ENERGY METALS LIMITED AND ITS CONTROLLED ENTITY€¦ · energy metals limited and its controlled...

ENERGY METALS LIMITED

AND ITS CONTROLLED ENTITY

A. B. N. 6311 I 306533

AN NUAL FINANCIAL REPORT 2012

CORPORATE DETAILS

Directors

He, Zuyuan (Nori-executive Chaimian)Xiang, Weidong (Managing Director)Lindsay George Dudfield (Non-executive Director)Geoffrey Michael lones 010n-executive Director)Zhong, Yu (Non-executive Director)Jin, Yunf^i orlon-executive Director)Feng, Xinjian (Non-executive Director)

Company SecretaryLi, Xuekun

Registered OfficeGround Floor

10 Kings Park RoadWEST PERTH WA 6005

61893226904

61893215240Telephone:Facsimile:Email:Web:

Auditor

BDO Audit (WA) Ply Ltd38 Station StreetSUBIACO WA 6008

en ui

WWW ener

Share RegistrySecurity Transfer Registrars Ply Ltd770 Canning HighwayAPPLECROSS WA 6153

Telephone: 61893152333

Facsimile: 61893152233

ener metals net

In etals n I

Stock EXchange ListingThe Company's shares are listed by the Australian Securities EXchange Limited ("AsX") - Code EME.The home eXchange is Perlh.

Bankers

National Australia Bank Limited

100 SI Georges TerracePERTH WA 6000

SolicitorsMinter Ellison

Allendale Square77 St Georges TerracePERTH WA 6000

CONTENTS

Directors' Report

Remuneration Report

Corporation Governance Statement

Consolidated Financial Statements

Directors' Declaration

Auditors' Independence Declaration

Auditor's Report

4

8

13

19

49

50

51

3

DIRECTORS' REPORT

The Directors present tlleir repoit o11 the consolidated entity (referred to hereafter as the group) consisting of Energy MetalsLimited and the entity it controlled at tile end or during the year ended 31 December 2012

DIRECTORS

The following persons were directors of Energy Metals Limited durlng the whole of the financial year (or as disclosed) andup to 111e dale of tliis report:

He, Zuyuan orlon-executive Chainnan)Xiang, Weidong (Managing Dii'ector)Lindsay George Dudfield (Non-executive Director)Geoffrey Michael lones (Non-executive Directoi)ZnOng, Yu (Non-executive Director)Ii", Yunfei(Non-executive Dire. tor, appointed 16 July 2012)Peng, Xinjian (Nori-executive Director, appointed 16 July 2012)Zlieng, Xiaowei 010n-executive Director, resigned 16 July 2012)Cui, Bin (Finance Director, resigned 16 July 2012)

PRINCIPAL ACTIVITIES

During tile year tile principal continuing activity of the group was uranium exploration.

DIVIDENDS

No dividends nave been paid or declai'ed and no dividends nave been recoinmended by the Directoi's.

REVIEW OF OPERATIONS

Explo, 'ajio"

Exploration and development activities contintied on tile Bigrlyi and Ngalia Projects in the NomieiTi Termory. Work wasdesigned to increase the resource base by targeting extensions of tl, e known mineralisation within both projects.

Exploration activities were also conducted on various projects, including in Western Australia. Several 11igli pitoiity targetshave been idei, tmed in the 100% Enei'gy Metals tenements.

thiniii{!11 ridd^hg

111 December 2011 tile Company, througli its \vljolly owned subsidiary NT Energy Pty Ltd, eliteI'ed into all agreement topurchase 150,000 pounds of Naniral Ui'anIuin Concenti'ales from all independent Australian ui'am urn producer. 1/1 Janiiaiy2012 tlie Company also signed a sales agreement witli CONPC - Uraliiuin Resources CoiporatioiT Ltd ("CONPC - URC") tore-sell tilese wariiuin concentrates,

In Octobei' 2012 the above-mentioned Narui'al Uranium Concentrates antved in Cliina where they were immediately re-soldto CGNPC ~ ERC.

Full details oftlie Company's opei. ations during the year ai. e included witliin tile Review of Activities section of the AnnualReport.

4

OPERATING RESULTS FOR THE YEAR

The consolidated profit of the group for the year ended 31 December 2012 was $84,254 (31 December 2011: $374,408).

RinVlltW OF FINANCIAL CONDITIONS

The net assets of the gi'oup were $46,763,100 at 31 December 2012 (2011: $46,678,846).

Casli and assets utilised by the Company for the year Glided 31 December 2012 are consistent with tl, e Company's businessobjectives since listing on the Australian Stock Excliange on 9 September 2005.

MATTERS SUBSEQUENT To THE END OF THE FINANCIAL YEAR

Tl, ere has been 110 matter or circumstance arisen since 31 December 2012 that has significantly affected, o1' may significantlyaffect:

(a) the group's operations in future financial years, or(b) the results of those operations in future financial years, o1'(c) tile group's state of affairs in future financial years'

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

TlIe Directors are riot aware of any developments tliat might nave a significant effect on the operations of the group illsubseqtient financial years that are not already disclosed in tliis report

ENVIRONMENTAL REGULATION

The Company is subject to significant environmental regulation ill I'espect of its exploi'ation activities. Tenements in theNorthern Terntoiy and Western Australia ale grunted subject to adhei'ence to environmental conditions witli strict controls onclearing, including a proliibition on tlie use of meclTallized equipment or development witho11t tlie appi'oval of the I'elevantgoven, merit agencies and with reliabiliiatioii required on completion of exploration activities.

Eneigy Metals Limited conducts its exploration activities in an environmentally sensitive manner and 111e Company is notaware of any breacli of statutoiy environmental conditions or obligations.

The Dii'ectors nave considered compliance with 1/16 National Gleenhouse and Energy Reporting Act 2007 WITicli ^eqtiiiesentities to report annual greenhouse gas emissions and energy use. For the measurement year I January 2012 to 31 December2012 tile Diiectors nave assessed Inat111ere are 110 CLIrrentieportingiequiremeii!s, but may be required 10 do so in tile futtii'e.

5

INFORMATION ON DIRECTORS

Name

Mr He, Zuyuan

Director's Experience

Mr He 1101ds a Bachelor degree in Geology and an MBA from Tsinghua Non-ExecutiveUniversity in China and lias over 23 years' expel'ience in uranium exploration Chainnanand financial management. Mr He was pieviously the Chief Financial Officerand Vice President of Nanjing ZnOng Da Group for a period of 3 years'

Dr Xiang, Weidong

He is currently a director of the following affiliate Companies: Beijing Sino-Kaz Uranium Investment Company Limited; Semizbay-U LLP; and ChinaUruniuin Development Company Limited. Mr He was an Executive Dii'ectorof Extract Resources Pty Ltd (fomierly known as Extiact Resources Limited)froin Marelt 2012 to January 2013.Dr Xiang is a qualified geologist and 11as over 17 years' experience ill Managinggeology and uranium exploration. Dr Xiang holds a Doctor degree of DirectorExploration and Prospecting for Mineral Resources. He worked for CNNCBeijing Research Institution of Uraniuin Exploration for appioximatelytwelve years before Ile joined CGNPC-Uranium Resources Co, Ltd, asubsidiary of China Guangdong Nucleai. Power Holding Co. Ltd. , as a senior

Dr Xiang is a In ember of Nuclear Geology and Mineralexecutive.

Committee, ClTina Mining Association. Dr Xiang is a member of AUSIMMand act as director and ExCO member of Australian Ui'alituin Association

Ltd. Di. Xiang does 1101 hold directorship in any other Australian public

Mr Liiidsay DudfieldBSC

coin anies in the ast three ears

Mr Dudfield is a qualified geologist witli over 30 years' experience exploring Non"executivefor gold and base metals in AUSti'alia and overseas, including close Directorinvolvement with a number of greenfields discoveiies. Member' of tlieAUSIMM, SEG, A1G and GSA. He is currently the Managing Director ofJindalee Resources Ltd.

Mr Geoff lones

BEng F1EAust CPEng

SpecialRes onsibilities

Other public company directorships held by Mr Dudfield ova' the last threeJindalee Resources Limited current; A1cliemy Resourcesyears are:

Limited, froin November 2011 to GIIrrent, Extract Resources Ltd (currentlyknown as Extract Resources PI Ltd froin Marcli 2012 10 June 2012

Mr iones is a Fellow of the Institution of Engineei's, Australia, witli a Nori-ExecutiveBachelor of Engineering (Civil) degree, He 11as over 25 years' experience Directorcovering the areas of constiT. ICtion, engineering, In illei'al processing andproject development. Mr lones 11as been I'esponsible for the preparation offeasibility studies for gold and base In etals projects and 11as completednumerous project evaluations and due diligence 16views and 11as managed 1/1esuccessful developinent of projects botl, domestically and overseas.

Mr Jones 11as operated his own project management and engineeringconsultancy, inG Projects Pty Ltd, servicing the mining industry. In thiscapacity Mr Jones has completed works on gold and base linetal projects forAUSti'alian and overseas based mining groups. Mr iones is currentlyemployed witl, GR Engineei^rig Services Limited as the Chief OperatingOfficer.

Otl, er public company directorsllips Ileld by Mr lones over the last three yearsare:

Brumby Resources Ltd - (February 2006 - current)Matrix Metals Ltd - (Octobe, 2006 - January 2011)Azumah Resotirces Limited - (October 2009 - current)

6

Name

Mr Zhong, Yu

Ms Jin, Yunfei(appointed 16 July 2012)

Director's Experience

Mr ZnOng 11as over 30 years' experience in engineering and specialises ill Non-executiveresearcli and development of new engineering technology. Mr Zhong has a DirectorMaster degree of Management and does 1101 currently hold other directorshipsof public Australian companies in the past three years.

Dr Feng, Xinjian(appointed 16 July 2012)

Ms Jin is a qualified accountant with over 20 years' experience in finance and Non-executivecorporate governance. Ms Jin 11as a Master degree of Accounting. Ms Jin Directorwas a senior officer in State-owned Assets Supervision and AdministrationCoinmission of tlie State Council. Ms Jilt 11as been appointed the CliiefFinance Officer of CGNPC-URC since she joined 111e company in October2011. Ms Jin does not 1101d any directorsliips 111 o111er Australian public

DIRECTORS' INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY

coin antes in tlIe ast three ears

Dr Feng is a qualified engineer and has over 20 years' experience in geology Nori-executiveand uranium exploi'ation. Dr Feng holds a Doctor degree of Mineral DirectorResearclI and Exploration. He worked for Division of Geology in ChinaNational Nuclear Corporation for 15 years before he joined CGNPC-URC asa senior executive in 2007, Dr Feng is curieiiily the Cliief Engineer ofCGNPC-URC. Dr Peng does not hold any directorships in other Australian

The particulars of Directors' interest in shares and options are as at 1/1e date of 111is report.

He, ZuyuaiiXiang, Weido"gLindsay G DudfieldGeoff M lones

ZnOng, Yu*Jin, YunfeiFeng, Xiiijian

*: shares indiiectly Ileld tlii'ougli KangDe Investment Group. Mr ZnOng conti'o1s KangDe Investment Grotip by holding In o1'ethan 50% holding.

ublic coin anies in the ast three ears

MEETINGS OF DIRECTORS

TITe following table sets out tlie number of meetings of the Company's Directors Ileld during the year ended 31 December2012 andilieiiumbei's of Ineelings attended byeach Director.

SpecialRes onsibilities

He, ZuyuaiiXiang WeidongLindsay G DudfieldGeoff M lones

ZnOng, YuJin, YunfeiFeng, XinjianZheng XiaoweiCui, Bin

Ordinar Snares

As at 111e date of this repoit, 111e Group did notl, ave an Audit Coininittee of the Board of Directors. The Board considers thatdue to tlie Group's size, an audit committee's functions and I. esponsibilities can be adequately and efficiently discharged bytlie Board as a wliole, operating in accordance witlI the Group's mechanisms designed to ensure independentjudgement indecision making.

3,255,165

I9,472,773

O tions

Number Held Winilst

in Office

3

3

3

3

3

2

2

Nuniber Attended

7

3

3

3

3

3

o

o

2

Retirement, election and continuation in office of directors

Ms Jin, Yunfei was appointed a Nori-executive Director on 16 July 2012.

Dr Feng, Xinjian was appointed a Non-executive Director o11 16 July 2012.

Ms Zheng, Xiaowei resigned from Nori-executive Director on 16 July 2012,

Mr Cui, Bin resigned fioin Finance Director on 16 July 2012 and 11as remained as Chief Financial Officer

Mr Geoff lones and Mr YU ZnOng are the directors Tetirlng by rotation wito, being eligible, may offer himself for re-electionat Annual Geneial Meeting.

COMPANY SECRETARYINFORMATION

Ms Li, Xuekun, ACCA, ACIS, was appointed Company Secretary o11 15 June 2010. Ms Li has completed a Baclielor ofManagement. SIIe 11as over 10 years' experience in corporate finance and governance.

REMUNERATION REPORT (AUDITRD)

The infonnation provided jilthisiemunei'ation reportl, as been audited as required by section 308(3C) of the Coipointio"sAC! 2001.

Remuneration Policy

TITe reinunei'ation policy of the Group has been designed to align directors' objectives witlt SIIai'eholders and businessobjectives. The Board of Energy Metals Limited believes 1/1e remuneration policy to be appropi'iate and effective ill itsability 10 attract and retain the best executives and directoi's 10 run and Inariage the Group, as well as create goal congruencebetween directors, executives and shardtoldeis.

The Board's policy for deterIn initig tlie nature and amount of remuneration for Boai'd mein bel's of the Company is as follows:

All executives receive either consulting fees o1' a salary, pal't of which may be taken as superannuation, and from time to time,options. Options issued to directors are subject to approval by Shareholders, The Board reviews executive packagesannually by I'eference to the executive's performance and coinpai'able information froin indristiy sectors and o1/16r listedcoinpanies in siinilar industries. An Employee Snare Option Flail was adopted by tile Group following approval byshare1101deis at tile Group's Annual General Meeting Ileld on 24th November 2006.

