VDM : 2019 Annual Report

VDM GROUP LIMITED

and its Controlled Entities ABN 95 109 829 334

2019

ANNUAL REPORT

VDM GROUP LIMITED

CORPORATE INFORMATION

COMPANY SECRETARY AND CHIEF FINANCIAL OFFICER (ACTING)

Mr Michael Fry

REGISTERED AND PRINCIPAL OFFICE

Suite 2, Level 2, 123 Adelaide Terrace

East Perth WA 6004

Telephone (08) 9265 1100

Facsimile (08) 9265 1199

Website www.vdmgroup.com.au

POSTAL ADDRESS

PO Box 3347

East Perth WA 6892

AUDITORS

Hall Chadwick Audit (WA) Pty Ltd

283 Rokeby Road

Subiaco WA 6008

SHARE REGISTER

Computershare Investor Services Pty Limited

GPO Box 2975

Melbourne, VIC 3001

Telephone 1300 850 505

(outside Australia) +61 3 9415 4000

VDM Group Limited shares are listed on the Australian Securities Exchange (ASX)

In this report, the following definitions apply:

"Board" means the Board of Directors of VDM Group Limited

"Company" means VDM Group Limited ABN 95 109 829 334

"VDM" or "Group" means VDM Group Limited and its controlled entities

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VDM GROUP LIMITED

DIRECTORS' REPORT

FOR THE YEAR ENDED 30 JUNE 2019

FROM THE EXECUTIVE DIRECTOR OF MINING

Dear Shareholders

Over the course of the past year VDM's main activity has been in the area of Mining, being the business sector that is expected to provide the best investment returns for shareholders and position your Company for long term success.

Business overview

VDM Mining: Significant exploration progress has been made at the Cachoeiras do Binga (CdB) project in the past year with the Phase One drilling program extending the area of known copper mineralisation. The Phase Two drilling program is currently in progress having commenced in May 2019 and aims to build on the success of the Phase One program. Drilling can be expected to continue up until November 2019, or until weather restricts access. The CdB partners are grateful for the assistance and cooperation from the Government of Angola, the exploration contractor, and technical services contractor SRK Consulting.

Recently, VDM announced the acquisition of a 55% interest in the Cage Bengo Gold Project, also located in Angola. The project area is extremely large, covering 9,904km2 and is considered prospective for gold, copper, manganese and iron mineralisation.

Our focus areas for VDM mining over the next 12 months are to:

1. complete an initial mineral resource estimate for CdB, which I expect will be the first step towards a full copper mining feasibility study for the project; and
2. undertake geological mapping and sampling at Cage Bengo prior to commencement of drilling.

The above two goals will require further strong support from existing partners who understand and see the potential in the copper and gold projects retained by VDM and are able to provide the funding support that VDM requires. To this end, VDM was extremely pleased to have completed a $4 million placement in January of this year, which was conducted at a significant premium to the Company's share price at the time.

I am confident that the Company's investment in CdB will provide healthy returns for our shareholders and partners and am of the view that the addition of the Cage Bengo project is a very positive development for VDM.

VDM Construction: VDM continues to retain capability and will review the situation on an ongoing basis.

Safety and Environment

It is my pleasure to report that VDM has had another outstanding safety performance with no Lost Time Injuries in the year and a LTIFR of nil. Safety is a fundamental plank of VDM's business and we will continue to ensure that safety is a top priority.

Corporate

I wish to thank my fellow directors, our employees, and all VDM stakeholders for their service and support to the Company. I am especially grateful to our largest shareholder, Australia Kengkong Investments Co Pty Ltd, who has continued to support VDM's business strategy for this past year.

Dr Hua Dongyi

Executive Director of Mining

30 August 2019

DIRECTORS' REPORT

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VDM GROUP LIMITED

DIRECTORS' REPORT

FOR THE YEAR ENDED 30 JUNE 2019

Your directors submit their report of VDM Group Limited ("the Company") and of the Consolidated Entity, being the Company and its controlled entities ("VDM" or "the Group") for the year ended 30 June 2019.

1. DIRECTORS

Current Directors

The names and details of the directors of VDM Group Limited in office during the year and until the date of this report are as follows: Directors were in office for the entire year unless otherwise stated.

Mr Luk Hiuming

Non-Executive Chairman

Appointed Non-Executive Director on 21 March 2014, appointed Non-Executive Chairman on 29 January 2015

Member of the Audit & Risk Committee

Mr Luk has abundant experience in an extensive range of business sectors, including textile & clothing, pharmaceutical, steel, real estates, manufacturing mining, natural resources, new energy and oil and gas. Apart from businesses in mainland China, he also has extensive international experience in various industries around the globe. Mr Luk is currently Chairman of Australia Kengkong Investments Co Pty Ltd.

Dr Hua Dongyi

Executive Director of Mining

Appointed Director on 28 August 2013, appointed Managing Director on 9 September 2013, appointed Executive Chairman and Interim CEO on 29 November 2013, appointed Managing Director and CEO on 29 January 2015, appointed Executive Director of Mining on 1 March 2016.

Member of the Audit & Risk Committee Doctorate of Engineering

Dr Hua is the former Vice President, Executive Chairman and CEO of CITIC Pacific Mining, a position he held from October 2009 until April 2013. He was previously with Beijing-based CITIC Group, which he joined in 2002. Dr Hua has held executive management positions during the past 15 years for construction and resource development projects across Asia, Africa and Latin America in countries such as China, Angola, the Philippines, Pakistan, Brazil and Algeria. Dr Hua is the Vice President of the Australian China Business Council Western Australia. Dr Hua is also Executive Director and CEO of Frontier Services Group Limited, an aviation and logistics company listed on the Hong Kong Stock Exchange.

Mr Michael Fry

Chief Financial Officer/Company Secretary

Appointed Chief Financial Officer/Company Secretary on 12 February 2018, appointed Non-Executive Director on 3 June 2011

Chairman of the Audit & Risk Committee Bachelor of Commerce

Mr Fry is an experienced company manager across a broad range of industry sectors. Mr Fry has a background in accounting and corporate advice having worked with KPMG (Perth) where he qualified as a Chartered Accountant, Deloitte Touche Tohmatsu (Melbourne) and boutique corporate advisory practice Troika Securities Ltd (Perth). From 2006 to 2011, Mr Fry was the Chief Financial Officer and Finance Director at Swick Mining Services Limited, a publicly listed drilling services provider contracting to the mining industry in Australia and North America.

Mr Fry is Chief Financial Officer and Company Secretary of ASX-listed companies Globe Metals & Mining Limited (ASX:GBE), Cauldron Energy Limited (ASX: CXU) and Winmar Resources Limited (ASX: WFE). Mr Fry is also a Director of Winmar Resources Limited. Mr Fry was previously a director of ASX-listed company Cougar Metals NL between 13 October 2014 to 14 June 2017.

Company Secretary

Mr Michael Fry

Appointed 12 February 2018

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