ORBMINCO LIMITED — Governance Information 2005

Sep 12, 2005

MONARO MINING NL

ABN: 99 073 155 781

12 September 2005

Explanations for Departures from Best Practice Recommendations

This report has been requested by the ASX prior to listing. Any current departures and explanations for those departures from the ASX Corporate Governance Council Principles of Good Corporate Governance and Best Practice Recommendations are described below:

Principle 1: Lay solid foundations for management and oversight

Recommendation 1.1B

Notification of Departure

The Company has not issued formal letters of appointment to directors.

Explanation for Departure

Formal letters of appointment are being developed and will be effective prior to the first AGM of the Company following listing on the ASX.

Principle 2: Structure the board to add value

Recommendation 2.1

Notification of Departure

The Board is not comprised of a majority of independent directors with 1 out of the 3 directors considered to be independent. This structure is therefore not in compliance with best practice recommendation 2.1.

The board notes that Mr. Warwick Grigor is a substantial shareholder and therefore fails the test at 2.1.1. and further Mr. Mart Rampe has a material contractual relationship with the company and fails the test at 2.1.5. Mr. Michael Evans satisfies each of the tests of independence as set out in Box 2.1 of the ASX Principles of Good Corporate Governance and Best Practice Recommendations ("Independence Test").

Explanation for Departure

The existing structure is considered appropriate given the early stage of development of the Company and the fact that the Company's projects are at an early exploration stage.

Recommendation 2.2

Notification of Departure

The Chairman does not satisfy the independence test as he is a substantial shareholder of the Company,

Explanation for Departure

While the Board recognises the importance of independence in decision making, it does not comply with best practice recommendation 2.2 as Mr Grigor, the current chairman, does not satisfy paragraph 1 of the test of independence set out in box 2.1 of the ASX Principles of Good Corporate Governance and Best Practice Recommendations ("Independence Test"). The Board believes that Mr Grigor is the most appropriate person for the position as chairman because of his industry experience. Additionally, the Board has appointed Mr Evans as the lead Independent director to facilitate any areas where it is inappropriate for Mr Grigor to do so.

Monaro CG LR 4.10.3 P.2

Recommendation 2.4

Notification of Departure

A separate nomination committee has not been formed.

Explanation for Departure

Given the Board comprises three members it was decided that no efficiencies would be achieved by establishing a separate nomination committee. The whole Board carries out the duties which would otherwise be undertaken by the nomination committee. The full will review nominations following representations from the managing director and each member excludes him or herself from matters in which he has a material person interest and otherwise ensures compliance with all aspects of the Corporations Act in relation to related party transactions.

Principal 4: Safeguard Integrity in financial reporting

Recommendation 4.1

Notification of Departure

Only the chairman of the audit committee provides a statement to the Board with respect to the Company's financial reports which is not in compliance with best practice recommendation 4.1.

Explanation for Departure

The Company does not have a chief financial officer. The Company relies on its auditors to verify matters relating to the financial reports.

Recommendation 4.3

Notification of Departure

Whilst an audit committee has been formed, it does not meet the requirements for composition.

Explanation for Departure

The audit committee consists of two non-executive directors which does not comply with the recommendation of at least three members.

As stated in the explanation to recommendation 2.1, Mr. Warwick Grigor, the other committee member, does not meet the requirements for independence making only 50% of the committee independent which does not comply with the recommendation that a majority of members be independent.

One of the directors on the audit committee, Mr. Michael Evans, is considered to be independent, and has therefore been appointed as the chairperson of the committee.

It is considered that this is an appropriate structure due to the size of the board with the only other director being the chief executive officer.

Principal 7: Recognise and manage risk

Recommendation 7.1

Notification of Departure

The Company has not yet finalised a formal risk oversight and management policy and internal compliance and control system.

Explanation for Departure

The Company is a junior resource entity at exploration stage with no current mining operations. The investment risk profile of the company is high and Investment in this Company is considered to be speculative.

Monaro CG LR 4.10.3 P.3

Principal 7: Recognise and manage risk

Recommendation 7.1 (continued)

Explanation for Departure (continued)

The Company does not have formal written policies on risk oversight and management. However, as a matter of practice, the board is responsible for risk oversight and management. Day to day responsibility is delegated to the CEO.

The CEO is responsible for:

• $\mathbf{v}$ . Identification of risk
• × Monitorina risk
• Communication of risk events to the board; and $\mathbf{r}$
• $\sim$ Responding to risk events with board authority.

The Company Secretary, reporting to the managing director, will manage the company's internal controls and risk management and the Audit Committee will oversee risk management and internal compliance.

The board defines risk to be any event that, if it occurs, will have a material impact on the ability of the Company to achieve its objectives. Risk is considered across the financial, operational and organisational aspects of the Company's affairs.

Given its early stage of development, the financial and organisational risks are considered low, as there are simple financial and organisational structures in place. Success of the Company is dependent upon exploration success and continued funding of exploration activities.

The Company has tenements in New South Wales. The Company, in accordance with corporate code of conduct (a copy of which will be made available on the website shortly) complies with all legal requirements in any jurisdiction in which it operates. In additions, where its own standards are higher than that required by local requirements, it adheres to its own higher standards.

The Company intends to develop this framework into a detailed policy as its operations continue to grow.

Principal 8: Encourage enhanced performance

Recommendation 8.1

Notification of Departure

The company does not yet have a formal process for performance evaluation of the board, its committees and individual directors and key executives.

Explanation for Departure

Due to the size and infancy of the company, the board has no formal performance evaluation policy at present.

It is considered that the current directors have a sufficient mix of skills and experience to discharge their responsibilities effectively.

The directors will be provided with access to the following resources: -

• monthly financial reports with actual expenditure compared to budget;
• subject to prior consultation with the chairman, the right to seek independent professional advice at the company's expense;
• unrestricted access to the Executive Director, Company Secretary and company information. $\blacksquare$

The Company intends to regularly review the situation as its operations continue to grow.

Monaro CG LR 4.10.3 P.4

Principal 9: Remunerate fairly and responsibly

Recommendation 9.2

Notification of Departure

A separate remuneration committee has not been formed.

Explanation for Departure

The Board considers that due to its small size, all members should be involved in determining remuneration levels. Instead, time is set aside at two Board meetings each year specifically to address the matters usually considered by a Remuneration Committee and function in accordance with the
Remuneration Committee Charter. Executive directors absent themselves during discussion of their remuneration.

Non-executive directors are remunerated by way of directors' fees within the limit approved by shareholders. The board determines fees paid to individual board members. Further information on directors' remuneration will be set out in the director's report and notes to the financial statements in the annual report.