EMPIRE RESOURCES LIMITED — Interim / Quarterly Report 2012

Apr 23, 2012

ACN 092 471 513

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QUARTERLY REPORT FOR THE PERIOD ENDING 31 MARCH 2012

HIGHLIGHTS

YUINMERY, WA : copper - gold

• Following excellent results released over the March Quarter, the Board of Empire (ASX:ERL) reaffirms its commitment to significantly expanding the Yuinmery resource on the short term.

• Diamond drilling at A Zone extends high grade copper - gold mineralization :

• 6m @ 3.0% Cu, 1.7g/t Au including 3m @ 4.0% Cu, 3.3g/t Au

• 6m @ 2.2% Cu, 1.2g/t Au including 3m @ 3.0% Cu, 2.0g/t Au

• 5m @ 2.1% Cu, 0.5g/t Au including 3m @ 2.6% Cu, 0.8g/t Au

• Mineralisation remains open at depth

PENNY’S FIND, WA : gold

• High grade gold intersections confirm underground potential

• 6m @ 13.34g/t Au from 113m, includes 4m @ 19.43g/t Au

• 2m @ 12.95g/t Au from 101m, within 8m @ 4.02g/t Au

• 3m @ 14.42g/t Au from 143m to EOH

• New hanging wall lode discovered : 16m @ 2.34g/t Au from 20m

• Mineralisation remains open at depth

• Enhances potential for Penny’s Find to support an underground mining operation below an initial open pit as a seamless mining operation

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Figure 1 : Project Location Map

REVIEW OF OPERATIONS MARCH QUARTER 2012

Yuinmery (WA): copper - gold project (100% interest and option to earn 90.4% interest on adjoining tenements)

The Directors of Empire continue to be confident of the economic potential of the Yuinmery project area and the Company remains focused on significantly expanding the current resource over the short term. High grade results obtained over the quarter at A Zone are particularly encouraging as is the fact that the prospect remains open at depth.

During the March quarter the Company continued its RC and diamond drilling programs at a number of prospects.

The deepest intersection at A Zone prospect recorded 5m @ 2.01% Cu, 0.52g/t Au from 311.7m including 3m @ 2.62%Cu, 0.76g/t Au from 312.7m in drill hole, YRC12-01D.

Seven contiguous drill holes have now intersected average grades of more than 1.5% copper in the A Zone Upper Horizon . (See Figure 3) Together these drill holes have a weighted average grade of 2.1% Cu and 0.7g/t Au. *

The Company is currently working towards the calculation of a maiden resource for the A Zone prospect in addition to the existing resource at Just Desserts prospect.

The Yuinmery project is a volcanogenic massive sulphide (VMS) copper - gold - zinc project located 80km southwest of Sandstone, WA, which hosts a cluster of individual mineralized prospects. (See Figure 2)

VMS deposits in Australia and around the world commonly form in clusters, and have great depth extent. For example, Golden Grove, west of Yuinmery, is known to extend 1.8 kms below surface and in Canada some deposits (such as La Ronde Penna Mine) have over 3 kms depth extent. (See Figure 5)

The deepest intersection through the upper horizon of mineralisation at A Zone prospect is at a vertical interval of approximately 280 metres below surface.

The Company has already identified an indicated and inferred resource of 1,070,000 tonnes at 1.82% copper and 0.78g/t gold at the Just Desserts prospect to a vertical depth of approximately 190 metres below surface. (See Figure 2)

A Zone Prospect

Assays results from diamond core drilling at the A Zone prospect has confirmed high grades of up to 4.0% Cu and 3.3g/t Au are present at depth.

Assays were received this quarter from two diamond core holes completed during the December 2011 quarter and reported to the ASX on the 7 February 2012.

Hole YRC11-41D intersected 8m @ 2.4% Cu, 1.3g/t Au from 274.8m, including 6m @ 3.0% Cu, 1.7g/t Au, including 3m @ 4.0% Cu, 3.3g/t Au .

Hole YRC11-42D, 40m to the southeast of YRC11-41D, intersected 7m @ 2.0% Cu, 1.0g/t Au from 268.6m, including 3m @ 3.0% Cu, 2.0g/t Au .

