AXIOM MINING LIMITED ARBN 119 698 770 Incorporated in Hong Kong 363279 and Controlled Entities HALF-YEAR FINANCIAL REPORT 31 March 2010
DIRECTORS REPORT Your Directors submit their report together with the consolidated financial report for the half-year ended 31 March 2010 and brief review of operations for the period. DIRECTORS The Directors of the Company during the half-year and to the date of this report are: Name of Director Period of Directorship John A Cook Non-Executive Chairman, appointed 4 June 2007 John V McCarthy Executive Director-Geology, appointed 21 September 1997 Neil Stuart Director, appointed 24 March 2009 Ryan Mount Director, appointed 22 April 2009 OPERATING AND FINANCIAL REVIEW Results of Operations The consolidated loss from ordinary activities of the Company and its controlled entities for the half-year ended 31 March 2010 was 362,616 (30 September 2009, 1,488,014) Review of Operations The principal activities of the Company and the group during the half-year were mineral exploration and assessment of potential mining acquisition opportunities in Australia and Vietnam. Substantial progress has been made since the suspension in trading of the Company s securities on 19 November 2009. Shortly afterward the Company in two share placements to sophisticated and professional investors that raised A$1,282,778 for working capital and exploration purposes. On 26 March 2010, the Company completed a transaction to return to 100% ownership of Ozmin Resources Pty Ltd and its valuable portfolio of mineral tenements in North Queensland. In Vietnam, Axiom has resumed development of its projects, particularly in the Province of Quang Binh where a gold deposit of substantial size is being defined. Following are brief summaries of these activities. NORTH QUEENSLAND Mountain Maid IRGS Gold Project A seven hole diamond drilling program completed early November 2009 intercepted broad gold zones such as 83 m @ 0.47 g/t Au (MMD001) and 79 m @ 0.53 g/t Au (MMD003). Five of the seven holes are contiguous with four historical holes. During the March quarter intermittent bottle roll leach tests were conducted showed excellent leaching of gold in higher-grade oxidised composite samples. An 8,030 m, 43 hole RC drill program is planned to define an initial JORC resource in two parallel gold zones that have a known strike of approximately 600 m. Both zones remain open to the north and south.
Nisha Copper-Gold-Silver Project In conjunction with resource drilling at Mountain Maid, three exploration holes will also test for the first time a strong, 600 m X 200 m induced polarisation (IP) geophysical anomaly referred to as the Nisha prospect. Three-dimensional modelling of the anomaly has been used in targeting of holes. The anomaly is important as it is located only 1 km southwest from the Cardross mining lease on the same structure where a similar, but less intense IP anomaly produced an intercept of 6 m averaging 4.8% Cu, 3 g/t Au and 90 g/t Ag in drill hole CA06DD02. Split Rock Porphyry Copper Project Split Rock is located 2.5 kms southwest of Mountain Maid and probably originates from the same intrusive centre. One past drill hole intersected 51.8 m @ 0.39% Cu in the 1970 s. Recent work by Axiom has shown a very large copper soil anomaly and a strong gradient array IP anomaly that has yet to be drill tested. Highly anomalous rock chip samples containing 277 g/t Ag, 7.6% Pb and 0.5% Zn are spatially related to the geophysical anomaly. Given mineralisation in the Chillagoe region is associated with permo-carboniferous aged intrusives and has shown continuity to depths of over 1 km the Split Rock and Mountain Maid prospects nearby to the north have exceptional potential to develop into very large deposits. OK Mines VMS Copper-Zinc Project At OK Mines drilling has intersected a folded volcanogenic massive sulphide (VMS) base metal deposit containing up to 5.91% Cu, 3.64% Zn 0.55 g/t Au and 13.6 g/t Ag over 4 m (OK07DD18). Interpretation of detailed geology from surface, drill hole intercepts and IP data has resulted in mapping of a 3-dimensional model of the VMS deposit now ready for renewed drilling. Mineralisation is an extension to the oxide section of a deposit that produced over 80,000t averaging 9.2% Cu, 0.14 g/t Au and 1.2 g/t Ag according to historical records. VIETNAM Quang Binh Porphyry Style Gold-Silver Project Axiom has drilled 58 diamond drill holes on two zones of gold-silver mineralisation on the Quang Binh project. Forty-six of these holes have multiple economically important gold-silver intercepts ranging from 17.25 m @ 2.93 g/t Au and 54 g/t Ag in hole XK-1A to 21 m @ 0.66 g/t Au in hole XK45. The final hole of the program drilled at the Bach Dan prospect, BD12, intersected 7 gold bearing zones ranging from 14 m @ 0.71 g/t to 2 m @ 1.32 g/t Au. A very large 2.5 km by 500 m gold in soil anomaly has yet to be drill tested. The Company has employed Vietnamese consultants to undertake a comprehensive study of the exploration results to date to produce a reserve-resource statement under the Vietnamese reporting system in preparation for submission of an application for a Mining Licence. Quang Tri Gold-Silver Project The Company has employed Vietnamese consultants to produce an application under new Vietnamese guidelines for the issue of an Exploration Licence over a 23 square kilometre area in northern Quang Tri. Significantly, the licence will be issued to Axiom s wholly owned Vietnamese subsidiary. Exploration activities will commence on sediment hosted gold zones mapped and sampled by Department of Geology Vietnam, which included one diamond drill hole (LK-2) that intersected 6.6 m @ 2.65 g/t Au and 32 g/t Ag.
