Axiom Mining 2015 Annual Report

COMPANY FINANCIAL REPORT

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

96

19. Share capital (continued) The Company operates a share option scheme (the ‘Scheme’) for the purpose of remunerating consultants and/or suppliers of services to the Company. General terms and conditions of the Scheme include: – Each option entitles the holder the right to subscribe for one ordinary share in the capital of the Company for the relevant option exercise price – Vesting requirements: An option may only be exercised by the option holder by lodging an exercise – Notice with the Company when the option exercise price has been met – Maximum term of options granted was 3.2 years, and – Method of settlement is by cash. The share options outstanding as at 30 September 2015 had a weighted average remaining contractual life of 1.5 years. A share consolidation of Axiom’s capital, on the basis of one share for every 15 shares was completed on 14 April 2015. The number of options in the above table has been amended to reflect this consolidation. The weighted average fair value of the share options granted during the year was AU$0.1679 (2014: AU$0.0687), of which the Company recognised a share option expense of AU$506,805 (2014: AU$367,432) during the year 31 September 2015. The fair value of options granted is measured using the Black Scholes option pricing model, as appropriate, 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. Key inputs used in the calculation of the value of options granted during the year ended 30 September 2015 are:

Spot price AU$

Volatility %

Risk free rate %

Grant date

Expiry date

10 Jul 15

30 Sep 15 30 Sep 15 31 May 16 31 Mar 16 31 May 16

0.35 0.37 0.35 0.35 0.35

192 192 192 192 192

2.15 2.15 2.15 2.25 2.25

AXIOM MINING LIMITED ANNUAL REPORT 2015 13 Jul 15 10 Jul 15 10 Jul 15 10 Jul 15

Expected volatility was determined based on historic volatility adjusted for any expected changes to future volatility based on publicly available information. All options granted during the year vested on grant date. None of the options issued have vesting conditions attached.

c. Share performance rights Details of the movements in rights granted are as follows:

Number of rights outstanding as at 30 September 2015

Number of rights outstanding as at 1 October 2014

Granted during the year

Exercised during the year

Cancelled during the year

833,332

– – –

–

–

833,332

Stephen Ray Williams (1) Ryan Richard Mount (2)

6,666,661 7,499,993

– (6,666,661) – (6,666,661)

–

833,332

(1) 833,332 Rights lapsed post year end on 21 October 2015. (2) Cancelled on 31 March 2015 as detailed in the 31 March 2015 AGM Notice of Meeting. All share performance rights were issued for the directors of the Company. Details please refer to Note 26b.