial
position cannot be derived from active markets, their fair value is determined using various valuation
techniques, such as Black-Scholes valuation models and discounted cash flow models. The inputs to
these models are taken from observable markets where possible, but where this is not feasible, a degree
of judgement is required in establishing fair values. These judgements include consideration of inputs
such as market price volatility and foreign exchange volatility. Changes in these assumptions could affect
the reported fair value of financial instruments.

(iv)

Income taxes

The Group is subject to income taxes in Australia. There are many transactions and calculations
undertaken during the ordinary course of business for which the ultimate tax determination is uncertain.
Sufficient tax losses exist to offset any deferred tax liabilities. The Group’s ability to access existing tax
losses is dependent on it demonstrating achievement of either of two income tax defined tests, being the
continuity of ownership test or the same business test.

(v)

Impairment

The Group assesses impairment at each reporting date by evaluating conditions specific to the Group
that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the
asset is determined. The directors considered the impairment of the investments in subsidiaries and
loans receivable from subsidiaries based on their estimate of the fair value less costs to sell off the
underlying mineral tenements. The inter-company loans have no interest or repayment terms and are
effectively investments in controlled entities and are reflected at cost.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 25

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

SEGMENT INFORMATION

The Group has identified its operating segments based on the internal reports that are reviewed and used by the
Board of Directors (chief operating decision maker) in assessing performance and determining the allocation
of resources.

The Group operates one business segment: Exploration and Evaluation. The activities undertaken by this
segment relate to the Mulga Rock Project. This activity does not generate any sales revenue.

Result

Segment contribution

Reconciliation to Consolidated Loss

Segment contribution

Corporate and administration expense

Share based payments expense

Finance expense

Debt forgiveness

R&D Incentive Grant

Interest received

Exploration

2016
$

2015
$

(8,497,410)

(9,071,519)

(8,497,410)

(3,732,340)

(914,655)

(194,223)

1,215,701

165,102

(9,071,519)

(2,186,215)

(954,116)

(122,379)

1,467,367

141,560

Loss from continuing operations

(11,957,825)

(10,725,302)

Total Assets

Segment assets

Reconciliation to Group Total Assets

Segment assets

Corporate and administration assets

Total assets

630,395

213,666

630,395

5,217,594

5,847,989

213,666

6,754,507

6,968,173

FINANCIAL RISK MANAGEMENT

The Group’s financial position is not complex. Its activities may expose it to a variety of financial risks in the
future such as market risk (including fair value interest rate risk), credit risk, and liquidity risk. The Group’s
overall financial risk management focuses on the unpredictability of the financial markets and seeks to minimise
potential adverse effects on the financial performance of the Group.

Risk management is carried out under an approved framework covering a risk management policy and internal
compliance and control by management. The Board identifies, evaluates and approves measures to address
financial risks.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 26

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

The Group holds the following financial instruments:

Financial assets

Cash and cash equivalents

Trade and other receivables - current

Trade and other receivables – non-current

Financial liabilities

Trade and other payables – current

Loans and borrowings

Trade and other payables – non-current

Other financial liabilities

(a) Market risk

Cash flow and fair value interest rate risk

Consolidated

2016
$

2015
$

4,572,609

32,203

190,506

4,795,318

2,604,953

7,500,000

112,183

20,416

6,445,757

86,020

6,531,777

869,945

10,237,552

869,945

The Group’s main interest rate risk arises from cash deposits. Deposits at variable rates expose the Group to
cash flow interest rate risk. Deposits at fixed rates expose the Group to fair value interest rate risk. During 2016
and 2015, the Group’s deposits at variable rates were denominated in Australian dollars.

As at the reporting date, the Group had the following variable rate deposits and there were no interest rate swap
contracts outstanding:

Short-term deposits

Cash at bank

2016

2015

Weighted
average
interest rate

Balance
$

3,750,000

822,609

Weighted
average
interest rate

Balance
$

4,045,000

2,400,757

Net exposure to cash flow interest rate risk

2.53%

4,572,609

1.46%

6,445,757

The Group analyses its interest rate exposure on each occasion a deposit term expires. The Group aims to
maximise interest returns from available funds and at the same time retain operating flexibility through adequate
access to funds. During 2016 and 2015, if interest rates had been 10% higher or lower than the prevailing rates
realised, with all other variables held constant, there would be an immaterial change in post-tax loss for the year.
Equity would not have been impacted.

(b) Credit risk

The Group has no significant concentrations of credit risk. Cash transactions are limited to high credit quality
financial institutions.

Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks
and financial institutions, as well as credit exposures on outstanding receivables and committed transactions.
For banks and financial institutions, the Group will only hold deposits with A or better rated banks or financial
institutions. All funds are currently banked with the Australian and New Zealand Banking Group Limited.
Receivables are generally limited to Goods and Services Tax refunds or Research and Development Tax
Incentive grant income from the Australian Taxation Office. Events leading to other receivables are reviewed on

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 27

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

a case by case basis and if there is no independent rating, management assesses the credit quality of the
transaction party, taking into account its financial position, past experience and other factors.

The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as
summarised at the beginning of this note. All receivables at 30 June 2016 were received within two months.

Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through
an adequate amount of committed credit facilities and the ability to close-out market positions. The Group
manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity
profiles of financial assets and liabilities. The Group will aim at maintaining flexibility in funding by accessing
appropriate committed credit lines available from different counterparties where appropriate and possible.
Surplus funds when available are generally only invested in high credit quality financial institutions in highly
liquid markets.

Maturities of financial liabilities

As at 30 June 2016, the Group’s financial liabilities have contractual maturities (including interest payments
where applicable) as summarised below:

Current

Non-current

Within Six
Months
$

Six - Twelve
Months
$

One - Five Years
$

Later than Five
Years
$

30 June 2016

Loans and borrowings

Trade and other payables

Other financial liabilities

165,373

2,604,953

Total

2,770,326

7,666,667

913,109

20,416

933,525

This compares to the maturity of the Group’s non-derivative financial liabilities in the previous reporting periods
as follows:

30 June 2015

Trade and other payables

Total

(d) Capital management

869,945

The Group’s capital management objective is to ensure adequate funding is obtained to enable it to progress
its exploration and evaluation activities, while retaining sufficient cash reserves to ensure the Group continues
as a going concern. As a project development company, funds for activities are generally sourced from equity
markets, asset sales, or from borrowing facilities. The Group has utilised equity raisings and borrowings to
maintain adequate funding. The Board monitors cash resources against expenditure forecasts associated with
the Company’s stated growth strategies and development plans to assess financial requirements.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 28

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

(e) Fair value estimation

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped
into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant
inputs to the measurement, as follows:

•
•

•

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly
Level 3: unobservable inputs for the asset or liability

The following table shows the levels within the hierarchy of financial assets and liabilities measured at fair value
on a recurring basis at 30 June 2016 and 30 June 2015:
Level 1
$

30 June 2016

Level 3
$

Level 2
$

Total
$

Financial assets

Cash and cash equivalents

Trade and other receivables current

Trade and other receivables non-current

Total financial assets

Financial liabilities

Trade and other payables current

Loans and borrowings

Trade and other payables non-current

Other financial liabilities

Total financial liabilities

Net fair value

30 June 2015

Financial assets

Cash and cash equivalents

Trade and other receivables

Total financial assets

Financial liabilities

Trade and other payables

Total financial liabilities

Net fair value

4,572,609

32,203

190,506

4,795,318

(2,604,953)

(7,500,000)

(112,183)

(10,217,136)

(5,421,818)

(20,416)

4,572,609

32,203

190,506

4,795,318

(2,604,953)

(7,500,000)

(112,183)

(20,416)

(10,237,552)

(5,442,234)

Level 1
$

Level 2
$

Level 3
$

Total
$

6,445,757

86,020

6,531,777

(869,945)

5,661,832

6,445,757

86,020

6,531,777

(869,945)

5,661,832

There were no transfers between Level 1 and Level 2 in 2016 or 2015.

Value techniques used to derive Level 2 fair values

The fair value of financial instruments that are not traded in an active market is determined using valuation
techniques. These valuation techniques maximise the use of observable market data where it is available and
rely as little as possible on entity specific estimates.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 29

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

The fair value of the embedded derivatives associated with the RCF VI Bridge Finance facility are valued using
a Black-Scholes option pricing model that takes into account the exercise price, term of the facilities, non-
tradeable nature of the facilities, the share price at drawdown date and expected share price volatility of the
underlying share, the expected dividend yield, and the risk-free rate for the term of the facility.

The table below summarises the model inputs for the embedded derivatives as at 30 June 2016:

Dividend yield

Expected volatility of Company’s shares

Risk-free rate

Term remaining (years)

Conversion price (cents)

Underlying security spot price at valuation date (cents)

Valuation date

Black-Scholes valuation per share

EARNINGS PER SHARE

Bridge finance facility

0.00%

101.00%

1.57%

1.75

0.30

0.340

30 June 2016

0.182

Consolidated

2016
Cents per share

2015
Cents per share

Basic and diluted loss per share (cents per share)

(5.24)

(5.26)

Loss after tax used in the calculation of basic EPS

$(11,957,825)

$(10,725,302)

Weighted average number of shares outstanding during the year
used in calculations of loss per share

#229,761,367

#203,752,216

There are 21,849,988 (2015: 79,010,701) potential ordinary shares that have not been included in the dilutive
EPS calculation because they are anti-dilutive.

5. DIRECTORS AND KEY MANAGEMENT PERSONNEL DISCLOSURE

(a) Key management personnel

The following additional persons had authority and responsibility for planning, directing and controlling the
activities of the Group, directly or indirectly, during the year:

Name

Position

Employer

T. Chamberlain
From 1 November 2015

R. Chamberlain
Appointed 5 February 2016

S. McBride
Resigned 5 February 2016

Chief Operating Officer

Vimy Resources Limited

Chief Financial Officer and Company Secretary

Vimy Resources Limited

Chief Financial Officer and Company Secretary

Vimy Resources Limited

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 30

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

(b) Key management personnel compensation

Short-term employee benefits

Post-employment benefits

Share-based payments

Consolidated

2016
$

2015
$

1,707,603

1,275,414

122,237

792,644

107,267

346,235

2,622,484

1,728,916

In accordance with AASB124 remuneration disclosures related to key management personnel are included in
the Remuneration Report in the Directors’ Report.

