Empire Resources Limited Annual Report 2009

FY2009 Annual Report · Empire Resources Limited

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EMPIRE RE SOURCES LIMITED A ND C ONTR OL LED ENTI TIES A BN 32 09 2 471 513

FOR THE YEAR ENDED 30 J UNE 2 00 9

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 1

ANNUAL REPORT
TABLE OF CONTENTS

PAGE
1. Corporate Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IFC
2. Highlights of 2008-2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
3. Corporate Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
4. Chairman’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
5. Review of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Financial Statements

6. Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7. Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8. Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9. Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10. Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11. Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12. Directors’ Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
13. Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14. Corporate Governance Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
15. Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

1. COR POR ATE DIRECTOR 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 Stock Exchange Limited.
Home Exchange Perth
ASX Code: Shares – ERL

Page IFC
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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009
EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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HIGHL IGHTS OF 2008-200 9

> Initial resource announced for Yuinmery copper-gold project:

1.07 Mt @ 1.82% copper and 0.78 g/t gold

> Major potential as Yuinmery not tested >250 m depth –

deep diamond drilling planned

> High-grade copper discovery at 100%-owned Troy Creek

project (WA)

> Exploration tenement interest at Troy Creek more than doubled

to 1,230 km2

> New high priority drill targets identified at Troy Creek over a

20-km strike length

> Drilling of Troy Creek targets planned for the September

‘09 quarter

> Uranium mineralisation confirmed over large areas at

Yarlarweelor project (WA)

> Base-metal mineralisation identified over a 4-km strike length at

the new Wynne project (WA)

CORPOR ATE
OBJECTIVES

The Company’s long-term
objective is to become a
successful mining house by
participating 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 delineating
reserves and commencing
mining operations, entering into
significant farm-out or royalty
arrangements or acquiring new
opportunities to provide an early
cash flow.

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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4. CHAIR MAN’S R EPO RT

Dear Shareholders

It is my pleasure to present to you this annual report, which outlines Empire Resource’s second full year of operation
since listing on the ASX.

The reporting period saw markets change from buoyant to bearish as the full grip of the global financial crisis was
realised. The Empire board was quick to react, cutting exploration activities to the minimum level required to preserve
our assets. Outgoings were minimised as we awaited an improved market to resume prior levels of activity. Markets
did indeed improve, allowing capital to be raised shortly after the end of the financial year. We have resumed our field
activities and look forward to a successful 2009-2010.

Despite the recent financial gloom, we continued to advance the Company’s projects, announcing a maiden copper-
gold resource at Yuinmery and achieving high-grade copper intersections at Troy Creek. The Yuinmery resource,
which remains open along strike and down dip, will be the subject of deeper drilling in the future.

Exploration success at Yuinmery and Troy Creek has come at a very modest cost and, longer term, these projects have
the potential to add significant upside to the Company’s resource base. Rising gold prices during the period significantly
changed the economics of small gold deposits and the Company continues to assess its options to realise value from the
Penny’s Find resource (314,000 t at a grade of 5.18 g/t for an estimated 52,000 oz of contained gold). The ability to
return real value at lower gold prices proved to be limited; however, with gold around US$1000/ounce we now view
Penny’s Find in a much more positive light.

Uranium mineralisation was confirmed over a large area of the Yarloweelor project (WA). Uranium prices have firmed
as markets emerge from the global financial crisis and forecasts for uranium consumption as a source of clean energy are
strong. The Company has been assessing means by which it can convert the potential into value for shareholders and,
subsequent to the end of the period, entered into an option agreement to dispose of the project. I believe the terms
upon which this disposal is likely to be effected will be very favourable to Empire shareholders.

The Company will continue to develop its focus on copper and gold while adding value for shareholders by
appropriately dealing with any other commodity opportunities. The board values your support and strongly encourages
you to continue to be part the Company.

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

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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REVIEW OF OP ERATIONS

Empire Resources Limited is a gold- and copper-
focused exploration company.

Since listing in February 2007, the Company has made
three significant copper and/or gold discoveries in
WA and announced JORC-compliant resources for
two of these discoveries.

At the Penny’s Find project near Kalgoorlie, the
Company located a near-surface high-grade gold
deposit, which has a JORC-compliant resource
estimated at 314,000 t @ 5.2 g/t Au. It is likely that
further drilling will upgrade this resource.

Following exploration success during 2007 and 2008,
the Company announced a copper-gold resource for
the Just Desserts prospect at the Yuinmery project,
80 km southwest of Sandstone, WA. This initial
resource has been estimated at 1,070,000 t @ 1.82%
Cu and 0.78g/t Au at a 1 % Cu cut-off. It is likely
that further drilling will upgrade this resource.

In the latter part of 2008, a discovery of high-grade
copper sulphide mineralisation was made at the Troy
Creek project, 180 km northeast of Wiluna in WA.
The drill intersections consisted of 2 m @ 4.65%
Cu and 3 m @ 1.97% Cu – forming part of a 36 m
intersection grading 0.76% Cu.

The large Yarlarweelor uranium project, 125 km
north of Meekatharra, WA has shown the potential to
host large tonnages of primary uranium mineralisation
at the Kangaroo Ridge, Kangaroo Valley and Doris
prospects. These prospects all occur within a 5 km
long zone of anomalous uranium radioactivity, which
has returned up to 8 m @ 708 ppm U3O8 in previous
limited drilling.

A new base-metal project was recently acquired at
Wynne, 260 km northeast of Carnarvon in WA.
Surface sampling has identified base-metal gossans
outcropping over at least a 4 km strike length; these
represent immediate drill targets on granting of the
tenement.

Empire’s projects in Western

and South Australia.

REGISTERED and PRINCIPAL OFFICE

53 Canning Highway, Victoria Park WA 6100 (cnr Taylor Street)

Phone +618 9361 3100 Fax +618 9361 3184

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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YUINMERY (WA): copper-gold project
100% interest

The Yuinmery copper-gold project is situated 475 km
northeast of Perth, WA. It lies within the Archaean
Youanmi Greenstone Belt and covers a synclinal
sequence of chloritised felsic tuffaceous rocks with
interbedded sulphide bearing chert horizons. Copper-
gold mineralisation, previously identified from a
number of prospects at Yuinmery, is of volcanogenic
massive sulphide (VMS) style similar in nature to
orebodies currently being mined at Golden Grove and
Jaguar in WA. It occurs as massive sulphides associated
with chert exhalite horizons, as matrix sulphides in
lapilli tuff, and associated with mafic and ultramafic
intrusions.

At one of the Yuinmery prospects, Just Desserts,
drilling during 2007-2008 intersected high-grade
copper-gold zones, with assays such as 23 m @ 2.68%
Cu, 1.28 g/t Au; 14 m @ 2.63% Cu, 1.91 g/t Au; 13 m @

2.55% Cu, 1.67 g/t Au; 6 m @ 3.79% Cu, 12.85 g/t Au and

10m @ 4.23% Cu, and 6.01 g/t Au.

Based on the above drilling an indicated + inferred
JORC resource of 1,070,000 t @ 1.82% Cu, 0.78
g/t Au was estimated for the Just Desserts prospect
and reported on in the March 2009 Quarterly.
This resource lies between 50 and 250 m below
surface, and is open at depth and along strike to the
southeast. Elsewhere in the world, deposits of this
style of mineralisation commonly occur in clusters and
have been mined to great depths, as shown by the
comparison with Bousquet La Ronde Penna, a series
of gold-base metal VMS deposits, currently the largest
producing gold camp in Canada. No drilling below
a vertical depth of 250 m has yet been undertaken
at Just Desserts or anywhere else on the Yuinmery
project, which highlights the potential for a major
discovery within the tenement area.

The Company is currently planning a diamond drilling
programme to expand the size of the Just Desserts
resource at depth and an RC programme to locate
similar deposits at the B Zone, C Zone, Trajan and
Augustus prospects.

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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Yuinmery project prospects.

Yuinmery project. Just Desserts prospect. Lower zone long section.

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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Longitudinal section of a Canadian VMS camp showing comparable area currently tested at Yuinmery.
Just Desserts classified mineral resources – March 2009.

The mineral resource by category to a depth of
250 m below surface is reported below. The resource
comprises no oxide mineralisation, only transitional
and fresh.

Resource modelling consultants Datageo calculated a
JORC-compliant in situ resource estimate, utilising all
drill-hole information available on Prospecting Licence
P57/1215 up to the end of June 2008.

Just Desserts Classified Mineral Resources – March 2009

Grade*
g/t

Grade* Category
Ag g/t

Tonnes

Grade*
Cu%

Au g/t

1% Cu cut-off

1.32

2.12

2.06

Indicated

104,000

Inferred

966,000

TOTAL

1,070,000

1.5 % Cu cut-off 1.58

Indicated

46,000

2.68

2.61

Inferred

536,000

TOTAL

582,000

1.65

1.84

1.82

2.11

2.34

2.33

0.86

0.77

0.78

1.14

0.92

0.93

*High assays have been cut to 9% Cu, 20g/t Au and 10g/t Ag.

The resource grade was estimated using ordinary
kriging based on the drill-hole data composited
downhole to 1 m intervals within constraining shapes
representing the mineralisation.Assumed specific
gravity values used were: transitional 2.7 t/m3; fresh
3.2 t/m3.

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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TROY CREEK (WA): copper-gold-PGM project
100% interest

(earning selected 70% interest in adjoining blocks)

The Troy Creek copper-gold-PGM project is situated
900 km northeast of Perth on the northern margin
of the Palaeoproterozoic Earaheedy Basin, where the
Company holds tenements covering an area of 585
km2. Under the terms of a joint venture deal with
United Orogen Ltd, the Company can earn up to a
70% interest in base- and precious-metal deposits in an
additional 645 km2 of tenement applications.

Several prominent geochemical and magnetic targets
have been identified in sedimentary rocks within the
Company’s tenements. These include a large zone of
multi-element anomalous geochemistry in sedimentary
rocks that extend along strike for a distance of
more than 20 km. This zone, defined by rock-chip
sampling, soil geochemistry and limited drilling, is
anomalous in copper, gold, PGM, arsenic, silver and
antimony.

