Empire Resources Limited
Annual Report 2007

Plain-text annual report

EmpireAR5 11/10/07 5:19 PM Page 1 A C N 0 9 2 4 7 1 5 1 3 A C N 0 9 2 4 7 1 5 1 3 EmpireAR5 11/10/07 5:19 PM Page 2 TA B L E O F C O N T E N T S PAGE 1. Corporate Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IFC 2. Chairman’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3. Review of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 4. Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 5. Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 6. Income Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 7. Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 8. Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 9. Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 10. Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 11. Directors’ Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 12. Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 13. Auditors’ Independent Declaration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 14. Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 1 . C O R P O R AT E D I R E C T O R Y DIRECTORS Adrian Griffin BSc.(Hons) – Chairman David Sargeant BSc. – Managing Director Adrian Jessup BSc.(Hons) – Executive Director MANAGEMENT David Ross BSc.(Hons) MSc. – Exploration Manager COMPANY SECRETARY Simon Storm BCom., BCompt.(Hons), CA, FCIS REGISTERED and PRINCIPAL OFFICE 53 Canning Highway Victoria Park 6100 Western Australia Phone +61 (0)8 9361 3100 Facsimile +61 (0)8 9361 3184 Email info@resourcesempire.com.au Website www.resourcesempire.com.au ABN 32 092 471 513 SHARE REGISTRY Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross 6153 Western Australia AUDITOR RSM Bird Cameron Partners 8 St George’s Terrace Perth 6000 Western Australia STOCK EXCHANGE LISTING The Company is listed on the Australian Securities Exchange Limited: Home Exchange, Perth. ASX code: Shares – ERL Options – ERLO EmpireAR5 11/10/07 5:19 PM Page 1 2 . C H A I R M A N ’ S R E P O R T T O S H A R E H O L D E R S Empire Resources Limited (‘Empire’ or ‘the Company’) was admitted to the official list of the Australian Securities Exchange Limited (‘ASX’) on Wednesday, 31 January 2007.The Company was founded on a solid exploration portfolio, with both geographic and commodity diversity incorporated to mitigate risk. Further, Empire’s portfolio incorporated projects which, in the short term, could produce cash flow, as well as others that, in the longer term, may provide the basis of a significant commodity house if exploration proves successful. Between them, Empire’s management team have more than 125 years’ experience in mineral exploration and development of mining projects.This team has been actively expanding the Company’s portfolio to increase value for its shareholders. Although the Company has been listed for only a short period of time, it has already made significant progress towards expanding the resource at Penny’s Find, located within an historic goldfield close to Kalgoorlie. As a result, Empire may soon be able to proceed towards commercial development of the project. In addition, the Company has planned a number of significant drilling campaigns for the first half of 2007-08. These will take place at the Torrens Project (Olympic Dam style copper-gold-uranium targets in South Australia), Yuinmery (polymetallic volcanogenic sulphide mineralisation in Western Australia) and Troy Creek (copper-gold- PGM in Western Australia). Empire’s Torrens Project lies within the geological corridor that also contains the Olympic Dam, Prominent Hill, Carrapateena and Punt Hill projects – all major iron oxide-copper-gold+uranium (‘IOCG’) deposits. Regional surveys indicate a similarity between these projects and Torrens when comparing the principal geophysical indicators; that is, magnetic and gravity signatures.Therefore, Empire has completed a new gravity survey to establish IOCG drill targets at Torrens. The Company believes its Troy Creek Project, located near the northern boundary of the Yilgarn Craton (Western Australia), exhibits similar geophysical characteristics to those described in the paragraph above, making it a target for IOCG-style mineralisation; in addition, platinum group metals (‘PGM’) have been found in this environment. At Empire’s Yuinmery Project (also in the Yilgarn Craton), previously identified mineralisation contains gold and copper and demonstrates similarities with volcanogenic massive sulphides contained within projects such as the giant Golden Grove deposit, approximately 200 kilometres to the east. Currently at Yuinmery, the Company is targeting high-grade copper-gold mineralisation within eight drill targets due to be drilled in 2007-08. Recent additions to Empire’s portfolio include the Larkin’s Find and Yarlarweelor Prospects, both of which add further nickel and uranium mineralisation to the Company’s asset base. Larkin’s Find comprises a modest nickel resource, one that Empire believes can be easily expanded. In the late 1970s, Agip Australia Pty Ltd identified primary uranium mineralisation at Yarlarweelor, which Empire plans to test using ground-based radiometric surveying and drilling. Despite its short history in the public domain, the Company has taken major steps towards becoming a mineral producer. Empire’s definition of exploration targets has continued to improve, as has its resource potential, and we believe both will contribute to an exciting future. I thank you – the Company’s shareholders – for your support, and look forward to maintaining a strong relationship with all of you in the future. Adrian Griffin Chairman REGISTERED and PRINCIPAL OFFICE 53 Canning Highway, Victoria Park WA 6100 (cnr Taylor Street) Phone +618 9361 3100 Fax +618 9361 3184 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 1 EmpireAR5 11/10/07 5:19 PM Page 2 3 . R E V I E W O F O P E R AT I O N S REVIEW OF EXPLORATION CORPORATE OBJECTIVES Empire’s long-term objective is to become a successful mining house by participation in the discovery and development of one or more world-class mineral deposits. The short-term objective is to enhance value and obtain a cash flow from the Company’s existing tenements in Australia, which have potential for gold, copper, uranium, nickel and PGM deposits.This value may be realised by identifying targets, delineating resources and entering into mining operations, as well as entering into significant farm-out or royalty arrangements or acquiring new opportunities to provide an early cash flow. Empire has, since listing, primarily focused on the Penny’s Find gold deposit, where an expanded resource has been defined. A pre-feasibility scoping study has commenced, to indicate which development or sale options provide the optimum economic return for the shareholders. In the short period since listing on the ASX on 1 February 2007, Empire has undertaken a vigorous exploration program.This has involved a major drilling program at Penny’s Find, resulting in the definition of a gold resource at an improved tonnage and grade. together with preliminary metallurgical and engineering studies of this resource.Various geophysical surveys – such as gravity, ground electromagnetic and airborne magnetic and electromagnetic surveys – have been completed at the Yuinmery,Torrens and Troy Creek Projects, to accurately define drill targets. A new property at Yarlarweelor, containing uranium mineralisation, was acquired and a joint venture was entered into on a new property at Larkin’s Find, containing a nickel-cobalt laterite resource as well as untested gold potential. Darwin I N D I A N O C E A N Derby Port Hedland W E S T E R N A U S T R A L I A PARADIS N O R T H E R N T E R R I T O R Y N Cairns TROY CREEK Alice Springs Q U E E N S L A N D YARLARWEELOR YUINMERY NOONDIE S O U T H A U S T R A L I A Brisbane Kalgoorlie LARKIN’S FIND PENNY’S FIND Perth Albany TORRENS N E W S O U T H W A L E S Adelaide Sydney V I C T O R I A Melbourne 0 500 1000km T A S M A N I A Hobart Empire’s projects in South and Western Australia. Page 2 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 3 PENNY’S FIND The Penny’s Find Project, situated in the Eastern Goldfields of Western Australia, lies 50 kilometres northeast of Kalgoorlie and 30 kilometres from the Kanowna Belle Gold Mine. Within mining lease M27/156, gold mineralisation is associated with quartz veining developed at or near the northwest-trending sheared contact between volcanic rocks of intermediate to mafic composition and sediments. Strong weathering in the area has resulted in irregular surface leaching of gold and some supergene gold enrichment. In the year to June 2007, the Company completed three reverse circulation drill-hole programs consisting of 78 holes totalling 7,245 metres. Most of this drilling was completed in the vicinity of some old prospecting pits and adjacent to a small, previously defined resource.The drilling resulted in numerous wide and/or high-grade gold intersections that included the following. PFRC07–01 23 m @ 10.02 g/tAu from 33 m PFRC07–03 5 m @ 9.60 g/tAu from 46 m PFRC07–12 19 m @ 9.36 g/tAu from 19 m PFRC07–15 8 m @ 11.07 g/tAu from 75 m PFRC07–17 17 m @ 6.88 g/tAu from 41 m PFRC07–32 8 m @ 22.58 g/tAu from 20 m PFRC07–59 6 m @ 6.77 g/tAu from 178 m PFRC07–60 13 m @ 7.25 g/tAu from 69 m PFRC07–71 5 m @ 20.88 g/tAu from 162 m PFRC07–72 14 m @ 5.34 g/tAu from 121 m PFRC07–74 7 m @ 11.45 g/tAu from 89 m Due to the dip of the mineralisation, the reported drill intersections are close to true widths.The intersections obtained in holes PFRC07–59 and PFRC07–71 indicate that mineralisation remains open below a vertical depth of 140 metres, with a potential for high-grade shoots. Drill-hole PFRC07–66, located 160 metres to the north of drill-hole PFRC07–59, intersected 8 metres averaging 3.13 g/tAu from 144 metres, which may indicate the start of another high-grade shoot at depth (see long section). Diamond drilling is planned, to test the depth extensions of these potential high-grade shoots. Screen fire assays of selected mineralised samples indicate the presence of coarse gold within quartz veins, with many samples recording over 50% of the contained gold reporting in the coarse fraction of the analysis (+75 micron). Initial metallurgical test work on samples of oxide and fresh mineralisation from Penny’s Find indicate high recoveries by conventional gravity and cyanide extraction, with recoveries expected to be in the +97% range. Resource modelling consultants Datageo Geological Consultants were engaged to estimate a resource figure for the gold mineralisation intersected in the reverse circulation drilling program.The resource grade was estimated using ordinary kriging based on the drill-hole data composited down hole to 1-metre intervals within constraining shapes representing the mineralisation. Assumed specific gravity values used were: oxide 2.0 tonnes per cubic metre (‘t/cu.m’); transitional 2.2 t/cu.m, and fresh 2.5 t/cu.m. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 3 EmpireAR5 11/10/07 5:20 PM Page 4 300 000 mE 400 000 mE Empire Resources Ltd Prospect Nickel Laterite Prospects Major Mine / operations Main Road 6 800 000 mN Legend 6 700 000 mN Murrin Murrin (Ni laterite) Laverton Sunrise Dam (Au) Leonora Wallaby (Au) LARKIN’S FIND Ni & Au Prospect Aubils (Ni laterite) Kookynie Boyce Creek (Ni laterite) Jump-up Dam (Ni laterite) Duck Hill (Ni laterite) PENNY’S FIND Au Prospect Cawse (Ni laterite) Paddington (Au) Black Swan (Ni) 6 600 000 mN Roaster Coolgardie Kanowna Belle (Au) KALGOORLIE Superpit (Au) Nickel smelter 0 50km Scale Project Location of Penny’s Find and Larkin’s Find. Page 4 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 5 N m 0 2 3 9 N m 0 4 3 9 N m 0 6 3 9 N m 0 8 3 9 N m 0 0 4 9 N m 0 2 4 9 N m 0 4 4 9 N m 0 6 4 9 N m 0 7 4 9 N m 0 8 4 9 N m 5 8 4 9 N m 0 0 5 9 N m 0 2 5 9 N m 0 4 5 9 N m 0 6 5 9 SE N m 0 8 2 9 N m 0 0 3 9 -40 RL -60 RL -80 RL -100 RL -120 RL 1 0 30 30 30 0 0 3 1 NW N m 0 0 6 9 N m 0 8 5 9 Profile 1 0 Pit Possible Base of Weathering 1 0 3 0 30 1 0 PFRC07-71 5/20.88 PFRC07-72 14/5.34 PFRC07-59 6/6.77 REFERENCE 10 30 +10g/t Au x metre intersection +30g/t Au x metre intersection Drillhole pierce point 14/5.34 Intersection (m) / g/t Au 0 20 40 metres Penny’s Find long section. Workings 8 m @ 0.54 g/tAu in RAB hole 18 m @ 1 .71 g/tAu in RAB hole Low level anomalous gold values in RAB holes on contact Geological contact trend Penny’s Find Gold Deposit 314,000 tonnes @ 5 .18 g/tAu Penny’s Find shear LEGEND Sediments and felsic volcanics Colluvium Laterite Dolerite and gabro intrusives Basal t / andesite Source:- Dept. of Industry and Resources Penny’s Find geological trends. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 5 EmpireAR5 11/10/07 5:20 PM Page 6 YUINMERY The Yuinmery Copper-Gold Project is situated 475 kilometres northeast of Perth, within the Youanmi Greenstone Belt that forms part of the Archaean Yilgarn Craton.The Company holds a 9.2 square kilometre block of tenements, which cover a folded sequence of mafic and felsic volcanic rocks with ultramafic and mafic layered intrusives. Previous exploration within the project area has located copper and gold mineralisation in a volcanogenic massive sulphide environment, with drill intersections including 1.79 m @ 6.82% copper and 3.07 m @ 3.09% copper. Since listing, the Company has acquired, processed and interpreted data from a SIROTEM ground geophysical survey, interpreted data from a helicopter- borne Skytem geophysical survey and integrated an aeromagnetic survey into the existing geological database.While the parameters of the Skytem geophysical survey proved inadequate to properly evaluate the area, interpretation of the ground geophysical survey identified a number of high- priority electrical conductors believed to be caused by massive sulphide mineralisation. A reverse circulation drilling program to test various geophysical and/or geological targets is planned in the next financial year. The mineral resource estimate is summarised in the following table. PENNY’S FIND MINERAL RESOURCE Category Measured Indicated Inferred TOTAL Tonnes 79,000 132,000 103,000 314,000 Grade* (g/t Au) Ounces 4.40 3.98 7.33 5.18 11,120 16,880 24,313 52,313 * Grades are based on a minimum cut-off of 0.5 g/t Au and high assays cut to 25 g/t Au A pre-feasibility study has commenced on the Penny’s Find resource, looking at the various development options available to the Company. Elsewhere within the Penny’s Find Project area, potential exists for additional gold occurrences. One of these areas with exploration potential is the extension of the Penny’s Find contact zone.This zone, which lies along the contact between volcanic rocks of intermediate and mafic composition and sediments, can be traced for several kilometres along strike in a northerly direction, based on aeromagnetic data interpretation and rotary air blast (‘RAB’) drilling geological logs. Subsequent to the end of the financial year, the Company has carried out a RAB drilling program testing along this contact. In all, 118 holes totalling 5,666 metres have been drilled. Results from this program include intercepts of 18 m @ 1.71 g/t Au from 44 metres to end of the hole in a drill-hole located 2 kilometres north of Penny’s Find.This intersection lies near to the contact described above. The RAB program also located a potentially new area of gold mineralisation 2 kilometres northwest of Penny’s Find, where a drill-hole testing the Penny’s Find shear returned 8 m @ 0.54 g/t Au from 44 metres’ depth. A reverse circulation drilling program will test these RAB intersections in the coming year. Page 6 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 7 686 000 mE 0 0.5 1 km 25.81 m @ 0.97% Cu 6 838 000 mN 1.55 m @ 1.80% Cu 14.0 g/tAu 4 m @ 0.97% Cu Surficial Mafic Granite Felsic Sulphides Faults Exhalite Tenure Empire Resources Ltd. Geophysical and Geological Drill Targets 4 m @ 0.97% Cu Resultsfrom Previous Exploration 690 000 mE 8 m @ 1.19% Cu 6 836 000 mN 1.79 m @ 6.8% Cu 3.07 m @ 3.09% Cu Yuinmery targets. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 7 EmpireAR5 11/10/07 5:20 PM Page 8 500000 mE 600000mE 700000 mE 6 900 000 mN To Geraldton Yalgoo Golden Grove 6 800 000 mN Mt Magnet Sandstone y a w h Hig Northern Noondie Project (U) Youanmi Youanmi Noondie Noondie Yuinmery Project (Cu, Au) Paynes Find t a e G r To Perth Location of Yuinmery and Noondie Projects. 0 50 km 700 000 mE 740 000 mE 0 10km Scal e 6 840 000 mN Qg Qg Ql E57/648 Qg Lake Noondie Yuinmery Copper - Gold Project Ql E57/643 Noondie Uranium Project 6 810 000 mN Qg Reference Ql Qg Lake sediments Aeolian sands, clay silts & gravels Radiometric anomaly Location of Yuinmery and Noondie Projects. Page 8 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 9 TORRENS Empire’s Torrens Project comprises two granted exploration licences located in South Australia and situated approximately 100 kilometres northeast of Port Augusta.The area lies within the intra-cratonic Torrens Hinge Zone and an interpreted contained regional corridor of IOCG mineralisation that includes both the new copper-gold discovery at Carrapateena,70 kilometres northwest of Empire’s licences and the major Olympic Dam copper, gold and uranium mine. Since listing, detailed gravity surveys have been completed in two separate areas within the Torrens copper-gold-uranium project area, to extend and complement previous surveys. In the southern area, this survey was designed to define drill targets, and to extend to the east and upgrade the existing gravity coverage using a 200- metre by 200-metre grid pattern. Data was collected at 519 new gravity stations in this phase of the survey. In the northern area, the survey completed a first-pass assessment of a poorly defined northwesterly-striking gravity high previously identified in a regional gravity survey. Data was collected on a 500-metre by 500- metre grid pattern from 558 new gravity stations in this phase of the survey. The gravity data from this survey has been processed and merged with the existing data set. A preliminary residual gravity image shows, in the southern area, the extension and clearly defined southeastern limits of the high-density domain that has been the focus of interest to date in the Torrens Project.The survey in the northern area has confirmed the presence of a large, complex gravity high within the tenement, consisting of a northwesterly-trending, high-density unit and at least one large, ovoid discrete gravity high. The source of the gravity anomalism is unknown. Access tracks have been surveyed and Aboriginal site clearance is being undertaken.The Company intends to drill-test several of the gravity and magnetic features in the coming year. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 9 EmpireAR5 11/10/07 5:20 PM Page 10 Olympic Dam Andamooka Lyndhurst Leigh Creek TORRENS PROJECT Lake LaLakkeke Torrens enss TorrTT Woomera S t u a r t S O U T H H i g h w a y Port Augusta Hawker A U S T R A L I A Quorn Whyalla Spencer Gulf Port Pirie Adelaide 200 km Location of Torrens Project. Peterborough Page 10 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 11 Location of Torrens drill targets. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 11 EmpireAR5 11/10/07 5:20 PM Page 12 TROY CREEK The Troy Creek Copper-Gold-PGM Project is situated 900 kilometres northeast of Perth and 260 kilometres northeast of Wiluna.The Company’s tenements cover an area of 522 square kilometres on the northern margin of the Palaeoproterozoic Earaheedy Basin. Previous exploration within the tenements has identified multi-element anomalous geochemistry in sedimentary rocks over a widespread area extending for over 20 kilometres’ strike length. Within this area, separate drill intersections of 1.5 metres @ 2.98% copper, 9.6 metres @ 0.34% copper and 8 metres @ 0.79 g/t PGM and gold have been obtained. In the year to date, the Company has completed geophysical surveys and resampling of selected drill samples and rock outcrops to define drill targets. Processing and modelling of existing aeromagnetic data was completed over a number of discrete magnetic anomalies.These anomalies have not been previously drill-tested and represent high-priority exploration targets.Two gravity surveys totalling 934 stations were designed to further evaluate the magnetic anomalies. Following interpretation and assessment of this work, several drilling targets will be tested later in the year. 117°00´ Dampier 120°00´ Ach 123°00´ P I L B A R A Ach NIFTY 1.6 Mt Cu LP C R A T O N Paulsens Gold Mine 600,000 ozs LP TELFER 24 Moz Au (1 Mt Cu) 0 200km A hs b otru n Waugh (Au) P A R A D I S P R O J E C T Paraburdoo SIPA +1 Moz Au urtS larutc Ilgarari (Cu) T R O Y C R E E K P R O J E C T N 22°00´ Exmouth Mt Clement 70,000 ozs Au 24°00´ Granite outcrops Archaean Lower Proterozoic Ach LP Magnetic linear Fault Mine Prospect Tenements PLUTONIC 6.8 Moz Au Ach Y I L G A R N C R A T O N Ach LP Location of Troy Creek and Paradis Project. E A R A H E E D Corrid or Y B A S I N LP Ach Page 12 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 13 YARLARWEELOR The Company acquired a 100% interest in the Yarlarweelor Uranium Project in June 2007.This acquisition involved the application for an exploration licence covering several known uranium occurrences. Previous exploration within the application area between 1978 and 1982 located both primary and secondary uranium mineralisation at a number of locations.This mineralisation occurs in Palaeo- proterozoic quartz-biotite schist units that are folded and faulted into the Archaean Despair Granite. Elsewhere within the project area, anomalous radioactivity is associated with older Archaean leucocratic granitic gneisses. Exploration reports held by the Department of Industry and Resources record many drill intersections with anomalous radioactivity.These include intercepts of two metres assaying 630 parts per million (‘ppm’) uranium and 24 metres assaying 310 ppm uranium. While the true widths of these intersections are not known, the Company is encouraged by the geological setting, the widespread anomalous radioactivity and the presence of potentially economic grades of primary uranium mineralisation in drill holes. A major exploration program is planned upon grant of the tenement. 6 0 0 0 0 0 m E 6 2 0 0 0 0 m E 0 5km GDA94 Zone 50 7 180 000 mN E52/2095 Uranium Prospect Proterozoic sediments and volcanics Archean granite, gniess and schist Fault Geology extracted from Dept. Of Industry and Resources 1 : 100,000 series mapping Yarlarweelor regional geology. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 13 EmpireAR5 11/10/07 5:20 PM Page 14 LARKIN’S FIND The Company entered into a farm-in and joint venture of the Larkin’s Find Nickel and Gold Project whereby it may earn an 80% interest in a lateritic nickel resource with additional untested gold potential.The project area of approximately 33 square kilometres was granted on 13 August 2007. It is situated approximately 85 kilometres southeast of the Murrin Murrin Nickel Mine and 155 kilometres north-northeast of Kalgoorlie in Western Australia. Previous exploration in the Larkin’s Find area has located widespread lateritic nickel-cobalt mineralisation. Based on the results of this exploration, the Company engaged Burger Geological Services Pty Ltd to estimate a resource for this mineralisation and report on additional exploration possibilities within the project area.This work outlined an inferred resource of 5.2 million tonnes assaying 0.8% nickel and 0.08% cobalt using a 0.6% nickel cut-off grade. Additional untested areas with further exploration potential were identified. The Company believes that the Larkin’s Find Project area is under-explored for nickel and has had only minimal previous exploration for gold. Programs testing both the gold and the nickel potential are planned for the coming year. Exploration for gold will target northeast-trending splay structures that strike from a regionally extensive northwest-trending structure known as the Claypan Fault.This fault and structural zone hosts gold mineralisation approximately 3 kilometres north of the tenement boundary at Gardner’s Find. Future nickel exploration will be directed towards drilling untested targets to increase the size of the resource. Beneficiation test work is planned to assess the amenability of increasing the grade of the current inferred resource. Page 14 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 15 NOONDIE PARADIS The Noondie Project comprises two exploration licence applications that are prospective for palaeochannel calcrete-type uranium deposits. The licence applications are located on the margin of Lake Noondie, between 30 and 65 kilometres southeast and east of the Company’s Yuinmery Project and approximately 100 kilometres south of the town of Sandstone. Lake Noondie is a large Tertiary-Recent drainage system extending for almost 100 kilometres in length and is up to 25 kilometres wide. These licence applications cover isolated airborne radiometric anomalies first identified in 1968. One covers the confluence of two palaeochannel drainage systems and represents a favourable location for the deposition and accumulation of uranium minerals. Field inspection confirmed that the aerial anomalies are sourced from the drainage system and not the basement granite rocks that were the original source of uranium minerals. No previously recorded ground exploration has been undertaken within the licence areas, despite the fact that potentially economic uranium mineralisation has been drilled elsewhere within Lake Noondie. Upon grant of the tenements, the Company will undertake airborne and ground radiometric surveys over the licence area.These will be followed by a program of aircore drilling on regularly spaced lines across the broad channel area, to define mineralised zones to the extent of the previously located anomalies. The Paradis Project, located 25 kilometres west of Paraburdoo, contains late Archaean rocks on the southern margin of the Pilbara Craton.The project area, which comprises two exploration licence applications in which the Company has a 100% interest, covers an area of 230 square kilometres. The Paradis Project is situated within the major west-northwest/east-southeast structural corridor (also known as the Ashburton Structural Corridor) that hosts the Mt. Olympus,Waugh and Paulsens deposits, which contain a combined total in excess of 1 million ounces of gold. While there has been no recorded drilling within the project area, previous explorers did locate surface samples assaying up to 0.31 g/t PGM and gold. Anomalous precious metal values associated with alteration minerals and occurring in proximity to geological structures trending northwest/southeast are found throughout the project area. Empire intends to carry out surface and stream sediment geochemical sampling upon grant of the tenements.This will be followed by drill-testing of geochemical and structural targets. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 15 EmpireAR5 11/10/07 5:20 PM Page 16 4 . C O R P O R AT E G O V E R N A N C E (b) Principle 2 Recommendations 2.1 and 2.2 To the extent that they are applicable, and given its circumstances, the Company adopts the Ten Essential Corporate Governance Principles and Best Practice Recommendations (‘Recommendations’) published by the Corporate Governance Council of the ASX. As the Company’s activities develop in size, nature and scope, the size of the Board and the implementation of additional corporate governance structures will be afforded further consideration. The Board sets out below its ‘If not, why not?’ report in relation to matters of corporate governance in which the Company’s practices depart from the Recommendations. (a) Principle 1 Recommendation 1.1 Notification of Departure Empire has not formally disclosed the functions reserved to the Board and those delegated to management. Explanation for Departure The Board recognises the importance of distinguishing between the respective roles and responsibilities of the Board and management.The Board has established an informal framework for the management of the Company and the roles and responsibilities of the Board and management. Due to the small size of the Board and of the Company, the Board does not think that it is necessary to formally document the roles of Board and management, as it believes that these roles are being carried out in practice and are clearly understood by all members of the Board and management.The Board is responsible for the strategic direction of the Company, establishing goals for management and monitoring the achievement of these goals, monitoring the overall corporate governance of the Company and ensuring that shareholder value is increased.The Company has two executives, being the managing director and an executive director.The managing director is responsible for ensuring that the Company achieves the goals established by the Board. The appointments of non–executive directors are formalised in accordance with the regulatory requirements and the Company’s constitution. Notification of departure The Company does not have a majority of independent directors, with only one of the three Board members being independent. Explanation for departure The Board considers that the current composition of the Board is adequate for the Company’s current size and operations and includes an appropriate mix of skills and expertise relevant to the Company’s business. The current Board structure presently consists of the non-executive chairman, the managing director and one executive director, only one of whom is independent.The Company considers that each of the directors possesses the skills and experience suitable for building the Company.The Board takes the responsibilities of best practice in corporate governance seriously. It is the Board’s intention to appoint another independent director as and when the size and complexity of its operations change and a suitable candidate is identified. (c) Principle 2 Recommendation 2.4 and Principle 4 Recommendations 4.2 and 4.3 Notification of Departure Separate audit and nomination committees have not been formed. Explanation for Departure The Board considers that the Company is not currently of a size, or its affairs of such complexity, that the formation of separate or special committees is justified at this time.The Board as a whole is able to address the governance aspects of the full scope of the Company’s activities and ensure that it adheres to appropriate ethical standards. In particular, the Board as a whole considers those matters that would usually be the responsibility of an audit committee and a nomination committee.The Board considers that, at this stage, no efficiencies or other benefits would be gained by establishing a separate audit committee or a separate nomination committee. (d) Principle 3 Recommendation 3.1 Notification of Departure Empire has not established a formal code of conduct. Explanation for Departure The Board considers that its business practices, as determined by the Board and key executives, are the equivalent of a code of conduct. Page 16 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 17 (e) Principle 5 Recommendation 5.1 (h) Principle 8 Recommendation 8.1 Notification of Departure Empire does not have in place a formal process for evaluation of the Board, its committees, individual directors and key executives. Explanation for Departure Evaluation of the Board is carried out on a continuing and informal basis.The Company will put a formal process in place as and when the level of operations of the Company justifies this. (i) Principle 9 Recommendations 9.1, 9.2, 9.3, 9.4 Notification of departure Empire does not have a formal remuneration policy and has not established a separate remuneration committee. Non-executive directors may receive options. Explanation for Departure The current remuneration of the directors is disclosed in the Directors’ Report. Non-executive directors receive a fixed fee for their services and may also receive options.The issue of options to non-executive directors may be an appropriate method of providing sufficient incentive and reward while maintaining cash reserves. Due to the Company’s early stage of development and small size, it does not consider that a separate remuneration committee would add any efficiency to the process of determining the levels of remuneration for the directors and key executives.The Board believes it is more appropriate to set aside time at specified Board meetings each year to specifically address matters that would ordinarily fall to a remuneration committee. In addition, all matters of remuneration will continue to be in accordance with regulatory requirements, especially in respect of related party transactions; that is, none of the directors will participate in any deliberations regarding their own remuneration or related issues. Notification of Departure Empire has not established written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and accountability for compliance. Explanation for Departure The directors have a long history of involvement with public listed companies and are familiar with the disclosure requirements of the ASX listing rules. The Company has in place informal procedures that it believes are sufficient for ensuring compliance with ASX Listing Rule disclosure requirements and accountability for compliance.The Board has nominated the managing director and the company secretary as being responsible for all matters relating to disclosure. (f) Principle 6 Recommendation 6.1 Notification of Departure Empire has not established a formal shareholder communication strategy. Explanation for Departure While the Company has not established a formal shareholder communication strategy, it actively communicates with its shareholders in order to identify their expectations and actively promotes shareholder involvement in the Company. It achieves this by posting on its website copies of all information lodged with the ASX. Shareholders with internet access are encouraged to provide their email addresses in order to receive electronic copies of information distributed by the Company. Alternatively, hard copies of information distributed by the Company are available on request. (g) Principle 7 Recommendation 7.1 Notification of Departure Empire has an informal risk oversight and management policy and internal compliance and control system. Explanation for Departure The Board does not currently have formal procedures in place but is aware of the various risks that affect the Company and its particular business. Section 8 of the prospectus dated 7 November 2006 provides a summary of the relevant risk factors that may affect the Company. As the Company develops, the Board will develop appropriate procedures to deal with risk oversight and management and internal compliance, taking into account the size of the Company and the stage of development of its projects. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 17 EmpireAR5 11/10/07 5:20 PM Page 18 5 . D I R E C T O R S ’ R E P O R T Your directors submit their report on Empire and its controlled entities for the financial year ended 30 June 2007. Empire and its controlled entities comprise a company limited by shares that is incorporated and domiciled in Australia. DIRECTORS The Company’s directors in office during the financial period and until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated. Adrian Griffin Chairman (Non–Executive) BSc., MAusIMM Mr Griffin graduated from the University of Melbourne in 1975 and is a member of the Australasian Institute of Mining and Metallurgy (‘AusIMM’) and the Geological Society of Australia. He began his professional career with exploration for base metals in Tasmania, and went on to develop mine planning, grade control and exploration methods in iron ore with BHP. In the 1980s, Mr Griffin was operations manager for a number of public companies involved in the mining and production of gold and base metals throughout Australia and southeast Asia. In 1988, he managed the commissioning of underground production at the Bellevue Gold Mine in Western Australia. Mr Griffin began consulting to the mining industry in 1990 and has held board positions with a number of public companies since then. His management experience is broad, encompassing as it does exploration, financing, development, commissioning and the production of a wide range of mineral commodities. Mr Griffin has been a director of the following listed companies during the past three years. Company Dwyka Resources Ltd Northern Uranium Ltd Empire Resources Ltd Position Appointed Non-executive director 1/12/2005 Non-executive director 12/06/2006 Chairman 3/02/2004 Hodges Resources Ltd Managing director 17/08/2005 Reedy Lagoon Corporation Ltd Non-executive director 9/05/2007 Washington Resources Ltd Managing director 7/09/2004 Page 18 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 19 David Sargeant Managing Director BSc., MAusIMM Mr Sargeant – who holds a Bachelor of Science degree in economic geology from the University of Sydney – has more than 35 years’ experience as a geologist, consultant and company director. As such, he has been involved in numerous mineral exploration, ore deposit evaluation and mining development projects and is a member of AusIMM and the Geological Society of Australia. During his career, Mr Sargeant has held a range of senior positions, including that of senior geologist with Newmont Pty Ltd and senior supervisory geologist with Esso Australia Ltd at the time of the Harbour Lights Gold Mine discovery and development. Further, Mr Sargeant was the first chief geologist at Telfer Gold Mine during exploration, development and production at that project. In addition, he was exploration manager for the Adelaide Petroleum NL group of companies, manager of resources development for Sabminco NL and a technical director of Western Reefs Limited during the period in which that company became a successful producer at the Dalgaranga Gold Project. Adrian Jessup Executive Director BSc., MAusIMM Mr Jessup also holds a Bachelor of Science degree (with honours) in economic geology from the University of Sydney and has more than 35 years’ continuous experience as a geologist, company director and consultant involved in mineral exploration, ore deposit evaluation and mining. He is a member of AusIMM, the Geological Society of Australia and the Australian Institute of Geoscientists. For the last 12 years, Mr Jessup has operated a geological consulting company. During that time, he was a founding director of Sylvania Resources Ltd and remained on the board for two years. Prior to that, Mr Jessup was managing director of Giralia Resources NL for eight years, from the company’s inception in 1987. Previously, he had worked for AMAX Exploration Inc., as a senior geologist and as regional manager in charge of that company’s mineral exploration in Western Australia. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 19 EmpireAR5 11/10/07 5:20 PM Page 20 MANAGEMENT Principal Activities Simon Storm Company Secretary BCom., BCompt(Hons), CA, FCIS Mr Storm is a chartered accountant with more than 20 years’ of Australian and international experience in the accounting profession and commerce. He commenced his career with Deloitte Haskins & Sells in Africa, then London, before joining Price Waterhouse in Perth. Mr Storm has held various senior finance and/or company secretarial roles with listed and unlisted entities in the banking, resources, construction, telecommunications and property development industries. In the last five years, he has provided consulting services – covering accounting, financial and company secretarial matters – to various companies in these sectors. David Ross Exploration Manager BSc.(Hons), MSc., MAusIMM Mr Ross holds a Bachelor of Science degree (with honours) in geology from Aberdeen University, Scotland and a Master of Science degree in economic geology from McMaster University in Canada. He is a member of the AusIMM, the Geological Society of Australia and the Australian Institute of Geoscientists. With over 20 years’ experience as an exploration geologist in Western Australia, Mr Ross’ career has seen him involved with numerous mineral exploration, ore deposit evaluation and mine development projects for both gold and base metals. He has held senior geologist positions with Brunswick NL and Giralia Resources and was geological superintendent for Australian Resources at the Gidgee Gold Mine. Most recently, Mr Ross held the position of chief geologist with De Grey Mining Ltd, where he was instrumental in the discovery of the Orchard Well VMS deposits. During the period, the principal activities of the Company consisted of mineral exploration and evaluation of properties in Australia.There has been no significant change in these activities during the financial period. Dividends No dividends have been paid during the period and no dividends have been recommended by the directors. Result for the Financial Period Loss from ordinary activities after income tax expense was $234,737 (2006: $33,450) Review of Operations A review of the operations during the financial year is set out on pages 2 to 15. Significant changes in the state of affairs of the Company during the financial year were as follows. Under the Yuinmery joint venture agreement, the Company acquired an interest in the Yuinmery copper-gold tenements in October 2006 in exchange for 250,000 shares in the Company. Lodgement of a prospectus dated 7 November 2006 with the Australian Securities and Investment Commission (‘ASIC’), and a supplementary prospectus dated 1 December 2006, which subsequently resulted in the raising of $5,500,000 by the issue of 27,500,000 shares. Listing of the Company’s shares with the ASX on 1 February 2007. The Company acquired a 100% interest in the Yarlarweelor Uranium Project in exchange for 5,000,000 shares in the Company in June 2007. Page 20 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 21 Non–executive directors The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities.The Board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to directors is subject to approval by shareholders at a general meeting. Fees for non-executive directors are not linked to the performance of the economic entity. However, to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the Company and may receive options. The directors have resolved that non-executive directors’ fees will be $25,000 per annum for the chairman, inclusive of statutory superannuation contributions. Shareholders have approved aggregate remuneration for all non-executive directors at an amount of $100,000 per annum. Where applicable, superannuation contributions of 9% are paid on these fees, as required by law. At this stage, options are not issued as part of remuneration for long-term incentives. Executives Executive directors receive either a salary plus superannuation guarantee contributions as required by law, currently set at 9%, or provide their services via a consultancy arrangement. Directors do not receive any retirement benefits. Individuals may, however, choose to sacrifice part of their salary to increase payments towards superannuation. Options are not issued as part of remuneration for long-term incentives. All remuneration paid to directors and executives is valued at cost to the Company and expensed. Compensation of Key Management Personnel for the Year Ended 30 June 2007. The following table discloses the remuneration of the key management personnel (directors and executive officers) of the Company. The information in this table is audited. The Company acquired a 100% interest in the Penny’s Find Gold Project in exchange for 2,000,000 shares in the Company (1,000,000 deferred) and $120,000 in cash ($90,000 deferred) in January 2007. The Company acquired the share capital of Torrens Resources Pty Ltd in January 2007, in exchange for 5,000,000 shares in the Company and $100,000 in cash ($90,000 deferred) in January 2007. In the opinion of the directors, there were no other significant changes in the state of affairs of the Company. Remuneration Report (Audited) This report details the amount and nature of the remuneration of each director of the Company and the executives receiving the highest remuneration. Remuneration Policy The principles used to determine the nature and amount of remuneration are applied through a remuneration policy that ensures the remuneration package properly reflects the person’s duties and responsibilities and that the remuneration is competitive in attracting, retaining and motivating people of the highest quality. The remuneration policy, setting the terms and conditions for the executive directors, has been developed by the Board after seeking professional advice and taking into account market conditions and comparable salary levels for companies of a similar size and operating in similar sectors. The remuneration policy is to provide a fixed remuneration component.The Board believes that this remuneration policy is appropriate, given the stage of development of the Company and the activities which it undertakes, and is also appropriate in aligning the directors’ objectives with shareholders’ and businesses’ objectives. The remuneration framework has regard to shareholders’ interests in the following ways: it focuses on sustained growth, as well as focusing the directors on key non-financial drivers of value, and it attracts and retains high-calibre directors. The remuneration framework has regard to directors’ interests in the following ways: it rewards capability and experience, it reflects competitive reward for contributions to shareholder growth, it provides a clear structure for earning rewards, and it provides recognition for contribution. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 21 EmpireAR5 11/10/07 5:20 PM Page 22 Directors Specified directors Non–executive Mr A Griffin Executive Mr D Sargeant Mr A Jessup Total specified Specified executives Mr S Shah – company secretary to 30 April 07 Mr S Storm – company secretary from 30 April 07 Total specified Employment contracts Mr D Sargeant Directors’ fees Consulting fees Post- Short–term employment benefits benefits Share- based payments Value of options 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 12,500 – – – – – 12,500 – – – – – – – – – 50,000 – 50,000 – 100,000 – 30,960 10,539 8,100 – 39,060 10,539 12,500 – 50,000 – 50,000 – 112,500 – 30,960 10,539 8,100 – 39,060 10,539 – – – – – – – – – – – – – – – – – – – – – – – – – – – – Total 12,500 – 50,000 – 50,000 – 112,500 – 30,960 10,539 8,100 – 39,060 10,539 Directors may be paid additional fees for special duties or services outside the scope of the ordinary duties of a director. Directors will also be reimbursed for all reasonable expenses incurred in the course of their duties. Share Options In all, 30,709,075 options over unissued ordinary shares with an exercise price of $0.25 were granted during or since the end of the financial year. At the date of this report, unissued ordinary shares of the Company under option are as follows. Grant date 19 Jun 07 1 Feb 07 Date of expiry 30 Jun 09 31 Dec 10 Exercise price ($) Number under option 0.25 0.25 27,709,075 3,000,000 30,709,075 Directors’ Interest The relevant interest of each director in the shares and options over shares issued by the Company at the date of this report is as follows. Director Mr A Griffin Ordinary shares Options Direct Indirect Direct Indirect – – 300,000 – Mr D Sargeant – 5,100,000 – 2,849,999 Mr A Jessup 722,222 645,333 361,111 622,666 By agreement dated 24 October 2006, the Company and Kirkdale Holdings Pty Ltd (ACN 009 096 388) (‘Kirkdale’) agreed the terms and conditions under which Kirkdale would provide the services of Mr Sargeant as managing director of the Company. The agreement has: (a) a term of three years; (b) requires the payment to Kirkdale of a fee of $10,000 per month (increasing by 10% each year) and reimbursement of expenses; (c) provisions requiring the payment of a termination benefit of 50% of the amount due on termination of the agreement.This provision will require ratification by shareholders in order to be effective. Mr A Jessup By agreement dated 24 October 2006, the Company and Murilla Exploration Pty Ltd (ACN 068 277 190) (‘Murilla’) agreed the terms and conditions under which Murilla would provide the services of Mr Jessup as an executive officer of the Company. The agreement has: (a) a term of three years; (b) requires the payment to Murilla of a fee of $10,000 per month (increasing by 10% each year) and reimbursement of expenses; (c) provisions requiring the payment of a termination benefit of 50% of the amount due on termination of the agreement.This provision will require ratification by shareholders for it to be effective. Page 22 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 23 Company Performance Proceedings on Behalf of the Company Comments on performance are set out in the review of operations. Significant Changes in the State of Affairs There were no other significant changes in the state of affairs of the Company, other than those noted in the review of operations. Likely Developments and Expected Results The likely developments in the operation of the Company and the expected results of those operations in future financial years are as follows. It will focus on the exploration of its portfolio of mining tenements and the acquisition of new projects and/or assets. It will begin a pre-feasibility scoping study of the economics of mining and treating the gold resource presently defined at Penny’s Find. It has planned a number of significant drilling campaigns for the first half of 2007-08 at the Torrens Project (Olympic Dam-style copper-gold- uranium targets in South Australia),Yuinmery (polymetallic volcanogenic sulphide mineralisation in Western Australia),Troy Creek and Larkin’s Find (nickel in Western Australia). Disclosure of any further information has not been included in this report because, in the reasonable opinion of the directors, to do so would be likely to prejudice the business activities of the Company. No person has applied to the court under Section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of the proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the court under Section 237 of the Corporations Act 2001. Indemnification and Insurance of Directors and Officers Indemnification The Company has agreed to indemnify current directors and officers and past directors and officers against all liabilities to another person (other than the Company or a related body corporate), including legal expenses that may arise from their position as directors and officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that the Company will meet the full amount of any such liabilities, including costs and expenses. Insurance The directors have not included details of the amount of the premium paid in respect of the directors’ and officers’ liability insurance contracts, as such disclosure is prohibited under the terms of the contract. Environmental Regulation Events subsequent to reporting date The Company’s operations were subject to environ- mental regulations under both Commonwealth and state legislation in relation to its exploration activities. The directors are not aware of any breaches during the period covered by this report. Meetings of Directors The following table sets out the number of meetings of the Company’s directors held during the period ended 30 June 2007 and the number of meetings attended by each director. Directors’ meetings Director Mr A Griffin Mr D Sargeant Mr A Jessup A 5 5 5 A = meetings attended B = meetings held whilst a director B 5 5 5 As at the date of this report, the Company has not formed any committees, as the directors consider that at present the size of the Company does not warrant such. Audit, corporate governance, director nomination and remuneration matters are all handled by the full Board. No matter or circumstance has arisen, since the end of the financial year, that significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in subsequent financial years. Non–audit Services There were no non-audit services provided to the Company by the auditors during the year. Auditors’ Independence Declaration Section 307C of the Corporations Act 2001 requires the Company’s auditors, RSM Bird Cameron, to provide the directors with a written Independence Declaration in relation to their audit of the financial report for the year ended 30 June 2007. This written Auditors’ Independence Declaration is attached to the Auditors’ Independent Audit Report to the members and forms part of this Director’s Report. Signed in accordance with a resolution of directors. David Sargeant Managing Director Perth,Western Australia 24 September 2007 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 23 EmpireAR5 11/10/07 5:20 PM Page 24 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S 6 . I N C O M E S TAT E M E N T F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 7 Revenue Other income Depreciation expense Employee benefits expense Management fee expense Accounting expense Consultancy expense Other expenses Loss before income tax Income tax expense Consolidated group Parent entity 2007 $ 130,155 – (5,422) (52,742) (100,000) (38,281) (30,640) (137,807) 2006 $ 130 8,835 (1,041) – – – – (41,374) 2007 $ 130,155 – (5,422) (52,742) (100,000) (38,281) (30,640) (137,807) 2006 $ 130 8,835 (1,041) – – – – (41,374) (234,737) (33,450) (234,737) (33,450) – – – – Note 2 2 3 4 Loss attributable to members of the parent entity (234,737) (33,450) (234,737) (33,450) Basic and diluted loss per share (cents per share) 5 (0.67) (0.19) The above income statement should be read in conjunction with the accompanying notes. Page 24 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 25 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S 7 . B A L A N C E S H E E T A S AT 3 0 J U N E 2 0 0 7 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Total Current Assets NON-CURRENT ASSETS Trade and other receivables Financial assets Plant and equipment Exploration and evaluation expenditure Total Non-current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY Consolidated group Parent entity 2007 $ 2006 $ 2007 $ 2006 $ Note 6 7 7 8 9 10 11 12 13 4,327,553 134,903 4,462,456 8,289 – 8,289 4,327,493 134,903 4,462,396 – – 2,020 74,722 – 1,100,000 64,293 4,403,560 4,467,853 1,025 1,057,940 1,060,985 64,293 3,228,838 4,467,853 8,229 – 8,229 2,020 – 1,025 1,057,940 1,060,985 8,930,309 1,069,274 8,930,249 1,069,214 521,265 521,265 145,101 145,101 520,415 520,415 144,251 144,251 521,265 145,101 520,415 144,251 8,409,044 924,173 8,409,834 924,963 8,745,721 1,518,700 8,745,721 1,518,700 492,587 (829,264) – 492,587 – (594,527) (828,474) (593,737) 8,409,044 924,173 8,409,834 924,963 The above balance sheet should be read in conjunction with the accompanying notes. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 25 EmpireAR5 11/10/07 5:20 PM Page 26 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S 8 . S TAT E M E N T O F C H A N G E S I N E Q U I T Y F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 7 Balance at 1 July 2005 Shares issued during the year Share issue expenses Cancellation of preference shares Loss attributable to members of the parent entity Balance at 30 June 2006 Balance at 1 July 2006 Shares issued during the year Options issued during the year Equity issue expenses Loss attributable to members of the parent entity Balance at 30 June 2007 Balance at 1 July 2005 Shares issued during the year Share issue expenses Cancellation of preference shares Loss attributable to members of the parent entity Balance at 30 June 2006 Balance at 1 July 2006 Shares issued during the year Options issued during the year Equity issue expenses Loss attributable to members of the parent entity Balance at 30 June 2007 Consolidated group Share capital Retained ordinary $ profits $ Option reserve $ 1,450,416 (561,077) 85,000 (7,881) (8,835) – 1,518,700 1,518,700 7,925,483 – (698,462) – 8,745,721 – – – (33,450) (594,527) (594,527) – – – (234,737) (829,264) Parent entity Share capital Retained ordinary $ profits $ 1,450,416 (560,287) Option reserve $ 85,000 (7,881) (8,835) – 1,518,700 1,518,700 7,925,483 – (698,462) – 8,745,721 – – – (33,450) (593,737) (593,737) – – – (234,737) (828,474) 509,591 (17,004) – 492,587 8,409,044 – – – – – – – – – – – – – – – – Total $ 889,339 85,000 (7,881) (8,835) (33,450) 924,173 924,173 7,925,483 509,591 (715,466) (234,737) Total $ 890,129 85,000 (7,881) (8,835) (33,450) 924,963 924,963 7,925,483 509,591 (715,466) (234,737) 509,591 (17,004) – 492,587 8,409,834 Page 26 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 27 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S 9 . C A S H F L O W S TAT E M E N T F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 7 Consolidated group Parent entity 2007 $ 2006 $ 2007 $ 2006 $ Note Activities Payments to suppliers and employees Interest received (308,686) 130,155 (33,244) 130 (308,686) 130,155 (33,244) 130 Net cash used in operating activities 21(i) (178,531) (33,114) (178,531) (33,114) Cash Flows from Investing Activities Purchase of property, plant and equipment Payment for renewal or purchase of prospects Loans – payments made Exploration and evaluation expenditure Proceeds from borrowings (68,690) (208,358) (10,000) (779,765) – – – (20,000) (85,695) 60,000 (68,690) (308,358) (10,000) (679,765) – – – (20,000) (85,695) 60,000 Net cash used in investing activities (1,066,813) (45,695) (1,066,813) (45,695) Cash Flows from Financing Activities Proceeds from issue of equity securities Equity securities issue costs 6,047,574 (482,966) 75,000 (3,002) 6,047,574 (482,966) 75,000 (3,002) Net cash provided by financing activities 5,564,608 71,998 5,564,608 71,998 Net increase in cash held Cash at the beginning of the financial year 4,319,264 8,289 (6,811) 15,100 4,319,264 8,229 (6,811) 15,040 Cash at the end of the financial year 6 4,327,553 8,289 4,327,493 8,229 The above cash flow statement should be read in conjunction with the accompanying notes. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 27 EmpireAR5 11/10/07 5:20 PM Page 28 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S 1 0 . N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 3 0 J U N E 2 0 0 7 1. Statement of Significant Accounting Policies (a) Principles of Consolidation The financial report covers the consolidated entity of Empire Resources Limited (‘Empire’ or ‘the Company’) and its controlled entities and Empire as an individual parent entity. Empire is a listed public company limited by shares, incorporated and domiciled in Australia. This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001. It is prepared on the basis of historical costs, except for the revaluation of selected non-current assets that have been measured at fair value.The financial report is presented in Australian dollars. The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (‘AIFRS’). Compliance with AIFRS ensures that the consolidated financial report, comprising the financial statements and notes thereto, complies with the International Financial Reporting Standards (‘IFRS’). No new Australian Accounting Standards that have been issued but are not yet effective have been applied in the preparation of this financial report. Such standards are not expected to have a material impact on the consolidated entity’s financial report on initial application, with the exception of AASB 7 “Financial Instruments Disclosure”, which will require various additional disclosures regarding financial instruments. The financial report was authorised for issue by the Board on 24 September 2007. The following is a summary of the material accounting policies adopted by the consolidated entity in the preparation of the financial report.The accounting policies have been consistently applied by the entities in the consolidated entity unless otherwise stated.The accounting policies have been consistently applied to all the years presented, unless otherwise stated. A controlled entity is any entity that Empire has the power to control the financial and operating policies of the entity so as to obtain benefits from its activities. A list of controlled entities is contained in Note 8 to the financial statements. All controlled entities have a June financial year end. All inter-company balances and transactions between entities in the consolidated group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity. Where controlled entities enter or leave the consolidated group during the year, their operating results are included/excluded from the date control was obtained or until the date control ceased. (b) Plant and Equipment Plant and equipment is measured on the cost basis, less depreciation and impairment losses. The carrying amount of plant and equipment is reviewed annually by the directors to ensure it is not in excess of the recoverable amount from those assets. Recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets’ employment and subsequent disposal.The expected net cash flows have been discounted to their present values in determining recoverable amounts. Depreciation is calculated on the prime cost method and is brought to account over the estimated useful lives of all plant and equipment from the time the asset is held ready for use.The depreciation rates used are: Office furniture Office computer equipment Motor vehicles 15-33% 33% 20% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposal are determined by comparing proceeds with the carrying amount.These gains and losses are included in the income statement when revalued assets are sold. Amounts included in the revaluation reserve relating to the assets are then transferred to accumulated losses. Page 28 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 29 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 3 0 J U N E 2 0 0 7 (c) Income Tax (d) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet. (e) Acquisition of Assets The purchase method of accounting is used for all acquisitions of assets, regardless of whether shares or other assets are acquired. Cost is determined as the fair value of the assets given up at the date of the acquisition, plus costs incidental to the acquisition. Transaction costs arising on the issue of equity instruments are recognised directly in equity. (f) Impairment of Assets At each reporting date, the Company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. The Company adopts the liability method of tax-effect accounting, whereby the income tax expense is based on the profit from ordinary activities adjusted for any non-assessable or disallowed items. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement, except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available, against which deductible temporary differences can be utilised. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. Empire and its wholly-owned Australian subsidiary have formed an income tax consolidated group under the Tax Consolidation Regime. Each entity in the group recognises its own current and deferred tax liabilities, except for any deferred tax liabilities resulting from unused tax losses and tax credits, which are immediately assumed by the parent entity. The current tax liability of each group entity is then subsequently assumed by the parent entity.The group will notify the Tax Office of its intention to form an income tax consolidated group to apply from 31 January 2007.The tax consolidated group has entered a tax-sharing agreement whereby each company in the group contributes to the income tax payable in proportion to their contribution to profit before tax of the tax consolidated group. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 29 EmpireAR5 11/10/07 5:20 PM Page 30 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 3 0 J U N E 2 0 0 7 1. (g) Statement of Significant Accounting Policies (cont.) Financial Instruments Recognition Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition, these instruments are measured as set out below. Financial assets at fair value through profit and loss A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also categorised as held for trading unless they are designated as hedges. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the income statement in the period in which they arise. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method. Held-to-maturity investments These investments have fixed maturities, and it is the Company’s intention to hold these investments to maturity. Any held-to-maturity investments held by the Company are stated at amortised cost using the effective interest rate method. Available-for-sale financial assets Available-for-sale financial assets include any financial assets not included in the above categories. Available- for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity. Financial liabilities Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation. Derivative instruments Derivative instruments are measured at fair value. Gains and losses arising from changes in fair value are taken to the income statement unless they are designated as hedges. Fair value Fair value is determined based on current bid prices for all quoted investments.Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. Impairment At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered, to determine whether an impairment has arisen. Impairment losses are recognised in the income statement. (h) Exploration and Development Expenditure Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest.These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area, or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit or loss in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area, according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest, to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. Any changes in the estimates for the costs are accounted for on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly, the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site. Page 30 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 31 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 3 0 J U N E 2 0 0 7 (i) Employee Entitlements (m) Leased Non–current Assets Salaries, wages and annual leave Liabilities for wages and salaries, including non- monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date, are recognised in other creditors in respect to employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased non-current assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits Operating lease payments are charged to the Profit and Loss in the periods in which they are incurred, as this represents the pattern of benefits derived from the leased assets. (j) Trade Receivables (n) Revenue Recognition All trade debtors are recognised at the amounts receivable as they are due for settlement no more than 30 days from the date of recognition. Collectability of trade debtors is reviewed on an ongoing basis. Debts known to be uncollectible are written off. A provision for doubtful debts is raised where some doubt as to collection exists. (k) Trade Creditors These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial period and which are unpaid.The amounts are unsecured and are usually paid within 30 days of recognition. (l) Recoverable Amount of Non–current Assets The recoverable amount of an asset is the net amount expected to be recovered through the cash inflows and outflows arising from its continued use and subsequent disposal. Where the carrying amount of a non-current asset is greater than its recoverable amount, the asset is written down to its recoverable amount.Where net cash inflows are derived from a group of assets working together, recoverable amount is determined on the basis of the relevant group of assets.The decrement in the carrying amount is recognised as an expense in net profit or loss in the reporting period in which the recoverable amount write-down occurs. The expected net cash flows used in determining recoverable amount are not discounted to their present value. Amounts disclosed as revenue are net of duties and taxes paid. Revenue is recognised as follows. (i) Interest Interest earned is recognised as and when it is receivable, including interest that is accrued and is readily convertible to cash within two working days. Accrued interest is recoded as part of other debtors. (ii) Sundry income Sundry income is recognised as and when it is receivable. Income receivable, but not received at balance date, is recorded as part of other debtors. (o) Goods and Services Tax (‘GST’) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Balance Sheet are shown inclusive of GST. (p) Critical Accounting Estimates and Judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company is of the view that there are no critical accounting estimates and judgements in this financial report, other than in respect of judgements made about the carrying value of mineral exploration and evaluation expenditure. (q) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 31 EmpireAR5 11/10/07 5:20 PM Page 32 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 3 0 J U N E 2 0 0 7 2. Revenue Revenue Interest received Other income 3. Loss from Ordinary Activities Loss before income tax The loss from ordinary activities before income tax has been determined after: (a) Expenses Depreciation Consolidated group Parent entity 2007 $ 130,155 – 2006 $ 2007 $ 2006 $ 130 8,835 130,155 – 130 8,835 130,155 8,965 130,155 8,965 Consolidated group Parent entity 2007 $ 2006 $ 2007 $ 2006 $ 5,422 1,041 5,422 1,041 Exploration costs written off 830 6,608 830 6,608 Auditors’ remuneration for audit and review of the financial report 7,500 6,100 7,500 6,100 4. (a) Income Tax Income Tax Recognised in Profit No income tax is payable by the parent or consolidated entities as they both recorded losses for income tax purposes for the year, as a tax consolidated group. (b) Numerical Reconciliation Between Income Tax Expense and the Loss Before Income Tax Consolidated group Parent entity 2007 $ 2006 $ 2007 $ 2006 $ Loss before tax (234,737) (33,450) (234,737) (33,450) Income tax benefit at 30% (2006:30%) (70,421) (10,035) (70,421) (10,035) Tax effect of: – non-deductible expenses – deductible capital raising expenditure – deductible temporary differences – deductible exploration acquisition consideration Deferred tax asset not recognised Income tax benefit attributable to loss from ordinary activities before tax – (12,927) – (12,927) (34,187) (320,571) (330,000) 755,179 – (47,479) (34,187) (320,571) – 70,441 – 425,179 – (47,479) – 70,441 – – – – Page 32 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 33 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 3 0 J U N E 2 0 0 7 4. Income Tax (cont.) (c) Unrecognised Deferred Tax Balances Tax losses attributable to members of the tax consolidated group – revenue Potential tax benefit at 30% Deferred tax liability not booked – revaluation of mineral exploration tenements Net unrecognised deferred tax asset at 30% Consolidated group Parent entity 2007 $ 2006 $ 2007 $ 2006 $ 3,824,970 1,307,716 2,724,970 1,307,706 1,147,491 392,312 817,491 392,312 (330,000) 817,491 – – – 392,312 817,491 392,312 A deferred tax asset attributable to income tax losses has not been recognised at balance date as the probability criteria disclosed in Note 1(c) is not satisfied and such benefit will only be available if the conditions of deductibility also disclosed in Note 1(c) are satisfied. For the purposes of taxation, Empire and its 100% owned Australian subsidiary are a tax consolidated group. The head entity of the tax consolidated group is Empire. The group has not entered into a tax-sharing agreement and an election for the purposes of tax consolidation has not yet been made. 5. Loss per Share Basic and diluted loss per share (cents per share) Consolidated group 2007 Cents (0.67) 2006 Cents (0.19) Loss used in the calculation of basic EPS (234,737) (33,450) Weighted average number of shares outstanding during the year used in calculations of basic loss per share 35,053,193 17,946,049 Diluted loss per share has not been disclosed as it is not materially different from basic loss per share. 