VRX SILICA LIMITED
ABN 59 142 014 873
ANNUAL REPORT
30 JUNE 2022
CORPORATE DIRECTORY
DIRECTORS
Paul Boyatzis (Non-executive Chairman)
Bruce Maluish (Managing Director)
Peter Pawlowitsch (Non-executive Director)
David Welch (Non-executive Director)
SECRETARY
Ian Hobson
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
During the year VRX Silica continued to make solid progress on its Western Australian silica sand projects,
in what has globally been a challenging environment.
Disruption caused by the Covid-19 pandemic, together with an unprecedented skills shortage, has
materially affected all manner of Government approvals processes. With department resources stretched
to the limit advised and mandated timelines are consistently put to the test.
All of the Company’s silica sand projects at Arrowsmith North, Arrowsmith Central, Muchea and Boyatup
have progressed throughout the year despite these challenges, with Arrowsmith North the most advanced
through the approvals process.
All projects continue to attract a significant level of interest from potential offtake customers, with demand
(subject to final agreed terms) for anticipated silica sand products far exceeding what we expect to be able
to supply.
Key areas of progress during the year include:
• Continuing and expanding detailed extensive environmental studies across all silica sand projects
• Finalising unique processing circuit engineering for Arrowsmith North
•
Issuing a tender for major processing equipment and electrical infrastructure for Arrowsmith North
• Acquiring and refurbishing second hand critical equipment for Arrowsmith North
• Establishment of a pilot scale test rig at Nagrom laboratories and completing trials
• Developing a tailings management strategy for each project
•
Issuing a tender for power supply at Arrowsmith North
• Drafting piping & instrumentation diagrams for Arrowsmith North
• Submission of Brand Highway intersection design to Main Roads Western Australia for Arrowsmith
North
• Continuing proactive engagement with key stakeholders, including traditional owners, local
authorities and the general public
We are entering an exciting new phase for the Company as we progress to development of Arrowsmith
North and work towards our goal of becoming a leading supplier of high-quality silica sand to the global
market.
On behalf of the Board, I would like to thank all personnel for their valuable contribution during the year and
thank shareholders for their continued support.
Paul M Boyatzis
Chairman
For and on behalf of the Board
VRX Silica Limited
2
VRX SILICA LIMITED
The most advanced, pure-play
silica sand company on ASX
Four high-value, long-life, high-grade Western Australian silica sand projects
• Four multi-decade-scale contiguous sand deposits – Arrowsmith North, Arrowsmith
Central, Muchea and Boyatup
• A combined +1.1 billion tonne mineral resources of 99.6% to 99.9% SiO2 grade silica sand on
granted mining leases over three projects, all with secure tenure
• Muchea boasts ultra-high- purity product of 99.9% SiO2 with <100ppm Fe2O3 after processing,
with likely higher quality after further, targeted processing
• Arrowsmith North high-purity product of 99.7% SiO2 with <500ppm Fe2O3
Made-for-purpose, low capex processing plant capable of independent operation
•
Largely identical 2mtpa processing plants on all four projects utilising a unique flotation
process, rather than spirals and screening
• Flotation will reduce capex and operating costs, and produce a more consistent, high-grade
and marketable product
• Process circuit design and detailed engineering complete, extensive and ongoing
metallurgical testing regime to refine plant operating parameters and optimal products
• Flotation reagents are organic and rapidly oxidise once used, presenting no environmental issues
Extensive environmental studies and approvals progressing
• Extensive seasonal environmental studies conducted over a number of years in anticipation of
State and Federal environmental requirements
• Number and extent of required surveys expanded following further consultation with EPA
• Advanced in the approvals process with the EPA for development of Arrowsmith North
• Environment approvals process commenced for Arrowsmith Central
Rehabilitation at the heart of mining – Vegetation Direct Transfer
• VDT provides rapid and comprehensive regeneration of mined areas based on continuous
rehabilitation as mining progresses
• VDT removes a 3m x 3m, 400mm deep sod, with topsoil containing the vast majority of native
flora and invertebrate fauna
Substantial offtake interest
• Bulk pilot plant scale testing programs test the process circuit and supply large samples to
an extensive list of potential buyers
•
Initial offtake term sheet agreed for supply of Arrowsmith North foundry sand products to prominent
South Korean foundry sand suppliers and users, subject to project approvals and pricing
• Poised to be an Australian first, and only, supplier of foundry sand to South Korea
• Substantial interest from significant players across the Asia Pacific for silica sand products
from all four projects
Arrowsmith North in final stages of approval, targeting production in 2023
• First project slated for commencement of production in 2023
• Project in last stages of environmental and mining approvals processes
• Environmental review document (ERD) close to release for public review and comment.
Provides a comprehensive summary of the environmental setting, physical and operational
elements of the mine and infrastructure, environmental impact and mitigation and proposed
rehabilitation and closure plan
• Mining proposal finalised for DMIRS approval, subject to EPA approval
•
Indicative timetable from the EPA for development anticipates final approvals in late 2022 with
plant construction following in early 2023
• Plant and equipment procurement process well-advanced to enable timely construction following a
decision to mine
•
Long-lead plant items identified, specification and production of tender documentation for
processing equipment underway
• Substantial interest in financing and offtake to underpin project
Arrowsmith North – Key Environmental Assessment Milestones
Past
• Desktop, recce and detailed flora and a surveys
• Desktop, basic, detailed and targeted fauna surveys
• Short Range Endemic species desktop and field
assessment
• Terrestrial Environmental Quality
• Dieback field and follow up assessment
• Surface Water Drainage assessment
• Groundwater Hydrology
• Acid Mine Drainage
• Social Surrounds and Archaeological and
Ethnographic Heritage survey
• Cultural Values and Heritage assessment
• Greenhouse Gas Emissions estimation
• Air Quality assessment
July 2022
ERD lodged
March 2022
ESD approved
Oct 2021
EPA referral approved
2019-2021
Detailed environmental studies
2018
Baseline and desktop studies
Q4 2022/Q1 2023
EPA produces assessment report
Minister approves
Q4 2022
ERD approved and released to public
Future
• EPA accepts ERD
• ERD released for 4 week public review
• EPA provides summary of public submissions to proponent
• EPA reviews proponent response to submissions
• EPA accepts and publishes proponent’s response to
submissions
• EPA finalises assessment report (including
consultation on draft conditions) and sends
recommendation to Minister for the Environment
• Minister for Environment grants approval for project
COMPANY REVIEW
Review of Operations
The following is a summary of the activities conducted by VRX Silica Limited (VRX or Company) during the
financial year ended 30 June 2022 at its silica sand projects at Arrowsmith North, Arrowsmith Central (located
270 km north of Perth), Muchea (located 50 km from Perth) and Boyatup (located 100 km east of Esperance),
all situated in Western Australia.
VRX Silica Sand Resources
VRX is a Western Australian based pure-play silica sand exploration company with four high-value,
advanced, very long-term, high-grade and low impurity silica sand projects in Western Australia, a Tier 1
mining region.
The Company has multi-decade scale contiguous sand deposits on granted Mining Leases with secure
tenure and a combined +1.1bn tonne Mineral Resource of 99.6% to 99.9% SiO2 grade silica sand (see Table
1).
Project
Classification
Mt
SiO₂ % Al₂O₃ % Fe₂O₃ %
TiO₂ %
LOI %
Muchea
Arrowsmith
North
Arrowsmith
Central
Boyatup*
Indicated
Inferred
Total
Indicated
Inferred
Total
Indicated
Inferred
Total
Inferred
Total
29
172
208
248
523
771
28.2
48.3
76.5
60
60
99.6
99.6
99.6
97.7
98.2
98.0
96.6
96.9
96.8
97.8
97.8
0.09
0.05
0.06
1.00
0.80
0.86
1.70
1.50
1.50
0.83
0.83
0.03
0.02
0.02
0.40
0.30
0.30
0.40
0.40
0.40
0.23
0.23
0.07
0.10
0.10
0.20
0.20
0.17
0.20
0.20
0.20
0.13
0.13
0.22
0.23
0.23
0.50
0.40
0.41
0.70
0.70
0.70
0.88
0.88
Total Mineral Resource
1,116 Million Tonnes**
* Boyatup Mineral Resource Estimate announced to ASX on 18 August 2022
** See material assumptions statement on page 19
Table 1: Silica Sand Mineral Resources as at 30 June 2022
Each project can be run independently and supply high grade silica sand to many diverse markets.
Applications for Silica Sand
Silica sand is the most-used commodity on the planet after air and water. It is the main ingredient in all types
of glassmaking, including containers, flat glass and specialty solar panel and high-tech glass. The glass
manufacturing industry demand is increasing at a rate of 5-6% per year, or about 8-10 million tonnes pa.
Around 47% of the world’s glass is made in Asia.
Silica sand is an essential component of the foundry and casting industries. The largest foundry industry is
in South Korea, which dominates these industries, particularly for large marine components.
Silica sand is the main ingredient in concrete and building cladding.
VRX Silica Limited
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COMPANY REVIEW
It is also a component of many household products such as paint, plastics and insulation and automobile
components such as glass and tyres.
Silica sand is a finite resource that is rapidly being exhausted with the Asia-Pacific region currently
experiencing increasing demand at a time of a global supply shortfall.
Figure 1: Applications for silica sand
A Project development pipeline to ensure a disciplined, staged development of world-class
assets
VRX has the most-advanced silica sand projects in Australia for an ASX listed company, having commenced
planning, Aboriginal heritage and environmental studies in 2017.
The Arrowsmith North silica sand project will lead a staggered and disciplined development program, followed
by Muchea and Arrowsmith Central.
Resources have been reported for all four projects with Mining Leases granted over three projects as well as
various Miscellaneous Licences for access. Permitting and infrastructure preparations are well-advanced,
with Arrowsmith North in the final stages of approval.
The scale of the projects provides for a long-term opportunity for silica sand export and potential for glass
manufacturing and downstream industries in Western Australia.
VRX Silica Limited
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COMPANY REVIEW
Arrowsmith North – Near-term development opportunity on a world-class silica sand project
The mining and processing operation is relatively simple and low impact.
Long-term production is expected to commence in 2023 at Arrowsmith North on the 223Mt Probable Ore
Reserve1 @ 99.7% SiO2, subject to final environmental and mining approvals.
Classification
Product
Recovery Mt
SiO2
%
Al2O3
%
Fe2O3
%
TiO2
%
LOI
%
Probable
N20
N40 / NF500
Local Market
24%
60%
6%
Arrowsmith North Probable Ore Reserve
0.2
99.7
60
149
15
223 Million Tonnes
0.05
0.035
0.1
Table 2: Arrowsmith North Probable Ore Reserve (as at 30 June 2022)
Process circuit design and detailed engineering for a tailored 2Mtpa processing plant, with a unique patented
process circuit, has been undertaken following an extensive metallurgical testing regime.
Bulk testwork programs continue to refine the operating parameters and provide final product samples to an
extensive list of potential buyers.
The results of additional bulk testwork programs undertaken during the March and June 2022 quarters were
received in August 2022. These programs produced sufficient final product for the large samples (50-60kg)
required for glassmaking furnace testing and foundry resin coating testing. The samples have been requested
by an extensive list of potential buyers following previous successful testwork on smaller (1-5kg) samples.
Geotechnical surveys have been completed for the plant site and access roads. The plant design has
determined the location of non-process infrastructure requirements. The creation of an overall site and plant
model will culminate
the Company’s website
(www.vrxsilica.com.au).
in 3D modelling, which can be viewed on
The Company has identified long-lead items and has commenced the specification and production of tender
documentation of processing equipment for the plant in preparation for the procurement process. This will
enable a timely construction program following a decision to mine at Arrowsmith North.
Water is a critical component for the viability for any silica sand processing. The Company has secured this
critical component by successfully drilling a 400 metre deep water bore to access water from the Yarragadee
North deep aquifer with aquifer confirmation testing to supply data for an abstraction licence application for
0.9Gl per year of water. This deep bore will ensure that the surficial water aquifer is unaffected. Monitoring
boreholes for a borefield have been completed. The plant has been designed to operate predominately with
recycled water.
Gas pipelines run adjacent to each of the project areas and it is planned for the plant in the medium to long
term to run on a hybrid gas and solar power supply following a tender process for power supply contractors.
Arrowsmith North has access to established infrastructure such as the unused rail line (from Eneabba to
Geraldton) which runs adjacent to the Arrowsmith project tenements. A joint co-operation agreement with
Mid West Ports Authority (for export of silica sand product from Geraldton Port) has been signed and
collaboration has commenced with Arc Infrastructure for a dedicated train unloader at the Geraldton Port.
The Company has access to the adjacent Brand Highway and a road intersection plan has been submitted
to Main Roads to enable road transport of silica sand product in the short term.
1 See ASX announcement of 28 August 2019 and material assumptions statement on page 19
VRX Silica Limited
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COMPANY REVIEW
Heritage – Arrowsmith North
VRX has conducted comprehensive Aboriginal Heritage Surveys over the 30-year mining envelope at
Arrowsmith North and access roads. These surveys were conducted with Aboriginal Consultants from the
Yamatji Southern Regional Corporation, anthropologists and VRX.
