VRX SILICA LIMITED
ABN 59 142 014 873
FORMERLY KNOWN AS VENTNOR RESOURCES LIMITED
ANNUAL REPORT
30 JUNE 2019
CORPORATE DIRECTORY
DIRECTORS
Paul Boyatzis (Chairman)
Bruce Maluish (Managing Director)
Peter Pawlowitsch (Non-executive Director)
SECRETARY
John Geary
REGISTERED AND PRINCIPAL OFFICE
Level 1, 6 Thelma Street
West Perth WA 6005
Telephone: (08) 9226 3780
Facsimile: (08) 9226 3764
Website: www.vrxsilica.com.au
SHARE REGISTRY
Computershare Investor Services Pty Ltd
Level 11, 172 St George's Terrace
Perth WA 6000
Telephone: (08) 9323 2000
Facsimile: (08) 9323 2033
AUDITORS
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade
Perth WA 6000
AUSTRALIAN SECURITIES EXCHANGE
VRX Silica Limited shares (VRX) are listed on the
Australian Securities Exchange.
VRX Silica Limited
1
LETTER FROM THE BOARD OF DIRECTORS TO SHAREHOLDERS
Dear Shareholders
This year VRX Silica Ltd has achieved many milestones in the Company’s aim to become a global supplier
of high-grade silica sand. To better reflect this focus of activities you voted to change the company name
from Ventnor Resources Limited to VRX Silica Ltd in November last year.
We have added to our existing Arrowsmith North and Central projects (370kms north of Perth) by acquiring
the Muchea project (50 kms north of Perth) and the Boyatup Silica Sand Project (100 kms east of
Esperance), however our work this year has been concentrated at Arrowsmith North, Arrowsmith Central
and Muchea.
During the year we have negotiated and executed Aboriginal Heritage Survey Agreements covering all of
our Silica Sand Projects and conducted heritage surveys as well as desktop and autumn, spring flora and
fauna field studies over the Arrowsmith and Muchea project areas.
Our team has completed initial hand auger programs at the Arrowsmith North, Arrowsmith Central and
Muchea projects, enabling work to be completed for JORC compliant Resource estimations on those three
projects.
Currently, I can confirm that the Company has a total JORC compliant Indicated and Inferred silica sand
Resources of 1,056 mt at an average grade of 98.2% SiO2 at Arrowsmith North, Arrowsmith Central and
Muchea.
We have completed three iterations of test work on each project from which we have produced a catalogue
of potential silica sand products. Additionally, completed is a process circuit design, engineering study and
capital cost estimate for a process plant to produce the quality of sand our market research has identified.
During the year the Company appointed an International Sales Manager, Korean national Yoonil Kim who
has over 15 years’ experience selling silica sand in the Asian market.
There has been continued strong interest from Asian customers for our potential products. Customers
included manufacturers of plate glass, ultra-clear glass, LEDs, tube glass, fibre glass, tableware and fibre
cables. Interested countries include China, Taiwan, Philippines, Thailand, Korea, Malaysia, Japan and
India.
The Company has also received strong interest from the foundry industry both in Korea and China.
The Company is in the unique position of being able to produce numerous silica sand products and if
necessary modify the plant to produce the products required by the largest buyers. We continue to receive
enquiries for our silica sand products, and in some cases for significant quantities.
Mining Lease applications have been lodged at Muchea, Arrowsmith North and Arrowsmith Central and
negotiations with Native Title claimants are at an advanced stage.
Much has been done to position VRX Silica Ltd for what looks to be a bright and exciting future.
On behalf of the Board, I would like to thank all staff and contractors for their valuable contribution during
the year. I would also like to thank our shareholders for their support.
Bruce Maluish
Director
For and on behalf of the Board
VRX Silica Limited
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COMPANY REVIEW
REVIEW OF OPERATIONS
During the financial year VRX Silica Limited (VRX Silica or the Company) focused its activities on advancing
the Company’s three silica sand projects at Arrowsmith North and Arrowsmith Central (each 270km north of
Perth) and Muchea (50km north of Perth), which in aggregate contain a total Mineral Resource Estimate of
silica sand of 1,056 million tonnes.
The locations of all three the projects are shown below in Figures 1 and 2:
Figure 1. Muchea Location
Figure 2. Arrowsmith North and Central Locations
OVERVIEW
Exploration and Project Development
During the financial year VRX Silica achieved many milestones by completing the following activities in the
Company’s plan to become a major global silica sand supplier:
Acquired the Muchea Silica Sand Project.
Completed initial hand-auger programs on all three project areas.
Conducted three iterations of testwork with progressively extra attritioning.
Announced JORC compliant Resource estimations on all three projects:
Arrowsmith North 193 million tonnes Inferred Resource
Arrowsmith Central 28 million tonnes Inferred Resource
Muchea
191 million tonnes Inferred Resource, which includes 19 million tonnes
of Indicated Resource.
Performed desktop and autumn/spring flora and fauna field studies on all three project areas.
Negotiated and executed Aboriginal Heritage Survey Agreements.
VRX Silica Limited
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COMPANY REVIEW
Carried out Heritage surveys on all three project areas.
Changed the company name and rebranded the Company from Ventnor Resources Limited to VRX
Silica Limited.
Appointed Yoonil Kim as International Sales Manager. Mr Kim is a Korean national with more than
15 years’ experience selling silica sand in the Asian market.
Received Letters of Intent totalling 590,000 tonnes per year from potential customers in China,
Korea, and Philippines and from three different industries.
Lodged Mining Lease applications over Muchea, Arrowsmith North and Arrowsmith Central.
Acquired the Boyatup Silica Sand Project, 100km east of Esperance.
Produced a catalogue of potential silica sand products based on completed testwork.
The last iteration of testwork provided adequate sample material of each of the products, which can
be sent to potential buyers.
Designed a process circuit, completed an engineering study, and a capital cost estimate on a 2
million tonne per year processing plant to produce the quality of sand to meet market demand,
based on the completed testwork.
Announced receipt of continued strong interest from Asian customers for the Company’s catalogue
of potential products. Customers included manufacturers of plate glass, ultra-clear glass, LEDs,
tube glass, fibreglass, tableware, fibre cables, and users of foundry sand. Prospective customers
come from China, Taiwan, Philippines, Thailand, Korea, Malaysia, Japan and India with enquiries
for silica sand products continuing and, in some cases, in significant quantities. The Company is in
the unique position of being able not only to produce numerous products, but can also modify the
plant to produce alternative products required by the largest buyers.
Completed drill programs at each of the three projects.
Lifted Resource confidence in Resource Estimations within the Mining Lease Applications to
“Indicated” status at both Arrowsmith North and Arrowsmith Central.
Developed a summary of yields of each product from each project based on testwork in 2018,
process circuit design and engineering.
Commenced negotiations with NT claimants for Mining Agreements to finalise the Mining Lease
applications.
Since the end of the financial year, announced Reserve estimates and released Bankable
Feasibility Studies for Arrowsmith North and Arrowsmith Central based on the plant design, capital
cost, recoveries and market prices.
Corporate
In July 2018, the Company completed the acquisition of the Muchea Silica Sand Project. Following completion
of the acquisition, the Company’s voluntary suspension from trading on ASX was lifted and trading in its shares
recommenced on 2 August 2018.
During the financial year VRX Silica conducted two equity capital raisings.
In late July 2018 the Company completed a placement of ordinary shares to professional and sophisticated
investors raising $2.4 million. And in March 2019, the Company completed a further placement of ordinary
shares to professional and sophisticated investors, lead managed by Hartleys Limited, raising a further
$2.2 million, with very strong support and interest exceeding the targeted raise.
VRX Silica Limited
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COMPANY REVIEW
DETAILED INFORMATION – EXPLORATION AND PROJECT DEVELOPMENT
Muchea Silica Sand Project
Project Acquisition
In late July 2018, the Company entered into new agreements with Wisecat Pty Ltd and Australian Silica Pty
Ltd to immediately acquire 100% of the Muchea project (in lieu of the previously agreed option arrangement)
in consideration for the issue of 8,333,333 shares in the Company to the Wisecat vendor and 65 million
shares and 20 million options to Australian Silica, together with an ongoing net production royalty of 1%,
subject to shareholder approval which was obtained in September 2018.
The Muchea project consists of tenement E70/4886 with the adjacent licence application ELA 70/5157 and
covers an area of 93km2 located 50kms north of Perth, Western Australia. Since the acquisition, the Company
has applied for a Mining Lease for Muchea, namely M70/1390.
Maiden Mineral Resource Estimate and Upgrade
On 20 November 2018, VRX Silica reported a maiden Mineral Resource Estimate (MRE) for the Muchea
project of a total Indicated and Inferred Mineral Resource of 191 million tonnes @ 99.6% SiO(cid:3437) including an
Indicated component of 19 million tonnes @ 99.7% SiO(cid:3437), with the Inferred component being 172 Mt @ 99.6%
SiO2 from shallow hand-auger and aircore drilling.
The MRE was carried out by CSA Global and based on 44 hand-auger drill holes for 260.7m. 46 aircore
holes for 522m were carried out by VRX Silica as part of its due diligence exercise during the March 2018
quarter, prior to the acquisition of the Muchea project.
On 17 January 2019 the Company announced that a silica sand Mining Lease application (MLA) (M70/1390)
had been lodged for the Muchea project having an area of 2,918Ha and covering part of the Exploration
Licence E70/4886, which was granted in March 2017.
This was the second such application for the Company (the first being Arrowsmith North – see further details
below) and included 92% of the total previously announced Indicated and Inferred Mineral Resource of 191
Mt @ 99.6% SiO(cid:3437). This is expected to increase with deeper drilling than the hand-auger sampling previously
undertaken to estimate the Resource.
The MLA for the Muchea project is a very extensive application and covers the prospective Resource for very
long-term future mining. Significant environmental studies have already been undertaken and will be finalised
as part of the Company’s application for a Mining Permit. In March 2019, a 57-hole aircore drill program for
a total of 887m was conducted over a 217ha area, which is a small portion of the 2,900ha MLA area and the
most likely starting area for mining.
This aircore drilling program at the Muchea project was closer spaced than the original aircore drilling and
expected to both increase the tonnage within the area of Indicated Resource and also increase the JORC
20121 (JORC) confidence within the area of the proposed Mining Lease.
As expected, when the results from this drill program were received, they added substantial value to VRX
Silica’s inventory while confirming previous assumptions about the extent and quality of the Company’s silica
sand projects. Receipt of the assay results enabled a new JORC compliant MRE to be determined and this
was announced on 17 June 2019.
The new MRE increased the JORC Indicated Mineral Resource by 49% to 29 Mt @ 99.6% SiO2 and the
JORC Inferred Mineral Resource by 4% to 179 Mt @ 99.6% SiO2 for a Total MRE of 208 Mt @ 99.6% SiO2,
an overall increase of 9%, see Tables 1 and 2 below.
The MRE update was based on the results of the March 2019 drilling, combined with a reinterpretation of the
previously modelled sand layer. The reinterpretation investigated layers of low iron sand which were
previously discounted due to colour and higher levels of clay and organic matter which were represented as
Al2O3 and LOI1000C in the assay dataset. The prior MRE was estimated purely on the percentage of SiO2
present, rather than defining all materials that were amenable to beneficiation to produce glass and foundry-
grade silica sand.
1 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves
VRX Silica Limited
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COMPANY REVIEW
The MRE only includes sand 3m above the year 2000 mapped water table level and discounts the top half
metre of topsoil which will be used for rehabilitation. The low variability of results over the Resource area
supports the Company’s expectation that the majority of the Indicated Resource will convert to Probable
Reserves.
Testwork indicates that high-grade silica sand can be produced from Muchea, for which there is strong
demand in glassmaking in Asia.
Metallurgical testwork completed to-date has also demonstrated that a section of sand in the Resource –
previously discounted due to logged discolouration – is considered readily amenable to upgrading by
conventional washing and screening methods to produce a high-purity silica sand product with high mass
recoveries. The high-purity silica sand product specifications are expected to be suitable for industries such
as the glassmaking and foundry industries. It is anticipated that further testwork focusing on currently
discounted sand layers may result in further reinterpretation and upgrades to the Muchea MRE. Future
drilling and estimations will include this sand zone which is expected to significantly add to the Resource
inventory.
A more extensive Programme of Work (PoW) has been lodged to enable a further aircore drill program over
areas that have been previously hand augered and work is ongoing to complete the process for the Mining
Lease applications and necessary environmental approvals at Muchea.
Figure 3 below shows the MRE separated into two areas defined by the type of drill testing. The auger drilling
area has not changed since first reported on 20 November 2018 however the aircore drilling area has been
updated with the additional drilling and reinterpretation.
Figure 3: Muchea Project schematic geology map showing MRE with separate drill type areas
VRX Silica Limited
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COMPANY REVIEW
The MRE results are shown in Table 1 and tonnage comparisons with the prior MRE are shown in Table 2.
A plan showing the resource areas and classification is shown in Figure 4.
Classification
Indicated
Inferred
Indicated + Inferred
*Note: Interpreted silica sand mineralisation is domained above a basal surface wireframe. The upper (overburden) layer within
0.5 m of surface is depleted from the modelled silica sand unit, being reserved for rehabilitation purposes. All classified silica
sand blocks in the model are reported. Differences may occur due to rounding.
Million Tonnes
29
179
208
Fe2O3%
0.03
0.02
0.02
Al2O3%
0.09
0.05
0.06
SiO2%
99.6
99.6
99.6
TiO2%
0.07
0.1
0.1
LOI%
0.22
0.23
0.23
Table 1 Muchea Silica Sand Mineral Resource Estimate as at June 2019
Drill Area
Classification
Aircore
Hand Auger
Total
Indicated
Inferred
Indicated + Inferred
Inferred
Indicated
Inferred
Indicated + Inferred
Maiden MRE
(Mt)
19
60
79
112
19
172
191
2019
June
MRE Update (Mt)
29
67
96
112
29
179
208
Difference
+49%
+12%
+21%
+49%
+4%
+9%
*Note: Interpreted silica sand mineralisation is domained above a basal surface wireframe. The upper
(overburden) layer within 0.5 m of surface is depleted from the modelled silica sand unit, being reserved for
rehabilitation purposes. All classified silica sand blocks in the model are reported. Differences may occur due to
rounding.
Table 2: Tonnage Comparison with Prior estimate
Figure 4: Muchea Updated MRE areas and classification
VRX Silica Limited
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COMPANY REVIEW
Arrowsmith Silica Sand Projects
On 2 August 2018 the Company announced the development program for the Arrowsmith projects,
comprising Arrowsmith North and Arrowsmith Central with five granted exploration licences for a total area
of 379km².
Environmental desktop studies undertaken by the Company formed the basis for detailed flora, vegetation,
and fauna studies conducted during the Spring months of 2018. These will support a referral to the relevant
environmental authorities for a Mining Proposal.
Preliminary testwork programs conducted early in the year under review indicated the deposits at Arrowsmith
could be upgraded to glassmaking silica sand requirements. Further iterations of testwork were conducted
to enable the finalisation of the proposed process circuit design.
Adequate auger and aircore drilling has been undertaken to allow a JORC Resource Estimation at each of
the Arrowsmith projects following the completion of QA/QC assaying and review.
On 15 August 2018 the Company announced that the Department of Mines, Industry and Safety (DMIRS)
had granted a POW for exploration on both the Arrowsmith North (E70/5076) and Arrowsmith Central
(E70/4987) prospects.
Arrowsmith North
VRX Silica engaged CSA Global to prepare a maiden Mineral Resource Estimate (MRE) for the Arrowsmith
North target area reportable under JORC guidelines. On 2 October 2018 the Company announced the
Arrowsmith North MRE comprises an Inferred Resource of (cid:3436)(cid:3444)(cid:3438).(cid:3441) Mt @ (cid:3444)(cid:3443)% SiO(cid:3437). The MRE exceeded the
previous Exploration Target of 100 to 140 million tonnes at 95% to 98% SiO2.
The MRE was based on the results obtained from (cid:3441)(cid:3437) hand-auger drill holes to a depth of 4-5 metres for a
total of (cid:3437)(cid:3438)(cid:3440).(cid:3441)m and defined two silica sand types – white and yellow sand – geologically logged and
differentiated based on colour and through chemical analysis results. Based on metallurgical testwork
completed to date, both sand types are readily amenable to upgrading by conventional washing and
screening methods to produce a high-purity silica sand product with high mass recoveries. The high-purity
silica sand product specifications are expected to be suitable for industries such as glassmaking. The MRE
results are shown in Table 1(cid:3438).