During 2013, shareholders approved a new employee share scheme for the Company. As a result, the
Company adopted the employee share plan to be known as the Vimy Employee Share Plan (‘Plan’), pursuant to
which certain employees (including directors) of the Company can be invited to subscribe for shares using
financial assistance provided by the Company.

The Plan provides a mechanism for the Company to invite employees (including the directors) to subscribe for
shares in the Company and to apply for a loan from the Company to pay the subscription price for those shares
(‘Plan Shares’). The Company takes security over the Shares acquired under the Plan until the limited recourse
loan provided for the subscription price for those shares is repaid in full (‘Limited Recourse Loan’).

Subsequent to shareholder approval of the Plan and separate shareholder approval to issue shares to directors,
a summary of the terms of issue and the Limited Recourse Loan provided is shown below.

Grant date

Number of shares
acquired

Amount
of the loan

Term of the loan

Director (or associate)

C. Edwardes

M. Young

J. Tapp

17/12/2014

14/6/2013

17/12/2014

14/6/2013

Key management personnel (or associate)

S. McBride - resigned

T. Chamberlain

R. Chamberlain

Share based payment

5/9/2014

20/11/2015

3/6/2016

857,142

714,285

1,428,571

714,285

1,428,571

457,142

142,857

1,000,000

500,000

$357,500

$298,000

$246,753

$298,000

$246,753

$221,440

$69,200

$340,800

$158,450

up to 5 years

As non-interest bearing limited recourse loans were provided to purchase Plan Shares in the Company and
these loans are secured against the same Plan Shares, AASB 2 (share based payments) applies. On this basis,
the loan amount is not recognised in the financial statements.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 31

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

Loan terms

The key terms of each Limited Recourse Loan provided under the Plan are as follows:

(i)

(ii)

the Limited Recourse Loan may only be applied towards the subscription price for the shares issued under
the Plan;

the Limited Recourse Loan will be interest free, provided that if the Limited Recourse Loan is not repaid by
the repayment date set by the Board, the Limited Recourse Loan will incur interest at 9% per annum after
that date (which will accrue on a daily basis and compound annually on the then outstanding loan balance);

(iii) by signing and returning an application for a Limited Recourse Loan, the participants of the Plan (each a

Participant):

─

(iv)

the Limited Recourse Loan becomes repayable on the earliest of:

─

the date which is five years after the grant date of the Limited Recourse Loan (‘Repayment Date’);

one month after the Participant ceases for any reason to be employed by the Company; and

(by the legal personal representative of the Participant) six months after the Participant ceases to be
an employee of the Company due to their death;

(v) notwithstanding paragraph (iv) above and subject to any voluntary escrow conditions entered into by the
individual participant, the Participant may repay all or part of the loan at any time before the Repayment
Date; and

(vi)

the Limited Recourse Loan will be limited recourse such that on the repayment date the repayment
obligation under the Limited Recourse Loan will be limited to the lesser of:

─

the outstanding balance of the Limited Recourse Loan; and

the market value of the Plan Shares on that date.

In addition, where the Participant has elected for the Plan Shares to be provided to the Company in full
satisfaction of the Limited Recourse Loan, the Company must accept the Plan Shares as full settlement of the
repayment obligation under the Limited Recourse Loan.

Rights attaching to Plan Shares

The Plan Shares will rank equally with all other shares on issue in the capital of the Company. Holders of Plan
Shares issued under the Plan will be entitled to exercise all voting rights attaching to the Shares in accordance
with the Constitution. In addition, holders of Plan Shares issued under the Plan will be entitled to participate in
dividends declared and paid by the Company in accordance with the Constitution.

Sale of Plan Shares

Where the Participant has been granted a Limited Recourse Loan to purchase the Plan Shares; and subject to
voluntary escrow those Plan Shares may only be sold by a Participant when the Limited Recourse Loan has
been repaid proportionately to the number of Plan Shares to be sold. Otherwise any dealing by the Participant
in the Plan Shares is prohibited without the prior written consent of the Company.

If the Limited Recourse Loan becomes due and payable and the Participant has not repaid the amount of the
Limited Recourse Loan in full within one month of the due date, then the Participant will forfeit their interest in
the Plan Shares as full consideration for the repayment of the outstanding loan balance. The Company may
either (at its election) take such action in the Participant's name or direct that Participant take such action in
relation to the Plan Shares as the Company considers appropriate, which may include but is not limited to the
Company undertaking buy-back of the Plan Shares or selling the Plan Shares.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 32

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

(d) Other transactions with director and key management personnel related entities

Mr Haslam is a director of Hasbar Pty Ltd. Hasbar Pty Ltd has been
providing mining consulting services to the company for which it
was paid at commercial rates. There was $2,000 unpaid at 30 June
2016 (2015: $nil).

Mining consulting services

7,600

Consolidated

2016
$

2015
$

6. OTHER INCOME

Interest received
R&D tax incentive grant income (a)
Sale of royalty (b)

Other income

Consolidated

2016
$

165,102

1,215,702

10,000,000

11,380,804

2015
$

141,560

24,095

165,655

(a)

The research and development tax incentive grant income relates to the 2015 income tax year.

(b) On 17 August 2015, the Company announced a legally binding agreement with Resource Capital Fund VI L.P.

(“RCF VI”) for the provision of a funding package which included a $10 million payment in return for a 1.15% royalty on
future production from the Mulga Rock Project. The Company’s accounting policy to expense exploration and evaluation
expenditure as incurred.

LOSS FOR THE YEAR

The loss from ordinary activities before income tax has been determined after:

(a) Expenses

Depreciation expense

Operating leases costs

Audit and review fees

(b) Employee benefits expense

Wages, salaries and directors' fees

Share based payments expense (refer Note 19)

Other employee benefits

Consolidated

2016
$

184,589

287,576

35,665

507,830

4,080,190

914,655

341,895

5,336,740

2015
$

128,368

267,434

34,229

430,031

2,535,352

954,116

221,727

3,711,195

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 33

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016

Notes to the Financial Statements
30 June 2016

Fair value movement on embedded derivative (refer Note 16)

(d) Debt forgiveness
Debt forgiveness (a)

Consolidated

2016
$

20,416

2015
$

1,467,367

(a) On 17 July 2014, the Company converted loans and borrowings into equity. The Company convertible note holders
comprising Australian resource investment groups Acorn Capital Limited and its clients, Macquarie Bank Limited and
Element Resources Fund, converted $23.3 million of debt into equity by subscribing for 613,741,209 ordinary fully paid
shares at an issue price of $0.038 per share (pre-consolidation), in addition the note holders have forgiven $1.2 million in
fees plus $0.3 million on interest thereon. These transactions resulted in the Company eliminating the convertible note
facility.

INCOME TAX BENEFIT

(a)

Income tax recognised

No income tax is payable by the Group as it recorded losses for income tax purposes for the year.

(b) Reconciliation of effective tax rate

Loss after income tax

Income tax expense

Loss before income tax

Income tax using the Company’s domestic tax rate of
30 percent (2015: 30 percent)

Non-deductible expenses and non-assessable income

Equity based remuneration

Tax incentives

Mining royalty payment

Consolidated

2016
$

2015
$

(11,957,825)

(10,725,302)

(11,957,825)

(10,725,302)

(3,587,347)

(3,217,591)

3,373

274,189

(364,711)

(15,833)

393

286,235

(25,887)

Movement in deferred tax assets not brought to account as
future income tax benefits

2,896,438

2,899,323

Under (over) provided in prior periods

793,891

57,527

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 55

Vimy Resources Limited Annual Report 2016

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

Deferred tax assets and liabilities are attributable to the following:

Property, plant and equipment

Receivables

Accrued income

Exploration tenements

Employee provisions

s40-880 costs

Other costs

Loans and borrowings

Rehabilitation provision

Tax losses

Tax (assets) liabilities

Unrecognised

Net tax (assets) liabilities

Consolidated

2016
$

(6,802)

(1,476)

(4,526)

2015
$

(33,328)

(774)

1,739,650

105,334

158,328

36,888

74,169

135,438

81,329

189,541

34,500

18,400,268

20,637,271

15,729,913

17,740,831

(20,637,271)

(17,740,831)

On 1 July 2007, Vimy Resources Limited and its wholly-owned Australian subsidiaries have formed an income
tax consolidation group under the Tax Consolidation Regime. Each entity in the Group will continue to recognise
its own current and deferred tax liabilities, except for any deferred tax assets resulting from unused tax losses
and tax credits, which are immediately assumed by the Parent entity. The current tax liability of each Group
entity will then subsequently be assumed by the Parent entity. The tax consolidated group entered into a tax
sharing agreement whereby each company in the Group contributes to the income tax payable in proportion to
their contribution to profit before tax of the tax consolidated group.

9. CASH AND CASH EQUIVALENTS

Cash at bank and in hand

Short-term deposits

Consolidated

2016
$

822,609

3,750,000

4,572,609

2015
$

2,400,757

4,045,000

6,445,757

(a) The above figures are shown as cash and cash equivalents at the end of the financial period in the

statement of cash flows.

(b) Cash at bank and on hand includes interest-bearing amounts. The average rate applicable to the Group’s

balance at 30 June 2016 was 2.53% (2015: 1.46%).

(c)

Included within cash and equivalents disclosed above at 30 June 2016 is $1.0 million in restricted cash
(2015: not applicable) in the form of a minimum working capital amount under the terms of the RCF VI
Bridge Facility Agreement (refer Note 15).

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 35

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

10. TRADE AND OTHER RECEIVABLES

Current

Other receivables

Goods and services tax receivable

Non-Current

Security deposit (a)

Consolidated

2016
$

2015
$

32,204

354,284

386,488

190,506

82,248

121,546

203,794

(a) The security deposit for $190,506 (2015: $nil) is cash security required for a bank guarantee related to the office lease at

10 Richardson Street, West Perth.

11. PREPAYMENT

Deposits for tenement applications

Other prepayments

Consolidated

2016
$

2015
$

245,000

22,631

267,631

75,668

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 57

Vimy Resources Limited Annual Report 2016

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

12. PLANT AND EQUIPMENT

Office equipment

Cost

Accumulated depreciation

Total office equipment

Exploration equipment

Cost

Accumulated depreciation

Total exploration equipment

Total office and exploration equipment

Movements in the carrying amounts of each class of assets at the
beginning and end of the current financial period is as set out
below:

Office equipment

Balance at the beginning of year

Additions

Depreciation expense

Carrying amount at the end of the year

Exploration equipment

Balance at the beginning of year

Additions

Depreciation expense

Carrying amount at the end of the year

Total carrying amount at the end of the year

Consolidated

2016
$

2015
$

280,911

(235,552)

45,359

1,370,843

(985,447)

385,396

430,755

29,288

51,803

(35,732)

45,359

213,666

320,587

(148,857)

385,396

430,755

280,911

(251,623)

29,288

1,167,272

(953,606)

213,666

242,954

8,873

48,688

(28,273)

29,288

198,632

115,129

(100,095)

213,666

242,954

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 37

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

13. TRADE AND OTHER PAYABLES

Current

Trade payables and accruals
Interest payable (i)

Non-Current

Interest payable (i)

Consolidated

2016
$

2,654,043

82,040

2,736,083

112,183

2015
$

971,694

(i) Relates to interest payable on the RCF VI Bridge Facility Agreement, refer to note 15 for details.

