ABN 47 109 815 796
annual report 2009
www.enrl.com.au
Encounter Resources Ltd is a mineral exploration company
based in Perth, Western Australia (WA). The company’s
ABN 47 109 815 796
shares are listed on the Australian Stock Exchange
Corporate Directory
Directors
Paul Chapman
Will Robinson
Peter Bewick
Non-Executive Chairman
Managing Director
Exploration Director
Jonathan Hronsky
Non-Executive Director
(ASX : ENR). The company’s strategy is to grow shareholder
value through focused, methodological exploration and the
development of uranium, gold and base metals resources
in Australia. To drive its growth strategy the company
has assembled a dedicated and experienced team of
geoscientists who are leaders in their field of expertise.
Company Secretary
Kevin Hart
Daniel Travers (Joint Company Secretary)
Contents
Letter from the Chairman & Managing Director
Exploration Review
Summary of Tenements
Corporate Governance Statement
Directors’ Report
Auditor’s Independence Declaration
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
ASX Additional Information
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Principal and Registered Office
Level 7, 600 Murray Street
West Perth, Western Australia 6005
Telephone (08) 9486 9455
Facsimile (08) 6210 1578
Web www.enrl.com.au
Auditor
WHK Horwath Perth Audit Partnership
Level 6, 256 St Georges Terrace
Perth, Western Australia 6000
Share Registry
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross, Western Australia 6153
Telephone (08) 9315 2333
Facsimile (08) 9315 2233
Stock Exchange Listing
The Company’s shares are quoted on the
Australian Securities Exchange. The home
exchange is Perth, Western Australia.
ASX Code
ENR – Ordinary shares
Company Information
The Company was incorporated and registered
under the Corporations Act 2001 in Western
Australia on 30 June 2004 and became a
public company on 26 May 2005.
The Company is domiciled in Australia.
Front Cover: Sunset at Yeneena Exploration Camp.
Termite mounds of
the Great Sandy Desert.
Cannings Camp, Tchintaby Project.
Letter from the Chairman & Managing Director
Dear Fellow Shareholder,
At the risk of understatement, 2008/09 was an interesting year for the resources sector. Our industry and our Company
have seen a number of signifi cant developments over the last twelve months.
At the start of the 2008/09 year, Encounter released its maiden uranium resource at the Hillview project of over
10 million pounds of near surface U3O8. In September 2008 the ban on uranium mining in Western Australia (WA) was
lifted following a change of State Government. This is a big positive for a company that has been exploring for uranium in
WA since 2004. The discovery and development of uranium resources is likely to be a signifi cant growth industry for WA
for many years and Encounter is keen to be part of the growth of this vibrant new industry.
However, to complement its uranium assets, the Company has also been investing considerable resources towards
establishing a base metals portfolio. Along with uranium, we see base metals, and particularly copper, as commodities
key to future global growth. One of the most exciting developments in 2009 has been the emergence of the Company’s
copper targets in the Paterson Province of WA. The targets identifi ed are the culmination of two years of investment which
included an extensive airborne EM survey and a large re-analysis program from 18,000m of historic drilling. The fi rst
diamond drill testing of these copper targets has just commenced as this annual report goes to print.
While the Company is continually assessing new opportunities to build the project portfolio, it has maintained its exploration
focus in Australia on three broad areas:
–
The Paterson Province in northern WA where the Company is a major exploration land holder between the
Nifty copper mine and Kintyre uranium deposit.
–
The northern Yilgarn region of WA where the Company maintains its uranium interests including the 10 million pound
uranium resource at Hillview. The resource is located in the district that is likely to host WA’s fi rst uranium mine.
The Company is assessing the potential development and commercial alternatives to advance the Hillview project.
–
The Bangemall Basin in WA where the primary target is SEDEX Century style zinc/lead and sedimentary
hosted copper.
One of the most exciting developments in 2009 has been the emergence
of the Company’s copper targets in the Paterson Province of WA.
Hillview Uranium Project.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
1
Letter from the Chairman & Managing Director continued
The Company’s main focus in 2009 has been the opportunity that has emerged in the Paterson Province. Put simply,
we believe that the Paterson region is one of the most underexplored sedimentary copper and unconformity uranium
regions in the world.
The Paterson Province is the host to Australia’s most recent greenfi elds unconformity uranium discovery (Kintyre, 1985).
For a number of reasons there has been minimal systematic uranium exploration in this region since the Kintyre discovery.
In relation to copper, we believe there are a number of signifi cant copper deposits to be discovered in the region. Deposits
of this type generally occur in clusters of several major discoveries and a tail of smaller deposits. There is extensive sand
cover in this region and while outcropping areas make up a very small part of this mineral province they have delivered
a number of world class mineral discoveries.
Encounter controls 1,300km2 of ground between the Nifty copper mine to the north and the Kintyre uranium deposit to the
south along a major structural corridor. The Company is one of the largest exploration landholders in this district. The major
regional structures that are integral to the formation of the known mineral deposits in the region extend under sand cover
through Encounter’s project.
The new datasets collected by Encounter have been the key to improving the explorability under sand cover in this world
class mineral province.
…we believe that the Paterson region is one of the most underexplored
sedimentary copper and unconformity uranium regions in the world.
In 2008 Encounter fl ew a 1,000 line km airborne EM over the Paterson project area in conjunction with Geoscience
Australia. The survey has been highly successful at seeing well into the basement with minimal interference from any surface
conductive units. Also in 2008, Encounter completed an extensive re-analysis program of sample pulps from the 18,000
metres of gold exploration drilling conducted by Barrick. This re-analysis has highlighted new areas of signifi cant uranium
and base metal anomalism.
Together, these new datasets collected by Encounter in 2008, have defi ned a series of compelling new targets in this
underexplored region. In recognition of the quality of the targets, the Company was successful in its application for a
co-funded drilling grant under the new WA Government Exploration Incentive Scheme. The initial drill program is focused
on the large scale, near surface, copper targets identifi ed. The considerable uranium potential of the Paterson project will
be the focus of future programs.
In September 2009, the Company arranged a private placement to raise A$3.5 million. This additional funding will allow the
Company to accelerate its exciting copper exploration programs and advance its uranium exploration portfolio.
In closing we would like to thank our committed team for their professionalism and dedication to the Company’s exploration
efforts. The Company has an exceptional exploration team in place, an exciting suite of large scale exploration targets
and it is well funded to complete its exploration plans. With these critical factors in place, 2010 has the potential to be a
company transforming year for Encounter. We would also take this opportunity to thank our fellow shareholders for their
ongoing support.
Yours sincerely
Paul chapman
Chairman
Will robinson
Managing Director
2
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
Exploration Review
Encounter Resources Limited (Encounter) is a Western Australian (WA) based exploration and resource development
company with projects in three geological regions of WA. Encounter’s portfolio covers over 4,500km2 of strategically located
and highly prospective exploration projects (Figure 1). The portfolio includes:
■ A major ground position in the Paterson mineral province, between the Nifty copper mine and the Kintyre uranium
deposit, considered highly prospective for unconformity related uranium and Proterozoic copper mineralisation;
■ Over 10 million pounds of near surface calcrete style uranium resources in the Yilgarn Province; and
■
Five projects targeting base metals deposits in the Bangemall Basin.
Figure 1: Project Location Plan.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
3
Exploration Review continued
Paterson Province
YeneenA pRoJeCt – Copper, uranium and base metals
(E45/2500, E45/2501, E45/2502, E45/2503, E45/2561, E45/2657, E45/2658,
ELA45/2805 and ELA45/2806 – Encounter earning 75% from Barrick)
The Yeneena JV covers a 1,300km2 tenement package in the Paterson Province of WA that is considered highly prospective
for unconformity related uranium mineralisation, SEDEX lead-zinc mineralisation and Nifty/Isa style copper mineralisation.
Encounter is earning a 75% interest in the tenements from Barrick Gold of Australia through the expenditure of $3M
over 5 years.
The project area covers the northern margin of an area of anomalously thick Yeneena Group sedimentary rocks (Throssell
Graben). This margin replicates the geological setting seen 40kms to the south, where the Kintyre uranium deposits are
located (Figure 2). Outside of the known discoveries at Nifty (Cu) and Kintyre (U), found in areas of outcrop, the greenfi elds
Paterson Province is signifi cantly underexplored due to extensive sand cover and the remoteness of the location.
Simplifi ed geological stratigraphy for the region comprises the Palaeo-Proterozoic Rudall Complex as the lowermost
unit, overlain by the Neo-Proterozoic Coolbro Sandstone (Figure 3). The Broadhurst Formation sits stratigraphically above
the Coolbro Sandstone and is the host
to the base metals targets and the Nifty
copper mine. The Kintyre uranium deposit
sits directly below the unconformity
between the Coolbro Sandstone and
the Rudall Complex. This position is the
primary target for unconformity uranium
mineralisation.
During 2008 Geoscience Australia (GA)
completed a 30,000 line km airborne
TEMPEST©
electromagnetic
(AEM)
survey over a large portion of the
Paterson Province. The survey lines
were fl own in an east-west orientation
at 1km or 2km line spacing. Encounter
contracted Fugro Airborne to fl y an
additional 1000 line kms within the
Yeneena JV to infi ll line spacing to 500m
over the project area. The fi nal data
from this survey, including the GA fl ight
lines, was received in April 2009.
The extensive
regional AEM survey
was highly successful at seeing well
into the basement and shows minimal
interference from any surface conductive
units. This data has opened up a new
exploration space at a relatively shallow
depth in a region that hosts three major
Figure 2: Yeneena project regional aeromagnetics, leasing and target plan.
4
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
Figure 3: Schematic cross section stratigraphy of the Yeneena Basin.
mineral deposits. Bedrock conductors, in conjunction with geochemical and geological datasets, were used to defi ne eight
priority regional targets (refer to Figure 2). Of these targets, BM1 and BM5 were aircore drilled in May and June 2009.
A ground based EM survey commenced in July 2009 to provide greater defi nition of the bedrock conductors. Targets T2,
BM1 and BM5 will be drill tested during September 2009 in a planned diamond drilling program. The quality of these targets
resulted in the company being awarded funding from the WA Government’s Co-Funded Exploration Initiative Scheme for
up to $150,000 for the Yeneena diamond drilling program.
BM1 target
The BM1 target is located within the Broadhurst Formation and consists of a coincident magnetic and AEM anomaly located
on a SSW trending splay structure to the McKay Fault (refer to Figure 2).
Drilling by CRA in the mid 1980s focused on the outcropping ironstone unit at the northern end of the magnetic
anomaly. Three holes were drilled by CRA and intersected copper up to 1000ppm and broad anomalous zones of uranium
mineralisation. A water bore hole (WTWB2) drilled to the south of the ironstone returned highly anomalous copper
results of 15m @ 0.14% Cu from 25m, including 3m @ 0.35% Cu. A second water bore (WTWB1) drilled 350m to
Sampling historical drill holes at the Yeneena Project.
the north west of WTWB2 ended in mineralisation with 8m @
0.08% Cu from 52m to the end of hole, including 6m @ 0.10%
Cu from 52m.
A decade later Normandy completed two broadly spaced lines
of shallow RAB drilling across the target area and intersected
additional copper regolith anomalism of 10m @ 0.12% Cu from
15m and 26m @ 310ppm Cu from 17m.
Historical drilling defi ned a regolith copper anomaly over
1.2kms in strike and open to the north, south and east. This
regolith anomalism includes thick intersections in three holes
grading in excess of 0.1% Cu over 800 metres in strike. The
southern half of this copper anomaly is coincident with a westerly
dipping AEM conductor that is interpreted to represent a sulphidic
horizon below the base of oxidation.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
5
Exploration Review continued
Figure 4: Exploration summary plan for BM1 target.
6
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
During June 2009 three aircore drill traverses at 400m x 100m
spacing were completed across the northern and eastern
(up dip) extents of the AEM conductor at the BM1 target
(Figure 4). This drilling successfully defi ned a coherent, under
cover, near surface copper regolith anomaly that is open and
strengthening towards the south.
The anomalism is focused along two contacts between black
shale and carbonate units of the Broadhurst Formation (refer
to drill sections in Figures 5 and 6). The western contact sits
above the AEM conductor along the interpreted splay fault
whereas the eastern contact lies directly up dip of the modelled
AEM plate.
Will Robinson, Peter Bewick and Sarah James (Senior
Exploration Geologist) at the Yeneena Core Farm.
Prominent copper anomalism focused along the eastern
carbonate-shale contact is interpreted to be metal leakage
directly up dip of the modelled, shallow, westerly dipping AEM conductor. Anomalous results include 16m @ 0.23%
Cu from 24m and 12m @ 0.23% Cu from 54m. Numerous regolith intersections over 0.1% Cu and results of up to
2m @ 0.89% Cu highlight the potential of this area to host a substantial body of copper oxide mineralisation. Extensive
and pervasive silica, carbonate and hematite alteration together with elevated cobalt and uranium are associated with
the zone of anomalous copper on the eastern contact. This association of alteration and metal anomalism shows
similarities to the Zambian style “Red Bed” copper deposits.
Copper anomalism focused along the western carbonate-shale contact is coincident with a magnetic anomaly along the
NNE trending splay structure from the McKay Fault. Anomalism associated with this structure includes 8m @ 0.12% Cu
from 68m in pervasively carbonate altered fresh rock. This anomalism is interpreted to be metal leakage from the modelled
AEM conductor at depth, that has migrated up the interpreted steeply dipping splay structure.
Figure 5: BM1 aircore drill section 7543100mN.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
7
Exploration Review continued
Figure 6: BM1 aircore drill section 7542700mN.
The observed geological, geochemical and geophysical features at BM1 show strong similarities to that of the 2 million metal
tonne Nifty copper deposit (Figure 7).
In September 2009 two diamond drill holes will be completed to test the source of the bedrock AEM and ground
EM conductor. Additional drilling is also proposed south of the recent aircore drill traverses to test for economic copper oxide
mineralisation.
Figure 7: Nifty Copper Mine idealised cross section. (Source: Straits Resources Ltd Annual Report 2001)
8
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
BM5 target
The BM5 target is located along the regionally extensive Kintyre Fault (refer to Figure 2).
The area was initially drilled by WMC in the early 1990s, at the end of their exploration
program in the region. A series of 800m spaced reverse circulation (RC) traverses
were drilled across the NW trending Kintyre Fault where it separates two large zones of
conductive Broadhurst Formation. These were followed up by one diamond drill hole.
The early drilling program intersected thick zones of Fe-Mn rich material below
Permian and Recent cover. The Fe-Mn body is over 1km long and is associated with
strong Cu-Zn-Pb-Ag anomalism. The body appears to be controlled by the underlying
dolomitic basement geology at the intersection with the Kintyre Fault (Figure 8). Initial
interpretation by Western Mining Corporation (WMC) inferred that the base metal
anomalism was due to manganese scavenging within the regolith. A comprehensive
review of the historical data clearly shows that the high Cu-Zn-Pb-Ag values in this
zone do not correlate with the high manganese values. It is therefore interpreted that
this enriched body represents a potentially signifi cant base metal gossan.
The compilation and interpretation of the results from the seven hole aircore and
RC drill program has recently been completed. A strong geochemical vector within
the gossanous horizon indicates increased prospectivity along the western margin of
Soil sampling at the
Yeneena Project.
the dolomite unit located at historical drill hole THRD794 (Figure 8). The geochemical
target is coincident with an interpreted NW to NNW structural jog along the western dolomite contact. This geochemical
and structural target will be tested as part of the September 2009 diamond drilling program.
Figure 8: Geochemical vectors at BM5 are coincident at western margin of dolomite unit.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
9
Exploration Review continued
Figure 9: Conductive depth image (CDI) of T2 target with planned drilling.
t2 target
The T2 target is a discrete AEM conductor located in the north west of the project on a section of the McKay Fault
(Figure 9, refer to Figure 2 for location). The bedrock AEM anomaly is located at a major stratigraphic discontinuity
between the deeper water environment of the Coolbro Sandstone on the east, and the shallow marine shelf sediments
to the west. Signifi cantly, in the area of the AEM anomaly the basement geology is masked by two extensive sand dunes.
Geochemistry from historical drilling 5kms to the south of T2, reveals near surface base metal anomalism that is open
and increasing in intensity to the north.
A ground EM survey in July 2009 confi rmed the AEM anomaly is a 600 metre long conductive body at a depth of
100-150m. The T2 EM conductor is modelled as a northerly plunging synform located on the McKay Fault. There is
negligible geological information for this target as it is completely sand covered, but the strength and geometry of the
conductive body and its ideal structural location, are considered highly encouraging and a justifi cation for drill testing in
the September program (Figure 9).
BM2 target
The BM2 target is also beneath an area of extensive sand cover at
the intersection between a north-south trending, westerly dipping
fault and the regional north west striking Tabletop Fault (refer to
Figure 2). AEM conductivity depth images indicate a clear structural
termination along the eastern margin of a conductive horizon
against the Tabletop Fault. The AEM target was refi ned by a ground
EM survey completed in July 2009. Copper regolith anomalism up
to 521ppm Cu has been intersected in 1km spaced historical aircore
drill holes. This broad base metal regolith anomaly extends over
an interpreted strike of 3kms.
An aircore drill program is planned to further defi ne the regolith
geochemistry at the BM2 target in 2010.
10
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
Yilgarn District
Encounter progressed initial uranium exploration discoveries
at Hillview, Lake Way South and Bellah Bore East through
intensive drill programs and geological evaluation into resources
in 2008 and 2009. The company has now embarked on an
evaluation phase of the uranium projects looking at strategic
and commercial opportunities within the northern Yilgarn
Province of WA. Figure 10 shows the location of uranium
resources in the northern Yilgarn region.
HIllVIeW – uranium
(E51/1127 – 80% Encounter, 20% Avoca)
Glenn Budge (Field Manager) completing
regional rock chip sampling.
The Hillview uranium project is located 50kms south east of
Meekatharra and contains an Inferred Resource of 27.6 million tonnes, averaging 174ppm U3O8 for a contained 10.6 million
pounds of U3O8. The Inferred Resource is reported in accordance with the JORC code (2004) and guidelines.