Board In embers are allocated stiperannuatioii guarantee contributions as required by law, and do 1101 ^eceive any o1hei'retirement benefits. From Iiine to tinie, some individuals may clioose to saciifice tlteir salary or consulting fees to increasepayments towards supei'aimuation

All remuneration paid to directois and specified executives is valued at the cost to the Company and expensed. Options alevalued using tile Black-Scholes metliodology.

TITe Board's policy is to reinunerate non-executive directors at commercial market rates for compareble companies for tileirtime, coinmitmeiit and responsibilities. Independent external advice is songlit when required, Tlie maximum aggregateamount of fees that can be paid to non-executive directors is subject to approval by shareliolders at the Annual GeneralMeeting and is CUITently set at $200,000 per annum. Fees for non-executive directors are not linked to the performance of theGroup. Non-executive directors' leinuneration may also include all incentive portion consisting of options, subject toapproval by Shareliolders.

8

Group performance, shareholder wealth and directors and key executive remuneration

Tile policy, setting the tenns and conditions for the executive directors and specified executives, was developed and approvedby the Board and is considered appropriate for tile current exploi'ation PIiase of the Gi'oup's development. Einoluineiits ofDirectors are set by reference to payinents made by other coinpanies of similar size and industry, and by reference to tlieskills and experience of Directors. Fees paid to dii'ectors are not linked to tlie pertoiTnance of the Group. This policy maychange once the exploration phase is complete. At present the existing remuneration policy is not jinpacted by tlie Group'spertonnance including earnings and clianges in snareholder wealtlI (dividends, clianges in share price or returns of capital toshareholders).

The following table shows the snare pitce and the Inarketcapitalisation oftlie Company at 111e end of each periodin111e pastfour financial years' No dividends nave been paid dunng 111e year.

At 31 December 2012At 30 June 2009 At 30 June 2010 At 31 December 2010

$0.46 $0,245$079$0,515

$618MS60.3M S37.7MSI21.5M

Share Price

Market Capitalisation

Dividend

Directors and Executives (Key Management Personnel) EmolumentsTITe Group's policy for detenniniiig tlie nature and amount of Ginoluments of key management personnel is that Directors areto be paid by salaif es or consulting fees at commercial lates for' PIOfessional services perfoi'lined.

Details of the nature and amount of eacli element of the emoluments of eacli directoi' of Energy Metals Limited are set out inthe following tables.

Share-Post- %

basedcniployment remuneration

consistingpaymentOptionsStiper- of options

anITUatioii

$ VSNon-Executive Directors2012H. Zuyuai,2011

2012L. Dtidfield20112012G. lones

2011

2012Zli. Yu

2011

Jin. Yunfei 20122011

P. Xinjiaii 2012

2011

Zh. Xiaowei 2012

2011

Execiitive Directors

Snort-term benefits

CaslI Salary,D i recto rs

Consulting FeesFees

$ S

At 31 December 2011

$0.31

546.7M

25,00025,000

X. Weidong

22,93622,93625,00025,000I1,459

11,459

13,54221,414

C. Bin

Ke Officers

L, Xuekun

P. Dunbar

24,00052,500

2012

2011

2012

2011

200,000182,308168,942180,000

2012

2011

2012

2011

2,0642,064

Total

$

25,00025,00024,00052,50025,00025,00025,00025,00011,459

11,459

13,54221,414

53,04358,775

190,000189,808

17,10017,083

9

200,000182,308168,942180,000

53,04358,775

207,100206,891

Service AgreementsOn appointment to the Board, all non-executive directors enter into a service agreeinent with 111e Company in the fomi of aletter of appointment. TITe letter summarises the Board policies and tenns of appointment, including compensation relevantto the office of director. Reinuneratioi, and other tenns of employtnent for tlie Executive Director and other Senior Managersale also for'Inalised in service agreements as summarised below.

^QOn 23 December 2009 tile Company entered into an agreement (via a letter of appointment), appointing Mr He, Zuyuai, as aNori-Executive Chairinaii. Mi' He is entitled to directors fees of $25,000 (2011: $25,000) per annum.

^Dr Xiang was appointed a director on 8 December 2010 PUTSuant to the telTns and conditions of his elmployinent contractwith the Company whiclI 11as been extended until30 June 2013. Dr Xiang has been appointed the Managing Director since IJanuary 2011. His salary is $200,000 per a"num (2011: $200,000 per an"urn). The agreement ,nay be tenninated by eitlierpal^' on I montlI'S written notice

^:!Mr Dudfield 11as resigned from tlIe Managing Director since I January 2011 and Ile is CUIreiitly a Nori-executive Director.He is contracted via a Consultancy Agreeinent between the Company and lopaii Management Pty Ltd trading as WesteinGeological Services. The Coinpany pays Western Geological Services at a rate of $750/day (2011: $750/day) in return for MrDudfield's service. TITe agreement may be telmninated by either palty o11 I In on 111's written notice,

Geoff lones

011 29 August 2008 111e Company entered into all agreement (via a letter of appointment), appointing Mr Geoff lones as aNon-Executive Chairman. Mr lonesis entitled to directois fees of $25,000 (2011: $25,000) per annum.

Z^^!!0118 December 2010, the Company enter'ed into all agreement (via a letter of appointment), appointing Mi' Zhoiig, Yu as aNon-Executive Dii'ector. Mr ZnOiig is entitled to directors fees of $25,000 (2011: $25,000) per annuin.

Jilt Yunfei

On 16 July 2012 the Company entered into an agi'eelneiit (via a letter of appointment), appointing Ms Jin, Yunfei as a Non-Executive Director. Ms Jin is entitled to directors fees of $25,000 (2011: nil) per annuin.

^!!On 16 July 2012 the Company entei. ed into an agreement (via a letter of appointlnent), appointing Dr Feng, Xiiijiaii as a Non~Executive Dii'ector. Dr Feng is entitled to directors fees of $25,000 (2011: nil) per aimum.

Cui Bill

Mr Cui retired froin Finance Director on 16 July 2012 and has remained as Chief Financial Controller. PUTSuant to the tennsand conditions of his new employment coinmct willI 111e Company Mr Cui's salary is $155,000 as 11/6 Cliief Financial Officer(2011: $180,000 as Finance Dii'ectoi') per annum. Tlie agreement may be tenninated by either palty on I In onth's writtennotice.

Li Xuekun

Ms Li is the Company Secretary of Energy Metals Limited and is employed as a consultant. On I Mareli 2012, tile Companyhas entei. ed into a Professional Service Agreement witli Ms. U and pays at a rate of $105/hour in return for Iler professionalSGIvices. Tile agreement Inay be tenninated by either party o11 30 days notice or earlier ill the event of a default.

Paul Dunbar

Mr. Dunbar was appointed Exploration Manager on 12 July 2010 pursuaiit to tlie tenns and conditions of his elmployinentcontt'act with the Company witli a salaiy of $190,000 per annuin (2011: $190,000 per aimuin). Tile employinent contractInay be tenninated by either party on I month's wittten notice.

10

Options granted as part of remuneration

Options over shares in Energy Metals Limited are granted under the Energy Metals Employee Snare Option Plan.Participation in the plan and any vesting cviteria, are at tlIe Board's discretion and no individual has a contractual right topalticipate in tlie plan or to receive any guaranteed benefits. Any options issued to directors of tlIe Company are subject toshareholdei' approval and are not linked to Company financial performance.

Share-based compensation

No options over ordinary snares in the Company were provided as remuneration to each director of Energy Metals Limitedand seniorinanagers of the Company during the year (2011: Nil). No options were vested during the year (2011: Nil).

Securities Policy

The Company has implemented a policy o11 troding in the Company's secumies designed to ensure that all directors, seniormanagement and employees of tile Coinpany act ethical Iy and do not use confidential inside infomiation for personal gain.The policy states acceptable and unacceptable times for trading in Company secuiities and outlines tile responsibility ofdirectors, senior manageinent and einployees to ensure that trading coinplies willI the Coipoi'ations Act 2001, the AustralianSecurities Excliange (AsX) Listing Rules and Company Policy.

Ally transaction conducted by Directors willI regards to snares of the Company requires notification to the AsX. EachDirector 118s entered into all agreement to provide any SIIcli infoimatioii witli regards to Company dealings diiectly to tlieCompany Secretaiy promptly to allow tile Company to notify tlie AsX within 111e required reporting timerTames.

Shares provided on exercise of options

No ordinaly shares in tile Company were provided as a result of tile exercise of I'emuneratioii options to eaclt directoi' ofEnergy Metals Limited and senior managers of the Company during the yeai' (2011: Nil).

End of Remuneration Report (Amdited).

11

SHARES UNDER OPTION

There were no options granted during the year ended 31 December 2012.

SHARES ISSUED ON EXERCISE OPTIONS

There were no shales issued on exercise of options during the financial year and up to tl, e date of this report. No amounts areunpaid on any of the snares,

DIRECTORS AND OFFICERSINSURA. NCE

TITe Company has paid a premium to insure the directors and officers of the Company for the period 30/10/2012 to30/10/2013 against those liabilities for wliicli insurance is pennitted under section 199B of 111e Coinorations Act 2001.Details of 111e nature of the liabilities insured for and the amount of tlie PIEmiuin ale subject to a confidentiality clause underthe contract of insurance,

PROCEEDINGS ON BEHALF OF THE COMPANY

No person lias applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings o11 bellalfof tlie Company, or to intervene in any proceedings to whicli the Company is a party, for the pulpose of taking responsibilityon behalf oftlIe Company for all or palt oftllose proceedings.

No proceedings have been brought or intervened in o11 behalf of the Company witlt leave of tlie Court under section 237 of1/1e Coinorations Act 2001.

AUDITOR'SINDEPENDENCE DECLARATION

A copy of the auditor's independence deciaiation as requii'ed by section 307C of the Coinorations Act 2001 is included onpage 50 of this report.

NON-AUDIT SERVICES

During tlie year, the Company paid nil to 1/1e auditor in reluin for nori-audit SGI\, ice.

Tins report Ivlitcli includes the aceonipanying Corporate Governance State"lent is signed in accordance witli aresolution of tile Directors'

8111 day of March 2013, at Peru^, Western Australia

\ <;!;}-r^ :^;,MANG, WEIDONGManaging Director

12

Corporate Governance Statement

It is 111e responsibility of the Board of Directors of Enei'gy Metals Liinited to monitor 111e business affairs ofthe Company and to protect the lights and intelests of the shareholders. The Board believes that Inghstandards of corporate governance are an essential prerequisite for creating sustainable value forsnareholdeis. This statement summarises tile Company's main corporate governance policies and practicesin place tinnugliout the financial year ended 31 December 2012. Tile policies and piactices have aimed toensure the implementation of a strategic business plan and an integrated flamework of accountability overthe Company's resources, functions and assets.


CORPORATE GOVERNANCE STATEMENT

Tile Company's most significant goveimance policies are available o11 1/1e Company's websiteWWW. ener In etalsinet

Principal I: Lay solid foundations for management and oversignt

Tile Board is responsible for the overall Coinoi'ate Goveinance of 11/6 Company including the strategicdirection, establishing goals for management and momtoiing tlie achievement of these goals. Due to tliesize of the Board, all issues are considered by the full Board. Tile Board is responsible for' corporatestrategy, jinplementation of business plans, allocation of resources, approval of budgets, capitalexpenditure, financial reports and the adherence 10 Company policies.

TITe appointment of non-executive directors are formalised in accordance witli the requii. einents of tlteCoinorations Act 2001 and the Coinpany's constitution.

011 appointment to the Board, all non-executive directors enter into a service agreeineiit with the Companyin the fomi of a letter of appointment. The letter summarises 111e Board policies and tenns of appointment,inclLidiiig compensation relevant to 111e office of diiector. Remuneration and other tenns of employineiit forthe Executive Director and otliei' Senior Executives are formalised in service agreements or employmentagreements which are summarised in the Directors Report

Skills and experience of each directorare disclosed in tile Directoi's' Report. The Dii'ectors oftlieCompany ill office at 111e date of 111is statement are:

Name

He, Zuyuaii

Xiang, Weidong

Litidsay Dudfield

Geoffrey lones

ZnOng, Yu

Jin, Yunfei

Feng, Xinjian

!\. gg

47

Position and Period of Office Held

43

56

Nori-executive Director and Chair for 3 yeai. s

Managing Director for 2 years

Nori-executive Director foi' 2 years;Managing Director for 6 years

Nori-executive Director for 4 years

Non-executive Director for 2 years

Non-executive Director for I year

Non-executive Director for I year

The Board coinpiises of a nori-executive Chairman, five non-executive directors and one executivedirector. Tile Board believes 11ns structure is effective for tile current lange of duties of tile Board to beproperly dischaiged.

51

63

46

47

Tlie Company's Executive Director has the responsibility for guiding Inariagement in effective Iy carryingout tasks and achieving Company objectives. Tile Company's ChainnaiT is responsible for leadership andgovernance of 111e Board and ensuring its efficient organisation and conduct.

TlIe only publicly available copy of Inatters ^eseived for the Board is the Corporate Governance Statementin tl, e annual ^GPort

^s. ,e

Company Management

Resource Industry

Resource Industry

Engineei. ing & Project Managemeiit

Corporate Management

Financial Management

Resoui'ce Industry

13

The other senior executives of the Company are the, Chief Financial Officer, the Company Secretary and theExploration Manager. The Chief Financial Officer's responsibilities include financial management, budget andcost control, and reporting to the Board on various financial matters. Tlie Company Secretary's responsibilitiesinclude ensuring that the Company complies with its statutory obligations under any relevant laws andregulations, ensuring completion and 10dgment of statutory forms/returns and reporting under the lisiing rulesand other relevant legislation or regulation, arranging board meetings and assistance with other corporateadministration matters. The Exploration Manager's responsibilities include management of safety andenvironment systems, implement the Board's strategic planning of long term exploration goals and day to dayexploration activities


CORPORATE GOVERNANCE STATEMENT

The Executive Director or the Board reviews the performance of senior executives whose pertomiance isassessed against their perfonnance in tileir respective roles and responsibilities. The reviews are done at leastannually and more often when deemed necessary. The senior executives were reviewed dunno the 2012financial period in accordance with this procedure.