14. PROVISIONS

Current

Employee entitlement: Annual Leave

Opening balance

Employee entitlements provided for

Employee entitlements used

Closing balance

The current provision relates to annual leave for employees of the
Group. The provision is expected to be used over the forthcoming
twelve months.

Rehabilitation

Opening balance

Rehabilitation provided for

Closing balance

The Group recognised a liability for rehabilitation during the year
relating to completion of geotechnical test pits designed to provide
information inputs into the Definitive Feasibility Study for the Mulga
Rock Project.

Total current provision

Non-Current

Employee entitlement: Long Service Leave

Opening balance

Employee entitlements provided for / foregone

Total non-current provision

151,447

248,357

(153,776)

246,028

100,393

148,409

(97,355)

151,447

451,460

697,488

151,447

99,913

(20,043)

79,870

60,243

39,670

99,913

VIMY RESOURCES LIMITED – Annual Financial Report 2016 І Page 59

Vimy Resources Limited Annual Report 2016

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

15. LOANS AND BORROWINGS

RCF VI Bridge Facility Agreement

Total Loans and Borrowings

RCF VI Bridge Facility Agreement:

Consolidated

2016
$

7,500,000

2015
$

The RCF VI Bridge Facility is part of a $30 million funding package from Resource Capital Fund VI. The funding
package comprised a $5 million placement to RCF VI undertaken in May 2015, a $10 million payment received
in September 2015 in return for a 1.15% royalty, and a $15 million unsecured Bridge Facility.

The Company has drawdown $7.5 million of the facility as at 30 June 2016. The facility has a maturity date of
31 March 2017. The available facility at 30 June 2016 of $7.5 million was drawdown on 15 August 2016.

Interest on the facility is calculated at a rate of 15% per annum, with 4% payable quarterly and 11% deferred for
payment until 31 March 2018. However, the deferred interest amounts at 31 March 2018 do not become payable
if, up to 31 March 2018 all the following circumstances have occurred:

RCF VI is granted a participation opportunity on all equity issues,

Vimy completes the project financing for the Mulga Rock Project,

There is no event of default, and

Vimy had repaid all loans.

Included within the facility terms and conditions are:

a conversion price option for RCF VI to convert deferred interest payable into shares at a fixed price.
At 30 June 2016, the fair value of this embedded derivative was $20,416, refer Note 16, and

A requirement to maintain $1.0 million in restricted cash in the form of a minimum working capital
amount, refer Note 9(c).

16. OTHER FINANCIAL LIABILITIES

Embedded derivatives (i)

Total

Consolidated

2016
$

20,416

2015
$

(i) Relates to an embedded derivative in the RCF VI Bridge Facility Agreement, refer to note 15 for details.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 39

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

17. CONTRIBUTED EQUITY

229,761,367 (2015: 227,732,795) fully paid ordinary shares

Ordinary shares

At 1 July 2014 (Pre consolidation)

17 July 2014 Share placement @ 3 cents (Pre consolidation)

17 July 2014 Conversion of convertible and promissory notes to
equity (Pre consolidation)

Consolidated

Number

423,726,209

400,000,000

27,572,593

12,000,000

613,741,209

23,322,166

5 September 2014 Employee share plan issue (Pre consolidation)

13,500,000

8 December 2014 Consolidation of share capital

17 December 2014 Employee share plan issue (Post consolidation)

21 May 2015 Share placement @ 30 cents (Post consolidation)

21 May 2015 Shares issued for fees on placement @ 30 cents
(Post consolidation)

Share issue costs

(1,243,687,002)

2,285,712

16,666,667

5,000,000

1,500,000

450,000

(617,456)

Balance at 30 June 2015 (Post consolidation)

227,732,795

67,727,303

At 1 July 2015

20 November 2015 Employee share plan issue

25 November 2015 Buy-back of shares

3 June 2016 Employee share plan issue

227,732,795

67,727,303

1,000,000

(271,428)

1,300,000

Balance at 30 June 2016

229,761,367

67,727,303

The shares have no par value.

Fully paid ordinary shares

Ordinary shares participate in dividends and the proceeds on winding up of the Parent entity in proportion to the
number of shares held. At shareholders’ meetings each ordinary share is entitled to one vote when a poll is
called, otherwise each shareholder has one vote on a show of hands.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 40

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

18. EMPLOYEE SHARE AND OPTION RESERVES

Employee Share Option Reserves

Reserves

Reserves comprise the following:

Employee Share Option Reserve

Balance as at start of financial year
1,428,570 options vesting (a)

Balance as at end of the financial year

Consolidated

2016
$

2015
$

1,316,153

1,093,362

222,791

1,316,153

974,663

118,699

1,093,362

(a) On 16 December 2014, the Company granted 714,285 options each to Messrs Young and Tapp which vest two years

and expire on 16 December 2019. Each option is exercisable at $0.80 per ordinary share. The Black Scholes valuation
expense will be proportionately allocated over the vesting period.

Employee Share Plan Reserves

The share plan reserve records items recognised as expenses on the valuation of employee shares.

Reserves

Reserves comprise the following:

Employee Share Plan Reserve

Balance as at start of financial year

1,928,571 shares issued and vested
2,285,712 shares issued and vesting (a)
13,500,000 shares issued and vesting (b)
1,000,000 shares issued and vesting (c)
1,300,000 shares issued and vesting (d)

Consolidated

2016
$

2015
$

1,927,281

1,235,417

390,434

139,427

136,975

25,028

400,000

205,885

629,532

Balance as at end of the financial year

1,927,281

1,235,417

(a) On 18 December 2014, a total of 2,285,712 ordinary shares were issued to Directors, Messrs Young and Tapp and

The Hon. Cheryl Edwardes and have been funded by a non-interest bearing, limited recourse loan from the Company.
These shares are subject to vesting period of two years which expires on 17 December 2016. The Black Scholes
valuation expense will be proportionately allocated over the vesting period.

(b) On 5 September 2014 a total of 13,500,000 shares were issued to staff and have been funded by a non-interest bearing,

limited recourse loan from the Company. The shares are subject to a vesting period of one year and expire on
4 September 2019. The Black Scholes valuation expense has been proportionally allocated over the vesting period.

(c) On 20 November 2015 a total of 1,000,000 shares were issued to Mr T. Chamberlain and have been funded by a non-
interest bearing, limited recourse loan from the Company. The shares are subject to a vesting period that ends upon
completion of the Definitive Feasibility Study for the Mulga Rock Project to the absolute satisfaction of the Remuneration
Committee, and expire on 20 November 2020. The Black Scholes valuation expense will be proportionally allocated
over the vesting period.

(d) On 3 June 2016 a total of 1,300,000 shares were issued to employees and have been funded by a non-interest bearing,

limited recourse loan from the Company. The shares are subject to a vesting period of one year and expire on 3 June
2021. The Black Scholes valuation expense will be proportionally allocated over the vesting period.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 41

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

As non-interest bearing limited recourse loans were provided to purchase Plan shares in the Company and
these loans are secured against the same Plan shares, AASB 2 (share based payments) applies. On this basis,
the loan amount is not recognised in the financial statements and instead an amount is expensed as a share
based payment.

19. SHARE BASED PAYMENTS

(a) Employee share option plan

The Company had an employee share option plan, which was also available to directors (the issue of securities
to directors requires shareholder approval), called the Vimy Resources Limited Employee Share Option Plan
(“Plan”). This Plan was replaced by the Vimy Employee Share Plan on 14 June 2013, however, some options
remain outstanding under the prior employee option plan. No options were issued during the year.

Set out below is a summary of options granted to employees under the Vimy Resources Limited Employee
Option Plan:

Grant date

Expiry
date

Number
Balance
at start
of year

Number
Granted
during
year

Number
Exercised
during
year

Number
Cancelled
during
year

Number
Balance
at end
of year

Number
Exercisable
at end
of year

Various

4,439,285

Weighted average exercise price

(17,856)

4,421,429

2,992,859

0.52

(b) Employee share plan

On 14 June 2013, the Company established an employee share plan, which is also available to directors (the
issue of securities to directors requires shareholder approval). The plan is called the Vimy Employee Share Plan.

A summary of the main terms and conditions of the Vimy Employee Share Plan can be found at Note 5.

Set out below is a summary of shares granted to employees under the Plan:

Issue date

Number
Balance at start
of year

Number
Issued during
year

Number
Cancelled during
year

Number
Balance at end
of year

14 June 2013

2,857,142

5 September 2014

1,928,571

17 December 2014

2,285,712

20 November 2015

3 June 2016

1,000,000

1,300,000

(271,433)

2,857,142

1,657,138

2,285,712

1,000,000

1,300,000

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 42

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

On 20 November 2015, the Company issued 1,000,000 shares to Mr T. Chamberlain under its employee share
plan. The input variables used in the Black Scholes option pricing model are as follows:

Issue date:

Expected volatility:

Latest loan repayment date:

Risk free interest rate (based on government bonds):

Calculated share value at issue date:

20 November 2015

115%

5 years

2.85%

$0.25

Total amount to be recognised as share based payments over a one year
escrow period

$249,994

Subsequently on 3 June 2016, the Company issued 1,300,000 shares to employees under its employee share
plan. The input variables used in the Black Scholes option pricing model are as follows:

Issue date:

Expected volatility:

Latest loan repayment date:

Risk free interest rate (based on government bonds):

Calculated share value at issue date:

3 June 2016

115%

5 years

2.22%

$0.26

Total amount to be recognised as share based payments over a one year
escrow period

$338,348

Expenses arising from share-based payment transactions

Total expenses arising from share-based payment transactions recognised during the year as part of employee
benefit expense were as follows:

Consolidated

2016
$

2015
$

Share based payments expense

914,655

954,116

20. ACCUMULATED LOSSES

Consolidated

2016
$

2015
$

Accumulated losses at the beginning of the financial year

(64,310,963)

(57,330,845)

Transfer of compound financial instrument to accumulated losses

3,745,184

Net loss attributable to members of the Company

(11,957,825)

(10,725,302)

Accumulated losses at the end of the financial year

(76,268,788)

(64,310,963)

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 43

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

21. EXPENDITURE COMMITMENTS

(a)

Operating lease commitments

Non-cancellable operating leases contracted for but not capitalised
in the financial statements relating to office space

Payable - minimum lease payments

- not later than 12 months

- between 12 months and 5 years

Consolidated

2016
$

2015
$

241,512

332,489

574,001

74,000

On 1 November 2015 the Company entered into a new office lease for the Ground Floor, 10 Richardson
Street, West Perth, Western Australia for three years. A cash-backed guarantee bond has been established
for $190,506 in relation to the new lease.

