HIGHFIELD RESOURCES LIMITED — Governance Information 2016

Sep 29, 2016

Rules 4.7.3 and 4.10.3[1]

Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

Name of entity

Highfield Resources Limited

ABN/ARBN	ABN/ARBN	Financialyear ended
51 153 918 257		30 June 2016

Our corporate governance statement[2] for the above period above can be found at:[3]

• ☐ these pages of our annual report:

• ☒ this URL on our website: http://www.highfieldresources.com.au/corporate-governance/

The Corporate Governance Statement is accurate and up to date as at 30 September 2016 and has been approved by the board.

The annexure includes a key to where our corporate governance disclosures can be located.

Date here: 30 September 2016

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Sign here: _______ Company Secretary

Print name: Donald Stephens

1 Under Listing Rule 4.7.3, an entity must lodge with ASX a completed Appendix 4G at the same time as it lodges its annual report with ASX.

Listing Rule 4.10.3 requires an entity that is included in the official list as an ASX Listing to include in its annual report either a corporate governance statement that meets the requirements of that rule or the URL of the page on its website where such a statement is located. The corporate governance statement must disclose the extent to which the entity has followed the recommendations set by the ASX Corporate Governance Council during the reporting period. If the entity has not followed a recommendation for any part of the reporting period, its corporate governance statement must separately identify that recommendation and the period during which it was not followed and state its reasons for not following the recommendation and what (if any) alternative governance practices it adopted in lieu of the recommendation during that period.

Under Listing Rule 4.7.4, if an entity chooses to include its corporate governance statement on its website rather than in its annual report, it must lodge a copy of the corporate governance statement with ASX at the same time as it lodges its annual report with ASX. The corporate governance statement must be current as at the effective date specified in that statement for the purposes of rule 4.10.3.

2 “Corporate governance statement” is defined in Listing Rule 19.12 to mean the statement referred to in Listing Rule 4.10.3 which discloses the extent to which an entity has followed the recommendations set by the ASX Corporate Governance Council during a particular reporting period.

3 Mark whichever option is correct and then complete the page number(s) of the annual report, or the URL of the web page, where the entity’s corporate governance statement can be found.

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ANNEXURE – KEY TO CORPORATE GOVERNANCE DISCLOSURES

	Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We haveNOTfollowed the recommendation in full for the whole of the period above. We have disclosed …
	PRINCIPLE 1– LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
	1.1	A listed entity should disclose: (a) the respective roles and responsibilities of its board and management; and (b) those matters expressly reserved to the board and those delegated to management.	… the fact that we follow this recommendation: ☒in our Corporate Governance StatementOR  at this location: ______ Insert location here_ … and information about the respective roles and responsibilities of our board and management (including those matters expressly reserved to the board and those delegated to management):  at this location: ______ _Insert location here	 an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity and this recommendation is therefore not applicable
	1.2	A listed entity should: (a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director.	… the fact that we follow this recommendation: ☒in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity and this recommendation is therefore not applicable
	1.3	A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.	… the fact that we follow this recommendation: ☒in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity and this recommendation is therefore not applicable

2

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We haveNOTfollowed the recommendation in full for the whole of the period above. We have disclosed …
1.4	The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.	… the fact that we follow this recommendation: ☒in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity and this recommendation is therefore not applicable
1.5	A listed entity should: (a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them; (b) disclose that policy or a summary of it; and (c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them and either: (1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or (2) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act.	… the fact that we have a diversity policy that complies with paragraph (a):  in our Corporate Governance StatementOR  at this location: ______ Insert location here_ … and a copy of our diversity policy or a summary of it:  at this location: highfieldresources.com.au/corporate-governance/ … the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with our diversity policy and our progress towards achieving them:  in our Corporate Governance StatementOR  at this location: ______ _Insert location here … and the information referred to in paragraphs (c)(1) or (2):  in our Corporate Governance StatementOR  at this location: _________ Insert location here	☒an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity and this recommendation is therefore not applicable

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We haveNOTfollowed the recommendation in full for the whole of the period above. We have disclosed …
1.6	A listed entity should: (a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.	… the evaluation process referred to in paragraph (a):  in our Corporate Governance StatementOR  at this location: ______ Insert location here_ … and the information referred to in paragraph (b):  in our Corporate Governance StatementOR  at this location: ______ _Insert location here	☒an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity and this recommendation is therefore not applicable
1.7	A listed entity should: (a) have and disclose a process for periodically evaluating the performance of its senior executives; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.	… the evaluation process referred to in paragraph (a): ☒in our Corporate Governance StatementOR  at this location: ______ Insert location here_ … and the information referred to in paragraph (b): ☒in our Corporate Governance StatementOR  at this location: ______ _Insert location here	 an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity and this recommendation is therefore not applicable

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	Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We haveNOTfollowed the recommendation in full for the whole of the period above. We have disclosed …
	PRINCIPLE 2- STRUCTURE THE BOARD TO ADD VALUE
	2.1	The board of a listed entity should: (a) have a nomination committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings;OR (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively.	[If the entity complies with paragraph (a):] … the fact that we have a nomination committee that complies with paragraphs (1) and (2): ☒in our Corporate Governance StatementOR  at this location: … and a copy of the charter of the committee: ☒at this location: highfieldresources.com.au/corporate-governance/ … and the information referred to in paragraphs (4) and (5): ☒in our Corporate Governance StatementOR  at this location: ______ Insert location here_ [If the entity complies with paragraph (b):] … the fact that we do not have a nomination committee and the processes we employ to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively:  in our Corporate Governance StatementOR  at this location: ______ _Insert location here	 an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity and this recommendation is therefore not applicable

