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Corporate Governance
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.
Although the Company endeavours to comply in all
material respects with all applicable environmental laws
and regulations, there are risks inherent in its activities,
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 that 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. 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 in
maintenance mode. As the Company awaits clarity in
Vietnam mining legislation, exploration activities have been
wound down. The Company currently maintains a small
office with minimal staff.
The Solomon Islands economy and political environment
remains fragile. The Company is currently involved in
litigation in respect of the Prospecting Licence and
Registered Lease 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 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.
AXIOM MINING LIMITED
ANNUAL REPORT 2015
22