Classification Domain
Million Tonnes
SiO2%
Al2O3%
Fe2O3%
LOI%
TiO2%
Yellow Sand
149.4
Inferred
White Sand
44.2
All Sand
193.6
97.7
99.1
98.0
1.1
0.3
0.9
0.4
0.1
0.3
0.5
0.2
0.4
0.2
0.2
0.2
*Note: Interpreted mineralisation is domained into different sand types based on drill logging data and publicly
available soil mapping information, above a basal surface wireframe defined based on the current drill sampling
depths. Depletion zones include the upper 0.5 m for rehabilitation purposes, and minor swamp zones in the east and
south of the modelled area. Differences may occur due to rounding.
Table 3: Arrowsmith North Mineral Resource Estimate
In early 2019, the Company completed an extensive Aboriginal Heritage survey with representatives of the
Southern Yamatji claimant group for a more intensive and wider ranging drill program, and obtained an
approved POW to infill the Arrowsmith North Inferred Mineral Resource by aircore drilling and to add to it
substantially with the intention of upgrading the resource to an Indicated category. Aircore drilling does not
have the depth limitations of the hand-auger technique, and therefore the full depth of sand can be drill tested.
The drilling program was planned to consist of 105 holes with an average depth of 11.3m, confined to existing
tracks once native title heritage clearance was concluded. When completed in March 2019 a total of 189
holes for 1,726m had been drilled.
The initial exploration program also provided a bulk sample which was used for the second iteration of
metallurgical testwork and has verified that the sand can be beneficiated to glassmaking quality (detailed in
the announcement 20 September 2018). An additional third iteration of testwork was undertaken to improve
on the current known quality.
VRX Silica Limited
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COMPANY REVIEW
On 24 December 2018, VRX Silica announced the lodgement of its first silica sand Mining Lease application
(MLA) (M70/1389) at its Arrowsmith North prospect. The MLA Resource at 73mt @ 97.7% SiO2 is only a
small portion of the total Resource of 193.6 Mt @ 98% SiO2, but is expected to increase with deeper drilling
than the hand-auger sampling that this resource was based on.
The Arrowsmith North MLA is for an area of 1,728Ha and covers part of Exploration Licences E70/5027 and
E70/5109 (see Figure 2)
CSA Global reported the Mineral Resource Estimate located within the MLA boundary, which is summarised
in Table 4.
Classification Million Tonnes
SiO2% Al2O3%
Fe2O3%
LOI%
TiO2%
Inferred
73.2
97.7
1.1
0.4
0.5
0.2
* Note: Mineral Resources are reported only from within the VRX-nominated MLA and form a subset
of the total Arrowsmith North Mineral Resources as reported to the ASX on 2 October 2018.
Differences may occur due to rounding.
Table 4: Arrowsmith North Silica Sand Mineral Resource Estimate within MLA boundary
Arrowsmith Central
VRX Silica engaged CSA Global to prepare a maiden Mineral Resource Estimate (MRE) for the Arrowsmith
Central target area reportable under JORC guidelines. On 2 October 2018 the Company announced the
Arrowsmith Central project comprises (cid:3437)(cid:3443) Mt @ (cid:3444)(cid:3442).(cid:3442)% SiO(cid:3437). The result was based on an exploration program
of 39 hand-auger drill holes.
The MRE results are shown in Table 1(cid:3440).
Classification
Million Tonnes
SiO2%
Al2O3%
Fe2O3%
K2O%
LOI%
TiO2%
Inferred
28
97.7
1.2
0.3
0.3
0.5
0.2
*Note: Interpreted silica sand layer is domained above a basal surface wireframe defined, based on the current drill
sampling depths. A depletion zone consisting of the upper 0.5 m is reserved for rehabilitation purposes, is not estimated
or reported. Differences may occur due to rounding.
Table 5: Arrowsmith Central Mineral Resource Estimate
The Resource area is a small portion of the tenement area, adequate for initial mining studies amenable to
future aircore drilling over an increased area. To that end, early in 2019 the Company completed an
extensive Aboriginal Heritage survey with representatives of the Southern Yamatji claimant group for a more
intensive and wider ranging drill program and, following POW approval, an aircore drill program was
completed in March 2019.
The exploration program also provided a bulk sample which was used for the second and third iteration of
metallurgical testwork and has verified that the sand can be beneficiated to glassmaking quality. An additional
testwork program, which is underway, is investigating the recovery and quality of products for the foundry
industry, particularly in Korea.
On 14 February 2019, VRX Silica announced the lodgement of its Mining Lease application (MLA)
(M70/1392) at its Arrowsmith Central prospect. The MLA Resource is 27mt @ 97.7% SiO2 and covers 96%
of the total Resource of 28 Mt @ 97.7% SiO2.
The Arrowsmith Central MLA is for an area of 1,900Ha and covers part of Exploration Licence E70/4987 (see
Figure 2).
CSA Global reported the Mineral Resource Estimate located within the MLA boundary, which is summarised
in Table 6.
VRX Silica Limited
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COMPANY REVIEW
Classification Million Tonnes
SiO2% Al2O3%
Fe2O3%
LOI%
TiO2%
Inferred
27
97.7
1.2
0.3
0.5
0.2
* Note: Mineral Resources are reported only from within the VRX-nominated MLA and form a subset
of the total Arrowsmith Central Mineral Resources as reported to the ASX on 13 December 2018.
Differences may occur due to rounding.
Table 6: Arrowsmith Central Silica Sand Mineral Resource Estimate within MLA
Boyatup Project
On 4 February 2019, VRX Silica announced the acquisition of the Boyatup Silica Sand Project (Boyatup
Project), located on Exploration Licence E69/3560 with a total area of 105.7km². The consideration for the
acquisition was 2,000,000 ordinary fully paid shares issued to the tenement holder, Silatec Pty Ltd, plus
$10,000 in cash.
The tenement is almost totally covered by vacant, unallocated crown land and only a very small section is
over farming freehold land, the latter being of no interest to the Company. It is located 100km east of the
port town of Esperance (see Figure 5) and is connected to the Esperance Bulk Port via a sealed road which
by-passes the city of Esperance. The Esperance Deep Water Bulk Port has been the exit port for bulk nickel
and iron ore commodities and can load ships of up to 200,000 tonnes.
The Boyatup Project deposit is subtly different from the Company’s Arrowsmith and Muchea Silica Sand
Projects and has the potential to provide yet another option in the product range that the Company could
market in Asia.
Figure 5. Boyatup Project Location
VRX Silica Limited
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COMPANY REVIEW
Testwork Results
On 2 May 2019, VRX Silica announced the results of testwork and confirmation assays for recoveries of silica
sand commercial products from its Arrowsmith and Muchea Silica Sand Projects.
The Company has conducted three iterations of testwork, with the final iteration completed in March 2019 by
CDE Global, a renowned testwork laboratory and process plant fabricator based in Northern Ireland. The
Company has since completed confirmation assays on final products from that testwork through Nagrom
Laboratories in Perth, WA.
In March 2019 the Company released a process circuit design, engineering and cost estimate by CDE Global
for a plant which would be based on this testwork. The final determination of recoveries is based on this
circuit design, which included the attritioning step being conducted twice.
Attritioning is a high energy interaction of grains rubbing on grains which liberates attached fine particles and
reduces particle size by breakage on corners and grain boundaries. This reduces contaminants and improves
particle shape.
VRX Silica is now confident in the process circuit design and the final silica sand products capable of
production. These have been compiled into the products catalogue which the Company continues to
distribute and gauge the response in the market, which to date has been extremely positive.
Table 7 summarises the recovered products based on the testwork and process circuit mass balance data.
Arrowsmith North
Product
Arrowsmith - N20
Industry
Foundry
Arrowsmith - N40 / NF500
Foundry/Glass
Local Market/Filter/Bunker
Filter/Bunker
Arrowsmith Central
Product
Arrowsmith - C20
Industry
Foundry
Arrowsmith - C50/CF400
Foundry/Glass
High TiO2
Mineral Sands
Muchea
Product
Muchea F80C
Muchea F80
Muchea F150
Industry
LCD/Foundry
Glassmaking
Glassmaking
Recovery
24%
60%
6%
Recovery
34%
34%
9%
Recovery
20%
48%
20%
Recoveries based on CDE Global/Nagrom Testwork Mass Balance Data
Table 7: Recoveries at Arrowsmith and Muchea
Three iterations of testwork have been carried out on the Arrowsmith projects (North and Central) and
Muchea project. Significantly, the attritioning cycle has been demonstrated to be particularly effective in
removing impurities from the quartz grains.
Testwork completed by VRX Silica has confirmed that the plant design for the production of a high purity
silica sand product suitable for the glassmaking industry is the same for all three projects.
VRX Silica Limited
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COMPANY REVIEW
Plant Design and Costs
On 27 March 2019, VRX Silica received an independent process design, engineering and cost estimate for
processing plants at its Arrowsmith projects (North and Central) and Muchea project. The independent
processing testwork, process circuit design and engineering was undertaken by CDE Global, Northern
Ireland, a global leader in the construction of sand mining wet processing plants.
The plant design (see Figure 6) incorporates features to ensure high utilisation and performance with
duplicated critical pumps and variable speed drives on all pumps.
CDE Global has provided the Company with a cost estimate for a 2 million tonne per annum (Mtpa)
processing plant which, due to its modular nature, is a detailed proposal and accurate to ±15% in pricing.
Table 8 sets out a summary of this cost estimate.
Figure (cid:2568). Computer-generated image of plant design
Processing Plant Costs ± 15%
Mechanical Equipment, lighting, wiring, pipework
WHIM Module (optional)
Installation & commissioning Labour
Crane Hire and EWP’s
Freight (C.I.F Fremantle) (65 containers)
Contingency (5% of mech.)
Total
CDE Quote GBP
£6,800,000
£700,000
£1,100,000
£400,000
£420,000
£340,000
£9,760,000
$AUD
$12,716,000
$1,309,000
$2,057,000
$748,000
$785,400
$635,800
$18,251,200
Table 8: Summary of quote details for processing plant (exchange rate of 1GBP = 1.87AUD)
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COMPANY REVIEW
VRX Silica estimates costs for plant feeder, water supply and contingencies will increase the total capital cost
for a 2 Mtpa processing plant to approximately A$25 million.
Further testwork is underway to finalise the requirements for the magnetic separation component (WHIMS).
This is not anticipated to materially affect the costs.
The processing plant will wash, screen and attrition sand, and remove heavy minerals to create a final product
for delivery to customers.
No chemicals are required for the process.
The process includes a thickener which will allow for 95% of process water to be recycled.
The process flow for the plant will be as follows:
1. An upstream process will provide a slurry feed product with solids of a maximum 2mm size; the
product is classified by a series of screens that will create a coarse product (<2mm - +0.6mm) and a
fine product (-0.6mm).
2. The coarse product is washed, dewatered, and stockpiled.
3. The finer product moves to an attrition scrubbing and washing process.
4. The finer product then moves on to a spiral bank separating the feed into heavies and lights.
5. The light product passes through a magnetic separation process.
6. Non-magnetic product moves to a counter flow classification unit (CFCU) which produces two
products:
(a) a glass sand product (<0.6mm + 0.212mm); and
(b) a fines product (<0.212mm + 0.6mm) that will be sent to the coarse sand stockpile.
7. Slimes less than 75µm produced by the plant will be treated through an AquaCycle thickener for
process water recovery.
Sales and Marketing
On 16 April 2019 VRX Silica announced it had received strong interest for the purchase of significant
tonnages of silica sand products from its Arrowsmith projects (North and Central) and Muchea project
following the appointment of Mr Yoonil Kim as its International Sales Manager in November 2018.
Mr Kim is a South Korean national with more than 15 years’ experience marketing and selling silica sand
products to glass manufacturers and foundries across the Asia-Pacific region.
The Company has identified numerous markets in the Asia-Pacific region and met with a number of potential
offtake customers for the sale of silica sand products from all three projects. The Company will be able to
commit to binding offtake agreements following the approval of Mining Permits.
VRX Silica has received enquiries and expressions of interest and letters of intent from manufacturers and
purchasing agents for smaller shipments of silica sand product for glassmaking in the following countries:
China (3)
Philippines (2)
Thailand (2)
India (1)
Japan (1)
Korea (1)
Malaysia (1)
Taiwan (1)
With more than 270 glassmaking facilities the Chinese glassmaking industry is the most dominant in the Asia-
Pacific region.
VRX Silica Limited
13
COMPANY REVIEW
Interest to-date for glassmaking-quality silica sand totals 1,675,000 tonnes per annum and such interest is
expected to increase as the product catalogue is further distributed. The Company has also received
enquiries and expressions of interest from organisations in the foundry industry in:
South Korea (5)
Japan (1)
Philippines (1)
Taiwan (1)
The highest level of demand was from South Korea, which is the world’s largest foundry market,
predominately in the automobile and ship building industries. Interest to date for foundry-quality silica sand
totals 888,000 tonnes per annum and, as for glassmaking silica sand, such interest is expected to increase.
Whilst these expressions of interest may not all lead to binding contracts, the Company is confident of
securing adequate offtake to justify the development of its silica sand projects. Further enquiries are
expected and the Company will look to progress this strong interest into binding offtake agreements before
committing to funding arrangements for processing plant requirements.
Warrawanda HPQ Project
The Company has undertaken an Aboriginal Heritage Survey over potential drill sites and access tracks to
quartz outcrops.
A drill program has been undertaken post the 2019 financial year and results are pending.
Biranup Project Option and Farm-In JV
On 15 November 2018 VRX Silica announced it had entered into an option agreement with Metalicity Limited
(ASX:MCT) (MCT) for MCT to acquire a 40% interest in the Company’s Biranup Project and a farm-in and
joint venture arrangement for the balance of the project. On 13 March 2019 the Company received written
notice from MCT that it has decided not to progress the proposed transaction and the option has lapsed.
Now that VRX Silica is focused on progressing its silica sand projects, the Company will seek new
opportunities for a joint venture to further explore the many anomalies highlighted on the Biranup Project.
DETAILED INFORMATION – CORPORATE EVENTS
Muchea Acquisition
In late July 2018, the Company entered into new agreements with Wisecat Pty Ltd and Australian Silica Pty
Ltd to immediately acquire 100% of the Muchea project (in lieu of the previously agreed option arrangement)
in consideration for the issue of an aggregate of 8,333,333 shares in the Company to the Wisecat vendor
and 65 million shares and 20 million options to Australian Silica, together with an ongoing net production
royalty of 1%, subject to shareholder approval which was obtained in September 2018.
Under the new transaction structure ASX confirmed that the Company was no longer required to re-comply
with ASX’s admission requirements for the re-listing of its shares, and trading in its shares recommenced on
2 August 2018.
Capital Raisings
July 2018
During July 2018 the Company received firm commitments for a capital raising via a share placement to
professional and sophisticated investors to raise $2.4 million by the way of the issue of 40 million fully paid
ordinary shares at $0.06 each.
VRX Silica Limited
14
COMPANY REVIEW
The capital raising comprised the issue of 36,550,000 shares to non-related parties (with 19,364,647 under
its existing Listing Rule 7.1 capacity and 17,185,353 under Listing Rule 7.1A) and a further 3,450,000 shares
to VRX Silica directors (following receipt of shareholder approval in September 2018).
April 2019
During April 2019 the Company received firm commitments for a capital raising via a share placement to
professional and sophisticated investors to raise approximately $2.26 million before costs by the way of the
issue of 37,666,666 million fully paid ordinary shares at $0.06 each
The capital raising comprised the issue of 33,333,33 new fully paid ordinary shares to non-related parties
within the Company’s placement capacity under Listing Rule 7.1 and a further 4,333,333 shares to VRX Silica
directors (following receipt of shareholder approval in May 2019).
Hartleys Limited (AFSL No 230052) acted as lead manager to the placement.
EVENTS SUBSEQUENT TO THE PERIOD
Arrowsmith North Mineral Resource Estimate Upgrade
On 9 July 2019, after the receipt of the analytical results from the March 2019 aircore drill program, VRX
Silica announced a new Mineral Resource Estimate (MRE) for Arrowsmith North.
The upgrade was to a JORC compliant Indicated Mineral Resource of 248 Mt @ 97.7% SiO2 in addition to
an Inferred Mineral Resource of 523 Mt @ 98.2% SiO2 for a Total MRE of 771 Mt @ 98.0% SiO2, an overall
increase of 398% on the maiden estimate.
The Indicated Mineral Resource is predominately within the Company’s Mining Lease application area for
Arrowsmith North.
