Encounter Resources Limited

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EXPLORATION STAGE
CODE : ENR.AX
ISIN : AU000000ENR2
AUSTRALIA
AU$ 0.140
01/28 15:09 -
-3.45%
AUSTRALIA (ENR.AX)
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Shares OustandingShares Fully Diluted
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Last updated on : 12/16/2010

2016 Annual Report

. encount.er

-411 RESOURCES LIMITED

C O R P O R A T E D I R E C T O R Y

Directors

Paul Chapman Non-Executive Chairman Will Robinson Managing Director

Peter Bewick Exploration Director Jonathan Hronsky Non-Executive Director

Company Secretaries

Kevin Hart Dan Travers

Principal and Registered Office

Level 7, 600 Murray Street

West Perth, Western Australia 6005 Telephone (08) 9486 9455

Facsimilie (08) 9486 8366 Web www.enrl.com.au

Auditor

Crowe Horwath Perth

Level 5, 45 St Georges Terrace Perth, Western Australia 6000

Share Registry

Security Transfer Registrars Pty Ltd 770 Canning Highway

Applecross, Western Australia 6153 Telephone (08) 9315 2333

Facsimilie (08) 9315 2233

Stock Exchange Listing

C O N T E N T S

Letter from the Chairman & Managing Director 1-2

Exploration Review 3-14

Summary of Tenements 15

Directors' Report 16 - 26

Auditor's Independence Declaration 27

Consolidated Statement of Profit or Loss and Other

Comprehensive Income 28

Consolidated Statement of Financial Position 29

Consolidated Statement of Changes in Equity 30

The Company's shares are quoted on the Australian

Securities Exchange. The home exchange is Perth, Western Australia.

ASX Code

ENR - Ordinary shares

Company Information

The Company was incorporated and registered under

Consolidated Statement of Cash Flows 31

Notes to the Financial Statements 32 - 63

Directors' Declaration 64

Independent Auditor's Report 65 - 66

ASX Additional Information 67 - 69

the Corporations Act 2001 in Western Australia on 30

June 2004 and became a public company on 26 May 2005. The Company is domiciled in Australia.

ENCOUNTER RESOURCES LIMITED

ANNUAL REPOR T 2016

1

L E T T E R F R O M T H E C H A I R M A N A N D M A N A G I N G D I R E C T O R

Dear Fellow Shareholder,

I am pleased to present the 2016 Annual Report for Encounter Resources Ltd ("Encounter"). A number of important developments have occurred over the last year in our expanding exploration portfolio in Western Australia.

This time a year ago, the Lookout Rocks copper project was a sound exploration concept with no prior exploration. It was essentially a blank sheet with a compelling structural address. Over the past year Lookout Rocks has advanced from an early stage, grassroots concept through to the successful intersection of zones of up to 1% Cu in disseminated sulphide mineralisation in our first diamond drill hole at the prospect.

Importantly, this copper-cobalt mineralisation is hosted by black, reduced carbonaceous sediments, located directly above an oxidised "red bed" stratigraphic unit - a stratigraphic position similar to that of many major copper deposits of the Zambian Copperbelt. This is the first time that this style of mineralisation has been identified within the project and, as such, has promising regional exploration implications.

Encounter has now amalgamated the Lookout Rocks and Fishhook Copper prospects. These two prospects combined contain an interpreted 50km of strike of the stratigraphic contact position that hosts the "first reductant" copper sulphide mineralisation intersected at Lookout Rocks. While continuing with the planned exploration, we are also actively pursuing a new partner to advance the combined Lookout Rocks/Fishhook prospect.

Our corporate strategy is to share exploration risk at appropriate points as this approach maximises exploration upside for shareholders while minimising financial demands upon them.

Drilling at the Millennium zinc prospect, completed in conjunction with our joint venture partner Hampton Hill Mining (ASX:HHM), continues to reveal the potential of this greenfield zinc discovery. The large scale mineral system discovered at Millennium is over 3km long and is depth extensive. The processes to produce high tenor zinc mineralisation have been established and multiple zinc mineralisation styles have been discovered. In essence the drilling completed to date has established the sort of footprint you would expect to find associated with a major zinc deposit. These sort of exploration opportunities are rare and there is a dearth of new quality zinc developments around the globe. Finding the best parts of the sizable zinc system discovered at Millennium is a key goal in the upcoming year.

ANNUAL REPOR T 2016

2

L E T T E R F R O M T H E C H A I R M A N A N D M A N A G I N G D I R E C T O R

In addition, Encounter continues to take advantage of our strategic and operational advantages in the Paterson region to build our quality portfolio. With this in mind, back in early 2014, we secured the Telfer West gold project. The Telfer

West tenement was recently granted and a review of historical exploration results has been illuminating. This review has identified a large, high quality, gold exploration project. The context of the opportunity is important:

  • Telfer West contains a dome of prospective stratigraphy similar to the host units at Telfer;

  • The Egg Prospect contains several areas of high grade gold mineralisation within a substantial volume of stockwork style gold mineralisation; and

  • Telfer West is sparsely drill tested, particularly at depths below 100 metres, with the most recent diamond drill program completed by Newmont in 1989.

Telfer West is an exciting new addition to the project portfolio in the Paterson region and is characteristic of the exploration opportunities that continue to be generated by the Encounter technical team. First drilling at Telfer West is scheduled to commence in November 2016.

Encounter remains one of the most dedicated and active greenfield explorers in Australia. We are focused on generating value for our shareholders through leading edge greenfield exploration for new Tier 1 mineral assets in favourable mining jurisdictions like Australia.

Encounter provides high quality access to large scale copper, zinc and gold exploration in a region that has demonstrated the capacity to produce major mineral deposits. We are encouraged by the recent increased focus on the Paterson region in WA. The renewed exploration activity in the region appears to be driven by the performance of the Telfer gold/copper mine; the recent acquisition of the Nifty copper mine; and expanded exploration efforts by a number of major multinational and junior companies.

Encounter is disciplined in its approach to capital management and we are steadfast in our commitment to systematic frontier exploration that can create enduring value for our shareholders. Our exploration plans remain well funded and, importantly, we have an extremely capable and experienced team that is dedicated to realising the vast potential of our project portfolio.

In closing, we would like to thank our employees, earn-in partners, suppliers and other business partners. We also would take this opportunity to thank our fellow shareholders for your ongoing support.

Yours sincerely

Paul Chapman

Chairman

Will Robinson

Managing Director

ENCOUNTER RESOURCES LIMITED