Corporate Governance STATEMENT
This statement outlines the main corporate governance practices in place throughout the financial year, which comply with the Australian Stock Exchange (“ASX”) and Alternative Investment Market ("AIM"), unless otherwise stated.
The Company’s Board of Directors has reviewed the recommendations. In a limited number of instances, the Company may determine not to meet the standard set out in the recommendations, largely due to same recommendations being considered by the Board to be unduly onerous for a company of this size.
The Company’s Corporate Governance Statement is now structured with reference to the Corporate Governance Council’s principles and recommendations, which are as follows:
- Lay solid foundations for management and oversight.
- Structure the Board to add value.
- Promote ethical and responsible decision making.
- Safeguard integrity in financial reporting.
- Make timely and balanced disclosure.
- Respect the rights of shareholders.
- Recognise and manage risk.
- Encourage enhanced performance.
- Remunerate fairly and responsibly.
- Recognise the legitimate interests of stakeholders.
Board of Directors
Role of the Board
The primary role of the Board of Directors is the protection and enhancement of long-term shareholder value.
To fulfil this role, the Board is responsible for the overall corporate governance of the Company including formulating its strategic direction, approving and monitoring capital expenditure, setting remuneration, appointing, removing and creating succession policies for directors and senior executives, establishing and monitoring the achievement of management’s goals and ensuring the integrity of internal control and management information systems. It is also responsible for monitoring financial and other reporting.
Board processes
The Board has established a framework for the management of the Company including, a system of internal control, a business risk management process and the establishment of appropriate ethical standards.
The Company is engaged in exploration and evaluation of mining interests. The critical skills required by the Board in pursuing the Company’s business plan at this relatively early stage of its development are expert geological, exploration and evaluation project management skills together with strong fiscal management skills. In addition, each director is charged with having a thorough understanding of, and responsibility for, the protection of the rights of the Company and its shareholders.
The Board has these skills and as the Company progresses will review the Board Composition as and when complimentary skills are required. The Board presently comprises five non-executive directors, three executive directors and the Managing Director. Christopher de Guingand, John Shaw and Valentine Chitalu are independent directors at this time.
The Directors meet frequently, both formally and informally, to ensure a mutually thorough understanding of the Company’s business and all the Company’s policies of corporate governance are adhered to. The agenda for meetings is prepared in conjunction with the Chairman, Managing Director and Company Secretary and is circulated in advance.
The term in office held by each director in office at the date of the Annual report is as follows:
| NAME | TERM IN
OFFICE |
| Mr J Shaw | 3 Months |
| Mr C de Guingand | 5 Years |
| Mr A Cooke | 7 Years |
| Mr D Rogers | 3 Years |
| Mr P Chapman | 1 Year |
| Mr V Chitalu | 1 Year |
Director Education
The Company has a formal process to educate new directors about the nature
of the business, current issues, the corporate strategy and the expectations
of the Company concerning the performance of directors. Directors are
given access to and encouraged to participate in continuing education
opportunities to update and enhance their skills and knowledge.
Independent professional advice and access to company information
Each director has the right of access to all relevant Company information
and to the Company’s executives and, subject to prior consultation
with the Chairman, may seek independent professional advice from a suitably
qualified advisor at the Company’s expense. The director must consult
with an advisor suitably qualified in the relevant field and obtain the
Chairman’s approval of the fee payable for the advice before proceeding
with the consultation. A copy of the advice received by the director is
made available to all other board members.
Independence
Corporate Governance Council Recommendation 2.1 requires a majority of
the Board to be independent directors. The Corporate Governance Council
defines independence as being free from any business or other relationship
that could materially interfere with, or could reasonably be perceived
to materially interfere with, the exercise of unfettered and independent
judgement. In accordance with this definition three directors, Mr Christopher
de Guingand, Mr John Shaw and Mr Valentine Chitalu, are considered to
be independent.
The Board considers that the majority of the Board is not independent in accordance with Recommendation 2.1. However the Board believes that the individuals on the Board have sufficient expertise, at this stage of the Company’s development, to make independent judgements in the best interests of the Company on all relevant issues. Directors having a conflict of interest in relation to a particular item of business must and do absent themselves from the Board Meeting before commencement of discussion on the topic.
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the expense of the appointment of additional Independent Non-Executive Directors.
Recommendation 9 states that Non-Executive Directors should not receive options or bonus payments. The Company intends to continue its policy of awarding options or other securities to non-executive directors as it considers this to be a reasonable and appropriate method of assisting in attracting and retaining suitably skilled board members.
Nomination committee
Recommendation 2.4 requires listed entities to establish a nomination
committee. During the period ended 31 December 2007, the Company did not
have a separate nomination committee. The duties and responsibilities
typically delegated to such a committee are considered to be the responsibility
of the full Board, given the size and nature of the Company’s activities.
The Board does not believe that any marked efficiencies or enhancements
would be achieved by the creation of a separate nomination committee.
The Board has reviewed its policy on nominations and incorporates below
its summarised policy.
Factors considered for a new candidate include:
- The skills required for appointment to the Board.