China Southern Glass Strategic Alliance
On 11 July 2019, the Company announced it had entered into a memorandum of understanding (MOU) with
CSG Holding Co Ltd (China Southern Glass) to form a strategic alliance in connection with the Muchea Silica
Sand Project.
China Southern Glass is the largest architectural glass manufacturer in the Peoples Republic of China (PRC),
involved in the manufacture and sale of glass products including float glass, display glass, automotive glass,
coated glass, mirrors, colour filter glass, solar glass and conservation glass.
The objectives of the strategic alliance include exploring the potential for marketing, promotion and sale in
the PRC of silica sand products from the Muchea project and potential sources of capital finance for the
construction of production facilities at the Muchea project. In addition, the parties will consider potential for
the development of a high-quality glass manufacturing facility in Western Australia for silica sand products
generated from the Muchea project.
Arrowsmith North Probable Ore Reserve and Bankable Feasibility Study
On 28 August 2019 VRX Silica announced details of its Bankable Feasibility Study (BFS) and maiden
Probable Ore Reserve at Arrowsmith North, demonstrating exceptional financial metrics and a World-class
project for Arrowsmith North.
The Probable Ore Reserve for Arrowsmith North totals 223 Mt @ 99.7% SiO2 as reported in accordance with
the JORC Code with 204 Mt @ 99.7% SiO2 contained within the MLA area.
VRX Silica Limited
15
COMPANY REVIEW
The key outcomes from the BFS and summary financial model outputs set out below. The BFS contains full
details, including a life of mine production profile and sensitivity analysis for the model.
Post Tax, ungeared NPV10
Post Tax, ungeared NPV20
Post Tax, ungeared IRR
Payback period (yrs) (post tax) (ramp up rate)
Exchange Rate US$/A$
Life of Mine (yrs) (Scope of BFS)
EBIT
Total Sales (initial 25 years) (no escalation)
Cashflow after finance and tax
Capex (2 mtpa)
Capex contingency (inc)
Life of Mine C1 costs, FOB Geraldton (inc royalties)
Tonnes Processed (initial 25 years) (Mt)
Production Target (initial 25 years) (Mt)
Probable Ore Reserves @ 99.7% SiO2 (Mt)
Ore Reserve life (yrs)
JORC Resources (million tonnes)
$242,300,000
$99,800,000
79%
2.4
$0.70
25
$1,144,000,000
$2,773,000,000
$835,000,000
$28,260,000
20%
$30.18
53
47.7
204
102
771
Notes:
1: The Ore Reserve underpinning the above production target has been prepared by a
Competent Person in accordance with the requirements of the JORC Code.
2. Details of economic assumptions are set out in the BFS.
3. All figures are presented in Australian dollars, unadjusted for inflation
Arrowsmith Central Probable Ore Reserve and Bankable Feasibility Study
On 13 September 2019 VRX Silica announced details of its Bankable Feasibility Study (BFS) and maiden
Probable Ore Reserve at Arrowsmith Central, demonstrating compelling financial metrics and complementing
Arrowsmith North.
The Probable Ore Reserve for Arrowsmith Central totals 18.9 Mt @ 99.6% SiO2 as reported in accordance
with the JORC Code with 18.7 Mt @ 99.6% SiO2 contained within the MLA area, and this supports a 13-14
year project. This is estimated from the Indicated Mineral Resource only and constitutes approximately (cid:3439)(cid:3443)%
of the estimated total production target (in terms of processed tonnes of silica sand) over the (cid:3437)(cid:3440) year mine
life for the project BFS. The Company intends to mine solely from Probable Ore Reserve during the initial
(cid:3436)(cid:3438)-(cid:3436)(cid:3439) years of the project.
The balance is from Inferred Mineral Resource in the proposed mining area which is 29.4 Mt @ 96.2% SiO2,
which the Company intends to mine from year 14 onwards. The Company has undertaken sufficient drilling
to assume geological and metallurgical continuity of the sand deposit and there is negligible difference
between the modelled sand in each category. In order to upgrade the Inferred Mineral Resource, the
Company anticipates that an additional 500 m of aircore drilling will be required. The cost for drilling, assaying
and associated studies is estimated (at current rates) to be in the region of $100,000 and will need to be
undertaken within the first 13 years of mining operations.
VRX Silica Limited
16
COMPANY REVIEW
The key outcomes from the BFS and summary financial model outputs set out below. The BFS contains full
details, including a life of mine production profile and sensitivity analysis for the model. The financial model
shows that Arrowsmith Central is a viable project with the Probable Ore Reserve only, and the Inferred
Mineral Resource is not the determining factor for its viability.
Post Tax, ungeared NPV10
Post Tax, ungeared NPV20
Post Tax, ungeared IRR
Payback period (yrs) (post tax) (ramp up rate)
Exchange Rate US$/A$
Life of Mine (yrs) (Scope of BFS Study)
EBIT
Total Sales (initial 25 years) no escalation
Cashflow after finance and tax
Capex (2 mtpa)
Capex contingency (inc)
Life of Mine C1 costs, FOB Geraldton (inc royalties)
Tonnes Processed (initial 25 years) (Mt)
Production Target (Mt) (initial 25 years) (BFS Study)
Probable Ore Reserves @ 99.6% SiO2 (Mt)
Ore Reserve life (yrs)
JORC Resources (million tonnes)
$147,600,000
$56,100,000
60%
2.8
$0.70
25
$737,000,000
$2,167,000,000
$539,000,000
$25,880,000
20%
$27.67
51
39.6
19
10
77
Notes:
1. A proportion of the production target is based on Inferred Mineral Resource. There is a low level of geological confidence
associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination
of Indicated Mineral Resources or tha the production target itself will be realised.
2. The Probable Ore Reserve and Inferred Mineral Resource underpinning the above production target have been prepared by a
Competent Person in accordance with the requirements of the JORC Code.
3. Details of economic assumptions are set out in the BFS.
4. All figures are presented in Australian dollars, unadjusted for inflation
VRX Silica Limited
17
COMPANY REVIEW
Competent Persons’ Statements
The information in this report that relates to Arrowsmith Central, Arrowsmith North and Muchea Exploration
Results is based on data collected and compiled under the supervision of Mr David Reid, who is a full-time
employee of VRX Silica. Mr Reid, BSc (Geology), is a registered member of the Australian Institute of
Geoscientists and has sufficient experience that is relevant to the style of mineralisation and type of deposit
under consideration and the activity being undertaken to qualify as a Competent Person under the 2012
edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves
(JORC Code).” Mr Reid consents to the inclusion of the data in the form and context in which it appears.
The information in this report that relates to Arrowsmith Central, Arrowsmith North and Muchea Mineral
Resources is based on information compiled by Mr Grant Louw who is a full-time employee of CSA Global,
under the direction and supervision of Dr Andrew Scogings, who is an Associate of CSA Global. Dr Scogings
is a Member of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute
of Geoscientists. He is a Registered Professional Geologist in Industrial Minerals. Dr Scogings has sufficient
experience relevant to the style of mineralisation and type of deposit under consideration and to the activity
which he is undertaking to qualify as Competent Person as defined in the 2012 Edition of the “Australasian
Code for the Reporting of Exploration Results, Mineral Resources, and Ore Reserves (JORC Code).” Dr
Scogings consents to the disclosure of information in this report in the form and context in which it appears.
The information in this report that relates to the Probable Ore Reserves for Arrowsmith Central and
Arrowsmith North is based on data collected and compiled under the supervision of Mr David Reid, who is a
full-time employee of VRX Silica. Mr Reid, BSc (Geology), is a registered member of the Australian Institute
of Geoscientists and has sufficient experience that is relevant to the style of mineralisation and type of deposit
under consideration and the activity being undertaken to qualify as a Competent Person under the 2012
edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves
(JORC Code)”. Mr Reid consents to the inclusion of the data in the form and context in which it appears.
VRX Silica Limited
18
DIRECTORS REPORT
Your directors present their report on the Company and its controlled entities for the year ended 30 June
2019.
DIRECTORS
The names of the directors of the Company in office during the financial year and up to the date of this report
are as follows:
Paul Boyatzis
Bruce Maluish
Peter Pawlowitsch
Directors were in office from the beginning of the financial year until the date of this report unless otherwise
stated.
The particulars of the qualifications, experience and special responsibilities of each director are as follows:
Paul Boyatzis, B Bus, AICD, MSDIA, ASA, CPA – Non-Executive Chairman
Mr Boyatzis is a current member of the Australian Institute of Company Directors, the Securities and
Derivative Industry Association of Australia and a member of the Certified Practising Accountants of Australia.
Mr Boyatzis has over 30 years’ experience in the investment and equity markets and an extensive working
knowledge of public companies. He has advised numerous emerging companies and assisted in raising
significant investment capital both locally and overseas.
Director since 24 September 2010.
During the past three years Mr Boyatzis has held the following other listed company directorships:
Nexus Minerals Ltd – 6 October 2006 to present
Aruma Resources Ltd – 5 January 2010 to present
Transaction Solutions International Ltd – 23 February 2010 to 30 June 2017
Bruce Maluish, BSc (Surv), Dip Met Min – Managing Director
Mr Maluish has more than 30 years’ experience in the mining industry with numerous roles as Managing
Director and General Manager with companies such as the Monarch Group of Companies, Matilda Minerals,
Abelle, Hill 50 and Forsyth Mining, while mining a variety of commodities from gold, nickel and mineral sands
from both open pits and underground.
His management and administrative experience includes the set up and marketing of IPOs, from
commencement of exploration to full production, to the identification, development and expansion of projects
including mergers and acquisitions.
His international experience includes identification of projects and negotiations with clients in Asian markets.
His qualifications include credentials in Surveying, Mining, Project Planning and Finance
Director since 24 September 2010.
During the past three years Mr Maluish has held the following other listed company directorships:
Nexus Minerals Ltd – 1 July 2015 to present
VRX Silica Limited
19
DIRECTORS REPORT
Peter Pawlowitsch, B.Com, MBA, CPA, FGIA – Non-Executive Director
Mr Pawlowitsch holds a Bachelor of Commerce from the University of Western Australia, is a member of the
Certified Practising Accountants of Australia, a fellow of the Governance Institute and holds a Masters of
Business Administration from Curtin University.
These qualifications have underpinned more than 15 years’ experience in the accounting profession and
more recently in business management and the evaluation of businesses and mining projects.
Director since 12 February 2010.
During the past three years Mr Pawlowitsch has held the following other listed company directorships:
Dubber Corporation Limited – 26 September 2011 to present
Knosys Limited – 16 March 2015 to present
Novatti Group Limited – 19 June 2015 to present
Rewardle Holdings Limited – 30 May 2017 to 2 January 2019
Family Zone Cyber Safety Limited – 24 September 2019 to present
Interests in the shares and options of the Company and related bodies corporate
As at the date of this report, the interests of the directors (direct and indirect) in the shares and options of
VRX Silica Limited were:
Paul Boyatzis
- 3,480,000 ordinary fully paid shares
- 1,000,000 options expiring 28 November 2019, exercisable at 2.8 cents each
- 3,000,000 options expiring 30 November 2020, exercisable at 7.2 cents each
- 3,000,000 options expiring 30 November 2021, exercisable at 21.7 cents each
Bruce Maluish
- 12,810,535 ordinary fully paid shares
- 2,000,000 options expiring 28 November 2019, exercisable at 2.8 cents each
- 5,000,000 options expiring 30 November 2020, exercisable at 7.2 cents each
- 5,000,000 options expiring 30 November 2021, exercisable at 21.7 cents each
Peter Pawlowitsch
- 24,841,769 ordinary fully paid shares
- 1,000,000 options expiring 28 November 2019, exercisable at 2.8 cents each
- 3,000,000 options expiring 30 November 2020, exercisable at 7.2 cents each
- 3,000,000 options expiring 30 November 2021, exercisable at 21.7 cents each
COMPANY SECRETARY
John Geary, B.Bus, Grad Dip Acctg, Grad Dip Adv Taxation
Mr Geary has forty years’ experience in the mineral exploration industry in Australia and overseas. His
experience includes prospecting and the evaluation, acquisition, maintenance and compliance requirements
associated with mining tenements.
He has been actively engaged in the planning and implementation of many exploration programmes and his
experience as a contract driller has enabled him to recognise and identify potential resource value.
He has been involved in the promotion, prospectus preparation and listing of a number of exploration
companies (IPO’s) on the Australian Securities Exchange. He has held the position of Executive Director and
Company Secretary for a number of ASX listed exploration companies in recent years.
VRX Silica Limited
20
DIRECTORS REPORT
CORPORATE INFORMATION
Corporate Structure
VRX Silica Limited is a limited liability company that is incorporated and domiciled in Australia. VRX Silica
Limited has prepared a consolidated financial report incorporating the entities that it controlled during the
financial year as follows:
VRX Silica Ltd
Ventnor Gold Pty Ltd
VRX Boyatup Pty Ltd (formerly
Ventnor Kumarina Pty Ltd)
Ventnor Mining Pty Ltd
Ventnor Pilbara Pty Ltd
Wisecat Pty Ltd
- parent entity
- 100% owned controlled entity
- 100% owned controlled entity
- 100% owned controlled entity
- 100% owned controlled entity
- 100% owned controlled entity
Nature of Operations and Principal Activities
The principal continuing activities during the year of entities within the consolidated entity was mineral
exploration.
OPERATING AND FINANCIAL REVIEW
Review of Operations
A review of operations for the financial year and the results of those operations is contained within the
company review.
Operating Results
Consolidated loss after income tax for the financial year was $6,017,950 (2018: $1,781,477).
Financial Position
At 30 June 2019, the Group had net asset of $8,434,814 (2018: $2,839,913) with cash reserves of
$1,545,418.
Financing and Investing Activities
The Company issued the following securities during the year:
77,665,416 ordinary fully paid shares by placement at an issue price of 6 cents each, raising
$4,659,925.
Dividends
No dividends were paid during the year and no recommendation is made as to dividends.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Significant changes in the state of affairs of the Company during the financial year are detailed in the company
review.
In the opinion of the directors, there were no other significant changes in the state of affairs of the Company
that occurred during the financial year under review not otherwise disclosed in this report or in the financial
report.
VRX Silica Limited
21
DIRECTORS REPORT
EVENTS SUBSEQUENT TO BALANCE DATE
No matters or circumstances have arisen, since the end of the financial year, which significantly affected, or
may significantly affect, the operations of the Company, the results of those operations, or the state of affairs
of the Company in subsequent financial years, other than outlined in the company review which is contained
in this Annual Report.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Company will continue to pursue its principal activity of exploration and evaluation, particularly in respect
to the projects as more particularly outlined in the company review. The Company will also continue to pursue
other potential investment opportunities to enhance shareholder value.
MEETINGS OF DIRECTORS
The numbers of meetings of directors (including meetings of committees of directors) held during the year
and the number of meetings attended by each director were as follows:
Board of Directors Meetings
Number eligible to attend
Number attended
P Boyatzis
B Maluish
P Pawlowitsch
7
7
7
7
7
7
REMUNERATION REPORT (AUDITED)
This report details the nature and amount of remuneration for each director and executive of VRX Silica
Limited. The information provided in the remuneration report includes remuneration disclosures that are
audited as required by section 308(3C) of the Corporations Act 2001.
For the purposes of this report Key Management Personnel of the Group are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the group, directly or
indirectly, including any director (whether executive or otherwise) of the parent company.
For the purposes of this report the term “executive” includes those key management personnel who are not
directors of the parent company.
Remuneration Committee
The full Board carries out the role and responsibilities of the Remuneration Committee and is responsible for
determining and reviewing the compensation arrangements for the Directors themselves, the Managing
Director and any Executives.
Executive remuneration is reviewed annually having regard to individual and business performance, relevant
comparative remuneration and internal and independent external advice.
The remuneration report is set out under the following main headings:
● Remuneration policy
● Remuneration structure
● Employment contracts of directors and senior executives
● Details of remuneration for year
● Compensation options to key management personnel
● Shares issued to key management personnel on exercise of compensation options
● Additional disclosures relating to key management personnel
VRX Silica Limited
22
DIRECTORS REPORT
A. Remuneration policy
The board policy is to remunerate directors at market rates for time, commitment and responsibilities. The
board determines payments to the directors and reviews their remuneration annually, based on market
practice, duties and accountability. Independent external advice is sought when required. The maximum
aggregate amount of directors’ fees that can be paid is subject to approval by shareholders in general
meeting, from time to time. Fees for non-executive directors are not linked to the performance of the
consolidated entity. However, to align directors’ interests with shareholders’ interests, the directors are
encouraged to hold shares in the Company.
