Vimy Resources Limited Annual Report 2017

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FY2017 Annual Report · Vimy Resources Limited

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ANNUAL REPORT
2017

RESOURCES LIMITED

Vimy Resources LimitedAnnual Report 2017CORPORATE
DIRECTORY

BOARD OF DIRECTORS

SHARE REGISTRY

Computershare Investor Services Pty Ltd

Postal address:
GPO Box 2975
Melbourne VIC 3001

Office address:
Level 11, 172 St Georges Terrace
Perth WA 6000

Tel:
Australia:
International: +61 3 9946 4421

1300 367 027

TRANSACTIONAL BANKER
ANZ Banking Group Limited
1275 Hay Street
West Perth WA 6005

AUSTRALIAN SECURITIES
EXCHANGE
Shares in Vimy Resources Limited are quoted
on the Australian Securities Exchange.
ASX code: VMY

The Hon. Cheryl Edwardes, AM
Non-Executive Chairman

Mike Young
Managing Director

Julian Tapp
Executive Director

David Cornell
Non-Executive Director

Andy Haslam
Non-Executive Director

Mal James
Non-Executive Director

Dr Vanessa Guthrie
Non-Executive Director

Ron Chamberlain
Company Secretary

REGISTERED & PRINCIPAL OFFICE

Ground Floor
10 Richardson Street
West Perth WA 6005

Tel: +61 8 9389 2700
Fax: +61 8 9389 2722
Email: info@vimyresources.com.au
Web: www.vimyresources.com.au

AUDITOR

Grant Thornton Audit Pty Ltd
Level 1
10 Kings Park Road
West Perth WA 6005

Vimy Resources LimitedAnnual Report 2017TABLE OF
CONTENTS

CHAIRMAN’S LETTER

CEO’S REVIEW OF ACTIVITIES

OUTLOOK FOR 2018

OPERATIONS REVIEW

MINERAL RESOURCE AND ORE
RESERVE UPDATES

TENEMENTS

MINERAL RESOURCE AND ORE RESERVE
STATEMENT AS AT 30 JUNE 2017

FINANCIAL REPORT

ADDITIONAL INFORMATION

CORPORATE GOVERNANCE STATEMENT

Vimy Resources LimitedAnnual Report 2017CHAIRMAN’S
LETTER

Dear Shareholders,

Vimy has had another great year – the news keeps getting better while the
Mulga Rock Project moves towards production. Mike and his team have once
again made significant progress and continue to achieve the strategies set out
by the Board.

One of the most important achievements for the year was the State and Federal
Ministerial environmental approvals for the Project. The Public Environmental Review
process that Vimy moved through took 1,234 days and was very thorough. We
welcome the approvals from both the Western Australian State Government and the
Federal Government.

Vimy’s vision of ‘Mining a cleaner tomorrow’ captures the strong environmental ethic
and values that underpin all the activities of our professional team. The Mulga Rock
Project will not only be mined to a high environmental standard, employing world’s
best practices, but will also generate a carbon-free energy source that will offset
approximately 70 million tonnes of CO2 which is around 13% of Australia’s total
greenhouse gas emissions.

Regardless of the world’s changing economic cycles, the demand for energy
continues to grow. Nuclear energy is an important part of the clean energy mix.
There is certainly a place for wind, wave and solar but there is no cleaner, cheaper
or more efficient source of baseload power than nuclear power, which significantly
reduces the reliance on fossil fuels to produce electricity. Nuclear power will be a
key energy source for billions of people in communities which are either completely
without power or have only limited access to it.

The insatiable appetite for reliable energy in the developing world will require an
emissions-free energy source that can deliver reliable, dispatchable electricity 24/7.
Only two baseload sources can do this: hydro and nuclear. As the non-OECD
world, particularly India and China, continue to lift their populations out of poverty
through providing electricity, they will continue to embrace and grow their nuclear
power industries; in fact, there are more nuclear power plants under construction in
the world than at any time in the past 25 years. Vimy is very well placed to leverage
off this new demand.

It was a privilege to represent Vimy at the World Nuclear Association Symposium
last month in London with Mike and Julian. While they had many scheduled
meetings to attend, or were engaged in the technical sessions of the conference,
I took the opportunity to engage with the new generation of stakeholders involved in
the nuclear industry. The atmosphere and enthusiasm exhibited at the conference
reflected a commitment to embracing technologies that will provide the world with a
safe and sustainable long-term energy source.

VIMY’S VISION OF
‘MINING A CLEANER
TOMORROW’
CAPTURES
THE STRONG
ENVIRONMENTAL
ETHIC AND VALUES
THAT UNDERPIN ALL
THE ACTIVITIES OF
OUR PROFESSIONAL
TEAM.

Vimy Resources LimitedAnnual Report 2017Piacentini and Son upgrading the Mulga Rock airstrip

The people involved in the industry are a reasonably large but tight-knit group
who meet at these conferences on a fairly regular basis. As with all industry
conferences, the aim is to keep each other updated on technical matters
and debate the issues around the industry. Mike and Julian have established
themselves within the circles of people who have worked in the sector for
many years and have put Vimy on the world map.

I would like to take this opportunity of thanking our shareholders for their on-
going support. Our major shareholders, Resource Capital Fund VI L.P. (RCF),
Forrest Family Investments, Macquarie Bank, Acorn Capital and original Board
member Mike Fewster, continue to show their faith in the Vimy team and the
Mulga Rock Project.

RCF have provided support for one of our biggest achievements this year,
the optimisation drilling program which is proving to have greatly improved the
economics of the Project. Their support has been ongoing since 2015 when
they initially provided a $30 million funding package. In August last year, we
completed the final drawdown of the $15 million RCF unsecured bridging loan
which was part of this funding package and with shareholder support earlier this
year, converted the remaining loan into ordinary shares, leaving us debt free. Just
as this report is going to print, RCF have appointed their first board member to
the Vimy Board, Dr Vanessa Guthrie, formerly Managing Director of Toro Energy.
I welcome Vanessa to the Vimy Board, and look forward to sharing her wisdom
and knowledge of the uranium industry and her wider experience.

My thanks also go to Mike and his team for another year of significant
achievement. Once again, their skill and determination have moved the Mulga
Rock Project closer to production. On behalf of the Vimy Board, I would like to
thank each one of them.

The Hon. Cheryl Edwardes LLM GAICD AM
Chairman

MY THANKS ALSO
GO TO MIKE AND HIS
TEAM FOR ANOTHER
YEAR OF SIGNIFICANT
ACHIEVEMENT. ONCE
AGAIN, THEIR SKILL
AND DETERMINATION
HAVE MOVED THE
MULGA ROCK
PROJECT CLOSER TO
PRODUCTION.

Vimy Resources LimitedAnnual Report 2017Mulga Rock team at camp

CEO’S REVIEW
OF ACTIVITIES

Dear Shareholders,

I must admit to not being a great fan of the annual report these days.
It feels really strange to me to be writing this letter in September about
activities that were finished in June. Given the incredible pace that
our team maintains, going back three months feels like we’re talking
about old news! And don’t even get me started about how this goes
against the ‘continuous disclosure’ rules of the ASX and the fast pace
of communication these days.

But I will do whatever it takes to maintain our momentum and success and if
that means following the rules, then I’m happy to do that too. Despite this, a fact
that seems to be lost on many, is that Vimy has successfully mined uranium ore,
processed it to produce uranium oxide concentrate, or ‘yellowcake’, and shipped
that yellowcake overseas. We’re officially uranium exporters!

Despite my concerns about the timing of an annual report, I like to think our
shareholders keep up with our activities all year. Our mailing list statistics
show that many of you read our quarterly reports and ASX announcements
as soon as they are released. And if you’re not on our mailing list, please
contact us and you soon will be!

But like New Year’s Eve, the annual report is a good opportunity to look
at how far we’ve come during the year, and to set out plans for the future.
It offers me the chance to reflect on how much can be achieved by a small
group of driven individuals in a year.

So, how to review what has been a very busy year? A good starting point
is to browse the list of ASX announcements that were made during the
year. Every year I do it, and every year I’m amazed by how much our
team can achieve in one year, and that is certainly the case this year;
it’s a very impressive list. From the confirmation from the newly-elected
WA State Government that the Mulga Rock has approval to go ahead, the
State and Commonwealth environmental approvals, the Mineral Resource
and Ore Reserve upgrades, to the successful completion of a pilot plant

Mike Young on site

ACHIEVEMENTS
FOR 2017
• Significant Mineral Resource
and Ore Reserve updates

• State and Federal Ministerial

Approval

• DFS due for release in

November 2017

• Export of yellowcake and

converter accounts established

• $6 million placement to new

institutional and sophisticated
investors

Vimy Resources LimitedAnnual Report 2017Mike Young on site

and then approval from three overseas
converters that our product meets their
exacting standards, there’s been a lot
of good news.

As often happens, some of our most
impressive achievements this year
were reported after 30 June but they
shouldn’t be lost in the ‘subsequent
events’ section. While it’s interesting
to look at the comparison figures in
the resources and reserves figures from
30 June last year to 30 June this year
(on page 18) the more exciting and up
to date pieces of news are the Mineral
Resource upgrade, announced on 12
July, where the Mulga Rock Project
cracked the 90Mlb U3O8 mark, and the
Ore Reserve upgrade, announced on
4 September 2017, which saw Ore
Reserves move to 42.3Mlbs U3O8 from
22.7Mt at 845ppm U3O8. The resource
and reserve tables on page 15 are the
ones to look at as they are the most up
to date.

The Resource upgrade announced
on 12 July showed a 30% increase in
uranium metal since November 2016
and highlighted the world-class scale
and economic development potential
of the Mulga Rock Project.

The higher-grade zones within
Ambassador, 25Mlb at 0.15%
(1,500ppm) U3O8, are supporting
significantly improved economics
compared to the PFS which we
released back in November 2015. Our
mining studies show that early mining
of these zones will underpin the initial
payback period and lead to a significant
improvement in our operating costs.

The Ore Reserve update announced
on 4 September showed that the ‘go
line’ – a miner’s term for the point where
the trucks assemble for the next shift –
is truly in sight for the Project. The Ore
Reserve contained metal was up 36%
from the previous update in November
2016. The Reserves now stand at
42.3Mlbs U3O8 from 22.7Mt at 845ppm
U3O8. The three years of Proved
Reserves should provide sufficient surety
to fund the Project.

Board visit to pilot plant - July 2016

As a result of the strong positive grade reconciliation from the test pits, a significant
infill drilling campaign was carried out in late 2016. The outcome of that drilling
was so positive that in April we announced a delay to the delivery of the DFS. We
decided on this course of action as it became clear that the resource model we
had been using had been built on conservative assumptions using data available
at the time. Material from the test pits showed significantly more metal in the bulk
sample than we expected from the resource model. Additional contained metal
in a deposit results in a proportional increase in revenue for almost no increase
in total operating costs, so we decided to conduct the infill drilling, and upgrade
the resource and reserve models which have been incorporated into the updated
mining schedule, leading to a much improved DFS. We expect to release the DFS
during November 2017.

Gaining State and Commonwealth environmental approvals was a huge
achievement this year and one of the major ticks for the Project. The statement in
June this year by the newly-elected WA State Labor Government confirming that
the Project would be allowed to proceed to development finally put the approvals
issue beyond doubt and confirmed that the Mulga Rock Project could be the first
uranium mine in Western Australia. The statement was consistent with Premier
McGowan’s position when he first became Leader of the Opposition in 2012
and with an earlier statement by the Hon. Bill Johnston, Minister for Mines and
Petroleum. Importantly, the Minister has first-hand understanding of the Mulga Rock
Project and its environment, having visited it in July 2017.

This confirmation built on the long approvals process which the Vimy team had
been working on steadily for more than three years. The twelve-week Public
Environmental Review period, which closed in March 2016, was followed by
a series of reviews and appeals. It’s a rigorous process and allows everyone
involved, the public and government agencies, to consider the Project from every
perspective. We ticked every box through this process and the Project was
approved by the Western Australian Minister for the Environment in December 2016
and then the Federal Minister in March 2017. Most pleasing was the recognition of
the limited residual environmental impact associated with the Project against major
environmental benefits associated with offsetting greenhouse gas emissions.

At the same time, following consent from the Environmental Protection Agency
(EPA), we were able to carry out earthworks that will speed up the move toward
construction and operation. An upgrade to the existing site access road means
heavy equipment can enter the site for construction activities and the clearing of the
Kakarook North borefield provides improved access to the main water supply for
the mining operation.

In October 2016, we were granted new mining leases, giving us security of tenure
for all proposed mining areas and post-mine landforms, with those grants valid for
an initial 21-year period. These replaced the existing mining leases and provide
increased operational flexibility for our mining crews, improving both environmental
and engineering outcomes.

Vimy Resources LimitedAnnual Report 2017As I mentioned above, we made history this year by exporting
yellowcake from Western Australia for the first time. It was only
four and a half kilograms sent as test samples, but it was the
first uranium produced from Mulga Rock. The samples were
produced from ore material from the Ambassador test pits and
put through the pilot plant in 2016 as part of the DFS process.

