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2023 ReportA N N U A L
R E P O R T
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A B N 4 7 1 0 9
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CORPORATE
DIRECTORY
DIRECTORS
Paul Chapman
Non-Executive Chairman
Will Robinson
Managing Director
Peter Bewick
Exploration Director
Jon Hronsky OAM
Non-Executive Director
Philip Crutchfield
Non-Executive Director
(appointed October 2019)
COMPANY
SECRETARIES
Kevin Hart
Dan Travers
PRINCIPAL AND
REGISTERED OFFICE
STOCK EXCHANGE
LISTING
Level 7, 600 Murray Street
West Perth Western Australia 6005
Telephone (08) 9486 9455
Facsimilie (08) 9486 8366
Web www.enrl.com.au
The Company’s shares are
quoted on the Australian
Securities Exchange. The
home exchange is Perth,
Western Australia.
AUDITOR
Crowe Perth
Level 5, 45 St Georges Terrace
Perth Western Australia 6000
SHARE REGISTRY
Automic Group Pty Ltd
Level 2, 267 St Georges Terrace
Perth Western Australia 6000
Telephone 1300 288 664
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
3
Exploration Review
Summary of Tenements
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
ASX Additional Information
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23-24
26-37
38
39
40
41
42
43-70
71
73-76
78-80
Dear Fellow Shareholder,
We are pleased to present the 2020 Annual Report
for Encounter Resources Ltd (“Encounter”).
Encounter remains one of the most productive
project generation and active mineral exploration
companies listed on the Australian Securities
Exchange.
Our project generator business model facilitates
exploration of an expansive project pipeline
through a mix of alliances, earn-ins and joint
ventures as well as sole funded exploration.
Our business model allows Encounter to pursue
large scale gold and base metal opportunities. This
provide shareholders with leverage to multiple,
well-funded projects in world class mineral
belts while minimising the funding demands on
shareholders.
Encounter is a fast mover and early adopter of new
technologies and new datasets which has provided
us with key insights into new exploration frontiers.
In recent years, Encounter has teamed up with
leading mid-tier and major producers which have
talented and highly resourced exploration teams.
In March 2020, IGO Limited (ASX:IGO) entered
an earn-in and joint venture agreement to sole
fund up to $15 million in exploration expenditure
over a maximum seven year period at the Yeneena
copper-cobalt project (“Yeneena”) in the Paterson
Province of Western Australia to earn a 70%
interest in Yeneena.
Sole funded, project generation activities
continued in the Northern Territory, utilising new
Geoscience Australia datasets. This has resulted
in Encounter securing six new projects covering
14,800km2 with potential for large, sedimentary-
hosted and IOCG style copper deposits. All in
a time of increasing optimism for copper. The
projects lie in a highly prospective and vastly
underexplored region under shallow cover located
between the major mineral districts of Mt Isa and
Tennant Creek.
In September 2020, BHP (ASX:BHP) and Encounter
entered into an Option Agreement covering the
Elliott Copper Project (“Elliott”) in the Northern
Territory.
The Option Agreement provides BHP with the right,
following the completion of a jointly designed
validation program, to enter an earn-in and joint
LETTER FROM THE CHAIRMAN
AND MANAGING DIRECTOR
venture agreement to earn up to 75% interest
in Elliott by spending up to $22 million over ten
years.
Encounter continues to advance a highly
prospective suite of projects in the Tanami and
West Arunta regions via four joint ventures with
Australia’s largest gold miner, Newcrest Mining
Limited (ASX:NCM).
In October 2020, diamond drilling commenced at
the Aileron joint venture in the West Arunta region
of Western Australia. This Newcrest-funded drill
program is targeting a discrete magnetic anomaly
consistent with the scale of an Ernest Henry or
Carrapateena style IOCG gold-copper system.
Encounter continues to advance the 100% owned
Lamil Copper-Gold Project (“Lamil”) located in
the Paterson Province of Western Australia. High-
grade gold has been intersected in broad spaced
drilling over 5km of the Lamil dome. A follow up
RC drill program is due to commence in October
2020.
Encounter remains one of the most dedicated and
active mineral exploration companies in Australia.
We are focused on generating value for our
shareholders through leading edge exploration for
major mineral deposits in Australia.
Encounter is disciplined in its approach to
capital management and we are steadfast in
our commitment to systematic exploration that
can create enduring value for our shareholders.
Our exploration plans remain well funded and,
importantly, we have an extremely capable and
experienced team that is dedicated to realising
the potential of our portfolio.
In closing, we would like to thank our local
communities, employees, joint venture and
alliance partners, suppliers and other business
partners. We also would take this opportunity to
thank our fellow shareholders for your ongoing
support.
Yours sincerely,
Paul Chapman
Chairman
Will Robinson
Managing Director
3
EXPLORATION REVIEW
2020 HIGHLIGHTS
» In January 2020 the Company announced that first
pass RC drilling at the Afghan and Mojave prospects
by joint venture partner Newcrest Mining Limited
(ASX:NCM) in the Tanami Province of Western
Australia (“WA”) had identified bedrock gold
mineralisation at both prospects. Mineralisation
is hosted by structures developed within folded
dolerite units, which are a favourable host for
orogenic gold mineralisation.
» In March 2020, IGO Limited (ASX:IGO) elected
to enter an earn-in and joint venture agreement
to sole fund up to $15 million in exploration
expenditure over a maximum seven year period at
the Yeneena copper-cobalt project (“Yeneena”) in
the Paterson Province of WA to earn a 70% interest
in the project.
» In April 2020 a four hole diamond drill hole
program (1,807m) was completed at the 100%
owned Lamil Copper-Gold Project (“Lamil”) located
in the Paterson Province of Western Australia.
The program intersected zones of strongly altered
brecciated sediments containing sulphides
interpreted to be a major structure and fluid
pathway and is a potential feeder for a system
similar in style to the large Havieron gold discovery
located 80km to the east.
» In June 2020 exploration commenced at Yeneena
under the earn-in and joint venture agreement
with IGO Limited. The program included fine-
fraction soil surveys covering targets identified
in the successful 2019 orientation program and
moving loop electromagnetic (“EM”) surveys to
refine conductors identified in the 100 line km
magnetotelluric (“MT”) survey completed in 2019.
» Six new project areas covering 14,800km2 have
been pegged in the Northern Territory (”NT”) based
on their potential to contain large, sedimentary-
hosted and IOCG style copper deposits. The areas
lie in a highly prospective but vastly underexplored
region under shallow cover located between the
major mineral districts of Mt Isa and Tennant Creek.
» In August 2020, the Company announced that
systematic investigation of rock chips from water
bore holes at the Jessica Copper Project in the
NT, identified the existence of near surface copper
oxide (malachite) mineralisation.
» In September 2020 BHP (ASX:BHP) and Encounter
entered into an Option Agreement covering the
Elliott Copper Project (“Elliott”) in the NT. The Option
Agreement provides BHP with the right, following the
completion of a jointly designed validation program, to
enter an earn-in and joint venture agreement to earn
up to 75% interest in Elliott by spending up to $22
million over 10 years. Elliott represents a compelling
first mover copper opportunity in a high quality
jurisdiction:
▪ Located at a major structural intersection on the
southwestern margin of the Beetaloo Basin
▪ Contains the key conceptual criteria for the
formation of sedimentary copper with the target
sequence being undercover and untested
▪ Standout copper-in-groundwater anomaly which is
supported by surface geochemical sampling at Elliott
» In October 2020 diamond drilling commenced at the
Aileron joint venture with Newcrest Mining located in
the West Arunta region of WA. The Newcrest-funded
drill program is targeting a discrete magnetic anomaly
consistent with the scale of an Ernest Henry or
Carrapateena style IOCG gold-copper system.
» An RC drill program is to commence at the Lamil
Copper/Gold Project in October 2020 and will include:
▪ Testing the discrete IP chargeability Elsa anomaly
modelled adjacent to the altered breccia intersected
in April 2020 for potential Havieron-style gold
mineralisation
▪ Extensional drilling of the Gap, including
reorientating the drill rig to test whether recent
drilling has intersected a zone of supergene
anomalism lying parallel to primary mineralisation
▪ Testing for extensions to the high-grade
supergene gold mineralisation at Dune
and to provide potential vectors to the
primary gold source
» In November 2020 a diamond
drill program is scheduled to
commence at Yeneena under the
earn-in and joint venture
agreement with IGO Limited.
4
PATERSON PROVINCE
COPPER-GOLD
100% Encounter – E45/4613
Lamil Project
Figure 1 – Encounter Projects –
Location Plan
Lamil covers an area of ~61km2 and is located 25km northwest of the major gold-copper mine at Telfer, owned
by Newcrest Mining Ltd (ASX:NCM). Lamil is adjacent to a major regional gravity lineament which marks the
location of a significant structure and deformation zone that would have acted as a major pathway for ore
forming fluids during the formation of the Proterozoic aged deposits. This is a regionally similar structural
context to the setting of Rio Tinto Ltd’s (ASX:RIO) Winu copper-gold deposit (Figure 6).
Over the past 18 months, new magnetic, airborne electromagnetic and ground IP surveys have been completed
at Lamil. In July 2020, Encounter engaged Barry Bourne of Terra Petrophysics to complete full integration and
inversion modelling of these recent geophysical surveys completed at Lamil. Mr Bourne is a highly respected
geophysicist and was formally Chief Geoscientist Global Exploration for Barrick Gold Corporation.
This process involved a detailed review of the recently acquired IP data and the construction of 3D magnetic
susceptibility, chargeability and resistivity models using the Pawsey supercomputer. The 3D IP model and the
inversion of the detailed magnetics and airborne electromagnetic data has been integrated with geological
observation from our recent diamond drilling program. Encouragingly this has delivered a number of high
quality gold drill targets at Lamil.
5
EXPLORATION REVIEW EXPLORATION
REVIEW (CONTINUED)
Figure 2 – Airphoto and Max Au
Elsa Prospect – IP Chargeability Anomaly
In March 2020, two diamond drill holes (ETG0203 and ETG0204) intersected wide zones of brecciated,
fractured and veined intercalated metasediments with associated intense alteration (see Photos 1 & 2).
The breccia intersected in ETG0203 and ETG0204 is interpreted to be a major structure and fluid pathway
and is a potential feeder for a system similar in style to the large Havieron gold discovery, located 80km to
the east.
The geophysical inversion modelling and integration of the IP, magnetics and airborne electromagnetic
data has highlighted a distinct, untested chargeability anomaly located 400m north of ETG0203 and at
the interpreted intersection of the breccia zone and a second order structure (Figure 3). The top of this
anomaly has been modelled at ~200m from surface. RC drilling will be completed at Elsa to the depth
capacity of the rig (~300m) with a diamond tail possible to test the full extent of this discrete anomaly.
6
EXPLORATION
REVIEW (CONTINUED)
Figure 3 – Elsa Prospect – Chargeability Anomaly Section
Gap Prospect – Open broad zone of gold-copper mineralisation
A section of four 80m spaced RC/diamond drill holes has been completed at the Gap. The three holes on the
south-western end of the section contain thick zones of near surface supergene gold mineralisation (Figures 2
and 4).
Gold mineralisation on this single section of drilling is over 180m wide (see ASX release 11 June 2020):
» 30m @ 1.1g/t Au from 96m in ETG0068
» 36m @ 0.4g/t Au from 124m in ETG0067
» 36m @ 0.5g/t Au from 28m in ETG0201
Mineralisation is open in all directions with no other bedrock drilling within 400m. Recent interpretation
suggests the single line of drilling may be parallel to the strike of the primary mineralisation. Accordingly, the
RC rig will be turned 90 degrees and the upcoming program will be drilled in a south-east orientation.
7
EXPLORATION
REVIEW (CONTINUED)
Figure 4 – Gap Prospect Section
Dune Prospect
Diamond drill hole ETG0003 intersected strong supergene gold mineralisation at Dune located on the fold
axis in the northern part of the Lamil dome:
» 24.9m @ 0.7g/t Au from 127.1m and 4.0m @ 7.1g/t Au from 216m (see ASX release 19 January
2017)
Follow up RC drill programs primarily focused on the area southeast of ETG0003. These programs
successfully intersected high grade, near surface gold mineralisation. Intersections included (see ASX
release 26 April 2017):
» 20m @ 1.8g/t Au and 502ppm Cu from 94m including 10m @ 2.8g/t Au and 812ppm Cu from 94m
in ETG0015
» 14m @ 1.2g/t Au and 1,179ppm Cu from 66m including 4m @ 3.3g/t Au and 1,400ppm Cu from
74m in ETG0016
» 8m @ 1.0 g/t Au and 426ppm Cu from 197m in ETG0010
Prior exploration at Dune has outlined a laterally extensive +1g/t Au supergene anomaly in broad spaced
drilling. The primary areas of focus for the upcoming RC drill program, will be northeast and northwest
of the prior drilling to test for lateral extension of the supergene mineralisation and to define vectors to
primary mineralisation (Figure 5).
In the northwest, the focus will be extending the high grade gold mineralisation intersected in ETG0003
and ETG0010. In addition, the existing RC drill lines will be extended to the northeast where the supergene
gold anomaly remains open.
8
EXPLORATION
REVIEW (CONTINUED)
Figure 5 – Dune Prospect (Max in hole Au) planned drilling
Upcoming Activity
The RC drill program to commence in October 2020 will include:
» Testing the discrete IP chargeability Elsa anomaly modelled along strike of the altered breccia
intersected in ETG0203 & ETG0204 for potential Havieron-style gold mineralisation
» Extensional drilling of the Gap, including reorientating the drill rig to test whether recent drilling has
intersected a zone of supergene anomalism lying parallel to primary mineralisation
» Testing for extensions to the high-grade supergene gold mineralisation at Dune to provide potential
vectors to the primary gold source
9
EXPLORATION
REVIEW (CONTINUED)
Photo 1 – ETG0204 (~305-309m) Brecciated and altered sediments containing disseminated and blebby sulphides.