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We haveNOTfollowed the recommendation in full for the whole of the period above. We have disclosed …
2.2	A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.	… our board skills matrix: ☒in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity and this recommendation is therefore not applicable
2.3	A listed entity should disclose: (a) the names of the directors considered by the board to be independent directors; (b) if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and (c) the length of service of each director.	… the names of the directors considered by the board to be independent directors: ☒in our Corporate Governance StatementOR  at this location: ______ Insert location here_ … where applicable, the information referred to in paragraph (b):  in our Corporate Governance StatementOR ☒at this location: Annual Report 2016 highfieldresources.com.au/asx-releases/ … the length of service of each director: ☒in our Corporate Governance StatementOR  at this location: ______ _Insert location here	 an explanation why that is so in our Corporate Governance Statement
2.4	A majority of the board of a listed entity should be independent directors.	… the fact that we follow this recommendation:  in our Corporate Governance StatementOR  at this location: _________ Insert location here	☒an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity and this recommendation is therefore not applicable

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	Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We haveNOTfollowed the recommendation in full for the whole of the period above. We have disclosed …
	2.5	The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity.	… the fact that we follow this recommendation:  in our Corporate Governance StatementOR  at this location: _________ Insert location here	☒an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity and this recommendation is therefore not applicable
	2.6	A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.	… the fact that we follow this recommendation: ☒in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity and this recommendation is therefore not applicable
	PRINCIPLE 3– ACT ETHICALLY AND RESPONSIBLY
	3.1	A listed entity should: (a) have a code of conduct for its directors, senior executives and employees; and (b) disclose that code or a summary of it.	… our code of conduct or a summary of it: ☒in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance Statement
	PRINCIPLE 4– SAFEGUARD INTEGRITY IN CORPORATE REPORTING
	4.1	The board of a listed entity should: (a) have an audit committee which: (1) has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chair of the board, and disclose: (3) the charter of the committee; (4) the relevant qualifications and experience of the members of the committee; and (5) in relation to each reporting period, the number of times the committee met	[If the entity complies with paragraph (a):] … the fact that we have an audit committee that complies with paragraphs (1) and (2):  in our Corporate Governance StatementOR  at this location: … and a copy of the charter of the committee: ☒at this location: highfieldresources.com.au/corporate-governance/ … and the information referred to in paragraphs (4) and (5): ☒in our Corporate Governance StatementOR	☒an explanation why that is so in our Corporate Governance Statement

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We haveNOTfollowed the recommendation in full for the whole of the period above. We have disclosed …
	throughout the period and the individual attendances of the members at those meetings;OR (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner.	 at this location: [If the entity complies with paragraph (b):] … the fact that we do not have an audit committee and the processes we employ that independently verify and safeguard the integrity of our corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner:  in our Corporate Governance StatementOR  at this location: _________ Insert location here
4.2	The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO 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 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.	… the fact that we follow this recommendation: ☒in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance Statement
4.3	A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.	… the fact that we follow this recommendation: ☒in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity that does not hold an annual general meeting and this recommendation is therefore not applicable

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	Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We haveNOTfollowed the recommendation in full for the whole of the period above. We have disclosed …
	PRINCIPLE 5– MAKE TIMELY AND BALANCED DISCLOSURE
	5.1	A listed entity should: (a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and (b) disclose that policy or a summary of it.	… our continuous disclosure compliance policy or a summary of it: ☒in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance Statement
	PRINCIPLE 6– RESPECT THE RIGHTS OF SECURITY HOLDERS
	6.1	A listed entity should provide information about itself and its governance to investors via its website.	… information about us and our governance on our website: ☒at this location: highfieldresources.com.au/corporate-governance/	 an explanation why that is so in our Corporate Governance Statement
	6.2	A listed entity should design and implement an investor relations program to facilitate effective two- way communication with investors.	… the fact that we follow this recommendation: ☒in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance Statement
	6.3	A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.	… our policies and processes for facilitating and encouraging participation at meetings of security holders: ☒in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity that does not hold periodic meetings of security holders and this recommendation is therefore not applicable
	6.4	A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.	… the fact that we follow this recommendation: ☒in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance Statement

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	Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We haveNOTfollowed the recommendation in full for the whole of the period above. We have disclosed …
	PRINCIPLE 7– RECOGNISE AND MANAGE RISK
	7.1	The board of a listed entity should: (a) have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings;OR (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework.	[If the entity complies with paragraph (a):] … the fact that we have a committee or committees to oversee risk that comply with paragraphs (1) and (2):  in our Corporate Governance StatementOR  at this location: ______ Insert location here_ … and a copy of the charter of the committee: ☒at this location: highfieldresources.com.au/corporate-governance/ … and the information referred to in paragraphs (4) and (5): ☒in our Corporate Governance StatementOR  at this location: ______ _Insert location here [If the entity complies with paragraph (b):] … the fact that we do not have a risk committee or committees that satisfy (a) and the processes we employ for overseeing our risk management framework:  in our Corporate Governance StatementOR  at this location: _________ Insert location here	☒an explanation why that is so in our Corporate Governance Statement

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We haveNOTfollowed the recommendation in full for the whole of the period above. We have disclosed …
7.2	The board or a committee of the board should: (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and (b) disclose, in relation to each reporting period, whether such a review has taken place.	… the fact that we follow this recommendation: ☒in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance Statement
7.3	A listed entity should disclose: (a) if it has an internal audit function, how the function is structured and what role it performs; OR (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes.	[If the entity complies with paragraph (a):] … how our internal audit function is structured and what role it performs:  in our Corporate Governance StatementOR  at this location: ______ Insert location here_ [If the entity complies with paragraph (b):] … the fact that we do not have an internal audit function and the processes we employ for evaluating and continually improving the effectiveness of our risk management and internal control processes: ☒in our Corporate Governance StatementOR  at this location: ______ _Insert location here	 an explanation why that is so in our Corporate Governance Statement
7.4	A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.	… whether we have any material exposure to economic, environmental and social sustainability risks and, if we do, how we manage or intend to manage those risks: ☒in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance Statement