We sent the yellowcake to three converters, the first stage
in the nuclear fuel cycle. These were New Areva in France,
Cameco Corporation in Canada and ConverDyn in the USA.
Nuclear utilities have quality assurance standards that need
to be met before they enter long-term offtake agreements.
Likewise, this was a quality assurance box that we needed
to tick to support the Project development. A developer
moving towards production must prove that its product
meets industry standards and all three commercial converters
confirmed the high quality of our final product.

Again, after the 30 June reporting date, we announced a
very successful $6 million placement to new institutional
and sophisticated investors. We had a great response from
investors, with the placement heavily oversubscribed. As a
result, we welcomed approximately 300 new shareholders to
our register, and it was very encouraging to see our belief in
the Mulga Rock Project and our optimistic view of the uranium
market reinforced by people willing to put their money behind
it. Funds raised from the placement allow us to continue
work on the DFS work programs and to advance offtake and
funding discussions.

Throughout the year, we have increased our engagement
with nuclear utilities around the world to further offtake
discussions. As Cheryl mentioned, Julian Tapp and I have
attended several nuclear industry conferences, and I was
asked to present at the World Nuclear Fuel Cycle conference
in Toronto in April this year. These conferences are the best
way to showcase the Mulga Rock Project and to engage with
the right people in the nuclear industry and demonstrate the
credentials of the Project and the team behind it. Becoming
known in the industry is very important, especially given the
off-market contract nature of uranium procurement.

The conferences also give us an insider’s view of the current
state of the uranium market. One of the strongest impressions
we’ve taken away from these meetings is that everybody in
the industry, on the supply side and the demand side, knows
that there’s a shortage coming, even the pessimists. The
utilities and converters say the shortage won’t come until
2030, while the producers say the shortage will come next
month. Obviously it’s somewhere between those two data
points. We think it’s probably going to become clear in the
next six to eighteen months, but believe there is definitely a
shortage coming.

The organisations we speak to have a strong interest in
Australian uranium suppliers as they see Australia as a safe
jurisdiction with the world’s leading environmental practices.
Our company mission of becoming ‘a reliable and respected
uranium producer’ strikes a strong chord with them as

security and reliability of supply are their most important
considerations. They are also very keen to diversify their
supply and to include suppliers from countries other than
Kazakhstan and Canada who currently control about 60
percent of the world’s uranium production.

Vimy is now a member of the World Nuclear Association, with
members covering every aspect of global nuclear generation
and many of the world’s uranium miners. They run a number of
these conferences so being approached to become a member
is an important step in being an integral part of the industry.

Despite my reservations about the annual report process, it
is, like Christmas, a good opportunity to say thanks. Firstly,
thanks to our shareholders for their continued confidence in
Vimy management and team, the Mulga Rock Project and
for their positive outlook for uranium. As mentioned earlier,
we are keen to keep all shareholders up to date with our
progress throughout the year, not just once a year at annual
report time, so please add your name to the mailing list on
our website if you haven’t done so already.

The Vimy team has continued to tick all the boxes this year.
Between us, we have the experience and contacts in all
the right areas from project approvals to mine operation.
Importantly we have a great deal of experience in building
mines which is so important as we move towards the
construction phase. We also have a great can-do attitude
and team spirit. This extends to our contractors, a talented
bunch who fit in easily with the Vimy team and produce great
results.

I’d like to make a special mention of our team members who
work on site at the Mulga Rock Project. It’s a very long way
from anywhere and it takes them all an awfully long time to
get to work. They deal with many things that we city dwellers
don’t have to worry about – being away from their families,
communication outages, working weekends and Christmas,
some quite extreme weather conditions, strange critters and
hard physical work that must often be quite repetitive.
They need to have a wide range of skills, not the least of
which is just to keep things ticking over. They deal with
visitors to site from board members to large drilling teams
and they make them all welcome. Some of them have special
talents that we all benefit from – they have embraced drone
technology and some of them take great photos, many of
which are in this report.

I’d like to say thanks to every Vimy team member for another
year of hard work and dedication and to congratulate them for
their ongoing commitment to safety.

Mike Young
Managing Director and CEO

6 Vimy Resources Limited Annual Report 2017

Wallis Drilling at Mulga Rock

Vimy Resources Limited Annual Report 2017

OUTLOOK FOR
2018

Vimy has often said that it is better to be in the take-off
zone, on the surfboard, and waiting for the incoming
swell, rather than sitting on the beach waxing your
board. You don’t need to live next to the Indian Ocean
to get the metaphor, and with the Definitive Feasibility
Study nearing completion and Ministerial approvals
completed, we’re paddling out to the take-off zone! The
perfect storm that is supply-demand imbalance is just
over the horizon, and the swell will surely follow.

We will be ready.

The 2018 financial year will be a transitional year for us. This
will be less demanding for our technical team, and much
more active for our corporate side as we begin the process
of securing contracts which will underpin our development.

We at Vimy believe deeply in our uranium thesis as set out
below. Part of our strategy is to grow the Company’s asset
base through exploration and acquisitions. With studies done,
our technical team will assess other uranium opportunities both
within Australia and overseas as there are some great bargains
out there.

URANIUM SPOT PRICE
There is a fundamental disconnect between sentiment and
reality in the uranium business. Market sentiment is driven
by the ‘spot market’ which currently stands at US$20.70
per pound U3O8. However, the marginal cost of uranium
production is such that in 2017, a majority of global uranium
production would be underwater at current spot prices.

At the same time, more highly priced offtake agreements
and delivery commitments ensure that these mines remain
profitable. In fact, most of the uranium purchased by utilities
is done on a long-term contract basis in what is an opaque
market. The disconnect therefore is simple: customers (and
investors) think the price of uranium is US$20 while the miners
(and smart investors) know that the actual price needs to be
three times that to sustain and grow primary supply.

Only two things can happen in this scenario: nuclear power
plants run out of fuel, or the uranium price goes up. The thesis
above is complicated somewhat by secondary supplies and
current global stockpiles, but the long-term viability of the nuclear
power industry will require existing mines to continue operating,
and new mines to open.

The global capacity of operable nuclear reactors continues
to grow and, with over 60GWe of nuclear capacity under
construction and a further 165GWe in advanced planning,
new reactors coming on line are expected to significantly
outpace closures and retirements leading to a sustained
growth in demand. The biggest factors underpinning growth
are the Chinese nuclear build program, and the glacially slow,
though eventual, restart of the bulk of the Japanese reactor
fleet over the next five years. China is without doubt the key
to growth, with 20 reactors under construction, a further 40
planned, and another 143 proposed. China has a target of
150GWe of nuclear capacity by 2030 which will require new
reactors being commissioned at a rate of about 10 per year
from 2022 onwards, taking China’s nuclear capacity above
that of the United States by around 2026.

Piacentini and Son building the access road at Mulga Rock

Vimy Resources LimitedAnnual Report 2017 Diamond drilling at Mulga Rock,

carried out by Wallis Drilling

Mining is a game of diminishing assets
as each mine depletes its reserves.
Without a steady pipeline of new mines
in any commodity, demand growth
unreservedly leads to shortages. The
timing of this tipping point remains
unclear, but some analysts suggest
that a meaningful shortfall could
happen as soon as 2020. The nuclear
fuel cycle, that is the timing and
process of manufacturing nuclear fuel
rods, takes over 18 months, and so
utilities typically secure their contracts
two or more years out from delivery
requirements. With insufficient volume
available from the spot market, prices
are expected to rise quickly as more
utilities enter the market and security
of supply takes precedence over price.

All of these factors provide strong
support for our view that the uranium
price is due for a rebound in the
same timeframe that we plan to
move towards production. While
many new uranium prospects have
been discovered, the lead times to
production are growing and Vimy’s
Mulga Rock Project is one of the
most advanced development projects
in the world.

Our strategy has always been to be
‘mine ready’ as soon as possible and
to be first ‘off the blocks’ when the
price inflexion occurs.

URANIUM MARKETING
Nuclear utilities around the world
are keenly aware of developments
being made by Vimy and appreciate
that the Mulga Rock Project is
now largely de-risked in terms of
obtaining the necessary approvals.
Some utilities have recently provided
Vimy the opportunity to bid into their
procurement opportunities. The
completion of the DFS will enhance
Vimy’s ability to bid competitively into
these processes.

Post DFS-completion, a more
active engagement with utilities will
commence with a view to obtaining
strategic offtake agreements sufficient
to underpin the financing required for
project development.

BANKING DISCUSSIONS
Early engagement with banking
institutions is crucial for uranium
producers. The off-market contract
nature of uranium procurement
provides an inextricable link between
uranium marketing and bank funding.

As a consequence, Vimy sought early
engagement with banking institutions
and was pleased to announce the
appointment of Société Générale
as bank project finance advisor in
February 2017. Société Générale will
assist with development of the overall
bank project financing structure for the
Mulga Rock Project, an area in which
they have significant experience.

This early bank engagement provides
multiple benefits to Vimy, including
quantification of debt capacity and
clarification of uranium marketing
contract requirements. Société
Générale’s advisory role will be key to
Vimy defining the bankable incentive
price for the Mulga Rock Project.

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 LimitedAnnual Report 2017OPERATIONS
REVIEW

Vimy’s focus is the Mulga Rock Project, one of Australia’s largest and most
advanced undeveloped uranium resources. The Project is located 240km east-
northeast of Kalgoorlie in Western Australia. The Mulga Rock Project is 100%
owned and operated by Vimy. As the Project is located in the Great Victoria
Desert, there are no competing land uses to the proposed mining operation.

The Mulga Rock Project comprises four Mineral Resources: Ambassador
and Princess, which form the Mulga Rock East Mining Centre and Shogun
and Emperor, which form the Mulga Rock West Mining Centre, approximately
20km away. The Project is situated on two granted Mining Leases (ML39/1104
and ML39/1105). Vimy holds title to approximately 750 square kilometres of
exploration ground across the Mulga Rock Project and shares road access with
the Tropicana Gold Mine.

Results of the Mulga Rock Project 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 East, then Ambassador West,
Shogun and then Emperor.

Excavation of Ambassador test pit

Vimy Resources LimitedAnnual Report 2017OPERATIONS

REVIEW

DEFINITIVE
FEASIBILITY STUDY
The Vimy team made solid progress
on the Definitive Feasibility Study
(DFS) during the year, building on the
major milestones reached in the 2016
year. The release of the DFS was
postponed to allow positive results from
the optimisation drilling program to be
incorporated into the updated resource
figures. It is now due for release in
November 2017.

OPTIMISATION
IN-FILL DRILLING
In late 2015-early 2016, two open-cut
geotechnical trenches, or test pits, were
completed at Ambassador East and
West. Assessment of the material in
the test pits showed that the contained
U3O8 in the excavated material was
significantly higher than expected from

the resource model. The Company
decided to conduct what we called
the ‘optimisation drilling program’ to
investigate these results.

The optimisation drilling program
commenced in October 2016 with
assay, density, and disequilibrium data
assessment completed in April 2017.
The program was carried out over a
4km long section of the Ambassador
East resource, an area which falls
inside the current pit designs. Drill
spacing varied between 50 x 80m and
50 x 40m. 84 diamond drill holes (for
4,333m) and 215 aircore drill holes
(for 11,700m) were drilled with 5,673
samples taken and 739 bulk density
measurements (drill core only).

A number of improvements were made
to sampling procedures in this drilling
program, including vacuum packing of
diamond drill core at the rig to preserve

moisture, and two-stage validation of
wireline data. The Company identified
several areas where the understanding
of controls on mineralisation, input data
and resource modelling processes
have improved and can cumulatively
lead to a material increase in the
uranium metal. These include the
use of geological sub-domaining
which better honours local diamond
drilling data and an increased drilling
density, irrespective of drilling method,
which increases contained metal. Ore
densities from diamond core data
increased with improved methodology.
Overall, we gained a much better
understanding of the controls on
mineralisation and geological modelling
and developed new best practice in
handling disequilibrium issues in young
uranium deposits.

Approaching desert storm at Mulga Rock

Vimy Resources LimitedAnnual Report 2017Borehole Wireline conducting downhole
wireline survey at Mulga Rock

Vimy Resources LimitedAnnual Report 2017book transfers of uranium concentrate
are made to utility customers, and sales
invoicing is finalised. Australia’s uranium
is sold strictly for electrical power
generation only, and there are extremely
strict safeguards in place to ensure
this. Australia was the first country to
bring into force an additional protocol
above the Nuclear Non-Proliferation
Treaty (NPT) and requires all customer
countries to have entered into a bilateral
safeguards treaty which is more
rigorous than NPT arrangements.

SAFETY
At Vimy, we actively encourage a
culture of safety while emphasising
that safety is everyone’s responsibility.
We had an in-house competition this
year to come up with a safety slogan
and the winner was Mathew Lovelock,
one of our mining engineers, with the
slogan: ‘Safety – The Power is in U’.