The Company’s aim is to remunerate at a level that will attract and retain high-calibre directors and
employees. Company officers and directors are remunerated to a level consistent with the size of the
Company.
The executive directors and full time executives receive a superannuation guarantee contribution required by
the government, which is currently 9.50%, and do not receive any other retirement benefits. Some
individuals, however, may choose to sacrifice part of their salary to increase payments towards
superannuation.
All remuneration paid to directors and executives is valued at the cost to the Company and expensed.
The Board believes that it has implemented suitable practices and procedures that are appropriate for an
organisation of this size and maturity.
The Company did not pay any performance-based component of remuneration during the year.
B. Remuneration structure
In accordance with best practice corporate governance, the structure of non-executive director and executive
compensation is separate and distinct.
Non-executive Director Compensation
Objective
The Board seeks to set aggregate compensation at a level that provides the Company with the ability to
attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
Structure
The Constitution and the ASX Listing Rules specify that the aggregate compensation of non-executive
directors shall be determined from time to time by a general meeting. An amount not exceeding the amount
determined is then divided between the directors as agreed. The latest determination approved by
shareholders was an aggregate compensation of $250,000 per year.
The amount of aggregate compensation sought to be approved by shareholders and the manner in which it
is apportioned amongst directors is reviewed annually. The Board considers advice from external consultants
as well as the fees paid to non-executive directors of comparable companies when undertaking the annual
review process. Non-Executive Directors’ remuneration may include an incentive portion consisting of
options, as considered appropriate by the Board, which may be subject to Shareholder approval in
accordance with ASX listing rules.
Separate from their duties as Directors, the Non-Executive Directors undertake work for the Company directly
related to the evaluation and implementation of various business opportunities, including mineral
exploration/evaluation and new business ventures, for which they receive a daily rate. These payments are
made pursuant to individual agreement with the non-executive Directors and are not taken into account when
determining their aggregate remuneration levels.
VRX Silica Limited
23
DIRECTORS REPORT
Executive Compensation
Objective
The entity aims to reward executives with a level and mix of compensation commensurate with their position
and responsibilities within the entity so as to:
reward executives for Company and individual performance against targets set by appropriate
benchmarks;
align the interests of executives with those of shareholders;
link rewards with the strategic goals and performance of the Company; and
ensure total compensation is competitive by market standards.
Structure
In determining the level and make-up of executive remuneration, the Board negotiates a remuneration to
reflect the market salary for a position and individual of comparable responsibility and experience. Due to
the limited size of the Company and of its operations and financial affairs, the use of a separate remuneration
committee is not considered appropriate. Remuneration is regularly compared with the external market by
participation in industry salary surveys and during recruitment activities generally. If required, the Board may
engage an external consultant to provide independent advice in the form of a written report detailing market
levels of remuneration for comparable executive roles.
Remuneration consists of a fixed remuneration and a long term incentive portion as considered appropriate.
Compensation may consist of the following key elements:
Fixed Compensation;
Variable Compensation;
Short Term Incentive (STI); and
Long Term Incentive (LTI).
Fixed Remuneration
The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate
to the position and is competitive in the market. Fixed remuneration is reviewed annually by the Board having
regard to the Company and individual performance, relevant comparable remuneration in the mining
exploration sector and external advice.
The fixed remuneration is a base salary or monthly consulting fee.
Variable Pay — Long Term Incentives
The objective of long term incentives is to reward directors/executives in a manner which aligns this element
of remuneration with the creation of shareholder wealth. The incentive portion is payable based upon
attainment of objectives related to the director’s/executive’s job responsibilities. The objectives vary, but all
are targeted to relate directly to the Company’s business and financial performance and thus to shareholder
value.
Long term incentives (LTI’s) granted to directors/ executives are delivered in the form of options.
LTI grants to Executives are delivered in the form of employee share options. These options are issued at
an exercise price determined by the Board at the time of issue. The employee share options generally vest
over a selected period.
The objective of the granting of options is to reward Executives in a manner which aligns the element of
remuneration with the creation of shareholder wealth. As such LTI’s are made to Executives who are able
to influence the generation of shareholder wealth and thus have an impact on the Company’s performance.
The level of LTI granted is, in turn, dependent on the Company’s recent share price performance, the seniority
of the Executive, and the responsibilities the Executive assumes in the Company.
Typically, the grant of LTIs occurs at the commencement of employment or in the event that the individual
receives a promotion and, as such, is not subsequently affected by the individual’s performance over time.
VRX Silica Limited
24
DIRECTORS REPORT
C.
Employment contracts of directors and senior executives
The employment arrangements of the directors are not formalised in a contract of employment.
D. Details of remuneration for year
Directors
The following persons were directors of VRX Silica Limited during the current and previous financial years:
Paul Boyatzis
Bruce Maluish
Peter Pawlowitsch
Chairman (non-executive)
Director (executive)
Director (non-executive)
There were no other persons that fulfilled the role of a key management person, other than those disclosed
as Executive Directors.
Remuneration
Details of the remuneration of each Director and named executive officer of the Company, including their
personally-related entities, during the year was as follows:
Director
Year
Salary and Fees Superannuation
Short Term
Benefits
Post
Employment
P Boyatzis
B Maluish
P Pawlowitsch
Total
2019
2018
2019
2018
2019
2018
2019
2018
$
60,000
30,000
a)
245,000
100,000
36,530
18,265
341,530
148,265
$
-
-
19,000
9,500
3,470
1,735
22,470
11,235
Share Based
Payments
Options
$
237,600
60,900
396,000
101,500
237,600
60,900
871,200
223,300
Total
$
297,600
90,900
660,000
211,000
277,600
80,900
1,235,200
382,800
a) During the year, $45,000 was paid as a payroll payment to Mr Maluish for advisory services outside
his usual executive director duties.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Director
P Boyatzis
B Maluish
P Pawlowitsch
Year
2019
2018
2019
2018
2019
2018
Fixed
Remuneration
At risk - STI
At risk - LTI
20%
33%
40%
52%
14%
25%
-
-
-
-
-
-
80%
67%
60%
48%
86%
75%
There were no performance related payments made during the year. Performance hurdles are not attached
to remuneration options, however the Board determines appropriate vesting periods to provide rewards over
a period of time to key management personnel.
VRX Silica Limited
25
DIRECTORS REPORT
E.
Compensation options to key management personnel
The following options were granted as equity compensation benefits to Directors and Executives. The options
were issued free of charge and vested immediately. Each option entitles the holder to subscribe for one fully
paid ordinary share in the Company at various exercise prices with various expiry dates.
Director
P Boyatzis
B Maluish
P Pawlowitsch
Total
Grant
Date
Number
Granted
30/11/18
30/11/18
30/11/18
3,000,000
5,000,000
3,000,000
11,000,000
Fair Value per
Option at
Grant Date
Exercise
price per
Option
First
exercise
date
$0.0792
$0.0792
$0.0792
$0.217
$0.217
$0.217
4/12/18
4/12/18
4/12/18
Last
exercise
date
30/11/21
30/11/21
30/11/21
F.
Shares issued to key management personnel on exercise of compensation options
No shares were issued to Directors and Executives on exercise of compensation options during the year.
G.
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members of
key management personnel of the consolidated entity, including their personally related parties, is set out
below:
Director
Balance
01/07/18
Received as
Remuneration
Options
Exercised
Acquired/
(disposed)
Net Change
Other
Balance
30/06/19
Paul Boyatzis
2,531,250
Bruce Maluish
11,310,535
Peter Pawlowitsch
19,508,436
Total
33,350,221
-
-
-
-
-
-
-
-
-
-
-
-
a) 948,750
3,480,000
a) 1,500,000
12,810,535
a) 5,333,333
24,841,769
7,782,083
41,132,304
a) – Shares subscribed for under share placements to professional and sophisticated investors announced on 30 July
2018 and 2 April 2019.
VRX Silica Limited
26
DIRECTORS REPORT
Option Holding
The number of options over ordinary shares in the Company held during the financial year by each director
and other members of key management personnel of the consolidated entity, including their personally
related parties, is set out below:
Director
Balance
01/07/18
Received as
Remuneration
Options
Exercised
Options
Expired
Paul Boyatzis
4,000,000
3,000,000
Bruce Maluish
7,000,000
5,000,000
Peter Pawlowitsch
4,000,000
3,000,000
Total
15,000,000
11,000,000
-
-
-
-
-
-
-
-
Net
Change
Other
Balance
30/06/19
-
7,000,000
- 12,000,000
-
7,000,000
- 26,000,000
H.
Other transactions with key management personnel
Transactions between related parties are on normal commercial terms and conditions no more favourable
than those available to other parties unless otherwise stated.
During the year, the Company subleased office space for:
-
-
$11,100 to Gyoen Pty Ltd, Mr Peter Pawlowitsch’s consultancy company; and
$29,350 to Aruma Resources Ltd, a company Mr Paul Boyatzis is a director of.
At 30 June 2019, the Group has an outstanding receivable of:
-
-
$3,053 from Gyoen Pty Ltd, Mr Peter Pawlowitsch’s consultancy company; and
$8,071
from Aruma Resources Ltd, a company Mr Paul Boyatzis
is a director of.
During the year, $35,000 was paid to Mr Peter Pawlowitsch’s consultancy company, Gyoen Pty Ltd for
advisory services outside his usual Board duties. At 30 June 2019, the Group has an outstanding payable to
Gyoen Pty Ltd of $15,000.
On 30 July 2018, the Company announced that in conjunction with the acquisition of Wisecat Pty Ltd and the
Muchea Tenement, the Company received firm commitments for a placement of 40,000,000 shares at an
issue price of 6 cents each to raise approximately $2,400,000 (before costs). The first tranche of 36,550,000
shares were issued to investors on 1 August 2018. The second tranche of 3,450,000 shares were issued to
the directors on 19 September 2018, after shareholder approval was obtained on 14 September 2018. Mr
Paul Boyatzis, Mr Bruce Maluish and Mr Peter Pawlowitsch subscribed for 450,000, 1,000,000 and 2,000,000
shares respectively under this placement.
On 2 April 2019, the Company announced that it had received commitments for a placement of 37,666,666
shares at an issue price of 6 cents each to raise approximately $2,260,000 (before costs), with the directors
committed to subscribe for an aggregate of 4,333,333 shares. On 9 April 2019, 33,333,333 shares were
issued to investors. On 30 May 2019, shareholders approved the placement of shares to the directors. On 4
June 2019, Mr Paul Boyatzis, Mr Bruce Maluish and Mr Peter Pawlowitsch were issued with 498,750, 500,000
and 3,333,333 shares respectively under this placement.
I.
Voting and comments made at the Company's last Annual General Meeting ('AGM')
At the 2018 AGM, 99.98% of the votes received supported the adoption of the remuneration report for the
year ended 30 June 2018. The Company did not receive any specific feedback at the AGM regarding its
remuneration practices.
VRX Silica Limited
27
DIRECTORS REPORT
J. Additional information
The earnings of the consolidated entity for the five years to 30 June 2019 are summarised below:
2019
$
2018
$
2017
$
2016
$
2015
$
Sales revenue
EBITDA
EBIT
Loss after income tax
96,228
(6,015,965)
(6,017,950)
(6,017,950)
75,384
(1,780,193)
(1,781,477)
(1,781,477)
80,355
(999,075)
68,950
(9,980,287)
(1,010,828) (10,013,717)
(1,010,828) (10,013,717)
61,135
(825,273)
(863,297)
(863,297)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial
year end ($)
Total dividends declared
(cents per share)
Basic loss per share
(cents per share)
2019
0.09
-
2018
0.07
-
2017
0.01
-
2016
0.02
-
2015
0.03
-
(1.69)
(0.75)
(0.51)
(7.28)
(0.73)
[THIS CONCLUDES THE REMUNERATION REPORT, WHICH HAS BEEN AUDITED]
INSURANCE OF OFFICERS
The Company has in place an insurance policy insuring Directors and Officers of the Company against any
liability arising from a claim brought by a third party against the Company or its Directors and officers, and
against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of
their conduct while acting in their capacity as a Director or officer of the Company, other than conduct involving
a wilful breach of duty in relation to the Company.
In accordance with a confidentiality clause under the insurance policy, the amount of the premium paid to the
insurers has not been disclosed. This is permitted under Section 300(9) of the Corporations Act 2001.
INDEMNITY AND INSURANCE OF AUDITOR
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the
auditor of the Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor
of the Company or any related entity.
VRX Silica Limited
28
DIRECTORS REPORT
SHARE OPTIONS
At the date of this report there were the following unissued ordinary shares for which options were
outstanding:
1,000,000 options expiring 31 October 2019, exercisable at 2.8 cents each
5,000,000 options expiring 28 November 2019, exercisable at 2.8 cents each
15,250,000 options expiring 30 November 2020, exercisable at 7.2 cents each
25,000,000 options expiring 30 June 2021, exercisable at 10 cents each
5,750,000 options expiring 30 November 2021, exercisable at 10 cents each
11,000,000 options expiring 30 November 2021, exercisable at 21.7 cents each
5,000,000 options expiring 30 November 2021, exercisable at 9 cents each
4,00,000 options expiring 30 November 2022, exercisable at 9 cents each
During the year options were issued as follows:
25,000,000 options exercisable at 10 cents each on or before 30 June 2021
5,750,000 options exercisable at 10 cents each on or before 30 November 2021
11,000,000 options exercisable at 21.7 cents each on or before 30 November 2021
5,000,000 options exercisable at 9 cents each on or before 30 November 2021
4,000,000 options exercisable at 9 cents each on or before 30 November 2022
No options expired and no options were exercised during the year.
Subsequent to year end and up to the date of this report, no other options have been issued or exercised
and no options have expired.
No person entitled to exercise these options had or has any right, by virtue of the option, to participate in any
share issue of any other body corporate.
LEGAL PROCEEDINGS
The Company was not a party to any legal proceedings during the year.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or 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 any part of those proceedings. The Company was not a party to any such proceedings during the
year.
ENVIRONMENTAL REGULATIONS
The Company is not currently subject to any specific environmental regulation. There have not been any
known significant breaches of any environmental regulations during the year under review and up until the
date of this report.
CORPORATE GOVERNANCE
Under ASX Listing Rule 4.10.3 the Company’s Corporate Governance Statement can be located at the URL
on the Company’s website being: https://vrxsilica.com.au/investor-centre/corporate-governance/
VRX Silica Limited
29
DIRECTORS REPORT
AUDITOR
RSM Australia Partners continues in office in accordance with Section 327 of the Corporations Act 2001.
NON-AUDIT SERVICES
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the
auditor are outlined in Note 4 to the financial statements. The directors are satisfied that the provision of non-
audit services is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The directors are of the opinion that the services do not compromise the auditor’s independence as all non-
audit services have been reviewed to ensure that they do not impact the impartiality and objectivity of the
auditor and none of the services undermine the general principles relating to auditor independence as set
out in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting
Professional & Ethical Standards Board.
OFFICERS OF THE COMPANY WHO ARE FORMER PARTNERS OF RSM AUSTRALIA PARTNERS
There are no officers of the Company who are former partners of RSM Australia Partners.
AUDITOR’S DECLARATION OF INDEPENDENCE
The auditor’s independence declaration as required under section 307C of the Corporations Act 2001, has been
received and is included within the financial report.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
Bruce Maluish
Director
Perth, 25 September 2019
VRX Silica Limited
30
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
Continuing operations
Revenue
Exploration and evaluation expenditure
Depreciation
Directors fees and benefits expense
Share based payments
Other expenses
Loss before income tax expense
Income tax expense
Net loss for the year
Consolidated
Note
2019
$
2018
$
2(a)
9
24
2(b)
3
96,228
75,384
(2,937,956)
(1,985)
(364,000)
(1,525,250)
(1,284,987)
(370,428)
(1,284)
(159,500)
(302,750)
(1,022,899)
(6,017,950)
(1,781,477)
-
-
(6,017,950)
(1,781,477)
Other comprehensive income
Other comprehensive income for the year, net of tax
-
-
-
-
Total comprehensive loss attributable to the members of
VRX Silica Limited
(6,017,950)
(1,781,477)
Earnings per share attributable to the members of
VRX Silica Limited
Cents
Cents
Basic/diluted earnings per share
5
(1.69)
(0.75)
The accompanying notes form part of these financial statements.
VRX Silica Limited
31
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-Current Assets
Trade and other receivables
Plant and equipment
Deferred exploration expenditure
Total Non-Current Assets
Total Assets
LIABILITIES
Current Liabilities
Trade and other payables
Provisions
Total Current Liabilities
Total Liabilities
Net Assets
EQUITY
Issued capital
Reserves
Accumulated losses
Total Equity
The accompanying notes form part of these financial statements.
