EMPIRE RESOURCES LIMITED
OPERATIONS REVIEW
EMPIRE RESOURCES LIMITED
ABN 32 092 471 513
Annual Report
30 June 2013
EMPIRE RESOURCES LIMITED
Corporate Directory
Directors
Company Secretary
Registered Office
Auditor
Share Registry
:
:
:
:
:
Thomas Revy
David Sargeant
Adrian Jessup
Simon Storm
Registered Office and Principal Place of Business
53 Canning Highway
Victoria Park
WA 6100
Telephone: (08) 9361 3100
Facsimile: (08) 9361 3184
Email info@resourcesempire.com.au
Website www.resourcesempire.com.au
HLB Mann Judd
Level 4
130 Stirling Street
Perth
WA 6000
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross
WA 6153
Telephone: (08) 9315 2333
Facsimile: (08) 9315 2233
Australian Securities Exchange
Home Branch: Perth
Code: ERL
ABN
:
32 092 471 513
EMPIRE RESOURCES LIMITED
HIGHLIGHTS 2012 - 2013
YUINMERY
Diamond drilling extends A Zone – this high grade copper-gold deposit remains open at
depth.
Re-interpretation of geophysical data indicates the Just Desserts and A Zone deposits,
which lie just 1.3 km apart, lie on the same mineralised horizon which has been disrupted
by faulting. New geophysical targets have been discovered on this horizon located
between Just Desserts and A Zone.
The discovery of mineralisation that may link the two deposits has potentially significant
planning and feasibility consequences.
Further high grade gold intersections confirm the underground potential of the project :
PENNY’S FIND
8m @ 5.16g/t Au from 155m, including 4m @ 8.03g/t Au
3m @ 17.41g/t Au from 66m, including 2m @ 24.33g/t Au
3m @ 8.89g/t Au from 173m
Current resource of 314,000 tonnes @ 5.18g/t Au defined to a vertical depth of 150m.
POINT KIDMAN
New 800 km
discovered along a 2.5 km long zone where there has been no previous exploration.
2
gold project acquired in prolific Laverton gold belt with gold nuggets
Comparable geology to the world class Granny Smith mine (4.3 M oz).
Widespread, highly anomalous Rare Earth elements discovered in initial reconnaissance
drilling.
JOANNA
A new project has been acquired in the Great Sandy Desert which is considered
prospective for gold and base metals.
SUBSEQUENT TO 30 JUNE 2013
A twelve month extension has been negotiated on the option of the La Mancha tenements
at Yuinmery.
After a review of exploration results from the Wynne base metal project in the Gascoyne
region of Western Australia, the tenements were surrendered.
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EMPIRE RESOURCES LIMITED
CHAIRMAN’S REPORT
Dear Shareholders
Empire Resources, like many junior explorers in the market, has had a testing 12 months
in the market, which at this stage looks like it may continue for the short term at least.
Despite our flagship Yuinmery Project having enormous potential, the market has proved
difficult in terms of raising additional equity. Your Board is forever cognisant of the need to
balance the raising of funds to further develop the company’s projects with the enormous
dilutionary impacts that shareholders would incur, bringing in new investors into the
Company.
Our strategic review of each of the Company’s projects has included the options of partial
or full divestment, joint venturing on a suitable farm-in arrangement or sitting tight and
waiting for market conditions to improve. This is an ongoing process that currently forms
an integral part of each Board and senior management meeting.
Our recent decision to commence working with an experienced corporate advisor is
testament to the Company’s commitment to ensure that Empire is continuing to identify
new opportunities as well as maximising its value on current projects. The Company has
heavily incentivised the advisors to ensure that all parties remain focused on increasing
shareholder value.
Empire will continue to preferentially drive organic growth where possible by increasing the
value of its current assets whilst looking for new opportunities both here in Australia and
abroad, that will complement the Company’s current skill and experience base.
While 2013 has proven to be a testing year, I would like to take the time to thank the
Empire team for their efforts and on behalf of the Board, would like to take the opportunity
to thank all our shareholders for their continued patience and support in the Company.
______________
Thomas Revy
Chairman
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CORPORATE OBJECTIVES
Empire Resources Ltd has a long term objective to become a successful mining house built on the
discovery and development of world class mineral deposits.
In the short term, Empire Resources is committed to enhancing value for shareholders by obtaining
cash flow from the Company’s existing copper and gold deposits.
Empire’s options for realising value include delineating reserves and commencing mining
operations; entering into significant farm-out or royalty arrangements or by acquiring new
opportunities to provide an early cash flow.
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EMPIRE RESOURCES LIMITED
REVIEW OF OPERATIONS
REVIEW OF OPERATIONS
Empire Resources Ltd listed on the Australian Stock Exchange in February 2007 with a focus on
copper and gold exploration. The Company is managed by a team with extensive exploration and
resource development experience.
In its short six year history, Empire Resources has continuously shown an ability to locate new
projects by reinterpreting existing data and securing tenements with unrealised potential.
This ability of sourcing projects and then following through with solid drilling programs has seen the
company rack up six mineral discoveries in the resource-rich state of Western Australia, with JORC
compliant resources at two of these.
Lateral thinking in a competitive market has resulted in Empire Resources securing a portfolio of
projects with copper, gold, platinum and rare earth potential which will add real value to
shareholders as the opportunities are developed.
Yuinmery : Copper - Gold Project
(100% interest and option to earn over 91.44% interest on adjoining tenements)
The flagship project for Empire Resources is the 100 per cent owned Yuinmery project located 475
km northeast of Perth in Western Australia.
The Yuinmery project sits in the base metal rich Youanmi greenstone belt with the principal target
being volcanogenic massive sulphide (VMS) deposits. Elsewhere in the world, VMS deposits
typically occur in clusters with individual prospects often mined to great depths. Similar VMS
deposits are found at the Golden Grove mine to the west and Jaguar mine to the east underlining
the potential of Yuinmery.
The potential of Yuinmery arises from the calibre of drill intersections, with a string of high grade
copper-gold results at two of the projects most advanced prospects – Just Desserts and A Zone.
Interest in Yuinmery increased after excellent drilling results in 2007-2008 discovered high grade
copper-gold zones at the Just Desserts prospect. Assay results included 23m @ 2.7% Cu, 1.3g/t
Au; 14m @ 2.6% Cu, 1.9g/t Au; 13m @ 2.6% Cu, 1.7g/t Au; 6m @ 3.8% Cu, 12.9g/t Au and
10m @ 4.2% Cu, and 6.0g/t Au.
Based on the above drilling an indicated and inferred JORC resource of 1.07 million tonnes @
1.8% Cu, 0.8g/t Au was estimated for Just Desserts. This resource lies between 50 and 250 metres
below surface. Further drilling is planned around and also within the currently defined resource itself
to upgrade inferred resources to indicated.
In September 2010 Empire Resources entered into an option agreement to purchase an interest in
adjoining tenements managed by La Mancha Resources Ltd. This deal meant Empire’s tenement
in this base metal rich province, giving the project significant scope as
holding increased to 250 km
it develops.
2
Of major interest to Empire Resources was an airborne electromagnetic (EM) survey completed by
La Mancha over their tenements which revealed numerous untested conductive zones for base
metal sulphides.
This deal has paid dividends, with subsequent exploration on the La Mancha tenements leading to
the discovery of significant copper-gold mineralisation at the A Zone prospect and large widths of
low grade platinum – palladium mineralisation (PGM) at the Constantine prospect which included
intersections of up to 80m @ 0.49 g/t Pt+Pd.
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EMPIRE RESOURCES LIMITED
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EMPIRE RESOURCES LIMITED
REVIEW OF OPERATIONS
During the past year Empire Resources completed five Induced Polarisation (IP) geophysical
surveys, 6 holes totalling 1,200m of reverse circulation drilling and one diamond core hole at five
different prospects on both Empire’s and La Mancha’s tenements.
Yuinmery - A Zone Prospect
The A Zone prospect is located 1.3 km north of Just Desserts, where drilling in 2012 confirmed the
view that A Zone hosts a major copper-gold deposit.
Previous intersections at A Zone include -
5m @ 4.4% Cu, 0.4g/t Au within 19m @ 1.8% Cu, 0.3g/t Au
4m @ 4.7% Cu, 0.5g/t Au within 7m @ 3.2% Cu, 0.3g/t Au
3m @ 8.2% Zn within 8m @ 4.0% Zn
7m @ 2.2% Cu, 0.6g/t Au within 12m @ 1.8% Cu, 0.5g/t Au
3m @ 4.0% Cu, 3.3g/t Au within 6m @ 3.0% Cu, 1.7g/t Au
5m @ 2.8% Cu, 1.2g/t Au within 10m @ 1.8% Cu, 0.9g/t Au
The copper–gold and zinc mineralisation at A Zone occurs in two horizons which dip eastwards and
plunge to the north. The Upper Horizon hosts the major mineralisation and remains open at depth.
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EMPIRE RESOURCES LIMITED
REVIEW OF OPERATIONS
During 2013 one diamond core hole (YRC12-02D) was completed to a depth of 379m testing the
northwestern edge of the deposit. This intersected 3m @ 1.8% Cu, 1.1g/t Au from 303m downhole.
One 270m deep RC pre-collar was also completed in preparation for diamond drilling beneath hole
YRC11-42D.
Ongoing drilling will allow Empire Resources to calculate a maiden resource at A Zone which will
expand the total resource base of Yuinmery, lifting the economics of the total project.
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EMPIRE RESOURCES LIMITED
REVIEW OF OPERATIONS
During the past year a re-interpretation of the geology and magnetics at Yuinmery has led to the
conclusion the Just Desserts and A Zone deposits occur in the same mineralised horizon which has
been disrupted and offset by faulting.
Reprocessing of ground EM surveys has identified two new targets at the YC23 prospect located
between the existing Just Desserts and A Zone deposits. These new targets, which represent an
extension to the Just Desserts mineralization, lie in this same horizon but have been moved by
faulting 350m to the east of Just Desserts. The anomaly closest to Just Desserts is the stronger
and larger of the two and will be the priority drill target for the next round of RC drilling
YC23 Prospect Drill Targets on Magnetics
YC23 Prospect Drill Targets on
Electromagnetics
Empire holds the expansion of the Yuinmery resource as its central focus and is excited to be
generating additional targets in between known mineral deposits.
The area to be targeted has had no drilling or sampling carried out previously, so the discovery of
further mineralisation in this area would have a significant impact on the size and economics of the
Yuinmery project.
Yuinmery – Other Prospects
Reverse circulation drilling was also undertaken at the YC3A, YC10, YC16 and Constantine
prospects testing IP or EM anomalies.