The Vimy EHS team uses the MyOSH
electronic safety system across the
operation, which enables all hazards
and incidents to be captured,
investigated, remedied and closed off.
The system supports an integrated
framework for Vimy’s EHS management
system and has enabled the team to
move to a more resilient safety culture.

Vimy’s health and safety performance
for 2017 was positive with a strong
emphasis on leading indicators, such
as Hazard Reports, Take 5’s and Job
Hazard Assessments. This focus on
preventative measures resulted in
frequency rates for Lost Time Injuries
(LTIs), Medically Treated Injuries (MTIs)
and Minor Injuries (MI) well below
mining industry averages. This is a
great outcome, and all Vimy employees
should be commended on putting
safety first.

APPROVALS
We have made great progress
with approvals, culminating in gaining
State and Commonwealth conditional
environmental approvals in December
2016 and March 2017 respectively.
This was followed by an announcement
on 20 June 2017 from the McGowan
Government that the Mulga Rock
Project is legally entitled to obtain all
secondary approvals.

The twelve-week Public Environmental
Review period for the Mulga Rock
Project was completed in March
2016. Vimy submitted responses
to all comments, and in July 2016
the responses were deemed to be
accepted by the Office of the EPA, and
the proposal was put forward to the
EPA for consideration.

On 15 August 2016, the EPA
recommended approval of the Mulga
Rock Project and their assessment
report was sent to the Minister for
approval as required under s.44(1) of
the Western Australian Environmental
Protection Act 1986. The Project was
assessed under an agreement between
the Commonwealth of Australia, and
Western Australia made under s.45
of the Environment Protection and
Biodiversity Conservation Act 1999
(Cth).

On 19 December 2016, the Mulga
Rock Project was approved by the
then Western Australian Minister for
Environment, the Hon. Albert Jacob
MLA. The Minister’s statement was
an endorsement of the very low
environmental impacts associated with
the Project which was deemed to have
no significant residual impacts on the
environment, if implemented with the
required conditions. In March 2017,
the Project was then approved by the
Hon. Josh Frydenberg MP, the Federal
Minister for the Environment and Energy.
Together these constitute the Project’s
major environmental approvals.

Although we were confident that the
new WA State Labor Government would
stand by the policy adopted by Premier
Mark McGowan when he first became
Leader of the Opposition in 2012,

we welcomed the statement to State
Parliament by the Hon. Bill Johnson
on 20 June 2017, providing absolute
assurance that the Mulga Rock Project
is allowed to proceed.

We now have all the major
environmental approvals to become
Western Australia’s first uranium mine.

EXPORT OF SAMPLES
In April this year Vimy was given
permission by the then Minister for
Resources and Northern Australia,
the Hon. Matthew Canavan, to export
uranium ore concentrate as samples
to uranium converters for testing and
quality assurance purposes. Approval
was also granted by the Director General
of ASNO, the Australian Safeguards and
Non-proliferation Office.

The samples were produced during
2016 as the final product of the DFS
pilot plant process. The ore feed
was extracted from the geotechnical
investigation trenches excavated at
Ambassador in 2015/2016 and put
through the metallurgical pilot plant.
The first Uranium Oxide Concentrate
(UOC) was precipitated in December
2016, and these particular samples
were chosen as being closest to the
quality expected in final production.

Vimy will produce a high-quality
UOC at Mulga Rock, which will be
shipped to the conversion plants
for processing into nuclear fuel.
The three samples were sent to
converters’ facilities in Canada for
Cameco Corporation, the USA for
ConverDyn and France for New Areva
and put through their testing and quality
assurance programs. In September
this year, the Company announced
that all three converters confirmed that
the product from Mulga Rock was of a
high quality. Nuclear utilities seeking to
purchase Vimy’s product under long-
term offtake agreements can now be
assured of product quality.

The setting up of accounts with all
three converters is also an important
step as all uranium concentrate from
the Mulga Rock Project is required to
be delivered to converter accounts. It
is from these converter accounts that

Vimy Resources LimitedAnnual Report 2017MINERAL RESOURCE &
ORE RESERVE UPDATES

RESOURCE STATUS

CONTAINED METAL BY DEPOSIT

A Mineral Resource upgrade was announced on
8 November 2016 for Shogun and Emperor and 25
May 2017 for the Ambassador East deposit, but the
most significant upgrade, announced just after the
end of the reporting period on 12 July 2017, saw
the Mulga Rock aggregate Mineral Resource move
above the 90Mlb mark. The global resource at the
Mulga Rock Project now stands at 90.1Mlbs U3O8,
from 71.2Mt at 570ppm U3O8, with 50% of the global
Mineral Resource now in Measured and Indicated
status. As announced on 4 September 2017, most
of this material was converted to Proven and
Probable Reserves.

The Mulga Rock East mining centre, comprising the
Princess and Ambassador deposits, will be the focus
of initial mine development, with sufficient mineral
inventory in the Ore Reserve (which also includes the
Shogun deposit) to feed the process plant for the first
thirteen years of production. The Mineral Resource
at Mulga Rock East has increased by 30% for a total
of 56.4Mlb U3O8 at 680ppm U3O8 compared to the
November 2016 estimate.

The Princess and Ambassador resources now
represent 63% of the global resource as shown
on the chart to the left.

Drilling at Mulga Rock

Vimy Resources LimitedAnnual Report 2017MULGA ROCK PROJECT MINERAL RESOURCE, JULY 2017

Deposit / Resource

Classification

Cut-off Grade
(ppm U3O8)

Tonnes
(Mt)1

Mulga Rock East

Princess

Ambassador

Mulga Rock West

Emperor

Shogun

Indicated

Inferred

Measured

Indicated

Inferred

Indicated

Inferred

150

Sub-total

150

Sub-total

Total Resource

2.0

1.3

5.2

14.8

14.2

37.4

30.8

2.2

0.9

33.8

71.2

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

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

MULGA ROCK PROJECT ORE RESERVE, AUGUST 2017

Deposit / Resource

Classification

Cut-off Grade
(ppm U3O8)

Tonnes
(Mt)1,2

Mulga Rock East

Ambassador

Princess

Mulga Rock West

Proved

Probable

150

Sub-total

Shogun

Probable

150

Sub-total

Total Reserve

5.3

14.1

1.7

21.1

1.6

22.7

1. Tonnages and grades are reported including mining dilution.

2. t = metric dry 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.

U3O8
(ppm)2

820

420

1,100

800

420

680

440

680

290

450

570

U3O8
(ppm)3

1,055

775

870

850

760

845

Total Metal
U3O8
(Mlb)

3.6

1.2

12.6

26.0

13.1

56.4

29.8

3.2

0.6

33.6

90.1

U3O8
(Mlb)4

12.3

24.0

3.3

39.6

2.7

42.3

Aircore drilling at Ambassador West

Vimy Resources LimitedAnnual Report 2017TENEMENTS

At 30 June 2017, Vimy held title to
approximately 750 square kilometres of
exploration ground across the Mulga Rock
Project. All tenements are in the Mt Margaret
Mineral Field of Western Australia.

The Company currently has 24 tenements
that all relate to the Mulga Rock Project:
two are mining leases, eight are exploration
licences, five are prospecting licences, and
nine 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.

GRANT OF MINING LEASES
In October 2016 the Company announced the
granting of two new mining leases (M39/1104
and M39/1105). These replaced the previous
mining leases M39/1080 and M39/1081
granted in July 2012, which were conditionally
surrendered. All licences and conditions attached
to the original tenements were carried over to the
new Mining Leases.

Tenement

M39/1104

M39/1105

E39/876

E39/877

E39/1148

E39/1149

E39/1150

E39/1551

E39/1683

E39/1902

P39/4878

P39/4879

P39/4880

P39/4881

P39/4882

L39/193

L39/219

L39/239

L39/240

L39/241

L39/242

L39/252

L39/253

L39/254

Ownership

100%

Aerial view of Mulga Rock camp and airstrip

Vimy Resources LimitedAnnual Report 2017MINERAL RESOURCE AND
ORE RESERVE STATEMENT
AS AT 30 JUNE 2017

MULGA ROCK PROJECT

OVERVIEW

• The Mineral Resource and Ore Reserve reported in this section have been superseded. Please refer to pages

14 and 15 of this report for details of further significant increases to both the Resource and Ore Reserve
estimates, announced after the end of the reporting period.

• The Mulga Rock Project global uranium mineral estimate increased by 3% between 1 July 2016 and 30 June 2017, from
76.2Mlbs to 78.5Mlbs (from 66.6Mt at 520ppm U3O8 to 67.9Mt at 525ppm), all reported in accordance with the JORC
Code 2012.

• The Ambassador and Princess resources are grouped to form the Mulga Rock East Deposit and the Shogun and Emperor

resources form the Mulga Rock West Deposit.

• At Mulga Rock East, the change was the result of a 14% increase in the Mineral Resource at Ambassador East, resulting

from the optimisation drilling campaign which took place in the fourth quarter of 2016, increasing the contained metal from
12.4 to 14.1Mlbs U3O8.

• On 25 May 2017, the Company announced a high-grade Maiden Measured Mineral Resource for the Mulga Rock Project

(12.4Mlb U3O8) at 0.11% U3O8 (1,100 ppm).

• At Mulga Rock West, the combined resources of Emperor and Shogun stood at 33.7Mt at 450ppm U3O8 for a total of

33.6Mlb, a 2% increase on that reported to the year to 30 June 2016, which was 32.5Mt at 460ppm U3O8 for a total of
33.0Mlbs.The increase arose from extensive infill (Shogun) and twin (Emperor) drilling programs completed and announced
early in 2016.

• On 16 November 2016, the Company announced an increased Probable Ore Reserve for the Mulga Rock Project of

18.7Mt at 755ppm for a total metal content of 31.2Mlb U3O8 (from 15.2Mt at 660ppm for a total metal content of 22.1Mlb
U3O8). This represented a 41% increase in contained metal and 14% increase in uranium grade from the Maiden Ore
Reserve announced in March 2016.

Diamond core drilling at Mulga Rock

Vimy Resources LimitedAnnual Report 2017MULGA ROCK PROJECT TOTAL ORE RESERVE
30 JUNE 2017 COMPARED TO 30 JUNE 2016, REPORTED AT A 150PPM CUT-OFF GRADE

Deposit / Resource

Classification

Tonnes
(Mt)1, 2

2017

U3O8
(ppm)3

U3O8
(Mlb)4

Tonnes
(Mt)1, 2

2016

U3O8
(ppm)3

U3O8
(Mlb)4

Mulga Rock East

Princess

Ambassador

Mulga Rock West

Shogun

Probable

Sub-total

Probable

Sub-total

Total Reserve

1.1

16.4

17.5

1.2

18.7

734

753

752

808

755

1.7

27.3

29.0

2.2

31.2

1.3

13.9

15.2

640

660

1.8

20.2

22.1

MULGA ROCK PROJECT TOTAL MINERAL RESOURCE
30 JUNE 2017 COMPARED TO 30 JUNE 2016, REPORTED AT A 150PPM CUT-OFF GRADE

Deposit / Resource

Classification

Tonnes
(Mt)2

Mulga Rock East

Princess

Ambassador

Mulga Rock West

Emperor

Shogun

Indicated

Inferred

Measured

Indicated

Inferred

Sub-total

Inferred

Indicated

Inferred

Sub-total

Total Resource

1.3

2.5

5.1

14.0

11.3

34.2

30.8

1.9

1.1

33.7

67.9

2017

U3O8
(ppm)3

690

380

1,105

655

335

595

440

680

390

450

525

U3O8
(Mlb)4

Tonnes
(Mt)2

2016

U3O8
(ppm)3

U3O8
(Mlb)4

1.9

2.1

12.4

20.1

8.3

45.0

29.8

2.9

0.9

33.6

78.5

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 Tonnages and grades are reported including mining dilution.

2 t = metric dry 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.

Vimy Resources LimitedAnnual Report 2017MINERAL RESOURCE ESTIMATE
UPDATES BY DEPOSIT

RESOURCES - OTHER MATERIAL
INFORMATION SUMMARY

MULGA ROCK EAST
• The “optimisation drilling program” at Ambassador,
carried out in 4Q 2016, was planned following
assessment of the material from the two test pits
excavated at Ambassador during the ongoing Definitive
Feasibility Study. Results indicated that the contained
U3O8 in the excavated material was significantly higher
than expected from the resource model and the
optimisation drilling was conducted to confirm this
assessment.

GEOLOGY AND GEOLOGICAL INTERPRETATION
• Geological modelling: Updates to the Mulga Rock West
and East geological models relied on the increased
drill spacing in part of the Project as well as better
characterisation of the various stratigraphic packages
based on their wireline signature.

• The increased drill spacing at Ambassador East resulted
in very limited changes in volume and tonnage of the
mineralised domains (typically less than 4-5%).

• The 4Q 2016 optimisation drilling program was

conducted on a 4km long section of the Ambassador
East resource using a drill spacing varying between 50 x
80m and 50 x 40m.

