VHM Limited (VHM) Earnings Call Transcript & Summary

Good afternoon to those people in Victoria, New South Wales and Tasmania. Good morning to those people in Queensland, South Australia, Western Australia and the Northern Territory. Welcome to VHM's 2026 Annual General Meeting. My name is Ian Smith. I am VHM's Board Chair, and I'll be chairing today's meeting. As the time is now midday, I declare the meeting open. I'm joined today by my fellow directors, Ron Douglas, Colin Moorhead and Don Runge; Non-Executive Director, Maree Arnason, is in attendance virtually. Also in attendance is our CEO, Andrew King; and our CFO, Ben Mccormick; and COO, Stuart Reid. Also present are representatives from our auditors, [ HLB Mann Judd ] and Company Secretary's office. The notice of meeting has previously been circulated, so I will take it as read. The format of today's meeting will be a brief address from myself, a presentation by our CEO, Andrew, followed by consideration of formal business on today's agenda. Shareholders will have the opportunity to ask questions on each item of business as it is considered. Following the conclusion of formal business, there will be a Q&A session, providing all shareholders with a further opportunity to ask questions regarding the resolutions considered at today's meeting and the company's operations agenda. On behalf of the Board of VHM Limited, I am pleased to present the company's 2026 annual report. Before I brief you on many of the accomplishments the team as achieved during the year, I would like to address the matter I know is front of mind for many shareholders, our share price. Despite VHM's position at the forefront of critical minerals developments in Australia, our share price has remained subdued. We have a fully approved project in a low sovereign risk location close to infrastructure with the technology that is improved. The deposit is close to surface in material that requires no blasting is easily extracted and leaves no tailings or surface expression at the end of mine life. The cost of recovery are at the low end of the cost curve. We now have offtake agreements for our critical minerals and a substantial proportion of our heavy minerals. The refreshed and updated DFS displays a very healthy NPV, IRR and payback period. The missing element is surely on pricing and/or access to funds in an industry that has been historically relied on government involvement to act as an assurance point against the presence of an extremely dominant existing supplier. Ongoing discussions with government authorities are progressing positively. And while these processes necessarily require sufficient time for proper due diligence to be completed, the Board remains confident in the direction of these discussions. This is frustrating to our shareholders, executive and Board members. Please be assured that we are pursuing a positive outcome with Goschen. VHM wants to be an integral part of Australia being able to demonstrate a full supply profile for critical minerals from mining to market delivery. The demand for our products is expected to continue to grow. We intend to be a fundamental part of the supply chain for minerals that will support the 21st century and beyond. Now turning to the accomplishments of 2026. Through the completion of key approvals, advancement of financing initiatives and the strategic partnership with Iluka Resources, we have materially derisked the Goschen project's pathway toward a final investment decision and construction. As noted above, Goschen is strategically positioned to contribute to Australia's sovereign rare earth industry and broader critical minerals strategy while creating long-term value for shareholders. One of the most significant milestones in the company's progress was achieved shortly after year-end through the announcement of a strategic partnership with Iluka Resources. This landmark transaction included a long-term binding rare earth concentrate offtake agreement and a cornerstone $40 million funding to support project development. The partnership establishes an integrated Australian rare earth supply chain linking Goschen with Iluka's Eneabba rare earths refinery and delivering a powerful endorsement of the project's strategic value and long-term potential. The Eneabba refinery will be Australia's first producer of rare earth oxides and the partnership positions VHM and the Goschen project as key contributors to the Australian critical minerals strategy and to the future Made in Australia Federal Industrial Policy initiative. The Board believes the Iluka partnership materially enhances project supports financing initiatives, validates the quality of going products and significantly strengthens the company's pathway towards financing and development. Most importantly, we position GM to participate building a solar Australian critical menus industry at a time when secure supply chains of the iconic globe priority. The company delivered significant progress across project approvals, financing, stakeholder engagement and development readiness activities further derisking the cation project and strengthening pathway towards development case concurs then progress included: number one, securing the remaining key project approvals, including Commonwealth Environment Protection and Biodiversity Conservation Act approval, together with a proof of the cultural heritage management plan and Goschen platform. Subsequent to year-end, the company also received a planning scheme amendment meaning the Goschen project now holds all site and supporting infrastructure approvals required to commence construction and mining. Number two, completing work to update the mineral resource and ore reserves and define the project submitting an exploration target. All of which further enhances the company's understanding of the Goschen reserve supports ongoing mine planning and project optimization. Number three, successfully running a competitive process to secure offtake of the projects rare earths concentrate with Iluka and secured a nonbinding offtake from Mitsui for the projects that meals concentrate. Number four, progression of debt and export credit agency engagement, including securing a level of endorsement of the project with letters and interest from the export import bank of the United States of up to USD 200 million and export finance Australia of up to AUD 75 million. The strategic value of the project was further demonstrated with the $40 million of funding support became the agreement with Iluka. Number five, board endorsement of the plan to develop the Goschen project to its license processing capacity of 5 million tonnes per annum rather than a staged correction, thereby enhancing strategic relevance and operating leverage for the product -- for the project and aligning further with government and customer supply chain strategy. These activities have materially improved the project's level of readiness and continue to build confidence in the developed pathway. Global market conditions continue to reinforce the strategic importance of new rare earth supply, particularly for projects like Goschen, with a strong conveyor of heavy rare rows such as Dysprosium, terbium and Yttrium. Ongoing export controls on certain rare elements, together with increasing government support for critical mineral supply chains in Australia the United States and other allied jurisdictions have highlighted the need for diversified and secure source of supply. Goschen is well positioned within this environment. The project's combination of rare earths and mineral sands provides exposure to multiple commodity markets while supporting industries that are critical to clean energy defense, robotics, advanced manufacturing and broader industrial applications. VHM remains committed to responsible development and maintaining a strong social license will break. Throughout the year, the company engagement with traditional owners, local communities, regional stakeholders agent as we progress development planning for the Goschen project. The VHM Board recently visited Kerang and Swan Hill for a comprehensive project review and on-site ordinate, the visit provided an important opportunity for the Board to spend time in the region, meet with our local Kerang based team inspect the project site and hear directly from community stakeholders without local priorities, perspectives and aspirations. Over dinner with the VHM Board and local stakeholders, I shared this reflection: The strongest rural communities of Australia often display a balance of farming, mining and tourism as 3 pillars of long-term success. Western Victoria's farming communities are incredibly important and we really do mining introduced change. However, the broader region prosperity of balanced and diversified local economy is important. I believe that long-term project success is closely meant to meaningful engagement, local participation and the delivery of lasting economic benefits to the non-value region. With the Goschen project now fully permanent and supported by strategic industry partnerships, VHM enters the next phase of development with momentum. Looking ahead, VHM's priorities are clear. The company remains focused on securing project financing, completing remaining execution readiness actives and progressing towards a final investment decision. Achievement of these milestones are expect to position VHM as we transition from project development to produce it, which will unlock the next stage of value creation for shareholders. The Board is confident that the work completed over the past year has established a strong foundation for the company's future. Goschen represents a significant opportunity for Australia to expand its contribution to global critical mineral supply chains while creating long-term value for shareholders. On behalf of the Board, I would like to thank our shareholders for their continued support our employees and contractors for their dedication and our government community and industry partners for their ongoing engagement. We look forward to updating shareholders as we continue to advance the Goschen project towards production. I'll now hand over to Andrew to go through his presentation.

