VYSARN LIMITED — AGM Information 2020

Nov 18, 2020

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AGM PRESENTATION NOVEMBER 2020

Disclaimer

This presentation has been prepared by Vysarn Limited ("Vysarn" or the "Company") ("Presentation") and contains general and background information about Vysarn activities current as at the date of the Presentation. The Presentation should not be considered to be comprehensive or to comprise all the information that an investor should consider when making an investment decision. The information in the Presentation should be read in conjunction with Vysarn's other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange, available at www.asx.com.au.

The Presentation contains statements, opinions, projections, forecasts and other material ("forward-looking statements") with respect to the financial condition, business operations and competitive landscape of the Company and certain plans for its future management. The words anticipate, believe, expect, project, forecast, estimate, likely, should, could, may, target, plan and other similar expressions are intended to identify forward-looking statements. Such forwardlooking statements are not guarantees of future performance and include known and unknown risks, uncertainties, assumptions and other important factors which are beyond the Company's control and may cause actual results to differ from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements. Any forwardlooking statements contained in this document are qualified by this cautionary statement. The past performance of the Company is not a guarantee of future performance. None of the Company, or its officers, employees, agents or any other person named in the Presentation makes any representation, assurance or guarantee as to the accuracy or likelihood of fulfilment of any forward-looking statements or any of the outcomes upon which they are based.

The Presentation is not financial product, investment advice or a recommendation to acquire Vysarn securities and has been prepared without taking into account the objectives, financial situation or needs of individuals. Each

recipient of the Presentation should make their own enquiries and investigations regarding all information in the Presentation including, but not limited to, the assumption, uncertainty and contingencies which may affect future operations of Vysarn and the impact that different future outcomes may have on Vysarn. Before making an investment decision prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs, and seek legal, taxation and financial advice appropriate to their jurisdiction and circumstances. Vysarn is not licensed to provide financial product advice in respect of its securities or any other financial products. Cooling off rights do not apply to the acquisition of Vysarn securities. Each investor must make its own independent assessment of Vysarn before acquiring any securities in Vysarn.

Vysarn Limited results are reported under International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. The Company discloses certain non IFRS measures that are not prepared in accordance with IFRS and therefore are considered non-IFRS financial measures. The non-IFRS measures should only be considered in addition to and not as a substitute for, other measures of financial performance prepared in accordance with IFRS.

To the maximum extent permitted by law, the Company and its directors and advisers give no warranty, representation or guarantee as to the accuracy, completeness or reliability of the information contained in the Presentation. Further, none of the Company, or its officers, employees or agents accepts, to the extent permitted by law, any liability for any loss, claim, damages, costs or expenses arising from the use of the Presentation or its contents or otherwise arising out of, or in connection with it. Any recipient of the Presentation should independently satisfy themselves as to the accuracy of all information contained herein.

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VYSARN LIMITED ASX:VYS

Cor orate Sna shot p p

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About Vysarn Limited (ASX:VYS)

Vysarn Limited (‘Vysarn’ or ‘the Company’) commenced operations in September 2019, quickly establishing itself as a leading provider of production critical, hydrogeological drilling and dewatering services.

The Company has experienced significant interest for its offering, primarily driven by tier-1 iron ore and gold producers that are facing mounting dewatering issues as a greater proportion of their resources lie below the water table.

Driven by industry demand, Vysarn has a clear growth strategy that will transform the Company into a specialised ‘end-to-end’ water service provider.

Corporate Snapshot (18.11.2020)

Corporate Snapshot (18.11.2020)
Share Price	$0.098
Shares on Issue	~386.9m
Market Capitalisation	~$37.9m
Cash at Bank (30.06.2020)	~$9.7m
Equipment Finance (30.06.2020)	~$9.7m
Enterprise Value	~$37.9m
Top 20 (18.11.2020)	50.4%
Board and Management (18.11.2020)	20.5%

Share Price Performance

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Board and Executive Mana ement g

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Peter Hutchinson

Non-Executive Chairman

James Clement

CEO & MD

Sheldon Burt

Executive Director

Chris Brophy Non-Executive Director

Business leader with over 30 years’ experience managing a diverse portfolio of industrial investments in manufacturing, engineering, property and construction, at the most senior levels. Founding Director of Forge Group Ltd, floated in 2007 with a market cap of $12m and reaching over $450m at the time of his resignation as CEO and final sell down in July 2012. Also former Chair of Resource Equipment Ltd and founding shareholder and Chairman of Mareterram Ltd both subject to successful takeover bids at significant premiums to market

An experienced manager and ASX company director with a demonstrated history of working in finance and industry. Skilled in strategy, business planning, team building, management and mergers and acquisitions. He has a strong professional background having graduated from Latrobe University (MBA), Curtin University (BSc) and the AICD. Previously CEO and MD ASX:MTM, Institutional dealer Euroz Ltd, fund manager and investment adviser. Life member Collingwood Football Club

Drilling industry professional with over 30 years national and international experience including field based, operations, senior management and directorship roles. Former General Manager of Easternwell Minerals, a leading drilling contractor with operations throughout Australia, specifically in the hydro drilling space. Sheldon is also a Director of Vysarn Limited.