SAMPLING AND SUB-SAMPLING
•

Improvements were made to measurements of wet bulk
densities and moistures through vacuum packing samples
at the drill rig.

• At Ambassador East there was a 92% conversion from an

Indicated to Measured status.

• A dual validation process of wireline data was also
introduced, ensuring more efficient delivery of high
quality data.

MULGA ROCK WEST
• On 8 November 2016, the Shogun Resource Estimate
was announced at 3.0Mt at 580ppm U3O8 for 3.8Mlbs
U3O8, with 76% of the Mineral Resource classified as
Indicated. The Shogun Mineral Resource grade increased
from 550ppm to 570ppm U3O8.

• The estimate was based on the extensive infill

drilling program at Shogun, announced to the ASX on
25 February 2016, and comprising 162 air core and
15 diamond core holes in the Shogun resource area,
for a total of 7,096 metres.

• The twin drilling program at Emperor, also conducted in
early 2016, consisted of 25 twin aircore and diamond
holes for a total of 2,470 metres, primarily to verify bulk
density and to establish radiometric disequilibrium factors.

BY-PRODUCTS RESOURCE ESTIMATES
• Base and other metals within the uranium mineralisation

domains were previously reported although outside of the
uranium domains they were considered not economically
recoverable. A base metal estimate has not been
included in this report. Poor continuity, low grades and
overall low metal content indicate that they do not have a
reasonable chance of eventual economic recovery.

SAMPLE ANALYSIS METHOD
• The correction methodology for secular radiometric

disequilibrium was updated on the basis of geological
sub-domains, honouring locally consistent thicknesses,
grades and metal accumulations. This has resulted in a
general increase in grade, and justified overall increases in
top cut-off grades applied across to various sub-domains.

• A more thorough data validation process was introduced
in the analysis of bulk density and moisture, resulting in
a better treatment of outliers and very good correlation of
measurements on physical readings and wireline density
logs equivalents. This has resulted in minor changes
to the bulk and dry density assigned to the various
lithologies used in the estimation process. Bulk densities
at Ambassador and Princess were estimated directly
into the block models, with bulk densities at Shogun
and Emperor applied to the block model using indicator
derived fractions for the key lithologies.

DRILLING TECHNIQUES
• There were no material changes to the drilling techniques
involved in the 4Q 2016 optimisation drilling program, with
consistent delivery of high quality drill core and aircore
cutting achieved throughout the program.

Vimy Resources LimitedAnnual Report 2017 ESTIMATION METHODOLOGY
• 3D estimation methods were used this year for all domains at Ambassador and Princess, in preference to the 2D

accumulation or grade x thickness estimation method used for the domains 100 and 200 at Ambassador in previous years.

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. Conditional simulation modelling of the
various mineralised domains was used to assess confidence levels associated with drill spacing and corresponding Mineral
Resource classification. All other things being equal, the following criteria were used:

- Measured category is defined as having +/- 15% relative error at the 90% level against the quarterly production output.

Indicated category is defined as having a +/-15% relative error at the 90% level against the annual production output.

CUT-OFF GRADE
• No adjustment was made to the overall cut-off grade for the Project (150 ppm U3O8), with ongoing mining and process

studies supporting that threshold.

MINING AND METALLURGICAL METHODS AND PARAMETERS AND OTHER MODIFYING FACTORS
CONSIDERED TO DATE
• There were no material changes to report, assuming mining via a mix of conventional and strip mining methodologies.

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 Ore Reserves and Mineral Resources committee responsible for reviewing and monitoring
the Company’s processes for calculating Ore Reserves and Mineral Resources and for ensuring that the appropriate internal
controls are applied to such calculations.

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

The Company has also engaged the services of a highly reputable Mineral Resource consultant to peer review the data
acquisition, handling, processing and estimation used during the year.

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 are 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’.

The information in this report that relates to operating costs and estimation of the Mulga Rock Ore Reserves is based on information compiled by
Andrew Hutson, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Hutson is an employee of Mining Plus. Mr Hutson
consents to the inclusion, form and context of the relevant information herein as derived from the original Ore Reserve report. Mr Hutson 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’.

The information in this report that relates to resource optimisation, mining methodology, mine schedule and infrastructure for the Mulga Rock Ore
Reserves is based on information compiled by Joel van Anen, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr van Anen is
an employee of Vimy Resources. Mr van Anen consents to the inclusion, form and context of the relevant information herein as derived from the original
Ore Reserve report. Mr van Anen 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’.

Vimy Resources LimitedAnnual Report 2017 2017 FINANCIAL REPORT

TABLE OF 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

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 2017 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 21 September 2017. 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 2017

DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Directors’ Report
for the Year ended 30 June 2017

Your directors present their report on Vimy Resources Limited consolidated entity (‘Group’) for the financial year ended 30 June 2017.

DIRECTORS

The names and details of directors who held office during the year ended 30 June 2017 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. She was
appointed in August 2017 as a part-time member of the Foreign Investment Review Board for a five-year period. Mrs Edwardes
assists the clients of FTI Consulting with a range of complex statutory approvals required for resources and infrastructure projects.
She also chairs the Port Hedland International Airport, a joint venture company between AMP Capital and Infrastructure Capital
Group and is a Commissioner on the WA Football Commission.

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.

Mrs Edwardes was awarded an Order of Australia in the Queen’s Birthday Honours 2016 for “significant service to the people and
Parliament of Western Australia, to the law and to the environment, and through executive roles with business, education and
community organisations.”

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), and Cycliq Group Limited February
2017 to present.

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 Report 2017DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Directors’ Report
for the Year ended 30 June 2017

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 (Andy) 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 Limited. 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 (Mal) 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; and Algae Tec Limited
from September 2014 to present.

COMPANY SECRETARY

Ronald (Ron) 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.

Listed company directorships in the last three years: Nil

Vimy Resources Limited Annual Report 2017DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Directors’ Report
for the Year ended 30 June 2017

PRINCIPAL ACTIVITIES

The principal activities of the Group during the year ended 30 June 2017 were exploration and evaluation on the Mulga Rock
Project, with Definitive Feasibility Study work undertaken during the year.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

During the year the following significant events occurred:

•

On 15 August 2016, the Company completed the final drawdown of $7.5 million from the Resource Capital Fund VI L.P.
(‘RCF VI’) unsecured bridging loan. On 17 August 2015, the Company announced a legally binding agreement with 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 $5 million share placement completed in May 2015, 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 30 September 2016, the Company announced completion of a placement from new and existing institutional and
sophisticated investors which raised $6.3 million in new funds at $0.26 per share before costs. The funds raised were
primarily for a uranium grade optimisation drilling program.

On 23 November 2016, the Company issued 19,230,769 fully paid ordinary shares for an agreed value of $0.26 per share to
repay $5 million of the RCF VI bridge facility.

On 24 January 2017, the Company announced shareholders had approved the conversion of the remaining $10 million of the
RCF VI bridge facility into 38,461,539 fully paid ordinary shares for an agreed value of $0.26 per share to repay the facility
before its maturity on 31 March 2017.

OPERATING AND FINANCIAL REVIEW

OPERATING RESULT

The consolidated operating loss after tax for the year ended 30 June 2017 attributable to members of the Group was $11,500,157
(2016: operating loss after tax $11,957,825). 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 decreased to $7,724,364 (2016: $11,380,804) as a consequence of the RCF VI royalty payment of $10 million in
2016, despite higher R&D tax incentive grant income in 2017.

Lower exploration and evaluation expenditure of $13,597,184 (2016: $18,497,411) as a result of nearing completion of the
Definitive Feasibility study for the Mulga Rock Project.

DIVIDENDS

No dividends were paid in the current year (2016: $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:

•

On 7 July 2016, the Office of the Environmental Protection Authority informed the Company that its responses to the Public
Environmental Review submissions had been determined to be acceptable and that its proposal for the project can now be
considered by the Environmental Protection Authority (‘EPA’).

On 15 August 2016, the EPA recommended approval of the project to the Western Australian Minister for Environment,
subject to specific conditions and procedures.

On 27 September 2016, the EPA granted consent to allow preliminary works to be undertaken in support of the project.

On 24 October 2016, the Company was granted two new replacement Mining Leases, giving security of tenure for all
proposed mining areas and post-mine landforms for the life-of-mine of the project.

On 8 November 2016, the Company announced a significant increase in the resource classification across the Ambassador
and Shogun deposits, with greater than 36Mlbs U3O8 classified as indicated.

Vimy Resources Limited Annual Report 2017

DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Directors’ Report
for the Year ended 30 June 2017

•

On 16 November 2016, the Company announced an updated Probable Ore Reserve containing 18.7Mt at 755ppm U3O8 for
31.2Mlb U3O8 comprising a 41% increase in contained metal from the Maiden Ore Reserve announced in March 2016, with
uranium grade increasing 14%, from 660ppm to 755ppm U3O8.

On 28 November 2016, the Western Australian Minister for Environment determined the appeals to the EPA recommendation,
and partly allowed the appeals, by amending a number of conditions, primarily in order to improve consistency between the
conditions and the assessment and recommendations.

On 19 December 2016, the Western Australian Minister for Environment approved the Project, subject to implementation
conditions.

On 6 March 2017, the Commonwealth’s Minister for the Environment and Energy approved the Project, subject to specified
conditions, and this was the final approval required before work could commence.

On 10 March 2017, the Company announced commencement of work on the project, involving some initial construction activity
associated with both infrastructure facilities and mining.

On 24 April 2017, the Company announced dispatch of uranium samples to converters for testing.

On 26 April 2017, the Company announced results of the 2016 in-fill drilling program, with an overall increase of 5% to 15% in
contained uranium metal in the area drilled out. This increase in contained metal will have a material, positive effect on the
economics of the Mulga Rock Project, the Company has determined that publication of the DFS should be delayed.

On 25 May 2017, the Company announced an update to the Project mineral resource, with a maiden measured mineral
resource of 12.4Mlb U3O8 high-grade, as the measured resource is greater than 0.11% U3O8 (1,100ppm), and a 14% increase
in contained metal at Ambassador East (from 12.4 to 14.1Mlb U3O8).

On 20 June 2017, the new McGowan Western Australian Government confirmed that the Project will be allowed to proceed to
development.

The Company currently has twenty-four tenements that all relate to the Mulga Rock Project, two are mining leases, eight are
exploration licences, five are prospecting licences, and nine 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 assets at 30 June 2017 were $4,627,848 (2016: Net liabilities of $5,298,051) and are low as a consequence of the accounting
policy to expense all exploration and evaluation expenditure as incurred.

Cash balances at 30 June 2017 totalled $5,081,972 (2016: $4,572,609).

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 $6 million placement to new institutional and sophisticated investors on 31 July 2017.

Research and Development Tax Incentive receipts expected from lodging the 2017 Group income tax return.

The Group’s demonstrated track record in raising equity.

The previous funding support provided by existing shareholders and indication that they would continue to support the Group

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.

Vimy Resources Limited Annual Report 2017

DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Directors’ Report
for the Year ended 30 June 2017

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 and other projects as may be acquired.

MATTERS SUBSEQUENT TO THE END OF THE YEAR

Since 30 June 2017 the following significant subsequent events have occurred:

On 12 July 2017, the Company announced the results from a Mineral Resource update at its Mulga Rock Project. The new global
Mineral Resource has increased by 17% to 71.2Mt at 570ppm U3O8 for 90.1Mlbs U3O8 compared to the November 2016 estimate of
76.8Mlb U3O8.

On 31 July 2017, the Company announced the completion of a heavily oversubscribed placement from new institutional and
sophisticated investors which raised $6 million at $0.14 per share before costs. The funds raised were primarily to enable
completion of the DFS work programs for the Mulga Rock Project.

On 4 September 2017, the Company announced a major ore reserve update to 42.3Mlbs U3O8 from 22.7Mt at 845ppm U3O8,
a 36% increase in ore reserve metal since the last reserve update in November 2016, including a maiden proved ore reserve
of 12.3Mlbs from 5.3Mt at 1,055ppm U3O8.

On 6 September 2017, the Company announced that it had received all results from testing of the Uranium Ore Concentrate product
samples dispatched to the three international commercial converters, confirming the high quality product from the Mulga Rock Project.

MEETINGS OF DIRECTORS

The meetings of the Company’s Board of Directors held during the year ended 30 June 2017, and the number of meetings attended
by each director were:

Directors during the year ended 30 June 2017

C. Edwardes

M. Young

J. Tapp

D. Cornell

A. Haslam

M. James

Full meetings
of directors

Remuneration
Committee

Audit Committee

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

C. Edwardes

M. Young

J. Tapp

D. Cornell

A. Haslam

M. James (a)

Number of shares

Number of options

857,142

5,238,094

3,571,427

2,142,856

(a) Mr James is the nominated representative of Forrest Family Investments Pty Ltd, an investment entity within Andrew Forrest’s Minderoo Group

which currently holds 57,142,857 ordinary shares.

Vimy Resources Limited Annual Report 2017

DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Directors’ Report
for the Year ended 30 June 2017

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

Fair value per option
at grant date

Exercise price

Number of options

$0.31

$0.35

$0.098

$0.80

$1.54

$0.70

$0.35

1,428,572

8,714,281

8,714,283

2,857,142

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 2017.