10
Photo 2 – ETG0204 (~315m) Coarse sulphides
within brecciated and altered sediments – the silver
coloured sulphide mineral is arsenopyrite
EXPLORATION
REVIEW (CONTINUED)
Figure 6 – Regional gravity over Seebase depth to Proterozoic basement image (red = shallow, blue = deep)
TANAMI AND WEST ARUNTA - GOLD
50:50 JV Encounter/Newcrest – E80/5132, E80/5137, E80/5145, E80/5146, E80/5147,
E80/5169, E80/5186, E80/5323, E80/5469, E80/5470
Newcrest is sole funding exploration activities across four joint ventures in the Tanami and West Arunta
Provinces. Three of these joint ventures (Watts, Selby and Lewis) cover over 100km of strike along the major
structural corridor (Trans-Tanami Structure) that extends through the Tanami region of WA. In addition,
the Aileron joint venture in the West Arunta district of WA contains a number of structural targets identified
through aerial magnetic surveying, including a large, discrete magnetic anomaly consistent with the scale of an
Ernest Henry or Carrapateena style system.
1. Aileron JV (West Arunta)
The Aileron joint venture is located in the West Arunta region of WA, approximately 600km west of Alice
Springs. There has been no previous mineral exploration on the project, although gold/copper anomalism
has been identified within the region. The project contains a number of existing structural targets identified
through aerial magnetic surveys, including a discrete magnetic anomaly consistent with the scale of an Ernest
Henry or Carrapateena style gold-copper system (Figures 7 and 8).
11
EXPLORATION
REVIEW (CONTINUED)
Figure 7 – Aileron joint venture tenure, interpreted structures and targets on TMI background
Figure 8 – Modelled magnetic feature at Aileron with planned first drill hole EAL_001
The initial anomaly to be drilled tested has been modelled utilising close spaced aeromagnetic data, as a
steeply dipping 500 x 200m magnetic body starting from ~50m below surface. The strongly magnetic body is
modelled to a depth of 1km. The first drill hole (EAL_001) has been planned to a depth of 500m with further
drilling dependent on observations in the initial drill hole.
12
EXPLORATION
REVIEW (CONTINUED)
Diamond drilling commenced in October 2020. The Aileron drilling is co-funded through a WA Government
drilling grant of up to $150,000 under the Exploration Incentive Scheme.
2. Watts JV (Tanami)
The Watts joint venture covers the central corridor of targets where a regional scale north-northeast trending
structure intersects the Trans-Tanami Structure including the Hutch’s Find and Sunset Ridge prospects
(Figure 9).
3. Selby JV (Tanami)
The Selby joint venture includes a number of regional scale geochemical anomalies defined in shallow drilling,
discrete geophysical targets and historical high grade gold intersections in limited deeper drilling. High
priority prospects include the Afghan, Mojave and the Bandicoot to Camel corridor prospects.
4. Lewis JV (Tanami)
The Lewis joint venture covers over 20km of strike of untested Trans-Tanami Structure. Vast areas along
this highly prospective structure have never seen a soil sample or a drill hole. Lewis represents a first mover
opportunity into a newly defined area.
Figure 9 – Tanami Joint Venture areas with gold occurrences over regional gravity data
Phillipson Range (Tanami) (100% ENR)
The Phillipson Range project covers untested Trans-Tanami Structure south-west of the Lewis JV. The future
work program at Philipson Range will focus on the eastern end of the project along the Trans-Tanami Structure
with field reconnaissance and soil geochemistry.
13
EXPLORATION
REVIEW (CONTINUED)
PATERSON PROVINCE – COPPER-COBALT
E45/2500, E45/2502, E45/2657, E45/2658, E45/2805, E45/2806, E45/3768, E45/4861,
E45/5333, E45/5334, E45/5379, ELA45/5686 and ELA45/5630 – IGO Limited (ASX:IGO)
Earn-in and JV Agreement
In March 2020, IGO Limited elected to enter an earn-in and joint venture agreement to sole fund up to $15
million in exploration expenditure over a maximum seven year period at the Yeneena copper-cobalt project
to earn a 70% interest in the project. This decision follows the collaborative deployment of a suite of new
exploration technologies at Yeneena during 2019 which successfully defined new, large scale copper-cobalt
targets.
Background
Yeneena comprises a major land position covering more than 1,600km2 in the highly prospective Paterson
Province, targeting copper-cobalt mineralisation (Figure 10).
During 2019, the exploration program conducted at Yeneena effectively deployed several new technologies,
including a large-scale magnetotelluric (“MT”) survey (~100 line-km) to better define the basin architecture
and to further advance 3D targets as follows (refer ASX release 28 November 2019).
14
Figure 10 – Yeneena – MT lines, key structures and leasing summary
EXPLORATION
REVIEW (CONTINUED)
Fine Fraction Soil Surveys
Several broad, orientation surface sampling programs were completed in 2019 at Yeneena in areas where
traditional geochemistry was considered ineffective. The innovative interpretation of this data has provided a
potential breakthrough that may be applied to vast areas of prospective geology under shallow cover.
As a result of the learnings in the 2019 orientation surveys, an extensive fine fraction soil sampling program
has been completed at Yeneena. This included the collection of more than 3,700 surface fine fraction samples
during June-July 2020 over the McKay, Vines, Windsor, T4 and Lookout Rocks prospects.
Fine fraction soil surveys have defined new copper in soil anomalies which are supported in multi element
geochemistry. Infill soil sampling commenced in September 2020 to further define the anomalies.
Moving Loop Ground EM Geophysical Program
A regional MT line was completed in the southwest of the project in 2019, crossing the Vines Fault in the
west through to the Windsor Fault to the east, 2km north of the BM1 Prospect. BM1 is a zone of near surface
copper oxide and cobalt mineralisation. The mineralisation is hosted within conductive sediments of the
Broadhurst Formation and is interpreted to be the weathered product of an in-situ sulphide system adjacent to
the Windsor Fault.
The MT has mapped conductivity anomalies to the west and east of the Windsor Fault that are interpreted to be
Broadhurst Formation.
A high-powered ground moving loop EM survey was deployed to further define the two conceptually compelling
targets (“Windsor Targets”) (Figure 11).
A ground EM survey was also completed at the Aria IOCG Prospect located in the northwest of Yeneena. A
3D audio-magnetotelluric (“AMT”) survey completed in 2019 highlighted a conductive feature within the
interpreted breccia pipe which is untested by prior drilling.
In June 2020, the Company was successful in its application for a WA Government Exploration Incentive
Scheme (“EIS”) co-funded drilling grant of up to $150,000 to test the Windsor and Vines targets at Yeneena.
The EIS co-funded diamond drill program is scheduled to commence in November 2020.
15
EXPLORATION
REVIEW (CONTINUED)
Figure 11 – MT section – Vines Fault to BM1 showing interpreted geology and the Vines and Windsor Targets
PATERSON PROVINCE - GOLD
100% Encounter – E45/3446, P45/2750 to P45/2752 and P45/3032
Encounter holds a highly prospective and strategic ground holding in the Paterson Province that hosts
Newcrest’s major gold-copper operation at Telfer.
East Thomson’s Dome Project
East Thomson’s Dome is located 5km from Telfer. The domal structure at East Thomson’s Dome has a core of
Malu Formation with the fold axis trending WNW. The majority of surface gold and reef style mineralisation at
East Thomson’s Dome has been discovered in the overlying Telfer Formation sediments. This geological setting
is similar to that of the high grade reefs at Telfer.
Zones of reef-style mineralisation have been identified by Encounter across the 200m by 200m drill area at the
Fold Closure prospect. Near surface intersections include (refer ASX release 21 December 2017):
» 6m @ 2.7g/t Au from 39m in ETG0125
» 4m @ 4.3g/t Au from surface in ETG0109
» 4m @ 3.5g/t Au from 17m in ETG0110
» 2m @ 5.4g/t Au from 46m in ETG0106
The reefs at the Fold Closure prospect remain open to the north-west and south-east.
A new surface gold occurrence that may represent a bedding parallel reef position has been identified by
prospecting activities in an area of thin sand cover. Two costeans are planned along the defined trend to map
this potential reef position and to assess potential drill sites.
16
EXPLORATION
REVIEW (CONTINUED)
YILGARN PROVINCE - GOLD
100% Encounter – E30/517, ELA30/527 and ELA38/3471-73
Encounter holds two exploration projects in the Yilgarn region of WA prospective for gold mineralisation.
Rani Project
The Rani gold project is located 40km west of Menzies. The 220km2 project is situated adjacent to Ora Banda
Mining’s (ASX:OBM) Riverina gold deposits. The tenure covers 30 strike kilometres of folded and highly
metamorphosed greenstone stratigraphy on the eastern side of the Ida Fault Zone (Figure 12). The area is
predominantly under cover and has been subject to minimal historical exploration.
Encounter is currently assessing the use of fine fraction soil sampling in the region to identify gold anomalism
in areas of shallow sand cover. If successful further soil sampling will be conducted in the area as a precursor
to regolith drilling of the high priority structural targets defined at Rani.
Figure 12 – Rani Gold
Project Location Plan
(TMI background)
Mt Sefton Project
The Mt Sefton gold project covers the southern half of the Cosmo Newbury Greenstone belt that is located
between the Laverton and the Yamarna greenstone belts. This 1,150km2 project area is situated 80km east of
Laverton. Previous exploration in this area has been limited to surface rock chip sampling and shallow auger
geochemical drilling.
The tenure is currently under application. The Company intends to progress a Land Access Agreement prior to
the grant of tenure.
17
EXPLORATION
REVIEW (CONTINUED)
PATERSON PROVINCE – MILLENNIUM PROJECT
Encounter 75% / Hampton Hill Mining (“HHM”) 25% in E45/2501, E45/2561 and the
four eastern sub-blocks of E45/2500
The Millennium Project (“Millennium”) is located in the north-east of Yeneena where previous aircore and
RC drilling by Encounter defined a +3km long zinc regolith anomaly that remains open to the SE. Diamond
drilling at Millennium has intersected a thick zinc ironstone gossan at the contact between a brecciated
carbonate and a thick sequence of carbonaceous shales of the Broadhurst Formation.
The primary focus of exploration at Millennium in recent years has been on zinc. The copper exploration
potential of the Millennium project is being reviewed taking into account the recent learnings in the Paterson
Province.
Millennium is located on the regionally-extensive Tabletop Fault in an area of no outcrop, with up to 20m of
transported overburden. 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. Aircore drilling completed
during 2010-2011 defined a broad zone of copper anomalism (+0.25% Cu) over a strike extent of 800m.
RC drill hole EPT1140 collared in the core of the regolith copper anomaly defined in aircore drilling, returned
a copper sulphide intersection:
» 26m @ 0.60% copper from 100m incl. 10m @ 0.92% copper from 100m
(refer ASX release 19 July 2012)
Additional drilling is planned at Millennium in 2021 to test for potential extensions to open zones of copper
and zinc mineralisation intersected in prior drilling.
18
EXPLORATION
REVIEW (CONTINUED)
NORTHERN TERRITORY - COPPER
Background
New datasets provided by Geoscience Australia (“GA”), as part of the Federal Government’s Exploring for the
Future Program, resulted in the application for new exploration licences comprising six copper projects in the
Northern Territory (Figure 13).
Figure 13 – NT Copper Project Location Plan
Elliott Copper Project (“Elliott”) – EL32156, EL32157, EL32158, EL32159, ELA32226,
ELA32329 and ELA32437 – BHP Option Agreement
Elliott was the first project secured by Encounter in the Northern Territory. The project comprises seven
tenements covering more than 4,500km2. Four of the tenements covering over 3,000km2 were granted in
March 2020. The project is located on the Stuart Highway which runs along the western margin of the project.
Elliott is located at a major structural intersection on the southwestern margin of the Beetaloo Basin targeting
sedimentary hosted copper. The Beetaloo Basin is part of the Greater McArthur Superbasin that hosts the giant
sediment hosted base metal deposit at McArthur River. The basin contains thick, petroleum bearing, reduced
sediments which is an ideal trap sequence and structural setting for major sediment hosted base metal
deposits.
Historical exploration within adjacent properties has confirmed the presence of red beds and evaporites within
the sedimentary sequence which is an important ingredient in sedimentary copper deposit models.
The project encompasses key conceptual criteria for the formation of sedimentary copper and the target
sequence is undercover and untested.
19
EXPLORATION
REVIEW (CONTINUED)
New GA datasets released in 2019 and 2020 have supported the conceptual and structural targeting model
at Elliott. The standout, copper in groundwater anomaly (order of magnitude above background) in the
extensive GA sampling program is located at Elliott. This copper in groundwater anomaly is supported by a
copper soil anomaly also collected by GA.
Elliott represents a compelling first mover copper opportunity in a high quality jurisdiction. Data compilation
and a validation program is progressing and is scheduled to be completed in 2020 to allow for on ground
exploration to commence in 2021.
In September 2020, Encounter entered into an Option Agreement in relation to Elliott. The Option
Agreement provides BHP with the right to enter an earn-in and joint venture agreement covering Elliott.
Earn-in and Joint Venture Agreement Principles
Following the completion of a validation program, BHP has right, but not the obligation, to enter an earn-in
and joint venture agreement in relation to Elliott where the key terms would be:
» Staged earn-in where BHP has the right to earn up to 75% interest in Elliott by sole funding up to
A$22 million of exploration expenditure within 10 years;
» Upon BHP completing the earn-in, a 75:25 joint venture will be formed and the parties must
contribute funds based on their percentage interest to maintain their respective interests or dilute
according to a standard dilution formula. Should a party’s interest dilute to below 10% it shall
automatically convert to a net smelter royalty;
» During the earn-in phase, BHP has the right to be the Manager of the project.
