VRX SILICA LIMITED
ABN 59 142 014 873
ANNUAL REPORT
30 JUNE 2021
CORPORATE DIRECTORY
DIRECTORS
Paul Boyatzis (Non-executive Chairman)
Bruce Maluish (Managing Director)
Peter Pawlowitsch (Non-executive Director)
David Welch (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
It has been a very busy and productive year for VRX Silica Limited as your Company continued to advance
its high-grade silica sand projects at Arrowsmith North, Arrowsmith Central and Muchea.
The Western Australian government has maintained a hard border stance which has kept the mining
industry in WA relatively insulated. This stance although understandable has not been without
consequences, with labour and skills shortages being experienced across many sectors of the mining and
general business community. The immediate and continuing impact and risk of COVID-19 to the mining
and exploration industry has been ever present in our daily considerations.
VRX Silica Limited, fortunately is headquartered in Perth Western Australia as are the Company’s personnel
and consultants. Likewise, the Company’s Silica Sand Projects: Arrowsmith North, Arrowsmith Central,
Muchea and Boyatup are all located in Western Australia. This has enabled your Company to keep its
experienced team and consultants fully engaged and actively progressing all projects.
Significant progress has been made during the past year and a comprehensive and detailed description of
the important events follows in the ‘Company Review’. However, it is worth highlighting some of the key
achievements:
• Mining leases granted for all the company’s three Silica Sand projects;
• Extensive environmental studies conducted on all the company’s silica sand projects over each
season;
• Comprehensively reviewed a ‘proof of concept’ Vegetation Direct Transfer (VDT) trial;
• Lodged Project Referrals with Federal and State environmental assessment agencies;
• Continues to engage with those agencies to progress the environmental approvals for mining at
Arrowsmith North;
• The first 6 to 10 years of proposed mining at Arrowsmith North has been grade controlled;
• Significant test work was successfully conducted in order to produce a number of specific
marketable products;
• Significant progress has been made on the engineering of the proposed plant by experienced
engineers ProjX;
• The proposed plant design was conducted with the aim to operate predominately with recycled
water;
• Commencement of drilling the Bore field water supply for the plant;
•
• Engaged with potential final use offtake partners and sent numerous samples of various volumes
Investigated opportunities for the project to be powered by gas with supporting solar;
for testing.
• VRX Silica Limited is very conscious of its social licence obligations and during the year proactively
engaged with the traditional owners, conducted Heritage Surveys at all projects, and engaged with
stakeholders;
• Completed greenhouse gas emissions estimates as part of its maiden ESG reporting included in
this Annual Report.
I am pleased to advise that during the year the Company was chosen by Morgan Stanley Capital
International to be included in their MSCI Australia Micro-Cap Index which is designed to measure the
performance of the Micro-Cap segment of companies traded on the ASX.
VRX Silica Limited
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LETTER FROM THE BOARD OF DIRECTORS TO SHAREHOLDERS
Also, a large international institution joined our shareholder register as a Substantial Shareholder which
recognises the prospectivity of the Company’s projects.
A high exercise rate of the Company’s listed options (VRXO) places the Company in a strong financial
position.
Finally on behalf of the Board, I would like to thank all staff, contractors and consultants for their valuable
contribution during the year which globally has been impacted by the Covid-19 pandemic.
Paul M Boyatzis
Chairman
For and on behalf of the Board
VRX Silica Limited
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COMPANY REVIEW
Review of Operations
During the 2021 financial year, VRX Silica Limited (Company or VRX) focused on advancing its silica sand
projects, in particular at Arrowsmith North and Arrowsmith Central and Muchea, which in aggregate contain
a total Mineral Resource Estimate of silica sand of 1,056 million tonnes.
Arrowsmith Silica Sand Projects
Native Title Clearance
The Arrowsmith North and Arrowsmith Central Silica Sand Projects (Arrowsmith Projects) are located
270km north of Perth, Western Australia, and are held by VRX in its wholly owned subsidiary Ventnor Mining
Pty Ltd.
In October 2020, conclusive registration of the Yamatji Nation Indigenous Land Use Agreement (ILUA)
occurred, which cleared the path for grant of the Company’s Mining Lease and Miscellaneous Licence
applications for its Arrowsmith Projects.
The ILUA is an alternative settlement by the Western Australian Government of Native Title claims covering
a significant portion of land in the Mid West, including the Southern Yamatji People’s claim covering the
Arrowsmith Projects.
This Government-led ILUA settled all Native Title claims over the Arrowsmith Projects area. Negotiations had
been progressing in good faith between VRX and the Southern Yamatji People Native Title claimants prior
to its implementation and these ceased automatically under the ILUA. Nevertheless, the strong and
supportive relationships established with the Southern Yamatji People will continue to benefit all parties as
the Arrowsmith Projects are developed, and the Company intends to continue to consult and work closely
with the Southern Yamatji People.
Arrowsmith North will present employment and contract opportunities to local Indigenous groups and VRX
intends to support the local ranger program.
Aboriginal Heritage Survey
In November 2020, VRX announced the results of an Aboriginal heritage survey at its Arrowsmith Projects.
The comprehensive archaeological and ethnographic survey was conducted during October in conjunction
with Amangu representatives of the Yamatji Nation and Yamatji Marlpa Aboriginal Corporation (YMAC)
personnel over proposed initial mining and critical infrastructure areas.
The survey found no isolated artifacts and no onerous heritage recommendations were made. Preliminary
advice received by the Company from YMAC confirmed that the Arrowsmith North Access Road, Services
Corridor and Production Area have been approved for the stated works to proceed for 10 years of production.
The Arrowsmith Central Production Area and Arrowsmith Central Infrastructure Areas are cleared for five
years of production, see Figure 1.
VRX Silica Limited
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COMPANY REVIEW
Figure 1 - Critical infrastructure and mining areas surveyed at Arrowsmith Projects
Grant of Mining Leases
On 17 November 2020, VRX announced the grant of Mining Leases for its Arrowsmith Projects, see Figure
2. This, together with the Aboriginal heritage clearance for the proposed works on both projects, is an
important step forward for their development. The combined Mining Lease areas cover over 3,600ha,
sufficient for more than 100 years of production.
VRX Silica Limited
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COMPANY REVIEW
The grant of these Mining Leases was another significant milestone for the Company and came shortly after
the grant of the Mining Lease for VRX’s Muchea Silica Sand Project (Muchea Project), see Figure 8. It
enables the Company to step up negotiations to finalise sales contracts for the high-quality silica sand
products and secure the necessary funding for their development.
Figure 2 - Arrowsmith Silica Sand Projects Location
Environmental Approval Referral and Permitting
As part of the environmental approvals process for the grant of a Mining Permit at the Arrowsmith Projects,
the Company continued to compile the necessary data to support the Environmental Referral Document
(ERD) referrals to the Federal Department of Agriculture, Water and Environment (DAWE) and the State
Department of Water and Environmental Regulation (DWER). The Company and its environmental
consultants held pre-referral meetings with representatives from DWER and received comments regarding
further requirements for the referral. Pre-referral meetings with representatives from DAWE and the DWER
provided valuable feedback regarding requirements for these referrals.
In the first half of the 2021 financial year, VRX submitted a formal Environmental Review Document to DAWE
for assessment under the Environmental Protection and Biodiversity Conservation Act 1999 (EPBC Act).
DAWE responded with a determination that Arrowsmith North was a controlled action subject to assessment
by DWER and approval under the EPBC Act before it could proceed.
VRX Silica Limited
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COMPANY REVIEW
In October 2020, VRX submitted a draft ERD to DWER with comments returned in November 2020 requiring
further clarification in the formal ERD and follow-up work and consultation.
In March 2021, VRX submitted this referral to DWER for assessment by the Environmental Protection
Authority of Western Australia (EPA), under Section 38 of the Environmental Protection Act 1986, for
environmental approval for Arrowsmith North. The referral was the culmination of wide-ranging environmental
studies undertaken by and for the Company over the past three years and extensive pre-referral consultation
with the EPA.
In May 2021, the Company’s Arrowsmith North Silica Sand Project moved to the next stage of the
environmental approval process with the EPA, which informed the Company that it would assess the proposal
under s39A(1) of the Environmental Protection Act 1986 at a Public Environmental Review (PER) level of
assessment.
The Company lodged a draft Environmental Scoping Document (ESD), which detailed the environmental
studies that are required to inform the assessment of the project.
The following additional studies were progressed subsequent to year-end for lodgement with the EPA:
•
Cultural and Heritage Assessment
• Greenhouse Gas Emissions Estimate
•
High-Level Air Quality Assessment study
Preparation of the ESD is a fundamental step in the EPA administration procedures to inform the
Environmental Impact Assessment of Arrowsmith North. The Company is confident the project has
addressed the Environmental Principles, Factors and Objectives of the guidelines for assessment.
The comments will enable the Company to clarify the timeline to completion of the approvals process and
development of the project.
Other government agencies will be restricted from approving any approvals related to the full development
of the project until the EPA process is complete (noting exploration and investigations are not restricted).
The Commonwealth Department of Agriculture, Water and Environment (DAWE) has determined that the
project will be assessed by accredited assessment under the Environmental Protection Act 1986 (WA) in the
form of a PER with a four-week public review period which aligns with the EPA decision.
In parallel with the environmental approval process, the Company will seek approval for its Mining Proposal
and the issue of a mining permit from the Department of Mines, Industry Regulation and Safety (DMIRS).
Rehabilitation and sustainability
VRX has developed a unique and progressive mining and rehabilitation method specifically for Arrowsmith
North and its other silica sand projects to minimise the environmental impact of the Company activities.
VRX’s Vegetation Direct Transfer (VDT) method lends itself to rapid and extensive regeneration of affected
areas based on continuous rehabilitation as silica sand mining progresses.
Root structures in the loose sand at Arrowsmith North are relatively shallow at 200-300mm in depth. The
VDT method removes a 400mm deep sod, with the topsoil containing the vast majority of native flora and
invertebrate fauna preserved with near-surface humus and its microbial contents remaining intact.
A video of the Company’s proposed VDT method is available for viewing at:
https://vrxsilica.com.au/miningandrehabilitationmethodology/
VRX’s referral to the EPA, which incorporated pre-referral feedback received from the EPA in December 2020
to the Company’s draft referral submitted in September 2020, concludes that Arrowsmith North can be
developed without significant residual impacts on the environment given the implementation of mitigation
measures, in particular the proposed mining and rehabilitation methodology.
VRX Silica Limited
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COMPANY REVIEW
In February 2021, VRX received approval to conduct a trial rehabilitation program over a sample section of
the project area. VRX trialled and videoed a front-end loader to establish the capability of removing and
replacing sods of topsoil as proposed in our mining and rehabilitation methodology. The front-end loader was
equipped with a standard sand bucket, not the proposed modified bucket. The trial was undertaken between
late March and April 2021 and successfully demonstrated the VDT methodology and practicality.
VRX will use no harsh chemicals and produce no dust while processing the mined silica sand, with efficient
attritioning beneficiating the sand to glass-quality product for export.
The Company will recycle a substantial proportion of water used in processing, with preliminary engineering
work targeting an up to 95% recycling rate and the Company further investigating the ability to recycle even
more water. Water will be sourced from the deeper Yarragadee North aquifer.
All mining will be conducted well above the surficial water table.
Importantly, thorough planning will allow VRX to deliver its silica sand projects sustainably and efficiently,
with a very low carbon footprint.
Figure 3 - Arrowsmith Vegetation
VRX Silica Limited
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COMPANY REVIEW
Grade Control Drilling
During March 2021 VRX conducted a 130 hole grade control drill program at Arrowsmith North.
The grade control area is wholly within the previously reported area of the Ore Reserve Statement (ORS) of
204 Mt @ 99.7% SiO2 within Mining Lease M70/1389 and contains approximately 10.2Mt of Probable Ore
Reserve. The grade control area was not expected to materially change the tonnage in the ORS or the
bankable feasibility study (BFS) for Arrowsmith North as reported1, see Figure 4, but was anticipated to
upgrade the ORS in the area drilled to a Measured Resource and Proven Reserve and increase the
geological knowledge and confirm the continuity and homogeneity that has been demonstrated by previous
drilling.
Drilling was conducted over 10 days with assay results and other determinations received in late May 2021.
The results were in line with expectations and allowed the Company to update the Mineral Resource Estimate
in the area covered by the drilling. The Company has conducted a detailed review of the outlined production
for the next 6 years with a detailed mining and processing schedule.
There were no material changes to the material assumptions underpinning the production target and detailed
in the BFS.
The drilling of tight spaced grade control holes at Arrowsmith North was another key pre-production activity
undertaken in preparation for the commencement of mining.
The drilling also generated a significant tonnage of additional raw material for VRX to conduct supplementary
bulk metallurgical test work to confirm the design and operating parameters of the process plant and for
approvals required by Mid West Ports for the shipping of silica sand under its environmental licence with
DWER.
Importantly, the testwork generated additional commercial sample for despatch to potential offtake partners
as demand for VRX’s silica sand continues to grow.
Sources of supply of quality silica sand throughout the Asian region are shrinking at a rapid rate, and this has
led to tremendous interest for VRX’s silica sand from potential customers who are acutely aware of the supply
problem.
1 ASX announcement of 28 August 2019, “Arrowsmith North BFS and Maiden Ore Reserve”
VRX Silica Limited
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COMPANY REVIEW
Figure 4 - Mineral Resource Estimate within the grade control drilling area
Engineering
The Company has commissioned experienced sand processing engineers, ProjX Engineering, to carry out a
detailed engineering design for the Arrowsmith North processing plant.
The design is based on a comprehensive testwork regime and the proposed process circuit. Preliminary
engineering design is well developed with most all of the key process equipment identified, sized and
selected, and plant design well advanced across all disciplines including civil, structural, mechanical and
electrical. Site layout and access design is well progressed along with non-process infrastructure
requirements being determined. 3D modelling will culminate in the creation of an overall site and plant model.
The Company will specify and tender appropriate processing equipment for the plant to be procured at the
earliest opportunity following a decision to mine at Arrowsmith North.
To enable a timely construction program. the Company will identify long-lead items and commence the
procurement process at the appropriate time.
VRX Silica Limited
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COMPANY REVIEW
Power
The Company has been in discussions with a number of potential power providers to supply the power
requirements at Arrowsmith North.
The Company’s sustainability goals include having a low carbon footprint at all of its silica sand projects, and
all providers have indicated that a renewable energy solution to be ultimately driven by solar and wind options
supported by gas is not only viable but will also be cost-effective.