Accomplished business leader with over 15 years of senior leadership and consulting experience within the Mining, Oil & Gas and Infrastructure industries. Mr Brophy is a specialist in strategy, portfolio growth, financial and operational restructuring. Drilling experience gained during several years with Easternwell Minerals where he held operations and commercial management roles.

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Investment Hi hli hts g g

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Delivering Profits

During FY20 Vysarn grew monthly revenue from zero to $2.5m per month. Net operating cashflow of $2.0m in FY20

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Strong Growth Thematic

Demand for hydrogeological services continues to grow as clients increase production from below the water table

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Critical to Production, not Exploration

Vysarn has quickly positioned itself as a premium provider of services that are critical to maintaining mining production

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Robust Balance Sheet

Net assets of ~$24.3m (cash: ~$9.7m & debt: ~$9.7m as at 30 June 2020) positions Vysarn to pursue its growth strategy

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Clear Growth Strategy

Robust foundation established to facilitate a vertical integration strategy that will transform the Company into a specialised ‘end-to-end’ water service provider

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Competitive Moat

Concentrated competition combined with the cost and long lead-time of new specialised rigs provides a barrier to entry

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Servicing Tier-1 Clients

Vysarn has established a great reputation servicing tier-1 iron ore and gold producers, providing a platform for further growth

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Experienced Board & Management

Experienced and highly regarded Board with a history of delivering significant shareholder returns

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FY20 Results Overview

FY20 Profit & Loss – A Strong First Year

From IPO in September 2019, Vysarn established operations and delivered profitability

• Total revenue: $19.3m

• Operational revenue: $11.9m

• Other income primarily from gain on bargain purchase: $7.2m

• Share based payment expense: $1.7m

• IPO transaction costs: $0.43m

• Corporate overheads (excl. interest & deprecation): $0.32m per month

• Net operating cashflow: $2.0m

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FY20 – Profit and Loss

	30 June 2020	30 June 2019
REVENUE
Revenue from operations	11,912,589	163,459
Other income	7,383,749	-
TOTAL REVENUE	19,296,338	163,459
EXPENSES
Administration and corporate expense	(1,267,399)	(473,285)
Employee benefits expense	(6,724,729)	(174,000)
Consumables and other direct expenses	(5,248,851)
EBITDA	6,055,519	(483,826)
Depreciation and amortisation expense	(2,987,580)	-
Finance costs	(595,036)
PROFIT BEFORE INCOME TAX	2,472,743	(483,826)
Income tax benefit	2,362,552	-
PROFIT AFTER INCOME TAX EXPENSE	4,835,295	(483,826)

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FY20 Results Overview cont.

FY20 Balance Sheet – Remains Robust

Vysarn’s balance sheet has transformed over the past 12 months

• Strong cash position: $9.7m

• Capital raise via a rights issue in FY20: $4.0m*

• Plant and equipment: $24.7m

• Purchased 2 extra DR rigs from New Zealand: $2.2m

• Equipment finance: $9.7m

• The value of Vysarn underpinned by net assets: $24.3m

*rights issue conducted to prepare for further COVID-19 related shocks, debt management or funding growth options

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FY20 – Balance Sheet

	30 June 2020	30 June 2019
CURRENT ASSETS
Cash and cash equivalents	9,706,113	6,983,931
Trade receivables	2,766,495	36,206
Inventories	2,641,305	-
Assets classified as held for sale	152,727	-
Prepayments and other assets	161,871	14,501
TOTAL CURRENT ASSETS	15,428,512	7,034,638
NON-CURRENT ASSETS
Plant and equipment	24,707,782	-
Right of use asset	725,330	-
TOTAL NON-CURRENT ASSETS	25,433,112
TOTAL ASSETS	40,861,623	7,034,638
CURRENT LIABILITIES
Borrowings	3,070,264	-
Trade and other payables	4,852,027	110,492
Employee liabilities	215,488	-
Lease liability	186,473	-
TOTAL CURRENT LIABILITIES	8,324,252	110,492
NON-CURRENT LIABILITIES
Borrowings	6,707,770
Lease liability	581,895	-
Deferred tax liability	912,798	-
TOTAL NON-CURRENT LIABILITIES	8,202,463
TOTAL LIABILITIES	16,526,715	110,492
NET ASSETS	24,334,908	6,924,146