The only publicly available copy of matters reserved for senior executives is the Corporate GovernanceStatement in the annual report.

Principle 2: Structure the Board to add value

The AsX Corporate Governance Council's Principles and Recommendations (AsX Corporate Governance)recommends that a majority of the Board should be independent directors' The Board 11as adopted specificprinciples in relation to directors' independence. These state that when detennining independence, a directormust be a non-executive and the Board should consider wlietlier the director:

is a substantial shareholder of tlie conipany or an officer of, or otherwise associated directly with,a substantial snareholder of the company;is or 11as been Ginployed in an executive capacity by tlie company or any other group memberwithin three years before coiniiTencing to serve o11 the board;within the last three yearsltas been a principal of a material professional adviser or a materialconsultant to the company or ally other group member, or an employee materialIy associated willIthe service provided;is a material supplier or customer of the coinpany or any other group member, or all officer of orotherwise associated directly or indirectly with a material supplier or customer;has a material contractual relationship with the company or a controlled entity other than as adirector of the group;is free from any business or otlier relationship WITich could, or could reasonably be perceived to,materialIy interfere witli tlie director's independent exercise of theirjudgments.

Materiality for these purposes is determined on boili quantitative and qualitative bases. All aimount of over 5%of annual expenditure of tlie Company is considered material for these purposes. In addition, a transaction ofany amount or a relationship is deemed material if knowledge of it niay impact the shareliolders' understandingof the director's perfomiance.

Mr Geoffrey Michaellones is considered to be an independent director as he complies witli this definition.

The Company 11as not coniplied willT the AsX Corporate Governance Recommendation 2.1 and 2.2 that themajority of directors and the Chair be independent. However, all directors bring tlieir independentjudgment tomake board decisions and act as the best interests of shareholders. The Conipany is to maintain a mix ofdirectors on the board from different genders, age groups, etlmicity and cultural and professional backgroundswho have coinplenientary skills and experience.

The Board seeks to ensure that at any point in time, its membership represents an appropriate balance betweendirectors with experience and knowledge and directors with an external or fresli perspective, and the size of theboard is conducive to effective discussion and efficient decision making.

14

The AsX Corporate Governance Recommendation 2.4 suggest listed entities establislt a nomination committee.During the period ended 31 December 20 12, Energy Metals Limited did not have a separately establishednomination committee. However, responsibilities of the full Board include the duties and responsibilitiestypically delegated to sucli a committee and given the size and the Company's current stage of development, theBoard does not believe that any marked efficiencies or enhancements would be achieved by the creation of aseparate nomination coriumittee. When a new director appointment is to be made the remaining board nTembersseek a candidate that has relevant industry experience, is willing to serve on the Board and followingappointment that director stands for confinnation by snareholders at the next annual general meeting. The onlypublicly available policy for the nomination and appointment for directors is the corporate governance statementin the annual report.

ENERGY METALS LIMITEDCORPORATE GOVERNANCE STATEMENT

Due to the nature of the Colllpany's activities and small size of tile Company, the Company 11as not compliedwith the AsX Corporate Governance Recoinmendation 2.5 that the process for evaluating the pertonmance ofthe board, its committees and individual directors is developed and disdosed. However, shareholders are able toassess the pertomiance of the Board by tlie way they manage tlie Company and vote for or against their re-appointment at the annual general meeting.

The skills, experience and expertise relevant 10 the position held by each director is disclosed in the Directors'Report which fomis part of this report. Tl\e Directors Inay, in fulfilling their duties, obtain independentprofessional advice at tile Company's expense, however prior notification by the Director to the Board isrequired, At every Annual General Meeting one third of the Directors (except the Managing Director) niustretire and sit for re-election.

Principle 3: Proniote ethical and responsible decision-making

The Board is responsible for setting tlie tone of legal, ethical and moral conduct to ensure that the Company isconsidered reputable by the industry and other outside entities, This involves considering the impact of theCompany's decisions on the industry, colleagues and tile general community. The Code of Conduct adopted by111e Company requires that all eiilployees abide by tlie laws, regulations and business practices WITerever theCompany operates. The Board niaintains an approacli that preserves tlie integrity of any laws or regulationsunder WITich the Company operates, Tlie Company has also put in place various internal policies which provideinternal controls to ensure employees only act within the authority given to tliein by tile Board. This is to ensurethat the Board has responsibility for any Inaterial transactions and dealings witli outside parties, and that anylegal, environmental and social consequences of sucl} dealings will be properly considered before any action istaken.

The Company 11as a Trading Policy whicli outlines the restrictions, closed periods and processes required whendirectors and employee trade company securities. The Code and the Company's trading policy are discussedwith each new employee. Any transaction conducted by Directors witli regards to shares of the Companyrequires notification to the AsX. Eacli Director 11as entered into an agreement to provide any SUGli infomiationwith regards to Company dealings directly to tlie Company Secretary proinptly to allow the Company to notifythe AsX within the required reporting timeframes.

The Company has an Environmental Policy which requires that all employees comply with the environmentalregulations in force in the region in wliicli work is undertaken. The Company is committed to dealing fairly andequitably witli interested parties relating to environmental issues, SUGli as landholders, governmental agenciesand native title claimants.

The directors are satisfied tliat the Company has complied witli its policies on ethical standards.

The Company is committed to maintaining the Inghest standards of integrity and seeks to ensure that all itsactivities are undertaken witli efficiency, honesty and fairness. The Company also maintains a Ingli level oftransparency regarding its actions consistent with the need to Inaintain the confidentiality of commercial-in-confidence niaterial and market integrity.

A copy of the Company's Code of Conduct, Environmental and Share Trading policy is available on theConipany's website.

15

Due to its small size and small number of employees the Company has not complied witli Recommendation 3.2to develop a diversity policy. However, the Company values diversity and recognises the benefits it can bring tothe organisation's ability to achieve its goals. The Board has detennined that the composition of the currentBoard represents tile satisfactory mix of directors that have an appropriate range of qualifications and expertise,can understand and competently deal with current and emerging business issues.

The proportion of women within tlie whole organization, in senior executive positions and women on the Boardas at the date of this report are:


Number of women employees inthe whole organizationNumber of women in scniorexecutive OSitiOnS

Number of women on the Board

TITe Company 11as not complied with tlie AsX Corporate Governance Recommendation 3.2 and 3.3 thatnieasurable objectives for achieving gender diversity should be developed and disclosed. Due to the size of thecompany, the Board does not consider it practical to fon, Tally establisll specific targets for gender diversity attile nioment. However, every candidate suitably qualified for a position has an equal opportunity of appointmentregardless of gender, age, ethnicity or cultural background.

Principle 4: Safeguard integrity in financial reporting

The AsX Corporate Governance Guidance recommend listed entities establislt all audit committee. During theperiod ended 31 December 2012 Energy Metals Limited did not have a separately established audit committeeThe Board considers that due to the Company's size, an audit coinniittee's functions and responsibilities can beadequately and efficiently discliarged by tlie Board as a whole, operating in accordance with the Company'smechanisms designed to ensure independentjudgment in decision making. The Board as a whole meets with theCompany auditor prior to the final sign-off of the half yearly and final annual financial accounts

The Board considers and deals witli matters \vhicli would ordinarily be attended to by an audit committeeincluding:

monitoring the Company's performance against strategy;approving and monitoring all significant or major business transactions;designing and impleinenting an appropriate organisational structure;appointing and monitoring the conduct and perfonnance of management and personnel, and overseeingall remuneration, development and succession;approving and monitoring financial reporting and compliance;monitoring the principal risks and opportunities of the Conipany's business;ensuring appropriate risk management systems are established and reviewed;overseeing control and accountability systems; andreviewing and approving corporate governance systems.

The Managing Director is accountable to the Board for nianagement of the Company within autliority levelsapproved by the Board and is subject to the supervision of the Board. The Managing Director and the FinanceDirector are required to periodically state in writing to tlie Board that the Company's financial report presents atrue and fair view of the Company's financial condition and tliat results are reported in accordance witli relevantaccounting standards.

Number

5

2

Percentage23%

20%

14%

16

Extol?101 auditoi'

The Company's policy is to appoint external auditors who clearly demonstrate quality and independence. It isthe auditor's policy to rotate engagement partners on listed companies at least every five years,

The auditor is required to attend the Aimual General Meeting of Shareholders. The Chainnan will penniishareholders to ask questions about the conduct of the audit and tile preparation and content of the audit report,in accordance with section 250T of the Corporations Act 2001


Principle 5: Make Timely and balanced disclosure

The company 11as written policies and procedures on infonnation disclosure that focus on continuous disclosureof any infomTatioi\ concerning the Company that a reasonable person would expect to have a material effect onthe price of the company's securities. A summary of 11Tese policies and procedures is available on theCompany's website. To ensure it meets its continuous disclosure obligations, the Board has nominated theManaging Director and tlie Company Secretary as responsible for all disclosure matters. Their role is to collateand, wliere appropriate, disclose snare price sensitive infonnation.

In 111e Company's current stage of development, matters of crucial importance arise regularly. The ManagingDirector will discuss significant issues witli Board n, embers WITo jointly will Inake a decision on the tinielyrelease of factual and balanced infonnation concerning the Company's activities.

Presentations that are niade to analysts or investors are posted on the Company's website. If the presentationscontain infomtation tliat 11as not previously been announced to AsX that could have a material effect o11 theshare price, the presentation is released to the AsX before the presentation is made.

A copy of the Company's continuous disclosure policy is available on 11Te Company's website.

Principle 6: Respect tlie riglits of SIIareholders

The Board of Energy Metals Limited endeavors to ensure that shareliolders are infonned of all the activitiesaffecting the Conipany, TITe Company 11as publislied a con, inunications policy for promoting effectivecommunication witli shareholders o11 tlie Company's website. Infontiation is conveyed to shareholders via theannual report* quarterly reports and other announcements wliicli are delivered to the Australian Stock EXchangeand posted on the Company's website. Shareholders witll access to Ihe internet are encouraged to submit theiremail addresses to receive electronic copies of infon, Tation distributed by the Company. Hard copies of thisinfonnation are available on request.

The Board encourages the attendance and participation of snareliolders at tlie Nunual General Meeting andspecifically convened General Meetings by holding those meetings in a location accessible by a large nuniber ofshareholders.

The Board of Energy Metals Limited adopted a policy to promote effective communication with shareholders

A copy of the policy is available from tlie Company's website.

Principle 7: Recognise and Manage Risk

Taking and managing risk are central to business and building shareholder value. The Board is responsible forthe identification of significant areas of business risk, implementing procedures to manage such risks inTddeveloping policies regarding the establisliinent and maintenance of appropriate ethical standards to:

ensure compliance in legal, statutory and ethical matters;monitor tlie business environment, identify potential opportunities & risk areas therein; andmonitor systems established to ensure pronipt and appropriate responses to shareholders complaintsand enquities.

17

Tile Board meets on a regular basis and reviews and monitors Ihe parameters under which sucli risks will beInariaged. Tl, e Board 11as established a Risk Management Team ("RMT") wl, icli comprises the Managing Directorand Coinpany Secretary and any other senior executives. The RMT consider appropriate 10 oversee the dailymanagement of risk and make recommendations to the Board on risk management mattei. s. TITe RMT is not acommittee of the Board and tlie Board acknowledges tliat it is ultimately responsible for tlIe implementation of anypolicies, actions or decisions made by the RMT.

Tile Managing Director and Company Seci'etaiy are required 10 periodically report 10 111e Board that the Company11as a sound system of risk management, tlIat internal compliance and control systems are in place to ensure theimplementation of Board policies, and tliat those systems are opei. ating efficiently and effectiveIy in all materialaspects.


ANNUAL FINANCIAL REPORTFOR THE FINANCIAL YÊR ENDED 31 DECEMBER 2012

Tile Board also I'eceives a declaration pursuant to s295A of the Conyorations Act fi'o1n tile Chief Executive Officer(Managing Director) and the Chief Financial Officer prior to tl, e approval of financial statements

A copy of tlIe policy is available from tlie Company's website.

Principle 8: Rerunncrate fairly and responsibly

The Company 11as Gsmblis lied a separate Reinuneration Committee. The Reinuiieratioii Committee is cliaired by MrGeoff lones, tlie sole independent director of t!Ie Company. Mr He, Zuyuan and Mr Zhoitg, Yu are the In embers ofthe Remuneration Committee. Both Mr He and Mr ZnOng are the Non-executive Directors of the Company. TheCoinpany 11as not complied with Recommendation 8.2 as 111e Reinuneiatioii Committee consists of only oneindependent director. The Remuneration Committee's responsibilities include a review and recoininendatioii to theBoard o11 111e Company's 1'6muiieration policy, senior executives' rentunemtion and incentives, and 111e I'emunerationfâmework for directors. However, ultimate I'esponsibility for' tile Company's remuneration policy rests with the fullBoai'd.

Remuneration is currently in accordance witli tlIe general principles recommended by tile AsX, Inat is, non-executive directors receive a fixed fee for their services and do not receive performance based Iemuneration. Feesfor nori-executive directors are not linked to tile pelformance of tlte Company

Nori-executive directors' remuneration Inay also include an incentive portion consisting of options to subscribe forSIIares, subject to approval by Shareholders. The Company has not complied willI the AsX Coiporate GovernanceRecommendations ill this legard but considers tlie nature and quantum of remuneration of its non-executive directorsto be appropriate and reasonable for a Company of its size and 111e granting of options is a useful tool foi' attractingand retaining quality directors witliout diminisliing tlie Company's Gasli resoui'CGs.

All executives receive eitliei' consulting fees or a salary, palt of wliicli may be taken as superannuation, and fromtiine to time, options. Options issued to directors are subject to approval by Sharonolders. The Board I'eviewsexecutive packages annually by reference to the executives' perfoÎnarice and coinparable information from industrysectors and other listed companies in siinilar industries. There are no schemes for retirement benefits for lion-executive directors,

The Companyis required to disclosein its annual report details of Directors remuneration. A detailed explanation oftlie basis and quantum of Directors' reinuneration is set out in tlie Directors' Report.

