EMPIRE RESOURCES LIMITED
OPERATIONS REVIEW
EMPIRE RESOURCES LIMITED
ABN 32 092 471 513
Annual Report
30 June 2020
EMPIRE RESOURCES LIMITED
Corporate Directory
Directors
Company Secretary
Registered Office
Auditor
Share Registry
:
:
:
:
:
Michael Ruane
Sean Richardson
Jeremy Atkinson
Simon Storm
Registered Office and Principal Place of Business
159 Stirling Highway
Nedlands
WA 6009
Telephone: (08) 9386 4699
Email info@resourcesempire.com.au
Website www.resourcesempire.com.au
HLB Mann Judd (WA) Partnership
Level 4
130 Stirling Street
Perth
WA 6000
Automic Group
Level 2
267 St Georges Terrace
Perth WA 6000
Australian Securities Exchange
Home Branch: Perth
Code: ERL
ABN
:
32 092 471 513
1
Empire Resources Limited
Review of Operations
REVIEW OF OPERATIONS
Figure 1 : Project Location Map
Penny’s Gold Project (WA)
The Penny’s Gold Project is located 50km east of Kalgoorlie, Western Australia within the north-northwest trending
Gindalbie greenstone belt consisting of a sequence of mafic-ultramafic volcanic rocks with intercalated horizons of
felsic volcanic rocks and metasediments. The sequence has been subjected to multiple deformation events resulting
in significant folding, pronounced foliation, and a northerly plunging mineral lineation. To the east of the project is the
GMQ shear where subsidiary structures are common and locally appear to influence spatial distribution of gold
mineralisation, particularly where structures intersect or bifurcate. Outcrop within the project area is poor with the
regolith dominated by a deeply dissected laterite weathering profile and the subsequently derived colluvial products.
Gold mineralisation at Penny’s occurs within a lower order northwest trending shear that intersects a northerly
trending structure. This structure is interpreted to continue to the north through the project area. To the east of this
structure and within the project area lie multiple northerly and northwest trending structures interpreted from
reprocessed aeromagnetic data.
During the June 2019 quarter, the Company engaged an independent geological consultant to complete a
comprehensive geological review of the Company’s Penny’s Gold Project. The review included the collection,
collation and interpretation of geochemical (surface and drilling), geological mapping and geophysical datasets
(aeromagnetic and electromagnetic surveys) from Company and historical sources.
Drilling during the year demonstrated the strong potential for the project to host structurally controlled gold
mineralisation comparable to the Penny’s Find open pit mine (now excluded from the Project area), where 18,356oz
was recovered by Empire from 138,272 tonnes grading 4.47g/t Au between 2017 and 2018.
2
Empire Resources Limited
Review of Operations
Yuinmery Project (Cu-Au)
The Yuinmery Copper-Gold project is located in the Mid-West region of Western Australia and consists of five
granted tenements, two mining and three exploration, for a total area of 84.5 km2. The project has a current JORC
2012 Resource of 2.52Mt @ 1.31% Cu, 0.49g/t Au and 1.76g/t Ag using a 0.5% Cu cut-off (refer ASX:ERL
announcement “Updated copper-gold Resource Yuinmery Project” 17 May 2016).
The Yuinmery project area covers the eastern portion of the Archaean Youanmi greenstone belt with rock types
consisting largely of mafic and ultramafic volcanics with altered chloritic felsic and intermediate volcanic units. The
volcanic units contain a number of intercalated strongly sulphidic cherty sediments, which are host to Volcanic
Massive Sulphide (VMS) copper-gold mineralisation. The project area lies between the Youanmi Shear zone
(western boundary) and the Yuinmery Shear zone (eastern boundary) with the southern area covering the southern
closure of a northerly plunging syncline.
During the June 2019 quarter, Empire commenced a comprehensive geological review of the Yuinmery Project. The
review included research of historical exploration activities undertaken at the project since Western Mining
Corporation commenced exploration in 1969. A database of 115,179m of historical and Company drilling, and 10,228
geochemical samples have been compiled across the broader project area.
The geological review also included the compilation and assessment of several generations of geophysical surveys.
The Company has engaged geophysical consultants to assist in the compilation and review of all registered
geophysical surveys across the broader project area. The historical data offers a rich collection of information that,
when assessed as a collective, will allow the Company to refine existing targets as well as identify new areas for
detailed follow up exploration.
The Company completed several drilling campaigns at Yuinmery during the year and looks forward to further
exploration in the future.
Barloweerie Project (Zn-Pb-Ag-Au-Cu)
2
The Company has been granted a 113km
exploration licence located approximately 155km west of Cue, WA.
The exploration licence covers part of the Barloweerie greenstone belt where historical exploration discovered highly
anomalous zinc, lead, silver, gold and copper mineralisation in a volcanogenic massive sulphide (VMS) setting.
CORPORATE ACTIVITIES
Rights Issue
During the December 2019 quarter, the Company conducted a 2:5 Rights Issue which raised $1,227,352, before
costs, by the issue of 153,418,999 fully paid shares. An additional 24,550,000 shares were issued in January 2020
as part of a short fall and small scale offering placement, raising $196,400.
FYI Resources Limited
During the year, the Company sold 1,334,743 shares in FYI Resources Limited (ASX:FYI), realising proceeds of
$87,590. Empire’s holding in FYI at the close of the June quarter was nil shares.
NTM Gold Ltd
During the year the Company took a placement of 46.15M fully paid ordinary shares in NTM Gold Limited (ASX:NTM)
by investing $1.5M at $0.0325 per share. At completion, Empire held 8.70% of NTM’s expanded capital. Empire’s
investment in NTM followed an extensive review of exploration and investment opportunities in the Eastern
Goldfields. Empire believes that there are significant opportunities for junior gold exploration and development
companies in the current economic climate and the recent record Australian dollar gold price underpins Empire’s view
that some quality junior gold companies are currently undervalued. During the year, the Company sold 261,292
shares in NTM Gold Limited (ASX:NTM), realising proceeds of $22,210.
Empire’s holding in NTM at 30 June 2020 was 45,888,708 shares.
Dr Ruane has held NTM stock since early 2018 and currently holds 43.76 million shares. This combined with the
Company’s holding comprises 13% of NTM’s expanded capital.
Dr Ruane was appointed a Director of NTM in April 2020.
3
Empire Resources Limited
Review of Operations
Loan Facility
The investment in NTM was funded from cash reserves and an unsecured loan of $1.5M provided by Empire’s Non-
Executive Chairman and major shareholder, Dr Michael Ruane.
The key terms and conditions of the loan facility were as follows:
Commencement Date:
Lender:
Term:
Interest Rate:
Security:
Purpose:
11 July 2019.
Kesli Chemicals Pty Ltd
12 months
7.5% per annum. Interest accrues daily on outstanding money and will be paid quarterly in
arrears.
The loan money and interest are unsecured.
Board approved payments for working capital, direct exploration and investments.
The term was extended indefinitely in July 2020.
Project Assessment
Empire continued to assess opportunities in the Eastern Goldfields of Western Australia complimentary to its existing
portfolio. The Company assessed several prospective projects during the quarter.
Legal claim
Johannes (Steve) Norregaard commenced an action in the Supreme Court of Western Australia against Empire
Resources Ltd and Brimstone Resources Ltd, the joint venture participants in the Penny’s Find project. Both Empire
and Brimstone defended the claim which settled in January 2020.
