EMMERSON RESOURCES LIMITED — Interim / Quarterly Report 2011

Mar 3, 2011

EMMERSON RESOURCES LIMITED

ABN 53 117 086 745

FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 December 2010

EMMERSON RESOURCES LIMITED ACN 117 086 745

CONTENTS

	Page
Corporate Information	2
Directors’ report	3
Auditor’s independence declaration	5
Consolidated statement of financial position	6
Consolidated statement of comprehensive income	7
Consolidated statement of changes in equity	8
Consolidated statement of cash flows	9
Notes to the consolidated financial statements	10
Directors’ declaration	12
Independent auditor’s review report	13

Page 1

CORPORATE INFORMATION

ABN 53 117 086 745

Directors

Mr Andrew McIlwain, Chairman Mr Rob Bills, Chief Executive Officer Mr Timothy Kestell Mr Simon Andrew Mr Peter Reeve

Share Registry

Computershare Investor Services Level 2, 45 St Georges Terrace, Perth 6000

GPO Box D182 Perth 6840

Company Secretary

Solicitors to the Company

Mr Shane Volk

Banker

National Australia Bank Level 1, 1238 Hay St West Perth

Steinepreis Paganin Lawyers and Consultants Level 4, Next Building 16 Milligan Street PERTH WA 6000

Ward Keller Lawyers Level 7, NT House 22 Mitchell Street Darwin, NT 0807

Principal Place of Business and Registered Office

Auditors

3 Kimberley Street West Leederville WA 6007 Telephone: (08) 9381 7838 Facsimile: (08) 9381 5375

Ernst & Young The Ernst & Young Building, 11 Mounts Bay Road, Perth WA 6000

Internet: www.emmersonresources.com.au

Emmerson Resources Limited shares are listed on the Australian Securities Exchange: Symbol ERM

Page 2

EMMERSON RESOURCES LIMITED

DIRECTORS' REPORT

Your directors submit their report together with the financial statements of Emmerson Resources Limited and its controlled entities (“Emmerson Resources" or the “Group”), for the half-year ended 31 December 2010.

Directors

The names of the company’s directors in office during the half-year and until the date of this report are set out below. Directors were in office for this entire period unless otherwise stated.

Mr Andrew McIlwain (Non-Executive Chairman)

Mr Rob Bills (Managing Director and Chief Executive Officer)

Mr Tim Kestell (Non-Executive Director)

Mr Simon Andrew (Non-Executive Director)

Mr Peter Reeve (Non-Executive Director)

Review and results of operations

During the half year the Group continued with its aggressive exploration program in the Tennant Creek Mineral Field with Ivanhoe Australia Limited (IVA) continuing to fund all exploration, consequently the Group maintains a healthy cash position with $11,528,279 at bank and on term deposit as at 31 December, 2010.

During the half year considerable advances were made with respect to the processing of the company’s geophysical data sets. Of particular relevance has been the application of Vector Remnant Magnetic Intensity (VRMI) processing of magnetic surveys which amongst other things takes into account the size and intensity of the magnetic bodies and provides a robust means of discriminating the large hydrothermal iron-oxide bodies (that typically host the gold and copper mineralisation) from the background. Drilling validated this approach, with many drill holes encountering highly altered and thick ironstone bodies, in fact one of our thickest ever intersections of over 120m of ironstone was recorded at the Smokey prospect. However, based on the historic deposits, the copper and gold mineralization typically occupies only a small volume of the total ironstone, thus the challenge is to not only discriminate the mineralised from barren ironstones but also to pinpoint the mineralisation within the ironstones. Some exciting work is now underway to further refine our approach and provide a means of directly targeting the mineralised portions of the ironstone bodies.

A summary of the drilling completed during the half year is:

Drilling Type	No. of Holes	Prospects tested	Total Depth (Mtrs)
Reverse Circulation	17	8	4,251
Reverse Circulation (Pre-collars)	16	-	2,545
Diamond Drilling	24	7	7,700
RAB Drilling	279	10	13,517
Totals	336	17^	28,013

^ Several prospects were tested by more than one type of drilling

Page 3

EMMERSON RESOURCES LIMITED

DIRECTORS' REPORT (continued)

Review and results of operations (continued)

As at 31 December, 2010 Ivanhoe Australia Limited has spent $15.642 million of the $18.0 million Farm-In amount and upon IVA attaining the $18.0 million spend a Joint Venture will be formed between Emmerson Resources and IVA, with IVA having a 51% interest in the majority of the Groups tenements with Emmerson Resources retaining the remaining 49%.