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 2016 and 2017 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.

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.

Vimy Resources Limited Annual Report 2017

DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Directors’ Report
for the Year ended 30 June 2017

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 has regard to the following indices in respect
of the current financial year and the previous four financial years:

Item

Loss per share (cents)

Dividend (cents per share)

Net loss

Share price ($)

2017

(4.11)

2016

(5.24)

2015

(5.26)

2014 *

2013 *

(13.72)

(27.23)

(11,500,157)

(11,957,825)

(10,725,302)

(8,298,813)

(15,337,969)

0.18

0.34

0.26

0.35

0.21

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.

Vimy Resources Limited Annual Report 2017

DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Directors’ Report
for the Year ended 30 June 2017

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 2017 and 2016 are set out in the following tables.

Short-term benefits

Post-employment
benefits

Share-based
payments

Cash salary
and fees

Cash
bonus (a)

Superannuation

Value of options /
shares

Total

Directors

Non-executive

C. Edwardes
Chairman

D. Cornell

A. Haslam
from 1 April 2016

M. James (b)
from 1 April 2016

A. Hood (b)
Resigned 1 April 2016

Executive

M. Young
CEO and MD

J. Tapp

Total directors

2017
2016

90,000
90,000

40,000
40,000

43,800
10,950

-
32,850

425,000
425,000

325,000
325,000

967,600
934,750

-
-

179,775 (a)
-

103,100 (a)
-

282,875
-

8,550
8,550

3,800
3,800

-
-

25,000
25,000

62,350
62,350

67,513
146,212

166,063
244,762

-
-

43,800
43,800

43,800
10,950

-
32,850

302,953
233,391

107,768
233,391

478,234
612,994

932,728
683,391

560,868
583,391

1,791,059
1,610,094

(a) Cash bonus payments to M. Young and J. Tapp in 2017 relate to both the 2017 and 2016 years. No recognition of cash bonus payments were made
in 2016 for M. Young and J. Tapp as no legal or constructive obligation existed as at 30 June 2016 for the entitlement. During 2017 the service
agreements for M. Young and J. Tapp were amended to include a short term incentive entitlement, which has resulted in the recognition of both
2017 and 2016 cash bonus payments in the 2017 year.

(b) Payments for Mr James and Mr Hood 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.

Short-term benefits

Post-employment
benefits

Share-based
payments

Cash salary
and fees

Cash
bonus (a)

Superannuation

Value of options /
shares

Total

Key management personnel

T. Chamberlain
Chief Operating Officer

from 1 November 2015

2017
2016

380,000
278,933

R. Chamberlain
CFO and Company Secretary

2017
2016

300,000
125,150

from 5 February 2016

S. McBride
CFO and Company Secretary

2017
2016

-
304,370

58,900
49,400

45,000
15,000

-
-

Resigned 5 February 2016

Total key management
personnel

2017
2016

680,000
708,453

103,900
64,400

19,616
13,012

28,500
11,875

-
35,000

48,116
59,887

113,019
136,975

120,508
9,626

-
33,049

571,535
478,320

494,008
161,651

-
372,419

233,527
179,650

1,065,543
1,012,390

Vimy Resources Limited Annual Report 2017

DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Directors’ Report
for the Year ended 30 June 2017

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.

For the 2017 year cash bonus payments, M. Young received 78% of the maximum annual short-term incentive bonus (22%
forfeited), J. Tapp received 70% of the maximum annual short-term incentive bonus (30% forfeited), T. Chamberlain received 77.5%
of the maximum annual short-term incentive bonus (22.5% forfeited), and R. Chamberlain received 75% of the maximum annual
short-term incentive bonus (25% forfeited).

For the 2016 year cash bonus payments, M. Young received 63% of the maximum annual short-term incentive bonus (37%
forfeited), J. Tapp received 82% of the maximum annual short-term incentive bonus (18% forfeited), T. Chamberlain received 65%
of the maximum annual short-term incentive bonus (35% forfeited), and R. Chamberlain received 60% of the maximum annual
short-term incentive bonus (40% forfeited).

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

2017

2016

2017

2016

2017

2016

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

C. Service agreements

59%

100%

48%

63%

70%

67%

40%

100%

66%

60%

61%

85%

91%

19%

18%

10%

41%

60%

33%

19%

20%

24%

34%

40%

29%

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.

Short Term Incentive – Maximum annual award of 30% of base remuneration.

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.

Change of Control - If there is a change of control of the Company, and there is a material diminution of the executive’s duties
or decision-making authority which is not agreed with the executive, the executive will be entitled to twelve months base
remuneration plus the equivalent of the full year short term incentive bonus. This change of control entitlement is inclusive of
the applicable notice period.

•

Vimy Resources Limited Annual Report 2017

DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Directors’ Report
for the Year ended 30 June 2017

Mr J. Tapp, Executive Director

•

Base Remuneration - $350,000 inclusive of 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 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

•

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 T. Chamberlain’s employment at any time with four months’ written notice or
the payment of four months’ remuneration in lieu of notice. Mr T. Chamberlain must provide two months’ written notice to
terminate the agreement.

Mr R. Chamberlain, Chief Financial Officer and Company Secretary

•

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

Change of Control - If there is a change of control of the Company, and there is a material diminution of the executive’s duties
or decision making authority which is not agreed with the executive, the executive will be entitled to twelve months’ base
remuneration plus the equivalent of the full year short term incentive bonus. This change of control entitlement is inclusive of
the applicable notice period.

D. Share-based compensation

During the year the Company issued shares under the 2016 Vimy Employee Share Plan (‘2016 Plan’) to one key management
personnel.

On 22 November 2016, the Company issued 1,666,667 ordinary shares to Mr M. Young. 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 three
year service condition relating to satisfaction of key performance indicators for project approvals, finance, decision to mine,
production, health, safety and environment, governance and continuity.

Vimy Resources Limited Annual Report 2017

DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Directors’ Report
for the Year ended 30 June 2017

The exercise price of the equity instruments granted was $0.245 per share, the fair value of the equity instruments granted was
$0.24 per share, and the total amount to be recognised as share based payments over the three-year service condition period was
$323,978. The expiry date of the issued shares is 22 November 2021.

The terms of the 2016 Plan are detailed below under ‘Loans to Directors and Key Management Personnel’.

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 2017

Directors
C. Edwardes

M. Young

J. Tapp

D. Cornell

A. Haslam
M. James (a)

Key management personnel
T. Chamberlain

R. Chamberlain

857,142

3,571,427

1,666,667

7,999,996

1,666,667

1,142,857

500,000

1,642,857

857,142

5,238,094

3,571,427

9,666,663

1,142,857

500,000

1,642,857

(a) Mr James is the representative of Forrest Family Investments Pty Ltd (Peepingee Trust) which held 57,142,857 ordinary shares in the Company

during the year ended 30 June 2017.

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

30 June 2017

Directors

C. Edwardes

M. Young

J. Tapp

D. Cornell

A. Haslam
M. James (a)

2,142,856

4,285,712

Key management personnel

T. Chamberlain

R. Chamberlain

Vested and
exercisable at
30 June 2017

2,142,856

4,285,712

(a) Mr James is the representative of Forrest Family Investments Pty Ltd (Peepingee Trust) which held 57,142,857 ordinary shares in the Company

during the year ended 30 June 2017.

Vimy Resources Limited Annual Report 2017

DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Directors’ Report
for the Year ended 30 June 2017

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 2013 Vimy Employee Share Plan (‘2013 Plan’), pursuant to which employees (including directors) of
the Company can be invited to subscribe for shares using financial assistance provided by the Company.

During 2016, shareholders approved an employee share scheme for the Company. As a result the Company adopted the employee
share plan to be known as the 2016 Vimy Employee Share Plan (‘2016 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 Plans provide 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 Plans until the limited recourse loan provided for the subscription price for
those shares has been repaid in full (‘Limited Recourse Loan’).

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

22/11/2016

17/12/2014

857,142

1,666,667

714,285

14/6/2013

1,428,571

17/12/2014

714,285

14/6/2013

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

$407,500

$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 Plans are as follows:

(i)

(ii)

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

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 Plans (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 Report 2017

DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Directors’ Report
for the Year ended 30 June 2017

(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)

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 Plans 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 Plans 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 2017 was $nil (2016: $7,600).

Mining Consulting Services

7,600

Consolidated

2017
$

2016
$

End of audited remuneration report.

Vimy Resources Limited Annual Report 2017

DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Directors’ Report
for the Year ended 30 June 2017

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:

Consolidated

Year ended
30 June 2017
$

Year ended
30 June 2016
$

Assurance services

1. Audit services

Grant Thornton Audit Pty Ltd:

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

34,871

35,665

2. Non-audit services

Advisory fees

Total remuneration for assurance services

AUDITORS’ INDEMNITIES AND INSURANCE

34,871

35,665

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 has also 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.

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.

Vimy Resources Limited Annual Report 2017

DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Directors’ Report
for the Year ended 30 June 2017

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 21 September 2017

Vimy Resources Limited Annual Report 2017

AUDITOR’S INDEPENDENCE DECLARATION

Level 1
10 Kings Park Road
West Perth WA 6005

Correspondence to:
PO Box 570
West Perth WA 6872

T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au

Auditor’s Independence Declaration
To the Directors of Vimy Resources Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor

for the audit of Vimy Resources Limited for the year ended 30 June 2017, I declare that, to the best

of my knowledge and belief, there have been:

no contraventions of the auditor independence requirements of the Corporations Act 2001 in

relation to the audit; and

no contraventions of any applicable code of professional conduct in relation to the audit.

GRANT THORNTON AUDIT PTY LTD
Chartered Accountants

Patrick Warr

Partner - Audit & Assurance

Perth, 21 September 2017

Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation.

VIMY RESOURCES LIMITED – Annual Financial Report 2017 І Page 20

Vimy Resources Limited Annual Report 2017

STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Statement of Profit or Loss and Other Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2017
for the year ended 30 June 2017

Other Income

Consolidated

2017
$

2016
$

7,724,364

11,380,804

Note

Exploration and evaluation expenditure

(13,597,184)

(18,497,411)

Corporate and administration expense

Financing expense

(3,809,237)

(3,732,340)

(913,419)

(194,223)

Share based payments expense

(904,681)

(914,655)

Loss before income tax

Income tax expense

(11,500,157)

(11,957,825)

Loss attributable to members of the Company

(11,500,157)

(11,957,825)

Other comprehensive income, net of tax

Total comprehensive loss attributable to members of the Company

(11,500,157)

(11,957,825)

Loss per share from continuing operations attributable to the ordinary

equity holder of the Company:

Cents per share

Basic and diluted loss per share

(4.11)

(5.24)

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

Vimy Resources Limited Annual Report 2017

STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
Statement of Financial Position
as at 30 June 2017

Consolidated

Note

2017
$

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

Other financial liabilities

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

5,081,972

2,363,665

82,813

4,572,609

386,488

267,631

7,528,450

5,226,728

190,506

299,265

489,771

190,506

430,755

621,261

8,018,221

5,847,989

2,403,709

377,390

22,237

2,736,083

697,488

7,500,000

2,803,336

10,933,571

587,037

112,183

79,870

20,416

212,469

3,390,373

11,146,040

4,627,848

(5,298,051)

88,248,678

67,727,303

1,419,026

2,729,089

1,316,153

1,927,281

(87,768,945)

(76,268,788)

4,627,848

(5,298,051)

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

Vimy Resources Limited Annual Report 2017

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Statement of Changes in Equity
Statement of Changes in Equity
for the year ended 30 June 2017
for the year ended 30 June 2017

Balance at 30 June 2016
Balance at 30 June 2016

67,727,303
67,727,303

(76,268,788)
(76,268,788)

1,316,153
1,316,153

CONSOLIDATED
CONSOLIDATED

Balance at 1 July 2015
Balance at 1 July 2015
Loss attributable to members
of the Company
Loss attributable to members
of the Company
Share based payments
expense
Share based payments
expense

Balance at 1 July 2016
Balance at 1 July 2016
Issue of ordinary shares net of
issue costs
Issue of ordinary shares net of
issue costs
Loss attributable to members
of the Company
Loss attributable to members
of the Company
Share based payments
expense
Share based payments
expense

Contributed
equity
Contributed
$
equity
$

Accumulated
losses
Accumulated
$
losses
$

Option
reserve
Option
$
reserve
$

Share
reserve
Share
$
reserve
$

Total
$
Total
$

67,727,303
67,727,303

(64,310,963)
(64,310,963)

1,093,362
1,093,362

1,235,417
1,235,417

5,745,119
5,745,119

(11,957,825)
(11,957,825)

-
-

(11,957,825)
(11,957,825)

-
-

222,791
222,791

691,864
691,864

1,927,281
1,927,281

914,655
914,655

(5,298,051)
(5,298,051)

67,727,303
67,727,303

(76,268,788)
(76,268,788)