Port and Logistics
The Company has continued its discussions with the Mid West Ports Authority (MWPA), operators of the
Geraldton Port, around logistics and access to port facilities for export. The outcome of these discussions
has been positive as the Company looks to secure a long-term relationship with MWPA.
The Company has completed the testwork on Arrowsmith North silica sand final product and has forwarded
results to MPWA to allow it to amend its EPA licence conditions to facilitate export of silica sand products
from Geraldton Port.
Importantly the respirable silica results are well below the allowable limits to allow shipping of silica sand
products from the Port.
The Company has also continued work on logistics planning and implementation for the project, including
transport and shipping solutions.
Financing
Interest remains strong from third party debt financiers to fund development and construction of the plant for
Arrowsmith North. The Company has engaged AMC Consultants to undertake a comprehensive independent
technical review of the project, which will underpin due diligence on the project by potential financiers.
Water Bore
The Company commenced drilling of a water production bore which will be the source of water supply for the
proposed processing plant at Arrowsmith North, see Figure 5. The supply of good quality processing water
is a critical step in the development of Arrowsmith North. Water is being sourced from the deep and plentiful
Yarragadee North aquifer and the project will not affect the local users of the shallower Eneabba basin
surficial water supplies.
Drilling is being undertaken by a licenced water bore driller, see Figure 6, under an approved Licence to
Construct or Alter a Well, CAW205840(1), from DWER, which has accepted the Company’s application for
an allocation of 900,000 kilolitres. The 5C licence to take water will be applied for once the bore construction
and geophysical logging and test pumping results have been forwarded to DWER.
VRX Silica Limited
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COMPANY REVIEW
Figure 5 - Water Bore Location
Figure 6 - Water Bore Rig onsite
VRX Silica Limited
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COMPANY REVIEW
Muchea Silica Sand Project
On 29 October 2020, VRX announced the grant of a Mining Lease for its Muchea Silica Sand Project
(Muchea Project), located 50km north of Perth, Western Australia. The Mining Lease (M70/1390), held in
the Company’s wholly owned subsidiary Wisecat Pty Ltd, covers approximately 1,008ha including the
development area, sufficient for at least 25 years of production, see Figure 8.
The grant of the Mining Lease was a significant milestone for VRX and a major step forward in the Company’s
journey to becoming a global, long-life supplier of high-quality silica sand.
The Company also continued work on progressing an expansion of the current proposed development area
to extend the Muchea Project’s mine life to well beyond 25 years and assessment of available options to do
so while addressing concerns relating to the file notation area 12671 that sits adjacent to that area.
During the period, as for its Arrowsmith Projects, the Company progressed compilation of necessary data to
support referrals to DAWE and the EPA with pre-referral meetings held with representatives from DAWE. As
studies have been completed at Arrowsmith North following consultation with EPA, the same studies have
been duplicated at both Arrowsmith Central and Muchea.
Demand from potential customers for long-term supply of silica sand from the Muchea Project is strong. As
with the Arrowsmith Projects, the grant of the Mining Lease enables the Company to step up negotiations to
finalise sales contracts for the high-quality silica sand products and secure the necessary funding for the
project’s development.
The Muchea Project is a world-class, high-grade and low environmental impact silica sand project with
outstanding economics and located in a Tier 1 jurisdiction. Its development will support a substantial export
industry in Western Australia and provide significant financial and employment benefits in the north-eastern
corridor of Perth.
The low vegetation at Muchea, which includes the recalcitrant sedges and grasses have root systems which
are 200-300 mm below the surface will be addressed by the same rehabilitation method (VDT) which has
been developed at the Arrowsmith Projects, see Figure 7.
The larger widely spaced Banksia trees will be propagated and tube planted to ensure the same density of
trees.
VRX Silica Limited
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COMPANY REVIEW
Figure 7 - Muchea Vegetation
VRX Silica Limited
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COMPANY REVIEW
Figure 8 - Muchea Silica Sand Project Location
VRX Silica Limited
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COMPANY REVIEW
Silica Sand Offtake
The Company has continued discussions with potential customers in Asia for long-term contracts for offtake
of products from its Arrowsmith Projects and Muchea Project. These customers are in Malaysia, Thailand,
Taiwan, Japan and South Korea.
The outbreak of COVID-19 in early 2020 caused the cessation of all possible face-to-face meetings with
potential clients. However, the Company has progressed discussions via video conferencing and interest
remains strong, despite the current challenging health and economic climate in those countries. More recently
second and third-wave lockdowns in Japan and Korea have further postponed offtake discussions, with no
possibility for VRX to conduct face-to-face meetings.
Despite the COVID-19 impediment, global market conditions continued to improve over the period. Sources
of supply of high-quality silica sand throughout the Asian region are shrinking at a rapid rate and increasing
the already strong demand for silica sand products capable of production from VRX’s projects, providing the
Company with comfort its considered and disciplined approach to offtake deals will deliver significant value to
shareholders.
Product samples have been shipped to potential offtake partners and grade-control drilling conducted during
March 2021 generated additional commercial samples for interested parties. The majority of recipients have
confirmed that the sand quality meets their specification requirements and underpins their desire to secure
long-term supply.
Interest in the Company’s products from Arrowsmith North remains incredibly strong and continues to grow.
Demand for significant bulk samples for final furnace testing, which is regarded as the last quality assurance
test before supply contracts are agreed with potential offtake partners in South Korea, Japan and Taiwan,
has led the Company to undertake a substantial pilot plant-scale testwork program on 1 tonne of Arrowsmith
North ore. Some samples have been dispatched and further samples are waiting on final PSD and assays. It
will also enable the Company to further test the project’s process circuit design.
The Company is well-positioned to benefit from the rapidly changing, and improving, market conditions and
will continue negotiations to secure formal offtake agreements.
Project Economics
The Company’s silica sand projects have outstanding economic prospects and will support a substantial
export industry in Western Australia that can provide significant financial and employment benefits to the
State.
With all three Mining Leases granted at the Arrowsmith Projects and the Muchea Project and development of
the projects well-progressed, VRX is on the cusp of becoming a global player in high-quality silica sand
supplies.
VRX Silica Limited
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COMPANY REVIEW
Aggregate Project Metrics
Key outcomes and summary financial model outputs for each individual project, and in aggregate, from the
BFSs for each project2 are set out below. The combined post-tax NPV10 of $727.8 million
Arrowsmith North Arrowsmith Central
Muchea
Total
Post Tax, ungeared NPV10
Post Tax, ungeared NPV20
Post Tax, ungeared IRR
Payback period (yrs) (post tax) (ramp up rate)
Exchange Rate US$/A$
Life of Mine (yrs) (Scope of BFS Study)
Total Sales (initial 25 years) no escalation
EBIT
Cashflow after finance and tax
Capex (2 mtpa)
Capex contingency (inc)
Life of Mine C1 costs, FOB Kwinana (inc royalties)
Tonnes Processed (initial 25 years) (Mt)
Production Target (Mt) (BFS Study) (initial 25 Years)
Probable Ore Reserves (Mt)
Ore Reserve life (yrs)
JORC Resources (million tonnes)
$242.3m
$99.8m
79%
2.4
$0.70
25
$2,773m
$1,144m
$835m
$28.3m
20%
$30.18
53
47.7
204
102
771
$147.6m
$56.1m
60%
2.8
$0.70
25
$2,167m
$737m
$539m
$25.9m
20%
$27.67
51
39.6
18.9
10
77
$337.9m
$146.4m
$727.8m
$302.3m
96%
2.3
$0.70
25
$3,345m
$1,540m
$1,123m
$32.8m
20%
$32.74
54
48.3
18.7
9-10
208
83%
2.4
$0.70
25
$8,285m
$3,421m
$2,497m
$87m
20%
$30.24
158
136
242
1,056
Notes:
1. A proportion of the production target for each of Arrowsmith Central and Muchea 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 that the production target itself
will be realised.
2. The Ore Reserves and, in the case of Arrowsmith Central and Muchea, the Inferred Mineral Resource underpinning the
above production targets have been prepared by a Competent Person in accordance with the requirements of the JORC
Code.
3. Full summaries of economic assumptions are set out in the BFS for each project. All such material assumptions continue
to apply and have not materially changed from the dates of release of the BFSs.
4. All figures are presented in Australian dollars, unadjusted for inflation
2 ASX announcements of 28 August 2019, “Arrowsmith North BFS and Maiden Ore Reserve”,
17 September 2019, “Arrowsmith Central BFS and Maiden Ore Reserve” and
18 October 2019, “Muchea BFS and Maiden Ore Reserve”.
VRX Silica Limited
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COMPANY REVIEW
Biranup
On 1 July 2020, the Company announced it had entered into a conditional agreement with New Energy Metals
Limited (later renamed Nickel X Limited) (NickelX) for the sale of its Biranup Project and an IPO and listing
of that company on the ASX.
Originally expected to complete by the end of 2020, completion of the sale of the project took place 6 May
2021 and NickelX shares commenced trading on ASX on 7 May 2021.
The Biranup project comprised a total project area of almost 400km2 with six granted tenements having no
pastoral lease or native title claims. The project covers a region which hosts many varying mineralisation
styles. VRX had previously identified the potential for base metal mineralisation and successfully drilled and
intersected copper and nickel sulphides on a structurally controlled geophysical target at the Fire Dragon
Prospect. Studies have shown the right geology is present for Nova Type mafic intrusive Ni-Cu Deposit.
Under the terms of the sale agreement, the consideration comprised 6,250,000 fully paid ordinary shares in
NickelX issued at completion (escrowed for 12 months in accordance with ASX requirements) and up to
$900,000 in cash payments subject to achievement of milestones linked to delineation of a JORC resource,
completion of a feasibility study and commercial production. The Company lodged the required substantial
shareholder notice advising the market of its 9.11% holding in NickelX.
Biranup is the last of the Company’s non-silica sand projects. The sale enables VRX to share in any future
exploration success in the project and allow the Company to focus on its stated aim of becoming a global
supplier of high-quality silica sand, initially from its Arrowsmith and Muchea silica sand projects.
Corporate
On 20 November 2020, VRX announced that it had received binding commitments for a capital raising via a
share placement to institutional, professional and sophisticated investors to raise $7 million before costs.
VRX received strong support for the capital raising from a wide range of investors, with bids received well in
excess of the amount raised.
This placement positioned VRX to rapidly advance the development of its silica sand projects, in particular
at Arrowsmith North for grade-control drilling for the first 10 years of production, confirmatory test work, drilling
and equipping water bores, port access design, construction of access roads and final engineering.
The placement was conducted at 18 cents per share, which represented a 23.4% discount to the last closing
price of VRX shares on ASX of 23.5 cents prior to announcing the placement and a 13.6% discount to the
10-day volume-weighted average price (VWAP) of 20.8 cents as at the same date. A total of 38.9 million new
shares were issued within the Company’s current placement capacity under Listing Rule 7.1.
Funds raised under the placement were allocated to pre-production preparatory work at Arrowsmith North,
additional drilling at the Muchea Project and VXR’s other silica sand asset, Boyatup Project, and general
working capital.
Euroz Hartleys Limited (AFSL No 230052) acted as lead manager to the placement.
VRX Silica Limited
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COMPANY REVIEW
Events Subsequent to Year End
A total of 22,662,911 quoted options (VRXO) were exercised before their 31 July 2021 expiry date, with
21,226,543 exercised after 30 June 2021. This represented a 94.7% take up of the options, which raised a
total of $4,079,324 from the exercise of the options.
Substantial Shareholder
On 1 June 2021, the Company welcomed a significant investment in its shares by a new strategic European-
based investor group3. The investment followed due diligence inquiries on the Company and its Arrowsmith
and Muchea Silica Sand Projects and was undertaken via a combination of off-market transfers from VRX
Top 20 shareholders and on-market acquisitions.
VRX Included in MISCI Small Caps Index
Global market index provider, Morgan Stanley Capital International, otherwise known as the MSCI
announced changes to their Australian Global Micro Cap Indexes.
As part of the changes, effective as at close of business on 27 May 2021, VRX was added to the MSCI
Australia Micro Cap Index which is designed to measure the performance of the Micro Cap segment of
companies traded on the ASX.
MSCI is a leading provider of investment services such as research, data and technology to the global
investment community enabling clients to better understand and analyse key drivers of risk and return and
build more effective investment portfolios.
There are a number of advantages to VRX being admitted into a global index such as MSCI, including:
exposure to larger and global institutions
research coverage and transparency for institutional and retail investors
broader exposure to the Australian and International investment markets
increased trading liquidity
access to capital sources
3 See Form 603 – Notice of Initial Substantial Holder lodged 1 June 2021.
VRX Silica Limited
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COMPANY REVIEW
Annual Mineral Resource and Ore Reserve Report
As at 30 June 2021
In accordance with ASX Listing Rule 5.21, VRX reviews and reports its Mineral Resources and Ore Reserves
at least annually. The date of reporting is 30 June each year, to coincide with the Company’s end of financial
year balance date. If there are any material changes to its Mineral Resources or Ore Reserves over the
course of the year, the Company promptly reports these changes.
Mineral Resources
The Mineral Resources for VRX remain unchanged from 30 June 2021 and are shown in Table 1 below.
Table 1 Mineral Resources (as at 30 June 2021)
Project
Classification
Muchea
Arrowsmith
North
Arrowsmith
Central
Mt
29
172
208
248
SiO
%
₂
99.6
Al
O
%
₂
₃
0.09
Fe
O
%
₂
₃
0.03
TiO
%
₂
0.07 0.22
LOI
%
99.6
0.05
0.02
0.10 0.23
99.6
0.06
0.02
0.10 0.23
97.7
1.00
0.40
0.20 0.50
Indicated
Inferred
Total
Indicated
Inferred
523
98.2
0.80
0.30
0.20 0.40
Total
771
98.0
0.86
0.30
0.17 0.41
Indicated 28.2
Inferred 48.3
Total 76.5
96.6
1.70
0.40
0.20 0.70
96.9
1.50
0.40
0.20 0.70
96.8
1.50
0.40
0.20 0.70
Total Mineral Resource 1,056 Million Tonnes
VRX Silica Limited
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COMPANY REVIEW
Ore Reserves
The Ore Reserves for VRX Silica remain unchanged from 30 June 2021 and are shown in Table 2 below.