Eastern Goldfields Milling Services (EGMS)
Empire remains in dispute with Eastern Goldfield Milling Services Pty Ltd regarding unaccounted gold following a toll
treatment milling campaign conducted by EGMS at its Burbanks Gold Processing facility in late 2017. The Company
is seeking to recover gold to a value in excess of $1 Million. The matter has been referred to Arbitration.
COMPETENT PERSON STATEMENTS
The information is this report concerning the Mineral Resources for the Just Desserts deposits 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 2012
Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr
Ball consents to the inclusion in this report of the matters based on his information in the form and context in which it
appears.
4
Empire Resources Limited
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 2020.
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.
Michael Ruane – Non Executive Chairman BSc, PHD
Dr Ruane holds BSc and PhD qualifications in chemistry from UWA and has been involved in the mining and chemical
industries for over 35 years. Dr Ruane has been responsible for the listing or development of numerous Public
Companies including Metaliko Resources Ltd (merged with Echo Resources Ltd 2017 (ASX: EAR)), lntermin
Resources Ltd (ASX: HRZ), Reward Minerals Ltd (ASX: RWD), Haddington Resources Ltd (now Altura Mining Limited
(ASX: AJM) and Wedgetail Exploration Ltd (now Millennium Minerals Ltd (ASX: MOY).
Company
Position
Reward Minerals Ltd
NTM Gold Ltd
Executive Director
Director
Appointed
02/12/2004
24/04/2020
Sean Richardson – Managing Director MBA, MSc (Curtin) – Appointed 4 July 2019
Mr Richardson is an experienced Minerals Executive, a graduate of the Western Australian School of Mines (WASM)
and a Fellow of the Australasian Institute of Mining and Metallurgy (FAusIMM). Mr Richardson has over 25 years’
operational, consultancy and managerial experience in Australian, North American, African, South-East and Central
Asian mineral projects. His experience ranges from exploration through project development to production, having
held senior management positions for a number of ASX listed and private exploration, mining and consultancy
companies including; Bardoc Gold Limited, North West Nickel and Atlas Iron.
Jeremy Atkinson – Non Executive Director BA CPA GradDipAppFin
Mr Atkinson is a qualified CPA (Australia), professionally trained in project financial modelling. In the past eight years
Mr Atkinson has specialised professionally in the construction of financial models for mining projects in Australia,
Africa, Europe and South America and is very conversant with commercial terms and cost parameters associated with
mining and processing of a range of mineral commodities including gold. He also holds a degree in modern languages
from Oxford University and speaks English, French and German languages fluently. Prior to his involvement in the
mining industry Mr Atkinson spent 18 years in senior strategic and operational positions in the development and
turnaround of various international manufacturing businesses.
David Sargeant - Non-Executive Director - BSc. MAusIMM – Resigned 15 August 2020
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 company during the past three years.
Company
Position
Appointed
FYI Resources Ltd
Non-executive Director
30/11/2009
Company Secretary
Simon Storm - BCom. BCompt(Hons). CA, FGIA
Mr Storm is a Chartered Accountant with more than 30 years of Australian and international experience in the
accounting profession and commerce. He commenced his career with Deloitte Haskins & Sells in Africa then London
5
Empire Resources Limited
Directors’ Report
before joining Price Waterhouse in Perth. During the past 18 years he has held various senior finance and company
secretarial roles with
the resources, agribusiness, banking, construction,
in
listed and unlisted entities
telecommunications, property development and funds management industries.
He was a non-executive Director and Company Secretary of West African Resources Ltd until his retirement in May
2020, CFO and Company Secretary of BlackEarth Minerals Ltd until September 2020 and currently acts as CFO &
Company Secretary for two unlisted companies.
Principal Activities
During the period, the principal activities of the Company consisted of mineral exploration and evaluation of properties
in Australia.
Dividends
No dividends have been paid during the period and no dividends have been recommended by the Directors.
Result for the Financial Period
Profit from ordinary activities after provision for income tax was $422,038 (2019: Loss $1,323,987).
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
In July 2019, the Company made an investment in NTM Gold Limited (NTM) by investing $1.5 million at 3.25 cents
per share for 46.15 million shares. At 30 June 2020, the Company recognised a gain on NTM financial assets of
$2,193,431 (2019: $Nil) which represented an increase in the market value of NTM to 8 cents per share.
Expenses
Interest expense was up to $110,651 (2019: $7,567) due to the 7.5% interest on an unsecured loan of $1.5 million
from an entity associated with Dr Michael Ruane.
The Company conducted exploration activities at its various exploration projects with expenditure on exploration
increasing 436% to $846,643 (2019: $157,379) which was mainly attributable to the drilling program at Yuinmery.
During the year, the Company incurred legal fees relating to the EGMS dispute of $190,808 (2019:$69,824) which
was included as a care and maintenance expense for the Penny’s Find mine.
Operating cash flows
Cash outflow from operating activities was $1,787,470 (2019: $2,219,870) due to the reduced care and maintenance
mining work at the previously owned Penny’s Find mine. The payments for exploration and evaluation expenditure
were increased due to the Yuinmery drilling program.
Investing cash flows
Cash inflows from investing activities were $119,800 (2019: $800,372) due to the sale of FYI Resources shares and
NTM shares for $109,800 (2019: $346,594). In the prior year, the Company received the first payment for the sale of
the Penny’s Find mine for $200,000 and on settlement with Brimstone Resources Ltd, the cash acquired was
$313,591.
Financing cash flows
Cash inflows from financing activities were $1,372,415 (2019: $1,304,738) following share placements of $1,372,415
net of share issue costs (2019: $1,304,738).
Statement of financial position
Current assets
Current assets increased by 256% to $4,631,702 (2019:$1,299,466) mainly due to the increase in value of the
investment in NTM Gold Ltd shares.
Non-current assets
Non-current assets decreased by 43% to $47,532 (2019: $82,708) due to the depreciation of plant and equipment.
Current liabilities
Current liabilities increased by 415% to $1,834,119 (2019: $356,383) due to the $1.5 million loan with an entity
associated with Dr Michael Ruane.
6
Empire Resources Limited
Directors’ Report
Review of Operations
Refer pages 2-4 for details.
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 other
than as discussed elsewhere in this Report.
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 internally by
the board and taking into account market conditions and comparable salary levels for companies of a similar size and
operating in similar sectors.
The remuneration policy is to provide a fixed remuneration component. The board believes that this remuneration
policy is appropriate given the stage of development of the Company and the activities which it undertakes and is
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 Directors’ fees will be $36,000 per annum for the Chairman and for
Directors, inclusive of statutory superannuation contributions.
Shareholders have approved aggregate remuneration for all non-executive Directors at an amount of $150,000 per
annum at a general meeting on 12 March 2004. Where applicable, superannuation contributions of 9.5% (2019:
9.5%) are paid on these fees as required by law.
At the forthcoming AGM in November 2020, shareholder approval will be sought to increase the aggregate fee pool
to $250,000 per year.
7
Empire Resources Limited
Directors’ Report
Share-based compensation
Performance Related Share Issue
The Managing Director, Sean Richardson was issued with 20 million performance rights in Empire subject to the price
of Empire's shares remaining at or above a 20 day VWAP price of 1.5 cents for a period of not less than 20 days and
within a period of two years of continuous employment from the date of his engagement in July 2019.
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 Empire Resources Option Plan is not currently active insofar as there have been no option issues in the last two
years and shareholder renewal, which is required every three years, has not been sought.
There were no options issued as share-based compensation to key management personnel during the current
financial year or previous financial year.
No shares were issued during the year upon the exercise of options.
Executive Director
The Executive Director provides his services via an employee services agreement.
Non- executive Directors do not receive any retirement benefits. 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.