(b)

Expenditure commitments contracted for:

Exploration tenements
In order to maintain current rights of tenure to exploration
tenements, the Group is required to meet the minimum expenditure
requirements. These obligations are not provided for in the financial
statements:

- not later than 12 months

- between 12 months and 5 years

1,984,017

5,214,000

1,947,120

5,034,120

7,198,017

6,981,240

22. CONTROLLED ENTITIES

Country of
incorporation

Percentage owned

2016

2015

Parent entity:

Vimy Resources Limited

Subsidiaries of Vimy Resources Limited:

Narnoo Mining Pty Ltd

Velo Resources Pty Ltd (previously Camuco Pty Ltd)

Gunbarrel Energy and Minerals Australia Pty Ltd

Australia

100%

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 44

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

23. REMUNERATION OF AUDITORS

Consolidated

2016
$

2015
$

During the period the following fees were paid or payable for
services provided by the auditor of the Parent entity, its related
practices and non-related audit firms:

Assurance services

Audit services

Grant Thornton Audit Pty Ltd:

audit and review of financial reports and other audit work
under the Corporations Act 2001

35,665

32,629

Non audit services

Advisory fees

Total remuneration

24. CASH FLOW INFORMATION

(a) Reconciliation of Loss after tax to net cash outflow from

Operating Activities

Loss after income tax

Adjustments for:

Depreciation expense

Share based payments expense

Fair value adjustment to embedded derivative

Fees and interest forgiven on Convertible Notes

Finance costs

Proceeds from sale of royalty

Changes in operating assets and liabilities:

(Increase) / Decrease in trade and other receivables

(Increase) / Decrease in prepayments

Increase / (Decrease) in trade and other payables

Increase / (Decrease) in provisions

35,665

1,600

34,229

(11,957,825)

(10,725,302)

184,589

914,655

20,416

(10,000,000)

128,368

954,116

(1,467,367)

112,380

(20,838,165)

(10,997,805)

(182,694)

(191,963)

1,876,573

525,998

(115,616)

24,672

227,723

90,725

Net cash outflow from operating activities

(18,810,251)

(10,770,301)

(b) Non-cash financing and investing activities
Capitalisation of finance costs

Debt forgiveness

Payment of facility fee on RCF VI funding facility

112,380

(1,467,367)

450,000

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 45

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

25. CONTINGENT LIABILITIES AND ASSETS

Contingent Liability - Royalty

On 17 August 2015, the Company announced a legally binding agreement with Resource Capital Fund VI L.P.
(“RCF VI”) for the provision of the final $25 million of the $30 million funding package announced on 20 May
2015. The funding package comprises a $10 million payment in return for a 1.15% royalty on future production
from the Mulga Rock Project and a $15 million unsecured bridging loan.

On 3 September 2015, the Company received the royalty payment of $10 million from RCF VI. Narnoo Mining
Pty Ltd (‘Narnoo’), wholly owned subsidiary of Vimy, has agreed to pay a royalty to RCF VI of 1.15% on the
gross proceeds received by Narnoo from selling mineral products extracted and recovered from the tenements
that make up the Mulga Rock Project.

As is customary for a royalty arrangement, the Company has granted security to RCF VI for the royalty
obligations, in the form of a mortgage over the mining tenements.

Contingent Asset – R&D Tax Incentive Grant

During the year ended 30 June 2016, the Group finalised its 2015 financial year research and development tax
incentive claim filings, and as a consequence the recognised $1.2 million in grant income in Note 6. The Group
intends to lodge a claim for the 2016 financial year relating to continuation of research and development
activities. At the time of preparing the consolidated financial statements for the year ended 30 June 2016, work
on the 2016 financial year research and development tax incentive claim filings is incomplete and a reliable
measurement of this claim is not presently available. As a consequence, the Group has not recognised a
receivable asset for the 2016 financial year research and development tax incentive claim as at 30 June 2016.

26. PARENT ENTITY INFORMATION

Information relating to Vimy Resources Limited:

Current assets

Total assets

Current liabilities

Total liabilities

Total net (liabilities) / assets

Issued capital

Accumulated losses

Employee share plan reserve

Employee options plan reserve

Total (deficit) / equity

Loss of the parent entity

Parent Entity

2016
$

2015
$

5,226,728

5,847,989

10,004,486

10,216,956

6,649,551

6,892,504

1,104,683

1,204,596

(4,368,967)

5,687,908

67,727,303

67,272,303

(75,339,704)

(63,913,174)

1,927,281

1,316,153

1,235,417

1,093,362

(4,368,967)

5,687,908

(11,426,530)

(6,523,956)

Total comprehensive loss of the parent entity

(11,426,530)

(6,523,956)

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 46

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

Guarantees of the Parent:

On 1 July 2007, Vimy Resources Limited and its wholly-owned Australian subsidiaries have formed an income
tax consolidation group under the Tax Consolidation Regime. Each entity in the Group will continue to
recognise its own current and deferred tax liabilities, except for any deferred tax assets resulting from unused
tax losses and tax credits, which are immediately assumed by the Parent entity. The current tax liability of each
Group entity will then subsequently be assumed by the Parent entity. The tax consolidated group entered into a
tax sharing agreement whereby each company in the Group contributes to the income tax payable in proportion
to their contribution to profit before tax of the tax consolidated group.

Commitments and contingent liabilities of the Parent

Expenditure commitments

Non-cancellable operating leases contracted for but not capitalised
in the financial statements relating to office space

Payable - minimum lease payments

- not later than 12 months

- between 12 months and 5 years

Parent Entity

2016
$

2015
$

241,512

332,489

574,001

74,000

27. EVENTS OCCURRING AFTER REPORTING DATE

Since 30 June 2016 the following significant subsequent events have occurred:

On 15 August 2016 the Office of the Environmental Protection Authority assessed the Company’s proposal and
prepared an Assessment Report that has been sent to the Minister under s44(1) of the Western Australian
Environmental Protection Act (EPA Act). The Assessment Report recommends that the proposal is implemented
and specifies the conditions and procedures to which implementation should be subject, as required by
s44(2)(b) of the EPA Act.

On 15 August 2016 the Company announced the final drawdown of funds of $7.5 million under the RCF VI
funding facility to maintain progress on the Definitive Feasibility Study for the Mulga Rock Project.

On 23 September 2016 the Company announced a $6.6 million placement to new and existing institutions and
other sophisticated investors, conversion of the full $15 million RCF VI funding facility, and a Share Purchase
Plan. The placement is in part subject to FIRB approval, and the loan conversion to equity is subject to both
FIRB and shareholder approval.

28. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This note provides a list of the significant accounting policies adopted in the preparation of these consolidated
financial statements to the extent they have not already been disclosed in other notes above. These policies
have been consistently applied to all the years presented, unless otherwise stated. The financial statements are
for the group consisting of Vimy Resources Limited and its subsidiaries.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 47

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act
2001. Vimy Resources Limited is a for-profit entity for the purpose of preparing the financial statements.

Compliance with IFRS

The consolidated financial statements of Vimy Resources Limited group also comply with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the
revaluation of available-for-sale financial assets, and financial assets and liabilities (including derivative
instruments) at fair value.

Critical accounting estimates

The preparation of financial statements in conformity with Australian Accounting Standards requires the use
of certain critical accounting estimates. It also requires management to exercise its judgement in the process
of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity,
or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 1.

Functional and presentation currency

These consolidated financial statements are presented in Australian dollars, which is the Company’s functional
currency and are rounded to the nearest dollar. Where necessary prior year balances can be reallocated to
compare with the current year.

(b) Going Concern

The Group incurred a net loss of $11,957,825 during the year ended 30 June 2016, after recognising the sale of
a 1.15% royalty on future production from the Mulga Rock Project for $10 million. The Group’s net cash used in
operating activities was $18,810,251 for the year ended 30 June 2016.

At 30 June 2016 a net liability exists in the Statement of Financial Position of $5,298,051, as a consequence of
both the Group’s accounting policy to expense exploration and evaluation expenditure as incurred, and the
$7.5 million drawdown of Resource Capital Fund VI L.P. (RCF VI) unsecured bridge facility agreement. Current
liabilities exceed current assets by $5,706,843.

On 15 August 2016 the Group completed the final $7.5 million drawdown of the $15 million unsecured bridge
facility agreement with RCF VI, which has a maturity date of 31 March 2017. On 23 September 2016 the Group
announced full conversion of the $15 million RCF VI unsecured bridge facility agreement to equity, subject to
both FIRB and shareholder approval.

The Group’s ability to continue as a going concern and to capitalise on its exploration and evaluation activities
depends on being able to obtain additional funding through equity, debt or hybrid financing, joint ventures,
production off-take arrangements, R&D Tax Incentive receipts or other means. The Group’s ability to continue
as a going concern also depends on FIRB and shareholder approval for full conversion of the RCF VI $15 million
unsecured bridge facility agreement to equity. These circumstances create material uncertainties as to the ability
of the Group to continue as a going concern.

In considering these circumstances, the directors have taken into account the R&D Tax Incentive receipts
expected from lodging both the 2016 and 2017 Group income tax returns, the Group’s demonstrated track
record in raising equity, the $6.6 million placement to new and existing institutions and other sophisticated
investors (in part subject to FIRB approval), and the previous funding support provided by RCF VI.