Consolidated
Note
2019
$
2018
$
6
7
7
8
9
10
11
1,545,418
222,593
1,768,011
276,936
153,547
430,483
45,794
11,016
6,972,573
45,184
4,546
2,634,453
7,029,383
2,684,183
8,797,394
3,114,666
303,215
59,365
362,580
200,449
74,304
274,753
362,580
274,753
8,434,814
2,839,913
13
14
12
30,796,699
4,188,356
(26,550,241)
21,448,698
1,923,506
(20,532,291)
8,434,814
2,839,913
VRX Silica Limited
32
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
Consolidated
2019
Issued
Capital
$
Reserves
Accumulated
Losses
$
$
Total
$
Balance at 1 July 2018
21,448,698
1,923,506
(20,532,291)
2,839,913
Loss for the year
Total comprehensive loss for the year
-
-
-
-
(6,017,950)
(6,017,950)
(6,017,950)
(6,017,950)
Securities issued during the year
Capital raising costs
Cost of share based payments
9,544,925
(196,924)
-
-
-
2,264,850
-
-
-
9,544,925
(196,924)
2,264,850
Balance at 30 June 2019
30,796,699
4,188,356
(26,550,241)
8,434,814
2018
Balance at 1 July 2017
20,571,809
1,620,756
(18,750,814)
3,441,751
Loss for the year
Total comprehensive loss for the year
Securities issued during the year
Capital raising costs
Reduction of capital on demerger of
subsidiary
Cost of share based payments
-
-
977,350
(461)
(100,000)
-
-
-
-
-
-
302,750
(1,781,477)
(1,781,477)
(1,781,477)
(1,781,477)
-
-
-
-
977,350
(461)
(100,000)
302,750
Balance at 30 June 2018
21,448,698
1,923,506
(20,532,291)
2,839,913
The accompanying notes form part of these financial statements.
VRX Silica Limited
33
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Other income
Note
Consolidated
2019
$
2018
$
(1,735,630)
5,102
79,650
(1,067,511)
3,870
46,450
Net cash outflows used in operating activities
6(i)
(1,650,878)
(1,017,191)
Cash flows from investing activities
Expenditure on mining interests
Payment for plant and equipment
Cash disposed on demerger of subsidiary
Net cash outflows used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payment of capital raising costs
Net cash provided by financing activities
Net increase/(decrease) in cash held
Cash at beginning of the financial year
(1,602,095)
(5,146)
-
(807,513)
(3,050)
(100,000)
(1,607,241)
(910,563)
4,659,925
(133,324)
4,526,601
977,360
(461)
976,899
1,268,482
(950,855)
276,936
1,227,791
Cash at end of financial year
6
1,545,418
276,936
The accompanying notes form part of these financial statements.
VRX Silica Limited
34
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
Summary of Significant Accounting Policies
These consolidated financial statements and notes represent those of VRX Silica Limited and
controlled entities. (“Group” or “Consolidated Entity”).
VRX Silica Limited is a company limited by shares incorporated in Australia whose shares are publicly
traded on the Australian Securities Exchange. The nature of the operations and principal activities of
the Group are described in the Directors’ Report.
The separate financial statements of the parent entity, VRX Silica Limited, have not been presented
within this financial report as permitted by the Corporations Act 2001.
The financial report was authorised for issue on 25 September 2019 by the directors of the Company.
(a) Basis of Preparation
The financial report is a general purpose financial report which has been prepared in accordance with
Australian Accounting Standards, Australian Accounting
Interpretations, other authoritative
pronouncements of the Australian Accounting Standards Board (‘AASB’) and the Corporations Act
2001. The group is a for-profit entity for financial reporting purposes under Australian Accounting
Standards.
Except for cash flow information, the financial report has been prepared on an accruals basis and is
based on historical costs modified by the revaluation of selected non-current assets, financial assets
and financial liabilities for which the fair value basis of accounting has been applied.
(b) New Accounting Standards for Application in Current and Future Periods
The consolidated entity has adopted all of the new and revised Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board that are mandatory for the current
reporting period. The adoption of these new and revised Accounting Standards and Interpretations has
not resulted in a significant or material change to the consolidated entity’s accounting policies.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 9 Financial Instruments
The consolidated entity has adopted AASB 9 from 1 July 2018. The standard introduced new
classification and measurement models for financial assets. A financial asset shall be measured at
amortised cost if it is held within a business model whose objective is to hold assets in order to collect
contractual cash flows which arise on specified dates and that are solely principal and interest. A debt
investment shall be measured at fair value through other comprehensive income if it is held within a
business model whose objective is to both hold assets in order to collect contractual cash flows which
arise on specified dates that are solely principal and interest as well as selling the asset on the basis
of its fair value. All other financial assets are classified and measured at fair value through profit or loss
unless the entity makes an irrevocable election on initial recognition to present gains and losses on
equity instruments (that are not held-for-trading or contingent consideration recognised in a business
combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset
may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of,
or eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or
loss, the standard requires the portion of the change in fair value that relates to the entity's own credit
risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge
accounting requirements are intended to more closely align the accounting treatment with the risk
management activities of the entity. New impairment requirements use an 'expected credit loss' ('ECL')
model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the
credit risk on a financial instrument has increased significantly since initial recognition in which case
the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected
credit losses using a lifetime expected loss allowance is available.
VRX Silica Limited
35
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. Summary of Significant Accounting Policies (Continued)
(b) New Accounting Standards for Application in Current and Future Periods (continued)
AASB 15 Revenue from Contracts with Customers
The consolidated entity has adopted AASB 15 from 1 July 2018. The standard provides a single
comprehensive model for revenue recognition. The core principle of the standard is that an entity shall
recognise revenue to depict the transfer of promised goods or services to customers at an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those goods or
services. The standard introduced a new contract-based revenue recognition model with a
measurement approach that is based on an allocation of the transaction price. This is described further
in the accounting policies below. Credit risk is presented separately as an expense rather than adjusted
against revenue. Contracts with customers are presented in an entity's statement of financial position
as a contract liability, a contract asset, or a receivable, depending on the relationship between the
entity's performance and the customer's payment. Customer acquisition costs and costs to fulfil a
contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract
period.
Impact of adoption
AASB 9 and AASB 15 were adopted using the modified retrospective approach and as such
comparatives have not been restated. As a result of adopting AASB 9 and AASB 15, the consolidated
entity has changed its accounting policies as detailed below. The impact of adoption on opening
accumulated losses as at 1 July 2018 and on the current reporting period was determined to be not
material.
Australian Accounting Standards and Interpretations that have recently been issued or amended but
are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting
period ended 30 June 2019. The consolidated entity's assessment of the impact of these new or
amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set
out below:
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The
standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating
leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the
statement of financial position, measured at the present value of the unavoidable future lease
payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or
less and leases of low-value assets (such as personal computers and small office furniture) where an
accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments
are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be
recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and
an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease
expense recognition will be replaced with a depreciation charge for the leased asset (included in
operating costs) and an interest expense on the recognised lease liability (included in finance costs).
In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be
higher when compared to lease expenses under AASB 117. However EBITDA (Earnings Before
Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is
replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within
the statement of cash flows, the lease payments will be separated into both a principal (financing
activities) and interest (either operating or financing activities) component. For lessor accounting, the
standard does not substantially change how a lessor accounts for leases. The consolidated entity will
adopt this standard from 1 July 2019 and its impact on adoption is expected to result in total assets
increasing by $165,116 and total liabilities increasing by $165,116, with no impact to net assets.
VRX Silica Limited
36
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. Summary of Significant Accounting Policies (Continued)
(c) Statement of Compliance
The financial report complies with Australian Accounting Standards, which include Australian
equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures
that the financial report, comprising the financial statements and notes thereto, complies with
International Financial Reporting Standards (IFRS).
(d) Basis of Consolidation
The consolidated financial statements comprise the financial statements of VRX Silica Limited
(“Company” or “Parent Entity”) and its subsidiaries as at 30 June each year (“Consolidated Entity” or
“Group”). Control is achieved where the Company has the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent
company, using consistent accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions, income
and expenses and profit and losses resulting from intra-group transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease
to be consolidated from the date on which control is transferred out of the Group. Control exists where
the Company has the power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing when the Group controls another entity.
Business combinations have been accounted for using the acquisition method of accounting (refer note
1(e)).
Unrealised gains or transactions between the Group and its associates are eliminated to the extent of
the Group’s interests in the associates. Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred. Accounting policies of associates have
been changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held
by the Group and are presented separately in the statement of comprehensive income and within equity
in the consolidated statement of financial position. Losses are attributed to the non-controlling interests
even if that results in a deficit balance.
The Group treats transactions with non-controlling interests that do not result in a loss of control as
transactions with equity owners of the Group. A change in ownership interest results in an adjustment
between the carrying amounts of the controlling and non-controlling interests to reflect their relative
interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling
interests and any consideration paid or received is recognised within equity attributable to owners of
the Company.
When the group ceases to have control, joint control or significant influence, any retained interest in
the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss.
The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained
interest as an associate, joint controlled entity or financial asset. In addition, any amounts previously
recognised in other comprehensive income in respect of that entity are accounted for as if the Group
had directly disposed of the related assets or liabilities. This may mean that amounts previously
recognised in other comprehensive income are reclassified to profit or loss.
VRX Silica Limited
37
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. Summary of Significant Accounting Policies (Continued)
(e) Business Combinations
The acquisition method of accounting is used to account for all business combinations, including
business combinations involving entities or business under common control, regardless of whether
equity instruments or other assets are acquired. The consideration transferred for the acquisition of a
subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity
interests issued by the Group. The consideration transferred also includes the fair value of any
contingent consideration arrangement and the fair value of any pre-existing equity interest in the
subsidiary. Acquisition-related costs are expenses as incurred. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are, with limited exceptions,
measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the
Group recognises any non-controlling interest in the acquiree either at fair value or at the non-
controlling interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree
and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of
the Group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are
less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement
of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain
purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified as either equity or a financial liability. Amounts classified as a
financial liability are subsequently remeasured to fair value with changes in fair value recognised in the
statement of comprehensive income.
(f) Revenue Recognition
The consolidated entity recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is
expected to be entitled in exchange for transferring goods or services to a customer. For each contract
with a customer, the consolidated entity: identifies the contract with a customer; identifies the
performance obligations in the contract; determines the transaction price which takes into account
estimates of variable consideration and the time value of money; allocates the transaction price to the
separate performance obligations on the basis of the relative stand-alone selling price of each distinct
good or service to be delivered; and recognises revenue when or as each performance obligation is
satisfied in a manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the
customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer
and any other contingent events. Such estimates are determined using either the 'expected value' or
'most likely amount' method. The measurement of variable consideration is subject to a constraining
principle whereby revenue will only be recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not occur. The measurement
constraint continues until the uncertainty associated with the variable consideration is subsequently
resolved. Amounts received that are subject to the constraining principle are initially recognised as
deferred revenue in the form of a separate refund liability.
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the customer obtains control
of the goods, which is generally at the time of delivery.
VRX Silica Limited
38
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. Summary of Significant Accounting Policies (Continued)
(f)
Revenue Recognition (continued)
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered
based on either a fixed price or an hourly rate.
Interest
Interest revenue is recognised as interest accrues using the effective interest method.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
(g) Cash and Cash Equivalents
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash
equivalents as described above, net of outstanding bank overdrafts.
(h)
Trade and Other Receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost
using the effective interest method, less any allowance for expected credit losses. Trade receivables
are generally due for settlement within 30 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which
uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables
have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
(i)
Income Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively enacted by the reporting date.
Deferred income tax is provided on all temporary differences at the reporting date between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or
liability in a transaction that is not a business combination and that, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss; or
when the taxable temporary difference is associated with investments in subsidiaries, associates
or interests in joint ventures, and the timing of the reversal of the temporary difference can be
controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
VRX Silica Limited
39
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. Summary of Significant Accounting Policies (Continued)
(i)
Income Tax (continued)
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences and the carry-forward of unused tax
credits and unused tax losses can be utilised, except:
when the deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and, at
the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
when the deductible temporary difference is associated with investments in subsidiaries, associates
or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent
that it is probable that the temporary difference will reverse in the foreseeable future and taxable
profit will be available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to
the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part
of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised
to the extent that it has become probable that future taxable profit will allow the deferred tax asset to
be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or
loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to
the same taxable entity and the same taxation authority.
The amount of benefits brought to account or which may be realised in the future is based on the
assumption that no adverse change will occur in income legislation and the anticipation that the Group
will derive sufficient future assessable income to enable the benefit to be realised and comply with the
conditions of deductibility imposed by the law.
(j) Other Taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
when the GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the statement of financial position.
Cash flows are included in the cash flow statement on a gross basis and the GST component of cash
flows arising from investing and financing activities, which is recoverable from, or payable to, the
taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable
to, the taxation authority.
VRX Silica Limited
40
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. Summary of Significant Accounting Policies (Continued)
(k)
Investments and Other Financial Assets
Investments and other financial assets are initially measured at fair value. Transaction costs are
included as part of the initial measurement, except for financial assets at fair value through profit or
loss. Such assets are subsequently measured at either amortised cost or fair value depending on their
classification. Classification is determined based on both the business model within which such assets
are held and the contractual cash flow characteristics of the financial asset unless, an accounting
mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been
transferred and the consolidated entity has transferred substantially all the risks and rewards of
ownership. When there is no reasonable expectation of recovering part or all of a financial asset, its
carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income
are classified as financial assets at fair value through profit or loss. Typically, such financial assets will
be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with
an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where
permitted. Fair value movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which
the consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify
them as such upon initial recognition.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets
which are either measured at amortised cost or fair value through other comprehensive income. The
measurement of the loss allowance depends upon the consolidated entity's assessment at the end of
each reporting period as to whether the financial instrument's credit risk has increased significantly
since initial recognition, based on reasonable and supportable information that is available, without
undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a
12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime
expected credit losses that is attributable to a default event that is possible within the next 12 months.
Where a financial asset has become credit impaired or where it is determined that credit risk has
increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The
amount of expected credit loss recognised is measured on the basis of the probability weighted present
value of anticipated cash shortfalls over the life of the instrument discounted at the original effective
interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance
is recognised within other comprehensive income. In all other cases, the loss allowance is recognised
in profit or loss.
VRX Silica Limited
41
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. Summary of Significant Accounting Policies (Continued)
(l) Mineral Exploration and Evaluation Expenditure
Exploration and evaluation expenditures in relation to each separate area of interest are recognised as
an exploration and evaluation asset in the year in which they are incurred where the following conditions
are satisfied:
(i)
the rights to tenure of the area of interest are current; and
(ii)
at least one of the following conditions is also met:
(a)
(b)
the exploration and evaluation expenditures are expected to be recouped through
successful development and exploitation of the area of interest, or alternatively, by its sale;
or
exploration and evaluation activities in the area have not, at the reporting date, reached a
stage which permits a reasonable assessment of the existence, or otherwise, of
economically recoverable reserves and active and significant operations in, or relation to,
the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to
explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation
of depreciation and amortisation of assets used in exploration and evaluation activities. General and
administrative costs are only included in the measurement of exploration and evaluation costs where
they are related directly to operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest
that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount.
The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to
which it has been allocated being no larger than the relevant area of interest) is estimated to determine
the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its recoverable amount, but only to the
extent that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset in previous years.
Where a decision has been made to proceed with development in respect of a particular area of
interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then
reclassified to development.
(m)
Impairment of Assets
The Group assesses at each reporting date whether there is an indication that an asset may be
impaired. If any such indication exists, or when annual impairment testing for an asset is required, the
Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the
higher of its fair value less costs to sell and its value in use and is determined for an individual asset,
unless the asset does not generate cash inflows that are largely independent of those from other assets
or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In
such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs.
When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the
asset or cash-generating unit is considered impaired and is written down to its recoverable amount.
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. Impairment losses relating to continuing operations are recognised in those
expense categories consistent with the function of the impaired asset unless the asset is carried at
revalued amount (in which case the impairment loss is treated as a revaluation decrease).
VRX Silica Limited
42
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. Summary of Significant Accounting Policies (Continued)
(m)
Impairment of Assets (continued)
An assessment is also made at each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists,
the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there
has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its
recoverable amount. That increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which
case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is
adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on
a systematic basis over its remaining useful life.
