Axiom Mining 2015 Annual Report

COMPANY FINANCIAL REPORT

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

93

17. Borrowings

2015 AU$000

2014 AU$000

Convertible notes: Unsecured redeemable convertible notes (at amortised cost)

551 581

678

Embedded derivative liability (at fair value)

–

1,132

678

Other borrowings

–

8

1,132

686

On 7 February 2014, the Company arranged a partly secured convertible note facility of AU$650,000 with a face value of AU$700,000 at interest bearing at 10%. The facility was able to be drawn down in tranches. The notes convert into ordinary shares at the election of the noteholder: a. on the expiry date; 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 noteholder; 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. The issue price is AU$0.6 per share with an anti-dilution provision. The issue included a commencement fee of AU$112,500 settled by way of issuance of 7,956,153 ordinary shares to the investor and partially secured by issue of 15,000,000 ordinary shares held as collateral security. The Company also issued 13,250,000 options to the noteholder. The facility was fully converted to shares on 23 December 2014 at AU$0.7 with the issue of 15,000,000 ordinary shares. On 22 May 2015, the Company raised AU$1 million through the issue of six convertible notes, pursuant to a number of convertible note agreements. The Convertible Notes were issued on the following terms: – Each convertible note has a term of 18 months and can be converted at any time by the noteholder – A coupon rate of 8% per annum applies to the convertible notes, which is quarterly – A conversion price of AU$0.30 applies to each convertible note, and – For every AU$5.00 worth of convertible notes, the noteholder will be entitled to 10 free attaching Options, with an exercise price of AU$0.30, expiring 12 months from the date of issue. One note with face value of AU$100,000 was converted on 9 June 2015 at AU$0.30 cents with issue of 333,333 shares. The convertible notes are considered to be a hybrid financial instrument with an amortised financial liability component and an embedded derivative liability component that are disclosed separately. The value of the embedded derivative liability at reporting date was AU$581,350 (initial recognition was AU$1,000,000 with the balance of AU$567,267 recognised as a financial liability). The amortised cost of the financial liability at reporting date was AU$550,547.

AXIOM MINING LIMITED ANNUAL REPORT 2015

18. Provisions

2015 AU$000

2014 AU$000

156

139

Employee benefits payable

The employee benefits payable relates to leave provisions and is presented as current as it is expected to be settled within 12 months.