No previously unrecorded Aboriginal archaeological sites were found during the surveys which was
consistent with previous surveys in the area. The absence of newly recorded Aboriginal sites demonstrates
that unsuitable conditions exist for the formation and persistence of surface archaeological sites or previously
unrecorded ethnographic sites within the project area and surrounds. There are no recorded heritage features
in the survey area requiring action or management.
During the Heritage surveys the Company engaged the consultants to record fauna observations while
traversing the survey area. These observations were compiled at the end of each day to provide a first-hand
summary of field observations of potential fauna sightings. This data has been incorporated into fauna
submissions as part of the environmental approvals process. The Company has used this exercise as an
introduction to the proposed Ranger program with the Yamatji Southern Regional Corporation.
Vegetation Direct Transfer
VRX has developed a unique and progressive mining and rehabilitation method for its silica sand projects.
The Vegetation Direct Transfer (VDT) method provides rapid and comprehensive regeneration of mined
areas based on continuous rehabilitation as mining progresses. The VDT method is a made-for-purpose
mining method which removes and relocates a 400mm-deep sod with topsoil to the mined area containing
the vast majority of native flora and invertebrate fauna remaining intact.
At the VRX selected mine areas, the root structures in the loose sand are relatively shallow at 200-300mm
in depth and ideally suited to the VDT system. The method has been developed to provide the best
rehabilitation outcome for the recalcitrant sedges and grass species.
The VDT methodology can be viewed at: https://vrxsilica.com.au/miningandrehabilitationmethodology/
QA/QC Metallurgical Testwork
Extensive metallurgical testwork has been undertaken by sand processing metallurgical specialists BHM
Process Consultants to ensure throughput and quality can be maintained. This has resulted in the
development and successful testing at lab and bulk scale of a new and unique process circuit incorporating
flotation to replace spirals.
A patent application for the process has been lodged by BHM to protect the unique intellectual property for
the benefit of VRX to utilise and share in future licensing opportunities. Flotation will replace spirals and
screening by upstream classifying, which is intended to not only reduce capex and operating costs but also
produce a more consistent high grade marketable product.
The flotation reagents are organic and rapidly oxidise once used, presenting no environmental issues.
Bulk pilot plant scale testing has been undertaken to test the process circuit and supply further large samples
to potential buyers. Testing to date has resulted in an Arrowsmith North product of 99.7% SiO2 with Fe2O3
<500ppm after processing and a preliminary Muchea product of 99.9% SiO2 with Fe2O3 <100ppm after
processing (high-grade).
The Company’s goal is to provide consistent QA/QC production and extend the silica sand resources that
can be processed to its maximum grade for sale.
VRX Silica Limited
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COMPANY REVIEW
Environmental Approvals
Arrowsmith North
VRX has conducted extensive environmental studies over the Company’s silica sand projects over a number
of seasons in anticipation of requirements of the State and Federal environmental regulation authorities to
undertake approvals assessments. These surveys commenced shortly after the tenements were acquired
and the number and extent of these surveys have expanded following further consultation with these
authorities. The Company has initially concentrated on gaining approval for development of the Arrowsmith
North project.
VRX has received confirmation from the Commonwealth Department of Agriculture, Water and the
Environment (DWER) for accredited approval under the Environment Protection and Biodiversity
Conservation Act 1999 (EPBC Act). Accreditation of the Environmental Protection Authority of Western
Australia’s (EPA) assessment processes means that the Commonwealth can rely on environmental
assessments undertaken by the EPA for the purpose of its approval decisions under the EPBC Act on
proposals that are likely to have a significant impact on a matter of national environmental significance. If the
EPA assesses a proposal at the level of Public Environmental Review (PER), as is the case for Arrowsmith
North, separate assessment by the Commonwealth is not required.
In late 2021 the Company finalised its mining proposal for Arrowsmith North for lodgment at the Department
of Mines, Industry Regulation and Safety (DMIRS) subject to the receipt from the EPA of approval for the
Company’s Environmental Scoping Document (ESD) for the project. An initial project scope document was
prepared and discussed with DMIRS prior to its lodgement.
The ESD was lodged with the EPA in September 2021 and approved in April 2022.
In May 2022 the Company lodged the Environmental Review Document (ERD) with the EPA for Arrowsmith
North.
The ERD document is required under the EPA’s PER process and will be released for public review following
the review by the EPA and other relevant authorities. The ERD was prepared according to the procedures in
the EPA’s Environmental Impact Assessment (EIA; Part IV Divisions 1 And 2) Procedures Manual (EPA,
2021b).
The ERD is a comprehensive summary of the project environmental setting, the physical elements of the
mine and infrastructure, operational elements, the extent of effects on the environment and the proposed
rehabilitation and closure plan. An important feature of the proposed rehabilitation is the use of the unique
VDT method to restore of the mine area vegetation and habitat.
The Company received a request from the EPA for further information on 4 July 2022 and the response was
submitted on 12 July 2022. The Company awaits EPA confirmation of when that the document will be
released for public review.
The indicative timetable for the development of Arrowsmith North anticipates final EPA approval in December
2022, with the six-month construction phase scheduled to commence in January 2023, subject to formal
consent required from the State Minister for Environment.
Arrowsmith Central
The Arrowsmith Central proposal was referred to the EPA under s. 38 of the EP Act in September 2021
The initial referral to DAWE for EPBC assessment of the Arrowsmith Central project was lodged in October
2021. VRX has been informed by DAWE that the proposal is a Controlled Action and DAWE will accept the
State EPA accredited assessment.
In December 2021, the EPA issued to the Company a notice under s. 38F (1) and (2) of the EP Act to supply
further information to incorporate additional material from the September 2021 detailed flora and vegetation
study at Arrowsmith Central. This was submitted to the EPA in February 2022.
VRX Silica Limited
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COMPANY REVIEW
The revised referral package was reviewed and in April 2022 the EPA determined that an amendment
application under s. 38C of the EP Act was required prior to the EPA making a decision whether or not to
assess the proposal. The additional information was lodged in May 2022 and included alignment with new
EPA guidance that was issued in March 2022, subsequent to the original lodgement date. This led to the
inclusion of a proposal content document section, holistic impact section, cumulative impact section,
restructure of the impact tables, revision of development envelopes, disturbance footprints and updated
figures.
In June 2022, as expected the EPA determined that the proposal should be assessed at a PER level of
assessment and the ESD for Arrowsmith Central was to be submitted to the EPA for assessment later that
same month. The Company awaits the EPA’s comments on this document.
Offtake
The Company has entered into an initial offtake term sheet for the supply of Arrowsmith North foundry sand
products to the South Korean foundry industry, with strong interest from other potential customers in SE Asia
at a time of diminishing global supply and increasing demand.
The customers, prominent South Korean foundry sand suppliers and users, Dong A Heung Eop Mining Co.
Ltd (Dong A) and Dong Nam Corporation (Dong Nam) supply casting and silica sand to Kia, Hyundai, Daewoo
and Samsung Renault. This is a first for VRX and Australia, as it is the first and only intent to supply agreement
for foundry sand from Australia to South Korea.
The term sheet, which is non-binding and conditional on project approvals, sets out the terms and conditions
for a FOB silica sand supply contract from Geraldton Port, as well as product specifications, quality control
and variation limits, term and quantity determination, sampling and analysis procedures, dispute resolution,
FOB (INCO 2020) terms and required documentation and Letter of Credit payment terms.
The final purchase price is to be determined once the delivery date can be committed.
Muchea - Large scale, world class high-grade silica sand project
Once production is underway at Arrowsmith North, the Company expects to commence development at
Muchea on the 18.7Mt Probable Ore Reserve2 @ 99.8 to 99.9% SiO2.
Classification
Product
Recovery Mt
SiO2
%
Al2O3
%
Fe2O3
%
TiO2
%
LOI
%
Probable
48%
20%
20%
Muchea North Probable Ore Reserve
F80
F80C
F150
99.9
0.02
10.2
4.25
4.25
18.7 Million Tonnes
99.8
0.008
0.03
0.1
Table 3: Muchea Probable Ore Reserve (as at 30 June 2022)
Muchea sits adjacent to established infrastructure such as grid power, road (Brand Highway), rail
(underutilised railway line to Kwinana Port) and two gas pipelines.
Water will be sourced from the Yaragadee deep aquifer.
As for Arrowsmith North, the mining and processing operation is relatively simple and low impact. The
processing plant will be identical to that at Arrowsmith North and will utilise the same unique flotation process
and upstream classifying.
2 See ASX announcement of 18 October 2019 and material assumptions statement on page 19
VRX Silica Limited
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COMPANY REVIEW
This is intended to not only reduce capex and operating costs but also produce a more consistently high-
grade marketable product. Testing to-date at lab scale 20-40kg samples, has resulted in 99.9% SiO2 with
Fe2O3 <100ppm after processing (high-grade).
The Company has received a substantial number of enquiries from international buyers for Muchea silica
sand. The production of such consistently high-grade silica sand with a low iron content will be in high
demand as raw material for the manufacture of premium ultra-clear cover glass production, particularly for
the burgeoning solar panel manufacturing industry.
Figure 2: Muchea Banksia open woodland
In July 2021, VRX commissioned Mattiske consulting to undertake a detailed springtime flora and vegetation
study on the priority area in the north of the Muchea silica sand project area. This is in addition to a 2017
desktop survey and a field survey in spring 2018. The survey area included 884ha of proposed mining area
and proposed access routes.
A comprehensive flora and vegetation assessment of the survey area has been prepared, and includes:
•
•
•
•
•
An assessment of the area at a suitable scale that allows the vegetation communities to be
delineated, including replicate survey sites in similar vegetation types to enable statistical analysis of
flora species data.
The collection and identification of the vascular plant species present in both the survey sites and
opportunistically in order for a more complete assessment of the flora in the survey to be made.
A review of the conservation status of the vascular plant species recorded by reference to current
literature and listings by the Department of Biodiversity, Conservation and Attractions (DBCA) and
plant collections held at the Western Australian State Herbarium (WAH), and listed by DAWE under
the EPBC Act.
Collation and analysis of data and comparison with local and regional datasets and analyses.
Definition and mapping of the vegetation communities, Floristic Community Types (FCTs) and Site-
Vegetation Types (SVTs) in the survey area.
VRX Silica Limited
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COMPANY REVIEW
•
•
•
Definition and mapping of the location of any Threatened or Priority flora and any Threatened or
Priority Ecological Communities located within the survey area.
Definition of any management issues related to flora and vegetation values.
Provision of recommendations on the local and regional significance of the vegetation communities
In combination with previous flora and fauna survey reports the detail in this report will allow VRX to select
areas of mining that will have the least impact to the environment and habitats.
Further detailed flora, vegetation and fauna studies have been commissioned for the spring season in 2022
on provisional mining areas.
Boyatup
In March 2022 VRX conducted a 206 hole, 312m, 400m x 800m spaced air core drill program over nine days
at its 100% owned Boyatup silica sand project, located approximately 100km east of Esperance, Western
Australia.
Results of early work undertaken by VRX and the previous tenement holder indicate in-situ sand grades up
to 99.7% SiO2 with potential to produce a very low Fe2O3 product.
This drilling campaign enabled a maiden Inferred Mineral Resource Estimate of 60 million tonnes at 97.8%
SiO2
3.
Drilling also produced bulk material for metallurgical testwork to determine the product quality that the project
can produce. Preliminary testing demonstrates that the Resource can be processed to high-quality glass-
making sand.
A heritage (site avoidance) survey was undertaken by the Esperance Tjaltjraak Native Title Aboriginal
Corporation (ETNTAC) who cleared the area for the drill program.
Environmental desktop studies over the area have commenced with databases from the DBCA received to
review regional data on:
• Priority flora
• Priority ecological communities
• Threatened ecological communities; and
• Significant fauna.
The desktop studies will be reviewed to select potential production sites with the lowest environmental impact
in line with our ESG priorities.
The Solar Panel Industry
To meet 2050 greenhouse gas targets the world requires +400GW of solar installation per year. A record
140GW was installed in 2020. The majority of solar panels are manufactured in China and the top 10
producers of “cover glass” for solar panels are all Chinese companies.
Australian Solar Panel Installation
Solar panel installation in Australia is a fast-growing industry. As of September 2021, Australia’s 2.96 million
solar PV installations had a combined capacity of 23.46GW. In the preceding 12 months 4.12GW were
installed in Australia.
3 See ASX announcement of 18 August 2022 and material assumptions statement on page 19
VRX Silica Limited
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COMPANY REVIEW
Australia has the highest solar capacity in the World at 600W per capita and solar power accounted for 9.9%
of Australia’s total energy production in 2020.
The installed solar capacity quadrupled between 2011 and 2016 and the price of photovoltaic power is
steadily decreasing.