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	Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We haveNOTfollowed the recommendation in full for the whole of the period above. We have disclosed …
	PRINCIPLE 8– REMUNERATE FAIRLY AND RESPONSIBLY
	8.1	The board of a listed entity should: (a) have a remuneration committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings;OR (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive.	[If the entity complies with paragraph (a):] … the fact that we have a remuneration committee that complies with paragraphs (1) and (2): ☒in our Corporate Governance StatementOR  at this location: ______ Insert location here_ … and a copy of the charter of the committee: ☒at this location: highfieldresources.com.au/corporate-governance/ … and the information referred to in paragraphs (4) and (5): ☒in our Corporate Governance StatementOR  at this location: ______ _Insert location here [If the entity complies with paragraph (b):] … the fact that we do not have a remuneration committee and the processes we employ for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive:  in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity and this recommendation is therefore not applicable

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	Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We haveNOTfollowed the recommendation in full for the whole of the period above. We have disclosed …
	8.2	A listed entity should separately disclose its policies and practices regarding the remuneration of non- executive directors and the remuneration of executive directors and other senior executives.	… separately our remuneration policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives:  in our Corporate Governance StatementOR ☒at this location: Annual Report 2016 highfieldresources.com.au/asx-releases/	 an explanation why that is so in our Corporate Governance StatementOR  we are an externally managed entity and this recommendation is therefore not applicable
	8.3	A listed entity which has an equity-based remuneration scheme should: (a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and (b) disclose that policy or a summary of it.	… our policy on this issue or a summary of it:  in our Corporate Governance StatementOR ☒at this location: Annual Report 2016 highfieldresources.com.au/asx-releases/	 an explanation why that is so in our Corporate Governance StatementOR  we do not have an equity-based remuneration scheme and this recommendation is therefore not applicableOR  we are an externally managed entity and this recommendation is therefore not applicable
	ADDITIONAL DISCLOSURES APPLICABLE TO EXTERNALLY MANAGED LISTED ENTITIES
	-	Alternative to Recommendation 1.1 for externally managed listed entities: The responsible entity of an externally managed listed entity should disclose: (a) the arrangements between the responsible entity and the listed entity for managing the affairs of the listed entity; (b) the role and responsibility of the board of the responsible entity for overseeing those arrangements.	… the information referred to in paragraphs (a) and (b):  in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance Statement

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We haveNOTfollowed the recommendation in full for the whole of the period above. We have disclosed …
-	Alternative to Recommendations 8.1, 8.2 and 8.3 for externally managed listed entities: An externally managed listed entity should clearly disclose the terms governing the remuneration of the manager.	… the terms governing our remuneration as manager of the entity:  in our Corporate Governance StatementOR  at this location: _________ Insert location here	 an explanation why that is so in our Corporate Governance Statement

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Corporate Governance Statement 2016

The Directors of Highfield Resources Limited (the Company) and its controlled entities (the Group) are committed to achieving and demonstrating robust corporate governance practices which are appropriate to our size and stage of development and which facilitate the long term performance and sustainability of the Company as well as protect and enhance the interests of our shareholders. The Board guides and monitors the business and affairs of the Group on behalf of the shareholders by whom they are elected and to whom they are accountable. The Board, with the assistance of its Committees regularly reviews its governance practices to ensure they remain consistent with the needs of the Group. In addition the Group monitors developments in governance market practice, expectations and regulations.

The Group complies with the majority of recommendations set out in the Australian Securities Exchange (“ASX”) Corporate Governance Council’s Corporate Governance Principles and Recommendations 3rd Edition (the “ASX Principles”). This statement incorporates the disclosures required by the ASX Principles under the headings of the eight core principles. All of these practices, unless otherwise stated, were in place for the entire 2016 financial year and remain in place.

The Group publishes its corporate governance policies, code of conduct and its Board and committee charters on its website at highfieldresources.com.au/corporate-governance (Company Website). Additional information that is relevant to this corporate governance statement can also be found in the Group’s annual report for the year ended 30 June 2016.

Principle 1: Lay solid foundations for management and oversight

A listed entity should establish and disclose the respective roles and responsibilities of its board and management and how their performance is monitored and evaluated.

Recommendation 1.1 – Recommendation followed

A listed entity should disclose:

(a) The respective roles and responsibilities of its board and management; and

(b) Those matters expressly reserved to the board and those delegated to management.

The relationship between the Board and senior management is critical to the Group’s long-term success. The Directors are responsible to the shareholders for the performance of the Group in both the short and the longer term and seek to balance objectives in the best interests of the Group as a whole. Their focus is to enhance the interests of shareholders and other key stakeholders and to ensure the Group is properly managed.

The responsibilities of the Board include:

• providing strategic guidance to the Group including contributing to the development of and approving the corporate strategy;

• reviewing and approving business plans, the annual budget and financial plans including available resources and major capital expenditure initiatives;

• overseeing and monitoring the organisational performance and the achievement of the Group’s strategic goals and objectives;

• monitoring financial performance including approval of the annual and half-year financial reports and liaison with the Company’s auditors;

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Corporate Governance Statement 2016

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• appointment and performance assessment of the Managing Director (MD);

• ratifying the appointment and/or removal and contributing to the performance assessment for the members of the senior management team, including the Company Secretary;

• ensuring there are effective management processes in place and approving major corporate initiatives;

• enhancing and protecting the reputation of the organisation;

• overseeing the operation of the Group’s system for compliance and risk management reporting to shareholders; and

• ensuring appropriate resources are available to senior management.