The Main Gossan prospect, which lies within this
zone, was tested with one reverse circulation drill hole
in November 2008. That hole intersected high-grade
copper sulphide mineralisation, which included
2 m @ 4.65% Cu from 91 m, and 3 m @ 1.97% Cu from
117 metres. These high-grade intersections form part

of a 36 m sulphide mineralised zone assaying 0.76% Cu
and extending from 91 m to the end of hole. The true
width of mineralisation is estimated to be 60% of the
intersected width and is open in both directions along
strike and at depth.

The copper mineralisation, which consists of
fine-grained stratiform copper and iron sulphides
in graphitic shales, shows some similarities to
‘Kupferscheifer Style’ mineralisation, which forms
world-class copper deposits in Germany and
southwest Poland. These similarities include stratiform
mineralisation over large areas, the presence of
adjacent haematitic oxidised rocks and comparable
geochemistry; that is, anomalous copper, silver,
arsenic, and zinc, with adjacent but discrete PGM
mineralisation; for example, 7 m @ 0.59 g/t Pt + Pd.

A review by the Company of all exploration
completed in the Troy Creek area within the past
20 years was undertaken following the significant
intersection obtained from the Main Gossan prospect.
This review identified a further 10 Cu-Au-Pt
anomalous gossan occurrences over a distance of
20 km along strike from the Main Gossan prospect.

The Company plans to undertake RC and diamond
drilling to test these targets, in addition to drilling the
Main Gossan at depth and along strike.

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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Troy Creek, project location.

Troy Creek project, exploration targets.

Troy Creek project, Main Gossan prospect, section 9150E.

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YARLARWEELOR (WA):
uranium project – 100% interest

The Yarlarweelor uranium project (E52/2095) is
located 125 km north of Meekatharra in WA.

Previous exploration during the early 1980s discovered
primary uranium mineralisation in the form of
uraninite at five locations within the licence area.
Four of these occurrences are from within the
Archaean Despair Granite, where limited drilling
showed the uraninite mineralisation to be hosted in
multiple parallel shear zones and the surrounding
granites.

Site visits and a data review during the past year
identified three locations within the Despair Granite
that have the potential to host substantial tonnages
of primary uranium mineralisation – the Kangaroo
Ridge, Kangaroo Valley and Doris prospects. These
prospects all occur within a 5 km long zone of
anomalous uranium radioactivity in the Despair
Granite, which has been subjected to only limited
drilling in the past.

Shown below are sections from these three prospects
which were drilled in the early 1980s. Currently at
each prospect, the mineralisation remains open in both
directions along strike and at depth, with the grades
comparable to or better than large-tonnage mines
elsewhere in the world; for example, Namibia.

The Kangaroo Ridge and Kangaroo Valley prospects
are 1.3 km apart and appear to lie on the same zone
of uranium mineralisation, which contains values in
excess of 700 ppm U3O8 and is increasing in width and
grade with depth.

The Doris prospect contains multiple zones of
uranium mineralisation, with additional parallel zones
still untested.

The Company will re-establish access to these
prospects in the coming year and undertake drilling to
enable calculation of initial uranium resources.

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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Yarlarweelor project, geology.

Yarlarweelor uranium project, Kangaroo Ridge prospect, section 13380N.

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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Yarlarweelor uranium project, Kangaroo Valley prospect, section 12490N.

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Yarlarweelor uranium project, Doris prospect, section 9440N.

Resource modelling consultants Datageo calculated
a JORC-compliant in situ resource estimate, utilising
all drill-hole information available on mining lease
M27/156 up to the end of June 2007.

The resource grade was estimated using ordinary
kriging based on the drill-hole data composited
downhole to 1 m intervals within constraining shapes
representing the mineralisation. Assumed specific
gravity values used were: oxide 2.0 t/m3; transitional
2.2 t/m3; fresh 2.5 t/m3.

During the past year the Company continued
discussions with various parties for the sale or joint
development of the resource.

PENNY’S FIND (WA): gold project
100% interest

The Penny’s Find project, situated in the eastern
goldfields of WA, lies 50 km northeast of Kalgoorlie
and 30 km from the Kanowna Belle Gold Mine.
Within mining lease M27/156, gold mineralisation is
associated with quartz veining developed at or near a
sheared contact between basalt and sediment.

The Company has previously outlined a gold resource
at Penny’s Find of 314,000 t @ 5.18 g/t Au down to
a vertical depth of 150 m below surface. 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.

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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Penny’s Find prospect, M27/156 long section.

Penny’s Find project, mineralised trends.

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WYNNE (WA): copper-lead-zinc project
100% interest

TORRENS (SA): copper-gold-uranium project
100% interest

The Torrens project lies on the eastern margin of the
Gawler Craton in South Australia. The Gawler Craton
is a recognised world-class iron oxide-copper-gold
(IOCG) province that includes the Olympic Dam,
Prominent Hill and Carrapateena deposits.

The Company is actively seeking a joint venture
partner to drill a number of prominent circular
magnetic anomalies that remain to be tested on the
project tenements.

An application for an exploration licence has been
lodged covering an area of 90 km2 in the northern
Gascoyne region of WA, 260 km northeast of
Carnarvon. Previous exploration in the area identified
extensive gossans containing geochemically anomalous
copper, lead and zinc values, but no drilling was
ever undertaken. These gossans are associated with
meta-sedimentary rocks of the Proterozoic Morrissey
Metamorphic Suite.

Surface rock-chip sampling by the Company has
confirmed the anomalous base-metal signature of
the Wynne gossans, which occur in three horizons
outcropping over at least a 4 km strike length. Assays
were highly anomalous, with values up to 0.25% Cu,
0.39% Pb, 0.14% Zn, 124 ppm Bi, 114 ppm Mo and
128 ppm W. These gossans represent immediate drill
targets upon grant of the exploration licence.

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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LARKIN’S FIND (WA): nickel-gold project
Earning 80% interest

PARADIS (WA): gold-platinum project
100% interest

The Larkin’s Find nickel and gold project is situated
approximately 85 km southeast of the Murrin Murrin
nickel mine and 155 km north-northeast of Kalgoorlie
in WA. It consists of one exploration licence, which
covers an area of approximately 33 km2.

Previous exploration in the Larkin’s Find area located
widespread lateritic nickel-cobalt mineralisation and
outlined an Inferred Resource of 5.2 Mt assaying 0.8%
nickel and 0.08% cobalt using a 0.6% nickel cut-off
grade.

No field work was undertaken on the tenement
during the past year and the Company’s interest in the
project is being reviewed.

The Paradis gold and PGM project, located 25 km
west of Paraburdoo in Western Australia, contains late
Archaean rocks on the southern margin of the Pilbara
Craton. Previous exploration by other companies
detected anomalous gold, platinum and nickel values
in stream sediments and some rock samples were taken
from the project area.

Stream sediment sampling undertaken by the
Company failed to confirm the aforementioned
anomalous values and the project has been
relinquished.

Competent Person’s Statement

The information in this Annual Report that relates to Exploration Results and Resources have been compiled by Mr David Ross BSc MSc, who is
an employee of the Company. He is a member of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists.
He has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity to which he
is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves”. David Ross consents to the inclusion in this Annual Report of the matters based on his information in the
form and context in which it appears.

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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EMPIRE RE SOURCES LIMITED A ND C ONTR OL LED ENTI TIES A BN 32 09 2 471 513

FOR THE YEAR ENDED 30 J UNE 2 00 9

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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FINANCIAL STATEMENTS

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.
Having begun his professional career with exploration
for base metals in Tasmania, Mr Griffin 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.

DIRECT ORS’ REPO RT

Your directors submit their report on Empire
Resources Limited and its controlled entities for the
financial year ended 30 June 2009.

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.

Company

Dwyka Resources Limited

Northern Uranium Limited

Empire Resources Limited

Position

Appointed

Ceased

Non-executive director

1/12/2005

30/10/2007

Non-executive director

2/06/2006

Chairman

3/02/2004

–

Hodges Resources Limited

Managing director

17/08/2005

1/12/2008

Reedy Lagoon Corporation Limited

Non-executive director

9/05/2007

–

Washington Resources Limited

Managing director

7/09/2004

1/12/2008

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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David Sargeant
Managing Director
BSc MAusIMM

Adrian Jessup
Executive 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 the 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.

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 Limited
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 WA.

Page 18

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 19

MANAGEMENT

Simon Storm
Company Secretary
BCom BCompt(Hons) CA FCIS

Mr Storm is a chartered accountant with more than
25 years’ 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.

During his career, 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, he held the position of
chief geologist with De Grey Mining Ltd, where he
was instrumental in the discovery of the Orchard Well
VMS deposits.

Principal Activities

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 $1,167,359 (2008: $3,713,015)

Page 20

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 21

Non-executive directors
The board policy is to remunerate non-executive
directors for time, commitment and responsibilities
at the market rates for comparable companies. 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 $30,000 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.

Share-based compensation (audited)

To ensure that the Company has appropriate
mechanisms to continue to attract and retain the
services of directors and employees of a high calibre,
the Company has established the Empire Resources
Limited Share Plan (SP).

The directors consider that the SP is an appropriate
method of:

a) rewarding directors and employees for their past

performance;

b) providing long-term incentives to participate in the

Company’s future growth;

c) motivating directors and employees and generating

loyalty in employees, and

d) helping retain the services of valuable employees.

Review of Operations

A review of the operations during the financial year is
set out on pages 3 to 15.

Significant changes in the state of affairs of the
Company during the financial year were as follows.

• Placement of five million shares at 17 cents per

share with Apex Minerals NL to raise A$850,000
in July 2008.

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
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, which ensures that 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 appropriate in aligning directors’
objectives with shareholder and businesses objectives.

The remuneration framework has regard to
shareholders’ interests in the following ways.

• Focuses on sustained growth as well as focusing the
directors on key non-financial drivers of value.

• Attracts and retains high-calibre directors.

The remuneration framework has regard to directors’
interests in the following ways.

• Rewards capability and experience.

• Reflects competitive reward for contributions to

shareholder growth.

• Provides a clear structure for earning rewards.

• Provides recognition for contribution.