DIRECTORS REPORT (CONTINUED) Since its ASX listing the Company has invested heavily in drilling programs and this effort is providing a great deal of encouragement. Grades and widths of mineralisation encountered in North Queensland and Vietnam support our belief that economic mineral deposits are being delineated on the Company s tenements. As an exploration company, Axiom will maintain the momentum of its aggressive exploration programs. In the immediate future exploration will be focused on drilling to move two of the projects into the feasibility study stage. Signed in accordance with a Resolution of the Directors, John Cook Chairman Dated at Sydney this 26th day of May 2010
DIRECTORS DECLARATION In accordance with the resolution of the Directors of Axiom Mining Limited, I state that: In the opinion of the directors: a. The financial statements and notes of the Company and of the consolidated entities are in accordance with the Hong Kong Companies Ordinance, including: i. Giving a true and fair view of the Company s and consolidated entity s financial position as at 31 March 2010 and of their performance for the six month period ended on that date; and ii. Complying with International Financial Reporting Standards; and b. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. On behalf of the Board John Cook Chairman Dated at Sydney this 26th day of May 2010
STATEMENT OF COMPREHENSIVE INCOME For the half year ended 31 March 2010 Consolidated 31 March 2010 31 March 2009 Revenue Other revenues 50,651 - Interest received - 122 Total revenue from ordinary activities 50,651 122 Expenses Administration expenses 58,281 30,199 Exploration and other impairment costs 353,458 1,774,027 Depreciation expense 1,528 1,554 Total expenses 413,267 1,805,780 Loss before income tax expense (362,616) (1,805,658) Income tax expense - - Net loss for the period (362,616) (1,805,658) Earnings per share Basic loss per share (cents per share) (0.01) (0.01) Diluted losses per share are not disclosed as they are not materially different to basic losses per share The income statement should be read in conjunction with the accompanying notes.
BALANCE SHEET For the half year ended 31 March 2010 Consolidated 31 March 2010 30 September 2009 Current Assets Cash and bank balances 588,383 59,322 Trade and other receivables 50,875 27,150 Total Current Assets 639,258 86,482 Non-Current Assets Property, plant & equipment 8,655 10,183 Mineral exploration expenditure 5,027,783 500,000 Total Non-Current Assets 5,036,438 510,183 Total Assets 5,675,696 596,665 Current Liabilities Trade and other payables 38,494 516,342 Provisions - 38,086 Total Current Liabilities 38,494 554,428 Total Liabilities 38,494 554,428 Net Assets 5,637,202 42,237 Equity Share capital 8,277,483 2,319,902 Reserves 25,807,151 25,807,151 Accumulated losses (28,447,432) (28,084,816) Total Equity 5,637,202 42,237 The Balance Sheet should be read in conjunction with the accompanying notes.