(n)
Trade and Other Payables
Trade payables and other payables are carried at amortised costs and represent liabilities for goods
and services provided to the Group prior to the end of the financial year that are unpaid and arise when
the Group becomes obliged to make future payments in respect of the purchase of these goods and
services. The amounts are unsecured and are usually paid within 30 days of recognition.
(o) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a separate assets but only when the reimbursement is
virtually certain. The expense relating to any provision is presented in the statement of comprehensive
income net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax
rate that reflects the risks specific to the liability.
When discounting is used, the increase in the provision due to the passage of time is recognised as a
borrowing cost.
(p)
Interest-Bearing Loans and Borrowings
All loans and borrowings are initially recognised at cost, being the fair value of the consideration
received net of issue costs associated with the borrowing. Interest calculated using the effective
interest rate method is accrued over the period it becomes due and increases the carrying amount of
the liability.
On the issue of the convertible notes the fair value of the liability component is determined using a
market rate for an equivalent non-convertible bond and this amount is carried as a non-current liability
on the amortised cost basis until extinguished on conversion or redemption. The increase in the liability
due to the passage of time is recognised as a finance cost. The remainder of the proceeds are allocated
to the conversion option that is recognised and included in shareholders equity as a convertible note
reserve, net of transaction costs. The carrying amount of the conversion option is not remeasured in
the subsequent years. The corresponding interest on convertible notes is expensed to profit or loss.
VRX Silica Limited
43
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. Summary of Significant Accounting Policies (Continued)
(q) Share-Based Payment Transactions
The Group provides benefits to employees (including senior executives) of the Group in the form of
share-based payments, whereby employees render services in exchange for shares or rights over
shares (equity-settled transactions).
When provided, the cost of these equity-settled transactions with employees is measured 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 model or the binomial option valuation model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than
conditions linked to the price of the shares of VRX Silica Limited (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period in which the performance and/or service conditions are fulfilled, ending on the date on
which the relevant employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting
date reflects (i) the extent to which the vesting period has expired and (ii) the Group’s best estimate of
the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of
market performance conditions being met as the effect of these conditions is included in the
determination of fair value at grant date. The statement of comprehensive income charge or credit for
a period represents the movement in cumulative expense recognised as at the beginning and end of
that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
only conditional upon a market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the
terms had not been modified. In addition, an expense is recognised for any modification that increases
the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee,
as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and
any expense not yet recognised for the award is recognised immediately. However, if a new award is
substituted for the cancelled award and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were a modification of the original award,
as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the
computation of earnings per share.
(r)
Issued Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs
directly attributable to the issue of new shares or options for the acquisition of a new business are not
included in the cost of acquisition as part of the purchase consideration.
(s)
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision maker. The chief operating decision maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the Board of
Directors of the Company.
VRX Silica Limited
44
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. Summary of Significant Accounting Policies (Continued)
(t)
Earnings per Share
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to
exclude any costs of servicing equity (other than dividends) and preference share dividends, divided
by the weighted average number of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted
for:
costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that
have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from
the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares
and dilutive potential ordinary shares, adjusted for any bonus element.
(u) Leases
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to
ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased
property or, if lower, at the present value of the minimum lease payments.
Lease payments are apportioned between the finance charges and reduction of the lease liability so
as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are
charged directly against income.
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added
to the carrying amount of the leased asset and recognised over the lease term on the same bases as
the lease income.
Operating lease payments are recognised as an expense in the statement of comprehensive income
on a straight-line basis over the lease term.
(v) Plant and Equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment
losses.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as
follows:
Plant and equipment – over 3 to 5 years
The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if
appropriate, at each financial year end.
(i) Impairment
The carrying values of property, plant and equipment are reviewed for impairment at each reporting
date, with recoverable amount being estimated when events or changes in circumstances indicate that
the carrying value may be impaired.
The recoverable amount of plant and equipment 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.
VRX Silica Limited
45
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. Summary of Significant Accounting Policies (Continued)
(v) Plant and Equipment (continued)
For an asset that does not generate largely independent cash inflows, recoverable amount is
determined for the cash-generating unit to which the assets belongs, unless the asset's value in use
can be estimated to be close to its fair value.
An impairment exists when the carrying value of an asset or cash-generating units exceeds its
estimated recoverable amount. The asset or cash-generating unit is then written down to its
recoverable amount.
For plant and equipment, impairment losses are recognised in the statement of comprehensive
income.
(ii) Derecognition and disposal
An item of plant and equipment is derecognised upon disposal or when no further future economic
benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the
asset is derecognised.
(w) Finance Costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance
costs are expensed in the period in which they are incurred, including interest on short-term and long-
term borrowings.
(x)
Employee Benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave
expected to be settled within 12 months of the reporting date are recognised in current liabilities in
respect of employees' services up to the reporting date and are measured at the amounts expected to
be paid when the liabilities are settled
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they
are incurred.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the
reporting date are recognised in non-current liabilities, provided there is an unconditional right to defer
settlement of the liability. The liability is measured as the present value of expected future payments
to be made in respect of services provided by employees up to the reporting date using the projected
unit credit method. Consideration is given to expected future wage and salary levels, experience of
employee departures and periods of service. Expected future payments are discounted using market
yields at the reporting date on national government bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
VRX Silica Limited
46
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. Summary of Significant Accounting Policies (Continued)
(y) Current and Non-Current Classification
Assets and liabilities are presented in the statement of financial position based on current and non-
current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or
consumed in the consolidated entity's normal operating cycle; it is held primarily for the purpose of
trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or
cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12
months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity's
normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12
months after the reporting period; or there is no unconditional right to defer the settlement of the liability
for at least 12 months after the reporting period. All other liabilities are classified as non-current.
(z) Significant Accounting Estimates and Judgments
Significant accounting judgments
In the process of applying the Group’s accounting policies, management has made the following
judgments, apart from those involving estimations, which have the most significant effect on the
amounts recognised in the financial statements.
Exploration and evaluation assets
The Group’s accounting policy for exploration and evaluation expenditure is set out at Note 1(l). The
application of this policy necessarily requires management to make certain estimates and assumptions
as to future events and circumstances. Any such estimates and assumptions may change as new
information becomes available. If, after having capitalised expenditure under the policy, it is concluded
that the expenditures are unlikely to be recovered by future exploitation or sale, then the relevant
capitalised amount will be written off to the statement of comprehensive income.
Significant accounting estimates and assumptions
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:
Impairment of assets
In determining the recoverable amount of assets, in the absence of quoted market prices, estimations
are made regarding the present value of future cash flows using asset-specific discount rates and the
recoverable amount of the asset is determined. Value-in-use calculations performed in assessing
recoverable amounts incorporate a number of key estimates.
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 from
market value.
VRX Silica Limited
47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Revenue and Expenses
(a) Revenue
Interest received – other corporations
Other
(b) Other Expenses
Audit fees
Consulting fees
Legal fees
Marketing
Rent
Securities exchange and registry fees
Travel
Other
3.
Income Tax
(a) Income tax expense
The income tax expense for the year differs from the prima facie
tax as follows:
Loss for year
Consolidated
2019
$
2018
$
5,553
90,675
96,228
4,334
71,050
75,384
35,500
206,400
107,810
369,878
81,665
99,531
113,407
270,796
1,284,987
33,500
150,735
227,580
72,746
83,316
63,963
19,527
371,532
1,022,899
(6,017,950)
(1,781,477)
Prima facie income tax (benefit) @ 27.5% (2017: 27.5%)
(1,654,936)
(489,906)
Tax effect of non-deductible/(non-assessable) items
Deferred tax assets not brought to account
Total income tax expense
725,512
929,424
-
(28,623)
518,529
-
(b) Deferred tax assets
Deferred tax assets not brought to account arising from tax losses,
the benefits of which will only be realised if the conditions for
deductibility set out in Note 1(i) occur:
There are no franking credits available to the Group.
7,444,427
6,670,888
4. Auditors’ Remuneration
The auditor of VRX Silica Limited is RSM Australia Partners.
Amounts, received or due and receivable by RSM Australia
Partners for:
- audit or review services
- other non-audit services
VRX Silica Limited
35,500
2,000
37,500
33,500
56,595
90,095
48
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
5.
Earnings per Share (EPS)
Basic earnings per share
The earnings and weighted average number of ordinary shares
used in the calculation of basic earnings per share is as follows:
Earnings – Net loss for year
Weighted average number of ordinary shares used in the
calculation of basic EPS
Consolidated
2019
$
2018
$
Cents
Cents
(1.69)
(0.75)
(6,017,950)
(1,781,477)
No.
No.
355,810,049
237,730,795
6.
Cash and Cash Equivalents
Cash at bank
1,545,418
276,936
Cash at bank earns interest at floating rates based on daily bank deposit rates.
(i) Reconciliation of loss for the year to net cash flows from
operating activities:
Loss for the year
Depreciation
Equity settled share based payment
Exploration and evaluation expenditure
Changes in assets and liabilities
Receivables
Payables
Provisions
GST payable/receivable
(6,017,950)
(1,781,477)
1,985
1,525,250
2,937,956
(18,451)
(36,669)
(12,951)
(30,048)
1,284
302,750
370,428
(34,565)
121,371
11,047
(8,029)
Net cash flows used in operating activities
(1,650,878)
(1,017,191)
(ii) Non-cash financing and investing activities:
Shares issued as consideration for mining interests
Options issued as consideration for mining interests
Options issued as consideration for capital raising costs
VRX Silica Limited
4,885,000
676,000
63,600
5,624,600
-
-
-
-
49
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
7.
Trade and Other Receivables
Current
Interest receivable
GST recoverable
Other receivables
Consolidated
2019
$
2018
$
-
112,701
109,892
222,593
159
71,905
81,483
153,547
Terms and conditions relating to the above financial instruments:
Other receivables are non-interest bearing and generally repayable within 30 days.
Due to the short term nature of these receivables, their carrying value is assumed to approximate their
fair value.
Non-Current
Security bonds
Performance bond
25,794
20,000
45,794
25,184
20,000
45,184
Allowance for expected credit losses
The Group has not recognised any expected credit losses for the year 30 June 2019.
8.
Plant and Equipment
Plant and equipment - at cost
Less: Accumulated depreciation
Net carrying amount
Reconciliation
At 1 July, net of accumulated depreciation and impairment
Additions
Depreciation expense
At 30 June, net of accumulated depreciation and impairment
9.
Deferred Exploration Expenditure
Expenditure brought forward
Acquisition of subsidiary (Note 16)
Tenement acquisitions (Note 17)
Expenditure incurred during the year
Expenditure written off during the year
Expenditure carried forward
234,061
(223,045)
225,606
(221,060)
11,016
4,546
4,546
8,455
(1,985)
11,016
2,780
3,050
(1,284)
4,546
2,634,453
500,000
5,272,215
1,503,861
(2,937,956)
2,374,791
-
-
630,090
(370,428)
6,972,573
2,634,453
The expenditure above relates principally to the exploration and evaluation phase. The ultimate recoupment
of this expenditure is dependent upon the successful development and commercial exploitation, or
alternatively, sale of the respective areas of interest, at amounts at least equal to book value.
VRX Silica Limited
50
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
10. Trade and Other Payables
Current
Trade and other payables
Consolidated
2019
$
2018
$
303,215
200,449
Terms and conditions relating to the above financial instruments:
Due to the short term nature of trade payable and accruals, their carrying value is assumed to
Trade payables are non-interest bearing and are normally settled on 30 day terms.
approximate their fair value.
11. Provisions
Current
Employee benefits
59,365
74,304
Employee benefits represent annual leave entitlements of employees within the Group and are non-interest
bearing. The entire obligation is presented as current, since the Group does not have a right to defer
settlement.
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes all unconditional entitlements where employees have
completed the required period of service and also those where employees are entitled to pro-rata payments
in certain circumstances. The entire amount is presented as current, since the consolidated entity does not
have an unconditional right to defer settlement. However, based on past experience, the consolidated entity
does not expect all employees to take the full amount of accrued leave or require payment within the next 12
months. The following amounts reflect leave that is not expected to be taken within the next 12 months:
Employee benefits expected to be settled after 12 months
-
-
12. Equity - Accumulated Losses
Accumulated losses at the beginning of the year
Loss after income tax expenses for the year
Accumulated losses at the end of the year
(20,532,291)
(6,017,950)
(18,750,814)
(1,781,477)
(26,550,241)
(20,532,291)
VRX Silica Limited
51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
13.
Issued Capital
Issued and paid up capital
(a)
Ordinary shares - fully paid
Consolidated
2019
$
2018
$
30,796,699
21,448,698
(b) Movement in ordinary shares on issue
Issue
Price
No. of Shares
$
2019
Balance at the beginning of the year
Issued as consideration for acquisition of subsidiary
(Note 16) – 1 August 2018
Issued for cash pursuant to placement to investors
– 1 August 2018
Expense of issue
Issued as consideration for acquisition of tenement (Note 17)
– 1 August 2018
Issued as consideration for acquisition of tenement (Note 17)
– 19 September 2018
Issued for cash pursuant to placement to directors
– 19 September 2018
Issued as consideration for acquisition of tenement (Note 17)
– 18 February 2019
Issued for cash pursuant to placement to investors
– 9 April 2019
Expense of issue
Issued for cash pursuant to placement to directors
– 4 June 2019
Balance at the end of the year
251,319,868
21,448,698
$0.060
8,333,333
500,000
$0.060
36,550,000
-
2,193,000
(23,072)
$0.060
10,000,000
600,000
$0.065
55,000,000
3,575,000
$0.060
3,450,000
207,000
$0.105
2,000,000
210,000
$0.060
33,333,333
-
2,000,000
(173,852)
$0.060
4,332,083
259,925
404,318,617
30,796,699
2018
Balance at the beginning of the year
Reduction of capital on demerger of subsidiary (Note 15)
Issued for cash pursuant to entitlement offer
– 22 December 2017
Entitlement offer shortfall shares issued for cash
– 5 January 2018
Expense of issue
Balance at the end of the year
223,395,589
20,571,809
-
(100,000)
$0.035
20,696,623
724,382
$0.035
7,227,656
252,968
-
(461)
251,319,868
21,448,698
VRX Silica Limited
52
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
13.
Issued Capital (Continued)
(c) Share options
At the end of the year, the following options over unissued ordinary shares were outstanding:
1,000,000 options expiring 31 October 2019, exercisable at 2.8 cents each;
5,000,000 options expiring 28 November 2019, exercisable at 2.8 cents each;
15,250,000 options expiring 30 November 2020, exercisable at 7.2 cents each;
25,000,000 options expiring 30 June 2021, exercisable at 10 cents each;
5,750,000 options expiring 30 November 2021, exercisable at 10 cents each;
11,000,000 options expiring 30 November 2021, exercisable at 21.7 cents each;
5,000,000 options expiring 30 November 2021, exercisable at 9 cents each; and
4,000,000 options expiring 30 November 2022, exercisable at 9 cents each.
(d) Terms and conditions of issued capital
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company,
to participate in proceeds from the sale of all surplus assets in proportion to the number of and amounts paid
up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
(e) Capital management
Management controls the capital of the Company in order to maintain a good debt to equity ratio, provide the
shareholders with adequate returns and ensure that the Company can fund its operations and continue as a
going concern.
The Company’s debt and capital includes ordinary share capital and financial liabilities, supported by financial
assets. There are no externally imposed capital requirements.
Management effectively manages the Company’s capital by assessing its financial risks and adjusting its
capital structure in response to changes in these risks and in the market. These responses include the
management of debt levels, distributions to shareholders and share issues. There have been no changes in
the strategy adopted by management to control the capital of the Company since the prior year. The gearing
ratios for the year ended 30 June 2019 and 30 June 2018 are as follows:
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total capital
Consolidated
2019
$
2018
$
10
6
303,215
(1,545,418)
(1,242,203)
8,434,814
7,192,611
200,449
(276,936)
(76,487)
2,839,913
2,763,426
Gearing ratio
N/A
N/A
VRX Silica Limited
53
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
14. Reserves
Option issue reserve
Option issue reserve
Consolidated
2019
$
2018
$
4,188,356
1,923,506
(i) Nature and purpose of reserve
The option issue reserve is used to accumulate amounts received on the
issue of options and records items recognised as expenses on valuation of
incentive based share options.