Thank you, Ian. Welcome, everyone, and I'll go through a brief presentation, very much reinforcing the messages that Ian has spoken about. It's been a full and productive year for VHM. Rachel, if you could put the first slide up, please. Next slide, that's past the introduction. Thank you. For a productive year for the team at VHM, I'll cover -- in this presentation, what we set out to do, what we delivered and the priority is now in front of us. We have, in the last year, used our various releases to try and remind shareholders and our stakeholders of what we have in front of us. We set out about this time last year, clearly pointing out that we needed to finalize approvals secure offtake, update the financials of the project, and put in place project funding. While doing that, we were preparing for construction and production. And through that whole journey continuing to build our community engagement and the trust in the communities that we're working with them. A key point of all these work streams is they're not being handled in isolation one at a time. They're all progressing in parallel. And each of the outcomes is reliant on another and needs to fall in place in the right order. And I very much appreciate that sometimes that can be frustrating for those that are looking on that want to hear lots of things are happening. Several also dependent on our external stakeholders and those that we are working with in the government and the community and the financing houses and the like. So they are not within our immediate control. So our focus being on disciplined execution rather than guessing delivery dates that we do not fully control. the progress we've made reflects sustained work over many months by all the team at VHM, my predecessor, who did the work leading into that and a highly engaged board that is always available and brings a depth of industry knowledge that is as good as any mining company in Australia that I would argue. We're moving forward each item as quickly as we can and as efficiently as possible. And as soon as each piece is delivered, we'll move straight to the next delivery. Looking through, we've achieved during the course of this year, and as Ian touched on, all the approvals and permits we need to get started. If you just go back, Rachel, I'll just run through those achievements quickly. We've signed an offtake with Iluka and materially progressed our discussions with Mitsui. We published the DFS reaffirming the strong agionomics of the project. In relation to funding, as Ian mentioned, we're fully engaged with the export credit agencies and as part of our partnership with Iluka, they are providing cornerstone funding. We're fully tended, as part of the DFS refresh. All the packages of footwork that we need to do to set us up and be ready as soon as we have a final investment decision. And the drill program itself runs into the planning for the development of the mine and begin production. And we continue to engage with the community in a substantive fashion to move them along with our progress. Stepping through those very, very quickly. Next slide, please, Rachel. We have all the approvals that we need to commence construction and the operation of the project, and we can progress to FID as soon as we have the financing in place. Next slide, please. Securing a strong offtake customers was a key part of the priorities for the year. With Iluka, we have secured an offtake partnership covering 100% cautions rare earth concentrate for approximately 18 years and an agreement to provide cornerstone funding for the project. Goschen will supply Iluka's and Enneaba rare earth oxide refinery. Enneaba will be the first refinery for rare earth oxides in Australia. In partnership with Iluka, as Ian touched on, Goschen will be a key contributor to the delivery of the Australian critical metals strategy and a sovereign Australian rare earth supply chain. Processing our product in Australia will also support value-adding jobs in Australia and the development and retention of intellectual property here in Australia. Goschen is expected to provide a material share of any Avis feedstock, particularly its heavy rare of content. That positions Goschen as an important part of a secure Australian supply chain for a global customer base. We have also materially advanced our arrangements with Mitsui to cover 50% of Goschen's heavy mineral concentrate the zircon and titanium up to 65,000 tonnes per annum. The current term sheet is nonbinding and the discussions are continuing towards a final and binding agreement and for potential coverage of that to 100% of our volume. Next slide, please, Rachel. The refreshed tier best confer financial and operating strength of the project and gives us a robust basis to proceed to financing, contracting and operational readiness. Goschen has the benefit of 2 products selling in separate markets and produced from a single processing stream. The heavy mineral concentrate credits supports a competitive rare production cost in a competitive market, while the product -- the project delivers strong returns and a 3-year payback from commencement of production, delivering high value to the VHM shareholders. The current plan also uses less than half of the