The main mineralised zone at Hillview is 7km long by 1.4km wide with an average thickness of 3.15m. The resource is
a fl at lying, consistent body of near surface uranium mineralisation with minimal internal dilution. The average grade of
the drill holes within the resource indicates that the uranium mineralisation is best developed at a bend in the channel
system where potential exists for a smaller, higher grade resource (Figure 11).
Figure 10: Location of uranium resources in the northern Yilgarn Province (Encounter tenure is coloured green).
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
11
Exploration Review continued
A strategic review of the Hillview uranium resource was initiated by the company to consider the potential development
and commercial alternatives to advance the project.
Initial work involved a mineralogical assessment and metallurgical leach testing. The results of the leach test,
using a conventional calcrete uranium circuit, resulted in low dissolution of uranium. Mineralogical work indicated that
the majority of the uranium present in the sample is contained within opaline silica, with no discrete uranium mineral
identifi ed. The uranium-bearing opaline silica fraction is a relatively small part of the deposit. This observation suggests
the possibility of benefi ciating this material to produce a much higher feed to a leach circuit optimised for leaching
the opaline silica material.
Figure 11: Hillview uranium resource U3O8 grade distribution.
12
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
YeelIRRIe CHAnnel – uranium
(E53/1158, E36/541 – 80% Encounter, 20% Avoca and ELA 53/1427 – 100% Encounter)
Encounter concentrated its early exploration activities within the Yeelirrie drainage channel, located 60kms south west of
Wiluna WA. This channel is host to the world’s largest calcrete associated uranium deposit, BHP’s Yeelirrie uranium deposit
with a published resource of 52,500 tonnes U3O8 (refer to Figure 10).
The potential for additional satellite uranium deposits in the Yeelirrie channel was founded in the discovery of Bellah Bore
East in 2007. Bellah Bore East (E53/1158) is located upstream from the Yeelirrie uranium deposit and has an Inferred Resource
of 350,000t averaging 210ppm U3O8 for 160,000lb of U3O8, estimated in accordance with the JORC (2004) Code.
Reassessment of Encounter’s ground holding has resulted in a rationalisation of tenements in the area. Encounter still has
the belief that there is potential for calcrete associated and basal palaeochannel uranium mineralisation within the Yeelirrie
catchment. An application for ELA53/1427 is a target based on the palaeochannel uranium model similar to the Beverley
uranium deposit in South Australia. Exploration will commence once the tenement is granted.
lAKe WAY SoutH – uranium
(E53/1232 – 60% Encounter, 40% Avoca uranium rights only)
The Lake Way South project is located approximately 10kms south of Wiluna, between Toro Energy’s Lake Way and
Centipede uranium deposits. Toro Energy is well advanced with development of its uranium resources in WA, which
gives a strategic value to the Lake Way South project. A program of lake based aircore drilling was completed by Encounter
that confi rmed the Centipede resource extended approximately 200m into the Lake Way South tenement using a cutoff
grade above 100ppm U3O8 (Figure 12). Results obtained from the drilling and a compilation of historical information
provided suffi cient information to produce an Inferred Resource for the area of the Centipede resource within the JV
tenement. This calculation defi ned 220,000t @ 244ppm U3O8 for 120,000lbs of U3O8. The Inferred Resource is reported
in accordance with the JORC code (2004) and guidelines.
Figure 12: Lake Way South project tenement and exploration summary.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
13
Exploration Review continued
Figure 13: Lake Darlot project tenements and regional geology plan.
lAKe DARlot – gold
(E37/830 – 80% Encounter, 20% Avoca and E37/978 – 100% Encounter)
The Lake Darlot project comprises two tenements located north and east of the Darlot Gold Mine on the eastern margin
of the Yandal Greenstone Belt (Figure 13). These tenements have been acquired to cover a previously unrecognised
greenstone belt. Interpretation of the regional magnetics has identifi ed an extensive NNW trending structural corridor that
‘horsetails’ as it fl exes along the margin of a major granite intrusion located in the east of the project.
Aircore drilling under shallow cover within E37/830 identifi ed a previously unknown belt of greenstone lithologies
including dolerites, basalts and felsic intrusions under lake sediment cover. The 1km x 200m spaced drilling across the
8km long greenstone belt intersected low level gold (250ppb) anomalism.
The southern tenement E37/978 was granted in March 2009. This tenement covers 212km2 and captures the interpreted
southern extension of the recently discovered greenstone belt. Interpretation of the regional aeromagnetics infers a southerly
plunging antiform of greenstone in the centre of the tenement, terminating against the NNW structural corridor.
This geological setting is similar to the 4 million ounce Darlot Gold Mine and is considered prospective for gold mineralisation.
Exploration commenced with a series of regional soil sample traverses and rock chip samples collected across defi ned
structural targets. Previously unmapped outcrops of greenstone were defi ned within the area of magnetic complexity.
The results from this program are pending and will be used to assess areas for follow up exploration.
14
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
Bangemall Basin
Drill programs completed at Tchintaby and Pingandy Creek
projects during 2008, provided a greater understanding of
the interpreted controls on base metals mineralisation in the
Bangemall Basin. As a result of this work, the company has
acquired a new project in the basin and reduced ground holdings
in areas of lower prospectivity. This program of tenement
rationalisation resulted in an overall 50% reduction of tenure in
the basin to approximately 1,000km2 (Figure 14).
tCHIntABY – zinc and copper
(E52/1882 – 80% Encounter, 20% Avoca and
E52/2386 – 100% Encounter)
RC drilling at Tchintaby.
The Tchintaby project covers over 336km2 targeting high grade SEDEX zinc mineralisation, similar to the Century
and McArthur River deposits in eastern Australia.
An initial drill program of seven vertical RC holes was completed in September 2008 at the Andes, Laksa and Rendang
prospects (Figure 15). The program was designed to test a series of bouguer gravity anomalies within the sedimentary
package. The excess mass gravity anomalies were interpreted to represent concentrations of sulphidic material and possibly
base metal mineralisation.
Figure 14: Bangemall Basin lease and regional geology plan.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
15
Exploration Review continued
Figure 15: Location of gravity anomalies, historical drilling and Encounter drilling at the Tchintaby project.
Drilling discovered a signifi cant 4 km strike extension to the Zn-Cu-Ag mineralised black shale horizon, including intersections of
12m @ 7062ppm Zn, 1053ppm Cu (ETW 013 – Rendang) and 11m @ 7327ppm Zn, 1022ppm Cu (ETW 006 – Laksa).
Table 1 includes signifi cant assay results from the September 2008 drill program. The drilling results, however, did not
account for the 2g/cc (2mgal) excess mass anomaly targeted by the drill program. Samples of the drilled lithologies
were submitted for density measurement, which will be incorporated into geological models to determine the depth and
nature of the excess mass anomaly.
Hole number Prospect
northing
Easting
Depth From
(metres)
thickness
(metres)
Zn ppm
cu ppm
ETW 1
ETW 2
ETW 3
ETW 6
ETW 9
ETW 13
ETW 14
Andes
Andes
Andes
Laksa
Laksa
Rendang
Laksa
7340300
7340702
7341170
7338200
7338200
7337400
7336750
611827
612072
612280
615750
616200
619200
615400
26
35
33
164
164
197
273
7
9
13
11
9
12
10
4057
6338
7488
7327
6806
7062
6050
472
870
854
1022
999
1053
833
Table 1: Significant drill hole intersections from Tchintaby project drilling in September 2008
Key learnings from this drill program identifi ed the potential for additional SEDEX targets along the northern margin of
the Bangemall Basin. A structural targeting exercise and review of the regional geochemical sampling defi ned a new
target 30kms to the east of the Tchintaby project. Tenement E52/2386 was granted in June 2009, with initial fi eld work
to commence in 2010.
16
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
WAnnA – base metals
(E09/1297 – 80% Encounter, 20% Avoca)
The Wanna project is located at the southern margin of the
Bangemall Basin, approximately 40kms WNW of Mt Augustus (refer to
Figure 14). A regional ground gravity survey was completed in 2008
designed to infi ll a regional excess mass anomaly at Koorabooka
Spring. Scattered bouguer gravity anomalies were associated with
the geochemically anomalous stratigraphy (Pb, Ag, Mo and As from
previous lag and groundwater sampling) in areas of little outcrop. Soil
surveys were completed over untested gravity anomalies using the
hand held Niton XRF. Data from the soil surveys were inconclusive
due to the presence of transported cover. Consequently, data from
these surveys are currently being remodelled and reassessed.
pInGAnDY CReeK – base metals
(E08/1779 – 80% Encounter, 20% Avoca)
Regional Geochemical sampling at Wanna.
The Pingandy Creek project is located 80km south of Paraburdoo and covers an area of 332km2 along the northern
margin of the Bangemall Basin (refer to Figure 14).
Historical drilling in the area by Pasminco in the mid 1990s intersected extensive, shallow, low grade Zn-Cu-Pb
mineralisation within a black shale unit named the Peebeezee Horizon. Encounter completed a ground gravity survey
over a 15km segment of the prospective Peebeezee Horizon where only one hole had tested the horizon below a depth
of 25m from surface. The survey area encompassed a number of historic mineralised holes and 3kms of the downdip
extension of the target horizon.
Four of the fi ve subtle density anomalies identifi ed by the survey were drill tested in September 2008 by eleven RC drill
holes. Assay results confi rmed extensions to the area of low grade base metal mineralisation. From the results, it was
interpeted the gravity anomalies are accounted for by the density contrast between the host shale unit and the dolerite
sills that have intruded the mineralised horizon.
Hillview Qualifying Statement
The information in this report that relates to Exploration Results
is based on information compiled by Mr Peter Bewick who is a
Member of the Australasian Institute of Mining and Metallurgy.
Mr Bewick is a full time employee of Encounter Resources Ltd
(Encounter) and has sufficient experience which is relevant to
the style of mineralisation under consideration to qualify as a
Competent Person as defined in the 2004 Edition of the
‘Australian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’.
The Mineral Resource is based on information compiled by Mr
Neil Inwood who is employed by Coffey Mining Ltd. Mr Peter
Bewick from Encounter has consented to a joint sign off for the
Resource, Mr Bewick taking responsibility for the quality and
reliability of the drillhole database and Mr Inwood is responsible
for the grade estimate and classification of the resource. Messrs
Inwood and Bewick have sufficient experience which is relevant
to the style of mineralisation and type of deposit under
consideration and to the activity which they have undertaking
to qualify as a Competent Person as defined in the 2004 Edition
of the “Australasian Code for Reporting of Mineral Resources
and Ore Reserves”.
The information in this report that relates to gamma uranium
grades is based on information compiled by David Wilson BSc MSc
MAusIMM from 3D Exploration Ltd based in Western Australia.
Holes were logged with an Auslog A75 total count gamma tool.
The gamma tool was calibrated in Adelaide at the Department of
Water, Land and Biodiversity Conservation in calibration pits
constructed under the supervision of the CSIRO. These calibration
pits have been shown to provide calibration standards for drill
hole logging tools that are comparable to those at the DOE facility
in Grand Junction, Colorado USA. The gamma tool measures the
total gamma ray flux in the drill hole. Readings were averaged
over 2 centimetre intervals and the reading and depth recorded
on a portable computer. The gamma ray readings were then
converted to equivalent U3O8 readings by using the calibration
factors derived in the Adelaide calibration pits. These factors also
take into account differences in hole size and water content.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
17
Exploration Review continued
The gamma radiation used to calculate the equivalent U3O8
is predominately from the daughter products in the uranium
decay chain. When a deposit is in equilibrium, the measurement
of the gamma radiation from the daughter products is
representative of the uranium present. It takes approximately
2.4M years for the uranium decay series to reach equilibrium.
Thus, it is possible that these daughter products, such as radium,
may have moved away from the uranium or not yet have
achieved equilibrium if the deposit is younger than 2.4M years.
In these cases the measured gamma radiation will over or
under estimate the amount of uranium present. At Hillview,
the calculated U3O8 from the measured gamma radiation
appears to be under reporting, by 20%, the true grades when
compared to the ICP assays from 42 holes. Further studies on this
apparent disequilibrium are being conducted.
Mr Wilson is a full-time employee of 3D Exploration Pty Ltd, a
consultant to Encounter Resources Limited. Mr Wilson has
sufficient experience which is relevant to the style of mineralisation
and type of deposit under consideration and to the activity which
he is undertaking to qualify as a Competent Person as defined in
the 2004 Edition of the ‘Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves’.
Messrs Wilson, Inwood and Bewick consent to the inclusion in the
report of the matters based on the information compiled by them,
in the form and context in which it appears.
Bellah Bore east Qualifying Statement
The information in this report that relates to Exploration Results
is based on information compiled by Mr Peter Bewick who is a
Member of the Australasian Institute of Mining and Metallurgy.
Mr Bewick is a full time employee of Encounter Resources Ltd
(Encounter) and has sufficient experience which is relevant to
the style of mineralisation under consideration to qualify as a
Competent Person as defined in the 2004 Edition of the
‘Australian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’.
values used in the calculation are based on chemical analysis of
representative drill samples. A specific gravity of 2.1 was used in the
calculation which is an assumed figure based on a literature search
of similar deposits found in Western Australia and Namibia.
The mineralised zone varies in vertical thickness from 1m to 6m.
The main uranium mineral identified in drilling is carnotite which
is a common mineral found in Surficial style deposit in Western
Australia. All mineralised intervals in the modelled area are within
10m of surface and, therefore, are potentially easily mined.
Additional drilling is required determine the extent of the higher
grade core of
the mineralisation centred on EYN064
(3m@781ppm U3O8 including 1m@2111ppm U3O8). The
assay interval of 1m@2111ppm U3O8 in EYN064 was treated
as an outlier in the resource model and cut to 500ppm U3O8.
If further drilling can extend the high grade area it is anticipated
that the resource grade will increase.
Mr Bewick consents to the inclusion in the report of the matters
based on the information compiled by him, in the form and
context in which it appears.
lake Way Qualifying Statement
The information in this report that relates to Exploration Results is
based on information compiled by Mr Peter Bewick who is a
Member of the Australasian Institute of Mining and Metallurgy.
Mr Bewick is a full time employee of Encounter Resources Ltd
(Encounter) and has sufficient experience which is relevant
to the style of mineralisation under consideration to qualify as a
Competent Person as defined in the 2004 Edition of the
‘Australian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’.
The figures are rounded to reflect the accuracy of the estimation
process and as a consequence exhibit rounding errors. Both
Contained U3O8 tonnes and Contained U3O8 pounds are based
on contained metal content and at this stage do not consider
any mining, metallurgical or economic parameters.
Resource numbers are rounded to reflect the accuracy of the
estimation process and as a consequence exhibit rounding
errors. Both Contained U3O8 tonnes and Contained U3O8 pounds
are based on contained metal content and at this stage do not
consider any mining, metallurgical or economic parameters.
The estimate is based on a cut off of 70ppm U3O8 over a
minimum downhole distance of 1m. Shallow aircore drilling has
been completed on a nominal 200m by 200m grid. All grade
values used in the calculation are based on chemical analysis
of representative drill samples.
The estimate is based on a cut off of 100ppm U3O8 over a
minimum downhole distance of 1m. Shallow aircore drilling has
been completed on a nominal 150m by 150m grid. All grade
Mr Bewick consents to the inclusion in the report of the matters
based on the information compiled by him, in the form and
context in which it appears.
18
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
Summary of Tenements
Summary of Tenements
Lease
Lease name
Project name
Area km2 Managing company
Encounter Interest
E08/1779
Pingandy Creek
Bangemall Basin
332.8
Encounter Resources Limited
E09/1297
Wanna
Bangemall Basin
65.1
Encounter Resources Limited
E52/1882
Tchintaby
Bangemall Basin
172.5
Encounter Resources Limited
E52/2386
Tchintaby East
Bangemall Basin
163.1
Encounter Resources Limited
E52/2385
Staten
Bangemall Basin
153.1
Encounter Resources Limited
80%
80%
80%
100%
100%
E53/1232
Wiluna South
Lake Way South JV
66.8
Avoca Resources Ltd
60% of Uranium Rights
ELA53/1427
Yeelirrie North
Yilgarn/Gascoyne
168
Encounter Resources Limited
100%
E29/577
Lakeview
Leonora Regional
62.2
Encounter Resources Limited
E51/1096
Gidgee Bore
Meekatharra
18.47
Encounter Resources Limited
E51/1127
Hillview
Meekatharra
202.1
Encounter Resources Limited
E37/830
Lake Darlot
Melrose
82.1
Encounter Resources Limited
E37/978
Darlot East
Melrose
212.4
Encounter Resources Limited
E38/1784
Lake Irwin
Melrose
54.5
Encounter Resources Limited
80%
80%
80%
80%
100%
80%
E45/2500
Yeneena
Paterson JV
163.4
Barrick Gold of Australia
earning 75%
E45/2501
Yeneena
Paterson JV
41.4
Barrick Gold of Australia
earning 75%
E45/2502
Yeneena
Paterson JV
216.3
Barrick Gold of Australia
earning 75%
E45/2503
Yeneena
Paterson JV
76.3
Barrick Gold of Australia
earning 75%
E45/2561
Yeneena
Paterson JV
86
Barrick Gold of Australia
earning 75%
E45/2657
Yeneena
Paterson JV
222.8
Barrick Gold of Australia
earning 75%
E45/2658
Yeneena
Paterson JV
222.8
Barrick Gold of Australia
earning 75%
ELA45/2805
Yeneena
Paterson JV
209.7
Barrick Gold of Australia
earning 75%
ELA45/2806
Yeneena
Paterson JV
63.7
Barrick Gold of Australia
earning 75%
E70/2957
Shackleton
SW Regional
574.8
Encounter Resources Limited
E70/2958
Wongan Hills
SW Regional
495.6
Encounter Resources Limited
E53/1158
Bitter Bore
Yeelirrie North
10.5
Encounter Resources Limited
E36/541
Altona Bore
Yeelirrie South
81
Encounter Resources Limited
80%
80%
80%
80%
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
19
Corporate Governance Statement
Introduction
Since the introduction of the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best
Practice Recommendations (“ASX Guidelines” or “the Recommendations”), Encounter Resources Limited (“Company”)
has made it a priority to adopt systems of control and accountability as the basis for the administration of corporate
governance. Some of these policies and procedures are summarised in this report. Commensurate with the spirit of the ASX
Guidelines, the Company has followed each Recommendation where the Board has considered the Recommendation to be
an appropriate benchmark for corporate governance practices, taking into account factors such as the size of the Company,
the Board, resources available and activities of the Company. Where, after due consideration, the Company’s corporate
governance practices depart from the Recommendations, the Board has offered full disclosure of the nature of, and reason
for, the adoption of its own practice.