Table 2 Ore Reserves (as at 30 June 2021)
Project
Classification
Product
Recovery Mt
Muchea
Probable
F80
F80C
F150
48%
20%
20%
10.2
4.25
SiO2
%
Al2O3
%
Fe2O3
%
TiO2
%
LOI
%
99.9
0.02 0.008
0.03
0.1
4.25 99.8
0.07 0.015 0.035
0.1
Muchea Ore Reserve
18.7 Million Tonnes
Arrowsmith
North
Probable
N40 / NF500
Local Market
N20
24%
60%
6%
60
149
15
99.7
0.2
0.05
0.035
0.1
Arrowsmith North Ore Reserve
223 Million Tonnes
Arrowsmith
Central
Probable
CF400
C20
C40
High TiO2
17%
34%
17%
9%
4.2
8.4
4.2
2.2
99.6
0.25
0.04
0.03
0.1
<1%
2%
Arrowsmith Central Ore Reserve
18.9 Million Tonnes
Total Ore Reserve 261 Million Tonnes
Competent Persons’ Statements
The information in this document that relates to Arrowsmith North, Arrowsmith Central and Muchea
Exploration Results and Muchea Aircore Drilling Area Mineral Resources are 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 document that relates to Arrowsmith North, Arrowsmith Central and Muchea Auger
area Mineral Resources is based on information compiled by Mr Grant Louw who was 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 document that relates to Arrowsmith North, Arrowsmith Central and Muchea Probable
Ore Reserves 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
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COMPANY REVIEW
Material Assumptions
Full details of the bankable feasibility studies for the Arrowsmith North, Arrowsmith Central and Muchea Silica
Sand Projects, including material assumptions, are contained in VRX’s ASX announcements of 28 August
2019, 17 September 2019 and 18 October 2019, respectively. All such material assumptions continue to
apply and have not materially changed from the date of release of the respective BFS. While VRX considers
all of the material assumptions to be based on reasonable grounds, there is no certainty they will be correct
or that the range of outcomes indicated within the studies will be achieved.
VRX Silica Limited
22
SUSTAINABILITY REPORT
VRX Silica FY21 Sustainability Report
FY21 Highlights
• Environmental – Conducted carbon life cycle analysis for estimated greenhouse gas (GHG)
emissions at Arrowsmith North.
• Social - Engaged with numerous stakeholders in the region including Indigenous groups, local
government and landowners
• Governance - Adopted ASX Corporate Governance Principles and Recommendations 4th Edition as
the new governance standards
Development at VRX
Significant progress has been made during the past year. Some of the key achievements:
• Mining leases granted for all the company’s three Silica Sand projects:
• Extensive environmental studies conducted on all the company’s silica sand projects over each
season
• Comprehensively reviewed a ‘proof of concept’ Vegetation Direct Transfer (VDT) trial
•
Lodged Project Referrals with Federal and State environmental assessment agencies for the
Arrowsmith North Silica Sand project
• Continue to engage with those agencies to progress the environmental approvals for mining at
Arrowsmith North
• The first 6 to 10 years of proposed mining at Arrowsmith North has been grade controlled
• Significant test work was successfully conducted in order to produce a number of specific marketable
products
• Significant progress has been made on the engineering of the proposed plant by experienced
engineers ProjX
• The proposed plant design was conducted with the aim to operate predominately with recycled water
• Commencement of drilling the Bore field water supply for the plant
•
• Engaged with potential final use offtake partners and sent numerous samples of various volumes for
Investigated opportunities for the project to be powered by gas with supporting solar
testing
• Completed greenhouse gas emissions estimates as part of its maiden ESG reporting this year
VRX Silica Limited is very conscious of its social licence obligations and during the year proactively engaged
with the traditional owners, conducted Heritage Surveys at all projects, and engaged with stakeholders in the
region.
Overview of operations
VRX Silica Limited (ASX: VRX) is an explorer and prospective producer of silica sand with a focus on
exporting the commodity to meet rising demand in the Asia Pacific region. We are headquartered in Perth,
Western Australia (WA) with operations at three silica sand mine sites across the State.
Our total silica sand mineral resource stands at 1,056 million tonnes (Mt) and range in grade from 96% to
99% silicon dioxide or silica (SiO2), with low iron impurities. We also have total declared probable ore reserves
of 261 Mt, ranging in grade from 99.6% to 99.9% SiO2.
Silica sand is the primary component of a range of standard and specialty glass and is used for metal casting
(foundries), metal production, chemical production, paint and coatings, ceramics, filtration and water
production, and oil and gas recovery. Specifications of high-quality silica sand is also used to produce the
high demand ultra-clear glass covering solar panels.
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SUSTAINABILITY REPORT
Rising global demand and prices for silica sand – coupled with an increasing shortage due to dwindling local
supplies and environmental restrictions specifically on dredging – offers a significant export opportunity for
VRX. The Asia Pacific region currently accounts for 47% of global demand for silica sand and, between 2021
and 2027, is predicted to grow at a compound annual growth rate (CAGR) of 7.7% or over 10 million tonnes.
VRX and our WA-based silica sand projects are well positioned to meet this need. The scale of our projects
could also provide a long term opportunity for Western Australia to develop a glass manufacturing industry.
Corporate strategy
Our strategy is to become a global producer, exporter and supplier of choice for high-quality silica sand. To
achieve this, we have secured long-term mining leases at four large-scale, high-grade and low-impurity silica
sand tenements in Western Australia, the first two of which are in an advanced stage of development. All
three projects offer the potential for substantial mineral reserves, benefit from existing and adjacent road and
rail lines to major export ports and close to established infrastructure (logistics, power, water).
VRX projects
Figure 9 – VRX Projects
VRX Silica Limited
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SUSTAINABILITY REPORT
Arrowsmith North Silica Sand Project, Western Australia
VRX was granted our 100%-owned Arrowsmith North Mining Lease, M70/1389, on 16 November 2020. The
site is located in the Geraldton Sandplain bioregion approximately 35-km north-west of Eneabba, Shire of
Irwin, and some 270-kms north of Perth. It holds an estimated 771 Mt of total indicated and inferred mineral
resources at 98.0% SiO2 readily amenable to upgrading by conventional washing and screening to be suitable
for industries such as glass making and foundry sand. Arrowsmith North is considered a world class deposit
and estimated to hold 25 years’ worth of production with potential for a 100+ year mine life. The 377-square-
kilometre site lies adjacent to the Brand Highway and the Eneabba-Geraldton railway, providing a direct road
and rail connection to Geraldton Port which is suitable for bulk shipping and offers a unique logistics solution.
Arrowsmith Central Silica Sand Project, Western Australia
VRX was granted our 100%-owned Arrowsmith Central Mining Lease, M70/1392, in November 2020. As with
the Arrowsmith North project the site is located in the Geraldton Sandplain bioregion approximately 35-km
north-west of Eneabba, Shire of Irwin, and some 270-kms north of Perth. It holds an estimated 76.5 Mt of
total indicated and inferred mineral resources at 96.8% SiO
readily amenable to upgrading by conventional
washing and screening to be suitable for industries such as glass making and foundry sand. Arrowsmith
Central is considered a world class deposit and estimated to hold 75 years’ worth of production. The 19-
square-kilometre site lies adjacent to the Brand Highway and the Eneabba-Geraldton railway, providing a
direct road and rail connection to Geraldton Port which is suitable for bulk shipping and offers a unique
logistics solution.
₂
Muchea Silica Sand Project, Western Australia
Our 100%-owned Muchea lease is located 50-km north of Perth and is estimated to hold a total 208 Mt of
indicated and inferred mineral resources at 99.6% SiO2. Muchea’s sand grain size and quality is suitable for
the ultra-clear glass market for use in solar panels. The 74.4-square-kilometre site lies adjacent to the Brand
Highway and the Moora-Kwinana railway, providing a direct road and rail connection to Perth’s main industrial
port, the Kwinana Bulk Terminal.
Boyatup Silica Sand Project, Western Australia
VRX acquired our 100%-owned Boyatup lease in early 2019. Located 100-km east of Esperance, this 124-
square-kilometre exploration site has the potential to produce silica sand for export that is subtly different
from our two other projects. The site is connected by sealed road to Esperance Port for bulk commodity
shipping.
Development
VRX is planning a staggered and disciplined development timetable across our projects beginning with
Arrowsmith North, followed by Muchea and Arrowsmith Central. Permitting is well advanced with
environmental approvals, native title work, offtake agreements, engineering and other development activities
underway.
Construction of the 2mtpa processing plant is expected, subject to approvals, to begin at Arrowsmith North
mid 2022, followed by first production later in 2022. Permitting for a 2mtpa processing plant and production
at Muchea is forecast to be late-2022.
Biranup gold project divestment, Western Australia
To refocus our development strategy more directly on silica sand production and export, we sold our Biranup
Gold and Base Metals Project to Nickel X Limited in July 2020. We have retained a 9.1% stake in this ASX-
listed business which is exploring promising gold and copper-nickel prospects to the north of AngloGold
Ashanti and Regis Resources Tropicana Gold Mine in WA’s Albany-Fraser Gold Belt.
VRX Silica Limited
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SUSTAINABILITY REPORT
Sustainability at VRX
Our approach to sustainability
VRX recognises that expectations of corporate behaviour are changing and that investment capital is
increasingly being redirected towards socially and environmentally responsible businesses. This has
transformed the environment in which we operate to one which prioritises climate risk, biodiversity loss, social
impacts and, more recently, COVID-19 and its associated public health challenges in their portfolios.
While we are in the early stages of developing our world-class silica sand projects, VRX has a unique
opportunity to incorporate forward-thinking approaches to sustainability into our operations to ensure we
leverage the opportunities associated with the transition to a low carbon future.
By committing to operating our business in a low carbon manner and in accordance with high standards of
environmental, social and governance (ESG), we aim to reduce risk, build resilience into our operations and
drive long-term, sustainable value for our stakeholders.
The VRX Sustainability Report will annually capture and report publicly on the Company’s economic,
environmental and social impacts, and hence its contributions, both positive and negative, towards the goal
of sustainable development. It covers all projects owned and operated by VRX and all monetary values in
this Report are in Australian dollars ($).
VRX sustainability ecosystem
Sustainability vision: We are committed to creating a sustainable, low-impact environmental legacy and
positive benefits for our communities.
ESG Pillar
Environment
Social
Governance
Indigenous engagement & training
ESG Material Topic
• Rehabilitation
• Emissions and GHGs
• Water management
• Endangered species, flora and fauna
• Waste
• Feral animal control
• Health and safety, wellbeing
• Economic performance
•
• Local employment
• Employment practices
• Local businesses
• Contractor engagement
• Diversity
• Supporting community organisations
• Employee development & training
• Customer risk & production quality
• Business ethics
• Sustainable products
• Supply chain management
•
•
Infrastructure
Innovation and technical improvements
Table 3 – VRX Material Topics
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SUSTAINABILITY REPORT
Policies
Current relevant sustainability policies are on the VRX website
•
Indigenous Community Policy
• Environmental Policy
• OH&S Policy
• Whistle-blower Policy
Reporting our sustainability performance
Following global best-practice, a materiality process has been followed with VRX stakeholders engaged and
a list of material ESG topics developed alongside a materiality matrix to prioritise the most critical issues that
we will prioritise in our sustainability journey. Focus areas include mine-site rehabilitation, health, safety and
wellbeing, endangered species, emissions, greenhouse gases and business ethics.
VRX has also adopted a ‘think global, act local’ approach to selecting frameworks against which to inform
our sustainability planning and against which to measure our progress. We commit to regularly updating our
stakeholders on our ESG performance to ensure we remain a responsible investment opportunity.
Whilst we are in project development phase, we have chosen to benchmark our performance against the
recommendations of the following two organisations.
United Nations: Sustainable Development Goals (SDGs)
The SDGs promote action in areas that are critical to ending poverty, protecting the environment and
improving the prosperity of all people through economic, social and technological progress. The goals are
relevant for all countries and sectors of society, including business, and will enable VRX to tailor its approach
to best serve the Company’s stakeholders.
Below are the actions that our Board and Leadership Team are taking to make a positive contribution to the
17 SDGs and the way in which we plan to measure the meaningful progress being made towards them.
VRX Silica Limited
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SUSTAINABILITY REPORT
VRX is aligning our activities with seven SDGs
Figure 10 – VRX SDG contributions
World Economic Forum (WEF): Stakeholder Capitalism Framework
In partnership with global accounting firms, the WEF has identified a set of global, cross-industry baseline
disclosures and metrics for companies to use to analyse their ESG performance and regularly communicate
this to their stakeholders.
Disclosures are drawn from existing voluntary standards including the Global Reporting Initiative (GRI), the
Sustainability Accounting Standards Board (SASB) and the Financial Stability Board’s Task Force on
Climate-Related Financial Disclosures (TCRD). They are grouped under four pillars that are considered the
most critical for business, society and the planet. The WEF framework is a logical and appropriate starting
point for VRX as we begin our ESG journey.
Our adoption of the WEF framework has already highlighted a number of ESG opportunities across our
operations, including the integration of solar panels and battery storage capacity into power generation and
a purpose-built Vegetation Direct Transfer (VDT) method to rapidly and continuously regenerate vegetation
that is disturbed during our operations (see below). These two initiatives reflect VRX’s commitment to
reducing our environmental footprint and building sustainable outcomes for our stakeholders.
Our performance against the framework in FY21 can be found in Appendix 1 at the end of this report.
Risk management
Risk is managed at VRX by the full Board of Directors as, due to the size and limited resources, the Company
does not have a separately constituted Audit and Risk Committee. More information can be found in
Corporate Governance Plan 4th edition, found on the VRX website. The full Board undertakes the duties
which would normally fall to such a committee. The Board oversees the Company’s risk management
systems, practices and procedures to ensure effective risk identification and management and compliance
with internal guidelines and external requirements. Other statutory and fiduciary responsibilities include:
• Compliance with all applicable laws, regulations and company policy.
• Monitor the effectiveness and adequacy of internal control processes.
•
Identification and management of business, economic, environmental and social sustainability risks.
VRX Silica Limited
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SUSTAINABILITY REPORT
• Review of the Company’s risk management framework at least annually to satisfy itself that it
continues to be sound and to determine whether there have been any changes in the material
business risks the Company faces and to ensure that they remain within the risk appetite set by the
Board.
• Review reports by management on the efficiency and effectiveness of the Company’s risk
management framework and associated internal compliance and control procedures.
The Company’s process of risk management and internal compliance and control includes:
Identifying and measuring risks
that might impact upon the
achievement of the Company’s
goals and objectives, and
monitoring the environment for
emerging factors and trends that
affect these risks;
Monitoring the performance of,
and improving the effectiveness
of, risk management systems
and internal compliance and
controls, including regular
assessment of the effectiveness
of risk management and internal
compliance and control.
