Axiom 2014 Annual Report - page 33

31
2014 Annual Report
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.
The Company has recently affected Key Person
Insurance to cover the Chief Executive Officer and
Managing Director, who holds key relationships with
government, landowner representatives and partners.
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.
General risks
Economic conditions
General economic conditions may affect interest rates,
inflation rates and other economic variables. Movements
in these factors may benefit or adversely affect the
Company. Movement in general economic conditions
may also affect companies with which the Company
conducts its business, which may also affect the
Company’s earnings.
Changes to laws and regulations
The introduction of new policies, legislation or
amendments to existing policies or legislation by
governments or the interpretation of those laws as noted
above could impact adversely on the assets, operations
and ultimately financial performance of the Company.
continued
Corporate Governance
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