VYSARN LIMITED — Interim / Quarterly Report 2014

Apr 29, 2014

MHM Metals Limited 80 Buckley Grove Moolap VIC 3221 AUSTRALIA

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

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

ASX Announcement

For immediate release Wednesday 30[th] April 2014

MHM QUARTERLY ACTIVITIES REPORT

March Quarter Financial Performance (unaudited)

MHM has continued to work to provide a solid foundation for the business with a net increase in cash of $1.40 million for the quarter. Total cash sales receipts for the quarter were $1.97 million with additional receipts of $0.11 million banked on 1-Apr-14. The R&D tax refund of $1.39 million was also received during the quarter.

The $1.40 million increase in cash held for the quarter is comprised of:-

Net Operating Cash Flow $1.47 million Net Investing Cash Flow ($0.07 million) Net financing Cash Flow $0

Cash on hand at the end of March 2014 was $2.62 million.

The cash sales receipts were lower than the forecast from the December 2013 Quarterly report owing to a lower volume of NMP. The company also had product delivered from Sims Metals during the quarter in which the payment date fell outside of the reporting quarter.

Projected cash sales receipts are expected to be $1.52 million for FY14 Q4 (to the end of Jun-14) with outgoings anticipated to be $1.58 million plus capex of $0.06m.

Strategy

As announced on 18 February 2014, Alcoa Inc. has stated that it will permanently close its two rolling mills at Pt. Henry, Victoria and Yennora, New South Wales by the end of 2014. Currently, the majority of the salt slag that MHM processes at its Moolap plant near Geelong, Victoria, originates from Alcoa’s Yennora facility. The permanent closure of Yennora in itself is likely to have a highly detrimental impact on the revenues of MHM in the second half of the financial year ending 30 June 2015 and thereafter if the Company is unable to source alternative processing arrangements. MHM expects to continue to receive revenue from Alcoa for at least the remainder of calendar year 2014 and from NMP sales.

During this quarter the company has established the framework and begun detailing its strategic review. The documentation and analysis stage of the review will run until the end of this financial year and will include an assessment of the business and related upstream and downstream opportunities.

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

The review will consider the following:

1. Review of operations at Moolap and consideration of feedstock opportunities;

2. Investigation into upstream opportunities including a review of the secondary smelting landscape in Australia and South East Asia;

3. Investigation into downstream opportunities including value adding to non-metallic product;

4. A review of the expansion into the USA at MHM’s Kentucky site and comparative review into salt slag treatment in other parts of the world;

5. Analysis of other waste streams that may be treatable using the Moolap plant.

It is expected that a final decision will be made, based on the strategic review, and communicated to the market by the release of the FY14 annual accounts.

Production

Production for the quarter was 2,885 tons. A significant amount of January production and a small amount of February production was lost due to overruns in the annual maintenance shutdown and reactivity in the filter press as reported in the previous quarterly report. The reactivity in the press damaged some of the filter cloths that lead to unexpected downtime to rectify the issue.

Production began to stabilise in March as operators became more familiar with the operation of the filter press. Owing to the change in the overall process post commissioning of the filter press, some bottlenecks in the NMP drying circuit occurred and are currently being improved. The abrasive nature of the product continues to create breakdowns through wear and tear.

The production volume has not met the forecasts level for the quarter, however advancements in the process continue to be made. The process now achieves the stated aim of processing salt slag into discrete, useable and saleable products including aluminium, non-metallic product and concentrated brine.

Filter Press

Our production in January was adversely affected by the filter press and associated reactivity. The reactions that occurred in the filter press were determined to be caused by the excessive ambient temperatures during the month. The control system for the plant has been modified to monitor temperature of the feedstock and some of the additives to the process to ensure they remain in ranges that eliminate this reactivity. Since improving the monitoring of the process, we have not had any further reactivity in the filter press.

The filter press continues to perform well and we are looking at ways to increase throughput by reducing its cycle time.

NMP sales

For the quarter the company sold all of the NMP that was produced. For the quarter the company shipped 1,333 tons of NMP to both local and international customers. The lower volume of NMP shipped was a direct result of reduced plant throughput for the quarter.

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

Legal Dispute with Former Managing Director

The company continues to pursue its former Managing Director, Frank Rogers, with respect to alleged breaches of the Corporations Act, 2001 via proceedings issued in the Federal Court of Australia. The date of the trial has been set down for 14 May 2014. The company will inform the market and shareholders of the outcome as soon as is practicable.

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 41
124
212
175

Quarter
ended
(“current
quarter”) 31
March
2014

**Consolidated

statement
of
cash
flows**

==> picture [450 x 409] intentionally omitted <==

----- Start of picture text -----

Current
quarter
Year
to
date
(.Nine
Cash
flows
related
to
operating
activities
$A’000
months)
$A’000
1.1
Receipts
from
product
sales
and
related
1,971
5,654
debtors
1.2
Payments
for
(a)
exploration
&
evaluation
-­‐
-­‐
(b)
US
development
(35)
(108)
(c)
production
(1,503)
(4,361)
(d)
administration
(362)
(1,000)
1.3
Dividends
received
1.4
Interest
received
10
45
1.5
Interest
and
other
costs
of
finance
paid
1.6
Income
tax
refund
1,388
1,388
1.7
Other
(provide
details
if
material)
Net
Operating
Cash
Flows 1,469 1,618
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
(67)
(1,417)
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 (67) (1,417)
----- End of picture text -----

• 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 (carried forward)	1,402	201

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

15/4/2014

Appendix
5B Mining
exploration
entity
quarterly
report

1.13 Total operating and investing cash flows (brought forward)		1,402	201
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		1,402 1,222 (2)	201 2,428 (7)
		2,622	2,622
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
			29
			-
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.

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Appendix
5B
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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 (24) 4.3 Production (1,218) 4.4 Administration (333) Total (1,575)

Total

**Reconciliation

of
cash**

Reco show to th	nciliation of cash at the end of the quarter (as n in the consolidated statement of cash flows) e related items in the accounts is as follows.	Curent quarter $A’000	Previous quarter $A’000
5.1 5.2 5.3 5.4	Cash on hand and at bank Deposits at call Bank overdraft Other (provide details)	2,622	1,222
	Total: cash at end of quarter(item 1.22)	2,622	1,222

Reconciliation
of
cash
at
the
end
of
the
quarter
(as shown
in
the
consolidated
statement
of
cash
flows) to
the
related
items
in
the
accounts
is
as
follows.

• 5.1 Cash
  on
  hand
  and
  at
  bank 5.2 Deposits
  at
  call 5.3 Bank
  overdraft 5.4 Other
  (provide
  details)

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

15/4/2014

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
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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	140,000 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 25 cents 28 cents 28 cents 85 cents 180 cents 100 cents 126 cents 100 cents 171 cents 135 cents 100 cents 45 cents	Expiry date 9 October 2014 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)

• See
  chapter
  19
  for
  defined
  terms.

Appendix
5B
Page
6

15/4/2014

Appendix
5B Mining
exploration
entity
quarterly
report

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

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