VYSARN LIMITED — Interim / Quarterly Report 2015

Oct 30, 2014

T: +613 5248 2002 F: +613 5248 3498 E: info@mhmmetals.com www.mhmmetals.com

MHM Metals Limited 80 Buckley Grove Moolap VIC 3221 AUSTRALIA

==> picture [84 x 44] intentionally omitted <==

ASX Announcement

For immediate release Friday 31 October 2014

MHM QUARTERLY ACTIVITIES REPORT

September Quarter Financial Performance (unaudited)

Total cash sales receipts for the quarter were $1.697 million.

There was a decrease of cash held for the quarter of $0.322 million comprised of:-

Net Operating Cash Flow ($0.322 million) Net Investing Cash Flow ($0.000 million)

Cash on hand as at 30 September 2014 was $2.104 million.

Projected cash sales receipts are expected to be $1.54 million for FY15 Q2 (to the end of Dec-14) with outgoings anticipated to be $1.54 million and no capex expenditure.

Production

Production for the quarter was 6,363 tonnes, a further improvement to 5,480 tonnes from the prior quarter. The plant continued to run well during the quarter and achieved a record week of 770 tonnes of salt slag treatment late in the quarter compared with an average of 422 tonnes per week in FY2015 to date.

The Company continues to work on optimising the process to ensure that it can deplete the stockpiles of untreated salt slag in the coming months. Current forecasts have the stockpiles of untreated salt slag treated by end of February barring any major breakdowns.

NMP sales (Q4)

For the quarter the company sold 1,052 tonnes of NMP, which was 58% below forecast. The Company continues to work with its current customers around future contracts and expects to increase its sales in the 2[nd] quarter of FY2015.

Legal

Judgement for the proceedings against the Company’s former Managing Director, Frank Rogers, and Rogers Southern Pty Ltd were handed down in the Federal Court during the quarter. Judgement was made in favour of the Company for $548,581 plus interest in the sum of $241,262.10 plus costs. While costs to be recovered have yet to be finally determined, the Company estimates that the total amount owed to the Company is $1,045,821.

MHM
Metals
Limited ABN
41
124
212
175

Registered
Office:
80
Buckley
Grove,
Moolap,
VIC
3221
|
Tel:
03
5240
8999
|
Fax:
03
5248
3498
|
E:
info@mhmmetals.com
|
www.mhmmetals.com

Subsequent to end of the quarter, Mr Rogers and Rogers Southern Pty Ltd appealed the judgement. It is expected that the appeal will be heard during the 3[rd] quarter of FY 2015. In the meantime, the Court has ordered that Mr Rogers pay $25,000 in security for MHM's costs of the Appeal by 5 December 2014, failing which the appeal to be dismissed. The Company remains confident as to the merits of its case and has instructed its lawyers to defend the appeal and to pursue recovery of the judgement in the event that the appeal is successfully defended.

Further, as announced on 22 September 2014, the Company has issued several demands seeking to recover substantial funds against a number of entities, including Project Development Corporation and its Joint Venture partners.

These claims, which total approximately $5 million plus interest and legal costs, relate to alleged breaches of a number of agreements entered into by the MHM Metals group of companies concerning processing and sales, and technology licenses with Project Development Corporation and its joint venture partners.

As previously advised, the Company’s demands were issued following investigation into a significant number of related party transactions and conflict of interest and duty issues, which raised serious disclosure and corporate governance concerns. The Company’s legal advice is strong and the board intends to vigorously pursue these claims.

Strategic Review

During the quarter the results of the strategic review were determined and announced to the market. The conclusions of the strategic review were:

1. The ability of the Company continuing to work in the domestic waste sector treating salt slag is solely dependant on the outcome of decisions by Alcoa (and the EPA of Victoria) regarding the Alcoa landfill.

2. In the event that the Alcoa landfill opportunity does not eventuate, the Company will activate its plan to clean-up and remediate the Moolap site including the removal of all legacy stockpiles.

3. Expansion into USA (or other jurisdictions) is currently sub-economic even assuming the Company could secure the substantial capital investment. Accordingly, the directors have determined that it is in the best interests of the Company to sell Russellville property in Kentucky.

Alcoa Landfill

Subsequent to the end of the quarter, the Company announced that it would be closings its aluminium by-product treatment operations at Moolap, in south-east Geelong with operations to cease in the 3[rd] quarter of FY2015.

As reported in the Company Update on 30 September 2014, the ability for the Company to continue to treat salt slag in the domestic-waste sector depend solely on the outcome of decisions by Alcoa (and the EPA of Victoria) regarding the Alcoa landfill. The Company has now received confirmation that the Alcoa landfill is expected to remain in-situ.

The Company’s last shipment of salt slag from Alcoa’s Yennora plant in NSW is expected to take place in December 2014. The processing of this shipment, and the remaining legacy stockpile, is expected to be completed by early 2015. The Company will then undertake any necessary cleanup and remediation works on its Moolap site and to otherwise prepare all remaining assets, including the freehold property, for sale.

