ABN 47 109 815 796
A N NuAl
r e p o r T
2 0 1 2
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
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.
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 Auditor’s Report
ASX Additional Information
page
1
3
19
20
27
33
34
35
36
37
38
62
63
65
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.
E n c o u n tEr r E s o u r cE s lI M I TeD A N N
u Al r e p o r T 2 0 1 2
letter from the Chairman & Managing Director
Dear Fellow Shareholder,
Over the past 12 months the Company has been actively advancing its greenfield copper discoveries made at the Yeneena
Project (“Yeneena”) in the Paterson Province in Western Australia (“WA”).
The Company completed a total of 37,000 metres of drilling during the 2011 calendar year. In 2012 the Company is
investing in 25,000 metres of diamond, RC and aircore drilling at Yeneena. The significant escalation in exploration activity
over the last 18 months has been demanded by the discovery of significant copper at four separate locations at Yeneena.
Yeneena is located in a region that has demonstrated the capacity to produce world class mineral deposits including the
giant gold/copper mine at Telfer, the Woodie Woodie manganese mine, the Nifty copper mine and the Kintyre uranium
deposit. Importantly, all of these deposits were discovered in areas of outcrop and minimal systematic exploration has
occurred across the vast areas of sand cover in this region.
The initial BM1 discovery made by the Company was the first significant new copper discovery in this area for over
25 years. The initial discovery of high grade copper oxide at BM1 was a milestone and resulted in the rapid escalation
of exploration activities at Yeneena. Drilling by the Company has defined a coherant zone of near surface copper oxide
mineralisation at BM1 over an area of approximately 500m x 250m with intersections up to 10m @ 6.8% Cu from 32m.
New discoveries of copper with significant scale and grade potential have since been made at Yeneena, including:
n At the BM7 prospect, located 3km south of the initial copper discovery at BM1, RC and diamond drilling has confirmed
a large new copper discovery. Intersections at this new discovery drilled in 2012 include:
n 73m @ 0.4% copper incl. 8m @ 1.0% copper
n 34m @ 0.6% copper incl. 10m @ 1.6% copper
n 22m @ 0.4% copper incl. 2m @ 2.9% copper
n 34m @ 0.5% copper incl. 14m @ 0.8% copper
n 16m @ 0.4% copper incl. 7m @ 0.7% copper
Drilling at the Yeneena project
AN N u Al r e p o r T 2 0 1 2
1
letter from the Chairman & Managing Director continued
n The BM2 prospect where the Company has discovered an 800m long 0.25% copper oxide anomaly. The deep drill
program completed at BM2 in April 2012 resulted in an intersection of 26m @ 0.6% copper from a depth of 100m.
This drill program also uncovered a highly anomalous zinc unit with an intersection of 201m @ 0.6% zinc from a depth
of 233m to end of hole.
n The T4 prospect where a stratigraphic diamond hole intersected multiple zones of copper anomalism up to 0.9m @
0.84% copper. The copper at T4 is related to a magnetic anomaly with a strike-length of approximately 4km that is
interpreted to represent magnetite alteration associated with copper mineralisation.
Our targeting methodologies at Yeneena are having a tremendous success rate at finding new zones of copper
mineralisation under sand cover across our major land position in this region. We believe we are seeing the hallmarks
of the early stages of a new copper province in Western Australia.
During the year the Company expanded its land holding at Yeneena with the completion of a joint venture agreement
with the Independence Group in July 2012. The Company has secured a huge foothold in this region with the 1,400km2
land holding containing an extensive pipeline of exploration opportunities.
The significant escalation in exploration activity over the last 18 months has been
demanded by the discovery of significant copper at four separate locations at Yeneena.
The Company has established a distinct competitive advantage in the area through our understanding of ore forming
processes and how these mineralised systems are represented in regional datasets. Advances in modern geophysics
(including advances in rapid collection airborne electromagnetics) and geochemistry (improved assay detection limits and
real time analysis though hand held technologies) continue to improve the explorability of this world class mineral province.
The focus for the upcoming year is to advance one or more of these recent copper discoveries from the initial groundbreaking
intersections to a mineral resource definition program.
At BM7, the Company has uncovered a large scale copper-cobalt mineral system. BM7 has demonstrated broad
thicknesses of lower grade copper mineralisation intersected over a large area. The recent intersection of up to 0.9m @
4.9% copper, has demonstrated the potential for high grade copper within this large mineral system. To date the Company
has only had access to the northern quarter of the 3km long target at BM7 and drilling has been on a broad spacing.
The tenement over the remaining part of the BM7 target was granted in August 2012 with drilling scheduled to commence
in October 2012.
In closing we would like to thank our committed team for their professionalism and dedication. The company is fortunate
to have such a talented team of geologists who are leaders in their field. Finally, we would also take this opportunity to
thank our fellow shareholders for their ongoing support.
Yours sincerely
paul Chapman
Chairman
Will robinson
Managing Director
2
E n c o u n tEr r E s o u r cE 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 The Yeneena project (“Yeneena”) – a major ground position between the Nifty copper mine, the Telfer gold/copper
mine and the Kintyre uranium deposit where Encounter has made a series of new copper discoveries that have
demonstrated the potential for large tonnage copper 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 Al r e p o r T 2 0 1 2
3
exploration Review continued
paterson province
YEnEEnA ProJEct
(e45/2500, e45/2501, e45/2502, e45/2503, e45/2561, e45/2657, e45/2658, e45/2805
and e45/2806 – 100% encounter), elA45/3881 earning up to 85%
The Yeneena project covers a 1,400km2 tenement package in the Paterson Province of WA located between the Nifty
copper mine, the Telfer gold/copper mine and the Kintyre uranium deposit (Figure 2). Encounter has made a series of new
copper discoveries that demonstrate the potential of the area for large tonnage copper deposits. 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 geology for the Yeneena Basin comprises the Palaeoproterozoic Rudall Complex as the lowermost unit,
unconformably overlain by the Neoproterozoic Coolbro Sandstone which is conformably overlain by the Broadhurst
Formation. The Broadhurst Formation is the host to Encounter’s 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.
A total of 37,000m of drilling was completed in 2011, along with extensive airborne geophysical surveys and geochemical
programs. In 2012 the company is in the process of completing a 25,000m program of aircore, RC and diamond drilling.
This work has resulted in the discovery of copper sulphide mineralisation at four separate targets at Yeneena (BM1, BM2,
BM7 and T4).
Figure 2: Yeneena project leasing and target plan.
4
E n c o u n tEr r E s o u r cE s lI M I TeD
Diamond drill rig at T4
BM7 copper Discovery
The BM7 prospect is located 3km south of the initial BM1 discovery (Figure 2), at the intersection of the north-east
trending Queen fault and the regionally-extensive McKay fault. Copper-oxide mineralisation has been defined by aircore
drilling over 3.5km along the Queen fault and remains open both along strike and to the south. The best development of
this mineralisation observed to date in shallow aircore drilling is close to the intersection of the Queen and McKay faults.
The first diamond drill hole beneath the large scale copper-oxide anomaly, EPT1109, was completed in December 2011.
The drill hole intersected an extensive hydrothermal stockwork system containing broad zones of finely disseminated,
locally blebby and stringer copper sulphide mineralisation. Assay results included a zone of 102m @ 0.2% Cu and
243ppm Co from 274m. These results indicate the presence of a large-scale, depth-extensive, primary copper-mineralised
system at BM7.