8
Empire Resources Limited
Directors’ Report
Compensation of Key Management Personnel
The following table discloses the remuneration of the Key Management Personnel (‘KMP’) of the Company. KMP are
defined as those persons having authority and responsibility for planning, directing and controlling the major activities
of the Group, directly or indirectly, including any Director (whether Executive or otherwise) of the Company.
The information in this table is audited.
Equity Holdings
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.
9
Directors' FeesConsulting FeesSalaryPost-employment benefitsShare-based paymentsValue of performance rightsPerformance based % of remunerationTotalOptions$$$$$$%DirectorsNon-ExecutiveDr M Ruane1202036,000- - - - 36,0000%201927,000- - - - 27,0000%Mr J Atkinson1202036,000- - - - 36,0000%201926,806- - - - 26,8060%Mr D Sargeant8202036,000- - - - 36,0000%2019- 142,050- - - 142,0500%Mr L Christensen2,32020- - - - - - 0%201925,000- - - - 25,0000%Mr A Jessup42020- - - - - - 0%2019- 1,700- - - 1,7000%Mr C Banasik5,62020- - - - - - 0%20198,760- - - - 8,7600%Mr B Fraser5,62020- - - - - - 0%201911,232- - - - 11,2320%ExecutiveMr S Richardson72020- - 198,35118,84324,871242,06510%Total Directors2020108,000- 198,35118,84324,871350,0657%201998,798143,750- - - 242,5480%1 Appointed 3 October 20182 Appointed 23 April 20183Resigned 27 November 20184Resigned 17 July 20185 Appointed 17 July 20186Resigned 2 October 20187 Appointed 4 July 20198Resigned 15 August 2020
Empire Resources Limited
Directors’ Report
All equity transactions with key management personnel, which relate to the Company’s listed ordinary shares or
options, have been entered into on an arm’s length basis.
Performance rights
The number of performance rights issued by the Company during the year and held by each director and other key
management personnel, including their personally related entities or associates, are set out below.
Mr. Sean Richardson received 20 million performance rights in the Company which vest when the price of the
Company’s shares remain at or above a 20 day VWAP price of 1.5 cents for a period of not less than 20 days and
within a period of two years of continuous employment from the date of employment.
Option holdings
There were no options over ordinary shares in the Company held during the reporting period by any director or key
management personnel
End of Remuneration Report.
10
DirectorsBalance at beginning of yearGranted as remunerationDisposedAcquiredBalance at end of yearMr D Sargeant28,016,668 - - 4,153,332 12,170,000 Dr M Ruane124,204,960 - (200,000)131,857,062 255,862,022 Mr J Atkinson5,266,667 - - 3,331,667 8,598,334 Mr S Richardson1500,000 - - 10,850,000 11,350,000 137,988,295 - (200,000)150,192,061 287,980,356 1 Appointed 4 July 20192 Resigned 15 August 20202020 Shareholdings of Key Management Personnel2020 Performance rights holdings of Key Management PersonnelDirectorsBalance at beginning of yearGranted as remunerationExercisedBalance at end of yearVested and exercisable at 30 June 2020Mr D Sargeant2- - - - - Dr M Ruane- - - - - Mr J Atkinson- - - - - Mr S Richardson1- 20,000,000 - 20,000,000 - - 20,000,000 - 20,000,000 - 1 Appointed 4 July 20192 Resigned 15 August 2020
Empire Resources Limited
Directors’ Report
Other transactions with Directors, their associates and director related entities are as follows:
The above amounts relate to unpaid remuneration.
Loans from Directors
The company obtained an unsecured loan of $1.5 million with a 12 month term and 7.5% interest from an entity
associated with the Non-executive Chairman, Dr Michael Ruane. The Company must repay the loan and interest on
the earlier of:
11 July 2020, or
on presentation of an Event of Default Notification, or
seven days from the date of a successful capital raising in excess of $1.5 million, or
seven days from the date on which any bidder for the Company becomes entitled to 50% or more of the
Company’s fully paid securities.
The term was extended indefinitely in July 2020.
Share Options
On 18 July 2019, 9 million unlisted options expired. At the date of this report there were no unissued ordinary shares
of the Company under option.
Directors’ Interests
The relevant interest of each Director in the shares and performance rights 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.
11
20202019$$Amounts payable at balance date to Key Management Personnel in relation to remunerationKirkdale Holdings Pty Ltd - Mr D Sargeant16,500 156,255 Kesli Chemicals Pty Ltd - Dr M Ruane18,000 27,900 Northshore Capital Advisors Pty Ltd - Mr J Atkinson3,300 3,300 37,800 187,455 Consolidated20202019$$Amounts payable to Directors as unsecured loansKesli Chemicals Pty Ltd - Dr M Ruane1,556,096 - 1,556,096 - Interest expense on unsecured loansKesli Chemicals Pty Ltd - Dr M Ruane109,726 6,267 ConsolidatedDirectorDirectIndirectDirectIndirectDr M Ruane- 256,862,022- - Mr J Atkinson- 10,538,334- - Mr S Richardson- 11,350,00020,000,000- Number of Ordinary SharesNumber of Rights
Empire Resources Limited
Directors’ Report
Likely Developments and Expected Results
Disclosure of likely developments in the operations of the Company and the expected results of those operations in
future financial years, and any further information, has not been included in this report because, in the reasonable
opinion of the Directors to do so would be likely to prejudice the business activities of the Company.
Environmental Regulation
The Company’s operations were subject to environmental regulations under both Commonwealth and State
legislation in relation to its exploration activities.
The Directors are not aware of any breaches during the period covered by this report.
Meetings of Directors
The following table sets out the number of meetings of the Company’s Directors held during the year ended 30 June
2020 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
On 7 August 2020, the Company issued 108,966,333 shares at 1.2 cents raising $1,307,596.
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.
12
DirectorMeetings attendedMeetings held whilst a DirectorDr Michael Ruane33Mr Jeremy Atkinson33Mr David Sargeant213Mr Sean Richardson1331 Appointed 4 July 20192Resigned 15 August 2020Directors’ Meetings
Empire Resources Limited
Directors’ Report
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.
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:
Consolidated
Year ended
30 June 2020
$
Year ended
30 June 2019
$
Assurance Services
HLB Mann Judd (Current Auditor)
1. Audit and review services
Audit and review of financial reports and other audit work under the
Corporations Act 2001
Total remuneration
29,633
29,633
27,030
27,030
2. Joint Venture Audit services
Audit of the Penny’s Find Joint Venture -2018
-
28,000
3. Company Tax Compliance Services
7,000
6,000
Auditors Independence Declaration
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
2020. This written Auditor’s Independence Declaration is attached to the Independent Auditor’s Report to the
members and forms part of this Directors’ Report.
Signed in accordance with a resolution of Directors.
_________________
Michael Ruane
Director
Perth, Western Australia
17 September 2020
13
EMPIRE RESOURCES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
The above Statement of Comprehensive Income
should be read in conjunction with the accompanying notes.
14
Note20202019$$Interest income2,4927,275Net fair value gain on financial assets92,193,431- Other income290,498559,285Interest expense(110,651)(7,567)Depreciation expense(3,517)(13,572)Exploration expense3(846,643)(157,379)Care and maintenance3(194,712)(395,810)Employee benefits expense(125,271)(85,616)Management fee expense- (143,750)Directors' fees expense(108,000)(98,798)Accounting expense(82,061)(88,360)Consultancy expense(87,167)(73,913)Share-based payment20(24,871)- ASX expense(19,976)(23,398)Corporate relations expense(610)(4,382)Insurance expense(19,660)(62,537)Net fair value loss on financial assets9- (500,678)Other expenses (241,244)(234,787)Profit/(loss) before income tax422,038 (1,323,987)Income tax benefit- - Net profit/(loss) for the year422,038 (1,323,987)Other comprehensive income for the year, net of tax- - Total comprehensive income/(loss) for the year422,038 (1,323,987)Basic and diluted earnings gain (loss) per share (cents per share)50.06 (0.24)Consolidated
EMPIRE RESOURCES LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
The above Statement of Financial Position
should be read in conjunction with the accompanying notes.