MHM
Metals
Limited ABN
41
124
212
175

Registered
Office:
80
Buckley
Grove,
Moolap,
VIC
3221
|
Tel:
03
5240
8999
|
Fax:
03
5248
3498
|
E:
info@mhmmetals.com
|
www.mhmmetals.com

Future Business

During the strategic review, the Company documented and modelled its current process for the treatment of salt slag to allow it to roll out the process in the event it becomes attractive in the future. In addition, further work has been made on further value-adding the NMP in order to improve the economics of the operation in addition to determining whether the current plant has potential use for processing alternate materials. This work in ongoing and the Board is committed to ensuring that if further value can be extracted from the current process it will do so, if possible.

The Board will be examining all feasible business opportunities available to the Company. Importantly, the Company expects to have a positive cash position following the closure and cleanup of its Moolap operations and taking into account the subsequent sales of its remaining assets including freehold land in the USA and locally.

An update will be provided at the Company’s AGM which will be held on Wednesday 26 November 2014.

END

For more information :

MHM Metals Limited Matthew Keen, CEO: +61 3 5240 8999

MHM
Metals
Limited ABN
41
124
212
175

Registered
Office:
80
Buckley
Grove,
Moolap,
VIC
3221
|
Tel:
03
5240
8999
|
Fax:
03
5248
3498
|
E:
info@mhmmetals.com
|
www.mhmmetals.com

Appendix
5B Mining
exploration
entity
quarterly
report

**Rule

5.5**

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Introduced
01/07/96
Origin
Appendix
8
Amended
01/07/97,
01/07/98,
30/09/01,
01/06/10,
17/12/10,
01/05/2013

Name
of
entity

**MHM

METALS
LIMITED**

ABN Quarter
ended
(“current
quarter”) 41
124
212
175 30
September
2014

**Consolidated

statement
of
cash
flows**

Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration & evaluation (b) US development (c) production (d) administration 1.3 Dividends received 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material) Net Operating Cash Flows	Current quarter $A’000	Year to date (.Three months) $A’000
	1,697 - (24) (1,673) (336) 14	1,697 - (24) (1,673) (336) 14
	(322)	(322)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets (i) Aluminium processing activities 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows	-	-
	-	-

• See
  chapter
  19
  for
  defined
  terms.

01/05/2010
Appendix
5B
Page
1

Appendix
5B Mining
exploration
entity
quarterly
report

1.13 Total
operating
and
investing
cash
flows (322) (322) (carried
forward)

• See
  chapter
  19
  for
  defined
  terms. Appendix
  5B
  Page
  2

01/05/2013

Appendix
5B Mining
exploration
entity
quarterly
report

1.13 Total operating and investing cash flows (brought forward)	(322)	(322)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) Net financing cash flows
	-	-
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end ofquarter	(322) 2,426 -	(322) 2,426 -
	2,104	2,104

Payments
to
directors
of
the
entity,
associates
of
the
directors, related
entities
of
the
entity
and
associates
of
the
related
entities

1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Curent quarter $A'000
		93
		-
1.25	Explanation necessaryfor an understandingof the transactions

**Non-­‐cash

financing
and
investing
activities**

2.1 Details
of
financing
and
investing
transactions
which
have
had
a
material
effect
on consolidated
assets
and
liabilities
but
did
not
involve
cash
flows

• See
  chapter
  19
  for
  defined
  terms.

01/05/2010
Appendix
5B
Page
3

Appendix
5B Mining
exploration
entity
quarterly
report

• 2.2 Details
  of
  outlays
  made
  by
  other
  entities
  to
  establish
  or
  increase
  their
  share
  in
  projects
  in which
  the
  reporting
  entity
  has
  an
  interest

**Financing

facilities
available**

Add
notes
as
necessary
for
an
understanding
of
the
position.

• 3.1 Loan
  facilities 3.2 Credit
  standby arrangements

Amount
available Amount
used $A’000 $A’000 Nil Nil Nil Nil

**Estimated

cash
outflows
for
next
quarter**

• $A’000

• 4.1 Exploration
  and
  evaluation -­‐ 4.2 Development -­‐ 4.3 Production (1,227) 4.4 Administration (317) Total (1,544)

**Reconciliation

of
cash**

• Reconciliation
  of
  cash
  at
  the
  end
  of
  the
  quarter
  (as Curent
  quarter Previous
  quarter shown
  in
  the
  consolidated
  statement
  of
  cash
  flows) $A’000 $A’000 to
  the
  related
  items
  in
  the
  accounts
  is
  as
  follows. 5.1 Cash
  on
  hand
  and
  at
  bank 2,104 2,426 5.2 Deposits
  at
  call 5.3 Bank
  overdraft 5.4 Other
  (provide
  details) 2,104 2,426

• Total:
  cash
  at
  end
  of
  quarter (item
  1.22)

