HIGHFIELD RESOURCES LIMITED — Governance Information 2012

Feb 2, 2012

HIGHFIELD RESOURCES LIMITED

ACN 153 918 257

(Company)

Corporate Governance Statement

This Corporate Governance Statement sets out the Company’s current compliance with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (Principles and Recommendations). The Principles and Recommendations are not mandatory. However, the Company will be required to provide a statement in its future annual reports disclosing the extent to which the Company has followed the Principles and Recommendations.

The Board of the Company currently has in place a corporate governance policy which has been posted in a dedicated corporate governance information section of the Company’s website at www.highfieldresources.com.au.

PRINCIPLES AND RECOMMENDATIONS	PRINCIPLES AND RECOMMENDATIONS	COMPLY (YES/NO)	EXPLANATION
1.	Lay solid foundations for management and oversight
1.1	Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions.	Yes	The Directors monitor the business affairs of the Company on behalf of Shareholders and have adopted a Corporate Governance Plan which is designed to encourage Directors to focus their attention on accountability, risk management and ethical conduct. The Company’s Corporate Governance Plan includes a Board Charter, which discloses the specific responsibilities of the Board. The Company’s Corporate Governance Plan is available on the Company’s website at www.highfieldresources.com.au.
1.2	Companies should disclose the process for evaluating the performance of senior executives.	Yes	Due to the Company’s stage of development, it does not yet have any senior executives apart from the Board. However, if the Company appoints senior executives in the future, the Board will monitor the performance of those senior executives includingmeasuringactualperformance

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PRINCIPLES AND RECOMMENDATIONS	PRINCIPLES AND RECOMMENDATIONS	COMPLY (YES/NO)	EXPLANATION
			of senior executives against planned performance. The Board has adopted a policy to assist in evaluating the performance of senior executives, which is contained in Schedule 6 of its Corporate Governance Plan (Disclosure - Performance Evaluation). Given the current size and structure of the Board, the Board has not established a separate nomination committee to oversee the performance evaluation of the senior executives. Until a nomination committee is established, the Board will undertake the obligations of the nomination committee in connection with evaluating the performance of senior executives in accordance with Schedule 6 of its Corporate Governance Plan.
1.3	Companies should provide the information indicated in the_Guide to reporting on Principle 1_.	Yes	The Company will explain any departures from Principles and Recommendations 1.1 and 1.2 (if any) in its future annual reports, including whether a performance evaluation for senior executives (if any exist at that time) has taken place in the reporting period and whether it was in accordance with the process disclosed. The Company has not undertaken any performance evaluation of any senior executive in the last reporting period. The Company has adopted a Board Charter, which discloses the specific responsibilities of the Board and provides that the Board may delegate responsibility for the day-to-day operations and administration of the Company to the chief executive officer/managingdirector(if

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PRINCIPLES AND RECOMMENDATIONS	PRINCIPLES AND RECOMMENDATIONS	COMPLY (YES/NO)	EXPLANATION
			appointed). The Board Charter is contained in Schedule 1 of the Company’s Corporate Governance Plan and the Nomination Committee Charter is contained in Schedule 5 of the Company’s Corporate Governance Plan.
2.	Structure the board to add value
2.1	A majority of the board should be independent directors.	No	An independent director is one who is independent from management and free from any business or other relationship, which could, or could reasonably be perceived to, materially interfere with, the exercise of independent judgement. An independent director will also fall within the definition of what constitutes independence as set out in the ASX Corporate Governance Council Principles and Recommendations, as set out in Annexure A of the Company’s Corporate Governance Principles. Currently the Company has one (1) independent Director – Mr Jonathan Murray. The Company’s Corporate Governance Plan outlines that the majority of the Board will be comprised of non-executive directors, and where practical, at least 50% of the Board will be independent. However, the Board considers that the Company is not currently of a size, nor are its affairs of a complexity, to justify the expense of an appointment of a majority of independent directors. The current Board structure presently consists of a non-executive Chairman, a managing director and an executive director. The Board believes that each of the Directors can make, and do make,qualityand independentjudgements in the

