Corporate Governance

CORPORATE GOVERNANCE POLICY

The Board of Directors oversees and monitors the business and affairs of the Group. To assist the Board in discharging its responsibilities, the Board has adopted the following principles of corporate governance that are considered, having regards to cost effectiveness, appropriate for the present size and scope of operations of the Group and that unless otherwise explained, follows the Corporate Governance Principles and Recommendations – 3rd edition of the ASX Corporate Governance Council.

Principle 1: Lay solid foundations for management and oversight.

Board Charter

The Board is responsible for:
(i) developing, approving and monitoring the implementation of, corporate policies, corporate strategies and performance objectives;
(ii) developing and monitoring the adoption and effectiveness of, appropriate corporate governance practices;
(iii) reviewing, ratifying and monitoring systems of accountability, risk management and internal control, codes of conduct and legal compliance;
(iv) approving and monitoring management’s implementation of financial and other reporting;
(v) approving and monitoring the progress of major capital expenditure, capital management,
and acquisitions and divestments delegated to management for implementation;
(vi) reviewing and approving business plans, operating budgets and capital budgets for
implementation by management;
(vii) reviewing, ratifying and monitoring systems implemented by management for health,
safety and environment management and controls;
(viii) appointing, removing and evaluating the performance of, the Chief Executive Officer and
senior executives, including the Company Secretary;
(ix) approving the Group’s remuneration framework; and
(x) selecting and appointing new Directors to the Board, and evaluating the performance of all
members of the Board.

The Board delegates responsibility for the day to day operations and administration of the Group to the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer.

Diversity Policy

The Board has established a policy concerning diversity recognising the benefits that it can bring to the Group. Diversity includes, but is not limited to, gender and gender identity, age, ethnicity and cultural background. The Group encourages an environment conducive to the appointment of well qualified employees, consultants, senior management and Board candidates so that there is appropriate diversity to maximise the achievement of corporate goals.

The Board has set the following objectives, to be assessed annually, for achieving diversity in the next few years as the Group’s business develops from its current early stage of operations:
35% female participants in operations and support positions;
20% female in senior executive positions – those reporting to the Board or to an officer who reports to the Board or Chief Financial Officer;
20% female in Board positions.

Performance Assessment

The Board undertakes bi-annual self-assessments of its collective performance and the performance of the Chairman.
The Chairman undertakes bi-annual assessments of the performance of individual directors. Any deficiency identified in a Director’s performance is addressed directly with the relevant Director.

Principle 2: Structure the Board to add value

Composition of the Board

The composition of the Board is determined in accordance with the following principles and guidelines:
(i) the Board shall comprise of at least three Directors, increasing where additional expertise is considered necessary in certain areas to a maximum of ten Directors;
(ii) Directors are initially appointed by the Board and are subject to re-election at the annual general meeting by shareholders at three-yearly intervals, or at the next annual general meeting after their initial appointment;
(iii) to the extent practicable and having regards to the stage of development of the Company and cost, the Board shall comprise a majority of non-executive and independent Directors with the Chairman being a non-executive and independent person; and
(iv) The Board shall comprise of Directors with a range of skills and experience that are appropriate and can assist the Directors in performing their duties within the scope of the Group’s operations.

The Board reviews its composition regularly to ensure that it has the appropriate mix of expertise and experience. Where a vacancy exists, for whatever reason, or where it is considered that the Board would benefit from the services of a new Director with particular skills and expertise, the Board selects that new Director from appropriate candidates with relevant qualifications, skills, expertise and experience.

The Board presently is composed of four Non-Executive Directors, Mr Dennis Morton (Chairman), Mr Edward Ambler, Mr Hugh Thomas and Mr Aidong Yang. Mr Dennis Morton is a substantial shareholder. Mr Edward Ambler was managing director until 4 July 2016 and is a substantial shareholder. Mr Hugh Thomas and Mr Aidong Yang are nominees and related parties of International Base Metals Limited, a substantial shareholder. Under the ASX Corporate Governance Council guidance all Directors are considered to be not independent. Consequently, the Company is not complying with Recommendations 2.4 and 2.5 of the Corporate Governance Principles and Recommendations of the ASX Corporate Governance Council. The Board, with Directors who are, or who represent, substantial shareholders that are independent of each other, has interest to add value to the Company and therefore act for the benefit of all shareholders. At the current stage of development and the size of operations of the Company, non-compliance with Recommendations 2.4 and 2.5 will not adversely affect the Company. However, the Company may consider appointing additional independent directors in the future.