ore reserves and about 12% of the mineral resources. That, together with the opportunities identified in our retention license and in our surrounding tenements provides meaningful potential to extend and expand the operation over time. and again, add further value for VHM shareholders. Next slide, please, Rachel. Goschen is a real advantage. We are close to establish roads, rail, power and water as well as the regional centers of Swan Hill and Kerang. That means we can focus our efforts and capital on building the mine and processing operation rather than having to create an entirely new support network around the project. It reduces execution risk, and the project's position and new infrastructure will support and strengthen growth in our existing regional community and for existing businesses. Next slide please, Rachel. While on that community, we have active -- we have had an active presence in the region for some time with 2 of our current team of 10 based locally. As the project grows, most of the increase in our workforce is expected to be based in the region and living and working locally. Construction is expected to support around 170 jobs with approximately 200 ongoing operational roles when we're up and running. The wider benefit will come through wages, contracting opportunities and operating expenditure flowing through that regional economy. We're already engaging with local suppliers, councils, landowners and traditional owner groups. Our aim is to ensure the cultural interests are respected and opportunities for employment and participation of practical and accessible to all. We have also established the Goschen community reference group. It is independently chaired to provide a formal channel for information and feedback. It is only one part of our wider engagement, but it forms an important platform to now have operating. Next slide please, Rachel. Before turning to the next steps of the project, it is worth stepping back and reminding ourselves why rare earth matter and why Goschen is so well positioned. Demand is forecast to grow strongly driven by the need for permanent magnets used in many energy transition technologies, particularly electric vehicles and wind turbines. Together with it being critical to componentry in robotics, advanced industrial applications and technologies and in defense. All these are the key drivers for the future economic growth both in Australia and globally. At the same time, the market remains concentrated and exposed to supply restrictions and hence, the strategic importance of projects like Goschen. Heavy rarer,particularly Dysprosium and Terbium are among the most supply constrained parts of that market. Goschen has a valuable balance of both light and heavy railroads with heavy areas contributing a significant share of the basket value of the project. In partnership with Iluka, Goschen will form a key part of an Australian rare supply chain in and process in Australia, a refined in Western Australia and providing key materials to our closest trading partners. That is strategically important and commercially valuable and will drive the creation of value for both VHM shareholders and the communities in which we are operating. Next slide, please, Rachel. Next slide. Thank you. And the next steps are clear. And work is already well underway in all these areas. Project financing is the immediate focus. Engagement is well advanced with Australian and U.S. export credit agencies and a number of other credit agencies around the world. We also are in deep discussions with other international and commercial finances. The $40 million Iluka funding package provides an important cornerstone support. Final investment decision will follow clear financing commitments. In parallel, we are advancing contracts and construction readiness, workforce planning, accommodation, training and local supplier engagement. So the project is positioned to move efficiently into delivery as soon as we've reached the FID. We're also continuing to build community partnerships and demonstrate our intention and ability to deliver what we have said we will deliver. We will continue to assess the long-term extension expansion potential across the mining license retention license and surrounding exploration tenants. We will develop that opportunity responsibly and in step with the delivery of the initial project. Next slide. Thanks, Rachel. In conclusion, to summarize, Goschen is fully permitted and is building a strong platform in our local community has 100% land ownership in place and a clear pathway through to financing FID, construction and production. It has 2 strong revenue streams, a globally significant mix of light and heavy rares, a competitive operating model and substantial future development potential. We've secured 100% rear earths and trade-off take with Iluka and a $40 million funding package while progressing heavy mineral concentrate offtake with Mitsui and financing discussions with export credit agencies and commercial partners, all moving towards derisking the project. Over the last 12 months, the project is well progressed. The plan is clear, and the team is focused on delivering the remaining steps in the right order. Thank you very much for your time.