The roles and responsibilities of the Board are set out within the Board Charter.

The Board has established the following standing Committees to assist the Board in exercising its authority and in meeting its responsibilities:

• Audit, Business Risk and Compliance Committee; and

• Remuneration and Nomination Committee

Copies of the Committee Charters are located on the Company’s website.

The Board Charter also sets out those matters that are expressly reserved to the board and those delegated to management. The Charter is reviewed periodically.

Day to day management of the Group’s affairs and the implementation of the corporate strategy and policy initiatives are formally delegated by the Board to the Managing Director. This delegation is set out in the Delegation of Authority document and is reviewed on an annual basis or as material changes occur which warrant review.

The Board Charter is available online on the Company Website.

Recommendation 1.2 – Recommendation followed

A listed entity should:

• (a) Undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and

• (b) Provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director.

The Board has established a Remuneration and Nomination Committee to carry out the responsibilities delegated by the Board relating to the Company's director nominations process and procedures (see Recommendation 2.1, below). The Remuneration and Nomination Committee is responsible for conducting the appropriate checks prior to the appointment of a person as a director of the Company or prior to putting forward to security holders a new candidate for election as a director. These processes are governed by the Group’s Remuneration and Nomination Committee Charter. Checks undertaken may include checks as to the person’s character, experience, education, criminal record and bankruptcy history.

Material information relevant to a decision on whether or not to elect or re-elect a director is provided to security holders in all Notices of Meeting which contain director election or re-election resolutions.

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Corporate Governance Statement 2016

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Recommendation 1.3 – Recommendation followed

A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.

A written agreement is executed with each director upon appointment setting out the terms of their appointment, including the basis upon which they will be indemnified. The letter of appointment clearly defines the role of directors, including the expectations in terms of independence, participation, and time commitment. The letter of appointment also makes it clear that directors are required to disclose circumstances that may affect, or be perceived to affect, their ability to exercise independent judgement so that the Board can assess independence on a regular basis.

A written agreement is executed with each senior executive detailing the terms of their appointment, including roles and responsibilities, key performance indicators and remuneration.

Recommendation 1.4 – Recommendation followed

The company secretary of a listed entity should be accountable to the board through the chair, on all matters to do with the proper functioning of the board.

The Company Secretary is accountable directly to the Board, through the Chairman, on all matters to do with the proper functioning of the Board. The Company Secretary is responsible for maintaining the information systems and processes that are appropriate for the Board to fulfil its role and to achieve the objective of the Company. The Company Secretary is also responsible for ensuring that the Board procedures are complied with and advising the Board on governance matters. All directors and Committees of the Company have access to the Company Secretary for advice and services. Independent advisory services are retained by the Company Secretary at the request of the Board or Committees.

Recommendation 1.5 – Recommendation partially followed

A listed entity should:

• (a) Have a diversity policy in place which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them; (followed)

• (b) Disclose that policy or a summary of it; and ( followed)

• (c) Disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them (not followed) and either:

• (1) The respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); (followed) or

• (2) If the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators,” as defined in and published under that Act. (not applicable)

The Company has a strong belief in the advantages of an inclusive work environment. People with a variety of backgrounds and perspectives are welcomed, encouraged and given the opportunity to contribute to their full potential. The Company takes a broad and all-encompassing view of diversity. Diversity is about accepting, respecting and understanding that each person is unique.

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The Group has a diversity policy, which documents the principles and commitment in relation to maintaining a diverse group of employees within the Group. The total proportion of men and women on the board, in senior positions (being Key Management Personal and decision makers of the Group) and across the whole organisation is listed below:

Category	Male	Women	% of Women
Board	5	1	17%
Senior Management_(excluding the managing director captured above)_	6	1	14%
Whole Organisation	26	10	28 %

Note 1: A senior manager is defined as being all Key Management Personnel and all non KMP Group managers reporting directly to the Managing Director.

The Board accepts overall responsibility for the establishment and annual review of measurable diversity targets. Given that the Group is in a project development phase with only a small number of employees the directors believe that it has not been appropriate to date to set measurable objectives in relation to gender diversity.

The overwhelming majority of the Group’s workforce is based in Spain and the Company is not classified as a “relevant employer” under the Australian Workplace Gender Equality Act.

The Diversity Policy is disclosed on the Company Website.

Recommendation 1.6: Recommendation Not Followed

A listed entity should:

• (a) Have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and

• (b) Disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.

The Board aims to periodically evaluate its performance and the performance of its Committees and individual directors to determine whether or not it is functioning effectively by reference to the Board Charter and current best practices. The Board at least annually evaluates the composition of the Board. It has not, however, arranged for a formal independent evaluation of its performance and the performance of its Committees and individual directors.

Due to the size of the Group, the Board believes it has not been necessary to arrange for a formal independent evaluation to be conducted. As a result at the date of this report, the Group has not complied with recommendation 1.6(b) of the Corporate Governance Principles and Recommendations.

Recommendation 1.7: Recommendation Followed

A listed entity should:

• (a) Have and disclose a process for periodically evaluating the performance of its senior executives; and

• (b) Disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.

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The Group reviews the performance of all senior executives at least annually in a formal and structured manner. The performance of senior executives and the Managing Director is measured against the objectives and performance indicators set by the Remuneration and Nomination Committee and approved by the Board. A performance evaluation of senior executives took place for the current reporting period.

