Empire Resources Limited Annual Report 2007

FY2007 Annual Report · Empire Resources Limited

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EmpireAR5 11/10/07 5:19 PM Page 1

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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

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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

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

500

1000km

T A S M A N I A

Hobart

Empire’s projects in South and Western Australia.

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007

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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

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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

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

N
m
0
8
2
9

N
m
0
0
3
9

-40 RL

-60 RL

-80 RL

-100 RL

-120 RL

1 0

N
m
0
0
6
9

N
m
0
8
5
9

Profile

1 0

Pit

Possible
Base of
Weathering

PFRC07-71
5/20.88

PFRC07-72
14/5.34

PFRC07-59
6/6.77

REFERENCE

+10g/t Au x metre intersection

+30g/t Au x metre intersection

Drillhole pierce point

14/5.34

Intersection (m) / g/t Au

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

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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

0.5

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

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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

G r

To
Perth

Location of Yuinmery and Noondie Projects.

50 km

700 000 mE

740 000 mE

10km

Scal e

6 840 000 mN

E57/648

Lake Noondie

Yuinmery
Copper - Gold Project

E57/643

Noondie
Uranium Project

6 810 000 mN

Reference

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

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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

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Olympic
Dam

Andamooka

Lyndhurst

Leigh Creek

TORRENS PROJECT
Lake
LaLakkeke
Torrens
enss
TorrTT

Woomera

S O U T H

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

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EmpireAR5 11/10/07 5:20 PM Page 11

Location of Torrens drill targets.

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPOR T 2007

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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

C R A T O N

Paulsens Gold Mine
600,000 ozs

TELFER
24 Moz Au
(1 Mt Cu)

0 200km

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

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

Location of Troy Creek and Paradis Project.

Corrid

S
I

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

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

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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

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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

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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

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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

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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

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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

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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

Share-
based
payments

Value
of options

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

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

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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 = meetings attended

B = meetings held whilst a director

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

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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

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)

(0.67)

(0.19)

The above income statement should be read in conjunction with the accompanying notes.

Page 24

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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

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

145,101

520,415

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

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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

7,925,483

–

(698,462)

–

8,745,721

–

(33,450)

(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

7,925,483

–

(698,462)

–

8,745,721

–

(33,450)

(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

7,925,483

509,591

(715,466)

(234,737)

Total

890,129

85,000

(7,881)

(8,835)

(33,450)

924,963

7,925,483

509,591

(715,466)

(234,737)

509,591

(17,004)

–

492,587

8,409,834

Page 26

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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

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

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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

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

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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

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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

(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.

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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

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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

Revenue

Interest received

Other income

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

(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

–

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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.

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.

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

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Receivables

Current

Other receivables

Non–current

Amount receivable from controlled entity

Provision for impairment of loans to controlled entities

Other debtors

Financial Assets

Unlisted investments, at cost

Shares in controlled entities
Provision for impairment

Consolidated group

Parent entity

2007

2006

2007

2006

134,903

–

2,020

134,903

167,552

(92,830)

–

74,722

–

92,830

(92,830)

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

–

Australia

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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

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

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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

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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

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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

4,462,456

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

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

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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

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

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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

50,000

12,500

–

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

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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.

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

1,100,000

(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

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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:

(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:

(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;

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

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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

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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

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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

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 (%)

(%)

6
7

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

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

3.7

3.0

2.0
2.0

1.7

1.5

1.3

1.2

1.1

1.0

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

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

287,500

274,500

250,000

Holding (%)

10.3

4.1

2.2

2.1

1.8

1.6

1.4

1.3

1.2

1.1

1.0

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
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Application not yet granted
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Application not yet granted

Page 48

EMPIRE RESOURCES LIMITED – ANNUAL REPOR T

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