Skills Matrix

A matrix of the collective skills of the Board is as follows:

Screen Shot 2016-07-21 at 11.55.28 PM

Nomination

The Board has established a Nomination Committee composed of Mr Dennis Morton (Chairman), Mr Edward Ambler and Mr Hugh Thomas, who are all considered not independent. Consequently, the Company is not complying with Recommendation 2.1 of the Corporate Governance Principles and Recommendations of the ASX Corporate Governance Council. Given the present size of the Board and early stage of development of the Group, the constituted Nomination Committee is able to deal efficiently and effectively with board composition and succession issues.

Independent Professional Advice

Directors have the right, in connection with their duties and responsibilities as directors, to seek independent professional advice at the Group’s expense. Prior approval of the Chairman is required, which will not be unreasonably withheld.

Principle 3: Act ethically and responsibly Code of Conduct

Ethical Standards

The Board’s policy is for the Directors and management to conduct themselves with the highest ethical standards in addition to compliance with their legal obligations and having regard to the reasonable expectations of the Group’s stakeholders. All Directors, officers and employees are expected to act with integrity and objectivity, striving at all times to enhance the reputation and performance of the Group.

In particular, Directors, officers and employees must at all times:
(i) manage situations where their personal interests may conflict with the interests of the
Group;
(ii) not take advantage of property, information or position for personal gain;
(iii) not compete with the Group;
(iv) not use non-public information except where disclosure is authorised or legally mandated;
(v) deal fairly with customers, suppliers, competitors and employees;
(vi) protect and make proper use of the Group’s assets;
(vii) comply with laws and regulations, and actively promote compliance; and
(viii) report any unlawful or unethical behaviour knowing that they will have proper protection
by the Board when making such reports in good faith.

Securities Trading

The Board has set a policy on dealing with securities of the Company. Directors, officers and employees, and their family members and close associates, may not buy, sell or subscribe for any securities of the Company, whether on their own account or on behalf of another person while in possession of price sensitive information which is not generally available to the public. They must comply with the Share Trading Policy of the Group that is lodged with ASX from time to time.

Principle 4: Safeguard integrity in corporate reporting

Audit Committee

The Board has established an Audit Committee composed of Mr Hugh Thomas (Chairman) BA, Grad Dip Finance who has considerable experience in finance and managing listed entities, Mr Dennis Morton BA (Hons Geology) who has considerable experience in geology and managing listed entities and Mr Edward Ambler BSc, PhD who has considerable experience in geology, mining and in plant operations. However, no members of the Audit Committee are independent, and therefore the Audit Committee’s composition is not in compliance with Recommendation 4.1(a) of the Corporate Governance Principles and Recommendations of the ASX Corporate Governance Council.

Senior executives and the auditors are invited to attend meetings as required to assist the Audit Committee with its deliberations. The Audit Committee shall meet at least two times a year.

The Audit Committee ensures that the auditor is invited to attend all general meetings of shareholders.
Under its formal charter, the Audit Committee is responsible for reviewing and making recommendations to the Board in relation to:
(i) the adequacy of the Group’s corporate reporting processes;
(ii) whether the Company’s financial statements reflect the understanding of the committee
members of, and otherwise provide a true and fair view of, the financial position and
performance of the Group;
(iii) the appropriateness of the accounting judgements or choices exercised by management in
preparing the Group’s financial statements;
(iv) the appointment or removal of the external auditor;
(v) the rotation of the audit engagement partner;
(vi) the scope and adequacy of the external audit;
(vii) the independence and performance of the external auditor; and
(viii) any proposal for the external auditor to provide non-audit services and whether it might
compromise the independence of the external auditor.