STATEMENT OF CHANGES IN EQUITY For the half year ended 31 March 2010 CONSOLIDATED Share Capital Share Premium Asset Revaluation Foreign Currency Translation Accumulated Profit/(Loss) Balance as at 30 September 2009 2,319,902 27,188,885 81,100 (1,462,824) (28,084,816) 42,237 Exchange differences on translation of foreign operations - - - - - - Issue of shares 5,957,581 - - - - 5,957,581 Net loss attributable to shareholders - - - - (362,616) (362,616) Balance as at 31 March 2010 8,277,483 27,188,885 81,100 (1,462,824) (28,447,432) 5,637,202 Total The attached notes form an integral part of these financial statements.
STATEMENT OF CASH FLOWS For the half year ended 31 March 2010 Cash flows from operating activities 31 March 2010 Consolidated 30 September 2009 Insurance recovery 50,651 - Payments to suppliers and employees (58,281) (729,473) Interest paid - - Interest received - 1,649 Net cash used in operating activities (7,630) (727,824) Cash flows from investing activities Proceeds from disposal of subsidiary - 2 Exploration and evaluation expenditure (353,458) - Net cash used in investing activities (353,458) 2 Cash flows from financing activities Proceeds from borrowings - 345,657 Proceeds from issue of shares 888,891 - Net cash provided by financing activities 888,891 345,657 Net increase/(decrease) in cash and cash equivalents 527,803 (382,165) Cash and cash equivalents at beginning of halfyear 59,322 206,594 Effects of exchange rate changes on cash 1,258 234,903 Cash and cash equivalents at end of half year 588,383 59,332 This Statement of Cash Flows should be read in conjunction with the accompanying notes.
NOTES TO THE FINANCIAL STATEMENTS For the half year ended 31 March 2010 1. Reporting Entity The Company is incorporated in Hong Kong and listed on the Australian Securities Exchange and its principal activities are mineral exploration. The financial statements have been prepared in accordance with Hong Kong Statements of Standard Accounting Practice, accounting principles generally accepted in Hong Kong and the disclosure requirements of the Companies Ordinance. The condensed consolidated half year financial report of the Company for the six months ended 31 March 2010 comprise the Company and its subsidiaries together referred to as the "consolidated entity". 2. Statement of Compliance The consolidated interim financial report is a general purpose financial report prepared in accordance with Australian equivalents to International Financial Reporting Standards (AIFRS), and Australian Accounting Standard AASB 134 Interim Financial Reports. The consolidated interim financial report does not include all of the information required for a full annual financial report, and should be read in conjunction with the consolidated annual financial report of the consolidated entity for the year ended 30 September 2009. This consolidated interim financial report was approved by the Board of Directors on the date the directors report and declaration were signed. 3. Significant Accounting Policies The accounting policies applied by the consolidated entity in this consolidated interim financial report are the same as those applied by the consolidated entity in its consolidated financial report for the year ended 30 September 2009. 4. Going Concern The directors consider that the going concern basis for the consolidated entity is appropriate and recognise that additional funding is required to ensure the consolidated entity can continue its operations for the twelve month period from the date of this financial report and to fund the continued development of the exploration assets. This basis has been determined after consideration of the following factors: the ability to issue additional share capital the option of farming out all or part of the exploration projects the ability if required to dispose of interests in the exploration projects the ability to raise additional debt funding.
5. Estimates The preparation of the interim financial report requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. In preparing this consolidated interim financial report, the significant judgments made by management in applying the consolidated entity s accounting policies and key sources of estimation uncertainty were the same as those that applied to the consolidated financial report for the year ended 30 September 2009. 6. Financial Risk Management The consolidated entity s financial risk management objectives and policies are consistent with those disclosed in the consolidated financial report for the year ended 30 September 2009. 7. Issued Capital Ordinary Shares - Fully Paid 31 March 2010 Consolidated 30 September 2009 827,748,339 fully paid shares ordinary at 31 March 2010 (30 September 2009:231,990181) 8,277,483 2,319,902 Notes Ordinary shares participate in dividends and the proceeds on winding up of the Parent Entity in proportion to the number of shares held and the amounts paid on shares. At shareholder meetings when a poll is called each ordinary share is entitled to one vote or proportion thereof in respect of partly paid shares, otherwise each shareholder has one vote on a show of hands. 8. Subsequent Events There has not arisen in the interval between the end of the financial half-year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Consolidated Entity, the results of those operations, or the state of affairs of the Consolidated Entity, in subsequent financial periods.