Announcement PDF VRX SILICA LIMITED ABN 59 142 014 873 FORMERLY KNOWN AS VENTNOR RESOURCES LIMITED INTERIM FINANCIAL REPORT FOR HALF-YEAR ENDED 31 DECEMBER 2018 CORPORATE DIRECTORY DIRECTORS Paul Boyatzis (Non-Executive Chairman) Bruce Maluish (Managing Director) Peter Pawlowitsch (Non-Executive Director) SECRETARY John Geary REGISTERED AND PRINCIPAL OFFICE Level 1, 6 Thelma Street West Perth WA 6005 Telephone: (08) 9226 3780 Facsimile: (08) 9226 3764 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 DIRECTORS’ REPORT Your directors submit the financial report of the consolidated entity for the half-year ended 31 December 2018. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows: DIRECTORS The names of the Directors who held office during or since the end of the half-year and until the date of this report are noted below. Directors were in office for this entire period unless otherwise stated: Paul Boyatzis (Non-Executive Chairman) Bruce Maluish (Managing Director) Peter Pawlowitsch (Non-Executive Director) PRINCIPAL ACTIVITIES The principal continuing activities during the half-year of entities within the consolidated entity was mineral exploration. REVIEW OF OPERATIONS The net loss for the half-year attributable to members of VRX Silica Limited was $2,259,284 (2017: loss of $919,872). During the six months ending 31 December 2018, VRX Silica Ltd (VRX Silica or the Company) (ASX: VRX) continued to advance the Company’s high-grade silica sand projects at Arrowsmith and Muchea in Western Australia. The following is a summary of those activities: Exploration VRX Silica has two silica sand projects at Arrowsmith and Muchea, 270km and 50km north of Perth, respectively. See Fig 1 and 2 below: Figures 1 and 2: Arrowsmith (Left) and Muchea (Right) Silica Sand Projects VRX Silica Limited 2 DIRECTORS’ REPORT On 2 August 2018, VRX Silica announced the development program for the Arrowsmith (Arrowsmith) and Muchea (Muchea) Silica Sand Projects which included the completed environmental desktop studies for both Arrowsmith and Muchea. These formed the basis for detailed flora, vegetation and fauna studies which were conducted during the spring months, which will also support a referral to the relevant environmental authorities for a Mining Proposal. The Company conducted preliminary testwork programs on Arrowsmith sand samples which indicated the deposits at Arrowsmith can be upgraded to glassmaking silica sand requirements. Testwork continued during the period to enable the finalisation of the proposed processing circuit design. Adequate auger and aircore drilling has been undertaken to allow a JORC Code 20121 (JORC Code) Resource estimation at each of the projects following the completion of QA/QC assaying and review. On 15 August 2018, VRX Silica announced that the Department of Mines, Industry and Safety (DMIRS) had granted a Programme of Work (PoW) for exploration on both the Arrowsmith North (E70/5076) and Arrowsmith Central (E70/4987) prospects. The exploration drilling planned in the POW was subject to the conditions of the Company’s Dieback Management Plan, which has been accepted by DMIRS and added to the tenement conditions for the PoW areas. It requires dry conditions in order for ground disturbing work to be conducted. It also required an Aboriginal Heritage survey, which was completed late in the period. Drilling programmes planned to enable a JORC Code compliant Mineral Resource Estimation to an Indicated category will be undertaken in March 2019. Positive Bulk Sampling Results VRX Silica has completed bulk sampling at both of its silica sand projects – air core drilling and hand auger at Muchea, and hand auger at Arrowsmith. The drill samples were used to generate four bulk composites for metallurgical testwork for Muchea (air core drilling only sampling), Arrowsmith North, Arrowsmith Central and Arrowsmith South (hand auger sampling). On 20 September 2018, VRX Silica announced positive bulk sampling results from both Arrowsmith and Muchea. The testwork program was developed from laboratory scale testwork undertaken by Nagrom in Perth and confirmed that Arrowsmith North, Arrowsmith Central and Muchea can produce sought-after product for glassmaking. The Company collected a bulk sample of 300kg from each of its four granted tenements across the Arrowsmith and Muchea projects for bulk metallurgical testwork. The initial results justified a further program on a larger sample and the composite was sent to the CDE Global facility in Cookstown, Northern Ireland, a specialist sand metallurgical testing laboratory, with the intention of gaining a better understanding of the sand characteristics when subjected to standard processing techniques. 