Formulating risk management
strategies to manage identified
risks, and designing and
implementing appropriate risk
management policies and
internal controls; and
Figure 11 – Risk management process
VRX Supply Chain
VRX engages a variety or suppliers and contractors (as both businesses and individuals) to provide various
services at our operations, exploration projects and offices. A breakdown of this is outlined below.
Exploration
Development
Corporate & Admin
• Drilling contractors
• Environmental
consultants
• Metallurgical
• Process design
• Design engineering
• Auditors
• Legal
• Communications
• Logisitics
Figure 12 – VRX supply chain
VRX Silica Limited
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SUSTAINABILITY REPORT
Stakeholders and Materiality
VRX strives for open and transparent dialogue with our stakeholders with whom we seek to engage early
and in a timely manner. We recognise such an approach is central to building our reputation and the way in
which we are perceived by our investors, indigenous communities and others. During the materiality process,
a map of VRX stakeholders was produced and is displayed below.
Employees
Aboriginal
groups &
programs
NGOs &
conservation
groups
Suppliers &
contractors
Directors
VRX
Stakeholders
Financiers
Customers
Government &
regulators
Shareholders
Local
communities
Figure 13 – VRX stakeholders
Material topics are those that reflect VRX’s economic, environmental or social impacts and can substantially
influence stakeholder decisions. In this report, VRX addresses the material matters that enable ongoing
assessment of our sustainability performance. These topics include both environmental, social and
governance risks and opportunities, and have potentially significant negative or positive impact on our
business and our stakeholders. The materiality assessment process identified 23 ESG topics. In alignment
with the Global Reporting Initiative (GRI) Standards, an initial ranking of material issues based on those that
were of most importance to our stakeholders. Senior VRX leaders then reviewed the ranking of the material
issues to ensure that our purpose and strategic imperatives were also considered. This process and the
listing of material issues has informed our strategic thinking on ESG priorities and dictated the structure and
content of this report.
VRX Silica Limited
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SUSTAINABILITY REPORT
Figure 14 – VRX Materiality Matrix
Governance
High standards of corporate governance are an essential prerequisite for creating sustainable value for
stakeholders.
Corporate Governance
The Corporate Governance Statement sets out the Company’s main corporate governance policies and
practices. All VRX policies and practices are reported against the 4th Edition of the ASX Corporate
Governance Council’s Corporate Governance Principles and Recommendations.
Summary of policies and responsibilities:
Pillar
Policies
Board/Committee
Environmental Environmental Policy
Social
Governance
Diversity Policy
Indigenous Community Policy
Corporate Code of Conduct
Shareholder Communication
S
Trading Policy
Disclosure Policy
Board
Board
Board
Board
Board
Board
Board
Executive/Manager
responsible
Managing Director
Managing Director
Managing Director
Chairman
Managing Director
Company Secretary
Managing Director
There has been no breach of regulations or compliance by VRX during 2021.
VRX Silica Limited
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SUSTAINABILITY REPORT
Business ethics
The Company will uphold the highest standard of business ethics and ensure adequate training for all staff
and contractors.
Ethical behaviour at VRX is guided by our Corporate Code of Conduct. The purpose of the Code is to provide
a framework for decisions and actions in relation to ethical conduct in employment. It underpins the
Company’s commitment to integrity and fair dealing in its business affairs and to a duty of care to all
employees, clients and stakeholders. The Code sets out the principles covering appropriate conduct in a
variety of contexts and outlines the minimum standard of behaviour expected from employees.
Corrupt conduct involves the dishonest or partial use of power or position which results in one person/group
being advantaged over another. Corruption can take many forms including, but not limited to official
misconduct, bribery and blackmail, unauthorised use of confidential information, fraud and theft. Corrupt
conduct will not be tolerated at VRX and disciplinary action up to and including dismissal will be taken in the
event of any employee participating in corrupt conduct.
Customer risk & production quality
The Company is cognisant that the quality of the products
will determine the selling price and future contracts. The
Company approach is to provide a better quality product than
the specification requires for sales without compromising
yield and operating costs. This will avoid quality disputes,
compromised contracts and general branding in the industry.
The Company will also undertake adequate metallurgical
testwork to ensure that the process circuit design will provide
the quality of product that the customer requires
Sustainable products
Although VRX will sell silica for a variety of different uses, a key priority will be contributing to a net-zero
future through supply of the ultra-clear glass market for use in solar panels. Reaching net-zero will require
rapid scale-up of already commercial clean energy technologies, such as wind and solar.
‐
In its Net
Zero Emissions by 2050 Scenario (NZE), the International Energy Agency (IEA) outlines that to
reach net-zero by 2050, the global energy sector will need to be based largely on renewables, with solar the
single largest source of supply. Solar technologies – solar photovoltaic (PV) electricity and concentrating
solar power (CSP) - need to contribute over 30% of global energy to reach net-zero (see Figure 7 below). As
competitiveness continues to improve, solar technology will require average annual growth of 15% between
2020 and 2030. The pathway calls for annual additions of solar PV to reach 630 gigawatts by 2030 (134GW
was added in 2020), the equivalent to installing the world’s current largest solar park roughly every day.
Achieving this cleaner, healthier future will rely on quality, reliable and affordable sources of silica and glass
for solar panel production.
VRX Silica Limited
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SUSTAINABILITY REPORT
Figure 7 – Contributions by energy source in Net
Zero Emissions by 2050 Scenario (NZE) (Source: IEA - 2021)
Social pillar
‐
The Company will endeavour to engage with regional stakeholders and beneficiaries to ensure a fluid line of
communication.
Where possible employees and contractors will be sourced locally to support local communities.
Health and safety, wellbeing
The Company will adopt the highest industry standards when planning and operating to ensure the safety
and wellbeing of its employees and contractors.
The Company will use experienced management and contractors and ensure adequate training for
employees to operate in a safe and efficient manner.
Training manuals for mining and processing will be developed with regular updates and education.
Fatalities
Lost time
injuries
LTIFR
Total recordable
injuries
TRIFR
0
0
0
0
0
Economic performance
At all times the Company will endeavour to maintain a product yield, quality and quantity and operating cost
that will maximise the economic potential of the sales of product from the projects.
VRX Silica Limited
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SUSTAINABILITY REPORT
FY21 contribution
• Goods and service supplier purchases = $3,191,175
• Wage spend = $592,110
• Taxes = $12,426
• Royalties = Nil
• State and Shire Rent = $55,858
Indigenous relations
A number of Aboriginal groups are the custodians for the land on which our projects are located in Western
Australia. We are committed to engaging with these communities and their representatives to ensure they
are kept fully informed about our developing operations and have the opportunity to be involved in our plans
and benefit from our success. This is guided by our Indigenous Community Policy.
As part of our commitment to local and indigenous employment, we anticipate offering employment and
contract opportunities to local indigenous communities in the vicinity of our projects and to support the ranger
programs associated with our project areas.
Aboriginal heritage
VRX is committed to understanding the Aboriginal heritage values and significance of the land on which we
operate. This helps us ensure we respect and protect the land and that our operations have as minimal impact
and disruption as possible.
To date, VRX has undertaken a number of comprehensive archaeological and ethnographic heritage surveys
at our operations in accordance with requirements set out in Western Australia’s Environmental Protection
Act 1986 and Aboriginal Heritage Act 1972.
For example, at our Arrowsmith project, VRX has conducted Aboriginal heritage and ethnographic surveys
with no significant sites recorded in the proposed mining area but a number of verbal accounts of the region’s
significance for hunting and fishing, especially along the natural waterways.
In November 2020, the Amangu representatives of Yamatji Nation and Yamatji Marlpa Aboriginal Corporation
produced a final report regarding the archaeological and ethnographic, work area clearance, heritage survey
undertaken over our Arrowsmith North and Arrowsmith Central project areas. This concluded that:
• no isolated artefacts have been identified in the project areas;
•
the Arrowsmith North Access Road, Arrowsmith North Services Corridor, Arrowsmith North Production
Area and Arrowsmith Central
Infrastructure Area are clear for the
stated works to proceed;
•
• The Arrowsmith Central Production
Area is partially clear for the stated
works to proceed; and
If work is proposed on a section of
Access Route
L70-208
that
the Arrowsmith River,
intersects
the
further
is
Southern Yamatji Corporation
required.
consultation with
In July 2021, we commissioned Horizon
Heritage Management to undertake a
comprehensive assessment of known
and likely Aboriginal heritage values and
traditional uses within our Arrowsmith
identified
North Project area. This
VRX Silica Limited
Heritage surveying at Arrowsmith Central
34
SUSTAINABILITY REPORT
registered Aboriginal heritage sites (including those of high value for bush tucker and bush medicine and
those of ethnographical or archaeological value), provided a contextual assessment of the general Aboriginal
heritage values of the area, and made recommendations on ways of minimising our impacts on Aboriginal
heritage.
The assessment identified one registered Aboriginal site located within the area with three other heritage
places within Yamatji country surrounding the Arrowsmith North Project assessment area. Based on the
assessment, VRX understands that any future development within our Arrowsmith North Project assessment
area should include project consultation, Aboriginal traditional uses consultation and full and detailed
Aboriginal heritage ethnographic and archaeological surveys with the Yamatji Nation people.
Native title - Yamatji Nation Agreement
At our Arrowsmith Silica Sand Project, we have built up a strong and supportive relationship with the Southern
Yamatji people through the Yamatji Marlpa Aboriginal Corporation (YMAC), the Native Title Representative
Body for the Yamatji and Marlpa people.
In October 2020, conclusive registration of the Yamatji Nation Indigenous Land Use Agreement (ILUA)
occurred.
The ILUA is an alternative settlement by the Western Australian Government of Native Title claims covering
a significant portion of land in the Mid West, including the Southern Yamatji People’s claim covering the
Arrowsmith Projects.
This Government-led ILUA settled all Native Title claims over the Arrowsmith Projects area.
The strong and supportive relationships established with the Southern Yamatji People will continue to benefit
all parties as the Arrowsmith Projects are developed, and the Company intends to continue to consult and
work closely with the Southern Yamatji People; and
Native title - Noongar South West Native Title State Agreement
In November 2020, the Government of Western Australia implemented the South West Native Title
Settlement which, in January 2021, led to the registration of six Indigenous Land Use Agreements (ILUA).
All native title claims in WA’s south-west region must now be negotiated in accordance with the terms of the
ILUAs which supersede all previous legislation and title negotiations. Native title claims at our projects will
now reference terms in the following ILUAs:
• Muchea Silica Sand Project: ILUA Whadjuk People Indigenous Land Use Agreement;
• Boyatup Silica Sand Project: ILUA Wagyl Kaip and Southern Noongar Indigenous Land Use Agreement.
Prior to the implementation of WA’s South West Native Title Settlement, VRX proactively engaged with a
number of local Aboriginal groups overseeing the land on which our projects are located:
• At our Muchea Silica Sand Project, we worked constructively with the South West Aboriginal Land and
Sea Council (SWALSC) to finalise a Mining Agreement with the Whadjuk People.
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SUSTAINABILITY REPORT
Figure 15 – Map showing Western Australia’s South West Native Title Settlement and six Indigenous Land Use
Agreements (ILUA)
Environnment pillar
The project area has been selected for its minimal impact on the native vegetation, landforms and fauna. The
mining of sand will be undertaken to leave an undulating landform with the vegetation and habitat lower than
originally encountered but largely intact. Processing will use recycled water and few non-toxic chemicals. The
resource is relatively consistent in its attributes over a resource which may be mined for up to 100 years.
Low impact mining to minimise environmental impact
Figure 16 – Process Flow Diagram
Environmental permitting
In March 2021, we submitted our Environment Protection Agency (EPA) referral for the Arrowsmith North
Silica Sand Project to WA’s EPA. It followed a series of wide-ranging environmental studies undertaken by
and for us over the past three years and extensive pre-referral consultation with the EPA.
VRX Silica Limited
36
SUSTAINABILITY REPORT
This EPA referral incorporates pre-referral feedback received from the EPA in December 2020 and concludes
that Arrowsmith North can be developed without significant residual impacts on the environment. The EPA’s
Environmental Impact Assessment will be conducted as an accredited assessment that will also involve
assessing the proposal on behalf of the Federal Department of Agriculture, Water and Environment.
Documentation provided
epa.wa.gov.au/proposals/arrowsmith-north-silica-sand-project
to
the WA EPA on our Arrowsmith North project
is available at:
Rehabilitation
The Company has developed and tested a unique method for translocating topsoil to ensure the best possible
outcome in restoring the native vegetation.
At our Arrowsmith North project over the initial 30-year lifetime of the project, we expect to disturb a total 360
hectares of native vegetation as a result of sequential mining of sand 8-15 metres below the soil surface.
Minimising vegetation disturbance, maximising rehabilitation
To ensure we have a minimal impact on the
vegetation at our mine sites, VRX has
developed a unique and progressive made-for-
purpose method to rehabilitate disturbed flora.
Known as Vegetation Direct Transfer (VDT), it
involves carefully lifting and removing a 400-
millimetre deep sod from areas that are set to
be mined for silica sand.
With the root structures in the loose sand relatively shallow at 200-300 millimetres in depth, the VDT
methods enables the topsoil containing the vast majority of native flora and invertebrate fauna
preserved and near-surface humus and its microbial contents to remain intact. The technique lends
itself to rapid and extensive regeneration of affected areas based on continuous rehabilitation as
is available at:
silica sand mining progresses. A video of
vrxsilica.com.au/miningandrehabilitationmethodology
the VDT method
We will strive to minimise our impact on vegetation and topsoil by relocating it to rehabilitation areas using
our Vegetation Direct Transfer method (see case study above). We will also undertake mining in sections by
removing blocks (typically 150 x 150 metres) with an estimated five blocks mined per year.
VRX’s low-impact approach to silica sand mining means that no chemicals will be used in our production
process and minimal dust will be produced during mining activities. We are also deploying innovative new
measures to ensure that any vegetation removed during our mining activities can be used for continuous
rehabilitation (see case study above).
Greenhouse gas emissions
The Company will use all available opportunities to reduce emissions and greenhouse gases produced from
operating the projects. VRX will endeavour to reduce net greenhouse gas emissions in order to minimise the
risk of environmental harm associated with climate change and maintain air quality and minimise emissions
so that local environmental values are protected.