Okay. So thank you very much, Andrew. I would now invite our company secretary, Bronagh Freeman, to outline the procedures of today's meeting.

Thank you, Ian. I will now outline the procedure for the Q&A sessions. Prior to asking questions, we invite you to introduce yourself and if you are a proxy or corporate representative, who you are representing. If you wish to ask any questions, please do so via the Q&A function. To ask a verbal question, please select the rears hand icon to be Partner. You will be invited to speak at the appropriate time. Questions of a similar nature will be amalgamated and answered at the relevant time of the meeting. We may experience some time lag, and this may cause some delay in written questions or comments coming to our attention. We encourage you to ask them as early as you can. I will now outline the voting procedure for this meeting. All shareholders, proxy holders and authorized corporate representatives and attorneys of shareholders who are entitled to vote will be able to do so via the webinar call. If you've launched a proxy form and voted prior to the meeting, you do not need to vote again at this meeting unless you wish to change your proxy instruction. For proxy holders, shareholders and authorized corporate representatives who have not yet voted prior to the meaning please cast your votes on each of the resolutions when the poll is opened. For proxy holders, you will have a summary of proxy votes, which detail the voting instructions, if any, for the items of business. by completing the voting via the webinar pole when instructed to vote in a particular manner, you dive voted in accordance with those instructions. Where the Chair has been appointed proxy on behalf of the shareholder, the Chair of the meeting intends to be voting these in favor of all resolutions. When the poll is declared open, a poll window will appear. To vote, simply select the direction in which you would like to cast your vote. The selected option will be marked. To submit your vote simply click on the submit button. Voting on all resolutions is allowed up until the time the poll is closed. This concludes the procedures for today's meeting. Thank you, Ian.