Potential for manufacturing cover glass from adjacent gas/hydrogen pipeline
VRX believes it is the right time, and Muchea is the right place, for WA to maximise its economic advantages
of a very long-life high-grade silica sand supply and WA domestic LNG reserves, together with rapidly
developing hydrogen projects in the Mid-West, for a high-tech ultra-clear glass production capability at
Muchea.
Since confirming the high-grade resource at Muchea, VRX has been in consultation with the State and
Federal Governments to attract foreign and local investment into the development of world-class glass
manufacturing and downstream processing industries in Western Australia.
Key Plant and Equipment for Arrowsmith North
In May 2022 VRX announced the start of project capital expenditure for its Arrowsmith North processing
plant, with the purchase of two major items of sand processing equipment.
With the support of specialist engineering consultancy ProjX, VRX purchased locally a 3m diameter x 8m
long RCR-designed feed trommel and a 3.6 x 8.5m Schenck “banana” vibrating screen.
Figure 3: Feed trommel
VRX Silica Limited
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COMPANY REVIEW
The trommel was previously part of a mineral sands operation and is now at Hotweld Engineering, a Bunbury
based mechanical & fabrication workshop for refurbishment. The screen was previously in use at a lithium
processing plant and has been relocated to RCR, a Bunbury based mechanical equipment workshop where
it has been refurbished.
The acquisition of these two key pieces of equipment for Arrowsmith North is a significant saving in both lead
time and capital. The Company’s strategy to purchase and refurbish high-quality second-hand major plant
and equipment has both pre-empted any lead time issues associated with ongoing global supply chain
disruption and delivered more than $1 million in capital savings to-date.
The trommel is a key piece of process equipment, comprising a rotating screening barrel mounted over a
large sump on a structural steel-base frame. Mined sand passes through the screen panels and is pumped
to the processing plant. The trommel is in excellent condition structurally and an ideal fit-for-purpose item of
major process equipment for the project.
VRX will continue to pursue other lead time and cost-saving opportunities to capitalise on its first-mover
advantage in Western Australia’s emerging silica sand sector, at a time when there is fast-rising global demand
for high-quality, responsibly sourced silica sand volumes.
Figure 4: The trommel barrel is loaded for transport
VRX Silica Limited
14
COMPANY REVIEW
The screen had undergone strip, non-destructive testing and assessment by the OEM (Original Equipment
Manufacturer) and refurbishment is completed.
Figure 5: Schenck screen being refurbished at RCR
Geothermal Energy Resources
On 21 January 2022, DMIRS released 21 areas in Western Australia for applications for Geothermal
Exploration Permits with a closing date for applications of 21 April 2022.
VRX has made a number of applications for permits proximal to the Company’s current Arrowsmith North
and Arrowsmith Central silica sand holdings.
The applications were made as part of VRX Silica’s overall green energy ambitions as demonstrated by the
hydrogen gas memorandum of understanding with XODUS Energy and embodied in the Company’s
Sustainability Report.
The process is by way of competitive bids and the Company expects there will be significant interest. There
is no guarantee of a successful application. DMIRS has not indicated as to when the bidding process will be
finalised.
Metallurgical Testwork R&D
In April 2022 VRX lodged an R&D Tax Incentive Application with AusIndustry for the year ending June 2021.
The claim is for costs incurred for the R&D work undertaken by VRX and its consultants in the core
development of a new process route for high grade silica sand which includes the recovery and testing of
metallurgical composite samples, preparation and analytical testwork to determine a process circuit design
and subsequent engineering.
The Company received $197,714 in July 2022 before fees for the year ending June 2021. An additional claim
will be made for the year ending June 2022.
VRX Silica Limited
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COMPANY REVIEW
WA Investment Attraction Fund
In July 2019 the Western Australian State Government released Diversity WA to provide an economic
development framework for the State. It sets out initiatives, actions and strategies that will contribute to
achieving its vision for “a strong and diversified economy delivering secure, quality jobs through increased
investment across a broad range of industries”. It also identifies priority sectors for strategic development that
match Western Australia’s unique strengths with global trends to achieve growth across the economy.
As part of the initiative, successful applicants will be eligible for financial assistance in the form of grants and
other incentives, subject to a Financial Assistance Agreement (FAA) from the Investment Attraction Fund.
In May 2022 VRX made a preliminary application under Stage 1 of the scheme (Expressions of Interest) and
in August 2022 the Company was invited to progress to Stage 2 and make a detailed application.
Environmental, Social and Governance - ESG
VRX committed to a series of Environmental, Social and Governance (ESG) initiatives ahead of the release
of its FY21 Sustainability Report, the first one to be published by the Company and included in the 2021
Annual Report.
VRX is conscious of its social licence obligations, not only in proactively engaging with the traditional owners
and other stakeholders in the region, but also as an emerging global supplier, to join the world movement
towards a low-carbon future. Carbon life cycle analysis for estimated greenhouse gas (GHG) emissions at
Arrowsmith North have been conducted.
To ensure that VRX can measure, assess and communicate progress, the Company has engaged ESG
specialist Futureproof Consulting to facilitate appropriate data disclosures and framework alignment.
Following global best-practice, VRX stakeholders have been engaged and a list of material ESG topics has
been developed alongside a materiality matrix to prioritise the most critical issues. Focus areas include
minesite rehabilitation, health, safety and wellbeing, endangered species, emissions and greenhouse gases
and business ethics.
Underpinned by a global prospective customer base, VRX applauds the fact that expectations of corporate
behaviour are changing and investment capital is being redirected towards more responsible entities.
Sustainable investment now tops $35 trillion globally, including a two-year growth of 25% across Australasia.4
This has transformed the environment in which VRX operates to one with new priorities around climate risk,
biodiversity loss and, of-late, COVID-19 and its associated public health and social challenges.
Importantly, in these early stages of VRX developing its world-class silica sand projects, the Company is able
to investigate opportunities to limit its impact on the world in which it operates. VRX will build resilience and
drive positive outcomes through its commitment to long-term, sustainable value creation for all stakeholders.
In partnership with the Big 4 accounting firms, the World Economic Forum (WEF) identified a set of global,
cross-industry baseline disclosures and ESG metrics for companies to use to analyse their ESG performance
and communicate this to their stakeholders on a regular basis. Disclosures were drawn from existing
voluntary standards including GRI, SASB and TCFD and across four pillars considered the most critical for
business, society and the planet.
The adoption by VRX of the WEF framework has already highlighted a number of ESG opportunities,
including the Company’s long-term objective of integration of solar and battery capacity into power generation
and the VDT mining method. VDT has been designed for rapid regeneration through continuous rehabilitation
that ensures the best outcome for the vast majority of native flora and fauna across the Company’s silica
sand projects.
4 Global Sustainable Investment Review 2020
(http://www.gsi-alliance.org/wp-content/uploads/2021/07/GSIR-2020.pdf)
VRX Silica Limited
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COMPANY REVIEW
These initiatives reflect VRX’s commitment to reducing its environmental footprint and building sustainable
outcomes for all stakeholders, focusing on the Company’s key development assets and the surrounding
communities. The Company will update stakeholders regularly on its ESG progress and ensure VRX and its
projects remain a responsible investment opportunity.
With the support of Futureproof, VRX will continue to measure, monitor and report on its sustainability
progress as the Company adapts to the growing demands of investors and stakeholders to implement and
improve its ESG strategies and reporting practices.
Hydrogen Offtake
In March 2022 the Company announced the signing of a non-binding memorandum of understanding (MOU)
with Xodus Group Pty Ltd (Xodus) to explore the future supply of renewable hydrogen to the Company’s
silica sand projects as well as to potential, nearby glass-manufacturing facilities to enable the production of
net-zero glass.
Xodus, a global energy consultancy, specialises in the integration of environmental science, engineering and
management to provide holistic support and services in energy transition. An Xodus-led consortium is
developing Project MercurHy for the industrial-scale production of hydrogen gas using renewable energy in
the Mid West region of Western Australia.
The MOU with Xodus establishes a platform for strategic confidential communication and future co-operation
between the parties. It contemplates the sharing of information with a view to a future offtake of between
9,000 tonnes to 11,000 tonnes of hydrogen per annum, which is adequate to supply a substantial glass-
making facility.
Figure 6: Glass Manufacturing
VRX Silica Limited
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COMPANY REVIEW
Corporate
On 31 July 2021, the Company’s quoted options (ASX:VRXO) expired and a strong take-up for exercise
placed the Company in a solid financial position. A total of 22,662,911 options were exercised before their
expiry date (with 21,226,543 options exercised in July 2021), representing a 94.7% take up, raising a total of
$4,079,324.
During October to December 2021, 6.8 million unlisted options were exercised for a total of $617,250 and
11,000,000 unlisted options expired unexercised.
In September 2021, VRX strengthened its Board of Directors with the appointment of David Welch as a 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. Further details of Mr
Welch’s background and experience are set out elsewhere in the Annual Report.
Annual Mineral Resources and Ore Reserves Report
In accordance with ASX Listing Rule 5.21, VRX reviews and reports its Mineral Resource and Ore Reserve
Estimates 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 Company's silica sand projects have a combined +1.1bn tonne Mineral Resource of 99.6% to 99.9%
SiO2 grade silica sand.
Project
Classification
Mt
SiO₂ % Al₂O₃ % Fe₂O₃ %
TiO₂ %
LOI %
Muchea
Arrowsmith
North
Arrowsmith
Central
Boyatup*
Indicated
Inferred
Total
Indicated
Inferred
Total
Indicated
Inferred
Total
Inferred
Total
29
172
208
248
523
771
28.2
48.3
76.5
60
60
99.6
99.6
99.6
97.7
98.2
98.0
96.6
96.9
96.8
97.8
97.8
0.09
0.05
0.06
1.00
0.80
0.86
1.70
1.50
1.50
0.83
0.83
0.03
0.02
0.02
0.40
0.30
0.30
0.40
0.40
0.40
0.23
0.23
0.07
0.10
0.10
0.20
0.20
0.17
0.20
0.20
0.20
0.13
0.13
0.22
0.23
0.23
0.50
0.40
0.41
0.70
0.70
0.70
0.88
0.88
Total Mineral Resource
1,116 Million Tonnes
* Boyatup Mineral Resource Estimate announced to ASX on 18 August 2022
Table 4: Silica Sand Mineral Resources as at 30 June 2022
VRX Silica Limited
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COMPANY REVIEW
Project
2021
2022
Change
Mt
SiO₂ % Mt
SiO₂ %
Mt
SiO₂ %
Muchea
Arrowsmith North
Arrowsmith Central
Boyatup*
208
771
76.5
-
99.6
98.0
96.8
-
208
771
76.5
60
Total Mineral Resource 1,056
98.2
1,116
* Boyatup Mineral Resource Estimate announced to ASX on 18 August 2022
Table 5: Silica Sand Mineral Resources Comparison (2021 and 2022)
99.6
98.0
96.8
97.8
98.2
-
-
-
60
60
-
-
-
97.8
97.8
Ore Reserves
The Ore Reserves for the Company’s silica sand projects are set out below.
Project
Classification
Product
Recovery Mt
SiO2
%
Al2O3
%
Fe2O3
%
TiO2
%
LOI
%
Muchea
Probable
F80
F80C
F150
Muchea Ore Reserve
Arrowsmith
North
Probable
N20
N40 / NF500
Local Market
Arrowsmith North Ore Reserve
Arrowsmith
Central
Probable
CF400
C20
C40
High TiO2
48%
20%
20%
24%
60%
6%
17%
34%
17%
9%
Arrowsmith Central Ore Reserve
Total Ore Reserve
Table 6: Ore Reserves as at 30 June 2022
0.07
0.02
99.9
99.7
99.8
10.2
4.25
4.25
18.7 Million Tonnes
60
149
15
223 Million Tonnes
4.2
8.4
4.2
0.25
99.6
0.2
0.008
0.03
0.1
0.015 0.035
0.1
0.05
0.035
0.1
0.04
0.03
0.1
2.2
<1%
2%
18.9 Million Tonnes
261 Million Tonnes
There has been no change in the Company’s Ore Reserves since 30 June 2021.
Material Assumptions underpinning Mineral Resources and Ore Reserves
Information that relates to the estimation and reporting of the Mineral Resources and Ore Reserves for the
Arrowsmith North, Arrowsmith Central, Muchea and Boyatup Silica Sand Projects is extracted from releases
to ASX on 28 August 2019, 17 September 2019, 18 October 2019 and 18 August 2022, respectively. The
Company confirms that it is not aware of any new information or data that materially affects the information
included in this document and all material assumptions and technical parameters underpinning the estimates
continue to apply and have not materially changed.
The Company’s governance and internal controls in place with respect to estimates of mineral resources and
ore reserves involve the use of external consultants where required, in conjunction with input by management
and review by the Board.
VRX Silica Limited
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COMPANY REVIEW
Competent Persons’ Statements
Information in this document that relates to Arrowsmith North, Arrowsmith Central, Muchea and Boyatup
Exploration Results, Boyatup Mineral Resources and Arrowsmith North, Arrowsmith Central and Muchea
Probable Ore Reserves is based on data collected and compiled under the supervision of Mr David Reid BSc
(Geology), who is a full-time employee of VRX Silica and a registered member of the Australian Institute of
Geoscientists. Information 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, a Member of the Australian
Institute of Geoscientists, and a Registered Professional Geologist in Industrial Minerals.
