ANNUAL REPORT 2013 For personal use only

www.axiom-mining.com

Mining Limited

ANNUAL REPORT

2013

For

per

sona

l use

onl

y

Assets & Projects

Contents

01 Axiom in 201302 Chairman’s Report04 CEO’s Report06 Axiom’s Community Commitment 08 Board of Directors & Management10 Review of Projects22 Tenement Schedule24 Sampling Techniques and Data

27 Reporting of Exploration Results34 Corporate Governance39 Directors’ Report41 Directors’ Declaration42 Independent Audit Report44 Income Statements45 Statements of Comprehensive

Income

46 Balance Sheets47 Statements of Changes in Equity49 Cash Flow Statements50 Notes to the Financial Statements79 ASX Additional Information81 Corporate Directory

Mineral Exploration

Licence

Focus in Vietnam is in the highly prospective Sepon region. Current prospects lie 40 km east of the world class copper-gold Sepon Mine in Laos

Relatively unexplored mineralisation belt lying within the highly productive base metal producing “Rim of Fire”.

Strategic holdings in the Chillagoe region of North Queensland

Prospecting Licences

Under Litigation

Mining Leases

Exploration Permits

Exploration Permit

Applications

Axiom Mining Limited

VIE

TN

AM

1 3 8

SOLO

MO

N I

SLA

ND

S

AU

STR

ALI

A

1

1 8

3

Axiom Mining Limited is an Australian mining and exploration company focused on tapping into the significant resource potential within the mineral-rich Pacific Rim.

For

per

sona

l use

onl

y

Focus in the Solomon Islands

in 2013

SOLOMON ISLANDS VIETNAM AUSTRALIA

Other Opportunities

HIGH COURT CASE 258/11 – Adverse rulings against Axiom expunged by Court of Appeal in Oct 2012 – Trial for final determination commenced October 2013 – Final ruling on trial first half of 2014

2.5 YEARS LITIGATION

HIGH COURT TRIAL KEY DEVELOPMENTS – Prospecting licence extended to January 2017 – Guarantee obtained from Sumitomo as to damages

KEY ACHIEVEMENTS

Successful transformation of the exploration prospectivity profile

THE ISABEL PROJECT

THE ISABEL NICKEL PROJECT – One of the largest undeveloped nickel-laterite deposits in the Pacific – Extensively investigated previously by mining and engineering companies,

INCO and Kaiser

Axiom has successfully recruited a well balanced and highly proficient exploration team.

Axiom remains confident in the validity of its rights and in the significant benefits that Axiom’s approach will deliver to the local landowners and the Solomon Islands nation.

Mineral resource extension potential at Mountain Maid

XA LOI1 ME XI2 KHE FIA3

WEST GUADALCANAL PROJECT

3 PRIMARY TARGETS

EPM 19821 Au-Cu-AgConsolidation of four tenements covering the Mountain Maid and Cardross deposits

Covering the Minnamoolka nickel laterite granted for five years from October 2013

EPM 25255 Ni

Under application, comprising the Toolebuc Formation oil shale project

3 EPM’s Oil Shale

1 EPM under application covering the known roll front uranium deposit

Edenvale U

39 g/t AuRockchip sampling

10 kmMineralised corridor

3Defined targets

Clear near surface exploration

opportunities

SW Pacific style mineralisation

Prospecting licence secured

GREENFIELD KHAKIFIELD

2013 2014

EPM APPLICATIONS

Very prospective judging by:

– Geological setting – Occurrence of

mineralisaion system – Large un-explored land

QUANG TRI PROJECT

Prospective and un-touched

mineral province

Low cost operation

Dilational structures similar to the

mineralisation at Sepon

40 kmTo the east of

the Sepon Au-Cu Deposit

2 yrsMineral

Exploration Licence

Soil sampling

2.31 g/t Au

012013 Annual Report

For

per

sona

l use

onl

y

As shareholders are aware, we are currently in the midst of a long running trial regarding the Isabel nickel deposit in the Solomon Islands High Court. SMM Solomon Limited (Sumitomo) is seeking judicial review of Axiom KB Limited’s entitlement to undertake exploration activities on the Kolosori land, Isabel Island, over which the Company obtained a registered lease and a prospecting licence.

The trial commenced in October 2013 and was expected to be completed within eight weeks, however Sumitomo’s witnesses have taken longer than anticipated to complete their evidence and cross-examination. Despite the extra time that will be required to complete the hearing, we are quite pleased with how the trial is progressing and encouraged as to the prospects of our success.

To mitigate potential risks associated with this delay, Axiom has secured an extension of the prospecting licence by order of the Court for a minimum of another 2 years and 267 days subject to the final determination and outcome of the trial. We also secured a guarantee in the form of a court order from Sumitomo Metal Mining Co., Ltd as to costs and damages earlier in the year.

In those circumstances the Board is looking ahead and preparing for future operations on Isabel Island as far as possible. Whilst this trial has certainly had a negative impact on our business operations, it also presents us with an opportunity to secure the assets we obtained and to protect our operations in the future.

To this end, we have recently lodged an amended defence and a cross claim which seeks, amongst other things:

– a continuing permanent injunction restraining Sumitomo from interfering in any way in the mining, exploration or other the business interests of Axiom in the Solomon Islands should we succeed in the proceedings;

– a continuing permanent injunction restraining Sumitomo from lodging an application for a prospecting licence in competition with Axiom over the area formerly the subject of Axiom’s San Jorge Island letter of intent which is separate to the Kolosori land; and

– a declaration that the issuance of the Axiom letter of intent (in respect of San Jorge Island) and the Axiom prospecting licence (in respect of Kolosori land) were valid and lawful.

The Board remains committed to seeking a course of action that protects shareholder value and reflects the value of the assets in dispute. We are also considerate to obtaining an outcome that is satisfactory to our landowner partners and Solomon Islands Government.

The Isabel nickel deposit is a significant mineral deposit, and while nickel prices have been somewhat depressed recently, we anticipate the asset will have a mine life in excess of 20 years. The recent ban on the shipping of laterite from Indonesia’s shores also adds to the value of these deposits.

If Axiom KB Limited is given the ‘green light’ to commence exploration on Isabel, it is the Board’s intention to complete all of the necessary steps required to obtain a mining licence and proceed to development of a sustainable mine as soon as possible.

Chairman’s Report

The Board remains committed to seeking a course of action that protects shareholder value and reflects the value of the assets in dispute.

02 Axiom Mining Limited

For

per

sona

l use

onl

y

We are also focused on the other exciting opportunities for long term development and sustainability of the Company, particularly in the Solomon Islands, as detailed in this Annual Report.

During that period I have also witnessed our management team encounter many challenging situations, which they have dealt with professionally and keeping the Company’s and shareholder’s interests paramount at all times.

In 2014, we will continue to work with the landowners of the Isabel nickel deposits to protect the Company’s assets in the often difficult operational environment of the Solomon Islands. We are also focused on the other exciting opportunities for long-term development of the Company, particularly in the Solomon Islands, as detailed in this Annual Report.

On behalf of the Board I thank you all for your continued support.

I have chaired your Company since we negotiated the agreement with the Kolosori and Bungusule landowners in 2010 and I have overseen the procurement by management of the leasehold interest and the prospecting licence on Isabel Island as well as overseeing the defence of the proceedings to protect the Company’s assets commenced by Sumitomo in the Solomon Islands High Court.

Training with Dr Gregg Morrison

Stephen Williams Chairman


For

per

sona

l use

onl

y

Axiom’s focus on tapping into the abundant resource potential of our Asia Pacific projects continued in 2013. We successfully secured additional funding and expanded our exploration activities across a portfolio of assets which have delivered promising outcomes.

We continue to defend the High Court challenge by Sumitomo regarding the Isabel Nickel Project in the Solomon Islands. While these proceedings have been protracted, the Board remains confident of achieving a favourable trial outcome and we are prepared to recommence development of these deposits as soon as that occurs.

With a number of exciting projects across the Solomon Islands, Australia and Vietnam our initial exploration activity has identified strong potential at a number of these sites – more on this below.

Working with local communities remains a pillar of our business strategy. All Axiom projects operate with a strong focus on proactive community relations and creating shared values and vision with the communities we operate within. I see our capacity to balance and align the goals and expectations of local communities with our corporate strategy as a crucial element of our future success in these locations.

Procurement of CapitalWe raised $3 million through a private placement of shares in February 2013 and as a result, Axiom’s largest shareholder, Drake Private Investments, now holds 18.5% per cent of the Company’s issued capital.

A further $2 million was raised in July via an additional private placement of shares, and after the reporting period $1 million was raised via a private placement of shares and a non-renounceable rights issue raised an additional $3 million, announced in November 2013.

Solomon Islands Legal Proceedings Against the background of protracted and aggressive legal proceedings, Axiom achieved a court order to extend our prospecting licence until at least January 2017. We also secured a court order whereby Sumitomo guarantees costs and a damages claim if we are successful in the trial.

The Board is monitoring the progress of these proceedings closely including the mounting costs of defending Sumitomo’s challenge. Considering the huge potential value of the project, and our confidence in the validity of the rights Axiom has been granted we are committed to securing the Isabel nickel deposits as our flagship asset.

The Board remain positive about the outcome of this trial and the significant benefits the company’s approach will deliver to our shareholders, the local landowners and the Solomon Islands nation.

ExplorationAxiom has built a well-balanced and highly proficient exploration team to drive business success.

With the new West Guadalcanal Project in the Solomon Islands, we have identified a number of very exciting prospects in a 10 kilometre mineralised corridor adjacent to the Gold Ridge Mine. Initial exploration has highlighted significant levels of gold and silver, with further exploration underway.

CEO’s Report

We are progressing with a number of exciting projects across the Solomon Islands, Australia and Vietnam.


For

per

sona

l use

onl

y

All Axiom projects operate with a strong focus on proactive community relations and creating shared values and vision with the communities we operate within.

Looking ForwardFinalising the trial and securing our rights over the Isabel nickel deposits is our key goal for 2014. We are confident that the High Court will validate our rights to these deposits, and our exploration team remain prepared to re-enter and efficiently develop this asset.

We will continue to develop strong relationships with the communities within which we operate, while identifying exploration and mining opportunities in the Asia Pacific region that align with our corporate philosophy.

Whilst 2013 was a challenging year for us, I am satisfied that the Company has performed well under the circumstances

I look forward to an exciting and rewarding year in 2014, and am especially looking forward to be able to report to you on the outcome of the litigation in the Solomon Islands.

The West Guadalcanal Project has exciting potential and was secured as a result of leveraging on our already established operations in Solomon Islands and efficient project generation functions by our exploration team.

We have relinquished the Arosi and Itina tenements. Despite early promising results we believe our efforts are better focused in on the West Guadalcanal Project which has much greater potential.

In Vietnam, we are focused on exploration at Quang Tri, an area less than 50 kilometres from Laos’s major gold and copper deposits. Surface assessments have been conducted ahead of drilling at three primary target locations. Perusal of the Quang Binh project is on hold until the Central Vietnam Government implements its new mineral law.

Pleasingly, four tenements covering the Mountain Maid and Cadross deposits in Queensland were consolidated in an exploration permit granted until 2018.

Joint venture negotiations with Solomons Copper Australia Pty Ltd have been placed on hold pending further analysis of the resource extension potential of Mountain Maid operations.

A further exploration permit covering nickel laterite at Minnamoolka was also granted for five years.

Axiom has also applied for permits to explore the three tenements that comprise the Toolebuc Formation oil shale project and a sedimentary uranium project in Edenvale, all in Queensland, Australia.

Ryan Mount Chief Executive Officer


For

per

sona

l use

onl

y

Axiom’s Community Commitment Axiom is committed to appropriate and transparent development that ensures local landowners and the wider community benefit now and in the future. Our approach to community engagement gives local communities a voice and an ongoing share in the development plans of our land.

BUILDWe will build robust and profitable mining operations by developing strong relationships with the communities and governments we work with, and investing in local economies and our workforce.

SHAREWe will create shared values and a shared vision with the communities we operate within, ensuring that they share in the economic rewards of our operations.

PROTECT We will protect the land, the natural environment and the rights of local landowners.

Community Report


For

per

sona

l use

onl

y

Axiom in the Community

Investing in Our People

Throughout the year, we delivered on our commitment to provide training and development for our Solomon Islands workforce. Our Solomon Islands geological team undertook a number of different training courses in 2013, including, travelling to Australia to attend the Copper-Gold Exploration Field Training program, specifically designed to upskill our team.

The team made another visit to Australia to attend a course taken by an internationally recognised gold geology expert. This course focused on drill core logging of gold mineralising systems, and significantly improved our geologists’ understanding of the critical aspects that control mineralisation and how to identify it in drill core.

Supporting National Sports

Axiom has continued to show its commitment to investing in local communities in 2013, with a focus on national sports in the Solomon Islands.

We were proud to be the premier sponsor of the National Rugby Sevens team for the Oceania Rugby Sevens tournament in Fiji, which included the team being coached by former Super Rugby Coach, Damien Hill.

Axiom was also excited to sponsor the Isabel Frigate Football team’s participation in the Solomon Islands Games in September.

Celebrating Cultures and Customs

Our team’s genuine interest in and respect for local customs and cultures has seen Axiom become a firm part of the local communities we work with. Our people regularly participate in community functions and ceremonies, cementing our strong relationship with the Solomon Islands community.

“ Axiom has shown genuine respect and acceptance of our culture. They have a unique ability to communicate effectively with me and my people. This has allowed us to convey our intentions and to be able to participate in the decision making process of development plans for the Isabel nickel deposits. There is a mutual respect between us that is a pillar for our long term relationship.”

“ We are determined to defend our rights in the High Court and ensure Axiom is the mine developer of our land.”

Elliot Cortez – Chairman of Kolosori Trustees


For

per

sona

l use

onl

y

Directors

Mr Ryan MountChief Executive Officer and Managing Director

Ryan joined the Axiom Board as a Director in April 2009. Following his appointment, he led the crucial restructure of the Company – an exercise which saw Axiom gain full control of its assets, define a clear strategic direction, as well as appoint new Board and management team members. This turnaround allowed Axiom to re-list on the ASX in December 2009 fully operational again.

In mid-2010, Ryan accepted the Board’s offer of the CEO position. Since his appointment, Ryan has been relentless in driving and refining Axiom’s operations. Ryan has also played an integral role in securing the Isabel nickel deposit in the Solomon Islands and he is also the CEO and a Director of Axiom KB Limited.

Ryan has an extensive background in Australian and international financial markets, as well as corporate advisory.

Mr Anthony FaillaceNon-Executive Director

Anthony, Drake Private Investment’s Founder and Chief Investment Officer joined the Board of Axiom as a Director in February 2013. Prior to starting Drake, Anthony was a Managing Director and Senior Portfolio Manager at BlackRock Inc., an international investment management firm where he was responsible for managing non-US fixed income assets. Before joining BlackRock, Anthony spent five years at Pacific Investment Management Company (PIMCO) and led the firm’s discussion on international and emerging markets at the annual secular forum strategy sessions.

Anthony has a Bachelor of Science from the University of Texas at Austin and a Master of Business Administration from the Kellogg School of Management at Northwestern University, Chicago, Illinois, America.

Mr Stephen WilliamsIndependent Non-Executive Director, Chairman

Stephen was appointed Chairman of Axiom Mining in July 2010. Since then, he has overseen procurement of the exploration rights in Solomon Islands and played an important in the business development in the Solomon Islands.

He is Chairman of Axiom KB, Axiom’s 80% owned subsidiary company in the Solomon Islands. He has been actively engaged in protecting the company’s asset in the Solomon Islands throughout the long running litigation.

Stephen is a corporate lawyer by profession and is an experienced company director and has served on several boards of public companies from IPO including Coffey International Limited and PrimeAg Australia Limited.

Board of Directors & Management


For

per

sona

l use

onl

y

Management New Appointments in 2013

Mr Trevor WrightExploration Manager, Australia & Oceania

Prior to joining Axiom, Trevor worked on the Anglo Gold Ashanti Joint Venture exploration projects in the Solomon Islands where he was integral in developing, implementing and managing multiple drill rig exploration programs over four advanced gold and copper projects.

Trevor’s extensive exploration experience and specialisation in exploring Pacific Rim gold systems, has been instrumental in the evaluation and development of exploration opportunities for Axiom in Australia and the Pacific.

Trevor holds a Master of Geology degree (MSc) from the University of Otago, New Zealand and is a member of the Australian Institute of Geoscientists (AIG) and the Society of Economic Geologists (SEG).

Mr Jess OramGeneral Manager of Exploration

Jess has over 20 years’ experience in mineral exploration in a wide variety of geological terrains and resource commodities as well as accomplished track record in significant mineral discoveries. Prior to joining Axiom, Jess was Exploration Manager for Polymetals Mining Limited where he successfully established the exploration function of the company including the implementation of three sizable exploration programs.

He was also Chief Exploration Geologist for Heathgate Resources Pty Ltd where he was instrumental in the exploration discovery and subsequent resource drilling of the Pepegoona Uranium, Pannikan Uranium and Pepegoona West Uranium deposits.

Jess has a Bachelor of Science (BSc), Geology major from the University of Queensland and is a member of the Australian Institute of Geoscientists (AIG).


For

per

sona

l use

onl

y

Review of Projects

Solomon Islands

WEST GUADALCANAL PROJECTAu-Ag, Cu

Figure 1. Solomon Islands Project Locations

CHOISEUL

NEW GEORGIA

SANTA ISABEL

SAN JORGE

Honiara

Gold Ridge MineGUADALCANAL

MALAITA

GOLD RIDGE MINEAu

PANGUNA MINECu, Au

Panguna Mine

BOUGAINVILLEPAPUA NEW GUINEA

SOLOMON ISLANDS


For

per

sona

l use

onl

y

Review of Projects – Solomon Islands

Axiom has recruited a well-balanced and highly proficient exploration team who has accomplished a successful transformation of the Company’s prospectivity profile of the Solomon Islands exploration projects.

The Solomon Islands is located in the Southwest Pacific and is part of the globally significant archipelago of mineralisation spanning from the Philippines to Fiji. This region is part of the commonly referred to “Rim of Fire” region which hosts many world-class gold and gold-copper deposits.

Most of the deposits in the Rim of Fire region fall into the classic gold-rich porphyry copper category, such as Panguna and OK Tedi in Papua New Guinea, Grasberg in Indonesia and the Namosi deposit in Fiji. The Panguna (Bougainville) deposit is the closest deposit to the Solomon Islands.

Another major group of deposit styles, the epithermal gold style, is represented by Porgera and Lihir in Papua New Guinea, Emperor in Fiji and Gold Ridge which is located on Guadalcanal, Solomon Islands. Some of these, such as Porgera Zone VII, host bonanza zones where significant tonnages grade in excess of 30 g/t Au.

Nickel laterite deposits are also common along the same archipelago but form under different geological conditions. They result from tropical weathering of ultramafic rocks which formed deep below earth’s surface and have been exhumed and exposed.

The Solomon Islands is considered favourable for all three styles of deposits.

