EMPIRE RESOURCES LIMITED — Interim / Quarterly Report 2017

Mar 13, 2017

EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITY

ABN 32 092 471 513

Interim Financial Report 31 December 2016

EMPIRE RESOURCES LIMITED 31 DECEMBER 2016

Table of Contents

	Page
	Number
Corporate Directory.......................................................................	2
Directors’ Report………………….……….……………....…..........	3
Condensed Statement of Comprehensive Income......…..........	4
Condensed Statement of Financial Position…………....….......	5
Condensed Statement of Changes in Equity….………….........	6
Condensed Statement of Cash Flows……..………..………......	7
Notes to the Condensed Consolidated Financial Statements.	8
Directors’ Declaration……...……………………………................	15
Auditor’s Independence Declaration..……………………….......	16
Independent Auditor’s Review Report …………………….........	17

1

EMPIRE RESOURCES LIMITED 31 DECEMBER 2016

CORPORATE DIRECTORY

DIRECTORS

Tom Revy BAppSc – Chairman David Sargeant BSc – Managing Director Adrian Jessup BSc(Hons) – Executive Director

COMPANY SECRETARY

Simon Storm BCom, BCompt(Hons), CA, FGIA

REGISTERED and PRINCIPAL OFFICE

53 Canning Highway Victoria Park 6100 Western Australia

Phone +61 (0)8 9361-3100 Facsimile +61 (0)8 9361-3184 Email info@resourcesempire.com.au Website www.resourcesempire.com.au ABN 32 092 471 513

SHARE REGISTRY

Security Transfer Australia Pty Ltd 770 Canning Highway Applecross 6153 Western Australia

AUDITOR

HLB Mann Judd Level 4 130 Stirling Street Perth 6000 Western Australia

SECURITIES EXCHANGE LISTING

The Company is listed on the Australian Securities Exchange Limited. Home Exchange Perth ASX Code: Shares ERL

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EMPIRE RESOURCES LIMITED

DIRECTORS’ REPORT 31 December 2016

Directors’ Report

Your directors submit their report on Empire Resources Limited (the “Company”) and its controlled entity (“the Group”) for the half-year ended 31 December 2016. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

Directors

The directors of the Company at any time during or since the end of the half-year were:

Tom Revy David Sargeant Adrian Jessup

Review of Operations and Exploration Activities

The Group’s loss for the half-year ended 31 December 2016 was $1,227,303 (2015: $761,079).

During the period the principal activities of the Group consisted of mineral exploration, evaluation and development of properties in Australia. There has been no significant change in these activities during the financial period.

The Company holds a 60% interest and acts as manager in an unincorporated exploration and mining joint venture to explore for, evaluate and mine reserves of gold, nickel and other minerals on the Penny’s Find tenements. A feasibility study into mining those reserves has been completed and the joint venture commenced initial mining of overburden at the open pit. The remaining 40% interest is held by unlisted Brimstone Resources Ltd.

Dividends

No dividends have been paid during the period and no dividends have been recommended by the directors.

Events subsequent to reporting date

In January 2017, the Company entered into a two year option agreement to acquire two copper-gold licences from Evolution Mining (Mungari) Pty Ltd.

In February 2017, The Company received a further $150,000 loan from a third party.

In March 2017, the Company awarded, on behalf of the Penny’s Find Joint Venture, a haulage contract to Hampton Transport Services for the cartage of gold ore from the Penny’s Find gold mine to the Lakewood Mill.

Other than this, no matter or circumstance has arisen, since the end of the financial half year, which significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial periods.

Auditors Independence Declaration

Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the directors of the company with an Independence Declaration in relation to the review of the interim financial report. This written Auditor’s Independence Declaration is set out on page 15 and forms part of this directors’ report for the half-year ended 31 December 2016.

This report is signed in accordance with a resolution of the Board of Directors made pursuant to s306(3) of the Corporations Act 2001.