Each of Mr Reid and 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). Each of Mr Reid and Dr Scogings consents to the disclosure
of information in this report in the form and context in which it appears.
VRX Silica Limited
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SUSTAINABILITY REPORT
VRX Silica FY22 Sustainability Report
Acknowledgement of Country
VRX acknowledges First Nations people as the Traditional Owners of Country upon which our projects lie.
We recognise the unique cultural heritage of First Nations people and their continued connection to lands,
waters and communities. We pay our respects to all First Nations people, and to Elders past, present and
emerging.
About VRX
VRX Silica Limited1 (ASX: VRX) is an explorer and imminent producer of high-quality 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 with development at four silica sand projects across the state. Our total silica sand JORC
compliant mineral resource stands at 1.12 billion tonnes (Bt) and range in grade from 96% to 99% silicon
dioxide (SiO2), with low iron impurities. Our projects also have total probable ore reserves of 261 Mt, ranging
in grade from 99.6% to 99.9% SiO2. 2
1 In this report, the terms the “VRX”, “Company”, “we”, “us” and “our” refer to VRX Silica Limited.
2 Refer to our 2022 Annual Report for references to ASX releases and commentary on material assumptions
underpinning these results.
VRX Silica Limited
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SUSTAINABILITY REPORT
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 four large-scale, high-grade, and low-impurity silica sand projects in Western
Australia, three of which have long-term mining leases granted and two of which are in an advanced stage
of development. All four projects offer the potential for substantial mineral reserves, benefit from existing and
adjacent road and rail lines to major export ports and are within close proximity to established or available
infrastructure (logistics, power, water).
Given the substantial volume of high-quality silica sand and the close proximity to energy infrastructure at
our locations, VRX is exploring the potential for development of glass-manufacturing facilities. We believe it
is the right time and place for Western Australia to maximise its economic advantages for high-grade silica
sand supply and ultra-clear glass production.
Arrowsmith North silica sand project, Western Australia
VRX was granted our 100%-owned Arrowsmith North Mining Lease in November 2020. The site is located
in the Geraldton Sandplain bioregion approximately 270 km north of Perth. It holds an estimated 771 Mt total
of 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.
Arrowsmith Central silica sand project, Western Australia
VRX was granted our 100%-owned Arrowsmith Central Mining Lease in November 2020. As with the
Arrowsmith North project the site is located in the Geraldton Sandplain bioregion approximately 270 km north
of Perth. It holds an estimated 76.5 Mt total of Indicated and Inferred Mineral Resources at 96.8% SiO₂ 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.
Muchea silica sand project, Western Australia
Our 100%-owned Muchea Mining Lease is located 50 km north of Perth and is estimated to hold a 208 Mt
total 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 much in demand for use in solar panels.
Boyatup silica sand project, Western Australia
VRX acquired our 100%-owned Boyatup exploration licence in early 2019. Located 100 km east of
Esperance, this 124 km2 exploration site has the potential to produce silica sand for export that is subtly
different from our three other projects. The project holds an estimated 60 Mt of Inferred Mineral Resource at
97.8% SiO2.
VRX Silica Limited
22
SUSTAINABILITY REPORT
Latest Developments at VRX
Significant progress has been made during the past year. The key achievements related to environmental
approvals and sustainable development include:
• Gained approval from Environmental Protection Authority of Western Australia (“EPA”) on the
Environmental Scoping Document for Arrowsmith North
Lodged an Environmental Review Document to EPA for Arrowsmith North
•
• Commenced detailed flora evaluation of high resolution aerial photography at Arrowsmith North
• Referred a proposal for Arrowsmith Central to the Federal Department of Water and Environment for
assessment
• Completed Aboriginal heritage surveys at Arrowsmith North and Arrowsmith Central
• Conducted a detailed springtime flora and vegetation study for Muchea
• Undertook an Aboriginal heritage (site avoidance) survey for the drill program at Boyatup
• Completed an environmental desktop study at Boyatup
• Signed a non-binding memorandum of understanding (“MOU”) with Xodus Group Pty Ltd (“Xodus”)
to explore the future supply of renewable hydrogen to VRX’s silica sand projects as well as potential
nearby glass-manufacturing facilities
• Completed carbon life cycle analysis for estimated greenhouse gas (“GHG”) emissions at Arrowsmith
North and Arrowsmith Central
Future Focus
VRX is planning a staggered and disciplined development timetable across our multiple projects beginning
with Arrowsmith North, followed by Muchea, Arrowsmith Central and Boyatup. Permitting is well advanced
with environmental approvals, native title agreements, offtake agreements, process circuit design,
engineering and other development activities underway.
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.
Stakeholder
Key Interests and Concerns Engagement methods
Investors and shareholders Financial performance,
management of financial and
non-financial risks, and
sustainability reporting
ASX releases, Half Year and Full
Year results presentations and
webcasts, Annual General Meeting,
Annual Report including the
Sustainability Report, regular
meetings and social media
channels
Government and regulators Environmental and safety
Reports and meetings
Supplier and contractors
compliance
Supply chain management
and sustainable sourcing
Supplier screening, tender contract
documents, meetings and
contractor engagement
VRX Silica Limited
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SUSTAINABILITY REPORT
Stakeholder
Key Interests and Concerns Engagement methods
Aboriginal groups and local
communities
Local economic development,
heritage conservation, land
management and
rehabilitation
Project specific community
engagement plans, local media,
social media channels, employment
opportunities, community
investment projects, sponsorships
and donations
Team meetings and training
sessions
Invitations for participation in
meetings and community events
Employees
NGOs
Customers
Working conditions, benefits,
professional development
opportunities and
occupational health and
safety
Potential environmental and
social impacts associated
with operations
Reliability, quality, cost and
delivery
Meetings and social media
channels
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 (“ESG”) risks and opportunities that have potentially significant negative or positive impacts on
our business and our stakeholders. In alignment with the Global Reporting Initiatives, VRX senior
management conducted a materiality assessment workshop to identify and prioritise the ESG topics. A list of
material ESG topics was developed alongside a materiality matrix to show the most important issues that we
will prioritise in our sustainability journey. Focus areas include sustainable products, rehabilitation, health,
safety and wellbeing, endangered species, emissions, greenhouse gases and business ethics. 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
ESG Pillar
Environment
Social
Governance
ESG Topic
Indigenous engagement & training
• 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
Sustainability at VRX
We are committed to creating a sustainable, low-impact environmental legacy and positive benefits for our
communities.
High-quality silica sand – an essential material for a low carbon future
Limiting global warming will require major efforts in global transition to a low carbon economy. As the
transition accelerates, it is vital to maintain essential raw materials supply for renewable energy infrastructure
development. Solar energy technology is one of the fastest-growing renewable energy sources. Among all
low-carbon technology options, increased development of solar photovoltaic (“PV”) could reduce carbon
emissions by 21% by 20503. According to International Energy Agency (“IEA”), solar technologies need to
contribute over 30% of global energy to reach net-zero4.
High-purity silica sand plays an indispensable role in solar energy development. It offers optimal thermal
expansion properties, excellent photoconductivity, durability and low toxicity. The unique qualities of premium
silica sand make it suitable for ultra-clear solar panels manufacturing. Further utilisation on this world-class
resource will help mitigate climate change, as well as job creation and economy growth.
3 Future of Solar Photovoltaic - International Renewable Energy Agency (IRENA)
https://irena.org/-/media/Files/IRENA/Agency/Publication/2019/Nov/IRENA_Future_of_Solar_PV_2019.pdf
4 Net Zero by 2050 A Roadmap for the Global Energy Sector – IEA
https://iea.blob.core.windows.net/assets/beceb956-0dcf-4d73-89fe-1310e3046d68/NetZeroby2050-
ARoadmapfortheGlobalEnergySector_CORR.pdf
VRX Silica Limited
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SUSTAINABILITY REPORT
VRX’s contribution to low carbon economy
VRX has an emerging position in high quality silica
sand which is vital for supporting decarbonisation.
Although VRX will sell silica sand 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. Our Muchea silica sand
project is well-situated to take advantage of the
premium silica sand resources.
“Western Australia’s mid-west
region is increasingly being
recognised for its potential to
become a substantial hub to
supply renewable energy and
production of hydrogen for local
consumption and export.”
Glass manufacturing requires substantial energy
inputs which contributes to rising global emissions.
VRX is exploring the potential of utilising renewable
energy in glass-manufacturing, highlighted by our
MOU with Xodus to explore the future supply of renewable hydrogen to our projects, as well as potential
glass-manufacturing facilities. This could potentially enable us to produce net-zero glass. The potential glass-
making facility could also generate a significant number of permanent jobs in Western Australia.
Bruce Maluish, Managing Director
By committing to operating our business in a low carbon manner and in accordance with high ESG standards,
we aim to reduce risk, build resilience into our operations and drive long-term, sustainable value for our
stakeholders.
VRX Silica Limited
26
SUSTAINABILITY REPORT
Responsible Sand Exploration, Mining and Production
We recognise 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.
One kilogram of polysilicon — a refined
material made from Silica — saves over
7,000 kg of CO2 emissions during the
lifetime of a solar cell.
Environmental Pillar
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 during transition to a low carbon future.
Environmental protection through low impact mining
Our project sites have been selected for their minimal impact on the native vegetation, landforms and fauna.
Sand mining will leave an undulating landform with vegetation and habitat lower than originally encountered
but largely intact. Processing will only involve the use of recycled water and few non-toxic chemicals. The
resource is relatively consistent in its attributes which could potentially be mined for up to 100 years. By
adopting low impact and sustainable mining solutions, we can effectively reduce our environmental impact
during operations. An illustrative process flow diagram is shown below.
VRX Silica Limited
27
SUSTAINABILITY REPORT
Low impact mining to minimise environmental impact
Rehabilitation
Rehabilitation is an integral component in the lifecycle of a mine. VRX is committed to restoring the pre-
mining conditions as closely as possible to support the future sustainability of our sites.
We have developed a progressive method Vegetation Direct Transfer (“VDT”) to rehabilitate disturbed flora
and ensure a minimal impact on the native vegetation at our mine sites. It involves using a modified front-
end loader to carefully lift and remove a 400-mm deep, 3 x 3m square sod from areas that are set to be mined
for silica sand and relocate to an area just mined. With the root structures in the loose sand relatively shallow
at 200-300 mm in depth, the VDT method 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 silica sand mining progresses. In addition, VRX’s low-impact approach to silica sand mining means that
only few non-toxic chemicals will be used in our production process and minimal dust will be produced during
mining activities. We will undertake mining in block sections (typically 150 x 150 m) with an estimated five
blocks mined per year. We are also deploying innovative new measures to ensure that any vegetation
removed during our mining activities can be used for continuous rehabilitation. A video of the VDT method is
available at: vrxsilica.com.au/miningandrehabilitationmethodology.
VRX Silica Limited
28
SUSTAINABILITY REPORT
Priority, threatened and endangered species (flora and fauna)
Preserving biodiversity and protecting native wildlife are essential throughout all stages of our mining projects.
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.
VRX will manage the application of the mitigation hierarchy in the proposal design, construction, operations
and closure. Specific, measurable, achievable, realistic and time-bound actions will be undertaken to
minimise and mitigate environmental impacts. Where significant residual impacts remain, propose an
appropriate offsets package that is consistent with the WA Environmental Offsets Policy and Guidelines and
the EPBC Act Environmental Offsets Policy.
The Company will undertake detailed surveys of proposed project areas to identify potential presence of
endangered or threatened species. This will enable the assessment of the potential direct and indirect
impacts on such species during construction and operational phrases. To reduce feral animal populations,
we will explore development of a ranger program across our project sites. VRX will endeavour to protect
terrestrial fauna so that biological diversity and ecological integrity are maintained.
VRX Silica Limited
29
Arrowsmith North Environmental Review Document: • Flora and vegetation assessment • Dieback assessment • Fauna assessment • Short range endemic invertebrate surveys • Detailed baseline flora evaluation of high-definition aerial photography • Carbon life cycle analysis for estimated greenhouse gas emissions • Respirable silica analysis • Radiation activity analysis Arrowsmith Central Environmental Scoping Document: • Flora and fauna studies • Dieback assessment • Short range endemic invertebrate surveys • Carbon life cycle analysis for estimated greenhouse gas emissions • Respirable silica analysis • Radiation activity analysis • • • Carbon life cycle analysis for estimated greenhouse gas emissions Muchea • Springtime flora and vegetation study • Respirable silica analysis Boyatup • Flora and fauna desktop studies Ecological studies completed / in progress
SUSTAINABILITY REPORT
Environmental permitting
VRX has conducted extensive environmental studies and assessments over our silica sand projects in
accordance with the requirements of the State and Federal environmental regulations. In FY22, we lodged a
draft Environmental Scoping Document (“ESD”) for Arrowsmith North to the EPA that defines the form,
content, timing and procedure of the environmental review. The EPA approved the ESD in March 2022, after
which VRX lodged the Environmental Review Document (“ERD”)5 which includes a comprehensive summary
of project environmental setting, physical elements of the mine and infrastructure, operational elements,
extent of environmental impacts and the proposed rehabilitation and closure plan. The indicative timetable
for Arrowsmith sees final EPA approval in December 2022, with the six-month construction phase scheduled
to commence in January 2023. This year, we also lodged a referral and ESD6 for Arrowsmith Central. We
are confident that we have addressed the environmental principles, factors and objectives of the assessment
guidelines.