In the unlikely event that additional funding is not able to be obtained, and approval is not obtained to convert
the RCF VI bridge facility agreement to equity, the directors would actively curtail both project and corporate
expenditure in light of the Group’s actual funding and indebtedness.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 48

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

In view of all the foregoing, the directors are of the view that they have a reasonable expectation that the Group
will have adequate resources to continue to operate for at least the next twelve months. For these reasons, they
continue to adopt the going concern basis in preparing the financial report.

If the Group is unable to continue as a going concern, it may be required to realise its assets and/or settle its
liabilities other than in the ordinary course of business and at amounts different from those stated in the financial
report.

The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of
30 June 2016. Subsidiaries are all entities (including structured entities) over which the group has control. The
group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with
the entity, and has the ability to affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are
deconsolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of
the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the group.

(d) New standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June
2016 reporting periods. These standards and interpretations have not been early adopted.

• AASB 9 Financial Instruments (effective for annual reporting periods beginning on or after 1 January 2018).
AASB 9 addresses the clarification, measurement and de-recognition of financial assets and financial
liabilities and introduces new rules for hedge accounting. Following a preliminary assessment Vimy has
determined that AASB 9 will have no material impact on the way the Group accounts for its financial
instruments.

• AASB 15 Revenue from Contracts with Customers (effective for annual reporting periods beginning on or
after 1 January 2018). AASB 15 introduces new framework for accounting for revenue and will replace
AASB 118 Revenue and AASB 111 Construction Contracts. The new standard is based on the principle that
revenue is recognised when control over goods and services transfers to a customer, therefore the notion of
control replaces the existing notion of risks and rewards. Following a preliminary assessment Vimy has
determined that there will be no material impact of the new standard on the Group’s financial statements.

• AASB 16 Leases (effective for annual reporting periods beginning on or after 1 January 2019). AASB 16

introduces new framework for accounting for leases and will replace AASB 117 Leases. The new standard
will primarily affect the accounting by lessees and will result in the recognition of almost all leases on the
Statement of Financial Position. The standard removes the current distinction between operating and
financing leases and requires recognition of an asset (the right to use the leased item) and a financial liability
to pay rentals for almost all lease contracts. Management is continuing to assess the impact of the new
standard on Vimy’s financial statements.

(e)

Impairment of non-financial assets

At each reporting date, the entity reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Where the asset does not generate cash flows that are independent from other assets, the entity estimates the
recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 49

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

(f) Plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation
is calculated on a straight-line basis over the estimated useful life of the asset as follows:

Plant and equipment – 2 to 15 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included
in the statement of comprehensive income.

(g) Provisions

Provisions for legal claims are recognised when the Group has a present legal or constructive obligation as a
result of past events, it is probable that an outflow of resources will be required to settle the obligation and the
amount can be reliably estimated.

Provisions are measured at the present value of management’s best estimate of the expenditure required to
settle the present obligation at the end of the reporting period. The discount rate used to determine the present
value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific
to the liability. The increase in the provision due to the passage of time is recognised as an expense.

(h) Employee benefits

Employee entitlement

Provision is made for employee benefits accumulated as a result of employees rendering services up to the
reporting date. These benefits include wages and salaries, annual leave and long service leave. Liabilities
arising in respect of wages and salaries, annual leave and long service leave and any other benefits expected to
be settled wholly within twelve months of the reporting date are measured at their nominal amounts based on
remuneration rates which are expected to be paid when the liability is settled. All other employee benefit
liabilities are measured at the present value of the estimated future cash outflow to be made in respect of
services provided by employees up to the reporting date. In determining the present value of future cash
outflows, the market yield as at the reporting date on high quality corporate bonds, which have terms to maturity
approximating the terms of the related liabilities, are used.

Share-based payments

The company provides staff with an Employee Share Plan, whereby eligible participants are granted shares in
the company funded by a limited recourse loan company. The limited recourse loans are recorded within equity
and not as a receivable or financial asset to be recovered by the Company. Share-based compensation benefits
may be provided to employees and directors via Vimy Employee Share Plan. The fair value of the shares is the
market volume weighted average closing price for the Shares over the 10 trading day period prior to issue,
which is represented as an increase in equity.

(i)

Financial instruments

(i)

Non-derivative financial assets

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted
in an active market. Such assets are recognised initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition loans and receivables are measured at
amortised cost using the effective interest method, less any impairment losses.

Loans and receivables comprise trade and other receivables.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 50

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

(ii)

Non-derivative financial liabilities

The Group classifies non-derivative financial liabilities into the other financial liabilities category.
Such financial liabilities are recognised initially at fair value less any directly attributable transaction
costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost
using the effective interest rate method.

The Group derecognises a financial liability when its contractual obligations are discharged,
cancelled or expire.

Other financial liabilities comprise loans, borrowings, trade and other payables.

(iii)

Derivative financial liabilities

Derivative financial instruments are recorded at fair value on the Statement of Financial Position and
classified by contract maturity. Derivative instruments are classified as either hedges of the fair
value of recognised assets or liabilities or of firm commitments (fair value hedges), hedges of highly
probably forecast transactions (cash flow hedges), or non-hedge derivatives. The changes in the
fair value of any non-hedge derivatives are recognised immediately in the Consolidated Statement
of Profit and Loss and Other Comprehensive Income.

(j)

Income tax

The income tax expense for the period is the tax payable on the current period's taxable income based on the
national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts
in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply
when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or
substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts
of deductible and taxable temporary differences to measure the deferred tax asset or liability.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and
tax bases of investments in controlled entities where the Parent entity is able to control the timing of the reversal
of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised
directly in equity.

(k) Exploration and evaluation expenditure

Exploration and evaluation expenditure is expensed in the year it is incurred. Development costs, when
incurred, will be capitalised. Amortisation is not charged on costs carried forward in respect of areas of interest
in the development phase until production commences.

(l) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition the asset
or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in
the Statement of Financial Position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing
or financing activities which are recoverable from, or payable to the taxation authority, are presented
as operating cash flow.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 51

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

(m) Leases

Operating lease payments are recognised as an expense in the Statement of Comprehensive Income on a
straight-line basis over the lease term.

(n) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly
liquid investments that are readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value.

(o) Segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker has been identified as the Board of Directors.

(p) Revenue and income recognition

Revenue and income are recognised and measured at the fair value of the consideration received or receivable
to the extent it is probable that the economic benefits will flow to the Group and the revenue and income can be
reliably measured. The following specific recognition criteria must also be met before revenue and income is
recognised:

Interest revenue

Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating
the amortised cost of a financial asset and allocating the interest income over the relevant period using the
effective interest rate.

Royalty income

Royalty income is recognised when the royalty has been transferred out of the control of the Group.

R&D Tax Incentive grant income

Any grant received for eligible research and development tax incentive income is offset against the area where
the costs were initially incurred. This is in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income as a consequence of the accounting policy to expense exploration and evaluation costs
as incurred.

(q) New accounting standards and interpretations

The following new standards and amendments to standards are mandatory for the first time for the financial year
beginning 1 July 2015:

•

AASB 2014-1 Amendments to Australian Accounting Standards Part A: Annual Improvements 2010-2012
and 2011-2013 Cycles. AASB 2014-1 introduced annual improvements that resulted in changes to various
standards.

The adoption of the 2010-2012 and 2011-2013 annual improvement cycles had no impact on the amounts
recognised and disclosures in Vimy’s financial statements.

(r) Trade and other receivables

Trade receivables are recognised and carried at original invoice amount less an allowance for uncollectible
debts.

(s) Trade and other payables

These amounts represent liabilities for goods and services provided to the group prior to the end of financial
year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade
and other payables are presented as current liabilities unless payment is not due within 12 months after the
reporting period.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 52

Vimy Resources Limited Annual Report 2016NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2016
Notes to the Financial Statements
30 June 2016

(t) Loans and borrowings

Loans and borrowings are initially recognised at fair value, net of transaction cost incurred. Loans and
borrowings are subsequently measured at amortised costs. Loans and borrowings are removed from the
Statement of Financial Position when the obligation specified in the contract is discharged, cancelled or expired.

(u) Rehabilitation and site restoration

The Group is required to rehabilitate mine sites, to the extent that any environmental disturbance has occurred,
to a condition acceptable to the relevant authorities. The rehabilitation provision is the best estimate of the
present value of the expenditure required to settle the restoration obligation at the reporting date. Future
restoration costs are reviewed annually and any changes are reflected in the provision at the end of the
reporting period.

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 53

Vimy Resources Limited Annual Report 2016Directors’ Declaration
DIRECTORS’ DECLARATION
30 June 2016
30 JUNE 2016

In the opinion of the directors of Vimy Resources Limited:

(a)

the consolidated financial statements and notes of Vimy Resources Limited are in accordance with the
Corporations Act 2001, including

ii.

giving a true and fair view of its financial position as at 30 June 2016 and of its performance for
the financial year ended on that date; and

complying with Accounting Standards, the Corporations Regulations 2001, and other mandatory
professional reporting requirements.

(b)

there are reasonable grounds to believe that Vimy Resources Limited will be able to pay its debts as
and when they become due and payable; and

The directors have been given the declarations by the chief executive officer and chief financial officer
required by Section 295A of the Corporations Act 2001 .

The consolidated financial statements comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board.

This declaration is made in accordance with a resolution of the directors:

Michael Young

Chief Executive Officer and Managing Director

Dated: 28 September 2016

VIMY RESOURCES LIMITED – Annual Financial Report 2016

І Page 54

Vimy Resources Limited Annual Report 2016INDEPENDENT AUDITOR’S REPORT

Vimy Resources Limited Annual Report 2016ADDITIONAL INFORMATION
AS AT 30 SEPTEMBER 2016
Additional Information as at 30 September 2016

Capital structure

The capital structure of the Company at the date of this report was:

Ordinary shares

254,250,925

Unlisted options

21,842,846

Distribution of listed ordinary fully paid shares

Size of holding

Number of shareholders

Number of ordinary shares

1,001

5,001

10,001

1,000

5,000

10,000

100,000

100,001 -

and over

449

537

154

253

1,451

174,368

1,360,617

1,164,032

8,397,214

243,154,694

254,250,925

The number of shareholders holding less than a marketable parcel of ordinary shares was 667.