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PRINCIPLES AND RECOMMENDATIONS	PRINCIPLES AND RECOMMENDATIONS	COMPLY (YES/NO)	EXPLANATION
			best interests of the Company. Any Director who has a conflict of interest in relation to a particular item of business must declare their conflict and abstain from voting or participating in Board deliberations to which a conflict of interest relates.
2.2	The chair should be an independent director.	Yes	The Company’s Corporate Governance Plan provides that the Chairman, where practical, should be a non-executive Director. Mr Jonathan Murray is the non-executive Chairman and falls within the definition of an independent director.
2.3	The roles of chair and chief executive officer should not be exercised by the same individual.	Yes	The Company has not appointed a chief executive officer. The Company’s Corporate Governance Plan provides, where practical, that the chief executive officer should not be the Chairman of the Company during his term as chief executive officer or in the future. The Company intends to seek out and appoint a chief executive officer, separate from the role of Chairman, in the future. However due to the current limited size of the Company’s operations, it may not be appropriate to appoint a chief executive officer for some time.
2.4	The board should establish a nomination committee.	No	Given that the Company is in its early stages of development and given the current size and structure of the Board, the Board has not established a separate nomination committee. Matters typically dealt with by such a committee are dealt with bythe Board. The Board mayalso seek independent

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PRINCIPLES AND RECOMMENDATIONS	PRINCIPLES AND RECOMMENDATIONS	COMPLY (YES/NO)	EXPLANATION
			advice to assist with the identification process.
2.5	Companies should disclose the process for evaluating the performance of the board, its committees and individual directors.	No	The Company will put a formal process in place as and when the Company’s level of operations justifies it. Currently, the Board undertakes the obligations of the nomination committee in connection with evaluating the performance of the Board, its committees and individual directors, and will continue to do so until a nomination committee is established. The Board does so without the affected Board member participating in that decision- making process and will, where necessary, consult with independent professional advisers.
2.6	Companies should provide the information indicated in the_Guide to reporting on Principle 2_.	Yes	A description of the skills and experience of each of the current Directors is included on the Company’s website at www.highfieldresources.com.au. Given that the Company is in its early stages of development and given the current size and structure of the Board, the Company has not fully complied with Principle 2 of ASX Corporate Governance Council Principles and Recommendations. However, it will seek to do so as it develops and the Board grows. The Board Charter includes a statement that the Board may seek independent professional advice at the Company’s expense. The Board has not established a nomination committee and its functions are carried out by the Board. The Company will provide details of any new director, such as their skills, experience and expertise relevant to their

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PRINCIPLES AND RECOMMENDATIONS	PRINCIPLES AND RECOMMENDATIONS	COMPLY (YES/NO)	EXPLANATION
			position, together with an explanation of any departures from Corporate Governance Principles and Recommendations 2.1, 2.2, 2.3, 2.4 and 2.5 in its future annual reports.
3.	Promote ethical and responsible decision making
3.1	Companies should establish a code of conduct and disclose the code or a summary of the code as to: • the practices necessary to maintain confidence in the company’s integrity; • the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders; and • the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.	Yes	The Company’s Code of Conduct, which is included in Schedule 2 of the Company’s Corporate Governance Plan, aims to encourage the appropriate standards of conduct and behaviour of the directors, officers and employees of the Company.
3.2	Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measureable objectives for achieving gender diversity and for the board to assess annually both the objectives and progress in achieving them.	Yes and No	Under the Company’s Corporate Code of Conduct, employees must not harass, discriminate or support others who harass and discriminate against colleges or members of the public on the grounds of sex, pregnancy, marital status, age, race (including their colour, nationality, descent, ethnic or religious background), physical or intellectual impairment, homosexuality or transgender. Such harassment or discrimination may constitute an offence under legislation. Under the Company’s Corporate Code of Conduct, all forms of discrimination and harassment are prohibited. Such harassment or discrimination may constitute an offence under legislation. The Board will conduct all Board appointmentprocesses in a