Thank you, Bronagh. Our share registry, Automic, has provided a report on valid proxy votes received 48 hours before this meeting. We will display the results on the screen as we go through each resolution. We will now move to the resolutions, which are up for consideration today. Details are set out in the notice of meeting and are taking this rig. Earlier today, the company announced the withdrawal of resolution 7 to 10 relating to the future issue of remuneration auctions to directors. Accordingly, Resolution 7 to 10 will not be put to shareholders for consideration or go at this meeting. I'll be commenting further on that because someone has asked a question in this regard. So when that question is read out, at more fully at that time. All other resolutions remain unchanged and will be considered in accordance with the notice of me for online attendees, the poll is now open, and you may cast your votes as we go through the resolutions. Financial statements and reports. The financial report, directors' report and independent boarders report are now open for discussion. There is no requirement for shareholders to approve these reports. Accordingly, item #1 is for discussion only, and there will not be a vote on this item. Are there any questions or comments? Bronagh, have we received any online questions or comments.

No, Chair.

Thank you. Resolution 1, I refer -- now refer to Resolution 1, which is for the adoption of remuneration. I move that shareholders consider an ordinary resolution. Are there any questions or comments?

Chair, we do have a question from shareholder, Stephen Mayne, and it's to do with the resolutions that is drawn. And the question is the decision to withdraw Resolution 7, 8, 9 and 10 today after shareholder feedback was presumably because they were unvoted down on the proxies. Could the Chair confirm if that is correct? Also, please disclose the proxy votes on the call results so that the shareholders who went to the voting have access to the data and how they actively felt about the for proposed incentive grants to the directors. It's shareholders data. And if you're being transparent, it should be disclosed, even directors are a little last?

Certainly not embarrassed to. Yes, it was voted down. The voting was just over 60% versus for just under -- so we drew on that basis. Now I take full responsibility for this being put forward. The reason I put it forward is that this Board has not been given a pay rise in the time the Board's been together. And also, we are asking for a pay rise. So this was the way I thought for directors to share in participation with shareholders from equity viewpoint as a component of the overall salary, which is below the average for a company of this structure and profile. So that's why I put it forward. The overwhelming feedback that went with those percentages was about price. So I take it as a positive. The concept has been lifted, but the pricing hasn't. So the future quite in time, you may well revisit this at a different pricing given the feedback that we got from shareholders. So thank you very much for the question. Bronagh, have we received any online questions or comments about that?

No other questions relating to this resolution, Chair.

Thank you very much. Resolution 2. I now refer to Resolution 2, the reelection of Ms. Maree Arnason as a Director. I know that shareholders consider and to pass the ordinary resolution. Are there any questions or comments?

No questions relating to this resolution, Chair.

So I'll take that as passed. Congratulations to Maree. Well done. I'll now refer to Resolution 3, the reelection of Mr. Colin Moorhead as a Director. I know that shareholders can certainly thought it pass the ordinary resolution. Are there any questions or comments?