In accordance with the terms and conditions of the Tennant Creek Mineral Field Exploration Joint Venture Agreement, once the Joint Venture is formed IVA is required to sole fund the initial $10.0 million of Joint Venture expenditure over a maximum 5 year period for it to retain its 51% interest.

The information in this report relating to Exploration Results is based on information compiled by Mr Steve Russell who is a Member of the Australian Institute of Geoscientists and has sufficient exploration experience which is relevant to the style of mineralization under consideration to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Russell is a full time employee of Emmerson Resources Ltd. Mr Russell consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Results

The net loss of the Group for the half year ended 31 December 2010 was $574,438 (2009: $1,528,816).

Dividends

No dividends were paid or declared by Emmerson Resources during the half-year.

Significant changes

There have been no changes in the state of affairs of the Group that occurred during the halfyear under review not otherwise disclosed in this report.

Subsequent events

There has not been any matter or circumstance that has arisen since 31 December 2010, which has significantly affected, or may significantly affect the operations of the Group, the result of those operations, or the state of affairs of the Group subsequent to 31 December 2010.

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 5.

Signed in accordance with a resolution of the Board of Directors.

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Andrew McIlwain Non Executive Chairman Date: 2 March, 2011 Perth, Western Australia

Page 4

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Auditor’s Independence Declaration to the Directors of Emmerson Resources Limited

In relation to our review of the financial report of Emmerson Resources Limited for the half-year ended 31 December 2010, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

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Ernst & Young

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R J Curtin Partner Perth 2 March 2011

Liability limited by a scheme approved under Professional Standards Legislation

EMMERSON RESOURCES LIMITED

Consolidated statement of financial position

As at 31 December 2010

Note CURRENT ASSETS Cash and cash equivalents 3 Receivables Other TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, Plant & Equipment Exploration and evaluation Other financial assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Provisions Interest bearing liabilities TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest bearing liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Share-based payments reserve Accumulated losses TOTAL EQUITY	31 December 2010 $ 11,528,279 442,454 25,348 11,996,081 6,218,524 9,797,266 1,310,000 17,325,790 29,321,871 879,369 155,512 2,938 1,037,819 2,423 2,423 1,040,242 28,281,629 33,151,621 2,583,360 (7,453,352) 28,281,629	30 June 2010 $ 10,881,993 1,722,687 25,273
		12,629,953
		6,318,798 9,767,380 1,471,000
		17,557,178
		30,187,131
		1,227,162 128,415 2,783
		1,358,360
		3,933
		3,933
		1,362,293
		28,824,838
		33,151,621 2,552,131 (6,878,914)
		28,824,838

The above statement of financial position should be read in conjunction with the accompanying notes.

Page 6

EMMERSON RESOURCES LIMITED

Consolidated statement of comprehensive income For the half-year ended 30 June, 2010

Interest Management Fee – Exploration Services Revenue Depreciation expense Corporate and legal expenses Employee benefits Finance costs Occupancy expense Insurance General and administration expenses Loss before income tax Income tax (expense)/benefit Loss after tax Total comprehensive loss for the period attributable to owners of the parent Basic loss per share – cents per share Diluted loss per share- cents per share	31 December 2010 $ 342,720 186,536 529,256 (58,245) (224,520) (525,557) (8,292) (46,837) (120,873) (119,370) (574,438) - (574,438) (574,438) (0.3) (0.3)	31 December 2009 $ 297,003 212,720
		509,723 (80,688) (299,277) (1,374,580) (7,070) (40,626) (114,607) (121,691)
		(1,528,816) -
		(1,528,816)
		(1,528,816)
		(0.7) (0.7)

The above statement of comprehensive income should be read in conjunction with the accompanying notes.

Page 7

EMMERSON RESOURCES LIMITED

Consolidated statement of changes in equity For the half-year ended 31 December 2010

Balance at 1 July 2009 Total Comprehensive Loss for period Share Based Payments Balance at 31 December 2009 Balance at 1 July 2010 Total Comprehensive Loss for period Share Based Payments Balance at 31 December 2010	Issued Capital ($)	Share-based payments reserve ($) Accumulated losses ($)	Total ($)
	33,109,621 - - 33,109,621 33,151,621 - -	1,596,335 (4,873,818) - (1,528,816) 892,305 - 2,488,640 (6,402,634) 2,552,131 (6,878,914) - (574,438) 31,229 -	29,832,138 (1,528,816) 892,305
			29,195,627 28,824,838 (574,438) 31,229
	33,151,621	2,583,360 (7,453,352)	28,281,629

The above statement of changes in equity should be read in conjunction with the accompanying notes.