The Company has adopted systems of control and accountability as the basis for the administration of corporate governance.
The Board of the Company is committed to administering the policies and procedures with openness and integrity, pursuing
the true spirit of corporate governance commensurate with the Company’s needs.
Further information about the Company’s corporate governance practices is set out on the Company’s website at
www.enrl.com.au. In accordance with the recommendations of the ASX, information published on the Company’s website
includes:
Board Charter
Nomination Committee Charter
Remuneration Committee Charter
Code of Conduct
Policy and Procedure for Selection and Appointment of New Directors
Summary of Policy for Trading in Company Securities
Summary of Compliance Procedures
Procedure for the Selection, Appointment and Rotation of External Auditor
Shareholder Communication Strategy
Summary of Company’s Risk Management Policy
Explanation for Departures from Best Practice recommendations
During the Company’s 2008/2009 fi nancial year the Company has complied with the Corporate Governance Principles
and the corresponding Best Practice Recommendations as published by the ASX Corporate Governance Council (“Corporate
Governance Principles and Recommendations”)1 and has adopted the revised Principles and Recommendations
taking effect from reporting periods beginning on or after 1 January 2008. Signifi cant policies and details of any signifi cant
deviations from the principles are specifi ed below.
corporate Governance council recommendation 1
Lay Solid Foundations for Management and Oversight
Role of the Board of Directors
The role of the Board is to increase shareholder value within an appropriate framework which safeguards the rights and
interests of the Company’s shareholders and ensure the Company is properly managed.
In order to fulfi l this role, the Board is responsible for the overall corporate governance of the Company including formulating
its strategic direction, setting remuneration and monitoring the performance of Directors and executives. The Board relies
on senior executives to assist it in approving and monitoring expenditure, ensuring the integrity of internal controls and
management information systems and monitoring and approving fi nancial and other reporting.
In complying with Recommendation 1.1 of the Corporate Governance Council, the Company has adopted a Board Charter
which clarifi es the respective roles of the Board and senior management and assists in decision making processes. A copy
of the Board Charter is available on the Company’s website.
20
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
Board Processes
An agenda for the meetings has been determined to ensure certain standing information is addressed and other items which
are relevant to reporting deadlines and or regular review are scheduled when appropriate. The agenda is regularly reviewed
by the Chairman, the Managing Director and the Company Secretary.
Evaluation of Senior Executive Performance
The Company has not complied with Recommendation 1.2 of the Corporate Governance Council. Due to the early stage
of development of the Company it is diffi cult for quantitative measures of performance to be established. As the Company
progresses its projects, the board intends to establish appropriate evaluation procedures. The Chairman assesses the
performance of the Executive Directors on an informal basis.
corporate Governance council recommendation 2
Structure the Board to Add Value
Board Composition
The Constitution of the Company provides that the number of Directors shall not be less than three. There is no requirement
for any share holding qualifi cation.
The membership of the Board, its activities and composition is subject to periodic review. The criteria for determining the
identifi cation and appointment of a suitable candidate for the Board shall include the quality of the individual, background of
experience and achievement, compatibility with other Board members, credibility within the scope of activities of the Company,
intellectual ability to contribute to Board duties and physical ability to undertake Board duties and responsibilities.
Directors are initially appointed by the Board and are subject to re election by shareholders at the next general meeting.
In any event one third of the Directors are subject to re election by shareholders at each general meeting.
The Board is comprised of four members, two Non-Executive and two Executive. The Non-Executive Directors are Mr
Paul Chapman (Chairman) and Dr Jonathan Hronsky. The skills, experience and expertise of all Directors is set out in the
Directors’ Report included in this Annual Report.
The Board has assessed the independence of its non executive directors according to the defi nition contained within the
ASX Corporate Governance Guidelines and has concluded that one of the current Non-Executive Directors, Mr Chapman
does not meet the recommended independence criteria, by virtue of his substantial shareholding in the Company. As a
result the Company does not comply with Recommendation 2.1 of the Corporate Governance Council. However, the Board
considers that both its structure and composition are appropriate given the size of the Company and that the interests of
the Company and its shareholders are well met.
Independent Chairman
The Chairman is not considered to be an independent director and as such Recommendation 2.2 of the Corporate Governance
Council has not been complied with. However, the Board believes that Mr Chapman is the most appropriate person for the
position as Chairman because of his industry experience and proven track record as a public company director.
Roles of Chairman and Chief Executive Officer
The roles of Chairman and Chief Executive Offi cer are exercised by different individuals, and as such the Company complies
with Recommendation 2.3 of the Corporate Governance Council.
Nomination Committee
The Board does not have a separate Nomination Committee comprising of a majority of independent Directors and as
such does not comply with Recommendation 2.4 of the Corporate Governance Council. The selection and appointment
process for Directors is carried out by the full Board. The Board considers that given the importance of Board composition
it is appropriate that all members of the Board partake in such decision making. The Company adopted the Nomination
Committee Charter on 8 February 2006.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
21
Corporate Governance Statement continued
Evaluation of Board Performance
The Company does not have a formal process for the evaluation of the performance of the Board and as such does
not comply with Recommendation 2.5 of the Corporate Governance Council. The Board is of the opinion that the
competitive environment in which the Company operates will effectively provide a measure of the performance of the
Directors, in addition the Chairman assesses the performance of the Board, individual directors and key executives on
an informal basis.
Education
All Directors are encouraged to attend professional education courses relevant to their roles.
Independent Professional Advice and Access to Information
Each Director has the right to access all relevant information in respect of the Company and to make appropriate enquiries of
senior management. Each Director has the right to seek independent professional advice at the Company’s expense, subject
to the prior approval of the Chairman, which shall not be unreasonably withheld.
corporate Governance council recommendation 3
Promote Ethical and Responsible Decision Making
The Board actively promotes ethical and responsible decision making.
Code of Conduct
The Board has adopted a Code of Conduct that applies to all employees, executives and Directors of the Company, and
as such complies with Recommendation 3.1 of the Corporate Governance Council. This Code addresses expectations
for conduct in accordance with legal requirements and agreed ethical standards. A copy of the Code is available on the
Company’s website.
Security Trading Policy
The Board has committed to ensuring that the Company, its Directors and executives comply with their legal obligations
as well as conducting their business in a transparent and ethical manner. The Board has adopted a policy and procedure
on dealing in the Company’s securities by directors, offi cers and employees which prohibits dealing in the Company’s
securities when those persons possess inside information, and as such complies with Recommendation 3.2 of the Corporate
Governance Council. The policy also provides that the acknowledgement of the Chairman should be obtained prior to
trading. A summary of the Policy is available on the Company’s website.
corporate Governance council recommendation 4
Safeguarding Integrity in Financial Reporting
Audit Committee
The Board does not have a separate Audit Committee with a composition as suggested by Recommendations 4.1, 4.2
and 4.3 of the Corporate Governance Council. The full Board carries out the function of an audit committee. The Board
believes that the Company is not of a suffi cient size to warrant a separate committee and that the full Board is able to meet
objectives of the best practice recommendations and discharge its duties in this area. The relevant experience of Board
members is detailed in the Directors’ section of the Directors’ Report.
Financial reporting
The Board relies on senior executives to monitor the internal controls within the Company. Financial performance is monitored
on a regular basis by the Managing Director who reports to the Board at the scheduled Board meetings.
22
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
corporate Governance council recommendation 5
Make Timely and balanced disclosure
The Board reviews the performance of the external auditors on an annual basis and meets with them during the year to
review fi ndings and assist with Board recommendations.
In the absence of a formal audit committee the Non-executive Directors of the Company are available for correspondence
with the auditors of the Company.
Continuous Disclosure
The Board is committed to the promotion of investor confi dence by providing full and timely information to all security
holders and market participants about the Company’s activities and to comply with the continuous disclosure requirements
contained in the Corporations Act 2001 and the Australian Securities Exchange’s Listing Rules. The Company has established
written policies and procedures, designed to ensure compliance with the ASX Listing Rule Requirements, in accordance with
Recommendation 5.1 of the Corporate Governance Council.
Continuous disclosure is discussed at all regular Board meetings and on an ongoing basis the Board ensures that all activities
are reviewed with a view to the necessity for disclosure to security holders.
In accordance with ASX Listing Rules the Company Secretary is appointed as the Company’s disclosure offi cer.
corporate Governance council recommendation 6
Respect the Rights of Shareholders
Communications
The Board fully supports security holder participation at general meetings as well as ensuring that communications with
security holders are effective and clear. This has been incorporated into a formal shareholder communication strategy,
in accordance with Recommendation 6.1 of the Corporate Governance Council. A copy of the policy is available on the
Company’s website.
In addition to electronic communication via the ASX web site, the Company publishes all signifi cant announcements
together with all quarterly reports. These documents are available in both hardcopy on request and on the Company website
at www.enrl.com.au.
Shareholders are able to pose questions on the audit process and the fi nancial statements directly to the independent
auditor who attends the Company Annual General Meeting for that purpose.
corporate Governance council recommendation 7
Recognise and manage risk
Risk management policy
The Board has adopted a risk management policy that sets out a framework for a system of risk management and internal
compliance and control, whereby the Board delegates day-to-day management of risk to the Managing Director, therefore
complying with Recommendation 7.1 of the Corporate Governance Council. The Board is responsible for supervising
management’s framework of control and accountability systems to enable risk to be assessed and managed.
Risk management and the internal control system
The Managing Director, with the assistance of senior management as required, has responsibility for identifying, assessing,
treating and monitoring risks and reporting to the Board on risk management.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
23
Corporate Governance Statement continued
corporate Governance council recommendation 7 continued
Recognise and manage risk
In order to implement the Company’s Risk Management Policy, it was considered important that the Company establish
an internal control regime in order to:
• Assist the Company to achieve its strategic objectives;
• Safeguard the assets and interests of the Company and its stakeholders; and
• Ensure the accuracy and integrity of external reporting.
Key identifi ed risks to the business are monitored on an ongoing basis as follows:
• Business risk management
The Company manages its activities within budgets and operational and strategic plans.
•
Internal controls
The Board has implemented internal control processes typical for the Company’s size and stage of development.
It requires the senior executives to ensure the proper functioning of internal controls and in addition it obtains advice
from the external auditors as considered necessary.
• Financial reporting
Directors approve an annual budget for the Company and regularly review performance against budget at Board
Meetings.
• operations review
Members of the Board regularly visit the Company’s exploration project areas, reviewing both geological practices, and
environmental and safety aspects of operations.
• Environment and safety
The Company is committed to ensuring that sound environmental management and safety practices are maintained on
its exploration activities. As the Company is an active uranium explorer it has also incorporated a radiation management
plan into its occupational health and safety policies. Reports on levels of radiation exposure during the Company’s
activities are made available to the Board.
The Company’s risk management strategy is evolving and will be an ongoing process and it is recognised that the level and
extent of the strategy will develop with the growth and change in the Company’s activities.
Risk Reporting
As the Board has responsibility for the monitoring of risk management it has not required a formal report regarding the
material risks and whether those risks are managed effectively therefore not complying with Recommendation 7.2 of the
Corporate Governance Council. The Board believes that the Company is currently effectively communicating its signifi cant
and material risks to the Board and its affairs are not of suffi cient complexity to justify the implementation of a more formal
system for identifying, assessing monitoring and managing risk in the Company.
The Company does not have an internal audit function.
Managing Director and Chief Financial Officer Written Statement
The Board requires the Managing Director and the Company Secretary provide a written statement that the fi nancial
statements of company present a true and fair view, in all material aspects, of the fi nancial position and operational
results and have been prepared in accordance with Australian Accounting Standards and the Corporation Act. The Board
also requires that the Managing Director and Company Secretary provide suffi cient assurance that the declaration is
founded on a sound system of risk management and internal control, and that the system is working effectively.
The declarations have been received by the Board, in accordance with Recommendation 7.3 of the Corporate
Governance Council.
24
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
corporate Governance council recommendation 8
Remunerate Fairly and Responsibly
Remuneration Committee
The Board does not have a separate Remuneration Committee and as such does not comply with Recommendation 8.1
of the Corporate Governance Council. Remuneration arrangements for Directors are determined by the full Board. The
Board is also responsible for setting performance criteria, performance monitors, share option schemes, superannuation,
termination and retirement entitlements, and professional indemnity and liability insurance cover.
The Board considers that the Company is effectively served by the full Board acting as a whole in remuneration matters, and
ensures that all matters of remuneration continue to be decided upon in accordance with Corporations Act requirements,
by ensuring that no Director participates in any deliberations regarding their own remuneration or related issues.
Distinguish Between Executive and Non-Executive Remuneration
The Company does distinguish between the remuneration policies of its Executive and Non-Executive Directors in accordance
with Recommendation 8.2 of the Corporate Governance Council.
Executive Directors receive salary packages which may include performance based components, designed to reward and
motivate, including the granting of share options, subject to shareholder approval and vesting conditions relating to continuity
of engagement.
Non-Executive Directors receive fees agreed on an annual basis by the Board, within total Non-Executive remuneration
limits voted upon by shareholders at Annual General Meetings. In the current fi nancial year, no Non-Executive Director
received share options as remuneration. Share options which were issued to a Non-Executive Director in a prior reporting
period, and are currently still held by the Director, were subject to shareholder approval and a vesting condition based
upon continuity of engagement. The grant of options was deemed appropriate by the Board to provide an incentive and
to reward the Director.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
25
Directors’ Report
The Directors present their report on Encounter Resources Limited (the Company) and the entities it controlled at the
end of, and during the year ended 30 June 2009 (the Group).
Directors
The names and details of the Directors of Encounter
Peter Bewick – B.Eng (Hons), MAusIMM
Resources Limited during the fi nancial year and until the
Exploration Director (Executive) appointed 7 October 2005
date of this report are:
Paul chapman – B.comm, AcA, Grad. Dip. tax, cFtP(snr), MAIcD, sA Fin
Non-Executive Chairman appointed 7 October 2005
Mr Chapman is a Chartered Accountant and has held various
senior commercial roles within WMC over a seventeen
year period. This includes experience in North America
as CFO of WMC’s Houston based oil and gas division as
well as time in Pittsburgh working on the formation of the
AWAC bauxite and Alumina business. Mr Chapman was
appointed CFO of Anaconda Nickel Limited (now Minara
Resources Limited) in 2001 and was responsible for its
US$700 million debt restructuring process. Mr Chapman
was a founding shareholder and Managing Director of
Reliance Mining Limited (2003-2005) culminating in the
recommended takeover by Consolidated Minerals Limited.
Mr Chapman was a director of Albidon Limited until 22 April
Mr Bewick is an experienced geologist and has held a
number of senior mine and exploration geological roles
during a fourteen year career with WMC. These roles
include Exploration Manager and Geology Manager of
the Kambalda Nickel Operations, Exploration Manager
for St Ives Gold Operation and Exploration Manager for
WMC’s Nickel Business Unit. Most recently he held the
position of Exploration Manager for North America based
in Denver, Colorado. Whilst at WMC, Mr Bewick gained
extensive experience in project generation for a range
of commodities including nickel, gold and bauxite. Mr
Bewick has been associated with a number of brownfi elds
exploration successes at Kambalda and with the greenfi eld
Collurabbie NI-CU-PGE discovery.
Jonathan Hronsky – BAppsci, PhD, MAusIMM, FsEG
Non-executive director appointed 10 May 2007
2009 and is currently the Non-Executive Chairman of Silver
Dr Jon Hronsky has more than twenty fi ve years of
Lake Resources Limited and Rex Minerals Limited.
experience in the mineral exploration industry, primarily
Will robinson – B.comm, MAusIMM
Managing Director (Executive) appointed 30 June 2004
Mr Robinson is a resources industry commercial and
fi nance specialist with over fi fteen years experience in
commercial management,
transaction structuring and
negotiation, business strategy development and London
Metals Exchange metals trading. Mr Robinson held various
senior commercial positions with WMC in Australia and
North America from 1994 to 2003. During his time with
focused on project generation,
technical
innovation
and exploration strategy development. Dr Hronsky has
particular expertise in targeting for nickel sulfi de deposits,
but has worked across a diverse range of commodities.
His work led to the discovery of the West Musgrave nickel
sulfi de province in Western Australia. Dr Hronsky was
most recently Manager-Strategy & Generative Services
for BHP Billiton Mineral Exploration. Prior to that, he was
Global Geoscience Leader for WMC Resources Ltd.
WMC he was instrumental in the success of the Kambalda
company secretary
nickel mine outsourcing strategy as the Commercial
Kevin Hart
Manager of the Kambalda Nickel Operations. Mr Robinson
Mr Hart is a Chartered Accountant and was appointed to
has extensive experience in the sale and distribution of
the position of Company Secretary on 4 November 2005.
commodities and was Vice President – Marketing for
He has over 20 years experience in accounting and the
WMC’s nickel business from 2001 to 2003. Mr Robinson
management and administration of public listed entities
founded Encounter Resources Limited in 2004 and
in the mining and exploration industry. He is currently a
has overseen the development of the Company as its
partner in an advisory fi rm which specialises in the provision
Managing Director.
of company secretarial services to ASX listed entities.
26
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
Directors’ Interests
As at the date of this report the Directors’ interests in shares and unlisted options of the Company are as follows:
Director
P Chapman
W Robinson
P Bewick
J Hronsky
Directors’ Interests
in Ordinary Shares
Directors’ Interests
in Unlisted Options
Options vested at
the reporting date
4,747,400
21,846,900
4,725,000
–
–
–
800,000
500,000
–
–
400,000
500,000
Included in the Directors’ interests in Unlisted Options, there are 900,000 options that are vested and exercisable as at
the date of signing this report.