1 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The JORC Code, 2012 Edition. Prepared by: The Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia. VRX Silica Limited 3 DIRECTORS’ REPORT The 4 x 300kg composites were tested by CDE Global using the following flowsheet: +4mm dry screening and De-sliming (-63um) Attritioning (75% solids) Spiral Separation Magnetic Separation Final Product (Non-Magnetic) The bulk testwork returned the results set out in Table 1 below, after de-sliming, attritioning, spirals and magnetic separation. The final product grade and particle sizes as reported are considered to be of glass making quality. A significant result of the testwork was the apparent positive effect of high-density attritioning and also the effect of a high-intensity magnetic separator on the quality of the final product. Results from this testwork also supported the Mineral Resource Estimates (MRE) for reporting under the JORC Code and VRX Silica engaged experienced geological consultancy CSA Global to undertake the Maiden Resource Estimate for Arrowsmith North. The testwork results confirmed VRX Silica’s expectations for glassmaking quality sand at Arrowsmith and higher-quality sand at Muchea. They also justified a further iteration of testwork to investigate the potential for even higher-grade and higher-value products. This testwork program has enabled the Company to send samples to prospective customers. A third iteration of bulk testwork was conducted during the period in order to fine tune the process. Table 1: CDE Global Bulk Testwork results Project No. Samples in Composite Al2O3 CaO Fe2O3 K2O MgO MnO Na2O TiO2 LOI1000C SiO2Calc. SiO2+LOI ppm ppm ppm ppm ppm ppm ppm ppm % % % Muchea 163 729 6 285 64 36 9 14 970 0.22 99.57 99.79 Arrowsmith North 120 9,081 33 3,290 960 107 20 90 1,648 0.43 98.04 98.47 Arrowsmith Central 58 10,992 92 2,711 2,582 107 64 208 2,487 0.42 97.65 98.07 Arrowsmith South 104 26,117 322 5,861 6,669 259 41 532 2,824 0.85 94.88 95.73 These results clearly demonstrate that glass-quality silica sand product (+99.5% SiO2) can be produced from all project areas with the exception of Arrowsmith South and, as a consequence, Arrowsmith South has been excluded from the Arrowsmith development program at this stage. The silica sand from Muchea will produce a high-quality product with very low impurities, particularly iron. VRX Silica Limited 4 DIRECTORS’ REPORT The CDE Global testwork highlighted the potential for further improvements by utilising specialist processing equipment in the attritioning and magnetic separation steps. The attrition test uses a highspeed shaft with paddles at a high slurry density of 75% solids to liberate fine particles. The magnetic separation step involved pumping a slurry through a magnetised matrix “Hi Intensity Magnetic Filter”, which separates the feed into three distinct fractions: magnetics, middlings and nonmagnetics, dependent on the magnetic susceptibility of the individual sand grains. Table 2 below shows the results of the magnetic separation tests for the four project areas. The results demonstrate that a HI Filter can very effectively separate out the pure quartz grains from those which contain deleterious elements. Table 2: Magnetic Separation Results Project Sample Description Magnetics Muchea Magnetic Separation Arrowsmith North Magnetic Separation Arrowsmith Central Magnetic Separation Mass Al2O3 CaO Cr2O3 Fe 2O3 K2O MgO MnO Na2O TiO2 % ppm ppm ppm ppm ppm ppm ppm ppm LOI1000C SiO2+LOI ppm % % 0.41% 1,245 175 14 2,521 196 128 57 117 3,756 0.21% 99.18% Middlings 7.31% 335 50 2 90 51 14 1 30 207 0.05% 99.92% Non Magnetic 92.27% 262 49 2 68 38 12 1 21 179 0.10% 99.94% Magnetics 0.63% 5,069 403 75 15,456 904 518 433 126 22,668 0.39% 95.43% Middlings 9.33% 1,762 48 3 453 238 22 2 36 255 0.10% 99.72% Non Magnetic 90.04% 1,797 46 3 414 276 20 2 33 198 0.90% 99.72% Magnetics 0.71% 16,006 424 419 44,243 1,379 471 834 141 36,954 1.08% 89.91% Middlings 11.24% 2,863 71 5 749 827 31 7 74 676 0.18% 99.47% Non Magnetic 88.06% 2,566 68 3 341 785 22 2 69 267 0.13% 99.59% The Company’s ASX announcement of 20 September 2018 contained detailed images of the CDE Global flowsheet, the composite drill hole locations for both Arrowsmith and Muchea, tables showing grades and bulk testwork results, comparison charts of raw material vs attritioned and washed samples as well as the CDE Global lab scale attrition cell. The CDE Global testwork results confirmed that the Muchea, Arrowsmith North and Arrowsmith Central projects can produce a sought-after product for glassmaking. This enabled a JORC Code compliant Mineral Resource to be estimated for these projects and CSA Global were engaged to commence work on the Arrowsmith North Mineral Resource estimate, which was completed during the period. VRX Silica Limited 5 DIRECTORS’ REPORT Maiden Mineral Resource Estimate for Arrowsmith North VRX Silica engaged CSA Global to prepare a maiden Mineral Resource estimate (MRE) for the Arrowsmith North target area reportable under the guidelines of the JORC Code. On 2 October 2018 the Company announced the Arrowsmith North MRE comprises 193.6 Mt @ 98% SiO2 reported in accordance with the JORC Code. The MRE exceeds the previous Exploration Target of 100 to 140 million tonnes at 95% to 98% SiO2. The MRE is based on the results obtained from 62 hand auger drill holes to a depth of 4-5 metres for 235.6m and defines two silica sand types, white and yellow sand, geologically logged and differentiated based on colour and through chemical analysis results. Based on metallurgical testwork completed todate, both sand types are readily amenable to upgrading by conventional washing and screening methods to produce a high-purity silica sand product with high mass recoveries. The high-purity silica sand product specifications are expected to be suitable for industries such as glass making. The MRE results are shown in Table 3. Table 3: Arrowsmith North Mineral Resource Classification Inferred Domain Million Tonnes SiO2% Al2O3% Fe2O3% LOI% TiO2% Yellow Sand 149.4 97.7 1.1 0.4 0.5 0.2 White Sand 44.2 99.1 0.3 0.1 0.2 0.2 All Sand 193.6 98 0.9 0.3 0.4 0.2 *Note: Interpreted mineralisation is domained into different sand types based on drill logging data and publicly available soil mapping information, above a basal surface wireframe defined based on the current drill sampling depths. Depletion zones include the upper 0.5 m for rehabilitation purposes, and minor swamp zones in the east and south of the modelled area. Differences may occur due to rounding. The Mineral Resource is classified as Inferred according to the principles contained in the JORC Code. Material that has been classified as Inferred was considered by the Competent Person to be sufficiently informed by geological and sampling data to imply but not verify geological and grade continuity between data points. The project area is a substantial prominent dune system that has only been tested with shallow auger. The approved POW provides for the infill of the Arrowsmith North Inferred Mineral Resource and adding to it substantially with the intention of upgrading the resource to an Indicated category. This drilling will be done by an Aircore drill rig which will not have the depth limitations of the hand auger technique and the full depth of sand will be drill tested. It will improve the JORC Code classification, deepen and extend the current Mineral Resource and is expected to be completed in March 2019. The drilling program will consist of 105 holes with an average depth of 11.3m (in comparison, the average depth of hand auger holes was 3.8m) and will commence early in 2019 due to limited drill rig availability, the requirement for native title heritage clearance and the conditions of the Company’s Dieback Management Plan, which has been accepted by DMIRS and added to the tenement conditions for the POW areas. VRX Silica Limited 6 DIRECTORS’ REPORT Arrowsmith North Mining Lease Application On 24 December 2018, VRX Silica announced the lodgement of its first silica sand Mining Lease Application, MLA70/1389 at its Arrowsmith North prospect. At 73mt @ 97.7% SiO2 the MLA Resource is only a small portion of the total Resource of 193.6 Mt @ 98% SiO2 but is expected to increase with deeper drilling than the hand-auger sampling previously undertaken and used to estimate the Resource. This Resource at the Company’s Arrowsmith North prospect was previously announced as, “Arrowsmith North Maiden Mineral Resource” on 2 October 2018. This is the first of three Mining Lease applications that the Company will lodge in the short term and this Mining Licence Application will enable the Company to apply for a Mining Permit at Arrowsmith North in the 2019 calendar year. The Company recently announced that it has received interest from potential offtake partners for silica sand in quantities and grades that can be supplied from the Arrowsmith Silica Sand Project, “Three LOIs for Silica Sand Offtake” of 11 December 2018. The Arrowsmith North Mining Lease Application MLA70/1389 has an area of 1,728Ha, see Table 4 below, and covers part of the Exploration Licences E70/5027 and E70/5109, as shown in Figure 1, which were granted on 14/06/2018 and 14/08/2018 respectively. Table 4: Arrowsmith North Mining Lease Application tenement details Area Tenement Holders Application date (km2) MLA70/1389 Ventnor Mining Pty Ltd 21/12/2018 17.3 CSA Global has reported the Mineral Resource located within the MLA boundary and is summarised in Table 5, below. Table 5: Arrowsmith North Silica Sand Mineral Resource estimate within MLA