One diamond core hole was completed at A Zone during the current quarter, testing the down plunge extension to the mineralization noted above. This hole, YRC12-01D, intersected 5m @ 2.01% Cu, 0.52g/t Au from 311.7m including 3m @ 2.62%Cu, 0.76g/t Au from 312.7m.

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Figure 2 : Yuinmery Central Prospects

These intersections, located between 240 and 280m vertically below surface, are contained within the A Zone Upper Horizon, true widths being approximately 85% of drill widths. The high grade copper-gold mineralization remains open down plunge.

Three further diamond core holes have been planned at A Zone to test the zone at the same level below surface as YRC12-01D (approximately 280 metres deep), as shown in Figure 3.

Table 1 : A Zone Diamond Hole Assays

Hole ID	North	East	Az	Dip	Final	From	Interval	% Cu	g/t Au	% Zn	g/t Ag
	GDA94 MGAz50				Depth(m)	(m)	(m)
YRC11-41D*	6838690	685754	225	-55	353	274.8	8	2.36	1.33	0.06	2.8
					incls	275.8	6	**2.97 **	1.73	0.07	3.5
					incls	275.8	3	**4.01 **	3.29	0.09	5.3
						301.8	1	1.23	0.20	0.23	4.0
YRC11-42D*	6838668	685786	225	-55	322	268.6	7	1.95	1.05	0.07	3.3
					incls	268.6	6	2.16	1.18	0.07	3.5
					incls	270.6	3	**2.97 **	1.96	0.10	4.7
						281.6	12	0.96	0.98	0.06	2.9
					incls	282.6	3	**1.82 **	1.21	0.08	3.7
						295.6	1	0.17	**0.04 **	1.26	0.0
YRC12-01D	6838725	685787	225	-55	411	311.7	5	2.08	**0.52 **	0.05	1.6
					incls	312.7	3	**2.62 **	0.76	0.05	2.0
YRC12-02D	6838752	685757	225	-55	276	PRE-COLLAR

Intersections are an arithmetic average calculated using either a 0.5%Cu, 1.0% Zn or 0.5g/t Au lower cut-off. No high cut has been applied. Maximum internal dilution of 2m @ <0.5%Cu or <0.5g/tAu. Assays done on 1m half core using a 40gm fire assay for gold and mixed acid digest/ICP-AES/MS for Cu, Zn and silver. * Results reported previously.

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Figure 3 : A Zone Prospect Long Section, Upper Horizon

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Figure 4 : A Zone Prospect Long Section, Upper and Lower Horizon Relationship

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Figure 5 : Comparative VMS Long Section

Augustus Prospect

One RC hole, YRC12-04, was drilled at the Augustus prospect targeting a large EM geophysical anomaly. This hole intersected a wide zone of anomalous copper mineralization in felsic volcanics which assayed 18m @ 0.46% Cu from 234m downhole.

Smith Well Gossan Prospect

During the quarter two RC holes were drilled at the Smith Well Gossan prospect targeting EM geophysical anomalies. Significant assay results came from hole YRC12-06 which intersected 8m @ 0.63% Cu, 0.12g/t Au from 164m downhole.

Marcus Prospect

A single RC hole, YRC12-03, was drilled at the Marcus prospect (formerly known as YC11 prospect) targeting a large EM geophysical anomaly. In the target zone this hole intersected 13 m of felsic volcanics containing 20 – 40% magnetite with traces of chalcopyrite. This is thought to be the source of the EM anomaly.

Table 2 : Yuinmery RC Drill Assay Results	Table 2 : Yuinmery RC Drill Assay Results	Table 2 : Yuinmery RC Drill Assay Results	Table 2 : Yuinmery RC Drill Assay Results	Table 2 : Yuinmery RC Drill Assay Results	Table 2 : Yuinmery RC Drill Assay Results	Table 2 : Yuinmery RC Drill Assay Results	Table 2 : Yuinmery RC Drill Assay Results	Table 2 : Yuinmery RC Drill Assay Results	Table 2 : Yuinmery RC Drill Assay Results	Table 2 : Yuinmery RC Drill Assay Results
Hole ID	Northing	Easting	Az	Dip	Depth	From	Int	Cu	Zn	Au
					(m)	(m)	(m)	%	%	g/t
AUGUSTUS
YRC12-04	6837147	687758	180	-55	270	234	18	0.46	0.03	0.04
SMITH WELL
YRC12-05	6836995	688700	130	-55	250	NSA
YRC12-06	6836855	688642	120	-55	192	164	8*	0.63	0.13	0.12
MARCUS
YRC12-03	6837217	687393	195	-50	288	NSA