Jessica Copper Project (“Jessica”) – EL32273, ELA32317, ELA32338, ELA32339,
ELA32386, ELA32387 and ELA32388 – 100% Encounter
Jessica was the second project secured by Encounter in the NT. Jessica covers approximately 5,500km2
along key structural corridors east of Tennant Creek and is prospective for sedimentary-hosted copper and
IOCG style deposits. Access to the project is via the sealed Tablelands Highway that traverses the western
side of Jessica.
Systematic assessment of drill chips from water bores at Jessica has been conducted by Encounter and
previous explorer Natural Resources Australia (“NRE”) utilising handheld XRF machines. Areas of copper
anomalism were selected by NRE for chemical analysis. Assay results from the interval 0-3m sample in
RN28419 (No. 39 water bore) returned 1.5% copper (refer ASX release 19 August 2020). Visual inspection
of this interval by Encounter geologists confirmed the presence of abundant copper carbonate in the form of
malachite (Photo 3).
The first tenement at Jessica, which covers the RN28419 (No. 39 water bore), was granted in August 2020.
Preparations have commenced for an aircore drill program to confirm the copper mineralisation identified in
the water bore cuttings and determine the lateral extent of the near surface copper mineralisation
20
EXPLORATION
REVIEW (CONTINUED)
Photo 3 – Copper Carbonate (Malachite)
mineralisation at Jessica: 0-3m from
RN28419 – chemical assay 1.5% Cu
Photo 4 – Barkly Tablelands – Northern Territory (Photo: Geoscience Australia)
21
EXPLORATION
REVIEW (CONTINUED)
Sandover Copper Project (“Sandover”) – ELA32374 and ELA32421 – 100% Encounter
Sandover covers an intersection of major structural corridors on the southern margin of the Georgina basin,
200km north of Alice Springs. Historical exploration at Sandover has mapped copper oxides at surface in a
stratiform position extending over 20km of strike. Exploration will focus on the down dip continuation of this
horizon and identifying where this mineralised horizon extends under cover.
Carrara Copper/Zinc Project (“Carrara”) – ELA32476 and ELA32477 – 100% Encounter
Carrara was secured following the release of the South Nicholson Seismic Survey, a foundational dataset
acquired as part of the GA Exploring for the Future Program. A key finding of this study is the correlation of
prospective stratigraphic units from the Isa Super basin into the Carrara Sub-basin that extended the Mount
Isa Province to the west. Carrara is located at an interpreted structural offset of the western margin of the
Carrara Sub-basin where the prospective Isa Super basin has been modelled closer to surface.
Brunchilly Copper/Zinc Project (“Brunchilly”) – ELA32478 – 100% Encounter
Brunchilly contains a zinc in groundwater anomaly (top 1% of results) in the GA sampling program and is
located on a major north-east trending regional structure north of Tennant Creek. This anomalous sample is
supported by elevated anomalism in pathfinder elements that are considered prospective for sedimentary-
hosted base metals deposits.
Playford Copper Project (“Playford”) – ELA32493 – 100% Encounter
Playford is located in a region of copper regolith anomalism identified through handheld XRF analysis of
water bore drill chips. The bore is located on the margin of an interpreted felsic intrusion identified in a
seismic survey completed by GA in the Exploring for the Future Program.
Next steps
A program of compilation, interpretation and modelling of the data packages at Elliott has been designed
with BHP and will be completed by the parties before 31 December 2020. Following completion of this
program, BHP may elect to fund additional validation programs during 2021 prior to making a decision on
whether to exercise its option and to enter into a earn-in and joint venture agreement.
Encounter will continue to progress access agreements and complete data validation at its 100% owned
Jessica, Brunchilly, Carrara, Playford and Sandover projects. Consistent with our project generation
business model, Encounter will consider opportunities to advance these projects through the next phase
alone or in conjunction with an earn-in partner.
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 holds shares and options in and 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 2012 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.
The Company confirms that it is not aware of any new information or data that materially affects the information in the relevant ASX
releases and the form and context of the announcement has not materially changed. The Company confirms that the form and context in
which the Competent Persons findings are presented have not been materially modified from the original market announcements.
This announcement has been approved for release by the Board of Encounter Resources Limited
22
SUMMARY OF
TENEMENTS
Lease
Lease Name
Project Name
Area km2
Managing Company
Encounter Interest
Paterson
107.3
Encounter Operations Pty Ltd 100%* IGO earning up to 70%
E45/2500
E45/2501
E45/2502
E45/2561
E45/2657
E45/2658
E45/2805
E45/2806
E45/4861
E45/5333
E45/5334
ELA45/5686
E45/3768
E45/5379
ELA45/5630
Yeneena
Yeneena
Yeneena
Yeneena
Yeneena
Yeneena
Yeneena
Yeneena
Yeneena
Yeneena
Yeneena
Yeneena
Yeneena
Yeneena
Yeneena
Paterson
Paterson
Paterson
Paterson
Paterson
Paterson
Paterson
Paterson
Paterson
Paterson
Paterson
Paterson
Paterson
Paterson
19.12
Encounter Operations Pty Ltd
75%*
117.8
Encounter Operations Pty Ltd
100% IGO earning up to 70%
50.95
Encounter Operations Pty Ltd
75%*
156
95.4
85.8
35
328
Encounter Operations Pty Ltd
100% IGO earning up to 70%
Encounter Operations Pty Ltd
100% IGO earning up to 70%
Encounter Operations Pty Ltd
100% IGO earning up to 70%
Encounter Operations Pty Ltd
100% IGO earning up to 70%
Encounter Operations Pty Ltd
100% IGO earning up to 70%
127.2
Encounter Operations Pty Ltd
100% IGO earning up to 70%
102.1
Encounter Operations Pty Ltd
100% IGO earning up to 70%
108.4
Encounter Operations Pty Ltd
100%
149.7
Encounter Yeneena Pty Ltd
100% IGO earning up to 70%
235.3
Shumwari Pty Ltd
0% ** Option to Purchase
E45/4613
Telfer West
Paterson Cu/Au
E45/3446
East Thomson’s Dome
Paterson
86.6
60.7
6
Hamelin Resources Pty Ltd
Hamelin Resources Pty Ltd
Hamelin Resources Pty Ltd
P45/2750
East Thomson’s Dome
Paterson
198 HA
Hamelin Resources Pty Ltd
P45/2751
East Thomson’s Dome
Paterson
177 HA
Hamelin Resources Pty Ltd
P45/2752
East Thomson’s Dome
Paterson
199 HA
Hamelin Resources Pty Ltd
P45/3032
East Thomson’s Dome
Paterson
113.80 HA
Hamelin Resources Pty Ltd
100%
100%
100%
100%
100%
100%
100%
E80/5132
E80/5137
E80/5145
E80/5146
E80/5147
Selby JV
Selby JV
Watts JV
Lewis JV
Selby JV
E80/5152
Phillipson Range
Tanami
Tanami
Tanami
Tanami
Tanami
Tanami
646
613
552
548
275
Hamelin Resources Pty Ltd
50% NCM earning up to 80%
Hamelin Resources Pty Ltd
50% NCM earning up to 80%
Hamelin Resources Pty Ltd
50% NCM earning up to 80%
Hamelin Resources Pty Ltd
50% NCM earning up to 80%
Hamelin Resources Pty Ltd
50% NCM earning up to 80%
238.3
Hamelin Resources Pty Ltd
100%
E80/5169
Aileron JV
West Arunta
E80/5186
E80/5323
Lewis JV
Selby JV
Tanami
Tanami
187.6
70.96
Hamelin Resources Pty Ltd
50% NCM earning up to 80%
Hamelin Resources Pty Ltd
50% NCM earning up to 80%
330
Hamelin Resources Pty Ltd
50% NCM earning up to 80%
E80/5469
Aileron JV
West Arunta
E80/5470
Aileron JV
West Arunta
534.3
613.9
Hamelin Resources Pty Ltd
50% NCM earning up to 80%
Hamelin Resources Pty Ltd
50% NCM earning up to 80%
ELA80/5500
Ginger
Tanami
151.7
Hamelin Resources Pty Ltd
ELA80/5522
Aileron West
West Arunta
429.2
Hamelin Resources Pty Ltd
ELA38/3471
Mt Sefton
ELA38/3472
Mt Sefton
ELA38/3473
Mt Sefton
E30/517
Rani
Yilgarn
Yilgarn
Yilgarn
Yilgarn
212.4
530.1
411.1
208.8
Baudin Resources Pty Ltd
Baudin Resources Pty Ltd
Baudin Resources Pty Ltd
Baudin Resources Pty Ltd
100%
100%
100%
100%
100%
100%
23
SUMMARY OF
TENEMENTS (CONTINUED)
Lease
Lease Name
Project Name
Area km2
Managing Company
Encounter Interest
Rani
Elliott
Elliott
Elliott
Elliott
Yilgarn
6
Baudin Resources Pty Ltd
100%
Northern Territory
807.26
Baudin Resources Pty Ltd
100% BHP earning up to 75%
Northern Territory
696.31
Baudin Resources Pty Ltd
100% BHP earning up to 75%
Northern Territory
793.71
Baudin Resources Pty Ltd
100% BHP earning up to 75%
Northern Territory
723.9
Baudin Resources Pty Ltd
100% BHP earning up to 75%
Jessica
Northern Territory
750.46
Baudin Resources Pty Ltd
100%
Northern Territory
813.56
Baudin Resources Pty Ltd
100% BHP earning up to 75%
Northern Territory
136.99
Baudin Resources Pty Ltd
100% BHP earning up to 75%
Northern Territory
601.11
Baudin Resources Pty Ltd
100% BHP earning up to 75%
ELA30/527
EL32156
EL32157
EL32158
EL32159
EL32273
ELA32226
ELA32329
ELA32437
ELA32317
ELA32338
ELA32339
Elliott
Elliott
Elliott
Jessica
Jessica
Jessica
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Northern Territory
738.6
Baudin Resources Pty Ltd
Northern Territory
783.5
Baudin Resources Pty Ltd
Northern Territory
791.42
Baudin Resources Pty Ltd
ELA32374
Sandover
Northern Territory
795.4
Baudin Resources Pty Ltd
ELA32421
Sandover
Northern Territory
792.67
Baudin Resources Pty Ltd
ELA32386
ELA32387
ELA32388
ELA32476
ELA32477
Zeta
Zeta
Zeta
Carrara
Carrara
Northern Territory
814.55
Baudin Resources Pty Ltd
Northern Territory
814.94
Baudin Resources Pty Ltd
Northern Territory
813.76
Baudin Resources Pty Ltd
Northern Territory
805.42
Baudin Resources Pty Ltd
Northern Territory
805.21
Baudin Resources Pty Ltd
ELA32478
Brunchilly
Northern Territory
798.52
Baudin Resources Pty Ltd
ELA32493
Playford
Northern Territory
811.55
Baudin Resources Pty Ltd
Summary of tenements as of 1st October 2020.
* Tenement subject to Hampton Hill JV (only includes 4 eastern blocks on E45/2500)
see ASX announcement April 23, 2015
** Shumwari Option IGO JV
24
CONSOLIDATED
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 2020.
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, MAICD, MAusIMM
Non-Executive Chairman appointed 7 October 2005
Mr Chapman is a chartered accountant with over 30 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 and has held managing director and other senior
management roles in public companies. Mr Chapman was a founding shareholder/director of the following ASX
listed companies: Reliance Mining; Encounter Resources; Rex Minerals; Paringa Resources; Silver Lake Resources
and Black Cat Syndicate. Mr Chapman is currently a director of Western Australia based explorers, Black Cat
Syndicate Limited (ASX:BC8) and Dreadnought Resources Limited (ASX:DRE) and resigned as non-executive
director of Brazilian copper/gold producer Avanco Resources Limited (ASX:AVB) on 10 August 2018 following a
successful takeover by OZ Minerals Limited.
Will Robinson – B.Comm, MAusIMM
Managing Director (Executive) appointed 30 June 2004
Mr Robinson has worked in the resources industry in Australia and Canada for over twenty years. Mr Robinson’s
experience includes senior management roles at a large international resources company and executive roles
in the junior mining and exploration sector. Mr Robinson is former president of the resources industry advocacy
body, the Association of Mining and Exploration Companies (AMEC) a member of the Strategic Advisory Board
at the Centre for Exploration Targeting University of Western Australia and was a member of the Australian
Government’s Resources 2030 Taskforce.
Peter Bewick – B.Eng (Hons), MAusIMM
Exploration Director (Executive) appointed 7 October 2005
Mr Bewick is an experienced geologist and has held a number of senior mine and exploration geological roles
during a fourteen year career with WMC. These roles include Exploration Manager and Geology Manager of the
Kambalda Nickel Operations, Exploration Manager for St Ives Gold Operation, Exploration Manager for WMC’s
Nickel Business Unit and Exploration Manager for North America based in Denver, Colorado. Whilst at WMC, Mr
Bewick gained extensive experience in project generation for a range of commodities including nickel, gold and
bauxite. Mr Bewick has been associated with a number of brownfields exploration successes at Kambalda and
with the greenfield Collurabbie Ni-Cu-PGE discovery. Mr Bewick is currently a non-executive director of Mincor
Resources Limited (ASX:MCR) (appointed 2 December 2019).
Jonathan Hronsky OAM - BAppSci, PhD, MAusIMM, FSEG
Non-executive director appointed 10 May 2007
Dr. Hronsky has more than thirty 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 former Chairman of the board of management of the Centre for Exploration
Targeting at the University of Western Australia.
During the last 3 years Dr Hronsky has been a director of Cassini Resources Limited (appointed 3 April 2014) and
a director of Azumah Resources Limited (ASX:AZM) between 7 November 2019 to its delisting on 19 February
2020.