At YC16, 3m @ 0.34% Cu, 3ppm Ag was intersected from 147m downhole associated with
disseminated pyrite and chalcopyrite at the top of a coincident IP and EM anomaly. Downhole EM
will be used to determine if any massive sulphide bodies are located beneath this hole.
One RC hole was also completed 300 metres north of the Constantine prospect testing the same
platinum group metals (PGM) bearing horizon. This hole intersected 4m @ 0.16% Ni and 0.51g/t
Pt+Pd from 66 metres downhole. .
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EMPIRE RESOURCES LIMITED
REVIEW OF OPERATIONS
Strong IP and EM anomalies were drill tested at the YC3A and YC10 prospects respectively.
Although no significant sulphides were intersected in either hole, downhole EM is planned to
determine if any massive sulphide bodies are located close by.
In the coming year besides concentrating work on the A Zone deposit, exploration drilling will target
a number of other geophysical and/or geochemical anomalies which show good potential for
hosting base metal sulphide mineralisation. These include the YC23, YC24 and Maximus
prospects.
Penny’s Find : Gold Project - 60% interest
The first discovery for the Company in 2007 was Penny’s Find, a near surface, high grade gold
deposit situated in the Eastern Goldfields of Western Australia, within close proximity to the gold
mining centres of Kalgoorlie and Kanowna Belle.
Initial drilling at Penny’s Find outlined a JORC compliant resource of 314,000 tonnes at 5.2 g/t
gold to 150 metres depth.
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EMPIRE RESOURCES LIMITED
REVIEW OF OPERATIONS
PENNY’S FIND MINERAL RESOURCE
Category
Tonnes
Measured
79,000
Indicated
Inferred
TOTAL
132,000
103,000
314,000
Grade
g/tAu
4.40
3.98
7.33
5.18
Ounces
11,120
16,880
24,313
52,313
Brimstone Resources Ltd, who currently hold a 40% interest in the project, completed further RC
and diamond drilling of the deposit in August/September 2012. Although 22 holes, 2,464 metres of
RC and 198 metres of diamond coring were completed, drilling problems resulted in many failed
holes. Only six RC holes and two diamond holes successfully intersected the main lode but all eight
holes returning significant gold mineralisation. This included:
Hole ID
PFRC12-14
PFRC12-15
PFRC12-18
PFRC12-27
From
(m)
135
152
222
173
To
(m)
137
154
224
176
Int
(m)
2
2
2
3
Au
g/t
3.07
4.41
8.75
8.89
PFRC12-28D 187.10 188.30 1.20 17.19
PFRC12-32
incls
PFRC12-33
incls
66
66
155
158
69
68
163
162
3
2
8
4
17.41
24.33
5.16
8.03
PFRC12-36D 200.05 206.10 6.05 2.83
In the main lode, high grade, coarse gold mineralisation is hosted by quartz veins at the contact
between shale and basalt. Metallurgical test work has shown both oxide and fresh mineralisation to
be free milling with a high gravity recoverable gold component of >60% and a total gold recovery of
>96%. The Penny’s Find resource is located on granted mining lease M27/156.
Discussions are currently underway with Brimstone Resources to decide the optimum route forward
for this rich gold deposit.
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Point Kidman : Gold + REE Project – 80% interest
In mid 2012 Empire Resources acquired an 80% interest in a new gold project at Point Kidman, 40
km to the east of Laverton in the Eastern Goldfields of WA.
The Point Kidman project, located in the prolific Laverton gold region, comprises twelve exploration
licences covering a total area of 800 km2.
Recent metal detecting by prospectors discovered numerous gold nuggets spread along a 2.5 km
long zone. The area of nuggets overlies extensive quartz vein swarms and stockworks hosted by
leached and weathered granite with some veins showing limonite-goethite staining after sulphides.
This new gold discovery is in an area where there are no historical gold workings or previous
exploration drilling.
In addition, extensive soil-auger sampling undertaken by the tenement holders around the area of
the nugget discovery has outlined a number of other gold anomalies in the immediate vicinity.
The association of gold mineralization with granite at Point Kidman shows strong similarities to the
Granny Smith gold mine 50 km to the southwest and the Golden Cities mine located north of
Kalgoorlie. Both these large gold deposits are either partially or wholly located within granite.
The Laverton region is one of the best gold endowed areas within the Yilgarn Craton and is host to
a number of world class gold deposits such as the Sunrise Dam, Granny Smith and Wallaby mines,
all discovered and developed within the past 30 years. The total gold produced to date from the
region is in excess of 28 million ounces.
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Point Kidman - Quartz vein stockwork in weathered granite
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REVIEW OF OPERATIONS
During the past year the Company purchased detailed aeromagnetics over the entire tenement
holding to carry out a detailed structural analysis. On tenements requiring immediate expenditure, it
also completed 52 holes, 1,126 metres of aircore drilling and 599 soil-auger holes.
The aircore drilling targeted four discrete bullseye magnetic anomalies close to the margin of a
large granite intrusion. Although no significant gold values were found, highly anomalous rare earth
elements (REE) were intersected in a number of holes at each site. Better intersections included:
PKAC001 : 4m @ 0.21% REE from 36m to 40m, Prospect M1
PKAC027 : 3m @ 0.18% REE from 48m to EOH, Prospect M2
PKAC033 : 1m @ 0.30% REE from 8m to EOH, Prospect M3
PKAC051 : 4m @ 0.27% REE from 24m to 28m, Prospect M4
The REE are dominated by the light rare earths (LREE) Cerium, Lanthanum, Neodymium and
Praseodymium which together comprise on average 94% of the total REE. Uranium, thorium and
phosphorus values are low.
The magnetic targets tested by aircore drilling lie on prominent linear structures which can be traced
on regional magnetics extending for at least 20 km within the Company’s tenements. Along these
structures far more prominent magnetic anomalies exist than those drilled to date.
The significance of the anomalous REE discovered at four different prospects is at this stage
unknown, but they are initially thought to be related to possible hydrothermal activity associated with
regional shear zones. The world class Mt Weld carbonatite hosted REE deposit lies 50 km to the
southwest of Point Kidman.
Point Kidman Prospect Locations on Magnetics(RTP1VD)
During the coming year the Company plans to fully drill test the area of the gold nugget discovery
and to further investigate the significance of the rare earth occurrences.
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EMPIRE RESOURCES LIMITED
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Damperwah : Copper Project – earning 70% interest
Empire Resources added to its discovery portfolio in 2012 by identifying the Damperwah project
which sits in an area of volcanogenic massive sulphide copper mineralisation in the Warriedar Fold
Belt in Western Australia, 320 kilometres northeast of Perth and 60 kilometres southwest of the
Golden Grove copper-zinc mine.
Sampling by Empire uncovered three gossanous ironstone lenses in areas where only minimal
previous exploration had been undertaken. The gossanous ironstones are geochemically
anomalous in copper with rock chip values up to a maximum of 2,880 ppm Cu. The largest
gossanous zone, the Sears prospect, has a strike length in excess of 250 metres and a width up to
15 metres.
Gossan at Sears Prospect
Initial drilling beneath the Sears gossan zone during 2012 intersected a 15 metre thick garnet
bearing meta-sedimentary horizon carrying minor amounts of finely disseminated pyrite throughout.
At the base of this horizon a three metre interval contained minor disseminated chalcopyrite
(CuFeS2) mineralisation which assayed 2m @ 0.16% Cu.
It is Empire’s intention to conduct both downhole and surface electromagnetic geophysical surveys
to locate any accumulations of massive copper sulphide mineralisation in the vicinity of these
encouraging initial intersections.
Any significant anomalies detected will then be drill tested.
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Troy Creek – Copper, Gold, Platinum Group Metals Project – 45% interest
The Troy Creek project is made up of tenements covering 260 km2 located 180 kilometres northeast
of Wiluna in Western Australia. In 2008 the Company made a discovery of high grade copper
sulphide mineralisation in black shales.
Several prominent geochemical and magnetic targets have been identified in sedimentary rocks
within the Troy Creek tenements. These include a large zone of multi-element anomalous
geochemistry in sedimentary rocks which extend along strike for a distance of more than 20
kilometres. This zone, defined by rock chip sampling, soil geochemistry and limited drilling, is
anomalous in copper, gold, platinum group metals, arsenic, silver and antimony.
Reverse circulation drilling during 2008 and 2009 at the Main Gossan prospect, which lies within
this zone, intersected high grade copper sulphide mineralisation. Drill intersections have included
36m @ 0.76% Cu including 2m @ 4.65% Cu and 3m @ 1.97% Cu; 8m @ 1.47% Cu and 4m @
3.04% Cu.
The copper mineralisation consists of fine grained stratiform copper and iron sulphides in graphitic
and calcareous shale and shows some similarities to “Kupferscheifer Style” mineralisation which
forms world class copper deposits in Germany and southwest Poland.
The similarities include stratiform mineralisation over large areas, the presence of adjacent
haematitic oxidized rocks and comparable geochemistry - anomalous copper, silver, arsenic, and
zinc, with adjacent but discrete platinum group metals mineralisation, for example 7m @ 0.59g/t Pt
+ Pd.
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EMPIRE RESOURCES LIMITED
REVIEW OF OPERATIONS
Zodiac Resources Pty Ltd, who are currently earning an interest in the project, commenced
exploration activity in 2012 on the Troy Creek tenements with a 17 hole reverse circulation drill
program at the Main Gossan prospect. The program was designed to extend the zone of copper
sulphide mineralisation intersected previously by Empire near the northwest end of a 1 kilometre
long gossan-chert unit hosted by pyritic black shale.
The drill intercepts, up to 6m @ 1.8% Cu within 21m @ 0.6% Cu, basically replicated those
obtained previously by Empire Resources but did not significantly extend the mineralisation along
strike.
A review of previous exploration data by Zodiac Resources has revealed the Main Gossan prospect
area is part of a regionally extensive zone of pyritic black shale and gossan-chert outcrops
containing anomalous copper and gold in surface rock chip samples and shallow drill holes.
Several zones more highly anomalous than the Main Gossan outcrop are evident and require
further definition followed by drill testing.
Yarlarweelor : Uranium Project – 24.2% indirect interest
The Yarlarweelor uranium project is located 125 km north of Meekatharra in Western Australia.
Empire Resources Ltd holds an indirect 24.2% interest in the project through its shareholding in
ASX listed FYI Resources Ltd.
FYI Resources is targeting significant uranium mineralization (in the form of uraninite) present within
the Archaean Despair Granite where it is associated with foliated granitic rocks and biotite schists in
shear zones.