_____ D Sargeant Managing Director

Perth, Western Australia 13[th] March 2017

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EMPIRE RESOURCES LIMITED

CONDENSED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

Revenue - interest income Net gain on disposal of investment Interest expense Depreciation expense Exploration expense Feasibility written back Pre Mining expense Employee benefits expense Management fee expense Directors' fees expense Accounting expense Share-based payment ASX expense Corporate relations expense Insurance expense	Consolidated	Consolidated
	31/12/2016 $	31/12/2015 $
	14,056 254 - 210,131 (11,942) (15,076) (10,010) (774) (50,584) (469,363) 7,217 - (874,054) - (111,283) (39,560) (126,900) (217,800) (21,000) (21,000) (37,160) (34,005) (18,159) (53,884) (23,131) (14,429) (50,837) (39,511) (12,683) (13,153)
Other expenses	(7,957) (52,909)
Loss before income tax Income tax benefit Net loss for the period Other comprehensive income Total comprehensive loss for the period Basic and diluted loss per share (cents per share)	(1,334,427) (761,079) 107,124 -
	(1,227,303) (761,079)
	- -
	(1,227,303) (761,079)
	(0.32) (0.29)

The accompanying notes form part of these financial statements.

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EMPIRE RESOURCES LIMITED

CONDENSED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2016

Note ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables 8 Other financial assets Total Current Assets NON-CURRENT ASSETS Plant and equipment Total Non-Current Assets TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables 9 Borrowings 10 Provision for restoration and rehabilitation Total Current Liabilities TOTAL LIABILITIES NET (LIABILITIES) / ASSETS EQUITY Issued capital 11 Reserves Accumulated losses TOTAL (DEFICIENCY) / EQUITY	Note	Consolidated	Consolidated
		31/12/2016 $	30/06/2016 $
		260,611 265,828 629,653 89,224 20,000 20,000
		910,264 375,052
		174,967 29,714
		174,967 29,714
		1,085,231 404,766
		958,428 634,347 352,850 132,940 167,424 -
		1,478,702 767,287
		1,478,702 767,287
		(393,471) (362,521)
		19,610,918 18,572,844 1,737,474 1,579,195 (21,741,863) (20,514,560)
		(393,471) (362,521)

The accompanying notes form part of these financial statements.

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EMPIRE RESOURCES LIMITED

CONDENSED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

	Consolidated	Consolidated	Consolidated	Consolidated
	Issued Capital $	Accumulated Losses $	Option Reserves $	Total $
Balance at 1 July 2015 Shares issued during the period Share based payment Equity issue expenses Loss for the period Other comprehensive income for the Balance at 31 December 2015 Balance at 1 July 2016 Shares issued during the period Share based payment Options issued for share issue costs Equity issue expenses Loss for the period Other comprehensive income for the Balance at 31 December 2016	17,822,941 (18,889,940) 1,118,917 51,918 100,000 - - 100,000 - - 53,884 53,884 (7,654) - - (7,654) - (761,079) - (761,079) - - - -
	17,915,287 (19,651,019) 1,172,801 (562,931)
	18,572,844 (20,514,560) 1,579,195 (362,521) 1,260,000 - - 1,260,000 - - 18,159 18,159 - - 140,120 140,120 (221,926) - - (221,926) - (1,227,303) - (1,227,303) - - - -
	19,610,918 (21,741,863) 1,737,474 (393,471)

The accompanying notes form part of these financial statements.

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITY

CONDENSED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

Cash Flows from Operating Activities Exploration and evaluation expenditure Payments to suppliers and employees Interest received Interest paid Net cash used in operating activities Cash Flows from Investing Activities Purchase of plant and equipment Payments to joint venture on behalf of Brimstone Resources Ltd Proceeds from sale of investment Net cash (used in) / provided by investing activities Cash Flows from Financing Activities Proceeds from issue of equity securities Equity securities issue costs Proceeds from borrowings Repayments of borrowings Net cash provided by financing activities Net (decrease) / increase in cash held Cash at the beginning of the period Cash at the end of the period	Consolidated	Consolidated
	31/12/2016 $	31/12/2015 $
	(766,555) (368,889) (321,790) (171,646) 1,056 254 (9,092) (14,190)
	(1,096,381) (554,471)
	(63,525) - (248,000) - - 400,000
	(311,525) 400,000
	1,260,000 100,000 (154,379) (9,338) 350,000 270,000 (52,932) (200,000)
	1,402,689 160,662
	(5,217) 6,191 265,828 119,069
	260,611 125,260

The accompanying notes form part of these financial statements.