18

Contents

ENERGY METALS LIMITEDANNUAL FINANCIAL REPORT

FOR THE FINANCIAL Y^A1^ ENDED 31 DECEMBER 2012

Financial StatementsConsolidated Statement of Coni rehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in EquityConsolidated Statement of Casli flowsNotes to the Consolidated Financial Statements

Directors' DeclarationAuditors' Inde endence Declaration

hide endent Auditors' Re o1t to the Members

These financial statements covertlie consolidated financial statements for 11/6 controlled entity consisting of Energy MetalsLimited and its subsidiary and its joint venture. The financial statements are presented in 111e AUSti'alian CUI'rency.

Energy Metals Limited is a company limited by snares, incoiporated and domiciled in Allstralia. Its ^egistered office andprincipal place of business is:

Energy Metals LimitedGround Floor, I O Kings Park RoadWest Perili WA 6005

A desctiptioiiofthe natureoftlie consolidated entity's operations andits principal activities is included mine review ofoperations and activities in the directors' report on pages 4 to I I are riot part of tl, ese financial stateIn Grits

The financial statements were authoiised for issue by tile dii'ectoi's on 28 Febiuaiy 2013. The directors nave ille power toamend and reissue the financial statements

Tlirougli the use of tlie internet, we nave ensured tliat our corporate reporting is timely and complete. All press releases,financial reports and o111er infonnation are available at our Investor Infonnation on our website: WWW. energymetals. net

Page

20

21

22

23

24

4950

51

19


CONSOLIDATED STATEMENT OF COMPREHENSIVEINCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012

Revenue from continuing operations

Cost of Sales

Depreciation expenses

Employee benefits expenses

Corporate and regulatory expenses

Office rental

Legal Advisory

Other adtninistrative expenses

Note

Profit before inconie tax

Income tax expense

Profit for tlie year

Total con, PIGhensiveincome for' the year

Income attribtitab!e to owners of Energy MetalsLimited

Consolidated

31 December 2012 31 December 2011

S$

3a

3b

9,468,289

(7,531,035)

005,954)

(795.1 16)

(38,258)

(239,537)

(93,134)

(581,001)

3c

Total comprehensive income fot' the year atin but ableto owners of Energy Metals Limited

Ean, ings per shale for profit atnibutable to theoldinaiy equity holders of the Coinpany:

Basic earnings per snare (cents per share)

Diluted earnings per share (cents per share)

3b

2,352,581

(85,330)

(792,703)

(43,561)

(229,710)

(128,789)

(698,080)

The above Consolidated Statement of Comprehensive Income should be lead in conjunction with the accompanying notes.

4

84,254

84,254

84,254

374,408

84,254

6

6

374,408

84,254

374,408

374,408

0.05

0.05

374,408

02

0.2

20

CURRENT ASSETS

ENERGY METALS LIMITEDCONSOLIDATED STATEMENT OF FINANCIAL POSITION

As AT 31 DECEMBER 2012

Cash and can11 equivalentsTenri depositTrade and other receivables

Total Current Assets

NON-CURRENT ASSETS

Receivables

Propelty, plant and equipmentExploration and evaluation expenditureTotal Non-Current Assets

TOTAL ASSETS

CURRENT LIABILITIES

Trade and other payablesPIOvisions

Total Cultent Liabilities

Note

Consolidated

31 December 2012 31 December 2011

S S

8

89

TOTAL LIABILITIES

NET ASSETS

EQUITYContrlbuted equityAccumulated losses

11,153,13210,134,685

1,840,851

9

10

11

Capital and reserves atnibutable to owners ofEnergy Metals Limited

23,128,668

TOTAL EQUITY

82,554564,654

25,025,482

4,578,43619,720,578

1,302,427

The above Consolidated Statement of Financial Position snOuld be read in conjunction with the accompanying notes.

12

13

25,672,690

25,601,441

48,801,358

165,380551,241

20,980,625

1,937,260100,998

2,038,258

21,697,246

14

47,298,687

2,038,258

46,763,100

562,55457,287

49,677,832(2,914,732)

619,841

46,763,100

619,841

46,678,846

46,763,100

49,677,832(2,998,986)

46,678,846

46,678,846

21

ENERGY Mr, TAI. ,S 1.1MITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012

Balance at I January 201 I

Total coinprehensive income for the yearShare-based payments

Balance at 31 December 2011

Total coinpi'ehensive income for the year

Balance at 31 December 2012

The above Consolidated Statement of Changes in Equity should be read ill conjunction witlI the accompanying notes,

Contrlbuted

equityS

Attributahle to owners of Einer

49,677,832

Reserves

$

49,677,832

2,419,100

Accumulated

losses$

49,677,832

Metals Limited

(2,419,100)

(5,792,494)

374,4082,419,100

Total

S

(2,998,986)

46,304,438

374,408

84,254

(2,914,732)

46,678,846

84,254

46,763,100

22

Cash flows from operating activitiesIncome received from customers

Payinents to suppliers and employeesChange of bank deposits as a securityIncome received froin Joint VentureInterest received

Grant and 1'6bate I'eceived


CONSOLIDATED STATEMENT OF CASHFLOWS

Net cash inflow from operating activities

Carli flows from investing activitiesPayinents for exploration, evaluation and development expenditurePayments for PI'opeity, plant and equipmentCllanges of terin deposits at bank

Net casliinnow/(outflow) from investing activities

Net Cash flows from financing activities

Net inclease/(deci'ease) ill cash and cash eqLiivalents

Casli and casliequivalents at the beginning of the financial year

Cansli and cash equivalents at tlie end of the financial year

Note 31 December 2012

$Inflows

(Outflows)

7,695,987(9,250,429)

(41 0,000)197,149

1,479,54249,752

Tile above Consolidated Statement of Casliflows should be read incoiijunction witli the accoinpanyiiig notes.

31 December 2011

S

5

Inflows

(Outflows)

(237,999,

(1,447,31 I )

232,4811,247,716

39,453

(2,653,830"19,367)9,585,893

6812695

72,339

5

(5,269,388)(226,597)

(19,720,578)

6,574,696

4,578,436

(25,216,563

11,153,132

(25,144,224)

29,722,660

4,578,436

23

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

TITe principal accounting policies adopted in tile preparation of these consolidated financial statements are set out below.These policies nave been consistently applied to all the years presented.

ENERGY METALS LIMITEDNOTES To THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 DECmMBER 2012

(a)

These general pulpose financial statements nave been prepared in accordance with Australian Accounting Standards, otlierantlioritative pronouncements of 111e Australian Accounting Standards Board, Urgent Issues Group Interpretations and theCoipo!atto, ?s AC! 2001.

Basis of Preparation

Coinpfta, ,ce with IFRSThe consolidated financial statements of the Energy Metals Limited group also coinply with In teniational FinancialReporting Standards (IFRS) as issued by tlie Intentational Accounting Standai. ds Board (IASB)

Hisjolted/ Cosi Conyeii/10, I

These financial statements have been prepared under the historical cost convention.

0'11^^oldccoi4!trillg EstimatesThe preparation of financial statements requires the use of certain ctitical accounting estimates. It also I'equires Inariagementto exeicise its judgement in the process of applying the group's accounting policies. Tile areas involving a 11iglier degree ofjudgement or complexity, or at'eas \vliere assumptions and estimates are significant to the financial stateIn Grits, are disclosedin note 18.

Reino\, at of Pal'e, 11Sepal'ate financial statements for Energy Metals Limited, as an individual entity, are 00 longer presented as a consequence ofa cliaiige to the Co, polarioits AC! 2001. Financial information for Energy Metals Limited as all individual entity is includedin note 27.

(b)

(41

Principles of Consolidation

Tile consolidated financial stateIn Gilts incoiporate the assets and liabilities of the subsidiary of Energy Metals Liinited("Company" or "pal'ent entity") as at 31 December 2012 and tile result of 1/1e subsidiary for' tile year tilen ended. Eiiei'gyMetals Limited and its subsidiary to genier are referred to in this financial report as the group or the consolidated entity.

SIIbsi'of^^, for

SIIbsidiaries are all entities over wliicli tile group 11as tile power to govern tlie financial and operating policies, generallyaccompanying a shareliolding of more than one'in If of the voting rights. TITe existence and effect of potential voting rightsthat are currently exei'cisable or conveitible are considered when assessing whether tlie group controls another entity.

Subsidiaries are fully consolidated fi'o1n tile date on whicli control is ti'ansfeired to the group. They are de-consolicated fromthe date that control ceases.

The acquisition Inetliod of accounting is used to account for business combinations by the group.

Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated.Unrealised losses are also eliminated unless the transaction provides evidence of the impairinent of the asset transfeiT. ed.Accounting policies of subsidiaries have been changed where necessary to ensure consistency witli tlie policies adopted bythe group.

Nori-controlling interest in the results and equity of subsidiaries are shown separately ill the consolidated statement ofcoinpieliensive income, statement of changes ill equity and statement of financial position I'espectively.

24

I.

(b)

SUMMARY OF SIGNIFICANT ACCOUNTING FOMCIES (CONTINUED)



10i, 11 Conii. oned Ope, tiffoJi

Principles of Consolidation (continued)

Tlie proportionate interests in the assets, liabilities and expenses of a joint venture activity nave been incorporated in thefinancial statements under tile appropriate Ileadiiigs. Details of 111ejoint venture are set outin note 26.

(c) Segment Reporting

Operating segments are reported in a manner consistent with 111e internal reporting provided to tile Board. Tile Board isresponsible for allocating resources and assessing pelforinance of the operating segments.

(d)

Revenue is meusui'ed at 11/6 fair value of tile consideration received or receivable.

Revenue Recognition

The group recognises I'evenue when the alliount of revenue can be reliably me asui'ed, it is PI'obable that future econoinicbenefits will flow to 111e entity and specific cineria nave been met for' eacli of the group's activities as desciibed below.

Revenue is recognised for tlIe major business activities as follows:

(j) Managei?rein FeeManagement fee froin joint ventui'e activities is measured at fair value of tile consideration received or IECeivable. Amountsdisclosed as revenue are net of I'etums, allowances, rebates and amounts collected o11 bellalfof tliii'd parties,

(11) Infer CS!Inco, meInterest revenue is recognised on a proportional basis taking into account the interest ^ates applicable to the financial assets.

Income Tax(e)

The income tax expense or revenue for tile perlod is the tax payable on the curient period's taxable incoine based on theapplicable income tax rate for eacli juiisdiction adjusted by changes in deferred tax assets and liabilities atin but able totemporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of thereporting peltod in the countries wliere the Company's subsidiary operates and generates taxable income. Managementpeltodically evaluates positions taken in tax letums wit!I respect to situations in wliicli applicable tax regulation is subject tointernretation. 11 establishes provisions where appropriate on the basis of amounts expected to be paid to the tax aui110nties.

Deferred income tax is provided in full, using the liability metliod, o11 tempoi'ary differences arising between 111e lax bases ofassets and liabilities and their carrying amounts in the consolidated financial statements. However, tlie dereiTed income lax isnot accounted for ifit anses froin initial recognition of an asset orliabilityin a titnsaction other than a business combinationthat at the time of the transaction affects neitlier accounting nor taxable profit nor loss. Deferred income tax is detenninedusing tax rates (and laws) that nave been enacted or substantially enacted by t116 end of the reporting period and are expectedto apply when the 161ated deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are I'ecognised for deductible temporaly differences and unused tax losses only if it is probable Inat futuretaxable amounts will be available to utilise 1110se temporary differences and losses.

25

I.

(e)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Deferred lax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases ofinvestments in controlled entities where the parent entity is able to control the timing of tlIe reversal of tile temporarydifferences and it is probable that the differences will not reverse in the foreseeable futui'e.

Income Tax (continued)



Deferred tax assets and liabilities are offset when there is a legally enforceable light to offset CUITent lax assets and liabilitiesand when the deferred tax balances relate to tlie same taxation authority. Current tax assets and tax liabilities are offset wherethe entity has a legally enforceable riglit to offset and intends either to settle on a net basis, or to realise the asset and settle theliability simultaneously.

CUITent and defeiTed tax is recognised in profit or loss, except to the extent that it relates to items recognised in othei'coinpreltensive income or directly in equity. In tliis case, tlie tax is also recognised in otlier comprehensive incoine or directlyin equity, respectively.

co

Leases in wlIicli a significant portion of the lisks and rewards of ownership are not nansferred 10 11/6 group as lessee areclassified as opei'ajing leases (note 20). Paynients made under operating leases (net of ally incentives received fi'om thelessor) are charged to profit or loss on a straight-line basis over tlie period of the lease

Leases

(g)

Assets are tested for impairment whenever events or clianges in circumstances indicate tltat the calTyiiig amount may not berecoverable. An impainnei, t loss is recognised for the amount by \vliicli tlie asset's carrying amount exceeds its I'ecoverableamount. The recoverable amount is 111e 11iglIer of an asset's fair value less costs to sell and value ill use. For tlIe purposes ofassessing jinpairmeiit, assets are grouped at tile lowest levels of WITicli there are separately identifiable cash inflows \vliicli arelargely independent of tlie cash inflows from other assets o1' groups of assets (casli-generating units), Non-financial assetsthat suffered an impaiiment are reviewed foi' possible reversal of the impainnent at the end of eac!I repoi'ting pel'iod.

Impainnent of Assets

(11) Cash and Casli Eqtiivalents

For the pulposes of the Statement of cashflows, cash and casli equivalents includes cash on hand, and deposits lidd at callwith financial institutions, other siloit-tenn, 11igli!y liquid investments witli on griml marurities of tillee montlis or less that arereadily convertible to known amounts of cash and \vlIicli are subject to an insignificant risk of changes in value.

(i)

Receivables are recognised initially at fair value and subsequently measured at am o11ised cost using tile effective interestmeniod, less provision for impainnent. Receivables are genei. ally due for settlement within 30 days.