Axiom’s interest in the Solomon Islands includes:

1. The Isabel Nickel deposit on Santa Isabel and San Jorge Islands (subject to legal challenge)

2. The Itina Cu-Au exploration project on West Guadalcanal (relinquishment process in train)

3. The Arosi Cu-Au exploration project on Makira (relinquishment process in train)

4. The West Guadalcanal gold exploration project

Project generation activity identified two new advanced opportunities suitable for hosting gold rich economic deposits. One is in competitive application for which Axiom has a submission with the Solomon Islands Ministry of Mines, Energy and Rural Electrification; the other is the West Guadalcanal gold exploration project.

Compilation of historical data for the West Guadalcanal gold exploration project identified the existence of large hydrothermal systems; including under explored epithermal gold-silver-basemetal corridor at least 10 km long; in proximity to a large porphyry copper-gold system. Axiom has acquired the prospecting licence that cover this area (refer to Figure 1).

During 2013, Axiom tested both Itina and Arosi copper-gold exploration projects; and embarked on a strategy to increase the prospectivity profile of the exploration portfolio in the Solomon Islands. Following field exploration programs in Arosi and Itina as well as detailed project generation activity by Axiom, the Company recognised the West Guadalcanal Project as an opportunity that elevated its prospectivity profile in the Solomons. As such relinquishment of the Arosi and Itina projects were put in process to allow the Company to secure this and one other exploration opportunity (maximum of three prospecting licences allowed to be held under the Mines and Mineral Act of the Solomon Islands.)

1. The Isabel nickel deposits on Santa Isabel and San Jorge Islands

The Isabel Nickel Project remains one of the largest undeveloped nickel-laterite deposits in the Pacific region. Mining and engineering companies INCO and Kaiser completed extensive investigations of two deposits called Kolosori and San Jorge, collectively known here as the Isabel Nickel Project.

SANTA ISABEL ISLAND

Isabel Nickel ProjectKolosori DepositMineralisaon Outline

0 2kilometres

N9,065,000 mN

583,

000 m

E

Figure 2. Kolosori Deposit – Mineralisation Outline – Historic Data


For

per

sona

l use

onl

y

CHEM

ISTR

Y

0 4.50 0.45

45

Co %Ni %

Mg %Fe %0

Schematic Profile

Approximate Analysis %

Profile Name

Extraction Process

Transitional

Overburden

Saprolite Ore

Limonite Ore

Bedrock

Onsite Processing

Options

Direct Shipping

Ore

Rocky Saprolite

Ore

Isabel - Schematic Laterite - Saprolite Profile & Extraction Potential

Sulp

huric

Aci

d Le

ach

DNi N

itric

Aci

d Le

ach

RKEF

& F

eNi Bu

lk S

hipp

ingN

PI/P

I

RKEF

& F

eNi

NPI

/PI

HPAL

/Car

on

HPAL

/Car

on


The nickel deposit at Isabel exists in laterites, consisting of two mineralised zones, a limonitic zone which overlies a saprolitic zone. A layer of thin overburden and serpentinite basement (labelled Bedrock in Figure 3) encapsulates the mineralised horizon.

The project has several commercially attractive development characteristics, including:

– the main area of the deposit is free from human habitation;

– mineralisation outcrops at the surface; or covered by only shallow overburden;

– the deposit is very close to the shore line, thereby allowing short haul to barging facilities; and

– a deep water area adjoining Isabel Island will form an ideal loading facility and harbour.

International Nickel Southern Exploration (a division of INCO) conducted extensive testing of the Kolosori deposit from 1957 to 1963. During this time, INCO completed 4,409 test pits, 1,484 Gemco Power Auger holes, 394 Hand Auger holes, 121 Banks Drill holes, 43 Winkie Diamond Core holes and a feasibility study across both deposits. The intention of which was to bring the deposits into production.

Kaiser Engineering subsequently investigated the project from 1993 to 1995. Kaiser excavated 34 test pits across the deposits to compare against 43 historical INCO pits. This work completed by Kaiser, highlighted the following:

– Two mineralisation types, namely, a high iron limonite overlying a low iron saprolite at depth (Figure 3);

– Unknown total thickness and grade of the saprolite ore due to depth limitation of the pitting; most pits tested the entire depth of the limonite zone, but were unable to traverse the entire depth of the saprolite zone; the zone that typically contains the highest Ni grades;

– The INCO resource estimates do not comply with industry accepted reporting standards (JORC 2004 and JORC 2013) having been completed prior to the inception of the JORC code;

– Kaiser Engineering modelled the effect of cut-off grades on tonnage.

Axiom remains in legal dispute with Sumitomo over title to the exploration licence (PL 74/11) securing the Kolosori Deposit and the Letter of Intent (LOI M6 - Bungusule) over the San Jorge Deposit, currently heard in the High Court of the Solomon Islands. As such, Axiom has not completed any drilling in the Prospecting Licence and does not possess sufficient geological data to be able to determine a Mineral Resource estimate.

Axiom will investigate as highest priority the potential for mining the Isabel deposits by DSO (direct shipping ore) methods which minimise impact on the environment, and reduces the capital and time requirements to bring the deposit into production.

The work required to assess mining by DSO will commence on successful conclusion of the High Court challenge; and includes:

– drilling for purpose of gathering information on grade, geology and density;

– extensive environmental studies; – estimation of Mineral Resource; – estimation of Ore Reserve; and – completion of bankable feasibility study.

The Company is considering other metallurgical extraction processes that increase the value of ore material obtained at point-of-sale.

Figure 3.Isabel Laterite Profile


For

per

sona

l use

onl

y

Tenement Boundary

Au-Ag Epithermal

Cu-Au Porphyry

Drill Hole

Legend

TRENCHING37.6m @ 1.01g/t Au18m @ 1.03g/t Au7.0m @ 0.8g/t Au

8.8m @ 0.18g/t Au

TRENCHING130m @ 0.58g/t Au

SILICIFIED OUTCROP10m @ 0.59g/t Au STREAM SEDIMENT

up to 0.60g/t Au

STREAM SEDIMENTup to 0.75 g/t Au

ROCKCHIPup to 5.20g/t Auup to 68.0g/t Auup to 2.84% Cu

ONLY 4 DRILL HOLES IN ENTIRE PROJECT2m @ 3.30% Cu from 60m (PODD002)5m @ 0.45% Cu from 25m (PODD003)

ROCKCHIPup to 9.14g/t Au

STREAM SEDIMENTup to 0.1g/t Au

Honiara

Hoilava epithermal Au-Ag corridor>10km strike length

Cu-Au Poha Intrusive Complex

Kilometres0 10

N


2. The West Guadalcanal ProjectThe project is located in the west of Guadalcanal Island and has road access from Honiara, the main commercial centre of the country. The project area hosts a large under-explored epithermal style high grade gold-silver system in the west, and a porphyry style bulk low grade copper-gold system in the east.

From the review of the historical exploration data, the Project area shows grade and size potential. An example of which is best trench sample interval of past explorer, Nuigini Mining, of 130 m @ 0.58 g/t Au, including 10 m @ 3.44 g/t Au. The relatively un-explored nature of the project is highlighted by the fact that no drilling exists to confirm the down-depth continuation of this trench intercept. Historical data define an alteration system coincident with anomalous gold in stream sediment geochemistry, defining an interpreted epithermal corridor at least 10 km long.

In the east of the project area, recent drilling in 2012 by a predecessor company identified copper related to skarn alteration surrounding a large porphyry system in the order of 3 km across. Further exploration follow-up work away from this central zone shown by anomalous gold and copper-in-soil grades at surface is required to define potential zones of mineralisation.

That past explorers completed little drilling and little detailed follow-up work, presents an exciting exploration opportunity. Axiom intends to conduct detailed follow-up exploration to evaluate the potential of the entire system.

The acquisition of the West Guadalcanal gold project significantly enhances Axiom’s prospectivity profile. The project possesses size and grade; defined by historic exploration data compilations. These show consistently high surface geochemical concentrations of deposit pathfinder elements (Au, Ag, As, Sb, Pb, Cu and Zn).

Follow-up target zones based on these data allow rapid exploration advancement. Axiom will undertake field work to collect high quality exploration data and further enhancement to the exploration model, with aim to discover economic mineral deposits.

3. The Arosi ProjectAxiom has completed tenement wide reconnaissance evaluation of the Arosi Project, by undertaking geological mapping, stream sediment and rock-chip sampling.

The exploration program delineated discreet zones of zinc-copper-silver mineralisation. Project assessment completed by Axiom demonstrates this project to have limited economic value at this current time relative to other potential exploration projects.

The acquisition of the more prospective West Guadalcanal gold project has necessitated the relinquishment of the Arosi project.

4. The Itina ProjectAxiom has completed near tenement wide reconnaissance evaluation of the rugged and isolated Itina Project, by completing geological mapping, stream sediment and rockchip sampling.

The exploration program delineated discreet zones of copper-gold mineralisation. Project assessments completed by Axiom shows there are limitations to a major deposit of the type required to be economic in such rugged and isolated mountain terrain.

To enhance the prospectivity profile of Axiom’s exploration portfolio, the relinquishment of the Itina Project will enable Axiom to cut costs and acquire a more advanced exploration project. Axiom is currently seeking such an opportunity.

Figure 4.West Guadalcanal historical summary highlights


For

per

sona

l use

onl

y

Review of Projects

Vietnam

Ho Chi Minh City

Dong Hoi

CAMBODIA

THAILAND

VIETNAM

LAOS

QUANG TRIAu-Ag

QUANG BINHAu-Ag

Sepon MineOz Minerals

Figure 5. Vietnam Project Locations


For

per

sona

l use

onl

y

Review of Projects – Vietnam

Quang Tri Project is a low cost exploration operation located in one of the world’s most prospective and untouched mineral provinces.

Quang Tri Gold ProjectAxiom Vietnam JSC renewed its Quang Tri Mineral Exploration Licence (MEL) on 5 September 2013 for a period of two years.

The MEL situated in the prospective Truong Son Fold Fold Belt (TSFB); an area which hosts many major mineral deposits, including Sepon, Phu Bia in Laos PDR, and the producing gold mines of Phuoc Son and Bong Mieu in Vietnam.

Axiom has established an exploration model for the project area highlighting the importance of geological controls on mineralisation. These controls include structural architecture, host lithology and intrusive mineral source (Figure 6).

Consultant geologist Doug Menzies from Corbett and Menzies Consulting Pty Ltd (CMC) has completed a structural interpretation which shows the Axiom held tenement to be located adjacent to an off-set of a major fault structure sub-parallel to the TSFB. This has similarities to the dilational structures responsible for the mineralisation at Sepon (Figure 7).

Geochemical sampling is currently in progress with the aim of defining high quality drill targets to test the mineralisation model.

Figure 6. Conceptual model for the formation of sediment hosted replacement gold deposits (modified after Corbett, G. J., and Leach, T. M., 1998. Southwest Pacific rim gold-copper systems: structure, alteration, and mineralisation. Society of Economic Geologists Special Publication 6, 234 p, cited in CMC internal publication to Axiom); figure not to scale.

Sediment Hosted Replacement Gold Deposits Conceptual Model

Limestone

Argillite

Metamorphic basement

Strike-slipstructure

Impermeable unit eg: Andersite

Extensional Tectonic Setting

Dirty Limestone J J

J

Distal Magmatic Source

Structurally controlled ore

Lithologically controlled ore

Dolomitisation

Decalcification

Magmatic fluid flow

Jasperoid J

Legend


For

per

sona

l use

onl

y

Exploration activities centred on three prospects within the tenement, namely Me Xi, Xa Loi and Khe Fia prospects. Axiom collected 4,736 B-horizon soil samples for XRF analysis, of which 409 samples assayed by aqua regia-ICP methods for the purpose of cross-checking; 45 rock and trench channelled samples; and geological mapping.

There exists a close relationship between arsenic and gold-in-soil geochemical data and rock assays. Arsenic anomalies coincident with known gold mineralised structures at Me Xi, Xa Loi and Khe Fia prospects reinforce this interpretation. Axiom interprets a northeast-southwest trending intrusive sourced hydrothermal fluid “corridor” from Xa Loi in the southwest to Khe Fia North. This interpretation is based on the lateral extent of elevated molybdenum (Mo) in soil geochemistry (Figure 8), and is further supported by mapping an en-echelon mineralised quartz vein structure mapped at Xa Loi and numerous gold-in-soil anomalies at Khe Fia North prospect.

Review of Projects – Vietnam

0 1000metres

N

Quang Tri Project Summary

4.60

0.16

Legend

Defined

Rock chips g/t AuGrade labled

>2010 - 20<10

Soil samples ppb Au

Elevated Molybdenum Domain

Mineralised vein

InterpretedInterpreted fault

Soil Sample Image (Mo) Extremely AnomalousHighly AnomalousModerately AnomalousWeakly AnomalousBackground

MEL Boundary

Drill Hole

Rock chip assaysup to 82.60 g/t Au



Xa Loi en echelon tension gash vein system

Drill hole intercepts1m @ 1.57 g/t Au (LK4-MX)

1m @ 2.04 g/t Au (LK11-MX)

692,

000

mE

1,872,000 mN

MEL 1636

VietnamHa Noi

Ho Chi Minh

Dong Hoi

MEL 1636

Vietnam

Figure 7. Structural interpretation of the Sepon mineral district and the area surrounding Axiom’s exploration tenement (Menzies 2013 in CMC internal publication to Axiom); image is the digital elevation model; interpreted faults shown as yellow lines.

Figure 8. Quang Tri project summary and soil geochemistry – molybdenum image

SEPON MINE

QUANG TRIExploration Licence

Kilometres0 25

N

Quang Tri Project Summary

Structural interpretation of the Sepon mineral district


For

per

sona

l use

onl

y

Review of Projects

Australia

BrisbaneQUEENSLAND

Rockhampton

Townsville

Cairns

OK MINESCu-Zn-Au-Ag

MOUNT MOLLOYCu-Zn

MINNAMOOLKANi

WHITE HILLSAu-Ag

PINEVALECu-Au

CARDROSSCu-Au-Ag

PORPHYRYAu

EDENVALEU

MILLUNGERAKerogen, V, Mo, U SPLIT ROCK

Cu

MOUNTAIN MAIDAu

Figure 9. Queensland Project Locations


For

per

sona

l use

onl

y

Axiom continues its realignment of the Company’s exploration strategy of building a portfolio of highly prospective tenements at different stages of the exploration and development pipeline.

A full review of its Queensland tenements to either advance or divest is in progress. This assessment may also seek new high calibre project opportunities.

A systematic and detailed technical review of the Cardross Project Area which comprises the prospects of Mountain Maid, Split Rock, Nisha, Jessica, Mt Kitchen, Mt Barker, Callaghan Springs, Rocky Dome, Porphyry, Spaniard and the mining leases of Cardross is in progress. It is considered that all these prospects form a part of a much larger inter-related hydrothermal zone conforming to the intrusive related gold system (IRGS). The work required to compete this review include; detailed surface geological mapping, re-logging diamond drill-core, soil geochemistry and possibly electrical geophysics.

Mining joint-venture negotiations announced in the Axiom 2012 annual report have been put on hold, pending results of the exploration review.

The Pinevale copper-gold and White Hills gold-silver projects no longer fit with Axiom’s exploration and development strategy and will be relinquished. OK and Mt Molloy projects are under critical review.

Three new projects for a total of five new tenements all in various stages of application. These projects comprise the Edenvale Uranium Project, Minnamoolka nickel laterite project and the Millungera energy project.

The Cardross ProjectConsolidation of exploration permits for minerals (EPM’s) at the Cardross project is complete. Four tenements (EPM 15078, EPM 15449, EPM 15641 and EPM 16402) were conditionally relinquished in favour of one new EPM 19821. The permit comprises 267 km2 and was granted on 19 September 2013 for five years and resets the technical and financial statutory requirements.

A detailed review of the Cardross project (IRGS style mineralisaton) located 30 km west of Chillagoe in north Queensland has commenced with aim to define further mineralised zones.

The different prospects (Figure 10) within the Cardross project has to date been treated as independent small isolated pods of discrete zones of mineralisation. The prospects within the greater Cardross region appear to be inter-related and are interpreted to form one large hydrothermal system on the order of 35 km2. Additionally, a number of prospects including Mountain Maid appear to be the tin-tungsten-molybdenum core zone of an IRGS type mineralising system. The exploration model aims to identify the location of these zones and the lithological and structural relationships which enable prediction of the location of possible larger and higher grade zones of gold and copper mineralisation.

0 5

kilometres

N

Cardross Project

200,

000

mE

1,872,000 mN

8,095,000 mN

BARKERS CREEK

ROCKY DOME

MOUNTAIN MAID

SPANIARD

PORPHYRY

SPLIT ROCK

CARDROSS

EPM 19821

EPM 19821

ML 20003

CALLAGHAN SPRINGS

HYDROTHERMAL SYSTEM

Sediments - Jurrasic-Tertiary

Granodiorite - SilurianMetamorphics - Proterozoic

Intrusives/Volcanics - Permo

Surface Geology

Volcanics - Carboniferous

Tenement Boundary

Legend

Historical MineProspect LocalityHydrothermal System

Review of Projects – Australia

Figure 10. Cardross project tenement and prospect locality plan


For

per

sona

l use

onl

y

Minnamoolka Nickel Laterite ProjectAxiom has been granted an Exploration Permit for Minerals (EPM 25255) over a known nickel laterite over 19 km2 in Minnamoolka, Queensland.

Previous exploration drilling within the tenement has intersected nickel in laterites. Axiom Mining will be exploring for a potential direct shipping nickel laterite orebody.

Surface indications of mineralisation have been confirmed by Geological Survey of Queensland geological mapping as well as drilling by previous holder of the project.

Edenvale UraniumAxiom lodged an Exploration Permit for Minerals Application of 330 km2 targeting the historically known sedimentary hosted uranium deposit near Edenvale, Queensland.

The area under EPM application secures the only known roll front uranium deposit in Queensland, and covers highly prospective sandstone aquifer units in a geological setting that is favourable for accumulation of sandstone style uranium mineralisation (Figure 11).

The tenement contains outcropping Gilbert River Formation sandstones that on-lap the basement rocks of the Georgetown Inlier. Outcropping hard-rock style uranium mineralisation (such as Maureen held by Mega Uranium Limited) occurs in the basement sequences to the southeast and outside of the EPM application area. The exploration model presented by Axiom is of accumulated uranium in porous on-lapping sand sequences that have migrated down-dip from a basement rich source (Figure 12).

The previous tenement holder, Australian and New Zealand Exploration Company, targeted sandstone units within the tenement application area with drilling that defined the head of a sandstone palaeo-channel. This host sand sequence is anomalous in uranium radiometrics and has a distinctive gravity low that extends for 30 km, interpreted to model the palaeo-channel system. The historic drilling did not close off the limits of the palaeo-channel to the north-west nor at depth. Axiom believes this gravity low defines a large sand filled river system sitting in a channel incised into the basement.


0 20kilometres

N

143.

75⁰

-17.75⁰

EPM 25119EDENVALE

Maureen Uranium Deposit

Edenvale Uranium Project Tenement Location

Axiom tenement boundary

Abandoned mineOther uranium tenements

Legend

Uranium mineral occurance

Figure 11. Edenvale uranium project – tenement locality plan


For

per

sona

l use

onl

y


KarumbaNormanton

Cairns

Townsville

Mt Isa

EPM 25252BLACKBULL

EPM 25257REDBULL

EPM 25256WHITEBULL

Axiom tenement boundaryToolebuc related EPMs

Legend

Major city/town

Toolebuc related EPPs Major roads

-20.0⁰

144.