Twenty largest shareholders of listed ordinary shares

Name

Ordinary shares held

% of total

Forrest Family Inv. Pty Ltd ATF Peepingee A/C

Macquarie Bank Limited

Merrill Lynch Australia Nominees Pty Ltd

National Nominees Ltd ATF Geiger Resources Fund

Sumico WA Pty Ltd ATF Busani Family account

Ack Pty Ltd ATF Markoff Super No. 2

BNP Paribas Nominees Pty Ltd

Michael E. and S. T. Fewster

HSBC Custody Nominees Australia Ltd

Eaglefield Holdings Pty Ltd

Michael C. Young and J. T. Young

Citicorp Nominees Pty Ltd

J P Morgan Nominees Australia Ltd

Julian R. Tapp

Greensilk Nominees Pty Ltd (Dunbar-Tapp Family Account)

Anthony C. Chamberlain

Cheryl Edwardes

C. G., H. J. and M. Petricevic

Christopher W. Davis

HSBC Custody Nominees Australia Ltd

57,142,857

43,156,026

33,765,219

27,756,398

27,535,076

7,692,307

7,480,343

5,138,571

4,195,944

3,745,714

3,571,427

3,332,532

2,165,198

2,142,856

1,428,571

1,000,000

857,142

854,874

753,993

595,714

22.47%

16.97%

13.28%

10.92%

10.83%

3.03%

2.94%

2.02%

1.65%

1.47%

1.40%

1.31%

0.85%

0.84%

0.56%

0.39%

0.34%

0.30%

0.23%

234,310,762

92.13%

Vimy Resources Limited Annual Report 2016ADDITIONAL INFORMATION
AS AT 30 SEPTEMBER 2016
Additional Information as at 30 September 2016

Voting rights of ordinary shares (ASX Code: VMY)

At a general meeting, on a show of hands, every ordinary shareholder present in person or by proxy has one vote.
On the taking of a poll, every ordinary shareholder present in person or by proxy, and whose shares are fully paid,
has one vote for each of his or her shares.

Distribution of all unlisted employee option plan holders:

Size of holding

Number of option holders

Number of options

5,001

10,001

100,001

10,000

100,000

and over

7,142

121,428

4,285,712

4,414,282

Holders of 20% or more of the securities listed above:

Michael C. Young and J. T. Young ATF the MJE Trust

2,142,856 options

Julian R. Tapp

2,142,856 options

Distribution of unlisted option holders (expiring on 16 December 2018, exercisable at $1.54 per share):

Size of holding

Number of option holders

Number of options

100,001

and over

8,714,281

Holders of 20% or more of the securities listed above:

National Nominees Limited

Macquarie Bank Limited

3,290,235 options

4,292,751 options

Distribution of unlisted option holders (expiring on 16 December 2018, exercisable at 70 cents per share):

Size of holding

Number of option holders

Number of options

100,001

and over

8,714,283

Holders of 20% or more of the securities listed above:

National Nominees Limited

Macquarie Bank Limited

Unlisted options

3,242,318 options

4,230,236 options

Until exercised, unlisted options confer no voting rights and no rights to subscribe for new securities in the Company.
They do not entitle the holder to a dividend, or to participate in a winding up of the Company. The unlisted options
are a separate class of security that may be converted into the Company’s shares on a one-for-one basis once they
are exercised.

Vimy Resources Limited Annual Report 2016ADDITIONAL INFORMATION
AS AT 30 SEPTEMBER 2016
Additional Information as at 30 September 2016

Substantial shareholders (in accordance with notices provided to the Company)

Name

Ordinary shares held

% of total

Forrest Family Inv. Pty Ltd

Acorn Capital Limited

Macquarie Bank Limited

Michael Edward Fewster

Resource Capital Fund VI LP

On-market buy back

57,142,857

43,259,490

43,159,068

36,339,361

33,765,219

22.47%

17.01%

16.97%

13.90%

13.28%

There is no current on-market buy back of the Company’s shares in place.

Investor Relations

Shareholders and investors seeking information on the Company should reference the Australian Securities
Exchange website asx.com.au and search announcements under the Company’s ASX symbol VMY, reference
the Company’s website at www.vimyresources.com.au or contact the Chief Executive Officer or Company
Secretary at:

Vimy Resources Limited
Ground Floor
10 Richardson Street
West Perth WA 6005

Telephone:

+61 8 9389 2700

Facsimile:

+61 8 9389 2722

Email:

info@vimyresources.com.au

Shareholder enquiries

Enquiries relating to shareholding, tax file number and notification of change of address should be directed to:

Security Transfer Australia Pty Ltd
770 Canning Highway
Applecross WA 6153

Telephone:

+61 8 9315 2333

Facsimile:

+61 8 9315 2233

Vimy Resources Limited Annual Report 2016

CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement

STATEMENT

Vimy Resources Limited (‘Company’) has adopted systems of control and accountability as the basis for the
administration of corporate governance. Some of these policies and procedures are summarised in this statement.
Commensurate with the spirit of the ASX Corporate Governance Council's Corporate Governance Principles and
Recommendations Third Edition (“Principles and Recommendations”), the Company has followed each
recommendation where the Board has considered the recommendation to be an appropriate benchmark for its
corporate governance practices. Where the Company's corporate governance practices follow a recommendation,
the Board has made appropriate statements reporting on the adoption of the recommendation. Where, after due
consideration, the Company's corporate governance practices depart from a recommendation, the Board has offered
full disclosure and reason for the adoption of its own practice, in compliance with the "if not, why not" regime.

This statement is current as at 28 September 2016.

DISCLOSURE – PRINCIPLES AND RECOMMENDATIONS

The Company reports below on how it has followed (or otherwise departed from) each of the Principles and
Recommendations during the 2016 financial year (‘Reporting Period’).

Principle 1 – Lay solid foundations for management and oversight

A listed entity should establish and disclose the respective roles and responsibilities of board and management and
how their performance is monitored and evaluated.

Recommendation 1.1:

A listed entity should disclose:

(a)

(b)

the respective roles and responsibilities of board and management; and

those matters expressly reserved to the board and those delegated to management.

Disclosure:

The Company has established functions reserved to the Board and has set out these functions in its Board Charter.

A copy of the Company’s Board Charter is made available on the Company’s website.

The Board is collectively responsible for promoting the success of the Company through its key functions of
overseeing the management of the Company, providing overall corporate governance of the Company, monitoring
the financial performance of the Company, engaging appropriate management commensurate with the Company's
structure and objectives, involvement in the development of corporate strategy and performance objectives and
reviewing, ratifying and monitoring systems of risk management and internal control, codes of conduct and legal
compliance.

The Company has established the functions delegated to senior executives and has set out these functions in its
Board Charter. Senior executives are responsible for supporting the Chief Executive Officer and Managing Director
(‘CEO/MD’) and assisting the CEO/MD in implementing the running of the general operations and financial business
of the Company, in accordance with the delegated authority of the Board.

Senior executives are responsible for reporting all matters which fall within the Company's materiality thresholds at
first instance to the CEO/MD or, if the matter concerns the CEO/MD, then directly to the Chair.

VIMY RESOURCES LIMITED – Corporate Governance 2016 І Page 1

Vimy Resources Limited Annual Report 2016

CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement

Recommendation 1.2:

A listed entity should:

(a)

(b)

undertake appropriate checks before appointing a person, or putting forward to security holders a candidate
for election, as a director; and

provide security holders with all material information in its possession relevant to a decision on whether or not
to elect or re-elect a director

Disclosure:

When the Board determines that changes are required to the Board or indeed, if a director resigns from the Board,
in determining candidates for the Board, the Board will follow a prescribed procedure whereby it considers the
balance of independent directors on the Board as well as the skills and qualifications of potential candidates that will
best enhance the Board's effectiveness.

The Board recognises that Board renewal is critical to performance and the impact of Board tenure on succession
planning. Directors are rotated on the basis of: “At each annual general meeting one-third of the directors for the time
being, or, if their number is not a multiple of three, then the whole number nearest one-third, shall retire from office
and based on that calculation the directors to retire at an annual general meeting are those who have been longest in
office since their last election. A retiring director is eligible for re-election. Re-appointment of directors is not
automatic.”

The Company Policy and Procedure for the Selection and re/Appointment of Directors requires that shareholders
shall be informed of the names of candidates submitted for election as directors at a general meeting of
shareholders. In order to enable shareholders to make an informed decision regarding the election, the following
information shall be supplied to shareholders:

•

biographical details (including competencies and qualifications and information sufficient to enable an
assessment of the independence of the candidate);

details of material business relationships between the candidate and the Company; and the candidate and
directors of the Company;

directorships held;

the term of office currently served by any directors subject to re-election; and

any other particulars required by law.

A copy of the Company’s Policy and Procedure for the Selection and (Re)/Appointment of Directors is made available
on the Company’s website.

Recommendation 1.3:

A listed entity should have a written agreement with each director and senior executive setting out the terms of their
appointment.

Disclosure:

Remuneration and other terms of employment for key management personnel are formalised in service agreements
which are disclosed in the Remuneration Report which forms part of the Directors’ Report. Non-Executive Directors
sign a formal letter of appointment.

VIMY RESOURCES LIMITED – Corporate Governance 2016 І Page 2

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Corporate Governance Statement

Recommendation 1.4:

The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters
to do with the proper functioning of the board.

Disclosure:

The Company Secretary fulfils other management responsibilities in addition to company secretarial duties.
The formal reporting line of the Company Secretary is to the CEO/MD. For any matter relevant to the company
secretarial duties or conduct of the Board, the Company Secretary has an indirect reporting line, and is accountable,
to the Chair of the Board.

Recommendation 1.5:

A listed entity should:

(a)

(b)

(c)

have a diversity policy which includes requirements for the board or a relevant committee of the board to set
measurable objectives for achieving gender diversity and to assess annually both the objectives and the
entity’s progress in achieving them;

disclose that policy or a summary of it; and

disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by
the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress
towards achieving them and either:

the respective proportions of men and women on the board, in senior executive positions and across the
whole organisation (including how the entity has defined “senior executive” for these purposes); or

if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent
“Gender Equality Indicators”, as defined in and published under that Act.

Notification of departure:

The Company does not have a diversity policy.

Explanation for departure:

The Company has not established a diversity policy due to the relatively small size of the Company. The Board
considers that at this stage no benefits would be gained by establishing a diversity policy. The Company is
committed to ensuring a diverse mix of skills and talent exists amongst its directors, officers and employees to
enhance the Company’s performance.

At 30 June 2016 the Board was comprised of six members with one woman; being the Chairman, The Hon. Cheryl
Edwardes, AM. The Company had twenty four employees at 30 June 2016, with ten women which represented 42%
of the total employees. There are no women in senior executive roles.