Directors’ Meetings
review of Activities
The number of meetings of the Company’s Directors held
Exploration
during the year ended 30 June 2009, and the number of
The review of exploration activities has been summarised
meetings attended by each Director are as follows:
by principal areas of exploration, as follows:
Director
P Chapman
W Robinson
P Bewick
J Hronsky
Board of Directors’ Meetings
Held
Attended
7
7
7
7
7
7
7
7
Principal Activities
The principal activity of the Company during the fi nancial
year was mineral exploration in Western Australia.
There were no signifi cant changes in these activities during
the fi nancial year.
results of operations
The consolidated net loss after income tax for the fi nancial
year was $1,987,843 (2008: $855,306).
Included in the consolidated loss for the current year is
a write-off of deferred exploration expenditure totalling
$1,311,311 (2008: $339,998).
Dividends
No dividend has been paid since the end of the previous
fi nancial year and no dividend is recommended for the
current year.
PAtErson ProVIncE
Yeneena Project
In April 2009 Encounter received the fi nal data from the
1,000 line km airborne TEMPEST© electromagnetic (AEM)
survey completed in 2008 in conjunction with Geoscience
Australia. Bedrock conductors identifi ed in the survey were
used in conjunction with previously generated geochemical
and geological datasets, to defi ne eight priority regional
targets. Two of these targets BM1 and BM5 were aircore
drilled in May/June 2009.
Prominent copper anomalism was identifi ed at the BM1
target which is interpreted to be metal leakage directly
up dip of the modelled, shallow westerly dipping AEM
conductor. Anomalous results include 16m @ 0.23% Cu
from 24m and 12m @ 0.23% Cu from 54m. Numerous
regolith intersections over 0.1% Cu and results of up to
2m @ 0.89% Cu highlight the potential of this area to host
a substantial body of copper mineralisation.
A ground based EM program commenced in July 2009
to provide greater defi nition of the bedrock conductors.
The BM1, BM5 and T2 targets will be drill tested during a
planned September 2009 diamond drilling program.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
27
Directors’ Report continued
review of Activities
YILGArn rEGIon
Hillview
Pingandy Creek
Four subtle density anomalies identifi ed by the survey
completed in 2008 were drill tested in September 2008
by eleven RC drill holes. Assay results confi rmed extensions
The Hillview uranium project is located 50kms south
to the area of low grade base metal mineralisation.
east of Meekatharra and contains an Inferred Resource
of 27.6 million tonnes, averaging 174ppm U3O8 for a
contained 10.6 million pounds of U3O8. The Inferred
Resource is reported in accordance with the JORC
code (2004) and guidelines. Following the lifting of the
ban on uranium mining in WA a strategic review of the
Hillview uranium resource was initiated by the Company
to consider the potential development and commercial
alternatives to advance the project.
Yeelirrie Channel
Bellah Bore East is located upstream from the Yeelirrie
uranium deposit and has an Inferred Resource of 350,000t
averaging 210ppm U3O8 for 160,000lb of U3O8, estimated
in accordance with the JORC (2004) Code.
Lake Way South
Results obtained from the drilling and a compilation of
historical information provided suffi cient information to
produce an Inferred Resource for the area of the Centipede
resource within the JV tenement.
Lake Darlot
Aircore drilling under shallow cover identifi ed a previously
unknown belt of greenstone lithologies including dolerites,
basalts and felsic intrusions under lake sediment cover.
The 1km x 200m spaced drilling across the 8km long
The information in this report that relates to Exploration Results is
based on information compiled by Mr Peter Bewick who is a Member
of the Australasian Institute of Mining and Metallurgy. Mr Bewick is
a full time employee of Encounter Resources Ltd and has suffi cient
experience which is relevant to the style of mineralisation under
consideration to qualify as a Competent Person as defi ned in the
2004 Edition of the ‘Australian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves’. Mr Bewick consents
to the inclusion in the report of the matters based on the information
compiled by him, in the form and context in which it appears.
Financial Position
At the end of the fi nancial year the Group had $2,278,318
(2008: $4,701,043) in cash and at call deposits.
Capitalised mineral exploration and evaluation expenditure
is $3,716,716 (2008: $3,049,148). Mineral exploration
and evaluation expenditure incurred during the year for
the Group was $1,978,879 (2008: $1,968,917).
Expenditure was principally focused on the exploration
for uranium and base metals in Western Australia.
significant changes in the state of Affairs
There have been no signifi cant changes in the state of
affairs of the Company and Group during or since the end
of the fi nancial year.
greenstone belt intersected low level gold (250ppb)
options over unissued capital
anomalism.
BAnGEMALL BAsIn
Tchintaby
An initial drill program of seven vertical RC holes was
completed in September 2008 at the Andes, Laksa
and Rendang prospects and designed to test a series of
bouguer gravity anomalies within the sedimentary package.
Drilling discovered a signifi cant 4 km strike extension to
the Zn-Cu-Ag mineralised black shale horizon, including
unlisted options
During the fi nancial year the Company granted 1,125,000
unlisted options over unissued shares to employees of
the Company.
During the year 100,000 unlisted options were cancelled
on the cessation of employment of an employee.
No ordinary shares were issued during the fi nancial year
on the exercise of options.
intersections of 12m @ 7062ppm Zn, 1053ppm Cu (ETW
Since the end of the fi nancial year no options have been
013 – Rendang) and 11m @ 7327ppm Zn, 1022ppm Cu
issued to employees of the Company. No options have
(ETW 006 – Laksa).
been exercised since the end of the fi nancial year.
28
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
As at the date of this report 3,025,000 unissued ordinary shares of the Company are under option as follows:
Number of Options Granted
Exercise Price
Grant Date
Expiry Date
100,000 (i)
100,000 (i)
250,000 (i)
50,000 (i)
125,000 (i)
500,000 (i)
400,000 (i)
400,000 (ii)
325,000 (iii)
775,000 (iv)
20 cents
45 cents
52.5 cents
50 cents
50 cents
53.5 cents
55 cents
70 cents
30 cents
10 cents
23 March 2006
15 May 2006
23 March 2011
15 May 2011
7 December 2006
7 December 2011
9 August 2007
9 August 2012
11 December 2007
30 November 2012
11 December 2007
30 November 2012
11 December 2007
30 November 2012
11 December 2007
30 November 2012
1 July 2008
1 March 2009
30 June 2013
28 February 2014
(i) Unlisted options are vested and exercisable at the reporting date;
(ii) Unlisted options subject to a 24 month vesting period, exercisable after 11 December 2009;
(iii) Unlisted options subject to a 12 month vesting period, exercisable after 1 July 2009.
(iv) Unlisted options subject to a 12 month vesting period, exercisable after 1 March 2010.
These unlisted options do not entitle the holder to participate in any share issue of the Company or any other
body corporate.
The holders of unlisted options are not entitled to any voting rights until the options are exercised into ordinary shares.
Matters subsequent to the End of the Financial Year
On 23rd September 2009, the Company announced a share placement raising $3,498,442 before costs by the issue
of 10,289,535 ordinary fully paid shares at $0.34 each.
Other than the above, there has not arisen in the interval between the end of the fi nancial year and the date of this
report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the
Company to affect substantially the operations of the Group, the results of those operations or the state of affairs of the
Group in subsequent fi nancial years.
Likely Developments and Expected results of operations
Disclosure of any further information has not been included in this report because, in the reasonable opinion of the Directors
to do so would be likely to prejudice the business activities of the Group and is dependent upon the results of the future
exploration and evaluation.
Environmental regulation and Performance
The Group holds various exploration licences to regulate its exploration activities in Australia. These licences include conditions
and regulations with respect to the rehabilitation of areas disturbed during the course of its exploration activities.
So far as the Directors are aware, all exploration activities have been undertaken in compliance with all relevant
environmental regulations.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
29
Directors’ Report continued
remuneration report (Audited)
remuneration Policy
Remuneration levels are competitively set to attract and retain appropriately qualifi ed and experienced Directors and senior
executives. Remuneration packages include fi xed remuneration with bonuses or equity based remuneration entirely at
the discretion of the Board based on the performance of the Company.
Total remuneration for all Non-Executive Directors was last voted on by shareholders on 26 November 2007, whereby
it is not to exceed $200,000 per annum. Non-Executive Directors do not receive bonuses. Directors’ fees cover all main
Board activities.
At the date of this report the Company has not entered into any agreements with Directors or senior executives which
include performance based components.
Details of remuneration for Directors and Executive officers
During the year there were no senior executives which were employed by the Company for whom disclosure is required.
Details of the remuneration of each Director of the Company are as follows:
2009
Directors
P Chapman
W Robinson
P Bewick
J Hronsky
total
2008
Directors
P Chapman
W Robinson
P Bewick (i)
J Hronsky (ii)
total
Base
Emolument
$
Superannuation
Contributions
$
Other
Benefits
$
Value of
Options Granted
$
38,667
210,250
193,333
40,000
3,480
18,923
17,400
3,600
482,250
43,403
–
–
–
–
–
–
–
–
–
–
Base
Emolument
$
Superannuation
Contributions
$
Other
Benefits
$
Value of
Options Granted
$
30,000
205,000
187,500
40,000
2,700
18,319
16,875
3,600
462,500
41,494
–
–
–
–
–
–
–
162,160
111,800
273,960
777,954
Total
$
42,147
229,173
210,733
43,600
525,653
Total
$
32,700
223,319
366,535
155,400
(i) Options represent nil% (2008: 44.2%) of P Bewick remuneration for the financial year.
(ii) Options represent nil% (2008: 71.9%) of J Hronsky remuneration for the financial year.
Executive Employment Agreements
Remuneration and other terms of employment for the Managing Director and Exploration Director are set out in their
respective Executive Employment Agreements. Both employment contracts are for a two year term commencing 23 January
2009 and are subject to a three month notice of termination of contract.
The contractual arrangements contain certain provisions typically found in contracts of this nature.
Payment of termination benefi t by the employer, other than amongst other things for gross misconduct is equal to the
payment limit set by Sub-section 200G of the Corporations Act 2001.
30
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
unlisted options
No options over unissued shares have been issued to Directors or Key Management Personnel of the Company during or
since the end of the fi nancial year.
No options were exercised by Key Management Personnel during or since the end of the fi nancial year.
officers Indemnities and Insurance
During the year the Company paid an insurance premium to insure certain offi cers of the Company. The offi cers of the
Company covered by the insurance policy include the Directors named in this report.
The Directors and Offi cers Liability insurance provides cover against all costs and expenses that may be incurred in defending
civil or criminal proceedings that fall within the scope of the indemnity and that may be brought against the offi cers in
their capacity as offi cers of the Company. The insurance policy does not contain details of the premium paid in respect of
individual offi cers of the Company. Disclosure of the nature of the liability cover and the amount of the premium is subject
to a confi dentiality clause under the insurance policy.
The Company has not provided any insurance for an auditor of the Company.
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 Group, or to intervene in any proceedings to which the Company or Group is a party, for the purpose of
taking responsibility on behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company or Group with leave of the Court under
section 237 of the Corporations Act 2001.
corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of the Company
support and have adhered to the principles of corporate governance. The Company’s corporate governance statement is
contained in the Annual Report.
non-audit services
During the year WHK Horwath the Company’s auditor, has not performed any other services in addition to their statutory
duties.
consolidated
company
2009
$
2008
$
2009
$
2008
$
Total remuneration paid to auditors during the fi nancial year:
Audit and review of the Company’s fi nancial statements
27,800
25,500
27,800
25,500
Other services
total
–
–
–
–
27,800
25,500
27,800
25,500
The board considers any non-audit services provided during the year by the auditor and satisfi es itself that the provision of any
non-audit services during the year by the auditor is compatible with, and does not compromise, the auditor independence
requirements of the Corporations Act 2001 for the following reasons:
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
31
Directors’ Report continued
non-audit services continued
■ all non-audit services are reviewed by the board to ensure they do not impact the impartiality and objectivity of the
auditor; and
■
the non-audit services provided do not undermine the general principles relating to auditor independence as set out
in APES 110 Code of Ethics for Professional Accountants, as they do not involve reviewing or auditing the auditor’s
own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company
or jointly sharing risks and rewards.
Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration as required under Section 307C of the Corporations Act is set out
on page 33.
This report is made in accordance with a resolution of the Directors.
Dated at Perth this 24th day of September 2009.
W robinson
Director
32
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
3333
Consolidated Income Statement
For the financial year ended 30 June 2009
Revenue
total revenue
consolidated
company
Note
2009
$
2008
$
2009
$
2008
$
5
174,288
407,287
174,288
407,287
174,288
407,287
174,288
407,287
Employee expenses
(935,703)
(844,363)
(935,703)
(844,363)
Employee expenses recharged to exploration
685,461
497,464
685,461
497,464
Equity based remuneration expense
(230,297)
(181,721)
(230,297)
(181,721)
Non-executive Director’s fees
(78,667)
(70,000)
(78,667)
(70,000)
Depreciation expense
Corporate expenses
11
(23,103)
(10,087)
(23,103)
(10,087)
(100,868)
(107,376)
(100,868)
(107,376)
Joint venture administration costs recharged
24,806
65,566
24,806
65,566
Other expenses from ordinary activities
(305,635)
(272,078)
(305,635)
(272,078)
Exploration costs written off and expensed
6
(1,311,311)
(339,998)
(1,311,311)
(339,998)
Loss before income tax
Income tax benefi t/(expense)
Loss attributable to members for the year
Earnings per share for loss attributable to the
ordinary equity holders of the Company
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
7
17
28
28
(2,101,029)
(855,306)
(2,101,029)
(855,306)
113,186
–
113,186
–
(1,987,843)
(855,306)
(1,987,843)
(855,306)
cents
Cents
(2.90)
(1.25)
(2.90)
(1.25)
The above consolidated income statement should be read in conjunction with the accompanying notes.
34
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
Consolidated Balance Sheet
As at 30 June 2009
current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
total current assets
non-current assets
Investment in controlled entities
Loans to controlled entities
Property, plant and equipment
Capitalised mineral exploration and
Note
8
9(a)
9(b)
consolidated
company
2009
$
2008
$
2009
$
2008
$
2,278,318
4,701,043
2,278,316
4,701,041
160,374
114,066
43,586
63,010
137,319
43,586
79,945
63,010
2,482,278
4,878,119
2,459,221
4,843,996
10(a)
10(b)
11
–
–
–
–
2
1,123,268
220,907
298,163
220,907
2
375,334
298,163
evaluation expenditure
12
3,716,716
3,049,148
2,638,351
2,707,935
total non-current assets
3,937,623
3,347,311
3,982,528
3,381,434
total assets
6,419,901
8,225,430
6,441,749
8,225,430
current liabilities
Trade and other payables
Employee benefi ts
total current liabilities
total liabilities
net assets
Equity
Issued capital
Accumulated losses
Equity remuneration reserve
14(a)
14(b)
322,422
366,184
344,270
366,184
46,585
50,806
46,585
50,806
369,007
416,990
390,855
416,990
369,007
416,990
390,855
416,990
6,050,894
7,808,440
6,050,894
7,808,440
15
17
17
9,443,330
9,443,330
9,443,330
9,443,330
(3,823,888)
(1,865,530) (3,823,888)
(1,865,530)
431,452
230,640
431,452
230,640
total equity
6,050,894
7,808,440
6,050,894
7,808,440
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
35
Consolidated Statement of Changes in Equity
For the financial year ended 30 June 2009
consolidated
company
Note
2009
$
2008
$
2009
$
2008
$
total equity at the beginning
of the fi nancial year
Loss for the year
Movement in equity remuneration reserve
Transactions with equity holders
in their capacity as equity holders:
7,808,440
8,482,025
7,808,440
8,482,025
17
17
(1,987,843)
(855,306)
(1,987,843)
(855,306)
230,297
181,721
230,297
181,721
–
–
–
–
total equity at the end of the fi nancial year
6,050,894
7,808,440
6,050,894
7,808,440
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
36
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
Consolidated Cash Flow Statement
For the financial year ended 30 June 2009
consolidated
company
Note
2009
$
2008
$
2009
$
2008
$
cash fl ows from operating activities
Interest received
181,023
416,325
181,023
416,325
Payments to suppliers and employees
(525,733)
(440,107)
(525,733)
(440,109)
net cash used in operating activities
27
(344,710)
(23,782)
(344,710)
(23,784)
cash fl ows from investing activities
Payments for exploration and evaluation
(2,040,876)
(1,796,706) (1,292,942)
(1,421,372)
Payments for plant and equipment
(37,139)
(253,614)
(37,139)
(253,614)
net cash used in investing activities
(2,078,015)
(2,050,320)
(1,330,081)
(1,674,986)
cash fl ows from fi nancing activities
Expenditure incurred on behalf of
subsidiary company
net cash used in fi nancing activities
–
–
–
–
(747,934)
(375,334)
(747,934)
(375,334)
net increase/(decrease) in cash held
(2,422,725)
(2,074,102)
(2,422,725)
(2,074,104)
cash at the beginning of the fi nancial year
4,701,043
6,775,145
4,701,041
6,775,145
cash at the end of the fi nancial year
8(a)
2,278,318
4,701,043
2,278,316
4,701,041
The above consolidated cash fl ow statement should be read in conjunction with the accompanying notes.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
37
Notes to the Financial Statements
For the financial year ended 30 June 2009
note 1 summary of significant accounting policies
The principal accounting policies adopted in the preparation of the fi nancial report are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated. The fi nancial report includes separate
fi nancial statements for Encounter Resources Limited as an individual entity (“Company”) and the consolidated entity
consisting of Encounter Resources Limited and its subsidiaries (“Group”).
(a) Basis of preparation
This general purpose fi nancial report has been prepared in accordance with Australian equivalents to International
Financial Reporting Standards (AIFRS), other authoritative pronouncements of the Australian Accounting Standards
Board, Australian Accounting Interpretations and the Corporations Act 2001.
The fi nancial report is presented in Australian dollars and all values are rounded to the nearest dollar.
The fi nancial report of the Group was authorised for issue in accordance with a resolution of Directors on 24th
September 2009.
Statement of Compliance
The consolidated fi nancial report of Encounter Resources Limited complies with Australian Accounting Standards,
which include Australian Equivalents to International Financial Reporting Standards (AIFRS), in their entirety. Compliance
with AIFRS ensures that the fi nancial report also complies with International Financial Reporting Standards (IFRS) in
their entirety.