Previous mineralized drill intersections include the following at the Kangaroo Ridge prospect:
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EMPIRE RESOURCES LIMITED
REVIEW OF OPERATIONS
35m @ 503ppm U3O8 from 125.1m, including 5m @ 1,069ppm U3O8; and
7.8m @ 588ppm U3O8 from 47.8m, including 1m @ 1,873ppm U3O8
Results from detailed airborne radiometrics and geological mapping indicate shear zones
prospective for uranium mineralization have a combined strike length in excess of 25 kilometres
within the Company’s tenements. This project shows potential to host large tonnages of primary
uranium mineralisation.
FYI Resources was granted two new exploration licences during the past year covering extensions
to uranium radiometric anomalies previously outlined within its existing exploration licence,
E52/2095.
One diamond drill hole (199m) was also completed during the year testing prominent zones of
biotite schist in ‘hot’ granite located 2 km northwest of Kangaroo Ridge. Although biotite schist
zones were intersected in the drilling, uranium grades were of low tenor.
The coming year will see exploration efforts concentrate on drill testing three strong surface
uranium anomalies (1, 13 and 22) located to the north of Kangaroo Ridge.
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Joanna : Gold Project – 80% interest
The Company has an 80% interest in a 277 km2 exploration licence application located in the Great
Sandy Desert, 270 km southeast of Broome, WA. The tenement lies adjacent to the Admiral Bay
Fault and is considered prospective for gold and base metal mineralization.
Along strike to the northwest, the Admiral Bay Fault is associated with substantial lead – zinc
mineralization.
Initial prospecting activities are planned to commence on the property during the winter of 2014.
____________________
David Sargeant
Managing Director
COMPETENT PERSONS STATEMENT
The information in this report that relates to Exploration Results has been compiled by Mr David Ross B.Sc(Hons), M.Sc,
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 mineralization and type
of deposit 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 the public release of the matters based on his information in the form
and context in which it appears.
MINERAL RESOURCE ESTIMATES
The information is this report concerning the Mineral Resources for the Penny’s Find Deposit and the Just Desserts
Deposit at Yuinmery have been estimated by Mr Peter Ball B.Sc who is a director of DataGeo Geological Consultants and
is a member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Ball has sufficient experience which is
relevant to the styles of mineralization and types of deposit under consideration and qualifies as a Competent Person as
defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves”. Mr Ball consents to the inclusion in the public release of the matters based on his information in the form and
context in which it appears.
Notes on the Penny’s Find Resource
An updated resource estimate for the Penny’s Find gold mineralization was completed and announced to the market on 8
August 2007 and 12 October 2007. There has been no change to the resource since that time.
The mineral resource by category is 314,000 tonnes averaging 5.2 g/t gold down to a vertical depth of 150m below
surface. The mineral resource above 0.5 g/t gold is summarised in the following table.
Penny’s Find - Classified mineral resources – August 2007
Category
Tonnes
Grade*
Ounces
Measured
79,000
Indicated
Inferred
132,000
103,000
TOTAL
314,000
4.40
3.98
7.33
5.18
11,177
16,893
24,276
52,316
*grades are based on a minimum cut-off of 0.5g/tAu and high assays cut to 25g/tAu
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EMPIRE RESOURCES LIMITED
REVIEW OF OPERATIONS
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 1m intervals
within constraining shapes representing the mineralization. Assumed specific gravity values used were:- oxide 2.0t/m3;
transitional 2.2t/m3; fresh 2.5t/ m3.
Notes on the Yuinmery Resource
A resource estimate for the Just Desserts prospect at Yuinmery was completed and announced to the market on 9 April
2009. There has been no change in the resource since that time.
The mineral resource by category to a depth of 250m below surface is reported below. The resource comprises no oxide
mineralization, only transitional and fresh.
Just Desserts Classified Mineral Resources – March 2009
Category
Grade*
g/t
0.5%Cu cutoff
0.8
1.7
1.6
1%Cu cutoff
1.3
Tonnes
Grade* Grade*
Cu% Au g/t Ag
Indicated
184,000
1.11
0.54
Inferred 2,159,000
1.24
0.54
TOTAL 2,343,000
1.23
0.54
Indicated
104,000
1.65
0.86
Inferred
966,000
1.84
0.77
2.1
TOTAL 1,070,000
2.1
1.82
0.78
46,000
Indicated
1.5%Cu cutoff
1.6
Inferred
2.7
TOTAL
2.6
*High assays have been cut to 9%Cu, 20g/tAu and 10g/tAg.
536,000
582,000
2.11
2.34
2.33
1.14
0.92
0.93
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.
The resource grade was estimated using ordinary kriging based on the drill hole data composited down hole to 1m
intervals within constraining shapes representing the mineralization. Assumed specific gravity values used were:-
transitional 2.7t/m3; fresh 3.2t/m3.
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Empire Resources Limited
Directors' Report
Directors’ Report
Your directors submit their report on Empire Resources Limited (the “Company”) and its controlled entity (the “Group”)
for the financial year ended 30 June 2013.
Directors
The company’s directors in office during the financial year and until the date of this report are as follows. Directors
were in office for the entire period unless otherwise stated.
Thomas Revy - Chairman (Non-Executive) – BAppSc. Grad Dip Bus.
Mr Revy is a mining professional with in excess of 29 years experience in the mining industry to date including
operations, process design and commissioning, technical and general management, business development, project
and company evaluation and corporate management. Countries where extensive work has been undertaken include
Australia, PNG, Southern and Central Africa, Central and South America and China.
Mr Revy has been a director of the following listed companies during the past three years.
Company
Position
Appointed
Coppermoly Ltd
Non-executive Chairman
20/05/2013
David Sargeant - Managing Director - BSc. MAusIMM
Mr Sargeant – who holds a Bachelor of Science degree in economic geology from the University of Sydney – has
more than 40 years experience as a geologist, consultant and company director. As such, he has been involved in
numerous mineral exploration, ore deposit evaluation and mining development projects and is a member of AusIMM
and the Geological Society of Australia.
During his career, Mr Sargeant has held a range of senior positions, including that of senior geologist with Newmont
Pty Ltd and senior supervisory geologist with Esso Australia Ltd at the time of the Harbour Lights Gold Mine discovery
and development. Further, Mr Sargeant was the first chief geologist at Telfer Gold Mine during exploration,
development and production at that project. In addition, he was exploration manager for the Adelaide Petroleum NL
group of companies, manager of resources development for Sabminco NL and a technical director of Western Reefs
Limited during the period in which that company became a successful producer at the Dalgaranga Gold Project.
Mr Sargeant has been a director of the following listed companies during the past three years.
Company
Position
Appointed
FYI Resources Ltd
Non-executive Director
30/11/2009
Adrian Jessup - Executive Director - BSc. MAusIMM
Mr Jessup also holds a Bachelor of Science degree (with honours) in economic geology from the University of Sydney
and has more than 40 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 16 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 Western Australia.
Mr Jessup has been a director of the following listed companies during the past three years.
Company
Position
Appointed
FYI Resources Ltd
Non-executive Director
30/11/2009
22
Empire Resources Limited
Directors' Report
Management
Simon Storm - Company Secretary – BCom. BCompt(Hons). CA, FCIS
Mr Storm is a Chartered Accountant with over 29 years of Australian and international experience in the accounting
profession and commerce. He commenced his career with Deloitte Haskins & Sells in Africa then London before
joining Price Waterhouse in Perth.
He 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 10 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 26 years experience as an exploration geologist in Western Australia his 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 provision for income tax was $1,582,177 (2012: $3,027,693).
Review of results and operations
The operations and results of the Company for the financial year are reviewed below. This review includes information
on the financial position of the Company, and its business strategies and prospects for future financial years.
Revenue
Revenue comprised interest received, down 86% on prior year as a consequence of lower cash balances.
Expenses
During the year, the Company continued exploration activities at its various exploration projects with expenditure on
exploration decreasing 56% to $925,988 (2012: $2,089,807). The reduced expenditure has occurred as a
consequence of availability of cash, with total expenditure reducing from $3,231,836 to $2,090,931.
Tax benefit
A tax benefit of $498,632 (2012: $131,344) was received as an R&D tax offset payment
Cash and cash equivalents at 30 June 2013 decreased by 66% to $217,857 (2012: $640,807).
Operating cash flows
Cash flow from operating activities decreased by 47% to $282,203 (2012: $536,774). This amount decreased mainly
because of the receipt of a R&D tax offset in 2013 for the 2013 and 2012 financial years of $498,632 and $131,344
respectively.
Investing cash flows
Cash outflow for investing activities decreased by $1,169,430 due to decrease in exploration related expenditure.
Financing cash flows
Cash flow from financing activities decreased by $706,611 mainly due to a reduction in the proceeds from the issue of
shares.
23
Empire Resources Limited
Directors' Report
Statement of financial position
Current assets
Current assets decreased by 64% to $296,949 (2012: $834,609) mainly due to cash and cash equivalents
decreasing 66% to $217,857 (2012: $640,807). Trade and other receivables decreased by 59% to $79,092 (2012:
$193,802).
.
Non-current assets
Non-current assets decreased by 34% to $465,799 (2012: $710,288) due to the increased share of the loss of the
equity accounted investment in FYI Resources Ltd.
Current liabilities
Current liabilities decreased by 35% to $154,109 (2012: $237,477), being a reduction in trade and other payables due
to the decrease in operational activities.
Debt position
The Company has no debt.
Review of Operations
YUINMERY - the Just Desserts JORC Resource and A Zone deposits are now understood to be part of the same
mineralised horizon, with new targets discovered on this horizon, located between the existing Just Desserts JORC
Resource and the A Zone deposits. The Company has targeted mineralisation that may link the two deposits, with
potentially significant feasibility and planning consequences. The Company has moved towards a maiden JORC
Resource at A Zone, with diamond drilling extending the A Zone during the year. The Company obtained a 12 month
extension to 7 August 2014 for an option on surrounding tenements from of La Mancha, with the settlement cost for
the acquisition interest increasing from $750,000 to $1 million.
POINT KIDMAN - new gold project acquired in Laverton gold belt, where Gold nuggets were discovered along a
2.5km long zone, which had not been previously explored. The tenement holding doubled to 800 km2 around this
nugget zone, with magnetics acquired for a detailed structural study. Drilling commenced in the March 2013 quarter
with anomalous Rare Earths discovered in reconnaissance drilling, and magnetics indicating larger targets for Rare
Earth mineralization.
PENNY’S FIND - the Company entered into a staged sale agreement in 2012 with Brimstone Resources Ltd for the
latter to bring Penny’s Find into production. To date Brimstone has undertaken limited RC and diamond drilling in an
effort to expand and upgrade the existing resource.
JOANNA - a new gold project acquired in the Canning Basin.
YARLARWEELOR - the Company has a 24% indirect interest through FYI Resources Ltd. Two new exploration
licence applications cover extensions to uranium anomalies, with three diamond holes commenced in July 2013 to
test strong surface uranium anomalies.