A total of 29 RC drill holes were completed at BM7 during May and June 2012 in a broad 200m x 200m pattern. This drill
program was expanded from the original 2500m program following the identification of significant extensions to the zone
of copper-oxide mineralisation defined by the aircore drill program.
The assay results from the RC program include several zones of oxide, transitional and sulphide copper mineralisation:
n 34m @ 0.64% copper and 793ppm cobalt from 156m incl. 10m @ 1.64% copper and 1616ppm cobalt from 166m
n 22m @ 0.38% copper and 185ppm cobalt from 140m incl. 2m @ 2.87% copper and 518ppm cobalt from 156m
n 34m @ 0.48% copper from 20m incl. 14m @ 0.83% copper from 28m
n 18m @ 0.38% copper and 298ppm cobalt from 46m incl. 2m @ 2.24% copper from 50m
n 40m @ 0.21% copper and 143ppm cobalt from 100m incl. 12m @ 0.40% copper from 100m
n 12m @ 0.40% copper and 318ppm cobalt from 40m
n 12m @ 0.24% copper and 116ppm cobalt from 18m
Nine diamond drill holes have been completed at BM7 in 2012. This program has successfully intersected zones of
copper-sulphide mineralisation below the depth of the RC drilling. This mineralisation varies from coarse blebby copper-
sulphides in stockwork style vein arrays to narrower, strongly brecciated and sheared zones containing pervasive
disseminated copper-sulphides.
AN N u Al r e p o r T 2 0 1 2
5
exploration Review continued
BM7 copper Discovery continued
Assays results have been received from six drill holes to date and include the following intersections:
n 33m @ 0.37% copper and 221ppm cobalt from 410m incl. 19m @ 0.47% copper and 220ppm cobalt from
423m in EPT 1168
n 46m @ 0.21% copper from 148m in EPT1160
n 16m @ 0.41% copper and 324ppm cobalt from 498m incl. 7m @ 0.69% copper and 319ppm cobalt from 506m
in EPT 1167
n 279m @ 0.1% Cu and 100ppm Co from 172m incl. 23m @ 0.31% Cu and 170ppm Co and 6m @ 0.7% Cu and
435ppm Co in EPT1244
n 73m @ 0.4% Cu and 100ppm Co from 74m incl. 8m @ 1.0% Cu and 120ppm Co and 0.9m at 4.9% Cu and
350ppm Co in EPT1159
The RC and diamond drilling programs at BM7 have confirmed a new copper discovery at the Yeneena project. Mineralisation
intersected in drilling extends over an 800m strike extent and remains open to the south. The system appears to widen
and strengthen to the south where copper mineralisation has been intersected in drill holes across a 1km wide section
(Figure 3).
Figure 3: BM7 prospect drill status plan.
6
E n c o u n tEr r E s o u r cE s lI M I TeD
BM7 copper Discovery continued
The shales at BM7 are highly dolomite and silica altered and this alteration appears to have subdued the conductance
of the host rocks. A recently flown VTEM survey indicates that BM7 drilling to date is situated at the northern end of a
substantial target area of low conductance (Figure 4). It is interpreted that the dolomite-silica alteration process is intimately
associated with the copper mineralisation event, which implies that the BM7 copper system may extend a further 2.5km
south of the current area of drilling.
The 3km long target zone of low conductivity
at BM7 coincides with a major flexure in the
McKay Fault, where it changes from a SSW to a
SSE orientation. Conceptually such flexure zones
are considered highly prospective positions
as mineralising fluids are commonly focused at
these locations in major ore systems.
The tenement to the south, E45/2805, was
the
previously held under application by
Company, and prevented the extension of the
drilling program further south. This tenement
covers an area of 210km2 and importantly hosts a
12km segment of the McKay Fault Zone running
south from BM7. Exploration License E45/2805
was granted in August 2012. A heritage survey at
the new tenement was completed in September
2012 and drilling is scheduled to re-commence
in October 2012 to test the remaining 2.5km
long extent of the geophysical target at BM7.
is
BM1 copper Discovery
The BM1 Copper Discovery
located
approximately 60km south of the Nifty copper
mine (Figure 2). The BM1 copper mineralisation
is hosted within
the Broadhurst Formation
and is almost entirely overlain by 2-10 metres
of
transported cover. Aircore (“AC”) drilling
in the BM1 region has defined copper oxide
mineralisation over an 8km section of the McKay
fault zone from BM6 in the north to the BM7
prospect in the south (Figure 4).
High grade copper mineralisation was first
discovered in aircore drilling at BM1 in June
2010. Aircore and reverse-circulation (“RC”)
drilling defined two zones of coherent near
surface copper-oxide mineralisation named the
Northern and Central Areas. This mineralisation
lies adjacent to the intersection of the McKay Fault
with the north-east trending King fault (Figure 4).
At the Northern Area the flat lying copper oxide
mineralisation extends over an area 500m by
250m and is interpreted to be the weathered
remnants of a primary copper-sulphide position.
Figure 4: BM1, BM7 and BM6 prospects Maximum copper in hole.
AN N u Al r e p o r T 2 0 1 2
7
exploration Review continued
BM1 copper Discovery continued
Figure 5: Drill hole location plan BM1 Northern Area showing major faults and western breccia zone.
Diamond drilling during 2011 and 2012 focused on key structural intersections, interpreted to be pathways for the
ore bearing fluids that generate large scale sediment-hosted copper deposits. Diamond drilling identified an intense,
steep dipping fault breccia zone on the western margin of the BM1 Northern Area containing primary copper-sulphides
(Figure 5). Copper-sulphide mineralisation of varying intensity was intersected and was generally associated with bands
of intense quartz-carbonate veining along lithological
boundaries. Two diamond drill holes
intersected
significant copper oxide mineralisation including the
highest grade intersection at the project to date in
EPT751 (10m @ 6.8% copper from 32m). Significantly
diamond drilling confirmed that the copper system at
BM1 is alive to a vertical depth of at least 500m.
The western breccia zone appears to be a long lived
fluid pathway and has potentially been the focus
of multiple mineralising events that introduced the
copper, cobalt and silver mineralisation. The presence
of multiple phases of mineralisation is supported by the
observation that copper, cobalt and silver are not always
found together within the zone.
At the end of the 2011 field campaign, EPT1128
was in progress and at a downhole depth of 534m.
Visual inspection noted disseminated copper-sulphide
mineralisation in the last few trays of drill core.
Copper oxide mineralisation from BM1
8
E n c o u n tEr r E s o u r cE s lI M I TeD
BM1 copper Discovery continued
Drill hole EPT1128 was re-entered when diamond
drilling recommenced at BM1 in June 2012 and
completed to a depth of 690.6m. The narrow bands
of disseminated copper-sulphide mineralisation
noted at the bottom of the hole at the end of the
2011 drilling continued for a further 40m downhole.
Assay results from this extended hole are expected
to be received in October 2012.
BM6 Prospect
A detailed helicopter EM survey (“VTEM”) completed
at BM1 in June 2011 identified a regional scale
anomaly 3km north of BM1, adjacent to the regionally
significant McKay fault. This target was named BM6
(Figure 4). Initial reconnaissance aircore drilling over
BM6 was completed in September 2011. Assays
from reconnaissance aircore drilling included copper
grades up to 1.4% Cu (Figure 6) and indicate a close
correspondence between the strongest geochemical
and geophysical anomalism. The copper anomaly
at BM6 is currently 800m long, and is open to
the north and south. Follow up drilling at the BM6
prospect is planned in 2013.
Figure 6: BM6 Prospect drill status plan.