Early adoption of standards
The following standards, amendments to standards and interpretations have been identifi ed as those which may
impact the Group in the period of initial application. They are available for early adoption at 30 June 2009, but have
not been applied in preparing this report:
Reference
Title
Summary
AASB Int. 17 and
AASB 2008-13
Distributions of Non-cash
Assets to Owners and
consequential amendments
to other Australian Accounting
Standards
The Interpretation outlines how an
entity should measure distributions of
assets, other than cash, as a dividend
to its owners acting in their capacity
as owners. This applies to transactions
commonly referred to as spin-offs,
split offs or demergers and in-specie
distributions.
Application date
of standard
Application
date for Group
1 July 2009
1 July 2009
AASB 8 and
AASB 2007-3
Operating Segments and
consequential amendments
to other Australian Accounting
Standards
New standard replacing AASB 114
Segment Reporting, which adopts
a management reporting approach
to segment reporting.
1 January 2009
1 July 2009
1 January 2009
1 July 2009
AASB 101
(Revised), AASB
2007-8 and AASB
2007-10
Presentation of Financial
Statements and consequential
amendments to other
Australian Accounting
Standards
Introduces a statement of
comprehensive income. Other
revisions include impacts on the
presentation of items in the statement
of changes in equity, new presentation
requirements for restatements or
reclassifi cations of items in the
fi nancial statements, changes in
the presentation requirements for
dividends and changes to the titles
of the fi nancial statements.
38
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
note 1 summary of significant accounting policies continued
(a) Basis of preparation continued
Early adoption of standards continued
Reference
Title
Summary
AASB 2008-1
Amendments to Australian
Accounting Standard – Share-
based Payments: Vesting
Conditions and Cancellations
AASB 3 (Revised) Business Combinations
AASB 127
(Revised)
Consolidated and Separate
Financial Statements
The amendments clarify the defi nition
of ‘vesting conditions’, introducing
the term ‘non-vesting conditions’
for conditions other than vesting
conditions as specifi cally defi ned and
prescribe the accounting treatment of
an award that is effectively cancelled
because a non-vesting condition is not
satisfi ed.
The revised standard introduces a
number of changes to the accounting
for business combinations, the most
signifi cant of which allows entities a
choice for each business combination
entered into – to measure a non-
controlling interest (formerly a minority
interest) in the acquiree either at
its fair value or at its proportionate
interest in the acquiree’s net assets.
This choice will effectively result in
recognising goodwill relating to 100%
of the business (applying the fair value
option) or recognising goodwill relating
to the percentage interest acquired.
The changes apply prospectively.
Under the revised standard, a
change in the ownership interest of
a subsidiary (that does not result in
loss of control) will be accounted
for as an equity transaction.
Application date
of standard
Application
date for Group
1 January 2009
1 July 2009
1 July 2009
1 July 2010
1 July 2009
1 July 2010
AASB 2008-3
Amendments to Australian
Accounting Standards arising
from AASB 3 and AASB 127
Amending standard issued as a
consequence of revisions to AASB 3
and AASB 127.
1 July 2009
1 July 2010
AASB 2008-5
2008-6
2009-2
2009-5
Various Amendments to
Australian Accounting
Standards arising from the
Annual Improvements Project
Various
Various
The improvements project is an annual
project that provides a mechanism
for making non-urgent, but necessary,
amendments to IFRSs. The IASB has
separated the amendments into two
parts: Part 1 deals with changes the
IASB identifi ed resulting in accounting
changes; Part II deals with either
terminology or editorial amendments
that the IASB believes will have
minimal impact.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
39
Notes to the Financial Statements continued
For the financial year ended 30 June 2009
note 1 summary of significant accounting policies continued
(a) Basis of preparation continued
Early adoption of standards continued
Reference
Title
Summary
AASB 2008-7
Amendments to Australian
Accounting Standards –
Cost of an Investment in a
Subsidiary, Jointly Controlled
Entity or Associate
Amendments to IFRS 7
Amendments
to International
Financial Reporting
Standards
Amendments to IFRS 2
Amendments
to International
Financial Reporting
Standards
The main amendments of relevance to
Australian entities are those made to
AASB 127 deleting the ‘cost method’
and requiring all dividends from a
subsidiary, jointly controlled entity or
associate to be recognised in profi t or
loss in an entity’s separate fi nancial
statements (i.e., parent company
accounts). The distinction between
pre- and post-acquisition dividends
is no longer required. However, the
payment of such dividends requires
the entity to consider whether there
is an indicator of impairment.
AASB 127 has also been amended
to effectively allow the cost of an
investment in a subsidiary, in limited
reorganisations, to be based on the
previous carrying amount of the
subsidiary (that is, share of equity)
rather than its fair value.
The amended IFRS 7 requires fair
value measurements to be disclosed
by the source of inputs, using the
following three-level hierarchy:
– Quoted prices in active markets for
identical assets or liabilities (Level 1)
– Inputs other than quoted prices
included in Level 1 that are observable
for the asset or liability, either directly
(as prices) or indirectly (derived from
prices) (Level 2)
– Inputs for the asset or liability that
are not based on observable market
data (unobservable inputs) (Level 3)
The changes relate to the attribution
of cash-settled share based payments
between different entities within
a Group.
Application date
of standard
Application
date for Group
1 January 2009
1 July 2009
1 January 2009
1 July 2009
1 January 2010
1 July 2010
Reporting basis and conventions
These fi nancial statements have been prepared under the historical cost convention, and on an accrual basis.
Critical accounting estimates
The preparation of fi nancial statements in conformity with AIFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are signifi cant
to the fi nancial statements, are disclosed in Note 3.
40
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
note 1 summary of significant accounting policies continued
(a) Basis of preparation continued
Principles of consolidation
The fi nancial statements of subsidiary companies are included in the consolidated fi nancial statements from the date
control commences until the date control ceases. The fi nancial statements of subsidiary companies are prepared for
the same reporting period as the parent company, using consistent accounting policies.
Inter-entity balances resulting from transactions with or between controlled entities are eliminated in full on consolidation.
Investments in subsidiary companies are accounted for at cost in the individual fi nancial statements of the Company.
(b) segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to
risks and returns that are different to those of other business segments. A geographical segment is engaged in providing
products or services within a particular economic environment and is subject to risks and returns that are different from
those of segments operating in other economic environments.
(c) revenue recognition and receivables
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are
net of returns, allowances and amounts collectable on behalf of third parties.
Interest income
Interest income is recognised on a time proportion basis and is recognised as it accrues.
(d) Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on
the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable
to the temporary differences between the tax bases of assets and liabilities and their carrying amounts in the fi nancial
statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary timing differences at the tax rates expected to apply
when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantially
enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable
temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary
differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in
relation to those timing differences if they arose in a transaction, other than a business combination, that at the time
of the transaction did not affect either accounting profi t or taxable profi t or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax
bases of investments in controlled entities where the parent is able to control the timing of the reversal of the
temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are
offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly
in equity.
Amounts receivable from the Australian Tax Offi ce in respect of research and development tax concession claims are
recognised in the year in which the expenditure on which the claim was incurred.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
41
Notes to the Financial Statements continued
For the financial year ended 30 June 2009
note 1 summary of significant accounting policies continued
(e) Leases
Leases in which a signifi cant portion of the risks and rewards of ownership are retained by the lessor are classifi ed as
operating leases (note 23). Payments made under operating leases (net of any incentives received from the lessor) are
charged to the income statement on a straight line basis over the period of the lease.
(f) Impairment of assets
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and
value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifi able cash infl ows which are largely independent of the cash infl ows from other assets or groups of
assets (cash generating units). Non fi nancial assets, other than goodwill, that suffered an impairment are reviewed for
possible reversal of the impairment at each reporting date.
(g) cash and cash equivalents
For cash fl ow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at
call with fi nancial institutions, other short term, highly liquid investments with original maturities of three months or
less that are readily convertible to known amounts of cash and which are subject to an insignifi cant risk of changes
in value.
(h) Fair value estimation
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate
their fair values. The fair value of fi nancial liabilities for disclosure purposes is estimated by discounting the future
contractual cash fl ows at the current market interest rate that is available to the Group for similar fi nancial instruments.
(i) Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the assets.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefi ts associated with the item will fl ow to the Group and the cost of the
item can be measured reliably. All other repairs and maintenance are charged to the income statement during the
fi nancial period in which they are incurred.
Depreciation of property, plant and equipment is calculated using the straight line and written down value methods
to allocate their cost, net of residual values, over their estimated useful lives, as follows:
Field equipment
Offi ce equipment
Leasehold improvements
33.3%
33.3%
Over the term of the lease
The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount (note 1(f)). Gains and losses on disposal are determined by comparing
proceeds with the carrying amount. These gains and losses are included in the income statement.
42
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
note 1 summary of significant accounting policies continued
(j) Mineral exploration and evaluation expenditure
Mineral exploration and evaluation expenditure incurred is accumulated in respect of each identifi able area of interest.
These costs are carried forward only if they relate to an area of interest for which rights of tenure are current and in
respect of which:
■ such costs are expected to be recouped through the successful development and exploitation of the area of interest,
or alternatively by its sale; or
■ exploration and/or evaluation activities in the area have not reached a stage which permits a reasonable assessment
of the existence or otherwise of economically recoverable reserves and active or signifi cant operations in, or in
relation to, the area of interest are continuing.
In the event that an area of interest is abandoned or if the Directors consider the expenditure to be of reduced value,
accumulated costs carried forward are written off in the year in which that assessment is made. A regular review is
undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to
that area of interest.
Immediate restoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities are
expensed as incurred and treated as exploration and evaluation expenditure. Exploration activities resulting in future
obligations in respect of restoration costs result in a provision to be made by capitalising the estimated costs, on a
discounted cash basis, of restoration and depreciating over the useful life of the asset. The unwinding of the effect of
the discounting on the provision is recorded as a fi nance cost in the income statement.
(k) Joint ventures
Interests in joint ventures have been brought to account by including the appropriate share of the relevant assets,
liabilities and costs of the joint ventures in their relevant categories in the fi nancial statements. Details of these interests
are shown in Note 13.
(l) trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the fi nancial year
which are unpaid. The amounts are unsecured and usually paid within 30 days of recognition.
(m) Employee benefi ts
Wages, salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefi ts, and annual leave expected to be settled within 12
months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date
and are measured at the amounts expected to be paid when the liabilities are settled.
Long service leave
The liability for long service leave is recognised in the provision for employee benefi ts and measured as the present
value of expected future payments to be made in respect of services provided by employees up to the reporting date
using the projected unit credit method. Consideration is given to expected future salaries, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at the reporting date
on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated
future cash outfl ows.
Share based payments
Share based compensation payments are made available to Directors and employees.
The fair value of options granted is recognised as an employee benefi t expense with a corresponding increase in
equity. The fair value is measured at grant date and recognised over the period during which the employees become
unconditionally entitled to the options.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
43
Notes to the Financial Statements continued
For the financial year ended 30 June 2009
note 1 summary of significant accounting policies continued
(m) Employee benefi ts continued
Share based payments continued
The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into
account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected
price volatility of the underlying share, the expected dividend yield and the risk free rate for the term of the option.
The fair value of the options granted is adjusted to refl ect market vesting conditions. Non-market vesting conditions
are included in assumptions about the number of options that are expected to become exercisable. At each balance
sheet date, the entity revises its estimate of the number of options that are expected to become exercisable. The
employee benefi t expense recognised each period takes into account the most recent estimate.
Upon the exercise of options, the balance of the share based payments reserve relating to those options is transferred to
share capital and the proceeds received, net of any directly attributable transaction costs, are credited to share capital.
(n) Issued capital
Ordinary shares are classifi ed 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.
(o) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to equity holders of the Company, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the fi nancial year, adjusted for bonus elements in ordinary shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the fi gures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other fi nancing costs associated with dilutive potential ordinary shares
and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive
potential ordinary shares.
(p) Goods and services tax (Gst)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as
a part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.
Cash fl ows are presented on a gross basis. The GST components of cash fl ows arising from investing or fi nancing
activities which are recoverable from, or payable to, the taxation authority, are presented as operating cash fl ow.
(q) comparative fi gures
When required by Accounting Standards, comparative fi gures have been adjusted to conform to changes in presentation
for the current fi nancial year.
44
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
note 1 summary of significant accounting policies continued
(r) Investments and other fi nancial assets
Recognition
When fi nancial assets are recognised initially, they are measured at fair value, plus in the case of investments not at
fair value through profi t or loss, directly attributable transaction costs. The Group determines the classifi cation of its
fi nancial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each fi nancial
year-end.
All regular way purchases and sales of fi nancial assets are recognised on the trade date, i.e. the date that the Group commits
to purchase the asset. Regular way purchases or sales are purchases or sales of fi nancial assets under contracts that
require delivery of the assets within the period established generally by regulation or convention in the marketplace.
(i) Financial assets are fair value through profit or loss
Financial assets classifi ed as held for trading are included in the category ‘fi nancial assets at fair value through profi t or
loss’. Financial assets are classifi ed as held for trading if they are acquired for the purpose of selling in the near term.
Derivatives are also classifi ed as held for trading unless they are designated as effective hedging instruments. Gains or
losses on investments held for trading are recognised in profi t or loss.
(ii) Held-to-maturity investments
Non-derivative fi nancial assets with fi xed or determinable payments and fi xed maturity are classifi ed as held-to-maturity
when the Group has the positive intention and ability to hold to maturity. Investments included to be held for an
undefi ned period are not included in this classifi cation. Investments that are intended to be held-to-maturity, such as
bonds, are subsequently measured at amortised cost. This cost is computed as the amount initially recognised minus
principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference
between the initially recognised amount and the maturity amount. This calculation includes all fees and points paid or
received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all
other premiums and discounts. For investments carried at amortised cost, gains and losses are recognised in profi t or
loss when the investments are derecognised or impaired, as well as through the amortisation process.
(iii) Loans and receivables
Loans and receivables are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted
in an active market and are stated at amortised cost using the effective interest rate method.
(iv) Financial liabilities
Non-derivative fi nancial liabilities are recognised at amortised cost, comprising original debt less principal payments
and amortisation.
(s) Fair value estimation
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both fi nancial
and non-fi nancial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes
based on the following methods:
Investments in equity and debt securities
The fair value of fi nancial assets at fair value through profi t or loss, held to maturity investments and available for sale
fi nancial assets is determined by reference to their quoted bid price at the reporting date. The fair value of held to
maturity investments is determined for disclosure purposes only. For investments with no active market, fair value
is determined using valuation techniques. Such techniques include using recent arm’s length market transactions,
reference to the current market value of another instrument that is substantially the same, discounted cash fl ow analysis
and option pricing models.
Trade and other receivables
The fair value of trade and other receivables, excluding construction work in progress, is estimated as the present value
of future cash fl ows, discounted at the market rate of interest at the reporting date.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
45
Notes to the Financial Statements continued
For the financial year ended 30 June 2009
note 2 Financial risk management
The Group has exposure to a variety of risks arising from its use of fi nancial instruments. This note presents information
about the Company’s exposure to the specifi c risks, and the policies and processes for measuring and managing those
risks. The Board of Directors has the overall responsibility for the risk management framework and has adopted a Risk
Management Policy.
(a) credit risk
Credit risk is the risk of fi nancial loss to the Group if a customer or counterparty to a fi nancial instrument fails to meet
its contractual obligations, and arises principally from transactions with customers and investments.
Trade and other receivables
The Group has no investments and the nature of the business activity of the Group does not result in trading receivables.
The receivables that the Group does experience through it’s normal course of business are short term and the most
signifi cant recurring by quantity is the receivable from the Australian Taxation Offi ce, the risk of recovery of no recovery
of receivables from this source is considered to be negligible.
Cash deposits
The Group’s primary banker is St George Bank Limited, at balance date signifi cantly all operating accounts and funds
held on deposit are with this bank other than a cash at call deposit with Rabobank Australia. The Directors believe any
risk associated with the use of predominantly only one bank is addressed through the use of an A rated bank as a
primary banker and by the holding of a portion of funds on deposit with an alternative AAA rated institution. Except for
this matter the Group currently has no signifi cant concentrations of credit risk.
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its fi nancial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have suffi cient liquidity to meet
its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
The Group manages its liquidity risk by monitoring its cash reserves and forecast spending. Management is cognisant
of the future demands for liquid fi nance resources to fi nance the Company’s current and future operations, and
consideration is given to the liquid assets available to the Company before commitment is made to future expenditure
or investment.
(c) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will
affect the Group’s income or the value of its holdings of fi nancial instruments. The objective of market risk management
is to manage and control market risk exposures within acceptable parameters, while optimising any return.
Interest rate risk
The Group has signifi cant cash assets which may be susceptible to fl uctuations in changes in interest rates. Whilst
the Group requires the cash assets to be suffi ciently liquid to cover any planned or unforeseen future expenditure,
which prevents the cash assets being committed to long term fi xed interest arrangements; the Group does mitigate
potential interest rate risk by entering into short to medium term fi xed interest investments.
The Group does not have any direct contact with foreign exchange or equity risks other than their effect on the
general economy.
46
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
note 3 critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a fi nancial impact on the Group and that are believed to be reasonable under
the circumstances.
Accounting for capitalised exploration and evaluation expenditure
The Group’s accounting policy is stated at 1(j). There is some subjectivity involved in the carrying forward as capitalised or
writing off to the income statement exploration and evaluation expenditure, however management give due consideration
to areas of interest on a regular basis and are confi dent that decisions to either write off or carry forward such expenditure
refl ect fairly the prevailing situation.
note 4 segment information
Business segments
The Group is involved in the mineral exploration sector.