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PRINCIPLES AND RECOMMENDATIONS	PRINCIPLES AND RECOMMENDATIONS	COMPLY (YES/NO)	EXPLANATION
			manner that promotes gender diversity, including establishing a structured approach for identifying a pool of candidates, using external experts where necessary. Due to the small scale of the Company’s operations and the limited number of employees, the Company has not yet set a formal policy for achieving gender diversity. The Company will consider establishing such a policy as it develops.
3.3	Companies should disclose in each annual report the measureable objectives for achieving set by the board in accordance with the diversity policy and progress in achieving them.	No	Due to the small scale of the Company’s operations and the limited number of employees, the Company has not yet set a formal policy for achieving gender diversity. The Company will consider establishing a formal policy as it develops.
3.4	Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board.	Yes	The Company’s future annual reports will include the proportion of woman employees within the organisation as well as women in senior positions within the Company.
3.5	Companies should provide the information indicated in the_Guide to reporting on Principle 3_.	Yes	The Board will include in the Annual Report each year: • measurable objectives (if any) set by the Board; • progress against the objectives; and • the proportion of women employees in the whole organisation at senior management and at Board level. The Company will explain any departures from Corporate Governance Principles and Recommendations 3.1, 3.2, 3.3 and 3.4 in the Corporate Governance Statement and its future annual reports.

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PRINCIPLES AND RECOMMENDATIONS	PRINCIPLES AND RECOMMENDATIONS	COMPLY (YES/NO)	EXPLANATION
4.	Safeguard integrity in financial reporting
4.1	The board should establish an audit committee.	No	A formal Audit and Risk Committee Charter has been adopted by the Company, which is contained in Schedule 3 of the Company’s Corporate Governance Plan. The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the formation of separate or special committees at this time. The Board as a whole is able to address the governance aspects of the full scope of the Company’s activities and to ensure that it adheres to appropriate ethical standards. In particular, the full Board considers those matters that would usually be the responsibility of an Audit Committee and a nomination committee. The Board considers that, at this stage, no efficiencies or other benefits would be gained by establishing a separate Audit Committee or a separate nomination committee.
4.2	The audit committee should be structured so that it: • consists only of non-executive directors; • consists of a majority of independent directors; • is chaired by an independent chair, who is not chair of the board; and • has at least three members.	No	Refer to 4.1 above.
4.3	The audit committee should have a formal charter.	No	A formal Audit and Risk Committee Charter has been adopted by the Company, which is contained in Schedule 3 of the Company’s Corporate Governance Plan, however at this stage this has not been adopted bythe Company’s

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PRINCIPLES AND RECOMMENDATIONS	PRINCIPLES AND RECOMMENDATIONS	COMPLY (YES/NO)	EXPLANATION
			Audit Committee as no such committee is in place.
4.4	Companies should provide the information indicated in the_Guide to reporting on Principle 4_.	Yes	The Company does not have an Audit Committee. The Board carries out the duties of the Audit Committee. The Company will explain any departures from the Corporate Governance Principles and Recommendations 4.1, 4.2 and 4.3 (if any) in its future annual reports.
5.	Make timely and balanced disclosure
5.1	Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.	Yes	The Company’s Continuous Disclosure Policy, which is contained in Schedule 7 of the Company’s Corporate Governance Plan, is designed to ensure the compliance with ASX Listing Rule disclosure and to ensure accountability at a senior executive level for compliance and factual presentation of the Company’s financial position. The Company secretaries have been nominated as the people responsible for communications with the ASX. This role includes responsibility for ensuring compliance with the continuous disclosure requirements in the ASX Listing Rules and overseeing and co-ordinating information disclosure to the ASX, analysts, brokers, shareholders, the media and the public.
5.2	Companies should provide the information indicated in_Guide to Reporting on Principle 5._	Yes	The Company does not have an Audit Committee. The Board carries out the duties of the Audit Committee. The Company will provide an explanation of any departures from Corporate Governance Principle and Recommendation 5.1 in its future annual reports.

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PRINCIPLES AND RECOMMENDATIONS	PRINCIPLES AND RECOMMENDATIONS	COMPLY (YES/NO)	EXPLANATION
6.	Respect the rights of shareholders
6.1	Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy.	Yes	The Company has adopted a Shareholder Communications Strategy, contained in Schedule 10 of the Company’s Corporate Governance Plan, which aims to ensure that the shareholders of the Company are informed of all major developmentsaffecting the Company’s state of affairs. The strategy provides that information will be communicated to shareholders through: • the Annual Report delivered by post which is also placed on the Company’s website; • the half yearly report which is placed on the Company’s website; • the quarterly reports which are placed on the Company’s website; • disclosures and announcements made to the ASX, copies of which are placed on the Company’s website; • notices and explanatory memoranda of Annual General Meetings (AGM) and Extraordinary General Meetings (EGM), copies of which are placed on the Company’s website; • the Chairman’s address and the Managing Director’s address made at the AGMs and the EGMs, copies of which are placed on the Company’s website; • the Company’s website on which the Company posts all announcements which it makes to the ASX; and • the auditor’s lead engagement partner being present at the AGM to answerquestions from shareholders about