15
Note20202019ASSETS$$CURRENT ASSETSCash and cash equivalents6598,047 893,302 Trade and other receivables7352,558 316,757 Other financial assets810,000 20,000 Financial assets at fair value through profit or loss93,671,097 69,407 Total Current Assets4,631,702 1,299,466 NON-CURRENT ASSETSPlant and equipment1047,532 82,708 Total Non-Current Assets47,532 82,708 TOTAL ASSETS4,679,234 1,382,174 LIABILITIESCURRENT LIABILITIESTrade and other payables11278,023 356,383 Borrowings121,556,096 - Total Current Liabilities1,834,119 356,383 TOTAL LIABILITIES1,834,119 356,383 NET ASSETS2,845,115 1,025,791 EQUITYIssued capital1324,178,914 22,806,499 Reserves141,762,345 1,737,474 Accumulated losses(23,096,144)(23,518,182)TOTAL EQUITY 2,845,115 1,025,791 Consolidated
EMPIRE RESOURCES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes
16
Issued Capital Accumulated LossesOption ReservesAsset Revaluation ReserveTotal$$$$$Balance at 1 July 201821,497,202 (22,740,195)1,737,474 546,000 1,040,481 Adjustment to the opening balance of accumulated losses on initial application of AASB 9 in relation to equity investments- 546,000 - (546,000)- 21,497,202 (22,194,195)1,737,474 - 1,040,481 Loss for the period- (1,323,987)- - (1,323,987)Other comprehensive income- - - - - Total comprehensive loss for the period- (1,323,987)- - (1,323,987)Shares issued during the period1,386,132 - - - 1,386,132 Equity issue expenses(76,835)- - - (76,835)Balance at 30 June 201922,806,499 (23,518,182)1,737,474 - 1,025,791 Balance at 1 July 201922,806,499 (23,518,182)1,737,474 - 1,025,791 Profit for the period- 422,038 - - 422,038 Other comprehensive income- - - - - Total comprehensive profit for the period- 422,038 - - 422,038 Shares issued during the period1,423,752 - - - 1,423,752 Equity issue expenses(51,337)- - - (51,337)Share based payment- - 24,871 - 24,871 Balance at 30 June 202024,178,914 (23,096,144)1,762,345 - 2,845,115 Consolidated
EMPIRE RESOURCES LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
The above Statement of Cash Flows should be read in conjunction
with the accompanying notes.
17
Note20202019$$Cash Flows from Operating ActivitiesReceipts from customers29,934 1,200 Payments for exploration and evaluation expenditure(747,409)(187,671)Payments for suspension of operations(14,690)(400,129)Payments for surface mining expenditure(188,422)(259,263)Payments to employees and suppliers(815,349)(1,380,651)Interest received3,166 6,601 Other- 7,466 Interest paid(54,700)(7,423)Net cash outflow from operating activities6 (i)(1,787,470)(2,219,870)Cash Flows from Investing ActivitiesPurchase of plant and equipment- (63,813)Proceeds from sale of plant and equpment- 4,000 Cash acquired on acquisition of 40% share of Penny's Find JV- 313,591 Proceeds from sale of financial assets109,800 346,594 Proceeds from realisation of financial assets10,000 - Proceeds from sale of Tenement- 200,000 Net cash inflow from investing activities119,800 800,372 Cash Flows from Financing ActivitiesProceeds from issue of equity securities1,423,752 1,335,982 Equity securities issue costs(51,337)(31,244)Proceeds from borrowings- 500,000 Repayments of borrowings- (500,000)Net cash inflow from financing activities1,372,415 1,304,738 Net decrease in cash held(295,255)(114,760)Cash at the beginning of the period893,302 1,008,062 Cash at the end of the period6 598,047 893,302 Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
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 2019 financial report, unless otherwise stated.
(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).
For the purpose of preparing the consolidated financial statements, the Company is a for-profit entity, and is
presented in Australian dollars.
The financial report was authorised for issue by the Board on 17 September 2020.
(b)
Basis of Consolidation
A controlled entity is any entity over which 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 9(b) to the financial statements. The controlled entity has a
30 June financial year end.
All inter-company balances and transactions between entities in the consolidated Group, including any
unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have
been changed where necessary to ensure consistencies with those policies applied by the parent entity.
Where 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.
(c)
Plant and Equipment
Plant and equipment is measured on the cost basis less depreciation and impairment losses.
The carrying amount of plant & equipment is reviewed annually by Directors to ensure it is not in excess of the
recoverable amount from those assets. Recoverable amount is assessed on the basis of the expected net cash
flows which will be received from the asset’s employment and subsequent disposal. The expected net cash
flows have been discounted to their present values in determining recoverable amounts.
Depreciation is calculated on the straight line basis and is brought to account over the estimated useful lives of
all plant and equipment from the time the asset is held ready for use. The depreciation rates used are:
Office furniture
Office computer equipment
Motor vehicles
15-33%
33%
20%
18
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
1.
Statement of Significant Accounting Policies (continued)
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.
(d)
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.
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.
19
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
1.
(e)
Statement of Significant Accounting Policies (continued)
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.
(f)
Acquisition of Assets
The purchase method of accounting is used for all acquisitions of assets regardless of whether shares or other
assets are acquired. Cost is determined as the fair value of the assets given up at the date of the acquisition
plus costs incidental to the acquisition. Transaction costs arising on the issue of equity instruments are
recognised directly in equity.
(g)
Impairment of assets
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine
whether there is any indication that those assets have been impaired. If such an indication exists, the
recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is
compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is
expensed to the 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.
(h)
Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire,
or when the financial asset and substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at
the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value
adjusted for transaction costs (where applicable).
For the purpose of subsequent measurement, financial assets, other than those designated and effective as
hedging instruments, are classified into the following categories:
amortised cost
fair value through profit or loss (FVTPL)
equity instruments at fair value through other comprehensive income (FVOCI)
debt instruments at fair value through other comprehensive income (FVOCI).
All income and expenses relating to financial assets that are recognised in profit or loss are presented within
finance costs, finance income or other financial items, except for impairment of trade receivables which is
presented within other expenses.
The classification is determined by both:
the entity’s business model for managing the financial asset
the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within
finance costs, finance income or other financial items, except for impairment of trade receivables which is
presented within other expenses.
20
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
1.
Statement of Significant Accounting Policies (continued)
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as FVTPL):
they are held within a business model whose objective is to hold the financial assets to collect its
contractual cash flows
the contractual terms of the financial assets give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents,
trade and most other receivables fall into this category of financial instruments as well as listed bonds that
were previously classified as held-to-maturity under IAS 39.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect
and sell’ are categorised at fair value through profit and loss. Further, irrespective of business model financial
assets whose contractual cash flows are not solely payments of principal and interest are accounted for at
FVTPL. All derivative financial instruments fall into this category, except for those designated and effective as
hedging instruments, for which the hedge accounting requirements apply.