Greenhouse gas emissions
VRX is focused on reducing our carbon footprint by reducing GHG
emissions at our future mine sites. We are investigating a number of
ways to reduce our Scope 1, 2 and 3 carbon emissions.In 2021, we
engaged external consultants to assist with project approval processes
as well as GHG emissions estimation at Arrowsmith North. 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 GHG emissions, equating to an average of 19,444 tonnes annually.
Estimated Scope 3 GHG emissions
tCO2-e,
total 1,701,255
predominately from shipping our product to Asia, equates to an average of 56,708 tonnes annually. No Scope
2 GHG emissions are anticipated from the consumption of grid-sourced electricity.
5 Documentation provided to the WA EPA on our Arrowsmith North silica sand project is available at:
https://www.epa.wa.gov.au/proposals/arrowsmith-north-silica-sand-project
6 Documentation provided to the WA EPA on our Arrowsmith Central silica sand project is available at:
https://www.epa.wa.gov.au/proposals/arrowsmith-central-silica-sand-project
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SUSTAINABILITY REPORT
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 initially generated on site through the construction
of a gas-fired power station, working with local liquefied natural gas suppliers for power generation. 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. To utilise geothermal energy in our operations, VRX has applied
for Geothermal Exploration Permits at Arrowsmith North and Arrowsmith Central. These actions demonstrate
our commitment to harness green energy and reduce carbon emissions in our projects.
Social pillar
As part of our social licence to operate, we strive to develop and maintain strong community and stakeholder
relationships. To support local communities, we offer local employment and contracting opportunities where
possible.
Health and safety, wellbeing
Guided by our Health, Safety & Wellbeing Policy, VRX will adopt the highest industry standards when
planning and operating to ensure the safety and wellbeing of its employees and contractors. The Company
will ensure adequate training for all personnel to operate in a safe and efficient manner.
We have been preparing processing plant operating manuals to manage safety risks in our operations. During
the preparation of the manual, a workshop was conducted with our multi-discipline team to identify potential
hazards related to design, constructability, installation, and maintenance. This was followed by a Hazard and
Operability Study to identify operational issues that may be a risk to personnel or equipment. The results of
the workshop and study will be adopted in our Plant Operating Manual.
The Company has had no reportable incidents or accidents to date including in the last year.
Employees
Number / Rate7
Number of fatalities from work related injury
Total Lost time injuries frequency rate
Total recordable injuries
Total recordable injuries frequency rate
0
0
0
0
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. Our Indigenous Community Policy formalises our commitment to uphold and
respect human rights of indigenous peoples. 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.
7 Rate calculation is per 1,000,000 hours of work.
VRX Silica Limited
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SUSTAINABILITY REPORT
Aboriginal heritage
VRX is committed to understanding the Aboriginal heritage values and significance of the land on which we
operate. To date, VRX has undertaken several 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. This helps us ensure we respect and protect the land
and that our operations have as minimal impact and disruption as possible.
This year, Aboriginal heritage and ethnographic surveys have been completed at our Arrowsmith North and
Arrowsmith Central Silica Sand Projects with representatives of the Yamatji Southern Regional Corporation
(“YSRC”) and a national heritage management firm. The survey findings confirmed that all proposed long-
term mining and associated infrastructure areas are clear for the upcoming mining works. These areas
include 30 years of mining at the 360ha Arrowsmith North mine disturbance envelope and 20 years of mining
at the 485ha Arrowsmith Central mine disturbance envelope.
Mining Leases and Aboriginal Heritage Cleared Areas
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SUSTAINABILITY REPORT
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 North Project area.
The assessment identified 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.
A comprehensive Aboriginal Heritage Survey has been conducted over the 30-year mining envelope at
Arrowsmith North. The survey found no previously unrecorded Aboriginal archaeological sites, which is
consistent with previous recordings in the area. There are no recorded heritage features in the survey area
requiring action or management.
YSRC participants, national heritage management firm and VRX representatives during the Aboriginal
heritage survey at Arrowsmith Central
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SUSTAINABILITY REPORT
Governance
High standards of corporate governance are an essential prerequisite for creating sustainable value for
stakeholders.
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.
FY22 contribution
• Goods and service supplier purchases = $5,495,327
• Wage spend = $690,000
• Taxes = $34,487
• Royalties = Nil
• State and Shire Rent = $226,123
Corporate governance
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 for 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.
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
Health and Wellbeing Policy
Corporate Code of Conduct
Shareholder Communication
Strategy
Trading Policy
Disclosure Policy
Whistleblower Policy
Anti-bribery and Anti-corruption
Policy
Board
Board
Board
Board
Board
Board
Board
Board
Board
Board
Executive/Manager
responsible
Managing Director
Managing Director
Managing Director
Company Secretary
Chairman
Managing Director
Company Secretary
Managing Director
Company Secretary
Chairman
There has been no breach of regulations or compliance by VRX during 2022.
VRX Silica Limited
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SUSTAINABILITY 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. VRX’s policies and practices are reported
against the 4th Edition of the ASX Corporate Governance Council’s Corporate Governance Principles and
Recommendations. More information can be found in Corporate Governance Plan found on the VRX website.
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.
• The effectiveness and adequacy of internal control processes.
•
Identification and management of business, economic, environmental and social sustainability risks
• 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:
VRX Silica Limited
35
• Identify and measure risks that might impact upon the achievement of the Company’s goals and objectives. • Monitor the environment for emerging factors and trends that affect these risks. Monitor the performance of, and improve 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. • Formulate risk management strategies to manage identified risks • Design and implement appropriate risk management policies and internal controls.
SUSTAINABILITY REPORT
Anti-bribery and corruption
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. Guided by
our Anti-Bribery and Corruption Policy, we do not tolerate any form of corrupt conduct. Disciplinary actions
up to and including dismissal will be taken in the event of any employee participating in corrupt conduct. The
Company will continue to implement measures deemed appropriate to uphold the highest standard of
business ethics.
Whistleblower policy
VRX’s Whistleblower Policy applies to all entities within the Company. It allows all employees, directors,
contractors, suppliers, associates, consultants the ability to raise concerns regarding any misconduct or
unlawful, unethical or irresponsible behaviour without being subject to victimisation, harassment or
discriminatory treatment. This policy is reviewed every two years to ensure it remains consistent with all
relevant legislative requirements, as well as the changing nature of the organisation.
Customer risk & production quality
The Company is cognisant that the quality of the products
will determine the selling price and future contracts. The
Company’s approach is to provide a better quality product
for sales without
than
compromising yield and operating costs. This will avoid
quality disputes, compromised contracts and general
branding in the industry.
the specification
requires
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
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
• IT and
Communications
• Logisitics
VRX Silica Limited
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SUSTAINABILITY REPORT
Reporting Frameworks
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 ($A or AUD).
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 is aligning our activities with seven SDGs
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SUSTAINABILITY REPORT
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, the
Sustainability Accounting Standards Board and the Financial Stability Board’s Task Force on Climate-Related
Financial Disclosures. 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
our purpose-built 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 FY22 can be found in Appendix to this report.
VRX Silica Limited
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SUSTAINABILITY REPORT
Appendix: 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.
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
Start date
target
Disclosure
target
Completed
Disclosed
FY22
FY23
FY24
Completed
Disclosed
FY22
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
FY22
Completed
Disclosed
FY22
Completed
Disclosed
FY22
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.
VRX’s whistleblower policy allows
all employees, directors,
contractors, suppliers, associates,
consultants the ability to raise
concerns regarding any
misconduct or unlawful, unethical
or irresponsible behaviour without
being subject to victimisation,
harassment or discriminatory
treatment. As a reasonably small
business, all VRX managers and
board members are available to
employees and contractors to
discuss any ethical concerns.
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SUSTAINABILITY REPORT
WEF key data/question
Current status
Start date
target
Disclosure
target
A description of internal and external
mechanisms for reporting concerns about
unethical or unlawful behaviour and lack of
organizational integrity.
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 tCO2e GHG Protocol
Scope 1 and Scope 2 emissions.
Fully implement the recommendations of
the 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.
Percentage of employees per employee
category, by age group, gender and other
indicators of diversity (e.g. ethnicity).
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.
VRX’s whistleblower policy allows
all employees, directors,
contractors, suppliers, associates,
consultants the ability to raise
concerns regarding any
misconduct or unlawful, unethical
or irresponsible behaviour without
being subject to victimisation,
harassment or discriminatory
treatment. As a reasonably small
business, all VRX managers and
board members are available to
employees and contractors to
discuss any ethical concerns.
Completed
Disclosed
FY22
Risks are outlined in the FY22
VRX Annual Report
Completed
Disclosed
FY22
Risks are outlined in the FY22
VRX Annual Report
Completed
Disclosed
FY22
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
Emissions are immaterial to VRX
until development and
construction begins.
Outstanding disclosures:
Implementation or roadmap
towards the recommendations of
the 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.
When
construction
begins
Forecast
disclosed
FY22
FY23
FY26
Completed
Disclosed
FY22
Water usage is immaterial to VRX
until development and
construction begins.
When
construction
begins
When
construction
begins
Given the minimal nature of
current employment at VRX,
diversity is immaterial to VRX until
development and construction
begins.
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
When
construction
begins
When
construction
begins
When
construction
begins
When
construction
begins
When
construction
begins
When
construction
begins
VRX Silica Limited
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SUSTAINABILITY REPORT
WEF key data/question
Current status
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
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.
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 is domiciled in and only
operates in Australia, there is a
very low risk of incidents of child
labour, forced or compulsory
labour.
Start date
target
Disclosure
target
When
construction
begins
When
construction
begins
Completed
Disclosed
FY22
There were zero fatalities,
injuries, incidents or accidents in
FY22.
Completed
Disclosed
FY22
VRX does not currently facilitate
workers’ access to non-
occupational medical and
healthcare services
Given the minimal nature of
current employment at VRX,
training hours will not become
material until the hiring phase of
development and construction
Given the minimal nature of
current employment at VRX,
training and development
expenditure will not become
material until the hiring phase of
development and construction
Completed
Disclosed
FY22
Completed
Disclosed
FY22
Completed
Disclosed
FY22
There were one new employees
hired in FY22
Completed
Disclosed
FY22
There was zero employee
turnover in FY22
Completed
Disclosed
FY22
Disclosed in Economic
Performance section of this
Sustainability Report
Completed
Disclosed
FY22
No financial assistance was
received from the government.
Completed
Disclosed
FY22
$360,000 in FY22
Completed
Disclosed
FY22
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
FY22
VRX Silica Limited
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SUSTAINABILITY REPORT
WEF key data/question
Current status
Start date
target
Disclosure
target
Total costs related to research and
development.
$1,300,000 in FY22
Completed
The total global tax borne by the company.
Total tax paid was $34,487
(Payroll and FBT)
Completed
Disclosed
FY22
Disclosed
FY22
VRX Silica Limited
42
DIRECTORS REPORT
Your directors present their report on the Company and its controlled entities for the year ended 30 June
2022.
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 has over 30 years’ experience in the investment, corporate and capital markets and an extensive
working knowledge of public companies. He has advised numerous emerging companies on a broad range
of corporate and strategic issues and assisted in raising significant investment capital both locally and
overseas.
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.
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 8 December 2021
• Novatti Group Limited – 19 June 2015 to present
• 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
- 3,900,000 options expiring 31 August 2024, exercisable at 30 cents each
Bruce Maluish
- 13,810,535 ordinary fully paid shares
- 5,400,000 options expiring 31 August 2024, exercisable at 30 cents each
Peter Pawlowitsch
- 23,841,769 ordinary fully paid shares
- 3,000,000 options expiring 31 August 2024, exercisable at 30 cents each
David Welch
- No interests in shares
- 3,000,000 options expiring 31 August 2024, exercisable at 30 cents each
VRX Silica Limited
44
DIRECTORS REPORT
COMPANY SECRETARY
Ian Hobson (appointed 1 January 2022)
Mr Hobson holds a Bachelor of Business degree and is a Chartered Accountant and Chartered Company
Secretary with 35 years’ experience in the profession. Mr Hobson provides company secretary services and
corporate, management and accounting advice to a number of listed public companies.
John Geary (resigned 1 January 2022)
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 Mining Pty Ltd
VRX Boyatup Pty Ltd
VRX Midwest Pty Ltd
(formerly Ventnor Pilbara Pty Ltd) - 100% owned controlled entity
- 100% owned controlled entity
- parent entity
- 100% owned controlled entity
- 100% owned controlled entity
Wisecat Pty Ltd
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 $5,033,274 (2021: $1,089,611).