VIMY RESOURCES LIMITED – Corporate Governance 2016 І Page 3

Vimy Resources Limited Annual Report 2016CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement

Recommendation 1.6:

A listed entity should:

(a)

(b)

have and disclose a process for periodically evaluating the performance of the board, its committees and
individual directors; and

disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the
reporting period in accordance with that process.

Disclosure:

The Company has formalised a policy relating to the Process for Performance Evaluation, and a copy is made
available on the Company’s website.

The assessment process used by the Board requires each director to complete a questionnaire relating to the role,
composition, procedures, practices and behaviour of the Board and its members. Senior executives having most
direct contact with the Board may also be invited to complete similar questionnaires. Responses to the
questionnaires are confidential and provided direct to the Company Secretary with the results individually and in
aggregate then communicated to the Chair of the Board.

During the Reporting Period, a formal evaluation of the Board did not take place. The composition of the Board was
reviewed at the time of appointing Mr Andrew Haslam a Non-Executive Director on 1 April 2016.

Recommendation 1.7:

A listed entity should:

(a)

(b)

have and disclose a process for periodically evaluating the performance of its senior executives; and

disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the
reporting period in accordance with that process.

Disclosure:

The performance of all directors and senior executives is reviewed at least annually. The Board evaluates the
performance of senior executives having regard to such things as: the responsibilities of the executive; performance
against budget and goals that have been set; any communicated key performance indicators; and qualitative as well
as quantitative measures.

No senior executive is involved with their own evaluation, and the Board evaluates such parties without such parties
being present. An evaluation of senior executives was undertaken during the year in accordance with this process.

The Company’s policy on remuneration is contained in the Remuneration Report which forms part of the Directors’
Report.

VIMY RESOURCES LIMITED – Corporate Governance 2016 І Page 4

Vimy Resources Limited Annual Report 2016CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement

Principle 2 – Structure the Board to add value

A listed entity should have a board of an appropriate size, composition, skills and commitment to enable it to
discharge its duties effectively.

Recommendation 2.1:

The board of a listed entity should:

(a)

have a nomination committee which:

has at least three members, a majority of whom are independent directors; and

is chaired by an independent director,

and disclose:

the charter of the committee;

the members of the committee; and

as at the end of each reporting period, the number of times the committee met throughout the period and
the individual attendances of the members at those meetings; or

(b)

if it does not have a nomination committee, disclose that fact and the processes it employs to address board
succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience,
independence and diversity to enable it to discharge its duties and responsibilities effectively.

Notification of departure:

The Board has not established a Nomination Committee.

Explanation for departure:

The full Board performs the function of a Nomination Committee.

A separate Nomination Committee has not been formed due to the relatively small size and structure of the Board.
The Board considers that at this stage no efficiencies or other benefits would be gained by establishing a separate
Nomination Committee. The Board discusses nomination-related matters on an ongoing basis, as required. When
considering matters of nomination, the Board functions in accordance with its Nomination Committee Charter. Items
that are usually required to be discussed by a Nomination Committee are marked as separate agenda items at Board
meetings when required. The Board deals with any conflicts of interest that may occur when convening in the
capacity of Nomination Committee by ensuring the director with conflicting interests is not party to the relevant
discussions.

A copy of the Company’s Nomination Committee Charter is made available on the Company’s website.

Recommendation 2.2:

A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board
currently has or is looking to achieve in its membership.

Disclosure:

A profile of each director containing their skills, experience, expertise and term of office is set out in the Directors'
Report.

VIMY RESOURCES LIMITED – Corporate Governance 2016 І Page 5

Vimy Resources Limited Annual Report 2016CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement

Recommendation 2.3:

A listed entity should disclose:

(a)

(b)

the names of the directors considered by the board to be independent directors;

if a director has an interest, position, association or relationship of the type described in Box 2.3 of the
Principles and Recommendations, but the board is of the opinion that it does not compromise the
independence of the director; the nature of the interest, position, association or relationship in question and an
explanation of why the board is of that opinion; and

(c)

the length of service of each director.

Disclosure:

The Company has formalised a policy relating to Assessing the Independence of Directors, and a copy is made
available on the Company’s website.

The Board consisted of five members up to 1 April 2016, with two independent directors being The Hon. Cheryl
Edwardes, AM and Mr David Cornell. After 1 April 2016 the Board consisted of six members, with three independent
directors, being The Hon. Cheryl Edwardes, AM, Mr David Cornell, and Mr Andrew Haslam.

These directors are independent as they are non-executive directors who are not members of management and who
are free of any material business or other relationship that could materially interfere with, or could reasonably be
perceived to materially interfere with, the independent exercise of their judgement.

The director’s interest, position, association or relationship and length of service is set out in the Directors’ Report.
This disclosure includes the fact that Mr Andrew Haslam, in addition to his director fees, also receives payment at
commercial rates for mining consulting services relating to the Mulga Rock Project.

Recommendation 2.4:

A majority of the board of a listed entity should be independent directors.

Notification of departure:

The Company did not have a majority of independent directors.

Explanation for departure:

The Board considered that the composition of the Board was adequate for the Company’s current size and
operations, and includes an appropriate mix of skills and expertise, relevant to the Company’s business.

Recommendation 2.5:

The chair of the board of a listed entity should be an independent director and, in particular, should not be the same
person as the CEO/MD of the entity.

Disclosure:

The Hon. Cheryl Edwardes, AM is the independent chair and Mr Michael Young is the CEO/MD of the Company.

VIMY RESOURCES LIMITED – Corporate Governance 2016 І Page 6

Vimy Resources Limited Annual Report 2016CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement

Recommendation 2.6:

A listed entity should have a program for inducting new directors and provide appropriate professional development
opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors
effectively.

Disclosure:

The formal letter of appointment and induction pack provided to directors contains sufficient information to allow the
new director to gain an understanding of:

•

the rights, duties and responsibilities of directors;

the role of Board Committees;

the roles and responsibilities of the executive team; and

the Company’s financial, strategic, and operational risk management position.

New directors undertake an induction program which comprises:

•

an information pack which includes a copy of the Company’s constitution; Board and Committee charters;
most recent annual report; most recent monthly performance report; the Company’s strategic plan;
organisational chart; deed of access, insurance and indemnity and details of the Company’s director and
officers’ insurance policy; and a copy of the register of the Company’s most significant risks;

a program of meetings with members of the Company’s executive team; and

visits to the Company’s projects.

Principle 3 – Act ethically and responsibly

A listed entity should act ethically and responsibly.

Recommendation 3.1:

A listed entity should:

(a)

(b)

have a code of conduct for its directors, senior executives and employees; and

disclose that code or a summary of it.

Disclosure:

The Company has established a Code of Conduct as to the practices necessary to maintain confidence in the
Company's integrity, practices necessary to take into account their legal obligations and the expectations of their
stakeholders and responsibility and accountability of individuals for reporting and investigating reports of unethical
practices.

A summary of the Company’s Code of Conduct is made available on the Company’s website.

VIMY RESOURCES LIMITED – Corporate Governance 2016 І Page 7

Vimy Resources Limited Annual Report 2016CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement

Principle 4 – Safeguard integrity in financial reporting

Recommendation 4.1:

The board of a listed entity should:

(a)

have an audit committee which:

has at least three members, all of whom are non-executive directors and a majority of whom are
independent directors; and

is chaired by an independent director, who is not the chair of the board,

and disclose:

the charter of the committee;

the relevant qualifications and experience of the members of the committee; and

in relation to each reporting period, the number of times the committee met throughout the period and the
individual attendances of the members at those meetings; or

(b)

if it does not have an audit committee, disclose that fact and the processes it employs that independently
verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and
removal of the external auditor and the rotation of the audit engagement partner.

Disclosure:

The Company has an Audit Committee.

For the entire Reporting Period, Mr David Cornell was the independent chair of the Audit Committee.

Up to 1 April 2016 the Audit Committee had three members – Mr David Cornell, The Hon. Cheryl Edwardes AM,
and Mr Aaron Hood. Of these members two are considered to be independent – Mr David Cornell and The Hon.
Cheryl Edwardes AM, which represents a majority of the committee.

After 1 April 2016 the Audit Committee had four members – Mr David Cornell, The Hon. Cheryl Edwardes AM,
Mr Malcolm James and Mr Andrew Haslam. Of these members three are considered to be independent –
Mr David Cornell, The Hon. Cheryl Edwardes AM and Mr Andrew Haslam, which represents a majority of the
committee

The Audit Committee Charter is disclosed on the Company’s website.

The number of Audit Committee meetings held during the year and the qualifications of the directors are disclosed in
the Directors’ Report.

Recommendation 4.2:

The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive
from its CEO/MD and CFO a declaration that, in their opinion, the financial records of the entity have been properly
maintained and that the financial statements comply with the appropriate accounting standards and give a true and
fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a
sound system of risk management and internal control which is operating effectively.

VIMY RESOURCES LIMITED – Corporate Governance 2016 І Page 8

Vimy Resources Limited Annual Report 2016CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement

Disclosure:

The CEO/MD and CFO have provided the declaration to the Board in accordance with section 295A of the
Corporations Act 2001.

This declaration is that:

•

the financial records of Vimy Resources Limited for the financial year ended 30 June 2016 have been
properly maintained in accordance with section 286 of the Australian Corporations Act 2001; and

the financial statements, and the notes referred to in paragraph 295(3)(b) of the Australian Corporations Act
2001, for the financial year ended 30 June 2016 comply with the accounting standards; and

the financial statements and notes for the financial year ended 30 June 2016 give a true and fair view
(section 297 of the Australian Corporations Act 2001); and

any other matters that are prescribed by the regulations in relation to the financial statements and the notes
for the financial year ended 30 June 2016 are satisfied.

The consolidated financial statements comply with International Financial Reporting Standards.

Recommendation 4.3:

A listed entity that has an Annual General Meeting (‘AGM’) should ensure that its external auditor attends its AGM
and is available to answer questions from security holders relevant to the audit.

Disclosure:

The external auditor attends the Company's AGM. Shareholders may submit written questions to the auditor to be
considered at the meeting in relation to the conduct of the audit and the preparation and content of the Independent
Audit Report by providing the questions to the Company at least five business days before the day of the meeting.
Shareholders are also given a reasonable opportunity at the meeting to ask the auditor questions relevant to the
conduct of the audit, the Independent Audit Report, the accounting policies adopted by the Company and the
independence of the auditor.