The category also contains an equity investment. The Group accounts for the investment at FVTPL and did not
make the irrevocable election to account for the investment in unlisted and listed equity securities at fair value
through other comprehensive income (FVOCI). The fair value was determined in line with the requirements of
AASB 9, which does not allow for measurement at cost.
Assets in this category are measured at fair value with gains or losses recognised in profit or loss.
The fair values of financial assets in this category are determined by reference to active market transactions or
using a valuation technique where no active market exists.
Impairment of financial assets
AASB 9’s impairment requirements use more forward-looking information to recognise expected credit losses
– the ‘expected credit loss (ECL) model’. This replaced AASB 139’s ‘incurred loss model’.
Instruments within the scope of the new requirements included loans and other debt-type financial assets
measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under
AASB 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured
at fair value through profit or loss.
Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead
the Group considers a broader range of information when assessing credit risk and measuring expected credit
losses, including past events, current conditions, reasonable and supportable forecasts that affect the
expected collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
financial instruments that have not deteriorated significantly in credit quality since initial recognition or
that have low credit risk (‘Level 1’) and
financial instruments that have deteriorated significantly in credit quality since initial recognition and
whose credit risk is not low (‘Level 2’).
‘Level 3’ would cover financial assets that have objective evidence of impairment at the reporting
date.
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’
are recognised for the second category.
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses
over the expected life of the financial instrument.
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract
assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in
contractual cash flows, considering the potential for default at any point during the life of the financial
21
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
1.
Statement of Significant Accounting Policies (continued)
instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking
information to calculate the expected credit losses using a provision matrix.
The Group assess impairment of trade receivables on a collective basis as they possess shared credit risk
characteristics they have been grouped based on the days past due.
Classification and measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other payables and derivative financial
instruments.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs
unless the Group designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for
derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains
or losses recognised in profit or loss (other than derivative financial instruments that are designated and
effective as hedging instruments).
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or
loss are included within finance costs or finance income.
Derecognition of financial assets
A financial asset is derecognised when:
the rights to receive cash flows from the asset have expired or been transferred;
has transferred substantially all the risks and rewards of the asset, or
The Group no longer controls the asset.
(i)
Exploration, Evaluation and Development Expenditure
Exploration, evaluation and acquisition costs are expensed in the year they are incurred. Development costs
are capitalised. Development expenditure is recognised at cost less accumulated amortisation and any
impairment losses. Exploration and evaluation expenditure is classified as development expenditure once the
technical feasibility and commercial viability of extracting the related mineral resource is demonstrable. Where
commercial production in an area of interest has commenced, the associated costs together with any forecast
future capital expenditure necessary to develop proved and probable reserves are amortised over the
estimated economic life of the mine on a units-of-production basis.
Changes in factors such as estimates of proved and probable reserves that affect unit-of-production
calculations are dealt with on a prospective basis.
(j)
Employee Entitlements
Salaries, wages and annual leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave
expected to be settled within twelve months of the reporting date are recognised in other creditors in respect to
employees’ services up to the reporting date and are measured at the amounts expected to be paid when the
liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and
measured at the rates paid or payable.
Equity settled 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 or Binomial option pricing model, further details of which are given in Note 20. 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.
22
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
1.
Statement of Significant Accounting Policies (continued)
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
earnings per share (see Note 5).
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.
(k)
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.
(l)
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.
(m)
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.
23
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
1.
Statement of Significant Accounting Policies (continued)
(n)
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.
(o)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as
part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the
Statement of Financial Position are shown inclusive of GST and the fuel tax rebate.
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.
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.
(p)
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 or Binomial option pricing model, using the assumptions detailed in Note 20.
The Group measures the cost of cash-settled share-based payments at fair value at the grant date taking into
account the terms and conditions upon which the instruments were granted, as discussed in Note 20.
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.
(q)
Adoption of new and revised standards
Changes in accounting policies on initial application of Accounting Standards
In the year ended 30 June 2020, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant to the Company’s operations and effective for annual
reporting periods beginning on or after 1 July 2019. As a result of this review, the Directors have determined
that there is no material impact of the new and revised Standards and Interpretations of the Group and,
therefore, no material change is necessary to Group accounting policies.
24
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
1.
Statement of Significant Accounting Policies (continued)
Standards and Interpretations in issue not yet adapted
The Directors have also reviewed all new Standards and Interpretation that have been issued but are not yet
effective for the year ended 30 June 2020. 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 Company and,
therefore, no change necessary to Group accounting policies.
(r)
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 Limited.
The Group operates only in one business and geographical segment being predominantly in the area of
mineral exploration and exploitation in Western Australia. The Group considers its business operations in
mineral exploration and exploitation to be its primary reporting function.
(s)
Earnings per share
Basic earnings per share is calculated as net profit 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 earnings 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.
(t)
Parent Entity Financial Information
The financial information for the parent entity, Empire Resources Limited disclosed in Note 23 has been
prepared on the same basis as the Group.
25
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
2.
Revenue and other income
3.
Loss from ordinary activities
1 The reversal of the provision for rehabilitation and restoration was recognised on disposal of the Penny’s
Find Mine.
26
20202019$$Other incomeNet gain on disposal of financial assets18,183 6,679 Net gain on sale of tenement- 159,911 Net gain on acquistion of share of Penny's Find JV- 299,687 Option agreement income- 80,000 Royalty income27,213 - Other income45,102 13,008 90,498 559,285 Consolidated20202019$$The loss from ordinary activities before income tax has been determined after:(a) ExpensesDrilling401,212 - Exploration Geologist87,032 22,518 Assaying80,528 - Other277,871 134,861 Exploration expense846,643 157,379 Labour- 16,757 Rehabilitation written back1- (384,943)Other surface mining costs3,904 636,219 Legal190,808 69,824 Underground- 57,953 Care and maintenance194,712 395,810 Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
4.
Income tax
A deferred tax asset attributable to income tax losses has not been recognised at balance date as the
probability criteria disclosed in Note 1(d) is not satisfied and such benefit will only be available if the conditions
of deductibility also disclosed in Note 1(d) are satisfied.
27
(a)Numericalreconciliationbetweenincometaxexpenseandtheprofit before income tax20202019$$Profit (loss) before tax422,038 (1,323,987)Income tax benefit/(expense) at 27.5% (2019:27.5%)(116,060)364,096 Tax effect of:- deductible capital raising expenditure32,686 30,235 - non deductible expenditure- (217)- non assessable income- 82,414 - deductible temporary differences28,755 168,992 - net fair value gain on financial assets603,194 - - share based payment(6,840)- Deferred tax asset not recognised(541,735)(645,520)Income tax benefit attributable to profit from ordinary activities before tax- - Consolidated(b) Unrecognised deferred tax balancesTax losses attributable to members of the Group - revenue17,235,465 16,108,421 Potential tax benefit at 27.5%4,739,753 4,429,816 Amounts recognised in statement of comprehensive income- employee provisions600 25,809 - provision for impairment of receivables57,577 57,577 - other9,350 9,350 - financial assets- 137,686 - accrued interest- (409)Amounts recognised in equity- share issue costs59,715 59,715 Net unrecognised deferred tax asset at 27.5%4,866,995 4,719,544
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
5.
Earnings per share
6.
Cash and cash equivalents
Cash at bank earns interest at floating rates base on daily deposit rates.