VTEM survey helicopter and crew
AN N u Al r e p o r T 2 0 1 2
9
exploration Review continued
BM2 Prospect
The BM2 prospect is located 50km south-east of the Nifty copper deposit and 34km north-east of the BM1 copper
discovery, on the regionally extensive Tabletop Fault. This structure is known to be metallogenically important and is
closely associated with the position of the Nifty Copper deposit, 50km along strike to the north-west (Figure 2). The
prospect was first aircore drilled in August 2010 and later followed up with a more extensive aircore drill program in 2011.
A broad zone of copper anomalism (+0.25% Cu) was identified within the regolith over a strike extent of 800m
(Figure 7). The identification of this significant base metal anomaly was made in an area of no outcrop, with up to 20m of
transported overburden.
An orientation partial leach soil geochemical survey was completed over the BM2 prospect in 2011. It was designed to
determine if soil surveys can be used to ‘look through’ areas of thick transported cover. The results were encouraging, and
highlighted an east-northeast copper anomaly that is consistent with the copper anomaly defined by aircore drilling. This
surface sampling development has positive implications for the prioritisation and testing of sand-covered regional targets
at the Yeneena project.
Two diamond drill holes completed in August 2011 were the first deep drilling at the prospect. These drill holes were
co-funded through the Western Australian Government Exploration Incentive Scheme. The purpose of these drill holes
was to test for the source of the 800m long copper anomaly defined in aircore drilling and to gain a basic understanding of
the geology and structure at depth. Assay results from the two diamond drill holes drilled on section 389350mE confirmed
extensive thicknesses of zinc mineralisation in both drill holes with the mineralisation open along strike and at depth
(Figure 8). This zinc mineralisation appears stratabound in nature with the ‘Upper Zinc Contact’ coinciding with a marked
change in lithogeochemical indicators. The lower contact of this mineralised unit remains untested with zinc anomalism
extending to the bottom of all deep holes completed at BM2.
Figure 7: BM2 maximum copper in aircore drilling and drill status plan
(2012 RC and diamond collars in blue, 2011 diamond collars in black).
1 0
E n c o u n tEr r E s o u r cE s lI M I TeD
BM2 Prospect continued
Figure 8: BM2 Cross Section A-A’ 389350mE.
Results from the August 2011 diamond drilling include:
n EPT798 – 188m @ 0.35% Zn from 213.3m to EOH incl. 44.7m @ 0.74% Zn
n EPT799 – 173.6m @ 0.30% Zn from 375m incl. 26.5m @ 0.51% Zn; and 23.9m @ 0.37% Zn from 608m to EOH
Significantly, the minor levels of copper anomalism observed in fresh rock at depth in these drill holes were considered
insufficient to account for the scale and intensity of the 800m long near surface copper oxide anomalism at BM2. This
interpretation suggests that the copper anomalism observed within the regolith on this section represent secondary
dispersion from a primary source. It is noted that in many ore-systems it is not uncommon for zinc mineralisation to
occur distal to a central zone of copper mineralisation.
The Company was successful in its merit-based application for a second round of WA Government co-funded RC/diamond
drilling at BM2 in 2012. This funding contributed $150,000 towards the cost of drilling designed to test for the primary
source of the copper oxide anomalism and define potential vectors to higher grade zinc mineralisation.
An RC drill program was completed to test up dip and to the west of section 389350mE where previous diamond drilling
had intersected a broad zone of zinc sulphide mineralisation (see Figure 7). RC drilling results confirmed a heavily leached
oxide profile with many drill holes showing a strengthening of mineralisation at depth. RC drill holes EPT1136A through
to EPT1141 all ended in anomalous zinc and lead and have mapped out an extensive area of base-metal sulphide
mineralisation that extends over 1km in strike (Figure 7).
Drill hole EPT1140, collared in the core of the regolith copper anomaly, returned the first copper sulphide intersection at
BM2 of 26m @ 0.60% copper from 100m incl. 10m @ 0.92% copper from 100m (see Figure 9). This intersection sits
below the depth of the original aircore drilling and remains open to the west and at depth.
AN N u Al r e p o r T 2 0 1 2
1 1
exploration Review continued
BM2 Prospect continued
Figure 9: BM2 Cross Section 389150mE.
Diamond drill hole EPT1174 was designed to test for copper sulphide mineralisation at depth below EPT1140 and
to test for extensions to the zinc sulphide mineralisation drilled in EPT798 and EPT799. The hole intersected a broad zone
of carbonate alteration and veining in the shale unit that contained visible zinc and lead sulphides (Figure 9). Assays from
this hole confirmed the increased thicknesses and grade of primary zinc mineralisation, relative to intial results from
section 389350mE.
Assay results for EPT1174 include:
n 201m @ 0.6% zinc from 233m to end of hole including:
n 13m @ 1.3% zinc from 295m; and
n 8m @ 1.5% zinc from 349m; and
n 29m @ 1.0% zinc from 400m
A helicopter based VTEM
(“Versatile Time domain
Electromagnetic”) survey was also completed over the BM2
prospect during 2012. A series of 150m spaced north-south
lines were flown to assess whether any conductors could be
mapped out within the area of the copper regolith anomalism.
Initial processing and modelling of the VTEM data has outlined
a shallow NE dipping conductor centred to the west and
downdip of EPT1140. Further drilling at the BM2 prospect is
planned to test the modelled EM conductor located adjacent
to the copper mineralisation intersected in EPT1140.
Sunset at the Yeneena project
1 2
E n c o u n tEr r E s o u r cE s lI M I TeD
Electromagnetics
Magnetics
Gravity
Diamond holes
April 2012
Diamond holes
April 2012
Diamond holes
April 2012
4
k
m
EPt801 – copper sulphides
Intersected in 2011
EPt801
EPt801
Figure 10: T4 Palaeo-Proterozoic basement block interpretation over AEM, TMI magnetics and Gravity data.
t4 Prospect
The T4 prospect is located at the north of the Yeneena Project, about 30km north-east of the BM1 copper discovery
(see Figure 2). The geology of the T4 area is dominated by an 8km by 5km dome-shaped uplifted block of Palaeoproterozoic
Rudall Complex metamorphics. Encounter identified the presence of this block of Palaeoproterozoic basement rocks as
an anomalous response in three independent geophysical datatsets (AEM, magnetics and gravity; see Figure 10).
The T4 target represents a compelling structural, geological and geophysical target at the Yeneena project. Base metal
mineralisation is being targeted along structures internal to the basement block and along the margins of the dome. This
area has significant scale potential, is totally sand-covered and has received minimal prior exploration.
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 drill holes confirmed the geological
interpretation of the T4 block as a basement inlier and
significantly, one of them (EPT801) intersected multiple
zones of disseminated copper-sulphides.
1cm
Core samples from EPT801 were submitted to the
GEMOC research facility at Macquarie University for U-Pb
age analysis. The results confirmed that the age of the
peak metamorphic event in these rocks is 1780 ± 9Ma
and the age of the igneous protolith is at least 1980Ma.
These results confirmed that the copper target at T4 is
hosted within metamorphic basement rocks equivalent
to those of the Rudall Complex.