CORPORATE - ongoing management of the Company's cash remained critical throughout the year. Cash resources
were boosted following a share placement in November 2012 of 20 million shares raising $900,000 before costs. In
addition, the Company received an R&D tax offset payment totalling $498,632, for test work used to evaluate and
advance the high grade A Zone deposit at Yuinmery. A corporate advisory firm has been appointed to increase
shareholder value with their fees for service being incentive driven and linked to share price improvement.
Significant Changes in State of Affairs
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 other key
management personnel.
Remuneration Policy
The principles used to determine the nature and amount of remuneration are applied through a remuneration policy
which ensures the remuneration package properly reflects the person’s duties and responsibilities and that the
remuneration is competitive in attracting, retaining and motivating people of the highest quality.
The remuneration policy, setting the terms and conditions for the executive directors has been developed by the
board after seeking professional advice and taking into account market conditions and comparable salary levels for
companies of a similar size and operating in similar sectors.
24
Empire Resources Limited
Directors' Report
The remuneration policy is to provide a fixed remuneration component. The board believes that this remuneration
policy is appropriate given the stage of development of the Company and the activities which it undertakes and is
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, and
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, and
Provides recognition for contribution.
Non-executive directors
The board policy is to remunerate non-executive directors at market rates for comparable companies for time,
commitment and responsibilities. The Board determines payments to the non-executive director 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 Group.
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 director’s 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
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”) and
the Empire Resources Option Plan.
The Directors consider the plans are an appropriate method to:
a) reward Directors and Employees for their past performance;
b) provide long-term incentives to participate in the Company’s future growth;
c) motivate Directors and Employees and generate loyalty in Employees; and
d) assist to retain the services of valuable Employees.
There were no options issued as share-based compensation to key management personnel during the current
financial year (2012: 2,000,000).
No shares were issued during the year upon the exercise of options.
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.
25
Empire Resources Limited
Directors' Report
Compensation of Key Management Personnel for the year ended 30 June 2013.
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.
Employment contracts
– Mr D Sargeant
By agreement dated 24 October 2009, 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)
(b)
(c)
a term of three years;
requires the payment to Kirkdale of a fee of $15,000 (GST excl) per month (increasing by 10% each year)
and reimbursement of expenses;
provisions requiring the payment of a termination benefit of 50% of the amount due on termination of the
agreement.
– Mr A Jessup
By agreement dated 24 October 2009, 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.
26
Directors FeesConsulting FeesShort-term BenefitsPost-employment benefitsShare-based paymentsValue of shares & optionsTotalTotal$$$$$$DirectorsNon-ExecutiveMr T Revy 201330,000- 30,000- - 30,000201230,000- 30,000- 16,00746,007ExecutiveMr D Sargeant2013- 217,800217,800- - 217,8002012- 211,200211,200- 16,007227,207Mr A Jessup2013- 217,800217,800- - 217,8002012- 211,200211,200- 16,007227,207Total Directors201330,000435,600465,600- - 465,600201230,000422,400452,400- 48,021500,421ExecutivesMr S Storm 2013- 42,36042,360- - 42,3602012- 40,98040,980- 12,50753,487Total Executives2013- 42,36042,360- - 42,3602012- 40,98040,980- 12,50753,487
Empire Resources Limited
Directors' Report
The agreement has:
(a)
(b)
(c)
a term of three years;
requires the payment to Murilla of a fee of $15,000 (GST excl) per month (increasing by 10% each year) and
reimbursement of expenses;
provisions requiring the payment of a termination benefit of 50% of the amount due on termination of the
agreement.
In November 2012, the Chairman agreed to continue with these employment contracts until further notice.
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.
End of Remuneration Report.
Share Options
At the date of this report unissued ordinary shares of the Company under option are:
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:
Company Performance
Comments on performance are set out in the review of operations.
Significant Changes in the State of Affairs
There were no other significant changes in the state of affairs of the Company other than those noted in the review of
operations.
Likely Developments and Expected Results
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.
27
Grant DateDate of ExpiryExercise Price $Number under Option9-Aug-119-Aug-140.09 1,500,000 28-Nov-1128-Nov-140.10 1,500,000 27-Jun-1331-Aug-160.04 10,000,000 28-Jun-1331-Aug-160.05 10,000,000 29-Jun-1331-Aug-160.06 10,000,000 33,000,000 DirectorDirectIndirectDirectIndirectMr T Revy350,000360,000500,000- Mr D Sargeant- 6,400,000- 500,000Mr A Jessup922,2221,645,333500,000- Number of Ordinary SharesNumber of Options
Empire Resources Limited
Directors' 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
2013 and the number of meetings attended by each 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.
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 entity, 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
In September 2013, the Company raised $200,000 by issuing 10,000,000 ordinary shares at 2 cents.
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 Group, the results of those operations, or the state of affairs of the
Group in subsequent financial years.
Non-audit Services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the
auditor’s expertise and experience with the Company and/or the Group are important.
28
DirectorABMr Thomas Revy77Mr David Sargeant77Mr Adrian Jessup77A - meetings attendedDirectors’ MeetingsB - meetings held whilst a director
Empire Resources Limited
Directors' Report
Details of the amounts paid or payable to the auditor (HLB Mann Judd) for audit and non-audit services provided
during the year are set out below.
During the period, the following fees were paid or payable for services
provided by the auditors of the parent entity HLB Mann Judd, its related
practices and non-related audit firms:
Consolidated
Year ended
30 June 2013
$
Year ended
30 June 2012
$
Assurance Services
HLB Mann Judd (Current Auditor)
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
Auditors Independence Declaration
21,425
21,425
20,650
20,650
-
-
-
-
21,425
20,650
Section 307C of the Corporations Act 2001 requires the company’s auditors, HLB Mann Judd, to provide the directors
with a written Independence Declaration in relation to their audit of the financial report for the year ended 30 June
2013. This written Auditor’s Independence Declaration is attached to the Auditor’s Independent Audit Report to the
members and forms part of this Director’s Report.
Signed in accordance with a resolution of Directors.
_________________
Adrian Jessup
Director
Perth, Western Australia
26 September 2013
29
EMPIRE RESOURCES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2013
The above Statement of Comprehensive Income
should be read in conjunction with the accompanying notes.
30
Note20132012$$Revenue from continuing operations210,12272,799Depreciation expense3(4,205)(17,798)Exploration expense3(925,988)(2,089,807)Employee benefits expense(46,941)(59,991)Management fee expense(435,600)(422,400)Directors fees(30,000)(30,000)Accounting expense(59,160)(61,962)Consultancy expense(65,445)(17,599)Share-based payment- (84,037)ASX expense(23,556)(27,126)Corporate relations expense(104,577)(87,879)Insurance expense(18,206)(17,956)Other expenses (132,297)(156,449)Share of loss of equity accounted investees8(244,956)(158,832)Loss before income tax(2,080,809)(3,159,037)Income tax benefit4498,632 131,344 Net loss for the year(1,582,177)(3,027,693)Other comprehensive income- - Total comprehensive loss for the year(1,582,177)(3,027,693)Basic and diluted loss per share (cents per share)5(0.96)(2.13)Consolidated
EMPIRE RESOURCES LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2013
The above Statement of Financial Position
should be read in conjunction with the accompanying notes.
31
Note20132012ASSETS$$CURRENT ASSETSCash and cash equivalents6217,857 640,807 Trade and other receivables779,092 193,802 Total Current Assets296,949 834,609 NON-CURRENT ASSETSInvestments accounted for using the equity method8459,439 704,395 Plant and equipment96,360 5,893 Total Non-Current Assets465,799 710,288 TOTAL ASSETS762,748 1,544,897 LIABILITIESCURRENT LIABILITIESTrade and other payables10154,109 237,477 Total Current Liabilities154,109 237,477 TOTAL LIABILITIES154,109 237,477 NET ASSETS608,639 1,307,420 EQUITYIssued capital1116,970,103 16,086,707 Reserves12904,259 931,481 Accumulated losses(17,265,723)(15,710,768)TOTAL EQUITY608,639 1,307,420 Consolidated
EMPIRE RESOURCES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2013
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes
32
Issued Capital Accumulated LossesOption ReservesTotal$$$$Balance at 1 July 201114,516,700 (12,683,075)847,444 2,681,069 Shares issued during the year1,647,500 - - 1,647,500 Options issued during the year- - 84,037 84,037 Equity issue expenses(77,493)- - (77,493)Loss for the year- (3,027,693)- (3,027,693)Balance at 30 June 201216,086,707 (15,710,768)931,481 1,307,420 Balance at 1 July 201216,086,707 (15,710,768)931,481 1,307,420 Shares issued during the year950,000 - - 950,000 Options not vested- 27,222 (27,222)- Equity issue expenses(66,604)- - (66,604)Loss for the year- (1,582,177)- (1,582,177)Balance at 30 June 201316,970,103 (17,265,723)904,259 608,639 Consolidated
EMPIRE RESOURCES LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2013
The above Statement of Cash Flows should be read in conjunction
with the accompanying notes.
33
20132012Note$$Cashflows from Operating ActivitiesPayments to suppliers and employees(923,441)(839,289)Interest received11,262 98,493 Other - R&D tax offset629,976 204,022 Net cash used in operating activities6(i)(282,203)(536,774)Cash Flows from Investing ActivitiesPurchase of plant and equipment(2,854)- Exploration and evaluation expenditure(971,289)(2,143,573)Net cash used in investing activities(974,143)(2,143,573)Cash Flows from Financing ActivitiesProceeds from issue of equity securities900,000 1,617,500 Equity securities issue costs(66,604)(77,493)Net cash provided by financing activities833,396 1,540,007 Net (decrease) in cash held(422,950)(1,140,340)Cash at the beginning of the financial year640,807 1,781,147 Cash at the end of the financial year6217,857 640,807 Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
1.
Statement of Significant Accounting Policies
The financial report covers the consolidated entity of Empire Resources Limited and its controlled entity
(“Group”) and Empire as an individual parent entity (“Empire”). Empire is a listed public company limited by
shares, incorporated and domiciled in Australia.
The following is a summary of the material accounting policies adopted by the Group in the preparation of the
financial report. The accounting policies have been consistently applied by the controlled entity and are
consistent with those in the 30 June 2012 financial report.
(a)
Basis of Preparation
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 has been prepared on the historical cost basis.
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 26 September 2013.