(i) Reconciliation of cash flow from operations with loss after income tax
28
20202019CentsCentsBasicanddilutedearnings(loss)pershare(centsper share)0.06 (0.24)Profit/(Loss)usedinthecalculationofbasicEPS($)422,038 (1,323,987)Weighted average number of shares outstanding during the period used in calculations of basic loss per share716,927,344 557,988,511 Consolidated20202019$$Cash at bank and in hand598,047 893,302 598,047 893,302 Consolidated20202019$$Profit/(loss) after income tax422,038 (1,323,987)Depreciation 35,176 86,381 Share based payments expense24,871 - Gains on disposal of financial assets(18,183)(6,679)Proceeds from sale of motor vehicle- (4,000)Interest expense56,220 - Net gain from sale of tenement- (159,911)Gain on acquistion of share of Penny's Find JV- (299,687)Fair value gain on financial assets(2,193,431)- Fair value loss on financial assets- 500,678 (1,673,309)(1,207,205)Changes in assets and liabilities, net of the effects of purchase of subsidiaries:(Increase)/decrease in trade and other receivables(20,548)222,994 (Decrease)/increase in trade and other payables(12,997)(668,215)(Decrease)/increase in employee benefits(80,616)(182,501)(Decrease)/increase in provisions- (384,943)Net cash outflow from operating activities (1,787,470)(2,219,870)Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
7.
Trade and other receivables
Provision for impairment of receivables
Current trade receivables are non-interest bearing and generally on 30 day terms. In addition, the Group
applies AASB 9 simplified model of recognising lifetime expected credit losses for all trade receivables as
these items do not have a significant financing component. A provision for impairment is recognised when
there is objective evidence that an individual trade receivable is impaired.
A portion of the other receivables balance of $516,108 and the impairment provision of $209,370 relate to a
dispute over gold not accounted for from a milling campaign conducted by Eastern Goldfields Mining Services
(EGMS) late in 2017. The Company is seeking to recover gold owed with a value in excess of $1 Million. The
matter is currently being referred to Arbitration.
8.
Financial assets
29
20202019$$CurrentTrade receivables2,530 - GST receivables23,556 8,533 Other receivables535,842 517,594 Provision for impairment of receivables(209,370)(209,370)352,558 316,757 Consolidated20202019$$Aging of past due30-60 days- - 60-90 days- - 90-120 days516,108 516,108 Total516,108 516,108 20202019$$Deposit10,000 20,000 10,000 20,000 Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
9.
Financial assets at fair value through profit or loss
(a) Financial assets available for sale through profit or loss
The investment is level 1 in the fair value hierarchy and is valued using quoted prices in an active market.
(b) Investments in subsidiary
10.
Plant and equipment
30
20202019$$Listed shares-investment in FYI Resources Ltd - at fair value- 69,407 Listed shares-investment in NTM Gold Ltd - at fair value3,671,097 - 3,671,097 69,407 Financial AssetsBalance at the beginning of year69,407 910,000 Additions1,499,875 - Disposals(109,799)(339,915)Net fair value gain / (loss) on financial asset2,193,431 (500,678)Net gain on disposal of financial assets18,183 - Carrying amount at the end of the period3,671,097 69,407 ConsolidatedCountry of incorporationPercentage OwnedPercentage Owned20202019Controlled entity%%Parent Entity:Empire Resources LimitedAustraliaSubsidiary of Empire Resources Limited:Torrens Resources Pty LtdAustralia100 100 20202019$$Plant and Equipment Cost54,562 54,562 Accumulated depreciation(54,541)(52,692)21 1,870 Motor Vehicles Cost166,472 166,472 Accumulated depreciation(118,961)(85,634)47,511 80,838 Total Plant and Equipment47,532 82,708 Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
10. Plant and Equipment (continued)
11.
Trade and other payables
Trade payables are non-interest bearing and are normally settled on 30 day terms.
1 Included in these balances are amounts owing to key management personnel at balance date of $37,800
(2019: $187,455).
12.
Borrowings
1 Refer to note 18 for terms and conditions of Director loans.
31
20202019$$Plant and EquipmentBalance at the beginning of year1,870 57,266 Additions on settlement of PFJV- 37,695 Disposals- (40,089)Depreciation expense(1,849)(53,002)Carrying amount at the end of the year21 1,870 Motor VehiclesBalance at the beginning of year80,838 94,054 Additions on settlement of PFJV- 20,163 Depreciation expense(33,327)(33,379)Carrying amount at the end of the year47,511 80,838 Total Plant and Equipment47,532 82,708 Consolidated20202019$$Trade payables and accruals1264,787 262,531 Employee benefits13,236 93,852 278,023 356,383 Consolidated20202019$$Director and other loans at 1 July- - Additions to borrowings1,500,000 500,000 Finance costs incurred109,726 6,267 Repayment of borrowings- (500,000)Finance costs paid(53,630)(6,267)Balance at 30 June1,556,096 - Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
13.
Issued Capital
(a) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company
in proportion to the number of and amounts paid on the shares.
On a show of hands every holder of ordinary shares present at a meeting, in person or by proxy, is entitled to
one vote, and upon a poll each share is entitled to one vote.
(b) Options
As at 30 June 2020 (30 June 2019: 9,000,000) the Company had zero options on issue over ordinary shares.
32
20202019$$799,783,689 (30 June 2019: 621,814,690) fully paid ordinary shares24,178,91422,806,499No.No.(i) Ordinary shares - numberAt 1 July621,814,690 483,201,475 Shareplacement-131,098,215on11December2018 at $0.01- 131,098,215 Issueof2,500,000sharesat$0.01on6March2019- 2,500,000 Issueof5,015,000sharesat$0.01on6March2019- 5,015,000 Issueof153,418,999sharesat$0.008on12December 2019153,418,999 - Issueof24,550,000sharesat$0.008on24January 202024,550,000 - Balance at 30 June799,783,689 621,814,690 Consolidated20202019$$(ii) Ordinary shares – valueAt 1 July 22,806,499 21,497,202 Shareplacement-131,098,215on11December2018 at $0.01- 1,310,982 Issueof2,500,000sharesat$0.01on6March2019- 25,000 Issueof5,015,000sharesat$0.01on6March2019- 50,150 Issueof153,418,999sharesat$0.008on12December 20191,227,352 - Issueof24,550,000sharesat$0.008on24January 2020196,400 - Less share issue costs(51,337)(76,835)Balance at 30 June24,178,914 22,806,499 Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
14.
Reserves
The options reserve is used to recognise the fair value of rights and options issued to Directors, employees
and consultants but not exercised.
The asset revaluation reserve was used to record increases in the fair value of available-for-sale investments
and decreases to the extent that such decreases relate to an increase on the same asset previously
recognised in equity.
15.
Financial risk management
The Group’s financial situation is not complex. Its activities may expose it to a variety of financial risks in the
future: market risk (including currency risk and fair value interest rate risk), credit risk, liquidity risk and cash
flow interest rate risk. At that stage the Group’s overall risk management program will focus on the
unpredictability of the financial markets and seek to minimise potential adverse effects on the financial
performance of the Group.
Risk management is carried out under an approved framework covering a risk management policy and internal
compliance and control by management. The Board identifies, evaluates and approves measures to address
financial risks.
33
20202019$$Reserves1,762,345 1,737,474 Reserves comprise the following:Options reserveBalance as at start of financial year1,737,474 1,737,474 Performance rights issued to Director24,871 - Balance at 30 June1,762,345 1,737,474 Asset revaluation reserveBalance as at start of financial year- 546,000 Adjustment to the opening balance of accumulated losses in applying AASB 9 to the changes in the fair value of available-for sale investments- (546,000)Balance at 30 June- - Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
15.
Financial risk management (continued)
The Group holds the following financial instruments:
(a) Market risk
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 2020 and 2019, 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 2020 and 2019, 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 loss for the year. Equity would
not have been impacted.