Classification Million Tonnes SiO2% Al2O3% Fe 2O3% TiO2% LOI% Inferred 73.2 97.7 1.1 0.4 0.2 0.5 * Note: Mineral Resources are reported only from within the VRX nominated MLA and form a subset of the total Arrowsmith North Mineral Resources as reported to the ASX on 2 October 2018. Differences may occur due to rounding. Having established the Arrowsmith North Mineral Resource Estimate during the period, VRX Silica continued working towards the Mineral Resource Estimate at the Company’s Muchea Project which was also completed during the period. A further iteration of testwork was commenced by CDE Global using a refined flow sheet to incorporate additional attritioning to further improve the quality of the potential final products for Muchea, Arrowsmith North and Arrowsmith Central. The next step from the results of this work will be a process circuit design and engineering which will allow for capital cost estimates to be generated. VRX Silica Limited 7 DIRECTORS’ REPORT Maiden Mineral Resource Estimate for Muchea On 20 November 2018 VRX Silica announced the results from the independent estimate of the Mineral Resource at its Muchea Silica Sand Project (Muchea Project), which is located 50km north of Perth. The Mineral Resource estimate (MRE) for the Muchea Project comprises a combined total of Indicated and Inferred Mineral Resources of 191 Mt @ 99.6% SiO2 reported in accordance with the JORC Code. The Indicated component of the MRE comprises 19 Mt @ 99.7% SiO 2, with the Inferred component being 172 Mt @ 99.6% SiO2. The MRE was carried out by CSA Global and based on 44 hand auger drill holes for 260.7 m and 46 aircore holes for 522 m carried out by VRX Silica as part of its due diligence exercise during the March 2018 quarter, prior to the acquisition of the Muchea Project in July 2018. The MRE results are shown in Table 6. Table 6: Muchea White Silica Sand Mineral Resource Estimate as at November 2018 Classification Million Tonnes SiO2% Al2O3% Fe 2O3% TiO2% LOI% Indicated 19 99.7 0.03 0.03 0.08 0.2 Inferred 172 99.6 0.04 0.02 0.08 0.2 Indicated + Inferred 191 99.6 0.04 0.02 0.08 0.2 *Note: Interpreted white silica sand mineralisation is domained above a basal surface wireframe defined based on drill logging data. The upper (overburden) layer within 0.5 m of surface is depleted from the modelled silica sand unit, being reserved for rehabilitation purposes. All classified silica sand blocks in the model are reported. Differences may occur due to rounding. The large Maiden MRE of high-grade silica sand supports the Company’s belief that Muchea is a world class high-grade deposit, which can be processed to supply almost any grade sand for glassmaking in Asia. The area of the Inferred Mineral Resource estimate is predominately based on shallow hand auger results and has the potential to be deeper with a significantly larger Mineral Resource. The MRE defines the upper white silica sand layer, geologically logged and differentiated based on colour and chemical analysis results. The Company believes that the Indicated Mineral Resource area is adequate for detailed mining studies, and closer spaced drilling will also extend the area and tonnage for a potential Ore Reserve. On 29 January 2019, VRX Silica lodged its December Quarterly Activities Report which contained a detailed analysis of the geological explanations of the silica sand deposits in Western Australia and in particular, that of Muchea. The detail provided was extensive and the images were complete and readers requiring that level of information are referred to the 29 January 2019 ASX announcement and in particular the headings Silica Sand Geology and Silica Sand Geology – Muchea. Maiden Mineral Resource Estimate for Arrowsmith Central On 13 December 2018, VRX Silica Limited announced the results from the independent estimate of the Mineral Resource at its Arrowsmith Central prospect. The results are based on an exploration program of 39 hand-held auger drill holes and is an acceptable standard for use in a Mineral Resource estimate publicly reported in accordance with the JORC Code. The Resource area is a small portion of the tenement area, adequate for initial mining studies which can be increased substantially with future aircore drilling over an increased area. Additional drilling will be conducted in March 2019 with the Company having recently completed an extensive Aboriginal Heritage survey with representatives of the Southern Yamatji claimant group for a more intensive and wider ranging drill program. The Arrowsmith Central Project is immediately adjacent to the Eneabba – Geraldton rail line, which offers a unique low capex logistics solution to export bulk products out of Geraldton. VRX Silica Limited 8 DIRECTORS’ REPORT The exploration program