0⁰

0 100kilometres

N

Millungera Energy Project Tenement Locations

Figure 13. Location of the EPM applications

Edenvale Uranium Project Exploration Model

Oxidised watersdissolved U

Mudstone

CH & H S4 2Roll frontbodies Tabular

bodies

Playa Lake

Caprock

OilGas

U-richsource rocks

Diagrammatic - Not to scale

EDENVALE

Figure 12. Edenvale uranium project exploration model (after Jaireth, McKay & Lambert; Geoscience Australia)

Edenvale Uranium Project Exploration Model


For

per

sona

l use

onl

y

Millungera Energy Project The Millungera Project is further expansion by Axiom into the energy sector through three applications of Exploration Permit for Minerals covering an area of 980 km2 between Croydon and Julia Creek in north Queensland, 400 km west of Cairns (Figure 13).

The three EPM applications target oil shale units hosted within the Toolebuc Formation, known to host most of the known shale oil resources within Australia (Geoscience Australia “Energy-Oil Shale”, viewed 7 June 2013, http://www.ga.gov.au/energy/petroleum-resources/oil-shale.html). The tenements aggregate a total strike length of 105 km and cover from 10-30 km in the down dip extent. The three tenement application areas, named Blackbull, Whitebull and Redbull, cover a specific area where the oil shale lies from 40-120 m below surface, which would be available for open pit mining at a very low strip ratio (Figure 14).

The three tenement applications lie over the northern portion of the Toolebuc Formation, interpreted to be the direct stratigraphic extension of the Richmond deposit located to the south. The Julia Creek oil shale deposit lies on an arch that brings the Toolebuc Formation to the surface so duplicating the geological setting of its eastern edge. Axiom regards the tenements as highly prospective for oil shale.

Axiom has not completed any drilling in the new tenement applications and will complete the exploration work required to generate drill targets to explore for economic accumulations of oil shale.


Millungera Energy Project Depth to top of oil shale target horizon

-19.0⁰

141.5⁰

0 30kilometres

N

Millungera Energy EPM

< 10

Legend

Drill hole data point

10 - 25

Depth to Toolebuc (m)

25 - 50 50 - 75 75 - 100 100 - 125125 - 150 150 - 200> 200

Figure 14. Depth to top of oil shale horizon in EPM application area

DisclaimerStatements in this document that are forward-looking and involve numerous risks and uncertainties that could cause actual results to differ materially from expected results are based on the Company’s current beliefs and assumptions regarding a large number of factors affecting its business. There can be no assurance that (i) the Company has correctly measured or identified all of the factors affecting its business or their extent or likely impact; (ii) the publicly available information with respect to these factors on which the Company’s analysis is based is complete or accurate; (iii) the Company’s analysis is correct; or (iv) the Company’s strategy, which is based in part on this analysis, will be successful.

Competent Person’s StatementThe information in this annual report that relates to Exploration Results is based on information compiled by Mr Jess Oram who is a member of the Australian Institute of Geoscientists. Mr Oram has sufficient experience that is relevant to the styles of mineralisation and types of deposit under consideration and to the activity which is being undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ Mr Oram is a full time employee of Axiom Mining Limited and consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.


For

per

sona

l use

onl

y

Axiom Mining Limited22

Tenement Schedule

Mining tenements held as at annual period ending 30th September 2013

Disclosures Required Under ASX Listing Rule 5.3.3

Country Name Tenement Location Interest Comments

AUSTRALIA, QUEENSLAND

Cardross Project

Cardross ML 20003 Chillagoe 100% Granted

Jessica EPM 15593 Chillagoe 100% Granted

Cardross EPM 19821 Chillagoe 100% Application

Cardross North EPM15078 Chillagoe 100% Application conditional surrender

Cardross EPM15449 Chillagoe 100% Application conditional surrender

Barkers Creek EPM15641 Chillagoe 100% Application conditional surrender

Cardross Extended EPM16402 Chillagoe 100% Application conditional surrender

Mount Molloy Project

Mt Molloy Copper Mines ML 4831 Mareeba 100% Granted

Mt Molloy EPM 12998 Mareeba 100% Granted

Millungera Project

Blackbull EPMA 25252 Georgetown 100% Application

Whitebull EPMA 25256 Georgetown 100% Application

Redbull EPMA 25257 Georgetown 100% Application

OK Mines Project

OK North ML 4805 Chillagoe 100% Granted

OK South ML 4806 Chillagoe 100% Granted

OK Extended ML 4809 Chillagoe 100% Granted

OK Extended No.2 ML 4813 Chillagoe 100% Granted

OK ML 5038 Chillagoe 100% Granted

Ok Minerals EPM 14534 Chillagoe 100% Granted

Singular Tenement Projects

Pinevale ML 4775 Emerald 100% Granted

Minnamolka EPM 25255 Mareeba 100% Application

White Hills EPM 14409 Charters Towers

100% Granted

Edenvale EPMA 25119 Georgetown 100% Application

For

per

sona

l use

onl

y

2013 Annual Report 23

Mining tenements held as at annual period ending 30th September 2013 (cont.)

Mining tenements acquired and disposed of up to 30th September 2013

State Name Tenement Location Interest Comments

AUSTRALIA, QUEENSLAND

Blackbull EPMA 25252 Georgetown 100% Application

Whitebull EPMA 25256 Georgetown 100% Application

Redbull EPMA 25257 Georgetown 100% Application

Minnamolka EPM 25255 Mareeba 100% Application

Edenvale EPMA 25119 Georgetown 100% Application

White Hills EPM14409 Charters Towers 100% Relinquished

AbbreviationsEPMA Queensland Exploration Permit for Minerals ApplicationEPM Queensland Exploration Permit for MineralsMLA Queensland Mining Lease ApplicationML Queensland Mining LeasePL Solomon Island Prospecting LicenceLOI Solomon Island Letter of Intent (to obtain a Prospecting Licence)MEL Vietnam Mineral Exploration Licence

Country Name Tenement Location Interest Comments

VIETNAM


Quang Tri MEL 1636/ GP-BTNMT

Quang Tri 72% Granted

Quang Binh MEL 154 Quang Binh 63% Application; subject to re-writing of Vietnam mineral law

Pu Sam Cap MEL 316 Lai Chau 8.40% Free carried interest; subject to further negotiation

Pu Sam Cap MEL 317 Lai Chau 8.40% Free carried interest; subject to further negotiation

SOLOMON ISLANDS

Isabel Nickel Project

Kolosori PL 74/11 Isabel 80% Granted; subject to litigation

Bungusule LOI M6 Isabel 80% Granted; subject to litigation


Arosi PL 06/12 Makira 100% Granted

Itina PL 78/11 Guadalcanal 93% Granted

For

per

sona

l use

onl

y


Sampling Techniques and Data

Criteria JORC Code explanation Commentary

Sampling techniques Nature and quality of sampling (eg cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling.

Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used.

Aspects of the determination of mineralisation that are Material to the Public Report.

In cases where ‘industry standard’ work has been done this would be relatively simple (eg ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay’). In other cases, more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information.

QUANG TRI PROJECTTrenches hand excavated to a depth of 1.8 m below surface, or until C-horizon subcrop. Samples extracted from the base of trenches and benches in continuous cut channels with samples aggregated over measured 1.0 m intervals.

QUANG TRI PROJECTSoil sampling of B-horizon soil profile at depths of 0.75 m below surface. Sampling at 50 m spacing along 200 m spaced lines.

AROSI & ITINA PROJECTNo results reported.

WEST GUADALCANAL PROJECTNo results reported, other than historic exploration results available on open-file.

ISABEL PROJECTHistoric sampling completed by INCO and Kaiser Engineering not reported here.

CARDROSS, OK, MT MOLLOY PROJECTS No results reported.

Drilling techniques Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc).

ALL PROJECTSNo drilling reported.

Drill sample recovery

Method of recording and assessing core and chip sample recoveries and results assessed.

Measures taken to maximise sample recovery and ensure representative nature of the samples.

Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.


Logging Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.

Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography.

The total length and percentage of the relevant intersections logged.


QUANG TRI PROJECTThe entire interval trenched to bedrock is geologically logged.

For

per

sona

l use

onl

y



Sub-sampling techniques and sample preparation

If core, whether cut or sawn and whether quarter, half or all core taken.

If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry.

For all sample types, the nature, quality and appropriateness of the sample preparation technique.

Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.

Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/second-half sampling.

Whether sample sizes are appropriate to the grain size of the material being sampled.

ALL PROJECTSNo drilling results reported.

Quality of assay data and laboratory tests

The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.

For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.

Nature of quality control procedures adopted (eg standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) and precision have been established.

ALL PROJECTS (except Quang Tri)No sampling reported

QUANG TRIHand-held XRF used for soil sampling and trench sampling; 8% of entire XRF survey analysed by Australian Laboratory Services using an aqua-regia digest with ICP finish. Correlation co-efficient between hand-held XRF determination and ICP analyses for Cu, Pb, Zn, Mo, Fe, is 0.99, 0.76, 0.86, 0.94, and 0.94, respectively; an under-reporting bias generally for the hand-held XRF. This correlation is sufficient for the purpose of anomaly discrimination in soil sampling.

Hand-held XRF is not useful for Au determination. From the ICP assay subset (263 samples), there is good correlation between Au and As, Au and Mo, and As and Mo in soils. Because of good correlation in pathfinders As and Mo to Au; and XRF is reliable in for these elements; field strategy is to use As and Mo anomalies in soil as measured by the XRF to find anomalous areas worth further follow-up work.

Innov-X hand-held machine; Delta Premium: Serial number 511635.

For

per

sona

l use

onl

y



Verification of sampling and assaying

The verification of significant intersections by either independent or alternative company personnel.

The use of twinned holes.

Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.

Discuss any adjustment to assay data.


Location of data points

Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.

Specification of the grid system used.

Quality and adequacy of topographic control.

ALL PROJECTSWGS84 is datum used; in appropriate zone for each project.

Data spacing and distribution

Data spacing for reporting of Exploration Results.

Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.

Whether sample compositing has been applied.

ISABEL PROJECTSufficient data exists from historic INCO and Kaiser work to produce a resource; however, because these data were collected prior to the inception of the JORC system of reporting, they do not enable resource classification and are therefore not reported here.

ALL PROJECTS (excluding the Isabel Project)No Mineral Resource reported.

Orientation of data in relation to geological structure

Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.

If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.

ALL PROJECTS (except Quang Tri)No data reported.

QUANG TRI PROJECTToo early in exploration program to ascertain if tropical weathering causes sampling bias; no sub-surface drilling.

Sample security The measures taken to ensure sample security. ALL PROJECTSA chain of custody procedure is implemented from site to laboratory.

Audits or reviews The results of any audits or reviews of sampling techniques and data.

ALL PROJECTSNo audits have been undertaken.

Sampling Techniques and Data continued

For

per

sona

l use

onl

y



Mineral tenement and land tenure status

Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.

The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.

QUANG TRIRetain 72% interest in MEL 1636.

WEST GUADALCANAL PROJECTAxiom has acquired the tenements that secure the West Guadalcanal Project after the 30/9/2013 date reported in the tenement schedule.

CARDROSS PROJECTGroup tenement consolidation for Cardross EPM 19821 in application; for conditional surrender of EPM’s 15078, 15449, 15641 and 16402.

CARDROSS PROJECTRetain Jessica EPM 15593, considered part of Cardross Project.

ITINARelinquishment of PL-78/11 in process.

AROSIRelinquishment of PL-06/12 in process.

ISABEL PROJECTOne PL over Kolosori Deposit and one LOI over San Jorge Deposit; both tenements in dispute with Sumitomo Mining Limited which is being heard in court in late 2013 – early 2014.

MINNAMOOLKA PROJECTGranted EPM.

EDENVALE PROJECTSingle EPM in application phase, awaiting granting.

MILLUNGERA ENERGY PROJECTThree EPM’s in application phase, awaiting granting.

MT MOLLOYML4821 and EPM 12998 both 100% retained.

OKFive ML’s all granted and owned 100% by Axiom; ML 4805, 4806, 4809, 4813, 5038 and one EPM 14534 granted and 100% interest by Axiom.

Reporting of Exploration Results

For

per

sona

l use

onl

y



Exploration done by other parties

Acknowledgment and appraisal of exploration by other parties.

QUANG TRI PROJECTHistoric exploration work is not readily available on open-file.

WEST GUADALCANAL PROJECT1954 – Solomon Islands Geological Survey notes copper mineralisation from regional mapping. Identified Poha intrusive complex.

1963 – PhD student E Zohar completes stream sediment survey in Poha.

1970 – Carpentaria Exploration Company Pty Ltd (CEC) conducts a six month stream sediment sampling and mapping program; discovers altered and mineralised outcrop and float in Hoilava catchment.

1971 – 1972, Utah International conducted copper stream sediment program in western Guadalcanal. Assayed for copper only.

1975 – Amoco defined 500 ppm copper-in-soil anomaly at Poha; replicated the work in 1984.

1986 – 1988, BHP Utah were the first company to specifically target epithermal mineralisation. Identified anomalous gold and sporadic zones of siliceous, argillic and pyritic alteration in the headwaters of the Hoilava catchment. Loosely identified Polo, Taho and Mt Tanjili areas.

Austpac Gold NL (and from 1998 in JV with Nuigini mining through to 1990) completed trenching at Polo Creek and returned 130 m @ 0.58 g/t Au, including 10 m @ 3.44 g/t Au.

1994 – 1998, Gualer Resources completed 100 m spaced airborne magnetics and radiometrics which covers about half of the current project area. Soil and trench sampled at Hoilava, the best results reported as being 37.6 m @ 1.03 g/t Au. Mapped the Poha intrusive complex in detail. Identified anomalous Au/Cu float.

2012 – 2013, Caldera Minerals undertook regional reconnaissance and drilled four diamond drill holes in early 2013 intersecting magnetite–garnet skarn alteration.

ISABEL PROJECT1956 – 1975, information here is reported in Kaiser (1993) as the original INCO reports are lost, and microfiche quality deteriorated to unreadable. INCO reported to have completed the following work:

– 4409 sample pits – 1484 power auger holes – 394 hand auger holes – 43 Winkie diamond core holes – trial mining 32,700bcm from bulldozed benches

– resource estimation – feasibility study.

1975 – Solomon Islands self-rule; constitution granting land ownership to traditional land-owners.

1991 – 1993, Kaiser feasibility study (engineering consultants) for Bugotu Nickel Limited (Fijian company).

– re-compile INCO information – 34 pits to confirm INCO data – check assay – metallurgical sampling – resource estimation – that does not comply with JORC reporting

requirements.

2002 – 2004, Pacrim Resources Ltd; completed a ground penetrating radar orientation survey consisting of three lines across Kolosori (Takata) Deposit and San Jorge Deposit, to test its effectiveness to model the laterite horizon. This survey effectively modelled the upper and lower boundaries of the weekly mineralised lower saprolite zone; it could not model the boundary between the limonite zone and the saprolite zone. No drilling completed.

CARDROSS PROJECT, Mt MOLLOY, OKExtensive historic dataset; in progress of new compilation.

Reporting of Exploration Results continued

For

per

sona

l use

onl

y



Geology Deposit type, geological setting and style of mineralisation.

DEPOSIT TYPE – QUANG TRIThe exploration model that is in play at Quang Tri is that of Sepon style sediment hosted replacive gold mineralisation, and skarn style copper mineralisation.

The gold mineralisation at Sepon (the style sought at Quang Tri) is localised by structural and stratigraphic fluid traps. The mineralisation is finely disseminated and is closely related to decalcification and variable silica (jasperoid) replacement of carbonate rocks following structures and lithological contacts.

DEPOSIT TYPE – WEST GUADALCANAL, AROSI, ITINAThe regional tectonic and geological settings of the project is similar to that of major porphyry copper-gold and epithermal gold deposits elsewhere within the southwest Pacific island arc system including the Panguna porphyry copper and Gold Ridge epithermal gold deposits that lie within the same volcanic arc and in Gold Ridge’s case in the same island and are associated with similar aged igneous rocks.

DEPOSIT TYPE – CARDROSS, MT MOLLOY, OK PROJECTThe prospects that make up the Cardross project; Mountain Maid, Split Rock, Nisha, Jessica, Mt Kitchen, Mt Barker, Callaghan Springs, Rocky Dome, Spaniard and OK and Mt Molloy Projects are all slightly different manifestations of the different styles of deposits available in the range envisaged by the Intrusive Related Gold System (IRGS); typical of I-type, fractionated and felsic igneous intrusives.

DEPOSIT TYPE – ISABEL PROJECTNickel mineralisation bound in laterite deposits formed by wet tropical weathering of nickeliferous ultramafic rock units

GEOLOGICAL SETTING – WEST GUADALCANAL, AROSI, ITINA, ISABELThe Solomon Islands are part of the currently active Outer Melanesian Arc System, lying on a complex convergent boundary between the Indo-Australian and Pacific Plates They are composed of a diverse assemblage of rocks of Late Mesozoic to Cainozoic age that have formed and accreted within an intra-oceanic environment.

GEOLOGICAL SETTING – CARDROSS PROJECT, OK, MT MOLLOYThe Cardross Project is located to the west of the regional scale Palmerville Fault, in proximity to Permo-Carboniferous intrusives of the Ootann Suite that intrude Silurian aged basement granites of the Nundah Suite and Proterozoic aged basement rocks of the Dargalong Metamorphics. The Permo-Carboniferous rocks in the project vicinity have the chemistry type that is responsible for Au prospects within the area of the tenement that conform to the IRGS suite of deposit styles. Likewise, OK and Mt Molloy IRGS suite of deposit styles.

For

per

sona

l use

onl

y



Drill hole Information

A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes:

– easting and northing of the drill hole collar

– elevation or RL (Reduced Level – elevation above sea level in metres) of the drill hole collar

– dip and azimuth of the hole

– down hole length and interception depth

– hole length.

If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.

ALL PROJECTSNo drill results reported.

ISABEL PROJECTNo Mineral Resource estimate is available from historic exploration because these data where collected prior to the inception of the JORC system of reporting; Axiom have not collected its own drill data.

Data aggregation methods

In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (eg cutting of high grades) and cut-off grades are usually Material and should be stated.

Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail.

The assumptions used for any reporting of metal equivalent values should be clearly stated.

ALL PROJECTSFor gold: two cut-offs are used to report interval samples; the higher grade zone is marked by a cut-off of 1 g/t Au, which may or may not be enveloped by a lower grade zone defined by a cut-off of 0.1 g/t Au; there have been no requirement to include material defined by minimum internal dilution; and no minimum length criteria.

For nickel, no aggregate data reported.

In this release only aggregation on assays for historic trench samples reported for WEST GUADALCANAL PROJECT.


For

per

sona

l use

onl

y



Relationship between mineralisation widths and intercept lengths

These relationships are particularly important in the reporting of Exploration Results.

If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported.

If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg ‘down hole length, true width not known’).

ALL PROJECTSNo drilling results reported.

Diagrams Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.

Figure 2 – ISABEL PROJECT – Kolosori (Takata) Deposit

This plan shows an indicative outline of the mineral deposit as derived from historic data; it does not represent the limits of economic extraction; but designed to show the potential scale of the mineralised system; further drilling is required to ascertain the Mineral Resource and Mineral Reserve of this deposit.