26
DIRECTORS REPORT
(CONTINUED)
DIRECTORS (CONTINUED)
Philip Crutchfield – B. Comm, LL.B (Hons), LL.M LSE
Non-executive director appointed 9 October 2019
Mr Crutchfield is a prominent and highly respected barrister specialising in commercial law. Since 2015, Philip
has been Non-Executive Chairman of highly successful financial services company Zip Co Limited (ASX:Z1P) and a
director of NVOI Limited (ASX:NVI) since 17 October 2019.
Mr Crutchfield is a board member of the Geelong Grammar School Council, Bell Shakespeare Theatre Company
and the Victorian Bar Foundation Limited. Philip is also a former partner of Mallesons Stephen Jaques (now King &
Wood Mallesons). Philip is a senior barrister practising in commercial law and was admitted to practice in 1988.
COMPANY SECRETARIES
Kevin Hart – B.Comm, FCA
Mr Hart is a Chartered Accountant and was appointed to the position of Company Secretary on 4 November
2005. Mr Hart has over 30 years experience in accounting and the management and administration of public
listed entities in the mining and exploration industry. Mr Hart 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. Mr Travers 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.
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
P Crutchfield
Directors’ Interests in
Ordinary Shares
Directors’ Interests in
Unlisted Options
Options vested at the
reporting date
9,422,500
25,169,098
7,200,000
200,000
2,514,241
1,000,000
700,000
5,200,000
1,800,000
1,700,000
1,000,000
700,000
5,200,000
1,800,000
1,700,000
Included in the Directors’ Interests in Unlisted Options are 10,400,000 options that are vested and exercisable
as at the date of signing this report.
DIRECTORS’ MEETINGS
The number of meetings of the Company’s
Directors held during the year ended 30 June
2020, and the number of meetings attended
by each Director are as follows:
Director
P Chapman
W Robinson
P Bewick
J Hronsky
P Crutchfield
Board of Directors’ Meetings
Held
Attended
7
7
7
7
4
7
7
7
7
4
27
DIRECTORS REPORT
(CONTINUED)
PRINCIPAL ACTIVITIES
The principal activity of the Company during the financial year was project generation, mineral exploration and
project development in Western Australia and the Northern Territory.
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 $1,126,275 (2019: $1,064,491).
Included in the consolidated loss for the current year is a write-off of deferred and uncapitalised exploration and
joint venture expenditure totalling $284,403 (2019: $294,359).
REVIEW OF ACTIVITIES
Exploration
Encounter’s primary focus is on discovering major gold deposits in Western Australia’s most prospective gold
districts: the Tanami, the Paterson Province and the Yilgarn.
The Company is advancing a highly prospective suite of projects in the Tanami and West Arunta regions via joint
ventures with Australia’s largest gold miner, Newcrest Mining Limited (ASX:NCM).
Complementing its expansive gold portfolio, Encounter controls a major ground position in the emerging
Proterozoic Paterson Province where it is exploring for copper-cobalt deposits with highly successful mining and
exploration company IGO Limited (ASX:IGO), and copper-gold deposits at its 100% owned Lamil Project.
In addition, project generation activities in the Northern Territory utilising new Geoscience Australia datasets
has resulted in Encounter securing the first mover Elliott and Jessica copper projects.
Financial Position
At the end of the financial year the Group had $1,865,502 (2019: $2,480,280) in cash and at call deposits.
Capitalised mineral exploration and evaluation expenditure is $13,963,789 (2019: $13,008,555).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than stated below, 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.
» During the year the Company entered into a farm-in and joint venture arrangement with IGO Limited in
respect of certain exploration licences comprising the Yeneena project in the Paterson Province.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has delayed the commencement of
certain exploration programs, is has not materially financially impacted the Group up to 30 June 2020. It is not
practicable to estimate the potential impact, positive or negative, after the reporting date.
On 1 July 2020 the Company issued 900,000 options pursuant to its Employee Share Option Plan.
On 24 September 2020 the Company advised that it had entered into an option agreement which provides BHP
Group Limited the right to earn up to a 75% interest in the Company’s Elliott Copper Project in the Northern
Territory by spending up to $22 million over 10 years.
Other than as already stated in this report, 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.
28
DIRECTORS REPORT
(CONTINUED)
OPTIONS OVER UNISSUED CAPITAL
Unlisted Options
As at the date of this report 14,850,000 unissued ordinary shares of the Company are under option as follows:
Number of Options Granted
Exercise Price
1,850,000
750,000
675,000
725,000
3,150,000
1,500,000
5,300,000
900,000
13 cents
17.5 cents
10.5 cents
10 cents
9 cents
12 cents
20 cents
22 cents
Expiry Date
24 November 2020
24 November 2021
1 November 2021
31 May 2022
30 November 2022
30 November 2022
31 October 2023
30 June 2024
All options on issue at the date of this report are vested and exercisable. No options on issue are listed.
During the financial year:
» 5,300,000 options (2019: 4,650,000) were granted over unissued shares to employees, directors and
consultants of the Company;
» no options (2019: 475,000) were cancelled on the cessation of employment;
» 1,075,000 options (2019: 7,191,429) were cancelled on expiry of the exercise period; and
» no (2018: Nil) ordinary shares were issued on the exercise of options.
Since the end of the financial year:
» 900,000 options have been issued by the Company to employees pursuant to the Company’s Employee
Option Plan;
» no options have been exercised; and
» no options have been cancelled due to the lapse of the 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.
ISSUED CAPITAL
Number of Shares on Issue
Ordinary fully paid shares
2020
280,824,968
2019
262,375,092
29
DIRECTORS REPORT
(CONTINUED)
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
The Company expects to maintain exploration programs at its Paterson copper-gold, Yeneena copper-
cobalt-zinc projects (Yeneena) (in conjunction with the IGO Limited farm-in and joint venture) and undertake
exploration in joint venture with Newcrest Mining Limited in the Tanami and West Arunta regions of Western
Australia.
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.
DIVIDENDS
No dividend has been paid since the end of the previous financial year and no dividend is recommended for the
current year.
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.
REMUNERATION REPORT (AUDITED)
Remuneration paid to Directors and Officers of the Company is set by reference to such payments made by other
ASX listed companies of a similar size and operating in the mineral exploration industry. In addition, reference
is made to the financial position of the Company and the specific skills and experience of the Directors and
Officers.
Details of the nature and amount of remuneration of each Director, and other Key Management Personnel if
applicable, are disclosed annually in the Company’s Annual Report.
Remuneration Committee
The Board has adopted a formal Remuneration Committee Charter which provides a framework for the
consideration of remuneration matters.
The Company does not have a separate remuneration committee and as such all remuneration matters are
considered by the Board as a whole, with no Member deliberating or considering such matter in respect of their
own remuneration.
In the absence of a separate Remuneration Committee, the Board is responsible for:
1. Setting remuneration packages for Executive Directors, Non-Executive Directors and other Key Management
Personnel; and
2. Implementing employee incentive and equity based plans and making awards pursuant to those plans.
30
DIRECTORS REPORT
(CONTINUED)
Non-Executive Remuneration
The Company’s policy is to remunerate Non-Executive Directors, at rates comparable to other ASX listed
companies in the same industry, for their time, commitment and responsibilities.
Non-Executive Remuneration is not linked to the performance of the Company, however to align Directors’
interests with shareholders’ interests, remuneration may be provided to Non-Executive Directors in the form
of equity based long term incentives.
1. Fees payable to Non-Executive Directors are set within the aggregate amount approved by shareholders at
the Company’s Annual General Meeting;
2. Non-Executive Directors’ fees are payable in the form of cash and superannuation benefits;
3. Non-Executive superannuation benefits are limited to statutory superannuation entitlements; and
4. Non-executive directors are offered an annual election to receive cash remuneration or an equivalent
amount in unlisted options. The annual election relates to the remuneration period from 1 December to 30
November of the relevant year and is subject to approval by the Company’s shareholders.
5. Participation in equity based remuneration schemes by Non-Executive Directors is subject to
consideration and approval by the Company’s shareholders.
The maximum Non-Executive Directors fees, payable in aggregate are currently set at $300,000 per annum.
Executive Director and Other Key Management Personnel Remuneration
Executive remuneration consists of base salary, plus other performance incentives to ensure that:
1. Remuneration packages incorporate a balance between fixed and incentive pay, reflecting short and long-
term performance objectives appropriate to the Company’s circumstances and objectives; and
2. A proportion of remuneration is structured in a manner to link reward to corporate and individual
performances.
Executives are offered a competitive level of base salary at market rates (based on comparable ASX listed
companies) and are reviewed regularly to ensure market competitiveness. To date, the Company has not
engaged external remuneration consultants to advise the Board on remuneration matters.
Incentive Plans
The Company provides long term incentives to Directors and Employees pursuant to the Encounter
Resources Employee Share Option Plan, which was last approved by shareholders at the Annual General
Meeting held on 30 November 2018.
The Board, acting in remuneration matters:
1. Ensures that incentive plans are designed around appropriate and realistic performance targets and
provide rewards when those targets are achieved;
2. Reviews and approves existing incentive plans established for employees; and
3. Approves the administration of the incentive plans, including receiving recommendations for, and the
consideration and approval of grants pursuant to such incentive plans.
31
DIRECTORS REPORT
(CONTINUED)
REMUNERATION REPORT (CONTINUED)
Engagement of Non-Executive Directors
Non-Executive Directors conduct their duties under the following terms:
1. A Non-Executive Director may resign from their position and thus terminate their contract on written notice to
the Company; and
2. A Non-Executive Director may, following resolution of the Company’s shareholders, be removed before the
expiration of their period of office (if applicable). Payment is made in lieu of any notice period if termination is
initiated by the Company, except where termination is initiated for serious misconduct.
In consideration of the services provided by Mr Paul Chapman as Non-Executive Chairman and Dr Jon
Hronsky and Mr Philip Crutchfield as Non-Executive Directors, the Company pay them $50,000 plus statutory
superannuation per annum.
Non-Executive Directors are also entitled to fees for other amounts as the Board determines where they perform
special duties or otherwise perform extra services or make special exertions on behalf of the Company. There
were no such fees paid during the financial year ended 30 June 2019 or 30 June 2020.
For the period 1 December 2019 to 30 November 2020, Non-Executive Directors Mr Paul Chapman and Mr Philip
Crutchfield elected to receive options in lieu of directors’ fees paid in cash. A total of 1,400,000 options were
issued in respect of this election following shareholder approval at the Company’s 2019 annual general meeting
(for further details refer to the notice of meeting lodged with ASX on 22 October 2019).
Engagement of Executive Directors
The Company has entered into executive service agreements with Mr Will Robinson and Mr Peter Bewick on the
following material terms and conditions:
Mr Robinson’s current service agreement with the Company, in respect of his engagement as Managing Director,
is effective from 1 October 2019. Mr Robinson will receive a base salary of $270,000 per annum plus statutory
superannuation.
Mr Bewick’s current service agreement with the Company, in respect of his engagement as Exploration Director,
is effective from 1 October 2019. Mr Bewick will receive a base salary of $270,000 per annum plus statutory
superannuation.
Messrs Robinson and Bewick may also receive an annual short term performance based bonus which may be
calculated as a percentage of their current base salary, the performance criteria, assessment and timing of
which is negotiated annually with the Non-Executive Directors.
Messrs Robinson and Bewick may, subject to shareholder approval, participate in the Encounter Resources
Employee Share Option Plan and other long term incentive plans adopted by the Board.
Short Term Incentive Payments
Each year, the Non-Executive Directors set the Key Performance Indicators (KPI’s) for the Executive Directors.
The KPI’s are chosen to align the reward of the individual Executives to the strategy and performance of the
Company.
Performance objectives, which may be financial or non-financial, or a combination of both, are weighted when
calculating the maximum short term incentives payable to Executives. At the end of the year, the Non-Executive
Directors will assess the actual performance of the Executives against the set Performance Objectives. The
maximum amount of the short term incentive, or a lesser amount depending on actual performance achieved is
paid to the Executives as a cash payment.
32
DIRECTORS REPORT
(CONTINUED)
Shareholding Qualifications
The Directors are not required to hold any shares in Encounter Resources under the terms of the Company’s
constitution. However, Directors have made their own investment decisions to hold shares in Encounter
Resources which are shown in this report.
Group Performance
In considering the Company’s performance, the Board provides the following indices in respect of the current
financial year and previous financial years:
Profit/(Loss) for the
year attributable to
shareholders
Closing share price at
30 June
2020
2019
2018
2017
2016
$(1,126,275)
$(1,064,491)
$(10,129,591)
$(1,313,269)
$(5,803,036)
$0.15
$0.07
$0.053
$0.115
$0.13
As an exploration company, the Board does not consider the profit/(loss) attributable to shareholders as one
of the performance indicators when implementing Short Term Incentive Payments. In addition to economic and
technical exploration success, the Board considers more appropriate indicators of management performance
for the 2020 financial period to include:
» corporate management and business development (including the identification and acquisition of high
quality projects);
» project and operational performance (including safety and environmental management);
» management of the Company’s farm-in and alliance arrangements; and
» cash flow and funding management.