Trade and Other Receivables

Collectability of receivables is reviewed on an ongoing basis. Debts wliich are known to be uncollectible are written off byreducing tile carrying amount directly. An allowance account (provision for impainnent of receivables) is used when there isobjective evidence Inat the group will riot be able to collect all amounts due according to the o11ginal terms of tile receivables.Significant financial difficulties of tlIe debtor, probability tliat tile debtoi' will enter bankruptcy or financial reorganisation,and default or delinquency in payments (In ore tliaii 30 days overdue) are considered indicators tliat the receivable is impaii'ed.The amount of tlie impairment allowance is tlie difference between 111e asset*s calTying amount and the present value ofestimated future casli flows, discounted at tile original effective interest rate. Cash flows relating to short-term receivablesare not discounted if the effect of discounting is immaterial,

26

I.

co Trade and Oilier Receivables (continued)

The amount of tlie impainnent loss is recognized in 111e statement of comprehensive income within otlier expenses. WITen areceivable for which an impairment allowance had been recognized be coines uncollectible in a subsequent period, it iswritten off against the allowance account. Subsequent recoveries of amounts previously whiten off are credited against otherexpenses in tile profit or loss,




O)

ClassificationTITe group classifies its financial assets in the following categoiies: loans and receivables and held-10-1naturity investIneiits,Tlie classification depends on the purpose for \vhicli tile investments were acquired. Manageinent deteimines theclassification of its investments at initial recognition and, in the case of assets classified as 1161d-to-maturity, re-evaluates thisdesignation at the end of eacli reporting period.

Investments and Other Financial Assets

Loans und Rec@11, abler(4)Loans and receivables are lion-dellvaiive financial assets willI fixed or deleitninable payments that ale not qLioted in all activemarket. They are included in current assets, except for 1110se willI maturities grater Inari 12 months after the reporting peltodWITicli ale classified as lion"current assets. Loans and receivables are included in trade and other receivables (note 9) and intile Statement of Financial Position.

fill Held-10 martiniy fill, es/,?lollsHeld~to-matutity investIn Grits ale non"derivative financial assets witl, fixed or detenninable payments and fixed maturitiestliat the group's management 11as the positive intention and ability to 1101d to maturlty. If the group were to sell other than allinsignificant amount of nerd-10-1nalurily financial assets are included in lion-current assets, except for 1/10se willI Inatuiitiesless than 12 months from the end of the reporting peltod, \vliiclIare classified as CUITent assets.

Recogiiii!bii dint Del'coogiii!10/1Regular purchases and sales of financial assets are I. ecognised on traded ate - the date on whicli tlie group coinmits toPUTcliase or sell the asset. Investments are initially I'ecogi, ised at fair value plus transaction costs for all financial assets 1101carried at fair value through profit or loss. Financial assets carried at fair value Ihrougli profit or loss are initially recognisedat fail' value and transaction costs are expensed ill profit or loss. Financial assets are derecognised WITen 111e rights to IECeivecash flows from the financial assets nave expired or liave been transferred and 111e grotip 11as 11'ansferred subsiantially all tilerisks and rewards of ownership.

SIIbseq!fall Meds!11'elite1/1Loans and receivables and Ileld-to-maturity investments are carried at am onised cost using tlie effective interest In Gillod.

Impa!i', lien/The group assesses at the end of Gaoli ^epochng period whether there is objective evidence that a financial asset or group offinancial assets is impaired. If there is evidence of impainnent for any of 111e group's financial assets carried at am o1tisedcost, the loss is lineasured as tlie difference between tile asset's carrying ainount and tlie present vaine of estimated future cashflows, excluding future credit losses that nave not been incurred. Tlie cash flows are discounted at the financial asset'soriginal effective interest rate. The loss is recognised ill profit or loss.

27

I.

(k)

SUMMARY OF SIGNIMCANT ACCOUNTING POLICIES (CONTINUED)

Plant and equipment is stated at litstorical cost less depreciation. Historical cost includes expenditure tliai is directlyatin hulable to tlte acquisition of the items

Plant and Equipment

ENERGY METALS 1.1MITED

NOTES To THE FINANCIAL STATEMENTS


Subsequent costs are included in the asset's carrying ainount or recognised as a separate asset, as appropriate, only when it isprobable that future economic benefits associated willI tile item will now to the group and the cost of tile item call bemeasured Tellably. The calTying amount of any component accounted for as a separate asset is derecognised when replaced,All other repairs and maintenance are charged to profit or loss during the reporting period in which they ai'e incuned

Depreciation is calculated using the diminishing value and prime cost methods and is brought to account over the estimatedeconomic lives of all property, plant and equipment. The rates used are based on the useful life of the assets and I'ange frotnI O% to 40%.

TITe assets' residual values and useful lives are reviewed* and adjusted if appropriate, at tile end of eacli reporting period.

An asset's canying amount is written down immediately to its recovei. able ainouiit if tlie asset's carrying amount is greaterthan its estimated recoverable amount (note I(g)).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit orloss.

(1) Exploration and Evaluation Expenditure

The Company's policy with respect 10 exploration and evaluation expenditure is to use 111e area of in tel'est method. Underthis method exploration and evaluation expenditure is cariied forward on the following basis:

i) Each at'ea of interest is considered sepal'ately when deciding whetlter, and to what extent, to carry forward or writeoff exploration and evaluation costs.

it) Exploration and evaluation expenditure related to an area of interest is camed forward provided tliat Iigltts totenure of the area of interest are cultent and that one of the following conditionsis met:

suclt evaluation costs ale expected to be recouped tlirouglisuccessful developineiit and exploitation of thearea of interest or alteimiatively, by its sale; or

exploration and'or evaluation activities in the area of interest have not yet reached a stage which pennits areasonable assessment of tlie existence or otlierwise of economical Iy I'ecovei'able reserves and active andsignificant opei'ations in I'd ation to 111e alea are continuing.

Exploration and evaluation costs accumulated in respect of eacli particular area of interest include only net direct expenditure.

On)

The Company has an interest ill a joint venture that is a jointly controlled operation. A joint venture is a contractualarrangement whereby two or niore parties undertake an economic activity that is subject to joint control. The Companyrecognises its interest in 111e jointly controlled operation by recogiiising the assets tliat it controls and tile liabilities that itincurs. The Company also recognises 111e expenses tliat it incurs and its share of the income that it earns froin lite sale ofgoods or seivices by the jointly controlled operation.

Interest in a Jointly Controlled Entity

28

I.

(n)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINULD)

These ainounts êpreseiii liabilities for goods and services provided to 111e group prior to tile end of financial year wliicli aleunpaid. Tlie amounts are unsecured and are usually paid within 30 days of recognition.

Trade and Other Payables


NOTES To THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMB^R 2012

(0)

(41 Shoji-/elm 06/1^,!!ionsLiabilities for wages and salaries, stiperannuation, including nonmonetary benefits, annual leave expected to be settledwithin 12 months after the end of the period in whicli tlie employees render tlie related service are recognised in respect ofeinployees' services up to tlie end of the reporting period and are measured at tile amounts expected to be paid wlIen tileliabilities are settled. The liability for annual leave is recognised in tile provision for employee benefits. All otlier shoit-termeinployee benefit obligations are presented as payables.

Employee Benefits

flu 01he, ' Long-lain BMP/0), ee Bendi! Obj!ûnoiTsTITe liability for long SGIviceleave and annual leave \vhicllis riot expected to be settled within 12 montlis after the end of tlieperiod in wl, iclI the employees render the related service is recognised in the provision for employee benefits and measuredas tlie present value of expected future payinents to be Inadein respect of services provided by employees up to 111e end of thereporting perlod using 111e projected unit ci'edit method. Consideration is given to expected fLiture wage and salaiy levels,experience of employee departures and periods of SGI\, ice. Expected future paytnents are discounted using market yields atthe end of 111e reporting pel'iod on national goveniment bonds with tenns to maturity and CUITeiicy tliat Inatch, as closely aspossible, 111e estiinated future casli oLimows.

(1141 Shin'e-based PaymentsShare-based compensation benefits are provided to employees via 111e Energy Metals Limited Employee Option Plan.Infoimatioiii'elating10 tilese sclleines is set outin note 15.

Tl, e fair value of options gianted under the Energy Metals Liimited Ei, IPIoyee Option Plan is recognised as all employeebenefits expense witli a corresponding increase in equity. Tlie total amount to be expensed is deterniined by reference to thefair value of 111e options grunted, whicli includes ally market pelforrnance conditions but excludes tlie impact of ally serviceand lion-market performance vesting conditions and tile impact of any non-vesting conditions.

Nori-market vestiiig conditions are included ill assumptions about the rillinber of options tliat are expected to vest. The totalexpense is recognised over the vesting period, WITicliis the period over wliicli all of tile specified vesting conditions are to besatisfied. At 111e Gild of each penod, tlie entity revises its estimates of tile number of options that are expected to vest basedon tile nomnarketing vesting conditions, It êcognises tlie impact of the revision to original estimates, if ally, in profit o1loss, willI a con'esponding adjustineiit to equity.

(P)

Ordinary shares are classified as equity.

Contributed Equity

Increinenta! costs directly attribLitable to the issue of new snares or options are shown in equity as a deduction, net of tax,froin the proceeds.

29

I.

(q) Earnings Per Share

(, Basic Eru', Tings Pei' SlimeBasic earnings per snare is detennined by dividing

. the profit atin butable to owners of the Company, excluding any costs of servicing equity other tliaii ordinaly shares

. By t116 weighted average number of oldinary shares outstanding during tile financial year (note 6).



NOTES To THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBBR 2012

flu Dinned Eru7ii, ,gs Pel. SlimeDiluted earnings per' share adjusts tlie figures used in the determination of basic earnings per share to take into account:

. tile after income tax effect of interest and otlier financing costs associated with dilutive potential ordinary snares, and

. the weighted average ITUinber of additional ordinary snares Inat would have been outstanding assiiining theconvei'sioii of all dilutive potential ordinary shares.

to

Revenues, expenses and assets are I'ecognised net of the amount of associated GST, unless the GST incurred is notrecoverable from tlie taxation authority. In 111is caseitis recognised as partofthe cost of acquisition of the asset or as part ofthe expense.

Goods and Services Tax (GST)

Receivables and payables are stated inclusive of the amount of GST receivable or payable. Tlie net ainouiit of GSTrecovei'able from, or payable to, tile taxation aut1101'ity is included witlI other I'eceivables or payables 111 the statement offinancial position.

Cash flows are presented on a gross basis. The GST components of casli flows arising front investing or financing activitieswhicli are recoverable from, o1' payable to the taxation aut110nty, are presented as opeiating GaslI flows.

(s)

Certain new accounting standards and interpretations nave been publislied that are 1101 mandatory for 31 December 2012reporting periods. Tlie group's assessment of tile impact of 111ese new standards and internretations is set out below.

New Accounting Standards and Internretations

MSB 9 FinalICitt/ Instr'!, merits owl MSB2009 -1/4/118820/0 -7 Amendiiteit/s to AMI'anali ACc0!1/11/11g Slant/o1'(/s miring'01/1 ArtsB 9 (of eelii, elmJ, I I Inn!Idly 201.5, I

riasB 9 Financial Iris!!'!linents amends the requirements for classification and Ineasurement of financial assets. Theavailable-for-sale and Ileld-to-maturity categories of financial assets in AASB 1391iave been eliminated. It I'equires thatgains or losses on financial liabilities measured at fair value are recognised in profit orloss, except that tile effects of changesin the liability's credit risk are recognised in other comprehensive income.

Adoption of AASB 9 is only mandatory for the year ending 31 December 2015, The Company 11as not yet made anassessment of 1/1e impact of tilese aimendments.

30

I.

(s)


AsB 10 Coilsolid"fed Findncia! Sidle, "Gilts @111i, ,tt/, epoit!'"gpe, 10ds COM1iie, Icing o11 o1' tyre, '11,171,017 2013)

New Accounting Standards and Interpretations (Continued)



FOR THE FINANCIAL YEAR ENDED 31 DECrsMBER 2012

In August 2011 the MSB issued AsBIO - Consolidoied Filial^cia! Stolenie, IIS. The standard introduces a single 'controlmodel' for all entities, including special purpose entities (SPEs), whereby all of the following conditions must be presentpower over investee (whether or not power used ill practice), expostire, or rights, to variable I'etuins from investee, and abilityto use power over investee to affect tlie entity's returns froin investee.

When this standai'd is first adopted foi' the year ended 31 December 2013,111ere will be no impact on transactions andbalances recognised in 111e financial statements because the Company does not have any special pulpose entities

lisB 11 Joint 1/11uJige, "oils tofui!lull'epoiti, Igpei'10th commencing o11 o1' 41ie, ' flannely 2013)

In August 2011 the AASB issued AsBll - Jin'1/1 in. lunge, "elm. Joint arrangements will be classified as either 'jointoperations' (where parties witli joint control nave rights to asseis and obligations for liabilities) or 'joint ventures' (wliereparties with joint control nave rights to the net assets of the arrangement). Joint arrangements SIructui'ed as a separate veiliclewill generally be treated as joint ventures and accounted for using the equity method (proportionate consolidation 110 longerallowed). However, where terms of tile contracttial aiTangement, or oilier facts and circuinstances indicate that the partieshave 1'1ghts to assets and obligations for liabilities oftlie aiTangement, Tanner than riglits to net assets, tlie arrangement will betreated as a joint operation and joint venture parties will account for' 111e assets, liabilities, revenues and expenses inaccordance with tlie contract

Tlie Company 11as all assessment on its current Bigi'lyi Joint Venture and concluded it silould be classified as jointlyoperations. Under 111is assessineiit, when tliis standard is first adopted for the year ended 31 Deceinber 2013, there will be noimpact on transactions and balances recogiiised in tlie financial statements because tlie accounting niethod will be the same asthe current one'

MSB 12 Disclos!Ile offfiler'esis ill o1hei' elf/tries fulmaro/ ,'qpo!. ringpe, '10th coin, ?lending on o1. <4/1e, 11,111taiy 2013)

In August 2011, the AASB issued AllsB/2 - Dirc/OSI!I'e of tille!'es! ill of he, , e, ?!flies. The standard coinbines existingdisclosures from MSB 127 Consolic/died and Send, rite Flito"a'ul Slaterrents, AASB 1281/11, @511iieit/s ill Associates andNA. SB 131 hire, 'errs in Joint Palmi, es. TlIe standard introduces new disclosure requirements for interests in associates andjoint arrangements, as well as new requireinents for' unconsolidated structured entities.