6. Cash and Cash Equivalents Consolidated group Parent entity 2007 $ 2006 $ 2007 $ 2006 $ Cash at bank and in hand 4,327,553 8,289 4,327,493 8,229 4,327,553 8,289 4,327,493 8,229 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 33 EmpireAR5 11/10/07 5:20 PM Page 34 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 3 0 J U N E 2 0 0 7 7. Receivables Current Other receivables Non–current Amount receivable from controlled entity Provision for impairment of loans to controlled entities Other debtors 8. Financial Assets Unlisted investments, at cost Shares in controlled entities Provision for impairment Consolidated group Parent entity 2007 $ 2006 $ 2007 $ 2006 $ 134,903 134,903 – – – – – – – – 2,020 2,020 134,903 134,903 167,552 (92,830) – 74,722 – – 92,830 (92,830) 2,020 2,020 Consolidated group Parent entity 2007 $ 2006 $ 2007 $ 2006 $ – – – – – – 1,148,200 (48,200) 1,100,000 48,200 (48,200) – – Controlled entities Country of incorporation Percentage owned Parent entity: Empire Subsidiaries of Empire: PGM Technologies Oceania Pty Ltd Torrens Resources Pty Ltd Subsidiaries of PGM Technologies Oceania Pty Ltd: Seasafe Pty Ltd1 1. Seasafe Pty Ltd ceased to be a subsidiary during 2006. 2007 $ 2006 $ – 100 100 – – 100 – – Australia Australia Australia Australia Page 34 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:20 PM Page 35 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 3 0 J U N E 2 0 0 7 9. Plant and Equipment Plant and equipment Cost Accumulated depreciation Motor vehicles Cost Accumulated depreciation Consolidated group Parent entity 2007 $ 2006 $ 2007 $ 2006 $ 21,323 (7,351) 13,972 53,863 (3,542) 50,321 6,496 (5,471) 1,025 – – – 21,323 (7,351) 13,972 53,863 (3,542) 50,321 6,496 (5,471) 1,025 – – – Total plant and equipment 64,293 1,025 64,293 1,025 Movements in the carrying amounts of each class of property, plant and equipment at the beginning and end of the current financial period are as set out below. Plant and equipment Balance at the beginning of year Additions Depreciation expense Carrying amount at the end of the year Motor vehicles Balance at the beginning of year Additions Depreciation expense Carrying amount at the end of the year 10. Exploration and Evaluation Expenditure 1,025 14,827 (1,880) 13,972 – 53,863 (3,542) 50,321 2,066 – (1,041) 1,025 – – – – 1,025 14,827 (1,880) 13,972 – 53,863 (3,542) 50,321 2,066 – (1,041) 1,025 – – – – Consolidated group Parent entity 2007 $ 2006 $ 2007 $ 2006 $ Exploration phase – at cost – at fair value Balance 1 July Exploration properties acquired 3,303,560 1,100,000 4,403,560 1,057,940 993,358 Acquisition at fair value of tenements of Torrens Resources Pty Ltd 1,100,000 Expenditure incurred during the year Expenditure written off during the year Balance 30 June 1,057,940 3,228,838 1,057,940 – – – 1,057,940 3,228,838 1,057,940 908,124 – – 1,057,940 1,423,358 – 748,370 (830) 908,124 – – 156,424 (6,608) 1,253,092 (830) 156,424 (6,608) 4,403,560 1,057,940 3,228,838 1,057,940 Ultimate recoupment of costs carried forward in respect of areas of interest in the exploration and evaluation phase is dependent on successful development and commercial exploitation or, alternatively, sale of respective areas at an amount at least equivalent to the carrying value. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 35 EmpireAR5 11/10/07 5:21 PM Page 36 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 3 0 J U N E 2 0 0 7 11. Trade and Other Payables Trade payables and accruals Employee benefits Non-interest-bearing loans 12. Issued Capital (a) Ordinary Shares Consolidated group Parent entity 2007 $ 424,838 6,427 90,000 521,265 2006 $ 105,101 – 40,000 145,101 2007 $ 423,988 6,427 90,000 520,415 2006 $ 104,251 – 40,000 144,251 Ordinary shares entitle the holder to participate in dividends and the proceeds on winding-up of the Company in proportion to the number of and amounts paid on the shares. On a show of hands, every holder of ordinary shares present at a meeting, in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. 60,418,192 (2006: 18,663,333 ) fully paid ordinary shares 8,745,721 1,518,700 8,745,721 1,518,700 Consolidated group Parent entity 2007 $ 2006 $ 2007 $ 2006 $ (i) Ordinary shares – number At 1 July 2006 Shares issued – 850,000 on 4 May 2006 Shares issued – 229,883 on 15 August 2006 at $0.10 Challenge Drilling Shares issued – 250,000 on 27 October 2006 at $0.10 Yuinmery Shares issued – 500,000 on 3 November 2006 at $0.10 Shares issued – 2,275,000 on 13 November 2006 at $0.10 Shares issued – 27,500,000 on 29 January 2007 at $0.20 IPO Shares issued – 5,000,000 on 29 January 2007 at $0.20 Torrens Shares issued – 1,000,000 on 29 January 2007 at $0.20 Penny’s Find Shares issued – 5,000,000 on 7 June 2007 at $0.18 Yarlarweelor 2007 No. 2006 No. 2007 No. 2006 No. 18,663,309 17,813,309 18,663,309 17,813,309 – 850,000 – 850,000 229,883 250,000 500,000 2,275,000 27,500,000 5,000,000 1,000,000 5,000,000 – – – – – – – – 229,883 250,000 500,000 2,275,000 27,500,000 5,000,000 1,000,000 5,000,000 – – – – – – – – Balance at 30 June 2007 60,418,192 18,663,309 60,418,192 18,663,309 Page 36 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:21 PM Page 37 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 3 0 J U N E 2 0 0 7 12. Issued Capital (cont.) (ii) Ordinary shares – value At 1 July 2007 Shares issued – 850,000 on 4 May 2006 Shares issued – 229,883 on 15 August 2006 at $0.10 Challenge Drilling Shares issued – 250,000 on 27 October 2007 at $0.10 Yuinmery Shares issued – 500,000 on 3 November 2006 at $0.10 Shares issued – 2,275,000 on 13 November 2006 at $0.10 Shares issued – 27,500,000 on 29 January 2007 at $0.20 IPO Shares issued – 5,000,000 on 29 January 2007 at $0.20 Torrens Shares issued – 1,000,000 on 29 January 2007 at $0.20 Penny’s Find Shares issued – 5,000,000 on 7 June 2007 at $0.18 Yarlarweelor Less share issue costs Consolidated group 2007 $ 2006 $ Parent entity 2007 $ 2006 $ 1,518,700 – 1,441,580 85,000 1,518,700 – 1,441,580 85,000 22,983 25,000 50,000 227,500 5,500,000 1,000,000 200,000 900,000 (698,462) – – – – – – – 22,983 25,000 50,000 227,500 5,500,000 1,000,000 200,000 – – – – – – – – (7,880) 900,000 (698,462) – (7,880) Balance at 30 June 2007 8,745,721 1,518,700 8,745,721 1,518,700 On 25 November 2005 shareholders approved a share consolidation whereby every three (3) fully paid shares in the capital of the Company were consolidated into two (2) fully paid ordinary shares.The number of shares shown are reflected on a post-consolidation basis. (b) Options As at 30 June 2007 (30 June 2006: nil), the Company had the following options on issue over ordinary shares. Grant date Date of expiry Exercise price ($) Number under option 19–Jun–07 01–Feb–07 30–Jun–09 31–Dec–10 0.25 0.25 27,709,075 3,000,000 30,709,075 13. Reserves Consolidated group 2007 $ 2006 $ Parent entity 2007 $ 2006 $ Reserves 492,587 – 492,587 Reserves comprise the following. Options reserve Balance as at start of financial year Options issued – 3,000,000 on 1 February 2007 – at a deemed price of 7.5 cents – expiry 31 December 2010 232,500 Options issued – 27,709,075 on 15 June 2007 at $0.01 – expiry 30 June 2009 Less share issue costs Balance as at end of the financial year 277,091 (17,004) 492,587 – – – – – – 232,500 277,091 (17,004) 492,587 Details of certain components of the option reserve arising as a consequence of equity based payments are included in Note 13. – – – – – – EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 37 EmpireAR5 11/10/07 5:21 PM Page 38 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 3 0 J U N E 2 0 0 7 14. Financial Instruments 30 June 2007 Financial Assets: Fixed interest rate maturing Weighted average effective Floating interest rate $ Within year 1 to 5 years Over 5 years bearing $ $ $ $ Total $ Non–interest Cash and cash equivalents 6.0% 4,327,553 Trade and other receivables Total Financial Assets – 4,327,553 Financial Liabilities: Trade and other payables Short-term borrowings Total financial liabilities 30 June 2006 Financial Assets: Cash and cash equivalents Trade and other receivables Total Financial Assets Financial Liabilities: Trade and other payables Short-term borrowings Total financial liabilities (i) Credit risk exposure Weighted average effective 3.0% – – – Floating interest rate $ 8,289 – 8,289 – – – – – – – – – – – – – – – – – – – – 4,327,553 134,903 134,903 134,903 4,462,456 521,265 521,265 – – 521,265 521,265 Fixed interest rate maturing Within year 1 to 5 years Over 5 years bearing $ $ $ $ Non–interest- – – – – – – – – – – – – – – – – Total $ 8,289 2,020 10,309 – 2,020 2,020 145,101 145,101 – – 145,101 145,101 The credit risk exposure to the Company to financial assets that have been recognised on the Balance Sheet is not materially different from the carrying amount net of any provision for doubtful debts. (ii) Interest rate risk exposure The Company’s exposure to interest rate risk and the effective weighted average interest rate for each class of financial asset and financial liability is set out below. (iii) Liquidity and cash flow interest rate risk Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments. Cash flow interest rate risk is the risk that future cash flows on a financial instrument will fluctuate because of changes in market interest rates. To control liquidity and cash flow interest rate risk, the Company invests in financial instruments that, under normal market conditions, are readily convertible to cash. (iv) Net fair value of assets and liabilities The net fair values of financial assets and financial liabilities of the Company approximate their carrying values. Page 38 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:21 PM Page 39 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 3 0 J U N E 2 0 0 7 15. Capital and Leasing Commitments Consolidated group Parent entity 2007 $ 2006 $ 2007 $ 2006 $ 28,617 68,289 – 96,906 – – – – 28,617 68,289 – 96,906 – – – – 164,331 657,324 – 821,655 140,000 560,000 – 700,000 113,482 453,928 – 567,410 140,000 560,000 – 700,000 (i) Operating lease commitments Non–cancellable operating leases contracted for but not capitalised in the financial statements. Payable – minimum lease payments – not later than 12 months – between 12 months and 5 years – greater than 5 years The company entered into an operating lease on 1 August 2007 for office space it occupies in Victoria Park. The term of the lease is 3 years and expires on 1 August 2010. (ii) Expenditure commitments contracted for: exploration tenements In order to maintain current rights of tenure to exploration tenements, the Company is required to outlay rentals and to meet the minimum expenditure requirements. These obligations are not provided for in the financial statements and are payable: – not later than 12 months – between 12 months and 5 years – greater than 5 years. 