also provided a bulk sample which was used for the second and third iteration of metallurgical testwork and has verified that the sand can be beneficiated to glass-making quality (VRX Silica announcement 20 September 2018). An additional testwork program, which is underway, is investigating the recovery and quality of products for the foundry industry, particularly in South Korea. VRX Silica engaged CSA Global to prepare a maiden Mineral Resource estimate (MRE) for the Arrowsmith Central target area reportable under the guidelines of the JORC Code. Arrowsmith Central is part of the Arrowsmith Project, 270km north of Perth. See Figure 1 above. The MRE for the Arrowsmith Central Deposit comprises 28 Mt @ 97.7% SiO 2 reported in accordance with the JORC Code. The MRE is based on the results obtained from 39 hand-auger drill holes for 98.6 m and defines the modelled silica sand layer. Based on metallurgical testwork completed to-date, the silica sand at Arrowsmith Central is readily amenable to upgrading by conventional washing and screening methods to produce a high-purity silica sand product with high mass recoveries expected to be suitable for industries such as glass making. The MRE results are shown in Table 7. Table 7: Arrowsmith Central Mineral Resource Classification Million Tonnes SiO2% Al2O3% Fe 2O3% K2O% TiO2% LOI% Inferred 28 97.7 1.2 0.3 0.3 0.2 0.5 *Note: Interpreted silica sand layer is domained above a basal surface wireframe defined based on the current drill sampling depths. A depletion zone consisting of the upper 0.5 m is reserved for rehabilitation purposes, is not estimated or reported. Differences may occur due to rounding. This resource adds to the two previously announced silica sand resources, Arrowsmith North, “Arrowsmith North Maiden Mineral Resource” 2 October 2018, and Muchea, “Muchea Silica Sand Project Maiden Resource” 20 November 2018 (see Table 8). Table 8: Total Silica Sand Mineral Resource, Arrowsmith North, Arrowsmith Central and Muchea Indicated Tonnes Prospect Inferred Grade (millions tonnes) Tonnes Total Grade Tonnes Grade (% SiO2) (millions tonnes) (% SiO2) (millions tonnes) (% SiO2) Arrowsmith North 193.6 98.0% 193.6 98.0% Arrowsmith Central 28 97.7% 28 97.7% Muchea 19 99.7% 172 99.6% 191 99.6% Total 19 99.7% 393.6 98.7% 412.6 98.7% Mineral Resource Estimate - Drilling Drilling over the Arrowsmith project area has been completed by means of hand auger (see Figure 3) with hole depths ranging from 1.2 m to 7 m and an average depth of 3.8 m. Drilling has been completed along existing tracks, that form a nominal 800 m section line spacing, with drill spacing of 400 m to 1,000 m apart along the section lines. Drilling over the Muchea project area has been completed by means of hand auger and aircore drilling. Auger hole depths ranged from 1.8m to 11.4m with an average depth of 5.4m, while aircore drill hole depths ranged from 6m to 36m with an average depth of 11.7m. Drilling has been completed at a nominal 400m spacing along existing tracks, which are nominally between 400m and 1,200m apart, thus forming a somewhat irregular drilling pattern. Two pairs of close spaced (~<10m) auger / aircore drill hole twin holes have been drilled, along with a further two pairs at roughly 100m apart and a pair of auger holes ~35m apart. VRX Silica Limited 9 DIRECTORS’ REPORT Figure 3: Hand auguring sand at Arrowsmith Mineral Resource Modelling The Arrowsmith Mineral Resource is estimated above 3-d wireframe basal surfaces for the white and yellow sands. These basal surfaces are nominally limited to the auger drill hole depths, it should be noted that the full depth of silica sand was not tested due to the sampling methodology. The modelled extents are limited to within the nominated Arrowsmith North target area based on the geological boundaries defined by logged sand types from the drill data and with reference to the publicly available soil mapping data. The overburden, reserved for rehabilitation, forms the upper boundary of the estimated Mineral Resource and is depleted from the reported Mineral Resource. Comparatively minor areas that are mapped as swamp or sandy swamp are also depleted from the Mineral Resource. Despite both white and yellow sands being readily amenable to beneficiation, they have been separately interpreted, as they are separately estimated due to differences in grades of the various mineral components. The Muchea Mineral Resource is estimated above a 3D wireframe basal surface for the uppermost white silica sand layer. Based on analysis of the results from the drilling data this basal surface appears to nominally follow the topographic surface. Only the uppermost white silica sand layer has been modelled at this stage despite the evidence in the deeper AC holes