Page 20

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 21

Shares issued Shares issued Shares vested Shares vested
during the year during the year
for the year
year ended
ended
30-Jun-08
30-Jun-09

for the year
ended
30-Jun-08

year ended
30-Jun-09

Specified directors
Non-executive
Mr A Griffin
Executive
Mr D Sargeant

Mr A Jessup

Specified executives

Mr S Storm

–

500,000

750,000

500,000

350,000

–

500,000

750,000

500,000

350,000

Financial
years in
which
shares may
vest

Total
value of
grant
vested
$

Minimum
total value
of grant yet
to vest
$

Maximum
total value
of grant yet
to vest

Year granted

Vested
%

Forfeited
%

Directors

Mr A Griffin

Mr D Sargeant

Mr A Jessup

Specified executives

2007

39%

Mr S Storm

2007

39%

–

2008-11

27,077

40,616

27,077

42,550

63,825

42,550

63,825

42,550

2008-11

18,954

29,785

Directors

Mr A Griffin

Mr D Sargeant

Mr A Jessup

Specified executives

Mr S Storm

A
Remuneration
consisting of
shares

B
Value at
issue date
$

C
Value at
exercise date
$

D
Value at
lapse date
$

E
Total of
columns B-D
$

11%

69,627

104,441

69,627

48,739

–

69,627

104,441

69,627

48,739

A = The percentage of the value of remuneration

C = The value at exercise date of shares that were

consisting of shares, based on the value of shares
expensed during the current year.

B = The value at issue date calculated in accordance
with AASB 2 Share-based Payment of shares
issued during the year as part of remuneration.

issued as part of remuneration and were exercised
during the year, being the intrinsic value of the
shares at that date.

D = The value at lapse date of shares that were issued
as part of remuneration and that lapsed during the
year. Lapsed shares refer to shares that vested but
expired due to the term of the loan expiring.

Page 22

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 23

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 2009.

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.

Directors’
fees

Consulting
fees

Short–term
benefits

Post-
employment
benefits

Share-
based
payments
Value
of Shares

Directors

Specified directors
Non–executive
Mr A Griffin

Executive
Mr D Sargeant

Mr A Jessup

Total specified

directors

Specified executives

Mr S Storm

Total specified

executives

2009

2008

2009

2008
2009

2008

2009

2008

2009

2008

2009

2008

30,000

–

–
–

–

30,000

–

132,000

125,000
132,000

125,000

264,000

250,000

31,200

30,750

31,200

30,750

30,000

132,000

125,000
132,000

125,000

294,000

280,000

31,200

30,750

31,200

30,750

–

–
–

–

Total

53,209

33,868

166,814

130,802
155,209

128,868

375,232

293,539

23,209

3,868

34,814

5,802
23,209

3,868

81,232

13,539

16,246

2,708

16,246

2,708

47,446

33,458

47,446

33,458

Page 22

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 23

Employment contracts

Mr D Sargeant

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;

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

At the date of this report unissued ordinary shares of
the Company under option are:

Grant
date

Date of
expiry

1 Feb 07

31 Dec 10

Exercise
price ($)

0.25

Number under
option

3,000,000

27,709,075 listed options expired on 30 June 2009.

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.

Number of
Ordinary shares

Number of
Options

Director

Direct

Indirect

Direct

Indirect

Mr A Griffin

500,000

–

Mr D Sargeant

– 6,100,000

Mr A Jessup

722,222 1,345,333

–

Company Performance

Comments on performance are set out in the review
of operations.

Significant Changes in the State of Affairs

There were no significant changes in the state of affairs
of the Company, other than those noted in the review
of operations.

Likely Developments and Expected Results

Disclosure of likely developments in the operations
of the Company and the expected results of those
operations in future financial years, and 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.

Environmental Regulation

The Company’s operations were subject to
environmental 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 2009 and the number of meetings
attended by each director.

Director

Mr A Griffin

Mr D Sargeant

Mr A Jessup

Directors’ meetings
A

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.

Page 24

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 25

Proceedings on Behalf 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.

Events subsequent to reporting date

On 14 August 2009 the Company announced that
sophisticated investors had injected $630,000 into the
Company to assist in funding the aggressive drilling
schedules over the next few months on its key WA
projects. The proceeds were raised via a placement to
the investors of 12,600,000 fully paid ordinary shares
at $0.05 per share.

On 28 August 2009, the Company announced it had
entered into a six-month exclusive option agreement
on payment of $10,000, to sell its 100% owned
Yarlarweelor uranium project in WA.

Other than this, no matter or circumstance has arisen,
since the end of the financial year, which 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

The Company may decide to employ the auditor
on assignments additional to its statutory audit duties
where the auditor’s expertise and experience with
the Company and/or the consolidated entity are
important.

Details of the amounts paid or payable to the auditor
(RSM Bird Cameron) for audit and non-audit services
provided during the year are set out below.

The board of directors has considered the position
and is satisfied that the provision of the non-audit
services is compatible with the general standard of
independence for auditors imposed by the Corporations
Act 2001. The directors are satisfied that the provision
of non-audit services by the auditor, as set out below,
did not compromise the auditor independence
requirements of the Corporations Act 2001 for the
following reasons.
• All non-audit services have been reviewed by the

board to ensure they do not impact the impartiality
and objectivity of the auditor.

• None of the services undermine the general

principles relating to auditor independence as
set out in Professional Statement FI, including
reviewing or auditing the auditor’s own work,
acting in a management or a decision-making
capacity for the Company, acting as advocate for
the Company or jointly sharing economic risks
and rewards.

During the period, the following fees were paid or
payable for services provided by the auditor of the
parent entity RSM Bird Cameron, its related practices
and non-related audit firms.

Consolidated

Year ended
30 June 2009
$

Year ended
30 June 2008
$

Assurance Services

1. Audit services

Audit and review of financial
reports and other audit work
under the Corporations Act 2001

Total remuneration for
audit services

2. Other assurance services

Tax-related

Total remuneration for other
assurance services

Total remuneration for
assurance services

25,200

20,350

25,200

20,350

5,700

6,710

30,900

27,060

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 2008. This written Auditor’s
Independence Declaration is attached to the Auditor’s
Independent Audit Report to the members and forms
part of this Directors’ Report.

Signed in accordance with a resolution of directors.

D Sargeant
Managing Director

Perth, Western Australia
21 September 2009

Page 24

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 25

EMPIRE RESOURCES LIMITED AND CONTROL L ED ENT IT IES

7. INCOME STATEMENT FOR TH E YE AR ENDED 3 0 J UNE 2 009

Revenue

Other income

Depreciation expense

Exploration expense

Impairment of non-current assets

Impairment of receivable

Employee benefits expense

Management fee expense

Accounting expense

Consultancy expense

Share-based payment

ASX expense

Corporate Relations expense

Insurance expense

Other expenses

Note

3 –

7 –

Consolidated group

Parent entity

2009

65,206

74,526

2008

177,529

111,237

2009

2008

65,206

74,526

177,529

111,237

(24,601)

(23,919)

(24,601)

(23,919)

(647,618)

(3,324,163)

(647,618)

(2,638,454)

–

(80,000) –

(14,606)

–

(1,860,431)

(20,149)

(80,000)

(14,606)

(20,149)

(260,103)

(228,693)

(260,103)

(228,693)

(42,855)

(200)

(113,724)

(24,938)

(23,315)

(16,107)

(45,600)

(14,110)

(18,954)

(47,251)

(25,345)

(28,252)

(42,855)

(200)

(113,724)

(24,938)

(23,315)

(16,107)

(45,600)

(14,110)

(18,954)

(47,251)

(25,345)

(28,252)

(133,481)

(150,888)

(134,271)

(150,888)

Loss before income tax

Income tax expense

(1,167,359)

(3,713,015)

(1,168,149)

(4,887,737)

–

Loss attributable to members of the parent entity

(1,167,359)

(3,713,015)

(1,168,149)

(4,887,737)

Basic and diluted loss per share (cents per share)

(1.62)

(6.00)

The above Income Statement should be read in conjunction with the accompanying notes.

Page 26

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 27

EMPIRE RESOURCES LIMITED AND CONTROL L ED ENT IT IES

8. BALANCE SHEET AS AT 3 0 JU NE 20 0 9

CURRENT ASSETS

Cash and cash equivalents

Trade and other receivables

Total Current Assets

NON-CURRENT ASSETS

Plant & equipment

Total Non-Current Assets

Note

Consolidated group

Parent entity

2009

2008

2009

2008

809,433

1,361,273

809,433

1,361,213

15,648

67,899

15,648

67,899

825,081

1,429,172

825,081

1,429,112

58,004

82,605

58,004

82,605

TOTAL ASSETS

883,085

1,511,777

883,085

1,511,717

LIABILITIES

CURRENT LIABILITIES

Trade and other payables

Total Current Liabilities

101,287

525,604

101,287

524,754

TOTAL LIABILITIES

101,287

525,604

101,287

524,754

NET ASSETS

EQUITY

Issued capital

Reserves

Accumulated losses

TOTAL EQUITY

781,798

986,173

781,798

986,963

10,269,731

9,420,471

10,269,731

9,420,471

625,265

511,541

625,265

511,541

(10,113,198)

(8,945,839)

(10,113,198)

(8,945,049)

781,798

986,173

781,798

986,963

The above Balance Sheet should be read in conjunction with the accompanying notes.

