EMPIRE RESOURCES LIMITED — Interim / Quarterly Report 2021

Mar 10, 2021

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EMPIRE RESOURCES LIMITED ABN 32 092 471 513

Interim Report 31 December 2020

EMPIRE RESOURCES LIMITED 31 DECEMBER 2020

Table of Contents

	Page
	Number
Corporate Information	2
Directors’ Report	3
Condensed Consolidated Statement of Profit or loss and	5
other Comprehensive Income
Condensed Consolidated Statement of Financial Position	6
Condensed Consolidated Statement of Changes in Equity	7
Condensed Consolidated Statement of Cash Flows	8
Notes to the Condensed Interim Financial Statements	9
Directors’ Declaration	15
Auditor’s Independence Declaration	16
Independent Auditor’s Review Report	17

1

EMPIRE RESOURCES LIMITED 31 DECEMBER 2020

CORPORATE INFORMATION

DIRECTORS

Michael Ruane – Chairman Sean Richardson – Managing Director Jeremy Atkinson – Non-Executive Director

COMPANY SECRETARY

Simon Storm

REGISTERED PRINCIPAL OFFICE

159 Stirling Highway Nedlands 6009 Western Australia

Phone +61 (0)8 6389 1032 Email info@resourcesempire.com.au Website www.resourcesempire.com.au ABN 32 092 471 513

SHARE REGISTRY

Automic Group Level 2 267 St Georges Terrace Perth 6000 Western Australia

AUDITORS

HLB Mann Judd (WA) Partnership 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 2020

Directors’ Report

Your directors submit the interim report on Empire Resources Limited (the “Company”) and its controlled entity (“the Group”) for the half-year ended 31 December 2020. 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:

Michael Ruane Sean Richardson Jeremy Atkinson David Sargeant (resigned 15 August 2020)

Review of Operations and Exploration Activities

The Group’s profit for the half-year ended 31 December 2020 was $2,128,067 (2019: $1,208,961) primarily as a result of a net fair value gain on financial assets of $2,982,766 (2019: $2,192,125).

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

During the half year the Company carried out the following activities:

Exploration at Yuinmery

At the YT01 prospect, aircore drilling of multiple Cu-Au and Cu-Ni-PGM targets was completed with a broad zone of Cu-Ni-PGM mineralisation encountered in RC hole YRC20-28:

• 20m @ 0.39% Cu, 0.11% Ni, 0.02% Co, 0.21g/t Pd & 0.07g/t Pt from 143m, including 12m of elevated PGM’s @ 0.34g/t Pd & 0.11g/t Pt from 151m.

At the Smith Well Prospect RC Drilling intersected disseminated to matrix sulphide mineralisation. Assay results included:

• 10m @ 0.42% Cu, 0.24% Ni & 0.03% Co from 63m (YRC20-22), and

• 8m @ 0.29% Cu, 0.22% Ni & 0.03% Co from 149m (YRC20-23).

Gold mineralisation of 4m @ 1.0g/t Au from 56m (YRC20-27) was also intersected in the oxide zone.

Exploration at Penny’s Gold Project

Aircore drilling was completed at PF09 prospect with 1,381m drilled, with assay results received for 22 aircore holes, including:

• 12m @ 0.80g/t Au from 40m, including 4m @ 1.78g/t Au from 48m (PAC20-02), and - 22m @ 0.45g/t Au from 36m to EOH (PAC20-17).

Capital Raising

During the September 2020 quarter, the Company issued 108,966,333 new shares at an issue price of A$0.012 per share in a placement to professional and sophisticated investors to raise approximately A$1.3 million before costs.

Dividends

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

Events subsequent to reporting date

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.

Auditor’s 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 16 and forms part of this directors’ report for the half-year ended 31 December 2020.