Figure 3 – ISABEL PROJECTSection of an indicative laterite profile show schematic Ni and other element variations in concentration with depth in the profile; also indicative potential extraction processes for mineralisation; further drilling required to produce Mineral Resource, Mineral Reserve which will lead to a definitive process of extraction.

Figure 4 – WEST GUADALCANAL PROJECTPlan view showing highlights of historic data available on open-file; these data where used to derive the exploration model and plan the follow-up field work; which is currently in progress; Axiom has not completed any drilling in the project.

Figure 8 – QUANG TRI PROJECTPlan presents a continuous spectrum image of soil data for molybdenum (Mo), derived from irregularly distributed sampling data; Mo is considered one of several pathfinder elements for intrusive related Au mineralised systems; the relative scale bar in the legend for Mo is that considered for Mo as an indicator in a potential Au system, not for Mo as an economic accumulation in its own right.

Balanced reporting

Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.

QUANG TRIBest and selective Au rockchip sampling shown in Figure 8 only to show potential for mineralised Au system; Axiom is still in the process of generating drill targets; no results reported in text. Reference to deposits Sepon, Phu Bia, Phuoc son and Bong Mieu in the text illustrates the potential for the Truong Son Fold Belt to host mineralisation; Axiom does not possess any interest in these deposits.

MILLUNGERA ENERGY PROJECTReference to Julia Creek Oil Shale deposit in text is to show potential for the Toolebuc Formation to host oil shale; Axiom does not possess any interest in this deposit.

For

per

sona

l use

onl

y



Other substantive exploration data

Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.

ISABEL PROJECTSAxiom has not completed any work on Isabel Deposits; therefore metallurgical characteristics, density, and groundwater quality is not known.

Further work The nature and scale of planned further work (eg tests for lateral extensions or depth extensions or large-scale step-out drilling).

Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.

CARDROSS PROJECT

Complete a prospectivity analysis of the tenement group, following re-logging of core, detailed surface mapping at 1:5,000 scale, tenement wide soil sampling and possible some electrical geophysics, evaluate if a Mineral Resource can be defined at Cardross ML.

WEST GUADALCANAL PROJECT

Targeted soil sampling, trenching and detailed mapping in western tenement areas in follow-up to prospects identified from historical data compilations; leading to prospectivity review and drill target definition; future commitment to drilling only if prospectivity analysis provides enough merit.

ISABEL PROJECT

Drilling to establish Inferred Mineral Resource estimate; with data to allow grade, density and moisture determinations.

QUANG TRI Complete reconnaissance field activity including detailed mapping of entire tenement; complete drill target generation and prioritisation; further drilling is dependent upon quality of target, which to date, is uncertain.

EDENVALE; MILLUNGERAAwait granting of title before compilation of historic data.

MINNAMOOLKA Historic data compilation.

MT MOLLOY, OKDetailed review of both projects, re-logging of core and re-assessment of economic potential.


GlossaryAg silver

As arsenic

Au gold

CH4 methane gas

Cu copper

Fe iron

g/t units of concentration in grams per metric ton

H2S hydrogen sulphide gas

Mg magnesium

Mo molybdenum

Ni nickel

Pb lead

Sb antimony

U uranium

V vanadium

Zn zinc

For

per

sona

l use

onl

y

Corporate Governance Financial Report

The Board and its responsibilities 34Independence 34Nomination and remuneration committee 34Audit, risk and compliance committee 34Review of Board performance 35Diversity 35Securities trading disclosure 35Continuous disclosure 35Identification and management of business risk 35Ethical standards 35Shareholder communication 36Risk factors 36Business risks 36General risks 38

Directors’ Report 39Directors’ Declaration 41Independent Audit Report 42Income Statements 44Statements of Comprehensive Income 45Balance Sheets 46Statements of Changes in Equity 47Cash Flow Statements 49Notes to the Financial Statements 50

1. Company information 502. Significant accounting policies 503. Applications of new and revised IFRSs 574. Geographical information 585. Income tax 586. Loss per share 597. Other receivables 598. Intercompany receivables 599. Investments in subsidiaries 6010. Property, plant and equipment 6111. Mineral exploration expenditure 6312. Other payables 6413. Borrowings 6414. Provisions 6515. Capital and reserves 6616. Note to cash flow statements 7017. Short term employee benefits and

superannuation commitments 7018. Commitments 7119. Auditor’s remuneration 7120. Director and executive disclosures 7221. Financial risk management and fair values 7622. Contingent liability 7723. Subsequent events 7724. Significant accounting estimates

and judgements 77

ASX Additional Information 79Corporate Directory 81


For

per

sona

l use

onl

y


Corporate Governance

The Board of Directors of Axiom Mining Limited (“the Company”) is responsible for the corporate governance of the group. The Board guides and monitors the business and affairs of the Company on behalf of shareholders by whom it is elected and to whom it is accountable. Accordingly, the Board has adopted a Corporate Governance Charter, guided by the ASX Corporate Governance Council’s Revised Corporate Governance Principle and Recommendations.

In accordance with the Council’s recommendations, this section contains specific information, and reports on the Company’s adoption of the Council’s best practice recommendations on an exception basis. Disclosure is made of any recommendations that have not been adopted by the Company, together with the reasons why they have not been adopted. The Company’s corporate governance principles and policies are therefore structured as follows:

Principle 1 Lay solid foundations for management oversight

Principle 2 Structure the Board to add value

Principle 3 Promote ethical and responsible decision making

Principle 4 Safeguard integrity in financial reporting

Principle 5 Make timely and balanced disclosure

Principle 6 Respect the rights of Shareholders

Principle 7 Recognise and manage risk

Principle 8 Encourage enhanced performance

Principle 9 Remunerate fairly and responsibly

Principle 10 Recognise the legitimate interests of shareholders

The corporate governance practices of the Company are compliant with the Council’s best practice recommendations to the extent that they are relevant to the Company’s business activities and the stage of its development as a listed exploration and mining company. The Board will consider on an ongoing basis its corporate governance procedures and whether they are sufficient given the Company’s operations and size.

The Board and its responsibilitiesThe Board is of a size which is satisfactory for its current stage of development and it schedules formal quarterly board meetings and other meetings as and when required having regard to the relevant business activities. For the purposes of the proper performance of their duties, Directors are entitled to seek independent professional advice at the Company’s expense subject to having first advised the Chairman of the necessity to do so.

The Directors stand for re-election by shareholders in accordance with the requirements of the Articles of Association on a three-year rotational basis.

IndependenceGiven the size and scope of the Company’s operations the Board considers that it is appropriately structured to discharge its duties in a manner that is in the best interests of the Company and its shareholders from both a long-term strategic and day to day operations perspective, and to achieve the objectives of the Company. Furthermore, mechanisms are in place to ensure the integrity of the financial accounts. The Board will continue to monitor the effectiveness of its structure and will make any changes as are deemed desirable as the Company continues to grow.

The Board notes that neither Mr Williams nor Mr Stuart are current or past executives of the Company, are not substantial shareholders and are therefore considered to be independent. Having regard to the Company’s need to engage legal services to protect its Prospecting Licence in the Solomon Islands the Company has retained Kemp Strang Lawyers in Sydney in which Mr Williams was a partner until 31 December 2012 and is now a consultant to the firm. He has not and does not, personally supervise or undertake the legal work associated with this litigation. The remaining Board members do not consider that Mr Williams’ independence is affected by virtue of these matters.

Nomination and remuneration committeeThe full Board considers those matters that would usually be the responsibility of a nomination committee. The Board considers that no efficiencies or other benefits would be gained by establishing a separate nomination committee at this stage of the development of the Company.

Audit, risk and compliance committeeThe composition of the Board is not suitable for the formation of separate sub-committees and these responsibilities are undertaken by the whole Board. The Company has developed an audit review process whereby Directors meet with the external auditor bi-annually and with management responsible for the finance functions of the Company as required to ensure the highest possible degree of the integrity of the Company’s financial operations to prepare the relevant Financial Statements for the Company.

For

per

sona

l use

onl

y


The Board, acting in this role, has the primary responsibility to:

1. Oversee the existence and maintenance of internal controls and accounting systems;

2. Oversee the management of risk within the Company;

3. Oversee the financial reporting process;

4. Review the half year and full financial year Financial Statements and recommend them for approval by the Directors;

5. Review the performance of the external auditors and existing audit arrangements;

6. Ensure compliance with laws, regulations and other statutory or professional requirements and the Company’s governance policies set out in the Corporate Governance Charter;

7. Recognise and respect the rights of shareholders and its obligations to all legitimate stakeholders.

Review of Board performanceThere is currently no formal process for performance evaluation of the Board, individual Directors or Chief Executive Officer. The Board has considered this aspect of governance over the past year and more recently, but considers that until the commencement of its mining operations was more imminent the matter would be deferred until the 2013 calendar year when the resolution of the Solomon Islands litigation is clearer and the timing of its mining operations more certain.

DiversityThe Company has reviewed the new recommendations on diversity introduced by the ASX Corporate Governance Council on 30 June 2010. As far as practical, given the current size, scope and requirements of the Company’s operations in the locations in which it operates, the Company is committed to putting these recommendations into practice. Given the multinational scope of its operations, the Company will consider not only gender, but also ethnicity and cultural background in reporting its diversity performance.

Securities trading disclosureThe purpose of the Company’s securities dealing policy is to create awareness of the legal prohibition on dealing in securities of the Company. The policy also aims to ensure that the Company’s reputation and those of its employees and Directors is not adversely impacted by perceptions of dealing in the Company’s securities at inappropriate times. It is the duty of each person to seek to avoid any

such dealing at a time when persons are prohibited from dealing in the Company’s securities and in any event each person is required to inform the Chairman before they intend dealing in the Company’s securities and secure his consent to do so, unless it is proposed to do so in a period when it is otherwise permitted and the market is fully informed. A copy of the Trading Policy was released to the ASX on 24 December 2010 and is also available on the Company’s website.

Continuous disclosureThe Company must comply with the continuous disclosure requirements of the ASX Listing Rules and Corporation Act, which requires it to disclose to the ASX any information concerning the Company that a reasonable person would expect to have a material effect on the price or value of the Company’s securities unless certain exemptions from the requirements apply. To ensure it meets its continuous disclosure obligations, the Board itself, through the Chief Executive Officer, is responsible for determining and approving all continuous disclosure matters.

Identification and management of business riskThe Board is responsible to identify, monitor and reduce the significant areas of potential business and legal risk of the Company. The Board continually reviews the risks associated with its exploration activities and also reviews and monitors the parameters under which such risks will be managed.

Ethical standardsThe Board recognises the need for Directors and employees to observe the highest standards of behaviour and business ethics when engaging in corporate activity especially in developing jurisdictions. The Company officers and employees are required to act in accordance with the law and with the highest ethical standards and in compliance with Australian and the laws of each country in which it operates. In addition to the Trading Policy, on joining the Board, the Directors are required to sign a director’s disclosure statement. This sets out their obligations regarding disclosure of dealing in the Company’s securities. Each quarter at formal Board meetings or other meetings when convened Directors are required to make disclosures of any matters which may have altered or where any matter to be discussed by the Board might give rise to a conflict of interest. Where a conflict of interest may arise the relevant Director(s)

For

per

sona

l use

onl

y



may be asked to leave the meeting to ensure full and frank discussion of the matter(s) under consideration for determination.

Shareholder communicationThe Board strives to ensure that shareholders are provided with sufficient information on a continual basis to assess the activities and performance of the Company and its Directors to enable shareholders to make well informed investment decisions. Information is communicated to shareholders through:

– quarterly, half-yearly and audited annual financial reports;

– annual and other general meetings convened for shareholder review and where necessary approval of Board proposals;

– continuous disclosure of material changes to the ASX for open access to the public, as set out in the Company’s continuous disclosure policy; and

– the Company’s website at www.axiom-mining.com where all ASX announcements, notices and financial reports are published as soon as possible after release to the ASX.

The auditor is invited to attend the Annual General Meeting of shareholders.

Risk factorsThere are a number of risk factors that may affect the financial performance of the Company and the value of an investment in shares issued in the Company. While some of these risks can be minimised, some are outside the control of the Company. There are also specific risks associated with the Company’s business and investment in the mineral exploration and mining industry and in the jurisdictions in which it operates including but not limited to sovereign risks.

Business risks

Exploration

The business of mineral exploration, project development and mining, by its nature, contains elements of significant risk with no guarantee of success. There is no assurance that exploration on any of the Company’s projects described in this report, or on any other projects that may be acquired, will result in the discovery of a mineral deposit. If there is a discovery, it may not prove to be economically viable to exploit the discovery.

General mineral operation risks

The business of the Company may be disrupted by a variety of risks and hazards, which are beyond the control of the Company, including sovereign or political risks, environmental hazards, industrial accidents, technical failures, labour disputes, unusual or unexpected rock formations, severe seismic activity, flooding and extended interruptions due to inclement or hazardous weather conditions, fire, explosions, customs and port delays. These risks and hazards could also result in damage to or destruction of mining facilities, personal injury, environmental damage, business interruption, monetary losses and possible legal liability.

Development capital costs

Should the Company be successful with exploration, the capital cost of the Company’s future mine development could vary with changes in a variety of factors, including exchange rates which affect imported capital equipment prices, geological and technical conditions encountered during drilling and mine development, and the construction of new production facilities. A substantial development cost overrun could have a material adverse effect on the Company. At the current stage of development of the Company’s operations, mine development and production related risks are low but this is expected to change over the next one to two years.

Resource estimates

In this report and in future reporting by the Company, references to reserves and resources and their classifications, are in accordance with the Australasian Code for Reporting of Mineral Resources and Ore Reserves (“JORC Code”). Estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates, which were valid when made, may change significantly when new information becomes available. In addition, resource estimates are necessarily imprecise and depend to some extent on interpretations, which may ultimately prove to be inaccurate. Should the Company encounter mineralisation different from that predicted by past drilling, sampling and similar examination, resource estimates may have to be adjusted. This adjustment could affect development and mining plans, which could adversely impact the Company.

Title rights

There is no guarantee that any tenement applications or conversions in which the Company has a current or potential interest will be granted. Tenement applications may require the Company to commence negotiations with relevant government body, minister or official,

For

per

sona

l use

onl

y


landholder, and, in Australia, Vietnam and Solomon Islands, indigenous representative bodies to gain access to the underlying land. There is no guarantee that such negotiations will be successful or that having been successful the Company will not be challenged by third parties as it is currently in the Solomon Islands.

Also, due to its exploration activities in Queensland, the Company must observe its “duty of care” under Aboriginal Cultural Heritage Act 2003 (Qld) to ensure that its activities do not harm Aboriginal cultural heritage.

Price volatility

Most of the Company’s revenues from any successful exploration and mine development will ultimately be derived from sale of metals. Consequently, the Company’s expected earnings will be closely related to metal prices. Metal prices fluctuate and are affected by numerous factors beyond the control of the Company. These factors include world demand, forward selling by producers, and production cost levels in major metal-producing regions. Metal prices may also be affected by macro-economic factors such as expectations regarding inflation, interest rates, and global and regional demand for and supply of metals as well as global economic conditions. These factors may have an adverse effect on the Company’s exploration, development and production activity as well as its ability to fund these activities. The Company will consider developing a suitable hedging strategy as and when appropriate.

Funding requirements

The Company’s exploration and mining activities will require significant expenditure. The Company’s ability to effectively implement its business strategy over time may depend in part on its ability to raise additional funds, either in the form of debt or equity. Any additional equity funding may dilute holdings of shareholders and any debt financing, if available, may involve restrictive covenants, which may limit the Company’s operations and business strategy. Whilst the Board constantly reviews its capital requirements and expenditure there can be no assurance that the Company will be able to raise additional funding or that such funding will be on favourable terms. If adequate funds are not available on acceptable terms, the Company may not be able to take advantage of opportunities or otherwise respond to competitive pressures. This may have a material adverse effect on the Company’s activities and the price of its shares.

Dependence on key personnel

The Company’s success depends to a significant extent on key management personnel, as well as other management and technical personnel including those employed on a contractual basis. The loss of the services of certain personnel could have an adverse effect on the Company and its operations. The Board has implemented a long term incentive plan for senior management and Directors through a Performance Rights Plan which aligns the employee with the success of the Company and shareholder returns. Otherwise the Board is satisfied that the Company remunerates fairly and responsibly and where necessary independent remuneration advice is obtained.

Dependence on third party contractors

The Company will be contracting third parties to provide surface exploration services and equipment in relation to its exploration activities. Failure or termination of a contract with those third parties at any time may result in significant delays in the Company’s exploration program that may have a material effect on the Company. The Company will mitigate these risks through the use of multiple suppliers where feasible and by actively managing its supplier relationships and procurement policies.

Environmental regulations

The Company’s operations and projects are subject to the law and regulations of the jurisdictions in which it operates relating to environmental matters, including discharge of hazardous waste and materials. Although the Company endeavours to comply in all material respects with all applicable environmental laws and regulations, there are risks inherent in its activities, such as spills, leakages or other unforeseen circumstances, which could expose the Company to liability.

The Company may require, and has obtained or will obtain, approvals from all relevant authorities to undertake prescribed exploration or mining activities. Failure to maintain such approvals may prevent the Company from undertaking such activities. The Company is unable to predict the effect of additional environmental laws and regulations which may be adopted in the future, including whether such laws or regulations would materially increase the Company’s cost of doing business or affect its operations in any area.

There can be no assurance that the implementation of new environmental laws and regulations or stricter enforcement policies would not oblige the Company to incur expenses and investments which could have a material adverse effect on the Company’s business, financial condition or operational results.

For

per

sona

l use

onl

y



The cost and complexity of complying with applicable environmental laws and regulations in any relevant jurisdiction may prevent the Company from being able to develop mineral deposits.

Insurance

The Company intends to maintain adequate insurance over its operations within ranges of coverage that the Company understands to be consistent with industry practice and having regard to the nature of activities being conducted. However, insurance of all risks with mineral exploration, project development and production is not always possible. Accordingly, the Company may not be insured against all possible losses, either because of unavailability of cover or because the premiums may be excessive relative to benefits that would accrue.

Sovereign risk and foreign operations

There are risks associated with operating internationally. There can be no guarantee that the government regulations in Australia, Hong Kong, Vietnam or Solomon Islands, in particular in relation to foreign investment, repatriation of foreign currency, taxation and the regulation of the mineral exploration and mining industry, will not be amended in the future to the detriment of the Company’s business. Costs of compliance with laws and regulations in Australia, Hong Kong, Vietnam and Solomon Islands may vary from current estimates.

The Company undertakes its activities in Vietnam and in Solomon Islands in conjunction with other local partners. There can be no guarantee that the Company will be able to enter into commercially satisfactory arrangements with other local partners for any future operations in Vietnam and/or Solomon Islands.

The Company is incorporated in Hong Kong: changes in Hong Kong laws may have an adverse effect on non-Hong Kong holders of shares. Reporting requirements of the Company in Hong Kong may impose onerous obligations on the Company.