Page 26

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 27

EMPIRE RESOURCES LIMITED AND CONTROL L ED ENT IT IES

9. ST ATEM ENT OF CHAN GES IN EQUIT Y FOR TH E YEA R ENDED 30 J UNE 2009

Consolidated group

Share capital

Accumulated

ordinary

Losses

Note

Option

Reserve

Total

Balance at 1 July 2007

Shares issued during the year

Options issued during the year

Loss attributable to members of the parent entity

8,745,721

(5,232,824)

492,587

4,005,484

674,750

–

18,954

674,750

18,954

(3,713,015)

–

(3,713,015)

Balance at 30 June 2008

9,420,471

(8,945,839)

511,541

986,173

Balance at 1 July 2008

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 2009

9,420,471

(8,945,839)

511,541

850,000

–

(740)

–

(1,167,359)

–

113,724

–

986,173

850,000

113,724

(740)

(1,167,359)

10,269,731

(10,113,198)

625,265

781,798

Parent entity

Share capital

Accumulated

ordinary

Losses

Note

Option

Reserve

Total

Balance at 1 July 2007
Shares issued during the year

Options issued during the year

Loss attributable to members of the parent entity
Balance at 30 June 2009

Balance at 1 July 2008

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 2009

8,745,721

(4,057,312)

492,587

5,180,996

674,750

–

18,954

674,750

18,954

(4,887,737)

–

(4,887,737)

9,420,471

(8,945,049)

511,541

986,963

9,420,471

(8,945,049)

511,541

850,000

–

(740)

–

(1,168,149)

–

113,724

–

986,963

850,000

113,724

(740)

(1,168,149)

10,269,731

(10,113,198)

625,265

781,798

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes

Page 28

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 29

EMPIRE RESOURCES LIMIT ED AND CONT ROLL ED ENT IT IES

10. CAS H FLOW STATEMENT FOR TH E Y EA R E NDED 3 0 J UNE 2009

Consolidated group

Parent entity

2009

2008

2009

2008

Note

Activities

Receipts from customers

Payments to suppliers and employees

Interest received

74,526

(491,295)

65,206

31,237

(558,050)

177,476

74,526

(491,235)

65,206

31,237

(558,050)

177,476

Net cash used in operating activities

18(i)

(351,563)

(349,337)

(351,503)

(349,337)

Cash Flows from Investing Activities

Purchase of property, plant and equipment

–

(42,231) –

Payment for renewal or purchase of prospects

Loans – payments made

(90,000)

–

(90,000)

–

(42,231)

–

Exploration and evaluation expenditure

(959,537)

(2,574,712)

(959,537)

(2,574,712)

Net cash used in investing activities

(1,049,537)

(2,616,943)

(1,049,537)

(2,616,943)

Cash Flows from Financing Activities

Proceeds from issue of equity securities

Equity securities issue costs

Net cash provided by financing activities

850,000

(740)

849,260

–

850,000

(740)

849,260

–

Net increase in cash held

(551,840)

(2,966,280)

(551,780)

(2,966,280)

Cash at the beginning of the financial year

1,361,273

4,327,553

1,361,213

4,327,493

Cash at the end of the financial year

809,433

1,361,273

809,433

1,361,213

The above Cash Flow Statement should be read in conjunction with the accompanying notes.

Page 28

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 29

EMPIRE RESOURCES LIMITED AND C ONT ROLLED ENTI TI ES
11. NO TES TO THE FI NA NCIAL STA TEMENTS 3 0 J UNE 2 00 9

Statement of Significant Accounting Policies

The financial report covers the consolidated entity
of Empire Resources Limited (“Empire”) 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, Australian Accounting Interpretations,
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).

The financial report was authorised for issue by the
Board on 21 September 2009.

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)

Going Concern

As disclosed in the Income Statement, the company
and consolidated entity recorded operating losses
of $1,168,149 (2008:$4,887,737) and $1,167,359
(2008:$3,713,015) respectively and as disclosed in the
Cash Flow Statement, the consolidated entity recorded
cash outflows from operating activities of $351,563
(2008: $349,337) and investing activities of $1,049,537
(2008:$2,616,943) and a cash inflow from financing
activities of $849,260 (2008:$Nil). Cash flows from
financing activities arose from capital raisings that are
disclosed in Note 11(a). After consideration of these
financial conditions, the Directors have assessed the
following matters in relation to the adoption of the
going concern basis of accounting by the company
and consolidated entity:

•

The company and consolidated entity have
successfully completed a capital raising during
the year as disclosed in Note 11(a) and have the
ability to continue doing so on a timely basis,
pursuant to the Corporations Act 2001, as is
budgeted to occur in the twelve month period
from the date of this financial report;

Subsequent to year end and disclosed in Note 21,
$630,000 of capital was raised by share placement;

The company and consolidated entity have net
current assets of $723,794 (2008: $904,358)
and $723,794 (2008: $903,568) respectively at
balance date and expenditure commitments for
the next 12 months of $585,458 (2008:$919,155)
and $685,458 (2008:$970,004) respectively, as
disclosed in Note 14, and retain the ability to
scale down their operations to conserve cash, in
the event that the capital raisings are delayed or
partial; and

The company and consolidated entity have
the ability, if required, to undertake mergers,
acquisitions or restructuring activity or to
wholly or in part, dispose of interests in mineral
exploration and development assets.

Due to the above matters, the Directors believe that
it is reasonably foreseeable that the company and
consolidated entity will continue as going concerns
and that it is appropriate that this basis of accounting
be adopted in the preparation of the financial
statements.

(b)

Principles of Consolidation

A controlled entity is any entity that Empire
Resources Limited 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.

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Business Combinations

(d)

Income Tax

Business combinations occur where control over
another business is obtained and results in the
consolidation of its assets and liabilities. All business
combinations, including those involving entities
under common control, are accounted for by
applying the purchase method. The purchase method
requires an acquirer of the business to be identified
and for the cost of the acquisition and fair values of
identifiable assets, liabilities and contingent liabilities
to be determined as at acquisition date, being the
date that control is obtained. Cost is determined as
the aggregate of fair values of assets given, equity
issued and liabilities assumed in exchange for control
together with costs directly attributable to the business
combination. Any deferred consideration payable
is discounted to present value using the entity’s
incremental borrowing rate.

(c)

Plant & Equipment

Plant and equipment is measured on the cost basis less
depreciation and impairment losses.

The carrying amount of plant & equipment is
reviewed annually by 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 asset’s 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 straight line basis 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
assets 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.

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 the benefits of deferred tax
assets 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.

(e)

Cash & 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.

(f)

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.

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(g)

Impairment of assets

At each reporting date, the Group 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 Group estimates
the recoverable amount of the cash-generating unit to
which the asset belongs.

(h)

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.

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.

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.

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.

(i)

Exploration and Development Expenditure

Exploration, evaluation and acquisition costs
are written off in the year they are incurred.
Development costs are capitalised. Amortisation is not
charged on costs carried forward in respect of areas of
interest in the development phase until production.

(j)

Employee Entitlements

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 twelve 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.

Equity settled compensation
The Company operates an equity-settled share-based
payment employee share scheme. The fair value of
the equity to which employees become entitled is
measured at grant date and recognised as an expense
over the vesting period, with a corresponding
increase to an equity account. The fair value of
shares is ascertained as the market bid price. The fair
value of options is ascertained using a Black-Scholes
pricing model which incorporates all market vesting
conditions. The number of shares expected to vest is
reviewed and adjusted at each reporting date such that
the amount recognised for services as consideration for
the equity instruments granted shall be based on the
number of equity instruments that eventually vest.

(k)

Trade Receivables

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 which are known to be
uncollectible are written off. A provision for doubtful
debts is raised where some doubt as to collection
exists.

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(l)

Trade creditors

(o)

Revenue Recognition

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.

(m)

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.

(n)

Leased Non-current Assets

A distinction is made between finance leases, which
effectively transfer from the lessor to the lessee
substantially all the risks and benefits incidental to
owner ship 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 as expenses
in the periods in which they are incurred, as this
represents the pattern of benefits derived from the
leased assets.

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 which is accrued and is
readily convertible to cash within two working days.
Accrued interest is recorded 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.

(p)

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.

(q)

Critical accounting estimates and judgements

The directors evaluate estimates and judgments
incorporated into the financial report based on
historical knowledge and best available current
information. Estimates assume a reasonable expectation
of future events and are based on current trends and
economic data, obtained both externally and within
the group.

Key Estimates — Impairment

The group assesses impairment at each reporting date
by evaluating conditions specific to the group that may
lead to impairment of assets. Where an impairment
trigger exists, the recoverable amount of the asset is
determined. Value-in-use calculations performed in
assessing recoverable amounts incorporate a number of
key estimates.

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(r)

New accounting standards and interpretations

(iv) AASB 2008-1 Amendments to Australian

Accounting Standard – Share-based Payments:
Vesting Conditions and Cancellations (effective
from 1 January 2009)

AASB 2008-1 clarifies that vesting
conditions are service conditions and performance
conditions only and that other features of a share-
based payment are not vesting conditions. It also
specifies that all cancellations, whether by the
entity or by other parties, should receive the same
accounting treatment. The consolidated entity will
apply the revised standard from 1 July 2009, but
it is not expected to affect the accounting for the
consolidated entity’s share based payments.

(v) Revised AASB 3 Business Combinations, AASB

127 Consolidated and Separate Financial

Statements and AASB 2008-3 Amendments

to Australian Accounting Standards arising from
AASB 3 and AASB 127 (effective 1 July 2009)
The revised AASB 3 continues to apply

the acquisition method to business combinations,
but with some significant changes. For example,
all payments to purchase a business are to be
recorded at fair value at the acquisition date, with
contingent payments classified as debt subsequently
remeasured through the income statement. There
is a choice on an acquisition-by-acquisition
basis to measure the non-controlling interest in
the acquiree either at fair value or at the non-
controlling interest’s proportionate share of the
acquiree’s net assets. All acquisition-related costs
must be expensed. The revised AASB 127 requires
the effects of all transactions with non-controlling
interests to be recorded in equity if there is no
change in control and these transactions will
no longer result in goodwill or gains and losses.
The standard also specifies the accounting when
control is lost. Any remaining interest in the entity
is remeasured to fair value, and a gain or loss is
recognised in profit or loss. The consolidated
entity will apply the revised standards prospectively
to all business combinations and transactions with
non-controlling interests from 1 July 2009.