As mentioned above, EPT801 also intersected narrow
zones of disseminated sulphide mineralisation including
an intersection of 0.9m @ 0.84% copper and 8g/t silver,
within a broader zone of copper-silver anomalism. These
results confirmed the presence of a copper-mineralising
event in the T4 region. This is considered to be a highly
significant result as EPT801 was a stratigraphic hole that
was not specifically targeted to intersect mineralisation
but drilled at a logistically convenient position along an
existing track to test our geological model.
chalcopyrite
Bornite
EPt801 – 194m – Disseminated chalcopyrite and
bornite in altered metamorphics – 0.8% cu
AN N u Al r e p o r T 2 0 1 2
1 3
exploration Review continued
t4 Prospect continued
A surface geochemical sampling program in the sand dune swales at T4 was completed in late 2011. Results highlighted
multiple Cu-Ag anomalies on the margins of the T4 block. Final results from that survey have highlighted four anomalies
(Figure 11; Anomalies A to D).
Significantly, a copper-silver geochemical anomaly (Anomaly A) has been defined across two sample lines to the north
of EPT801. Anomaly A lies coincident with a +4km long magnetic and gravity geophysical anomaly that have both now
been modelled. The magnetic anomaly dips steeply to the east-northeast and the gravity anomaly has been modelled as a
broad, flat lying, near surface +0.5 Mgal density anomaly.
Two diamond drill holes were completed at T4 in April-May 2012 for a total of 841m. These drill holes were drilled 1.6km
north of EPT801 (Figure 10).
Assay results from these two drill holes confirmed that zones of elevated copper anomalism (300-1000ppm copper) are
associated with more intense magnetite alteration at T4. Magnetic susceptibility testing of the drill holes is in progress to
allow analysis of the original airborne magnetic modeling and to ensure drilling intersected the main geophysical anomaly.
A track mounted aircore rig completed a 160 hole (5700m) drill program at the T4 prospect in August 2012. Broad
spaced drill lines were designed across the southern half of the Rudall Complex Inlier to identify zones of stronger copper
mineralisation and to test a series of geochemical targets around the margin of the Inlier identified at T4.
This drilling confirmed a shallow cover sequence and a strongly stripped regolith profile. The majority of holes drilled
over the main geophysical anomalies intersected 7-10m of cover and then progressed directly into 10-15m of saprolitic
metamorphic rock. Due to the strongly stripped nature of the regolith profile at T4, any oxide or supergene dispersion
from a primary copper-sulphide horizon is likely to be very narrow. It is therefore considered that any coherent copper
anomalism identified in this broad spaced program is potentially significant.
Figure 11: a) Copper – Silver partial leach geochemical anomalies at T4; b) Copper – Silver anomalies on TMI magnetics.
1 4
E n c o u n tEr r E s o u r cE s lI M I TeD
t4 Prospect continued
Initial handheld XRF analysis of the aircore samples
has defined four corridors of copper anomalism that
extend 1-2km in strike length. The copper corridors
appear to be structurally controlled and are located
adjacent to the area of magnetic anomalism.
Importantly it appears none of the three stratigraphic
diamond drill holes completed at T4 have tested
any of these four corridors. Following the receipt of
geochemical analysis of samples from the aircore
drilling, further shallow drilling and/or geophysical
surveys are planned to define targets for follow up
RC or diamond drilling.
BM5 target
The BM5 target is located along the regionally
extensive Kintyre Fault (Figure 2). In 2009, diamond
drill hole EPT062 was drilled to test beneath a
gossanous iron manganese horizon associated
with copper-lead-zinc-silver geochemical anomalism
and returned an intersection of 0.1m @ 28.5%
zinc, 2.3% lead and 33.9g/t silver from 301.6m
(see Figure 12).
No exploration activity was completed at the BM5
prospect in 2011/12, however, additional RC drilling
is planned towards the north of BM5 where it is
interpreted that the prospective geological contact
is trending closer to surface.
Figure 12: BM5 Cross Section 7565150mN.
Soil sampling at Yeneena project
AN N u Al r e p o r T 2 0 1 2
1 5
exploration Review continued
Yilgarn District
cALcrEtE urAnIuM rEsourcEs
A strategic review of the calcrete uranium resource continues to consider the potential development and commercial
alternatives to advance the projects. The area of interest is shown on Figure 13.
HILLVIEW (e51/1127 – 83% encounter, 17% Avoca)
The Hillview uranium project is located 50km 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 (elA53/1685 – 100% encounter)
The Bellah Bore East 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 13: Location of uranium resources in the north east Yilgarn Province.
1 6
E n c o u n tEr r E s o u r cE s lI M I TeD
DArLot EAst ProJEct – Gold (elA 37/1148 – 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 150km
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 14).
Minimal exploration work was completed on the Bangemall Basin projects during the 2011/2012 year due to the
prioritisation of the exploration activities at Yeneena.
Figure 14: Location of Encounter Tenements in the Bangemall Basin.
AN N u Al r e p o r T 2 0 1 2
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
E n c o u n tEr r E s o u r cE 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
30.17 Avoca Resources Limited
60% of Uranium Rights
E36/769
Yeelirrie South
Yilgarn
48.83 Encounter Resources Limited
ELA37/1148 Darlot
Yilgarn
212.4 Encounter Resources Limited
ELA53/1685 Bellah Bore East Yilgarn
45.96 Encounter Resources Limited
E51/1127
Hillview
Yilgarn
52.02 Encounter Resources Limited
ELA57/905
Nesbitt Soak
Yilgarn
212
Encounter Resources Limited
ELA57/906
Nesbitt Soak
Yilgarn
212
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
E45/2805
Yeneena
Paterson
209.7 Encounter Operations Pty Ltd
E45/2806
Yeneena
Paterson
63.7
Encounter Operations Pty Ltd
100%
100%
100%
83%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
ELA45/3881 Yeneena
Paterson
114.4 Encounter Operations Pty Ltd 0% earning up to 85%
AN N u Al r e p o r T 2 0 1 2
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
Audit Committee Charter
Code of Conduct
Diversity Policy
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 2011/2012 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
E n c o u n tEr r E s o u r cE 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 both of the current Non-Executive Directors meet the
recommended independence criteria. As a result the Company complies with Recommendation 2.1 of the Corporate
Governance Council. 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 considered to be an independent director and as such Recommendation 2.2 of the Corporate
Governance Council has been complied with. 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 Al r e p o r T 2 0 1 2
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 Company employs new employees and promotes current employees on the basis of performance, ability and attitude.
The Board is continually 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
E n c o u n tEr r E s o u r cE s lI M I TeD
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 2012:
Females employed in the Company as a whole
Females employed in the Company in senior positions
Females appointed as a Director of the Company
proportion of female /
total number of persons employed
5/13
1/1
0/4
The recommendations of the Corporate Governance Council relating to reporting require a Board to set measurable
objectives for achieving diversity within the organisation, and to report against them on an annual basis. The Company has
implemented measurable objectives as follows:
Measurable objective
Adoption and promotion of a
Formal Diversity Policy
To ensure Company policies are consistent with
and aligned with the goals of the Diversity Policy
To provide flexible work and salary arrangements
to accommodate family commitments, study
and self-improvement goals, cultural traditions
and other personal choices of current and
potential employees.
To implement clear and transparent policies
governing reward and recognition practices.
To provide relevant and challenging professional
development and training opportunities for all
employees.
objective
Satisfied
Comment
Yes
Yes
Yes
Yes
Yes
The Company has adopted a formal diversity policy
which has been made publicly available via the
ASX and the Company’s website.
The Company’s selection, remuneration and
promotion practices are merit based and as such
are consistent with the goals of the Company’s
Diversity Policy.
The Company does, where considered reasonable,
and without prejudice, accommodate requests for
flexible working arrangements.