The audit committee has the right to obtain information, interview management and external auditors (with or without management present), and seek advice from external consultants or specialists where the committee considers that necessary or appropriate.

Financial Report

To assist the Board in approving the Group’s financial report, the Chief Executive Officer and the Chief Financial Officer are required to present a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards, the Corporations Act 2001 and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

Principle 5: Make timely and balanced disclosure

The Board’s policy is for all investors to have equal and timely access to material information concerning the Group, including its financial position, performance, ownership and governance.
The Board has delegated the function of continuous disclosure under ASX’s Listing Rules and the Corporations Act 2001 to the Chief Executive Officer and the Company Secretary to assess the type of information that needs to be disclosed and to ensure that Group’s announcements are made in a timely manner, are factual, do not omit material information and are in compliance with the Listing Rules and Corporations Act 2001. Information which is considered to be price sensitive is approved by the Board before its release.

Principle 6: Respect the rights of security holders

The Board shall establish practices to facilitate communication with the Company’s security holders. The Chief Executive Officer and the Company Secretary oversee this process through the Group’s website and direct mailing by email and/or post. Regular briefings are held with professional investors. Prior to such briefings, information to be given is first released to ASX and later posted on the Group’s website and broadcast to shareholders/investors who have registered their email address with the Group.

Principle 7: Recognise and manage risk

Business Risk

The Board monitors, consults with the Chief Executive Officer and receives advice as required on, areas of operational and financial risk, and further considers appropriate risk management strategies.
Specific areas of risk that are identified are regularly considered by the Board. Included in these areas are performance of activities, human resources, health, safety and the environment, continuous disclosure obligations, asset protection and financial exposures.

Internal Audit

The current stage of establishment and size of the Group does not justify the cost of increasing the number of staff to implement an internal audit function.

The evaluation and continuous improvement in the effectiveness of its risk management and internal control processes are considered by the Board at its regular meetings.

Environment, Health and Safety Management

The Board recognises the importance of environmental, occupational health and safety issues, and is committed to the highest standards of performance. All Directors and employees are required to comply with all relevant legislation, continually assess and improve the impact of the Group’s operations on the environment, and encourage the adoption of similar standards by the Group’s principal suppliers, contractors and any joint venture partners.

The Board regularly reviews risk management with the Operating Committee (consisting of Mr Edward Ambler and Mr Aidong Yang), the Chief Executive Officer, the Chief Operating Officer and the General Manager – Mine, who are required to report on its effectiveness.

Principle 8: Remunerate fairly and responsibly

The Board has established a Remuneration Committee consisting of Mr Dennis Morton (Chairman), Mr Edward Ambler and Mr Hugh Thomas. All members of the committee are non- executive but not independent, and therefore, the composition of the Remuneration Committee is not in compliance with Recommendation 8.1(a) of the Corporate Governance Principles and Recommendations of the ASX Corporate Governance Council.

The Remuneration Committee reviews the remuneration packages and policies applicable to all Directors and senior executives on an annual basis by reference to market practice for the industry in which the Group operates and makes recommendations to the Board. The policy is for remuneration levels to be competitively set to retain and/or attract qualified and experienced Directors and senior executives. Where necessary, the Remuneration Committee obtains independent advice on the appropriateness of remuneration packages.

Directors’ fees are determined within an aggregate fee pool limit approved by shareholders which currently stands at $500,000 per annum.

The Remuneration Committee and the Board have not resolved to pay fees or remuneration to non-executive Directors and the Company Secretary/Chief Financial Officer. It is the Board’s intention to resolve on payments to Directors and the Company Secretary/Chief Financial Officer after the Company has been admitted to the Official List of ASX. At the appropriate time, subject to financial capacity, the remuneration of Directors and the Company Secretary/Chief Financial Officer will be determined by the Remuneration Committee on normal commercial terms having regards to market and the size and stage of development of the Company.

Consultancy fees of $1,000 per day may be payable to Directors in the event that they provide services to the Company other than normal duties of a Director.

Download the Table on Corporate Governance Compliance PDF