The performance of senior executives is reviewed by comparing individual and Group performance against agreed measures, examining the effectiveness and results of their contribution and identifies areas of potential improvements.

Principle 2: Structure the board to add value

A listed entity should have a board of an appropriate size, composition, skills and commitment to enable it to discharge its duties effectively.

Recommendation 2.1: Recommendation Followed

The Board of a listed entity should:

• (a) Have a nomination committee which:

• (1) Has at least three members, a majority of whom are independent directors; and

• (2) Is chaired by an independent director, and disclose:

• (3) The charter of the committee;

• (4) The members of the committee; and

• (5) As at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

• (b) If it does not have a nomination committee, disclose that fact and the processes it employs to address Board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively.

In 2016 the Board expanded the responsibilities of the Remuneration Committee to encompass the both remuneration and nomination related functions. The Remuneration and Nomination Committee of the Board oversees selected nomination activities so that Boards within the Highfield Group comprise individuals who are best able to discharge the responsibilities of Directors having regard to the law and excellence in governance standards.

Accordingly the Board adopted an expanded the Remuneration and Nomination Committee charter in 2016 which sets out the roles and responsibilities of the Remuneration and Nomination Committee, a copy of which can be viewed on the Company Website.

Pursuant to the Remuneration and Nomination Committee Charter, the Remuneration and Nomination Committee:

• Comprises only non-executive Directors;

• Comprises at least three members and has a majority of independent non-executive members;

• Has between its members sufficient contemporary expertise and understanding of remuneration and related matters to be able to discharge the Committee’s responsibilities; and

• Is chaired by a non-executive independent Director who is not Chairman of the Board.

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The table below shows the current members:

Ms Pauline Carr	Independent Non-executive Director	(Committee Chairman)
Mr Richard Crookes	Non-executive Director	(Committee Member)
Mr Jim Dietz	Independent Non-executive Director	(Committee Member)

The Group complies with recommendation 2.1(a)(1) & (2) of the Corporate Governance Principles and Recommendations.

The Remuneration and Nomination Committee met four times throughout the period and all members of the Committee were in attendance on each occasion.

Recommendation 2.2: Recommendation Followed

A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.

The Group’s desired mix of skills and competence is listed below. The Board considers its current composition adequately meets these required competencies.

Area	Competence
Leadership	Business Leadership,Public Listed CompanyExperience
Business and Finance	Accounting, Audit, Business Strategy, Competitive Business Analysis, Corporate Financing, Financial Literacy, Mergers and Acquisitions, Risk Management,Tax – International
Sustainability and Stakeholder Management	Community Relations, Corporate Governance, Health & Safety, Human Resources,Remuneration
Technical	Geological,Mining/Engineering,Project Development,Mine Construction
Commodity expertise	Potash industryand marketingexperience

Recommendation 2.3: Recommendation Followed

A listed entity should disclose:

(a) The names of the directors considered by the board to be independent directors;

(b) If a director has an interest, position, association or relationship that might cause doubts about their independence as a director but the board is of the opinion that their independence isn’t compromised, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and

(c) The length of service of each director.

At the date of this statement the Board consists of the following directors:

• Peter Albert, Managing Director (Appointed 1 September 2016)

• Derek Carter, Non-Executive Chairman (Appointed 11 October 2012)

• Pauline Carr, Non-Executive Director (Appointed 30 October 2015)

• Richard Crookes, Non-Executive Director (Appointed 16 May 2013)

• Jim Dietz, Non-Executive Director (Appointed 23 November 2015)

• Owen Hegarty, Non-Executive Director (Appointed 14 August 2013)

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The Board considers this to be an appropriate composition given the size and development of the Group at the present time and regularly assesses the composition of the Board to ensure its membership maintains a combination of skills and experience that ensure the Board has the expertise to meet both its responsibilities to stakeholders and its strategic objectives.

The names of directors including details of their qualifications and experience are set out in the Directors’ Report of the Annual Report and also available on the Company Website.

Recommendation 2.4: Recommendation Not Followed

A majority of the board of a listed entity should be independent directors.

The Board is conscious of the need for independence and ensures that where a conflict of interest may arise, the relevant Director(s) leave the meeting to ensure a full and frank discussion of the matter(s) under consideration by the rest of the Board. Those Directors who have interests in specific transactions or potential transactions do not receive Board papers related to those transactions or potential transactions, do not participate in any part of a Directors’ meeting which considers those transactions or potential transactions, are not involved in the decision making process in respect of those transactions or potential transactions, and are asked not to discuss those transactions or potential transactions with other Directors.

Directors of the Company are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the exercise of their unfettered and independent judgement.

The Board has accepted the following definition of an independent Director: “An independent director is a director who is not a member of management, is a Non-Executive Director and who:

• is not, or has not been, employed in an executive capacity by the Group and there has been a period of at least three years between ceasing such employment and serving on the Board;

• is not, or has not within the last three years been, a partner, director or senior employee of a provider of material professional services to the Group;

• is not, or has not within the last three years been, in a material business relationship (eg as a supplier or customer) with the Group , or an officer or, or otherwise associated with, someone with such a relationship;

• is not a substantial security holder of the entity or an officer of , or otherwise associated with, a substantial security holder of the entity;

• does not have a material contractual relationship with the Group other than as a director; or

• has not been a director of the entity for such a period that his or her independence may have been compromised.

In accordance with the definition above, Pauline Carr and Jim Dietz are considered to be independent. The Board Charter requires that where practical the majority of the Board will be independent. The Group therefore has not complied with Recommendation 2.4 of the Corporate Governance Principles and Recommendations, in that a majority of Directors are not independent.