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Ke Milestones y

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Company Milestones

• FY20 $6.0m EBITDA (includes gain on bargain purchase, share based payments and IPO transaction costs)

• FY21 earnings anticipated to be $6.0m EBITDA subject to rig utilisation (operational earnings). Potential to outperform if several earmarked multi-rig, multi-year contracts are won during 2HFY21*

• ✓

• ✓ Earnings if several earmarked multi-rig, multi-year contracts are won during 2HFY21* ✓ ▪ Early FY21 earnings foundation achieved with Vysarn generating $2.0m EBITDA in the first four months of FY21 (July to October unaudited management accounts)

• ▪ Seven Rigs deployed with tier-1 clients in 1HFY21

• ✓ Early Rig Utilisation ▪ Opportunities to deploy 100% of rigs by the end of FY21 (12 rigs) ▪ Stage 1 of ISO accreditation process – Complete ▪ Stage 2 of ISO accreditation to occur in December 2020 - Pending

• ISO Accreditation ▪ Accreditation to position Vysarn as a preferred contractor for all tiers of current and prospective clients multiple industries

• Key Contract ▪ Targeting the execution of a multi-rig, multi-year contract with a leading tier-1 client by 30 June 2021 ▪ Targeting 100% rig utilisation by 30 June 2021 (12 rigs)

• 100% Rig Utilisation ▪ Two rigs currently being upgraded to satisfy RIO/BHP compliance specifications – Targeted deployment Q3FY21 ▪ Two rigs purchased from New Zealand being brought into rig readiness state – Targeted deployment Q3 and Q4FY21

• Vertical Integration ▪ Targeting an entry into the water vertical via organic development or earnings accretive acquisition by 30 June 2021

• Early FY21 earnings foundation achieved with Vysarn generating $2.0m EBITDA in the first four months of FY21 (July to October unaudited management accounts)

• Accreditation to position Vysarn as a preferred contractor for all tiers of current and prospective clients across multiple industries

*outlined within the full year results commentary and the Managing Director’s report within the Annual Report – released on the ASX 16 October 2020

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STRATEGY & OUTLOOK

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Pilbara Production is Heading Under Water

• Dewatering has become an operational imperative with water table issues becoming one of the largest impediments to ongoing production

• 65% of the economic resources in the Pilbara are under the water table, requiring significant dewatering to mine

• Pumping must be continuously maintained to keep the groundwater levels suppressed and the mine pit dry

Significant Growth in WA Water Abstraction

• The Pilbara region abstracts over 450 GL of water p.a. which is expected to increase to over ~575 GL by 2024.

• Western Australia resource sector (WA) abstracts over 650 GL of water p.a. which is expected to increase to ~775 GL by 2024

• The growing dewatering requirements of WA present an opportunity for Vysarn to develop a significant end to end water service business

Note: information in this slide has been sourced from the Western Australian Resources Sector Outlook Report 2018-2028 prepared by KPMG and the Chamber of Minerals and Energy of Western Australia available here: https://www.cmewa.com/policy-and-publications/annual-reports-submissionspublications/preview?path=2018-2028%2BResources%2BSector%2BOutlook%2BReport%2Bv1.0.pdf Investors should have regard to the disclaimers set out in that report in assessing the information in this slide

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	VYSARN LIMITED ASXVYS FY21Rig Deployment Targets Quarter Rigs Deployed Commentary Sept Qtr 7 ▪ Seven rigs deployed across four clients ▪ Current utilisation underpins foundation of anticipated $6.0m FY21 EBITDA run rate Dec Qtr 7 ▪ Rig 5 and Rig 9 currently being fitted to RIO/BHP compliance in anticipation of targeting a multi-rig, multi-year contract in the March Quarter Mar Qtr 10 ▪ Rig 6 and Rig 7 (purchased from New Zealand) arrived in September and are being brought into rig readiness state Jun Qtr 12 ▪ Rig 10 to be brought into rig readiness and deployed in June Quarter Sep Qtr Dec Qtr Mar Qtr Jun Qtr 1 – DR24HD 2 – DR24HD 6 – DR24 5 – DR24HD 4 – DR24HD 3 – DR24HD 7 – DR12 10 – TX130 9 – TX130 8 – TX130 12 – T685WS 11 – T685WS

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Growth Strategy – Next Steps

Pump Testing

• Pump testing involves installing specialised equipment after a well is completed to determine performance and dewatering requirements