Coordinates GDA94 z50

NSA no significant assays. 1m riffle split samples assayed for : Gold by 40gm fire assay, ICP-MS. Copper and Zinc by mixed acid digest, ICP-AES/MS Cut-offs 0.3%Cu or 1.0% Zn or 0.5g/tAu. Maximum internal dilution 1m <0.3%Cu or 1m <1.0% Zn or 1m <0.5g/tAu.

No high cuts applied. * 4m composite samples assayed by 40gm Aqua Regia, ICP-AES/MS

Penny’s Find (WA): Gold Project – 60% interest

During this quarter, four RC drill holes were completed at the Penny’s Find project, 50 km northeast of Kalgoorlie, WA. (See Figure 6) The four holes, drilled by Brimstone Resources Ltd (“Brimstone”) who are farming into the project, targeted an area beneath the base of a potential open pit*.

All four holes intersected quartz veining carrying significant gold mineralization. Better intersections include holes :

• PFRC12-03 : 8m @ 4.02g/t Au from 100m including 2m @ 12.95g/t Au from 101m, and 6m @ 13.34g/t Au from 113m including 4m @ 19.43g/t Au from 115m,

• PFRC12-04 intersected 3m @ 14.42g/t Au from 143m to the end of hole, still in mineralization.

• PFRC12-02 intersected 15m @ 1.32g/t Au from 105m.

• Hole PFRC12-01 intersected 2m @ 5.47g/t Au in the target zone from 112m. The same drill hole also intersected 16m @ 2.34g/t Au from 20m. This shallow intersection, in the hanging wall to the main lode, is the first indication there maybe a second mineralized lode at Penny’s Find. This new shallow mineralization currently remains open along strike to the southeast.

True widths of mineralization are approximately 90% of drill intersections.

These high grade gold intersections confirm the underground potential beneath the planned open ** pit (see the footnote on a previous open pit scoping study) and enhance the potential for a seamless transition from open pit to underground operations. (See Figure 7)

At Penny’s Find, the Company has previously identified a near surface resource of 314,000 tonnes @ 5.2g/t Au (52,500ozs) . The proximity of this deposit to Kalgoorlie (50km), the current high gold price and the possibility of mining a substantial portion of the deposit by open pit methods, confirms the value of this resource.

Penny’s Find high grade, coarse gold mineralization is hosted by quartz veins at the contact between shales and basalt. Metallurgical testwork has shown both oxide and fresh mineralization to be free milling with a high gravity recoverable gold component of >60% and a total gold recovery of >96%. The current resource has been defined to a vertical depth of 150m and remains open at depth. (See Figure 8)

Assay results are listed below in Table 3 with the drill hole intersection points shown on long section in Figure 7.

Table 3 : Penny’s Find RC Drill Results

Hole ID	Northing	Easting	Az	Dip	Depth	From	To	Int	Au
	Local Grid(m)				(m)	(m)	(m)	(m)	g/t
PFRC12-01	9485	9294	230	-60	130	20	36	16*	2.34
					incls	24	28	4*	6.14
						112	114	2	5.47
PFRC12-02	9520	9303.5	230	-60	140	28	32	4*	0.72
						98	102	4	0.83
						105	120	15	1.32
PFRC12-03	9532	9299	230	-60	130	100	108	8	4.02
					incls	101	103	2	12.95
						113	119	6	13.34
					incls	115	119	4	19.43
PFRC12-04	9510	9328.4	230	-60	146	24	32	4*	0.81
						143	146	3	14.42

Intersections are an arithmetic average calculated using a 0.5g/t Au lower cut-off. No high cut has been applied. Maximum internal dilution of 2m @ <0.5g/tAu. Analyses were done on 1m or 4m riffle split samples using a 50gm Fire Assay. *4m composite samples.