The Company grants reward and promotion based
on merit and responsibility as part of its annual
and ongoing review processes.
The Company seeks to continually encourage
self-improvement in all employees, irrespective of
seniority, ability or experience, through external and
internal training courses, regular staff meetings and
relevant on job mentoring.
The Company has not implemented specific measurable objectives regarding the proportion of females to be employed
within the organisation or implement requirements for a proportion of female candidates for employment and Board
positions. The Board considers that the setting of quantitative gender based measurable targets is not consistent with the
merit and ability based policies currently implemented by the Company.
The Board will consider the future implementation of gender based diversity measurable objectives when more appropriate
to the size and nature of the Company’s operations.
AN N u Al r e p o r T 2 0 1 2
2 3
Corporate Governance Statement continued
Corporate Governance Council recommendation 4
Safeguarding Integrity in Financial Reporting
Audit Committee
During the 2012 financial year the Board formed a separate Audit Committee and as such complies with Recommendation
4.1 of the Corporate Governance Council.
The Audit Committee is comprised of the Company’s Non-Executive Directors, who are also considered to be independent,
and the Committee is chaired by Dr Jon Hronsky who is not the Chairman of the Board. The Board believes that with the
composition of the Audit Committee being of Independent Non-Executive Directors, the Company is able to meet the
objectives of Recommendation 4.2, and discharge its duties in this area. The relevant experience of members is detailed
in the Directors’ section of the Directors’ Report.
The Audit Committee has adopted a formal Audit Committee Charter which sets its role and responsibilities, as per
Recommendation 4.3. A copy of the Audit Committee Charter is available on the Company’s website.
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.
The Audit Committee 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.
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 website, the Company publishes all significant announcements
together with all quarterly reports. These documents are available in both hardcopy on request and on the Company
website at www.enrl.com.au
Shareholders are able to pose questions on the audit process and the financial statements directly to the independent
auditor who attends the Company Annual General Meeting for that purpose.
2 4
E n c o u n tEr r E s o u r cE s lI M I TeD
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:
n Assist the Company to achieve it’s strategic objectives;
n Safeguard the assets and interests of the Company and its stakeholders; and
n Ensure the accuracy and integrity of external reporting.
Key identified risks to the business are monitored on an ongoing basis as follows:
n Business risk management
The Company manages its activities within budgets and operational and strategic plans.
n
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.
n Financial reporting
Directors approve an annual budget for the Company and regularly review performance against budget at Board
Meetings.
n 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.
n 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.
AN N u Al r e p o r T 2 0 1 2
2 5
Corporate Governance Statement continued
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.
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. The grant of options was deemed appropriate by the Board to provide an
incentive and to reward the Director.
2 6
E n c o u n tEr r E s o u r cE s lI M I TeD
Directors’ Report
The Directors present their report on Encounter Resources Limited (the Company) and the entities it controlled
(the Group) at the end of, and during the year ended 30 June 2012.
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
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.
Non-Executive Chairman appointed 7 October 2005
Jonathan Hronsky – BAppSci, phD, MAusIMM, FSeG
Mr 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 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 eighteen 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
Non-executive director appointed 10 May 2007
Dr 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 – BSc (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.
AN N u Al r e p o r T 2 0 1 2
2 7
Directors’ Report continued
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
5,394,900
22,096,900
4,975,000
–
–
–
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 2012, 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
8
8
8
8
8
8
8
8
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 $758,706 (2011: $4,933,106).
Included in the consolidated loss for the current year is
a write-off of deferred exploration expenditure totalling
$234,086 (2011: $2,097,750).
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 and BM7 copper
discoveries, T4 copper prospect and the BM2 copper/zinc
prospect. The Yeneena Project covers a 1,400km2 area of
the Paterson Province in Western Australia.
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 $5,185,337
(2011: $7,241,296) in cash and at call deposits.
Capitalised mineral exploration and evaluation expenditure
is $15,219,430 (2011: $7,535,748).
Expenditure was principally focused on the exploration
for base metals at the Company’s Yeneena Project in the
Paterson Province of Western Australia.
Significant Changes in the State of Affairs
During the year the Company completed a placement
of 14,850,000 shares at $0.40 each, raising $5,940,000
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.
2 8
E n c o u n tEr r E s o u r cE s lI M I TeD
options over unissued Capital
unlisted options
As at the date of this report 8,025,000 unissued ordinary shares of the Company are under option as follows:
Number of Options Granted
500,000
400,000
400,000
200,000
5,425,000
550,000
550,000
Exercise Price
53.5 cents
55 cents
70 cents
30 cents
$1.35
80 cents
40 cents
Expiry Date
30 November 2012
30 November 2012
30 November 2012
30 June 2013
22 November 2014
30 September 2015
31 May 2016
All options on issue at the date of this report are vested and exercisable.
During the financial year the Company granted 1,250,000 unlisted options (2011: 5,500,000) over unissued shares
to employees, directors and consultants of the Company.
During the year 50,000 options were cancelled (2011: 175,000) on the cessation of employment.
During the financial year no (2011: 1,200,000) ordinary shares were issued on the exercise of options.
Since the end of the financial year no options have been issued by the Company. No options have been exercised since
the end of the financial year. Since the end of the financial year 50,000 options have been cancelled due to the lapse of
exercise period.
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.
AN N u Al r e p o r T 2 0 1 2
2 9
Directors’ Report continued
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.
Short-term incentive bonus
The Non-Executive Directors set the key performance indicators (KPI) for the Key Management Personnel. The KPI’s
include measures related to the Group and the individual, and may include safety, environmental, operational performance
and financial measures. The measures are chosen to directly align the individual’s reward to the KPI’s of the Group and
to its strategy and performance.
The objectives vary with position and responsibility and include measures such as achieving strategic and funding targets,
safety and environmental performance, exploration and other operational success. All performance objectives are weighted
when calculating the maximum bonus achievable.
At the end of each financial year the Non-Executive Directors assesses the performance of the Group against the KPI’s set
at the beginning of the financial year. A percentage of the pre-determined maximum bonus amount is awarded depending
on results. No bonus is awarded where performance falls below the minimum requirement.
There were no KPI’s set for the financial year ended 30 June 2012. The measurement of KPI’s and Key Management
Personnel’s individual performance will be assessed for the financial year ended 30 June 2013, and the Non-Executive
Directors will recommend the appropriate level of bonus to the Board.
The method of assessment provides the Non-Executive Directors with an objective measure of Key Management Personnel
performance.
Details of remuneration for Key Management personnel
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:
Directors
2012
P Chapman
W Robinson
P Bewick
J Hronsky
Total
2011
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
$
60,000
280,000
260,000
50,000
5,400
25,200
23,400
4,500
650,000
58,500
52,000
250,275
231,000
46,200
4,608
22,525
20,790
4,158
579,475
52,081
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
65,400
305,200
283,400
54,500
708,500
–
–
–
–
–
–
–
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%
3 0
E n c o u n tEr r E s o u r cE s lI M I TeD
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.
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.
unlisted options
No options over unissued shares were issued to Key Management Personnel of the Company during the year
(2011: 4,300,000).
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.
AN N u Al r e p o r T 2 0 1 2
3 1
Directors’ Report continued
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
2012
$
2011
$
39,240
–
39,240
32,000
–
32,000
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 the following page.
This report is made in accordance with a resolution of the Directors.
Dated at Perth this 21st day of September 2012.