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PRINCIPLES AND RECOMMENDATIONS	PRINCIPLES AND RECOMMENDATIONS	COMPLY (YES/NO)	EXPLANATION
			the conduct of the audit and the preparation and content of the auditor’s report.
6.2	Companies should provide the information indicated in the_Guide to reporting on Principle 6_.	Yes	The Company will provide an explanation of any departures from Corporate Governance Principle and Recommendation 6.1 (if any) in its future annual reports.
7.	Recognise and manage risk
7.1	Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.	Yes and No	Given that the Company is in its early stages of development, and given the current size and structure of the Board, the Board has not established a separate Audit Committee. However the Audit and Risk Committee Charter contained in the Company’s Corporate Governance Plan sets out the Company’s policies for the oversight and management of material business risks. The Board will carry out the duties of the Audit Committee in accordance with the formal terms of reference set out in the Company’s Corporate Governance Plan. The Board will carry out the duties of the Audit Committee. The Board is responsible for determining the Company’s “risk profile” and is responsible for overseeing and approving risk management strategy and policies, internal compliance and internal control.

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PRINCIPLES AND RECOMMENDATIONS	PRINCIPLES AND RECOMMENDATIONS	COMPLY (YES/NO)	EXPLANATION
7.2	The board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the company’s management of its material business risks.	Yes	The Board’s collective experience will enable accurate identification of the principal risks that may affect the Company’s business in addition to those identified by the audit committee (once established). Key operational risks and their management will be recurring items for deliberation at Board Meetings.
7.3	The board should disclose whether it has received f th hif ti ffi	No	The Board will seek the relevant assurance from the chief executive officer and chief financial officer (or their equivalents) at the relevant time.
	assurance rom e ce execuve ocer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.
7.4	Companies should provide the information indicated in_Guide to Reporting on Principle 7._	Yes	The Company will provide an explanation of any departures from Corporate Governance Principles and Recommendations 7.1, 7.2 and 7.3 (if any) in its future annual reports.
8.	Remunerate fairly and responsibly
8.1	The board should establish a remuneration committee.	No	A formal Remuneration Committee Charter has been adopted by the Company, which is contained in Schedule 4 of the Company’s Corporate Governance Plan. However, given that the Company is in its early stages of development and given the current size and structure of the Board, the Board has not established a separate Remuneration Committee.

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PRINCIPLES AND RECOMMENDATIONS	PRINCIPLES AND RECOMMENDATIONS	COMPLY (YES/NO)	EXPLANATION
			This will be reviewed as the Company’s circumstances change. Until a Remuneration Committee is established, the Board will carry out the duties of the Remuneration Committee in accordance with the formal terms of reference of the Remuneration set out in the Company’s Corporate Governance Plan.
8.2	The remuneration committee should be structured so that it: • consists of a majority of independent directors; • is chaired by an independent director; and • has at least three members.	No	Refer to 8.1 above.
8.3	Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives.	Yes	Executive Directors remuneration packages may comprise of: • fixed salary; • performance based bonuses; • participation in any share/option scheme; and • statutory superannuation. Non-executive Directors receive fixed directors fees only, and do not participate in any performance-based remuneration. Fixed Director’s fees may be paid in the form of cash, share options or a combination of both. Share options are issued on similar terms to previous issues by the entityand are considered to be in lieu of cash, not based

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PRINCIPLES AND RECOMMENDATIONS	PRINCIPLES AND RECOMMENDATIONS	COMPLY (YES/NO)	EXPLANATION
			on performance of the entity. Full remuneration disclosure, including superannuation entitlements will be provided by the Company in its future annual reports.
8.4	Companies should provide the information indicated in the_Guide to reporting on Principle 8_.	Yes	The Company will provide an explanation of any departures from Corporate Governance Principles and Recommendations 8.1, 8.2 and 8.3 (if any) in its future annual reports.

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