for additional white silica sand and yellow sand layers occurring below. This is due to the limitations on depth sampled from auger drilling, the variable depths of AC drilling and the drill hole spacing making interpretation of the geological extents of these layers difficult. The basal surface of the uppermost white silica sand is interpreted based on the geological logging, chemical analysis results and chip photography from the auger and AC drilling and with reference to the topographic surface and publicly available soil mapping data. The modelled extents are limited to VRX Silica Limited 10 DIRECTORS’ REPORT within the Ventnor nominated Muchea target area and are extrapolated to a nominal maximum of 400 m away from the drilling data. It should be noted that for some auger holes the full depth of the uppermost white silica sand layer was not tested due to the limitations of the sampling methodology. The modelled basal surface therefore does not necessarily represent the full sand layer thickness over parts of the auger drilled area. Over a small area in the central west of the modelled area the surface white silica sand layer is overlain by a minor clay in white sand zone, defined by the Al 2O3 content being nominally above 1%. The basal surface of this material has been modelled and it forms the upper boundary surface of the modelled white silica sand layer in this part of the model. This material has not been grade estimated and is not reported as part of the MRE. The surface humus layer is typically about 300 mm thick. In consultation with VRX Silica, CSA Global considered that the upper 500 mm (overburden) is likely to be reserved for rehabilitation purposes. This overburden surface forms the upper boundary of the estimated Mineral Resource and is depleted from the reported Mineral Resources. Mineral Resource Classification The Mineral Resource is classified as Indicated and Inferred according to the principles contained in the JORC Code. Material that has been classified as Indicated was considered by the Competent Person to be sufficiently informed by adequately detailed and reliable geological and sampling data to assume geological and grade continuity between data points. Material that has been classified as Inferred was considered by the Competent Person to be sufficiently informed by geological and sampling data to imply but not verify geological and grade continuity between data points. Warrawanda Project The Company continues to maintain the Warrawanda exploration licence tenements. Work conducted in 2017 on its nickel exploration target has highlighted an EM anomaly from one of the Company’s Fixed Loop EM Surveys. The Company will further investigate the anomaly with a drill hole planned for 2019. The tenements also hold significant potential for High Purity Quartz (as announced to ASX on 5 March 2019) and the Company will further evaluate the outcrops of quartz with a diamond drill program in 2019. Competent Persons’ Statements The information in this report that relates to Exploration Results is based on data collected under the supervision of Mr David Reid, in his capacity as Exploration Manager. Mr Reid, BSc (Geology), is a registered member of the Australian Institute of Geoscientists and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and the activity being undertaken to qualify as a Competent Person under the 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Reid consents to the inclusion of the data in the form and context in which it appears. The information in this report that relates to Mineral Resources is based on information compiled by Mr Grant Louw who is a full-time employee of CSA Global, under the direction and supervision of Dr Andrew Scogings, who is an Associate of CSA Global. Dr Scogings is a Member of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. He is a Registered Professional Geologist in Industrial Minerals. Dr Scogings has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the JORC Code. Dr Scogings consents to the disclosure of information in this report in the form and context in which it appears. VRX Silica Limited 11 DIRECTORS’ REPORT ASX Listing Rule 5.8.1 Summary The following summary presents a fair and balanced representation of the information contained within the Mineral Resource Estimate (MRE) technical report:  Silica sand mineralisation at the Muchea Project occurs within the Bassendean Sand, which extends along the Swan coastal plains of the Perth Basin, parallel to the coast. (ASX LR 5.8.1 geology & geological interpretation)  Samples were obtained from auger and aircore drilling. Quality of drilling/sampling and analysis, as assessed by the Competent Person, is of an acceptable standard for use in a Mineral Resource estimate public