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EMPIRE RESOURCES LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

1. Statement of Significant Accounting Policies

Statement of Compliance

These interim consolidated financial statements are general purpose financial statements prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards including AASB 134: Interim Financial Reporting, Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board (AASB). Compliance with AASB 134 ensures compliance with IAS 34 ‘Interim Financial Reporting’.

This condensed half-year report does not include full disclosures of the type normally included in an annual financial report. Therefore, it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the Group as in the full financial report.

It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2016 and any public announcements made by Empire Resources Ltd and its controlled entity during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001 and the ASX Listing Rules.

The accounting policies adopted and methods of computation are consistent with those of the previous financial year and corresponding interim reporting period. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

Basis of preparation

The interim report has been prepared on a historical cost basis. Cost is based on the fair value of the consideration given in exchange for assets. The Company is domiciled in Australia and all amounts are presented in Australian dollars.

For the purpose of preparing the interim report, the half-year has been treated as a discrete reporting period.

Significant accounting judgements and key estimates

The preparation of interim financial reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates.

In preparing this interim report, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial report for the year ended 30 June 2016.

Adoption of new and revised Accounting Standards

In the half-year ended 31 December 2016, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Company’s operations and effective for annual reporting periods beginning on or after 1 July 2016. .

It has been determined by the Directors that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on the Company and, therefore, no change necessary to Group accounting policies.

The Directors have also reviewed all new Standards and Interpretation that have been issued but are not yet effective for the half-year ended 31 December 2016. As a result of this review the Directors have determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on the Company and, therefore, no change necessary to Group accounting policies.

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EMPIRE RESOURCES LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

1. Statement of Significant Accounting Policies (continued)

Going Concern

As disclosed in the Statement of Comprehensive Income, the Group recorded operating losses of $1,227,303 (2015:$ 761,079) for the half-year and as disclosed in the Statement of Cash Flows, the Group recorded cash outflows from operating activities of $1,096,381 (2015:$554,471), cash outflows from investing activities of $311,525 (2015: inflow $400,000) and a cash inflow from financing activities of $1,402,689 (2015: $160,662). After consideration of these financial conditions, the Directors have assessed the following matters in relation to the adoption of the going concern basis of accounting by the Group:

• The Group has successfully completed a capital raising during the half-year as disclosed in Note 11 and has the ability to continue doing so on a timely basis, pursuant to the Corporations Act 2001, as is budgeted to occur in the twelve month period from the date of this financial report;

• The Group has a working capital deficit of $568,438 (30/6/16: $392,235) at balance date and retains the ability to scale down its operations to conserve cash, in the event that the capital raisings are delayed or reduced; and

• The Group has the ability, if required, to undertake mergers, acquisitions or restructuring activity or to wholly or in part, dispose of interests in investments, mineral exploration and development assets.

The directors also anticipate that a further equity raising will be required and will be completed in the first half of 2017. Should this equity raising not be completed, there is a material uncertainty that may cast significant doubt as to whether the Group will be able to continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial statements.

2. Related Parties

Arrangements with related parties continue to be in place. For details on these arrangements, refer to the 30 June 2016 annual financial report.

3. Segment Reporting

Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Empire Resources Ltd.

Consistent with prior year, the Group operates only in one business and geographical segment being predominantly in the area of mining and exploration in Australia. The Group considers its business operations in mineral exploration to be its primary reporting function.

4. Dividends

No dividends were paid or declared payable during or since the half-year.

5. Contingent Liabilities

The Company has been named as a defendant in a writ issued in the Supreme Court of Western Australia. The writ claims the amount of $60,000 plus an undefined profit claim and an amount of damages and costs which arises from the termination of arrangements. The Company believes that the claims are entirely without merit and will be vigorously defended.