VRX Silica Limited
37
SUSTAINABILITY REPORT
VRX is focused on reducing our carbon footprint by cutting emissions at our mine sites. We are investigating
a number of ways of doing this to ensure we can reduce Scope 1, 2 and 3 emissions where possible.
In 2021, we engaged Preston Consulting Pty Ltd to assist with project approval processes at our Arrowsmith
North Silica Sand project. In August 2021, Preston commissioned Kewan Bond Pty Ltd to calculate the
estimated greenhouse gas (GHG) emissions associated with the project.
The assessment showed that during Arrowsmith’s 30-year lifespan - assuming it will produce 1 million tonnes
of silica per annum (Mtpa) for the first three years rising to 2 Mtpa thereafter – the project will generate a total
583,330 tonnes of carbon dioxide equivalent (tCO2-e) of Scope 1 emissions, equating to an average of 19,444
tonnes annually. Estimated Scope 3 emissions total 1,701,255 tCO2-e, predominately from shipping product
to Asia, equates to an average of 56,708 tonnes annually. No Scope 2 emissions are anticipated from the
consumption of grid-sourced electricity.
The primary sources of Scope 1 GHG emissions for the project will be the consumption of electricity and
diesel to operate the plant and machinery. Electricity will be generated on site through the construction of a
gas-fired power station. To reduce emissions further, VRX is investigating the potential for deploying a hybrid
on-site gas-fired, solar and wind power plant and short-term battery storage.
Priority, threatened and endangered species (flora and fauna)
The Company will undertake detailed surveys of all areas to be disturbed and identify any areas that that
may encounter any endangered or threatened species and can be avoided.
VRX has undertaken a wide-ranging review of available technical reports, relevant databases and spatial
data to identify the potential flora and vegetation that may be present at each of the projects.
At the Arrowsmith Project a flora and vegetation survey has been undertaken in accordance with DAWE and
EPA guidance.
This will enable the assessment of the potential direct and indirect impacts of the construction and operational
elements of the Projects on identified environmental values and assess the extent of cumulative impacts as
appropriate.
VRX will manage the application of the
mitigation hierarchy in the proposal
design, construction, operation and
measurable,
closure.
achievable, realistic and time-bound
actions will be actioned to minimise
mitigate Project impacts.
Specific,
Where significant residual
impacts
remain, propose an appropriate offsets
package that is consistent with the WA
Environmental Offsets Policy and
the EPBC Act
Guidelines and
Environmental Offsets Policy.
and
In accordance with EPA guidelines
VRX will identify and describe the
fauna assemblages present and likely
to
be present within the areas that may be impacted by the projects. VRX will endeavour protect terrestrial fauna
so that biological diversity and ecological integrity are maintained.
VRX will endeavour to maintain the hydrological regimes and quality of groundwater and surface water so
that environmental values are protected.
VRX Silica Limited
38
SUSTAINABILITY REPORT
Results from studies performed to date
No threatened flora pursuant to Part 2, Division 1, and Subdivision 2 of the Biodiversity Conservation Act
2016 were recorded in the survey area.
Overall, eleven priority taxa, as listed by the Western Australian Herbarium have been recorded in the survey
area from 2018 to 2020 (see Table 1 below) and five of these priority flora species were recorded within the
targeted survey area in the spring months of 2020.
Overall, it is likely that the five priority species in the targeted area will be impacted to some extent by clearing
within the Arrowsmith North targeted area. However, impacts to these species can be minimised by avoiding
priority taxa locations where applicable.
The project area has a rich fauna assemblage but incomplete with some locally extinct mammal and bird
species. Assemblage is typical of the Lesueur Sandplains subregion. It is notable for high reptile species
richness and a high proportion of non-resident birds, many of which are seasonal visitors to exploit seasonal
nectar resources.
Few species of high conservation significance are present or expected, but the Carnaby’s Black-Cockatoo is
important and likely to forage in the area. There are foraging and roosting records for the species from nearby
sites. Vegetation within the project area represents foraging habitat of at least moderate value for the species,
but there is no breeding habitat within the project area.
•
VRX Silica Limited
39
SUSTAINABILITY REPORT
• Appendix 1: World Economic Forum – Stakeholder Capitalism Index
WEF key data/question
Current status
The company’s stated purpose, as the
expression of the means by which a business
proposes solutions to economic, environmental
and social issues. Corporate purpose should
create value for all stakeholders, including
shareholders.
Composition of the highest governance body
and its committees by: competencies relating to
economic, environmental and social topics;
executive or non-executive; independence;
tenure on the governance body; number of each
individual’s other significant positions and
commitments, and the nature of the
commitments; gender; membership of under-
represented social groups; stakeholder
representation
A list of the topics that are material to key
stakeholders and the company, how the topics
were identified and how the stakeholders were
engaged.
Total percentage of governance body members,
employees and business partners who have
received training on the organization’s anti-
corruption policies and procedures, broken down
by region. a) Total number and nature of
incidents of corruption confirmed during the
current year, but related to previous years; and
b) Total number and nature of incidents of
corruption
Discussion of initiatives and stakeholder
engagement to improve the broader operating
environment and culture, in order to combat
corruption.
A description of internal and external
mechanisms for seeking advice about ethical
and lawful behaviour and organizational integrity
A description of internal and external
mechanisms for reporting concerns about
unethical or unlawful behaviour and lack of
organizational integrity.
Start date
target
Disclosure
target
Completed
Disclosed
FY21
FY22
FY23
VRX’s ESG commitment is We are
committed to creating a sustainable,
low-impact environmental legacy and
positive benefits for our communities.
Partial. See diversity section of the
VRX Corporate Governance
Statement. The Company has
established a Diversity Policy but
because of its size and limited
resources, positions are selected on
the best available candidate.
Outstanding disclosures:
competencies relating to economic,
environmental and social topics;
membership of under-represented
social groups; stakeholder
representation.
Disclosed in the Sustainability at VRX
section of this Sustainability Report
Completed
Disclosed
FY21
Employees are required to sign the
Code of Conduct. VRX has not had
any incidents of corruption in the past
year or in any previous years.
Completed
Disclosed
FY21
Employees are required to sign the
Code of Conduct. Operating in
Australian jurisdiction there is a low
risk of corruption
The VRX Anti- Bribery and Corruption
policy has guidance on behaviour in
Section 10 of the Corporate
Governance Plan. As a reasonably
small business, all VRX managers
and board members are available to
employees and contractors to discuss
any ethical concerns.
The VRX Anti- Bribery and Corruption
policy has guidance on behaviour in
Sections 10 & 17 of the Corporate
Governance Plan. As a reasonably
small business, all VRX managers
and board members are available to
employees and contractors to discuss
any ethical concerns.
Completed
Disclosed
FY21
Completed
Disclosed
FY21
Completed
Disclosed
FY21
A description of principal material risks and
opportunities facing the company specifically (as
opposed to generic sector risks)
A description of the company appetite in respect
of these risks, how these risks and opportunities
have moved over time and the response to
those changes.
For all relevant greenhouse gases (e.g., carbon
dioxide, methane, nitrous oxide, F-gases etc.),
report in metric tonnes of carbon dioxide
equivalent (tCO2e) GHG Protocol Scope 1 and
Scope 2 emissions.
Risks are outlined in the FY21 VRX
Annual Report
Completed
Risks are outlined in the FY21 VRX
Annual Report
Completed
Disclosed
FY21
Disclosed
FY21
Emissions are immaterial to VRX until
development and construction begins.
We have forecasted our emissions in
the Greenhouse Gas Emissions
section of this Sustainability Report
When
construction
begins
Forecast
disclosed
FY21
VRX Silica Limited
40
SUSTAINABILITY REPORT
Fully implement the recommendations of the
Task Force on Climate-related Financial
Disclosures (TCFD). If necessary, disclose a
timeline of at most three years for full
implementation
Report the number and area (in hectares) of
sites owned, leased or managed in or adjacent
to protected areas and/or key biodiversity areas
(KBA)
Megalitres of water withdrawn, megalitres of
water consumed and the percentage of each in
regions with high or extremely high baseline
water stress, according to WRI Aqueduct water
risk atlas tool.
Emissions are immaterial to VRX until
development and construction begins.
Outstanding disclosures:
Implementation or roadmap towards
the recommendations of the Task
Force on Climate-related Financial
Disclosures (TCFD)
Muchea project is in an
Environmentally Sensitive Area, the
Mining Lease at Muchea M70/1390,
1,008Ha. No other projects are
considered at a KBA.
FY22
FY23
Completed
Disclosed
FY21
Water usage is immaterial to VRX
until development and construction
begins.
When
construction
begins
When
construction
begins
Percentage of employees per employee
category, by age group, gender and other
indicators of diversity (e.g. ethnicity).
Diversity is immaterial to VRX until
development and construction begins.
When
construction
begins
When
construction
begins
Ratio of the basic salary and remuneration for
each employee category by significant locations
of operation for priority areas of equality: women
to men, minor to major ethnic groups, and other
relevant equality areas.
Ratios of standard entry level wage by gender
compared to local minimum wage.
Ratio of the annual total compensation of the
CEO to the median of the annual total
compensation of all its employees, except the
CEO.
An explanation of the operations and suppliers
considered to have significant risk for incidents
of child labour, forced or compulsory labour.
The number and rate of fatalities as a result of
work-related injury; high-consequence work-
related injuries (excluding fatalities); recordable
work-related injuries; main types of work-related
injury; and the number of hours worked.
An explanation of how the organization
facilitates workers’ access to non-occupational
medical and healthcare services, and the scope
of access provided for employees and workers
Average hours of training per person that the
organization’s employees have undertaken
during the reporting period, by gender and
employee category (total number of hours of
training provided to employees divided by the
number of employees).
Average training and development expenditure
per full time employee (total cost of training
provided to employees divided by the number of
employees).
Total number and rate of new employee hires
during the reporting period, by age group,
gender, other indicators of diversity and region.
Total number and rate of employee turnover
during the reporting period, by age group,
gender, other indicators of diversity and region.
Direct economic value generated and distributed
(EVG&D), on an accruals basis, covering the
basic components for the organization’s global
operations
Given the minimal nature of current
employment at VRX, salary and
remuneration will not become material
until the hiring phase of development
and construction
Given the minimal nature of current
employment at VRX, salary and
remuneration will not become material
until the hiring phase of development
and construction
Given the minimal nature of current
employment at VRX, salary and
remuneration will not become material
until the hiring phase of development
and construction
As VRX only operates in Australia,
there is a very low risk of incidents of
child labour, forced or compulsory
labour.
When
construction
begins
When
construction
begins
When
construction
begins
When
construction
begins
When
construction
begins
When
construction
begins
Completed
Disclosed
FY21
There were zero fatalities, injuries,
incidents or accidents in FY21.
Completed
Disclosed
FY21
VRX does not currently facilitate
workers’ access to non-occupational
medical and healthcare services
Completed
Disclosed
FY21
Average hours: Approximately 25
hours per employee
Gender: Male
Employee category: Management
Completed
Disclosed
FY21
Average training expenditure in FY21
was approximately $10,000 per
employee
Completed
There were no new employees hired
in FY21
Completed
There was zero employee turnover in
FY21
Completed
Disclosed in Economic Performance
section of this Sustainability Report
Completed
Disclosed
FY21
Disclosed
FY21
Disclosed
FY21
Disclosed
FY21
VRX Silica Limited
41
SUSTAINABILITY REPORT
Financial assistance received from the
government: total monetary value of financial
assistance received by the organization from
any government during the reporting period.
Total capital expenditures (Capex) minus
depreciation, supported by narrative to describe
the company’s investment strategy
Share buybacks plus dividend payments,
supported by narrative to describe the
company’s strategy for returns of capital to
shareholders.
Total costs related to research and
development.
Financial assistance received from the
government was approximately
$50,000 (Covid cashflow payment).
Completed
VRX did not have any material capital
expenditure in FY21
Completed
Disclosed
FY21
Disclosed
FY21
Given there was no revenue generate
or dividends paid and there are not
likely to until production begins, a
supporting strategy will not become
material until then
Completed
Disclosed
FY21
No R&D during FY21
Completed
Disclosed
FY21
Disclosed
FY21
The total global tax borne by the company
Total tax paid was $12,426 (Payroll
and FBT)
Completed
VRX Silica Limited
42
DIRECTORS REPORT
Your directors present their report on the Company and its controlled entities for the year ended 30 June
2021.
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
David Welch (appointed 1 September 2021)
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 CPA 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 on a broad range of issues
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
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 include 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
43
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 Master 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
David Welch, B.Com – Non-Executive Director
Mr Welch is an experienced and well credentialed senior executive with a successful track record in the
planning, development and operation of logistics and infrastructure supply chains for commodities markets,
including mining, agriculture and industrial products sectors.
From 2007 to 2017, Mr Welch held senior executive positions within Aurizon Holdings Limited, Australia’s
largest rail freight operator. These positions included VP Iron Ore, VP Market Development and EVP Strategy
and Business Development where he had direct responsibility for strategy, business transformation and
performance, commercial negotiations, stakeholder engagement, major projects, joint venture management,
M&A and business development. He was previously the Managing Director of The Millennium Group from
1998 to 2006 and was a Marketing Manager at CSBP Limited (part of the Wesfarmers conglomerate)
responsible for the management of mining reagent logistics from 1989 to 1994.
Mr Welch holds a Bachelor of Commerce (1st Class Hons) from the University of Western Australia.
Director since 1 September 2021.
During the past three years Mr Welch has held the following other listed company directorship:
• Brockman Mining Limited – 15 October 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
- 5,180,000 ordinary fully paid shares
- 3,000,000 options expiring 30 November 2021, exercisable at 21.7 cents each
Bruce Maluish
- 13,810,535 ordinary fully paid shares
- 5,000,000 options expiring 30 November 2021, exercisable at 21.7 cents each
Peter Pawlowitsch
- 23,841,769 ordinary fully paid shares
- 3,000,000 options expiring 30 November 2021, exercisable at 21.7 cents each
David Welch
- No interests in shares and options.
VRX Silica Limited
44
DIRECTORS REPORT
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.
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
Ventnor Mining Pty Ltd
Ventnor Pilbara Pty Ltd
VRX Boyatup Pty Ltd
Wisecat Pty Ltd
- parent entity
- disposed on 6 May 2021
- 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 $1,089,611 (2020: $2,366,217).
Financial Position
At 30 June 2021, the Group had net assets of $20,053,981 (2020: $10,160,379) with cash reserves of
$10,442,067 (2020: $2,603,047).