The Board considers its current structure to be an appropriate composition of the required skills and experience, given the experience of the individual directors and the size and development of the Group at the present time. Each individual member of the Board is satisfied that whilst the Group may not comply with Recommendation 2.4, all directors bring an independent judgment to bear on Board decisions.

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Recommendation 2.5: Recommendation not followed

The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity.

The Board Charter provides that where practical, the Chairman of the Board will be a non-executive, independent Director. The Company’s Chairman, Derek Carter is not an independent director, but he does not fulfil the role of CEO. The Group therefore has not complied with recommendation 2.5 of the Corporate Governance Principles and Recommendations.

The Board believes this to be appropriate at this time given the size and nature of the Group’s activities, but will continue to consider the composition of the Board in the future.

Recommendation 2.6: Recommendation followed

A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.

The Company maintains a program for inducting new directors, for which the Company Secretary is responsible for. The Company also ensures that appropriate professional development opportunities are provided to directors to ensure they develop and maintain the skills and knowledge needed to perform their role as directors effectively.

Principle 3: Act ethically and responsibly

A listed entity should act ethically and responsibly.

Recommendation 3.1: Recommendation Followed

A listed entity should:

(a) Have a code of conduct for its directors, senior executives and employees; and

(b) Disclose that code or a summary of it.

The Group has developed a Code of Business Ethics and Conduct (the Code) which has been fully endorsed by the Board and applies to all Directors and employees. The Code is regularly reviewed and updated as necessary to ensure it reflects the highest standards of behaviour and professionalism and the practices necessary to maintain confidence in the Group’s integrity and to take into account legal obligations and reasonable expectations of the Group’s stakeholders.

In summary, the Code requires that at all times all Group personnel act with the utmost integrity, objectivity and in compliance with the letter and the spirit of the law and Group policies.

A copy of the Code of Conduct and Ethics can be found on the Company website.

Principle 4: Safeguard integrity in corporate reporting

A listed entity should have formal and rigorous processes that independently verify and safeguard the integrity of its corporate reporting.

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Recommendation 4.1: Recommendation mainly followed

The board of a listed entity should:

• (a) Have an audit committee which:

• (1) Has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and

• (2) Is chaired by an independent director, who is not the chair of the board, and disclose:

• (3) The charter of the committee;

• (4) The relevant qualifications and experience of the members of the committee; and

• (5) In relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

• (b) If it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner.

The Board has established an Audit, Business Risk and Compliance Committee of the Board, to assist the Board in overseeing the Group’s accounting and financial reporting processes and the preparation and auditing of the Group's financial statements. The Audit, Business Risk and Compliance Committee is responsible for monitoring and reviewing the integrity of the Group’s financial reporting, and reviewing the internal financial control system and risk management framework and systems.

The Board has adopted the Audit, Business Risk and Compliance Committee charter that sets out the roles and responsibilities of the Committee, a copy of which can be viewed on the Company Website.

The Audit, Business Risk and Compliance Committee:

• Comprises only non-executive Directors;

• Comprises at least three members and is working towards having a majority of independent nonexecutive members as soon as practical;

• Has between its members, sufficient accounting and financial expertise and understanding of the mining industry, to be able to discharge the Committee’s responsibilities; and

• Is chaired by a non-executive independent Director who is not Chairman of the Board.

The table below shows the current members:

Ms Pauline Carr	Independent Non-executive Director	(Committee Chairman)
Mr Richard Crookes	Non-executive Director	(Committee Member)
Mr Derek Carter	Non-executive Board Chairman	(Committee Member)

The Chairman of the Audit, Business Risk and Compliance Committee, Pauline Carr, is considered independent and is not the Chairman of the Board. However a majority of the committee members are not independent Directors and therefore the Group does not comply with recommendation 4.1(a) (1) of the Corporate Governance Principles and Recommendations.

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Corporate Governance Statement 2016

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The relevant qualifications and experience of each of the members of the Committee can be found in the Director profiles contained within the Group’s Annual Report and on the Company Website. Each member of the Committee has adequate education and experience that is relevant to their performance as an committee member and, in particular, the requisite education and experience that have provided the member with the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Group’s financial statements.

The Committee met four times throughout the period and all members of the Committee were in attendance on each occasion.

The Audit, Business Risk and Compliance Committee operates in accordance with a charter which is available on the Company Website. The Audit, Business Risk and Compliance Committee has the authority, within the scope of its responsibilities, to reasonably seek information it requires from employees and external parties.

The Board reviews the membership and charter of the Committee annually.

Recommendation 4.2: Recommendation Followed

The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO 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 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.

The Managing Director and Chief Financial Officer have certified to the Board that the financial statements are founded on a sound system of risk management and internal control and that the system is operating efficiently and effectively in all material respects. This declaration is provided to the Board before it approves the Group’s financial statements for a financial period, and declares that in their opinion, the financial records of the Group have been properly maintained and that the financial statements comply with the appropriate accounting standards and give and true and fair view of the financial position and performance of the entity.

Recommendation 4.3: Recommendation Followed

A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer any questions from security holders relevant to the audit.

The Group’s, and Audit, Business Risk and Compliance Committee’s Policy, is to appoint external auditors who clearly demonstrate quality and independence. The performance of the external auditor is reviewed annually and applications for tender of external audit services are requested as deemed appropriate, taking into consideration assessment of performance, existing value and tender costs. HLB Mann Judd (WA) Pty Ltd (‘HLB MJWA’) was appointed as the external auditor in 2012. It is HLB MJWA’s policy to rotate audit engagement partners on listed companies in accordance with the requirements of the Corporations Act 2001, which is generally after five years, subject to certain exceptions.