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EMPIRE RESOURCES LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

6. Events Subsequent to Reporting Date

In January 2017, the Company entered into a two year option agreement to acquire two copper-gold licences from Evolution Mining (Mungari) Pty Ltd. Empire must meet all expenditure commitments while retaining an option to purchase Evolution Mining (Mungari) Pty Ltd’s interest for either a cash or share consideration of $500,000. A 2% net smelter royalty capped at $500,000 will be payable by Empire on any minerals produced from the two tenements.

In February 2017, The Company received a further $150,000 loan from a third party.

In March 2017, the Company awarded, on behalf of the Penny’s Find Joint Venture, a haulage contract to Hampton Transport Services for the cartage of gold ore from the Penny’s Find gold mine to the Lakewood Mill.

Other than this, no matter or circumstance has arisen, since the end of the financial half year, which significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial periods.

7. Investments

(a) Investments accounted for using the Equity Method

	Consolidated	Consolidated
	Six months ended	Year ended
	31/12/2016 $	30/06/2016 $
Reconciliation of movements in investments accounted for using the equity method: Balance at 1 July Proceeds on sale Profit recognised on sale Balance at end of period	- 189,869 - (400,000) - 210,131
	- -

			Ownership interest	Ownership interest	Market Value	Market Value
			**31/12/2016 **	**30/06/2016 **	31/12/2016	30/06/2016
Name of entity	Principal activity	Country of incorporation	%	%	$	$
Associated entity FYI Resources Ltd Mineral exploration Australia			13% 14% 468,000 300,000

(b) Investments in subsidiary

	Country of incorporation	Percentage Owned	Percentage Owned
Controlled entity		31/12/2016 %	30/06/2016 %
Parent Entity: Empire Resources Limited Subsidiary of Empire Resources Limited: Torrens Resources Pty Ltd	Australia Australia 100 100

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EMPIRE RESOURCES LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

8. Trade and other receivables

31/12/2016 30/06/2016 $ $ Current Trade receivables 173,574 44,770 Payments to JV on behalf of Brimstone Resources Ltd 248,000 - Other receivables 208,079 44,454 629,653 89,224 Consolidated	Consolidated	Consolidated
	31/12/2016 $	30/06/2016 $
	629,653 89,224

9. Trade and other payables Trade payables and accruals Employee benefits and GST 10. Borrowings
	Consolidated
	31/12/2016 $	30/06/2016 $
	736,492 543,209 221,936 91,138
	958,428 634,347
	Consolidated
	31/12/2016	30/06/2016
	$	$
Director loans Other loans (i)	150,023 52,932 202,827 80,008
	352,850 132,940

(i ) The interest rate on the loan is 12% per annum. It is expected the Borrower will repay the loan from the proceeds of a future share placement of ordinary shares. No fixed terms for repayment have been set.

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EMPIRE RESOURCES LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

11. Issued capital

(a) Ordinary shares

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. 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.

poll each share is entitled to one vote.
	Consolidated
	31/12/2016 $	30/06/2016 $
387,201,475 (30/6/2016: 324,201,475) fully paid ordinary shares	19,610,918 18,572,844

Six months ended Year ended 31/12/2016 30/06/2016 No. No. (i) Ordinary shares - number At 1 July 324,201,475 259,201,475 Share placement - 10,000,000 on 19 November 2015 at $0.01 - 10,000,000 Share placement - 10,000,000 on 29 February 2016 at $0.01 - 10,000,000 Share placement - 5,000,000 on 31 March 2016 at $0.01 - 5,000,000 Share placement - 30,000,000 on 5 May 2016 at $0.0125 - 30,000,000 Share placement - 10,000,000 on 22 June 2016 at $0.02 - 10,000,000 Share placement - 63,000,000 on 18 July 2016 at $0.02 63,000,000 - Balance at end of period 387,201,475 324,201,475 Consolidated	Consolidated	Consolidated
	Six months ended	Year ended
	31/12/2016	30/06/2016
	No.	No.
	387,201,475 324,201,475

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EMPIRE RESOURCES LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