VRX Silica Limited
45
DIRECTORS REPORT
Financing and Investing Activities
The Company issued the following securities during the year:
• 38,888,891 ordinary fully paid shares by placement at an issue price of 18 cents each, raising
$7,000,000;
• 15,250,000 ordinary fully paid shares on the exercise of options at 7.2 cents each to raise $1,098,000;
• 25,000,000 ordinary fully paid shares on the exercise of options at 10 cents each to raise $2,500,000;
• 3,975,000 ordinary fully paid shares on the exercise of options at 9 cents each to raise $357,750;
• 1,000,000 ordinary fully paid shares on the exercise of options at 15 cents each to raise $150,000; and
• 1,436,368 ordinary fully paid shares on the exercise of listed options at 18 cents each to raise
$258,547.
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.
EVENTS SUBSEQUENT TO BALANCE DATE
The impact of the Coronavirus (COVID-19) pandemic is ongoing for the Group up to 30 June 2021, it is not
practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is
rapidly developing and is dependent on measures imposed by the Australian Government and other
countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any
economic stimulus that may be provided.
Exercise of Options
Since 30 June 2021, 21,226,543 listed options expiring on 31 July 2021 were exercised at 18 cents each.
Expiry of Options
1,276,614 listed options exercisable at 18 cents each, expired on 31 July 2021.
Consultants Options
On 20 August 2021, the Company issued 11,100,000 options exercisable at 30 cents each on or before 31
August 2024, to consultants for no consideration.
Other than the above, no other 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.
VRX Silica Limited
46
DIRECTORS REPORT
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
4
4
4
4
4
4
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
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.
VRX Silica Limited
47
DIRECTORS REPORT
The executive directors and full-time executives receive a superannuation guarantee contribution required
by the government, which was 9.50% for the financial year ended 30 June 2021 and increased to 10%
effective 1 July 2021, 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.
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.
VRX Silica Limited
48
DIRECTORS REPORT
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.
C. Employment contracts of directors and senior executives
The employment arrangements of the directors are not formalised in a contract of employment.
VRX Silica Limited
49
DIRECTORS REPORT
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
2021
2020
2021
2020
2021
2020
2021
2020
$
66,000
60,000
287,500
250,000
42,922
36,530
396,422
346,530
$
-
-
24,375
23,750
4,078
3,470
28,453
27,220
Share Based
Payments
Options
$
-
-
-
-
-
-
-
-
Total
$
66,000
60,000
311,875
273,750
47,000
40,000
424,875
373,750
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Director
P Boyatzis
B Maluish
P Pawlowitsch
Year
2021
2020
2021
2020
2021
2020
Fixed
Remuneration
100%
100%
100%
100%
100%
100%
At risk - STI
-
-
At risk - LTI
-
-
-
-
-
-
-
-
-
-
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.
E. Compensation options to key management personnel
No options were granted as equity compensation benefits to Directors and Executives during the year.
VRX Silica Limited
50
DIRECTORS REPORT
F. Shares issued to key management personnel on exercise of compensation options
Shares were issued to Directors and Executives on the exercise of the following compensation options during
the year. The options were issued free of charge and vested immediately when issued. Each option entitled the
holder to subscribe for one fully paid ordinary share in the Company at various exercise prices with various
expiry dates.
Director
Grant
Date
Number
Granted
P Boyatzis
B Maluish
P Pawlowitsch
30/11/17
30/11/17
30/11/17
Total
3,000,000
5,000,000
3,000,000
11,000,000
Fair Value per
Option at
Grant Date
Exercise
Price per
Option
Last
Exercise
Date
Number
Exercised
During the Year
$0.0203
$0.0203
$0.0203
$0.072
$0.072
$0.072
30/11/20
30/11/20
30/11/20
3,000,000
5,000,000
3,000,000
11,000,000
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
01/07/20
Received as
Remuneration
Shares Issued
on Exercise of
Options
Acquired/
(disposed)
Net
Change
Other
P Boyatzis
4,480,000
B Maluish
14,810,535
P Pawlowitsch
25,841,769
Total
45,132,304
-
-
-
-
3,000,000
(2,300,000)
5,000,000
(6,000,000)
3,000,000
(5,000,000)
11,000,000
(13,300,000)
-
-
-
-
Balance
30/06/21
5,180,000
13,810,535
23,841,769
42,832,304
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:
Balance
01/07/20
Received as
Remuneration
Options
Exercised
Options
Expired
Net Change
Other
Balance
30/06/21
Director
P Boyatzis
6,000,000
B Maluish
10,000,000
P Pawlowitsch
6,000,000
Total
22,000,000
-
-
-
-
(3,000,000)
(5,000,000)
(3,000,000)
(11,000,000)
-
-
-
-
-
-
-
-
3,000,000
5,000,000
3,000,000
11,000,000
VRX Silica Limited
51
DIRECTORS REPORT
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 $29,414 to Aruma Resources Ltd, a company Mr
Paul Boyatzis is a director of.
At 30 June 2021, the Group had an outstanding receivable of $8,142 from Aruma Resources Ltd, a company
Mr Paul Boyatzis is a director of.
I. Voting and comments made at the Company's last Annual General Meeting ('AGM')
At the 2020 AGM, 96.9% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2020. The Company did not receive any specific feedback at the AGM regarding its
remuneration practices.
J. Additional information
The earnings of the consolidated entity for the five years to 30 June 2021 are summarised below:
2021
$
2020
$
2019
$
2018
$
2017
$
Revenue
EBITDA
EBIT
Loss after income tax
1,356,599
(1,017,793)
(1,081,357)
(1,089,611)
73,665
(2,309,541)
(2,360,768)
(2,366,217)
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)
(1,010,828)
(1,010,828)
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)
2021
0.22
-
2020
0.09
-
2019
0.09
-
2018
0.07
-
2017
0.01
-
(0.23)
(0.55)
(1.69)
(0.75)
(0.51)
[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.
VRX Silica Limited
52
DIRECTORS REPORT
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.
SHARE OPTIONS
At the date of this report there were the following unissued ordinary shares for which options were
outstanding:
• 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
• 1,025,000 options expiring 30 November 2021, exercisable at 9 cents each
• 4,000,000 options expiring 30 November 2022, exercisable at 9 cents each
• 2,500,000 options expiring 23 October 2023, exercisable at 15 cents each
• 11,100,000 options expiring 31 August 2024, exercisable at 30 cents each
No new options were issued during the year.
During the year the following options were exercised:
• 15,250,000 options expiring 30 November 2020, exercised at 7.2 cents each
• 25,000,000 options expiring 30 June 2021, exercised at 10 cents each
• 3,975,000 options expiring 30 November 2021, exercised at 9 cents each
• 1,000,000 options expiring 23 October 2023, exercised at 15 cents each
• 1,436,368 listed options expiring 31 July 2021, exercised at 18 cents each
No other options expired during the year.
Subsequent to year end and up to the date of this report:
• 21,226,543 listed options expiring 31 July 2021, were exercised at 18 cents each
• 1,276,614 listed options exercisable at 18 cents each, expired on 31 July 2021
• 11,100,000 options exercisable at 30 cents each on or before 31 August 2024 were issued to
consultants for no consideration
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.
VRX Silica Limited
53
DIRECTORS 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/
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, 29 September 2021
VRX Silica Limited
54
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Continuing operations
Revenue
Exploration and evaluation expenditure
Depreciation
Directors fees and benefits expense
Finance costs
Loss on revaluation of equity instruments
Share based payments
Other expenses
Loss before income tax expense
Income tax expense
Net loss for the year
Consolidated
Note
2021
$
2020
$
2(a)
1,356,599
73,665
12
24
2(b)
3
(510,511)
(63,564)
(424,875)
(8,254)
(156,250)
(49,416)
(1,233,340)
(551,344)
(51,227)
(373,750)
(5,449)
-
(169,432)
(1,288,680)
(1,089,611)
(2,366,217)
-
-
(1,089,611)
(2,366,217)
Other comprehensive income
Other comprehensive income for the year, net of tax
-
-
-
-
Total comprehensive loss attributable to the members of
VRX Silica Limited
(1,089,611)
(2,366,217)
Earnings per share attributable to the members of
VRX Silica Limited
Cents
Cents
Basic/diluted earnings per share
5
(0.23)
(0.55)
The accompanying notes form part of these financial statements.
VRX Silica Limited
55
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-Current Assets
Trade and other receivables
Financial assets at fair value through profit or loss
Plant and equipment
Right-of-use assets
Deferred exploration expenditure
Total Non-Current Assets
Total Assets
LIABILITIES
Current Liabilities
Trade and other payables
Provisions
Lease liabilities
Total Current Liabilities
Non-Current Liabilities
Lease liabilities
Total Non-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
2021
$
2020
$
6
7
10,442,067
254,973
2,603,047
102,060
10,697,040
2,705,107
7
9
10
11
12
13
14
15
15
26,111
1,093,750
10,802
251,381
8,803,987
26,030
-
12,211
130,593
7,686,005
10,186,031
7,854,839
20,883,071
10,559,946
395,617
178,232
67,051
640,900
182,635
82,783
46,474
311,892
188,190
188,190
87,675
87,675
829,090
399,567
20,053,981
10,160,379
17
18
16
45,468,491
4,591,559
(30,006,069)
34,534,694
4,542,143
(28,916,458)
20,053,981
10,160,379
VRX Silica Limited
56
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
Consolidated
2021
Issued
Capital
$
Reserves
Accumulated
Losses
$
$
Total
$
Balance at 1 July 2020
34,534,694
4,542,143
(28,916,458)
10,160,379
Loss for the year
Total comprehensive loss for the year
Securities issued during the year
Capital raising costs
Cost of share based payments
-
-
11,364,297
(430,500)
-
-
-
(1,089,611)
(1,089,611)
(1,089,611)
(1,089,611)
-
-
49,416
-
-
-
11,364,297
(430,500)
49,416
Balance at 30 June 2021
45,468,491
4,591,559
(30,006,069)
20,053,981
2020
Balance at 1 July 2019
30,796,699
4,188,356
(26,550,241)
8,434,814
Loss for the year
Total comprehensive loss for the year
Securities issued during the year
Capital raising costs
Cost of share based payments
-
-
4,168,000
(430,005)
-
-
-
(2,366,217)
(2,366,217)
(2,366,217)
(2,366,217)
-
-
353,787
-
-
-
4,168,000
(430,005)
353,787
Balance at 30 June 2020
34,534,694
4,542,143
(28,916,458)
10,160,379
The accompanying notes form part of these financial statements.
VRX Silica Limited
57
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Other income
Interest and other finance costs paid
Note
Consolidated
2021
$
2020
$
(1,611,002)
4,981
105,962
(8,254)
(1,640,469)
3,754
94,812
(5,449)
Net cash outflows used in operating activities
6(i)
(1,508,313)
(1,547,352)
Cash flows from investing activities
Expenditure on mining interests
Payment for plant and equipment
Refund of security deposit
Net cash outflows used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payment of capital raising costs
Repayment of lease liabilities
Net cash provided by financing activities
Net increase in cash held
Cash at beginning of the financial year
(1,529,001)
(2,500)
-
(1,285,197)
(8,241)
20,000
(1,531,501)
(1,273,438)
11,364,297
(430,500)
(54,963)
4,168,352
(246,000)
(43,933)
10,878,834
3,878,419
7,839,020
1,057,629
2,603,047
1,545,418
Cash at end of financial year
6
10,442,067
2,603,047
The accompanying notes form part of these financial statements.
VRX Silica Limited
58
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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 29 September 2021 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 or Amended Accounting Standards and Interpretations Adopted
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 following Accounting Standards and Interpretations are most relevant to the consolidated entity:
Conceptual Framework for Financial Reporting (Conceptual Framework)
The consolidated entity has adopted the revised Conceptual Framework from 1 July 2020. The
Conceptual Framework contains new definition and recognition criteria as well as new guidance on
measurement that affects several Accounting Standards, but it has not had a material impact on the
consolidated entity's financial statements.
New Accounting Standards and Interpretations not yet mandatory or early adopted
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 2021. The consolidated entity has not yet assessed the impact of these new or
amended Accounting Standards and Interpretations.
(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).
VRX Silica Limited
59
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1. Summary of Significant Accounting Policies (Continued)
(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
60
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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)
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.
(g) 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.
VRX Silica Limited
61
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1. Summary of Significant Accounting Policies (Continued)
(g) Revenue Recognition (continued)
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.
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.
(h)
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.
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.
VRX Silica Limited
62
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1. Summary of Significant Accounting Policies (Continued)
(h)
Income Tax (continued)
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.
VRX Silica Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an
income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary
in the tax consolidated group continue to account for their own current and deferred tax amounts. The
tax consolidated group has applied the 'separate taxpayer within group' approach in determining the
appropriate amount of taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax
liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits
assumed from each subsidiary in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are
recognised as amounts receivable from or payable to other entities in the tax consolidated group. The
tax funding arrangement ensures that the intercompany charge equals the current tax liability or benefit
of each tax consolidated group member, resulting in neither a contribution by the head entity to the
subsidiaries nor a distribution by the subsidiaries to the head entity.
(i) 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
63
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1. Summary of Significant Accounting Policies (Continued)
(j) 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.
(k) 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.
(l)
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.
(m) Non-Current Assets Classified as Held for Sale
Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount
will be recovered principally through a sale transaction rather than through continued use. They are
measured at the lower of their carrying amount and fair value less costs of disposal. For non-current
assets or assets of disposal groups to be classified as held for sale, they must be available for
immediate sale in their present condition and their sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write down of the non-current assets
and assets of disposal groups to fair value less costs of disposal. A gain is recognised for any
subsequent increases in fair value less costs of disposal of a non-current assets and assets of disposal
groups, but not in excess of any cumulative impairment loss previously recognised.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest
and other expenses attributable to the liabilities of assets held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of disposal groups classified as held for
sale are presented separately on the face of the statement of financial position, in current assets. The
liabilities of disposal groups classified as held for sale are presented separately on the face of the
statement of financial position, in current liabilities.
VRX Silica Limited
64
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1. Summary of Significant Accounting Policies (Continued)
(n)
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
65
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1. Summary of Significant Accounting Policies (Continued)
(o) 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.
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.
VRX Silica Limited
66
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1. Summary of Significant Accounting Policies (Continued)
(p) Right-of-use Assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is
measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable,
any lease payments made at or before the commencement date net of any lease incentives received,
any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of
costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site
or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or
the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects
to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its
estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement
of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease
liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease
payments on these assets are expensed to profit or loss as incurred.