As this is a disclosure standard only, there will be 110 impact on ainounts recognised in 11/6 financial statements. However,additional disclosui'es will be requii'ed for jiltei'ests in associates and joint aiTangements, as well as for unconsolidatedstructured entities,

MSB 13Foii, value ,"east, ,Elitent ( annual, 'epoiti, Igpe, '!'ods commencing o11 o1. atei. null"dry 2013)

In September 2011,11/6 NA. SB issued AASB 13 - Fair value InGasuremeitt. Additional disclosures required for. itemsIneasured at fair valueinihe statelinent of financial position, as well as items merely disclosed at fair valtie in the notes to tliefinancial statements. Extensive additional disclosure requireineiits for items measured at fair value that are 'level 3'valuations in the fair value hiet'archy Inat are 1101 financial instruments, e. g. land and buildings, investment properties etc.

When tliis standard is adopted for tlie first time on I January 2013, additional disclosures will be requii. ed about fair values.

31

I.

(s)

SUMMARY OF SIGNIFICANT ACCOUNTING FOUCIES (CONTINUED)

MSB 119 - Employee Beltqfiir('11/1/1a/1'<porting periods commencing o11 o1' byie, ' 110,711a, y 2013)

New Accounting Standards and Interpretations (Continued)



FOR THE FINANCIAL YEAR ENDlED 31 DECEMBER 2012

Employee benefits expected to be settled (as opposed to due to settled under current standard) \vliolly within 12 InontlIs aftertile end of 11/6 reporting period are snort-term benefits, and therefore 1101 discounted when calculating leave liabilities. Annualleave not expected to be used \vliolly within 12 In onIlls of Grid of reporting period will in future be discounted whencalculating leave liability.

When 111is standard is first adopted for 31 December 2013 year Gild, annual leave liabilities will be recalculated on I Januaiy2012 aslong-terin benefits because they are not expected to be settled wholly witlTin 121nonths after 111e end of the reportingperiod. This will result in a reduction of the annual leave liabilities recognised o11 I January 2012, and a correspondingincrease in letained earnings at that dale.

MSB 2011-4lime, ?of I"eii/s to 4,131iufi",? Accounting Slurida, 'ofs 10 Reino\, e flitlii, Id!In/ Key Maimge, ,fell/ Pel'solute/ Disc/OSm'eReqi, tie, "eii!(, mill, at ,'epo, 'tingpe, 'tods coi?linenci', Ig oil o1' ate, ' nanumy 2013)

Aimendmeiiis to remove individual key Inariagemeiit pel'sonnel (KMP) disclosure requirements froin MSB 124 10 eliminateduplicated information I'equired under the Corporation Act 2001

When tliis standard is first adopted for tlie year ending 31 December 2013 the Company will show leduced disclosures underKey Management Personnel note to the financial statements.

MSB 2012-9 Amendment 10 AllsB/048 a, 'ismg/join 11/@ 17nhdiuitJ01 @141!SIIu/toll flare, 77, 'eru!10, I 1039 ( annual icyoi'!i, Igpel'10th commencing o11 o1' diei' ninthdiy 2013)

HASB 2012 - 9 deletes Australian Interpretation 1039 Substantive Enactment of Major Tax Bills In Australia from the list ofmandatory Australian Internretations to be applied by entities piepaiing financial statelinents under the Corporations Act2001 or otlier general pulpose financial statements.

TITere will be no impact on first-time adoption of tliis amendment as the lentityj does not account for proposed cltaitges intaxation legislation until the relevant Bill 11as passed 111rougli botliHouses of Parliament, wliicli is consistent with tile viewsexpressed by tlie Australian Accounting Standaids Board in their agenda decision of Decembei. 2012.

fillsB 2011-9 Amendments to HIMi'attain liceo!tilling Sta, 1,101'ds - PI'eraiia!toll of lienis of 01/1ei' Coinpiehe, 1st\, e liteome(mill!, alleyo, t!>Igpe, to ofs cowli"end, Ig o11 o1' diei' I July 2012)

itrtSB 2011 - 9 makes amendments to align tlie presentation of items of otlier comprehensive income (00) with Us GAAP.

Various name changes of statements in AASB 101 as follows:

. I statement of comprehensive income ~ to be referred to as 'statement of profit or loss and other comprehensive income'

. 2 statements ~ to be referred to as 'statement of profit orloss' and 'statement of comprehensive income'.

OCl items must be grouped to getlier into two sections: those that could subsequently be reclassified into profit o1' loss andthose that cannot.

32

2, SEGMENTINFORMATION

Management has determined that the Group has three reportable segments, being uranium exploration, corporate and uraniumtrading. As 111e Group is focused on uranium exploration, the Board periodically moultoi's the Gt'oup based on actual versusbudgeted exploration expenditui. e incurred by area of interest, The uranium tiadiiig is a new segment from 2011. Tliisinternal reporting fromework is most relevant to assist tile Board witli making decisions regarding the Group and its ongoingoperation activities.

Tile segment infoiTnation provided to the Board for the reportable segments for' the financial year ended 31 December 2012and 31 December 2011 are as follows:


NOTES To THE FINANCIAL STATmMENTs


31 Deceniber 2012:

Total segment revenue

Segment result

Depreciation

Total seginent assetsTotal assets includes:

Additions to lion-current assets (othertlian financial assets)

Total segment liabilities

Uranium

Exploration$

31 December 2011:

Total segment revenue

Segment result

Depi'eciation

Total segment assetsTotal assets includes:

Additions to non-current assets (otherthan financial assets)

Total seginent liabilities

213,200

Coinorate

$

137,313

85,123

26,405,644

Uraniuin

TradingS

1,281,583

4,164,225

(1,250,519)

(92,727)

20,831

13,538,922

7,973,506

677,396

Total

39,668

587,675

49,659

22,451,280

(274,843)

$

8,856,792

1,675,185

9,468,289

5,491,290

(476,728)

(135,316)

84,254

612,896)

35,671

24,847,307

105,954

48,801,358

4,164,225

(2,038,258)

(77,951)

I 1,682

043,113)

2,352,581

100

374,408

85,330

47,298,687

33

5,502,972

(619,841)

3. REVENUES AND EXPENSES

(a) Revenue from continuing operations includestlie following revenue items:

Interest income

Joint Venture revenue receivedFuel rebate

Revenue froin sales

ENERGY METALS LIMn'EDNOTruS To THE FINANCIAL STATEMENTS


(b) Profit includes tlie following specific expenses:Consulting fee*Depreciation

*: Consulting fee is included in Other Administrative Expenses.

(c) Employee benefit expenses:Wages & superan rillationDirectors fees

Others

4.

31 December2012

S

TAXATION

The reconciliation between tax expense and 11/6 PIOduct ofaccounting loss before income tax innliiplied by tile Company'sapplicable income tax rate is as follows:Income before income tax

Consolidated

Inconie tax expense (benefit) @ 309'0Tax effect of am o11nts whicli are not deductible in calculatingtaxable income:

Nori-deductible expensesNori-Assessable revenues

Timing differences not recognisedDeferred tax assets relating to tax losses not recognisedIncome tax expenses/benefit reported in tlie income statement

31 December2011

S

1,281,584197,149

16,0517,973,5059,468,289

I 10,068105,954

1,675,185604,24273,154

Tlie franking account balance at period end was Srii1(2010: Sriil).Defen. ed tax assets and liabilities not recognised relate to tlie following:

216,022

Deferred tax assetsTax losses

Other temporary differencesDeferred tax liabilities

Otlier temporary differencesNet deferred tax assets not recognised

2,352,581

488,063109,394197,659

143,78285,330

229,112

795,116

647,18094,34551,178

792,703

84,254

25,276

3,213

(1,186,392)1,157,903

374,408

I 12,322

6,495

(1,697,572)1,578,755

8,799,51358,709

(7,563,004)

34

1,295,219

7,378,55217,186

(6,422,428)973,310

4. TAXATION (CONTINUED)

Net deferTed tax assets nave not been brought to account as it is riot probable witljin the jinmediate future that tax profitswill be available against whicli deductible temporary differences and tax losses can be utilised,

The use of losses is dependent on the Company satisfying the required cincha willIin themcome Tax Assessment Act 1936& 1997 at the time the losses are incurred and used. The provisions of the Actsinay change ortlie businessinay alter (pastthe change of ownersliip) and as a result tlie Company's losses Inay be lost in tile future.

ENERGY METALS LIMITEDNOTES To THm FINANCIAL STATEMENTS

FOR THE FINANCIAL ERAl^ ENDED 31 DECEMBER 2012

Tax Consolidation

Energy Metals Limited and its 100% owned Australian resident subsidiary, NT Energy Pty Ltd nave implemented the taxconsolidation legislation.

5. RECONCILIATION OF PROFIT AFTER INCOME TAX To NET CASH INFLOW FROM OPERATINGACTIVITIES

Profit after income tax

Depi'eciationAnnual leave PIOvisionCliange in operating assets and liabilities dunng the financialperiod

(Increase) in bank deposit as a security(Increase) ill trade and otlier I'eceivables(Decrease)/increase in trade and oilier payables

Net casli inflow ft'om operating activities

Reconciliation of caslI balance comprises:Casli and casli equivalents*

*: Casli at bank earns interest at 4.52 % (2011: 3.18%). Casli on tenn deposit are denominated in As witli an averagematurity of 135 days (2011: 62 days) and effective interest rate of between 4.359, 'n to 5%.

6. EARNINGS PER SHARE

Profit used in calculation of basic and diluted earnings persnare

31 December

2012

S

Consolidated

Basic earnings per snare (cents per snare)

Diluted earnings per share (cents per share)

84,254105,95443,711

31 December

2011

$

Weighted average number of ordinary snares used as 111edenoininator in calculating basic earnings per share.

(410,000)(45,596)(16,322)

374,40885,33038,285

237,999

11,563,132

(934,893)509,209

11,563,132

72,339

4,578,436

4,578,436

84,254

0.05

0.05

2012

Number

374,408

35

153,767,762

0.2

0.2

2011

Number

153,767,762

7, DIVIDENDS

There were 110 dividends paid or declared by the Company during the year.

8.



CASH AND CASH EQUIVALENTS

CaslI and casli equivalentsShare of Joint Venture cash

Term deposits

As at 31 December 2012, the Companyltad approximately total $10.7 million tenn deposits witli Inaturities from 4 months to5In ontlis in various financial situations Gaining interest income at an average rate of 4.87%.

The Company's exposure 10 interest rate risk is disclosed in Note 17.

9. TRADE AND OTHER RECEIVABLES

CURRENTGST receivableTi'ade receivables

Bank deposit as a secLitityOther receivables

Consolidated

31 December 31 December2012 2011

S S

Tradei'eceivables are denominatedin Australian dollai's and are interest free witlisettlement telms of between 7 and 30 days.Other receivables are mainly interest I'eceivables. As at 31 December 2012 there were current trade receivables totalling$976,592 wliiclI did not colltain impaired assets and were 1101 past due. All these amounts were received in total subsequentto tlie period-end

10,687,157465,975

11,153,132

Due to tlte short-tenn nature of receivables their carrying value is assumed to be their fair value, Please refer to Note 17 forinfonnation on credit risk.

10,134,685

NON- CURRENTOther receivables

3,979,814598,622

4,578,436

As at 31 December 2012 there were nori-current receivables totalling $82,554 wliich included an environineiit secui. ity bondof $82,554, No non-current receivables are impaired.

19,720,578

187,851976,59241 0,000266,408

1,840,851

210,003310,865

781,5591,302,427

82,55482,554

165,380165,380

36

10. NON-CURRENT ASSETS " PROPERTY, PLANT AND EQUIPMENT

ENERGY Mrs'rALS LIMITEDNOTES To THE FINANCIAL STATEMENTS


Plant and equipineiit - at costLess accumulated depreciation

Motor vehicle - at cost

Less accumulated depreciation

Total

Reconciliation of tlie caltyiiig amount of property, plantand equipment:

Caltying amount at I January 2012Additions

DisposalDepreciation expensesCarrying ainount at 31 Deceinber2012

Consolidated31 December 31 December

2012 2011

$ $

CalTying amount at I January 2011Additions

DisposalDepreciation expensesCallying ainount at 31 December 20I I

821,663094,088)427,575

11.

200,807(63,728)

NON-CURRENT ASSETS - EXPLORATION AND EVALUATION EXPENDITURE

742,42701 0,861 )

137,079

431,566

564,654

Plant &

equipment$

Balance at beginning of the yearExploiation expenditureincurTedBalance at the end of tile year

160,675(41,000)I 19,675

431,56679,236

Tile balance carried forward represents projects in tile exploration and evaluation phase. Ultimate ^ecoupmeni of explorationexpenditure carried forward is dependent on successful developinent and commercial exploitation, or alternatively, sale ofrespective areas.

Motor vehicle

S

551,241

(83,227)427,575

12.

I I 9,67540,131

334,085169,112

Trade payablesOther payables

CURRENT LIABILITIES - TRADE AND OTHER PAYABLES

Total

S

(22,727)137,079

71631

431,566

Trade and other payables are non-interest bearing and are nonnally settled on 30 day tenns.37

551,241119,367

75,88864,473(6,987)

Consolidated

31 December 31 Deceniber2012 2011

S $

15,711,23720,980,6255,269,3884,044,857

(105,954)

(13,699

564,654

119,675

409,973233,585

(6,987)(85,330)

25,025,482

551,241

20,980,625

1,763,415173,845

1,937,260

446,206116,348562,554

13. PROVISIONS

ENERGY MrTALS LIMITEDNOTES To THE FINANCIAL STATEMENTS


Employee benefits

CalTying amount at SIait of yearAddition for the yearUtilised provisions recognisedCarrying amount at end of year

The current provision for employee benefits represents accrued annual leave. Tlie provision is presented as CUITent, since tileGIDup does 1101 nave an unconditional right to defer settlement for any of these obligations. Howevei', based on pastexperience, tlte group does not expect all employees to take the full amount of accrued leave or require payment witliin thenext 12 In on Ihs. $50,000 leave balance is not expected to be taken or paid witliin the next 12 months,

14.

