Axiom Mining 2015 Annual Report

GROUP FINANCIAL REPORT

Notes to the financial statements for the year ended 30 September 2015

68

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. 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, which 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.

23. Subsequent events Subsequent to the year end, on 4 November 2015 the Company announced that it had entered into a convertible note facility agreement for up to $15 million to project fund the development of the Isabel Nickel Project through a strategic partnership with experienced resource venture capitalist and project incubator InCor Holdings Plc (‘InCoR’). As part of the agreement, Axiom issued one secured convertible note with a face value of $5,000,000, convertible to a maximum issue of 13,513,514 fully paid ordinary shares based on a conversion price of $0.37 per share. The note is for the period of 24 months with interest rate of 6% per annum payable in advance for the first 12 months and thereafter quarterly in advance. Interest obligations have been satisfied by the issuing shares at a fixed price of $0.37. The facility is secured through the first ranking charge over Axiom’s assets in Australia and Hong Kong. At the Extraordinary General Meeting held on 15 October 2015, the shareholders approved the issue of the 150,000 Performance Rights to the newly-appointed director, Mr Jeremy Gray. Apart from the matters mentioned above, no other matters or circumstances have arisen since 30 September 2015 that significantly affected or could significantly affect the operations of the Consolidated Group in future years. 24. Significant accounting estimates and judgements Estimates and judgements 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 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 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.

AXIOM MINING LIMITED ANNUAL REPORT 2015