Certain new accounting standards and interpretations
have been published that are not mandatory for 30
June 2009 reporting periods. The Consolidated
entity’s assessment of the impact of these new
standards and interpretations is set out below.
(i) AASB 8 Operating Segments and AASB 2007-3
Amendments to Australian Accounting Standards
arising from AASB 8. AASB 8 and AASB
2007-3 are effective for annual reporting periods
commencing on or after 1 January 2009. AASB 8
will result in a significant change in the approach
to segment reporting, as it requires adoption of a
‘management approach’ to reporting on financial
performance. The information being reported
will be based on what the key decision-makers use
internally for evaluating segment performance and
deciding how to allocate resources to operating
segments. The Group has not yet decided when
to adopt AASB 8. Application of AASB 8 may
result in different segments, segment results and
different types of information being reported in
the segment note of the financial report. However,
at this stage, it is not expected to affect any of the
amounts recognised in the financial statements.
(ii) Revised AASB 123 Borrowing Costs and AASB
2007-6 Amendments to Australian Account
Standards arising from AASB 123 (AASB 1, AASB
101, AASB 107, AASB 111, AASB 116 & AASB
138 and interpretations 1 & 12). The revised
AASB 123 is applicable to annual reporting periods
commencing on or after 1 January 2009. It has
removed the option to expense all borrowing
costs and – when adopted – will require the
capitalisation of all borrowing costs directly
attributable to the acquisition, construction or
production of a qualifying asset. There will be no
impact on the financial report of the Group, as the
Group already capitalises borrowing costs relating
to qualifying assets.

(iii) Revised AASB 101 Presentation of Financial
Statements and AASB 2007 – 8 Amendments
to Australian Accounting Standards arising from
AASB 101. A revised AASB 101 was issued
in September 2007 and is applicable for annual
reporting periods beginning on or after 1 January
2009. It requires the presentation of a statement
of comprehensive income and makes changes to
the statement of recognised income and expense,
but will not affect any of the amounts recognised
in the financial statements. If an entity has made
a prior period adjustment or has reclassified items
in the financial statements, it will need to disclose
a third balance sheet (statement of financial
position), this one being as at the beginning of the
comparative period.

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(vi) AASB 2008-6 Further Amendments to Australian
Accounting Standards arising from the Annual
Improvements Project (effective 1 July 2009)

The amendments to AASB 5 Discontinued

Operations and AASB 1 First-Time Adoption of
Australian-Equivalents to International Financial
Reporting Standards are part of the IASB’s annual
improvements project published in May 2008.
They clarify that all of a subsidiary’s assets and
liabilities are classified as held for sale if a partial
disposal sale plan results in loss of control. Relevant
disclosures should be made for this subsidiary if
the definition of a discontinued operation is met.
The consolidated entity will apply the amendments
prospectively to all partial disposals of subsidiaries
from 1 July 2009.

(vii)AASB 2008-7 Amendments to Australian

Accounting Standards – Cost of an Investment in a

Subsidiary, Jointly Controlled Entity or

Associate (effective 1 July 2009)

In July 2008, the AASB approved
amendments to AASB 1 First-time Adoption of
International Financial Reporting Standards and
AABS 127 Consolidated and Separate Financial
Statements. The consolidated entity will apply the
revised rules prospectively from 1 July 2009. After
that date, all dividends received from investments
in subsidiaries, jointly controlled entities or
associates will be recognised as revenue, even
if they are paid out of pre-acquisition profits,
but the investments may need to be tested for
impairment as a result of the dividend payment.
Under the entity’s current policy, these dividends
are deducted from the cost of the investment.
Furthermore, when a new intermediate parent
entity is created in internal reorganisations it
will measure its investment in subsidiaries at the
carrying amounts of the net assets of the subsidiary
rather than the subsidiary’s fair value.

(viii) AASB Interpretation 15 Agreements for the

Construction of Real Estate (effective 1 January
2009)

AASB-I 15 clarifies whether AASB 118
Revenue or AASB 111 Construction Contracts
should be applied to particular transactions.
The consolidated entity intends to apply the
interpretation from 1 July 2009. It has no
current agreements for the sale of real estate and,
consequently, it does not expect to make any
adjustment on the initial application of AASB-I 15.

(ix) AASB Interpretation 16 Hedges of a Net

Investment in a Foreign Operation (effective 1
October 2008)

AASB-I 16 clarifies which foreign currency

risks qualify as hedged risk in the hedge of a net
investment in a foreign operation and that hedging
instruments may be held by any entity or entities
within the consolidated entity. It also provides
guidance on how an entity should determine the
amounts to be reclassified from equity to profit
or loss for both the hedging instrument and the
hedged item. The consolidated entity will apply
the interpretation prospectively from 1 July 2009.
It is not expected to have an impact on the
consolidated entity’s financial statements.

(x) AASB 2008-8 Amendment to IAS 39 Financial
Instruments: Recognition and Measurement
(effective 1 July 2009)

AASB 2008-8 amends AASB 139 Financial

Instruments: Recognition and Measurement and
must be applied retrospectively in accordance
with AASB 108 Accounting Policies, Changes in
Accounting Estimates and Errors. The amendment
makes two significant changes. It prohibits
designating inflation as a hedgeable component
of a fixed rate debt. It also prohibits including
time value in the one-sided hedged risk when
designating options as hedges. The consolidated
entity will apply the amended standard from 1 July
2009. It is not expected to have an impact on the
consolidated entity’s financial statements.

(xi) AASB Interpretation 17 Distribution of Non-
cash Assets to Owners and AASB 2008-13
Amendments to Australian Accounting Standards
arising from AASB Interpretation 17

AASB-I 17 applies to situations where

an entity pays dividends by distributing non-
cash assets to its shareholders. These distributions
will need to be measured at fair value and the
entity will need to recognise the difference
between the fair value and the carrying amount
of the distributed assets in the income statement
on distribution. The interpretation further
clarifies when a liability for the dividend must
be recognised and that it is also measured at fair
value. The consolidated entity will apply the
interpretation prospectively from 1 July 2009.
It is not expected to have an impact on the
consolidated entity’s financial statements.

(s)

Comparative figures

When required by Accounting Standards, comparative
figures have been adjusted to conform to changes in
presentation for the current financial year.

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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

2009

2008

2009

2008

65,206

74,526

177,529

111,237

65,206

74,526

177,529

111,237

139,732

288,766

139,732

288,766

Consolidated group

Parent entity

2009

2008

2009

2008

24,601

23,919

24,601

23,919

Exploration costs written off

647,618

3,324,163

647,618

2,638,454

Impairment of non-current assets:

Impairment writedown for investment in controlled entity

Impairment writedown for loan to controlled entity

–

1,100,000

760,431

Income tax

(a) 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

2009
$

2008
$

2009
$

2008
$

Loss before tax

(1,167,359)

(3,713,015)

(1,168,149)

(4,887,737)

Income tax benefit at 30% (2007:30%)

(350,208)

(1,113,905)

(350,445)

(1,466,321)

Tax effect of:

– deductible capital raising expenditure

– non deductible expenditure

– deductible temporary differences

–

– deductible exploration

– share based payment

Deferred tax asset not recognised

Income tax benefit attributable to loss from

ordinary activities before tax

(29,451)

–

(34,188)

1,359

–

(29,451)

–

(34,188)

1,359

–

34,117

5,686

34,117

5,686

345,542

1,141,048

345,779

1,493,464

–

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Income Tax (continued)

Tax losses attributable to members of the

tax consolidated group – revenue

Potential tax benefit at 30%

Deferred tax asset asset not booked
Amounts recognised in profit & loss

– impairment of non-current assets

– employee provisions

– other

Amounts recognised in equity

– share issue costs

Consolidated group

Parent entity

2009

2008

2009

2008

8,126,678

8,078,445

6,731,583

5,543,716

2,438,003

2,423,534

2,019,475

1,663,115

–

346

(1,425)

–

3,715

22,339

–

346

(1,425)

558,129

3,715

22,339

(9,503)

(9,633)

(9,503)

(9,633)

Net unrecognised deferred tax asset at 30%

2,427,421

2,439,955

2,008,893

2,237,665

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 Resources Limited and its 100% owned Australian subsidiary are a tax consolidated
group. The head entity of the tax consolidated group is Empire Resources Limited. The group intends to enter into a
tax sharing agreement and an election for the purposes of tax consolidation will be made.

Loss per share

Basic and diluted loss per share (cents per share)

Consolidated group

2009

Cents

(1.62)

2008

Cents

(6.00)

Loss used in the calculation of basic EPS

(1,167,359)

(3,713,015)

Weighted average number of shares outstanding
during the year used in calculations of basic loss per share

71,877,096

61,919,425

Diluted loss per share has not been disclosed as it is not

materially different from basic loss per share

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Cash and cash equivalents

Consolidated group

Parent entity

2009

2008

2009

2008

Cash at bank and in hand

809,433

1,361,273

809,433

1,361,213

809,433

1,361,273

809,433

1,361,213

Receivables

Current

Trade receivables

Other receivables

Consolidated group

Parent entity

2009

2008

2009

2008

Provision for impairment of receivables

–

(80,000) –

–

15,648

80,000

67,899

–

15,648

80,000

67,899

(80,000)

Non-Current

Amount receivable from controlled entity

–

Provision for impairment of loans to controlled entities

15,648

67,899

15,648

67,899

–

760,431

(760,431)

853,261

(853,261)

– –

Provision for Impairment of Receivables

Current trade receivables are non-interest bearing and generally on 30 day terms. A provision for impairment is
recognised when there is objective evidence that an individual trade receivable is impaired.

Financial Assets

Unlisted investments, at-cost

Shares in controlled entities
Provision for impairment

Consolidated group

Parent entity

2009

2008

2009

2008

–
–

–

–
–

–

1,100,000
(1,100,000)

1,148,200
(1,148,200)

–

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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EMPIRE RESOURCES LIMITED AND C ONT ROLLED ENTI TI ES
11. NO TES TO THE FI NA NCIAL STA TEMENTS 3 0 J UNE 2 00 9

Financial Assets (continued)

Controlled Entities

Parent Entity:

Empire Resources Limited

Subsidiaries of Empire Resources Limited:

PGM Technologies Oceania Pty Ltd

Torrens Resources Pty Ltd

Country of

incorporation

Australia

Percentage Owned

2009

–

100

2008

–

100

PGM Technologies Oceania Pty Ltd was deregistered during the year.