- How differing skills are represented on the Board.
- Processes for the identification of suitable candidates for the Board.
- The time commitment required by a director to effectively discharge duties.
- The number of existing directorships and other commitments that the candidate may have.
- Assessment of the ‘independence’ of the candidate.
- The extent to which the appointee is likely to work constructively with the existing directors and contribute to the overall effectiveness of the Board.
The following procedure is followed in selecting and appointing a new director:
- Utilise personal networks or external consultants to identify potential candidates.
- Assess appropriateness of candidate with consideration to the above points.
- Determine the terms, conditions, responsibilities and expectations of the new position.
- Non-Executive Directors should be appointed for specific terms subject to re-election and to the ASX.
Listing Rules and Corporations Act provisions concerning removal of a director.
- Ultimate decisions about who is elected to the Board are to be made by the shareholders.
- Ensuring that the new board member is inducted and that they have every opportunity to increase their knowledge about the Company to ensure that they can participate in an effective manner to the board deliberations.
Continuous disclosure policy
The Company is required to immediately inform the ASX and AIM once it becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the Company’s securities.
Therefore to meet this obligation the Company undertakes to:
- Notify the ASX and AIM immediately when it becomes aware of any information that a reasonable person would expect to have a material effect on the price and value of the Company’s securities, unless that information is not required to be disclosed under the listing rules.
- Disclose notifications to the ASX and AIM on the Company website following confirmation of the publishing of the information by the ASX and AIM.
- Not respond to market speculation or rumour unless the ASX or AIM considers it necessary due to there being, or likely to be, a false market in the Company’s securities.
The Company Secretary is responsible for coordinating the disclosure requirements. To ensure appropriate procedure all directors, officers and employees of the Company coordinate disclosures through the Company Secretary, including:
- Media releases
- Analyst briefings and presentations and
- The release of reports and operational results.
Information not disclosed via ASX and AIM announcement that might be considered share price sensitive will not be discussed with any external parties, except for third parties bound by confidentiality agreements and or clauses with the Company. Discussions with external parties will only occur following an ASX and AIM announcement. All written materials containing new price sensitive information to be used in briefing media, investors and analysts will be notified to the ASX and AIM prior to the commencement of that briefing.
In reviewing the content of analysts’ reports and profit forecasts, the Company will correct factual inaccuracies or historical matters.
Information is communicated to shareholders as follows:
- The annual report is distributed to all shareholders (unless a shareholder has specifically requested not to receive the document), including relevant information about the operations of the Company during the year, changes in the state of affairs and details of future developments. The audited annual financial report is lodged with the Australian Securities and Investment Commission and the ASX and AIM.
- The half-yearly report contains summarised financial information and a review of the operations of the Company during the period. The half-year reviewed financial report is lodged with the Australian Securities and Investment Commission and the ASX and AIM, and sent to any shareholder who requests it.
- Quarterly reports are prepared in accordance with ASX listing rules.
- Proposed major changes in the Company which may impact on share ownership rights are submitted to a vote of shareholders.
- All announcements made to the market and related information are placed on the Company’s website after they are released to the ASX and AIM, including regular updates on operations.
- The full texts of notices of meetings and associated explanatory material are placed on the Company’s website.
All of the above information is made available on the Company’s website. Copies of all presentations made by the Company in a public forum are posted on the website. The majority of the information is also emailed to all shareholders who lodge their email contact details with the Company.
The external auditor is requested to attend the Annual General Meeting to answer any questions concerning the audit and the auditor’s report.
The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the Company’s strategy and goals. Important issues are presented to the shareholders as single resolutions.
The shareholders are responsible for voting on the appointment of Directors, approval of the maximum amount of directors’ fees and the granting of options and shares to Directors.
Share trading policy
The Company has established a policy that imposes certain restrictions on directors, senior management and other employees trading in the Company’s securities. The policy has been adopted to prevent trading in contravention of the insider trading provisions of the Corporations Act 2001, in particular when Company personnel are in possession of price-sensitive information.
In general, trading in the Company’s securities is prohibited:
- whilst in possession of unpublished price sensitive information;
- where officers are engaging in the business of active dealing;
- two months before the release of the Company’s half yearly or annual report to the ASX and AIM
- one month before the release of the Company’s quarterly report to the ASX and AIM; and
- two weeks before lodgement and during the period that a disclosure document including a prospectus is open for applications except to the extent that a Director or employee is applying for securities pursuant to that disclosure document.
The Company holds a register of Employees that maintains share holdings and any sales must be referred to the Managing Director or Chairman.
Conflict of interest
In accordance with the Corporations Act and the Company’s constitution Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the Board believes that a significant conflict exists the Director concerned does not receive the relevant board papers and is not present at the meeting whilst the item is considered.
Remuneration and performance assessment
Remuneration Committee
Recommendation 9.2 requires listed entities to establish a remuneration
committee. During the year ended 31 December 2007, the Company had a separate
remuneration committee.