Snare capital

CONTRIBUTED EQUITY

Consolidated31 December 31 December

2012 2011

SS

100,998

153,767,762 ordinary shares, fully paid at 31 December2012 (31 December 2011: 153,767,762):

Tilere were no movements in contributed equity during the yeai'.

Ordinary Snares

100,998

Ordinary shares entitled tile holder to participate in dividends and tlie proceeds on winding up of tlie Company in proportionto tlie number of and amounts paid on the snares Ileld.

011 a snow of nanids every 1101der of ordinary snares present at a In eeling in person or by proxy, is entitled to one vote, andupon a poll each shale is entitled to one vote.

57,28718,61025.1 0I

100,998

57,287

Ordinary shares nave 110 par value and tlIe Company does notliave a limited amount of auntorised capital.

Options

Infoitnation relating to 11/6 Energy Metals Limited Employee Option Plan, including details of options issued, exercised andlapsed dunng the financial year and options outstanding at tile end of the financial year, is set out in note 15,

57,287

19,00334,9113,373

57,287

153,767,762 153,767,762

38

14, CONTRIBUTED EQUITY (CONTINUED)

Capital Risk Management

The group's objectives wlien managing capital are to safeguard their ability to continue as a going concern, so tliat tiley cancontinue to PIOvide returns for shareholders and benefits for other stakeholders and to maintain an optinial capital structure toreduce the cost of capital. In order to achieve this objective, tlie group seeks to maintain a gearing ratio that balances risksand returns at an acceptable level and also to Inaintain a sufficient funding base to enable tlte group to meet its workingcapital and strategic investment needs. In Inaking decisions to adjust its capital structure to achieve tllese aims, 61tlier 111rouglinew share issues, or tlie reduction of debt, the gi'oup considet's not only its short-tenn position but also its long-tennoperational and strategic objectives.

There have been 110 other significant changes to 111e group's capital management objectives, policies and processes in tl, e yearnor 11as tilere been any cl, ange in what the group considei's to be its capital.

15. SHARE BASED PAYMENT TRANSACTIONS

Share based payments transactions are recognised at fair value in accordance willI AASB 2. The adoption of MSB 2 isequity-neutral for equity-settled transactions. TlIe expense in the year was nil (2011: Nil).

EIJIployee Optio, , PI",,The establishment of the Energy Metals Employee Share Option Plan was approved by shai. eliolders at the 2006 annualgeneral meeting. The Einployee Share Option Plan is designed to provide eligible employees, executive officers anddirectors of tlie Company all opportunity, in tlie for'In of Options to subscribe for Shares in the Company. An "eligibleemployee" is a person w110 is at the time of all offer under the plan, a full or palt time employee or director of 111e Companyor an associated body corporate of 111e Company. Ally offer of options to Directors will be subject to shareholder approval

Under the plan, the Board may offer' to eligible persons tlie opportunity to subscribe for SUGli number of Options in theCompany as 111e Board may decide and on 111e terms set out in tile rules of the plan. Options gianted under tile plan will beoffeied to participants in the plan o11the basis of the Board's view of the contiibution of the eligible person to the Company.WITen exei'cisable, eacli option is convertible into one ordinary share. Options granted 11nder tlie plan calty no dividend orvoting rights.

Set out below are SUInmaiies of options PIGviously granted 11nder the plan:

ExercisedExpiry Exercise Balance GrantedGrant Dateat thePrice during dunng tileDate

start of the year yearNuinberthe year Number

Number

ENERGY METALS LIMIT'I'D



31 December 2012

31 December 2011

05/01/2007 30/06/2011 $0.98

Weighted average exercise pite150,000

Expireddunng the

yearNumber

Balance at end of

the yearNIIinber

$0.98(150,000)

Vested and

exercisable at

end of the yearNumber

39

15. SHARE BASED PAYMENT TRANSACTIONS (CONTINUED)

Fair Value of o lions ranted

The fair value of services received ill return for share options granted to Ginployees is measured by reference to 111e fair valueof options granted. The estiinate of the fair value of the services is lineasui'ed based on Black-Scholes option valuationmethodology. Tlie life of tlie options and early exercise option are built into the option model. All the options granted asshare-based payments nave now been fully expensed,


NOTES To THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012

16. RESERVES

Share-based option reserve

Balance at tlte beginning of the year

Transfer to Accumulated Losses

Balance at the end of tlie year

Natui'e and purpose of tlie leserve:

The share-based payments reserve is used to recognise the fair value of options issued but not exei'cised.

17.

The group's activities expose it to a variety of financial risks: Inarket risk (including currency risk and interest rate risky,credit risk and liquidity risk. TITe group's overall lisk Inariagement program focuses o11 tlte unpredictability of financialmarkets and seeks to minimise potential adverse effects on tlie financial pertoiTnance of tlie group. The group does not useany derivative financial instruments to hedge risk exposures. The group uses different methods to me astire different types ofrisk to WITicli it is exposed. Tliese methods include sensitivity analysis in tlIe case of interest rate and other prtce 1'1sks, andaging analysis for credit risk.

Risk management is carried out by the Boai'd as a whole.

FINANCIAL RISK MANAGEMENT

Consolidated

31 December 31 December

2012 2011

$ S

2,419,100

(2,419,100)

40

17.

Tile Group holds tlie following financial instruments:

FINANCIAL RISK MANAGEMENT (CONTINUED)



Financial Assets - C, ,,.,. e, ,t

Cash and cash equivalentsTenri depositTrade and other receivables

Financial Liabilities - C, 11.1. e, ,t

Trade and other payables

(a)

in Fo, .eig!? EXchange R!^kThe Group does riot have foreign currency holding, nowever, tlie Group during the year entered into uraltiutn purchase andsales agreements WITicli were boili valued in Us dollars. TlIe foreign currency 11'an sactions are 111us exposed to model'ateCUITency risk.

Market Risk

441 PI'ice RiskThe Group is not exposed to any material commodity PI'ice risk.

Consolidated31 December 2012 31 December 2011

$ $

din Cashjloiv andjizii. I'dAle titre, 'est lurei'iskThe Group's exposure to interest rate risk arises from assets and liabilities bearing variable interest lates. Tlie weiglitedaverageinteresti'ate on casli holdings was 4.87% at 31 December 2012 (31 December 2011: 4.58%). All other financialassets and liabilities are nori interest bearing.

11,153,13210,134,685

1,840,851

Gionp Sensitivity

At 31 December 2012, if interest I'ates 11ad increased by 70 or decreased by 100 basis points from the period end rates withall other variables Ileld constant, post-tax profit for 1/1e period \voLild nave been $152,000 11iglier/$217,000 lower' (31December 2011 -: $189,000 bigli^/$270,000 lower), mainly as a result of higher/lower interest income froin cash and timedeposits. Other components of equity would have been $152,000 11iglier/$217,000 lower (31 December 2011: $152,000higher/$217,000 lower).

23,128,668

2,038,258

(b)

4,578,43619,720,578

1.302,427

CIEdit risk allses from casli and deposits witlI banks and financial institutions, as well as outstanding receivables. The Groupinvests its surplus funds mainly witli Australian banking financial institutions, rimnely National Australia Bank, WestpacBanking Corporation. All these banks nave all AA- roting or above with Standard & Poors. The Inaximuin credit risk of theCompany was 111e exposure of its term deposits and trade and otlier receivables.

Credit Risk

25,601,441

(c) Liquidity Risk

PITident liquidity risk management implies maintaining sufficient casli and marketable secuiities and tlie availability offunding IthrouglI tlie equity market to meet obligations when due. At the end of the reporting period 111e Group held depositsof $21.6Inillion (2011: $23 Inillion) with maturities from I moiltlt to 6 months that are expected to readily generate cashinflows for managing liquidity risk.

619,841

(d)

The net fair value of tlte Group's financial assets and liabilities approximates their canying value.

Fair Value Measurenients

41

18.

Estimates and judgments are continually evaluated and are based on historical experience and other factors, includingexpectations of future events that Inay nave a financial impact on the entity and that are believed to be reasonable under the

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

circumstances.



ACcot, rin, Igfo, ' capi/ansed GTP/o1u!ion and driftiu!ion eA1Je, ?dirt"'e

The Group's accounting policy is stated at note I. There is some subjectivity involved in the carrying fonvard as capitalisedor writing off to tlie Statement of Comprehensive Income exploration and evaluation expenditure, however management givedtie consideration to areas of interest on a regular basis and are confident that decisions to either wine off or carry forwardsuch expenditure fairly reflect tlie prevailing situation.

Financial Iris/,"linen!s

The Group nag exposure to intelest rate lisk WITicliis the risk that the Group's financial position will be adversely affected bymovements in interest rates. Interest rate risk on caslT and snort term deposits is not considei'ed to be a material risk due totlie short term nature of tliese financial instruments,

19.

Contingent Liabilities

CONTINGENCIES

Claims of Native Title

To date the Company 11as been notified by tlie Native Title Titbunal of native title claims which cover some of tlieCompany's licence holdings. Until further infonnation anses in relation to tlie claims and its likeliliood of success, theCompanyis unable to assess the likely effect, ifaiiy, of the claims

20, COMMITMLNTS

Tene"lent Expenditure Commitments:TITe Company is required to Inaintain current riglits of tenure

to teneinents, whicli require outlays of expenditure ill20/1/2012. Under certain circumstances these

commitinents are SIIbjeci to the possibility of adjustment tothe amount and/or timing of sucliobligalions, however,they are expected to be ftilfilled in the normal COLIrse ofoperaiions. Estimated expenditure on mining, explorationand prospecting leases for 20/1/2012.

Capital CommitmentsTliere are no capital expenditure commitments for tile Group as at 31 December 2012.

Lease Commitntents: group as lessee

Commitinents for minimum lease payineiits in relation tonon-cancellable operating leases are payable as follows:Within one yearLater tlian one year but not later tl, an five years

31 December

2012

S

Consolidated

31 December2011

$

2,501,610 2,244,000

I 1,638

42

I 1,638

139,651I 1,638

151,289

21.

In support of titles granted to or operated by 111e Group, various securities have been submitted to the Department of Industryand Resources. These consist of unconditional performance bonds, securities or Form 32 security documents with a totalpotential liability of $45,000

PERFORMANCE BONDS AND SECUmTY DOCUMENTS


FOR THE FINANCIAL YEAR inNDED 31 DECEMBER 2012

22, KEY MANAGEMENT PERSONNEL

Demi^s of Directors (Key Management Personnel)

Tile following persons wei'e Key Management Personnel of Energy Metals Limited during 111e financial year:

(a)

Mr He, ZuyLianDr Xiang WeidongMr Lindsay DudfieldMr Geoff lones

Mr Zhong, YuMs Jin, YunfeiDr Feng, XinjianMr Cui, Bin

Ms Li, XuekunMr Paul Dunbar

Ms Zheng, Xiaowei

Non-Executive Chairtnan

Managing DirectorNori-Executive DirectorNon-Executive DirectorNon-Executive Director

Non-Executive Director (appointed 16/07/2012)Non-Executive Director (appointed 16/07/2012)Chief Financial Officer (resigned from Finance Director 16/07/2012 and remained as ChiefFinancial Officer 16/07/2012)Company SecretaryExploration ManagerNori-ExecLitive Dit'ector (resigned 16/07/2012)

Key Manageinent Personnel aie persons naving alithoiity and responsibility for planning, directing and controlling tileactivities of tile Company.

(b) Key Management Personnel Compensation

Short-tenn employee benefitsPost-employment benefits

(c) Equity Instrument Disclosures Relating to Directors and Employees

(i) Oplioiispi'o1, ifle(I us I'errrii, lei'rino, , rind sha, 'co issued on inIy exe, use of snell oplio, Is

No options were provided as remuneration and shares issued on any exercise of SLich options during tlie year.

(ii) Slim'e ,111d option 1101d!'Jigs

The number of shares and options over ordinary SIIares in the Company Ileld during tlie financial year by eacliDirector of Energy Metals Limited, including their personally related parties, are set out below:

31 December

2012

S

721,38119,164

Consolidated

31 December2011

S

775,02319,147

740,545 794,170

43

22, KEY MANAGEMENT PERSONNEL (CONTINUED)

SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL

Aggregate numbers of shares and options of the Company Ileld directly, indirectly or beneficial Iy by key managementpersonnel of the Company at the date of this report

31 December 2012

Name

^!!Ordinary fully paid sharesUnlisted Options




Mr Xian Weidon

Ordinary fully paid sharesUnlisted OptionsMr Lindsa Dudfield

Ordinary fully paid snaresMr Geofflones

Ordinary fully paid sharesUnlisted Options^!!Ordinaly fully paid shares**Unlisted OptionsMs 11/1 Yunfei

Balance at

the start of

the year

Ordinary fully paid sharesUnlisted Options^I^Oldinary fully paid shalesUnlisted OptionsMr Cui Bin*

Received duringtlie year onexercise of

options

Ordinary fully paid sharesUnlisted OptionsMs ZlIen Xiaowej*

Ordinary fully paid sharesUnlisted OptionsMs Li Xuekuii

Otlier changes duringthe year

2,422,620

Ordinary fully paid snaresUnlisted OptionsMr. Paul Dunbar

19,472,773

Ordinaly fillly paid shares***Unlisted Options

*: Balance on 111e date of resignation.

**: Snares Ileld at the appointment dale and indirectly held 11n'ougli KangDe Investment Group

***: snares acquii'ed 111rougli on-market trading.

Balance atthe end of

tlie year

832,545 3,255,165

30,000

19,472,773

44

30,000

22. KmY MANAGEMENT PERSONNEL (CONTINUED)

31 December 2011 Balance at

the start of

the yearName

^!!Ordinary fully paid snaresUnlisted Options

ENERGY METALS LIMITEDNOTES To THE FINANCIAL STAT^MENTs


Dr Xian Weidon

Ordinary fully paid sharesUnlisted OptionsMr Lindsa Dudfield

Ordinary fully paid sharesUnlisted OptionsMr Geofflones

Ordinary fully paid shalesUnlisted Options^!!Oldinary fully paid snaresUnlisted OptionsMr Cui Bin

Ordinary fully paid snaresUnlisted OptionsMs Zheii Xiaowei

Received duringthe year onexercise of

options

Ordinary fully paid sharesUnlisted OptionsMs Li Xuekun

Ordinary fully paid shalesUnlisted OptionsMr. Paul Dunbar

Oldinary fully paid sharesUnlisted Options

(d) Other Transactions willI Key Managemeiit Personnel

i) During tlie year tlie Company paid $25,000 each to Mr He, Zuyuan and Mr Zhoiig, Yu as director fee.

ii) During the year. the Coinpany paid salaries $200,000 and $168,942 to Dr Xiaiig, Weidong and Mr Cui, Bin,respectively.

iii) During the year the Company accrued $11,459 eaclito Ms Jin, Yunfei and Dr. Feng, Xinjian respectively. TITesefees were unpaid as at 31 December 2012.

