Axiom 2014 Annual Report - page 32

30
Axiom Mining Limited
continued
Corporate Governance
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,
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 that 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..
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.
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