(b)
Going Concern
As disclosed in the Statement of Comprehensive Income, the Group recorded operating losses of $1,582,177
(2012: $3,027,693) and as disclosed in the Statement of Cash Flows, the Group recorded cash outflows from
operating activities of $282,203 (2012: $536,774), investing activities of $974,143 (2012: $2,143,573) and a
cash inflow from financing activities of $833,396 (2012: $1,540,007). 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 Group:
The Group has successfully completed capital raisings during the year as disclosed in Note 11(a) and has
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;
The Group has net current assets of $142,840 (2012: $597,132) at balance date and expenditure
commitments for the next 12 months of $616,669 (2012: $403,921 ), as disclosed in Note 14 (ii), and
retains the ability to scale down its operations to conserve cash, in the event that the capital raisings are
delayed or partial; and
The Company and Group 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.
Subsequent to year end the Group raised $200,000 of equity capital via an issue of ordinary shares at $0.02.
The funds raised will be used to meet the ongoing working capital requirements of the Group. The directors
also anticipate that a further equity raising will be required and will be completed in 2013. Should this equity
raising not be completed, there is a material uncertainty that may cast significant doubt as to whether the
Company will be able to realise its assets and extinguish its liabilities in the normal course of business.
(c)
Basis 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.
Details of the controlled entity are contained in Note 8(b) to the financial statements. The controlled entity has a
June financial year end.
34
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
1.
Statement of Significant Accounting Policies (continued)
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 a controlled entity enters or leaves the consolidated Group during the year, their operating results are
included/excluded from the date control was obtained or until the date control ceased.
Business Combinations
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.
(d)
Investment in associated entities
The Group’s investment in its associate is accounted for using the equity method of accounting in the
consolidated financial statements, after initially being recognised at cost. The associate is an entity in which the
Group has significant influence and which is neither a subsidiary nor a joint venture. Significant influence is the
power to participate in the financial and operating decisions of the investee but is not control or joint control
over those policies.
Under the equity method, the investment in the associate is carried in the consolidated statement of financial
position at cost plus post-acquisition changes in the Group's share of net assets of the associate. Goodwill
relating to an associate is included in the carrying amount of the investment and is not amortised. After
application of the equity method, the Group determines whether it is necessary to recognise any additional
impairment loss with respect to the Group’s net investment in the associate. Goodwill included in the carrying
amount of the investment in associate is not tested separately, rather the entire carrying amount of the
investment is tested for impairment as a single asset. If an impairment is recognised, the amount is not
allocated to the goodwill of the associate.
The consolidated statement of comprehensive income reflects the Group's share of the results of operations of
the associate, and its share of post-acquisition movements in reserves is recognised in reserves. The
cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends
receivable from associates are recognised in comprehensive income as a component of other income.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any
unsecured long-term receivable and loans, the Group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associate.
The balance dates of the associate and the Group are identical and the associate's accounting policies conform
to those used by the Group for like transactions and events in similar circumstances.
Upon disposal of an associate that results in the Group losing significant influence over that associate, any
retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial
recognition as a financial asset in accordance with AASB 139. The difference between the previous carrying
amount of the associate attributable to the retained interest and its fair value is included in the determination of
the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously
recognised in other comprehensive income in relation to that associate on the same basis as would be required
if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously
recognised in other comprehensive income by that associate would be reclassified to profit or loss on disposal
of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a
reclassification adjustment) when it loses significant influence over that associate.
When a Group entity transacts with its associate, profits and losses resulting from those transactions with the
associate are recognised in the Group’s consolidated financial statements only to the extent of interests in the
associate that are not related to the Group.
(e)
Plant and Equipment
Plant and equipment is measured on the cost basis less depreciation and impairment losses.
35
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
1.
Statement of Significant Accounting Policies (continued)
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 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 statement of comprehensive
income. When revalued assets are sold, amounts included in the revaluation reserve relating to the assets are
then transferred to accumulated losses.
(f)
Income Tax
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income
based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and
liabilities attributable to temporary difference and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
the end of the reporting period in the countries where the company’s subsidiaries and associates operate and
generate taxable income. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted by the balance date.
Deferred income tax is provided on all temporary differences at the balance date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability
in a transaction that is not a business combination and that, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss; or
when the taxable temporary difference is associated with investments in subsidiaries, associates or
interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and
it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax
assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be
utilised, except:
when the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss; or
when the deductible temporary difference is associated with investments in subsidiaries, associates or
interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is
probable that the temporary difference will reverse in the foreseeable future and taxable profit will be
available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the
extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
36
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
1.
Statement of Significant Accounting Policies (continued)
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same
taxable entity and the same taxation authority.
(g)
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 Statement of Financial Position.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts.
(h)
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.
(i)
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 Statement of Comprehensive Income.
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.
(j)
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 classified as loans and receivables, held to
maturity investments or fair value through profit or loss. 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
37
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
1.
Statement of Significant Accounting Policies (continued)
the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised
in the statement of comprehensive income.
(k)
Exploration and Development Expenditure
Exploration, evaluation and acquisition costs are expensed in the year they are incurred. Development costs
are capitalised. Where commercial production in an area of interest has commenced, the associated costs in
respect of the area of interest in the development phase, together with any forecast future capital expenditure
necessary to develop proved and probable reserves are amortised over the estimated life of the mine on a units
of production basis.
(l)
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 transactions
The Group provides benefits to employees (including senior executives) of the Group in the form of share-
based payments, whereby employees render services in exchange for shares or rights over shares (equity-
settled transactions).
There are currently two plans in place to provide these benefits:
the Employee Share Option Plan (ESOP), which provides benefits to directors and senior executives; and
the Employee Share Loan Plan (ESLP), which provides benefits to all employees, excluding senior
executives and directors.
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined by an external valuer
using a Black Scholes model, further details of which are given in Note 18. In valuing equity-settled
transactions, no account is taken of any performance conditions, other than conditions linked to the price of the
shares of Empire Resources Limited (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant
employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each balance date until vesting date
reflects (i) the extent to which the vesting period has expired and (ii) the Group’s best estimate of the number of
equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance
conditions being met as the effect of these conditions is included in the determination of fair value at grant date.
The profit or loss charge or credit for a period represents the movement in cumulative expense recognised as
at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only
conditional upon a market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms
had not been modified. In addition, an expense is recognised for any modification that increases the total fair
value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the
date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for
the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and
new award are treated as if they were a modification of the original award, as described in the previous
paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of
loss per share (see Note 5).
38
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
1.
Statement of Significant Accounting Policies (continued)
The Group expenses equity-settled share-based payments such as share and option issues after ascribing a
fair value to the shares and/or options issued. The fair value of option and share plan issues of option and
share plan shares are recognised as an expense together with a corresponding increase in the share based
payments reserve or the share option reserve in equity over the vesting period. The proceeds received net of
any directly attributable transaction costs are credited to share capital when options are exercised.
The value of shares issued to employees financed by way of a non recourse loan under the employee Share
Plan is recognised with a corresponding increase in equity when the company receives funds from either the
employees repaying the loan or upon the loan termination, pursuant to the rules of the share plan. All shares
issued under the plan with non recourse loans are considered, for accounting purposes, to be options.
(m)
Trade and other receivables
All trade receivables 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 receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible
are written off. An allowance for doubtful debts is raised where some doubt as to collection exists.
(n)
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the
financial period which are unpaid and arise when the Group becomes obliged to make future payments in
respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within
30 days of recognition.
(o)
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
(p)
Leases
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee
substantially all the risks and benefits incidental to ownership of leased non-current assets, and operating
leases under which the lessor effectively retains substantially all such risks and benefits
Operating lease payments are charged as expenses in the periods in which they are incurred, as this
represents the pattern of benefits derived from the leased assets.
(q)
Revenue Recognition
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.
(r)
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
Statement of Financial Position are shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables
or payables in the statement of financial position.
39
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
1.
Statement of Significant Accounting Policies (continued)
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority
are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
taxation authority.
(s)
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.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined using the Black and
Scholes model, using the assumptions detailed in Note 18.
The Group measures the cost of cash-settled share-based payments at fair value at the grant date using the
Black and Scholes formula taking into account the terms and conditions upon which the instruments were
granted, as discussed in Note 18.
This fair value is expensed over the period until vesting with recognition of a corresponding liability. The liability
is re-measured to fair value at each balance date up to and including the settlement date with changes in fair
value recognised in profit or loss.
(t)
Adoption of new and revised standards
Changes in accounting policies on initial application of Accounting Standards
In the year ended 30 June 2013, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant to the Group’s operations and effective for the current
annual reporting period.
It has been determined by the Directors that there is no impact, material or otherwise, of the new and revised
Standards and Interpretations on the Group’s business and, therefore, no change is necessary to Group
accounting policies.
The Directors have also reviewed all new Standards and Interpretations that have been issued but are not yet
effective for the year ended 30 June 2013. As a result of this review the Directors have determined that there is
no impact, material or otherwise, of the new and revised Standards and Interpretations on the Group’s business
and, therefore, no change necessary to Group accounting policies.
(u)
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Board of Directors of Empire
Resources Ltd.
The Group operates only in one business and geographical segment being predominantly in the area of
mineral exploration in Western Australia. The Group considers its business operations in mineral exploration
to be its primary reporting function.
40
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
1.
(v)
Statement of Significant Accounting Policies (continued)
Loss per share
Basic loss per share is calculated as net profit or loss attributable to members of the parent, adjusted to
exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the
weighted average number of ordinary shares, adjusted for any bonus element.
Diluted loss per share is calculated as net loss attributable to members of the parent, adjusted for:
costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have
been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the
dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and
dilutive potential ordinary shares, adjusted for any bonus element.
(w)
Parent Entity Financial Information
The financial information for the parent entity, Empire Resources Limited disclosed in Note 22 has been
prepared on the same basis as the Group.
2.
Revenue
3.
Loss from ordinary activities
4.
Income tax
(a)
Income tax recognised in loss
No income tax is payable by the parent or consolidated group as they both recorded losses for income tax
purposes for the year.
(b)
Numerical reconciliation between income tax expense and the loss before income tax.
41
20132012$$RevenueInterest received10,122 72,799 10,122 72,799 Consolidated20132012$$Loss before income taxThe loss from ordinary activities before income tax has been determined after:(a) ExpensesDepreciation4,205 17,798 Exploration costs expensed925,988 2,089,807 Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
4.
Income tax (continued)
A deferred tax asset attributable to income tax losses has not been recognised at balance date as the
probability criteria disclosed in Note 1(f) is not satisfied and such benefit will only be available if the conditions
of deductibility also disclosed in Note 1(f) are satisfied.
5.