In September 2010, the Company entered into a staged sale agreement with unlisted company Brimstone Resources Ltd which plans to bring the deposit into production.

Brimstone currently holds 40% equity in the project. Updated terms for this agreement were announced to the ASX on the 7 February 2012 and a summary of the new agreement is as follows:

At the election of Brimstone Resources, the sale consideration for the Penny’s Find project now consists of either :

• A total cash payment of $3 million by June 2013 for a 100% interest together with a royalty on any gold produced in excess of 52,500oz. This includes a non-refundable payment of $500,000 already made to Empire for their 40% equity in the project, OR

• Brimstone may increase it’s interest to 51% by the expenditure of $750,000 by 30 September 2012 and a further expenditure of an additional $750,000 by June 2013 to increase its interest to 75%. In either case ERL’s costs would be carried and repayable from production.

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Figure 6 : Pennys Find Project location map

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Figure 7 : Penny’s Find Long Section

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Figure 8 : Penny’s Find Cross Section
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Wynne (WA): Copper Project- 100% interest

2 The Wynne prospect consists of two granted exploration licences covering an area of 113 km in the northern Gascoyne region of Western Australia.

Previous exploration in the area identified extensive gossanous ironstones containing highly geochemically anomalous copper, lead, tungsten and bismuth values. These ironstones are associated with meta-sedimentary rocks of the Proterozoic Morrissey Metamorphic Suite. At least three anomalous ironstone horizons are present each up to 2-3m thick with at least one extending for a distance of over 5 kilometres. No previous drilling has been undertaken in the prospect area.

Empire Resources has been successful in receiving funding of $75,000 under the Western Australian Government’s Incentive Scheme Co-Funded Drilling Program. This grant will be used to fund a 1,800m RC drilling program planned for the June quarter of 2012.

Damperwah (WA): Copper Project – Farm in earning 70% interest

As reported in the December 2011 quarterly, the Company has identified an area with potential for volcanogenic massive sulphide (VMS) copper mineralization in the Warriedar Fold Belt situated approximately 320 km northeast of Perth and 60 km southwest of the Golden Grove copper-zinc mine.

Sampling by the Company located three gossanous ironstone lenses in areas where only minimal previous exploration has been undertaken. The gossanous ironstones are geochemically anomalous in copper with rock chip values up to a maximum of 2,880 ppm Cu. The largest gossanous zone at Sears prospect has a strike length in excess of 250 metres and a width up to 15 metres.

A heritage survey was completed during the quarter to clear areas for RC drilling.

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Photos above left: Lateritised gossan at Sears Prospect, and
above right: Layering in the lateritised gossan
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Troy Creek (WA): Copper - Gold - PGM Project - 45% interest

The Troy Creek copper-gold-platinum group metal (PGM) project is situated 900 km northeast of Perth on the northern margin of the Palaeoproterozoic Earaheedy Basin where the Company holds tenements covering an area of 270 sq km.

No field work was undertaken during the quarter.

Yarlarweelor (WA): Uranium project (28% indirect interest)

The Yarlarweelor uranium project is located 125 km north of Meekatharra in Western Australia. Empire Resources Ltd holds an indirect 28% interest in the project through its shareholding in FYI Resources Ltd.

No field work was undertaken during the quarter.

DAVID SARGEANT MANAGING DIRECTOR

April 2012

For further information on the Company, visit www.resourcesempire.com.au

David Sargeant – Managing Director Phone: +61 8 9361 3100 Adrian Jessup – Executive Director Phone: +61 8 9361 3100

The information in this report that relates to Exploration Results has been compiled by Mr David Ross B.Sc(Hons), M.Sc, who is an employee of the Company. He is a member of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. He has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity to which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. David Ross consents to the inclusion in the public release of the matters based on his information in the form and context in which it appears.