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EMPIRE RESOURCES LIMITED

DIRECTORS’ REPORT 31 DECEMBER 2020

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

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_____ Michael Ruane Director

Perth, Western Australia 11[th] March 2021

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EMPIRE RESOURCES LIMITED

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2020

Note Interest income Net fair value gain on financial assets 7 Other income 12 Interest expense Depreciation expense Exploration expense Employee benefits expense Directors' fees expense Accounting expense Consultancy expense Share-based payments 13 ASX expense Corporate relations expense Insurance expense Other expenses Profit before income tax Income tax benefit Net profit for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Basic and diluted earnings per share (cents per share) 14	Note	Consolidated	Consolidated
		6 months ended 31/12/2020 $	6 months ended 31/12/2019 $
		314 1,424 2,982,766 2,192,125 152,378 52,096 (56,712) (54,555) (1,552) (1,819) (430,563) (382,390) (76,653) (59,241) (40,500) (54,000) (33,741) (42,279) - (87,167) (19,951) (13,088) (18,386) (19,070) (6,953) (610) (18,957) (28,972)
		(303,423) (293,493)
		2,128,067 1,208,961 - -
		2,128,067 1,208,961 - -
		2,128,067 1,208,961
		0.24 0.19

The accompanying notes form part of these financial statements.

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EMPIRE RESOURCES LIMITED

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020

Note ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables 6 Other financial assets Financial assets at fair value through profit or loss 7 Total Current Assets NON-CURRENT ASSETS Plant and equipment Total Non-Current Assets TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables 8 Borrowings 9 Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 10 Reserves Accumulated losses TOTAL EQUITY	Consolidated
	31/12/2020 30/06/2020 $ $ 868,324 598,047 383,476 352,558 10,000 10,000 6,653,863 3,671,097
	7,915,663 4,631,702
	32,014 47,532
	32,014 47,532
	7,947,677 4,679,234
	171,837 278,023 1,547,158 1,556,096
	1,718,995 1,834,119
	1,718,995 1,834,119
	6,228,682 2,845,115 25,414,463 24,178,914 1,782,296 1,762,345 (20,968,077) (23,096,144)
	6,228,682 2,845,115

The accompanying notes form part of these financial statements.

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EMPIRE RESOURCES LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2020

	Consolidated	Consolidated	Consolidated	Consolidated
	Issued Capital $	Accumulated Losses $	Option Reserves $	Total $
Balance at 1 July 2019	22,806,499 (23,518,182) 1,737,474 1,025,791
Profit for the period	- 1,208,961 - 1,208,961
Other comprehensive income Total comprehensive profit for the period Shares issued during the period Equity issue expenses Share based payment Balance at 31 December 2019 Balance at 1 July 2020	- - - -
	- 1,208,961 - 1,208,961 1,227,352 - - 1,227,352 (42,472) - - (42,472) - - 13,088 13,088
	23,991,379 (22,309,221) 1,750,562 3,432,720
	24,178,914 (23,096,144) 1,762,345 2,845,115
Profit for the period	- 2,128,067 - 2,128,067
Other comprehensive income Total comprehensive profit for the period Shares issued during the period Equity issue expenses Share based payment Balance at 31 December 2020	- - - -
	- 2,128,067 - 2,128,067 1,307,596 - - 1,307,596 (72,047) - - (72,047) - - 19,951 **19,951 **
	25,414,463 (20,968,077) 1,782,296 6,228,682

The accompanying notes form part of these financial statements.

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EMPIRE RESOURCES LIMITED AND CONTROLLED ENTITY

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2020

Cash Flows from Operating Activities Receipts from customers Payments for exploration and evaluation expenditure Payments for suspension of operations Payments to employees and suppliers Interest received Interest paid Net cash outflow from operating activities Cash Flows from Investing Activities Proceeds from sale of financial assets Proceeds from realisation of financial assets Net cash inflow from investing activities Cash Flows from Financing Activities Proceeds from issue of equity securities Equity securities issue costs Other Net cash inflow from financing activities Net increase in cash held Cash at the beginning of the period Cash at the end of the period	Consolidated	Consolidated
	31/12/2020 $	31/12/2019 $
	100,000 29,934 (452,633) (370,313) - (4,717) (547,303) (607,188) 314 2,098 (65,650) (144)
	(965,272) (950,330)
	- 87,590 - 10,000
	- 97,590
	1,307,596 1,227,352 (72,047) (42,472) - 26,400
	1,235,549 1,211,280
	270,277 358,540 598,047 893,302
	868,324 1,251,842

The accompanying notes form part of these financial statements.