Geographical segments
The Group is organised on a national basis with exploration and development interests in Western Australia.
note 5 revenue
Operating activities
Interest receivable
consolidated
company
2009
$
2008
$
2009
$
2008
$
174,288
407,287
174,288
407,287
note 6 Loss for the year
Loss before income tax includes the following specifi c expenses:
Depreciation
Offi ce equipment
Leasehold improvements
Rental expenses on operating leases
– minimum lease payments
15,724
7,379
10,087
–
15,724
7,379
10,087
–
23,103
10,087
23,103
10,087
29,492
44,069
29,492
44,069
Exploration expenditure written off and expensed
1,311,311
339,998
1,311,311
339,998
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
47
Notes to the Financial Statements continued
For the financial year ended 30 June 2009
note 7 Income tax
(a) Income tax expense
Current income tax:
Current income tax charge (benefi t)
Current income tax not recognised
R&D tax refund receivable
consolidated
company
2009
$
2008
$
2009
$
2008
$
(784,446)
784,446
(113,186)
(692,927)
692,927
–
(563,300)
563,300
(113,186)
(590,563)
590,563
–
Deferred income tax:
Relating to origination and reversal of timing differences
Deferred income tax benefi t not recognised
(664,887)
664,887
(241,289)
241,289
(664,887)
664,887
(241,289)
241,289
Income tax expense/(benefi t) reported
in the income statement
(113,186)
–
(113,186)
–
The Group submitted a claim to the Australian Taxation Offi ce for a Research and Development tax concession in respect
of qualifying transactions occurring during the year ended 30 June 2008. The $113,186 refund has been received by the
Group prior to the date of signing this fi nancial report.
(b) Reconciliation of income tax expense
to prima facie tax payable
Loss from continuing operations before
income tax expense
(1,987,843)
(855,306)
(1,987,843)
(855,306)
Tax at the Australian rate of 30% (2008: 30%)
(596,353)
(256,592)
(596,353)
(256,592)
Tax effect of permanent differences:
Non-deductible share based payment
R&D tax refund receivable
Exploration costs written off
Non-deductible entertainment
Net deferred tax asset benefi t not brought to account
69,089
(113,186)
364,926
622
161,716
54,516
–
–
908
201,168
69,089
(113,186)
364,926
622
161,716
54,516
–
908
201,168
Tax (benefi t)/expense
(113,186)
–
(113,186)
–
(c) Deferred tax – Balance Sheet
Liabilities
Accrued income
Prepaid expenses
Capitalised exploration expenditure
Assets
Revenue losses available to offset against
future taxable income
Employee provisions
Accrued expenses
Deductible equity raising costs
–
13,076
1,115,015
2,689
18,903
914,744
–
13,076
791,505
2,689
18,903
812,381
1,128,091
936,337
804,581
833,973
2,386,343
13,976
7,685
39,942
1,531,631
15,242
4,490
73,342
2,062,834
13,976
7,685
39,942
1,429,268
15,242
4,490
73,342
2,447,946
1,624,706
2,124,437
1,522,342
Net deferred tax asset/(liability)
1,319,855
688,369
1,319,856
688,369
48
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
note 7 Income tax continued
(d) Deferred tax – Income Statement
Liabilities
Accrued income
Prepaid expenses
Capitalised exploration expenditure
Assets
Accruals
Increase in tax losses carried forward
Employee provisions
consolidated
company
2009
$
2008
$
2009
$
2008
$
2,689
5,827
(200,270)
2,712
25,865
(623,562)
2,689
5,827
20,876
2,712
25,865
(521,199)
3,195
854,712
(1,266)
1,490
831,482
3,302
3,195
633,566
(1,266)
1,490
729,119
3,302
Deferred tax benefi t/(expense) not recognised
664,887
241,289
664,887
241,289
The deferred tax assets of tax losses not brought to account will only be obtained if:
(i) The Company derives future assessable income of a nature and an amount suffi cient to enable the benefi t from the
tax losses to be realised;
(ii) The Company continues to comply with the conditions for deductibility imposed by tax legislation; and
(iii) No changes in tax legislation adversely affect the Company realising the benefi t from the deduction of the losses.
All unused tax losses were incurred by Australian entities.
consolidated
company
2009
$
2008
$
2009
$
2008
$
143,954
2,134,364
449,454
4,251,589
143,952
2,134,364
449,452
4,251,589
2,278,318
4,701,043
2,278,316
4,701,041
note 8 current assets
– cash and cash equivalents
Cash at bank and on hand
Deposits at call
(a) Reconciliation to cash at the end of the year
The above fi gures are reconciled to cash at the end
of the fi nancial year as shown in the cash fl ow
statement as follows:
Cash and cash equivalents per cash flow statement
2,278,318
4,701,043
2,278,316
4,701,041
(b) Cash at bank and on hand
These attract interest at 2% (2008: 4.7%).
(c) Deposits at call
The deposits are bearing fi xed interest rates of 4% (2008: 7.77%). These deposits have an average maturity of 30 days.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
49
Notes to the Financial Statements continued
For the financial year ended 30 June 2009
note 9 current assets – receivables
(a) Trade and other receivables
Other receivables
Recoverable joint venture expenses
GST recoverable
(b) Other current assets
Prepaid tenement costs
Prepaid insurance
consolidated
company
2009
$
2008
$
2009
$
2008
$
124,527
12,792
23,055
8,964
70,971
34,131
124,527
12,792
–
8,964
70,971
10
160,374
114,066
137,319
79,945
30,678
12,908
49,934
13,076
30,678
12,908
49,934
13,076
43,586
63,010
43,586
63,010
Details of fair value and exposure to interest risk are included at note 18.
note 10 non-current assets
– Investment in controlled entities
(a) Investment in controlled entities
The following amounts represent the respective investments
in the share capital of the wholly owned subsidiary companies:
Encounter Operations Pty Ltd
–
–
2
2
Encounter Resources USA LLC was dormant until disposed of, and has no assets or liabilities at the reporting dates or any
revenue or expenses for the reporting periods.
subsidiary company
Encounter Operations Pty Ltd *
Encounter Resources USA LLC **
country of
Incorporation
Australia
USA
ownership Interest
2009
%
100%
Nil
2008
%
100%
100%
*Encounter Operations Pty Ltd was incorporated in Western Australia on 27 November 2006.
**Encounter Resources USA LLC was incorporated in the USA on 9 April 2007. Encounter Resources USA LLC was disposed of by the Group on 1 June 2009.
Encounter Resources USA LLC was dormant throughout the period of ownership and held no assets or liabilities. No consideration was received on disposal.
The ultimate controlling party of the group is Encounter Resources Limited.
consolidated
company
2009
$
2008
$
2009
$
2008
$
(b) Loans to controlled entities
The following amounts are payable to the parent company,
Encounter Resources Limited at the reporting date:
Encounter Operations Pty Ltd
–
–
1,123,268
375,334
The loan to Encounter Operations Pty Ltd, to fund exploration activity is non interest bearing and is repayable at call.
The Directors of Encounter Resources Limited do not intend to call for repayment within 12 months.
50
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
note 11 non-current assets
– Property, plant and equipment
Field equipment
At cost
Accumulated depreciation
Offi ce equipment
At cost
Accumulated depreciation
Leasehold improvements
At cost
Accumulated depreciation
Reconciliation
Field equipment
Net book value at start of the year
Additions
Depreciation
consolidated
company
2009
$
2008
$
2009
$
2008
$
337,594
(159,869)
337,154
(71,028)
337,594
(159,869)
337,154
(71,028)
177,725
266,126
177,725
266,126
63,099
(34,675)
43,133
(18,951)
63,099
(34,675)
43,133
(18,951)
28,424
24,182
28,424
24,182
22,137
(7,379)
7,855
–
22,137
(7,379)
14,758
7,855
14,758
7,855
–
7,855
220,907
298,163
220,907
298,163
266,126
440
(88,841)
73,434
232,663
(39,971)
266,126
440
(88,841)
73,434
232,663
(39,971)
Net book value at end of the year
177,725
266,126
177,725
266,126
Offi ce equipment
Net book value at start of the year
Additions
Depreciation
24,182
19,966
(15,724)
18,884
15,385
(10,087)
24,182
19,966
(15,724)
18,884
15,385
(10,087)
Net book value at end of the year
28,424
24,182
28,424
24,182
Leasehold improvements
Net book value at the start of the year
Additions
Depreciation
7,855
14,282
(7,379)
–
7,855
–
7,855
14,282
(7,379)
Net book value at the end of the year
14,758
7,855
14,758
–
7,855
–
7,855
No items of property, plant and equipment have been pledged as security by the Company.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
51
Notes to the Financial Statements continued
For the financial year ended 30 June 2009
consolidated
company
2009
$
2008
$
2009
$
2008
$
note 12 non-current assets – capitalised
mineral exploration and evaluation expenditure
In the exploration and evaluation phase
Cost carried forward in respect of:
Incurred at cost on assets not governed by
joint venture agreements (i)
646,598
899,372
646,598
899,372
Incurred at cost under Yeneena JV Earn-in Agreement (ii)
1,078,365
341,213
–
–
Capitalised share of exploration assets under
contributing JV Agreements (iii)
1,991,753
1,808,563
1,991,753
1,808,563
Cost carried forward
3,716,716
3,049,148
2,638,351
2,707,935
The recoverability of the carrying amount of the exploration and evaluation assets is dependent upon successful development
and commercial exploitation, or alternatively, sale of the respective areas of interest.
(i) Exploration and evaluation expenditure recognised on exploration assets held solely by Encounter Resources Limited
and exploration expenditure not allocable to tenements.
(ii) Exploration and evaluation expenditure recognised on tenements held under the Yeneena Joint Venture earn in
agreement with Barrick Gold of Australia.
(iii) Exploration and evaluation expenditure recognised on tenements under contributing joint venture agreements with
Avoca Resources Limited. This amount includes Encounter Resources Limited’s proportionate share of exploration
assets held by the respective joint venture entities.
The capitalised exploration expenditure written off includes expenditure written off on surrender of, or intended surrender
of tenements for both the group entities and the Group’s proportionate share of the exploration written off by the joint
venture entities.
consolidated
company
2009
$
2008
$
2009
$
2008
$
Capitalised exploration costs at the start of the period
Total exploration costs capitalised for the period
Total exploration costs written off and expensed
for the period
3,049,148
1,978,879
1,420,229
1,968,917
2,707,935
1,241,727
1,420,229
1,627,704
(1,311,311)
(339,998)
(1,311,311)
(339,998)
Capitalised exploration costs at the end of the period
3,716,716
3,049,148
2,638,351
2,707,935
52
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
note 13 Interest in joint ventures
Included in the assets and liabilities of the Group were the items below which represented the Group’s interest in the assets
and liabilities employed in joint ventures.
The total amount of the Group’s capitalised exploration and evaluation expenditure capitalised and employed under joint
venture agreements at the reporting date is $1,991,753 (2008: $1,808,563).
During the reporting period the Group recognised an expense of $885,185 (2008: $105,682) being its share of the
exploration expenditure written off by the joint venture entities during the period.
consolidated
company
2009
$
2008
$
2009
$
2008
$
(i) Lake Way Joint Venture
The Company has a 60% interest in the Lake Way Joint Venture.
Share of Joint Venture’s assets and liabilities:
Cash and cash equivalents
Trade and other receivables
Capitalised mineral exploration and evaluation expenditure
17,482
1,318
170,301
9,072
5
143,848
17,482
1,318
170,301
9,072
5
143,848
Total Assets
189,101
152,925
189,101
152,925
Trade and other payables
19,188
9,482
19,188
Total Liabilities
Net Assets
Share of Joint Venture’s revenue, expenses and results:
Revenue
Administration expenses
Result before tax
9,482
9,482
19,188
9,482
19,188
169,913
143,443
169,913
143,443
17
–
17
25
(15)
10
17
–
17
25
(15)
10
(ii) Uranium Regional Joint Venture
The Company originally had an 80% interest in a portfolio of projects and tenements which is increasing due to the election
of the Joint Venture partner Avoca Resources Limited to cease contributing to Joint Venture activities and hence diluting its
own interest.
Share of Joint Venture’s assets and liabilities:
18,579
Cash and cash equivalents
3,890
Trade and other receivables
Capitalised mineral exploration and evaluation expenditure 2,239,309
179,892
41,063
1,922,221
18,579
3,890
2,239,309
179,892
41,063
1,922,221
Total Assets
2,261,778
2,143,176
2,261,778
2,143,176
Trade and other payables
16,608
218,338
16,608
218,338
Total Liabilities
Net Assets
16,608
218,338
16,608
218,338
2,245,170
1,924,838
2,245,170
1,924,838
Share of Joint Venture’s revenue, expenses and results:
Revenue
Exploration costs written off
Administration expenses
2,714
(885,185)
(124)
2,653
(105,682)
(133)
2,714
(885,185)
(124)
2,653
(105,682)
(133)
Result before tax
(882,595)
(103,162)
(882,595)
(103,162)
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
53
Notes to the Financial Statements continued
For the financial year ended 30 June 2009
note 14 current liabilities
– trade and other payables
(a) Trade and other payables
GST payable
Trade payables and accruals
Other payables
(b) Employee benefits
Liability for annual leave
consolidated
company
2009
$
2008
$
2009
$
2008
$
–
301,717
20,705
–
366,162
22
21,848
301,717
20,705
–
366,162
22
322,422
366,184
344,270
366,184
46,585
50,806
46,585
50,806
Liabilities are not secured over the assets of the company. Details of fair value and exposure to interest risk are included
at Note 18.
note 15 Issued capital
(a) Ordinary shares
The Company is a public company limited by shares. The Company was incorporated in Perth, Western Australia.
The Company’s shares are limited whereby the liability of its members is limited to the amount (if any) unpaid on the shares
respectively held by them.
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 held. 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.
Ordinary shares have no par value. There is no limit to the authorised share capital of the Company.
(b) Share capital
Issued share capital
2009
no.
2008
No.
2009
$
2008
$
68,596,900 68,596,900
9,443,330
9,443,330
(c) Share movements during the year
There were no movements in share capital during the current or prior year.
(d) Option plan
Information relating to the Encounter Resources Limited Directors, Offi cers and Employees Option Plan is set out in
Note 16.
54
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
note 16 option Plan
The establishment of the Encounter Resources Limited Directors, Offi cers and Employees Option Plan (‘the Plan”) was
adopted at a Meeting of Directors on 8 February 2006, and approved by a special resolution at the Annual General Meeting
of shareholders of the Company on 17 November 2006. All eligible Directors, executive offi cers and employees of Encounter
Resources Limited who have been continuously employed by the Company are eligible to participate in the Plan.
The Plan allows the Company to issue free options to eligible persons. The options can be granted free of charge and
are exercisable at a fi xed price in accordance with the Plan.
Options issued under the Plan have a 12 month vesting period prior to exercise, except under certain circumstances
whereby options may be capable of exercise prior to the expiry of the vesting period.
(a) Options issued during the year
During the fi nancial year the Company granted the following unlisted options over unissued shares:
number of options granted
Exercise price
Expiry date
350,000
775,000
1,125,000
30 cents
10 cents
30 June 2013
28 February 2014
No options were exercised during the fi nancial year.
(b) Options cancelled during the year
During the year 100,000 options were cancelled upon termination of employment of an employee.
(c) Options on issue at the balance date
The number of options outstanding over unissued ordinary shares at 30 June 2009 is 3,025,000 (2008: 2,000,000).
The terms of these options are as follows:
number of options outstanding
Exercise price
Expiry date
100,000
100,000
250,000
50,000
125,000
500,000
400,000
400,000
325,000
775,000
3,025,000
20 cents
45 cents
52.5 cents
50 cents
50 cents
53.5 cents
55 cents
70 cents
30 cents
10 cents
23 March 2011
15 May 2011
7 December 2011
9 August 2012
30 November 2012
30 November 2012
30 November 2012
30 November 2012
30 June 2013
28 February 2014
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
55
Notes to the Financial Statements continued
For the financial year ended 30 June 2009
note 16 option Plan continued
(d) Subsequent to the balance date
No options have been granted subsequent to the balance date to the date of signing this report.
No options have been exercised subsequent to the balance date to the date of signing this report.
Reconciliation of movement of options over unissued shares
during the period including weighted average exercise price (WAEP)
Options outstanding at the start of the year
Options granted during the year
Options exercised during the year
Options expiring unexercised during the year
2009
2008
no.
2,000,000
1,125,000
–
(100,000)
WAEP
(cents)
54.6
16.2
–
48.5
No.
450,000
1,550,000
–
–
Options outstanding at the end of the year
3,025,000
40.5
2,000,000
WAEP
(cents)
38.7
57.8
–
54.6
Basis and assumptions used in the valuation of options
The options were valued using the Black-Scholes option valuation methodology.
Date granted
2009
1 July 2008
1 March 2009
number of
options granted
Exercise price
(cents)
Expiry date
risk free
interest
rate used
Volatility
applied
option
valuation
(cents)
350,000*
775,000*
30.0
10.0
30 June 2013
28 February 2014
6.75%
3.61%
52%
120%
12.06
5.65
* Options are subject to a 12 month vesting period
2008
11 December 2007
11 December 2007
11 December 2007
11 December 2007
150,000*
500,000*
400,000*
400,000**
* Options are subject to a 12 month vesting period
** Options are subject to a 24 month vesting period
50.0
53.5
55.0
70.0
30 November 2012
30 November 2012
30 November 2012
30 November 2012
6.50%
6.50%
6.50%
6.50%
49.53%
49.53%
49.53%
49.53%
23.28
22.36
21.85
18.69
Historical volatility has been used as the basis for determining expected share price volatility, as it is assumed that this is
an indicator of future tender, which may not eventuate.
56
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
note 17 reserves and accumulated losses
consolidated
Balance at the beginning of the year
Loss for the period
Movement in equity remuneration reserve in respect
of options issued
Transfer to accumulated losses on cancellation of options
2009
Equity
remuneraton
reserve (i)
$
2008
Equity
remuneration
reserve (i)
$
Accumulated
losses
$
Accumulated
losses
$
(1,865,530)
(1,987,843)
230,640
–
(1,010,224)
(855,306)
48,919
–
–
29,485
230,297
(29,485)
–
–
181,721
–
Balance at the end of the year
(3,823,888)
431,452
(1,865,530)
230,640
company
Balance at the beginning of the year
Loss for the period
Movement in equity remuneration reserve in respect
of options issued
Transfer to accumulated losses on cancellation of options
(1,865,530)
(1,987,843)
230,640
–
(1,010,224)
(855,306)
48,919
–
–
29,485
230,297
(29,485)
–
–
181,721
–
Balance at the end of the year
(3,823,888)
431,452
(1,865,530)
230,640
(i) Equity remuneration reserve
The equity remuneration reserve is used to recognise the fair value of options issued but not exercised.
note 18 Financial instruments
Credit risk
The Directors do not consider that the Group’s fi nancial assets are subject to anything more than a negligible level of credit
risk, and as such no disclosures are made, note 2(a).
Impairment losses
The Directors do not consider that any of the Group’s fi nancial assets are subject to impairment at the reporting date. No
impairment expense or reversal of impairment charge has occurred during the reporting period, other than the write off of
deferred exploration assets at note 12.
Liquidity risk
The following are the contractual maturities of fi nancial liabilities, including estimated interest payments and excluding the
impact of netting agreements, note 2(b):
2009
consolidated
Trade and other payables
company
Trade and other payables
carrying contractual
cash flows
amount
$
$
6 months
or less
$
6-12
months
$
1-2
years
$
2-5 More than
5 years
$
years
$
276,099 276,099 276,099
276,099 276,099 276,099
276,099 276,099 276,099
276,099 276,099 276,099
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
57
Notes to the Financial Statements continued
For the financial year ended 30 June 2009
note 18 Financial instruments continued
Liquidity risk continued
2008
consolidated
Trade and other payables
company
Trade and other payables
carrying contractual
cash flows
amount
$
$
6 months
or less
$
6-12
months
$
1-2
years
$
2-5 More than
5 years
$
years
$
351,216 351,216 351,216
351,216 351,216 351,216
351,216 351,216 351,216
351,216 351,216 351,216
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Interest rate risk
At the reporting date the interest profile of the Group’s interest-bearing financial instruments was:
2009
Fixed rate instruments
Financial assets
Variable rate instruments
Financial assets
2008
Fixed rate instruments
Financial assets
Variable rate instruments
Financial assets
carrying Amount ($)
consolidated
company
–
–
2,278,318
2,278,318
–
–
4,710,007
4,710,007
Cash fl ow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity and profit or
loss by the amounts shown below. This analysis assumes that all other variables remain constant.
2009
Profit or loss
Equity
1%
increase
1%
decrease
1%
increase
1%
decrease
Variable rate instruments
22,783
(22,783)
22,783
(22,783)
2008
Variable rate instruments
47,101
(47,101)
47,101
(47,101)
58
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
note 18 Financial instruments continued
Fair values
Fair values versus carrying amounts
The fair values of fi nancial assets and liabilities, together with the carrying amounts shown in the balance sheet are as follows:
consolidated
Cash and cash equivalents
Trade and other receivables
Trade and other payables
company
Cash and cash equivalents
Trade and other receivables
Loan to subsidiary
Trade and other payables
2009
2008
carrying
amount
$
Fair value
$
Carrying
amount
$
Fair value
$
2,278,318
129,352
(276,099)
2,278,318
129,352
(276,099)
4,701,043
79,935
(351,216)
4,701,043
79,935
(351,216)
2,131,571
2,131,571
4,429,762
4,429,762
2,278,316
129,352
1,123,268
(276,099)
2,278,316
129,352
1,123,268
(276,099)
4,701,043
79,935
375,334
(351,216)
4,701,043
79,935
375,334
(351,216)
3,254,837
3,254,837
4,805,096
4,805,096
The Group’s policy for recognition of fair values is disclosed at note 1(s).
note 19 Dividends
No dividends were paid or proposed during the fi nancial year.
The Company has no franking credits available as at 30 June 2009.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
59
Notes to the Financial Statements continued
For the financial year ended 30 June 2009
note 20 Key management personnel disclosures
(a) Directors
The following persons were directors of Encounter Resources Limited during the fi nancial year:
(i) Chairman – non-executive
Paul Chapman
(ii) Executive directors
Will Robinson, Managing Director
Peter Bewick, Exploration Director
(iii) Non-executive directors
Jonathan Hronsky, Director
(b) Other key management personnel
There were no other persons employed by or contracted to the Company during the fi nancial year, having responsibility for
planning, directing and controlling the activities of the Company, either directly or indirectly.
(c) Equity instrument disclosures relating to key management personnel
Unlisted Options provided as remuneration and shares issued on exercise of such options
No options over unissued shares have been issued to key management personnel of the Company during the fi nancial year.
The following options over unissued shares have been issued to key management personnel of the Company during the
previous fi nancial year:
Directors
Grant Date
number
of options
Value
of options
(cents)
total Value of
options Granted
($)
Expiry Date
Exercise Price
(cents)
P Bewick
P Bewick
J Hronsky
11 December 2007
11 December 2007
11 December 2007
400,000
400,000
500,000
21.85
18.69
22.36
87,400
74,760
111,800
30 November 2012
30 November 2012
30 November 2012
55 cents
70 cents
53.5 cents
The fair value of options issued as remuneration is allocated to the relevant vesting period of the options.
The options were provided at no cost to the recipients. No options were exercised by Key Management Personnel during
the fi nancial year.
Option holdings
Key Management Personnel have the following interests in unlisted options over unissued shares of the Company.
2009
name – Directors
P Chapman
W Robinson
P Bewick
J Hronsky
2008
P Chapman
W Robinson
P Bewick
J Hronsky
Balance at the
start of the year
received during the
year as remuneration
other changes
during the year
Balance at the
end of the year
–
–
800,000
500,000
–
–
–
–
–
–
–
–
–
–
800,000
500,000
–
–
–
–
–
–
–
–
–
–
800,000
500,000
–
–
800,000
500,000
Vested and
exercisable at
end of the year
–
–
400,000
500,000
–
–
–
–
60
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
note 20 Key management personnel disclosures continued
(c) Equity instrument disclosures relating to key management personnel continued
Share holdings
The number of shares in the Company held during the fi nancial year by key management personnel of the Company, including
their related parties are set out below. There were no shares granted during the reporting period as compensation.
2009
name – Directors
P Chapman
W Robinson
P Bewick
J Hronsky
2008
P Chapman
W Robinson
P Bewick
J Hronsky
Balance at the
start of the year
4,747,000
21,846,900
4,725,000
–
4,710,000
21,796,900
4,700,000
–
received during
the year on exercise
of options
other changes
during the year
Balance at the
end of the year
–
–
–
–
–
–
–
–
–
–
–
–
37,400
50,000
25,000
–
4,747,400
21,846,900
4,725,000
–
4,747,400
21,846,900
4,725,000
–
(d) Loans made to key management personnel
No loans were made to key personnel, including personally related entities during the reporting period.
(e) Other transactions with key management personnel
There were no other transactions with key management personnel.
consolidated
company
2009
$
2008
$
2009
$
2008
$
note 21 remuneration of auditors
Audit and review of the Company’s fi nancial statements
Other services
27,800
–
25,500
–
27,800
–
25,500
–
Total
27,800
25,500
27,800
25,500
note 22 contingencies
(i) Contingent liabilities
There were no material contingent liabilities not provided for in the fi nancial statements of the Group as at 30 June 2009
or 30 June 2008 other than:
Native Title and Aboriginal Heritage
Native title claims have been made with respect to areas which include tenements in which the Group has an interest. The
Group is unable to determine the prospects for success or otherwise of the claims and, in any event, whether or not and to
what extent the claims may signifi cantly affect the Group or its projects. Agreement is being or has been reached with various
native title claimants in relation to Aboriginal Heritage issues regarding certain areas in which the Group has an interest.
(ii) Contingent assets
There were no material contingent assets as at 30 June 2009 or 30 June 2008.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
61
Notes to the Financial Statements continued
For the financial year ended 30 June 2009
note 23 commitments
(a) Exploration
The Group has certain obligations to perform minimum exploration work on mineral leases held. These obligations may vary
over time, depending on the Group’s exploration programmes and priorities. As at balance date, total exploration expenditure
commitments on tenements held by the Group have not been provided for in the fi nancial statements and which cover
the following twelve month period amount to $1,649,750 (2008: $2,119,000). These obligations are also subject to
variations by farm-out arrangements or sale of the relevant tenements. This commitment does not include the expenditure
commitments which are the responsibility of the joint venture partners.
(b) Operating Lease Commitments
Commitments for minimum lease payments in relation to non-cancellable operating leases are as follows:
consolidated
company
2009
$
2008
$
2009
$
2008
$
Due within one year
Due later than one year but not later than fi ve years
68,931
73,431
52,500
130,500
68,931
73,431
52,500
130,500
Total
142,362
183,000
142,362
183,000
The operating lease commitment relates to the lease of the Group’s Perth offi ce plus car park. The initial lease period is for
three years commencing from 1 July 2008. At the reporting date there are no other operating lease commitments.
(c) Contractual Commitment
There are no material contractual commitments as at 30 June 2009 other than those disclosed above and not otherwise
disclosed in the Financial Statements.
note 24 related party transactions
There were no related party transactions during the year, other than disclosed at note 20.
62
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
note 25 Interests in joint ventures
Joint venture agreements have been entered into with third parties. Details of joint venture agreements are disclosed below.
Assets employed by these joint ventures and the Group’s expenditure in respect of them is brought to account initially as
capitalised exploration and evaluation expenditure (Refer note 12) until a formal joint venture agreement is entered into.
Thereafter, investment in joint ventures is recorded distinctly from capitalised exploration costs incurred on the company’s
100% owned projects.
See note 13 for disclosures of interests in the assets and liabilities employed under formal joint venture agreements.
Joint Venture and Exploration Agreement
Under a Joint Venture and Exploration Agreement dated 1 April 2005 the Company and Avoca Resources Limited
(“Avoca”) have agreed to establish an unincorporated joint venture for the purposes of identifying, acquiring, evaluating and
developing or selling mining tenements with potential uranium deposits within Western Australia. Encounter is the manager
of the joint venture.
Avoca Resources held a 20% free carried interest in Encounter’s exploration projects for the two year period which ended
on 1st April 2007. In accordance with the Agreement, Avoca had elected to contribute to the exploration expenditure
program commencing 1st April 2007 to maintain their 20% interest the projects. Under the terms of the agreement either
party may elect to dilute their interest to a 1% net smelter royalty. On 30 September 2008, Avoca Resources elected to
cease contributing to the Joint Venture and is diluting its interest in the projects in accordance with the terms of the Joint
Venture agreement.
Lake Way Uranium Joint Venture
Under the Lake Way Uranium Joint Venture dated 1 July 2007 between Avoca Resources Limited and the Company, the
Company has a 60% joint venture interest in the Uranium at the Lake Way South tenement. The parties are contributing to
expenditure in accordance with their equity interest. Encounter is the manager of the joint venture. The company’s interest
in the joint venture may increase to 75% if Avoca elects to dilute its interest in the tenement and be free carried though to
decision to mine.
Yeneena Joint Venture with Barrick Gold of Australia
The Yeneena JV agreement dated 14 September 2007 covers 1,500km2 of prospective uranium and base metals exploration
ground in the Paterson Province of Western Australia. The Paterson Province lies to the east of the Pilbara Craton, about
1,200km north north east of Perth. The region hosts the Kintyre uranium project and the Nifty copper mine.
Key terms of the earn in agreement are:
■
■
■
Encounter Resources Limited will spend a minimum of A$500,000 on exploration within 15 months, commencing
9 October 2007;
Encounter Resources Limited may spend A$3 million over 5 years to earn a 75% interest in the project;
Following the completion of the earn in period Barrick can contribute to expenditure to maintain an equity interest in
the project or dilute to a 1.5% net smelter royalty.
note 26 Events occurring after the balance sheet date
On 23rd September 2009, the Company announced a share placement raising $3,498,442 before costs by the issue of
10,289,535 ordinary fully paid shares at $0.34 each.
Other than the above, there has not arisen in the interval between the end of the fi nancial year and the date of this report
any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company to affect
substantially the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent
fi nancial years.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
63
Notes to the Financial Statements continued
For the financial year ended 30 June 2009
note 27 reconciliation of loss after tax
to net cash inflow from operating activities
Loss from ordinary activities after income tax
Share of management fee to JV not capitalised
R&D tax claim receivable
Depreciation
Exploration cost written off
Share based payments expense
Movement in assets and liabilities:
(Increase)/decrease in prepaid expenses
(Increase)/decrease in receivables
Increase/(decrease) in payables
Increase/(decrease) in provisions
consolidated
company
2009
$
2008
$
2009
$
2008
$
(1,987,843)
160,351
(113,186)
23,103
1,311,311
230,297
(855,306)
257,506
–
10,087
339,998
181,721
(1,987,843)
160,351
(113,186)
23,103
1,311,311
230,297
(855,306)
257,506
–
10,087
339,998
181,721
168
(5,391)
168
(5,391)
11,582
20,854
(1,347)
9,038
27,559
11,006
11,582
20,854
(1,347)
9,038
27,559
11,006
Net cash outfl ow from operating activities
(344,710)
(23,782)
(344,710)
(23,782)
note 28 Earnings per share
(a) Basic earnings per share
Loss attributable to ordinary equity holders of the Company
(b) Diluted earnings per share
Loss attributable to ordinary equity holders of the Company
(c) Loss used in calculation of basic and diluted loss per share
Consolidated loss after tax from continuing operations
(d) Weighted average number of shares used as the denominator
Weighted average number of shares used as the denominator in calculating
basic and dilutive loss per share
2009
cents
2008
Cents
(2.90)
(1.25)
(2.90)
(1.25)
2008
$
2007
$
(1,987,843)
(855,306)
2008
no.
2007
No.
68,596,900 68,596,900
At 30 June 2009 the Company has on issue 3,025,000 unlisted options (2008: 2,000,000) over ordinary shares that are
not considered to be dilutive.
64
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
Directors’ Declaration
In the opinion of the Directors of Encounter Resources Limited (“the Company”)
(a)
the financial statements and notes set out on pages 34 to 64 are in accordance with the Corporations Act 2001,
including:
(i)
(ii)
complying with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
give a true and fair view of the financial position as at 30 June 2009 and of the performance for the year ended
on that date of the Company and Consolidated Entity.
(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.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief
Executive Officer and Chief Financial Officer for the financial year ended 30 June 2009.
This declaration is made in accordance with a resolution of the Directors.
Signed at Perth this 24th day of September 2009.
W robinson
Director
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
65
66
E ncou ntEr r Eso u rcEs An n uAl R epoRt 2009
Encou ntEr r Esou rcEs An n uAl R epoRt 20 09
67
ASX Additional Information
Pursuant to the Listing Requirements of the Australian Securities Exchange, the shareholder information set out below was
applicable as at 5 October 2009.
A. Distribution of Equity securities
Analysis of numbers of shareholders by size of holding:
Distribution
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
More than 100,000
totals
number of
shareholders
78
327
227
372
60
1,064
There were 95 shareholders holding less than a marketable parcel of ordinary shares.
B. substantial shareholders
An extract of the Company’s Register of Substantial Shareholders (who hold 5% or more of the issued capital)
is set out below:
shareholder name
William Michael Robinson
Eye Investment Fund Limited
Stone Poneys Nominees Pty Ltd
Solvista Pty Ltd
Issued ordinary shares
number of shares
Percentage of shares
21,846,900
9,639,350
4,650,000
4,650,000
27.69%
13.66%
5.92%
5.92%
68
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
c. twenty Largest shareholders
The names of the twenty largest holders of quoted shares are listed below:
shareholder name
William Michael Robinson
HSBC Custody Nominees Australia Limited
Jacmew Pty Ltd
Stone Poneys Nominees Pty Ltd
Solvista Pty Ltd
Jorge Bernhard
Citicorp Nominees Pty Ltd
Pieter Los
HSBC Custody Nominees Australia Ltd
HSBC Custody Nominees Australia Ltd
National Nominees Limited
Credit First Asset Management Ltd
Custodial Services Pty Ltd
Forty Traders Pty Ltd
Charles Arthur Bennet Robinson
Bruce Birnie Pty Ltd
UBS Wealth Management Australia Nominees Pty Ltd
UBS Nominees Pty Ltd
Tierra Rist Pty Ltd
Palir Pty Ltd
total
D. Voting rights
Listed ordinary shares
number
Percentage Quoted
16,216,900
10,912,780
5,580,000
4,650,000
4,650,000
2,033,300
1,999,130
1,900,000
1,417,600
1,333,029
951,800
882,353
880,516
825,000
825,000
500,000
463,551
352,941
300,000
300,000
20.63%
13.89%
7.10%
5.92%
5.92%
2.59%
2.54%
2.42%
1.80%
1.70%
1.21%
1.12%
1.12%
1.05%
1.05%
0.64%
0.59%
0.45%
0.38%
0.38%
56,973,900
72.50%
In accordance with the Company’s Constitution, voting rights in respect of ordinary shares are on a show of hands
whereby each member present in person or by proxy shall have one vote and upon a poll, each share will have
one vote.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
69
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70
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
This page has been left blank intentionally.
Encou ntEr r Esou rcEs An n uAl R epo Rt 20 09
71
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72
E ncou ntEr r Esou rcEs An n uAl R epoRt 2009
Encounter Resources Ltd is a mineral exploration company
based in Perth, Western Australia (WA). The company’s
ABN 47 109 815 796
shares are listed on the Australian Stock Exchange
Corporate Directory
Directors
Paul Chapman
Will Robinson
Peter Bewick
Non-Executive Chairman
Managing Director
Exploration Director
Jonathan Hronsky
Non-Executive Director
(ASX : ENR). The company’s strategy is to grow shareholder
value through focused, methodological exploration and the
development of uranium, gold and base metals resources
in Australia. To drive its growth strategy the company
has assembled a dedicated and experienced team of
geoscientists who are leaders in their field of expertise.
Company Secretary
Kevin Hart
Daniel Travers (Joint Company Secretary)
Contents
Letter from the Chairman & Managing Director
Exploration Review
Summary of Tenements
Corporate Governance Statement
Directors’ Report
Auditor’s Independence Declaration
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
ASX Additional Information
Page
1
3
19
20
26
33
34
35
36
37
38
65
66
68
Principal and Registered Office
Level 7, 600 Murray Street
West Perth, Western Australia 6005
Telephone (08) 9486 9455
Facsimile (08) 6210 1578
Web www.enrl.com.au
Auditor
WHK Horwath Perth Audit Partnership
Level 6, 256 St Georges Terrace
Perth, Western Australia 6000
Share Registry
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross, Western Australia 6153
Telephone (08) 9315 2333
Facsimile (08) 9315 2233
Stock Exchange Listing
The Company’s shares are quoted on the
Australian Securities Exchange. The home
exchange is Perth, Western Australia.