16. Directors and Executive Disclosures (i) Details of key management personnel Chairman (non–executive) Mr A Griffin (from 3 February 2004) Managing director Mr D Sargeant (from 13 April 2000) Executive director Mr A Jessup (from 15 August 2003) (ii) Compensation of key management personnel The Company has applied the exemption under Corporations Amendments Regulation 2005, which exempts listed entities from providing remuneration disclosures in relation to their specified directors in their annual financial reports by Accounting Standard AASB 1046 “Director and Executive Disclosures by Disclosing Entities”.These remuneration disclosures are provided in the Directors’ Report under Remuneration Report and designated as audited. (iii) Shareholdings of key management personnel Shares held directly and indirectly in the Company are as follows. Directors Mr Adrian Griffin Mr David Sargeant Mr Adrian Jessup Balance at Balance at the start Issued under On exercise Net change the end of the period share plan of options other of the period – 4,788,895 1,067,555 5,856,450 – – – – – – – – – 311,105 300,000 – 5,100,000 1,367,555 611,105 6,467,555 All equity transactions with key management personnel that relate to the Company’s listed ordinary shares have been entered into on an arms-length basis. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 39 EmpireAR5 11/10/07 5:21 PM Page 40 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 3 0 J U N E 2 0 0 7 17. Related Parties Directors and Specified Executives Disclosures relating to the remuneration and shareholdings of directors and specified executives are set out in the Directors’ Report and Note 17 respectively. Other transactions with directors, their associates and director-related entities are as follows. Party Amounts received from companies associated with certain directors: Kirkdale Holdings Pty Ltd Mr Adrian Jessup Total Amounts paid to companies associated with certain directors for management services: Kirkdale Holdings Pty Ltd – Mr D Sargeant Murilla Exploration Pty Ltd – Mr A Jessup Total Amounts payable to directors for directors’ fees: Mr Adrian Griffin Consolidated group Parent entity 2007 $ 2006 $ 2007 $ 2006 $ – – – 30,000 30,000 30,000 – – – 30,000 30,000 30,000 50,000 50,000 50,000 12,500 – – – – 50,000 50,000 50,000 12,500 – – – – 18. Remuneration of Auditors Amounts received or due and receivable by the auditors for: Audit or review of the financial reports of the Company Other services Consolidated group Parent entity 2007 $ 7,500 – 7,500 2006 $ 6,100 – 6,100 2007 $ 7,500 – 7,500 2006 $ 6,100 – 6,100 Page 40 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:21 PM Page 41 E M P I R E R E S O U R C E S L I M I T E D A N D C O N T R O L L E D E N T I T I E S N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 3 0 J U N E 2 0 0 7 19. Cash Flow Information (i) Reconciliation of cash flow from operations with loss after income tax Loss after income tax Depreciation Other income Exploration expenditure written off Changes in assets and liabilities, net of the effects of purchase of subsidiaries: (increase)/decrease in trade and other receivables (decrease)/increase in trade and other payables (decrease)/increase in employee benefits Net cash outflow from operating activities 4 (ii) Businesses acquired Consolidated group Parent entity 2007 $ 2006 $ 2007 $ 2006 $ (234,737) (33,450) (234,737) (33,450) 5,422 – 830 1,041 (8,835) 6,608 5,422 – 830 1,041 (8,835) 6,608 (228,485) (34,636) (228,485) (34,636) – 43,527 6,427 2,001 (479) – – 43,527 6,427 2,001 (479) – (178,531) (33,114) (178,531) (33,114) During the financial year, the Group acquired Torrens Resources Pty Ltd.The net cash outflow on acquisition was $100,000. Details of the transaction are as follows. 1 Purchase consideration – cash – 5,000,000 ordinary shares at $0.20 per share Fair value of assets and liabilities held at acquisition date: non-current assets deferred exploration and evaluation expenditure mining tenement Book value ($) Torrens Resources Pty Ltd Fair value adjustment3 ($) Fair value ($) 100,000 1,000,000 1,100,000 – 1,716 1,716 1,100,000 (1,716) 1,100,000 – 1,098,284 1,100,000 (iii) Non-cash financing and investment transactions During the current financial year, the Company issued 5,000,000 ordinary shares at 20 cents with a value of $1,000,000 to acquire the business indicated in (ii) above.The issue cost is not reflected in the cash flow statement. During the current financial year, the Company issued 3,000,000 options at a deemed value of 7.5 cents per option ($232,500) as part payment for share issue expenses.The issue is not reflected in the cash flow statement. 20. Events After the Balance Sheet Date Since 30 June 2007, there has not been any matter or circumstance not otherwise dealt with in the financial report that has significantly affected or may significantly affect the Fund. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 41 EmpireAR5 11/10/07 5:21 PM Page 42 The Directors of the company declare that: 1 1 . D I R E C T O R S ’ D E C L A R AT I O N the financial statements and notes, as set out on 24 to 41, are in accordance with the Corporations Act 2001 and: 1. (a) comply with accounting Standards and the Corporations Regulations 2001; and (b) give a true and fair view of the financial position as at 30 June 2007 and of the performance for the year ended on that date of the Company. The chief executive officer and chief finance officer have each declared that: 2. (a) the financial records of the Company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; (b) the financial statements and notes for the financial year comply with the Accounting Standards, and (c) the financial statements and notes for the financial year give a true and fair view; 3. in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. The declaration is made in accordance with a resolution of the Board of Directors. David Sargeant Managing Director Perth,Western Australia 24 September 2007 Page 42 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:21 PM Page 43 1 2 . I N D E P E N D E N T A U D I T R E P O R T T O T H E M E M B E R S O F E M P I R E R E S O U R C E S L I M I T E D EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 43 EmpireAR5 11/10/07 5:21 PM Page 44 Page 44 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:21 PM Page 45 1 3 . A U D I T O R ’ S I N D E P E N D E N T D E C L A R AT I O N T O T H E B O A R D O F D I R E C T O R S O F E M P I R E R E S O U R C E S L I M I T E D EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 45 EmpireAR5 11/10/07 5:21 PM Page 46 1 4 . A D D I T I O N A L I N F O R M AT I O N Additional information required by the ASX and not shown elsewhere in this report is as follows.The information is current as at 12 September 2007. (a) Distribution of Shares The numbers of shareholders, by size of holding are as follows. Category (size of holding) Number of holders 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001 and over 8 87 162 426 102 785 The number of shareholdings held in less than marketable parcels is 24. (b) Twenty Largest Shareholders The names of the twenty largest holders of quoted shares are: SHAREHOLDERS Number of shares held Holding (%) (%) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 KIRKDALE HOLDINGS PTY LTD MR BRENTON ANTHONY PARRY ZETEK RESOURCES PTY LTD MRS SUKHON SUHARITDUMRONG DW SARGEANT PTY LTD ANZ NOMINEES LIMITED MR ARTUR BIRKNER RUBYSTAR NOMINEES PTY LTD RBJ NOMINEES PTY LTD AGENS PTY LTD COLTRANGE PTY LTD MR ADRIAN MARTIN LAMBERT JESSUP ELY PLACE NOMINEES LTD MR JIM JEFFREYS MURILLA EXPL PL ALCARDO INVESTMENTS LIMITED MR BRETT WADE TOLHURST MR RICHARD JAMES HARRIS MR CHUNLIN PAN AND MRS JIAN CHENG MR CHUNG YUEN CHOI 3,300,000 2,500,000 2,472,000 2,268,500 1,800,000 1,185,000 1,182,500 1,000,000 1,000,000 900,000 800,000 722,222 666,666 644,949 633,333 579,000 550,000 529,000 503,600 500,000 23,736,770 5.5 4.1 4.1 3.7 3.0 2.0 2.0 1.7 1.7 1.5 1.3 1.2 1.1 1.1 1.0 1.0 0.9 0.9 0.8 0.8% 39.2% Stock exchange listing – listing has been granted for all the ordinary shares of the company on all member exchanges of the ASX, except for the following, which are not quoted by virtue of restriction agreements. Quoted shares on ASX Unquoted – escrowed until: 24 Oct 07 3 Nov 07 29 Jan 08 1 Feb 09 Total issued share capital 47,589,498 902,500 535,000 6,000,000 5,491,194 60,518,192 Page 46 EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 EmpireAR5 11/10/07 5:21 PM Page 47 (c) Twenty Largest Option Holders The names of the twenty largest holders of quoted options are as follows. OPTION HOLDERS DW SARGEANT PTY LTD MRS SUKHON SUHARITDUMRONG MURILLA EXPLORATION PTY LTD MR ARTUR BIRKNER RUBYSTAR NOMINEES PTY LTD ALCARDO INVESTMENTS LIMITED AGENS PTY LTD CAMIRA HOLDINGS PTY LTD MR ADRIAN MARTIN LAMBERT JESSUP ELY PLACE NOMINEES LTD MR JIM JEFFREYS MR ADRIAN CHRISTOPHER GRIFFIN AYMVESS PTY LIMITED COLTRANGE PTY LTD WHI SECURITIES PTY LTD MR RICHARD JAMES AND MRS SUSAN ELIZABETH HARRIS CITIVIEW PTY LTD BLAMNCO TRADING PTY LTD NATIONAL NOMINEES LTD ALCARDO INVESTMENTS LIMITED 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Number of options held 2,849,999 1,134,250 616,666 591,250 500,000 494,500 450,000 375,000 361,111 333,333 322,474 300,000 300,000 300,000 287,500 274,500 250,000 250,000 250,000 250,000 Holding (%) 10.3 4.1 2.2 2.1 1.8 1.8 1.6 1.4 1.3 1.2 1.2 1.1 1.1 1.1 1.0 1.0 0.9 0.9 0.9 0.9 Stock exchange listing – listing has been granted for 27,709,075 options over ordinary shares of the Company on all member exchanges of the ASX. 10,490,583 37.9 (d) Substantial Shareholders The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are as follows. Shareholder David Sargeant (e) Voting Rights Number of shares 4,888,895 All shares carry one vote per unit without restriction. (f) Listing Rule 4.10.19 The Company outlined in the prospectus dated 7 November 2006 that it intended to spend funds raised under that prospectus on exploration and resource evaluation of its projects, in order to advance its exploration prospects to a stage at which further evaluation and mining development could be financed by joint venture funding, debt or additional equity funds. The Company can confirm that from admission on 31 January 2007 to 30 June 2007, it used the cash that it had at the time of admission in a way consistent with its business objectives. EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007 Page 47 EmpireAR5 11/10/07 5:21 PM Page 48 INTERESTS IN MINING AND EXPLORATION TENEMENTS as at 20 August 2007 PROJECT TROY CREEK PENNY’S FIND LARKIN’S FIND YUINMERY PARADIS NOONDIE YARLARWEELOR TORRENS TENEMENT E69/1486 E69/1728 E69/1729 E69/1826 E69/2358 M69/84 M69/85 M69/86 M69/87 M69/88 M69/89 M69/90 P69/40 P69/41 P69/42 P69/43 P69/44 P69/45 E27/64 E27/221 E27/255 M27/156 M27/241 M27/269 M27/292 M27/298 M27/299 M27/300 M27/301 P27/1226 P27/1251 P27/1455 P27/1713 P27/1714 P27/1715 P27/1716 P27/1717 P27/1718 P27/1719 P27/1720 P27/1721 P27/1722 P27/1723 P27/1724 P27/1725 P27/1726 P27/1727 P27/1728 P27/1729 P27/1730 P27/1731 P27/1814 P27/1815 P27/1992 E39/1248 M57/265 M57/357 P57/743 P57/744 P57/745 P57/746 P57/1214 P57/1215 P57/1216 P57/1217 E57/735 E47/1200 E47/1203 E57/643 E57/648 E52/2095 EL3081 EL3530 INTEREST 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Earning up to 80% Earning up to 90% Earning up to 90% Earning up to 90% Earning up to 90% Earning up to 90% 100% 100% REMARKS Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Application not yet granted Page 48 EMPIRE RESOURCES LIMITED – ANNUAL REPOR T cover1 11/10/07 5:40 PM Page 3 cover1 11/10/07 5:40 PM Page 4 

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