Remuneration Disclosures
The Key Management Personnel of the Company have been identified as:
Mr Paul Chapman
Mr Will Robinson
Mr Peter Bewick
Dr Jon Hronsky
Mr Philip Crutchfield
Non-Executive Chairman
Managing Director
Exploration Director
Non-Executive Director
Non-Executive Director
The details of the remuneration of each Director and member of Key Management Personnel of the Company is
as follows:
33
DIRECTORS REPORT
(CONTINUED)
REMUNERATION REPORT (CONTINUED)
Remuneration Disclosures (Continued)
30 June 2020
Short Term
Post
Employment
Other
Long Term
Base Salary
$
Short Term
Incentive
$
Superannuation
Contributions
$
Paul Chapman
Will Robinson
Peter Bewick
Jon Hronsky
23,333
264,442
267,314
50,000
Philip Crutchfield
4,167
-
13,500
13,500
-
-
TOTAL
609,256
27,000
2,217
25,122
25,395
4,750
396
57,880
Value of
Options
$
70,800
49,560
49,560
21,240
120,360
311,520
30 June 2019
Short Term
Post
Employment
Other
Long Term
Base Salary
$
Short Term
Incentive
$
Superannuation
Contributions
$
Value of
Options
$
Paul Chapman
Will Robinson
Peter Bewick
Jon Hronsky
TOTAL
60,000
267,135
246,635
50,000
623,770
-
-
-
-
-
5,700
25,380
23,430
4,750
59,260
-
-
51,022
17,579
68,601
Total
$
96,350
352,624
355,769
75,990
124,923
1,005,656
Total
$
65,700
292,515
321,087
72,329
751,631
Value of Options
as Proportion of
Remuneration
73.5%
14.0%
13.9%
28.0%
96.3%
Value of Options
as Proportion of
Remuneration
-
-
15,9%
24.3%
Details of Performance Related Remuneration
During the period, short term incentive payments were paid to the executive directors as follows:
Will Robinson
Peter Bewick
Short term incentive payments - cash bonuses paid
2019/20 financial year
2018/19 financial year
$13,500
$13,500
$nil
$nil
34
DIRECTORS REPORT
(CONTINUED)
Equity instrument disclosures relating to key management personnel
Options Granted as Remuneration
During the financial year ended 30 June 2020 4,400,000 (2019: 4,000,000) were granted to Directors or
Key Management Personnel of the Company, as follows:
Options issued in lieu of payment of director fees:
» Paul Chapman
» Philip Crutchfield
700,000
700,000
Incentive options:
» Paul Chapman
» Will Robinson
» Peter Bewick
» Jon Hronsky
» Philip Crutchfield
300,000
700,000
700,000
300,000
1,000,000
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.
Exercise of Options Granted as Remuneration
During the year, no ordinary shares were issued in respect of the exercise of options previously granted as
remuneration to Directors or Key Management Personnel of the Company.
Option holdings
Key Management Personnel have the following interests in unlisted options over unissued shares of the
Company.
2020
Directors
P. Chapman
W. Robinson
P. Bewick
J. Hronsky
Balance at
start of the
year
Received during
the year as
remuneration
-
-
5,250,000
1,500,000
1,000,000
700,000
700,000
300,000
P. Crutchfield
-
1,700,000
Other changes
during the year1
Balance at the
end of the year
Vested and
exercisable at the
end of the year
-
-
(750,000)
-
-
1,000,000
1,000,000
700,000
5,200,000
1,800,000
1,700,000
700,000
5,200,000
1,800,000
1,700,000
2019
Directors
P. Chapman
W. Robinson
P. Bewick
J. Hronsky
Balance at
start of the
year
Received during
the year as
remuneration
Other changes
during the year1
Balance at the
end of the year
Vested and
exercisable at the
end of the year
-
-
-
-
-
-
-
-
-
-
3,000,000
1,000,000
3,000,000
1,000,000
(750,000)
(500,000)
5,200,000
1,500,000
5,200,000
1,500,000
1 Options lapsing unexercised at the end of the exercise period.
35
DIRECTORS REPORT
(CONTINUED)
REMUNERATION REPORT (CONTINUED)
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.
2020
Directors
P. Chapman
W. Robinson
P. Bewick
J. Hronsky
P. Crutchfield
Balance at start of
the year
Received during the
year as remuneration
Other changes during
the year
Balance at the end of
the year
8,622,500
24,769,098
6,800,000
200,000
-
-
-
-
-
-
800,000
400,000
400,000
-
2,514,2411
9,422,500
25,169,098
7,200,000
200,000
2,514,241
1 Shares held as at the date of appointment as a director.
2019
Directors
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
8,622,500
24,769,098
6,800,000
200,000
-
-
-
-
-
-
-
-
8,622,500
24,769,098
6,800,000
200,000
Loans made to key management personnel
No loans were made to key personnel, including personally related entities during the reporting period.
Other transactions with key management personnel
There were no other transactions with key management personnel.
- End of Remuneration Report -
36
DIRECTORS REPORT
(CONTINUED)
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.
OFFICERS’ 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.
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
2020
$
32,000
2019
$
31,250
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:
» all non-audit services are reviewed by the board to ensure they do not impact the impartiality and objectivity
of the auditor; and
» the non-audit services provided do not undermine the general principles relating to auditor independence as
set out in APES 110 Code of Ethics for Professional Accountants, as they do not involve reviewing or auditing
the auditor’s own work, acting in a management or decision making capacity for the Company, acting as an
advocate for the Company or jointly sharing risks and rewards.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the Auditor’s Independence Declaration as required under Section 307C of the Corporations Act is set
out on the following page.
This report is made in accordance with a resolution of the Directors.
Dated at Perth this 30th day of September 2020.
W Robinson
Managing Director
37
AUDITOR’S INDEPENDENCE
DECLARATION
DECLARATION OF INDEPENDENCE BY SUWARTI ASMONO TO THE DIRECTORS OF
ENCOUNTER RESOURCES LIMITED
As lead auditor for the audit of Encounter Resources Limited for the year ended 30 June 2020, 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
DECLARATION OF INDEPENDENCE BY SUWARTI ASMONO TO THE DIRECTORS OF
ENCOUNTER RESOURCES LIMITED
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
relation to the audit; and
As lead auditor for the audit of Encounter Resources Limited for the year ended 30 June 2020, I
This declaration is in respect of Encounter Resources Limited and the entities it controlled during the
declare that, to the best of my knowledge and belief, there have been:
year.
(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 Perth
This declaration is in respect of Encounter Resources Limited and the entities it controlled during the
year.
Suwarti Asmono
Crowe Perth
Partner
Dated at Perth this 30th day of September 2020
Suwarti Asmono
Partner
Dated at Perth this 30th day of September 2020
Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a separate
and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe Global or any
other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or partnership interest in
Findex (Aust) Pty Ltd. Services are provided by Crowe Perth, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a scheme approved under
Professional Standards Legislation. Liability limited other than for acts or omissions of financial services licensees.
© 2020 Findex (Aust) Pty Ltd
17
38
Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a separate
and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe Global or any
other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or partnership interest in
Findex (Aust) Pty Ltd. Services are provided by Crowe Perth, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a scheme approved under
Professional Standards Legislation. Liability limited other than for acts or omissions of financial services licensees.
© 2020 Findex (Aust) Pty Ltd
17
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the financial year ended 30 June 2020
Interest income
Other income
Total income
Employee expenses
Employee expenses recharged to exploration
Equity based remuneration expense
Non-executive Directors’ fees
Gain/(loss) in fair value of financial assets
Profit/(loss) on disposal of fixed assets
Profit/(loss) on disposal of exploration assets
Depreciation expense
Corporate expenses
Administration and other expenses
Exploration costs written off and expensed
Profit/(Loss) before income tax
Income tax benefit
Profit/(Loss) after tax
Other comprehensive income
Total comprehensive income/(loss) for the year
Note
5
19
6,11
6
6,13
7
19
Consolidated
2020
$
2019
$
38,930
96,529
135,459
54,446
467,601
522,047
(1,146,709)
(1,115,069)
933,396
(375,240)
(77,500)
276,740
19,545
(130,430)
(633)
(71,613)
(404,887)
(284,403)
908,337
(86,528)
(110,000)
(461,234)
-
-
(593)
(65,807)
(361,285)
(294,359)
(1,126,275)
(1,064,491)
-
-
(1,126,275)
(1,064,491)
-
-
(1,126,275)
(1,064,491)
Earnings per share for loss attributable to the ordinary equity holders of the Company
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
29
29
(0.4)
(0.4)
(0.4)
(0.4)
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
39
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As at 30 June 2020
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Financial 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
Consolidated
2020
$
2019
$
1,865,502
2,480,280
57,888
147,994
70,692
149,216
2,071,384
2,700,188
768,723
85,195
491,982
37,009
13,963,789
13,008,555
14,817,707
13,537,546
16,889,091
16,237,734
241,014
313,175
554,189
554,189
199,282
315,096
514,378
514,378
16,334,902
15,723,356
43,828,235
42,465,654
(28,069,977)
(27,011,196)
576,644
268,898
16,334,902
15,723,356
8
9(a)
9(b)
11
12
13
15
16
17
19
19
The above consolidated statement of financial position should be read in conjunction with the
accompanying notes.
40
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the financial year ended 30 June 2020
Consolidated
Issued
capital
$
Accumulated
losses
$
Equity remuneration
reserve
$
Total
$
40,676,386
(26,075,127)
310,792
14,912,051
-
-
-
(1,064,491)
-
(1,064,491)
-
86,528
86,528
128,422
(128,422)
-
1,789,268
-
-
1,789,268
42,465,654
(27,011,196)
268,898
15,723,356
42,465,654
(27,011,196)
268,898
15,723,356
-
-
-
(1,126,275)
-
(1,126,275)
-
375,240
375,240
67,494
(67,494)
-
1,362,581
-
-
1,362,581
43,828,235
(28,069,977)
576,644
16,334,902
2019
Balance at the start of the financial
year
Comprehensive income for the
financial year
Movement in equity remuneration
reserve in respect of options vested
Transfer to accumulated losses on
cancellation of vested options
Transactions with equity holders
in their capacity as equity holders:
Shares issued (net of costs)
Balance at the end of the financial
year
2020
Balance at the start of the financial
year
Comprehensive income for the
financial year
Movement in equity remuneration
reserve in respect of options vested
Transfer to accumulated losses on
cancellation of vested options
Transactions with equity holders
in their capacity as equity holders:
Shares issued (net of costs)
Balance at the end of the financial
year
The above consolidated statement of changes in equity should be read in conjunction with the
accompanying notes.
41
CONSOLIDATED STATEMENT
OF CASH FLOWS
For the financial year ended 30 June 2020
Note
28
Cash flows from operating activities
Other income
Project generation fee received
State Government funded drilling rebate
Interest received
Payments to suppliers and employees
Net cash used in operating activities
Cash flows from investing activities
Contributions received from project generation alliance and
farm-in partners
Payments for exploration and evaluation
R&D tax concession for exploration activities
Proceeds from sale of fixed assets
Proceeds from sale of exploration assets
Payments for plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issue of shares
Payments for share issue costs
Net cash from financing activities
Net decrease in cash held
Cash at the beginning of the financial year
Cash at the end of the financial year
8(a)
Consolidated
2020
$
2019
$
55,578
-
120,000
38,930
(742,316)
(527,808)
2,903
400,000
112,674
54,446
(783,237)
(213,214)
663,223
417,286
(2,360,289)
(2,501,617)
253,168
19,545
60,000
(85,197)
127,686
-
-
-
(1,449,550)
(1,956,645)
1,383,740
(21,160)
1,362,580
(614,778)
2,480,280
1,865,502
1,800,800
(10,732)
1,790,068
(379,791)
2,860,071
2,480,280
The above consolidated statement of cash flows should be read in conjunction with the accompanying
notes.
42
NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 30 June 2020
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”).
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 and the Corporations Act 2001. The Group is a for-profit entity for
financial reporting purposes under Australian Accounting Standards.
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
29th September 2020.
Statement of Compliance
The consolidated financial report of Encounter Resources Limited complies with Australian Accounting
Standards, which include 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 Accounting Standards
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board (“AASB”) that are mandatory for the current
reporting period. The adoption of these Accounting Standards and Interpretations did not have any
significant impact on the financial performance or position of the Group during the financial year.
AASB 16 Leases
The Group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for
lessees eliminates the classifications of operating leases and fin ance leases. Except for short-term leases
and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in
the statement of financial position. Straight-line operating lease expense recognition is replaced with
a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense
on the recognised lease liabilities (included in finance costs). For classification within the statement of
cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease
payments are separately disclosed in financing activities.
Impact of adoption
At inception of a contract the Group assesses if the contract contains or is a lease. If there is a lease
present, a right-of-use asset and a corresponding liability are recognised by the Group where the Group is
a lessee. However, all contracts that are classified as short-term leases (i.e. leases with a remaining lease
term of 12 months or less) and leases of low-value assets are recognised as an operating expense on a
straight-line basis over the term of the lease.
43
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
New standards and interpretations not yet adopted
The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory
application date or future reporting periods.
There are no material new or amended Accounting Standards which will materially affect the Group.
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.
(a) 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.
(b) Other income
Interest income
Interest income is recognised on a time proportion basis and is recognised as it accrues.
Option fee income
Recognised for option fee income at such time that the option fee becoming receivable by the Company occurs.
Management fee income
Recognised for management fees from farm-in and alliance partners during the period in which the Company
provided the relevant service.
44
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
(c) 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.
(d) Leases
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised
at the present value of the lease payments to be made over the term of the lease, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's
incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives
receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under
residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably
certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend
on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts
are remeasured if there is a change in the following: future lease payments arising from a change in an
index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination
penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use
asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
45
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
(e) 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 impairment are reviewed for possible reversal of the impairment at each reporting
date.
(f) 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.
(g) Government grants
Government grants are recognised at fair value where there is reasonable assurance that the grant will be
received and all grant conditions will be met. Grants relating to expense items are recognised as income over
the periods necessary to match the grant to the costs they are compensating. Grants relating to assets are
deducted from the carrying value of the relevant asset.
Amounts receivable from the Australian Tax Office in respect of research and development tax concession
claims are recognised in the year in which the claim is lodged with the Australian Tax Office. Amounts
receivable are allocated in the financial statements against the corresponding expense or asset in respect of
which the research and development concession claim has arisen.
(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.
46
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
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:
Asset Class
Depreciation Rate
Field equipment and vehicles
Office equipment
Leasehold improvements
33%
33%
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:
» such costs are expected to be recouped through the successful development and exploitation of the area of
interest, or alternatively by its sale; or
» exploration and/or evaluation activities in the area have not reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves and active or significant
operations in, or in relation to, the area of interest are continuing.
In the event that an area of interest is abandoned or if the Directors consider the expenditure to be of reduced
value, accumulated costs carried forward are written off in the year in which that assessment is made. A
regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest.