1,316,153
1,316,153

1,927,281
1,927,281

(5,298,051)
(5,298,051)

20,521,375
20,521,375

-
-

(11,500,157)
(11,500,157)

-
-

102,873
102,873

-
-

801,808
801,808

2,729,089
2,729,089

20,521,375
20,521,375

(11,500,157)
(11,500,157)

904,681
904,681

4,627,848
4,627,848

-
-

Balance at 30 June 2017
Balance at 30 June 2017

88,248,678
88,248,678

(87,768,945)
(87,768,945)

1,419,026
1,419,026

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

Vimy Resources Limited Annual Report 2017

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
Statement of Cash Flows
Statement of Cash Flows
For the year ended 30 June 2017
For the year ended 30 June 2017

Note
Note

2017
$
2017
$

Consolidated
Consolidated

2016
$
2016
$

24
24

Cash Flows from Operating Activities
Cash Flows from Operating Activities
Interest received
Interest received
Payments to other suppliers and employees
Payments to other suppliers and employees
R&D tax incentive grant income
R&D tax incentive grant income
Interest paid
Interest paid

Net cash used in Operating Activities
Net cash used in Operating Activities

Cash Flows from Investing Activities
Cash Flows from Investing Activities
Proceeds from sale of royalty
Proceeds from sale of royalty
Purchase of plant and equipment
Purchase of plant and equipment
Proceeds from sale of assets
Proceeds from sale of assets
Office security deposit
Office security deposit

Net cash from / (used in) Investing Activities
Net cash from / (used in) Investing Activities

Cash Flows from Financing Activities
Cash Flows from Financing Activities
Proceeds from issue of ordinary shares
Proceeds from issue of ordinary shares
Share issue costs
Share issue costs
Proceeds from drawdown of loan
Proceeds from drawdown of loan

Net cash provided by Financing Activities
Net cash provided by Financing Activities

Net (decrease) / increase in cash and cash equivalents held
Net (decrease) / increase in cash and cash equivalents held
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the beginning of the financial year

Cash and cash equivalents at the end of the financial year
Cash and cash equivalents at the end of the financial year

9
9

197,958
197,958
(17,107,671)
(17,107,671)
3,973,698
3,973,698
(34,965)
(34,965)

(12,970,980)
(12,970,980)

-
-
(81,536)
(81,536)
12,737
12,737
-
-

(68,799)
(68,799)

6,419,897
6,419,897
(370,755)
(370,755)
7,500,000
7,500,000

13,549,142
13,549,142

509,363
509,363
4,572,609
4,572,609

5,081,972
5,081,972

152,596
152,596
(20,178,549)
(20,178,549)
1,215,702
1,215,702
-
-

(18,810,251)
(18,810,251)

10,000,000
10,000,000
(372,391)
(372,391)
-
-
(190,506)
(190,506)

9,437,103
9,437,103

-
-
-
-
7,500,000
7,500,000

7,500,000
7,500,000

(1,873,148)
(1,873,148)
6,445,757
6,445,757

4,572,609
4,572,609

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

Vimy Resources Limited Annual Report 2017

NOTE TO THE FINANCIAL STATEMENTS
AS AT 30 JUNE 2017

TABLE OF CONTENTS

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

10.

Trade and other receivables

11. Prepayment

12.

Plant and equipment

13.

Trade and other payables

14. Provisions

15.

Loans and borrowings

16.

Other financial liabilities

17.

Contributed equity

18.

Employee share and option reserves

19.

Share based payments

20.

Accumulated losses

21.

Expenditure commitments

22.

Controlled entities

23.

Remuneration of auditors

24.

Cash flow information

25.

Contingent liabilities and assets

26.

Parent entity information

27.

Events occurring after reporting date

28.

Summary of significant accounting policies

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

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 2017 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 Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

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

Gain on share issue

R&D Tax Incentive Grant income

Interest received

Loss from continuing operations

Total assets

Segment assets

Reconciliation to Group Total Assets

Segment assets

Corporate and administration assets

Total assets

Exploration

2017
$

2016
$

(13,584,457)

(8,497,411)

(13,584,457)

(3,809,237)

(904,681)

(913,419)

1,365,153

6,150,723

195,761

(8,497,411)

(3,732,340)

(914,655)

(194,223)

1,215,702

165,102

(11,500,157)

(11,957,825)

357,411

630,395

357,411

7,660,810

8,018,221

630,395

5,217,594

5,847,989

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 Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

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 – current

Trade and other payables – non-current

Other financial liabilities – current

Other financial liabilities – non-current

(a) Market risk

Cash flow and fair value interest rate risk

Consolidated

2017
$

2016
$

5,081,972

21,904

190,506

5,294,382

2,282,159

22,237

4,572,609

32,204

190,506

4,795,319

2,604,953

7,500,000

112,183

20,416

2,304,396

10,237,552

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 2017 and 2016, 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

2017

2016

Weighted
average
interest rate

Balance
$

4,500,000

581,972

Balance
$

3,750,000

822,609

Net exposure to cash flow interest rate risk

1.96%

5,081,972

2.53%

4,572,609

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 2017
and 2016 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 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 2017 were received within two months.

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

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 2017, the Group’s financial liabilities have contractual maturities (including interest payments where applicable)
as summarised below:

30 June 2017

Trade and other payables

Other financial liabilities

Total

Current

Non-current

Within Six Months
$

Six - Twelve
Months
$

One - Five Years
$

Later than Five
Years
$

1,559,222

1,044,841

22,237

1,559,222

1,067,078

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

30 June 2016

Trade and other payables

2,688,288

166,667

913,109

Loans and borrowings

Other financial liabilities

7,500,000

20,416

Total

2,688,288

7,666,667

933,525

(d) Capital management

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 Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

(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 2017 and 30 June 2016:

30 June 2017

Financial liabilities

Other financial liabilities

Total financial liabilities

Net fair value

30 June 2016

Financial liabilities

Other financial liabilities

Total financial liabilities

Net fair value

Level 1
$

Level 2
$

Level 3
$

Total
$

(22,237)

Level 1
$

Level 2
$

Level 3
$

Total
$

(20,416)

There were no transfers between Level 1 and Level 2 in 2017 or 2016.

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.

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 2017 and 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

2017
Embedded Derivative
Bridge Finance facility

2016
Embedded Derivative
Bridge Finance facility

101%

1.75%

0.75

101%

1.57%

1.75

30 June 2017

$0.0342

30 June 2016

$0.182

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

EARNINGS PER SHARE

Consolidated

2017

2016

Basic and diluted loss per share (cents per share)

(4.11) cents

(5.24) cents

Loss after tax used in the calculation of basic and diluted EPS

$(11,500,157)

$(11,957,825)

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

#279,447,019

#229,761,367

There are 21,714,274 (2016: 21,849,988) 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

In addition to the Directors the following persons had authority and responsibility for planning, directing and controlling the
activities of the Group, directly or indirectly, during the year:

Name

T. Chamberlain

R. Chamberlain

Position

Chief Operating Officer

Employer

Vimy Resources Limited

Chief Financial Officer and Company Secretary

Vimy Resources Limited

(b) Key management personnel compensation

Short-term employee benefits

Post-employment benefits

Share-based payments

Consolidated

2017
$

2016
$

2,034,375

1,707,603

110,466

711,761

122,237

792,644

2,856,602

2,622,484

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 2013 Vimy Employee Share Plan (‘2013 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.

During 2016, 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 2016 Vimy Employee Share Plan (‘2016 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 Plans provide 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 Plans 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 Plans 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.

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

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

22/11/2016

17/12/2014

14/6/2013

17/12/2014

14/6/2013

Key management personnel (or associate)

S. McBride resigned February 2016

T. Chamberlain

R. Chamberlain

Share based payment

5/9/2014

20/11/2015

3/6/2016

857,142

1,666,667

714,285

1,428,571

714,285

1,428,571

457,142

142,857

1,000,000

500,000

$357,500

$407,500

$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.

Loan terms

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

(i)

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

(ii)

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 Plans (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;

(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.

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

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.

(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 $nil unpaid at 30 June 2017 (2016: $2,000).

Mining consulting services

7,600

Consolidated

2017
$

2016
$

6. OTHER INCOME
Interest received
R&D tax incentive grant income (a)
Sale of royalty (b)
Gain on share issue (c)

Other income

195,761

6,150,723

1,346,153

31,727

165,102

1,215,702

10,000,000

7,724,364

11,380,804

(a) The research and development tax incentive grant income for the 2017 financial year relates to both the 2017 and 2016

income tax years, and for the 2016 financial year the grant income related 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 is to expense exploration and
evaluation expenditure as incurred.

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

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

Defined contribution superannuation expense

Share based payments expense (refer Note 19)

Other employee benefits

Fair value movement on embedded derivative (refer Note 16)

Consolidated

2017
$

222,927

334,279

34,871

592,077

2016
$

184,589

287,576

35,665

507,830

4,428,272

4,080,190

288,608

904,681

31,231

296,171

914,655

45,724

5,652,792

5,336,740

1,821

20,416

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
(2016: 30 percent)

Non-deductible expenses and non-assessable income

Equity based remuneration

Research and development grant incentive income

Research and development expenditure

Mining royalty payment

Commercial debt forgiveness

Reduction of tax losses

Capital raising costs taken to equity

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

Under recognition in prior year of deferred tax assets not brought to
account as future income tax benefits

Consolidated

2017
$

2016
$

(11,500,157)

(11,957,825)

(11,500,157)

(11,957,825)

(3,450,047)

(3,587,347)

4,964

271,404

(1,845,217)

1,501,397

(409,546)

409,546

(103,199)

3,373

274,189

(364,711)

(15,833)

969,878

2,896,438

2,650,820

793,891

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

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

Net tax assets

Unrecognised tax assets

Consolidated

2017
$

27,327

(5,817)

1,739,650

137,077

177,647

128,880

224,412

159,129

19,018,840

21,607,145

2016
$

(6,802)

(1,476)

(4,526)

1,739,650

105,334

158,328

36,888

74,169

135,438

18,400,268

20,637,271

(21,607,145)

(20,637,271)

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

2017
$

581,972

4,500,000

5,081,972

2016
$

822,609

3,750,000

4,572,609

(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 weighted average rate applicable to the Group’s

balance at 30 June 2017 was 1.96% (2016: 2.53%).

(c)

Included within cash and equivalents disclosed above at 30 June 2017 is $1.0 million in restricted cash
(2016: $1.0 million) 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 Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

10. TRADE AND OTHER RECEIVABLES

Current

Other receivables

R&D Tax Incentive Grant receivable

Goods and services tax receivable

Non-Current

Security deposit (a)

Consolidated

2017
$

2016
$

21,904

2,177,025

164,736

2,363,665

190,506

32,204

354,284

386,488

190,506

(a) The security deposit for $190,506 (2016: $190,506) 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

2017
$

78,995

3,818

82,813

2016
$

245,000

22,631

267,631

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

12. PLANT AND EQUIPMENT

Consolidated

2017
$

2016
$

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

13. TRADE AND OTHER PAYABLES

Current

Trade payables and accruals
Interest payable (i)

Non-Current
Interest payable (i)

332,714

(300,335)

32,379

1,424,387

(1,157,501)

266,886

299,265

45,359

16,156

(29,136)

32,379

385,396

75,280

(193,790)

266,886

299,265

1,677,905

725,804

2,403,709

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

2,654,043

82,040

2,736,083

112,183

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

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

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.

Employee entitlement: Long Service Leave

Opening balance

Employee entitlements provided for

Reclassification from non-current

Closing balance

Rehabilitation

Opening balance

Rehabilitation provided for

Reclassification to non-current

Closing balance

The Group recognised a liability for rehabilitation during 2016 relating to
completion of geotechnical test pits designed to provide information inputs
into the Definitive Feasibility Study for the Mulga Rock Project. During 2017
the Company received approval for a two year extension to complete the
rehabilitation work on the geotechnical test pits from 31 March 2017 to
31 March 2019.

Total current provision

NON-CURRENT

Employee entitlement: Long Service Leave
Opening balance

Employee entitlements provided for / foregone

Reclassification to current

Closing balance

Rehabilitation
Opening balance

Reclassification from current

Rehabilitation provided for

Closing balance
The Group recognised a liability for rehabilitation during 2016 relating to
completion of geotechnical test pits designed to provide information inputs
into the Definitive Feasibility Study for the Mulga Rock Project. During 2017
the Company received approval for a two year extension to complete the
rehabilitation work on the geotechnical test pits from 31 March 2017 to
31 March 2019.