• See
  chapter
  19
  for
  defined
  terms. Appendix
  5B
  Page
  4

01/05/2013

Appendix
5B Mining
exploration
entity
quarterly
report

**Changes

in
interests
in
mining
tenements
and
petroleum
tenements**

Tenement reference and location Nature of interest (note (2)) Interest at beginning ofquarter Interest at end of quarter 6.1 Interests in mining tenements and petroleum tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements and petroleum tenements acquired or increased Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.	Tenement reference and location Nature of interest (note (2)) Interest at beginning ofquarter Interest at end of quarter 6.1 Interests in mining tenements and petroleum tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements and petroleum tenements acquired or increased Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.	Tenement reference and location Nature of interest (note (2)) Interest at beginning ofquarter Interest at end of quarter 6.1 Interests in mining tenements and petroleum tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements and petroleum tenements acquired or increased Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.	Tenement reference and location Nature of interest (note (2)) Interest at beginning ofquarter Interest at end of quarter 6.1 Interests in mining tenements and petroleum tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements and petroleum tenements acquired or increased Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.	Tenement reference and location Nature of interest (note (2)) Interest at beginning ofquarter Interest at end of quarter 6.1 Interests in mining tenements and petroleum tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements and petroleum tenements acquired or increased Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.
	Total number	Number quoted	Issue price per security (see note3) (cents)	Amount paid up per security (see note3) (cents)
7.1 Preference +securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs, redemptions
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs	130,218,145	130,218,145
7.5 +Convertible debt securities (description)

• See
  chapter
  19
  for
  defined
  terms.

01/05/2010
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5B
Page
5

Appendix
5B Mining
exploration
entity
quarterly
report

7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	1,900,000 100,000 300,000 300,000 150,000 100,000 300,000 1,450,000 150,000 500,000 100,000		Exercise price 28 cents 28 cents 85 cents 180 cents 100 cents 126 cents 100 cents 171 cents 135 cents 100 cents 45 cents	Expiry date 30 November 2014 4 January 2015 6 October 2015 20 June 2016 30 June 2016 23 August 2016 5 November 2016 29 November 2016 14 February 2017 18 July 2017 18 December 2018
7.11 Debentures (totals only)
7.12 Unsecured notes(totals only)

Compliance statement

• 1 This
  statement
  has
  been
  prepared
  under
  accounting
  policies
  which
  comply
  with accounting
  standards
  as
  defined
  in
  the
  Corporations
  Act
  or
  other
  standards acceptable
  to
  ASX
  (see
  note
  5).

• 2 This
  statement
  does
  / ~~does not~~ * (delete
  one) give
  a
  true
  and
  fair
  view
  of
  the matters
  disclosed.

Sign
here:

............................................................
Date:
............................ ~~(Director~~ /Company
secretary)

Print
name: .........................................................

• See
  chapter
  19
  for
  defined
  terms.

Appendix
5B
Page
6

01/05/2013

Appendix
5B Mining
exploration
entity
quarterly
report

Notes

• 1 The
  quarterly
  report
  provides
  a
  basis
  for
  informing
  the
  market
  how
  the
  entity’s activities
  have
  been
  financed
  for
  the
  past
  quarter
  and
  the
  effect
  on
  its
  cash position.
  An
  entity
  wanting
  to
  disclose
  additional
  information
  is
  encouraged
  to do
  so,
  in
  a
  note
  or
  notes
  attached
  to
  this
  report.

• 2 The
  “Nature
  of
  interest”
  (items
  6.1
  and
  6.2)
  includes
  options
  in
  respect
  of interests
  in
  mining
  tenements
  and
  petroleum
  tenements
  acquired,
  exercised
  or lapsed
  during
  the
  reporting
  period.
  If
  the
  entity
  is
  involved
  in
  a
  joint
  venture agreement
  and
  there
  are
  conditions
  precedent
  which
  will
  change
  its
  percentage interest
  in
  a
  mining
  tenement
  or
  petroleum
  tenement,
  it
  should
  disclose
  the change
  of
  percentage
  interest
  and
  conditions
  precedent
  in
  the
  list
  required
  for items
  6.1
  and
  6.2.

• 3 Issued
  and
  quoted
  securities The
  issue
  price
  and
  amount
  paid
  up
  is
  not required
  in
  items
  7.1
  and
  7.3
  for
  fully
  paid
  securities .

• 4 The
  definitions
  in,
  and
  provisions
  of, AASB
  6:
  Exploration
  for
  and
  Evaluation
  of Mineral
  Resources and AASB
  107:
  Statement
  of
  Cash
  Flows apply
  to
  this
  report.

• 5 Accounting
  Standards ASX
  will
  accept,
  for
  example,
  the
  use
  of
  International Financial
  Reporting
  Standards
  for
  foreign
  entities.
  If
  the
  standards
  used
  do
  not address
  a
  topic,
  the
  Australian
  standard
  on
  that
  topic
  (if
  any)
  must
  be
  complied with.

==
==
==
==
==

• See
  chapter
  19
  for
  defined
  terms. 01/05/2010
  Appendix
  5B
  Page
  7