Mineral Resource Estimates

The information is this report concerning the Mineral Resources for the Penny’s Find Deposit and the Just Desserts Deposit at Yuinmery have been estimated by Mr Peter Ball B.Sc who is a director of DataGeo Geological Consultants and is a member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Ball has sufficient experience which is relevant to the styles of mineralization and types of deposit under consideration and qualifies 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 Ball consents to the inclusion in the public release of the matters based on his information in the form and context in which it appears.

Notes on the Yuinmery Resource

A resource estimate for the Just Desserts prospect at Yuinmery was completed and announced to the market on 9 April 2009.

There has been no change in the resource since that time.

The mineral resource by category to a depth of 250m below surface is reported below. The resource comprises no oxide mineralization, only transitional and fresh.

Just	Desserts Classified Mineral	Desserts Classified Mineral	Resources	– March 2009	– March 2009
Category	Tonnes		Grade*	Grade*	Grade*
			Cu%	Aug/t	Ag g/t
0.5%Cu cutoff	Indicated	184,000	1.11	0.54	0.8
	Inferred	2,159,000	1.24	0.54	1.7
	TOTAL	2,343,000	1.23	0.54	1.6
1%Cu cutoff	Indicated	104,000	1.65	0.86	1.3
	Inferred	966,000	1.84	0.77	2.1
	TOTAL	1,070,000	1.82	0.78	2.1
1.5%Cu cutoff	Indicated	46,000	2.11	1.14	1.6
	Inferred	536,000	2.34	0.92	2.7
	TOTAL	582,000	2.33	0.93	2.6

*High assays have been cut to 9%Cu, 20g/tAu and 10g/tAg.

Resource modelling consultants Datageo calculated a JORC compliant in situ resource estimate, utilising all drill hole information available on Prospecting Licence P57/1215 up to the end of June 2008.

The resource grade was estimated using ordinary kriging based on the drill hole data composited down hole to 1m intervals within constraining shapes representing the mineralization. Assumed specific gravity values used were:transitional 2.7t/m[3] ; fresh 3.2t/m[3] .

*** A Zone Drilling Results**

The weighted average grades for these holes cannot be considered at this time to be definitive of A Zone mineralisation as no resource calculation has been carried out.

** Penny’s Find Open Pit Scoping Study

During the March 2009 quarter, the Company employed an independent consultant to review pit design, mine scheduling, and potential cash flow based on a gold price of AUD$1,500/oz. The results of this study were positive and were utilised in discussions with various parties for the sale or joint development of the resource. No official reserve figures have been announced as a result of this study.

The parameters used in the study were: Gold price AUD$1,500/oz, Mining costs $3.50/t ore, $3.41/t waste, Mining 0 dilution 15%, Mining recovery 95%, Strip ratio 21:1, Pit slope average 50 , Treatment recovery 96%, Treatment costs $24.65/t.

The open pit outline shown in the Penny’s Find long section figure is based on the above scoping study conducted in the first quarter of 2009. It does not mean that mineralization above the outline is currently economic. To determine if any mineralization is currently economic a feasibility study will have to be undertaken using up to date costs and parameters.

Notes on the Penny’s Find Resource

An updated resource estimate for the Penny’s Find gold mineralization was completed and announced to the market on 8 August 2007 and 12 October 2007. There has been no change to the resource since that time.

The mineral resource by category is 314,000 tonnes averaging 5.2 g/t gold down to a vertical depth of 150m below surface.

The mineral resource above 0.5 g/t gold is summarised in the following table.

Penny’s Find - Classified mineral resources – August 2007

Category	Tonnes	Grade*	Ounces
Measured	79,000	4.40	11,177
Indicated	132,000	3.98	16,893
Inferred	103,000	7.33	24,276
TOTAL	314,000	5.18	52,316

*grades are based on a minimum cut-off of 0.5g/tAu and high assays cut to 25g/tAu

Resource modelling consultants Datageo calculated a JORC compliant in situ resource estimate, utilising all drill hole information available on mining lease M27/156 up to the end of June 2007.

The resource grade was estimated using ordinary kriging based on the drill hole data composited downhole to 1m intervals within constraining shapes representing the mineralization. Assumed specific gravity values used were:- oxide 2.0t/m[3] ; transitional 2.2t/m[3] ; fresh 2.5t/m m[3] .