Consolidated

2017
$

2016
$

246,028

250,907

(194,303)

302,632

37,697

37,061

74,758

451,460

(451,460)

151,447

248,357

(153,776)

246,028

451,460

377,390

697,488

79,870

13,799

(37,061)

56,608

451,460

78,969

530,429

99,913

(20,043)

79,870

Total non-current provision

587,037

79,870

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

15. LOANS AND BORROWINGS

RCF VI Bridge Facility Agreement

Total Loans and Borrowings

RCF VI Bridge Facility Agreement:

Consolidated

2017
$

2016
$

7,500,000

The RCF VI Bridge Facility was 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 had drawdown $7.5 million of the facility as at 30 June 2016. The Company completed drawdown of the
remaining facility of $7.5 million on 15 August 2016. On 23 November 2016, the Company issued 19,230,769 fully paid
ordinary shares for an agreed value of $0.26/share to repay $5 million of the facility. On 24 January 2017, the Company
announced shareholders had approved the conversion of the remaining $10 million of the facility into 38,461,539 fully paid
ordinary shares for an agreed value of $0.26/share to repay the facility before its maturity on 31 March 2017.

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 2017,
the fair value of this embedded derivative was $22,237 (2016: $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

Consolidated

Current

Embedded derivatives (i)

Total

Non-Current

Embedded derivatives (i)

Total

2017
$

22,237

2016
$

20,416

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

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

17. CONTRIBUTED EQUITY

316,885,800 (2016: 229,761,367) fully paid ordinary shares

Ordinary shares

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

Balance at 30 June 2016

At 1 July 2016

5 July 2016 Share placement @ 30 cents per share(iv)

29 August 2016 Share placement @ 31 cents per share(iii)

31 August 2016 Share buy back

Consolidated

Number

227,732,795

67,727,303

1,000,000

(271,428)

1,300,000

229,761,367

67,727,303

229,761,367

67,727,303

213,937

281,776

(100,000)

64,181

87,350

30 September 2016 Share placement @ 26 cents per share

24,093,844

6,264,400

3 October 2016 Share placement @ 24.50 cents per share(iii)

4 October 2016 Share placement @ 25 cents per share(iv)

1 November 2016 Share placement @ 24 cents per share(iii)

4 November 2016 Share purchase plan @ 26 cents per share

22 November 2016 Employee share plan grant

23 November 2016 Debt conversion share issue @ 24 cents/share (i)

1 December 2016 Share placement @ 26 cents per share(iii)

3 January 2017 Share placement @ 24 cents per share(iv)

284,315

417,253

383,398

398,066

1,666,667

19,230,769

955,464

532,072

69,657

104,313

92,015

103,497

4,615,385

248,421

127,697

24 January 2017 Debt conversion share issue @ 23.50 cents/share (ii)

38,461,539

9,038,462

30 January 2017 Share placement @ 23.50 cents per share(iv)

2 February 2017 Share placement @ 26 cents per share

Share issue costs

Balance at 30 June 2017

105,333

200,000

24,753

52,000

(370,756)

316,885,800

88,248,678

(i)

(ii)

In accordance with a Subscription Agreement with RCF VI, the Company issued 19,230,769 shares for an agreed value
of $0.26 per share to repay $5 million of the RCF VI Bridge Facility on 23 November 2016. As the Company share price
on this day was $0.24 per share, the shares issued have been valued using the lower number, and as a consequence a
gain on share issue of $384,615 has been recognised in other income (refer to Note 6).

In accordance with a Subscription Agreement with RCF VI, the Company issued 38,461,539 shares for an agreed value of
$0.26 per share to repay $10 million of the RCF VI Bridge Facility on 24 January 2017 after obtaining shareholder approval.
As the Company share price on this day was $0.235 per share, the shares issued have been valued using the lower
number, and as a consequence a gain on share issue of $961,538 has been recognised in other income (refer to Note 6).

(iii) Exploration and evaluation expenses settled in shares.

(iv) Financing expenses settled in shares.

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 Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

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

2017
$

2016
$

1,419,026

1,316,153

102,873

1,419,026

1,093,362

222,791

1,316,153

(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
2,285,712 shares issued and vested (a)
13,500,000 shares issued and vested (b)
1,000,000 shares issued and vesting (c)
1,300,000 shares issued and vesting (d)
1,666,667 shares issues and vesting (e)

Consolidated

2017
$

2016
$

2,729,089

1,927,281

180,284

113,019

313,319

195,186

1,235,417

390,434

139,427

136,975

25,028

Balance as at end of the financial year

2,729,089

1,927,281

(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.

(e) On 22 November 2016, a total of 1,666,667 shares were issued to Mr M. Young after shareholder approval was received and have been funded
by a non-interest bearing, limited recourse loan from the Company. The shares are subject to a variety of vesting conditions over a three year
period, and expire on 22 November 2021. The Black Scholes valuation expense will be proportionally allocated over the vesting period.

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.

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

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
Forfeited
during
year

Number
Balance
at end
of year

Number
Exercisable
at end
of year

Various

4,421,429

(135,717)

4,285,712

Weighted average exercise price

Weighted average remaining contractual life

(b) Employee share plans

$0.50

1.46 years

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 2013 Vimy Employee Share Plan.

On 18 November 2016, 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 2016 Vimy Employee Share Plan.

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

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

Number
Balance at start
of year

Number
Issued during
year

Number
Forfeited during
year

Number
Balance at end
of year

Issue date

14 June 2013

5 September 2014

2,857,142

1,657,138

17 December 2014

2,285,712

20 November 2015

1,000,000

3 June 2016

1,300,000

(100,000)

2,857,142

1,557,138

2,285,712

1,000,000

1,300,000

1,666,667

22 November 2016

1,666,667

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:

Share price at the date of grant:

Exercise price:

Expected volatility:

Latest loan repayment date:

Risk free interest rate (based on government bonds):

Fair value of the equity instruments granted:

20 November 2015

$0.31

$0.341

115%

5 years

2.85%

$0.25

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

$249,994

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

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:

Share price at the date of grant:

Exercise price:

Expected volatility:

Latest loan repayment date:

Risk free interest rate (based on government bonds):

Fair value of the equity instruments granted:

3 June 2016

$0.32

$0.317

115%

5 years

2.22%

$0.26

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

$338,348

On 22 November 2016, the Company issued 1,666,667 shares to Mr M. Young under its employee share plan. The input
variables used in the Black Scholes option pricing model are as follows:

Issue date:

Share price at the date of grant:

Exercise price:

Expected volatility:

Latest loan repayment date:

Risk free interest rate (based on government bonds):

Fair value of the equity instruments granted:

22 November 2016

$0.24

$0.245

115%

5 years

2.11%

$0.24

Total amount to be recognised as share based payments over the three
year escrow period

$323,978

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

2017
$

2016
$

Share based payments expense

904,681

914,655

20. ACCUMULATED LOSSES

Accumulated losses at the beginning of the financial year

(76,268,788)

(64,310,963)

Net loss attributable to members of the Company

(11,500,157)

(11,957,825)

Accumulated losses at the end of the financial year

(87,768,945)

(76,268,788)

Consolidated

2017
$

2016
$

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

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

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, refer to Note 10.

(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

Consolidated

2017
$

2016
$

248,757

83,732

332,489

241,512

332,489

574,001

1,723,700

6,840,800

8,564,500

1,984,017

5,214,000

7,198,017

22. CONTROLLED ENTITIES

Country of
incorporation

Percentage owned

2017

2016

Parent entity:

Vimy Resources Limited

Subsidiaries of Vimy Resources Limited:

Narnoo Mining Pty Ltd

Vélo Resources Pty Ltd (previously Camuco Pty Ltd)

Gunbarrel Energy and Minerals Australia Pty Ltd

Australia

100%

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

23. REMUNERATION OF AUDITORS

Consolidated

2017
$

2016
$

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

34,871

35,665

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

Gain on issue of shares

Exploration and evaluation expenses settled in shares

Financing expenses settled in shares

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

34,871

35,665

Consolidated

2017
$

2016
$

(11,500,157)

(11,957,825)

222,927

904,681

1,891

(1,346,154)

474,735

320,945

184,589

914,655

20,416

(10,000,000)

(10,921,132)

(20,838,165)

(1,977,177)

184,817

(444,557)

187,069

(182,694)

(191,963)

1,876,573

525,998

Net cash outflow from operating activities

(12,970,980)

(18,810,251)

(b) Non-cash financing and investing activities

Conversion of debt into equity

15,000,000

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

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.

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

2017
$

2016
$

7,313,288

7,536,173

1,752,737

1,831,582

5,226,728

5,847,989

10,004,486

10,216,956

5,704,591

(4,368,967)

88,248,678

(86,692,202)

2,729,088

1,419,026

67,727,303

(75,339,704)

1,927,281

1,316,153

5,704,591

(4,368,967)

(11,352,499)

(11,426,530)

Total comprehensive loss of the parent entity

(11,352,499)

(11,426,530)

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

2017
$

2016
$

248,757

83,732

332,489

241,512

332,489

574,001

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

27. EVENTS OCCURRING AFTER REPORTING DATE

Since 30 June 2017 the following significant subsequent events have occurred:

On 12 July 2017, the Company announced the results from a Mineral Resource update at its Mulga Rock Project.
The new global Mineral Resource has increased by 17% to 71.2Mt at 570ppm U3O8 for 90.1Mlbs U3O8 compared to the
November 2016 estimate of 76.8Mlb U3O8.

On 6 September 2017, the Company announced that it had received all results from testing of the Uranium Ore Concentrate
product samples dispatched to the three international commercial converters, confirming the high quality product from the Mulga
Rock Project.

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.

(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.

New and amended standards adopted by the Group

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning
1 July 2016:

•

AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting
Standards 2012-2014 Cycle. AASB 2015-1 introduced annual improvements that resulted in changes to various
standards.

AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101.
AASB 2015-2 clarifies existing presentation and disclosure requirements.

The adoption of the above new standards and amendments to standards had no impact on the amounts recognised and
disclosures in Vimy’s financial statements.

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017
Notes to the Financial Statements
30 June 2017

New standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2017 reporting
periods. These standards and interpretations have not been early adopted. The Group’s assessment of the impact of these
new standards and interpretations is set out below.

•

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. As Vimy is a project development company focussed on exploration and evaluation and
has no complex financial assets or financial liabilities, Vimy has determined that AASB 9 will have no material impact on
the way the Group accounts for or discloses 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. As Vimy is a project development company focussed on exploration and evaluation, 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. Vimy expects
that AASB 16 will result in an increase in assets and liabilities as fewer leases will be expensed as payments are made.
It is also expected that depreciation expense will increase as well as cash flow from operating activities as these lease
payments will be recorded as financing outflows in the cash flow statement. As the main lease Vimy has relates to rental
of a small amount of office space for a period of three years, it is not expected that AASB 16 will have a material impact
on the Group’s financial statements.

(b) Going Concern

The Group incurred a net loss of $11,500,157 during the year ended 30 June 2017. The Group’s net cash used in operating
activities was $12,970,980 for the year ended 30 June 2017.

At 30 June 2017, a low value of net assets is reflected in the Statement of Financial Position of $4,627,848, as a consequence
of the Group’s accounting policy to expense exploration and evaluation expenditure as incurred. Current assets exceed
current liabilities by $4,725,114.

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. 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 $6 million placement to new institutions and
sophisticated investors on 31 July 2017, R&D Tax Incentive receipts expected from lodging the 2017 Group income tax return,
the Group’s demonstrated track record in raising equity, and the previous funding support provided by existing shareholders
and indication that they would continue to support the Group.

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 and indebtedness.

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 2017.
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.

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017

Notes to the Financial Statements
30 June 2017

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) 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.

(e) 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.

Sale of Royalty

The sale of a royalty right 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 recognised 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.

(f)

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 and
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 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.

(g) Leases

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

(h)

Impairment of 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 Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017

Notes to the Financial Statements
30 June 2017

(i) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and deposits held at call with financial institutions, 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.

(j)

Trade and other receivables

Trade receivables are recognised and carried at original invoice amount less a provision for impairment.

(k) 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.

(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.

(l) 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.

(m) 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.

(n) 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.

Vimy Resources Limited Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2017

Notes to the Financial Statements
30 June 2017

(o) 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 not recognised for future operating losses.

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.

(p) 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. 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.

(q) 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 Employee Share Plans, 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 both the 2013 and 2016 Vimy Employee Share Plans.

(r) 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.

(s) Exploration, evaluation and development expenditure

Exploration and evaluation expenditure is expensed in the year it is incurred.

Exploration and evaluation expenditure is allocated separately to specific areas of interest. Each area of interest is limited to a
size related to a known or probable mineral resource capable of supporting a mining operation. Such expenditure comprises
direct exploration and evaluation costs incurred, together with an appropriate portion of directly related overhead expenditure.

When a decision to proceed to development is made for an area of interest, all costs subsequently incurred to develop a mine
prior to the start of mining operations are capitalised and carried at cost. These costs include expenditure incurred to develop
new ore bodies within the area of interest, to define further mineralisation in the area of interest, to expand the capacity of a
mine and to maintain production.