Iv) Fursuant to a Consulting Agi'Gement between 111e Company and lopan Management Pty Ltd ("lopan"), theCompany paid a total of $24,000 during the year to Western Geological Services (a division of lopan). Tile feeswere for the provision of technical and management services provided to tlie Company by Mr Litidsay Dudfield.Mr Dudfield's spouse is the major shareholder of, and sole director and coinpany secretai. y of lopan.

v) During the year the Company paid Mr Geoffreylones $22,936 in directors fee and $2,064 in superannuation.

vi) During the year tile Company paid Ms Li, Xuekun, $53,043 as consulting fee.

vii) During the year the Coinpaiiy paid Mr Paul Dunbar $190,000 as salary and $17,100 as superannuation.45

2,422,620

Other changes duringthe year

19,472,773

Balance at

the end of

the year

2,422,620

19,472,773

30,000 30,000

23. CONTROLLED ENTITIES

Controlled Entities

ENERGY METAl. ,S LIMITEDNOTES To THE FINANCIAL STATEMENTS

FOR THE FINANCIAL Y, !ER ENDED 31 DECEMBER 2012

NT Energy Ply Ltd

Tile dale of acquisition of tile controlled entities was on the date of incorporation. The fair value of net assets acquired at thedate of acquisition was nil.

24. RELATED PARTY TRANSACTIONS

310ecember 310eceinber2012 2011

(a)

The parent entity within tlie Group is Energy Metals Limited. The ulinnate parent entity is Cliina Guangdong Nuclear PowerCompany (incorporated In the P. R. China) ("CGNPC") wliicli at 31 December 2012 owned 60.56% (31 December 2011:60.56%) of the issued ordinary shares of Eneigy Metals Liinited.

(b) Subsidiaries

Interests in subsidiaiies are set out ill Note 23.

% held

Parent entities

100% 100%

(c) Key Management Personnel

Disclosures relating to key nianagement personnel are set out in Note 22.

(d) Transactions with related palties

Tlie Company earned $197,149 Inariagement and facility administration fee from the Bigrlyi Joint Venture during the year.

Tile Company, 111rouglI its WITolly owned subsidiary, NT Energy Pty Ltd, made a sales tmnsaction witli CGNPC at all amountof $7,973,505.

(e) Outstanding balance arising froin sales/purchases of goods and services

At 31 December 2012 the Companyliad $398,675 receivable due from CGNPC WITich was unsecLired andinteiest fee. Tliereceivable was under coinmercial terms.

Class

Ord

Incorporation Incorporation

State of

VIC

Date of 310ecember 310eceinber20112012

15/11/2006

Investment at Cost

At 31 December 2011 tlie Company had $586,064 receivable due from 111e Bigrlyi Joint Venture WITicli was unsecured andinterest fee. TITe receivable was under noimal commercial terms.

(f) Loans to/from telated palties

At 31 December 2012 the Companyl, ad an intergroup loan of $8.26 million and other receivable of $249,534 froin NTEnergy Liimited. The loan was interest beating o11 coininercial terms. Tile other receivable was unsecui'ed, interest fee andrepay on demand. The receivable is eliminated in tlie consolidated financial statements.

(g) Guarantees

There were 110 guarantees provided to tile related parties duntig 111e year.

100 100

46

25. REMUNERATION OF AUDITORS



Amounts paid or payable to tile auditors for:Audit and review of tlie financial reportsOther assurance service

The auditor of Energy Metals Limited is BDO Audit (WA) Ply Ltd.

26.

The Company has tlie following in telcot ill unincoipoiatedjoiiit ventures:

INTEREST IN JOINT VENTURE OPERATIONS

Joint Venture

Bigrlyi Joint Venture 53.2953.29Uruniuin Exploration

Tilejoint venture is a contractLial anal^gement between participants for the snaring of costs and outputs and does not generateIt venue and profit. The joint ventui'e does not 1101d ally assets and the Group's share of exploration and evaluationexpenditure is accounted for ill accordance with tlie policy set out in Note I.

Soutlieni Cross Exploretion NL ("SXX"), one of the Bigrlyi Joint Venture partners, 11as not advanced its full share of twocaslI calls within 111e required lime frame for 2011. Tilese two default amounts have been paid by the Company and VaniallaUrnniuin Ltd ("Vallialla Uranium") plopoitionally on behalf of SXX. SXX 11as failed to remedy its default payments and its5% interest in 1/1e Bigrlyi Joint Venture is subject to be diluted PUTSuant to the Four Party Discovery Opei'ating Agreement.

The Group*s snare of assets eiiiployedin tltejointveiitureis

31 December

2012

$

Consolidated

31 December

2011

S

CURRENT ASSETS

Cash and cash equivalentsTOTAL CURRENT ASSETS

82,420

82,420

NON CURRENT ASSETSReceivable

Exploration and evaluation expenditureTOTAL NON CURRENT ASSETS

Principal Activity

52,0782,754

54,832

TOTAL ASSETS

a)

There are no capital expenditure coininitments for the Joint Venture as at 31 Deceinber 2012.

Share of estimated 20/2/2013 miniinum expenditure commitinents for tlie Joint Ventui'e tenements is $479,610.

% Interest

31 December 31 December2012 2011

Commitments

b)

31 December 2012

S

GUI, "s QIN"lit, e 7171@

Contingent liabilities

There are no c!ajins of Native Title tliat affect the joint venture license 1101dings.

Consolidated

465,975465,975

31 Dece"Iber 2011

S

82,55413,842,72713,925,281

14,391,256

598,622598,622

85,36113,032,19713,117,558

13,716,180

47

27. PARENT ENTITY INFORMATION

The following details information related to the parent entity, Energy Metals Limited, at 31 December 2012. The infonnationpresented Ilerelias been prepared using consistent accounting policies as presented in note I.

11NERGY METALS LIMITED



Current Assets

Non-current Assets

Total AssetsCurrent LiabilitiesNori-current LiabilitiesTotal Liabilities

Conti'muted equityACcuinulated Losses

Reserve

Total Equity

Income for the year

Total Comprehensive income for the year

31 December

2012

$

Energy Metals Limited 11ad the saline contingencies and commitments as the Group. Please refer' to Note 19 and Note 20.

28. EVENTS OCCURRING AFT;ER REPORTING DATE

22,781,14825,672,790

TlIere 11as not arisen in LITe interval between the end of tlIe financial year and 111e date of this repoit any item, transaction orevent of a Inaterial and unusual nature likely, in tlie opinion of tlte Directors, to affect significantly the operations, the resultsof those operations, ortlie state of affairs of tile Gi. oupin future financial years'

31 December

2011

S

48,453,9381,649,706

1,649,706

49,677,832(2,873,600)

25,339,00122,363,45547,702,456

46,804,232

636,004

636,004

44,586

49,677,832(5,030,480)

2,419,100

44,586

47,066,452

759,129

759,129

48

DIRECTORS' DECLARATION

ENERGY METALS LIMITED AND ITS CONTROLLED ENTITIESACN 11/306533

DECLARATION BY DIRECTORS

The directors of tlie Company declare tltat:

TITe financial statements, comprising tlIe Consolidated Statement of Comprehensive Income,Consolidated Statement of Financial Position, Consolidated Statement of Caslt flows, ConsolidatedStateInent of Changes in Equity and accompanying notes are in accordance with 111e Co, pointio"s AC/2001, including:

(a) complying with Accounting Standards, the Corporations Regulations 2001 and othermandatory professional reporting requirements; and

(b) giving a 11'116 and fair view of the financial position as at 31 December 2012 and of theperfonnance for tlie year ended on that date of the consolidated entity.

2. 1/1 the diiectors' opinion, there are reasonable grounds to believe tl, at the Company will be able to payits debts as and WITen tliey become due and payable.

3 TITe directors nave been given the declarations by tile Cliief Executive Officer and Cliief FinancialOfficer as required by section 295A of the Coll70i. atto, Is AC! 2001.

4. Tlie consolidated entity has included in tlie notes to the financial statements an unreserved and explicitstatement of compliance willlintelnatioiial Financial Reporting Standards.

Tliis declaration is triade ill accordance with a resolution of tlte Board of Directors and is signed for and o11behalf of the dii. ectors by:

,,^;7"r^ ,,.MANG, WEIDONGManaging Director

Forth, Westeni Australia8 Marc!I 2013

,^ " ICUI BIN

Cliief Financial Officer

Peltli, Westeni Australia8 March 2013

49

IBDO

8 March 2013

The Board of Directors

Energy Metals LimitedGround Floor

10 Kings Park RoadWEST PERTH WA 6005

Tel: +863824600Fax: +863824601WWW. bdo. coin. au

Dear sirs,

DECLARATION OF INDEPENDENCE BY GLYN o 'BRIEN To THE DIRECTORS OF ENERGY METALS

LIMITED

As lead auditor of Energy Metals Limited for the year ended 31 December 2012, I declare that, tothe best of my knowledge and belief, there have been no contraventions of:

38 Station Street

Subiaco, WA 6008PO Box 700 West Perth WA 6872Australia

the auditor independence requirements of the Corporations Act 2001 in relation to the audit;and

any app"cable code of professional conduct in relation to the audit.

This declaration is in respect of Energy Metals Limited and the entities it controlled during the year.

6.4^. C>""""""'Glyn O'BrienDirector

BDO Audit (WA) Pty LtdPerth, Western Australia

Boo Audit IWA! Ply Ltd AB1179112284 787 Is a member o1 a national association of independent entitles which ale all members o1 BDO IAusr, anal Ltd ABl, n 050110 275. sri Australian company limited by guarantee. 800 Audit IWAi Ply Lad and Boo IAustialiaj Ltd ane members of aDO International Lid. a un company limitedby guarantee. and form part of the international Boo network blindependeni meritbei films. Llabil. tv limited by a scheme appioved under Professionals. andardsLegislation 10the, than for the acts or omissions of 11nancial services licensees I in each Slate or Terntorv o1he, than T'smania

IBDO

Report on the Financial Report

We have audited the accompanying financial report of Energy Metals Limited, which comprises theconsolidated statement of financial position as at 31 December 2012, the consolidated statement ofcomprehensive income, the consolidated statement of changes in equity and the consolidatedstatement of cash flows for the year then ended, notes comprising a summary of significantaccounting policies and other explanatory information, and the directors' declaration of theconsolidated entity comprising the company and the entities it controlled at the year's end or fromtime to time during the financial year.

INDEPENDENT AUDITOR'S REPORTTo MEMBERS OF ENERGY METALS LIMITED

Tel: +863824600Fax: +863824601WWW. bdo. coin, au

Directors' Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives atrue and fair view in accordance with Australian Accounting Standards and the Corporations Act2001 and for such internal control as the directors determine is necessary to enable the preparationof the financial report that gives a true and fair view and is free from material misstatement,whether due to fraud or error. In Note I, the directors also state, in accordance with AccountingStandard AASB 101 Presentotion of Finonciol Stotements, that the financial statements comply withInternotiono! Finonciol Reporting Stondords.

38 Station Street

Subiaco, WA 6008PO Box 700 West Perth WA 6872Australia

Auditor's Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conductedour audit in accordance with Australian Auditing Standards. Those standards require that we complywith relevant ethical requirements relating to audit engagements and plan and perform the audit toobtain reasonable assurance about whether the financial report is free from material misstatement,

An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial report. The procedures selected depend on the auditor's judgement, including theassessment of the risks of material misstatement of the financial report, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to thecompany's preparation of the financial report that gives a true and fair view in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the company's internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates madeby the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the CorporationsAct 2007. We confirm that the independence declaration required by the Corporotions Act 2001,which has been given to the directors of Energy Metals Limited, would be in the same terms if givento the directors as at the time of this auditor's report.

BDO Audit IWA) Ply L. d ABN 79/12284787 is a member of a national association of independent entities which are all members of Boo IAus, ranaj L. d ABN 77 050110 275. an Australian company 11mi, ed by guarantee. 800 Audit IWA) Pry LLd and Boo IAustrallaj Ltd are members o1 Boo Innernational Lad. a UK company limitedby guarantee. and form part of the International Boo riot, ,ork of independent member firms. Liability limited by a scheme approved under Professional StandardsLegislation lather than for the acts or omissions of financial services Iicai, eesj in each State or Terntory other than Ta, mania

IBDO

Opinion

In our opinion:(a) the financial report of Energy Metals Limited is in accordance with the Corporotions Act 2001,

including:in giving a true and fair view of the consolidated entity's financial position as at 31

December 2012 and of its performance for the year ended on that date; and(ii) complying with Australian Accounting Standards and the Corporotions Regu!otions 2001;

and

(b) the financial report also complies with International Financial Reporting Stondords as disclosedin Note I .

Report on the Remuneration Report

We have audited the Remuneration Report included in the directors' report for the year ended 31December 2012, The directors of the company are responsible for the preparation and presentationof the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Ourresponsibility is to express an opinion on the Remuneration Report, based on our audit conducted inaccordance with Australian Auditing Standards.

Opinion

In our opinion, the Remuneration Report of Energy Metals Limited for the year ended 31 December2012 complies with section 300A of the Corporations Act 2001.

BDO Audit (WA) Pty Ltd

I^:^OCD

G, ,, 4^^C>'~"""Glyn O'BrienDirector

Perth, Western AustraliaDated this 8'' day of March 2013

ENERGY METALS LIMITED AND ITS CONTROLLED ENTITY€¦ · energy metals limited and its controlled...

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