The Company also currently operates in Vietnam. Vietnam’s economy is undergoing a transition from a planned to a more market-oriented economy. Although in recent years the Vietnamese government has implemented economic reforms and reduced state ownership, a substantial portion of productive assets in Vietnam are still owned by the government. In addition, the Vietnamese government continues to exercise significant control over Vietnam’s economic growth through allocation of resources, control of foreign currency denominated obligations, setting of monetary policy and providing preferential treatment to particular

industries or companies. The Company’s future earnings could be affected if the Vietnamese government was to reverse recent trends and impose restrictions on the Company’s business.

The Solomon Islands economy and political environment remains fragile. The Company is currently involved in litigation in respect of the Prospecting Licence it was granted on Isabel Island and whilst the Company is confident that its rights will be upheld, this cannot be guaranteed.

Currency and exchange rate risk

Movements in currency exchange rates can be volatile. The Company’s expenditure obligations for exploration in Vietnam are incurred predominantly in US dollars (USD) and Vietnamese dong (VND), in the Solomon Islands in Solomon Bolona dollars (SBD) and in Australia in Australian dollars (AUD). Currency risk may result in an exchange rate loss or gain to the Company, depending on the value movement between currencies.

The Company has prepared its accounts denominated in AUD. For ASX reporting purposes, quarterly statements and accounts are provided in AUD.

The return on equity and any dividends for Australian Shareholders may be exposed to fluctuations and volatility of the exchange rates among USD, AUD, SBD, and VND.

General risks

Economic conditions

General economic conditions may affect interest rates, inflation rates and other economic variables. Movements in these factors may benefit or adversely affect the Company. Movement in general economic conditions may also affect companies with which the Company conducts its business, which may also affect the Company’s earnings.

Changes to laws and regulations

The introduction of new policies, legislation or amendments to existing policies or legislation by governments or the interpretation of those laws as noted above could impact adversely on the assets, operations and ultimately financial performance of the Company.F

or p

erso

nal u

se o

nly


Directors’ Report

The Directors submit herewith their annual report together with the audited financial statements for the year ended 30 September 2013.

The Directors of the Company during the year and to the date of this report are:

Name of Director Special Responsibilities

Stephen Ray Williams Non-Executive Chairman

Ryan Richard Mount Executive Director and Chief Executive Officer

Neil Francis Stuart Non-Executive Director (resigned on 22 April 2013)

Anthony Faillace Non-Executive Director (appointed on 1 March 2013)

Operating and Financial Review

Results of Operations

The consolidated loss from ordinary activities of the Company and its controlled entities for the year ended 30 September 2013 after income tax was A$13,649,940 (2012: A$5,669,246). The net loss of the Company for the year after income tax was A$9,050,818 (2012: A$8,355,350).

Events Subsequent to Period Ended 30 September 2013

On 10 October 2013, the Company announced a placement of 50,000,000 shares at A$0.02 each to raise a total fund of A$1,000,000.

On 14 October 2013, the Company’s subsidiary, Axiom KB Limited, appeared in the Solomon Islands High Court to commence the trial of case 258/11.

On 21 October 2013 the Company announced a non-renounceable rights issue of 1 for 10 rights to eligible shareholders at A$0.02 per share. The results of the rights issue was announced on 27 November 2013 with A$3,099,711 raised including shortfall placements.

Company Secretary

As the Company is incorporated in Hong Kong it is a requirement under the Hong Kong Companies Ordinance to have a resident Company Secretary and Boacoh Secretarial Limited of Hong Kong acts as Company Secretary for the Company. Boacoh Secretarial Limited is a Company owned by the partners of Boase Cohen & Collins Solicitors.

Accountant and Local Agent

As Axiom is registered in Australia it is required to appoint a Local Agent for receipt of notices from both the Australia Securities Exchange Limited and the Australian Securities and Investment Commission. Mr Ryan Richard Mount is the Local Agent and Chief Executive Officer.

Principal Activities

The principal activities of the Company and the Group during the year were mineral exploration and assessment of potential mining acquisition opportunities in Australia, Vietnam and Solomon Islands. No significant change in these activities occurred during the year.

Property, Plant and Equipment

Movements in property, plant and equipment of the Group are set out in Note 10 to the consolidated financial statements.

Risk Management

The Board of Directors is responsible for ensuring that risks, and also opportunities are identified on a timely basis and that activities are aligned with risks and opportunities identified with the Board of Directors. The Company believes that it is crucial for all Board members to be part of this process, and as such the Board of Directors has not established a separate risk management committee.

The Board of Directors has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with risks identified by the Board of Directors. These include the following:

– Board approval of a strategic plan, which encompasses strategy statements designed to meet shareholders needs and manage business risks.

– Implementation of Board approved operating plans and budgets and Board monitoring of progress against these budgets.

The Board of Directors will on a regular basis, identify likely risks and ways to mitigate such risks.

For

per

sona

l use

onl

y


Directors’ Report

Changes in the State of Affairs

No changes to the state of affairs of the Group have occurred during the financial year.

Dividends

The Board of Directors does not recommend the payment of any dividend for the year.

Share Capital

During the year the Company issued 614,494,546 ordinary shares via placements, on exercise of performance rights, conversion of convertible shares and as payment for services.

Details of the movements in share capital of the Company during the year are set out in Note 15(a) to the consolidated financial statements.

Share Options and Performance Rights

During the year, 338,443,086 options of the Company to acquire ordinary shares were issued and 239,839,564 expired.

Under the Directors and Executives Performance Rights Plan (approved by shareholders on 30 July 2010), 1 million performance rights were exercised by employees during the year, resulting in the issue of the same number of ordinary shares in the Company to those employees. A further 11 million performance rights were issued to Directors and 4.6 million performance rights were issued to employees and 33 million performance rights lapsed during the year.

Likely Developments and Expected Results

In the opinion of the Directors it may prejudice the interests of the Company to provide additional information in relation to the future developments and business strategies of the operations of the Company and the expected results of those operations in subsequent financial years.

Environmental Regulation

The Group is subject to significant environmental regulation in respect to its exploration activities. The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance with all environmental legislation. The Directors of the Company are not aware of any breach of environmental legislation for the year under review.

Indemnification of Officers and Auditors

During the financial year, the Company has paid an insurance premium in respect of a contract insuring against liability of Directors and Officers against claims brought against them individually or jointly while performing services for the Company, and against expenses relating thereto, in accordance with the Company’s constitution. In accordance with commercial practice, the insurance prohibits disclosure of the amount of the premium and the nature and the amount of the liability covered.

Directors’ Meetings

During the year the Company held two meetings of Directors. The attendance of Directors at meetings of the Board of Directors were:

Directors’ MeetingsDirectors A B

Stephen Ray Williams 2 2

Ryan Richard Mount 2 2

Neil Francis Stuart 2 2

Anthony Faillace 0 0

Notes: A – Number of meetings attended. B – Number of meetings held during the time the Director held

office during the year.

For

per

sona

l use

onl

y


Directors’ Interest in Shares

Except as disclosed in Note 20 to the financial statements, at no time during the year was the Company or any of its subsidiaries a party to any arrangement to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Directors’ Interests in Contracts

Except as disclosed in Note 20 to the financial statements, no contracts of significance to which the Company or any of its subsidiaries was a party, and in which Directors of the Company had a material interest, subsisted at the end of the year or at any time during the year.

Auditors

The Group’s financial statements have been audited by Baker Tilly Hong Kong Limited Certified Public Accountants, who retire and being eligible offer themselves for re-appointment. Rothsay Chartered Accountants Sydney has also provided auditing services to the Company.

Signed in accordance with a resolution of the Board of Directors.

Stephen Ray Williams Chairman

Dated at Brisbane this 31st day of December 2013

Directors’ Declaration

The Directors’ of the Company declare that:

The audited financial statements and notes and the additional disclosures included in the Directors’ Report designated of the Company and of the consolidated entity have been prepared in accordance with the Hong Kong Companies Ordinance, including:

i. giving a true and fair view of the Company’s and consolidated entity’s financial position as at 30 September 2013 and of their performance, for the year ended on that date; and

ii. complying with applicable accounting standards; and

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

This declaration is made in accordance with a Resolution of the Board of Directors.

Stephen Ray Williams Chairman

Dated at Brisbane this 31st day of December 2013For

per

sona

l use

onl

y


to the members of Axiom Mining Limited

Independent Audit Report

Independent auditor’s report to the shareholders of Axiom Mining Limited

(Incorporated in Hong Kong with limited liability)

We have audited the consolidated financial statements of Axiom Mining Limited (the “Company”) and its subsidiaries (together “the Group”) set out on pages 44 to 78, which comprise the consolidated and company balance sheets as at 30 September 2013, and the consolidated and company income statements, the consolidated and company statements of comprehensive income, the consolidated and company statements of changes in equity, and the consolidated and company cash flow statements for the year then ended, and a summary of significant accounting policies and other explanatory information.

Directors’ responsibility for the consolidated financial statementsThe directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board and the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on the consolidated financial statements based on our audit. This report is made solely to you, as a body, in accordance with section 141 of the Hong Kong Companies Ordinance, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

We conducted our audit in accordance with International Standards on Auditing issued by International Federation of Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and true and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the consolidated financial statements.

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

For

per

sona

l use

onl

y


Independent auditor’s report to the shareholders of Axiom Mining Limited (continued)

(Incorporated in Hong Kong with limited liability)

OpinionIn our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 30 September 2013 and of the Company’s and the Group’s loss and cash flows for the year then ended in accordance with International Financial Reporting Standards and have been properly prepared in accordance with the Hong Kong Companies Ordinance.

Without qualifying our opinion, we draw attention to Note 2(b) to the consolidated financial statements which indicates that if the Group and the Company are unable to raise additional equity or are unable to farm out or dispose of its exploration assets, there is significant uncertainty as to whether the Group and the Company can continue as a going concern.

Baker Tilly Hong Kong Limited Certified Public Accountants Hong Kong, 31 December 2013 Andrew David Ross Practising certificate number P01183

For

per

sona

l use

onl

y


for the year ended 30 September 2013 (Expressed in Australian dollars)

Income Statements

Group Company

Note2013

A$2012

A$2013

A$ 2012

A$

Revenue

Interest income 9,125 2,484 8,458 2,436

Sundry income 3,467 17,378 1,322 –

Total revenue from ordinary activities 12,592 19,862 9,780 2,436

Depreciation and amortisation 10 (287,932) (63,215) (33,195) (1,272)

Salaries, Directors and employee benefits expense (2,746,280) (1,962,955) (1,862,702) (1,713,760)

Superannuation (131,715) (149,869) (123,893) (146,819)

ASX fees (46,151) (50,840) (46,151) (50,840)

Audit fees (94,965) (71,584) (78,530) (53,751)

Provision for non-recovery of intercompany receivables 8 – – (4,631,064) (3,793,275)

Impairment loss on investments in subsidiaries – – – (141)

Impairment loss on mineral exploration expenditure 11 (5,542,675) – (568,182) –

Exploration costs 11 (675,612) – – –

Foreign exchange gain/(loss) 701,814 652 595 3,230

Administration, accounting, secretarial and other costs (4,026,158) (2,736,407) (1,613,254) (2,076,642)

Rent and occupancy costs (348,483) (186,160) (63,216) (57,001)

Share based payments 15(b)(iii) (29,225) (441,190) (29,225) (441,190)

Interest expense (435,150) (27,540) (11,781) (26,325)

Loss before income tax (13,649,940) (5,669,246) (9,050,818) (8,355,350)

Income tax 5 – – – –

Loss for the year (13,649,940) (5,669,246) (9,050,818) (8,355,350)

Attributable to:

Owners of the Company (13,168,430) (4,910,746) (9,050,818) (8,355,350)

Non-controlling interests (481,510) (758,500) – –

(13,649,940) (5,669,246) (9,050,818) (8,355,350)

Loss per share (cent)

Basic and diluted 6 A$0.61 A$(0.40)

The notes on pages 50 to 78 form part of these financial statements.

For

per

sona

l use

onl

y



Statements of Comprehensive Income

Group Company

2013 A$

2012 A$

2013 A$

2012 A$

Loss for the year (13,649,940) (5,669,246) (9,050,818) (8,355,350)

Other comprehensive income/(loss) for the year

Item that will not be reclassified to profit or loss:

Deficit on valuation of mineral exploration expenditure (15,030,391) – – –

Item that may be reclassified subsequently to profit or loss:

Exchange differences on translation of financial statements of overseas subsidiaries, net of tax (145,879) (329,142) – –

Total comprehensive loss for the year (28,826,210) (5,998,388) (9,050,818) (8,355,350)

Attributable to:

Owners of the Company (28,344,700) (5,239,888) (9,050,818) (8,355,350)

Non-controlling interests (481,510) (758,500) – –

(28,826,210) (5,998,388) (9,050,818) (8,355,350)


For

per

sona

l use

onl

y


as at 30 September 2013 (Expressed in Australian dollars)

Balance Sheets


Group Company

Note2013

A$2012

A$2013

A$ 2012

A$

Current assets

Cash and cash equivalents 421,598 808,596 369,348 742,527

Other receivables 7 588,113 369,609 422,488 93,850

Total current assets 1,009,711 1,178,205 791,836 836,377

Non-current assets

Intercompany receivables 8 – – – –

Investments in subsidiaries 9 – – – –

Property, plant and equipment 10 2,198,805 1,873,528 199,116 4,044

Mineral exploration expenditure 11 2,795,774 23,045,514 – 568,182

Total non-current assets 4,994,579 24,919,042 199,116 572,226

Total assets 6,004,290 26,097,247 990,952 1,408,603

Current liabilities

Other payables 12 1,048,709 2,350,423 857,320 1,983,203

Borrowings 13 20,480 147,855 20,480 147,855

Capitalised lease liabilities 10 713,794 123,493 – –

Provisions 14 92,737 147,210 82,640 146,158

Total current liabilities 1,875,720 2,768,981 960,440 2,277,216

Non-current liabilities

Capitalised lease liabilities 10 1,146,727 1,470,156 – –

Total non-current liabilities 1,146,727 1,470,156 – –

Total liabilities 3,022,447 4,239,137 960,440 2,277,216

NET ASSETS/(LIABILITIES) 2,981,843 21,858,110 30,512 (868,613)

CAPITAL AND RESERVES

Share capital 15(a) 23,952,648 17,353,837 23,952,648 17,353,837

Reserves 15(b) 37,971,779 49,880,811 38,163,416 34,896,178

Accumulated losses (57,702,574) (44,618,038) (62,085,552) (53,118,628)

Equity attributable to owners of the Company 4,221,853 22,616,610 30,512 (868,613)

Non-controlling interests (1,240,010) (758,500) – –

TOTAL EQUITY/(DEFICIT) 2,981,843 21,858,110 30,512 (868,613)

Approved and authorised for issue by the Board of Directors on 31 December 2013.

Stephen Williams Ryan Mount Director Director

For

per

sona

l use

onl

y



Statements of Changes in Equity


Group

Share Capital

A$

Share premium

A$

Exchange Reserve

A$

Share based

payment reserve

A$

Asset revaluation

reserve A$

Accumulated losses

A$

Attributable to owners

of the Company

A$

Non-controlling

interests A$

Total A$

At 1 October 2011 10,884,864 32,964,737 (649,826) 327,340 15,114,285 (39,707,292) 18,934,108 – 18,934,108

Shares issued during the year 6,312,751 2,168,449 – – – – 8,481,200 – 8,481,200

Equity-settled share-based settlement – – – 469,990 – (28,800) 441,190 – 441,190

Shares issued as payment for services 54,368 86,649 – (141,017) – – – – –

Exercise and lapse of performance rights 101,854 138,146 – (268,800) – 28,800 – – –

Loss for the year – – – – – (4,910,746) (4,910,746) (758,500) (5,669,246)

Other comprehensive loss – – (329,142) – – – (329,142) – (329,142)

At 30 September 2012 17,353,837 35,357,981 (978,968) 387,513 15,114,285 (44,618,038) 22,616,610 (758,500) 21,858,110

At 1 October 2012 17,353,837 35,357,981 (978,968) 387,513 15,114,285 (44,618,038) 22,616,610 (758,500) 21,858,110

Shares issued during the year 4,213,819 3,586,181 – – – – 7,800,000 – 7,800,000

Shares issued under share option scheme 2,320,560 (199,842) – – – – 2,120,718 – 2,120,718

Equity-settled share-based settlement – – – 29,225 – – 29,225 – 29,225

Shares issued as payment for services 50,471 (50,471) – – – – – – –

Exercise and lapse of performance rights 13,961 (13,961) – – – – – – –

Loss for the year – – – – – (13,168,430) (13,168,430) (481,510) (13,649,940)

Other comprehensive loss – – (145,879) – (15,030,391) – (15,176,270) – 15,176,270

Transfer to accumulated losses – – – – (83,894) 83,894 – – –

At 30 September 2013 23,952,648 38,679,888 (1,124,847) 416,738 – (57,702,574) 4,221,853 (1,240,010) 2,981,843

For

per

sona

l use

onl

y



Statements of Changes in Equity continued

Company

Share capital

A$

Share premium

A$

Exchange reserve

A$

Share based payment

reserve A$

Asset revaluation

reserve A$

Accumulated losses

A$Total

A$

At 1 October 2011 10,884,864 32,964,737 (933,210) 327,340 83,894 (44,763,278) (1,435,653)

Shares issued during the year 6,312,751 2,168,449 – – – – 8,481,200

Equity-settled share-based settlement – – – 469,990 – (28,800) 441,190

Shares issued as payment for services 54,368 86,649 – (141,017) – – –

Exercise and lapse of performance rights 101,854 138,146 – (268,800) – 28,800 –

Loss for the year – – – – – (8,355,350) (8,355,350)

At 30 September 2012 17,353,837 35,357,981 (933,210) 387,513 83,894 (53,118,628) (868,613)

At 1 October 2012 17,353,837 35,357,981 (933,210) 387,513 83,894 (53,118,628) (868,613)

Shares issued during the year 4,213,819 3,586,181 – – – – 7,800,000

Shares issued under share option scheme 2,320,560 (199,842) – – – – 2,120,718

Equity-settled share-based settlement – – – 29,225 – – 29,225

Shares issued as payment for services 50,471 (50,471) – – – – –

Exercise and lapse of performance rights 13,961 (13,961) – – – – –

Loss for the year – – – – – (9,050,818) (9,050,818)

Transfer to accumulated losses – – – – (83,894) 83,894 –

At 30 September 2013 23,952,648 38,679,888 (933,210) 416,738 – (62,085,552) 30,512


For

per

sona

l use

onl

y



Cash Flow Statements


Note

Group Company

2013 A$

2012 A$

2013 A$

2012 A$

Cash flow from operating activities

Payments to suppliers and employees (8,263,765) (5,137,458) (5,305,190) (4,154,699)

Interest received 9,125 2,484 8,458 2,436

Sundry income 3,467 17,378 1,322 –

Net cash used in operating activities 16(a) (8,251,173) (5,117,596) (5,295,410) (4,152,263)

Cash flow from investing activities

Purchase of property, plant and equipment (613,209) (325,991) (228,267) (5,316)

Mineral exploration expenditure (914,138) (2,472,448) – –

Loans to subsidiaries – – (4,631,064) (3,793,274)

Net cash used in investing activities (1,527,347) (2,798,439) (4,859,331) (3,798,590)

Cash flow from financing activities

Interest paid (353,136) (27,540) (11,781) (26,325)

Proceeds from issue of ordinary shares 7,800,000 8,751,200 7,800,000 8,751,200

Proceeds from shares issued under share option scheme 2,120,718 – 2,120,718 –

Repayment of non-interest bearing borrowings (127,375) (52,145) (127,375) (52,145)

Net cash generated from financing activities 9,440,207 8,671,515 9,781,562 8,672,730

Net increase/(decrease) in cash and cash equivalents (338,313) 755,480 (373,179) 721,877

Cash and cash equivalents at 1 October 2012/2011 808,596 54,006 742,527 20,650

Effect of exchange rate changes (48,685) (890) – –

Cash and cash equivalents at 30 September 2013/2012 421,598 808,596 369,348 742,527

For

per

sona

l use

onl

y


Expressed in Australian dollars

Notes to the Financial Statements

1. Company informationAxiom Mining Limited (the “Company”) is a Company incorporated in Hong Kong and has its registered office and principal place of business at 2303-7 Dominion Centre, 43-59 Queen’s Road East, Hong Kong and 6/76 Doggett Street, Newstead, Brisbane, Australia respectively. The Company’s shares are listed on the Australian Securities Exchange.