Vimy Resources Limited Annual Report 2017

DIRECTORS’ DECLARATION
30 JUNE 2017
Directors’ Declaration
30 June 2017

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 the consolidated entity’s financial position as at 30 June 2017 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 21 September 2017

Vimy Resources Limited Annual Report 2017

INDEPENDENT AUDITOR’S REPORT

Level 1
10 Kings Park Road
West Perth WA 6005

Correspondence to:
PO Box 570
West Perth WA 6872

T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au

Independent Auditor’s Report
to the Members of Vimy Resources Limited

Report on the audit of the financial report

Opinion
We have audited the financial report of Vimy Resources Limited (the Company) and its
subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30
June 2017, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year
then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:

a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its

performance for the year ended on that date; and

b Complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

Liability limited by a scheme approved under Professional Standards Legislation.

VIMY RESOURCES LIMITED – Annual Financial Report 2017 І Page 57

Vimy Resources Limited Annual Report 2017

INDEPENDENT AUDITOR’S REPORT

Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.

Key audit matter

How our audit addressed the key audit matter

Recognition of R&D tax incentive (Note 4)

Under the research and development (R&D) tax
incentive scheme, the Company receives a 43.5%
refundable tax offset (2016: 45%) of eligible
expenditure if its turnover is less than $20 million per
annum, provided it is not controlled by income tax
exempt entities. An R&D plan is filed with
AusIndustry in the following financial year and, based
on this filing, the Group receives the incentive in
cash. Management performed a detailed review of
the Group’s total R&D expenditure to estimate the
refundable tax offset receivable under the R&D tax
incentive legislation.

This area is a key audit matter due to the size of the
accrual and because there is a degree of judgement
and interpretation of the R&D tax legislation required
by management to assess the eligibility of the R&D
expenditure under the scheme.

Our procedures included, amongst others:
• comparing the nature of the R&D expenditure

included in the current year estimate to the prior
year claim;

• utilising an internal R&D tax specialist to review
the expenditure methodology employed by
management for consistency with the R&D tax
offset rules;

• considering the nature of the expenditure against
the eligibility criteria of the R&D tax incentive
scheme to form a view about whether the
expenses included in the estimate were likely to
meet the eligibility criteria;

• comparing the eligible expenditure used in the

•

receivable calculation to the expenditure recorded
in the general ledger;
inspecting copies of relevant correspondence with
AusIndustry and the ATO related to historic claims;
and

• assessing the adequacy of the Group’s related

disclosures within the financial report.

Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors’ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.

In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to liquidate the Group or
to cease operations, or have no realistic alternative but to do so.

VIMY RESOURCES LIMITED – Annual Financial Report 2017 І Page 58

Vimy Resources Limited Annual Report 2017

INDEPENDENT AUDITOR’S REPORT

Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.

Report on the Remuneration Report

Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 27-34 of the directors’ report for the
year ended 30 June 2017.

In our opinion, the Remuneration Report of Vimy Resources Limited, for the year ended 30 June
2017, complies with section 300A of the Corporations Act 2001.

Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.

GRANT THORNTON AUDIT PTY LTD

Chartered Accountants

P W Warr

Partner - Audit & Assurance

Perth, 21 September 2017

VIMY RESOURCES LIMITED – Annual Financial Report 2017 І Page 59

Vimy Resources Limited Annual Report 2017ADDITIONAL INFORMATION
AS AT 30 SEPTEMBER 2017

Additional Information as at 30 September 2017

Capital structure

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

Ordinary shares

359,885,800

Distribution of listed ordinary fully paid shares

Unlisted options

21,714,276

Size of holding

1,001

5,001

10,001

100,001

1,000

5,000

10,000

100,000

and over

Number of shareholders

Number of ordinary shares

441

517

170

559

176

1,863

166,274

1,347,318

1,317,640

25,240,470

331,814,098

359,885,800

The number of shareholders holding less than a marketable parcel of ordinary shares was 935.

Twenty largest shareholders of listed ordinary shares

Name

Ordinary shares held

% of total

Merrill Lynch (Australia) Nominees Pty Limited

Forrest Family Investments Pty Ltd

Macquarie Bank Limited

BNP Paribas Nominees Pty Ltd

Sumico (WA) Pty Ltd

FF Okram Pty Ltd

Mr Michael E. Fewster and Mrs Suzanne T. Fewster

Eaglefield Holdings Pty Ltd

JH Nominees Australia Pty Ltd

Citicorp Nominees Pty Limited

Mr Julian R. P. Tapp

Mr Michael C. Young and Mrs Jocelyn T. Young

HSBC Custody Nominees (Australia) Limited

Mr Michael C. Young and Mrs Jocelyn T. Young

Greensilk Nominee Pty Ltd

Mr Michael C. Young and Mrs Jocelyn T. Young

DHJPM Pty Limited

GR Engineering Services Limited

Dr Anthony C. Chamberlain

Rigi Investments Pty Limited

92,909,256

57,142,857

43,156,026

32,608,553

27,284,508

7,692,307

5,138,571

3,745,714

3,500,000

3,332,532

2,142,856

2,137,601

1,666,667

1,428,571

1,315,000

1,239,779

1,000,000

892,857

25.82%

15.88%

11.99%

9.06%

7.58%

2.14%

1.43%

1.04%

0.97%

0.93%

0.60%

0.59%

0.46%

0.40%

0.37%

0.34%

0.28%

0.25%

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.

291,905,082

81.11%

Vimy Resources Limited Annual Report 2017

ADDITIONAL INFORMATION
AS AT 30 SEPTEMBER 2017
Additional Information as at 30 September 2017

Distribution of all unlisted employee option plan holders:

Size of holding

100,001

and over

Number of option holders

Number of options

4,285,712

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.

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

Name

Ordinary shares held

% of total

Resource Capital Fund VI LP

Forrest Family Investments Pty Ltd

Macquarie Bank Limited

Michael Edward Fewster

Acorn Capital Limited

On-market buy back

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

92,512,184

57,142,857

43,159,068

36,168,793

35,941,085

25.71%

15.88%

11.99%

10.05%

9.99%

Vimy Resources Limited Annual Report 2017

ADDITIONAL INFORMATION
AS AT 30 SEPTEMBER 2017
Additional Information as at 30 September 2017

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, 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:

Website:

info@vimyresources.com.au

www.vimyresources.com.au

Shareholder enquiries

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

Computershare Investor Services Pty Limited

Level 11, 172 St Georges Terrace

Perth WA 6000

Australia

Telephone:

1300 850 505 (within Australia)

+61 3 9415 4000 (outside Australia)

Facsimile:

+61 3 9473 2500

Email:

Website:

www.investorcentre.com/contact

www.computershare.com

Vimy Resources Limited Annual Report 2017

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 6 October 2017.

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 2017 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 Chairman of the Board.

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.

Vimy Resources Limited Annual Report 2017

CORPORATE GOVERNANCE STATEMENT
Corporate Governance Statement

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.

Recommendation 1.4:

The company secretary of a listed entity should be accountable directly to the board, through the chairman, 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 Chairman 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.

Vimy Resources Limited Annual Report 2017

CORPORATE GOVERNANCE STATEMENT
Corporate Governance Statement

Explanation for departure:

The Company has not established a formal diversity policy at this point in time due to the relatively small size of the Company and
the limited scope of work activities. 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 2017, the Board was comprised of six members with one woman; being the Chairman, The Hon. Cheryl Edwardes AM.
The Company had twenty employees at 30 June 2017, with nine women which represented 45% of the total employees. There are
no women in senior executive roles, which have been defined as the Executive Directors and key management personnel of the
Company, as disclosed in the Remuneration Report which forms part of the Directors’ Report.

On 6 October 2017 Dr Vanessa Guthrie was appointed to the Board as a Non-Executive Director, and as the nominated
representative of Resource Capital Funds VI L.P., the Company’s largest shareholder. As a consequence of this appointment, the
Board now has seven members with two of those being women.

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 Chairman of the Board.

During the Reporting Period, a formal evaluation of the Board did not take place. The composition of the Board was last reviewed
at the time of appointing Mr Andrew Haslam as 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 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 Annual Report 2017

CORPORATE 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,

o
o
and disclose:

o
o
o

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 assumes the role of the 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.

Notification of departure:

The Board has not completed and disclosed a board skills matrix.

Disclosure:

A profile of each director containing their skills, experience, expertise and term of office is set out in the Directors' Report.
The Company will prepare a board skills matrix in the coming financial year to more formally disclose the mix of skills and diversity
of the current Board.

Vimy Resources Limited Annual Report 2017

CORPORATE 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.

For the reporting period 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.

On 6 October 2017 Dr Vanessa Guthrie was appointed to the Board as a Non-Executive Director, and as the nominated representative
of Resource Capital Funds VI L.P. As a consequence of this nominated representation, Dr Vanessa Guthrie is not considered to be an
independent director of the Company and the Board now consists of seven members, with three independent directors.

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, with only three on a Board consisting of six members. On 6 October
2017 the Board consisted of seven members, with three independent directors.

Explanation for departure:

The Board considers that the composition of the Board is 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.

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 rights, duties and responsibilities of directors;

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

the roles and responsibilities of the senior executives; and

the role of Board Committees;

Vimy Resources Limited Annual Report 2017

CORPORATE GOVERNANCE STATEMENT
Corporate Governance Statement

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 senior executives; and

visits to the Company’s projects.

The Company actively encourages directors to participate in continuing professional education opportunities to update and enhance
their relevant skills and knowledge.

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.

Principle 4 – Safeguard integrity in financial reporting

Recommendation 4.1:

The board of a listed entity should:

(a)

have an audit committee which:
o

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 chairman of the board,

o
and disclose:
o
o
o

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 reporting period, Mr David Cornell was the independent chairman of the Audit Committee.

During the reporting period 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 made available 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.

On 6 October 2017 Dr Vanessa Guthrie was appointed as a member of the Audit Committee, as a consequence the Committee now
has five members with three members considered to be independent, which represents a majority of the committee.

Vimy Resources Limited Annual Report 2017

CORPORATE GOVERNANCE STATEMENT
Corporate Governance Statement

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 this opinion has been formed on the basis of a sound system of risk management and internal
control which is operating effectively.

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 2017 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 2017 comply with the accounting standards; and

the financial statements and notes for the financial year ended 30 June 2017 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 2017 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 Annual Report 2017

CORPORATE 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 executives.

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.

The Company share register is managed and maintained by Computershare Investor Services Pty Limited. 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 Computershare Investor Services investor centre
www.computershare.com or by emailing www.investorcentre.com/contact.

Vimy Resources Limited Annual Report 2017

CORPORATE GOVERNANCE STATEMENT
Corporate Governance Statement

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:

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

(a)

is chaired by an independent director,

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

the members of the committee; and

the charter of the committee;

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 did not establish a Risk Committee during the year ended 30 June 2017. On 6 October 2017 the Board resolved to
establish a Risk Committee.

Explanation for departure:

During the year ended 30 June 2017 the full Board assumed the role of the Risk Committee.

A separate Risk Committee was not formed due to the relatively small size and structure of the Board. The Board considered at the
time that no efficiencies or other benefits would be gained by establishing a separate 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 within established authority limits, or 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;

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.

Vimy Resources Limited Annual Report 2017

CORPORATE GOVERNANCE STATEMENT
Corporate Governance Statement

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 the 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

Notification of departure:

The Company has not established an internal audit function.

Explanation for departure:

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.

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:

•
•
•
•
•
•

global uranium market, including commodity price and sales contracts

the ability to raise additional funding, both equity and debt finance

anti-nuclear energy industry activism

world economy, along with foreign exchange and interest rate markets

inherent risks associated with project construction, commissioning and ongoing production

recruiting and retaining qualified personnel

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.

Vimy Resources Limited Annual Report 2017

CORPORATE GOVERNANCE STATEMENT
Corporate Governance Statement

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:

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

(a)

is chaired by an independent director,

have a remuneration committee which:
o
o
and disclose:
o
o
o

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.

Disclosure:

The Company has a Remuneration Committee.

For the reporting period Mr Andrew Haslam was the independent chairman of the Remuneration Committee.

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

The Remuneration Committee Charter is made available 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.

On 6 October 2017 Dr Vanessa Guthrie was appointed as a member of the Remuneration Committee; as a consequence the
Committee now has five members with three members considered to be independent, which represents a majority of the committee.

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. Short term
performance incentives in the form on an annual bonus are dependent upon the Company’s performance in safety, Company share
price performance compared to a peer group, and specific individual project achievements. Long term performance incentives may
include securities granted at the discretion of the Board and subject to obtaining the relevant approvals. Senior executives are
offered a competitive level of base pay at market rates which 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.

Vimy Resources Limited Annual Report 2017

CORPORATE GOVERNANCE STATEMENT
Corporate Governance Statement

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 first obtain clearance prior to undertaking any share
trading.

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

PHOTOGRAPHS COURTESY OF:
Penelope Hale
Timothy Nicoll
Morris Wu
Mike Young
Altitude Imaging
Russell Brown, Mintox Media

Vimy Resources Limited Annual Report 2017

REGISTERED & PRINCIPAL OFFICE
Ground Floor
10 Richardson Street
West Perth WA 6005

POSTAL ADDRESS
PO Box 23,
West Perth WA 6872

Telephone: +61 8 9389 2700
Email:
Website: vimyresources.com.au

info@vimyresources.com.au

Vimy Resources Limited Annual Report 2017