(q) 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.
VRX Silica Limited
67
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1. Summary of Significant Accounting Policies (Continued)
(r)
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).
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.
(s)
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.
(t)
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.
VRX Silica Limited
68
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1. Summary of Significant Accounting Policies (Continued)
(u)
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.
(v)
Lease Liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially
recognised at the present value of the lease payments to be made over the term of the lease,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the
consolidated entity's incremental borrowing rate. Lease payments comprise of fixed payments less any
lease incentives receivable, variable lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise price of a purchase option when the
exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The
variable lease payments that do not depend on an index or a rate are expensed in the period in which
they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying
amounts are remeasured if there is a change in the following: future lease payments arising from a
change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and
termination penalties. When a lease liability is remeasured, an adjustment is made to the
corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is
fully written down.
(w)
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
69
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1. Summary of Significant Accounting Policies (Continued)
(x)
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.
(y)
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.
(z)
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.
(aa) 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.
VRX Silica Limited
70
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1. Summary of Significant Accounting Policies (Continued)
(aa) Share-Based Payment Transactions (continued)
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.
(ab) Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or
disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date;
and assumes that the transaction will take place either: in the principal market; or in the absence of a
principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the
asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair
value measurement is based on its highest and best use. Valuation techniques that are appropriate in
the circumstance and for which sufficient data are available to measure fair value, are used, maximising
the use of relevant observable inputs and minimising the use of unobservable inputs.
Asses and liabilities measured at fair value are classified into three levels, using a fair value hierarchy
that reflects the significance of the inputs used in making the measurements. Classifications are
reviewed at each reporting date and transfers between levels are determined based on a reassessment
of the lowest level of input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal
expertise is either not available or when the valuation is deemed to be significant. External valuers are
selected based on market knowledge and reputation. Where there is significant change in fair value of
an asset or liability from one period to another, an analysis is undertaken which includes a verification
of the major inputs applied in the latest valuation and a comparison, where applicable, with external
sources of data.
VRX Silica Limited
71
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
1. Summary of Significant Accounting Policies (Continued)
(ac) Critical Accounting Judgements, Estimates and Assumptions
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually
evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue
and expenses. Management bases its judgements, estimates and assumptions on historical
experience and on other various factors, including expectations of future events, management believes
to be reasonable under the circumstances. The resulting accounting judgements and estimates will
seldom equal the related actual results. The judgements, estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer
to the respective notes) within the next financial year are discussed below.
Exploration and evaluation assets
The Group’s accounting policy for exploration and evaluation expenditure is set out at Note 1(q). 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.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic
has had, or may have, on the consolidated entity based on known information. This consideration
extends to the nature of the products and services offered, customers, supply chain, staffing and
geographic regions in which the consolidated entity operates. Other than as addressed in specific
notes, there does not currently appear to be either any significant impact upon the financial statements
or any significant uncertainties with respect to events or conditions which may impact the consolidated
entity unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19)
pandemic.
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:
Fair value measurement hierarchy
The consolidated entity is required to classify all assets and liabilities, measured at fair value, using a
three level hierarchy, based on the lowest level of input that is significant to the entire fair value
measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date; Level 2: Inputs other than quoted prices
included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine
what is significant to fair value and therefore which category the asset or liability is placed in can be
subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models.
These include discounted cash flow analysis or the use of observable inputs that require significant
adjustments based on unobservable inputs.
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
72
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
2.
Revenue and Expenses
(a) Revenue
Interest received
Government grants
Sale of tenements
Other
(b) Other Expenses
Audit fees
Consulting fees
Legal fees
Marketing
Rent
Securities exchange and registry fees
Travel
Other
3.
Income Tax
Consolidated
2021
$
2020
$
8,835
50,000
1,250,000
47,764
1,356,599
38,000
275,054
110,787
379,254
38,590
142,828
17,412
231,415
3,990
50,000
-
19,675
73,665
35,500
281,800
96,000
428,516
49,284
100,590
76,981
220,009
1,233,340
1,288,680
(a) Income tax expense
The income tax expense for the year differs from the prima facie
tax as follows:
Loss for year
(1,089,611)
(2,366,217)
Prima facie income tax (benefit) @ 26.0% (2020: 27.5%)
(283,299)
(650,710)
Tax effect of non-deductible/(non-assessable) items
Deferred tax assets not brought to account
Total income tax expense
(693,907)
977,206
-
(283,998)
934,708
-
(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(h) occur:
There are no franking credits available to the Group.
8,894,028
8,377,008
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
38,000
6,000
44,000
35,500
8,000
43,500
73
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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
6.
Cash and Cash Equivalents
Cash at bank
Consolidated
2021
$
2020
$
Cents
Cents
(0.23)
(0.55)
(1,089,611)
(2,366,217)
No.
No.
480,729,994
430,249,718
10,442,067
2,603,047
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
Sale of tenements settled by equity instruments
Loss on revaluation of equity instruments
Net gain on termination of property lease
Changes in assets and liabilities
Receivables
Payables
Provisions
GST payable/receivable
(1,089,611)
(2,366,217)
63,564
49,416
510,511
(1,250,000)
156,250
(4,388)
9,727
23,124
49,591
(26,497)
51,227
169,432
551,344
-
-
-
21,969
(61,223)
17,254
68,862
Net cash flows used in operating activities
(1,508,313)
(1,547,352)
(ii) Non-cash financing and investing activities:
Options issued as consideration for capital raising costs
-
-
184,005
184,005
VRX Silica Limited
74
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
7.
Trade and Other Receivables
Current
GST recoverable
Other receivables
Consolidated
2021
$
2020
$
89,105
165,868
254,973
40,755
61,305
102,060
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
26,111
26,111
26,030
26,030
Allowance for expected credit losses
The Group has not recognised any expected credit losses for the year ended 30 June 2021.
8.
Non-current Asset Held for Sale
Current
Biranup Nickel and Gold Project
-
-
At 30 June 2020, the Biranup Nickel and Gold Project was held for sale to NickelX Limited (formerly New
Energy Metals Limited) under a conditional sale agreement dated 19 June 2020 (Note 20). The value of the
project was fully impaired by $1,276,985 during the year ended 30 June 2019. The sale of the project was
completed on 6 May 2021.
9.
Financial Assets at Fair Value Through Profit or Loss
Non-Current
Listed ordinary shares – designated at fair value through profit or
loss
Reconciliation
Opening fair value
Additions
Revaluation decrement
Closing fair value
1,093,750
-
1,250,000
(156,250)
1,093,750
-
-
-
-
-
On 6 May 2021, the Company received 6,250,000 fully paid ordinary shares in NickelX Limited (escrowed
for 12 months) at a deemed issue price of 20 cents each as part consideration for the sale of the Biranup
Nickel and Gold Project (Note 20). On 30 June 2021, the closing trading price of NickelX Limited shares was
17.5 cents each.
Refer to Note 26 for further information on fair value measurement.
VRX Silica Limited
75
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
10. 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
11. Right-of-use Assets
Land and buildings – right-of-use
Less: Accumulated depreciation
Consolidated
2021
$
2020
$
241,494
(230,692)
238,994
(226,783)
10,802
12,211
12,211
2,500
(3,909)
10,802
11,016
4,933
(3,738)
12,211
287,292
(35,911)
251,381
178,082
(47,489)
130,593
There were no additions to the right-of-use assets during the year.
The consolidated entity leases land and buildings for its offices under a two year agreement with an option
to extend for an additional two years. On renewal, the terms of the leases are renegotiated. On 1 January
2021, the consolidated entity terminated its existing lease and commenced a new lease to include additional
floor-space at the same location.
The consolidated entity leases warehouse space and office equipment. These leases are either short-term
or low-value, so have been expensed as incurred and not capitalised as right-of-use assets.
12. Deferred Exploration Expenditure
Expenditure brought forward
Expenditure incurred during the year
Expenditure written off during the year
Expenditure carried forward
7,686,005
1,628,493
(510,511)
6,972,573
1,264,776
(551,344)
8,803,987
7,686,005
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
76
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
13. Trade and Other Payables
Current
Trade and other payables
Consolidated
2021
$
2020
$
395,617
182,635
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.
14. Provisions
Current
Employee benefits
178,232
82,783
Employee benefits represent annual leave and long service leave entitlements of employees within the Group
and are non-interest bearing.
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
62,331
-
15. Lease Liabilities
Current
Non-current
16. 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
67,051
46,474
188,190
87,675
(28,916,458)
(1,089,611)
(26,550,241)
(2,366,217)
(30,006,069)
(28,916,458)
VRX Silica Limited
77
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
17.
Issued Capital
Issued and paid up capital
(a)
Ordinary shares - fully paid
Consolidated
2021
$
2020
$
45,468,491
34,534,694
(b) Movement in ordinary shares on issue
Issue
Price
No. of Shares
$
2021
Balance at the beginning of the year
445,101,227
34,534,694
Exercise of options expiring 30 November 2020
Issued for cash pursuant to placement to investors
– 30 November 2020
Expense of issue
Exercise of options expiring 30 June 2021
Exercise of options expiring 30 November 2021
Exercise of options expiring 23 October 2023
Exercise of listed options expiring 31 July 2021
$0.072
15,250,000
1,098,000
$0.180
$0.100
$0.090
$0.150
$0.180
38,888,891
-
25,000,000
3,975,000
1,000,000
1,436,368
7,000,000
(430,500)
2,500,000
357,750
150,000
258,547
Balance at the end of the year
530,651,486
45,468,491
2020
Balance at the beginning of the year
404,318,617
30,796,699
Exercise of options expiring 31 October 2019
Exercise of options expiring 28 November 2019
Issued for cash pursuant to placement to investors
– 13 November 2019
Expense of issue
$0.028
$0.028
$0.115
1,000,000
5,000,000
28,000
140,000
34,782,610
-
4,000,000
(430,005)
Balance at the end of the year
445,101,227
34,534,694
VRX Silica Limited
78
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
17.
Issued Capital (Continued)
(c) Share options
At the end of the year, the following options over unissued ordinary shares were outstanding:
•
•
•
•
•
•
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;
1,025,000 options expiring 30 November 2021, exercisable at 9 cents each;
4,000,000 options expiring 30 November 2022, exercisable at 9 cents each;
2,500,000 options expiring 23 October 2023, exercisable at 15 cents each; and
22,503,157 listed options expiring 31 July 2021, exercisable at 18 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 2021 and 30 June 2020 are as follows:
Total borrowings
Less: Cash and cash equivalents
Net debt
Total equity
Total capital
Consolidated
2021
$
2020
$
13, 15
6
650,858
(10,442,067)
(9,791,209)
20,053,981
10,262,772
316,784
(2,603,047)
(2,286,263)
10,160,379
7,874,116
Gearing ratio
N/A
N/A
VRX Silica Limited
79
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
18. Reserves
Option issue reserve
Option issue reserve
Consolidated
2021
$
2020
$
4,591,559
4,542,143
(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
Options issued and vesting in lieu of fees payable
Options vesting in lieu of fees payable
Balance at the end of the year
4,542,143
-
49,416
4,188,356
353,787
-
4,591,559
4,542,143
19. Commitments
Exploration commitments
20. Commitments
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
784,800
497,500
VRX Silica Limited
80
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
19. 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
Consolidated
2021
$
2020
$
44,288
107,490
151,778
29,382
49,157
78,539
The property lease is a non-cancellable lease with a 24 month term commencing 1 January 2021, 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. At 30 June 2021 this consists of the variable outgoings and parking licence
payments portions of the rent not recognised as a right-of-use asset.
The storage lease is currently on a month by month basis, and as a short term lease is not recognised as a
right-of-use asset.
20. Contingent Liabilities and Assets
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 not possible 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.
On 19 September 2018, Wisecat Pty Ltd, a wholly owned subsidiary of the Company, completed the
acquisition of the Muchea Tenement (E70/4886) from Australian Silica Pty Ltd. Under the terms of the
acquisition, Wisecat Pty Ltd will pay Australian Silica Pty Ltd an ongoing net production royalty of 1% on
gross revenue on all product sold from minerals mined from the Muchea Tenement minus allowable
deductions.
Contingent assets
A binding term sheet dated 19 June 2020 set out the terms upon which NickelX Limited, formerly New Energy
Metals Limited, agreed to acquire 100% of the issued capital of Ventnor Gold Pty Ltd from the Company.
Ventnor Gold Pty Ltd, a wholly owned subsidiary of the Company, owns 100% of the Biranup Nickel and Gold
Project tenements. The sale was completed after NickelX Limited was admitted to the ASX on 6 May 2021.
The consideration for the sale consists of:
• 6,250,000 fully paid ordinary shares in NickelX Limited at a deemed issue price of 20 cents per share,
•
issued at completion of the sale (Completed); and
cash milestone payments of:
-
$200,000 upon delineation of a JORC compliant inferred resource of no less than 7.5mt at a grade
of 2% nickel and 0.5% copper on the land comprising the tenements;
$200,000 at the completion of a feasibility study with respect to the Biranup Project demonstrating
an ability to operate it as a commercially viable enterprise, and
$500,000 at the first commercial extraction of any minerals, mineral products, ore or concentrates,
in whatever form, from the Biranup Project.
-
-
VRX Silica Limited
81
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
21. 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 2021, the Group had no development assets. The Board considers that it has
only operated in one segment, being mineral exploration within Australia.
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 (2020: Nil) are derived from a single external customer.
22. 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
2020
2021
%
%
Australia
Australia
Australia
Australia
Australia
100
100
100
100
-
100
100
100
100
100
Ventnor Mining Pty Ltd
Ventnor Pilbara Pty Ltd
VRX Boyatup Pty Ltd
Wisecat Pty Ltd
Ventnor Gold Pty Ltd*
* Disposed on 6 May 2021
(b) Parent entity
VRX Silica Limited is the ultimate Australian parent entity and ultimate parent of the Group.
VRX Silica Limited
82
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
22. Related Party Transactions (Continued)
(c) 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
2021.
The totals of remuneration paid to key management personnel of the Company during the year are as follows:
Short-term benefits
Post-employment benefits
Consolidated
2021
$
396,422
28,453
424,875
2020
$
346,530
27,220
373,750
Shares Issued to Key Management Personnel on Exercise of Compensation Options
During the year, the Company issued the following fully paid ordinary shares on the exercise of unlisted
options at 7.2 cents each, exercisable on or before 30 November 2020:
3,000,000 shares
Mr Paul Boyatzis
5,000,000 shares
Mr Bruce Maluish
Mr Peter Pawlowitsch 3,000,000 shares
The options were originally granted to directors on 30 November 2017.