The Company and its subsidiaries (the “Group”) is principally engaged in mineral exploration in Australia, Solomon Islands and Vietnam.

2. Significant accounting policies

a. Statement of compliance

The financial statements constitute a general-purpose financial report, which have been prepared in accordance with Australian Accounting Standards (AASB) (including Australian Accounting Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Hong Kong Companies Ordinance. The financial statements also comply with International Financial Reporting Standards (IFRS) and interpretations adopted by the International Accounting Standards Board (“IASB”). A summary of the significant accounting policies adopted by the Group is set out below.

The IASB has issued certain new and revised IFRS that are first effective or available for early adoption for the current accounting period of the Group and of the Company. Note 3 provides information on any changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Group for the current and prior accounting periods reflected in these financial statements.

b. Basis of preparation of the financial statements

The financial statements have been prepared under the historical cost basis except that the property, plant and equipment are stated at their revalued amount, being the fair value at the date of revaluation as explained in the accounting policy set out in Note 2(d). The financial statements are presented in Australian dollars (“A$”) which is also the functional currency of the Company.

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of IFRS that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are disclosed in Note 24.

In preparing the financial statements, the Directors consider that the going concern basis for preparing of the financial statements for the Group and the Company is appropriate and recognise that additional funding is required to ensure that the Group and the Company can continue its operations for the next twelve months.

This basis has been determined after consideration of the following factors:

– the ability to raise additional share capital by share placements, options or a right issue;

– the ability to farm out all or part of its exploration projects; and

– the ability to sell particular exploration projects.

Accordingly, the Directors are confident in the ability of the Group and the Company to successfully secure sufficient cash inflows to enable it to continue as a going concern and that it is appropriate to adopt that basis of accounting in the preparation of the financial statements.

For

per

sona

l use

onl

y


c. Subsidiaries and non-controlling interests

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.

An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group balances and transactions and any unrealised profits arising from intra-group transactions are eliminated in full in preparing the consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment.

Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Company, and in respect of which the Group has not agreed any additional terms with the holders of those interests which would result in the Group as a whole having a contractual obligation in respect of those interests that meets the definition of a financial liability. For each business combination, the Group can elect to measure any non-controlling interests either at fair value or at their proportionate share of the subsidiary’s net identifiable assets.

Non-controlling interests are presented in the consolidated balance sheet within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group are presented on the face of the consolidated income statement and the consolidated statement of comprehensive income as an allocation of the total profit or loss and total comprehensive income for the year between non-controlling interests and the equity shareholders of the Company.

Changes in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions, whereby adjustments are made to the amounts of controlling and non-controlling interests within consolidated equity to reflect the change in relative interests, but no adjustments are made to goodwill and no gain or loss is recognised.

When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the date when control is lost is recognised at fair value and this amount is regarded as the fair value on

initial recognition of a financial asset or, when appropriate, the cost on initial recognition of an investment in an associate or joint venture.

In the Company’s balance sheet, an investment in a subsidiary are stated at cost less any impairment losses (see Note 2(g)(iii)), unless the investment is classified as held for sale (or included in a disposal group that is classified as held for sale).

d. Property, plant and equipment

Property, plant and equipment are stated in the balance sheet at cost or revaluation less accumulated depreciation and impairment losses (see Note 2(g)(iii)).

Revaluations are performed with sufficient regularity to ensure that the carrying amount of these assets does not differ materially from that which would be determined using fair values at balance sheet date.

Changes arising on the revaluation of property, plant and equipment are generally dealt with in other comprehensive income and are accumulated separately in equity in the asset revaluation reserve. The only exceptions are as follows:

– when a deficit arises on revaluation, it will be charged to profit or loss to the extent that it exceeds the amount held in the reserve in respect of that same asset immediately prior to the revaluation; and

– when a surplus arises on revaluation, it will be credited to profit or loss to the extent that a deficit or revaluation in respect of that same asset had previously been charged to profit or loss.

Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of retirement or disposal. Any related revaluation surplus is transferred from the revaluation reserve to accumulated losses.

Depreciation is calculated to write off the cost or revaluation of items of property, plant and equipment, less their estimated residual value, if any, using the straight line method over their estimated useful lives. The principal annual rates used for this purpose are as follows:

Leasehold land over the lease term Leasehold improvements over the lease term Plant and equipment 20% – 33%

Both the useful life of an asset and its residual value, if any, are reviewed annually.

For

per

sona

l use

onl

y


Notes to the Financial StatementsExpressed in Australian dollars

2. Significant accounting policies (continued)

e. Mineral exploration expenditure

Mineral exploration expenditure comprise costs which are directly attributable to: researching and analysing existing exploration data; conducting geological studies, exploratory drilling and sampling; examining and testing extraction and treatment methods; and compiling prefeasibility and feasibility studies. Mineral exploration expenses also includes the costs incurred in the entry premiums paid to gain access to areas of interest and amounts payable to third parties to acquire interests in existing projects.

Mineral exploration expenditure is capitalised if the project is technically and commercially feasible and the Group has sufficient resources and the intention to complete the project. If a project does not prove viable, all irrecoverable costs associated with the project are expensed in profit or loss. Capitalised exploration and evaluation expenditures are stated in the statement of financial position at cost less accumulated amortisation and impairment losses (see Note 2(g)(ii)).

f. Leases

An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group determines that the arrangement conveys a right to a specific asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination is made based on an evaluation of the substance of the arrangement regardless of whether the arrangement takes the legal form of a lease.

Assets that are held by the Group under leases which transfer to the Group substantially all the risks and rewards of ownership are classified as being held under finance leases. Leases which do not transfer substantially all the risks and rewards of ownership to the Group are classified as operating leases, with the following exceptions:

– property held under operating leases that would otherwise meet the definition of an investment property is classified as investment property on a property-by-property basis and, if classified as investment property, is accounted for as if held under a finance lease; and

– land held for own use under an operating lease, the fair value of which cannot be measured separately from the fair value of a building situated thereon at the inception of the lease, is accounted for as being held under a finance lease, unless the building is also clearly held under an operating lease.

– For this purpose, the inception of the lease is the time that the lease was first entered into by the Group, or taken over from the previous lessee.

Where the Group acquires the use of assets under finance leases, the amounts representing the fair value of the leased asset, or, if lower, the present value of the minimum lease payments, of such assets are included in fixed assets and the corresponding liabilities, net of finance charges, are recorded as obligations under finance leases. Depreciation is provided at rates which write of the cost or valuation of the assets over the term of the relevant lease or, where it is likely the Group will obtain ownership of the asset, the life of the asset, as set out in Note 2(d). Finance charges implicit in the lease payments are charged to profit or loss over the period of the leases so as to produce an approximately constant periodic rate of charge on the remaining balance of the obligations for each accounting period. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.

Where the Group has the use of assets held under operating leases, payments made under the leases are charged to profit or loss in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives received are recognised in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.

g. Impairment of assets

i. Impairment of investments in equity securities and other receivables

Investments in equity securities and other current and non-current receivables that are stated at cost or amortised cost are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. Objective evidence of impairment includes observable data that comes to the attention of the Group about one or more of the following loss events:

– significant financial difficulty of the debtor;

– a breach of contract, such as a default or delinquency in interest or principal payments;

– it becoming probable that the debtor will enter bankruptcy or other financial reorganisation; and

– significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor.

– a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.

For

per

sona

l use

onl

y


If any such evidence exists, any impairment loss is determined and recognised as follows:

– For unquoted equity securities carried at cost, the impairment loss is measured as the difference between the carrying amount of the financial asset and the estimated future cash flows, discounted at the current market rate of return for a similar financial asset where the effect of discounting is material. Impairment losses for equity securities carried at costs are not reverse.

– For trade and other current receivables, the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets), where the effect of discounting is material. This assessment is made collectively where financial assets carried at amortised cost share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. Future cash flows for financial assets which are assessed for impairment collectively are based on historical loss experience for assets with credit risk characteristics similar to the collective group.

If in a subsequent period the amount of an impairment loss decreases and the decrease can be linked objectively to an event occurring after the impairment loss was recognised, the impairment loss is reversed through profit or loss. A reversal of an impairment loss shall not result in the asset’s carrying amount exceeding that which would have been determined had no impairment loss been recognised in prior years.

Impairment losses are written off against the corresponding assets directly, except for impairment losses recognised in respect of other receivables, whose recovery is considered doubtful but not remote. In this case, the impairment losses for doubtful debts are recorded using an allowance account. When the Group is satisfied that recovery is remote, the amount considered irrecoverable is written off against other receivables directly and any amounts held in the allowance account relating to that debt are reversed. Subsequent recoveries of amounts previously charged to the allowance account are reversed against the allowance account. Other changes in the allowance account and subsequent recoveries of amounts previously written off directly are recognised in profit or loss.

ii. Impairment of mineral exploration expenditure

The carrying amount of the mineral exploration expenditure is reviewed annually and adjusted for impairment whenever one of the following events or changes in circumstances indicates that the carrying amount may not be recoverable:

– The period for which the Group has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed;

– Substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned.

– Exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the Group has decided to discontinue such activities in the specific area; or

– Sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the mineral exploration expenditure is unlikely to be recovered in full from successful development or by sale.

An impairment loss is recognised in profit or loss whenever the carrying amount of an asset exceeds its recoverable amount.

iii. Impairment of other assets

Internal and external sources of information are reviewed at each balance sheet date to identify indications that the following assets may be impaired or an impairment loss previously recognised no longer exists or may have decreased:

– property, plant and equipment; and

– investments in subsidiaries in the company’s balance sheet.

For

per

sona

l use

onl

y



2. Significant accounting policies (continued)If any such indication exists, the asset’s recoverable amount is estimated.

– Calculation of recoverable amount

The recoverable amount of an asset is the greater of its net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).

– Recognition of impairment losses

An impairment loss is recognised in profit or loss whenever the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognised in respect of cash-generating units are allocated to reduce the carrying amount of assets in the unit (or Group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs to sell, or value in use, if determinable.

– Reversal of impairment losses

An impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount.

A reversal of an impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognised in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognised.

h. Other receivables

Other receivables are initially recognised at fair value and thereafter stated at amortised cost less allowance for impairment of doubtful debts (see Note 2(g)(i)), except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less allowance for impairment of doubtful debts.

i. Other payables

Other payables are initially recognised at fair value and are subsequently stated at amortised cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

j. Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are also included as a component of cash and cash equivalents for the purpose of the cash flow statement.

k. Employee benefits

Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is defined and the effect would be material, these amounts are stated at their present values. Superannuation is paid in accordance with applicable local government legislation.

l. Share-based payments

The fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in a reserve within equity. The fair value of shares granted to service providers is recognised as an expense. The fair value is measured at grant date using the binomial lattice model, taking into account the terms and conditions upon which the options were granted. Where the employees have to meet vesting conditions before becoming unconditionally entitled to the options, the total estimated fair value of the options is spread over the vesting period, taking into account the probability that the options will vest.

During the vesting period, the number of share options that is expected to vest is reviewed. Any adjustment to the cumulative fair value recognised in prior years is charged/credited to the profit or loss for the year of the review, unless the original employee expenses qualify for recognition as an asset, with a corresponding adjustment to the reserve. On vesting date, the amount recognised as an expense is adjusted to reflect the actual number of options that vest (with a corresponding adjustment to the reserve) except where forfeiture is only due to not achieving vesting conditions that relate to the market

For

per

sona

l use

onl

y


price of the Company’s shares. The equity amount is recognised in the reserve until either the option is exercised (when it is transferred to the share premium account) or the option expires (when it is released directly to accumulated losses).

m. Income tax

Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that they relate to items recognised in other comprehensive income or directly in equity, in which case the relevant amount is taken to other comprehensive income or directly to equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.

Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilised, are recognised. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilised.

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are not discounted.

n. Goods and services tax (GST)

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expenses. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as a current asset or liability in the balance sheet.

Cash flows are included in the cash flow statement on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the taxation authority are classified as operating cash flows.

o. Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Group or the Company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

p. Revenue recognition

Provided that it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in profit or loss as follows:

– Interest income is recognised as it accrues using the effective interest method.

– Sundry income is recognised at the fair value of the consideration received or receivable.

For

per

sona

l use

onl

y



2. Significant accounting policies (continued)

q. Translation of foreign currencies

Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the balance sheet date. Exchange gains and losses are recognised in profit or loss.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the foreign exchange rates ruling at the transaction dates. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated using the foreign exchange rates ruling at the dates the fair value was determined.

The results of foreign operations are translated into Australian dollars at the exchange rates approximating the foreign exchange rates ruling at the dates of the transactions. Balance sheet items are translated into Australian dollars at the foreign exchange rates ruling at the balance sheet date. The resulting exchange differences are recognised directly in other comprehensive income and accumulated separately in equity in the exchange reserve.

On disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation is reclassified from equity to profit or loss when the profit or loss on disposal is recognised.

r. Related parties

a. A person or a close member of that person’s family is related to the Group if that person:

i. has control or joint control over the Group;

ii. has significant influence over the Group; or

iii. is a member of the key management personnel of the Group or of the Group’s parent.

b. An entity is related to the Group if any of the following conditions applies:

i. The entity and the Group are members of the same Group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

ii. One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a Group of which the other entity is a member).

iii. Both entities are joint ventures of the same third party.

iv. One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

v. The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group.

vi. The entity is controlled or jointly controlled by a person identified in (A).

vii. A person identified in (A) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

s. Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to owners and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to.

t. Segmental reporting

Operating segments, and the amounts of each segment item reported in the financial statements, are identified from the financial information provided regularly to the Group’s most senior executive management for the purposes of allocated resources to, and assessing the performance of, the Group’s various lines of business and geographical locations.

Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria.

u. Convertible notes

Convertible notes which do not contain an equity component are accounted for as follows:

For

per

sona

l use

onl

y


At initial recognition the derivative component of the convertible notes is measured at fair value and presented as part of derivative financial instruments (see Note 2(v)). Any excess of proceeds over the amount initially recognised as the derivative component is recognised as the liability component. Transaction costs that relate to the issue of the convertible note are allocated to the liability and derivative components in proportion to the allocation of proceeds. The portion of the transaction costs relating the liability component is recognised initially as part of the liability. The portion relating to the derivative component is recognised immediately in profit or loss.

The derivative component is subsequently re-measured in accordance with Note 2(v). The liability component is subsequently carried at amortised cost. The

interest expense recognised in profit or loss on the liability component is calculated using the effective interest method.

If the note is converted, the carrying amounts of the derivative and liability components are transferred to share capital and share premium as consideration for the shares issued. If the note is redeemed, any difference between the amount paid and the carrying amounts of both components is recognised in profit or loss.

v. Derivative financial instruments

Derivative financial instruments are recognised initially at fair value. At the end of each reporting period the fair value is remeasured. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss.

3. Applications of new and revised IFRSsThe IASB has issued a number of amendments to IFRS that are first effective for the current accounting period of the Group and the Company. Of these, IAS 1 (Amendments), Presentation of financial statements – Presentation of items of other comprehensive income, is relevant to the Group’s consolidated financial statements.

The amendments to IAS 1 require entities to present the items of other comprehensive income that would be reclassified to profit or loss in the future if certain conditions are met separately from those that would never be reclassified to profit or loss. The Group’s presentation of other comprehensive income in these consolidated financial statements has been modified accordingly.

Up to the date of issue of the consolidated financial statements, the IASB has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended 30 September 2013 and which have not been adopted in the consolidated financial statements. Of these developments, the following relates to matters that may be relevant to the Group’s operations and consolidated financial statements:

Improvements to IFRS Annual improvements to IFRS 2009-2011 cycle1

Amendments to IFRS 9 and IFRS 7 Mandatory effective date of IFRS 9 and transition disclosures3

Amendments to IFRS 10, IFRS 11 and IFRS 12Consolidated financial statements, joint arrangements and disclosure of interest other entities: transition guidance1

Amendments to IFRS 7 Disclosures – Offsetting financial assets and financial liabilities1

Amendments to IAS 32 Offsetting financial assets and financial liabilities2

Amendments to IAS 36 Recoverable amount disclosures for non-financial assets2

IFRS 9 Financial instruments3

IFRS 10 Consolidated financial statements1

IFRS 12 Disclosure of interests in other entities1

IFRS 13 Fair value measurement1

IAS 27 (2011) Separate financial statements1

IFRIC – Int 20 Stripping Costs in the Production Phase of a Surface Mine1

1 Effective for annual periods beginning on or after 1 January 2013.



The Group is in the process of making an assessment of what the potential impact of these amendments and new standards is expected to be in the period of initial application. So far it has concluded that their adoption is unlikely to have a significant impact on the Group’s results of operations or financial position.

For

per

sona

l use

onl

y



4. Geographical informationThe Group is principally engaged only in mineral exploration in Vietnam, Australia and the Solomon Islands and as such has only one reportable business segment. The following table sets out the geographical location of the Group’s specified non-current assets. Specified non-current assets include property, plant and equipment, leasehold land and capitalised exploration costs.

Group 2013 Group 2012 (restated)

Australia A$

Vietnam A$

Solomon Islands

A$Total

A$Australia

A$Vietnam

A$

Solomon Islands

A$Total

A$

Specified Net Assets 749,815 803,874 3,440,890 4,994,579 21,649,169 479,604 2,790,386 24,919,042

Total Revenue 9,780 710 2,102 12,592 11,054 8,808 – 19,862

5. Income tax

a. Income tax expense

No Hong Kong profits tax has been provided as the Group and the Company did not have assessable profits arising in or derived from Hong Kong.

No income tax has been provided for 2013 and 2012 as the Group did not have assessable profit in Vietnam, Solomon Islands and Australia during the year.

The applicable income tax rates of the Group’s subsidiaries in Vietnam, Solomon Islands and Australia are 25%, 30% and 30% respectively.

Deferred tax asset arising from tax losses are not brought to account at balance sheet date as realisation of the benefit is not regarded as virtually certain. No provision for deferred taxation has been made as there were no material temporary differences at the balance sheet date.