(ii) Movements in reserve
Balance at the beginning of the year
Issue of incentive based share options
Options issued in lieu of fees payable
Options issued as consideration for acquisition of tenement
Balance at the end of the year
1,923,506
1,126,850
462,000
676,000
1,620,756
302,750
-
-
4,188,356
1,923,506
15. Demerger of Subsidiary
On 30 November 2017, at the 2017 annual general meeting, shareholders approved the demerger of Delgare
Pty Ltd (“Delgare”), a wholly owned subsidiary of the Company. The Company reduced the share capital of
the Company by distributing its holding of Delgare shares in specie to shareholders on a pro rata basis based
on the number of shares held by eligible shareholders on 6 December 2017. The demerger was completed
on 12 December 2017.
At demerger, the net assets of Delgare was cash of $100,000, resulting in the reduction of the Company’s
issued capital by $100,000.
16. Acquisition of Subsidiary
On 30 July 2018, the Company announced that it had acquired 100% of the issued capital of Wisecat Pty Ltd
(“Wisecat”). As Wisecat held the option to acquire the Muchea Tenement (E70/4886) (“Muchea Option”), with
no inputs or outputs being acquired, the acquisition was assessed as an asset acquisition rather than a
business combination.
The full consideration for the acquisition of Wisecat of 8,333,333 fully paid ordinary shares in the Company
were issued to Goldfire Enterprises Pty Ltd (“Goldfire”), the sole shareholder of Wisecat, on 1 August 2018.
Purchase consideration
Fair value of share consideration issued
Net assets acquired
Deferred exploration expenditure
$
500,000
500,000
500,000
500,000
VRX Silica Limited
54
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
17. Acquisition of Muchea and Boyatup Tenements
On 30 July 2018, the Company announced that Wisecat had entered into a tenement acquisition agreement
with Australian Silica Pty Ltd (“Australian Silica”) to purchase the Muchea Tenement (E70/4886) following the
Company’s acquisition of Wisecat.
The Muchea Tenement acquisition was on the following terms:
Initial issue of 10,000,000 shares in the Company to Australian Silica. The shares were issued on 1
August 2018;
Issue, subject to shareholder approval, 55,000,000 shares in the Company and 20,000,000 options, at
an issue price of 0.001 cent per option. Each option is exercisable into a share in the Company on or
before 30 June 2021 at 10 cents. Shareholder approval was obtained on 14 September 2018 and the
shares and options were issued to Australian Silica on 19 September 2018; and
Wisecat will pay Australian Silica an ongoing net production royalty of 1% on gross revenue on all
product sold from minerals mined from the Muchea Tenement minus allowable deductions.
On 4 February 2019, the Company announced that it had completed an agreement with Silatec Pty Ltd for
the acquisition of the Boyatup Silica Sand Project which consists of a single tenement, E69/3560. The
Company issued 2,000,000 shares on 18 February 2019 and paid $10,000 in full consideration for the
acquisition.
Acquisition of Muchea tenements
Fully paid ordinary shares
Unlisted options
Cash received for unlisted options
Stamp duty
Acquisition of Boyatup tenements
Fully paid ordinary shares
Cash consideration
Stamp duty
Total consideration for tenement acquisitions
18. Commitments
Exploration commitments
$
4,175,000
676,000
(200)
194,765
5,045,565
210,000
10,000
6,650
226,650
5,272,215
Consolidated
2019
$
2018
$
The Company has certain obligations to perform minimum exploration work and to expend minimum amounts
of money on such work on mining tenements. These obligations may be varied from time to time subject to
approval and are expected to be fulfilled in the normal course of the operations of the Group. These
commitments have not been provided for in the accounts. Due to the nature of the Group’s operations in
exploring and evaluating areas of interest, it is difficult to accurately forecast the nature and amount of future
expenditure beyond the next year. Expenditure may be reduced by seeking exemption from individual
commitments, by relinquishment of tenure or any new joint venture arrangements. Expenditure may be
increased when new tenements are granted or joint venture agreements amended. The minimum expenditure
commitment on the tenements is:
Not later than one year
490,000
358,000
VRX Silica Limited
55
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
18. Commitments (Continued)
Operating lease commitments
Non-cancellable operating leases contracted for but not recognised
in the financial statements:
Payable – minimum lease payments
- Not later than one year
- After one year but not more than five years
The property lease is a non-cancellable lease with a 24 month term
commencing 1 April 2019, with rent payable monthly in advance. An
option exists to renew the lease at the end of the 24 month term for
an additional term of 24 months.
The storage lease is currently on a month by month basis.
Consolidated
2019
$
2018
$
81,055
59,823
140,878
72,617
-
72,617
19. Contingent Liabilities
It is possible that native title, as defined in the Native Title Act 1993, might exist over land in which the
Company has an interest. It is impossible at this stage to quantify the impact (if any) that the existence of
native title may have on the operations of the Company. However, at the date of this report, the Directors
are aware that applications for native title claims have been accepted by the Native Title Tribunal over
tenements held by the Company.
In connection with Wisecat’s acquisition of the Muchea Tenement (Note 17), Wisecat will pay Australian Silica
an ongoing net production royalty of 1% on gross revenue on all product sold from minerals mined from the
Muchea Tenement minus allowable deductions.
20. Financial Reporting by Segments
The Group has identified its operating segments based on the internal reports that are used by the Board
(the chief operating decision makers) in assessing performance and in determining the allocation of
resources.
The operating segments are identified by the Board based on the phase of operation within the mining
industry. For management purposes, the Group has organised its operations into two reportable segments
on the basis of stage of development as follows:
Development assets
Exploration and evaluation assets, which includes assets that are associated with the determination
and assessment of the existence of commercial economic reserves.
The Board as a whole will regularly review the identified segments in order to allocate resources to the
segment and to assess its performance.
During the year ended 30 June 2019, the Group had no development assets. The Board considers that it has
only operated in one segment, being mineral exploration within Australia.
VRX Silica Limited
56
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
20. Financial Reporting by Segments (Continued)
Where applicable, corporate costs, finance costs, interest revenue and foreign currency gains and losses are
not allocated to segments as they are not considered part of the core operations of the segments and are
managed on a Group basis.
The consolidated entity is domiciled in Australia. All revenue from external customers is generated from
Australia only. Segment revenues are allocated based on the country in which the customer is located
Revenues of approximately Nil (2018: Nil) are derived from a single external customer.
21. Related Party Transactions
(a) Subsidiaries
The consolidated financial statements include the financial statements of VRX Silica Limited and the
subsidiaries listed in the following table.
County of
Incorporation
% Equity Interest
2018
2019
%
%
Ventnor Gold Pty Ltd
VRX Boyatup Pty Ltd (formerly
Ventnor Kumarina Pty Ltd)
Ventnor Mining Pty Ltd
Ventnor Pilbara Pty Ltd
Wisecat Pty Ltd
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
-
(b) Parent entity
VRX Silica Limited is the ultimate Australian parent entity and ultimate parent of the Group.
(c) Key management personnel
Disclosures relating to key management personnel are set out in Note 23.
VRX Silica Limited
57
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
22. Parent Entity Disclosures
(a) Summary financial information
Financial Position
Assets
Current Assets
Non-current asset
Total assets
Liabilities
Current Liabilities
Total liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial Performance
Loss for the year
Other comprehensive income
Total comprehensive loss
(b) Guarantees
Parent
2019
$
2018
$
1,716,576
6,958,206
416,308
2,696,559
8,674,782
3,112,867
239,968
239,968
272,954
272,954
30,896,699
4,188,356
(26,650,241)
21,548,698
1,923,506
(20,632,291)
8,434,814
2,839,913
(6,017,950)
-
(6,017,950)
(1,881,301)
-
(1,881,301)
VRX Silica Limited has not entered into any guarantees in relation to the debts of its subsidiary.
(c) Other commitments and contingencies
VRX Silica Limited has no commitments to acquire property, plant and equipment, and has no contingent
liabilities apart from the amounts disclosed in Note 19.
(d) Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity as disclosed in
Note 1 except for the following:
● Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
● Investments in associates are accounted for at cost, less any impairment, in the parent entity.
● Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt
may be an indicator of an impairment of the investment.
VRX Silica Limited
58
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
23. Director and Executive Disclosures
(a) Details of Key Management Personnel
Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or
payable to each member of the consolidated entity’s key management personnel for the year ended 30 June
2019.
Short-term benefits
Post-employment benefits
Share-based payments
Consolidated
2019
$
2018
$
341,530
22,470
871,200
1,235,200
148,265
11,235
223,300
382,800
(b) Loans with Key Management Personnel
There were no loans to key management personnel or their related entities during the financial year (2018:
nil).
(c) Other transactions with Key Management Personnel
Transactions between related parties are on normal commercial terms and conditions no more favourable
than those available to other parties unless otherwise stated.
During the year, the Company subleased office space for:
-
-
$11,100 (2018: $11,100) to Gyoen Pty Ltd, Mr Peter Pawlowitsch’s consultancy company; and
$29,350 (2018: $29,350) to Aruma Resources Ltd, a company Mr Paul Boyatzis is a director of.
At 30 June 2019, the Group has an outstanding receivable of:
-
-
$3,053 (2018: $3,053) from Gyoen Pty Ltd, Mr Peter Pawlowitsch’s consultancy company; and
$8,071 (2018: $8,071) from Aruma Resources Ltd, a company Mr Paul Boyatzis is a director of.
During the year, $35,000 (2018: nil) was paid to Mr Peter Pawlowitsch’s consultancy company, Gyoen Pty
Ltd for advisory services outside his usual Board duties. At 30 June 2019, the Group has an outstanding
payable to Gyoen Pty Ltd of $15,000.
On 30 July 2018, the Company announced that in conjunction with the acquisition of Wisecat Pty Ltd and the
Muchea Tenement, the Company received firm commitments for a placement of 40,000,000 shares at an
issue price of 6 cents each to raise approximately $2,400,000 (before costs). The first tranche of 36,550,000
shares were issued to investors on 1 August 2018. The second tranche of 3,450,000 shares were issued to
the directors on 19 September 2018, after shareholder approval was obtained on 14 September 2018. Mr
Paul Boyatzis, Mr Bruce Maluish and Mr Peter Pawlowitsch subscribed for 450,000, 1,000,000 and 2,000,000
shares respectively under this placement.
On 2 April 2019, the Company announced that it had received commitments for a placement of 37,666,666
shares at an issue price of 6 cents each to raise approximately $2,260,000 (before costs), with the directors
committed to subscribe for an aggregate of 4,333,333 shares. On 9 April 2019, 33,333,333 shares were
issued to investors. On 30 May 2019, shareholders approved the placement of shares to the directors. On 4
June 2019, Mr Paul Boyatzis, Mr Bruce Maluish and Mr Peter Pawlowitsch were issued with 498,750, 500,000
and 3,333,333 shares respectively under this placement.
During the previous financial year, the one for eight non-renounceable rights issue of 27,924,279 fully paid
ordinary shares at $0.035 each raised $977,350 (before costs). The application shares were issued on 22
December 2017 and the shortfall shares were issued on 5 January 2018. Mr Paul Boyatzis, Mr Bruce
Maluish and Mr Peter Pawlowitsch subscribed for their entitlement of 281,250, 1,256,725 and 500,937
shares respectively under the rights issue offer.
VRX Silica Limited
59
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
24. Share Based Payments
(a) Value of share based payments in the financial statements
Expensed:
Directors remuneration:
Unlisted options
Incentive based payments to employees and consultants:
Unlisted options
Share based payments in lieu of fees payable:
Unlisted options
Recognised in statement of comprehensive income
Share based payments to acquire exploration tenements:
Fully paid ordinary shares
Unlisted options
Recognised on statement of financial position
Share based payments in capital raising costs:
Unlisted options
Recognised on statement of changes in equity
Consolidated
2019
$
2018
$
871,200
223,300
255,650
79,450
398,400
1,525,250
-
302,750
4,385,000
676,000
5,061,000
63,600
63,600
-
-
-
-
Total share based payments
6,649,850
302,750
(b) Summary of share-based payments
Shares:
During the year, the Company issued 10,000,000 shares (fair valued at $0.06 each) on 1 August 2018 and
55,000,000 shares (fair valued at $0.065 each) on 19 September 2018 as part consideration to acquire the
Muchea Tenement (Note 17).
On 18 February 2019, the Company issued 2,000,000 shares, fair valued at $0.105 each, as part
consideration for the acquisition of the Boyatup Tenement (Note 17).
Options:
Set out below are the summaries of options granted as share based payments:
2019
Grant
Date
Expiry
Date
Exercise
Price
Balance
01/07/18
Granted
during the
year
Exercised
during the
year
Expired
Balance
30/06/19
02/11/16
28/11/16
30/11/17
11/12/17
14/09/18
18/09/18
21/11/18
30/11/18
09/04/19
31/05/19
31/10/19
28/11/19
30/11/20
30/11/20
30/06/21
30/11/21
30/11/21
30/11/21
30/11/21
30/11/22
$0.028
$0.028
$0.072
$0.072
$0.100
$0.100
$0.100
$0.217
$0.090
$0.090
1,000,000
5,000,000
12,000,000
3,250,000
-
-
-
-
- 25,000,000
5,500,000
-
-
250,000
- 11,000,000
5,000,000
-
4,000,000
-
21,250,000 50,750,000
-
-
-
-
-
-
-
-
-
-
-
1,000,000
-
-
5,000,000
- 12,000,000
-
3,250,000
- 25,000,000
5,500,000
-
-
250,000
- 11,000,000
5,000,000
-
4,000,000
-
- 72,000,000
Number
vested and
exercisable
1,000,000
5,000,000
12,000,000
3,250,000
25,000,000
5,500,000
250,000
11,000,000
5,000,000
4,000,000
72,000,000
Weighted average exercise price
$0.060
$0.124
-
-
$0.105
$0.105
VRX Silica Limited
60
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
24. Share Based Payments (Continued)
2018
Grant
Date
Expiry
Date
Exercise
Price
Balance
01/07/17
Granted
during the
year
Exercised
during the
year
Expired
Balance
30/06/18
06/11/14
10/12/14
02/11/16
28/11/16
30/11/17
11/12/17
02/12/17
02/12/17
31/10/19
28/11/19
30/11/20
30/11/20
$0.055
$0.055
$0.028
$0.028
$0.072
$0.072
2,500,000
250,000
1,000,000
5,000,000
-
-
-
-
- 12,000,000
3,250,000
-
8,750,000 15,250,000
-
-
-
-
-
-
-
-
(2,500,000)
-
(250,000)
1,000,000
-
-
5,000,000
- 12,000,000
3,250,000
-
(2,750,000) 21,250,000
Number
vested and
exercisable
-
-
1,000,000
5,000,000
12,000,000
3,250,000
21,250,000
Weighted average exercise price
$0.036
$0.072
-
$0.055
$0.060
$0.060
The assessed fair values of the options was determined using a binomial option pricing model or black-
scholes model, taking into account the exercise price, term of option, the share price at grant date and
expected price volatility of the underling share, expected yield and the risk-free interest rate for the term of
the option. The inputs to the model used were:
Grant date
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
Underlying share price ($)
Option exercise price ($)
Value of option ($)
Grant date
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
Underlying share price ($)
Option exercise price ($)
Value of option ($)
30/11/17
-
100%
1.890%
3
$0.040
$0.072
$0.0203
21/11/18
-
100%
2.120%
3
$0.170
$0.100
$0.1228
11/12/17
-
100%
1.965%
3
$0.037
$0.072
$0.0182
30/11/18
-
100%
2.055%
3
$0.145
$0.217
$0.0792
14/09/18
-
100%
2.040%
3
$0.065
$0.100
$0.0338
9/04/19
-
100%
1.430%
3
$0.062
$0.090
$0.0318
18/09/18
-
100%
2.085%
3
$0.071
$0.100
$0.0409
31/05/19
-
100%
1.100%
3
$0.058
$0.090
$0.0335
The weighted average remaining contractual life of share-based payment options that were outstanding as
at 30 June 2019 was 1.952 years (2018: 2.134 years).
The weighted average fair value of share-based payment options granted during the year was $0.04463 each
(2018: $0.01985).
VRX Silica Limited
61
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
25. Financial Risk Management
The Consolidated entity’s principal financial instruments comprise receivables, payables, loans, cash and
short-term deposits. The Consolidated entity manages its exposure to key financial risks in accordance with
the Consolidated entity’s financial risk management policy. The objective of the policy is to support the delivery
of the Consolidated entity’s financial targets while protecting future financial security.
The main risks arising from the Consolidated entity’s financial instruments are interest rate risk, credit risk and
liquidity risk. The Consolidated entity does not speculate in the trading of derivative instruments. The
Consolidated entity uses different methods to measure and manage different types of risks to which it is
exposed. These include monitoring levels of exposure to interest rates and assessments of market forecasts
for interest rates. Ageing analysis of and monitoring of receivables are undertaken to manage credit risk,
liquidity risk is monitored through the development of future rolling cash flow forecasts.