Page 8

EMMERSON RESOURCES LIMITED

Consolidated statement of cash flows

For the half-year ended 31 December 2010

Cash flows related to operating activities Management Fee Received Reimbursement of costs from Ivanhoe Australia Ltd Payments to suppliers, contractors and employees Interest received Interest paid Other Receipts Net cash flows from / (used in) operating activities Cash flows related to investing activities Reduction in Performance Bonds Payments for plant and equipment Total cash flows from / (used in) investing activities Cash flows from financing activities Repayment of finance lease liability Net cash flows used in financing activities Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the financial period Cash and cash equivalents at end of the financial period	31 December 2010 31 December 2009 $ $ 225,323 186,320 5,634,978 5,157,789 (5,635,774) (6,501,751) 318,400 690,773 (336) (475) - -
	542,591 (467,344)
	161,000 - (55,951) (359,500)
	105,049 (359,500)
	(1,354) (1,214)
	(1,354) (1,214)
	646,286 (828,058) 10,881,993 12,505,932
	11,528,279 11,677,874

The above statement of cash flows should be read in conjunction with the accompanying notes.

Page 9

EMMERSON RESOURCES LIMITED

Condensed notes to and forming part of the consolidated financial statements for the half-year ended 31 December 2010

1. Basis of preparation of the half-year financial statements

This general purpose condensed financial report for the half-year ended 31 December 2010 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.

The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

It is recommended that the half-year financial report be read in conjunction with the annual report for the year ended 30 June 2010 and considered together with any public announcements made by Emmerson Resources Limited during the half-year ended 31 December 2010 in accordance with the continuous disclosure obligations of the ASX listing rules.

Except for the adoption of new and amending accounting standards applicable for accounting periods commencing on or after 1 July, 2010, which have not resulted in any changes to the financial position or performance of the Group, the accounting policies and methods of computation are the same as those adopted in the most recent financial report.

The Group has not elected to early adopt any new Standards or amendments that are issued but not yet in effect.

2. Segment reporting

The consolidated entity is undertaking mineral exploration in Tennant Creek.

The operations of the consolidated entity present one segment under AASB 8 Operating Segments . The accounting policies applied for internal reporting purposes are consistent with those applied in the preparation of the interim report.

3. Cash and cash equivalents

For the purpose of the half-year statement of cash flows, cash and cash equivalents are comprised of the following:

Cash at bank and in hand Short-term deposits	Consolidated Consolidated 31 December 2010 30 June 2010 $ $ 778,279 92,378 10,750,000 10,789,615
	11,528,279 10,881,993

Page 10

EMMERSON RESOURCES LIMITED

Condensed notes to and forming part of the consolidated financial statements for the half-year ended 31 December 2010 (continued)

4. Dividends

No dividends were paid or declared by the company during the half-year.

5. Commitments and contingencies

There are no changes to commitments or contingencies disclosed in the most recent annual financial report.

6.

Events subsequent to reporting date

There has not been any matter or circumstance that has arisen since 31 December 2010, which has significantly affected, or may significantly affect the operations of the economic entity, the result of those operations, or the state of affairs of the economic entity.

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Page 11

EMMERSON RESOURCES LIMITED

Directors’ Declaration

In accordance with a resolution of the directors of Emmerson Resources Limited, I state that:

In the opinion of the directors:

• (a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the financial position as at 31 December 2010 and the performance for the half-year ended on that date of the consolidated entity; and

• (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and

• (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

On behalf of the Board,

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Andrew McIlwain Chairman

2 March, 2011 Perth, Western Australia

Page 12

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To the members of Emmerson Resources Limited

Report on the Half Year Financial Report

We have reviewed the accompanying half-year financial report of Emmerson Resources Limited, which comprises the statement of financial position as at 31 December 2010, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.

Directors’ Responsibility for the 31 December 2010 Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Emmerson Resources Limited and the entities it controlled during the half-year, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the Directors’ Report.

Liability limited by a scheme approved under Professional Standards Legislation

RC:VP:EMMERSON:021

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Emmerson Resources Limited is not in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of its performance for the half-year ended on that date; and

• (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

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Ernst & Young

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R J Curtin Partner Perth 2 March 2011

RC:VP:EMMERSON:021