Loss per share
42
20132012$$Loss before tax(2,080,809)(3,159,037)Income tax benefit at 30% (2012:30%)624,243 947,711 Tax effect of:- deductible capital raising expenditure24,871 20,875 - non deductible expenditure(74,154)(48,648)- deductible temporary differences(5,442)(3,809)- share based payment- (25,211)Deferred tax asset not recognised(569,518)(890,918)R&D tax offset payment from prior year498,632 131,344 Income tax benefit attributable to loss from ordinary activities before tax498,632 131,344 Consolidated(c) Unrecognised deferred tax balancesTaxlossesattributabletomembersofthegroup - revenue12,375,433 11,614,456 Potential tax benefit at 30%3,712,630 3,484,337 Deferred tax asset asset not bookedAmounts recognised in statement of comprehensive income-employee provisions10,811 7,769 -other6,750 4,350 Amounts recognised in equity- share issue costs57,252 62,142 Net unrecognised deferred tax asset at 30%3,787,443 3,558,598 20132012CentsCentsBasicanddilutedlosspershare(centspershare)(0.96)(2.13)Loss used in the calculation of basic EPS(1,582,177)(3,027,693)Weighted average number of shares outstanding during the year used in calculations of basic loss per share164,437,702 141,968,113 Diluted loss per share has not been disclosed as it is not materially different from basic loss per shareConsolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
6.
Cash and cash equivalents
Cash balances not available for use – there is a $20,000 NAB Bank Guarantee in the name of Linton Nominees
Pty Ltd and is in relation to the lease over 53 Canning Highway, Victoria Park.
(i) Reconciliation of cash flow from operations with loss after income tax
7.
Trade and other Receivables
Provision for impairment of receivables
Current trade receivables are non-interest bearing and generally on 30 day terms. A provision for impairment
is recognised when there is objective evidence that an individual trade receivable is impaired.
43
20132012$$Cash at bank and in hand217,857 640,807 217,857 640,807 Consolidated20132012$$Loss after income tax(1,582,177)(3,027,693)Depreciation 4,205 17,798 Share based payments expense- 84,037 Exploration expenditure not capitalised925,988 2,089,807 Income tax benefit- (131,344)Share of loss of equity accounted investees244,956 158,832 (407,028)(808,563)Changes in assets and liabilities, net of the effects of purchase of subsidiaries:(Increase)/decrease in trade and other 133,029 228,819 (Decrease)/increase in trade and other (18,704)23,810 (Decrease)/increase in employee benefits10,500 19,160 Net cash outflow from operating activities (282,203)(536,774)Consolidated20132012$$CurrentTrade receivables55,080 15,927 Other receivables24,012 177,875 79,092 193,802 Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
8.
Investments
(a) Investments accounted for using the Equity Method
The Group has reviewed the carrying value of its investment in FYI Resources Ltd and considers that it is not
stated in excess of its recoverable amount in the accounts. The carrying value is supported by the initial
independent valuations of Yarlarweelor, the net assets of FYI Resources Ltd and there is ongoing expenditure
on the tenements by FYI Resources.
44
20132012$$Reconciliation of movements in investments accounted for using the equity method:Balance at 1 July704,395 863,227 Share of loss(244,956)(158,832)Balance at 30 June 459,439 704,395 Consolidated2013201220132012Name of entityPrincipal activityCountry of incorporation%%$$Associated entityFYI Resources LtdMineral explorationAustralia24%28%641,490 516,569 Ownership interestMarket Value20132012$$Summarised financial information of associates:Financial positionTotal assets2,495,418 3,113,199 Total liabilities170,430 117,368 Net assets2,324,988 2,995,831 Group’s share of associates’ net assets562,696 838,833 Financial performanceTotal revenue18,015 25,191 Total loss for the year(959,850)(570,706)Group’s share of associate’s profit/(loss)(244,956)(158,832)Group’sshareofassociate’scompehensiveloss- - Capitalcommitmentsandcontingentliabilitiesof associate:Shareofcapitalcommitmentsincurredjointlywith other investors299,765 491,102 Shareofcontingentliabilitiesincurredjointlywith other investors- - Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
8.
Investments (continued)
(b) Investments in subsidiary
9.
Plant & equipment
45
Country of incorporationPercentage OwnedPercentage Owned20132012Controlled entity%%Parent Entity:Empire Resources LimitedAustralia- - Subsidiary of Empire Resources Limited:Torrens Resources Pty LtdAustralia100 100 20132012$$Plant and Equipment Cost41,825 37,153 Accumulated depreciation(35,465)(31,260)6,360 5,893 Motor Vehicles Cost90,217 90,217 Accumulated depreciation(90,217)(90,217)- - Total Plant and Equipment6,360 5,893 20132012$$Plant and EquipmentBalance at the beginning of year5,893 9,535 Additions4,672 - Depreciation expense(4,205)(3,642)Carrying amount at the end of the year6,360 5,893 Motor VehiclesBalance at the beginning of year- 14,156 Depreciation expense- (14,156)Carrying amount at the end of the year- - ConsolidatedConsolidatedMovements in the carrying amounts of each class of property, plant & equipment at the beginning and end of the current financial period is as set out below:
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
10. Trade and other payables
11.
Issued capital
(a) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company
in proportion to the number of and amounts paid on the shares.
On a show of hands every holder of ordinary shares present at a meeting, in person or by proxy, is entitled to
one vote, and upon a poll each share is entitled to one vote.
46
20132012$$Trade payables and accruals110,425 204,293 Employee benefits43,684 33,184 154,109 237,477 Consolidated20132012$$171,645,921 (2012: 150,645,921) fully paid ordinary shares16,970,10316,086,70720132012(i) Ordinary shares - numberNo.No.At 1 July150,645,921 127,295,921 Shareplacement-15,000,000on23September 2011 at $0.082- 15,000,000 SharesissuedERLsharePlan-7,750,000on14 February 2012 at $0.05- 7,750,000 SharesissuedpursuanttoaFarm-inandJVAgreement-600,000on20February2012at$0.05- 600,000 Shareplacement-20,000,000on2November2012 at $0.04520,000,000 - SharesissuedpursuanttoaFarm-inandJVAgreement-400,000on8November2012at$0.05400,000 - SharesissuedpursuanttoaFarm-inandJVAgreement-600,000on8November2012at$0.05600,000 - Balance at 30 June171,645,921 150,645,921 ConsolidatedConsolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
11. Issued capital (continued)
(b) Options
As at 30 June 2013 (30 June 2012: 13,927,729) the Company had the following options on issue over
ordinary shares:-
During the year, 30,000,000 options were issued and 10,927,729 expired unexercised.
47
20132012(ii) Ordinary shares – value$$At 1 July 16,086,707 14,516,700 Shareplacement-15,000,000on23September 2011 at $0.082- 1,230,000 SharesissuedERLsharePlan-7,750,000on14 February 2012 at $0.05- 387,500 SharesissuedpursuanttoaFarm-inandJVAgreement-600,000on20February2012at$0.05- 30,000 Shareplacement-20,000,000on2November2012 at $0.045900,000 - SharesissuedpursuanttoaFarm-inandJVAgreement-400,000on8November2012at$0.0520,000 - SharesissuedpursuanttoaFarm-inandJVAgreement-600,000on8November2012at$0.0530,000 - Less share issue costs(66,604)(77,493)Balance at 30 June16,970,103 16,086,707 ConsolidatedGrant DateDate of ExpiryExercise Price $Number under Option9-Aug-119-Aug-140.09 1,500,000 28-Nov-1128-Nov-140.10 1,500,000 27-Jun-1331-Aug-160.04 10,000,000 28-Jun-1331-Aug-160.05 10,000,000 29-Jun-1331-Aug-160.06 10,000,000 33,000,000
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
12. Reserves
Details of certain components of the option reserve arising as a consequence of equity based payments are
included in Note 18.
13. Financial risk management
The Group’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 Group’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 Group.
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 Group hold the following financial instruments:
48
20132012$$Reserves904,259 931,481 Reserves comprise the following:Options reserveBalance as at start of financial year931,481 847,444 Share-based payment- 84,037 Options not vested(27,222)- Balance as at end of the financial year904,259 931,481 Consolidated20132012$$Financial assetsCash and cash equivalents217,857 640,807 Trade and other receivables79,092 193,802 296,949 834,609 Financial liabilitiesTrade and other payables154,109 237,477 Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
13. Financial risk management (continued)
(a) Market risk
Cash flow and fair value interest rate risk
The Group’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 Group to cash flow interest rate risk. Deposits at fixed
rates expose the Group to fair value interest rate risk. During 2013 and 2012, the Group’s deposits at variable
rates were denominated in Australian Dollars.
As at the reporting date, the Group had the following variable rate deposits and there were no interest rate
swap contracts outstanding:
The Group 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 2013, 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 Group 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 Group
manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity
profiles of financial assets and liabilities. The Group 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 have no borrowing facilities.
49
Weighted average interest rateBalanceWeighted average interest rateBalance%$%$Deposit20,000 20,000 Other cash available197,857 620,807 Net exposure to cash flow interest rate risk2.6%217,857 4.7%640,807 20132012
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
13. Financial risk management (continued)
Maturities of financial assets and liabilities
The note above analyses the Consolidated and parent entity's financial liabilities. The 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
50
30 June 2013Weighted Average Effective Interest RateFloating Interest RateFixed Interest Rate Maturing Within YearNon-interest bearingTotal$$$$Financial Assets:Cash and cash equivalents2.6%197,857 20,000 - 217,857 Trade and other receivables- - 79,092 79,092 Total Financial Assets197,857 20,000 79,092 296,949 Financial Liabilities:Trade and other payables- - 154,109 154,109 Total financial liabilities- - 154,109 154,109 30 June 2012Weighted Average Effective Interest RateFloating Interest RateFixed Interest Rate Maturing Within YearNon-interest bearingTotal$$$$Financial Assets:Cash and cash equivalents4.7%620,807 20,000 - 640,807 Trade and other receivables- - 193,802 193,802 Total Financial Assets620,807 20,000 193,802 834,609 Financial Liabilities:Trade and other payables- - 237,477 237,477 Total financial liabilities- - 237,477 237,477 Year ended 30 June 2013<6 months6-12 months1-5 years>5 yearsTotalConsolidatedFinancial assetsCash & cash equivalents217,857 - - - 217,857 Trade & other receivables79,092 - - - 79,092 296,949 - - - 296,949 Financial liabilitiesTrade & other payables154,109 - - - 154,109 Net maturity142,840 - - - 142,840
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
13. Financial risk management (continued)
(d) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or
for disclosure purposes.
The fair value of financial instruments that are not traded in an active market (for example, investments in
unlisted subsidiaries) is determined using valuation techniques or cost (impaired if appropriate). The Group
uses a variety of methods and makes assumptions that are based on market conditions existing at each
balance date.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate
their fair values due to their short-term nature.
14. Capital and Leasing Commitments
These commitments are based on the Group holding the tenements for the next 5 years.