Immediate restoration, rehabilitation and environmental costs necessitated by exploration and evaluation
activities are expensed as incurred and treated as exploration and evaluation expenditure. Exploration
activities resulting in future obligations in respect of restoration costs result in a provision to be made by
capitalising the estimated costs, on a discounted cash basis, of restoration and depreciating over the useful
life of the asset. The unwinding of the effect of the discounting on the provision is recorded as a finance cost
in the income statement.
Farm-in arrangements (in the exploration and evaluation phase)
For exploration and evaluation asset acquisitions (farm-in arrangements) in which the Group has made
arrangements to fund a portion of the selling partner's (farmor's) exploration and/or future development
expenditures (carried interests), these expenditures are reflected in the financial statements as and when the
exploration and development work progresses.
Farm-out arrangements (in the exploration and evaluation phase)
The Group does not record any expenditure made by the farmee on its account. It also does not recognise
any gain or loss on its exploration and evaluation farm-out arrangements but designates any costs previously
capitalised in relation to the whole interest as relating to the partial interest retained. Monies received
pursuant to farm-in agreements are treated as a liability on receipt and until such time as the relevant
expenditure is incurred.
47
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
(k) Joint ventures and joint operations
Joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights
to the net assets of the arrangement. Investments in joint ventures are accounted for using the equity method.
Under the equity method, the share of the profits or losses of the joint venture is recognised in profit or loss
and the share of the movements in equity is recognised in other comprehensive income. Investments in joint
ventures are carried in the statement of financial position at cost plus post-acquisition changes in the Group's
share of net assets of the joint venture. Goodwill relating to the joint venture is included in the carrying amount
of the investment and is neither amortised nor individually tested for impairment. Income earned from joint
venture entities reduces the carrying amount of the investment.
Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the assets, and obligations for the liabilities, relating to the arrangement. The Group has recognised its
share of jointly held assets, liabilities, revenues and expenses of joint operations. These have been incorporated
in the financial statements under the appropriate classifications.
Details of these interests are shown in Note 14.
(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 at the
corporate bond rate 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.
48
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
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.
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.
49
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
(r) Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as
part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are
subsequently measured at either amortised cost or fair value depending on their classification.
Classification is determined based on both the business model within which such assets are held and the
contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred
and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no
reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are
classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either:
(i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of
making a profit, or a derivative; or
(ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit
or loss.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are
either measured at amortised cost or fair value through other comprehensive income. The measurement of
the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period as
to whether the financial instrument's credit risk has increased significantly since initial recognition, based on
reasonable and supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month
expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit
losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset
has become credit impaired or where it is determined that credit risk has increased significantly, the loss
allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised
is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of
the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is
recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or
loss.
(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 securities
The fair value of financial assets at fair value through profit or loss, is determined by reference to their quoted
bid price at the reporting date. 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.
50
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
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.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date; and assumes that
the transaction will take place either: in the principal market; or in the absence of a principal market, in the
most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset
or liability, assuming they act in their economic best interests. For non-financial assets, the fair value
measurement is based on its highest and best use. Valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair value, are used, maximising the use
of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that
reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each
reporting date and transfers between levels are determined based on a reassessment of the lowest level of
input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal
expertise is either not available or when the valuation is deemed to be significant. External valuers are
selected based on market knowledge and reputation. Where there is a significant change in fair value of an
asset or liability from one period to another, an analysis is undertaken, which includes a verification of the
major inputs applied in the latest valuation and a comparison, where applicable, with external sources of
data.
(t) Current versus non-current classification
The Group presents assets and liabilities in the statement of financial position based on a current or non-
current classification.
An asset is current when it is:
» Expected to be realized, or intended to be sold or consumed in the Group’s normal operating cycle;
» Expected to be realized within twelve months after the reporting period; or
» Cash or a cash equivalents (unless restricted for at least twelve months after the reporting period.
A liability is current when it is:
» Expected to be settled in the Group’s normal operating cycle;
» It is due to be settled within twelve months after the reporting date; or
» There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period.
All other assets and liabilities are classed as non-current.
51
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
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 its 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.
52
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
Equity risk
The Group has exposure to price risk in respect of its holding of ordinary securities in Hampton Hill NL (ASX:
HHM), which has a carrying value at 30 June 2020 of $768,723 (2019: $491,982). The investment is classified
at fair value through profit or loss and as such any movement in the market value of HHM shares will be
recognised as a benefit of expense in profit or loss. No specific hedging activities are undertaken into this
investment.
Foreign exchange risk
The Group enters into earn-in arrangements that may be denominated in currencies other than Australian
Dollars.
Whilst the Group does not recognise assets or liabilities in respect of these earn-in arrangements and
accordingly fluctuations in foreign exchange rates will have no direct impact on the Group’s net assets,
movements in foreign exchange may favourably or adversely affect future amounts to be incurred by the Group
or its earn-in partners pursuant to such agreements.
Other than the above, the Group does not have any direct contact with foreign exchange fluctuations other
than their effect on the general economy.
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. Key judgements
applied include determining which expenditures relate directly to exploration and evaluation activities and
allocating overheads between those that are expensed and capitalised. 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 18 for details of inputs into option pricing models in respect of options issued during the reporting period.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has
had, or may have, on the Group based on known information. This consideration extends to the nature of the
Group’s activities, staffing and geographic regions in which the Group operates. Whilst there has been delay
to the commencement of certain exploration activities, there does not currently appear to be direct material
impact upon the financial statements as at the reporting date as a result of the Coronavirus (COVID-19)
pandemic.
53
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
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 OTHER INCOME
Operating activities
Project generation fees
Cash flow assistance grant
Management fees from farm-in and project generation alliance partners
Other income
NOTE 6
LOSS FOR THE YEAR
Consolidated
2020
$
-
50,000
42,001
4,528
96,529
2019
$
400,000
-
63,647
3,954
467,601
Consolidated
2020
$
2019
$
Loss before income tax includes the following specific benefits/(expenses):
Depreciation: Office equipment
Total exploration and joint venture costs not capitalised and written off
(Loss)/Gain in fair value of financial assets1
(633)
(284,403)
276,740
(593)
(294,359)
(461,234)
1 Adjustment to carrying value of investment in Hampton Hill NL, based on ASX closing price as at 30 June 2020. The
gain/(loss) on investment has been recognised in the Statement of Profit or Loss. Refer note 11.
NOTE 7
INCOME TAX
a) Income tax expense
Current income tax:
Current income tax charge (benefit)
Current income tax not recognised
Deferred income tax:
Consolidated
2020
$
2019
$
(649,960)
649,960
(516,515)
516,515
Relating to origination and reversal of timing differences
Deferred income tax benefit/(liability) not recognised
1,172,779
1,019,703
(1,172,779)
(1,019,703)
Income tax expense/(benefit) reported in the income statement
-
-
54
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 7
INCOME TAX (CONTINUED)
b) Reconciliation of income tax expense to prima facie
tax payable
Profit/(Loss) from continuing operations before income tax expense
Tax at the Australian rate of 27.5% (2019 – 27.5%)
Tax effect of permanent differences:
Non-deductible share based payment
Unrealised movement in fair value of financial assets
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
Consolidated
2020
$
2019
$
(1,126,275)
(1,064,491)
(309,726)
(292,735)
103,191
(76,103)
13,036
(10,452)
280,054
-
23,795
126,839
-
(9,597)
151,698
-
(40,698)
(41,034)
(3,840,042)
(3,577,353)
(3,880,740)
(3,618,387)
Revenue losses available to offset against future taxable income
9,107,450
9,107,450
Employee provisions
Accrued expenses
Deductible equity raising costs
Net deferred tax asset not recognised
d) Deferred tax – Income Statement
Liabilities
Prepaid expenses
Capitalised exploration expenditure
Assets
Deductible equity raising costs
Accruals
Increase/(decrease) in tax losses carried forward
Employee provisions
86,123
9,813
18,596
9,221,981
5,341,241
86,651
1,089
23,319
7,786,849
4,168,462
336
25,685
(262,689)
(376,834)
(4,725)
8,724
(6,646)
(20,963)
1,431,661
(648,240)
(528)
7,295
Deferred tax benefit/(expense) movement for the period not recognised
1,172,779
(1,019,703)
55
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 7
INCOME TAX (CONTINUED)
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 were incurred by Australian entities.
The Company intends to issue Junior Mineral Exploration Incentive (JMEI) credits to eligible shareholders
in respect of the 2020 financial year amounting to $185,496 (2019: $309,504), a total of $674,531 (2019:
$1,125,469) in tax losses has been cancelled as at 30 June 2020 in the above disclosures in respect of this
issue.
NOTE 8 CURRENT ASSETS -
CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Deposits at call
Consolidated
2020
$
488,373
1,377,129
1,865,502
2019
$
907,780
1,573,000
2,480,280
(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:
Cash and cash equivalents per statement of cash flows
1,865,502
2,480,280
(b) Deposits at call
Amounts classified as deposits at call are short term deposits depending upon the immediate cash requirements of the
Group, and earn interest at the respective short term interest rates.
(c) Cash balances not available for use
Included in cash and cash equivalents above are amounts pledged as guarantees for the following:
Office lease bond guarantee (Note 24)
23,000
23,000
The Company recognises liabilities in the financial statements for unspent farm-in contributions (Note 15).
56
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 9 CURRENT ASSETS – RECEIVABLES
Consolidated
a) Trade and other receivables
Funds due from project generation and farm-in partners
Trade and other receivables
GST recoverable
b) Other current assets
Prepaid tenement costs
2020
$
6,927
41,271
9,690
57,888
2019
$
47,983
11,207
11,502
70,692
147,994
149,216
Details of fair value and exposure to interest risk are included at note 20.
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
Encounter Yeneena Pty Ltd
Baudin Resources Pty Ltd
Subsidiary Company
Encounter Operations Pty Ltd
Hamelin Resources Pty Ltd
Encounter Yeneena Pty Ltd
Baudin Resources Pty Ltd
2
1
2
10
Ownership Interest
2
1
2
10
2019
100%
100%
100%
100%
Country of
Incorporation
Australia
Australia
Australia
Australia
2020
100%
100%
100%
100%
» Encounter Operations Pty Ltd was incorporated in Western Australia on 27 November 2006.
» Hamelin Resources Pty Ltd was incorporated in Western Australia on 24 November 2009.
» Encounter Yeneena Pty Ltd was incorporated in Western Australia on 23 May 2013.
» Baudin Resources Pty Ltd was incorporated in Western Australia on 7 April 2017.
The ultimate controlling party of the group is Encounter Resources Limited.
57
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 10 NON-CURRENT ASSETS – INVESTMENT IN CONTROLLED
ENTITIES (CONTINUED)
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
Encounter Yeneena Pty Ltd
Baudin Resources Pty Ltd
2020
$
22,051,111
4,944,451
881,285
120,661
2019
$
21,783,786
4,280,398
803,052
-
The loans to Encounter Operations Pty Ltd, Hamelin Resources Pty Ltd, Encounter Yeneena Pty Ltd and Baudin
Resources Pty Ltd, to fund exploration activity are non-interest bearing. The Directors of Encounter Resources
Limited do not intend to call for repayment within 12 months.
NOTE 11 FINANCIAL ASSETS INVESTMENTS
DESIGNATED AT FAIR VALUE
THROUGH PROFIT OR LOSS
Balance at the start of the financial year1
Gain on investments recognised through profit & loss2
Balance at the end of the financial year
Consolidated
2020
$
491,983
276,740
768,723
2019
$
953,216
(461,234)
491,982
1 The investment relates to the shares received from Hampton Hill NL in relation to an option fee pursuant to an election
made under an earn-in agreement in respect of the Company’s Millennium project.
2 Adjustment to carrying value of investment in Hampton Hill NL, based on ASX closing price as at 18 February 2020,
being the last date that the shares traded on ASX. The gain on investment has been recognised in the Statement of Profit
or Loss. Refer note 6.
Investments designated at fair value through profit or loss have been measured at level 1 in the fair value
measurement hierarchy, refer accounting policy 1(s).
58
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 12 NON-CURRENT ASSETS –
PROPERTY, PLANT AND EQUIPMENT
Consolidated
2020
$
2019
$
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
Cost of additions
Net book value of disposals
Depreciation charged
Net book value at end of the year
Office equipment
Net book value at start of the year
Cost of additions
Depreciation charged
Net book value at end of the year
805,219
(721,645)
83,574
112,170
(110,549)
1,621
22,137
(22,137)
-
85,195
35,818
84,133
-
(36,377)
83,574
1,191
1,063
(633)
1,621
844,631
(808,813)
35,818
111,107
(109,916)
1,191
22,137
(22,137)
-
37,009
53,731
-
-
(17,913)
35,818
1,784
-
(593)
1,191
No items of property, plant and equipment have been pledged as security by the Group.
NOTE 13 NON-CURRENT ASSETS – CAPITALISED MINERAL
EXPLORATION AND EVALUATION EXPENDITURE
In the exploration and evaluation phase
Capitalised exploration costs at the start of the period
13,008,555
11,638,248
Total acquisition and exploration costs for the period (i)
Exploration costs funded by EIS grant
Research and development tax credits (ii)
Total exploration and joint venture costs written off and
expensed for the period
1,612,805
(120,000)
(253,168)
(284,403)
1,899,443
(107,090)
(126,687)
(294,359)
Capitalised exploration costs at the end of the period
13,963,789
13,008,555
59
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 13 NON-CURRENT ASSETS – CAPITALISED MINERAL
EXPLORATION AND EVALUATION EXPENDITURE
(CONTINUED)
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.
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.
(i) Does not include costs incurred by farm-in partners in respect of spend incurred on assets the subject of
farm-in arrangements.
(ii) Amounts receivable pursuant to research and development tax credit (R&D) claims lodged during the period.