Principle 5 – Make timely and balanced disclosure

A listed entity should make timely and balanced disclosure of all matters concerning it that a reasonable person
would expect to have a material effect on the price or value of its securities.

Recommendation 5.1:

Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies
or a summary of those policies.

Disclosure:

The Company has formalised policies relating to ASX Listing Rule Compliance and Compliance Procedures, and a
summary of both policies is made available on the Company’s website.

The written policies are designed to ensure compliance with ASX Listing Rule disclosure and accountability at a
senior executive level for that compliance.

VIMY RESOURCES LIMITED – Corporate Governance 2016 І Page 9

Vimy Resources Limited Annual Report 2016CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement

Principle 6 – Respect the rights of security holders

A listed entity should respect the rights of its security holders by providing them with appropriate information and
facilities to allow them to exercise those rights effectively.

Recommendation 6.1:

A listed entity should provide information about itself and its governance to investors via its website.

Disclosure:

The Company has formalised a policy relating to Shareholder Communication, and a copy is made available on the
Company’s website.

The Company has a website “vimyresources.com.au” providing information about itself and its governance to
investors.

Recommendation 6.2:

A listed entity should design and implement an investor relations program to facilitate effective two way
communication with investors.

Disclosure:

The Shareholder Communication policy includes promotion of effective communication with investors and
encourages shareholder participation at general meetings.

Recommendation 6.3:

A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at
meetings of security holders.

Disclosure:

Notices of meeting sent to the Company’s shareholders comply with the ASX Listing Rules. In relation to AGMs,
shareholders are invited to submit questions before the meeting.

The Chairman also encourages shareholders at the AGM to ask questions and make comments about the
Company’s operations and the performance of the Board and senior management.

New directors or directors seeking re-election are given the opportunity to address the AGM and to answer questions
from shareholders.

Recommendation 6.4:

A listed entity should give security holders the option to receive communications from, and send communications to,
the entity and its security registry electronically.

Disclosure:

Shareholders have the option of electing to receive all shareholder communications by email. The Company
provides a printed copy of the annual report only to those shareholders who have specifically elected to receive a
printed copy. The annual report is available on the Company website.

All announcements made to the ASX are available to shareholders by email notification when a shareholder provides
the Company with an email address and elects to be notified of all the Company’s ASX announcements.
In addition
to this, the ASX announcements are made available on the Company’s website.

VIMY RESOURCES LIMITED – Corporate Governance 2016 І Page 10

Vimy Resources Limited Annual Report 2016CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement

The Company share register is managed and maintained by Security Transfer Australia Pty Ltd. Shareholders can
access their shareholding details or make enquiries about their current shareholding electronically by quoting their
Shareholder Reference Number (SRN) or Holder Identification Number (HIN), via the Security Transfer Australia
Registrars investor centre or by emailing registrar@securitytransfer.com.au.

Principle 7 – Recognise and manage risk

A listed entity should establish a sound risk management framework and periodically review the effectiveness of that
framework.

Recommendation 7.1:

The board of a listed entity should:

(a)

have a committee or committees to oversee risk, each of which:

has at least three members, a majority of whom are independent directors; and

is chaired by an independent director,

and disclose:

the charter of the committee;

the members of the committee; and

as at the end of each reporting period, the number of times the committee met throughout the period and
the individual attendances of the members at those meetings; or

(b)

if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it
employs for overseeing the entity’s risk management framework.

Notification of departure:

The Board has not established a Risk Committee.

Explanation for departure:

The composition of the Board during the financial year did not allow for a Risk Committee to be structured in
accordance with the recommendation. The Board assumes the role of the Risk Committee.

The Board has adopted a Risk Management Policy, which sets out the Company's risk profile. Under the policy,
the Board is responsible for approving the Company's policies on risk oversight and management and satisfying itself
that management has developed and implemented a sound system of risk management and internal control.

Under the policy, the Board delegates day-to-day management of risk to the CEO/MD, who is responsible
for identifying, assessing, monitoring and managing risks. The CEO/MD is also responsible for updating the
Company's material business risks to reflect any material changes, with the approval of the Board.

In fulfilling the duties of risk management, the CEO/MD has unrestricted access to Company employees, contractors
and records. The CEO/MD may obtain independent expert advice on any matter believed appropriate, with the prior
approval of the Board.

The Audit Committee monitors and reviews the integrity of financial reporting and the Company's internal financial
control systems and risk management systems.

In addition, the following risk management measures have been adopted by the Board to manage the Company's
material business risks:

•

the Board has established authority limits for management which, if exceeded, will require prior Board
approval;

VIMY RESOURCES LIMITED – Corporate Governance 2016 І Page 11

Vimy Resources Limited Annual Report 2016CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement

•

the Board has adopted a compliance procedure for the purpose of ensuring compliance with the Company's
continuous disclosure obligations; and

the Board has adopted a corporate governance manual which contains other policies to assist the Company
to establish and maintain its governance practices.

A summary of the Risk Management Policy is made available on the Company’s website.

Recommendation 7.2:

The board or a committee of the board should:

•

review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound;
and

disclose, in relation to each reporting period, whether such a review has taken place.

Disclosure:

The Board has required management to design, implement and maintain risk management and internal control
systems to manage the Company's material business risks. The Board also requires management to report to it
confirming that those risks are being managed effectively. Further, the Board has received oral reports from
management as to the effectiveness of the Company's management of its material business risks on an ongoing and
regular basis for each reporting period.

Recommendation 7.3:

A listed entity should disclose:

•

if it has an internal audit function, how the function is structured and what role it performs; or

if it does not have an internal audit function, that fact and the processes it employs for evaluating and
continually improving the effectiveness of its risk management and internal control processes

Disclosure:

The Company does not have an internal audit function.

The CEO/MD and CFO are responsible for evaluating and continually improving the effectiveness of its risk
management and internal control processes

An annual declaration is provided to the Board by the CEO/MD and CFO in accordance with section 295A of the
Corporations Act 2001.

This declaration is:

•

founded on a sound system of risk management and internal control; and

that the system is operating effectively in all material respects in relation to financial reporting risks.

In making the declaration the CEO/MD and CFO consider the size of the Company, its complexity, number of
personnel and its financial resources, to ensure the system of risk management and internal control is appropriate.

Recommendation 7.4:

A listed entity should disclose whether it has any material exposure to economic, environmental and social
sustainability risks and, if it does, how it manages or intends to manage those risks.

VIMY RESOURCES LIMITED – Corporate Governance 2016 І Page 12

Vimy Resources Limited Annual Report 2016CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement

Disclosure:

The Board monitors all material risks that the Company is exposed to and actively seeks to mitigate them, using
resources reasonably available to control those risks.

The activities of the Company are focused on developing the Mulga Rock Project into a producing uranium mine.
Uranium mining has inherent risks which the Company, utilising its own professional employees and consultants and
working in partnership with communities and authorities, actively seeks to mitigate against.

The material risks which the Company is exposed include, but are not limited to, the following:

•

obtaining government approvals

geological and environmental issues

land access and community disputes

the ability to raise additional capital

commodity price and world economy

recruiting and retaining qualified personnel

inherent risks associated with production, storage and transport of uranium.

The Board is responsible to oversee the risk management function and the CEO/MD is in charge of implementing an
appropriate level of control to mitigate these risks within the Company. The Board reviews all major strategies and
decisions and takes appropriate actions on a continuous basis.

Principle 8 – Remunerate fairly and responsibly

A listed entity should pay director remuneration sufficient to attract and retain high quality directors and design its
executive remuneration to attract, retain and motivate high quality senior executives and to align their interests with
the creation of value for security holders.

Recommendation 8.1:

The board of a listed entity should:

(a)

have a remuneration committee which:

has at least three members, a majority of whom are independent directors; and

is chaired by an independent director,

and disclose:

the charter of the committee;

the members of the committee; and

as at the end of each reporting period, the number of times the committee met throughout the period and
the individual attendances of the members at those meetings; or

(b)

if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the
level and composition of remuneration for directors and senior executives and ensuring that such
remuneration is appropriate and not excessive.

VIMY RESOURCES LIMITED – Corporate Governance 2016 І Page 13

Vimy Resources Limited Annual Report 2016CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement

Disclosure:

The Company has a Remuneration Committee.

Up to 1 April 2016, Mr David Cornell was the independent chair of the Remuneration Committee. After 1 April 2016,
Mr Andrew Haslam was the independent chair of the Remuneration Committee.

Up to 1 April 2016 the Remuneration Committee had three members – Mr David Cornell, The Hon. Cheryl Edwardes
AM, and Mr Aaron Hood. Of these members two are considered to be independent – Mr David Cornell and The Hon.
Cheryl Edwardes AM, which represents a majority of the committee.

After 1 April 2016 the Remuneration Committee had four members – Mr David Cornell, The Hon. Cheryl Edwardes
AM, Mr Malcolm James and Mr Andrew Haslam. Of these members three are considered to be independent – Mr
David Cornell, The Hon. Cheryl Edwardes AM and Mr Andrew Haslam, which represents a majority of the committee.

The Remuneration Committee Charter is disclosed on the Company’s website.

The number of Remuneration Committee meetings held during the year and the qualifications of the directors are
disclosed in the Directors’ Report.

Recommendation 8.2:

A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive
directors and the remuneration of executive directors and other senior executives.

Disclosure:

Non-executive directors are remunerated at a fixed fee for time, commitment and responsibilities. Remuneration
for non-executive directors is not linked to individual performance.

Pay and rewards for executive directors and senior executives consists of a base salary and performance incentives.
Long term performance incentives may include securities granted at the discretion of the Board and subject to
obtaining the relevant approvals. Executives are offered a competitive level of base pay at market rates and are
reviewed annually to ensure market competitiveness.

Details of remuneration, including the Company’s policy on remuneration, are contained in the Remuneration Report
which forms part of the Directors’ Report.

Recommendation 8.3:

A listed entity which has an equity-based remuneration scheme should:

•

have a policy on whether participants are permitted to enter into transactions (whether through the use of
derivatives or otherwise) which limit the economic risk of participating in the scheme; and

disclose that policy or a summary of it.

Disclosure:

The board has adopted a Policy for Trading in Company Securities. The Policy prohibits short term speculative
trading of the Company’s securities. Directors, officers and employees are required to obtain clearance prior to
trading.

A summary of the Company’s Policy for Trading in Company Securities is made available on the Company’s website.

VIMY RESOURCES LIMITED – Corporate Governance 2016 І Page 14

Vimy Resources Limited Annual Report 2016