W robinson
Managing Director
3 2
E n c o u n tEr r E s o u r cE s lI M I TeD
AUDITOR’S INDEPENDENCE DECLARATION
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for
the audit of Encounter Resources Limited for the year ended 30 June 2012, I declare that, to the best
of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
CROWE HORWATH PERTH
CYRUS PATELL
Partner
Signed at Perth, 21 September 2012
AN N u Al r e p o r T 2 0 1 2
3 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.
Consolidated Statement of Comprehensive Income
For the financial year ended 30 June 2012
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
Administration and Other expenses
Exploration costs written off and expensed
loss before income tax
Income tax benefit/(expense)
loss after tax
Consolidated
2012
$
2011
$
371,715
371,715
(1,417,955)
1,143,686
(207,409)
(110,000)
(11,509)
(87,823)
642
(426,153)
(234,086)
(978,892)
220,186
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)
–
(758,706)
(4,933,106)
Note
5
17
6
6
7
17
Other comprehensive income
–
–
Total comprehensive income for the year
(758,706)
(4,933,106)
Earnings per share for loss attributable to the
ordinary equity holders of the Company
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
Cents
Cents
27
27
(0.7)
(0.7)
(5.2)
(5.2)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
3 4
E n c o u n tEr r E s o u r cE s lI M I TeD
Consolidated Statement of Financial Position
As at 30 June 2012
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
2012
$
2011
$
5,185,337
407,678
77,994
7,241,296
121,144
98,584
5,671,009
7,461,024
11
12
381,585
15,219,430
337,195
7,535,748
15,601,015
7,872,943
21,272,024
15,333,967
14(a)
14(b)
1,308,509
41,692
1,350,201
1,350,201
482,966
37,879
520,845
520,845
19,921,823
14,813,122
15
17
17
27,320,545
(10,178,761)
2,780,039
21,660,547
(9,448,420)
2,600,995
19,921,823
14,813,122
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
AN N u Al r e p o r T 2 0 1 2
3 5
Consolidated Statement of Changes in Equity
For the financial year ended 30 June 2012
Consolidated
Issued
capital
$
Accumulated
losses
$
equity
remuneration
reserve
$
Total
$
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
2012
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
21,660,547
–
–
(9,448,420)
(758,706)
28,365
2,600,995
–
179,044
14,813,122
(758,706)
207,409
5,659,998
–
–
5,659,998
Balance at the end of the financial year
27,320,545
(10,178,761)
2,780,039
19,921,823
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
3 6
E n c o u n tEr r E s o u r cE s lI M I TeD
Consolidated Statement of Cash Flows
For the financial year ended 30 June 2012
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
2012
$
2011
$
130,552
10,936
241,163
(838,919)
–
171,542
295,885
(754,242)
Net cash used in operating activities
26
(456,268)
(286,815)
Cash flows from investing activities
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
(7,072,265)
(187,425)
(3,504,287)
(257,726)
(7,259,690)
(3,762,013)
5,940,000
(280,001)
9,446,640
(531,161)
Net cash provided by financing activities
5,659,999
8,915,479
Net increase/(decrease) in cash held
Cash at the beginning of the financial year
(2,055,959)
7,241,296
4,866,651
2,374,645
Cash at the end of the financial year
8(a)
5,185,337
7,241,296
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
AN N u Al r e p o r T 2 0 1 2
3 7
Notes to the Financial Statements
For the financial year ended 30 June 2012
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 separate financial statements of the parent entity have not been presented within this financial report as permitted
by the Corporations Act 2001.
The financial report of the Group was authorised for issue in accordance with a resolution of Directors on
21 September 2012.
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.
Adoption of New and Revised Standards –
Changes in accounting policies on initial application of accounting standards
In the year ended 30 June 2012, the Group has reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to its operations and effective for the current annual reporting period. It has
been determined by the Group that there is no impact, material or otherwise, of the new and revised Standards and
Interpretations on its business and, therefore, no change is necessary to Group accounting policies other than those
set out below.
The Group has also reviewed all new Standards and Interpretations that have been issued but are not yet effective
for the year ended 30 June 2012. As a result of this review the Directors have determined that there is no impact,
material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change
necessary to Group accounting policies.
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.
3 8
E n c o u n tEr r E s o u r cE s lI M I TeD
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.
AN N u Al r e p o r T 2 0 1 2
3 9
Notes to the Financial Statements continued
For the financial year ended 30 June 2012
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 diminishing 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.
4 0
E n c o u n tEr r E s o u r cE s lI M I TeD
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.
AN N u Al r e p o r T 2 0 1 2
4 1
Notes to the Financial Statements continued
For the financial year ended 30 June 2012
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.
Upon the cancellation of options on expiry of the exercise period, or lapsing of vesting conditions, the balance of the
share based payments reserve relating to those options is transferred to accumulated losses.
(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.
4 2
E n c o u n tEr r E s o u r cE s lI M I TeD
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 is estimated as the present value of future cash flows, discounted at the
market rate of interest at the reporting date.
AN N u Al r e p o r T 2 0 1 2
4 3
Notes to the Financial Statements continued
For the financial year ended 30 June 2012
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 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 receivable from the Australian Taxation Office, the risk of non-recovery of receivables from this source is considered
to be negligible.
Cash deposits
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.
4 4
E n c o u n tEr r E s o u r cE s lI M I TeD
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.
Accounting for share based payments
The values of amounts recognised in respect of share based payments have been estimated based on the fair value of
the equity instruments granted. Fair values of options issued are estimated by using an appropriate option pricing model.
There are many variables and assumptions used as inputs into the models. If any of these assumptions or estimates
were to change this could have a significant effect on the amounts recognised. See Note 16 for details of inputs into
option pricing models in respect of options issued during the reporting period.
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
Operating activities
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
Consolidated
2012
$
2011
$
130,552
240,026
1,137
371,715
42,208
295,297
236
337,741
11,509
–
11,509
8,779
7,379
16,158
Rental expenses on operating leases – minimum lease payments
63,606
51,674
Total exploration costs not capitalised and written off
234,086
2,097,750
AN N u Al r e p o r T 2 0 1 2
4 5
Notes to the Financial Statements continued
For the financial year ended 30 June 2012
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
Income tax expense/(benefit) reported in the income statement
Consolidated
2012
$
2011
$
(2,556,703)
2,556,703
(220,186)
(1,266,734)
1,266,734
–
(269,215)
269,215
(220,186)
(788,283)
788,283
–
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 2011.
(b) Reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax expense
(978,892)
(4,933,106)
Tax at the Australian rate of 30% (2011: 30%)
(293,668)
(1,479,932)
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
Tax (benefit)/expense
(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)
62,223
(220,186)
70,226
(37,769)
198,988
(220,186)
705,493
–
629,325
(39,071)
184,185
–
(23,398)
(4,565,829)
(29,576)
(2,260,724)
(4,589,227)
(2,290,300)
6,621,346
12,508
16,295
129,447
4,359,507
11,364
6,000
129,458
6,779,596
4,506,329
2,190,369
2,216,029
4 6
E n c o u n tEr r E s o u r cE s lI M I TeD
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
Consolidated
2012
$
2011
$
6,178
(2,305,105)
(753)
(444,943)
10,295
2,556,703
1,144
–
1,241,507
(7,528)
Deferred tax benefit/(expense) not recognised
229,215
788,283
The deferred tax benefit 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 $22,071,152 (2011: $13,548,808) 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
2012
$
2011
$
1,185,337
4,000,000
126,321
7,114,975
5,185,337
7,241,296
Cash and cash equivalents per statement of cash flows
5,185,337
7,241,296
(b) Deposits at call
The deposits are bearing fixed interest rates of 5.9% (2011: 6.0%).