34
20202019$$Financial assetsCash and cash equivalents598,047 893,302 Trade and other receivables352,558 316,757 Term deposit10,000 20,000 Listed equity investments3,671,097 69,407 4,631,702 1,299,466 Financial liabilitiesTrade and other payables278,023 356,383 Short-term borrowings1,556,096 - 1,834,119 356,383 ConsolidatedWeighted average interest rateBalanceWeighted average interest rateBalance%$%$Deposit10,000 20,000 Other cash available598,047 893,302 Net exposure to cash flow interest rate risk0.3%608,047 0.8%913,302 20202019
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
15.
Financial risk management (continued)
Share price risk
The Group’s listed equity investments expose it to the financial risk of changes in share price. At balance date
the group is not materially exposed to share price risk.
(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.
35
30 June 2020Weighted Average Effective Interest RateFloating Interest RateFixed Interest Rate Maturing Within Year1 to 5 YearsOver 5 YearsNon-interest bearingTotal$$$$$$Financial Assets:Cash and cash equivalents0.3%598,047 - - - - 598,047 Trade and other receivables- - - - 352,558 352,558 Other financial assets1.2%- 10,000 - - - 10,000 Listed equity investments- - - - 3,671,097 3,671,097 Total Financial Assets598,047 10,000 - - 4,023,655 4,631,702 Financial Liabilities:Trade and other payables- - - - 278,023 278,023 Short-term borrowings7.5%- 1,556,096 - - - 1,556,096 Total financial liabilities- 1,556,096 - - 278,023 1,834,119
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
15.
Financial risk management (continued)
Maturities of financial assets and liabilities
The note above analyses the Consolidated and Parent entity's financial liabilities. The liabilities comprise trade
and other payables that are non interest bearing and will mature within 12 months and Director loans that are
interest bearing and will be repaid from the proceeds of a future share placement of ordinary shares. The
amounts disclosed are the contractual undiscounted cash flows. There are no derivatives.
Maturity analysis of financial assets and liability based on management’s expectation.
(d) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or
for disclosure purposes.
The fair value of financial instruments that are not traded in an active market (for example, investments in
unlisted subsidiaries) is determined using valuation techniques or cost (impaired if appropriate). The Group
uses a variety of methods and makes assumptions that are based on market conditions existing at each
balance date.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate
their fair values due to their short-term nature.
36
30 June 2019Weighted Average Effective Interest RateFloating Interest RateFixed Interest Rate Maturing Within Year1 to 5 YearsOver 5 YearsNon-interest bearingTotal$$$$$$Financial Assets:Cash and cash equivalents0.8%893,302 - - - - 893,302 Trade and other receivables- - - - 316,757 316,757 Other financial assets2.4%- 20,000 - - - 20,000 Listed equity investments- - - - 69,407 69,407 Total Financial Assets893,302 20,000 - - 386,164 1,299,466 Financial Liabilities:Trade and other payables- - - - 356,383 356,383 Total financial liabilities- - - - 356,383 356,383 Year ended 30 June 2020<6 months6-12 months1-5 years>5 yearsTotalConsolidatedFinancial assetsCash & cash equivalents598,047 - - - 598,047 Trade & other receivables352,558 - - - 352,558 Other financial assets- 10,000 - - 10,000 Listed equity investments3,671,097 - - - 3,671,097 4,621,702 10,000 - - 4,631,702 Financial liabilitiesTrade & other payables(278,023)- - - (278,023)Short-term borrowings(1,556,096)- - - (1,556,096)(1,834,119)- - - (1,834,119)
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
16.
Commitments and Contingencies
These commitments are based on the Group holding the tenements for the next 5 years.
Contingent asset
On 2 May 2019, the Company agreed with Orminex Penny’s Find Pty Ltd (Orminex) to sell the Penny’s Find
mining tenements and some mining assets for $600,000 plus an ongoing royalty stream. The cash component
consists of $600,000 from Orminex broken into three equal milestone payments:
Completion payment - on signing of full form documents, which was received in May 2019,
Mining Start payment - upon commencement of mining at the Penny's Find project, and
First Gold payment - at the first gold pour.
Orminex has agreed to pay to the Company:
an initial royalty for the first 50,000 ounces of gold produced from the tenement, and
a further royalty on all future product derived from the tenement.
Orminex has agreed to pay to the Company:
$100,000 if underground mining has not commenced within 9 months of Orminex receiving licences
from the WA Department of Water and Environmental Regulation,
$100,000 every 6 months thereafter if underground mining has not commenced, and
$100,000 if Orminex ceases mining operations for a continuous period exceeding 6 months, and
$100,000 every 6 months thereafter.
All payments related to the non-commencement or cessation of mining are:
capped at a total of $400,000, and
will be treated as a prepayment of the Royalty.
The directors consider it probable that Mining Start and First Gold payment will be received by the Company.
17.
Directors and other key management personnel
(i) Details of Key Management Personnel
Chairman – non-executive
Dr M Ruane
Managing Director
Mr S Richardson (from 4 July 2019)
Mr D Sargeant (from 13 April 2000 – 3 July 2019) Resigned 15 August 2020
Non-Executive Director
Mr J Atkinson
37
20202019$$Expenditure commitments contracted for:Exploration TenementsInordertomaintaincurrentrightsoftenuretoexplorationtenements,theCompanyisrequiredtooutlayrentalsandtomeettheminimumexpenditurerequirements.Theseobligationsarenotprovidedforinthefinancialstatementsandarepayable:- not later than 12 months363,041 197,947 - between 12 months and 5 years510,655 312,607 - greater than 5 years1,497,820 701,748 2,371,516 1,212,302 Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
17.
Directors and other key management personnel (continued)
(ii) Compensation of Key Management Personnel
The amounts outstanding to Key Management Personnel at the reporting date are included in Note 18.
18.
Related Parties
Directors and executives
Disclosures relating to the remuneration and shareholdings of Directors and executives are set out in the
Directors’ Report.
Other transactions with Directors, their associates and director related entities are as follows:
For the loan from Dr Michael Ruane, an interest rate of 7.5% was calculated daily and was payable at maturity.
38
20202019$$Short-term employee benefits306,351 242,548 Post-employment benefits18,843 - Share-based payments24,871 - 350,065 242,548 Consolidated20202019$$Amounts payable at balance date to Key Management Personnel in relation to remunerationKirkdale Holdings Pty Ltd - Mr D Sargeant16,500 156,255 Kesli Chemicals Pty Ltd - Dr M Ruane18,000 27,900 Northshore Capital Advisors Pty Ltd - Mr J Atkinson3,300 3,300 37,800 187,455 Consolidated20202019$$Amounts payable to Directors as unsecured loansKesli Chemicals Pty Ltd - Dr M Ruane1,556,096 - 1,556,096 - Interest expense on unsecured loansKesli Chemicals Pty Ltd - Dr M Ruane109,726 6,267 109,726 6,267 Consolidated
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
18.
Related Parties (continued)
19.
Remuneration of auditors
The auditor of Empire Resources Ltd is HLB Mann Judd.
20.
Share Based Payments
(a) Performance rights
The following table illustrates the number of and movements in performance rights during the year:
The fair value of the performance rights is estimated as at the date of grant using the Binomial option pricing
model taking into account the terms and conditions upon which the rights were granted.