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Service

Stage Hydro drilling Reinjection Pump Testing 1 Strategy: Organic / M&A

Foundation Established

• Logical first stage expansion beyond drilling

Pump Testing Rationale ▪ Integrated offering has potential to deliver scale and efficiencies Strategy: Organic / ▪ Staged organic expansion via skilled personnel and controlled capital Execution M&A outlay. Potential to undertake M&A on earnings accretive terms Design Fabrication, Installation & Maintenance ▪ Civil construction, fabrication and installation of water related Stage Services Design fabrication, infrastructure (piping, ponds, tanks, pump stations) 2 installation & maintenance Rationale ▪ Integration of infrastructure services is a key stage of Vysarn’s vertical integration strategy ▪ Will enhance scale and further solidify end to end position in market Strategy: Organic / ▪ Given the large bonding requirements for projects, Vysarn plans to M&A Execution investigate the space once greater scale has been achieved Monitoring Technology ▪ Borefield management and remote monitoring involves utilising an Stage Engineering Service integrated IoT sensor and technology platform to precisely monitor Monitoring wells from a remote location Consulting & OEM ▪ A service that provides annuity revenues per well 3 Rationale ▪ Critical service that entrenches Vysarn into client and increases the Strategy: M&A likelihood of preferred contractor status for other services

• Staged organic expansion via skilled personnel and controlled capital outlay. Potential to undertake M&A on earnings accretive terms

Robust Tier-1 Clients Systems Strong Full Rig Revenues and Utilisation (on Profitability target) Positive cashflow and robust balance sheet will facilitate the execution of the next steps of Vysarn’s growth strategy

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• Borefield management and remote monitoring involves utilising an

• Service integrated IoT sensor and technology platform to precisely monitor wells from a remote location

• ▪ A service that provides annuity revenues per well

• Rationale ▪ Critical service that entrenches Vysarn into client and increases the likelihood of preferred contractor status for other services

• Execution ▪ Targeting execution via M&A on earnings accretive terms

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Executive Mana ement – Ke A ointment g y pp

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Vysarn’s Executive Management Appointment

Vysarn’s wholly owned subsidiary Pentium Hydro Pty Ltd recently appointed Andrew Chandler to the position of Chief Operating Officer

• Previously the General Manager of market leading hydrogeological drilling company Easternwell Minerals

• Will commence the role in February 2021 or as otherwise agreed between Pentium Hydro and Mr Chandler

Experience to Drive Growth

Mr Chandler is highly qualified and brings with him the required skills to meet the demands of Vysarn’s impending growth

• Mr Chandler has a wealth of experience in drilling business management, team building and leadership, technical intellectual property and deep client relationships that will be of value to Vysarn

• Initial role focus will be on driving immediate growth of the core business via 100% utilisation of drilling assets

• Mr Chandler will then assist in the transformation of Vysarn’s core business into a whole of life, vertically integrated water specialist to the resource sector

Andrew Chandler

Pentium Hydro - Chief Operating Officer

Andrew has over 25 years of experience in the mineral exploration and resources industry, starting in field-based roles and gaining experience to become General Manager of market leading hydrogeological drilling company, Easternwell Minerals.

As General Manager, Andrew oversaw the delivery of drilling and completion services with a focus on providing safe, efficient and professional operations to Australia’s largest resource companies. Andrew holds tertiary qualifications in Business and Geoscience.

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Growth StrategyOutlook Stron Demand g

“In the Company’s first nine months we’ve been able to establish profitable operations and form a robust business. We’re set to build upon this foundation and leverage the water thematic to transform the Company into an integrated service provider.”

Vysarn has established its foundations with tier-1 customers, a robust balance sheet, strong management team and board, and a skilled workforce.

James Clement Vysarn’s CEO and MD

Throughout the remainder of FY21, the Company aims to continue to build the core business whilst seeking to execute growth opportunities that deliver long term, sustainable value for shareholders.

Financial Performance

Rig Utilisation

Corporate Development

▪ Vysarn has visibility on ▪ $2.0m EBITDA achieved from ▪ Vysarn has established a strong upcoming rig deployment the first four months of FY21 foundation to facilitate corporate contracts, which will likely (unaudited) initiatives result in the five remaining rigs ▪ Early financial performance of ▪ Management have identified being deployed by Q4FY21 the Company underpins an opportunities in Stage 1 and ▪ Two rigs are being brought up anticipated FY21 EBITDA Stage 3 of the vertical integration to RIO/BHP specifications. benchmark of $6.0m strategy Targeting deployment Q3FY21 ▪ Potential to materially ▪ These opportunities encompass ▪ organic business development Two New Zealand rigs arrived in outperform this EBITDA and minor bolt-on services September 2020 and are being benchmark if earmarked multithrough to company prepared for deployment by rig, multi-year contracts are transformational acquisitions Q3/Q4FY21 won early in 2HFY2021 ▪ The one remaining rig will be deployed in Q4FY21 to either a new or existing client

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