Financial Position
At 30 June 2022, the Group had net assets of $21,389,584 (2021: $20,053,981) with cash reserves of
$9,305,877 (2021: $10,442,067).
VRX Silica Limited
45
DIRECTORS REPORT
Financing and Investing Activities
The Company issued the following securities during the year:
• 21,226,543 ordinary fully paid shares on the exercise of listed options at 18 cents each to raise
$3,820,778;
• 1,025,000 ordinary fully paid shares on the exercise of options at 9 cents each to raise $92,250; and
• 5,250,000 ordinary fully paid shares on the exercise of options at 10 cents each to raise $525,000.
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
No matters or circumstances have arisen, since the end of the financial year, which significantly affected, or
may significantly affect, the operations of the Company, the results of those operations, or the state of affairs
of the Company in subsequent financial years, other than outlined in the company review which is contained
in this Annual Report.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Company will continue to pursue its principal activity of exploration and evaluation, particularly in respect
to the projects as more particularly outlined in the company review. The Company will also continue to pursue
other potential investment opportunities to enhance shareholder value.
MEETINGS OF DIRECTORS
The numbers of meetings of directors (including meetings of committees of directors) held during the year
and the number of meetings attended by each director were as follows:
Board of Directors Meetings
Number
Eligible to Attend
4
4
4
3
Number
Attended
4
4
4
3
P Boyatzis
B Maluish
P Pawlowitsch
D Welch
VRX Silica Limited
46
DIRECTORS REPORT
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.
Use of Remuneration Consultants
During the financial year ended 30 June 2022, the consolidated entity did not engage any remuneration
consultants.
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.
The executive directors and full-time executives receive a superannuation guarantee contribution required
by the government, which was 10% for the financial year ended 30 June 2022 and increased to 10.5%
effective 1 July 2022, 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.
VRX Silica Limited
47
DIRECTORS REPORT
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.
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.
VRX Silica Limited
48
DIRECTORS REPORT
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
Remuneration and other terms of employment for some key management personnel are formalised in service
agreements. Details of these agreements are as follows:
Bruce Maluish
Agreement type:
Agreement commenced: 22 February 2011
Term of Agreement:
Remuneration:
Managing Director
Employment agreement
Two years or such later date as agreed with the Board.
Base annual salary for the financial year of $350,000 (inclusive of statutory
superannuation), reviewed annually.
Base annual salary as from 1 July 2022 of $367,500 (inclusive of statutory
superannuation).
Three months termination notice by either party.
Termination notice:
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
David Welch
Chairman (non-executive)
Director (executive)
Director (non-executive)
Director (non-executive) appointed 1 September 2021
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
D Welch
Total
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
$
72,000
66,000
322,500
287,500
49,091
42,922
45,000
-
488,591
396,422
$
-
-
27,500
24,375
4,909
4,078
-
-
32,409
28,453
Share Based
Payments
Options
$
172,442
-
238,766
-
132,647
-
132,647
-
676,502
-
Total
$
244,442
66,000
588,766
311,875
186,647
47,000
177,647
-
1,197,502
424,875
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Director
P Boyatzis
B Maluish
P Pawlowitsch
D Welch
Year
2022
2021
2022
2021
2022
2021
2022
2021
Fixed
Remuneration
29%
100%
At risk - STI
-
-
At risk - LTI
71%
-
59%
100%
29%
100%
25%
-
-
-
-
-
-
-
41%
-
71%
-
75%
-
There were no performance related payments made during the year. Performance hurdles are not attached
to remuneration options, however the Board determines appropriate vesting periods to provide rewards over
a period of time to key management personnel.
VRX Silica Limited
50
DIRECTORS REPORT
E. Compensation options to key management personnel
The following options were granted as equity compensation benefits to Directors and Executives. The options
were issued free of charge and vest on various dates. Each option entitles the holder to subscribe for one fully
paid ordinary share in the Company at various exercise prices with various expiry dates.
Director
Grant
Date
Number
Granted
Fair Value per
Option at
Grant Date
Exercise
price per
Option
First
exercise
date
Last
exercise
date
29/11/21
29/11/21
29/11/21
29/11/21
Options Vesting on Issue:
P Boyatzis
B Maluish
P Pawlowitsch
D Welch
Options Vesting on 30 June 2022:
P Boyatzis
B Maluish
P Pawlowitsch
D Welch
Options Vesting on 30 June 2023:
P Boyatzis
B Maluish
P Pawlowitsch
D Welch
29/11/21
29/11/21
29/11/21
29/11/21
29/11/21
29/11/21
29/11/21
29/11/21
1,300,000
1,800,000
1,000,000
1,000,000
1,300,000
1,800,000
1,000,000
1,000,000
1,300,000
1,800,000
1,000,000
1,000,000
$0.0555
$0.0555
$0.0555
$0.0555
$0.0557
$0.0557
$0.0557
$0.0557
$0.0582
$0.0582
$0.0582
$0.0582
$0.300
$0.300
$0.300
$0.300
$0.300
$0.300
$0.300
$0.300
$0.300
$0.300
$0.300
$0.300
8/12/21
8/12/21
8/12/21
8/12/21
30/06/22
30/06/22
30/06/22
30/06/22
30/06/23
30/06/23
30/06/23
30/06/23
31/08/24
31/08/24
31/08/24
31/08/24
31/08/24
31/08/24
31/08/24
31/08/24
31/08/24
31/08/24
31/08/24
31/08/24
Total
15,300,000
F. Shares issued to key management personnel on exercise of compensation options
No shares were issued to Directors and Executives on exercise of compensation options during the year.
G. Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members of
key management personnel of the consolidated entity, including their personally related parties, is set out
below:
Director
Balance
01/07/21
Received as
Remuneration
Shares Issued
on Exercise of
Options
Acquired/
(disposed)
Net
Change
Other
P Boyatzis
5,180,000
B Maluish
13,810,535
P Pawlowitsch
23,841,769
D Welch
Total
-
42,832,304
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance
30/06/22
5,180,000
13,810,535
23,841,769
-
42,832,304
VRX Silica Limited
51
DIRECTORS REPORT
Option Holding
The number of options over ordinary shares in the Company held during the financial year by each director
and other members of key management personnel of the consolidated entity, including their personally
related parties, is set out below:
Balance
01/07/21
Received as
Remuneration
Options
Exercised
Options
Expired
Net Change
Other
Balance
30/06/22
Director
P Boyatzis
3,000,000
3,900,000
B Maluish
5,000,000
5,400,000
P Pawlowitsch
3,000,000
3,000,000
D Welch
Total
-
3,000,000
11,000,000
15,300,000
-
-
-
-
-
(3,000,000)
(5,000,000)
(3,000,000)
-
(11,000,000)
-
-
-
-
-
3,900,000
5,400,000
3,000,000
3,000,000
15,300,000
H. Other transactions with key management personnel
Transactions between related parties are on normal commercial terms and conditions no more favourable
than those available to other parties unless otherwise stated.
During the year, the Company subleased office space for $40,569 (2021: $29,414) to Aruma Resources
Limited, a company Mr Paul Boyatzis is a director of.
At 30 June 2022, the Group had an outstanding receivable of $11,305 (2021: $8,142) from Aruma Resources
Limited, 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 2021 AGM, 69.6% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2021. 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:
2022
$
2021
$
2020
$
2019
$
2018
$
Revenue
EBITDA
EBIT
Loss after income tax
56,901
(4,938,719)
(5,023,246)
(5,033,274)
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)
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)
VRX Silica Limited
2022
0.13
-
2021
0.22
-
2020
0.09
-
2019
0.09
-
2018
0.07
-
(0.91)
(0.23)
(0.55)
(1.69)
(0.75)
52
DIRECTORS REPORT
[THIS CONCLUDES THE REMUNERATION REPORT, WHICH HAS BEEN AUDITED]
INSURANCE OF OFFICERS
The Company has in place an insurance policy insuring Directors and Officers of the Company against any
liability arising from a claim brought by a third party against the Company or its Directors and officers, and
against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of
their conduct while acting in their capacity as a Director or officer of the Company, other than conduct involving
a wilful breach of duty in relation to the Company.
In accordance with a confidentiality clause under the insurance policy, the amount of the premium paid to the
insurers has not been disclosed. This is permitted under Section 300(9) of the Corporations Act 2001.
INDEMNITY AND INSURANCE OF AUDITOR
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the
auditor of the Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor
of the Company or any related entity.
SHARE OPTIONS
At the date of this report there were the following unissued ordinary shares for which options were
outstanding:
• 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
• 28,800,000 options expiring 31 August 2024, exercisable at 30 cents each
During the year options were issued as follows:
• 28,800,000 options exercisable at 30 cents each on or before 31 August 2024
During the year the following options were exercised:
• 21,226,543 listed options expiring 31 July 2021, exercised at 18 cents each
• 1,025,000 options expiring 30 November 2021, exercised at 9 cents each
• 5,750,000 options expiring 30 November 2021, exercised at 10 cents each
During the year the following options expired:
• 11,000,000 options exercisable at 21.7 cents each expired on 30 November 2021
Subsequent to year end and up to the date of this report, no other options have been issued or exercised
and no options have expired.
No person entitled to exercise these options had or has any right, by virtue of the option, to participate in any
share issue of any other body corporate.
LEGAL PROCEEDINGS
The Company was not a party to any legal proceedings during the year.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company
for all or any part of those proceedings. The Company was not a party to any such proceedings during the
year.
VRX Silica Limited
53
DIRECTORS REPORT
ENVIRONMENTAL REGULATIONS
The Company is not currently subject to any specific environmental regulation. There have not been any
known significant breaches of any environmental regulations during the year under review and up until the
date of this report.
CORPORATE GOVERNANCE
Under ASX Listing Rule 4.10.3 the Company’s Corporate Governance Statement can be located at the URL
on the Company’s website being: https://vrxsilica.com.au/investor-centre/corporate-governance/
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, 30 September 2022
VRX Silica Limited
54
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
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
Other comprehensive income
Other comprehensive income for the year, net of tax
Consolidated
Note
2022
$
2021
$
2(a)
11
23
2(b)
3
56,901
1,356,599
(760,580)
(84,527)
(521,000)
(10,028)
(312,500)
(1,930,849)
(1,470,691)
(510,511)
(63,564)
(424,875)
(8,254)
(156,250)
(49,416)
(1,233,340)
(5,033,274)
(1,089,611)
-
-
(5,033,274)
(1,089,611)
-
-
-
-
Total comprehensive loss attributable to the members of
VRX Silica Limited
(5,033,274)
(1,089,611)
Earnings per share attributable to the members of
VRX Silica Limited
Cents
Cents
Basic/diluted loss per share
5
(0.91)
(0.23)
The accompanying notes form part of these financial statements.
VRX Silica Limited
55
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
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
2022
$
2021
$
6
7
9,305,877
236,910
10,442,067
254,973
9,542,787
10,697,040
7
8
9
10
11
12
13
14
14
26,171
781,250
431,669
179,558
11,951,536
26,111
1,093,750
10,802
251,381
8,803,987
13,370,184
10,186,031
22,912,971
20,883,071
1,146,269
188,928
71,676
1,406,873
395,617
178,232
67,051
640,900
116,514
116,514
188,190
188,190
1,523,387
829,090
21,389,584
20,053,981
16
17
15
49,906,519
6,522,408
(35,039,343)
45,468,491
4,591,559
(30,006,069)
21,389,584
20,053,981
VRX Silica Limited
56
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
Consolidated
2022
Issued
Capital
$
Reserves
Accumulated
Losses
$
$
Total
$
Balance at 1 July 2021
45,468,491
4,591,559
(30,006,069)
20,053,981
Loss for the year
Total comprehensive loss for the year
-
-
-
-
(5,033,274)
(5,033,274)
(5,033,274)
(5,033,274)
Securities issued during the year
Cost of share based payments
4,438,028
-
-
1,930,849
-
-
4,438,028
1,930,849
Balance at 30 June 2022
49,906,519
6,522,408
(35,039,343)
21,389,584
2021
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
The accompanying notes form part of these financial statements.
VRX Silica Limited
57
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2022
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Other income
Interest and other finance costs paid
Note
Consolidated
2022
$
2021
$
(1,985,874)
14,962
37,693
(10,028)
(1,611,002)
4,981
105,962
(8,254)
Net cash outflows used in operating activities
6(i)
(1,943,247)
(1,508,313)
Cash flows from investing activities
Expenditure on mining interests
Payment for plant and equipment
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 inflow provided by financing activities
Net (decrease)/increase in cash held
Cash at beginning of the financial year
(3,172,696)
(391,224)
(1,529,001)
(2,500)
(3,563,920)
(1,531,501)
4,438,028
-
(67,051)
11,364,297
(430,500)
(54,963)
4,370,977
10,878,834
(1,136,190)
7,839,020
10,442,067
2,603,047
Cash at end of financial year
6
9,305,877
10,442,067
The accompanying notes form part of these financial statements.