The activities the subject of the R&D claims are subject to review by AusIndustry prior to being submitted.
R&D submissions may or may not be subject to future review or audit by AusIndustry or the Australian
Taxation Office.
NOTE 14
INTEREST IN JOINT VENTURES AND FARM-IN
ARRANGEMENTS
a) Joint Venture Agreements – Joint Operations
Joint venture agreements may be entered into with third parties.
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 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.
The Company was party to the following farm-in, option and joint venture arrangements during the financial year
ended 30 June 2019:
b) Joint Venture and Farm-in Arrangements
Millennium Zinc Project – Hampton Hill NL (HHM) Joint Venture
Encounter Resources Limited has a 75:25 contributing joint venture with HHM covering the Company’s
Millennium zinc project, comprising exploration licences EL45/2501, EL45/2561 and four blocks of EL45/2500
in the Paterson Province of Western Australia.
» HHM hold a 25% and Encounter holds a 75% interest in the joint venture.
» Industry standard expenditure contribution or dilution formulas would apply. If a party’s interest is diluted to
less than 10%, that interest would convert to a 1% Net Profit Royalty.
» Encounter is the Operator.
Earn-in and Joint Venture Agreement - Yeneena Copper-Cobalt Project (“Yeneena”)– IGO Limited NL (IGO)
The key terms of the earn-in and joint venture agreement are as follows:
» IGO may earn a 70% interest in the project by sole funding $15 million of expenditure over 7 years;
» During the earn-in, IGO shall have the right to be the Manager of the project;
» Upon IGO completing the earn-in a 70:30 joint venture will be formed, and the parties must contribute funds
based on their percentage interest to maintain their respective interests; and
» Standard dilution clauses will apply to the parties’ interests. Should a party’s interest dilute to below 10% it
shall automatically convert to a Net Smelter Royalty.
60
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
Joint Venture Agreement – Newcrest Mining Limited (ASX:NCM)
Newcrest and Encounter currently have four separate joint ventures (Selby, Watts, Lewis and Aileron), initially on
a 50:50 basis. While these are separate joint ventures, each joint venture is on the same or largely similar terms.
» Newcrest sole fund expenditure and may increase its interest to 80% in any of the joint venture by delivering a
JORC Inferred Resource of greater than 1 million ounces of gold or gold equivalent.
» Upon notification of the JORC Inferred Resource, Encounter can elect to maintain its 20% interest in the joint
venture by funding its portion of future expenditure or Newcrest will acquire Encounter’s joint venture interest
for fair value (being an amount agreed or as determined by independent experts).
» Prior to a decision to mine being made, if Encounter elects not to contribute to expenditure at any time
after previously contributing, then standard industry dilution formulas will apply down to a 10% interest. If
Encounter’s interest dilutes below 10%, the interest will be transferred to Newcrest and Encounter will be
entitled to a 2% net smelter royalty.
» If Newcrest elects at any time to withdraw from the joint venture or its interest in the joint venture dilutes to
below 10%, Newcrest’s interest will be transferred to Encounter.
NOTE 15 CURRENT LIABILITIES – TRADE
AND OTHER PAYABLES
Trade payables and accruals
Other payables
Trade and other receivables
Consolidated
2020
$
174,757
66,257
241,014
2019
$
151,051
48,231
199,282
Liabilities are not secured over the assets of the Group. Details of fair value and exposure to interest risk are
included at note 20.
NOTE 16 CURRENT LIABILITIES - EMPLOYEE BENEFITS
Liability for annual leave
Liability for long service leave
112,815
200,360
313,175
125,575
189,521
315,096
61
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 17
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
280,824,968
262,375,092
43,828,235
42,465,654
Issue
price
2020
No.
2019
No.
2020
$
2019
$
c) Share movements during the year
Balance at the start of the financial year
Share placement
Share placement
Less share issue costs
$0.075
$0.075
262,375,092
238,375,092
42,465,654
40,676,386
-
24,000,000
-
1,800,000
18,449,876
-
-
-
1,383,741
-
(21,160)
(10,732)
Balance at the end of the financial year
280,824,968
262,375,092
43,828,235
42,465,654
NOTE 18 OPTIONS AND SHARE BASED PAYMENTS
The establishment of the Encounter Resources Limited Employee Share Option Plan (“the Plan”) was last
approved by a resolution at the Annual General Meeting of shareholders of the Company on 30 November
2018. 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.
a) Options issued during the year
During the financial year the Company granted 5,300,000 options (2019: 4,650,000) over unissued shares.
b) Options exercised during the year
During the financial year the Company issued no shares (2019: Nil) on the exercise of unlisted employee options.
c) Options cancelled during the year
During the year no options (2019: 475,000) were cancelled upon termination of employment; and 1,075,000
options (2019: 7,191,429) were cancelled on expiry of exercise period.
62
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
d) Options on issue at the balance date
The number of options outstanding over unissued ordinary shares at 30 June 2019 is 13,950,000 (2019:
9,725,000). The terms of these options are as follows:
Number of options outstanding
Exercise price
1,850,000
750,000
675,000
725,000
3,150,000
1,500,000
5,300,000
13,950,000
13 cents
17.5 cents
10.5 cents
10 cents
9 cents
12 cents
20 cents
Expiry date
24 November 2020
24 November 2021
1 November 2021
31 May 2022
30 November 2022
30 November 2023
31 October 2023
e) Subsequent to the balance date
900,000 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 no options have been cancelled on expiry of the exercise period.
Reconciliation of movement of options over unissued shares during the period including weighted average
exercise price (WAEP)
2020
2019
No.
WAEP (cents)
No.
WAEP (cents)
Options outstanding at the start of the year
Options granted during the year
Options exercised during the year
Options cancelled and expired unexercised
during the year
9,725,000
5,300,000
-
(1,075,000)
Options outstanding at the end of the year
13,950,000
12.9
20.0
-
25.9
14.6
12,741,429
4,650,000
-
(7,666,429)
9,725,000
18.5
10.0
-
20.4
12.9
Weighted average contractual life
The weighted average contractual life for un-exercised options is 28.4 months (2019: 31.7 months).
Basis and assumptions used in the valuation of options.
The remuneration related options issued during the year were valued using the Black-Scholes option
valuation methodology.
Date granted
Number of
options granted
Exercise price
(cents)
Expiry date
Risk free
interest rate
used
Volatility
applied
Value of
Options
26 Nov 2019
5,300,000
20
31 Oct 2023
0.69%
83.6%
$375,240
Historical volatility has been used as the basis for determining expected share price volatility.
63
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 19
RESERVES AND ACCUMULATED LOSSES
Consolidated
2020
2019
Accumulated
losses
$
Equity
remuneration
reserve (i)
$
Accumulated
losses
$
Equity
remuneration
reserve (i)
$
Balance at the beginning of the year
(27,011,196)
268,898
(26,075,127)
310,792
Profit/(Loss) for the period
(1,126,275)
-
(1,064,491)
-
Movement in equity remuneration
reserve in respect of options issued
Transfer to accumulated losses on
cancellation of options
-
375,240
-
86,528
67,494
(67,494)
128,422
(128,422)
Balance at the end of the year
(28,069,977)
576,644
(27,011,196)
268,898
(i) The equity remuneration reserve is used to recognise the fair value of options issued and vested but not
exercised.
NOTE 20 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 13.
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 ($)
2020
2019
-
-
1,865,502
2,480,280
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.
64
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 20 FINANCIAL INSTRUMENTS (CONTINUED)
Profit or loss
Equity
1%
increase
1%
decrease
1%
increase
1%
decrease
2020
Variable rate instruments
18,655
(18,655)
18,655
(18,655)
2019
Variable rate instruments
24,803
(24,803)
24,803
(24,803)
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
2020
Carrying
amount
Contractual
cash flows
< 6
months
6-12
months
1-2 years 2-5 years > 5 years
$
$
$
$
-
-
-
-
-
$
-
-
-
-
-
$
-
-
-
-
-
$
-
-
-
-
-
Trade and other payables
174,757
174,757
174,757
174,757
174,757
174,757
2019
Trade and other payables
151,051
151,051
151,051
151,051
151,051
151,051
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:
Consolidated
2020
2019
Carrying amount
$
Fair value
$
Carrying amount
$
Cash and cash equivalents
1,865,502
1,865,502
2,480,280
Financial assets
Trade and other payables
Balance at the end of the year
768,723
(174,757)
2,459,468
768,723
(174,757)
2,459,468
491,982
(151,051)
2,821,211
The Group’s policy for recognition of fair values is disclosed at note 1(s).
Fair value
$
2,480,280
491,982
(151,051)
2,821,211
65
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 21 DIVIDENDS
No dividends were paid or proposed during the financial year ended 30 June 2020 or 30 June 2019.
The Company has no franking credits available as at 30 June 2020 or 30 June 2019.
NOTE 22 KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Directors and key management personnel
The following persons were directors of Encounter Resources Limited during the financial year:
(i)
(ii)
Chairman – non-executive
Paul Chapman
Executive directors
(iii)
Will Robinson, Managing Director
Peter Bewick, Exploration Director
Non-executive directors
Jonathan Hronsky, Director
Philip Crutchfield, 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
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
2020
$
636,256
311,520
57,880
1,005,656
2019
$
623,770
68,601
59,260
751,631
NOTE 23 REMUNERATION OF AUDITORS
Total short-term employment benefits
32,000
31,250
NOTE 24 CONTINGENCIES
(i) Contingent liabilities
There were no material contingent liabilities not provided for in the financial statements of the Group as at 30
June 2020 or 30 June 2019 other than:
Yeneena Project Gold Claw-back
Included in the agreement for the Group’s acquisition of the remaining 25% interest of certain licences 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.
66
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 24 CONTINGENCIES (CONTINUED)
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.
The Yeneena Project Gold Claw-back relates to the following exploration licences: E45/2500, E45/2501,
E45/2502, E45/2561, E45/2657, E45/2658, E45/2805 and E45/2806.
Telfer West Production Royalty
The Group is subject to a production unit royalty of $1 per dry metric tonne of ore mined and sold from licence
E45/4613 at its Telfer West Gold Project.
Native Title and Aboriginal Heritage
The Group has Land Access and Mineral Exploration Agreements with Western Desert Lands Aboriginal
Corporation in relation to the tenements comprising the Yeneena Base Metals Project and the Paterson Gold
Projects. Western Desert Lands Aboriginal Corporation ((Jamukurnu-Yapalikunu/WDLAC) is the Prescribed Body
Corporate for the Martu People of the Central Western Desert region in Western Australia.
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.
Bank guarantees
ANZ Bank has provided unconditional bank guarantees (refer Note 8) as follows:
»
$23,000 in relation to the lease over the Company’s office premises at Level 7, 600 Murray Street,
West Perth.
(ii) Contingent assets
There were no material contingent assets as at 30 June 2020 or 30 June 2019.
NOTE 25 COMMITMENTS
(a) Exploration
The Group has certain obligations to perform minimum exploration work on mineral leases held. These
obligations may be varied as a result of renegotiations of the terms of the exploration licences or their
relinquishment. The minimum exploration obligations are less than the normal level of exploration expected to be
undertaken by the Group.
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
$2,302,520 (2019: $1,214,770).
The exploration expenditure obligations stated above include amounts (approximately $1.9m) that are funded
by third parties pursuant to various farm-in agreements (Note 14). Hence current expenditure commitment on
Encounter 100% owned projects is approximately $0.4m.
(b) Lease Commitments
There are no material operating lease commitments as at 30 June 2020 or 30 June 2019 not otherwise disclosed
in the Financial Statements.
67
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 25 COMMITMENTS (CONTINUED)
(c) Contractual Commitment
There are no material contractual commitments as at 30 June 2020 or 30 June 2019 not otherwise disclosed in
the Financial Statements.
NOTE 26 RELATED PARTY TRANSACTIONS
Transactions with Directors during the year are disclosed at Note 22 – Key Management Personnel.
There are no other related party transactions, other than those already disclosed elsewhere in this financial
report.
NOTE 27 EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has delayed the commencement of
certain exploration programs, is has not materially financially impacted the Group up to 30 June 2020. It is not
practicable to estimate the potential impact, positive or negative, after the reporting date.
On 1 July 2020 the Company issued 900,000 options pursuant to its Employee Share Option Plan.
On 24 September 2020 the Company advised that it had entered into an option agreement which provides BHP
Group Limited the right to earn up to a 75% interest in the Company’s Elliott Copper Project in the Northern
Territory by spending up to $22 million over 10 years.
Other than as already stated in this report , 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 28 RECONCILIATION OF LOSS AFTER TAX TO NET CASH
INFLOW FROM OPERATING ACTIVITIES
Consolidated
2020
$
2019
$
Profit/(Loss) from ordinary activities after income tax
(1,126,275)
(1,064,491)
(Profit)/loss on disposal of assets
Depreciation
Exploration cost written off and expensed
Share based payments expense
Unrealised (gain)/loss on investments
Contribution to overheads from farm-in and project alliance partners
EIS grant funding offset against capitalised exploration
Movement in assets and liabilities:
(Increase)/decrease in receivables
Increase/(decrease) in payables
Net cash outflow from operating activities
110,885
663
284,403
375,240
(276,740)
(42,001)
120,000
(3,959)
(29,976)
(577,808)
-
593
294,359
86,528
461,234
(63,647)
112,674
5,690
(46,154)
(213,214)
68
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 29 EARNINGS PER SHARE
Consolidated
2020
Cents
2019
Cents
a) Basic earnings per share
Profit/(Loss) attributable to ordinary equity holders of the Company
(0.4)
(0.4)
b) Diluted earnings per share
Profit/(Loss) attributable to ordinary equity holders of the Company
(0.4)
(0.4)
c) Loss used in calculation of basic and diluted loss per share
Consolidated profit/(loss) after tax from continuing operations
(1,126,275)
(1,064,491)
$
$
d) Weighted average number of shares used as the denominator
Weighted average number of shares used as the denominator in calculating
basic earnings per share
Weighted average number of shares used as the denominator in calculating
diluted earnings per share
No.