51
20132012$$(i) Operating Lease Commitments Non-cancellableoperatingleasescontractedforbutnotcapitalisedinthefinancialstatements Payable - minimum lease payments - not later than 12 months57,000 55,881 - between 12 months and 5 years4,750 - - greater than 5 years- - 61,750 55,881 Thecompanyenteredintoanoperatingleaseon1August2007forofficespaceitoccupiesinVictoriaPark.Thesecondtermoftheleasewas3yearsandexpiredon31July2013.Theleasehasbeenrenewedforafurtheryearto31July 2014.Consolidated(ii) Expenditure commitments contracted for:20132012$$Exploration TenementsInordertomaintaincurrentrightsoftenuretoexplorationtenements,theCompanyisrequiredtooutlayrentalsandtomeettheminimumexpenditurerequirements.Theseobligationsarenotprovidedforinthefinancialstatements and are payable:- not later than 12 months616,669 403,921 - between 12 months and 5 years2,466,676 1,615,685 - greater than 5 years- - 3,083,345 2,019,606 Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
15. Directors and other key management personnel
(i) Details of Key Management Personnel
Chairman – non-executive
Mr T Revy (from 8 January 2010)
Managing Director
Mr D Sargeant (from 13 April 2000)
Executive director
Mr A Jessup (from 15 August 2003)
Company Secretary
Mr S Storm (from 30 April 2007)
(ii) Compensation of Key Management Personnel
The company has taken advantage of the relief provided by AASB 2008-4 Amendments to Australian
Accounting Standard – Key Management Personnel Disclosures by Disclosing Entities, and has transferred
the detailed remuneration disclosures to the directors’ report. The relevant information can be found in the
Remuneration Report on pages 3 to 6.
(iii) Equity instrument disclosures relating to directors and other key management personnel
Shareholdings
The number of ordinary shares in the Company held during the year by each director and other key
management personnel, including their personally related entities or associates, are set out below.
52
20132012$$Short-term employee benefits507,960 493,380 Post-employment benefits- - Share-based payments- 60,527 507,960 553,907 ConsolidatedDirectorsBalance at the start of the periodIssued under share planOn exercise of optionsShares acquiredBalance at the end of the periodMr T Revy 710,000 - - - 710,000 Mr D Sargeant6,400,000 - - - 6,400,000 Mr A Jessup2,567,555 - - - 2,567,555 9,677,555 - - - 9,677,555 Specified ExecutivesMr S Storm183,000 - - - 183,000 183,000 - - - 183,000 2013 Shareholdings of Key Management Personnel
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
15. Directors and other key management personnel (continued)
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.
53
DirectorsBalance at the start of the periodIssued under share planOn exercise of optionsShares acquiredBalance at the end of the periodMr T Revy 710,000 - - - 710,000 Mr D Sargeant6,100,000 - - 300,000 6,400,000 Mr A Jessup2,067,555 - - 500,000 2,567,555 8,877,555 - - 800,000 9,677,555 Specified ExecutivesMr S Storm183,000 - - - 183,000 183,000 - - - 183,000 2012 Shareholdings of Key Management Personnel2013 Option holdings of Key Management PersonnelDirectorsBalance at the start of the periodIssuedExpiredBalance at the end of the periodVested and exercisable at 30 June 2013Mr T Revy1,000,000 - (500,000)500,000 - Mr D Sargeant1,000,000 - (500,000)500,000 - Mr A Jessup1,000,000 - (500,000)500,000 - 3,000,000 - (1,500,000)1,500,000 - Specified ExecutivesMr S Storm1,000,000 - (500,000)500,000 - 1,000,000 - (500,000)500,000 - 2012 Option holdings of Key Management PersonnelDirectorsBalance at the start of the periodIssuedExpiredBalance at the end of the periodVested and exercisable at 30 June 2012Mr T Revy500,000 500,000 - 1,000,000 - Mr D Sargeant500,000 500,000 - 1,000,000 - Mr A Jessup500,000 500,000 - 1,000,000 - 1,500,000 1,500,000 - 3,000,000 - Specified ExecutivesMr S Storm500,000 500,000 - 1,000,000 - 500,000 500,000 - 1,000,000 -
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
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:
54
20132012$$Amounts paid to companies associated with certain Directors for management servicesKirkdale Holdings Pty Ltd - Mr D Sargeant217,800 211,200 Murilla Exploration Pty Ltd - Mr A Jessup217,800 211,200 Mr T Revy22,500 7,500 Total458,100 429,900 Amounts payable to Directors for Directors FeesMr T Revy7,500 22,500 7,500 22,500 ConsolidatedRelated partyRevenue from Related PartiesReimbursement of Expenditure Related PartiesAmounts owed by Related Parties as at 30 JuneAmounts Owed to Related parties as at 30 June$$$$ConsolidatedAssociate:FYI Resources Ltd2013- 94,070 55,080 - 2012- 42,880 15,927 - AssociateThe Group has a 24% interest in FYI Resources Limited (2012: 28%).The following table provides the total amount of transactions that were entered into with related parties for the relevant financial year:
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
17. Remuneration of auditors
The auditor of Empire Resources Ltd is HLB Mann Judd.
18. Share Based Payments
(a) Option plan
The Company has established an option share plan, which is also available to directors, employees and some
consultants, known as the 2010 Empire Resources Option Plan and was approved by shareholders on 25
June 2010.
The following table illustrates the number and weighted average exercise prices of and movements in share
options issued during the year:
1 These options were granted to a corporate advisory firm who has been appointed to increase shareholder
value.
2 These options did not meet the vesting requirements and expired on 25 June 2013.
The fair value of the equity-settled share options is estimated as at the date of grant using the Black and
Scholes model taking into account the terms and conditions upon which the options were granted.
55
20132012$$AmountsreceivedordueandreceivablebyHLB Mann Judd for:Audit or review of the financial reports of the Company21,425 20,650 AmountsreceivedordueandreceivablebyHLB Mann Judd audit firms:Other services- - 21,425 20,650 ConsolidatedNumberWeighted average exercise priceNumberWeighted average exercise price2013201320122012Outstanding at the beginning of the year5,700,000 $0.112,700,000 $0.14Granted during the year130,000,000 $0.053,000,000 $0.09Expired during the year2(2,700,000)$0.14- - Outstanding at the end of the year33,000,000 $0.095,700,000 $0.11Exercisable at the end of the year- -
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
18. Share Based Payments (continued)
The following table lists the inputs to the model used for the year ended 30 June 2013:
(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:
19. Segment Information
Operating segments are reported in a manner that is consistent with the internal reporting provided to the
chief operating decision maker. The chief operating decision maker has been identified as the Board of
Empire Resources Ltd.
Consistent with prior year, the Group operates only in one business and geographical segment being
predominantly in the area of mining and exploration in Australia. The Group considers its business
operations in mineral exploration to be its primary reporting function.
56
20132012$$$$Options issued- 84,037 ConsolidatedGrant DateExpiry dateExercise priceVesting PeriodFair value at grant date of optionsExpected VolatilityOption lifeDividend yieldRisk-free interest rateGrant date share priceKey Management Personnel options25-Jun-1025-Jun-13$0.1425-Jun-13$0.02107%3 years0%4.57%$0.04Key Management Personnel options09-Aug-1109-Aug-14$0.0909-Aug-14$0.03106%3 years0%4.75%$0.05Key Management Personnel options20-Nov-1120-Nov-14$0.1020-Nov-14$0.04106%3 years0%4.51%$0.07Employee options25-Jun-1025-Jun-13$0.1425-Jun-13$0.02107%3 years0%4.57%$0.04Employee options09-Aug-1109-Aug-14$0.0909-Aug-14$0.03106%3 years0%4.75%$0.05Consultant options25-Jun-1025-Jun-13$0.1425-Jun-13$0.02107%3 years0%4.57%$0.04Consultant options09-Aug-1109-Aug-14$0.0909-Aug-14$0.03106%3 years0%4.75%$0.05Consultant options27-Jun-1331-Aug-16$0.0431-Aug-16$0.01150%3.2 years0%3.00%$0.02Consultant options27-Jun-1331-Aug-16$0.0531-Aug-16$0.01150%3.2 years0%3.00%$0.02Consultant options27-Jun-1331-Aug-16$0.0631-Aug-16$0.01150%3.2 years0%3.00%$0.02
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
20. Contingent assets
Penny's Find
The Company entered into a new staged sale agreement in February 2012 for the Penny’s Find gold project
with Brimstone Resources Limited (Brimstone). At the election of Brimstone, the sale consideration
comprises either:
Staged cash payments totalling $2.5 million for a 100% interest of the Penny’s Find project. A royalty
will also be payable on gold produced in excess of the current JORC resource of 52,500 ozs gold.
Staged cash payments totalling $0.5 million together with exploration and development expenditure of
up to $3 million for an 75% interest in the Penny’s Find project. Any additional development costs
associated with the Company's residual 25% interest will carried by Brimstone and repayable from the
proceeds of future gold production.
An initial $500,000 (GST inclusive) payment had been made by Brimstone during the previous year to earn
a 40% interest in the project. Brimstone must then continue funding exploration and development work by
expending up to $3 million by 31st December 2013 to earn an 75% interest in the project. After expending
$1.5 million by December 2012, Brimstone can elect to purchase 100% of the project for $2.5 million plus a
2% gross royalty on gold produced in excess of the current JORC resource of 52,500 ozs gold. The royalty
would only apply when the gold price is above A$700/oz and would not exceed A$50 per ounce of gold
recovered.
Troy Creek
During the March 2011 quarter, the Company finalised an agreement with unlisted Sydney based
company, Zodiac Resources Ltd, whereby Zodiac may earn a 55% interest by spending $3 million on
exploration within three years and earn a 75% interest by spending an additional $4 million on exploration
and development within 5 years. Zodiac will have the option to acquire a 100% interest in the Troy Creek
project within five years of commencement of the joint venture for a purchase price of $5 million – this
amount being separate to the joint venture commitments.
21. Events after the Balance Date
In September 2013, the Company raised $200,000 by issuing 10,000,000 ordinary shares at 2 cents.
Other than this, 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.