VRX Silica Limited
58
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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 30 September 2022 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
Interpretations, other authoritative
Australian Accounting Standards, Australian Accounting
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.
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 2022. 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 2022
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.
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.
(e)
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision maker. The chief operating decision maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the Board of
Directors of the Company.
VRX Silica Limited
60
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. Summary of Significant Accounting Policies (Continued)
(f)
Revenue Recognition
The consolidated entity recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is
expected to be entitled in exchange for transferring goods or services to a customer. For each contract
with a customer, the consolidated entity: identifies the contract with a customer; identifies the
performance obligations in the contract; determines the transaction price which takes into account
estimates of variable consideration and the time value of money; allocates the transaction price to the
separate performance obligations on the basis of the relative stand-alone selling price of each distinct
good or service to be delivered; and recognises revenue when or as each performance obligation is
satisfied in a manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the
customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer
and any other contingent events. Such estimates are determined using either the 'expected value' or
'most likely amount' method. The measurement of variable consideration is subject to a constraining
principle whereby revenue will only be recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not occur. The measurement
constraint continues until the uncertainty associated with the variable consideration is subsequently
resolved.
Amounts received that are subject to the constraining principle are initially recognised as deferred
revenue in the form of a separate refund liability.
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the customer obtains control
of the goods, which is generally at the time of delivery.
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.
VRX Silica Limited
61
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
(g)
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.
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
62
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. Summary of Significant Accounting Policies (Continued)
(g)
Income Tax (continued)
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.
(h) 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.
(i)
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.
VRX Silica Limited
63
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. Summary of Significant Accounting Policies (Continued)
(j)
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.
(k)
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.
(l)
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.
VRX Silica Limited
64
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. Summary of Significant Accounting Policies (Continued)
(l)
Investments and Other Financial Assets (continued)
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.
(m) 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
65
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. Summary of Significant Accounting Policies (Continued)
(n) 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.
(o) 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
66
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. Summary of Significant Accounting Policies (Continued)
(p)
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.
(q)
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.
(r)
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
67
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. Summary of Significant Accounting Policies (Continued)
(s)
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.
(t)
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.
(u) 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.
(v)
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.
VRX Silica Limited
68
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. Summary of Significant Accounting Policies (Continued)
(w) 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.
(x)
Share-Based Payment Transactions
The Group provides benefits to employees (including senior executives) of the Group in the form of
share-based payments, whereby employees render services in exchange for shares or rights over
shares (equity-settled transactions).
When provided, the cost of these equity-settled transactions with employees is measured by reference
to the fair value of the equity instruments at the date at which they are granted. The fair value is
determined by using the Black-Scholes model or the binomial option valuation model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than
conditions linked to the price of the shares of VRX Silica Limited (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period in which the performance and/or service conditions are fulfilled, ending on the date on
which the relevant employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting
date reflects (i) the extent to which the vesting period has expired and (ii) the Group’s best estimate of
the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of
market performance conditions being met as the effect of these conditions is included in the
determination of fair value at grant date. The statement of comprehensive income charge or credit for
a period represents the movement in cumulative expense recognised as at the beginning and end of
that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
only conditional upon a market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the
terms had not been modified. In addition, an expense is recognised for any modification that increases
the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee,
as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and
any expense not yet recognised for the award is recognised immediately. However, if a new award is
substituted for the cancelled award and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were a modification of the original award,
as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the
computation of earnings per share.
VRX Silica Limited
69
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. Summary of Significant Accounting Policies (Continued)
(y)
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.
Assets 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.
(z) 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(o). 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 profit or loss and other comprehensive income.
VRX Silica Limited
70
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1. Summary of Significant Accounting Policies (Continued)
(z) Critical Accounting Judgements, Estimates and Assumptions (continued)
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 by
using valuation model taking into account the terms and conditions upon which the instruments were
granted. The accounting estimates and assumptions relating to equity-settled share-based payments
would have no impact on the carrying amounts of assets and liabilities within the next annual reporting
period but may impact profit or loss and equity.
VRX Silica Limited
71
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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
Superannuation
Travel
Other
3.
Income Tax
Consolidated
2022
$
2021
$
16,332
-
-
40,569
56,901
8,835
50,000
1,250,000
47,764
1,356,599
41,500
210,175
180,000
516,061
52,050
91,412
26,000
54,702
298,791
38,000
275,054
110,787
379,254
38,590
142,828
20,235
17,412
211,180
1,470,691
1,233,340
(a) Income tax expense
The income tax expense for the year differs from the prima facie
tax as follows:
Loss for year
(5,033,274)
(1,089,611)
Prima facie income tax (benefit) @ 25.0% (2021: 26%)
(1,258,319)
(283,299)
Tax effect of non-deductible/(non-assessable) items
Deferred tax assets not brought to account
Total income tax expense
(377,366)
1,635,685
(693,907)
977,206
-
-
(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(g) occur:
There are no franking credits available to the Group.
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 – taxation and R&D compliance
VRX Silica Limited
9,756,657
8,894,028
41,500
45,485
86,985
38,000
6,000
44,000
72
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
5.
Earnings per Share (EPS)
Basic earnings per share
The earnings and weighted average number of ordinary shares
used in the calculation of basic earnings per share is as follows:
Earnings – Net loss for year
Weighted average number of ordinary shares used in the
calculation of basic EPS
Consolidated
2022
$
2021
$
Cents
Cents
(0.91)
(0.23)
(5,033,274)
(1,089,611)
No.
No.
554,149,808
480,729,994
6.
Cash and Cash Equivalents
Cash at bank
9,305,877
10,442,067
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
Net cash flows used in operating activities
(5,033,274)
(1,089,611)
84,527
1,930,849
760,580
-
312,500
-
63,564
49,416
510,511
(1,250,000)
156,250
(4,388)
(12,969)
32,025
3,089
(20,574)
9,727
23,124
49,591
(26,497)
(1,943,247)
(1,508,313)
(ii) Non-cash financing and investing activities:
There were no non-cash financing and investing activities during the year or the previous year.
VRX Silica Limited
73
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
7.
Trade and Other Receivables
Current
GST recoverable
Other receivables
Consolidated
2022
$
2021
$
174,287
62,623
236,910
89,105
165,868
254,973
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
26,171
26,171
26,111
26,111
Allowance for expected credit losses
The Group has not recognised any expected credit losses for the year ended 30 June 2022.
8.
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
781,250
1,093,750
1,093,750
-
(312,500)
-
1,250,000
(156,250)
781,250
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 19). On 30 June 2022, the closing trading price of NickelX Limited shares was
12.5 cents each (30 June 2021: 17.5 cents each).
Refer to Note 25 for further information on fair value measurement.
VRX Silica Limited
74
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
9.
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
10. Right-of-use Assets
Land and buildings – right-of-use
Less: Accumulated depreciation
Consolidated
2022
$
2021
$
675,065
(243,396)
241,494
(230,692)
431,669
10,802
10,802
433,571
(12,704)
431,669
12,211
2,500
(3,909)
10,802
287,292
(107,734)
287,292
(35,911)
179,558
251,381
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.
11. Deferred Exploration Expenditure
Expenditure brought forward
Expenditure incurred during the year
Expenditure written off during the year
Expenditure carried forward
8,803,987
3,908,129
(760,580)
7,686,005
1,628,493
(510,511)
11,951,536
8,803,987
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
75
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
12. Trade and Other Payables
Current
Trade and other payables
Consolidated
2022
$
2021
$
1,146,269
395,617
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.
13. Provisions
Current
Employee benefits
188,928
178,232
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
68,543
62,331
14. Lease Liabilities
Current
Non-current
15. 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
71,676
67,051
116,514
188,190
(30,006,069)
(5,033,274)
(28,916,458)
(1,089,611)
(35,039,343)
(30,006,069)
VRX Silica Limited
76
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
16.
Issued Capital
Issued and paid up capital
(a)
Ordinary shares - fully paid
Consolidated
2022
$
2021
$
49,906,519
45,468,491
(b) Movement in ordinary shares on issue
Issue
Price
No. of Shares
$
2022
Balance at the beginning of the year
530,651,486
45,468,491
Exercise of listed options expiring 31 July 2021
Exercise of options expiring 30 November 2021
Exercise of options expiring 30 November 2021
Exercise of options expiring 30 November 2021
- using cashless exercise facility
$0.180
$0.090
$0.100
21,226,543
1,025,000
5,250,000
3,820,778
92,250
525,000
-
250,000
-
Balance at the end of the year
558,403,029
49,906,519
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
VRX Silica Limited
77
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
16.
Issued Capital (Continued)
(c) Share options
At the end of the year, the following options over unissued ordinary shares were outstanding:
•
•
•
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
28,800,000 options expiring 31 August 2024, exercisable at 30 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 2022 and 30 June 2021 are as follows:
Total liabilities (excluding provisions)
Less: Cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
Note
12, 14
6
Consolidated
2022
$
2021
$
1,334,459
(9,305,877)
(7,971,418)
21,389,584
13,418,166
650,858
(10,442,067)
(9,791,209)
20,053,981
10,262,772
N/A
N/A
VRX Silica Limited
78
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
17. Reserves
Option issue reserve
Option issue reserve
Consolidated
2022
$
2021
$
6,522,408
4,591,559
(i) Nature and purpose of reserve
The option issue reserve is used to accumulate amounts received on the
issue of options and records items recognised as expenses on valuation of
incentive based share options.
(ii) Movements in reserve
Balance at the beginning of the year
Issue and vesting of incentive based share options
Options vesting in lieu of fees payable
Balance at the end of the year
4,591,559
1,881,433
49,416
4,542,143
-
49,416
6,522,408
4,591,559
18. Commitments
Exploration 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
859,800
784,800
VRX Silica Limited
79
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
18. Commitments (Continued)
Operating lease commitments
Non-cancellable operating leases contracted for but not recognised
in the financial statements:
Payable – minimum lease payments
- Not later than one year
- After one year but not more than five years
Consolidated
2022
$
2021
$
42,175
61,325
103,500
44,288
107,490
151,778
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 2022 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.
19. 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 (received on 6 May 2021); 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
80
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
20. Financial Reporting by Segments
The Group has identified its operating segments based on the internal reports that are used by the Board
(the chief operating decision makers) in assessing performance and in determining the allocation of
resources.
The operating segments are identified by the Board based on the phase of operation within the mining
industry. For management purposes, the Group has organised its operations into two reportable segments
on the basis of stage of development as follows:
• Development assets
• Exploration and evaluation assets, which includes assets that are associated with the determination
and assessment of the existence of commercial economic reserves.
The Board as a whole will regularly review the identified segments in order to allocate resources to the
segment and to assess its performance.
During the year ended 30 June 2022, 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 (2021: Nil) are derived from a single external customer.
21. Related Party Transactions
(a) Subsidiaries
The consolidated financial statements include the financial statements of VRX Silica Limited and the
subsidiaries listed in the following table.
County of
Incorporation
% Equity Interest
2021
2022
%
%
Ventnor Mining Pty Ltd
VRX Boyatup Pty Ltd
VRX Midwest Pty Ltd (formerly Ventnor Pilbara Pty Ltd)
Wisecat Pty Ltd
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
(b) Parent entity
VRX Silica Limited is the ultimate Australian parent entity and ultimate parent of the Group.
VRX Silica Limited
81
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
21. 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
2022.
The totals of remuneration paid to key management personnel of the Company during the year are as follows:
Short-term benefits
Post-employment benefits
Share-based payments
Consolidated
2022
$
2021
$
488,591
32,409
676,502
1,197,502
396,422
28,453
-
424,875
Shares Issued to Key Management Personnel on Exercise of Compensation Options
During the year, key management personnel did not exercise any options.
During the previous 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
Mr Bruce Maluish
5,000,000 shares
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 (2021:
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:
-
$40,569 (2021: $29,414) to Aruma Resources Ltd, a company Mr Paul Boyatzis is a director of.
At 30 June 2022, the Group has an outstanding receivable of:
-
$11,305 (2021: $8,142) from Aruma Resources Ltd, a company Mr Paul Boyatzis is a director of.
VRX Silica Limited
82
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
22. 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
2022
$
2021
$
9,416,656
12,570,737
10,645,820
9,976,345
21,987,393
20,622,165
481,295
116,514
597,809
379,993
188,190
568,183
50,006,519
6,522,408
(35,139,343)
45,568,491
4,591,559
(30,106,069)
21,389,584
20,053,981
(5,033,274)
-
(5,033,274)
(1,089,611)
-
(1,089,611)
VRX Silica Limited has not entered into any guarantees in relation to the debts of its subsidiary.
(c) Other commitments and contingencies
VRX Silica Limited has no commitments to acquire property, plant and equipment, and has no contingent
liabilities apart from the amounts disclosed in Note 19.
(d) Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity as disclosed in
Note 1 except for the following:
● Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
● Investments in associates are accounted for at cost, less any impairment, in the parent entity.
● Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt
may be an indicator of an impairment of the investment.
VRX Silica Limited
83
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
23. Share Based Payments
(a) Value of share based payments in the financial statements
Expensed:
Incentive based payments to consultants:
Unlisted options
Directors remuneration:
Unlisted options
Incentive based payments to employees:
Unlisted options
Share based payments in lieu of fees payable:
Unlisted options*
Recognised in the statement of profit or loss and other comprehensive
income
Consolidated
2022
$
2021
$
1,100,010
676,502
104,921
49,416
1,930,849
-
-
-
49,416
49,416
Total share based payments
1,930,849
49,416
*Amortisation of previous options issued.
(b) Summary of share-based payments
Shares:
During the year, and previous financial year, no shares were issued as share based payments.
VRX Silica Limited
84
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
23. Share Based Payments (Continued)
Options:
Set out below are the summaries of options granted as share based payments:
2022
Grant
Date
Expiry
Date
Exercise
Price
Balance
01/07/21
Granted
during the
year
Exercised
during the
year
Expired
Balance
30/06/22
18/09/18
21/11/18
30/11/18
09/04/19
31/05/19
23/10/19
11/11/19
29/01/20
19/08/21
29/11/21
07/12/21
30/11/21
30/11/21
30/11/21
30/11/21
30/11/22
23/10/23
23/10/23
31/07/21
31/08/24
31/08/24
31/08/24
$0.100
$0.100
$0.217
$0.090
$0.090
$0.150
$0.150
$0.180
$0.300
$0.300
$0.300
5,500,000
250,000
11,000,000
1,025,000
4,000,000
2,000,000
500,000
5,111,852
-
-
-
-
-
-
-
-
- 11,100,000
- 15,300,000
2,400,000
-
(5,500,000)
(250,000)
-
(1,025,000)
-
-
-
(3,835,238)
-
-
-
-
-
(11,000,000)
-
-
-
-
(1,276,614)
-
-
-
-
4,000,000
2,000,000
500,000
-
- 11,100,000
- 15,300,000
2,400,000
-
Number
vested and
exercisable
-
-
-
-
4,000,000
-
500,000
-
11,100,000
10,200,000
1,600,000
29,386,852 28,800,000
(10,610,238)
(12,276,614) 35,300,000
27,400,000
Weighted average exercise price
$0.160
$0.300
$0.128
$0.213
$0.266
$0.267
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
VRX Silica Limited
85
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
23. Share Based Payments (Continued)
The value of options incurred as share based payments are as follows:.
2022
Options granted during the period:
Unlisted options exercisable at $0.30 each on or before 31 August
2024, issued to consultants and vesting on issue
$0.0991
11,100,000
1,100,010
Value per
Option
Number of
Options
$
Unlisted options exercisable at $0.30 each on or before 31 August
2024, issued to the Directors. The options vest and become
exercisable on the following dates, provided the holder continues to
be a director on those dates:
Vesting on issue
Vesting on 30 June 2022
Vesting on 30 June 2023
Less value of options not vested at 30 June 2022
Unlisted options exercisable at $0.30 each on or before 31 August
2024, issued to employees. The options vest and become
exercisable on the following dates, provided the holder continues to
be an employee on those dates:
Vesting on issue
Vesting on 30 June 2022
Vesting on 30 June 2023
Less value of options not vested at 30 June 2022
Amortisation of options granted in prior periods:
Value of options previously issued as part of financial advisory fees
to Argonaut Capital Limited, expensed during the year.
2021
Amortisation of options granted in prior periods:
Value of options previously issued as part of financial advisory fees
to Argonaut Capital Limited, expensed during the year.
$0.0555
$0.0557
$0.0582
5,100,000
5,100,000
5,100,000
283,050
284,070
296,820
(187,438)
$0.0551
$0.0553
$0.0577
800,000
800,000
800,000
44,080
44,240
46,160
(29,559)
49,416
1,930,849
49,416
49,416
VRX Silica Limited
86
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
23. Share Based Payments (Continued)
Where deferred vesting options are subject to milestones or vesting dates, probability of achieving those
milestones or vesting dates have been assessed at 100% unless otherwise stated.
The 11,100,000 unlisted options granted to consultants on 19 August 2021 were for nil consideration. The
options were valued using the Hoadley ESO2 binomial valuation model using an underlying share price of
$0.23, volatility of 85%, interest rate of 0.12%, early exercise multiple of 2.5x and nil dividend yield.
The 15,300,000 unlisted options issued to the Directors for nil consideration were approved by shareholders
on 29 November 2021. The options were valued using the Hoadley ESO2 binomial valuation model using an
underlying share price of $0.16, volatility of 85%, interest rate of 0.92%, early exercise multiple of 2.5x and
nil dividend yield.
On 7 December 2021, 2,400,000 unlisted options were granted to employees for nil consideration. The
options were valued using the Hoadley ESO2 binomial valuation model using an underlying share price of
$0.16, volatility of 85%, interest rate of 0.98%, early exercise multiple of 2.5x and nil dividend yield.
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 options were issued for $300 consideration and vest upon the satisfaction of milestones considered to
be non-market factors. The options were valued using the Black-Scholes model using an underlying share
price of $0.145, volatility of 100%, nil dividend yield and an interest rate of 0.745%.
The weighted average remaining contractual life of share-based payment options that were outstanding as
at 30 June 2022 was 1.913 years (2021: 0.658 years).
The weighted average fair value of share-based payment options granted during the year was $0.07286 each
(2021: Nil).
VRX Silica Limited
87
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
24. 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
2022
$
2021
$
9,274,160
7,390,876
9,274,160
7,390,876
VRX Silica Limited
88
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
24. 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
2022
$
2021
$
4,637
(4,637)
4,637
(4,637)
3,695
(3,695)
3,695
(3,695)
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 2022
24. 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
2022
Financial Assets:
Non-interest bearing
Variable interest rate
Fixed interest rate
Financial Liabilities:
Non-interest bearing
Fixed interest rate
2021
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
$
-
0.35
0.43
-
4.60
-
0.05
0.32
-
4.60
268,627
4,256,813
5,017,347
9,542,787
-
-
-
-
2,583
-
-
2,583
1,146,269
5,788
1,152,057
-
17,493
17,493
-
48,395
48,395
781,250
-
23,588
804,838
-
116,514
116,514
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
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.
Equity Price Risk
The consolidated entity’s investment in listed equity securities are susceptible to market price risk arising
from uncertainties about future values of the investment securities.
At the reporting date, the consolidated entity’s exposure to listed equity securities at fair value was $781,250
(2021: $1,093,750). A decrease of 10% (2021: 10 per cent) on the share prices could have an impact of
approximately $78,125 (2021: $109,375) on the profit or loss attributable to the consolidated entity.
VRX Silica Limited
90
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
24. Financial Risk Management (Continued)
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.
25. 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
$
2022
Assets
Ordinary shares at fair value through profit or loss
Total assets
781,250
781,250
2021
Assets
Ordinary shares at fair value through profit or loss
Total assets
1,093,750
1,093,750
-
-
-
-
-
-
781,250
781,250
- 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.
26. Events Subsequent to Year End
No matters or circumstances that have arisen since 30 June 2022 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 2022 and of
its performance for the year ended on that date;
2.
In the directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
3.
The directors have been given the declarations required by s295A of the Corporation Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations
Act 2001.
Bruce Maluish
Director
Perth, 30 September 2022
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 2022, 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 2022 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 11 in the financial statements
The Group has capitalised deferred exploration
expenditure with a carrying value of $11,951,536 as
at 30 June 2022.
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.
Share-Based Payments
Refer to Note 23 in the financial statements
During the year, the Group entered a share-based
payments arrangement with its key management
personnel, employees, consultants and suppliers.
Management has accounted for these instruments in
accordance with AASB 2 Share-Based Payments.
We considered this to be a key audit matter due to:
• The complexity of the accounting required to fair
value these instruments;
• Management
is
judgement
to
determine the probability of vesting conditions of
these instruments and the inputs used in the
valuation model to fair value these instruments;
and
required
• The recognition of the share-based payment
expense is complex due to the variety of vesting
conditions attached to these instruments.
Our audit procedures included:
• Assessing
the Group’s accounting policy
for
compliance with Australian Accounting Standards;
• Assessing whether the rights to tenure of those
areas of interest are current;
• Testing a sample of additions
to supporting
documentation and assessing whether the amounts
capitalised during the year are in compliance with
the Group’s accounting policy and relate to the
relevant area of interest;
• Enquiring with management and reading budgets
and other documentation as evidence that active
and significant operations in, or relation to, the
relevant area of interests will be continued in the
future;
• Assessing
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; and
• Assessing the appropriateness of the disclosures in
the financial statements.
Our audit procedures included:
• Assessing
the Group’s accounting policy
for
compliance with Australian Accounting Standards;
• Obtaining an understanding of the terms and
conditions of the instruments issued;
• Assessing the appropriateness of management’s
valuation model applied to determine the fair value
of these instruments issued and testing key inputs
used to determine the fair value;
• Critically assessing management’s determination of
the vesting conditions of each instrument;
the share-based
• Recalculating the amount of
payment expense recognised
in consolidated
statement of profit or loss and other comprehensive
income; and
• Assessing the appropriateness of disclosures in the
financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 30 June 2022, 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 2022.
In our opinion, the Remuneration Report of VRX Silica Limited, for the year ended 30 June 2022, 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: 30 September 2022
AIK KONG TING
Partner
RSM Australia Partners
Level 32 Exchange Tower,
2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of VRX Silica Limited for the year ended 30 June 2022, 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: 30 September 2022
AIK KONG TING
Partner
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
SECURITIES EXCHANGE INFORMATION
HOLDINGS AS AT 19 SEPTEMBER 2022
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
111
857
657
1,739
641
4,005
26,819
2,740,164
5,292,826
65,439,307
484,903,913
558,403,029
625
1,260,212
The company has been notified of the following substantial shareholdings:
Sparta AG
Voting Rights
Number
51,100,000
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 19 September 2022:
Ordinary Fully Paid Shares
SPARTA AG
1.
2. MR MICHELE GALEA
3. MOSCH PTY LTD
4. GOLDFIRE ENTERPRISES PTY LTD
5.
6. MR MICHELE GALEA
7. MR BRUCE DENNIS MALUISH
8. MORKIM PTY LTD
9.
AUSTRALIAN SILICA PTY LTD
PARLIN INVESTMENTS PTY LTD
10. MASH SUPER PTY LTD
11. CITICORP NOMINEES PTY LIMITED
12. MR JOHN CHARLES GEARY
13. AUSTRALIAN INTERNATIONAL SERVICES PTY LTD
14. HAVEN SUPER PTY LTD
15.
16. VAULT (WA) PTY LTD
17. ANDREW MALUISH SUPER PTY LTD
17. AURO PTY LTD
19. SURPION PTY LTD
20. GOLDFIRE ENTERPRISES PTY LTD
LESUER PTY LTD
Number
49,200,000
15,046,237
13,333,332
11,217,124
9,700,025
8,000,000
7,060,535
7,000,000
6,892,754
6,750,000
6,349,289
6,000,000
5,534,755
5,383,437
5,180,000
5,125,000
5,000,000
5,000,000
4,750,000
4,500,000
187,022,488
%
8.81
2.69
2.39
2.01
1.74
1.43
1.26
1.25
1.23
1.21
1.14
1.07
0.99
0.96
0.93
0.92
0.90
0.90
0.85
0.81
33.49
VRX Silica Limited
98
SECURITIES EXCHANGE INFORMATION
Unlisted Options
Details of unlisted option holders are as follows:
Class of unlisted options
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
-
Options exercisable at 30 cents each on or before 31 August 2024
Holdings of more than 20% of this class
-
-
-
Remcor Pty Ltd
Terence Robert Abel
Yoonil Kim
Options exercisable at 30 cents each on or before 31 August 2024
Holdings of more than 20% of this class
- MASH Super Pty Ltd
Lesuer Pty Ltd
-
Number
of
Options
Number
of
Holders
4,000,000
4,000,000
2,500,000
2,000,000
1
2
11,100,000
4
4,500,000
2,400,000
2,400,000
17,700,000
5
5,400,000
3,900,000
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
99
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
M70/1418
L70/198
L70/199
L70/202
L70/203
L70/208
L70/229
L70/230
G70/264
G70/265
G70/266
Muchea Project – Silica
Tenement
E70/4886
E70/5157
E70/5548
E70/5651
M70/1390
M70/1414
L70/200
L70/204
L70/205
L70/206
Boyatup Project – Silica
Status
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Application
Granted
Granted
Granted
Granted
Granted
Application
Granted
Granted
Granted
Granted
Status
Granted
Granted
Granted
Application
Granted
Application
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
Ventnor Mining Pty Ltd
Ventnor Mining Pty Ltd
Ventnor Mining Pty Ltd
Ventnor Mining Pty Ltd
Holder / Applicant
Wisecat Pty Ltd
Wisecat Pty Ltd
Wisecat Pty 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
100
100
100
100
Interest (%)
100
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
100