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EMPIRE RESOURCES LIMITED

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2020

1. Statement of Significant Accounting Policies

Basis of preparation

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).

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 2020 and any public announcements made by Empire Resources Limited 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, except for the impact of the new Standards and Interpretations as disclosed below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

The interim financial report has been prepared on a historical cost basis except for the revaluation of certain financial assets to fair value. 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.

Statement of Compliance

The financial report was authorised for issue on 11 March 2021.

The interim financial statements comply with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the interim financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS).

Adoption of New and Revised Standards

In the period ended 31 December 2020, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Company and effective for the current reporting period. As a result of this review, the Directors have determined that there is no material impact of the new and revised Standards and Interpretations on the Group and, therefore, no material change is 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 2020. As a result of this review the Directors have determined that there is no material impact of the new and revised Standards and Interpretations on the Company and, therefore, no material change is necessary to Group accounting policies.

2. Related Parties

Arrangements with related parties continue to be in place. For details on these arrangements, refer to the 30 June 2020 annual financial report.

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EMPIRE RESOURCES LIMITED

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2020

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 mineral exploration and evaluation of properties in Australia. The Group considers its business operations in mineral investment, exploitation and exploration to be its primary reporting function.

4. Dividends

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

5. Events Subsequent to Reporting Date

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.

6. Trade and other receivables

Current Trade receivables GST receivables Other receivables Provision for impairment of receivables	Consolidated	Consolidated
	31/12/2020 $	30/06/2020 $
	1,529 2,530 42,968 23,556 548,349 535,842 (209,370) (209,370)
	383,476 352,558

Provision for impairment of receivables

Current trade receivables are non-interest bearing and generally on 30 day terms. A provision for impairment is recognised when there is objective evidence that an individual trade receivable is impaired.

A portion of the other receivables balance of $516,108 and the impairment provision of $209,370 relate to a dispute over gold not accounted for from a milling campaign conducted by Eastern Goldfields Mining Services (EGMS) late in 2017. The Company is seeking to recover gold owed with a value in excess of $1 million. The matter is currently being referred to Arbitration.

7. Financial assets at fair value through profit or loss

	Consolidated	Consolidated
	31/12/2020 $	30/06/2020 $
Listed shares-investment in NTM Gold Ltd - at fair value	6,653,863 3,671,097
	6,653,863 3,671,097

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EMPIRE RESOURCES LIMITED

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2020

7. Financial assets at fair value through profit or loss (continued)

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Consolidated
6 months 12 months
ended ended
31/12/2020 30/06/2020
$ $
Balance at the beginning of period 3,671,097 69,407
Additions - 1,499,875
Disposals - (109,799)
Net fair value gain on financial asset 2,982,766 2,193,431
Net gain on disposal of financial assets - 18,183
Carrying amount at the end of the period 6,653,863 3,671,097
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The investment is level 1 in the fair value hierarchy and is valued using quoted prices in an active market.

8. Trade and other payables

Trade payables and accruals1 Employee benefits	Consolidated	Consolidated
	31/12/2020 $	30/06/2020 $
	142,891 264,787 28,946 13,236
	171,837 278,023

1 Included in these balances are amounts owing to key management personnel and associated entities at balance date of $39,300 (30 June 2020: $37,800) for Director fees.

9. Borrowings

	Consolidated	Consolidated
	6 months ended 31/12/2020 $	12 months ended 30/06/2020 $
Director loan at the beginning of the period Additions to borrowings Finance costs incurred Finance costs paid	1,556,096 - - 1,500,000 56,713 109,726 (65,651) (53,630)
Balance at the end of the period	1,547,158 1,556,096

For the loan from Dr Michael Ruane, an interest rate of 7.5% was calculated daily and is payable at maturity.