The Board reviews and agrees policies for managing each of these risks as summarised below.
Primary responsibility for identification and control of financial risks rests with the Board. The Board reviews
and agrees policies for managing each of the risks identified below, including for interest rate risk, credit
allowances and cash flow forecast projections.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement and the basis on which income and expenses are recognised, in respect of each class
of financial asset and financial liability are disclosed in Note 1 to the financial statements.
Risk Exposures and Responses
Interest Rate Risk
The Consolidated entity’s exposure to risks of changes in market interest rates relates primarily to the
Consolidated entity’s cash balances. The Consolidated entity constantly analyses its interest rate exposure.
Within this analysis consideration is given to potential renewals of existing positions, alternative financing
positions and the mix of fixed and variable interest rates. As the Company has no variable interest rate bearing
borrowings its exposure to interest rate movements is limited to the amount of interest income it can potentially
earn on surplus cash deposits. The following sensitivity analysis is based on the interest rate risk exposures
in existence at the reporting date.
At balance date, the Consolidated entity had the following financial assets exposed to variable interest rates
that are not designated in cash flow hedges:
Financial Assets
Cash and cash equivalents (interest-bearing accounts)
Net exposure
Consolidated
2019
$
2018
$
1,524,197
1,524,197
256,756
256,756
The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting
date.
VRX Silica Limited
62
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
25. Financial Risk Management (Continued)
Consolidated
2019
$
2018
$
At 30 June, if interest rates had moved, as illustrated in the table below, with all other variables held constant,
post tax profit and equity relating to financial assets of the Consolidated entity would have been affected as
follows:
Judgements of reasonably possible movements:
Post tax profit – higher / (lower)
+ 0.5%
- 0.5%
Equity – higher / (lower)
+ 0.5%
- 0.5%
Liquidity Risk
7,621
(7,621)
7,621
(7,621)
1,284
(1,284)
1,284
(1,284)
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use
of loans and other available credit lines.
The Consolidated entity manages liquidity risk by monitoring immediate and forecast cash requirements and
ensuring adequate cash reserves are maintained.
Credit risk
Credit risk arises from the financial assets of the Consolidated entity, which comprise deposits with banks
and trade and other receivables. The Consolidated entity’s exposure to credit risk arises from potential default
of the counter party, with the maximum exposure equal to the carrying amount of these instruments. The
carrying amount of financial assets included in the statement of financial position represents the Consolidated
entity’s maximum exposure to credit risk in relation to those assets.
The Consolidated entity does not hold any credit derivatives to offset its credit exposure.
The Consolidated entity trades only with recognised, credit worthy third parties and as such collateral is not
requested nor is it the Consolidated entity’s policy to secure its trade and other receivables.
The consolidated entity has adopted a lifetime expected loss allowance in estimating expected credit losses
to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning.
Receivable balances are monitored on an ongoing basis with the result that the Consolidated entity does not
have a significant exposure to bad debts.
The Consolidated entity’s cash deposits are held with a major Australian banking institution otherwise, there
are no significant concentrations of credit risk within the Consolidated entity.
VRX Silica Limited
63
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
25. Financial Risk Management (Continued)
The following table details the expected maturity of the Group’s financial assets and liabilities based on the
earliest date of maturity or payment respectively. The amounts are stated on an undiscounted basis and
include interest.
Consolidated
2019
Financial Assets:
Non-interest bearing
Variable interest rate
Fixed interest rate
Financial Liabilities:
Non-interest bearing
2018
Financial Assets:
Non-interest bearing
Variable interest rate
Fixed interest rate
Financial Liabilities:
Non-interest bearing
Weighted
average
effective
interest rate
%
Less than 1
month
$
1 – 3
Months
$
3 months
– 1 year
$
1 – 5
years
$
-
0.15
1.60
-
-
0.40
2.30
-
243,814
1,524,197
-
1,768,011
303,215
303,215
173,727
256,756
-
430,483
200,449
200,449
-
-
-
-
-
-
-
-
-
-
-
-
2,583
-
20,000
22,583
-
-
23,211
23,211
-
-
2,583
-
42,601
45,184
-
-
-
-
-
-
-
-
-
-
Capital Management Risk
Management controls the capital of the Consolidated entity in order to maximise the return to shareholders
and ensure that the Group can fund its operations and continue as a going concern.
Management effectively manages the Group’s capital by assessing the Consolidated entity’s financial risks
and adjusting its capital structure in response to changes in these risks and in the market. These responses
include the management of expenditure and debt levels and share and option issues.
There have been no changes in the strategy adopted by management to control capital of the Consolidated
entity since the prior year.
Commodity Price and Foreign Currency Risk
The Consolidated entity’s exposure to price and currency risk is minimal given the Consolidated entity is still
in the exploration phase.
Fair Value
The methods of estimating fair value are outlined in the relevant notes to the financial statements. All financial
assets and liabilities recognised in the statement of financial position, whether they are carried at cost or fair
value, are recognised at amounts that represent a reasonable approximation of fair values unless otherwise
stated in the applicable notes.
VRX Silica Limited
64
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
26. Events Subsequent to Year End
There are no matters or circumstances that have arisen since 30 June 2019 that have or may significantly
affect the operations, results, or state of affairs of the Company in future financial years.
VRX Silica Limited
65
DIRECTORS' DECLARATION
The directors of the Company declare that:
1.
The financial statements and notes, are in accordance with the Corporations Act 2001 and:
a.
b.
Comply with Accounting Standards, which, as stated in accounting policy Note 1(c) to the financial
statements, constitutes explicit and unreserved compliance with International Financial Reporting
Standards (IFRS); and
Give a true and fair view of the Consolidated Entity’s financial position as at 30 June 2019 and of
its performance for the year ended on that date;
2.
In the directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
3.
The directors have been given the declarations required by s295A of the Corporation Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations
Act 2001.
Bruce Maluish
Director
Perth, 25 September 2019
VRX Silica Limited
66
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
VRX SILICA LIMITED
Opinion
We have audited the financial report of VRX Silica Limited (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash
flows for the year then ended, and notes to the 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:
(i)
giving a true and fair view of the Group's financial position as at 30 June 2019 and of its financial
performance for the year then ended; and
(ii)
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 auditor 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 confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
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 this matter
Carrying Value of Deferred Exploration Expenditure
Refer to Note 9 in the financial statements
The Group has capitalised a significant amount of
deferred exploration expenditure, with a carrying
value of $6,972,573 as at 30 June 2019.
We considered this to be a key audit matter due to
the significant management judgments involved in
assessing the carrying value of the assets including:
• Determination of whether the exploration and
evaluation expenditure can be associated with
finding specific mineral resources, and the basis
on which that expenditure is allocated to an area
of interest;
• Assessing whether any indicators of impairment
are present and if so, judgement applied to
determined and quantify any impairment loss;
and
• Assessing whether exploration activities have
reached a stage at which the existence of an
economically recoverable reserves may be
determined.
Acquisition of subsidiary – Wisecat Pty Ltd
Refer to Note 16 in the financial statements
During the year, the Group acquired 100% interest
of Wisecat Pty Ltd (Wisecat) for a purchase
consideration of $500,000.
The accounting for this acquisition is considered to
be a key audit matter because it involved the
exercise of judgment in relation to:
the
transaction
• Determining whether
is a
business combination or an asset acquisition,
based on whether the definition of a business in
AASB 3 Business Combinations was met;
• Determining the fair value of the consideration
paid; and
Our audit procedures in relation to the carrying value of
deferred exploration expenditure included:
• Obtaining evidence that the Group has valid rights
to explore in the specific area;
• Reviewing and enquiring with management the
basis on which they have determined that the
exploration and evaluation of mineral resources has
not yet reached the stage where it can be concluded
that no commercially viable quantities of mineral
resources exists;
• Enquiring with management and reviewing budgets
and plans to test that the Group will incur substantive
expenditure on further exploration for and evaluation
of mineral resources in the specific area;
• Reviewing whether management has received
sufficient data to conclude that the exploration and
evaluation asset is unlikely to be recovered in full
from successful development or by sale; and
• Reviewing minutes of director meetings and
Australian Securities Exchange announcements to
ensure
to
discontinue activities in the specific area of interest.
the Group has not resolved
that
Our audit procedures in relation to the acquisition of
Wisecat included:
• Reviewing the binding heads of agreement to
understand key terms and conditions;
• Evaluating the management determination that the
acquisition did not meet the definition of a business
within AASB 3 Business Combinations and
therefore was an asset acquisition as opposed to a
business combination;
• Evaluating the assumptions and methodology in
management’s determination of the fair value assets
and liabilities acquired;
• Assessing management’s determination of the fair
• Determining the acquisition date.
value of consideration paid; and
• Assessing the appropriateness of the disclosures in
the financial report.
Other Information
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 2019, but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly 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 ability of the Group 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.
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/ar2.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 within the directors' report for the year ended 30 June 2019.
In our opinion, the Remuneration Report of VRX Silica Limited, for the year ended 30 June 2019, 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.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 25 September 2019
ALASDAIR WHYTE
Partner
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of VRX Silica Limited for the year ended 30 June 2019, I declare
that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 25 September 2019
ALASDAIR WHYTE
Partner
SECURITIES EXCHANGE INFORMATION
HOLDINGS AS AT 20 SEPTEMBER 2019
Number of Securities Held
No. of Holders
No. of Shares
FULLY PAID SHARES
1
1,001
5,001
10,001
to 1,000
to 5,000
to 10,000
to 100,000
100,001 and over
Total Number of Holders
Number of holders of less
than a marketable parcel
Percentage of the 20
largest holders
Substantial Shareholders
77
168
227
775
422
1,669
27,413
590,786
1,872,051
33,195,744
368,632,623
404,318,617
158
236,280
47.99%
The company has been notified of the following substantial shareholdings:
Australian Silica Pty Ltd
Peter Pawlowitsch
Peter Woodland
Voting Rights
Number
65,000,000
24,841,769
15,416,156
The Constitution of the company makes the following provision for voting at general meetings:
On a show of hands, every ordinary shareholder present in person, or by proxy, attorney or representative has one vote.
On a poll, every shareholder present in person, or by proxy, attorney or representative has one vote for any share held
by the shareholder.
20 Largest Holders of Securities as at 20 September 2019:
Fully Paid Ordinary Shares
1. AUSTRALIAN SILICA PTY LTD
2. MOSCH PTY LTD
3. MR PETER ROBERT WOODLAND
4. SUNSET CAPITAL MANAGEMENT PTY LTD
5. MORKIM PTY LTD
6. GOLDFIRE ENTERPRISES PTY LTD
7. MASH SUPER PTY LTD
8. MR BRUCE DENNIS MALUISH
9. AURO PTY LTD
10. BROWN BRICKS PTY LTD
11. HAVEN SUPER PTY LTD
12. CITICORP NOMINEES PTY LIMITED
13. MR WAYNE STEPHEN CLARK
14. GOLDFIRE ENTERPRISES PTY LTD
15. PARLIN INVESTMENTS PTY LTD
16. AUSTRALIAN INTERNATIONAL SERVICES PTY LTD
17. MR CHRISTOPHER JAMES WEED + MS JANET ELIZABETH BROCKMAN
18. PLASIA PTY LTD
19. ANDREW MALUISH SUPER PTY LTD
20. MR ANDREW JAMES DAYNEY
20. PARLIN SUPER PTY LTD
20. THIRTEENTH CINSAUT PTY LTD
Number
62,008,065
18,333,332
14,065,797
10,000,000
7,000,000
6,682,324
6,250,000
6,060,535
6,000,000
5,896,667
5,383,437
5,353,533
5,330,000
5,317,783
4,700,025
4,630,141
%
15.34
4.53
3.48
2.47
1.73
1.65
1.55
1.50
1.48
1.46
1.33
1.32
1.32
1.32
1.16
1.15
4,138,545
1.02
3,500,000
3,469,902
3,300,000
3,300,000
3,300,000
194,020,086
0.87
0.86
0.82
0.82
0.82
47.99
VRX Silica Limited
70
SECURITIES EXCHANGE INFORMATION
Unlisted Options
Details of unlisted option holders are as follows:
Class of unlisted options
Terence Abel
Options exercisable at 2.8 cents each on or before 30 October 2019
Holdings of more than 20% of this class
-
- Darren Holden
- Mandevilla Pty Ltd
- David Thomas Reid
Options exercisable at 2.8 cents each on or before 28 November 2019
Holdings of more than 20% of this class
- Bruce Maluish
Options exercisable at 7.2 cents each on or before 30 November 2020
Holdings of more than 20% of this class
- Bruce Maluish
Options exercisable at 10 cents each on or before 30 June 2021
Holdings of more than 20% of this class
- Australian Silica Pty Ltd
- Goldfire Enterprises Pty Ltd
Options exercisable at 10 cents each on or before 30 November 2021
Holdings of more than 20% of this class
- Parlin Investments Pty Ltd
Options exercisable at 21.7 cents each on or before 30 November 2021
Holdings of more than 20% of this class
- Bruce Maluish
Options exercisable at 9 cents each on or before 30 November 2021
Holdings of more than 20% of this class
-
Zenix Nominees Pty Ltd
Options exercisable at 9 cents each on or before 30 November 2022
Holdings of more than 20% of this class
- Parlin Investments Pty Ltd
Number
of
Options
Number
of
Holders
1,000,000
4
250,000
250,000
250,000
250,000
5,000,000
2,000,000
15,250,000
5,000,000
25,000,000
20,000,000
5,000,000
5,750,000
2,500,000
11,000,000
5,000,000
5,000,000
5,000,000
4,000,000
4,000,000
4
9
2
6
5
1
1
Restricted Securities
The company does not have any restricted securities on issue as at the date of this report.
On-market Buy-back
Currently there is no on-market buy-back of the Company’s securities.
Consistency with business objectives
The company has used its cash and assets in a form readily convertible to cash that it had at the time of listing in a way
consistent with its stated business objectives.
VRX Silica Limited
71
INTERESTS IN MINING TENEMENTS
WESTERN AUSTRALIA
Arrowsmith Project – Silica
Tenement
E70/4986
E70/4987
E70/5027
E70/5109
E70/5197
M70/1389
M70/1392
L70/198
L70/199
L70/202
L70/203
L70/208
Muchea Project – Silica
Tenement
E70/4886
E70/5157
M70/1390
L70/200
L70/204
L70/205
L70/206
Boyatup Project – Silica
Tenement
E69/3560
E69/3668
Warrawanda Project - Nickel
Tenement
E52/2372
E52/3447
Status
Granted
Granted
Granted
Granted
Granted
Application
Application
Application
Granted
Application
Application
Application
Status
Granted
Application
Application
Application
Application
Application
Application
Status
Granted
Granted
Status
Granted
Granted
Holder / Applicant
Ventnor Mining Pty Ltd
Ventnor Mining Pty Ltd
Ventnor Mining Pty Ltd
Ventnor Mining Pty Ltd
Ventnor Mining Pty Ltd
Ventnor Mining Pty Ltd
Ventnor Mining Pty Ltd
Ventnor Mining Pty Ltd
Ventnor Mining Pty Ltd
Ventnor Mining Pty Ltd
Ventnor Mining Pty Ltd
Ventnor Mining Pty Ltd
Holder / Applicant
Wisecat Pty Ltd
VRX Silica Ltd
Wisecat Pty Ltd
Wisecat Pty Ltd
Wisecat Pty Ltd
Wisecat Pty Ltd
Wisecat Pty Ltd
Interest (%)
100
100
100
100
100
100
100
100
100
100
100
100
Interest (%)
100
100
100
100
100
100
100
Holder / Applicant
VRX Boyatup Pty Ltd
VRX Boyatup Pty Ltd
Interest (%)
100
100
Holder / Applicant
Ventnor Pilbara Pty Ltd
Ventnor Pilbara Pty Ltd
Interest (%)
100
100
Biranup Project – Base Metals/Gold
Tenement
E39/1828
E39/2000
E39/2001
E39/2003
E38/3191
E38/3294
Status
Granted
Granted
Granted
Granted
Granted
Granted
Holder / Applicant
Ventnor Gold Pty Ltd
Ventnor Gold Pty Ltd
Ventnor Gold Pty Ltd
Ventnor Gold Pty Ltd
Ventnor Gold Pty Ltd
Ventnor Gold Pty Ltd
Interest (%)
100
100
100
100
100
100
VRX Silica Limited
72