No questions in relation to this resolution, Chair.

Congratulations, Colin. You've been reelected as a director. Well done. I now refer to Resolution 4, the ratification of prior share issue under November 2025 placement. I move that shareholders consider and import pass the ordinary resolution. Are there any questions or comments?

No questions in relation to this resolutions, Chair.

Thank you. Again, this has been passed. I now refer to resolution 4, the ratification of prior share issue and a share purchase plan. I move that shareholders consider, and if as ordinary resolution. Are there any questions or comments?

No questions in relation to this resolution, Chair.

Knowing this resolution has been passed, I think the shareholders. I now refer to Resolution 6, the ratification of prior share issue under April 2026 placement I mean that shareholders consider and it fit pass the ordinary resolution. Are there any questions or comments?

No questions in relation to this resolution, Chair.

Again, this resolution has been passed. Thank you to shareholders. I now referred to Resolution 11, which is approval to issue Tranche 1 convertible notes to our liquor resources I know that shareholders consider and give the pass the ordinary resolution. Does any shareholder have any question or comments?

No questions in relation to this resolution, Chair.

Thank you, Bronagh. Again, I note this has been passed. So thank you for that. I'll now refer to Resolution 12, the renewal of the company's equity incentive plan that shareholders consider and it past the special resolution. Does any shareholder have any comments or questions?

No questions in relation to this resolution, Chair.

Thank you, Bronagh. Again, this has been passed. Thank you. I'll now refer to Resolution 13, the approved 10% placement facility. I know that shareholders consider and not pass a special resolution. Does any shareholder have any questions or comments?

No questions lining to this resolution, Chair.

Thank you, Bronagh. Again, this has been passed thank you very much. We'll now provide shareholders with an extra 30 seconds for poll voting to be completed. [Voting]

I now declare the poll closed. We will announce the results to the ASX later today and the results have been tallied -- past results have been tallied. We will now answer other general questions or comments from shareholders. Bronagh, have we received any online mentions or comments?

We have, Chair, we've got quite a few. So I'll just take on one. And so [ Mark Engel ], you mentioned the share price depression is due to surety on pricing and our access to funds. I would suggest another significant element is the complete absence of any time line or milestone debts with which the company has stopped providing over the last 12 to 18 months. Why don't the company provide time lines to provide some surety instead of market attempting to extrapolate backwards from the proposed completion date of [indiscernible] refinery?

What was the last part again?

Excavating backwards from the any other refinery compute, so they're using that to work.

Thank you for the question. We've been updating the market as to offtake agreements and general approved -- so we're now fully approved. We have offtakes, which is quite unusual for a company in our position. We've updated people on what we've done with our feasibility scope. We now have an NPV on the updated feasibility study that represents a value per share of 2. The only thing we have lockup date and we can't update this definite date is our discussions with governmental authorities. Number one, it's problematic to a date around those discussions. Number two, we never want to put Golden authorities in a position where you can declare certain dates whereby they have to finish their consideration of what we are going to be doing and we want capacity and to what extent. So that's why we haven't been updating on that particular point. We expect those discussions and we're seeing them in general a lot to be concluded over the upcoming months. But at this point in time, I can't give you a definitive data. And we would not put any governed authorities in a position where we declared that date based on what they have to do. So we're fully approved. We've got offtakes. The last point in this whole thing is to engage with government authorities and we are working through that in a very positive manner. That is the last basically half the color that we've been putting in place. in the rare earth opportunity around the world has engaged with governments and governments who engage with those projects. There's nothing unusual in that. We are in an industry where we have a current supplier that controls 95% of the market. That's taken 20 years to get that supplier into that position. governments around the world are adding people to create an alternative supply chain, and we are part of that are fundamentally part for Australia and at the forefront of those initiatives. Again, it all points to a positive direction to fees moving in, but we can't give you a date on that. Next question please, Bronagh.