57
Empire Resources Limited
Notes to the Financial Statements 30 June 2013
22. Parent Entity Financial Information
The individual financial statements for the parent entity show the following aggregate amounts:
58
20132012ASSETS$$CURRENT ASSETSCash and cash equivalents217,857 640,807 Trade and other receivables79,092 193,802 Total Current Assets296,949 834,609 NON-CURRENT ASSETSTrade and other receivables470 240 Financial assets459,439 704,395 Plant and equipment6,360 5,893 Total Non-Current Assets466,269 710,528 TOTAL ASSETS763,218 1,545,137 LIABILITIESCURRENT LIABILITIESTrade and other payables154,109 237,477 Total Current Liabilities154,109 237,477 TOTAL LIABILITIES154,109 237,477 NET ASSETS609,109 1,307,660 EQUITYIssued capital16,970,103 16,086,707 Reserves904,259 931,481 Accumulated losses(17,265,253)(15,710,528)TOTAL EQUITY609,109 1,307,660 Loss before income tax expense(2,080,579)(3,158,810)Income tax benefit498,632 131,344 Other comprehensive loss for the year, net of tax- - Total comprehensive loss for the year(1,581,947)(3,027,466)Parent Entity
DIRECTORS’ DECLARATION
1. In the directors’ opinion:
(a)
the financial statements and notes set out on pages 30 to 58 are in accordance with the Corporations
Act 2001 including:
(i)
(ii)
complying with Australian Accounting Standards (including
the Australian Accounting
Interpretations), the Corporations Regulations 2001, professional reporting requirements and
other mandatory requirements; and
giving a true and fair view of the Group’s financial position as at 30 June 2013 and of its
performance for the financial year ended on that date.
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
(c)
the financial statements and notes thereto are in accordance with International Financial Reporting
Standards issued by the International Accounting Standards Board.
2. 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 for the financial year ended 30 June 2013.
This declaration is made in accordance with a resolution of the directors.
___________________
Adrian Jessup
Director
Perth, Western Australia
26 September 2013
59
INDEPENDENT AUDITOR’S REPORT
To the members of Empire Resources Limited
Report on the Financial Report
We have audited the accompanying financial report of Empire Resources Limited (“the company”),
which comprises the consolidated statement of financial position as at 30 June 2013, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year then ended, notes comprising a summary
of significant accounting policies and other explanatory information, and the directors’ declaration for
the Group. The Group comprises 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 of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that is free from material misstatement, whether due to fraud or error.
In Note 1(a), the directors also state, in accordance with Accounting Standard AASB 101:
Presentation of Financial Statements, that the financial report 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. Those 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
company’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 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.
Our audit did not involve an analysis of the prudence of business decisions made by directors or
management.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
60
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 consolidated entity’s financial position as at 30 June
2013 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations
2001; and
(b) the financial report also complies with International Financial Reporting Standards as
disclosed in Note 1(a).
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 1 (b) in the financial report which indicates
that the directors anticipate that a further equity raising will be required and will be completed in the
year to meet the ongoing working capital requirements of the Group. Should this equity raising not be
completed, there is a material uncertainty that may cast significant doubt as to whether the Group will
be able to realise its assets and extinguish its liabilities in the normal course of business.
Report on the Remuneration Report
We have audited the remuneration report included in the directors’ report for the year ended 30 June
2013. 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 year ended 30 June 2013
complies with section 300A of the Corporations Act 2001.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
26 September 2013
N G Neill
Partner
61
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Empire Resources
Limited for the year ended 30 June 2013, I declare that to the best of my knowledge and
belief, there have been no contraventions of:
a) the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
b) any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Empire Resources Limited and the entities it controlled
during the year.
Perth, Western Australia
26 September 2013
N G Neill
Partner
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
62
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE PRINCIPLES
Introduction
Empire Resources Limited ("Company") 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 further consideration.
DISCLOSURE OF CORPORATE GOVERNANCE PRACTICES
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.
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
3.4
3.5
4.1
√
√
√
X
√
√
X
√
√
√
X
X
√
X
X
Refer (a) below
Refer (a) below
Refer (a) below
Refer (b) below
Refer (b) below
Refer (b) below
Refer (c) below
Refer (d) below
Refer (e) below
Refer (f) below
Refer (g) below
Refer (g) below
Refer (h) below
Refer (g) below
Refer (c) below
4.2
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
8.4
n/a
n/a
n/a
√
√
√
√
√
√
√
n/a
X
n/a
√
n/a
n/a
n/a
n/a
Refer (i) below
Refer (i) below
Refer (j) below
Refer (j) below
Refer (k) below
Refer (k) below
Refer (l) below
n/a
Refer (m) below
n/a
Refer (n) below
n/a
(a) Principle 1 Recommendation 1.1, 1.2 and 1.3
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
63
CORPORATE GOVERNANCE
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.
(b) Principle 2 Recommendations 2.1, 2.2 and 2.3
Recommendation 2.1 recommends that a majority of the board should be independent directors.
The Company does not have a majority of independent directors, with only one of the 3 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 Thomas Revy, 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 and 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 and adheres to their respective Charters. The Board considers that, at this stage, no efficiencies
or other benefits would be gained by establishing a separate audit committee or a separate nomination committee.
(d) Principle 2 Recommendation 2.5
Notification of Departure
Empire does not have in place a formal process for evaluation of the Board, its committees, individual directors and key
executives.
Explanation for Departure
Evaluation of the Board is carried out on a continuing and informal basis. The Company will put a formal process in place
as and when the level of operations of the Company justifies this.
(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.
64
CORPORATE GOVERNANCE
Nomination Matters
The full Board sits in its capacity as a Nomination Committee.
Performance Evaluation
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 3 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
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, 3.3 and 3.5
Companies should establish a policy concerning diversity, the measurable objectives for achieving gender diversity, and
provide the information listed in Box 3.2 of the Principles & Recommendations for the content of a diversity policy.
Notification of Departure
A Diversity policy has not been established.
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 a
diversity policy is justified at this time.
(h) Principle 3 Recommendation 3.4
Companies should disclose the proportion of woman employees and those in executive and on the board.
Disclosure:
Empire Resources has 2 employees, of which none are women. There are no women in senior executive positions or
on the board.
(i) Principle 5 Recommendation 5.1 and, 5.2
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.
65
CORPORATE GOVERNANCE
(j) Principle 6 Recommendation 6.1 and 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.
(k) Principle 7 Recommendation 7.1 and 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.
(l) Principle 7 Recommendation 7.3
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.
(m) 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.
66
CORPORATE GOVERNANCE
(n) Principle 8 Recommendations 8.3
Companies should distinguish the structure of non-executive directors’ remuneration from that of executive directors and
senior executives.
Disclosure:
The policies adopted by the Company are set out in the audited Remuneration report in the Directors’ Report.
67
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is
as follows. The information is current as at 24 September 2013.
(a) Distribution of shares
The numbers of shareholders, by size of holding are:
The number of shareholdings held in less than marketable parcels is 237.
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
(c) Substantial Shareholder
68
NumberCategory (size of holding)of Holders1 - 1,00025 1,001 - 5,00070 5,001 - 10,000126 10,001 - 100,000370 100,001 - and over217 808SHAREHOLDERSNumber of shares held% Holding1 FITALL GROUP LTD 20,000,00011.01%2 BLAMNCO TRADING PTY LTD 9,000,0004.95%3 TRONES INVESTMENTS PTY LTD 5,915,0003.26%4 DETROIT EQUITIES INC 5,000,0002.75%5 RBJ NOMINEES PTY LTD 5,000,0002.75%6 KIRKDALE HOLDINGS PTY LTD 3,300,0001.82%7 AGENS PTY LTD 3,275,8061.80%8 MEEKAL PTY LTD 3,098,3331.71%9 ANKAA SPRINGS PTY LTD 3,056,1601.68%10 A N SUPERANNUATION PTY LTD 3,000,0001.65%11 WESTORIA RESOURCE INVESTMENTS 2,700,0001.49%12 MRS SUKHON SUHARITDUMRONG 2,268,5001.25%13 SECOND NAREMI PTY LTD 2,110,2451.16%14 ARMCO BARRIERS PTY LTD 2,000,0001.10%15 CANARY PTY LTD 2,000,0001.10%16 ALLUA HOLDINGS PTY LTD 2,000,0001.10%17 PURITAN STYLE PTY LTD 2,000,0001.10%18 MR BRIAN MCCUBBING 1,900,0001.05%19 MR KENNETH JOSEPH HALL 1,900,0001.05%20 RESOURCE ASSETS PTY LTD 1,800,0000.99%81,324,04444.77%ShareholderNumber of sharesFITALL GROUP LTD 20,000,000
ASX ADDITIONAL INFORMATION
(d) Stock Exchange Listing
Listing has been granted for all the ordinary shares of the company on all Member Exchanges of the Australian
Stock Exchange Limited except for the following which are not quoted by virtue of restriction agreements.
Quoted shares on ASX and total issued share capital
150,645,921
(e) Voting rights
All shares carry one vote per unit without restriction.
(f) Unlisted options
Unlisted options (Ex Price 9 cents; Exp 9 August 2014)
1,500,000
Unlisted options (Ex Price 9.8 cents; Exp 28 November 2014)
1,500,000
Options issued to William Buck Financial Services (WA) Pty Ltd:-
Tranche 1 - 10 Million options with an exercise price of 4 cents
each, when the share price maintains a 30 day VWAP of 4 cents
or more-expiring 31 Aug 2016
10,000,000
Tranche 2 - 10 Million options with an exercise price of 5 cents
each, when the share price maintains a 30 day VWAP of 5 cents
or more-expiring 31 Aug 2016
10,000,000
Tranche 3 - 10 Million options at an exercise price of 6 cents
each, when the share price maintains a 30 day VWAP of 6 cents
or more-expiring 31 Aug 2016
10,000,000
69
ASX ADDITIONAL INFORMATION
INTERESTS IN MINING AND EXPLORATION TENEMENTS
AT 24 SEPTEMBER 2013
PROJECT
TENEMENT
INTEREST
REMARKS
TROY CREEK
PENNY'S FIND
YUINMERY
E69/1729
E69/2357
E69/2358
E69/2869
E69/2870
E69/2904
E69/2905
P69/45
E27/410
E27/420
M27/156
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
P27/1923
P27/1962
P27/2007
P27/2008
M57/265
P57/1214
P57/1215
P57/1216
P57/1217
E57/766
E57/840
45%
45%
45%
45%
45%
45%
45%
45%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
100%
100%
100%
100%
100%
100%
100%
70
ASX ADDITIONAL INFORMATION
PROJECT
YUINMERY
OPTION
POINT KIDMAN
PIROMAN
TENEMENT
INTEREST
REMARKS
E57/514
Option for 91.4% Interest
Option for 91.4% Interest
Option for 91.4% Interest
Option for 91.4% Interest
80%
80%
80%
80%
80%
80%
80%
80%
80%
80%
E57/681
P57/1130
P57/1131
E38/2508
E38/2510
E38/2582
E38/2639
E38/2640
E38/2641
E38/2785
E38/2786
E38/2787
E38/2788
E38/2137
E38/2701
DAMPERWAH
E59/1323
Earning 70%
JOANNA
E45/4113
80%
Application not yet granted
71