Plant & equipment

Plant and Equipment
Cost

Accumulated depreciation

Motor Vehicles

Cost

Accumulated depreciation

Consolidated group

Parent entity

2009

2008

2009

2008

27,198

(19,635)

7,563

90,217

(39,776)

50,441

27,198

(13,176)

14,022

90,217

(21,634)

68,583

27,198

(19,635)

7,563

90,217

(39,776)

50,441

27,198

(13,176)

14,022

90,217

(21,634)

68,583

Total Plant and Equipment

58,004

82,605

58,004

82,605

Movements in the carrying amounts of each class of property, plant & equipment at the beginning and end of the
current financial period is 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

Consolidated group

Parent entity

2009

2008

2009

2008

14,022

–

(6,459)

7,563

13,972

5,876

(5,826)

14,022

–

(6,459)

7,563

13,972

5,876

(5,826)

14,022

68,583

–

(18,142)

50,441

50,321

36,355

(18,093)

68,583

–

(18,142)

50,441

50,321

36,355

(18,093)

68,583

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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10.

Trade and other payables

Trade payables and accruals

Employee benefits

Non-interest bearing loans

–

11.

Issued capital

(a)

Ordinary shares

Consolidated group

Parent entity

2009

79,091

22,196

2008

415,849

19,755

90,000

2009

79,091

22,196

–

2008

414,999

19,755

90,000

101,287

525,604

101,287

524,754

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.

71,918,192 (2008: 66,918,192)

fully paid ordinary shares

(i)

Ordinary shares – number
At 1 July 2008

Shares issued – 5,000,000 on 3 July 2008 at

$0.17 Apex Minerals NL

Shares issued – 100,000 on 26 July 2007

at $0.30 RM Capital Pty Ltd

Shares issued – 500,000 on 31 December 2007

at $0.22 Meekal Pty Ltd

Shares issued – 100,000 on 31 December 2007

at $0.18 Simmonds

Shares issued – 100,000 on 31 December 2007

at $0.18 Muskett

Shares issued – 1,250,000 on 5 February 2008

at $0.135 Meekal Pty Ltd

Shares issued – 1,000,000 on 12 May 2008

–

Consolidated group

Parent entity

2009

2008

2009

2008

10,269,731

9,420,471

10,269,731

9,420,471

Consolidated group

Parent entity

2009

No.

2008

No.

2009

No.

2008

No.

66,918,192

60,418,192

66,918,192

60,418,192

5,000,000

–

5,000,000

–

100,000

–

500,000

100,000

–

100,000

–

1,250,000

–

100,000

500,000

100,000

1,250,000

1,000,000

2,450,000

1,000,000

at $0.18 Rubystar Nominees Pty Ltd – Penny’s Find

–

1,000,000

Shares issued – 2,450,000 on 12 May 2008

at $0.188 ERL Share Plan

–

2,450,000

Shares issued – 1,000,000 on 26 May 2008

at $0.15 Meekal Pty Ltd – Yuinmery

–

1,000,000

Balance at 30 June 2009

71,918,192

66,918,192

71,918,192

66,918,192

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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EMPIRE RESOURCES LIMITED AND C ONT ROLLED ENTI TI ES
11. NO TES TO THE FI NA NCIAL STA TEMENTS 3 0 J UNE 2 00 9

11.

Issued capital (continued)

(ii)

Ordinary shares – value
At 1 July 2008

Shares issued – 5,000,000 on 3 July 2008 at

Consolidated group

Parent entity

2009

2008

2009

2008

9,420,471

8,745,721

9,420,471

8,745,721

$0.17 Apex Minerals NL

850,000

–

850,000

–

Shares issued – 100,000 on 26 July 2007 at

$0.30 RM Capital

Shares issued – 500,000 on 31 December 2007

at $0.22 Meekal

Shares issued – 100,000 on 31 December 2007

at $0.18 Simmonds

Shares issued – 100,000 on 31 December 2007

at $0.18 Muskett

Shares issued – 1,250,000 on 5 February 2008

at $0.135 Meekal

–

Shares issued – 1,000,000 on 12 May 2008

at $0.18 Rubystar Nominees Pty Ltd – Penny’s Find –

Shares issued – 2,450,000 on 12 May 2008

under ERL Share Plan

Shares issued – 1,000,000 on 26 May 2008

at $0.15 Meekal Pty Ltd – Yuinmery

–

Less share issue costs

Balance at 30 June 2009

30,000

110,000

18,000

–

18,000

168,750

180,000

–

150,000

–

(740)

–

(740)

30,000

110,000

18,000

168,750

180,000

–

150,000

–

10,269,731

9,420,471

10,269,731

9,420,471

(b)

Options

As at 30 June 2009 (30 June 2008: 30,709,075) the Company had the following options on issue over ordinary shares:

Grant date

01-Feb-07

Date of expiry

Exercise price ($) Number under option

31-Dec-10

0.25

3,000,000

Page 40

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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EMPIRE RESOURCES LIMITED AND C ONT ROLLED ENTI TI ES
11. NO TES TO THE FI NA NCIAL STA TEMENTS 3 0 J UNE 2 00 9

12.

Reserves

625,265

511,541

625,265

511,541

Consolidated group

Parent entity

2009

2008

2009

2008

Reserves comprise the following:

Options reserve

Balance as at start of financial year

Share-based payment

511,541

113,724

492,587

18,954

511,541

113,724

492,587

18,954

Balance as at end of the financial year

625,265

511,541

625,265

511,541

Details of certain components of the option reserve arising as a consequence of equity based payments are included in
Note 19.

13.

Financial risk management

The Consolidated entity’s financial situation is not complex. It’s activities may expose it to a variety of financial risks
in the future: market risk (including currency risk and fair value interest rate risk), credit risk, liquidity risk and cash
flow interest rate risk. At that stage the Consolidated entity’s overall risk management program will focus on the
unpredictability of the financial markets and seek to minimise potential adverse effects on the financial performance of
the Consolidated entity.

Risk management is carried out under an approved framework covering a risk management policy and internal
compliance and control by management. The Board identifies, evaluates and approves measures to address financial
risks.

The Consolidated and the Parent entity hold the following financial instruments:

Financial assets

Cash and cash equivalents

Trade and other receivables

Financial liabilities

Trade and other payables

(a)

Market risk

Cash flow and fair value interest rate risk

Consolidated group

Parent entity

2009

2008

2009

2008

809,433

1,361,273

809,433

1,361,213

15,648

67,899

15,648

67,899

825,081

1,429,172

825,081

1,429,112

101,287

525,604

101,287

524,754

The Consolidated entity’s main interest rate risk arises from cash deposits to be applied to exploration and development
of areas of interest. Deposits at variable rates expose the Consolidated entity to cash flow interest rate risk. Deposits
at fixed rates expose the Consolidated entity to fair value interest rate risk. During 2009 and 2008, the Consolidated
entity’s deposits at variable rates were denominated in Australian Dollars.

As at the reporting date, the Consolidated entity had the following variable rate deposits and there were no interest rate
swap contracts outstanding:

Page 42

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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EMPIRE RESOURCES LIMITED AND C ONT ROLLED ENTI TI ES
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13.

Financial risk management (continued)

Deposit

Other cash available

Net exposure to cash flow

interest rate risk

2009

Weighted

average

2008

Weighted

average

interest rate

Balance

interest rate

Balance

763,168

46,265

887,561

473,712

4.9%

809,433

6.2%

1,361,273

The Consolidated entity analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking
into the renewal of existing positions.

Sensitivity – Consolidated and Parent entity

During 2009, if interest rates had been 1% higher or lower than the prevailing rates realised, with all other variables held
constant, there would be an immaterial change in post-tax profit for the year. Equity would not have been impacted.

(b)

Credit risk

The Consolidated entity has no significant concentrations of credit risk. Cash transactions are limited to high credit
quality financial institutions.

Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial
institutions, as well as credit exposures on outstanding receivables and committed transactions. In relation to other
credit risk areas management assesses the credit quality of the customer, taking into account its financial position, past
experience and other factors.

The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised
at the beginning of this note.

(c)

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate
amount of committed credit facilities and the ability to close-out market positions. The Consolidated entity manages
liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial
assets and liabilities. The Consolidated entity will aim at maintaining flexibility in funding by accessing appropriate
committed credit lines available from different counterparties where appropriate and possible. Surplus funds when
available are generally only invested in high credit quality financial institutions in highly liquid markets.

Financing arrangements

The Consolidated and parent entity has no borrowing facilities.

Page 42

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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EMPIRE RESOURCES LIMITED AND CONTROL L ED ENT IT IES
11. NO TES TO THE FI NA NCIAL STA TEMENTS 3 0 J UNE 2 00 9

13.

Financial risk management (continued)

Weighted

Floating

average

interest

Non–interest-

Fixed interest rate maturing

30 June 2009

effective

rate

Within year 1 to 5 years Over 5 years

bearing

Total

Financial Assets:

Cash and cash equivalents

4.9%

809,433

Trade and other receivables

Total Financial Assets

–

809,433

Financial Liabilities:

Trade and other payables

Short-term borrowings

Total financial liabilities

–

15,648

808,433

15,648

825,081

101,287

–

101,287

Weighted

Floating

average

interest

Non–interest-

Fixed interest rate maturing

30 June 2008

effective

rate

Within year 1 to 5 years Over 5 years

bearing

Total

Financial Assets:

Cash and cash equivalents

6.2%

1,361,273

Trade and other receivables

Total Financial Assets

–

1,361,273

Financial Liabilities:

Trade and other payables

Short-term borrowings

Total financial liabilities

–

1,361,273

67,899

1,429,172

525,604

–

525,604

Maturities of financial assets and liabilities
The note above analyses the Consolidated and parent entity’s financial liabilities. These liabilities comprise trade and
other payables, are non-interest-bearing and will mature within 12 months. The amounts disclosed are the contractual
undiscounted cash flows. There are no derivatives.

Maturity analysis of financial assets and liability based on management’s expectation

Year ended 30 June 2009

<6 months

6-12 months

1-5 years

>5 years

Total

Consolidated

Financial assets

Cash & cash equivalents

Trade & other receivables

Year ended 30 June 2009

Consolidated

Financial liabilities

Trade & other payables

Net maturity

809,433

15,648

825,081

101,287

723,794

–

809,433

15,648

825,081

101,287

723,794

Page 44

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 45

EMPIRE RESOURCES LIMITED AND CONTROL L ED ENT IT IES
11. NO TES TO THE FI NA NCIAL STA TEMENTS 3 0 J UNE 2 00 9

13.

Financial risk management (continued)

(d)

Fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.