These deposits have an average maturity of 87 days.
AN N u Al r e p o r T 2 0 1 2
4 7
Notes to the Financial Statements continued
For the financial year ended 30 June 2012
Note 9 Current assets – receivables
(a) Trade and other receivables
R&D tax concession receivable
Other receivables
Recoverable joint venture expenses
GST recoverable
(b) Other current assets
Prepaid tenement costs
Prepaid expenses
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
2012
$
2011
$
209,250
110,600
7,449
80,379
407,678
77,994
–
77,994
–
61,782
4,938
54,424
121,144
85,618
12,966
98,584
2012
$
2
1
2012
%
100%
100%
Company
2011
$
2
1
ownership Interest
2011
%
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.
Company
2012
$
2011
$
(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
14,630,795
–
6,986,449
–
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.
4 8
E n c o u n tEr r E s o u r cE s lI M I TeD
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
2012
$
2011
$
759,949
(407,376)
592,309
(275,851)
352,573
316,458
93,225
(64,213)
29,012
22,137
(22,137)
–
73,441
(52,704)
20,737
22,137
(22,137)
–
381,585
337,195
316,458
167,640
(131,525)
352,573
20,737
19,784
(11,509)
29,012
–
–
–
–
120,251
252,852
(56,645)
316,458
24,644
4,872
(8,779)
20,737
7,379
–
(7,379)
–
No items of property, plant and equipment have been pledged as security by the Group.
AN N u Al r e p o r T 2 0 1 2
4 9
Notes to the Financial Statements continued
For the financial year ended 30 June 2012
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)
Consolidated
2012
$
2011
$
123,494
291,285
14,385,971
6,874,888
Capitalised share of exploration assets under JV Agreements (iii)
709,965
369,575
Cost carried forward
15,219,430
7,535,748
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.
Capitalised exploration costs at the start of the period
Total exploration costs for the period
Consolidated
2012
$
2011
$
7,535,748
7,917,768
6,052,602
3,580,896
Total exploration costs written off and expensed for the period
(234,086)
(2,097,750)
Capitalised exploration costs at the end of the period
15,219,430
7,535,748
5 0
E n c o u n tEr r E s o u r cE s lI M I TeD
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 1 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 in 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.
Joint Ventures – Financial Results and Carrying Values
The total amount of the Group’s capitalised exploration and evaluation expenditure capitalised and employed under
joint venture agreements at the reporting date is $709,965 (2011: $369,575 (Note 12). During the reporting period
the Group recognised an expense of $55,560 (2011: $1,544,098) being its share of the exploration expenditure written
off by the joint venture entities during the period.
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
2012
$
2011
$
1,267,846
40,663
1,308,509
444,133
38,833
482,966
41,692
37,879
Liabilities are not secured over the assets of the Group. Details of fair value and exposure to interest risk are included at
Note 18.
AN N u Al r e p o r T 2 0 1 2
5 1
Notes to the Financial Statements continued
For the financial year ended 30 June 2012
Note 15 Issued capital
(a) Ordinary shares
The Company is a public company limited by shares. The Company was incorporated in Perth, Western Australia. The
Company’s shares are limited whereby the liability of its members is limited to the amount (if any) unpaid on the shares
respectively held by them.
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion
to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a
meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
Ordinary shares have no par value. There is no limit to the authorised share capital of the Company.
(b) Share capital
Issued share capital
2012
No.
2011
No.
2012
$
2011
$
114,194,360
99,344,360
27,320,545
21,660,547
(c) Share movements during the year
Balance at the start of the financial year
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
Share placement
Less share issue costs
$0.10
$0.20
$0.30
$0.45
$0.50
$0.525
$0.27
$0.80
$0.40
99,344,360
–
–
–
–
–
–
–
–
14,850,000
–
79,161,435
500,000
100,000
125,000
100,000
125,000
250,000
11,482,925
7,500,000
–
–
21,660,547
–
–
–
–
–
–
–
–
5,940,000
(280,002)
12,745,067
50,000
20,000
37,500
45,000
62,500
131,250
3,100,390
6,000,000
–
(531,160)
Balance at the end of the financial year
114,194,360
99,344,360
27,320,545
21,660,547
(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 1,250,000 options over unissued shares (2011: 5,500,000).
5 2
E n c o u n tEr r E s o u r cE 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 no shares on the exercise of unlisted employee options (2011: 1,200,000).
(c) Options cancelled during the year
During the year 50,000 options (2011: 175,000) 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 2012 is 8,075,000 (2011: 6,875,000).
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
5,425,000
550,000
550,000
8,075,000
50 cents
53.5 cents
55 cents
70 cents
30 cents
$1.35
80 cents
40 cents
9 August 2012
30 November 2012
30 November 2012
30 November 2012
30 June 2013
22 November 2014
30 September 2015
31 May 2016
(e) Subsequent to the balance date
No options 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.
Subsequent to the balance date 50,000 options exercisable at 50 cents each were cancelled on expiry of the exercise
period.
Reconciliation of movement of options over unissued shares
during the period including weighted average exercise price (WAEP)
2012
2011
No.
WAep
(cents)
No.
Options outstanding at the start of the year
6,875,000
117.0
2,750,000
Options granted during the year
Options exercised during the year
Options expiring unexercised during the year
1,250,000
–
(50,000)
69.0
–
135.0
5,500,000
(1,200,000)
(175,000)
Options outstanding at the end of the year
8,075,000
109.4
6,875,000
WAEP
(cents)
43.6
135.0
28.9
135.0
117.0
AN N u Al r e p o r T 2 0 1 2
5 3
Notes to the Financial Statements continued
For the financial year ended 30 June 2012
Note 16 options and share based payments continued
(e) Subsequent to the balance date continued
Weighted average contractual life
The weighted average contractual life for un-exercised options is 26.5 months (2011: 35.9 months).
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
18 November 2011
25 October 2011
8 March 2012
13 June 2012
Number of
options granted
exercise price
(cents)
expiry date
150,000
450,000
100,000
550,000
$1.35
$0.80
$0.80
$0.40
22 November 2014
30 September 2014
30 September 2014
31 May 2016
risk free
interest
rate used
4.50%
4.50%
3.50%
2.35%
Volatility
applied
option
valuation
(cents)
85%
80%
85%
86%
33.0
21.3
10.4
9.4
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
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
2012
equity
remuneraton
reserve (i)
$
2011
Equity
remuneration
reserve (i)
$
Accumulated
losses
$
Accumulated
losses
$
(9,448,420) 2,600,995
–
(758,706)
(4,742,176)
(4,933,106)
476,214
–
–
–
28,365
207,409
–
(28,365)
–
151,390
75,472
2,351,643
(151,390)
(75,472)
Balance at the end of the year
(10,178,761)
2,780,039
(9,448,420) 2,600,995
(i) The equity remuneration reserve is used to recognise the fair value of options issued but not exercised.
5 4
E n c o u n tEr r E s o u r cE 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.
Interest rate risk
At the reporting date the interest profile of the Group’s interest-bearing financial instruments was:
Fixed rate instruments
Financial assets
Variable rate instruments
Financial assets
Carrying amount ($)
2012
–
2011
–
5,185,337
7,241,296
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.