The following table lists the inputs to the model used for performance rights issued during the year:
39
20202019$$Other transactions with Directors for normal business reimbursementsKesli Chemicals Pty Ltd - Dr M Ruane45,310 - Tyson Resources Pty Ltd - Dr M Ruane64,858 - 110,168 - Consolidated20202019$$AmountsreceivedordueandreceivablebyHLBMann Judd for:Audit or review of the financial reports of the Company29,663 27,030 Audit of the Penny's Find Joint Venture - 2018- 28,000 Tax Compliance7,000 6,000 ConsolidatedNumberNumber20202019Outstanding at the beginning of the period- - Issued 13 November 201920,000,000 - Outstanding at the end of the period20,000,000 - Grant DateExpiry dateValue at grant date of rightsProbabilityOption lifeDirector Performance Rights13-Nov-1904-Jul-21$0.00841%1.6 yearsVesting PeriodVesting occurs when the price of Empire's ordinary shares remain at or above a VWAP price of 1.5 cents for a period of not less than 20 days
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
20.
Share Based Payments (continued)
(b) Option plan
The following table illustrates the number and weighted average exercise prices of and movements in share
options issued during the year:
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.
The following table lists the inputs to the model used for options in existence during the year:
(c) Expenses arising from share-based payment transactions
There were $24,871 (2019: $Nil) expenses arising from share-based payment transactions recognised during
the period.
21.
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 Limited.
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.
22.
Events after the Balance Date
On 7 August 2020, the Company issued 108,966,333 shares at 1.2 cents raising $1,307,596.
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 Group in future financial periods.
40
NumberWeighted average exercise priceNumberWeighted average exercise priceOutstanding at the beginning of the period9,000,000 $0.0432,102,000 $0.03Expired 3 May 2019- - (22,102,000)$0.025Expired 22 June 2019- - (1,000,000)$0.04Expired 18 July 2019(9,000,000)$0.04- - Outstanding at the end of the period- - 9,000,000 $0.0420192020Grant DateExpiry dateExercise priceVesting PeriodFair value at grant date of optionsExpected VolatilityOption lifeDividend yieldRisk-free interest rateGrant date share priceConsultant options18-Jul-1618-Jul-19$0.0418-Jul-16$0.02140%3 years0%1.57%$0.02
Empire Resources Limited
Notes to the Financial Statements 30 June 2020
23.
Parent Entity Financial Information
The individual financial statements for the parent entity show the following aggregate amounts:
41
20202019ASSETS$$CURRENT ASSETSCash and cash equivalents598,047 893,302 Trade and other receivables352,558 316,757 Other financial assets10,000 20,000 Financial assets at fair value through profit or loss3,671,097 69,407 Total Current Assets4,631,702 1,299,466 NON-CURRENT ASSETSPlant and equipment47,532 82,708 Total Non-Current Assets47,532 82,708 TOTAL ASSETS4,679,234 1,382,174 LIABILITIESCURRENT LIABILITIESTrade and other payables278,023 356,383 Borrowings1,556,096 - Total Current Liabilities1,834,119 356,383 TOTAL LIABILITIES1,834,119 356,383 NET ASSETS2,845,115 1,025,791 EQUITYIssued capital24,178,914 22,806,499 Reserves1,762,345 1,737,474 Accumulated losses(23,096,144)(23,518,182)TOTAL EQUITY2,845,115 1,025,791 Profit / (loss) before income tax expense422,038 (1,324,236)Other comprehensive loss for the year, net of tax- - Total comprehensive income / (loss) for the year422,038 (1,324,236)Parent Entity
DIRECTORS’ DECLARATION
1. In the Directors’ opinion:
(a)
the financial statements and notes are in accordance with the Corporations Act 2001 including:
(i)
(ii)
the Australian Accounting
complying with Australian Accounting Standards (including
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 2020 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 2020.
This declaration is made in accordance with a resolution of the Directors.
___________________
Michael Ruane
Director
Perth, Western Australia
17 September 2020
42
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 2020, 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.
Perth, Western Australia
17 September 2020
N G Neill
Partner
43
INDEPENDENT AUDITOR’S REPORT
To the members of Empire Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Empire Resources Limited (“the Company”) and its
controlled entities (“the Group”), which comprises the consolidated statement of financial position
as at 30 June 2020, 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, and notes to the financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
a) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
financial performance for the year then ended; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. We have determined that there are no matters to be
communicated in our report.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2020 but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
44
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors 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 gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
-
-
- Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
-
45
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors’ report for the year ended
30 June 2020.
In our opinion, the Remuneration Report of Empire Resources Limited for the year ended 30 June
2020 complies with section 300A of the Corporations Act 2001.
Responsibilities
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.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
17 September 2020
N G Neill
Partner
46
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 1 September 2020.
(a) Distribution of shares
The numbers of shareholders, by size of holding are:
The number of shareholdings held in less than marketable parcels is 513.
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
(c) Substantial Shareholder
47
NumberCategory (size of holding)of Holders1 - 1,000103 1,001 - 5,000595,001 - 10,0008910,001 - 100,000665100,001 - and over549 1,465SHAREHOLDERSNumber of shares held% Holding1 KESLI CHEMICALS PTY LTD107,536,47911.83%2 TYSON RESOURCES PTY LTD88,610,6599.75%3 KESLI CHEMICALS PTY LTD 59,714,8846.57%4 BLAMNCO TRADING PTY LTD35,000,0003.85%5 BILL BROOKS PTY LTD 23,510,5502.59%6 YUCAJA PTY LTD 20,833,3332.29%7 RBJ NOMINEES PTY LTD 20,000,0002.20%8 FITALL GROUP LTD20,000,0002.20%9 AGENS PTY LTD 18,408,8522.03%10 ZINFANDEL EXPLORATION PTY LTD13,709,1251.51%11 SANGORA HOLDINGS PTY LTD13,000,0001.43%12 MR KENNETH JOSEPH HALL 11,900,0001.31%13 ARMCO BARRIERS PTY LTD11,000,0001.21%14 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED10,576,4941.16%15 MR JEREMY PAUL ATKINSON & MRS SARA CAROLINE ATKINSON 10,538,3341.16%16 MR LACHLAN ANTHONY CHRISTIE10,450,0011.15%17 LEEJAMESNOMINEESPTYLTD10,000,0001.10%18 CAMIRA HOLDINGS PTY LTD10,000,0001.10%19 HERA INVESTMENTS PTY LTD9,125,8331.00%20 1215 CAPITAL PTY LTD8,800,0000.97%512,714,54456.41%ShareholderNumber of sharesMICHAEL RUANE255,862,022
ASX ADDITIONAL INFORMATION
(d) Securities Exchange Listing
Listing has been granted for all the ordinary shares of the company on all Member Exchanges of the Australian
Securities Exchange Limited.
Quoted shares on ASX and total issued share capital
908,750,022
(e) Voting rights
All shares carry one vote per unit without restriction.
(f) Corporate Governance Statement
The Company’s Corporate Governance Statement can be found at https://resourcesempire.com.au/corporate-
governance/
(g) Unquoted Securities
The following person holds 20% or more of the equity securities in an unquoted class:
Class
Performance Rights
Holder
Sean Richardson
Number of units
20,000,000
% Held
100%
INTERESTS IN MINING AND EXPLORATION TENEMENTS
AT 1 SEPTEMBER 2020
PROJECT
TENEMENT
INTEREST
REMARKS
PENNY'S FIND
YUINMERY
E27/553
E27/591
E27/592
E27/593
P27/2245
P27/2262
M57/265
M57/636
E57/1037
E57/681
E57/1027
E57/1159
BARLOWEERIE
E59/2306
POISON HILLS
E51/1938
E20/968
E51/1985
WILUNA
P53/1707
100%
100%
100%
100%
100%
100%
100%
100%
100%
91.89%
91.89%
100%
100%
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Application
Application
Application
Application