The fair value of financial instruments that are not traded in an active market (for example, investments in unlisted
subsidiaries) is determined using valuation techniques or cost (impaired if appropriate). The Consolidated entity uses
a variety of methods and makes assumptions that are based on market conditions existing at each balance date.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair
values due to their short-term nature.

14.

Capital and Leasing Commitments

(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:

Consolidated group

Parent entity

2009

2008

2009

2008

34,272

36,137

32,649

34,418

–

34,272

36,137

–

32,649

34,418

–

70,409

67,067

70,409

67,067

Consolidated group

Parent entity

2009

2008

2009

2008

- not later than 12 months
- between 12 months and 5 years

- greater than 5 years

685,458
2,741,832

970,004
3,880,016

585,458
2,341,832

919,155
3,676,620

–

3,427,290

4,850,020

2,927,290

4,595,775

Page 44

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 45

EMPIRE RESOURCES LIMITED AND C ONT ROLLED ENTI TI ES
11. NO TES TO THE FI NA NCIAL STA TEMENTS 3 0 J UNE 2 00 9

15. Directors and other key management personnel

(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

Short-term employee benefits

Post-employment benefits

Share-based payments

Consolidated group

Parent entity

2009

2008

2009

2008

325,200

310,750

325,200

310,750

–

97,478

422,678

–

16,246

326,996

–

97,478

422,678

–

16,246

326,996

The company has taken advantage of the relief provided by AASB 2008-4 Amendments to Australian Accounting
Standard – Key Management Personnel Disclosures by Disclosing Entities, and has transferred the detailed
remuneration disclosures to the directors’ report. The relevant information can be found in the Remuneration
Report on pages 21 to 24.

(iii) Equity instrument disclosures relating to directors and other key management personnel

Shareholdings
The number of ordinary shares in the Company held during the year by each director and other key management
personnel, including their personally related entities or associates, are set out below. There were no shares granted
during the reporting period as compensation:

2009
Shareholdings

Directors

Mr Adrian Griffin

Mr David Sargeant

Mr Adrian Jessup

Specified Executives

Mr Simon Storm

Balance at

the start

Issued under

On exercise

Net change

the end

of the period

share plan

of options

other

of the period

500,000

5,850,000

1,967,555

8,317,555

350,000

–

500,000

250,000

100,000

6,100,000

2,067,555

350,000

8,667,555

–

350,000

Page 46

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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EMPIRE RESOURCES LIMITED AND C ONT ROLLED ENTI TI ES
11. NO TES TO THE FI NA NCIAL STA TEMENTS 3 0 J UNE 2 00 9

15. Directors and other key management personnel (continued)

2008
Shareholdings

Directors

Mr Adrian Griffin

Mr David Sargeant

Mr Adrian Jessup

Specified Executives

Mr Simon Storm

Balance at

the start

Issued under

On exercise

Net change

the end

of the period

share plan

of options

other

of the period

–

5,100,000

1,367,555

500,000

750,000

500,000

6,467,555

1,750,000

–

350,000

–

500,000

5,850,000

100,000

1,967,555

100,000

8,317,555

–

350,000

All equity transactions with key management personnel, which relate to the Company’s listed ordinary shares, have
been entered into on an arms length basis.

Option holdings

Details of shares issued as remuneration can be found in the remuneration report.

The number of options over ordinary shares in the Company held during the reporting period by each director and key
management personnel, including their personally related entities, are set out below.

2009

Directors

Mr Adrian Griffin

Mr David Sargeant

Mr Adrian Jessup

Specified Executives

Mr Simon Storm

Balance at

the start

Balance at

Vested and

the end

exercisable

of the period

Acquired

Expired

of the period at 30 June 2009

300,000

2,849,999

1,183,777

–

(300,000)

(2,849,999)

(1,183,777)

4,333,776

–

(4,333,776)

200,000

–

(200,000)

–

Page 46

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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EMPIRE RESOURCES LIMITED AND C ONT ROLLED ENTI TI ES
11. NO TES TO THE FI NA NCIAL STA TEMENTS 3 0 J UNE 2 00 9

16.

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 15 respectively.

Other transactions with directors, their associates and director related entities are as follows:

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 A Griffin

17.

Remuneration of auditors

Consolidated group

Parent entity

2009

2008

2009

2008

132,000

264,000

125,000

250,000

132,000

264,000

125,000

250,000

30,000

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

2009

2008

2009

2008

25,200

5,700

30,900

20,350

6,710

27,060

25,200

4,500

29,700

20,350

2,420

22,770

18.

Cash Flow Information

(i)

Reconciliation of cash flow from operations with loss after income tax

Loss after income tax

Depreciation

Share based payments expense

Impairment on non-current assets

Impairment of receivable

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

Consolidated group

Parent entity

2009

2008

2009

2008

(1,167,359)

(3,713,015)

(1,168,149)

(4,887,737)

24,601

113,724

–

23,919

18,954

–

80,000

24,601

113,724

23,919

18,954

–

1,860,431

80,000

959,537

3,324,163

959,537

2,638,454

(69,497)

(265,979)

(70,287)

(265,979)

52,251

(336,758)

2,441

(80,000)

(16,686)

13,328

52,251

(335,908)

2,441

(80,000)

(16,686)

13,328

Net cash outflow from operating activities

(351,563)

(349,337)

(351,503)

(349,337)

Page 48

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 49

EMPIRE RESOURCES LIMITED AND C ONT ROLLED ENTI TI ES
11. NO TES TO THE FI NA NCIAL STA TEMENTS 3 0 J UNE 2 00 9

19. Share Based Payments

(a)

Employee share plan

The Company has established an employee share plan, which is also available to Directors, known as the 2008 Empire
Resources Limited Employee Share Plan and was approved by shareholders on 28 November 2007.

The issue price for Shares offered under the Plan is at the discretion of the Board, provided that the issue price is not
less than 1% below the weighted average sale price of Shares sold through ASX during the one week period up to and
including the offer date.

A Director or Employee who is invited to subscribe for Shares under the Plan may also be invited to apply for a loan
up to the amount payable in respect of the Shares accepted, on the following terms:

a) Loans must be made solely to the Participant or their nominee and in the name of either the Participant or their

nominee as the case may be.

b) The principal amount outstanding under a Loan will be interest free.

c) Any loan made available to a Participant shall be applied by the Company directly toward payment of the issue price

of the Shares to be acquired under the Plan.

d) the term of the loan shall be three (3) years from the date of issue of the Shares

e) The Company retains a lien over each share acquired pursuant to the loan until such time as the loan is repaid.

Set out below is a summary of shares issued to Directors and employees under the Empire Resources Employee Share
Plan:

Consolidated and parent
entity – 30 June 2009
Issue date

Expiry date

Balance
at start
of period
$A

Issued
during year
Number

Loan repaid
during year
Number

Expired
during year
Number

Balance
at end
of year
Number

Exercisable
at end
of year
Number

12 May 2008

21 May 2013 2,450,000

–

2,450,000

–

Weighted average exercise price

0.188

(b)

Expenses arising from share-based payment transactions

Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit
expense were as follows:

Consolidated group

Parent entity

2009

2008

2009

2008

Shares issued under employee share plan

113,724

18,954

113,724

18,954

20.

Segment Information

For the year ended 30 June 2009 the Consolidated and Parent entity operated predominantly in Western Australia in
the minerals, development and exploration operating segment.

21.

Events after the Balance Sheet Date

On 14 August 2009 the Company announced sophisticated investors had injected $630,000 into the company to assist
fund the aggressive drilling schedules over the next few months on its key Western Australian projects. The proceeds
were raised via a placement to the investors of 12,600,000 fully paid ordinary shares at $0.05 per share.

On 28 August 2009, the Company announced it had entered into a six month exclusive option agreement on payment
of $10,000, to sell its 100% owned Yarlarweelor uranium project in Western Australia.

Other than this, since 30 June 2009 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 Company.

Page 48

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 49

In the directors’ opinion:

12. DIRECTORS’ DECLA RA TION

(a)

the financial statements and notes set out on pages 26 to 49 are in accordance with the Corporations Act 2001
including:

(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional

reporting requirements; and

(ii) giving a true and fair view of the Company’s and Consolidated entity’s financial position as at 30 June 2009

and of their performance for the financial year ended on that date; and

(b)

(c)

there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable; and

the audited remuneration disclosures set out on pages 21 to 24 of the Directors’ report comply with Accounting
Standard AASB 124 Related Party Disclosures and the Corporations Regulations 2001.

The directors have been given the declarations by the Chief Executive Officer and the Chief Financial Officer required
by section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the directors.

David Sargeant
Managing Director

Perth, Western Australia
21 September 2009

Page 50

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

Page 51

8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 8 9261 9100 F +61 8 9261 9101
www.rsmi.com.au

INDEPENDENT AUDITOR’S REPORT

13. IND EP ENDENT AUDITO R’S R EPORT
TO THE MEMBERS OF
TO THE M EMBE RS OF EMPIRE R ESO UR CES L IMI TED
EMPIRE RESOURCES LIMITED

Report on the Financial Report

We have audited the accompanying financial report of Empire Resources Limited (“the company”), which
comprises the balance sheet as at 30 June 2009, and the income statement, statement of changes in equity and
cash flow statement for the year ended on that date, a summary of significant accounting policies, other
explanatory notes and the directors' declaration of the consolidated entity comprising the company and the
entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in
accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the
preparation and fair presentation of the financial report that is free from material misstatement, whether due to
fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances. In Note 1 to the Financial Statements, the directors also state, in accordance
with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian
equivalents to International Financial Reporting Standards ensures that the financial report, comprising the
financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant
ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable
assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor's judgement, including the assessment of the
risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial report in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made
by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.

Liability limited by a
scheme approved under
Professional Standards
Legislation

Major Offices in:
Perth, Sydney, Melbourne,
Adelaide and Canberra
ABN 36 965 185 036

RSM Bird Cameron Partners is an
independent member firm of RSM
International, an affiliation of independent
accounting and consulting firms.

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Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s Opinion

In our opinion:

(a) the financial report of Empire Resources Limited is in accordance with the Corporations Act 2001,

including:

(i) giving a true and fair view of the company's and consolidated entity’s financial position as at 30 June

2009 and of their performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations)

and the Corporations Regulations 2001; and

(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1 to

the financial statements.