The amount of fees paid to the external auditors is provided in a note to the financial statements. It is the policy of the external auditors to provide an annual declaration of their independence to the Audit, Business Risk and Compliance committee.

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The external auditor will attend the Annual General Meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report.

Principle 5: Make timely and balanced disclosure

A listed entity should make timely and balanced disclosure of all matters concerning it that a reasonable person would expect to have a material effect on the price or value of its securities.

Recommendation 5.1: Recommendation Followed

A listed entity should:

(a) Have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and

(b) Disclose that policy or a summary of it.

The Group has a Continuous Disclosure Policy that focuses on continuous disclosure of any information concerning the Group that a reasonable person would expect to have a material effect on the price of the Company’s securities. A summary of this policy is available on the Company Website.

The Company Secretary has been nominated as the person responsible for communications with the Australian Securities Exchange (ASX). This role includes responsibility in assisting the Board to ensure compliance with the continuous disclosure requirements in the ASX Listing Rules and overseeing and coordinating information disclosure to the ASX, shareholders, the media and the public.

All information disclosed to the ASX is posted on the Company’s website as soon as it is disclosed to the ASX. The Company’s website also enables users to provide feedback on Company matters and includes a “Corporate Governance” landing page that discloses all relevant corporate governance information, including policies and procedures.

Principle 6: Respect the rights of security holders

A listed entity should respect the rights of its security holders by providing them with appropriate information and facilities to allow them to exercise those rights effectively.

Recommendation 6.1: Recommendation Followed

A listed entity should provide information about itself and its governance to investors via its website.

The Board strives to ensure that security holders are provided with sufficient information to assess the performance of the Group and its Directors and to made well-informed investment decisions. The Group provides all information about itself and its corporate governance via the Company Website.

Recommendation 6.2: Recommendation Followed

A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.

The Managing Director is responsible for the formulation of the annual investor relations plan. The plan considers market conditions as well as the Company’s strategies and priorities and is reviewed and approved by the Board prior to its implementation.

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The Group has a shareholder communication policy which outlines the various medium through which the Group communicates with security holders. A copy of this policy can be viewed on the Company Website.

The Company’s Shareholder Communication Policy also outlines policies and requirements for communications with analysts and investors to ensure that the communications are effective and comply with the Company’s continuous disclosure obligations under the Corporations Act and the ASX Listing Rules.

Recommendation 6.3: Recommendation Followed

A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.

Shareholders are encouraged to participate at all Annual General Meetings and other General Meetings of the Company. Upon the despatch of any notice of meeting to Shareholders, the Company Secretary shall send out material with that notice of meeting stating that all Shareholders are encouraged to participate at the meeting. The meetings shall also be conducted to allow questions and feedback to the Board and management of the Group.

Recommendation 6.4: Recommendation Followed

A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.

The Group aims to promote effective communication to and from shareholders. Members are encouraged to register with the Company’s share register to receive formal notices and material electronically and to communicate electronically.

Members are also encouraged to contact the Group via its website or directly to the registered office should they have any specific queries concerning the Company’s performance or its operations.

Principle 7: Recognise and manage risk

A listed entity should establish a sound risk management framework and periodically review the effectiveness of that framework.

Recommendation 7.1: Recommendation Mainly Followed

The board of a listed entity should:

• (a) Have a committee or committees to oversee risk, each of which:

• (1) Has at least three members, a majority of whom are independent directors; and

• (2) Is chaired by an independent director, and disclose:

• (3) The charter of the committee;

• (4) The members of the committee; and

• (5) As at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

• (b) If it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework.

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The Board has established an Audit, Business Risk and Compliance Committee of the Board, to monitor the Group’s risk management by overseeing management’s actions in the evaluation, management, monitoring and reporting of material operational, financial, compliance and strategic risks. In providing this oversight, the Committee:

• reviews the framework and methodology for risk identification, the degree of risk the Group is willing to accept, the management of risk and the processes for auditing and evaluating the Group’s risk management system;

• reviews Group-wide objectives in the context of the abovementioned categories of corporate risk;

• reviews and, where necessary, approves guidelines and policies governing the identification, assessment and management of the Group’s exposure to risk;

• reviews and approves the delegations of financial authorities and addresses any need to update these authorities on an annual basis, and

• reviews compliance with agreed policies.

The Committee recommends any actions it deems appropriate to the Board for its consideration.

The Board has adopted the Audit, Business Risk and Compliance Committee charter that sets out the roles and responsibilities of the Audit, Business Risk and Compliance, which can be viewed on the Company Website.

Pursuant to the Audit, Business Risk and Compliance Committee, the Committee currently:

• Comprises only non-executive Directors;

• Comprises at least three members and is working towards having a majority of independent nonexecutive members as soon as practical;

• Has between its members, sufficient accounting and financial expertise and understanding of the mining industry, to be able to discharge the Committee’s responsibilities; and

• Is chaired by a non-executive independent Director who is not Chairman of the Board.

The table below shows the current members:

Ms Pauline Carr	Independent Non-executive Director	(Committee Chairman)
Mr Richard Crookes	Non-executive Director	(Committee Member)
Mr Derek Carter	Non-executive Chairman	(Committee Member)

The Chairman of the Audit, Business Risk and Compliance Committee, Pauline Carr, is considered independent and is not the Chairman of the Board. However a majority of the committee members are not independent Directors and therefore the Group does not comply with recommendation 7.1(a) (1) of the Corporate Governance Principles and Recommendations.

The Committee met four times throughout the period and all members of the Committee were in attendance on each occasion.

Recommendation 7.2: Recommendation Followed

The board or a committee of the board should:

• (a) Review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and

• (b) Disclose, in relation to each reporting period, whether such a review has taken place.