11. Issued capital (continued)

Six months ended Year ended 31/12/2016 30/06/2016 $ $ (ii) Ordinary shares – value At 1 July 18,572,844 17,822,941 Share placement - 10,000,000 on 19 November 2015 at $0.01 - 100,000 Share placement - 10,000,000 on 29 February 2016 at $0.01 - 100,000 Share placement - 5,000,000 on 31 March 2016 at $0.01 - 50,000 Share placement - 30,000,000 on 5 May 2016 at $0.0125 - 375,000 Share placement - 10,000,000 on 22 June 2016 at $0.02 - 200,000 Share placement - 63,000,000 on 18 July 2016 at $0.02 1,260,000 - Less share issue costs (221,926) (75,097) Balance at end of period 19,610,918 18,572,844 Consolidated	Consolidated	Consolidated
	Six months ended 31/12/2016 $	Year ended 30/06/2016 $
	19,610,918 18,572,844

(b) Options

As at 31 December 2016 the Company had the following options on issue over ordinary shares:-

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----- Start of picture text -----

Weighted Weighted
average average
Number Number
exercise exercise
price price
31/12/2016 31/12/2016 30/06/2016 30/06/2016
Outstanding at the beginning of the yea 53,102,000 $0.04 30,000,000 $0.05
Granted 18 July 2016 9,000,000 $0.04 23,102,000 $0.04
Expired 31 August 2016 (30,000,000) $0.05 - -
Outstanding at the end of the year 32,102,000 $0.03 53,102,000 $0.04
----- End of picture text -----

The following share-based payment arrangements were entered into during the half-year.

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----- Start of picture text -----

Fair value
at grant
Expiry Vesting date of
Grant Date date Exercise price Period options
Consultant
options 18-Jul-16 18-Jul-19 $0.04 18-Jul-16 $0.02
----- End of picture text -----

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EMPIRE RESOURCES LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

11. Issued capital (continued)

The fair value of the equity-settled share options granted is estimated as at the date of grant using the Black and Scholes model taking into account the terms and conditions upon which the options were granted.

Expected Volatility	Option life	Dividend yield	Risk-free interest rate	Grant date share price
140%	3years	0%	1.57%	$0.02

12. Financial Instruments

The fair value of financial assets and liabilities approximate their carrying amounts at balance date.

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EMPIRE RESOURCES LIMITED

DIRECTORS’ DECLARATION

In the opinion of the Directors of Empire Resources Limited ("Company"):

1. The attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including:

2. a) complying with Accounting Standards, Corporations Regulations 2001 and other mandatory professional reporting requirements; and

3. b) giving a true and fair view of the Group's financial position as at 31 December 2016 and of its performance for the half-year then ended; and

4. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is signed made in accordance with a resolution of the Board of Directors made pursuant to s303(5) of the Corporations Act 2001.

_____ David Sargeant Managing Director

Perth, Western Australia 13[th] March 2017

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AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the review of the consolidated financial report of Empire Resources Limited for the half-year ended 31 December 2016, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• a) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• b) any applicable code of professional conduct in relation to the review.

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Perth, Western Australia D I Buckley 13 March 2017 Partner

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HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of

International, a worldwide organisation of accounting firms and business advisers. 16

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INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of Empire Resources Limited

Report on the Condensed Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Empire Resources Limited (“the company”) which comprises the condensed statement of financial position as at 31 December 2016, the condensed statement of comprehensive income, the condensed statement of changes in equity and the condensed statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory notes, and the directors’ declaration, for the Group 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 half-year 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 control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and 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 half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group’s financial position as at 31 December 2016 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 the company, 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 .

HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of International, a worldwide organisation of accounting firms and business advisers.

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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 Empire Resources Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the Group’s financial position as at 31 December 2016 and of its performance for the half-year ended on that date; and

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

Emphasis of Matter

Without qualifying our conclusion, we draw attention to Note 1 in the half-year financial report which indicates that the directors anticipate that a further equity raising will be required and will be completed in the first half of 2017. Should this equity raising not be completed, there is a material uncertainty that may cast significant doubt as to whether the Group will be able to continue as a going concern and, therefore, whether it will be able to realise its assets and extinguish its liabilities in the normal course of business.

HLB Mann Judd Chartered Accountants

D I Buckley Partner

Perth, Western Australia 13 March 2017

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