Loans with Key Management Personnel
There were no loans to key management personnel or their related entities during the financial year (2020:
Nil).
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 Group subleased office space for:
- Nil (2020: $8,325) to Gyoen Pty Ltd, Mr Peter Pawlowitsch’s consultancy company; and
-
$29,414 (2020: $29,350) to Aruma Resources Ltd, a company Mr Paul Boyatzis is a director of.
At 30 June 2021, the Group has an outstanding receivable of:
-
$8,142 (2020: $16,142) from Aruma Resources Ltd, a company Mr Paul Boyatzis is a director of.
VRX Silica Limited
83
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
23. Parent Entity Disclosures
(a) Summary financial information
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-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
2021
$
2020
$
10,645,820
9,976,345
2,689,388
7,795,357
20,622,165
10,484,745
379,993
188,190
568,183
236,691
87,675
324,366
45,568,491
4,591,559
(30,106,069)
34,634,694
4,542,143
(29,016,458)
20,053,981
10,160,379
(1,089,611)
-
(1,089,611)
(2,366,217)
-
(2,366,217)
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 20.
(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
84
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
24. Share Based Payments
(a) Value of share based payments in the financial statements
Expensed:
Share based payments in lieu of fees payable:
Unlisted options*
Issue price of options
Recognised in statement of profit or loss and other comprehensive
income
Share based payments in capital raising costs:
Listed options
Recognised on statement of changes in equity
Total share based payments
*Amortisation of previous options issued.
(b) Summary of share-based payments
Shares:
Consolidated
2021
$
2020
$
49,416
-
49,416
169,782
(350)
169,432
-
-
184,005
184,005
49,416
353,437
During the year, and previous financial year, no shares were issued as share based payments.
VRX Silica Limited
85
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
24. Share Based Payments (Continued)
Options:
Set out below are the summaries of options granted as share based payments:
2021
Grant
Date
Expiry
Date
Exercise
Price
Balance
01/07/20
Granted
during the
year
Exercised
during the
year
Expired
Balance
30/06/21
30/11/17
11/12/17
14/09/18
18/09/18
21/11/18
30/11/18
09/04/19
31/05/19
23/10/19
11/11/19
29/01/20
30/11/20
30/11/20
30/06/21
30/11/21
30/11/21
30/11/21
30/11/21
30/11/22
23/10/23
23/10/23
31/07/21
$0.072
$0.072
$0.100
$0.100
$0.100
$0.217
$0.090
$0.090
$0.150
$0.150
$0.180
12,000,000
3,250,000
25,000,000
5,500,000
250,000
11,000,000
5,000,000
4,000,000
3,000,000
500,000
6,548,220
76,048,220
-
-
-
-
-
-
-
-
-
-
-
-
(12,000,000)
(3,250,000)
(25,000,000)
-
-
-
(3,975,000)
-
(1,000,000)
-
(1,436,368)
(46,661,368)
Number
vested and
exercisable
-
-
-
5,500,000
250,000
11,000,000
1,025,000
4,000,000
-
500,000
5,111,852
-
-
-
-
-
-
5,500,000
-
-
250,000
- 11,000,000
1,025,000
-
4,000,000
-
2,000,000
-
500,000
-
5,111,852
-
- 29,386,852
27,386,852
Weighted average exercise price
$0.119
-
$0.094
-
$0.160
$0.150
2020
Grant
Date
Expiry
Date
Exercise
Price
Balance
01/07/19
Granted
during the
year
Exercised
during the
year
Expired
Balance
30/06/20
Number
vested and
exercisable
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
23/10/19
11/11/19
29/01/20
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
23/10/23
23/10/23
31/07/21
$0.028
$0.028
$0.072
$0.072
$0.100
$0.100
$0.100
$0.217
$0.090
$0.090
$0.150
$0.150
$0.180
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
-
-
-
-
-
-
-
-
-
-
- 3,000,000
500,000
-
6,548,220
-
(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
-
3,000,000
-
500,000
-
6,548,220
-
-
-
12,000,000
3,250,000
25,000,000
5,500,000
250,000
11,000,000
5,000,000
4,000,000
1,000,000
500,000
6,548,220
72,000,000 10,048,220
(6,000,000)
- 76,048,220
74,048,220
Weighted average exercise price
$0.105
$0.170
$0.028
-
$0.119
$0.118
VRX Silica Limited
86
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
24. Share Based Payments (Continued)
2021
No share-based payments were issued during the year.
2020
Various deferred vesting options issued during the previous year and listed above are subject to milestones
or vesting dates which are listed below. Probability of achieving these milestones or vesting dates have been
assessed at 100% unless otherwise stated.
a) Unlisted options granted on 23 October 2019, exercisable at $0.15 each on or before 23 October
2023, were issued as part of financial advisory fees to Argonaut Capital Limited, with the following
vesting criteria applying:
Tranche 1 – 1,000,000 options - no vesting criteria, exercisable from date of issue.
Tranche 2 – 1,000,000 options - exercisable only after the receipt of credit approval in respect of any
transaction (or series of transactions) that in aggregate contemplate the issuance of debt
financing of at least $20 million to the Company.
Tranche 3 – 1,000,000 options - exercisable only after the raising of sufficient capital, including debt or
equity or other financing, to fully fund construction of the first of one of the Arrowsmith Silica
Sand Projects or the Muchea Silica Sand Project.
The assessed fair values of the options was determined using a binomial option pricing model or black-
scholes model, taking into account the exercise price, term of option, the share price at grant date and
expected price volatility of the underling share, expected yield and the risk-free interest rate for the term of
the option. The inputs to the model used in 2020 were:
2020
Grant date
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
Underlying share price ($)
Option exercise price ($)
Value of option ($)
23/10/19
-
100%
0.745%
4
$0.145
$0.150
$0.0989
11/11/19
-
100%
0.865%
4
$0.115
$0.150
$0.0738
29/01/20
-
100%
0.700%
1.5
$0.095
$0.180
$0.0281
The weighted average remaining contractual life of share-based payment options that were outstanding as
at 30 June 2021 was 0.658 years (2020: 1.192 years).
The weighted average fair value of share-based payment options granted during the year was Nil each (2020:
$0.05151).
VRX Silica Limited
87
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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
2021
$
2020
$
7,390,876
2,588,892
7,390,876
2,588,892
VRX Silica Limited
88
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
25. Financial Risk Management (Continued)
The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting
date.
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)
+ 0.05%
- 0.05%
Equity – higher / (lower)
+ 0.05%
- 0.05%
Liquidity Risk
Consolidated
2021
$
2020
$
3,695
(3,695)
3,695
(3,695)
1,294
(1,294)
1,294
(1,294)
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
89
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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
2021
Financial Assets:
Non-interest bearing
Variable interest rate
Fixed interest rate
Financial Liabilities:
Non-interest bearing
Fixed interest rate
2020
Financial Assets:
Non-interest bearing
Variable interest rate
Fixed interest rate
Financial Liabilities:
Non-interest bearing
Fixed interest rate
Weighted
average
effective
interest rate
%
Less than 1
month
$
1 – 3
Months
$
3 months
– 1 year
$
1 – 5 years
$
-
0.05
0.32
-
4.60
-
0.05
0.65
-
3.50
3,306,164
2,387,300
5,003,576
10,697,040
-
-
-
-
2,583
-
-
2,583
1,093,750
-
23,528
1,117,278
395,617
5,411
401,028
-
16,355
16,355
-
45,285
45,285
-
188,190
188,190
116,215
2,588,892
-
2,705,107
-
-
-
-
2,583
-
-
2,583
182,635
3,791
186,426
-
11,440
11,440
-
31,243
31,243
-
-
23,447
23,447
-
87,675
87,675
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.
VRX Silica Limited
90
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
26. Fair Value Measurement
Fair value hierarchy
The following tables detail the consolidated entity's assets and liabilities, measured or disclosed at fair value,
using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value
measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly
Level 3: Unobservable inputs for the asset or liability
Level 1
$
Level 2
$
Level 3
$
Total
$
2021
Assets
Ordinary shares at fair value through profit or loss
Total assets
1,093,750
1,093,750
-
-
- 1,093,750
- 1,093,750
Assets and liabilities held for sale are measured at fair value on a non-recurring basis.
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables are assumed to
approximate their fair values due to their short-term nature.
27. Events Subsequent to Year End
The impact of the Coronavirus (COVID-19) pandemic is ongoing for the Group up to 30 June 2021, it is not
practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is
rapidly developing and is dependent on measures imposed by the Australian Government and other
countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any
economic stimulus that may be provided.
Exercise of Options
Since 30 June 2021, 21,226,543 listed options expiring on 31 July 2021 were exercised at 18 cents each.
Expiry of Options
1,276,614 listed options exercisable at 18 cents each, expired on 31 July 2021.
Consultants Options
On 20 August 2021, the Company issued 11,100,000 options exercisable at 30 cents each on or before 31
August 2024, to consultants for no consideration.
Other than the above, there are no other matters or circumstances that have arisen since 30 June 2021 that
have or may significantly affect the operations, results, or state of affairs of the consolidated entity in future
financial years.
VRX Silica Limited
91
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 2021 and of
its performance for the year ended on that date;
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.
The directors have been given the declarations required by s295A of the Corporation Act 2001.
2.
3.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations
Act 2001.
Bruce Maluish
Director
Perth, 29 September 2021
VRX Silica Limited
92
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 2021, the consolidated statement of profit
or loss and other 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 2021 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 12 in the financial statements
The Group has capitalised a significant amount of
deferred exploration expenditure, with a carrying
value of $8,803,987 as at 30 June 2021.
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.
Other Information
Our audit procedures in relation to the carrying value of
deferred exploration expenditure included:
• Ensuring that the right to tenure of the area of
interest was current;
• Agreeing a sample of additions to supporting
documentation and ensuring the amounts are
capital in nature and relate to the area of interest;
• Enquiring with management and reviewing budgets
and other documentation as evidence that active
and significant operations in, or relation to, the area
of interest will be continued in the future;
• Assessing
and
evaluating management’s
determination that exploration activities have not yet
progressed to the stage where the existence or
otherwise of economically recoverable reserves
may be determined; and
• Assessing
and
evaluating management’s
assessment of whether indicators of impairment
existed at the reporting date.
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 2021, 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: https://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 2021.
In our opinion, the Remuneration Report of VRX Silica Limited, for the year ended 30 June 2021, 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: 29 September 2021
AIK KONG TING
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 2021, 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: 29 September 2021
AIK KONG TING
Partner
SECURITIES EXCHANGE INFORMATION
HOLDINGS AS AT 21 SEPTEMBER 2021
Number of Securities Held
No. of Holders No. of Shares
Ordinary 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 of less
than a marketable parcel
Substantial Shareholders
105
931
675
1,782
643
4,136
28,476
2,907,000
5,495,759
67,371,319
476,075,475
551,878,029
401
567,677
The company has been notified of the following substantial shareholdings:
Sparta AG
Voting Rights
Number
39,212,828
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 21 September 2021:
Ordinary Fully Paid Shares
1. SPARTA AG
2. MR MICHELE GALEA
3. MOSCH PTY LTD
4. GOLDFIRE ENTERPRISES PTY LTD
5. AUSTRALIAN SILICA PTY LTD
6. MR MICHELE GALEA
7. CITICORP NOMINEES PTY LIMITED
8. MR BRUCE DENNIS MALUISH
9. MORKIM PTY LTD
10. MASH SUPER PTY LTD
11. PARLIN INVESTMENTS PTY LTD
12. AURO PTY LTD
13. HAVEN SUPER PTY LTD
14. AUSTRALIAN INTERNATIONAL SERVICES PTY LTD
15. MR WAYNE STEPHEN CLARK
16. LESUER PTY LTD
17. VAULT (WA) PTY LTD
18. MR JOHN CHARLES GEARY
19. SUNSET CAPITAL MANAGEMENT PTY LTD
20. ANDREW MALUISH SUPER PTY LTD
Number
37,350,296
15,296,237
13,333,332
11,417,124
8,189,699
8,000,000
7,175,467
7,060,535
7,000,000
6,250,000
6,200,025
5,500,000
5,383,437
5,375,659
5,250,000
5,180,000
5,125,000
5,000,000
5,000,000
4,592,759
173,679,570
%
6.77
2.77
2.42
2.07
1.48
1.45
1.30
1.28
1.27
1.13
1.12
1.00
0.98
0.97
0.95
0.94
0.93
0.91
0.91
0.83
31.47
VRX Silica Limited
97
SECURITIES EXCHANGE INFORMATION
Unlisted Options
Details of unlisted option holders are as follows:
Class of unlisted options
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
- Dale Allan Bryan
Options exercisable at 9 cents each on or before 30 November 2022
Holdings of more than 20% of this class
- Parlin Investments Pty Ltd
Options exercisable at 15 cents each on or before 23 October 2023
Holdings of more than 20% of this class
- Argonaut Investments Pty Ltd
Number
of
Options
Number
of
Holders
5,750,000
2,500,000
11,000,000
5,000,000
1,025,000
1,025,000
4,000,000
4,000,000
2,500,000
2,000,000
6
3
1
1
2
Options exercisable at 30 cents each on or before 31 August 2024
Holdings of more than 20% of this class
- Remcor Pty Ltd
-
- Yoonil Kim
Terence Robert Abel
11,100,000
4
4,500,000
2,400,000
2,400,000
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
98
INTERESTS IN MINING TENEMENTS
WESTERN AUSTRALIA
Arrowsmith Project – Silica
Tenement
E70/4986
E70/4987
E70/5027
E70/5109
E70/5197
E70/5817
M70/1389
M70/1392
L70/198
L70/199
L70/202
L70/203
L70/208
L70/229
L70/230
Muchea Project – Silica
Tenement
E70/4886
E70/5157
E70/5548
E70/5651
M70/1390
L70/200
L70/204
L70/205
L70/206
Boyatup Project – Silica
Status
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Application
Granted
Status
Granted
Granted
Granted
Application
Granted
Granted
Granted
Application
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
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
Wisecat Pty Ltd
Wisecat Pty Ltd
Interest (%)
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Interest (%)
100
100
100
100
100
100
100
100
100
Tenement
E69/3560
E69/3668
Status
Granted
Granted
Holder / Applicant
VRX Boyatup Pty Ltd
VRX Boyatup Pty Ltd
Interest (%)
100
100
VRX Silica Limited
99