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Corporate Governance Statement 2016

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Management is responsible for designing, implementing and reporting on the adequacy of the Group’s risk management and internal control system and has to report to the Audit, Business Risk and Compliance Committee on the effectiveness of:

• the risk management and internal control system during the year

• the Group’s management of its material business risks; and

• maintenance of the risk registers

The Group’s Risk Management Policy can be viewed on the Company Website. Management is required to report on material risks at each Board meeting. Risk framework reviews occur as necessitated by changes in the Group and its operating environment. A risk framework review was undertaken during the 2016 financial year.

Recommendation 7.3: Recommendation Followed

A listed entity should disclose:

(a) If it has an internal audit function, how the function is structured and what role it performs; or

(b) If it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk and internal control processes.

Due to its small size, lack of complexity and given that it is in a project development phase of its lifecycle, the Group does not currently have an in-house internal audit function. Instead reports and reviews into the effectiveness of internal controls are commissioned as required using internal and external specialist resources.

It is expected that that the requirement for an internal audit function will be considered by the Audit, Business Risk and Compliance Committee during the 2017 financial year.

During the reporting period an assessment on the effectiveness of internal controls was provided by the Company’s external auditor as part of the year end audit.

Reports are provided to each Board meeting on known and emerging risk and compliance issues, including non-financial, operational and other business risks for consideration and discussion.

The ongoing mitigation and management of key business risks is a standing item of business on the agenda of each Board meeting. Management reports regularly to the Board on the Company’s risk registers. Company’s managers are directly responsible for risk management in their respective areas of accountability and for ensuring that those risks are being managed appropriately.

Recommendation 7.4: Recommendation Followed

A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.

The Group undertakes mining development and, as such, faces risks inherent to its business, including economic, environmental and social sustainability risks, which may materially impact the Group’s ability to create or preserve value for security holders over the short, medium or long term.

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The Group believes that long-term success hinges on sustainable development that benefits the business, stakeholders and the environment. To this end, the Group has adopted a policy of responsible, proactive environmental management and will work to ensure compliance with relevant legislative obligations during its exploration and development activity. The Group is committed to delivering favourable results for shareholders while at the same time ensuring that its economic success is balanced alongside its environmental and social responsibilities.

The Group appreciates the importance of community consultation and facilitates the involvement and awareness of relevant communities and their representatives when undertaking any exploration or development activity. Through a proactive policy of self-regulation, legislative compliance and community involvement, the Group is working hard to deliver on its short and long-term business objectives while ensuring that relevant social and environmental considerations are included as part of any decision-making process.

The Company will continue its policy of sustainable development in the interests of meeting the expectations of its shareholders without compromising the health or vitality of both the natural and social environment.

A copy of the Company’s Environment and Social Management Policy can be found on its website.

One of the Company’s core values is safety - it prioritises safety and health to people, the environment and community. The Company has in place policies and procedures to help manage these risks. A copy of the Company’s Health and Safety Policy is located on its website.

Further details in relation to risks are found in note 19: Financial Risk Management of the Company’s 2016 Annual Report.

Principle 8: Remunerate fairly and responsibly

A listed entity should pay director remuneration sufficient to attract and retain high quality directors and design its executive remuneration to attract, retain and motivate high quality senior executives and to align their interests with the creation of value for security holders.

Recommendation 8.1: Recommendation Followed

The board of a listed entity should:

• (a) Have a remuneration committee which:

• (1) Has at least three members, a majority of whom are independent directors; and

• (2) Is chaired by an independent director, and disclose:

• (3) The charter of the committee;

• (4) The members of the committee; and

• (5) As at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

• (b) If it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive.

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The Board has established a Remuneration and Nomination Committee of the Board, to advise the Board (among other things) on remuneration and incentive policies and practices generally, and to make specific recommendations on remuneration packages and other terms of employment for executive directors, senior executives and non-executive directors. During 2016 the Committee undertook a major review of its Charter. The Board has adopted the expanded Remuneration and Nomination Committee charter, a copy of which can be viewed on the Company Website.

Pursuant to the Remuneration and Nomination Committee Charter, the Remuneration and Nomination Committee currently:

• Comprises only non-executive Directors;

• Comprises at least three members and have a majority of independent non-executive members;

• Has between its members sufficient contemporary expertise and understanding of remuneration and related matters to be able to discharge the Committee’s responsibilities; and

• Is chaired by a non-executive independent Director who is not Chairman of the Board.

The table below shows the current members:

Ms Pauline Carr	Independent Non-executive Director	(Committee Chairman)
Mr Richard Crookes	Non-executive Director	(Committee Member)
Mr Jim Dietz	Independent Non-executive Director	(Committee Member)

The Remuneration and Nomination Committee met four times throughout the period and all members of the Committee were in attendance on each occasion.

The Group complies with recommendation 8.1(a)(1) & (2) of the Corporate Governance Principles and Recommendations.

Recommendation 8.2: Recommendation Followed

A listed entity should separately disclose its policies and practices regarding the remuneration of nonexecutive directors and the remuneration of executive directors and other senior executives.

The Group’s policies and practices regarding the remuneration of executive and non-executive directors and other senior executives are disclosed in the Annual Report.

Recommendation 8.3: Recommendation Followed

A listed entity which has an equity-based compensation remuneration scheme should:

(a) Have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and

(b) Disclose that policy or a summary of it.

The Group has established a Securities Trading Policy which outlines, among other things, when Directors, senior management and other employees of the Group may deal in the Group’s securities. This policy also prohibits key management personnel from entering into certain hedging arrangements of the nature referred to in Recommendation 8.3. For further details, refer to the Securities Trading Policy, which is available on the Company Website.

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Corporate Governance Statement 2016