The benefit for tax losses will only be obtained if:

i. Future assessable income is derived of a nature and of an amount sufficient to enable the ebenfit to be realised;

ii. The conditions for deductibility imposed by tax legislation continue to be complied with; and

iii. No changes in tax legislation adversely affect the Group in realising the benefit.

For

per

sona

l use

onl

y


6. Loss per share

a. Basic loss per share

The calculation of basic loss per share is based on the loss attributable to owners of the Company of A$13,168,430 (2012: A$4,910,746) and the weighted average number of 2,142,701,270 ordinary shares (2012: 1,232,015,808 shares) in issue during the year, calculated as follows:

Weighted average number of ordinary shares

2013 2012

Issued ordinary shares at 1 October (Note 15(a)) 1,720,572,899 1,057,776,713

Effect of placement of shares 240,288,677 116,162,024

Effect of shares issued as payment for services 1,292,739 2,796,249

Effect of issues to employees 882,877 102,740

Effect of issues under share purchase plan and conversion of convertible notes 179,323,804 51,479,452

Effect of exercise of performance rights 340,274 3,698,630

Weighted average number of ordinary shares at 30 September 2,142,701,270 1,232,015,808

b. Diluted loss per share

The diluted loss per share is the same as the basic loss per share as the exercise of the share option and the conversion of convertible notes would result in a decrease in loss per share.

7. Other receivables

Group Company

2013 A$

2012 A$

2013 A$

2012 A$

Other receivables 588,113 369,609 422,488 93,850

Terms and conditions

Other receivables comprise sundry debtors and prepayments.

Sundry debtors are non-interest bearing and have repayment terms between 30 to 90 days.

8. Intercompany receivables Intercompany receivables are non-interest bearing and have no fixed terms of repayment.

At 30 September 2013, the Company had a gross intercompany receivable of A$14,922,316 (2012: A$10,308,838). A provision has been made against the whole of this amount as the subsidiary companies currently have no ability to repay the amounts.

For

per

sona

l use

onl

y



9. Investments in subsidiaries

Group Company

2013 A$

2012 A$

2013 A$

2012 A$

Unlisted shares, at cost – – 4,979,959 4,979,959

Less: Provision for impairment loss – – (4,979,959) (4,979,959)

– – – –

As at 30 September 2013, the Directors determined all investments in the subsidiaries of $4,979,959 (2012: $4,979,959) are to be impaired.

Details of the subsidiaries are as follows:

Percentage of equity interest held by the Group Investment cost

Name of subsidiariesPlace of

incorporation2013

%2012

%2013

A$2012

A$

Axiom Vietnam JSC Vietnam 90 90 – –

Axiom Nickel Pty Ltd Australia 100 100 – –

Axiom Nickel (SI) Ltd Solomon Islands 100 100 – –

Axiom KB Ltd Solomon Islands 80 80 – –

Azzu Mining Ltd. British Virgin Islands 100 100 – –

Guadalcanal Resources Limited Solomon Islands 93 93 – –

Laos Resources Ltd. British Virgin Islands 100 100 – –

Ozmin Resources Pty Ltd Australia 100 100 4,974,493 4,974,493

South Pacific Minerals Limited Solomon Islands 100 100 – –

Vietnam Resources Corporation Pty Ltd. Australia 100 100 5,382 5,382

Vietnam Resources Corporation (VN Holdings) Pty Ltd. Australia 100 100 79 79

Vietnam Resources Corporation (QB) Pty Ltd. Australia 100 100 4 4

VRC Quangtri Pty Ltd. Australia 100 100 1 1

4,979,959 4,979,959

A 93% stake in Guadalcanal Resources Limited was acquired on 25 June 2012 and South Pacific Minerals Limited was formed on 16 March 2012 in relation to the Guadalcanal and Makira projects respectively.

The principal activity of Axiom Vietnam JSC, Axiom KB Ltd and Ozmin Resources Pty Ltd is mineral exploration. Azzu Mining Ltd, Laos Resources Ltd and Guadalcanal Resources Ltd are dormant, and the other companies are intermediary holding companies.

The companies shown above are audited by firms other than Baker Tilly Hong Kong Limited.For

per

sona

l use

onl

y


10. Property, plant and equipment

Group

Leasehold land

A$

Leasehold improvements

A$

Plant & Equipment

A$Total

A$

Cost

At 1 October 2011 1,501,811 – 171,373 1,673,184

Additions – 151,939 174,052 325,991

At 30 September 2012 and 1 October 2012 1,501,811 151,939 345,425 1,999,175

Additions – 17,416 419,869 437,285

Disposals – – (4,099) (4,099)

Exchange realignment 157,711 9,266 31,830 198,807

At 30 September 2013 1,659,522 178,621 793,025 2,631,168

Accumulated depreciation and amortisation

At 1 October 2011 17,521 – 44,911 62,432

Provided for the year 30,036 – 33,179 63,215

At 30 September 2012 and 1 October 2012 47,557 – 78,090 125,647

Provided for the year 32,131 130,360 125,441 287,932

Written back on disposals – – (2,029) (2,029)

Exchange realignment 6,054 4,282 10,477 20,813

At 30 September 2013 85,742 134,642 211,979 432,363

Net carrying amount

At 30 September 2013 1,573,780 43,979 581,046 2,198,805

At 30 September 2012 1,454,254 151,939 267,335 1,873,528

For

per

sona

l use

onl

y



10. Property, plant and equipment (continued)

Company

Leaseholdimprovements

A$

Plant & Equipment

A$Total

A$

Cost

At 1 October 2011 – – –

Additions – 5,316 5,316

At 30 September 2012 and 1 October 2012 – 5,316 5,316

Additions 4,810 223,457 228,267

At 30 September 2013 4,810 228,773 233,583

Accumulated depreciation and amortisation

At 1 October 2011 – – –

Provided for the year – 1,272 1,272

At 30 September 2012 and 1 October 2012 – 1,272 1,272

Provided for the year 575 32,620 33,195

At 30 September 2013 575 33,892 34,467

Net carrying amount

At 30 September 2013 4,235 194,881 199,116

At 30 September 2012 – 4,044 4,044

Leased assets

Leasehold land comprises land where the Group is a lessee under a finance lease.

On 22 February 2011, the Group through its subsidiary Axiom KB Limited, entered into a long term lease over land on Santa Isabel Island in the Solomon Islands. As at 30 September 2013, the Group had obligations under the finance lease as follows:

Group

2013 2012

Present value of the

minimum lease

payments A$

Total minimum

lease payments

A$

Present value of the

minimum lease

payments A$

Total minimum

lease payments

A$

Within 1 year 713,794 956,182 123,493 153,767

After 1 year but within 5 years 374,686 1,292,939 389,347 615,069

After 5 years 772,041 5,459,492 1,080,809 6,650,434

1,146,727 6,752,431 1,470,156 7,265,503

1,860,521 7,708,613 1,593,649 7,419,270

Less: total future interest expenses (5,848,092) (5,825,621)

Present value of lease obligations 1,860,521 1,593,649

For

per

sona

l use

onl

y


11. Mineral exploration expenditureExploration, evaluation and development costs carried forward in respect of mining areas of interest:

Group Company

2013 A$

2012 A$

2013 A$

2012 A$

Carrying amount at 1 October 23,045,514 23,573,066 568,182 568,182

Deficit on valuation of mineral exploration expenditure (15,030,391) – – –

Exploration costs 914,138 2,472,448 – –

Exploration costs expensed (675,612) – – –

Exchange alignment 84,800 – – –

Impairment loss on mineral exploration expenditure (5,542,675) – (568,182) –

Carrying amount at 30 September 2,795,774 26,045,514 – 568,182

The deficit on valuation of mineral exploration expenditure and impairment loss on mineral exploration expenditure are recognised during the year. In the opinion of the directors, the carrying value of mineral exploration expenditure decreased due to significant decrease in gold price during the year.

Mineral Exploration Projects

Axiom Vietnam JSC was granted a Mineral Exploration Licence in the Quang Tri province Vietnam on 28 June 2011 to explore for gold in an area of 23 km2. The licence was renewed on 5 September 2013 for a period of two years and the area was reduced to 13 km2.

Axiom KB Limited has a prospecting licence (Kolosori project) granted on 15 April 2011 on Isabel Island in the Solomon Islands to explore for nickel, cobalt and other minerals. Exploration activities are currently subject to a court ordered injunction.

South Pacific Minerals Limited was granted a prospecting licence (Arosi project) on 21 June 2012 to explore for gold, copper and other minerals in Makira Province, Solomon Islands. The prospecting licence was relinquished on 27th November 2013.

Guadalcanal Resources Limited has a prospecting licence (Itina project) to explore for copper, gold, and other minerals.

Ozmin Resources Pty Ltd holds five exploration permits, four exploration permit applications, and three mining leases to explore for gold, silver, copper and other minerals.

For

per

sona

l use

onl

y



12. Other payables

Group Company

2013 A$

2012 A$

2013 A$

2012 A$

Other payables 1,048,709 1,350,423 857,320 983,203

Prepayment of shares – 1,000,000 – 1,000,000

1,048,709 2,350,423 857,320 1,983,203

All of the other payables are expected to be settled or recognised as an expense within one year or are repayable on demand.

Prepayment of shares

$900,000 of the prepayment of shares relates to funds received from related parties and sophisticated and professional investors for share placements made, but not yet issued. A portion of these shares were issued on 2 October 2012 with the balance issued on 19 October 2012 upon gaining shareholder approval at the Extraordinary General Meeting (EGM). $100,000 of the prepayment of shares relates to the fifth tranche share prepayment made by Bergen under the funding agreement announced on 14 March 2012.

13. Borrowings

Group Company

2013 A$

2012 A$

2013 A$

2012 A$

Drawings under convertible notes – 70,000 – 70,000

Other borrowings 20,480 77,855 20,480 77,855

20,480 147,855 20,480 147,855

Convertible notes

On 27 April 2011, the Company arranged an unsecured and interest free convertible note facility of A$4,000,000.

The notes convert into ordinary shares at the election of the note holder:

a. On the expiry date, being twelve months from the issue of the note; or

b. At any time prior to the expiry date, by service on the issuer of a written notice of conversion of the note given by the note holder; or

c. On redemption of the note if the convertible note facility is cancelled by the issuer in accordance with the convertible note facility agreement.

For

per

sona

l use

onl

y


The issue price is A$0.15 per share with an anti-dilution provision. The notes were repayable within 12 months and extended to 31 December 2012. The Company also issued options to the note holder on the basis of 1 option for each 4 shares upon conversion of the note. No interest was payable on these notes. On 5 October 2012 the Company negotiated and agreed to issue the note holders an additional 75,000,000 options exercisable at $0.02 expiring on 27 April 2013. One of the Directors whom is a note holder was not party to the additional options.

On 14 March 2012, the Company announced the execution of a funding package with the Bergen Global Opportunity Fund, LP. The agreement with Bergen provides the Company with A$300,000 per month in capital over 24 months with the capacity to increase to A$700,000 per month. During the year ended 30 September 2012, Bergen injected into the Company A$1,300,000 as prepayment for ordinary shares. As at 30 September 2012, A$1,200,000 shares has been issued to Bergen. No interest accrued on this loan. Bergen also subscribed to an interest free A$300,000 convertible security and a A$400,000 additional convertible security with a 24 month term. Of these A$700,000 convertible securities, only A$70,000 remains to be converted as at 30 September 2012.

Other borrowings

The Company arranged unsecured loan of A$100,000 in September 2011. As at the date of this report A$nil (2012: A$25,000) is still outstanding. No interest accrued on this loan.

In addition, the Company has entered into a premium funding arrangement with Macquarie Bank Limited for insurance. As at the reporting date the liability is A$20,480 (2012: A$52,855) payable on a monthly instalment to April 2014. Interest accrued at 6.3135% per annum.

14. Provisions

Group Company

2013 A$

2012 A$

2013 A$

2012 A$

Provision for employee benefits (Note 17) 92,737 147,210 82,640 146,158

92,737 147,210 82,640 146,158

For

per

sona

l use

onl

y



15. Capital and reserves

a. Authorised and issued share capital

Company

2013 A$

2012 A$

Authorised

4,000,000,000 (2012: 2,500,000,000) ordinary shares of US$0.01 each 39,902,458 24,939,036

Issued and fully paid

2,355,067,445 (2012: 1,720,572,899) ordinary shares of US$0.01 each 23,952,648 17,353,837

Company

2013 2012

Number of shares A$

Number of shares A$

Movements in issued shares:

Balance at 1 October 1,720,572,899 17,353,837 1,057,776,713 10,884,864

Issue of new shares

— placement for cash 392,399,267 4,213,819 457,174,757 4,466,705

Issued as payment for services 2,050,000 22,014 5,321,429 51,391

Issued to employees 2,650,000 28,457 300,000 2,977

Exercise of options 216,095,279 2,320,560 – –

Conversion of convertible notes into shares – – 190,000,000 1,846,046

Exercise of performance rights (Note 20(c)) 1,300,000 13,961 10,000,000 101,854

Balance at 30 September 2,335,067,445 23,952,648 1,720,572,899 17,353,837

By an ordinary resolution passed at the annual general meeting on 30 March 2012, the Company’s authorised ordinary share capital was increased to US$25,000,000 by the creation of an additional 1,000,000,000 ordinary shares of US$0.01 each, raking pari passu with the existing ordinary shares of the Company in all respects.

By an ordinary resolution passed at the annual general meeting on 22 April 2013, the Company’s authorised ordinary share capital was increased to US$40,000,000 by the creation of an additional 1,500,000,000 ordinary shares of US$0.01 each, raking pari passu with the existing ordinary shares of the Company in all respects.

On 2 Oct 2012, 21,538,461 ordinary shares of USD0.01 each were issued and alloted at A$0.013 per share for cash via private placement.

On 12 Oct 2012, 12,135,922 ordinary shares of USD0.01 each were issued and alloted at A$0.01 per share for cash under a share purchase plan announced on 2 December 2011.




For

per

sona

l use

onl

y




On 25 Oct 2012, 500,000 ordinary shares of USD0.01 each were issued and alloted for nil consideration to consultant for services rendered.





On 2 Nov 2012, 7,142,857 ordinary shares of USD0.01 each were issued and alloted at A$0.01 per share for cash under a share purchase plan announced on 2 December 2011.





On 26 Nov 2012, 100,000 ordinary shares of USD0.01 each were issued and alloted for nil consideration under a performance rights plan announced on 30 July 2010.



On 4 Dec 2012, 10,942,857 ordinary shares of USD0.01 each were issued and alloted at A$0.01 per share for cash under a share purchase plan announced on 2 December 2011.






For

per

sona

l use

onl

y



15. Capital and reserves (continued)On 21 Dec 2012, 25,999,999 ordinary shares of USD0.01 each were issued and alloted at A$0.01 per share for cash under a share purchase plan announced on 2 December 2011.

On 6 Feb 2013, 350,000 ordinary shares of USD0.01 each were issued and alloted for nil consideration to consultant for services rendered.

On 22 Feb 2013, 150,000,000 ordinary shares of USD0.01 each were issued and alloted at A$0.02 per share for cash via private placement.

On 28 Feb 2013, 150,000 ordinary shares of USD0.01 each were issued and alloted for nil consideration to employees.

On 2 Apr 2013, 1,200,000 ordinary shares of USD0.01 each were issued and alloted for nil consideration to consultant for services rendered.

On 7 June 2013, 2,500,000 ordinary shares of USD0.01 each were issued and alloted for nil consideration to employees.

On 8 Jul 2013, 900,000 ordinary shares of USD0.01 each were issued and alloted for nil consideration under a performance rights plan announced on 22 March 2013.

On 8 Jul 2013, 10,000,000 ordinary shares of USD0.01 each were issued and alloted at A$0.008 per share for cash under a share purchase plan announced on 2 December 2011.

On 5 Aug 2013, 60,000,000 ordinary shares of USD0.01 each were issued and alloted at A$0.02 per share for cash via private placement.

On 19 Aug 2013, 40,000,000 ordinary shares of USD0.01 each were issued and alloted at A$0.02 per share for cash via private placement.

On 6 Aug 2013, 300,000 ordinary shares of USD0.01 each were issued and alloted for nil consideration under a performance rights plan announced on 22 March 2013.

b. Nature and purpose of reserve

i. Share premium

The share premium contains amounts received as a premium on the issue of shares and options. The application of the share premium account is governed by section 48B of Hong Kong Companies Ordinance.

ii. Exchange reserve

The exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations as well as the effective portion of any foreign exchange differences arising from hedges of the net investment in these foreign operations. The reserve is dealt with in accordance with the accounting policy set out in Note 2(q).

iii. Share based payments reserve

The share based payments reserve is used to recognise:

– The grant date fair value of performance rights issued to employees but not exercised.

– The grant date fair value of shares issue to employees.For

per

sona

l use

onl

y


c. Distributability of reserves

At 30 September 2013, the aggregate amount of reserves available for distribution to shareholders of the Company was A$nil (2012: A$nil).

Details of the movements in options are as follows:

Grant Date

No. of options outstanding

as at 1 October

2012 Exercise Price

Granted during the

year

Expired during the

year

No. of options outstanding

as at 30 September

2013

Consultants 23.05.2011 1,980,000 A$0.08 – (1,980,000) –

Consultants 23.05.2011 7,000,000 A$0.06 – (7,000,000) –

Consultants 28.07.2011 2,000,000 A$0.06 – (2,000,000) –

Consultants 27.09.2011 4,000,000 A$0.04 – (4,000,000) –

Consultants 14.02.2012 4,750,000 A$0.04 – (4,750,000) –

Bergen Agreement 02.04.2012 10,000,000 A$0.03 – – 10,000,000

Consultants 16.04.2012 9,000,000 A$0.03 – – 9,000,000

Private Placement 20.07.2012 33,980,581 US$0.01 – (33,980,581) –

Consultants 24.09.2012 4,000,000 A$0.02 – (4,000,000) –

Consultants 24.09.2012 2,000,000 A$0.02 – – 2,000,000

Attaching Option to Private placement 19.10.2012 – A$0.01 147,857,139 (147,857,139) –

Consultants 19.10.2012 – A$0.01 24,271,844 (24,271,844) –

Consultants 19.10.2012 – A$0.02 19,230,769 – 19,230,769

Attaching Option to Private placement 25.10.2012 – A$0.03 5,583,334 – 5,583,334


Attaching Option to Private placement 30.10.2012 – A$0.03 666,667 – 666,667

Consultants 30.10.2012 – A$0.03 6,500,000 – 6,500,000


Consultants 04.03.2013 – A$0.02 10,000,000 – 10,000,000

Consultants 04.03.2013 – A$0.02 15,000,000 – 15,000,000

Consultants 04.03.2013 – A$0.01 10,000,000 (10,000,000) –

Consultants 04.03.2013 – A$0.02 1,000,000 – 1,000,000



Consultants 23.08.2013 – A$0.015 15,000,000 – 15,000,000

78,710,581 338,443,086 (239,839,564) 177,314,103

For

per

sona

l use

onl

y



15. Capital and reserves (continued)

e. Capital management

The Group’s primary objectives when managing capital is to safeguard the Group’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, by pricing products and services commensurately with the level of risk and by securing access to finance at a reasonable cost.

The Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher shareholder returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

16. Note to cash flow statementsReconciliation of loss from operations to net cash outflow from operating activities

Group Company

2013 A$

2012 A$

2013 A$

2012 A$

Loss before income tax (13,649,940) (5,669,246) (9,050,818) (8,355,350)

Interest expense 435,150 27,540 11,781 26,181

Non-cash items

Depreciation and amortisation 287,932 63,215 33,195 1,272

Impairment loss on investments in subsidiaries – – – 141

Provision for non-recovery of intercompany receivables – – 4,631,064 3,793,275

Net valuation loss on mineral exploration expenditure 6,218,287 – 568,182 –

Share based payments 32,089 441,190 29,224 441,190

Changes in assets and liabilities

Increase in other receivables (218,504) (54,478) (328,638) (39,461)

(Decrease)/increase in trade and other payables (1,301,714) 211,927 (1,125,883) 119,285

Decrease in provisions (54,473) (137,744) (63,518) (138,796)

Net cash used in operations (8,251,173) (5,117,596 (5,295,410) (4,152,263)

17. Short term employee benefits and superannuation commitments

Group Company

2013 A$

2012 A$

2013 A$

2012 A$

The aggregate employee benefit liability comprised provisions (current) 92,737 147,210 82,640 146,158F

or p

erso

nal u

se o

nly


18. Commitments

a. Expenditure commitments

Estimated capital expenditure required to maintain tenements by the balance sheet date, but not provided for, are payable as follows:

Group Company

2013 A$

2012 A$

2013 A$

2012 A$

Within 1 year 1,123,000 1,169,380 – –

After 1 year but within 5 years 3,256,500 3,186,297 – –

4,379,500 4,355,677 – –

These commitments may be achieved by seeking exemptions, relinquishment or by joint venture arrangements.

b. Operating lease commitments

Group Company

2013 A$

2012 A$

2013 A$

2012 A$

Within 1 year 39,366 144,910 39,366 –

After 1 year but within 5 years 50,758 1,672 50,758 –

90,124 146,582 90,124 –

19. Auditor’s remuneration

Group Company

2013 A$

2012 A$

2013 A$

2012 A$

Amount received or due and received by auditors for:

— an audit of the financial statements of the Group by Baker Tilly Hong Kong Limited 30,384 1,974 30,384 1,974

— audit services by firms other than Baker Tilly Hong Kong Limited 64,581 69,610 48,146 51,777

94,965 71,584 78,530 53,751

For

per

sona

l use

onl

y



20. Director and executive disclosures

a. Details of specified Directors and specified executives

i. Specified Directors

Mr. Stephen Ray Williams Non-Executive Chairman Mr. Ryan Richard Mount Executive Director and Chief Executive Officer Mr. Neil Francis Stuart Non-Executive Director (resigned on 22 April 2013) Mr. Anthony Faillace Non-Executive Director (appointed on 1 March 2013)

ii. Specified executives

Mr Eamonn Dare Chief Geologist (resigned 15 February 2013) Mr Jess Oram General Manager - Exploration (appointed 29 April 2013) Ms Valerie Valdez Chief Financial Officer and Local Agent (resigned 28 November 2012)

b. Remuneration of specified Directors and executives

The constitution of the Company provides that non-executive Directors may collectively be paid as remuneration for their services a fixed sum not exceeding the aggregate maximum sum per annum from time to time determined by the Company in general meeting currently set at US$300,000. The chairman’s fees are determined independently of the fees of the non-executive Directors based on comparative roles in the market place.

The chairman’s fees have been set at A$50,000 per annum (2012 – A$50,000) and non-executive Directors are remunerated at A$35,000 per annum (2012 – A$35,000).

Directors may be paid fees or other amounts as the Directors determine where a Director performs special duties or otherwise performs service outside the scope of the ordinary duties of a Director. A Director may also be reimbursed for out of pocket expenses incurred in carrying out their duties as a Director.

c. Performance Rights Plan

Director, Executive and Employee Performance Rights Plan

The establishment of Axiom Mining Limited Director and executive Performance Right Plan was approved by shareholders at the 30 July 2010 Extraordinary General meeting and refreshed at 22 April 2013 Annual General Meeting. The Director and Executive Performance Right Plan provides:

– appropriate incentives for the Board and management;

– to align the economic interests of the Board and management with shareholders;

– to keep the Board and management focused on the long term growth of the Company; and

– to increase shareholder value by achieving certain milestones.

Under the plan, participants are granted rights which vest if certain performance conditions are met. Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.

When exercisable, each right is convertible into one ordinary share for no consideration.For

per

sona

l use

onl

y


Details of the movements in rights granted are as follows:

No. of rights

outstanding as at

1 October 2012

Granted during the

year

Exercised during the

year

Lapsed during the

year

No. of rights

outstanding as at

30 September 2013

Mr Stephen Ray Williams 2,500,000 10,000,000 – – 12,500,000

Mr Ryan Richard Mount 31,500,000 100,000,000 – (31,500,000) 100,000,000

Mr Neil Francis Stuart 2,000,000 – – – 2,000,000

Other employees 100,000 4,600,000 (1,000,000) (1,500,000) 2,200,000

36,100,000 114,600,000 (1,000,000) (33,000,000) 116,700,000

– 100,000 rights granted and vested on 15 May 2012 expire 1 year after grant date.

– Rights granted on 30 July 2010 as approved by shareholders at the 30 July 2010 Extraordinary General Meeting carry various expiry dates as included in the Notice of Meeting. These vary from 180 days after satisfaction of performance conditions to 180 days after termination of employment.

– Rights granted on 19 December 2012, 14 June 2013 and 1 July 2013 as approved by shareholders at the 22 April 2013 Annual General Meeting carry various expiry dates as included in the Notice of Meeting. The Rights will vest where the Volume Weighted Average Price (“VWAP”) is equal to or exceeds the price ranging from 5 cents to 40 cents.

VWAP means the Volume Weighted Average Price of the ordinary shares in the Company on the ASX in any 30 day trading period from the date of grant of the Rights (whether or not a sale was recorded on a particular day) but does not include:

a. any transaction defined in the ASX Operating Rules as a “Special Crossing”;

b. any transaction defined in the ASX Operating Rules as a “Crossing” that occurs prior to the commencement of normal trading or during after after-hours adjust phase; or

c. any transaction pursuant to the exercise of options over Shares.

Fair value of rights granted

The assessed fair value at grant date of rights granted during the year ended 30 September 2013 was A$0.012 to A$0.024 (2012: A$0.015). The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The model inputs for options granted during the year ended 30 September 2013 included:

1 July 2013

14 June 2013

19 December 2012

15 May 2012

Exercise price A$nil A$nil A$nil A$nil

Share price at grant date A$0.014 A$0.012 A$0.024 A$0.015

Exercise price volatility of the Company’s share 100% 100% 100% 110%

Expected dividend yield 0% 0% 0% 0%

Risk-free interest rate 3.1% 3.1% 3.1% 5.48%

The expected price volatility is based on the historic volatility (based on the remaining life of the rights), adjusted for any expected changes to future volatility due to publicly available information.

For

per

sona

l use

onl

y



20. Director and executive disclosures (continued)

d. Service agreements

The Group has service agreements with the following officers:

Ryan Richard Mount, Chief Executive Officer & Executive Director

Terms of agreement – 3 years commencing 1 March 2013, base salary, exclusive of superannuation of A$400,000 plus superannuation guarantee to be reviewed annually by the remuneration committee. In addition an amount of A$100,000 is payable as bonus upon satisfying bonus conditions. Notice period six months.

Jess Timothy Oram, General Manager – Exploration

Terms of agreement – no fixed term, base salary, inclusive of superannuation of A$210,370. Notice period two months.

e. Remuneration of specified Directors and specified executives

Directors’ remuneration disclosed pursuant to Section 161 of the Hong Kong Companies Ordinance as follows:

Primary salary

A$

Directors’ Fees

A$

Post employment

superannuation A$

Equity share-based

payments A$

Total A$

Specified Directors

Stephen Ray Williams

2013 – 50,000 4,531 – 54,531

2012 – 50,000 4,500 – 54,500

Ryan Richard Mount

2013 462,415 15,000 28,970 – 506,385

2012 150,000 30,000 16,200 240,000 436,200

Neil Francis Stuart

2013 – 8,750 – – 8,750

2012 – 40,835 – – 40,835

John McCarthy

2013

2012 – – – – –

Total Remuneration

2013 462,415 73,750 33,501 – 569,666

2012 150,000 120,835 20,700 240,000 531,535

For

per

sona

l use

onl

y


Primary salary

A$

Post employment

superannuation A$

Equity share-based

payments A$

Total A$

Specified Executives

Jess Oram

2013 49,735 4,516 – 54,251

2012 – – – –

Eamonn Dare

2013 79,396 6,123 – 85,519

2012 171,923 15,473 – 187,396

John Bell

2013 – – – –

2012 78,491 7,064 – 85,555

Valerie Valdez

2013 37,798 2,810 – 40,608

2012 93,517 8,416 – 101,933

Total Remuneration

2013 166,929 13,449 – 180,378

2012 343,931 30,953 – 374,884

f. Balances with related parties are disclosed in Note 8.

For

per

sona

l use

onl

y



21. Financial risk management and fair valuesExposure to credit, liquidity, interest rate and currency risks arises in the normal course of the Group’s business.

The Group’s exposure to these risks and the financial risk management policies and practices used by the Group are described below and are limited by the Group’s financial management policies and practices described below.

a. Credit risk

The Group’s credit risk is primarily attributable to other receivables. Management has a credit policy in place and the exposures to these credit risks are monitored on an ongoing basis.

In respect of other receivables, individual credit evaluations are performed on all debtor’s requiring credit over a certain amount. These evaluations focus on the debtor’s past history of making payments when due and current ability to pay, and take into account information specific to the debtor. Other receivables are due within 30 days to 90 days from the date of billing. Normally, the Group does not obtain collateral from customers.

At the balance sheet date, the Group has no concentration of credit risk.

b. Liquidity risk

Individual operating entities within the Group are responsible for their own cash management, including the short term investment of cash surpluses and the raising of loans to cover expected cash demands, subject to approval by the parent Company’s Board when the borrowings exceed certain predetermined levels of authority. The Group’s policy is to regularly monitor its liquidity requirements and its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash and readily realisable marketable securities and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term.

c. Interest rate risk

The Group’s exposure to interest rate risk and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised at the balance sheet date, are as follows:

Financial instruments Floating interest rate Non-interest bearing

Total carrying amount as per the

balance sheetWeighted average

effective interest rate

2013 A$

2012 A$

2013 A$

2012 A$

2013 A$

2012 A$

2013 %

2012 %

(i) Financial assets

Cash 421,598 808,597 – – 421,598 808,597 2.2 4.0

Other receivables – – 588,113 369,609 588,113 369,609 – –

Total financial assets 421,598 808,597 588,113 369,609 1,009,711 1,178,206

(ii) Financial liabilities

Other payables – – 1,048,709 2,350,423 1,048,709 2,350,423 – –

Borrowings 20,480 52,855 – 95,000 20,480 147,855 – –

Capitalised lease liabilities 1,860,521 1,593,649 – – 1,860,521 1,593,649 10.0 10.0

Provisions – – 92,737 147,210 92,737 147,210 – –

Total financial liabilities 1,881,001 1,646,504 1,141,446 2,592,633 3,022,447 4,239,137

For

per

sona

l use

onl

y


d. Currency risk

The Group is not exposed to significant foreign currency risk as the majority of the Group’s income and expenditure is denominated in Australian dollars.

e. Fair values

All financial instruments are carried at amounts not materially different from their fair values as at 30 September 2013 and 2012.

22. Contingent liabilityOn 23 October 2012, the Company’s subsidiary, Axiom KB Limited, appeared in the Court of Appeal in Solomons Islands in respect of an appeal against the ruling the preliminary questions in the High Court. The Court of Appeal expunged the High Court’s answers to the preliminary questions and ordered that the whole matter proceed to an expedited trial. On 14 October 2013, Axiom KB Limited, appeared in the Solomon Islands High Court to commence the trial of case 258/11.

The results of the current litigation proceeding in the Solomon Island’s High Court when determined may result in a cost order against or in favour of Axiom KB Limited dependent on the results of the final ruling.

23. Subsequent events On 10 October 2013, the Company announced a placement of 50,000,000 shares at A$0.02 each to raise a total fund of A$1,000,000.

On 14 October 2013, the Company’s subsidiary, Axiom KB Limited, appeared in the Solomon Islands High Court to commence the trial of case 258/11 which is disclosed in Note 22.

On 21 October 2013 the Company announced a non-renounceable rights issue of 1 for 10 rights to eligible shareholders at A$0.02 per share. The results of the rights issue was announced on 27 November 2013 with A$3,099,711 raised including shortfall placements.

24. Significant accounting estimates and judgements Estimates and judgments used in preparing the consolidated financial statements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates may not equal to the related actual results. The estimates and assumptions that have a significant effect on the carrying amounts of assets and liabilities are discussed below:

a. Impairment of non-financial assets

The Group tests at least annually whether goodwill and other assets that have indefinite useful lives have suffered any impairment.

Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset exceeds its recoverable amount. The recoverable amount of an asset of a cash-generating unit has been determined based on value-in-use calculations. These calculations require the use of estimates.

The value-in-use calculations primarily use cash flow projections based on five-year financial budgets approved by management and estimated terminal values at the end of the five-year period. There are a number of assumptions and estimates involved for the presentation of cash flow projections for the period covered by the approved budget and the estimated terminal value. Key assumptions include the expected growth in revenue and operating margin, effective tax rates, growth rates and selection of discount rates, to reflect the risks involved and the earnings multiple that can be realised for the estimated terminal value.

Management prepared the financial budgets reflecting actual and prior year performance and market development expectations. Judgement is required to determine key assumptions adopted in the cash flow projections and changes to key assumptions can significantly affect these cash flow projections and therefore the results of the impairment reviews.F

or p

erso

nal u

se o

nly



b. Useful lives of property, plant and equipment

The Directors determine the estimated useful lives and residual values for its property, plant and equipment. The Directors revise the depreciation charge when useful lives are different from previous estimates. Obsolete or non-strategic assets, that have been abandoned or sold, shall be written off or written down.

c. Income tax

The Group is subject to income tax in a number of jurisdictions. Significant judgement is required in determining the provision for income tax for each entity in the Group. There are certain transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for potential tax exposures based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the year in which such determination is made.

d. Share-based payments

The fair value of option granted is measured using Black-scholes option pricing model based on various assumptions on volatility, option life, dividend yield and annual risk-free interest rate, excluding the impact of any non-market vesting conditions, which generally represent the best estimate of the fair values of the share options at date of grant.

For

per

sona

l use

onl

y


ASX Additional Information

Analysis of Equity Security Holders

SectorNumber of

shareholders Number of Shares

Holdings Ranges Holders Total Units %

1-1,000 119 10,704 0.000

1,001-5,000 58 196,511 0.008

5,001-10,000 119 995,593 0.040

10,001-100,000 1,325 66,100,772 2.632

100,001-99,999,999,999 1,705 2,444,182,925 97.320

Totals 3,326 2,511,486,505 100.000

Distribution of Marketable Parcels


Unmarketable (1-33,333) 760 11,452,770 0.456

Marketable (>33,333) 2,566 2,500,033,735 99.544

Totals 3,326 2,511,486,505 100.000

Performance Rights


1-1,000 0 0 0.000

1,001-5,000 0 0 0.000

5,001-10,000 0 0 0.000

10,001-100,000 0 0 0.000

100,001-99,999,999,999 5 116,700,000 100.000

Totals 5 116,700,000 100.000

Unlisted Options


1-1,000 0 0 0.000

1,001-5,000 0 0 0.000

5,001-10,000 0 0 0.000

10,001-100,000 2 125,000 0.107

100,001-99,999,999,999 18 117,189,103 99.893

Totals 20 117,314,103 100.000For

per

sona

l use

onl

y


ASX Additional Information

Top 20 Holdings as at 24 January 2014

Holder NameBalance at 14-01-2014 %

NATIONAL NOMINEES LIMITED 472,745,514 18.823

ADMARK INVESTMENTS PTY LTD 90,000,000 3.584

UBS NOMINEES PTY LTD 54,094,204 2.154

CITICORP NOMINEES PTY LIMITED 46,171,532 1.838

TPC PTY LTD 40,215,282 1.601

ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD 37,641,862 1.499

MR BRADLEY GAVIN DOWNES 31,760,570 1.265

NEIL GARDYNE INVESTMENTS PTY LTD 30,199,719 1.202

GAKS INVESTMENT HOLDINGS PTY LTD 27,000,000 1.075

BANTRY HOLDINGS PTY LTD 26,000,000 1.035

DYAMOND DEVELOPMENTS PTY LTD 23,742,802 0.945

MR DAVID JAMES AZAR 22,740,556 0.905

MR SHANE VICTOR HARDY 19,931,000 0.794

MR TOBY CHANDLER 19,500,000 0.776

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 17,785,834 0.708

MR DION MILAN RADICH 16,169,573 0.644

NESMEIS INVESTMENT PTY LTD 15,166,667 0.604

J & BA MCCARTHY SUPERANNUATION PTY LTD 14,953,882 0.595

MR RYAN RICHARD MOUNT 14,419,950 0.574

MR CHARLIE KHOURY 13,200,000 0.526

Total 1,033,438,947 41.148

Issued Capital 2,511,486,505

Axiom Mining Limited is incorporated in Hong Kong and is governed by Hong Kong Companies Ordinance with respect to its shareholdings. Accordingly, there are no limitations on the number of securities that may be held by a shareholder, nor are there any equivalent provisions to the takeovers provisions in Chapter 6 of the Australian Corporate Act 2001 (Cth).

For

per

sona

l use

onl

y


Corporate Directory

DirectorsMr Stephen Williams: Independent Non-Executive Director, Chairman Mr Ryan Mount: Executive Director, Chief Executive Officer Mr Anthony Faillace: Non-Executive Director Local Agent: Mr Ryan Mount

Company Secretary

Boacoh Secretarial Limited

2303-4 Dominion Centre 43-59 Queens Road Hong Kong SAR

Corporate Office6/76 Doggett Street Newstead QLD 4006 Australia

Tel: +61 7 3319 4100 Fax: +61 7 3252 7577

Email: [email protected]

Registered Office Hong Kong

C/- Boase Cohen & Collins Solicitors

2303-7 Dominion Centre 43-59 Queens Road Hong Kong SAR

Auditors Australia

Rothsay Chartered Accountants

Level 1, 2 Barrack St Sydney NSW 2000 Australia

Auditors Hong Kong

Baker Tilly Hong Kong Limited

2nd Floor, 625 King’s Road North Point Hong Kong

Share Registry

Boardroom Pty Limited

Level 7, 207 Kent Street Sydney NSW 2000

Tel: +61 2 9290 9600 Fax: +61 2 9279 0664

Email: [email protected]

Legal Advisors

Kemp Strang

Level 17, 175 Pitt Street Sydney NSW 2000 Australia

Norton Rose Fulbright Australia

Level 21, 111 Eagle Street Brisbane QLD 4001 Australia

ASX Code: AVQ

For

per

sona

l use

onl

y

www.axiom-mining.com

Mining Limited

For

per

sona

l use

onl

y

ANNUAL REPORT 2013 For personal use only

Documents

Transcript of ANNUAL REPORT 2013 For personal use only