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EMPIRE RESOURCES LIMITED

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2020

10. 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.

	Consolidated	Consolidated
	6 months ended 31/12/2020 $	12 months ended 30/06/2020 $
908,750,022 (30 June 2020:799,783,689) fully paid ordinary shares	25,414,463 24,178,914
(i) Ordinary shares - number At the beginning of the period Issue of 153,418,999 shares at $0.008 on 12 December 2019 Issue of 24,550,000 shares at $0.008 on 24 January 2020 Issue of 108,966,333 shares at $0.012 on 7 August 2020 Balance at the end of the period (ii) Ordinary shares – value At the beginning of the period Issue of 153,418,999 shares at $0.008 on 12 December 2019 Issue of 24,550,000 shares at $0.008 on 24 January 2020 Issue of 108,966,333 shares at $0.012 on 7 August 2020 Less share issue costs Balance at the end of the period
	Consolidated
	6 months ended	12 months ended
	31/12/2020 No.	30/06/2020 No.
	799,783,689 621,814,690 - 153,418,999 - 24,550,000 108,966,333 -
	908,750,022 799,783,689
	6 months ended 31/12/2020 $	12 months ended 30/06/2020 $
	24,178,914 22,806,499 - 1,227,352 - 196,400 1,307,596 - (72,047) (51,337)
	25,414,463 24,178,914

(b) Options

At 31 December 2020 the Company had nil options on issue over ordinary shares (30 June 2020:Nil).

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EMPIRE RESOURCES LIMITED

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2020

11. Financial Instruments

The fair value of financial assets and liabilities approximate their carrying amounts at balance date. The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period.

12. Revenue

	Consolidated	Consolidated
	6 months ended 31/12/2020 $	6 months ended 31/12/2019 $
Other income
Net gain on disposal of financial assets	-	18,183
Royalty income	100,000	27,213
Other income	52,378	6,700
	152,378	52,096

13.Share-based Payments

(a) Performance Rights

There have been no changes to the performance rights from the prior period.

(b) Options

There have been no changes in options since the prior period.

(c) Expenses arising from share-based payment transactions

	Consolidated	Consolidated
	6 months	6 months
	ended	ended
	31/12/2020	31/12/2019
	$	$
Share-based payments	19,951	13,088

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EMPIRE RESOURCES LIMITED

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2020

14. Earnings Per Share

	Consolidated	Consolidated
	6 months ended 31/12/2020 Cents	6 months ended 31/12/2019 Cents
Basic and diluted earnings per share (cents per
share)	0.24	0.19
Profit used in the calculation of basic EPS ($)	2,128,067	1,208,961
Weighted average number of shares outstanding
during the period used in calculations of basic
earnings per share	886,718,578	637,743,439

15. Contingencies

There has been no change in contingent assets since the last annual reporting date other than the receipt of $100,000 royalty payment from Orminex Penny’s Find Pty Ltd as underground mining had not commenced.

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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 2020 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.

_____ Michael Ruane Director

Perth, Western Australia 11[th] March 2021

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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 2020, 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.

Perth, Western Australia N G Neill 11 March 2021 Partner

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INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of Empire Resources Limited

Report on the Condensed Half-Year Financial Report

Conclusion

We have reviewed the accompanying half-year financial report of Empire Resources Limited (“the Group”) which comprises the condensed consolidated statement of financial position as at 31 December 2020, the condensed consolidated statement of profit or loss and other comprehensive income, the condensed consolidated statement of changes in equity and the condensed consolidated 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, 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.

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 does not comply with the Corporations Act 2001 including:

• (a) giving a true and fair view of the Group’s financial position as at 31 December 2020 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 .

Basis for conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity . Our responsibilities are further described in the Auditor’s responsibilities for the review of the financial report section of our report. We are independent of the company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

Responsibility of the directors for the 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 for the review of the financial report

Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether 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 2020 and

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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 .

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 .

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HLB Mann Judd N G Neill Chartered Accountants Partner

Perth, Western Australia 11 March 2021

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