PROSPECT RESOURCES LIMITED — Governance Information 2012

Jul 16, 2012

PROSPECT RESOURCES LIMITED (PSC) – CORPORATE GOVERNANCE STATEMENT This Corporate Governance Statement sets out Prospect Resource Limited’s (the Company) current compliance with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (the ASX Principles and Recommendations). The ASX 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 ASX Principles and Recommendations.	Explanation	1. Lay solid foundations for management and oversight	The Company’s board of directors (the Board) is responsible for corporate governance of the Company. The Board develops strategies for the Company, reviews strategic objectives and monitors performance against those objectives. The goals of the corporate governance processes are to: (a) maintain and increase Shareholder value; (b) ensure a prudential and ethical basis for the Company’s conduct and activities; and (c) ensure compliance with the Company’s legal and regulatory objectives. Consistent with these goals, the Board assumes the following responsibilities: (a) developing initiatives for profit and/or asset growth; (b) reviewing the corporate, commercial and financial performance of the Company on a regular basis; (c) acting on behalf of, and being accountable to, the Shareholders; and (d) identifying business risks and implementing actions to manage those risks and corporate systems to assure quality.
	Comply (Yes/No)		Yes
	ASX Principles and Recommendations		1.1. Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions.

The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors’ participation in Board discussions on a fully- informed basis. It is expected that the division of responsibility of the Board and senior executives will vary with the evolution of the Company. The Company intends to regularly review the balance of responsibilities to ensure that the division of functions remains appropriate to the needs of the Company.	Given the current size of the Company and the fact that the Company currently has no senior executives, the process for evaluating their performance is not relevant.	2. Structure the board to add value	The Board has reviewed the position and associations of each of the three directors in office and has determined that none of the directors are independent. In making this determination the Board has had regard to the independence criteria in ASX Principle 2 and other facts, information and circumstances that the Board considers relevant. The Board assesses the independence of new directors upon appointment and reviews their independence, and the independence of the other directors, as appropriate. The Board strives to ensure that it is comprised of directors with a blend of skills, experience and attributes appropriate to the Company and its business. The principle criterion for the appointment of new directors is their ability to add value to the Company and its business.
	No		No
	1.2. Companies should disclose the process for evaluating the performance of senior executives.		2.1. A majority of the board should be independent directors.

The Company’s current Chairman Mr Hugh Warner, does not satisfy the ASX Principles and Recommendations definition of an independent director. However, the Board considers Mr Warner’s role as chairman essential to the success of the Company at this early stage of its restructure and the development of its new business.	The Company has not yet appointed a chief executive officer.	No formal nomination committee or procedures have been adopted for the identification, appointment and review of the Board membership, but an informal assessment process, facilitated by the Chairman in consultation with the Company’s professional advisers (if required), has been committed to by the Board.	The Company does not have in place a separately constituted remuneration committee due to the size and current operations of the Company. The remuneration of an executive director will be decided by the Board, without the affected executive director participating in that decision- making process. There are currently no executive directors. The total maximum remuneration of non-executive directors is currently set at $500,000. Any increases will be the subject of a shareholder resolution in accordance with clause 13.7 of the Company’s constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determination of non- executive directors’ remuneration within that maximum amount will be made by the Board, having regard to the inputs and value to the Company of the respective contributions by each non-executive director. The Board may award additional remuneration to non- executive directors called upon to perform extra services or
No	N/A	No	No
2.2. The chair should be an independent director.	2.3. The roles of chair and chief executive officer should not be exercised by the same individual.	2.4. The board should establish a nomination committee.	2.5. Companies should disclose the process for evaluating the performance of the board, its committees and individual directors.

make special exertions on behalf of the Company.	3. Promote ethical and responsible decision-making	The Board is committed to the establishment and maintenance of appropriate ethical standards. Given the current size of the Company and the fact that the Company is only in the early stages of its restructure and the development of its new business, there is currently no official code of conduct in place. As the Company develops the Board intends to review its practices, and if deemed necessary, establish an appropriate code of conduct.	The Company has not established a formal policy addressing diversity. Given the current size of the Company and the fact that the Company is only in the early stages of its restructure and the development of its new business, the Board does not consider it necessary to have a diversity policy. As the Company develops the Board intends to review its practices, and if deemed necessary in the future, the Board may consider adopting a policy in the future.	As mentioned in 3.2 above, the Company has not established a formal policy addressing diversity	There are currently no women on the Board.	4. Safeguard integrity in financial reporting	The Company does not have a separately constituted audit committee due to its current size and the fact that the Company is only in the early stages of its restructure and the
		No	No	No	No		No
		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; • the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.	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.	3.3. Companies should disclose in each annual report the measureable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving them.	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.		4.1. The board should establish an audit committee.

development of its new business. The Company in general meeting is responsible for the appointment of the external auditors of the Company, and the Board from time to time will review the scope, performance and fees of those external auditors.	The Company does not currently have an audit committee.	The Company does not currently have an audit committee.	5. Make timely and balanced disclosure	Due to the current size of the Company and the fact that the Company is only in the early stages of its restructure and the development of its new business, there are no written policies in place. The Company is however committed to providing relevant up-to-date information to its shareholders and the broader investment community in accordance with the continuous disclosure requirements under the ASX Listing Rules and the Corporations Act 2001. The Board has designated the Company Secretary as the person responsible for overseeing and coordinating disclosure of information to the ASX and shareholders as well as providing guidance to directors and employees on disclosure requirements and procedures.	6. Respect the rights of shareholders
	N/A	N/A		No
	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; • has at least three members.	4.3. The audit committee should have a formal charter.		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.

Although the Company does not have a formal communications policy in place, all material matters will be disclosed to the market in accordance with the Listing Rules. The Company encourages shareholders to register for receipt of announcements and updates electronically.	7. Recognise and manage risk	The Board is responsible for the oversight and management of all material business risks. The Board’s collective experience will enable accurate identification of the principal risks that may affect the Company’s business. Key operational risks and their management will be recurring items for deliberation as Board meetings. The risk profile can be expected to change and procedures adapted as the Company develops and it grows in size and complexity. The Board intends to continue to regularly review and approve the risk management and oversight policies of the Company.	This has not been formalised as a role of management, as this responsibility presently sits at Board level.	The Company has not yet appointed a chief executive officer.
No		Yes	No	No
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.		7.1. Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.	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.	7.3. The board should disclose whether it has received assurance from the chief executive office (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded

	8. Remunerate fairly and responsibly	As mentioned in 2.5 above, the Company does not have in place a separately constituted remuneration committee due to the size and current operations of the Company.	The Company does not currently have a remuneration committee.	The remuneration of an executive director will be decided by the Board, without the affected executive director participating in that decision-making process. There are currently no executive directors. The total maximum remuneration of non-executive directors is currently set at $500,000. Any increases will be the subject of a shareholder resolution in accordance with clause 13.7 of the Company’s constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determination of non- executive directors’ remuneration within that maximum amount will be made by the Board, having regard to the inputs and value to the Company of the respective contributions by each non-executive director.
		No	No	Yes
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.		8.1. The Board should establish a remuneration committee.	8.2. The remuneration committee should be structured so that it: • consists of a majority of independent directors; • is chaired by an independent chair; • has at least three members.	8.3. Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives.