ABN 47 109 815 796
2011
a n n u a l r e p o r T
ABN 47 109 815 796
Corporate Directory
Directors
Paul Chapman
Will Robinson
Peter Bewick
Non-Executive Chairman
Managing Director
Exploration Director
Jonathan Hronsky
Non-Executive Director
Company Secretary
Kevin Hart
Dan Travers (Joint Company Secretary)
Principal and Registered Office
Level 7, 600 Murray Street
West Perth, Western Australia 6005
Telephone (08) 9486 9455
Facsimilie (08) 6210 1578
Web www.enrl.com.au
Auditor
Crowe Horwath Perth
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
Facsimilie (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
Encounter Resources Ltd is a mineral exploration company
based in Perth, Western Australia (WA). The company’s
shares are listed on the Australian Stock Exchange
(ASX : ENR). The company’s strategy is to grow shareholder
value through focused, methodological exploration and the
development of base metals, manganese and uranium
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.
Yeneena Exploration Camp
Contents
Letter from the Chairman & Managing Director
Exploration Review
Summary of Tenements
Corporate Governance Statement
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
ASX Additional Information
Page
1
3
19
20
26
32
33
34
35
36
37
62
63
65
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.
Competent persons 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 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’. 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.
enC o u nTe r r e S o u rCe S lI M I TeD a n n u a l r e p orT 2 0 1 1
Letter from the Chairman & Managing Director
Dear Fellow Shareholder,
In 2010 Encounter Resources announced the discovery of high grade copper oxide mineralisation at the Yeneena project.
This new greenfields copper discovery in the Proterozoic Paterson Province in Western Australia (“WA”) has been the
company’s primary focus over the last year.
The Yeneena project is located 450km south east of Port Headland. This region has demonstrated the capacity to
produce world class deposits including:
n Newcrest’s giant gold/copper mine at Telfer (60km to our north east);
n Consolidated Minerals’ high grade Woodie Woodie manganese mine (70km to our north west);
n Aditya Birla’s Nifty copper mine, with a pre-mined resource of over 2 million tonnes of copper (35kms to our north
west); and
n Cameco’s Kintyre uranium deposit to our south.
Importantly, all of these deposits were discovered in areas with outcropping mineralisation. There remains minimal
systematic exploration across the vast sand cover in the region which we believe is masking other large mineral
deposits. Accordingly, we are applying modern exploration techniques and models to the sand covered terrain in this
fertile mineral field.
The discovery of shallow, high grade copper in multiple intersections over an extensive area at the BM1 prospect within
the Yeneena project has been a significant development. We have just scratched the surface at BM1 with copper
mineralisation already defined over a large area.
The mineralised system at BM1 has demonstrated the capacity to generate high grade, near surface copper mineralisation.
An intersection in diamond hole EPT751 announced in June 2011 contained the highest grade copper assay achieved to
date at BM1 with 10m @ 6.8% copper from 32m. The main objective of our upcoming drilling programs is to identify high
grade, primary copper sulphide mineralisation at BM1.
The discovery of shallow, high grade copper in multiple intersections over an extensive
area at the BM1 prospect within the Yeneena project has been a significant development.
an n u a l r e p o rT 2 0 1 1
1
Letter from the Chairman & Managing Director continued
Aircore drilling at the BM2 target has defined a copper anomaly in the regolith extending over 1.2km long grading over
0.1% copper. The first diamond drilling program completed in July 2011 at BM2 identified a 100m thick zone containing
base metal-bearing sulphide veins.
At the T4 prospect, the intersection of copper sulphide minerals (chalcopyrite and bornite) in the first stratigraphic diamond
drill hole, within a large, covered and almost unexplored area, is a significant development that provides an additional
major copper target.
In the 2011 calendar year the company will complete approximately 30,000 metres of drilling at Yeneena. This investment
in 20,000m of aircore/RC and 10,000 metres of diamond drilling is a considerable escalation in exploration activities
demanded by the ongoing exploration success at the project.
A number of significant advances have already been made in the 2011 exploration program:
n The BM1 Northern Area of near surface, high grade copper has been extended to over 500m in strike;
n Copper mineralisation, up to 1.4% copper has been intersected in reconnaissance aircore drilling 2.5km north of the
previous drilling at BM1. The BM1 mineralised system now remains anomalous for over 6km which is a world class
copper regolith footprint;
n Diamond drilling at BM1 has identified the steeply dipping fault breccia feeder system along western margin of the
BM1 Northern Area which is an important ingredient in the formation of sedimentary hosted copper deposits; and
n Primary copper sulphide minerals have been intersected in a stratigraphic drill hole at the T4 prospect
As a result of these developments, a second diamond drill rig has been recently secured to further accelerate exploration
at Yeneena.
… our exploration success has generated considerable interest
across the copper industry.
The under-cover discovery at BM1 when viewed in the context of the earlier discoveries made in the 1980s in this region
Nifty (1981) and Maroochydore (1984) support the potential of the Yeneena project to host a number of new copper
discoveries. We believe that what we have seen so far in our exploration has the hallmarks of the early stages of a potential
new copper province in WA. We have secured a huge foothold in this region with the 1,300km2 land holding which is
100% owned by the company. In December 2010 the company raised an additional $6m to provide additional funding
to expand and accelerate exploration at the Yeneena project.
While global financial markets have been turbulent in recent times the outlook for copper demand remains positive. It
remains a good time to make a new copper discovery. There has been a dearth of new quality discoveries around the
world over a number of years and global copper production growth is dependent on expansions of existing, mature, large
scale mines, lower cut off grades and developments of copper projects at significant depth. Against this backdrop, it is
understandable that our exploration success has generated considerable interest across the copper industry.
In closing we would like to thank our committed team for their professionalism and dedication. We have an exceptional
exploration team in place, an exciting suite of large scale exploration targets and we are well funded to complete our
exploration plans. 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
enC o u nTe r r e S o u rCe S lI M I TeD
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 approximately 4,000km² of
strategically located and highly prospective exploration projects (Figure 1). The portfolio includes:
n A major ground position in the Paterson mineral province between the Nifty copper mine, Woodie Woodie manganese
operation and the Kintyre uranium deposit, considered highly prospective for Proterozoic copper and silver-lead-zinc
mineralisation, unconformity related uranium and carbonate hosted manganese deposits;
n Inferred Resources of 11 million pounds of near surface, calcrete style uranium in the Yilgarn Province; and
n Three projects targeting base metals deposits in the Bangemall Basin.
Figure 1: Project location plan
an n u a l r e p o rT 2 0 1 1
3
Exploration Review continued
Paterson Province
Yeneena proJeCT
(E45/2500, E45/2501, E45/2502, E45/2503, E45/2561, E45/2657, E45/2658, ELA45/2805
and ELA45/2806 – 100% Encounter)
The Yeneena project covers a 1,300km2 tenement package in the Paterson Province of WA located between the Nifty
copper mine, the Woodie Woodie manganese mine and the Kintyre uranium deposit (Figure 2). The project is considered
highly prospective for Nifty/Isa style copper mineralisation, silver-lead-zinc mineralisation, Woodie Woodie style manganese
mineralisation and unconformity related uranium mineralisation.
Outside of the known discoveries at Nifty (copper) and Kintyre (uranium), found in areas of outcrop, the greenfields
Yeneena Basin in the Paterson Province is significantly under-explored due to extensive sand cover and the remoteness
of the location.
Simplified geological stratigraphy for the Yeneena Basin comprises the Palaeo-Proterozoic Rudall Complex as the lowermost
unit, overlain by the Neo-Proterozoic Coolbro Sandstone. 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.
Two new and significant geological domains have been identified by Encounter at the project, neither of which had
been documented in previous regional geological mapping. Palaeo-Proterozoic Rudall Complex metamorphic basement
Figure 2: Yeneena project regional aeromagnetics, leasing and target plan.
4
enC o u nTe r r e S o u rCe S lI M I TeD
rocks have been identified at the T4 prospect, on the north eastern side of the Kintyre Fault. In addition, a shallow
water, stromatolitic, carbonate shelf depositional environment has been recognised to the west of the McKay Fault. These
domains were recognised through a review of independent geophysical datasets, the Encounter diamond drill core and
re-logging of historical aircore drilling.
BM1 Copper Discovery
The BM1 Copper Discovery is located approximately 60km south of the Nifty copper mine (Figure 2) and consists of a
coincident magnetic and AEM anomaly located along the McKay Fault.
The BM1 copper mineralisation is hosted within the Broadhurst Formation and is almost entirely overlain by 2-10 metres
of transported cover. The exploration target at this prospect is for a Zambian Copper Belt style, sediment-hosted copper
deposit. The copper regolith anomaly at BM1 extends over 6km and remains open to the north and south.
High grade copper mineralisation was first discovered in aircore drilling at BM1 in June 2010. Intersections included 4m
@ 5.45% Cu from 66m, 8m @ 1.09% Cu from 24m and 6m @ 1.41% Cu from 54m to end of hole. Further drilling
confirmed a coherent zone of high grade, near surface copper mineralisation defined over a large area in the northern
section of BM1 (“Northern Area”) (Figures 3 and 4).
In the 2010 drill campaign numerous thick intersections grading over 1% copper were intersected within 50 metres of
the surface at the Northern Area including:
n 20m @ 2.0% Cu from 22m (incl. 12m @ 3.2% Cu)
n 12m @ 1.5% Cu from 16m (incl. 2m @ 2.7% Cu)
n 10m @ 1.1% Cu from 36m (incl. 2m @ 2.5% Cu)
n 16m @ 0.7% Cu from 8m (incl. 2m @ 3.0% Cu)
n 34m @ 0.4% Cu from 18m (incl. 4m @ 1.6% Cu)
n 8m @ 3.6% Cu from 18m (incl. 2m at 7.6% Cu)
n 14m @ 1.1% Cu from 16m
n 12m @ 1.0% Cu from 24m
A second coherent zone of near surface copper mineralisation over 0.5% copper,
(“Central Area”) 500m south of the Northern Area discovery at BM1 was also identified
in 2010 (Figure 3).
Assays results from the Central Area include:
n 14m @ 1.2% Cu from 42m
n 2m @ 3.0% Cu from 40m
n 6m @ 0.8% Cu from 68m (incl. 2m @ 1.7% Cu)
n 6m @ 1.4% Cu from 54m
n 4m @ 1.1% Cu from 26m
n 2m @ 0.8% Cu from 74m
Aircore drilling BM1
Following the initial discovery of high grade copper oxide mineralisation, a detailed ground gravity survey was completed at
BM1 in July 2010. This survey was designed to provide additional structural and stratigraphic information at the prospect.
Results from the survey together with the regional Tempest Airborne EM (“AEM”) were utilised to define a series of primary
copper sulphide targets beneath the extensive regolith copper anomaly.
A coincident gravity and conductivity anomaly at BM1 trends East-North-East in the Northern Area, corresponding with the
location and orientation of the newly recognised and named ENE trending “King Fault”. A second major coincident gravity
and conductivity anomaly trends North-South within the Central Area (see Figure 3).
an n u a l r e p o rT 2 0 1 1
5
Exploration Review continued
Figure 3: BM1 Discovery – Maximum Copper in Hole over 0.75mg Gravity Shell.
6
enC o u nTe r r e S o u rCe S lI M I TeD
Three diamond holes were completed during November 2010 at BM1 designed to help define the geological units at
depth and to identify vectors towards the primary source of the near surface copper mineralisation. Two holes were drilled
at the Northern Area and one hole was drilled at the Central Area.
Zones of very intense haematite ‘red rock’ alteration, as well as extensive zones of pyrite within the shale packages were
intersected in the Northern Area drilling. This intense alteration provides further indication of the potential for a major
mineralised system beneath the near surface secondary copper mineralisation discovered at BM1 in 2010. Importantly,
these diamond holes did not intersect any units that would account for the gravity anomaly.
Petrographic thin section analyses completed from this diamond drilling has identified fine sulphide inclusions of primary
copper sulphide minerals (chalcopyrite/bornite) within narrow bands of low grade copper mineralisation at depths of
150-200m below surface. These inclusions may represent a halo to a primary copper sulphide position at BM1.
During the June 2011 quarter five diamond drill holes were completed around the Northern Area. These holes were
designed with multiple objectives: to test for primary copper sulphides below the oxide position; identify key stratigraphic
and structure controls to the mineralisation and to confirm the nature and possible origin of the copper oxide mineralisation.
Initial assay results from this program have confirmed the mineralisation within the Northern Area is primarily strataform
in nature and the footprint of alteration from the mineralisation event is extensive across the mineralised horizon and at
depth. Extensive zones of silica and pyrite replacement and occasional disseminations of chalcopyrite mineralisation within
the fresh rock are consistent with alteration expected proximal to primary copper mineralisation.
Diamond drill hole EPT751 was collared within the Northern Area oxide position and drilled south to intersect the King Fault
at depth. The hole intersected 10.1m @ 6.8% copper from 31.9m, including an interval of 2.8m @ 12.3% copper and
156 g/t silver. The intersection in EPT751 represents the highest grade copper assay achieved to date at BM1.
Figure 4: BM1 – Northern Area – Maximum Copper in Hole.
an n u a l r e p o rT 2 0 1 1
7
Exploration Review continued
A 70cm zone of black shale from 34m returned an assay result of 28.8% copper and 178 g/t silver (see Photo 1).
XRD analysis from the 70cm zone confirmed the dominant copper mineral is chalcocite.
A systematic program of north-south RC drill traverses to a depth of 120m was completed in July 2011 to determine the
orientation and extent of the mineralised horizon intersected in EPT751.
The RC drilling program intersected significant copper oxide mineralisation in a number of drill holes and has defined a
north-west orientation to the copper mineralisation. This trend is similar to the orientation of the steep structural fabric
observed within the diamond drill core from EPT 751.
It appears from the early assessment of this drilling that the mineralised horizon is flat lying in the centre of the Northern
Area and then dips off to the west and to the east. This observation confirms an earlier interpretation that the overall
geology of the BM1 area is dominated by an open antiform that appears to plunge gently to the north.
The western line of RC drilling has intersected significant copper mineralisation below the carbon oxidation front at depths
between 50-95m from surface (Figure 5). This indicates the western limb of the antiform is dipping steeply to the west.
The mineralisation along this section is dominated by chalcocite and native copper (Photo 2).
The progression from malachite dominated mineralisation in the oxide zone to chalcocite and native copper in the
supergene zone has provided a vector to a possible primary copper sulphide zone further west and at depth.
Photo 1: EPT 751 32.6m to 38.8m (Copper and Silver assay results shown along sampled intervals).
8
enC o u nTe r r e S o u rCe S lI M I TeD
Figure 5: BM1 368300E Section – Northern Area.
Drilling along the easternmost RC section has also intersected
copper anomalism below the carbon oxidation front at depths
from 35-80m and indicates a gentle easterly dip to the
eastern limb.
This area is also associated with highly anomalous cobalt
mineralisation with several intersections of over 0.1% cobalt
and anomalous silver in aircore drilling. These elements are
considered less mobile than copper and the anomalism along
this section has provided a second possible vector to a primary
copper sulphide mineralisation as this limb dips further east.
Photo 2: Native copper EPT 762 112m to 113m
an n u a l r e p o rT 2 0 1 1
9
Exploration Review continued
Figure 6: BM1 Schematic Oblique Section – Northern Area.
1 0
enC o u nTe r r e S o u rCe S lI M I TeD
EPT 604 Drill Core
A schematic cross section has been drafted to
illustrate the overall geology across the Northern
Area mineralisation (Figure 6).
A detailed helicopter EM survey (“VTEM”) was
completed at BM1 in June 2011. The final data from
this survey is currently being reviewed and modelled.
Early interpretation of this data has highlighted a
series of potentially important structural controls
to the copper mineralisation as well as providing
greater detail on bedrock conductors. Bedrock
conductors located down dip of the western and
eastern mineralised limbs will be modelled and are
considered high priority drill targets.
The VTEM survey has also identified a regional scale
target north of BM1 (Figure 7). Initial reconnaissance
aircore drilling over the BM1 North copper target
was completed in the September 2011 quarter.
The significant area of copper anomalism at the BM1
Copper Discovery indicates that the primary source
of the regolith hosted copper at BM1 is possibly
very large or a series of multiple sources. The BM1
prospect already has a world class copper regolith
footprint. The observed geological, geochemical and
geophysical features at BM1 show strong similarities
to that of the 2 million metal tonne Nifty copper
deposit (Figure 8).
Figure 7: BM1 Regional Prospects –
VTEM B-Field Channel 35 (NW sun angle).
Figure 8: Nifty copper mine idealised cross section.
an n u a l r e p o rT 2 0 1 1
1 1
Exploration Review continued
Figure 9: BM2 – Cross Section 7570470N.
BM2 prospect
The BM2 prospect is located 50km south-east of the Nifty copper deposit and 34km north-east of the BM1 copper
discovery at the intersection of a north-south trending, westerly dipping fault and the regionally extensive Tabletop Fault
(Figure 2).
Three east-west aircore drill traverses were completed at BM2 in September 2010. These traverses outlined a broad
area of regolith copper anomalism. The central line (Figure 9) included multiple thick, highly anomalous copper intersections
including:
n EPT561 30m @ 0.14% Cu from 42m to end of hole incl. 2m @ 0.88% Cu
n EPT563 28m @ 0.18% Cu from 54m incl. 4m @ 0.48% Cu & 2m @ 0.41% Cu
n EPT564 36m @ 0.17% Cu from 76m to end of hole incl. 6m @ 0.37% Cu
n EPT588 20m @ 0.27% Cu from 62m incl. 4m @ 0.57% Cu
A program of north-south aircore traverses was completed at BM2 during the June 2011 quarter. This program was
designed to confirm the orientation of the mineralised trend and define any higher grade zones within the extensive
area of regolith anomalism. The program confirmed copper regolith anomalism trends towards 2900 and extends over
a strike length of 1.2kms.
The aircore drill program was followed up with a two hole diamond drill program in July 2011. The diamond drilling
will provide the first geological and structural information at BM2 at depth. The first of the two diamond drill holes was
co-funded through the WA Government EIS program.
1 2
enC o u nTe r r e S o u rCe S lI M I TeD
Electromagnetics
Magnetics
Gravity
2km
Figure 10: T4 Palaeo-Proterozoic basement block interpretation over AEM, TMI magnetics and Gravity data.
T4 prospect
Encounter has confirmed the presence of a horst block of Palaeo-Proterozoic basement rocks (8.5km x 4.5km) at the
T4 prospect which is located approximately 5km west of the BM2 prospect. The block was observed in three independent
datatsets (AEM, magnetics and gravity) (Figure 10).
Re-logging of isolated historical drill chips confirmed the presence of metamorphic schists similar to Rudall Complex
rocks known in the area. Sedimentary units on the margins of the horst block are considered highly prospective for
SEDEX Cu and Pb-Zn mineralisation. The T4 target represents a compelling structural, geological and geophysical target at
the Yeneena project.
A gravity survey at a spacing of 200m x 400m was completed over the T4 prospect in April 2010. A VTEM survey was
completed over the prospect region in June 2011 to assist in the definition of drill targets along the margin of the Rudall
Complex metamorphics.
Two diamond drill holes were drilled at T4 in August 2011. The first hole targeted the margin of the interpreted block
of Rudall Complex and the second was drilled within the boundary of the block. These holes confirmed the geological
interpretation of the T4 block and intersected disseminated copper sulphide minerals .
Track to Yeneena Camp
an n u a l r e p o rT 2 0 1 1
1 3
Exploration Review continued
BM5 Target
The BM5 target is located along the regionally extensive Kintyre Fault (Figure 2). The area was initially drilled by WMC in
the early 1990s at the end of their exploration program in this area. A series of 800m spaced RC traverses were drilled
across the NW trending Kintyre Fault where it separates two large zones of conductive Broadhurst Formation. These RC
traverses were followed up by one deeper diamond drill hole.
This early WMC drilling program intersected a thick body of iron-manganese rich material below Permian and recent
cover over 1km in strike which is associated with strong copper, silver, lead and zinc anomalism. The anomalous body
appears to be controlled by the intersection of the underlying dolomitic unit with the Kintyre Fault. It is interpreted that this
iron-manganese rich body represents a potentially significant base metal gossan.
RC drill holes completed by Encounter in June 2009 defined a strong geochemical gradient within the gossanous
horizon indicating increased prospectivity towards the interpreted fault-bounded western margin of the dolomite unit,
coincident with an interpreted NW to NNW structural jog along this western dolomite contact. Diamond drill hole EPT062
was drilled to test beneath a gossanous iron manganese
horizon associated with copper-lead-zinc-silver geochemical
anomalism. Drilling confirmed the gossanous horizon sits at
the upper stratigraphic contact of a carbonate unit which is
the host to the base metal deposits in this region. The primary
target for base metals mineralisation is the lower contact of
this carbonate unit. Drilling conditions were difficult resulting
in the hole not reaching target depth and being abandoned at
306m. A vein of massive sulphide containing sphalerite and
galena was intersected between 301.6m and 301.7m within
5m of the end of hole in brecciated dolomite (Figure 11).
Assay results for the interval returned 0.1m @ 28.5% zinc,
2.3% lead and 33.9g/t silver.
A downhole electromagnetic survey from drill hole EPT062 identified a significant, greater than 500m long, offhole
conductor approximately 60m below the bottom of the hole. A detailed ground gravity survey was completed in April 2010
over an extensive area surrounding the BM5 prospect to help resolve structure, geology and drill targets. Results indicated
that an excess mass feature occurs in close proximity to the identified offhole EM conductor at BM5.
Diamond drilling during May 2010 successfully tested the modelled EM conductor and excess mass feature identified
in the ground gravity survey at the prospect. Geological logging indicates the modelled EM conductor represents an
apparent westerly dipping contact between the upper carbonate unit and carbonaceous shales below (Figure 11).
Geological observations suggest that this contact is structurally controlled and includes zones of strong faulting and veining.
Primary stratigraphic layering in the carbonate unit is observed to apparently dip shallowly to the east. A thick sequence
of brecciated carbonate including pervasive disseminated pyrite is present at the modelled position of the excess mass
anomaly on the drill section.
Additional RC drilling is planned towards the north of BM5 where it is interpreted that the prospective geological contact is
trending closer to surface. A VTEM survey was completed over the north of BM5 (together with the adjoining T4 region) in
June 2011. The results of the airborne EM survey have been received and are currently being modelled. The interpretation
of results of the survey will assist in the targeting of additional base metals mineralisation at BM5.
Mn1 Target
The MN1 prospect is located 70kms south east of the Woodie Woodie manganese mine (Figure 2) on the regionally
extensive McKay Fault. In November 2009, Encounter announced the discovery of high grade manganese at the MN1
prospect. Two high grade, near surface manganese intersections were reported, 200m apart in adjacent vertical aircore
holes at the southern end of a 14km long regional gravity anomaly. The regional gravity anomaly sits to the west of, and
1 4
enC o u nTe r r e S o u rCe S lI M I TeD
parallel to, the McKay Fault. Intersections were
identified in the re-analysis of samples from the
drilling program completed by Barrick Gold of
Australia in 2006. Intersections include 2m @
20% Mn from 25 metres in YNAC 168 (including
1m @ 28% Mn from 26m) and 3m @ 16% Mn
from 21 metres in YNAC 169.
to
Aircore drilling completed in 2010 at MN1
intersected extensions
the manganese
mineralisation intersected in YNAC 168 and
YNAC 169. These included 1m @ 17.7% Mn
from 26m and 1m @ 15.4% Mn from 27m. The
most northern drill traverse at the MN1 prospect
intersected near surface high grade manganese
(1m @ 21.2% Mn from 9m depth) over a residual
gravity feature. The hole terminated in hard,
massive silicified carbonate at a depth of 15m.
The geology in the MN1 area is masked by
sand cover with only isolated surface outcrops.
Manganese anomalism occurs within the newly
recognised geological domain of shallow marine
carbonates bounded to the east by the McKay
Fault. The discovery of high grade manganese
over a length of 2.5km along the regionally
significant McKay Fault is encouraging. High grade
manganese also exists up to 1km west of the
fault. This initial drill program has only focused on
the southern 3km of the 14km long target zone.
This new geological interpretation significantly
increases the potential for manganese discoveries
within
this extensive area of prospective
stratigraphy.
Mn2 Target
The MN2 Prospect (“MN2”) is a 1km wide zone
of manganese oxide and is located in an area
of extensive sand cover and no surface outcrop.
The highly anomalous manganese starts 30m
below the surface, is 2-9m thick and located
at the boundary between the overlying Tertiary
and the underlying Permian sediments. The
mineralised horizon also has low-level base
metal anomalism. It is considered that this
anomalous zone might represent dispersion
from a primary Mn and/or base-metal deposit.
Figure 11: BM5 Cross Section 7565150mN.
Helicopter EM survey (“VTEM”)
an n u a l r e p o rT 2 0 1 1
1 5
Exploration Review continued
Yilgarn District
CalCreTe uranIuM reSourCeS
A strategic review of the calcrete uranium resource has been initiated by the company to consider the potential development
and commercial alternatives to advance the projects. The area of interest is shown on Figure 12.
HIllVIeW (E51/1127 – 82% Encounter, 18% Avoca)
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
flat lying, consistent body of near surface uranium mineralisation with minimal internal dilution.
laKe WaY SouTH (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. An Inferred Resource for the area of the Centipede Extension resource within the JV tenement
has been calculated. This resource contains 220,000t @ 244ppm U3O8 for 120,000lbs of U3O8. The Inferred Resource is
reported in accordance with the JORC code (2004) and guidelines.
BellaH Bore eaST (E53/1158 – 83% Encounter, 17% Avoca)
The Bellah Bore East project is situated in the upper reaches of the Yeelirrie Channel. An Inferred Resource of 350,000t
averaging 210ppm U3O8 for 160,000lb of U3O8 has been calculated for the Bellah Bore East prospect. The Inferred
Resource is reported in accordance with the JORC code (2004) and guidelines.
Figure 12: Location of uranium resources in the north east Yilgarn Province.
1 6
enC o u nTe r r e S o u rCe S lI M I TeD
DarloT eaST proJeCT – Gold (E37/978 and E37/1062 – 100% Encounter)
The Darlot East project covers 285km2 and is located approximately 6kms east of the Darlot Gold mine, 70kms east of the
township of Leinster. The project is situated within an area of interpreted granite gneiss between the Yandal Greenstone
Belt to the west and the Duketon Greenstone Belt to the east. Interpretation of the regional aeromagnetics has identified an
extensive NNW trending structural corridor that ‘horsetails’ as it flexes along the margin of a major granite intrusion located
in the east of the project. Drilling to the north of the project by Encounter has identified a +1km wide zone of greenstone
lithologies that is interpreted to extend south into the Darlot East project.
Regional geochemical datasets collect by CSIRO have highlighted minor gold anomalism within the project area in
association with lithological indicators similar to other mapped greenstone terrains. Drilling is planned at the project to
determine if any significant regolith gold anomalism occurs within the area of interpreted greenstone lithologies.
Bangemall Basin
BeYonDIe (Encounter 100%)
A regional targeting exercise was initiated during late 2009 incorporating key learnings from the work completed at the
Yeneena project and building on our understanding of the formation of large scale base metal systems.
The targeting program highlighted an area on the eastern margin of the Bangemall Basin that demonstrates a number
of key structural ingredients. Applications have been lodged over an area of 1500km2 located approximately 150kms
south south east of Newman. The tenements capture the intersection of the Tangadee Lineament with the margin of the
Bangemall Basin and northern Yilgarn block (Figure 13). A series of field visits to the project are planned prior to the grant
of the tenements.
Figure 13: Location of Encounter Tenements in the Bangemall Basin.
an n u a l r e p o rT 2 0 1 1
1 7
Exploration Review continued
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.
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’.
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’.
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 100ppm U3O8 over a
minimum downhole distance of 1m. Shallow aircore drilling has
been completed on a nominal 150m by 150m grid. All grade
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.
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.
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.
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.
1 8
enC o u nTe r r e S o u rCe S lI M I TeD
Summary of Tenements
Lease
Lease Name
Project Name
Area
km2 Managing Company
Encounter Interest
E52/2648
Staten
Bangemall Basin
109.4 Encounter Resources Limited
E52/2654
Tchintaby
Bangemall Basin
106.6 Encounter Resources Limited
ELA69/2966 Beyondie
Bangemall Basin
359.1 Hamelin Resources Pty Ltd
ELA69/2967 Beyondie
Bangemall Basin
499.8 Hamelin Resources Pty Ltd
ELA69/2968 Beyondie
Bangemall Basin
568.1 Hamelin Resources Pty Ltd
100%
100%
100%
100%
100%
E53/1232
Wiluna South
Lake Way South JV
66.8
Avoca Resources Limited
60% of Uranium Rights
E36/769
Yeelirrie South
Yilgarn
48.83 Encounter Resources Limited
E51/1127
Hillview
Yilgarn
52.02 Encounter Resources Limited
ELA51/1465 Meekatharra
Yilgarn
39.7
Encounter Resources Limited
ELA51/1486 Meekatharra
Yilgarn
58.1
Encounter Resources Limited
E37/978
Darlot East
Yilgarn
212.4 Encounter Resources Limited
E37/1062
Darlot East
Yilgarn
72.8
Encounter Resources Limited
ELA38/2622 Melrose
Yilgarn
87.84
Encounter Resources Limited
ELA57/832
Nesbitt Soak
Yilgarn
200
Encounter Resources Limited
ELA57/833
Nesbitt Soak
Yilgarn
193.8 Encounter Resources Limited
E45/2500
Yeneena
Paterson
163.4 Encounter Operations Pty Ltd
E45/2501
Yeneena
Paterson
41.4
Encounter Operations Pty Ltd
E45/2502
Yeneena
Paterson
216.3 Encounter Operations Pty Ltd
E45/2503
Yeneena
Paterson
76.3
Encounter Operations Pty Ltd
E45/2561
Yeneena
Paterson
86
Encounter Operations Pty Ltd
E45/2657
Yeneena
Paterson
222.8 Encounter Operations Pty Ltd
E45/2658
Yeneena
Paterson
222.8 Encounter Operations Pty Ltd
ELA45/2805 Yeneena
Paterson
209.7 Encounter Operations Pty Ltd
ELA45/2806 Yeneena
Paterson
63.7
Encounter Operations Pty Ltd
E53/1158
Bellah Bore East Yilgarn
10.5
Encounter Resources Limited
100%
82%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
83%
an n u a l r e p o rT 2 0 1 1
1 9
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 2010/2011 financial 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”), other than as stated below. Significant policies and details of
any significant deviations from the principles are specified 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 fulfil 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 financial and other reporting.
In complying with Recommendation 1.1 of the Corporate Governance Council, the Company has adopted a Board Charter
which clarifies 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.
2 0
enC o u nTe r r e S o u rCe S lI M I TeD
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 difficult 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 qualification.
The membership of the Board, its activities and composition is subject to periodic review. The criteria for determining the
identification 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 section of this Annual Report.
The Board has assessed the independence of its non executive directors according to the definition 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 Officer 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.
an n u a l r e p o rT 2 0 1 1
2 1
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.
Guidelines for Trading in Company Securities
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 procedure on dealing in
the Company’s securities by directors, officers and employees which prohibits dealing in the Company’s securities when
those persons possess inside information.
The guidelines also provide that the acknowledgement of the Chairman or the Board should be obtained prior to trading.
A summary of the Guidelines are available on the Company’s website.
The Company’s policy restricts, notwithstanding exceptional circumstances, the trading in Company’s securities by those
individuals covered by the policy to trading windows that are open for 10 days following the hosting of General Meetings
of the Company, the release of annual, half yearly results and quarterly reports and after any other public announcement
on ASX.
Diversity
The Board has adopted a diversity policy that details the purpose of the policy and the employee selection and appointment
guidelines, consistent with the recommendations of the Corporate Governance Council. The Board believes that the
adoption of an efficient diversity policy has the effect of broadening the employee recruitment pool, supporting employee
retention, including different perspectives and is socially and economically responsible governance practice.
The recommendations of the Corporate Governance Council relating to reporting are effective from 1 July 2011 and
require a Board to set measurable objectives for achieving gender diversity and to report against them on an annual basis.
The Board is currently reviewing its practices with a focus on ensuring that the selection process at all levels within the
organisation is formal and transparent and that the workplace environment is open, fair and tolerant.
2 2
enC o u nTe r r e S o u rCe S lI M I TeD
The Company employs new employees and promotes current employees on the basis of performance, ability and attitude.
The Company, in keeping with the recommendations of the Corporate Governance Council provides the following
information regarding the proportion of gender diversity in the organisation as at 30 June 2011:
Females employed in the Company as a whole
Females employed in the Company in senior positions
Females appointed as a Director of the Company
Corporate Governance Council Recommendation 4
Safeguarding Integrity in Financial Reporting
Proportion of female /
total number of persons employed
5 / 12
1 / 1
0 / 4
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 sufficient 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.
The Board reviews the performance of the external auditors on an annual basis and meets with them during the year to
review findings 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.
Corporate Governance Council Recommendation 5
Make Timely and balanced disclosure
Continuous Disclosure
The Board is committed to the promotion of investor confidence 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 officer.
an n u a l r e p o rT 2 0 1 1
2 3
Corporate Governance Statement continued
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 significant announcements
together with all quarterly reports. These documents are available in both hardcopy on request and on the Company web
site at www.enrl.com.au
Shareholders are able to pose questions on the audit process and the financial 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.
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 it’s strategic objectives;
• Safeguard the assets and interests of the Company and its stakeholders; and
• Ensure the accuracy and integrity of external reporting.
Key identified 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.
2 4
enC o u nTe r r e S o u rCe S lI M I TeD
• Environment and safety
The Company is committed to ensuring that sound environmental management and safety practices are maintained
on its exploration activities.
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 significant
and material risks to the Board and its affairs are not of sufficient 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 financial
statements of company present a true and fair view, in all material aspects, of the financial 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 sufficient 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.
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. Share options which were issued to a Non-Executive
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.
an n u a l r e p o rT 2 0 1 1
2 5
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 2011 (the Group).
Directors
The names and details of the Directors of Encounter
Resources Limited during the financial year and until the
date of this report are:
Paul Chapman – B.Comm, ACA, Grad. Dip. Tax, CFTP(Snr), MAICD, MAusIMM
Non-Executive Chairman appointed 7 October 2005
Mr Paul Chapman is a chartered accountant with over
twenty years experience in the resources sector gained
in Australia and the United States. Mr Chapman has
experience across a range of commodity businesses
including gold, nickel, uranium, manganese, bauxite/
alumina and oil/gas. Mr Chapman has held managing
director and other senior management roles in public
companies of various sizes. Mr Chapman was a director
of Albidon Limited until 22 April 2009 and is the chairman
of ASX listed gold producer Sliver Lake Resources Ltd and
minerals explorer Rex Minerals Ltd.
Will Robinson – B.Comm, MAusIMM
Managing Director (Executive) appointed 30 June 2004
Mr Robinson is a resources industry commercial and
finance specialist with over sixteen 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. Mr Robinson has
extensive experience in the sale and distribution of
commodities and was Vice President – Marketing for
WMC’s nickel business from 2001 to 2003. Mr Robinson
founded Encounter Resources Limited in 2004 and
has overseen the development of the Company as its
Managing Director. Mr Robinson is the President of the
Association of Mining and Exploration Companies (AMEC).
Peter Bewick – B.Eng (Hons), MAusIMM
Exploration Director (Executive) appointed 7 October 2005
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, Exploration Manager for WMC’s
Nickel Business Unit and 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
brownfields exploration successes at Kambalda and with
the greenfield Collurabbie Ni-Cu-PGE discovery.
Jonathan Hronsky – BAppSci, PhD, MAusIMM, FSEG
Non-executive director appointed 10 May 2007
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. He
is currently a Director of exploration consulting group
Western Mining Services and Chairman of the board of
management of the Centre for Exploration Targeting at the
University of Western Australia.
Company Secretary
Kevin Hart – B.Comm, FCA
Mr Hart is a Chartered Accountant and was appointed to
the position of Company Secretary on 4 November 2005.
He has over 20 years experience in accounting and the
management and administration of public listed entities in
the mining and exploration industry.
He is currently a partner in an advisory firm, Endeavour
Corporate, which specialises in the provision of company
secretarial and accounting services to ASX listed entities.
Dan Travers – B.Sc (Hons), FCCA
Mr Travers is a Fellow of the Association of Chartered
Certified Accountants and was appointed to the position
of Joint Company Secretary on 20 November 2008. He
is an employee of Endeavour Corporate, which specialises
in the provision of company secretarial and accounting
services to ASX listed entities in the mining and exploration
industry.
2 6
enC o u nTe r r e S o u rCe S lI M I TeD
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
–
–
–
4,300,000
1,300,000
–
–
4,300,000
1,300,000
Included in the Directors’ interests in Unlisted Options, there are 5,600,000 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
during the year ended 30 June 2011, and the number of
meetings attended by each Director are 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 financial
year was mineral exploration in Western Australia.
There were no significant changes in these activities during
the financial year.
Results of Operations
The consolidated net loss after income tax for the financial
year was $4,933,106 (2010: $918,288).
Included in the consolidated loss for the current year is
a write-off of deferred exploration expenditure totalling
$2,097,750 (2010: $666,519).
Dividends
No dividend has been paid since the end of the previous
financial year and no dividend is recommended for the
current year.
Exploration
Exploration activities for the financial year have been
focussed on the Company’s Yeneena Project in the
Paterson Province, principally at the BM1 copper discovery
and the BM2 copper prospect. The Yeneena Project covers
a 1,300km2 area of the Paterson Province in Western
Australia.
Drilling during the year at BM1 has been successful in
defining a coherent zone of high grade, near surface,
copper oxide mineralisation. Planned follow up work
will test for primary copper sulphides below the oxide
position, identify key stratigraphic and structural controls,
and to identify the possible source of the copper oxide
mineralisation.
At BM2 the Company has identified a broad area of
regolith copper anomalism. Follow up diamond drilling
to provide structural information identified a 100m thick
zone containing metal bearing sulphide veins.
In addition to its activity at BM1 and BM2 the Company
has continued to advance other prospects at the Yeneena
Project.
Full details of the Company’s exploration activities are
available in the Exploration Review in the Annual Report.
Financial Position
At the end of the financial year the Group had $7,241,296
(2010: $2,374,645) in cash and at call deposits.
Capitalised mineral exploration and evaluation expenditure
is $7,535,748 (2010: $6,052,602).
Expenditure was principally focused on the exploration
for base metals at the Company’s Yeneena Project in the
Paterson Province of Western Australia.
an n u a l r e p o rT 2 0 1 1
2 7
Directors’ Report continued
Significant Changes in the State of Affairs
During the year the Company completed placements of 11,482,925 shares at $0.27 each, raising $3,100,390 before
costs, and 7,500,000 shares at $0.80 cents each, raising $6,000,000 before costs.
Other than the above, there have been no significant changes in the state of affairs of the Company and Group during or
since the end of the financial year.
Options over Unissued Capital
Unlisted Options
During the financial year the Company granted 5,500,000 unlisted options (2010: nil) over unissued shares to employees,
directors and consultants of the Company.
During the year 175,000 options were cancelled expired (2010: Nil) on the cessation of employment.
During the financial year 1,200,000 (2010: 275,000) ordinary shares were issued on the exercise of options. The shares
were issued at various prices and were exercisable by various dates.
Since the end of the financial year 150,000 options, exercisable at $1.35 each on or before 22 November 2014 have been
issued by the Company. No options have been exercised since the end of the financial year.
As at the date of this report 7,025,000 unissued ordinary shares of the Company are under option as follows:
Number of Options Granted
Exercise Price
Grant Date
Expiry Date
50,000
500,000
400,000
400,000
200,000
5,475,000
50 cents
53.5 cents
55 cents
70 cents
30 cents
$1.35
9 August 2007
11 December 2007
11 December 2007
11 December 2007
1 July 2008
Various
9 August 2012
30 November 2012
30 November 2012
30 November 2012
30 June 2013
22 November 2014
All options on issue at the date of this report are vested and exercisable.
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
There has not arisen in the interval between the end of the financial 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 financial 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.
2 8
enC o u nTe r r e S o u rCe S lI M I TeD
Remuneration Report (Audited)
Remuneration Policy
Remuneration levels are competitively set to attract and retain appropriately qualified and experienced Directors and senior
executives. Remuneration packages include fixed 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:
2011
Directors
P Chapman
W Robinson
P Bewick
J Hronsky
Total
2010
Directors
P Chapman
W Robinson
P Bewick
J Hronsky
Total
Base
Emolument
$
Superannuation
Contributions
$
Other
Benefits
$
Value of
Options
Granted
$
Share based
payments
as % of
remuneration
Total
$
52,000
250,275
231,000
46,200
4,608
22,525
20,790
4,158
579,475
52,081
–
–
–
–
–
–
–
1,509,449
345,017
56,608
272,800
1,761,239
395,375
1,854,466
2,486,022
–
–
85.7%
87.3%
74.6%
Base
Emolument
$
Superannuation
Contributions
$
Other
Benefits
$
39,267
213,513
196,333
40,600
3,534
19,216
17,670
3,654
489,713
44,074
–
–
–
–
–
Value of
Options
Granted
$
–
–
–
–
–
Total
$
42,801
232,729
214,003
44,254
533,787
Share based
payments
as % of
remuneration
–
–
–
–
–
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 2011 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 benefits 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.
an n u a l r e p o rT 2 0 1 1
2 9
Directors’ Report continued
Unlisted Options
4,300,000 (2010: Nil) options over unissued shares were issued to Directors of the Company as follows:
Director
Peter Bewick
Jon Hronsky
Number of Options
Exercise price
Expiry date
3,500,000
800,000
$1.35
$1.35
22 November 2014
22 November 2014
No options have been issued to other Key Management Personnel of the Company (2010: Nil).
No options have been issued to Directors or Key Management Personnel since the end of the financial year.
No options were exercised by Key Management Personnel during or since the end of the financial year.
End of Remuneration Report
Officer’s Indemnities and Insurance
During the year the Company paid an insurance premium to insure certain officers of the Company. The officers of the
Company covered by the insurance policy include the Directors named in this report.
The Directors and Officers 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
officers in their capacity as officers of the Company. The insurance policy does not contain details of the premium paid in
respect of individual officers of the Company. Disclosure of the nature of the liability cover and the amount of the premium
is subject to a confidentiality 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.
3 0
enC o u nTe r r e S o u rCe S lI M I TeD
Non-audit Services
During the year Crowe Horwath the Company’s auditor, has not performed any other services in addition to their
statutory duties:
Total remuneration paid to auditors during the financial year:
Audit and review of the Company’s financial statements
Other services
Total
2011
$
2010
$
32,000
–
32,000
30,500
–
30,500
The board considers any non-audit services provided during the year by the auditor and satisfies 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:
n all non-audit services are reviewed by the board to ensure they do not impact the impartiality and objectivity of the
auditor; and
n
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 32.
This report is made in accordance with a resolution of the Directors.
Dated at Perth this 16th day of September 2011.
W Robinson
Managing Director
an n u a l r e p o rT 2 0 1 1
3 1
Directors’ Report continued
3 2
enC o u nTe r r e S o u rCe S lI M I TeD
Consolidated Statement of Comprehensive Income
For the financial year ended 30 June 2011
Revenue
Total revenue
Employee expenses
Employee expenses recharged to exploration
Equity based remuneration expense
Non-executive Director’s fees
Depreciation expense
Corporate expenses
Joint venture administration costs recharged
Other expenses from ordinary activities
Exploration costs written off and expensed
Loss before income tax
Income tax benefit/(expense)
Loss after tax
Consolidated
2011
$
2010
$
337,741
337,741
(1,038,130)
838,006
(2,351,643)
(97,400)
(16,158)
(125,078)
34
(382,728)
(2,097,750)
(4,933,106)
–
305,373
305,373
(896,280)
716,688
(44,762)
(79,867)
(16,629)
(105,536)
383
(303,227)
(666,519)
(1,090,376)
172,088
(4,933,106)
(918,288)
Note
5
17
6
6
7
17
Other comprehensive income
–
–
Total comprehensive income for the year
(4,933,106)
(918,288)
Earnings per share for loss attributable to the
ordinary equity holders of the Company
Cents
Cents
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
27
27
(5.2)
(5.2)
(1.2)
(1.2)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
an n u a l r e p o rT 2 0 1 1
3 3
Consolidated Statement of Financial Position
As at 30 June 2011
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Capitalised mineral exploration and evaluation expenditure
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Employee benefits
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Equity remuneration reserve
Total equity
Note
8
9(a)
9(b)
Consolidated
2011
$
2010
$
7,241,296
121,144
98,584
2,374,645
320,961
96,079
7,461,024
2,791,685
11
12
337,195
7,535,748
152,274
6,052,602
7,872,943
6,204,876
15,333,967
8,996,561
14(a)
14(b)
482,966
37,879
520,845
520,845
454,483
62,973
517,456
517,456
14,813,122
8,479,105
15
17
17
21,660,547
(9,448,420)
2,600,995
12,745,067
(4,742,176)
476,214
14,813,122
8,479,105
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
3 4
enC o u nTe r r e S o u rCe S lI M I TeD
Consolidated Statement of Changes in Equity
For the financial year ended 30 June 2011
Consolidated
Issued
capital
$
Accumulated
losses
$
Equity
remuneration
reserve
$
Total
$
2010
Balance at the start of the financial year
Comprehensive income for the financial year
Movement in equity remuneration reserve
Transactions with equity holders
in their capacity as equity holders:
Shares issued
9,443,330
–
–
(3,823,888)
(918,288)
–
431,452
–
44,762
6,050,894
(918,288)
44,762
3,301,737
–
–
3,301,737
Balance at the end of the financial year
12,745,067
(4,742,176)
476,214
8,479,105
2011
Balance at the start of the financial year
Comprehensive income for the financial year
Movement in equity remuneration reserve
Transactions with equity holders
in their capacity as equity holders:
Shares issued
12,745,067
–
–
(4,742,176)
(4,933,106)
226,862
476,214
–
2,124,781
8,479,105
(4,933,106)
2,351,643
8,915,480
–
–
8,915,480
Balance at the end of the financial year
21,660,547
(9,448,420)
2,600,995
14,813,122
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
an n u a l r e p o rT 2 0 1 1
3 5
Consolidated Statement of Cash Flows
For the financial year ended 30 June 2011
Cash flows from operating activities
State Government funded drilling rebate
R&D tax concession tax refund
Interest received
Payments to suppliers and employees
Note
Consolidated
2011
$
2010
$
–
171,542
295,885
(754,242)
150,000
113,732
157,352
(629,858)
Net cash used in operating activities
26
(286,815)
(208,774)
Cash flows from investing activities
Payments for project acquisition costs
Payments for exploration and evaluation
Payments for plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issue of shares
Payments for share issue costs
Net cash used in financing activities
Net increase/(decrease) in cash held
Cash at the beginning of the financial year
–
(3,504,287)
(257,726)
(400,000)
(2,568,314)
(7,333)
(3,762,013)
(2,975,647)
9,446,640
(531,161)
3,291,745
(10,997)
8,915,479
3,280,748
4,866,651
2,374,645
96,327
2,278,318
Cash at the end of the financial year
8(a)
7,241,296
2,374, 645
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
3 6
enC o u nTe r r e S o u rCe S lI M I TeD
Notes to the Financial Statements
For the financial year ended 30 June 2011
Note 1 Summary of significant accounting policies
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated. The financial report includes financial
statements for the consolidated entity consisting of Encounter Resources Limited and its subsidiaries (“Group”).
(a) Basis of preparation
This general purpose financial report has been prepared in accordance with Australian equivalents to International
Financial Reporting Standards (AIFRS), other authoritative pronouncements of the Australian Accounting Standards
Board, Urgent Issues Group Interpretations and the Corporations Act 2001.
The financial report is presented in Australian dollars and all values are rounded to the nearest dollar.
The financial report of the Group was authorised for issue in accordance with a resolution of Directors on 16th
September 2011.
Statement of Compliance
The consolidated financial 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 financial report also complies with International Financial Reporting Standards (IFRS) in
their entirety.
Changes in accounting policies on initial application of Accounting Standards
The following new standards and amendments to standards are mandatory for the first time for the financial year
beginning 1 July 2010:
n AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements
Project;
n AASB 2009-8 Amendments to Australian Accounting Standards – Group cash-settled Share-based Payment
Transactions;
n AASB 2009-10 Amendments to Australian Accounting Standards – Classification of Rights Issues;
n AASB Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments;
n AASB 2009-13 Amendments to Australian Accounting Standards arising from Interpretation 19; and
n AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual Improvements Project.
The adoption of these standards did not have any impact on the amounts for the current period or prior periods.
Reporting basis and conventions
These financial statements have been prepared under the historical cost convention, and on an accrual basis.
Critical accounting estimates
The preparation of financial 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 significant to the financial statements, are disclosed in note 3.
Principles of consolidation
The financial statements of subsidiary companies are included in the consolidated financial statements from the date
control commences until the date control ceases. The financial 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 financial statements of
the Company.
an n u a l r e p o rT 2 0 1 1
3 7
Notes to the Financial Statements continued
For the financial year ended 30 June 2011
Note 1 Summary of significant accounting policies continued
(b) Segment reporting
Operating segments are identified and segment information disclosed, where appropriate, on the basis of internal
reports reviewed by the Company’s board of directors, being the Group’s Chief Operating Decision Maker, as defined
by AASB 8. Adoption of AASB 8 by the Group has not resulted in a redefinition of previously reported operating
segments.
(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 financial
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 profit or taxable profit 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 Office in respect of research and development tax concession claims are
recognised in the year in which the expenditure on which the claim was incurred.
(e) Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified 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.
3 8
enC o u nTe r r e S o u rCe S lI M I TeD
Note 1 Summary of significant accounting policies continued
(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 identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of
assets (cash generating units). Non financial 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 flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call
with financial 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 insignificant 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 financial liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.
(i) Property, plant and equipment
Property, plant and equipment is 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 benefits associated with the item will flow 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
financial 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
Office 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.
(j) Mineral exploration and evaluation expenditure
Mineral exploration and evaluation expenditure is written off as incurred or accumulated in respect of each identifiable
area of interest and capitalised. 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:
n such costs are expected to be recouped through the successful development and exploitation of the area of
interest, or alternatively by its sale; or
n 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 significant operations in, or in
relation to, the area of interest are continuing.
an n u a l r e p o rT 2 0 1 1
3 9
Notes to the Financial Statements continued
For the financial year ended 30 June 2011
Note 1 Summary of significant accounting policies continued
(j) Mineral exploration and evaluation expenditure continued
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 finance 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 financial 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 financial year
which are unpaid. The amounts are unsecured and usually paid within 30 days of recognition.
(m) Employee benefits
Wages, salaries and annual leave.
Liabilities for wages and salaries, including non-monetary benefits, 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 benefits 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 outflows.
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 benefit 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.
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. A
discount is applied, where appropriate, to reflect the non-marketability and non-transferability of unlisted options, as
the Black-Scholes option pricing model does not incorporate these factors into its valuation.
4 0
enC o u nTe r r e S o u rCe S lI M I TeD
Note 1 Summary of significant accounting policies continued
(m) Employee benefits continued
The fair value of the options granted is adjusted to reflect 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
benefit 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 classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of
tax, from the proceeds.
(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 financial year, adjusted for bonus elements in ordinary shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing 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 flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to, the taxation authority, are presented as operating cash flow.
(q) Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation
for the current financial year.
an n u a l r e p o rT 2 0 1 1
4 1
Notes to the Financial Statements continued
For the financial year ended 30 June 2011
Note 1 Summary of significant accounting policies continued
(r) Investments and other financial assets
Recognition
When financial assets are recognised initially, they are measured at fair value, plus in the case of investments not
at fair value through profit or loss, directly attributable transaction costs. The Group determines the classification of
its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each
financial year-end.
All regular way purchases and sales of financial 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 financial assets under
contracts that require delivery of the assets within the period established generally by regulation or convention in the
marketplace.
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or
loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term.
Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or
losses on investments held for trading are recognised in profit or loss.
(ii) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity
when the Group has the positive intention and ability to hold to maturity. Investments included to be held for an
undefined period are not included in this classification. 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 profit 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 financial assets with fixed or determinable payments that are not quoted in
an active market and are stated at amortised cost using the effective interest rate method.
(iv) Financial liabilities
Non-derivative financial 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 financial
and non-financial 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 financial assets at fair value through profit or loss, held to maturity investments and available for sale
financial 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 flow
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 flows, discounted at the market rate of interest at the reporting date.
4 2
enC o u nTe r r e S o u rCe S lI M I TeD
Note 2 Financial risk management
The Group has exposure to a variety of risks arising from its use of financial instruments. This note presents information
about the Company’s exposure to the specific 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 financial loss to the Group if a customer or counterparty to a financial 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 significant recurring by quantity is the receivable from the Australian Taxation Office, the risk of non-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 significantly all operating accounts and funds
held on deposit are with this bank other than cash at call deposits with Rabobank Australia and Bankwest Limited. The
Directors believe any risk associated with the use of predominantly only one bank is addressed through the use of at
least an A-rated bank as a primary banker and by the holding of a portion of funds on deposit with alternative A-rated
institutions. Except for this matter the Group currently has no significant concentrations of credit risk.
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient 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 finance resources to finance 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 financial 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 significant cash assets which may be susceptible to fluctuations in changes in interest rates. Whilst the
Group requires the cash assets to be sufficiently liquid to cover any planned or unforeseen future expenditure, which
prevents the cash assets being committed to long term fixed interest arrangements; the Group does mitigate potential
interest rate risk by entering into short to medium term fixed interest investments.
The Group does not have any direct contact with foreign exchange or equity risks other than their effect on the
general economy.
an n u a l r e p o rT 2 0 1 1
4 3
Notes to the Financial Statements continued
For the financial year ended 30 June 2011
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 financial 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 confident that decisions to either write off or carry forward such expenditure
reflect fairly the prevailing situation.
Note 4 Segment information
The Group has identified its operating segments based on the internal reports that are reviewed and used by the board of
directors in assessing performance and determining the allocation of resources. Reportable segments disclosed are based
on aggregating operating segments, where the segments have similar characteristics. The Group’s sole activity is mineral
exploration and resource development wholly within Australia, therefore it has aggregated all operating segments into the
one reportable segment being mineral exploration.
The reportable segment is represented by the primary statements forming these financial statements.
Note 5 Revenue
State Government funded drilling rebate
Interest receivable
Other income
Note 6 Loss for the year
Loss before income tax includes the following specific expenses:
Depreciation:
Office equipment
Leasehold improvements
2011
$
42,208
295,297
236
337,741
Consolidated
2010
$
150,000
155,123
250
305,373
Consolidated
2011
$
2010
$
8,779
7,379
16,158
9,250
7,379
16,629
Rental expenses on operating leases – minimum lease payments
51,674
28,142
Exploration expenditure written off
Exploration costs not capitalised
1,766,977
330,773
535,233
131,286
Total exploration costs expensed
2,097,750
666,519
4 4
enC o u nTe r r e S o u rCe S lI M I TeD
Note 7 Income tax
(a) Income tax expense
Current income tax:
Current income tax charge (benefit)
Current income tax not recognised
R&D tax refund receivable
Deferred income tax:
Relating to origination and reversal of timing differences
Deferred income tax benefit not recognised
Consolidated
2011
$
2010
$
(1,266,734)
1,266,734
–
(788,283)
788,283
(993,401)
993,401
(172,088)
(21,865)
21,865
Income tax expense/(benefit) reported in the income statement
–
(172,088)
The Group submitted a claim to the Australian Taxation Office for a Research and Development tax concession in respect
of qualifying transactions which occurred during the year ended 30 June 2010. An application has been lodged in respect
of qualifying expenditure for the year ended 30 June 2011, due to the immaterial monetary value of the claim no provision
has been made in these financial statements.
(b) Reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax expense
(4,933,106)
(1,090,376)
Tax at the Australian rate of 30% (2010 – 30%)
(1,479,932)
(327,113)
Tax effect of permanent differences:
Non-deductible share based payment
R&D tax refund receivable
Exploration costs written off
Capital raising costs claimed
Net deferred tax asset benefit not brought to account
705,493
–
629,325
(39,071)
184,185
13,429
(172,088)
199,956
(46,902)
160,630
Tax (benefit)/expense
–
(172,088)
(c) Deferred tax – Balance Sheet
Liabilities
Prepaid expenses
Capitalised exploration expenditure
Assets
Revenue losses available to offset against future taxable income
Employee provisions
Accrued expenses
Deductible equity raising costs
Net deferred tax asset/(liability)
(29,576)
(2,260,724)
(28,823)
(1,815,781)
(2,290,300)
(1,844,604)
4,359,507
11,364
6,000
129,458
3,118,000
18,892
6,000
60,550
4,506,329
3,203,442
2,216,029
1,358,838
an n u a l r e p o rT 2 0 1 1
4 5
Notes to the Financial Statements continued
For the financial year ended 30 June 2011
Note 7 Income tax continued
(d) Deferred tax – Income Statement
Liabilities
Prepaid expenses
Capitalised exploration expenditure
Assets
Accruals
Increase in tax losses carried forward
Employee provisions
Deferred tax benefit/(expense) not recognised
Consolidated
2011
$
2010
$
(753)
(444,943)
(12,257)
(700,766)
–
1,241,507
(7,528)
788,283
(1,685)
731,657
4,916
21,865
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 sufficient to enable the benefit 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 benefit from the deduction of the losses.
All unused tax losses of $14,531,690 (2010: $10,393,333) were incurred by Australian entities.
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 figures are reconciled to cash at the end of the financial year
as shown in the statement of cash flows as follows:
Consolidated
2011
$
2010
$
126,321
7,114,975
61,863
2,312,782
7,241,296
2,374,645
Cash and cash equivalents per statement of cash flows
7,241,296
2,374,645
(b) Deposits at call
The deposits are bearing fixed interest rates of 6.0% (2010: 5.4%).
These deposits have an average maturity of 87 days.
4 6
enC o u nTe r r e S o u rCe S lI M I TeD
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
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 Encounter Resources Limited’s wholly owned subsidiary companies:
Encounter Operations Pty Ltd
Hamelin Resources Pty Ltd
Subsidiary Company
Encounter Operations Pty Ltd
Hamelin Resources Pty Ltd
Country of
Incorporation
Australia
Australia
Consolidated
2011
$
2010
$
61,782
4,938
54,424
121,144
85,618
12,966
98,584
185,327
4,808
130,826
320,961
84,444
11,635
96,079
2011
$
2
1
2011
%
100%
100%
Company
2010
$
2
1
Ownership Interest
2010
%
100%
100%
Encounter Operations Pty Ltd was incorporated in Western Australia on 27 November 2006.
n
n Hamelin Resources Pty Ltd was incorporated in Western Australia on 24 November 2009.
The ultimate controlling party of the group is Encounter Resources Limited.
(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
Hamelin Resources Pty Ltd
Company
2011
$
2010
$
6,986,449
–
3,878,589
–
The loan to Encounter Operations Pty Ltd, to fund exploration activity is non interest bearing. The Directors of Encounter
Resources Limited do not intend to call for repayment within 12 months.
an n u a l r e p o rT 2 0 1 1
4 7
Notes to the Financial Statements continued
For the financial year ended 30 June 2011
Note 11 Non-current assets –
Property, plant and equipment
Field equipment
At cost
Accumulated depreciation
Office equipment
At cost
Accumulated depreciation
Leasehold improvements
At cost
Accumulated depreciation
Reconciliation
Field equipment
Net book value at start of the year
Additions
Depreciation
Net book value at end of the year
Office equipment
Net book value at start of the year
Additions
Depreciation
Net book value at end of the year
Leasehold improvements
Net book value at the start of the year
Additions
Depreciation
Net book value at the end of the year
Consolidated
2011
$
2010
$
592,309
(275,851)
339,457
(219,206)
316,458
120,251
73,441
(52,704)
20,737
22,137
(22,137)
–
68,569
(43,925)
24,644
22,137
(14,758)
7,379
337,195
152,274
120,251
252,852
(56,645)
177,725
1,863
(59,337)
316,458
120,251
24,644
4,872
(8,779)
20,737
7,379
–
(7,379)
–
28,424
5,470
(9,250)
24,644
14,758
–
(7,379)
7,379
No items of property, plant and equipment have been pledged as security by the Group.
4 8
enC o u nTe r r e S o u rCe S lI M I TeD
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 by Encounter Resources Limited on assets
not governed by joint venture agreements (i)
Costs capitalised by Encounter Operations Pty Ltd
in respect of the Yeneena Project (ii)
Capitalised share of exploration assets under JV Agreements (iii)
Cost carried forward
Consolidated
2011
$
2010
$
291,285
455,301
6,874,888
369,575
3,725,243
1,872,058
7,535,748
6,052,602
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.
(ii) Exploration and evaluation expenditure recognised incurred by Encounter Operations Pty Ltd on tenements at the
Yeneena Project.
(iii) Exploration and evaluation expenditure recognised on tenements under 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
2011
$
2010
$
Capitalised exploration costs at the start of the period
6,052,602
3,716,716
Capitalised costs in respect of the acquisition of the remaining
25% interest in the Yeneena Project from Barrick (Australia Pacific) Limited
Total exploration costs for the period
Total exploration costs written off and expensed for the period
–
3,580,896
(2,097,750)
400,000
2,602,405
(666,519)
Capitalised exploration costs at the end of the period
7,535,748
6,052,602
an n u a l r e p o rT 2 0 1 1
4 9
Notes to the Financial Statements continued
For the financial year ended 30 June 2010
Note 13 Interest 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.
Regional Uranium Joint Venture 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 Agreement
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.
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 $369,575 (2010: $1,872,058).
During the reporting period the Group recognised an expense of $1,544,098 (2010: $289,495) being its share of the
exploration expenditure written off by the joint venture entities during the period.
(i) Lake Way Joint Venture
Cash and cash equivalents
Trade and other receivables
Capitalised mineral exploration and evaluation expenditure
Total Assets
Trade and other payables
Total Liabilities
Net Assets
Revenue
Administration expenses
Result before tax
5 0
enC o u nTe r r e S o u rCe S lI M I TeD
2011
$
6,914
107
175,101
182,122
(7,407)
(7,407)
Consolidated
2010
$
5,680
1,146
174,711
181,537
(7,213)
(7,213)
174,715
174,324
1
–
1
1
–
1
Note 13 Interest in joint ventures continued
(ii) Regional Uranium Joint Venture
Cash and cash equivalents
Trade and other receivables
Capitalised mineral exploration and evaluation expenditure
Total Assets
Trade and other payables
Total Liabilities
Net Assets
Revenue
Exploration costs written off
Administration expenses
Result before tax
Note 14 Current liabilities – Trade and other payables
(a) Trade and other payables
Trade payables and accruals
Other payables
(b) Employee benefits
Liability for annual leave
Consolidated
2011
$
2010
$
13,818
241
644,044
9,053
381
2,140,673
658,103
2,150,107
(8,440)
(8,440)
(3,693)
(3,693)
649,663
2,146,414
1
(1,544,098)
(122)
2
(289,495)
(123)
(1,544,219)
(289,616)
Consolidated
2011
$
2010
$
444,133
38,833
482,966
396,406
58,077
454,483
37,879
62,973
Liabilities are not secured over the assets of the Group. 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.
an n u a l r e p o rT 2 0 1 1
5 1
Notes to the Financial Statements continued
For the financial year ended 30 June 2011
Note 15 Issued capital continued
(b) Share capital
Issued share capital
2011
No.
2010
No.
2011
$
2010
$
99,344,360
79,161,435
21,660,547
12,745,067
(c) Share movements during the year
Balance at the start of the financial year
Share placement
Issued on exercise of options
Issued on exercise of options
Issued on exercise of options
Issued on exercise of options
Issued on exercise of options
Issued on exercise of options
Share placement
Share placement
Less share issue costs
$0.34
$0.10
$0.20
$0.30
$0.45
$0.50
$0.525
$0.27
$0.80
79,161,435
–
500,000
100,000
125,000
100,000
125,000
250,000
11,482,925
7,500,000
–
68,596,900
10,289,535
275,000
–
–
–
–
–
–
–
–
12,745,067
–
50,000
20,000
37,500
45,000
62,500
131,250
3,100,390
6,000,000
(531,160)
9,443,330
3,489,442
27,500
–
–
–
–
–
–
–
(215,205)
Balance at the end of the financial year
99,344,360
79,161,435
21,660,547
12,745,067
(d) Option plan
Information relating to the Encounter Resources Limited Directors, Officers and Employees Option Plan is set out in
note 16.
Note 16 Options and share based payments
The establishment of the Encounter Resources Limited Directors, Officers and Employees Option Plan (‘the Plan”) was
last approved by a resolution at the Annual General Meeting of shareholders of the Company on 30 November 2009.
All eligible Directors, executive officers 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 fixed 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 financial year the Company granted 5,500,000 options over unissued shares, exercisable at $1.35 each on or
before 22 November 2014 (2010: nil).
5 2
enC o u nTe r r e S o u rCe S lI M I TeD
Note 16 Options and share based payments continued
(b) Options exercised during the year
During the financial year the Company issued shares on the exercise of 1,200,000 unlisted employee options (2010:
275,000). The options were exercised at various prices as follows:
Number of options exercised
Exercise price
Expiry date
100,000
100,000
250,000
125,000
125,000
500,000
1,200,000
$0.20
$0.45
$0.525
$0.50
$0.30
$0.10
23 March 2011
15 May 2011
7 December 2011
30 November 2012
30 June 2013
28 February 2014
(c) Options cancelled during the year
During the year 175,000 options (2010: nil) were cancelled upon termination of employment.
(d) Options on issue at the balance date
The number of options outstanding over unissued ordinary shares at 30 June 2010 is 6,875,000 (2010: 2,750,000). The
terms of these options are as follows:
Number of options outstanding
Exercise price
Expiry date
50,000
500,000
400,000
400,000
200,000
5,325,000
6,875,000
50 cents
53.5 cents
55 cents
70 cents
30 cents
$1.35
9 August 2012
30 November 2012
30 November 2012
30 November 2012
30 June 2013
22 November 2014
(e) Subsequent to the balance date
150,000 unlisted employee options, exercisable at $1.35 each on or before 22 November 2014 have been granted
subsequent to the balance date and 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)
2011
2010
No.
WAEP
(cents)
No.
Options outstanding at the start of the year
2,750,000
43.6
3,025,000
Options granted during the year
Options exercised during the year
Options expiring unexercised during the year
5,500,000
(1,200,000)
(175,000)
135.0
28.9
135.0
–
(275,000)
–
WAEP
(cents)
40.5
–
10.0
Options outstanding at the end of the year
6,875,000
117.0
2,750,000
43.6
an n u a l r e p o rT 2 0 1 1
5 3
Notes to the Financial Statements continued
For the financial year ended 30 June 2011
Note 16 Options and share based payments continued
(e) Subsequent to the balance date continued
Basis and assumptions used in the valuation of options.
The options issued during the year were valued using the Black-Scholes option valuation methodology.
Date granted
Number of
options granted
Exercise price
(cents)
Expiry date
Risk free
interest
rate used
26 November 2010
4 March 2011
5,000,000
500,000
$1.35
$1.35
22 November 2014
22 November 2014
5.27%
5.16%
Volatility
applied
103%
98%
Option
valuation
(cents)
43.13
39.06
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. A discount of 30% in respect of a lack of marketability has
been applied to the Black-Scholes option valuation to reflect the non-negotiability and non-transferability of the unlisted
options granted.
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 exercise of options
Transfer to accumulated losses on cancellation of options
Consolidated
2011
Equity
remuneraton
reserve (i)
$
2010
Equity
remuneration
reserve (i)
$
Accumulated
losses
$
Accumulated
losses
$
(4,742,176)
(4,933,106)
476,214
–
(3,823,888)
(918,288)
431,452
–
–
151,390
75,472
2,351,643
(151,390)
(75,472)
–
–
–
44,762
–
–
Balance at the end of the year
(9,448,420) 2,600,995
(4,742,176)
476,214
(i) The equity remuneration reserve is used to recognise the fair value of options issued but not exercised.
5 4
enC o u nTe r r e S o u rCe S lI M I TeD
Note 18 Financial instruments
Credit risk
The Directors do not consider that the Group’s financial 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 financial 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 financial liabilities, including estimated interest payments and excluding the
impact of netting agreements, note 2(b):
Consolidated
2011
Trade and other payables
2010
Trade and other payables
Fixed rate instruments
Financial assets
Variable rate instruments
Financial assets
Carrying
amount
$
Contractual
cash flows
$
6 months
or less
$
6-12
months
$
1-2
years
$
2-5
years
$
More than
5 years
$
424,133
424,133
424,133
424,133
424,133
424,133
376,406
376,406
376,406
376,406
376,406
376,406
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2010
–
Carrying amount ($)
2011
–
7,241,296
2,374,645
Interest rate risk
At the reporting date the interest profile of the Group’s interest-bearing financial instruments was:
Cash flow 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.
2011
Variable rate instruments
2010
Variable rate instruments
Profit or loss
Equity
1%
increase
$
1%
decrease
$
1%
increase
$
1%
decrease
$
72,413
(72,413)
72,413
(72,413)
23,746
(23,746)
23,746
(23,746)
an n u a l r e p o rT 2 0 1 1
5 5
Notes to the Financial Statements continued
For the financial year ended 30 June 2011
Note 18 Financial instruments continued
Fair values
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet are
as follows:
Cash and cash equivalents
Trade and other payables
Consolidated
2011
2010
Carrying
amount
$
Fair value
$
Carrying
amount
$
Fair value
$
7,241,296
(424,133)
7,241,296
(424,133)
2,374,645
(376,406)
2,374,645
(376,406)
6,817,163
6,817,163
1,998,239
1,998,239
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 financial year ended 30 June 2011 or 30 June 2010.
The Company has no franking credits available as at 30 June 2011 or 30 June 2010.
Note 20 Key management personnel disclosures
(a) Directors and key management personnel
The following persons were directors of Encounter Resources Limited during the financial 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
There were no other persons employed by or contracted to the Company during the financial year, having responsibility for
planning, directing and controlling the activities of the Company, either directly or indirectly.
(b) Key management personnel compensation
Details of key management personnel remuneration are contained in the Audited Remuneration Report in the Directors’
Report. A summary of total compensation paid to key management personnel during the year is as follows:
Total short-term employment benefits
Total share based payments
Total post-employment benefits
5 6
enC o u nTe r r e S o u rCe S lI M I TeD
2011
$
579,475
1,854,466
52,081
2,486,022
2010
$
489,713
–
44,074
533,787
Note 20 Key management personnel disclosures continued
(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 current
or prior financial year.
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 financial year.
Option holdings
Key Management Personnel have the following interests in unlisted options over unissued shares of the Company.
Name – Directors
2011
P Chapman
W Robinson
P Bewick
J Hronsky
2010
P Chapman
W Robinson
P Bewick
J Hronsky
Balance at
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
–
–
3,500,000
800,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,300,000
1,300,000
–
–
800,000
500,000
Vested and
exercisable
at the end
of the year
–
–
4,300,000
1,300,000
–
–
400,000
500,000
Share holdings
The number of shares in the Company held during the financial 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.
Name – Directors
2011
P Chapman
W Robinson
P Bewick
J Hronsky
2010
P Chapman
W Robinson
P Bewick
J Hronsky
Balance at
start of the year
4,747,400
21,846,900
4,725,000
–
4,747,400
21,846,900
4,725,000
–
Received during
the year on exercise
of options
Other changes
during the year
Balance at the
end of the year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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.
an n u a l r e p o rT 2 0 1 1
5 7
Notes to the Financial Statements continued
For the financial year ended 30 June 2011
Note 21 Remuneration of auditors
Audit and review of the Company’s financial statements
Other services
Total
Note 22 Contingencies
2011
$
32,000
–
32,000
Consolidated
2010
$
30,500
–
30,500
(i) Contingent liabilities
There were no material contingent liabilities not provided for in the financial statements of the Group as at 30 June 2011
or 30 June 2010 other than:
Yeneena Project Gold Claw-back
Included in the agreement for the Group’s acquisition of the remaining 25% interest in the Yeneena Project is a gold
claw-back right in the event of a major discovery of a deposit of minerals dominant in gold, with gold revenue measured
in a mining study equal to or exceeding 65% of total revenue and where a JORC compliant mineral resources exceeds
4,000,000 ounces of gold or gold equivalent, or is capable of producing at least 200,000 ounces of gold or gold equivalent
per year for 10 years. Under the agreement Barrick (Australia Pacific) Limited retains the right to regain an interest of
between 70 and 100% in the gold discovery at a price of between US$40-100 per ounce, with a 1.5% net smelter royalty
to Encounter Resources.
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 significantly 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 2011 or 30 June 2010.
5 8
enC o u nTe r r e S o u rCe S lI M I TeD
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 financial statements and
which cover the following twelve month period amount to $939,000 (2010: $1,144,500). 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:
Due within one year
Due later than one year but not later than five years
Total
Consolidated
2011
$
2010
$
41,250
–
41,250
73,431
–
73,431
The operating lease commitment relates to the lease of the Group’s Perth office plus car park. The initial lease period
was for three years commencing from 1 July 2008, and has been extended for 6 months to 31 December 2011. At the
reporting date there are no other operating lease commitments.
(c) Contractual Commitment
There are no material contractual commitments as at 30 June 2011 other than those disclosed above and not otherwise
disclosed in the Financial Statements.
Note 24 Related party transactions
Transactions with Directors during the year are disclosed at note 20 – Key Management Personnel.
The Company incurred the following amounts during the year in respect of exploration activities on under joint venture
agreements, for which it acts as manager:
Regional Uranium JV
Lake Way Uranium JV
Details of the Company’s interests under the
joint venture agreements are provided at Note 13.
As at the end of the financial year the Company had
the following amounts owing to it by the joint ventures:
Regional Uranium JV
Lake Way Uranium JV
2011
$
41,277
564
2010
$
165,963
6,391
8,440
12,345
35,693
12,021
an n u a l r e p o rT 2 0 1 1
5 9
Notes to the Financial Statements continued
For the financial year ended 30 June 2010
Note 25 Events occurring after the balance sheet date
There has not arisen in the interval between the end of the financial 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 financial years.
Note 26 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
Depreciation
Exploration cost written off
Share based payments expense
Movement in assets and liabilities:
(Increase)/decrease in R&D tax refundable
(Increase)/decrease in prepaid expenses
(Increase)/decrease in receivables
Increase/(decrease) in payables
Consolidated
2011
$
2010
$
(4,933,106)
6,243
16,158
2,097,750
2,351,643
171,542
(1,358)
(11,885)
16,198
(918,288)
25,470
16,629
666,519
44,762
(58,356)
1,273
2,229
10,988
Net cash outflow from operating activities
(286,815)
(208,774)
Note 27 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
Consolidated
2011
Cents
2010
Cents
(5.2)
(1.2)
(5.2)
(1.2)
$
$
(c) Loss used in calculation of basic and diluted loss per share
Consolidated loss after tax from continuing operations
(4,933,106)
(918,288)
(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
No.
No.
93,776,980
76,317,458
At 30 June 2011 the Company has on issue 6,875,000 (2010: 2,750,000) unlisted options over ordinary shares that are
not considered to be dilutive.
6 0
enC o u nTe r r e S o u rCe S lI M I TeD
Note 28 Parent Entity Information
Financial position
Assets
Current assets
Non-current assets
Total Assets
Liabilities
Current liabilities
Total Liabilities
NET ASSETS
Equity
Issued Capital
Equity remuneration reserve
Accumulated losses
TOTAL EQUITY
Financial performance
Loss for the year
Other comprehensive income
Total comprehensive income
Company
2011
$
2010
$
7,349,463
7,984,504
2,791,685
6,204,876
15,333,967
8,996,561
520,845
520,845
517,456
517,456
14,813,122
8,479,105
21,660,547
2,600,995
(9,448,420)
12,745,067
476,214
(4,742,176)
14,813,122
8,479,105
(4,933,106)
–
(918,288)
–
(4,933,106)
(918,288)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
No guarantees have been entered into by the parent entity in relation to the debts of its subsidiary companies.
Contingent liabilities
For full details of contingencies see Note 22.
Commitments
For full details of commitments see Note 23.
an n u a l r e p o rT 2 0 1 1
6 1
Directors’ Declaration
In the opinion of the Directors of Encounter Resources Limited (“the Company”)
(a)
the financial statements and notes set out on pages 33 to 61 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 2011 and of the performance for the year
ended on that date of the Group.
(b)
the remuneration disclosures that are contained in the Remuneration Report in the Directors Report comply with
Australian Accounting Standard AASB 124 Related Party Disclosures, The Corporations Act 2001 and the Corporations
Regulations 2001.
(c)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due
and payable.
(d)
the financial statements comply with International Financial Reporting Standards as set out in Note 1.
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 2011.
This declaration is made in accordance with a resolution of the Directors.
Signed at Perth this 16th day of September 2011.
W Robinson
Managing Director
6 2
enC o u nTe r r e S o u rCe S lI M I TeD
INDEPENDENT AUDITOR’S REPORT
Report on the Financial Report
We have audited the accompanying financial report of Encounter Resources Ltd, which comprises the
consolidated statement of financial position as at 30 June 2011, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, notes comprising a summary of significant
accounting policies and other explanatory information, and the directors’ declaration of the
consolidated entity comprising the company and the entities it controlled at the year’s end or from time
to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation of the financial report that gives a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of Encounter Resources Ltd., would be in the same terms if given to
the directors as at the time of this auditor’s report.
an n u a l r e p o rT 2 0 1 1
6 3
Crowe Horwath Perth is a WHK Group Firm and a member of Crowe Horwath International, a Swiss verein. Each member firm of Crowe Horwath is a separate and independent legal entity.
Opinion
In our opinion:
(a)
Opinion
In our opinion:
the financial report of Encounter Resources Ltd is in accordance with the Corporations Act
2001, including:
(a)
(i)
(ii)
the financial report of Encounter Resources Ltd is in accordance with the Corporations Act
giving a true and fair view of the consolidated entity’s financial position as at 30 June
2001, including:
2011 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001;
giving a true and fair view of the consolidated entity’s financial position as at 30 June
and
2011 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001;
the consolidated financial report also complies with International Financial Reporting Standards
and
as disclosed in Note 1.
(ii)
(i)
(b)
(b)
the consolidated financial report also complies with International Financial Reporting Standards
as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 29 to 30 of the directors’ report for the
year ended 30 June 2011. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 29 to 30 of the directors’ report for the
year ended 30 June 2011. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
Opinion
conducted in accordance with Australian Auditing Standards.
In our opinion, the Remuneration Report of Encounter Resources Ltd. for the year ended 30 June
2011 complies with section 300A of the Corporations Act 2001.
Opinion
In our opinion, the Remuneration Report of Encounter Resources Ltd. for the year ended 30 June
2011 complies with section 300A of the Corporations Act 2001.
CROWE HORWATH PERTH
CROWE HORWATH PERTH
SEAN MCGURK
Partner
Signed at Perth, 16 September 2011
SEAN MCGURK
Partner
Signed at Perth, 16 September 2011
6 4
enC o u nTe r r e S o u rCe S lI M I TeD
Crowe Horwath Perth is a WHK Group Firm and a member of Crowe Horwath International, a Swiss verein. Each member firm of Crowe Horwath is a separate and independent legal entity. Crowe Horwath Perth is a WHK Group Firm and a member of Crowe Horwath International, a Swiss verein. Each member firm of Crowe Horwath is a separate and independent legal entity.
ASX Additional Information
Pursuant to the Listing Requirements of the Australian Securities Exchange, the shareholder information set out below was
applicable as at 3 October 2011
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
Number of
shareholders
116
314
233
521
106
Securities held
65,693
983,555
1,957,110
16,812,488
79,525,514
Totals
1,290
99,344,360
There were 77 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
Issued Ordinary Shares
Number of shares
Percentage of shares
21,846,900
10,971,980
21.99%
11.08%
an n u a l r e p o rT 2 0 1 1
6 5
ASX Additional Information continued
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
UBS Nominees Pty Ltd
Jorge Bernhard
HSBC Custody Nominees Australia Limited
Willstreet Pty Ltd
Pieter Los
UBS Wealth Management Australia Nominees
Charles Robinson
National Nominees Limited
Gee Nominees Pty Ltd
Samantha Hogg
HSBC Custody Nominees Australia Limited
Ropat Nominees Pty Ltd
Thirty-fifth Celebrations Pty Ltd
HSBC Custody Nominees Australia Limited
Andrew Bewick
Total
D. Voting Rights
Listed Ordinary Shares
Number
Percentage Quoted
16,216,900
11,024,852
16.32%
11.10%
5,580,000
4,650,000
4,650,000
2,600,000
2,107,375
1,710,808
1,700,000
1,500,000
1,260,551
1,200,000
1,074,650
1,020,000
910,000
719,400
710,000
685,000
585,609
558,270
5.62%
4.68%
4.68%
2.62%
2.12%
1.72%
1,71%
1.51%
1.27%
1.21%
1.08%
1.03%
0.92%
0.72%
0.71%
0.69%
0.59%
0.56%
60,463,415
60.86%
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.
E. Restricted Securities
There are no restricted securities.
6 6
enC o u nTe r r e S o u rCe S lI M I TeD
This page has been left blank intentionally.
an n u a l r e p o rT 2 0 1 1
6 7
This page has been left blank intentionally.
6 8
enC o u nTe r r e S o u rCe S lI M I TeD
Morning at the Yeneena Camp
www.enrl.com.au