Report on the Remuneration Report

We have audited the Remuneration Report which is included in the directors’ report for the financial year ended
30 June 2009. The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to
express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.

Auditor’s Opinion

In our opinion the Remuneration Report of Empire Resources Limited for the financial year ended 30 June 2009
complies with section 300A of the Corporations Act 2001.

RSM BIRD CAMERON PARTNERS
Chartered Accountants

Perth, WA
Dated: 21 September 2009

S C CUBITT
Partner

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 8 9261 9100 F +61 8 9261 9111
www.rsmi.com.au

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the financial report of Empire Resources Limited for the year ended 30 June
2009, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

(i)

(ii)

the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

any applicable code of professional conduct in relation to the audit.

RSM BIRD CAMERON PARTNERS
Chartered Accountants

Perth, WA
Dated: 21 September 2009

S C CUBITT
Partner

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Liability limited by a
scheme approved under
Professional Standards
Legislation

Major Offices in:
Perth, Sydney, Melbourne,
Adelaide and Canberra
ABN 36 965 185 036

RSM Bird Cameron Partners is an
independent member firm of RSM
International, an affiliation of independent
accounting and consulting firms.

14. CORPORATE GOV ER NANCE PRI NCIPL ES

Introduction

Empire Resources Limited has made it a priority to
adopt systems of control and accountability as the basis
for the administration of corporate governance. Some
of these policies and procedures are summarised in
this statement. To the extent that they are applicable,
and given its circumstances, the Company adopts the
Eight Essential Corporate Governance Principles and
Best Practice Recommendations (Recommendations)
published by the Corporate Governance Council of
the ASX.

Where the Company’s corporate governance practices
follow a recommendation, the board has made
appropriate statements reporting on the adoption of
the recommendation. Where, after due consideration,
the Company’s corporate governance practices depart
from a recommendation, the board has offered full
disclosure and reason for the adoption of its own
practice, in compliance with the “if not, why not”
regime.

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 for consideration.

DISCLOSURE OF CORPORATE GOVERNANCE PRACTICES

Summary Statement

Recommendation

ASX Principles and

Recommendations

If not, why not

Recommendation

ASX Principles and

Recommendations

If not, why not

1.1

1.2

1.3

2.1

2.2

2.3

2.4

2.5

2.6

3.1

3.2

3.3

4.1

4.2

√

Refer (a) below

Refer (b) below

Refer (c) below

Refer (d) below

Refer (e) below

Refer (f) below

Refer (g) below

Refer (f) below

Refer (c) below

4.3

4.4³

5.1

5.2

6.1

6.2

7.1

7.2

7.3

7.4

8.1

8.2

8.3

n/a

√

n/a

Refer (h) below

n/a

Refer (i) below

n/a

Refer (j) below

n/a

Refer (k) below

n/a

Refer (l) below

n/a

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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(a)

Principle 1 Recommendation 1.1, 1.2 and 1.3

(b)

Principle 2 Recommendations 2.1, 2.2, 2.3

Notification of Departure
Empire has not formally disclosed the functions
reserved to the board and those delegated to senior
executives. The appointment of non-executive
directors to the board is not formalised in writing by
way of a letter or other agreement.

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 do 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
independent non-executive chairman, Mr Adrian
Griffin, the managing director (Mr David Sargeant)
and one executive director (Mr Adrian Jessup),
both of whom are not independent. The Company
considers that each of the directors possess skills and
experience suitable for building the Company. It is
the board’s intention to appoint another independent
director as and when the size and complexity of
its operations changes and a suitable candidate is
identified.

(c)

Principle 2 Recommendation 2.4 and Principle 4
Recommendations 4.1, 4.2, 4.3, 4.4

Notification of Departure
Separate nomination and audit 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.

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(d)

Principle 2 Recommendation 2.5

Performance Evaluation

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 justify this.

(e)

Principle 2 Recommendation 2.6

Companies should provide the information indicated
in the Guide to Reporting on Principle 2.

Disclosure:

Skills, Experience, Expertise and term of office
of each Director

A profile of each director containing their skills,
experience, expertise and term of office is set out in
the Directors’ Report.

Identification of Independent Directors

The independent director of the Company during the
Reporting Period is disclosed in (b) above.

Independence is measured having regard to the
relationships listed in Box 2.1 of the Principles &
Recommendations.

Statement concerning availability of
Independent Professional Advice

To assist directors with independent judgement, it
is the board’s policy that if a director considers it
necessary to obtain independent professional advice
to properly discharge the responsibility of their
office as a director then, provided the director first
obtains approval for incurring such expense from the
chair, the Company will pay the reasonable expenses
associated with obtaining such advice.

Nomination Matters

The full board sits in its capacity as a nomination
committee.

During the reporting period the performance
evaluations for the board and individual directors did
occur in accordance with the disclosed process in
Recommendation 2.5.

Selection and Reappointment of Directors

The board considers the balance of independent
directors on the board as well as the skills and
qualifications of potential candidates that will best
enhance the board’s effectiveness.

Each director other than the managing director must
retire from office no later than the longer of the third
annual general meeting of the company or three years
following that director’s last election or appointment.
At each annual general meeting a minimum of one
director or a third of the total number of directors
must resign. A director who retires at an annual
general meeting is eligible for re-election at that
meeting. Reappointment of directors is not automatic.

(f)

Principle 3 Recommendation 3.1, 3.3

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.

(g)

Principle 3 Recommendation 3.2

Companies should establish a policy concerning
trading in company securities by directors, senior
executives and employees, and disclose the policy or a
summary of that policy.

Disclosure:

The board has adopted a policy that prohibits dealing
in the Company’s securities by directors, officers
and employees when those persons possess inside
information. The policy prohibits short-term or
speculative trading of the Company’s securities. The
policy provides that permission be obtained from the
chairman prior to trading.

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(h)

Principle 5 Recommendation 5.1, 5.2

(k)

Principle 7 Recommendation 7.3

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.

(i)

Principle 6 Recommendation 6.1, 6.2

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.

(J)

Principle 7 Recommendation 7.1, 7.2

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.

The board should disclose whether it has received
assurance from the chief executive officer (or
equivalent) and the chief financial officer (or
equivalent) that the declaration provided in accordance
with section 295A of the Corporations Act is founded
on a sound system of risk management and internal
control and that the system is operating effectively
in all material respects in relation to financial
reporting risks.

Disclosure:

The chief executive officer (or equivalent) and the
chief financial officer (or equivalent) have provided a
declaration to the board in accordance with section
295A of the Corporations Act and have assured the
board that such declaration is founded on a sound
system of risk management and internal control and
that the system is operating effectively in all material
respects in relation to financial risk.

(l)

Principle 8 Recommendations 8.1

Notification of departure
Empire does not have a formal remuneration policy
and has not established a separate remuneration
committee. Directors and management may receive
options or shares.

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 or shares. The issue of options
or shares 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.

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Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as
follows. The information is current as at 21 September 2009.

15. ADDITIONAL INFORMA TIO N

(a) Distribution of shares

The numbers of shareholders, by size of holding are:

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

144

397

130

762

The number of shareholdings, held in less than marketable parcels is 96.

(b)

Twenty largest shareholders

The names of the twenty largest holders of quoted shares are:

SHAREHOLDERS

LIM JONATHAN

APEX MINERALS NL

KIRKDALE HLDGS PL

MEEKAL PL

SUHARITDUMRONG SUKHON

DW SARGEANT PL

RUBYSTAR NOM PL

ZETEK RES PL

ANZ NOM LTD

COLTRANGE PL

RBJ NOM PL

BIRKNER ARTUR

ARMCO BARRIERS PL

AGENS PL

TRISTESSE PL
DW SARGEANT PL

JESSUP ADRIAN MARTIN L

SUPER 1136 PL

ROBINSON KIM + JENNIFER

ELY PLACE NOM LTD

15
16

Number of shares held

Holding (%)

5,630,000

5,000,000

3,175,000

3,098,333

2,268,500

2,000,000

1,878,444

1,553,791

1,497,677

1,300,000

1,182,500

1,100,000

900,000

875,000
800,000

722,222

700,000

699,500

666,666

6.81%

6.05%

3.84%

3.75%

2.74%

2.42%

2.27%

1.88%

1.81%

1.57%

1.43%

1.33%

1.09%

1.06%
0.97%

0.87%

0.85%

0.81%

37,047,633

44.82%

Stock Exchange Listing – Listing has been granted for all the ordinary shares of the company on all Member Exchanges
of the Australian Securities Exchange Limited except for the following which are not quoted by virtue of restriction
agreements.

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITIES – ANNUAL REPORT 2009

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Quoted shares on ASX

Unquoted

Shares issued under ERL Share Plan

Total issued share capital

80,218,192

2,450,000

82,668,192

(c)

Substantial shareholders

The names of substantial shareholders who have notified the Company in accordance with section 671B of the
Corporations Act 2001 are:

Shareholder

Apex Minerals NL

David Sargeant

Number of shares

5,000,000

6,100,000

(d)

Voting rights

All shares carry one vote per share without restriction.

(e)

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 2009 it used the cash that it had at the
time of admission in a way consistent with its business objectives.

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INTERESTS IN MINING AND EXPLORATION TENEMENTS as 21 September 2009

PROJECT

TROY CREEK

PENNY’S FIND

LARKINS FIND
YUINMERY

PARADIS

NOONDIE

YARLARWEELOR

TORRENS

TENEMENT

E69/1486

E69/1728

E69/1729

E69/1826

E69/2357

E69/2358

E69/2485

P69/40

P69/41

P69/42

P69/43

P69/44

P69/45

E27/221

E27/255

M27/156

M27/241

M27/269

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

P27/1922

P27/1993

P27/1962

E39/1248
M57/265

P57/1214

P57/1215

P57/1216

P57/1217

E57/735

E57/766

E57/767

E47/1200

E47/1203

E57/643

E57/648

E52/2095

EL3530

EL4152

INTEREST

REMARKS

100%

100%
100%

100%

Earning up to 80%
100%

100%

Application not yet granted

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