Remuneration Committee members are:
- Christopher de Guingand (Chairman)
- John Shaw
- Nicholas Day
Remuneration policies
Remuneration of the Directors are formalised in service agreements. The
Remuneration Committee is responsible for determining and reviewing compensation
arrangements for the Directors themselves, the Managing Director and the
executive team.
It is the Company’s objective to provide maximum stakeholder benefit from the retention of a high quality board and executive team by remunerating Directors and key executives fairly and appropriately with reference to relevant employment market conditions. To assist in achieving this objective, the Board links the nature and amount of executive Directors’ and officers’ emoluments to the Company’s financial and operational performance. The expected outcomes of the remuneration structure are:
- Retention and motivation of key executives
- Attraction of quality management to the Company
- Performance incentives which allow executives to share the rewards of the success of the Company
Remuneration of non-executive directors is determined by the Board with reference to comparable industry levels and, specifically for Directors’ fees, within the maximum amount approved by shareholders.
In relation to the payment of bonuses, options and other incentive payments, discretion is exercised by the board, having regard to the overall performance of the Company and the performance of the individual during the period.
There is no scheme to provide retirement benefits to non-executive directors.
Performance
The performance of the Board and key executives is reviewed regularly against both measurable and qualitative indicators. The performance criteria against which Directors and executives are assessed is aligned with the financial and non-financial objectives of the Company. Directors whose performance is consistently unsatisfactory may be asked to retire.
Risk management
Oversight of the risk management system
The Board takes a proactive approach to risk management. The Board is responsible for oversight of the processes whereby the risks, and also opportunities, are identified on a timely basis and that the Company’s objectives and activities are aligned with the risks and opportunities identified by the Board. This oversight encompasses operational, financial reporting and compliance risks.
The Company believes that it is crucial for all Board members to be a part of the process, and as such the Board has not established a separate risk management committee.
The Board oversees the establishment, implementation and annual review of the Company’s risk management policies as part of the Board approval process for the strategic plan, which encompasses the Company’s vision and strategy, designed to meet stakeholder’s needs and manage business risks.
The Managing Director and the Chief Financial Officer have declared, in writing to the Board, that the financial reporting risk management and associated compliance and controls have been assessed and found to be operating efficiently and effectively. All risk assessments covered the whole financial year and the period up to the signing of the annual financial report for all material operations in the Company.
Internal control framework
The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective internal control system will preclude all errors and irregularities. To assist in discharging this responsibility, the Board has instigated an internal control framework that deals with:
- Financial reporting - there is a comprehensive budgeting system with an annual budget, updated on a regular basis and approved by the Board. Monthly actual results are reported against these budgets.
- Investment appraisal - the Company has clearly defined guidelines for capital expenditure including annual budgets, detailed appraisal and review procedures, levels of authority and due diligence requirements where businesses or assets are being acquired or divested.
- Quality and integrity of personnel - the Company’s policies are detailed in an approved induction manual. Formal appraisals are conducted annually for all employees.
Audit and compliance policy
The Board imposes stringent policies and standards to ensure compliance with all corporate financial and accounting standards. Where considered appropriate, the Company’s external auditors, professional advisors and management are invited to advise the Board on these issues and the Board meets quarterly to consider audit matters prior to statutory reporting.
The Company requires that its auditors must not carry out any other major area of service to the Company and should have expert knowledge of both Australian and international jurisdictions.
Recommendation 4.3 requires listed entities to have an Audit Committee consisting of only non-executive directors, a majority of independent directors, an independent Chairman, who is not Chairman of the board and at least three members. Recommendation 4.4 requires the audit committee to have a formal charter.
The Company does not currently comply with the Recommendations. During the year ended 31 December 2007, the Company had a separate audit committee.
Audit Committee members are:
- Christopher de Guingand (Chairman)
- Valentine Chitalu
- Kevin Hart
Due to the small size of the Board the audit committee consists of two non - executive directors one of which is independent. The Chairman of the Board is not the Chairman of the audit committee.
The audit committee consists of members with financial expertise and detailed knowledge and experience of the mineral exploration and evaluation business. It advises on the establishment and maintenance of a framework of internal control and appropriate ethical standards for the management of the Company.
The audit committee will meet with the Company’s external auditors, independent of the Managing Director, at least twice a year.
The Managing Director and the Chief Financial Officer declared in writing to the Board that the Company’s financial reports for the year ended 31 December 2007 present a true and fair view, in all material respects, of the Company’s financial condition and operational results and are in accordance with relevant accounting standards. This statement is required annually.
The external audit lead audit partner is rotated every 7 years and will be rotated off during 2011.
Ethical standards
All directors and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the Company.
Health, safety, environment and heritage protection policy
The Company is committed to compliance with all relevant laws and regulations and continual assessment of its operations to ensure protection of the environment, the community and the health and safety of its employees.
The Company has adopted a policy and maintains appropriate procedures to ensure that all Company activities are carried out in compliance with safety regulations, in a culture where the safety of personnel is paramount and which recognises environmental sustainability and respect for cultural and heritage issues as essential requirements for all its activities. Procedures are maintained to govern the activity of employees and contractors to ensure that the objectives of this policy are met.
The Company is committed to working in accordance with World Bank Standards.