Axiom 2014 Annual Report - page 76

Notes to the Financial Statements
for the year ended 30 September 2014
74
Axiom Mining Limited
23. Subsequent events
a. Solomon Islands High Court case 258/11 between SMM Solomon Limited (“Sumitomo”) and others v Axiom KB
Limited (“Axiom”), Solomon Islands Government and others.
On 24 September 2014 the High Court of the Solomon Islands dismissed all of SMM Solomon Limited’s claims and enabled
Axiom to recommence exploration activities on the Isabel nickel deposit. Included in this judgement was the continuation
of the undertaking in form of a court order from Sumitomo as to costs and damages in the proceedings.
On 30 September 2014 the Chief Justice of the Court of Appeal of the Solomon Islands granted an interim injunction,
at the application of Sumitomo preventing Axiom’s exploration activities on Isabel Island.
On 8 October 2014 the Solomon Islands Court of Appeal ruled in favour of Axiom and set aside the interim injunction
granted on 30 September 2014 and awarded costs to Axiom in relation to the hearing on 8 October 2014.
On 27 October 2014 Sumitomo filed a notice of appeal to the Solomon Islands Court of Appeal in response to the
High Court trial judgement delivered in favour of Axiom. It is expected that the appeal will be heard in early 2015.
On 29 October 2014 Axiom filed submissions and supporting evidence to recover costs from Sumitomo related to the
Solomon Islands Court Case 258/2011 of SBD $41,025,000 (~$6,500,000).
On 20 November 2014 Axiom’s drilling program for the Isabel Nickel Project commenced.
On 24 November 2014 Axiom announced that the Company was in negotiations with third parties regarding potential
involvement in the Isabel Nickel Project. Negotiations are occurring with nickel industry participants and mining services
providers over mine development and operation, processing of ore and off-take agreements.
On 16 December 2014 Axiom announced initial results from the drilling program on the Isabel Nickel Project. Drilling
has produced excellent results that identify significant grade and extension of mineralisation to depths that had not
been evaluated by previous studies or exploration.
b. Other matters
Apart from the aforementioned matters, no other matters or circumstances have arisen since 30 September 2014 that
significantly affected or could significantly affect the operations of the Consolidated Group in future years.
24. Significant accounting estimates and judgments
Estimates and judgements used in preparing the consolidated financial statements are continually evaluated and
are based on historical experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates may not equal the related actual results. The estimates and assumptions that have a significant
effect on the carrying amounts of assets and liabilities are discussed below.
a. Impairment of non-financial assets
The Group tests at least annually whether other assets that have indefinite useful lives have suffered any impairment.
Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of the asset exceeds its recoverable amount. The recoverable amount of an asset of a cash-generating unit has
been determined based on value-in-use calculations. These calculations require the use of estimates.
The value-in-use calculations primarily use cash flow projections based on five-year financial budgets approved by
management and estimated terminal values at the end of the five-year period. There are a number of assumptions and
estimates involved in the presentation of cash flow projections for the period covered by the approved budget and the
estimated terminal value. Key assumptions include the expected growth in revenue and operating margin, effective tax
rates, growth rates and selection of discount rates, to reflect the risks involved and the earnings multiple that can be
realised for the estimated terminal value.
Management prepared the financial budgets reflecting actual and prior year performance and market development
expectations. Judgement is required to determine key assumptions adopted in the cash flow projections and changes to
key assumptions can significantly affect these cash flow projections and therefore the results of the impairment reviews.
GROUP FINANCIAL REPORT
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