ASX Code
ENR – Ordinary shares
Company Information
The Company was incorporated and registered
under the Corporations Act 2001 in Western
Australia on 30 June 2004 and became a
public company on 26 May 2005.
The Company is domiciled in Australia.
Front Cover: Sunset at Yeneena Exploration Camp.
Termite mounds of
the Great Sandy Desert.
Cannings Camp, Tchintaby Project.
ABN 47 109 815 796
annual report 2009
www.enrl.com.au
NOTICE OF ANNUAL GENERAL MEETING
&
EXPLANATORY STATEMENT
To be held
At 11.00am, Monday, 30th November 2009
at the
Parmelia Hilton, 14 Mill Street
PERTH WA 6000
Level 7, 600 Murray Street
West Perth WA 6005
PO Box 273
West Perth WA 6872
P 08 9486 9455
F 08 6210 1578
www.enrl.com.au
27th October 2009
Dear Fellow Encounter Shareholder,
Please find enclosed the Notice of Annual General Meeting for the Shareholders’ Meeting to be held at the Parmelia Hilton,
14 Mill Street, Perth 6000 at 11.00am on Monday, 30th November 2009.
The purpose of the meeting is to conduct the annual business of the Company, being consideration of the annual financial
statements, the remuneration report and in addition seek shareholder approval in accordance with the Corporations Act
2001 and the Listing Rules of the ASX to a number of resolutions, which are set out in the attached Notice of Meeting paper.
Your Directors seek your support and look forward to your attendance at the meeting.
Yours sincerely
Paul Chapman
Chairman
1
ENCOUNTER RESOURCES LIMITED
ABN 47 109 815 796
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of Encounter Resources Limited will be convened at 11.00am on
Monday, 30 November 2009 at the Parmelia Hilton, 14 Mill Street, Perth, Western Australia.
AGENDA
ORDINARY BUSINESS
1.
2.
3.
Discussion of Financial Statements and Reports
To discuss the Financial Report, the Directors’ Report and Auditor’s Report for the year ended 30 June 2009.
Adoption of the Remuneration Report
To adopt the Remuneration Report for the financial year ended 30 June 2009.
Election of Director – Dr Jon Hronsky
To consider and, if thought fit, to pass with or without modification the following ordinary resolution:
“To elect as a Director, Dr Jon Hronsky who retires in accordance with the Company’s Constitution and being eligible,
offers himself for re‐election.”
4.
Adoption of Encounter Resources Limited Employee Share Option Plan
To consider, and if thought fit, to pass, with or without modification, the following ordinary resolution:
“That pursuant to ASX Listing Rule 7.2 exception 9, approval be given for the adoption and administration of the
Encounter Resources Limited Employee Share Option Plan, described in the Explanatory Statement, a signed copy of
which is available to the Meeting.”
The issue to be in accordance with the terms and conditions set out in the Explanatory Statement accompanying this
Notice of Meeting.
5.
Ratification of Prior Issue of Equity Securities
To consider, and if thought fit, to pass, with or without modification, the following ordinary resolution:
“That, for the purposes of Listing Rule 7.4 and for all other purposes, Shareholders approve and ratify the prior issue
of 10,289,535 Shares pursuant to the Placement announced on 23rd September 2009 to professional and sophisticated
investors on the terms and conditions set out in the Explanatory Statement accompanying this Notice.”
The issue to be in accordance with the terms and conditions set out in the Explanatory Statement accompanying this
Notice of Meeting.
2
ENCOUNTER RESOURCES LIMITED
ABN 47 109 815 796
NOTICE OF ANNUAL GENERAL MEETING
GENERAL NOTES
1.
2.
3.
4.
With respect to Agenda Item 2, the vote on this item is advisory only and does not bind the Directors of the Company.
However, the Board will take the outcome of the vote into consideration when reviewing the remuneration practices
and policies of the Company. The Chairman of the meeting intends to vote undirected proxies in favour of the
adoption of the remuneration report.
The Company will disregard any votes cast on resolution 4 by any Director of the Company, and any associate of those
persons.
The Company will disregard any votes cast on resolution 5 by any person who participated in the issue and any
associate of that person (or those persons).
Before a voting exclusion applies, the Company need not disregard a vote if:
(a)
(b)
it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the
proxy form; or
it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a
direction on the proxy form to vote as the proxy decides.
The Explanatory Statement to Shareholders attached to this Notice of Annual General Meeting is hereby incorporated
into and forms part of this Notice of General Meeting.
The Directors have determined in accordance with Regulation 7.11.37 of the Corporations Regulations that, for the
purposes of voting at the meeting, shares will be taken to be held by the registered holders at 5.00pm on 28th
November 2009.
BY ORDER OF THE BOARD
Kevin R Hart
COMPANY SECRETARY
Dated this 27th day of October 2009
3
ENCOUNTER RESOURCES LIMITED
ABN 47 109 815 796
EXPLANATORY STATEMENT
The purpose of the Explanatory Statement is to provide shareholders with information concerning all of the Agenda items in
the Notice of Annual General Meeting.
1.
Discussion of Financial Statements & Reports
Encounter Resources Limited’s financial reports and the directors’ declaration and reports and the auditor’s report
are placed before the meeting thereby giving shareholders the opportunity to discuss those documents and to ask
questions. The auditor will be attending the Annual General Meeting and will be available to answer any questions
relevant to the conduct of the audit and his report.
2.
Adoption of Remuneration Report
During this item there will be opportunity for shareholders at the meeting to comment on and ask questions about
the remuneration report. The remuneration report is available in the Directors’ Report section of the Annual Report.
The vote on the proposed resolution in item 2 is advisory only and will not bind the directors or the Company.
However, the Board will take the outcome of the vote into consideration when reviewing the remuneration practices
and policies of the Company.
A reasonable opportunity will be provided for discussion of the remuneration report at the meeting.
The Chairman of the meeting intends to vote undirected proxies in favour of the adoption of the remuneration report.
The directors recommend that shareholders vote in favour of item 2.
3.
Re‐Election of Director – Dr Jon Hronsky
as an Ordinary Resolution
Dr. Jon Hronsky has more than twenty five years of experience in the mineral exploration industry, primarily focused
on project generation, technical innovation and exploration strategy development. Dr. Hronsky has particular
expertise in targeting for nickel sulfide deposits, but has worked across a diverse range of commodities. His work led
to the discovery of the West Musgrave nickel sulfide province in Western Australia. Dr. Hronsky was most recently
Manager‐Strategy & Generative Services for BHP Billiton Mineral Exploration. Prior to that, he was Global Geoscience
Leader for WMC Resources Ltd.
Dr Hronsky was appointed as Director on 10 May 2007.
4.
Adoption of the Encounter Resources Limited Employee Share Option Plan
as an Ordinary Resolution
4.1
Employee Share Option Plan
Shareholder approval is being sought to ratify the Encounter Resources Limited Employee Share Option Plan (“Plan”).
The Plan complies with ASIC Policy Statement 49 in relation to employee share schemes. This Policy Statement gives
disclosure relief from the need to prepare a prospectus for offers of shares and options under compliant schemes.
Persons eligible to participate in the Plan are Directors and employees of Encounter Resources Limited or associated
body corporate.
The Plan was first approved by Shareholders on 17 November 2006 and it is a requirement of the ASX Listing Rule 7.2,
exception 9 that the Plan be submitted to Shareholders for approval.
4
ENCOUNTER RESOURCES LIMITED
ABN 47 109 815 796
EXPLANATORY STATEMENT
4.
Adoption of the Encounter Resources Limited Employee Share Option Plan (Continued)
4.2
Reasons for Plan
Success for the Company and its Shareholders depends greatly on the people engaged by the Company. To maintain
and improve performance the Company has an on going need both to motivate and retain an excellent and dedicated
team, and to attract new and high quality people.
The Board believes that the Plan will provide an effective means to achieve these ends, in that the implementation of
the Plan will:
- encourage our people to focus on creating Shareholder value;
-
link reward with the achievement of the long term performance of the Company;
- encourage our people to remain with the Company by giving them the opportunity to participate in the creation of
a valuable personal asset – ie a financial stake in the Company; and
- enable the Company to attract high calibre individuals.
4.3
Description of the Plan
This section gives a brief outline of the Rules of the Plan.
(a)
Participation
Persons eligible to participate in the Plan are Directors and employees of Encounter Resources Limited or
associated body corporate (“Eligible Person”). The Board may from time to time determine that any Eligible
Person is entitled to participate in the Plan and the extent of that participation. In making that determination
the Directors must consider, where appropriate, matters including employment performance and level of
responsibility.
(b)
Offer of Options
Each offer made by the Board must specify:‐
the number and the exercise price of the Options;
that the Eligible Person may accept the whole or any lesser number of Options offered;
the period within which the offer may be accepted.
The offer document must also include a copy of the plan. The offer document must also be provided to ASIC
within 7 days after provision of this material to an Eligible Person.
(c)
Price
Options issued under the Plan are issued free of consideration. The exercise price of the options will be
determined by the Board with regard to the market value of the shares when the Board resolves to offer the
options.
(d)
Acceptance
An Eligible Person must, within the period specified in the offer either:‐
accept the whole or any lesser number of Options offered by notice in writing; or
nominate a nominee in whose favour the Eligible Person wishes to renounce the offer by notice in
writing.
5
ENCOUNTER RESOURCES LIMITED
ABN 47 109 815 796
EXPLANATORY STATEMENT
4.
4.3
Adoption of the Encounter Resources Limited Employee Share Option Plan (cont’d)
Description of the Plan (cont’d)
(e)
Restrictions
Unless the Board determines otherwise, if an Eligible Person ceases to be an Eligible Person after the earliest
date for exercise of their options, for any reason other than a “Specified Reason” (being retirement at age 60
or over, permanent disability, redundancy or death) the options held by them will automatically lapse.
If an Eligible Person ceases to be an Eligible Person after the earliest date for exercise of their options because
of a Specified Reason such Eligible Person is entitled to exercise any such option at any time prior to its expiry
date.
Notwithstanding the terms of the options, the options may be exercised in the event of specified occurrences
including a change of control allowing replacement of all or a majority of the Board or during the period of a
takeover bid for the Company.
The
options are not transferable other than to the legal personal representative of a deceased option holder.
(f)
Administration
The Board in its absolute discretion will administer the Plan in accordance with terms and conditions set out in
the Plan rules.
The total number of Shares the subject of options issued under the Plan, when aggregated with:
the number of Shares which would be issued were each outstanding offer or option, being an offer
made or option acquired pursuant to the Plan or any other employee share scheme, exercised; and
the number of Shares issued during the previous 5 years pursuant to the Plan or any other employee
share scheme,
but disregarding any offer made, option acquired or Share issued by way of or as a result of an offer under the
Plan to a person situated outside Australia; or an offer under the Plan that did not need disclosure to investors
because of section 708 of the Corporations Act; or an offer made under a disclosure document, must not
exceed 5% of the Company’s issued Shares.
(g)
Number of Options issued under the Plan
As at the date of this Notice 1,825,000 Options have been issued under the Plan, 1,625,000 of these Options
have been issued since the last Shareholder approval. As at the date of this Notice 100,000 Options previously
issued under the Plan have been cancelled.
5.
Ratification of a Prior Issue of Equity Securities
On 23rd September 2009, the Company announced that it would place 10,289,535 Shares to professional and
sophisticated investors in Australia at a subscription price of $0.34 each, to raise $3,498,442 before the costs of the
issue.
The Placement was completed on 2nd October 2009 under the Company’s 15% existing placing facility provided in
Listing Rule 7.1 (“Placement”). The Placement was arranged by Blackwood Capital Limited.
Listing Rule 7.1 provides that without Shareholder approval, a company must not issue or agree to issue new equity
securities constituting more than 15% of its total issued capital within a 12 month period (excluding any issue of
equity securities approved by Shareholders and other various permitted exceptions which are not relevant for current
purposes).
Listing Rule 7.4 allows an issue of securities made without the approval of Shareholders to be ratified by shareholders,
in order to refresh the 15% capacity under Listing Rule 7.1, provided at the time the issue was made, the issue was
made within the Company’s existing 15% capacity under Listing Rule 7.1.
6
ENCOUNTER RESOURCES LIMITED
ABN 47 109 815 796
EXPLANATORY STATEMENT
5.
Ratification of a Prior Issue of Equity Securities (Continued)
Shareholder approval is therefore now sought pursuant to Listing Rule 7.4 to ratify the Placement so that the
Company refreshes its capacity to issue up to 15% of its issued ordinary capital, if required, in the next 12 months
without first requiring Shareholder approval for those future issues.
Listing Rule 7.5 requires that the following information be provided to Shareholders for the purpose of obtaining
Shareholder approval pursuant to Listing Rule 7.4:
(a) the total number of equity securities issued was 10,289,535 Shares;
(b) the Shares were issued at a price of $0.34 per Share;
(c) the Shares issued rank equally with existing Shares on issue;
(d) the Shares were issued to professional and sophisticated investors, none of whom are related parties of the
Company;
(e) the Shares are listed on ASX, and
(f) the funds raised will be used to accelerate the Company’s exploration activities at its copper exploration program
in the Paterson Province in Western Australia, advance its uranium exploration portfolio and provide working
capital.
7
PROXY FORM
To:
Encounter Resources Limited (ABN: 47 109 815 796)
PO Box 273
West Perth WA 6872
Fax No: 61 8 6210 1578
Mark this box with an ‘X’ if you have made any changes to your address details (see reverse)
Name: ____________________________________________________________________________________________
(PLEASE PRINT)
Address: ____________________________________________________________________________________________
____________________________________________________________________________________________
Appointment of Proxy:
I/We being a member/s of Encounter Resources Limited and entitled to attend and vote hereby appoint:
The Chairman of the Meeting
(mark with an ‘X’) OR
Write here the name of the
person you are appointing if this
person is someone other than
the Chairman of the Meeting.
Or failing the person named, or if no person is named, the Chairman of the Meeting, as my/our proxy to act generally at the
meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the
proxy sees fit) at the Annual General Meeting of Encounter Resources Limited to be held at the Parmelia Hilton, 14 Mill
Street, Perth on Friday, 30 November 2009 at 11.00am (Perth time) and at any adjournment of that meeting.
Voting directions to your proxy – please mark
X
to indicate your directions
Agenda Item
2. Adoption of Remuneration Report
3.
4. Approval of Option Plan
5.
Ratification of Prior Issues of Securities
Re‐election of Dr Jon Hronsky as a Director
Against
*Abstain
For
.
*
If you mark the Abstain box for a particular item, you are directing your proxy not to vote on you behalf on a show of
hands or on a poll and your votes will not be counted in computing the required majority on a poll.
If you do not wish to direct your proxy how to vote, and wish him or her to vote at his or her discretion, please place a mark
in this box.
By marking this box, you acknowledge that the Chairman may exercise your proxy even if he has an interest in the outcome
of the resolution, and votes cast by him other than as proxy holder will be disregarded because of that interest. If you do not
mark this box, and you have not directed your proxy how to vote, the Chairman of the meeting will not cast your vote on the
resolutions and your vote will not be counted in computing the required majority if a poll is called.
PLEASE SIGN HERE
directions to be implemented.
This section must be signed in accordance with the instructions overleaf to enable your
Individual or Securityholder 1
Securityholder 2
Securityholder 3
Individual / Sole Director and
Director
Director/Company Secretary
Sole Company Secretary
Contact Name
Contact Daytime Telephone
/ /
Date
8
1
2
3
4
HOW TO COMPLETE THE PROXY FORM
Your Name and Address
This is your name and address as it appears on the company’s share register. If this information is incorrect, please
mark the box and make the correction on the form. Securityholders sponsored by a broker should advise their
broker of any changes. Please note, you cannot change ownership of your securities using this form.
Appointment of a Proxy
If you wish to appoint the Chairman of the Meeting as your proxy, mark the box. If the person you wish to appoint
as your proxy is someone other than the Chairman of the Meeting please write the name of that person in the
space provided. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of
the Meeting will be your proxy. A proxy need not be a securityholder of the company. The Chairman intends to
vote in favour of resolutions for which no voting indication has been given.
Votes on Items of Business
You may direct your proxy how to vote by placing a mark in one of the boxes opposite each item of business. All
your securities will be voted in accordance with such a direction unless you indicate only a portion of voting rights
are to be voted on any item by inserting the percentage or number of securities you wish to vote in the
appropriate box or boxes. If you do not mark any of the boxes on a given item, your proxy may vote as he or she
chooses. If you mark more than one box on an item your vote on that item will be invalid.
Appointment of a Second Proxy
You are entitled to appoint up to two persons as proxies to attend the meeting and vote on a poll. If you wish to
appoint a second proxy, an additional Proxy Form may be obtained by telephoning the company’s share registry or
you may copy this form.
To appoint a second proxy you must:
(a) on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or
number of securities applicable to that form. If the appointments do not specify the percentage or number of
votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be
disregarded.
return both forms together in the same envelope.
(b)
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Signing Instructions
You must sign this form as follows in the spaces provided:
Individual: where the holding is in one name, the holder must sign.
Joint Holding: where the holding is in more than one name, all of the securityholders should sign.
Power of Attorney: to sign under Power of Attorney, you must have already lodged the Power of Attorney with
the registry. If you have not previously lodged this document for notation, please attach a certified photocopy of
the Power of Attorney to this form when you return it.
Companies: where the company has a Sole Director who is also the Sole Company Secretary, this form must be
signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a
Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly
with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate
place.
If a representative of a corporate securityholder or proxy is to attend the meeting, the appropriate "Certificate of
Appointment of Corporate Representative" should be produced prior to admission. A form of the certificate may
be obtained from the Company's share registry.
6.
Lodgement of a Proxy and Deadline for Receipt of Proxy
This Proxy Form (and any Power of Attorney under which it is signed) must be received at the address given below
no later than 11.00am (Perth time) on 28 November 2009, being 48 hours before the commencement of the
Meeting. Any Proxy Form received after that time will not be valid for the scheduled meeting.
Documents may be lodged by post, delivery or facsimile to the Registered Office of Encounter Resources
Limited being:
Level 7, 600 Murray Street, West Perth WA 6005
Or by facsimile to fax number +61 8 6210 1578
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