No.
280,192,048
253,498,380
280,192,048
253,498,380
At 30 June 2020, the Company has on issue 13,950,000 options (2019: 9,725,000) over ordinary shares that are not
considered to be dilutive.
69
NOTES TO THE FINANCIAL
STATEMENTS (CONTINUED)
For the financial year ended 30 June 2020
NOTE 30 PARENT ENTITY INFORMATION
Company
Financial position
Assets
Current assets
Non-current assets
Total Assets
Liabilities
Current liabilities
Non-current liabilities
Total Liabilities
NET ASSETS
Equity
Issued capital
Equity remuneration reserve
Accumulated losses
TOTAL EQUITY
Financial performance
Profit/(Loss) for the year
Other comprehensive income
TOTAL COMPREHENSIVE INCOME
2020
$
2019
$
2,061,193
2,680,979
14,834,189
13,556,755
16,895,382
16,237,734
560,480
514,378
-
-
560,480
514,378
16,334,902
15,723,356
43,828,235
42,465,654
576,644
268,898
(28,069,977)
(27,011,196)
16,334,902
15,723,356
(1,126,275)
(1,064,391)
-
-
(1,126,275)
(1,064,391)
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 24.
Commitments
For full details of commitments see Note 25.
70
DIRECTORS’
DECLARATION
In the opinion of the Directors of Encounter Resources Limited (“the Company”)
(a) the financial statements and notes set out on pages 39 to 70 are in accordance with the Corporations Act
2001, including:
(i) complying with Accounting Standards and the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
(ii) give a true and fair view of the financial position as at 30 June 2020 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 2020.
This declaration is made in accordance with a resolution of the Directors.
Signed at Perth this 30th day of September 2020.
W Robinson
Managing Director
71
INDEPENDENT
AUDIT REPORT
Crowe Perth
ABN 96 844 819 235
Level 5 45 St Georges Terrace
Crowe Perth
Perth WA 6000
ABN 96 844 819 235
PO Box P1213
Perth WA 6844
Level 5 45 St Georges Terrace
Australia
Perth WA 6000
PO Box P1213
Main +61 (8) 9481 1448
Perth WA 6844
Fax +61 (8) 9481 0152
Australia
www.crowe.com.au
Main +61 (8) 9481 1448
Fax +61 (8) 9481 0152
www.crowe.com.au
INDEPENDENT AUDITORS REPORT
TO THE MEMBERS OF ENCOUNTER RESOURCES LIMITED
INDEPENDENT AUDITORS REPORT
Report on the Audit of the Financial Report
TO THE MEMBERS OF ENCOUNTER RESOURCES LIMITED
Key Audit Matter
How we addressed the Key Audit Matter
Consideration of impairment of capitalised mineral exploration and evaluation expenditure
Opinion
Report on the Audit of the Financial Report
We have audited the financial report of Encounter Resources Limited (the Company) and its
subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30
Opinion
June 2020, the consolidated statement of profit or loss and other comprehensive income, the
We have audited the financial report of Encounter Resources Limited (the Company) and its
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30
then ended, and notes to the financial statements, including a summary of significant accounting
June 2020, the consolidated statement of profit or loss and other comprehensive income, the
policies, and the directors’ declaration.
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, and notes to the financial statements, including a summary of significant accounting
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
policies, and the directors’ declaration.
Act 2001, including:
The consideration of impairment of the
carrying value of the Group’s Capitalised
Mineral Exploration and Evaluation
Expenditure assets was material to our audit
and represented an area of significant
estimate and judgement within the financial
report.
assessment of the existence or otherwise of
impairment indicators from both internal and
external sources;
Our procedures included, but were not limited to:
• Corroborating representations made by
• Evaluating management’s documented
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
(a) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial
Act 2001, including:
management with available external data
and evidence obtained by us during the
course of our audit; and
(a) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
performance for the year then ended; and
This matter is considered a key audit matter
due to the high degree of judgement required
by the directors to assess whether
impairment indicators are present for
performance for the year then ended; and
specified tenements held and due to the
significance of the capitalised amount of
$13.96m at 30 June 2020.
• Considering the appropriateness of relevant
disclosures in the notes to the financial
statements.
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Basis for Opinion
Report section of our report. We are independent of the Group in accordance with the auditor
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
independence requirements of the Corporations Act 2001 and the ethical requirements of the
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Report section of our report. We are independent of the Group in accordance with the auditor
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
independence requirements of the Corporations Act 2001 and the ethical requirements of the
fulfilled our other ethical responsibilities in accordance with the Code.
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
fulfilled our other ethical responsibilities in accordance with the Code.
for our opinion.
The conditions and assessment undertaken
in relation to impairment are disclosed in the
Group’s accounting policy in Notes 1 and 13
of the financial report.
Information Other than the Financial Report and the Audit’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s 2020 Annual Report for the year ended 30 June 2020 but does
not include the financial report and our auditor’s report thereon.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
Key Audit Matters
for our opinion.
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
Key Audit Matters
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
Key audit matters are those matters that, in our professional judgement, were of most significance in
Our opinion on the financial report does not cover the other information and we do not express any
a separate opinion on these matters. For each matter below, our description of how our audit
our audit of the financial report of the current period. These matters were addressed in the context of
form of assurance conclusion thereon.
addressed the matter is provided in that context.
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based upon the work we have performed, we conclude that there is material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a
separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe
Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or
partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Perth, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a
Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a
scheme approved under Professional Standards Legislation. Liability limited other than for acts or omissions of financial services licensees.
separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe
© 2020 Findex (Aust) Pty Ltd
Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or
partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Perth, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a
scheme approved under Professional Standards Legislation. Liability limited other than for acts or omissions of financial services licensees.
© 2020 Findex (Aust) Pty Ltd
Responsibilities of the Directors for the Financial Report
73
The directors of the Group are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards, International Financial Reporting
51
Standards and the Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that gives a true and fair view and is free
51
from material misstatement, whether due to fraud or error.
52
INDEPENDENT
AUDIT REPORT
Key Audit Matter
How we addressed the Key Audit Matter
Consideration of impairment of capitalised mineral exploration and evaluation expenditure
Consideration of impairment of capitalised mineral exploration and evaluation expenditure
Key Audit Matter
The consideration of impairment of the
carrying value of the Group’s Capitalised
Mineral Exploration and Evaluation
Expenditure assets was material to our audit
and represented an area of significant
The consideration of impairment of the
estimate and judgement within the financial
carrying value of the Group’s Capitalised
report.
Mineral Exploration and Evaluation
Expenditure assets was material to our audit
This matter is considered a key audit matter
due to the high degree of judgement required
and represented an area of significant
by the directors to assess whether
estimate and judgement within the financial
impairment indicators are present for
report.
specified tenements held and due to the
significance of the capitalised amount of
$13.96m at 30 June 2020.
This matter is considered a key audit matter
due to the high degree of judgement required
by the directors to assess whether
The conditions and assessment undertaken
impairment indicators are present for
in relation to impairment are disclosed in the
specified tenements held and due to the
Group’s accounting policy in Notes 1 and 13
of the financial report.
significance of the capitalised amount of
$13.96m at 30 June 2020.
Our procedures included, but were not limited to:
How we addressed the Key Audit Matter
• Evaluating management’s documented
assessment of the existence or otherwise of
impairment indicators from both internal and
external sources;
Our procedures included, but were not limited to:
• Corroborating representations made by
• Evaluating management’s documented
management with available external data
and evidence obtained by us during the
course of our audit; and
assessment of the existence or otherwise of
impairment indicators from both internal and
external sources;
• Considering the appropriateness of relevant
disclosures in the notes to the financial
statements.
• Corroborating representations made by
management with available external data
and evidence obtained by us during the
course of our audit; and
• Considering the appropriateness of relevant
disclosures in the notes to the financial
statements.
Information Other than the Financial Report and the Audit’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s 2020 Annual Report for the year ended 30 June 2020 but does
not include the financial report and our auditor’s report thereon.
The conditions and assessment undertaken
in relation to impairment are disclosed in the
Group’s accounting policy in Notes 1 and 13
of the financial report.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
Information Other than the Financial Report and the Audit’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s 2020 Annual Report for the year ended 30 June 2020 but does
not include the financial report and our auditor’s report thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based upon the work we have performed, we conclude that there is material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
Responsibilities of the Directors for the Financial Report
The directors of the Group are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards, International Financial Reporting
Standards and the Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
If, based upon the work we have performed, we conclude that there is material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
74
Responsibilities of the Directors for the Financial Report
The directors of the Group are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards, International Financial Reporting
Standards and the Corporations Act 2001 and for such internal control as the directors determine is
52
necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
52
INDEPENDENT
AUDIT REPORT
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Key Audit Matter
How we addressed the Key Audit Matter
Consideration of impairment of capitalised mineral exploration and evaluation expenditure
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
The consideration of impairment of the
carrying value of the Group’s Capitalised
Mineral Exploration and Evaluation
Expenditure assets was material to our audit
and represented an area of significant
estimate and judgement within the financial
report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
assessment of the existence or otherwise of
impairment indicators from both internal and
external sources;
Our procedures included, but were not limited to:
• Corroborating representations made by
• Evaluating management’s documented
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
This matter is considered a key audit matter
due to the high degree of judgement required
by the directors to assess whether
impairment indicators are present for
specified tenements held and due to the
significance of the capitalised amount of
$13.96m at 30 June 2020.
• Considering the appropriateness of relevant
disclosures in the notes to the financial
statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit
management with available external data
and evidence obtained by us during the
course of our audit; and
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.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
The conditions and assessment undertaken
in relation to impairment are disclosed in the
Group’s accounting policy in Notes 1 and 13
of the financial report.
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting in
the preparation of the financial report. We also conclude, based on the audit evidence obtained
whether a material uncertainty exists related to events and conditions that may cast significant
Information Other than the Financial Report and the Audit’s Report Thereon
doubt on the entity’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in the auditor’s report to the disclosures in
The directors are responsible for the other information. The other information comprises the
the financial report about the material uncertainty or, if such disclosures are inadequate, to modify
information included in the Group’s 2020 Annual Report for the year ended 30 June 2020 but does
the opinion on the financial report. However, future events or conditions may cause an entity to
not include the financial report and our auditor’s report thereon.
cease to continue as a going concern.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the group financial report. The
auditor is responsible for the direction, supervision and performance of the group audit. The
auditor remains solely responsible for the audit opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based upon the work we have performed, we conclude that there is material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
75
The directors of the Group are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards, International Financial Reporting
Standards and the Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that gives a true and fair view and is free
53
from material misstatement, whether due to fraud or error.
52
INDEPENDENT
AUDIT REPORT
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
Key Audit Matter
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may be reasonably be thought to bear on our independence, and where applicable,
related safeguards.
Consideration of impairment of capitalised mineral exploration and evaluation expenditure
How we addressed the Key Audit Matter
Our procedures included, but were not limited to:
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
The consideration of impairment of the
carrying value of the Group’s Capitalised
Mineral Exploration and Evaluation
Expenditure assets was material to our audit
and represented an area of significant
estimate and judgement within the financial
report.
assessment of the existence or otherwise of
impairment indicators from both internal and
external sources;
• Evaluating management’s documented
• Corroborating representations made by
Report on the Remuneration Report
This matter is considered a key audit matter
Opinion on the Remuneration Report
due to the high degree of judgement required
We have audited the Remuneration Report included in pages 30 to 36 of the directors’ report for the
by the directors to assess whether
year ended 30 June 2020.
impairment indicators are present for
specified tenements held and due to the
significance of the capitalised amount of
$13.96m at 30 June 2020.
In our opinion, the Remuneration Report of Encounter Resources Limited for the year ended 30 June
2020, complies with section 300A of the Corporations Act 2001.
• Considering the appropriateness of relevant
disclosures in the notes to the financial
statements.
management with available external data
and evidence obtained by us during the
course of our audit; and
Responsibilities
The directors of the Group 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.
The conditions and assessment undertaken
in relation to impairment are disclosed in the
Group’s accounting policy in Notes 1 and 13
of the financial report.
Information Other than the Financial Report and the Audit’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s 2020 Annual Report for the year ended 30 June 2020 but does
not include the financial report and our auditor’s report thereon.
Crowe Perth
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
Suwarti Asmono
Partner
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
Dated at Perth this 30th day of September 2020
If, based upon the work we have performed, we conclude that there is material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
76
Responsibilities of the Directors for the Financial Report
The directors of the Group are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards, International Financial Reporting
54
Standards and the Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
52
ASX ADDITIONAL
INFORMATION
Pursuant to the Listing Requirements of the Australian Securities Exchange, the shareholder information set out
below was applicable as at 23 September 2020.
A. DISTRIBUTION OF EQUITY SECURITIES
Analysis of numbers of shareholders by size of holding:
Ordinary Fully Paid Shares
Distribution
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
More than 100,000
TOTALS
Number of shareholders
Securities held
109
232
212
549
228
1,330
40,787
768,729
1,734,919
21,419,219
256,861,314
280,824,968
There are 220 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
Zero Nom PL
William Michael Robinson
Deutsche Balaton Aktiengesellschaft
Silver Lake Resources Limited
78
Issued Ordinary Shares
Number of shares
% of shares
25,700,000
25,169,098
15,833,334
15,000,000
9.15%
8.96%
5.64%
5.34%
ASX ADDITIONAL
INFORMATION
C. TWENTY LARGEST SHAREHOLDERS
The names of the twenty largest holders of quoted shares are listed below:
Shareholder Name
Zero Nominees Pty Ltd
William Michael Robinson
Deutsche Balaton Aktiengesellschaft
Silver Lake Resources Limited
UBS Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited – GCSO
HSBC Custody Nominees (Australia) Limited
Stone Poneys Nominees Pty Ltd
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