2012
Variable rate instruments
2011
Variable rate instruments
profit or loss
equity
1%
increase
$
1%
decrease
$
1%
increase
$
1%
decrease
$
51,853
(51,853)
51,853
(51,853)
72,413
(72,413)
72,413
(72,413)
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
2012
Trade and other payables
2011
Trade and other payables
Carrying
amount
$
Contractual
cash flows
$
6 months
or less
$
6-12
months
$
1-2
years
$
2-5
years
$
More than
5 years
$
1,213,531 1,213,531 1,213,531
1,213,531 1,213,531 1,213,531
424,133
424,133
424,133
424,133
424,133
424,133
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
AN N u Al r e p o r T 2 0 1 2
5 5
Notes to the Financial Statements continued
For the financial year ended 30 June 2012
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
2012
2011
Carrying
amount
$
Fair value
$
Carrying
amount
$
Fair value
$
5,185,337
5,185,337
(1,213,531) (1,213,531)
7,241,296
(424,133)
7,241,296
(424,133)
3,971,806
3,971,806
6,817,163
6,817,163
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 2012 or 30 June 2011.
The Company has no franking credits available as at 30 June 2012 or 30 June 2011.
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
E n c o u n tEr r E s o u r cE s lI M I TeD
2012
$
650,000
–
58,500
2011
$
579,475
1,854,466
52,081
708,500
2,486,022
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.
Options are 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
2012
p Chapman
W robinson
p Bewick
J Hronsky
2011
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
–
–
4,300,000
1,300,000
–
–
800,000
500,000
–
–
–
–
–
–
3,500,000
800,000
–
–
–
–
–
–
–
–
–
–
4,300,000
1,300,000
–
–
4,300,000
1,300,000
Vested and
exercisable
at the end
of the year
–
–
4,300,000
1,300,000
–
–
4,300,000
1,300,000
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
2012
p Chapman
W robinson
p Bewick
J Hronsky
2011
P Chapman
W Robinson
P Bewick
J Hronsky
Balance at
start of the year
received during
the year on exercise
of options
other changes
during the year
Balance at the
end of the year
4,747,000
21,846,900
4,725,000
–
4,747,400
21,846,900
4,725,000
–
–
–
–
–
–
–
–
–
647,900
250,000
250,000
–
–
–
–
–
5,394,900
22,096,900
4,975,000
–
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 Al r e p o r T 2 0 1 2
5 7
Notes to the Financial Statements continued
For the financial year ended 30 June 2012
Note 21 remuneration of auditors
Audit and review of the Company’s financial statements
Other services
Total
2012
$
39,240
–
39,240
Consolidated
2011
$
32,000
–
32,000
Note 22 Contingencies
(i) Contingent liabilities
There were no material contingent liabilities not provided for in the financial statements of the Group as at 30 June 2012
or 30 June 2011 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 2012 or 30 June 2011.
5 8
E n c o u n tEr r E s o u r cE 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 $916,000 (2011: $939,000). These obligations are also
subject to variations by farm-out arrangements or sale of the relevant tenements. This commitment does not include the
expenditure commitments which are the responsibility of the joint venture partners.
(b) Operating Lease Commitments
Commitments for minimum lease payments in relation
to non-cancellable operating leases are as follows:
Due within one year
Due later than one year but not later than five years
Total
Consolidated
2012
$
2011
$
–
–
–
41,250
–
41,250
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 was 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 2012 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 (due to)/owing to it by the joint ventures:
2012
$
35,781
11,046
2011
$
41,277
564
Regional Uranium JV
Lake Way Uranium JV
(5,033)
11,173
8,440
12,345
AN N u Al r e p o r T 2 0 1 2
5 9
Notes to the Financial Statements continued
For the financial year ended 30 June 2012
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
2012
$
2011
$
(758,706)
6,381
11,509
234,086
207,409
(209,250)
12,965
(2,596)
41,934
(4,933,106)
6,243
16,158
2,097,750
2,351,643
171,542
(1,358)
(11,885)
16,198
Net cash outflow from operating activities
(456,268)
(286,815)
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
2012
Cents
2011
Cents
(0.7)
(5.2)
(0.7)
(5.2)
$
$
(c) Loss used in calculation of basic and diluted loss per share
Consolidated loss after tax from continuing operations
(758,706)
(4,933,106)
(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.
104,761,710
93,776,980
At 30 June 2012 the Company has on issue 8,075,000 (2011: 6,875,000) unlisted options over ordinary shares that
are not considered to be dilutive.
6 0
E n c o u n tEr r E s o u r cE 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
2012
$
2011
$
5,234,356
15,845,839
7,349,463
7,984,504
21,080,195
15,333,967
1,350,201
1,350,201
520,845
520,845
19,729,994
14,813,122
27,320,545
2,780,039
(10,370,590)
21,660,547
2,600,995
(9,448,420)
19,729,994
14,813,122
(950,535)
–
(4,933,106)
–
(950,535)
(4,933,106)
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 Al r e p o r T 2 0 1 2
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 34 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 2012 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 2012.
This declaration is made in accordance with a resolution of the Directors.
Signed at Perth this 21st day of September 2012.
W robinson
Managing Director
6 2
E n c o u n tEr r E s o u r cE s lI M I TeD
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ENCOUNTER RESOURCES
LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Encounter Resources Limited, which comprises
the consolidated statement of financial position as at 30 June 2012, 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.
AN N u Al r e p o r T 2 0 1 2
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. Auditor’s Opinion
In our opinion:
(a)
the financial report of Encounter Resources Limited is in accordance with the Corporations Act
2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 30 June
2012 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
(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 30 to 31 of the directors’ report for the
year ended 30 June 2012. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion, the Remuneration Report of Encounter Resources Limited. for the year ended 30 June
2012 complies with section 300A of the Corporations Act 2001.
CROWE HORWATH PERTH
CYRUS PATELL
Partner
Signed at Perth, 21 September 2012
6 4
E n c o u n tEr r E s o u r cE 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. ASX Additional Information
Pursuant to the Listing Requirements of the Australian Securities Exchange, the shareholder information set out below
was applicable as at 28 September 2012
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
113
302
222
532
143
Securities held
61,982
949,104
1,844,246
17,981,067
93,357,961
Totals
1,312
114,194,360
There were 213 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
22,096,900
11,145,852
percentage
of shares
19.35%
9.86%
AN N u Al r e p o r T 2 0 1 2
6 5
ASX Additional Information continued
C. Twenty largest Shareholders
The names of the twenty largest holders of quoted shares are listed below:
listed ordinary Shares
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
Samantha Hogg
Pieter Los
UBS Wealth Management Australia Nominees
Charles Robinson
Thirty-fifth Celebrations Pty Ltd
Kiki Super Fund
Picton Cove Pty Ltd
Andrew Bewick
Jonhston Family Account
Stone Poneys Nominees Pty Ltd
HSBC Custody Nominees Australia Limited
Number of shares
16,216,900
11,175,813
5,580,000
4,650,000
4,650,000
3,850,000
2,107,375
1,921,629
1,700,000
1,583,000
1,500,000
1,221,551
1,200,000
1,000,000
914,442
811,913
783,270
750,000
722,400
719,400
percentage
of Shares
14.20%
9.79%
4.89%
4.07%
4.07%
3.37%
1.85%
1.68%
1.49%
1.39%
1.31%
1.07%
1.05%
0.88%
0.80%
0.71%
0.69%
0.66%
0.63%
0.63%
Total
63,057,693
55.23%
D. Voting rights
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
E n c o u n tEr r E s o u r cE s lI M I TeD
Diamond drilling at T4 Prospect
www.enrl.com.au