PTR MINERALS LTD — Capital/Financing Update 2018

Apr 15, 2018

ASX Compliance Pty Limited 20 Bridge Street SYDNEY NSW 2000

6 April 2018

Dear Chris,

Petratherm Limited – Pre Quotation Disclosure

The following information is required to be provided to ASX Limited (ASX) for release to the market in connection with the admission to the official list of, and official quotation of, fully paid ordinary shares (Shares) and options to acquire shares (Options) in, Petratherm Limited (ACN 106 806 884) (Company).

Confirmation of Conditions Precedent Under SAEX Pty Ltd Tenement Purchase Agreement Have Been Satisfied

The Company and SAEX Pty Ltd ACN 154 922 728 (SAEX) entered into a Tenement Purchase Agreement dated 20 December 2017 (TPA), pursuant to which the Company agreed to acquire two gold and basemetal prospective tenements, EL 5306 and EL 5717 (SAEX Tenements) and related technical information from SAEX.

The TPA is subject to:

• the Company conducting due diligence in respect of the SAEX Tenements and being satisfied in its absolute discretion with such due diligence;
• the Company obtaining all shareholder approvals required under the Corporations Act and the ASX Listing Rules in order for its Shares to be reinstated to quotation on ASX including for a significant change to the nature or scale of the Company's activities, and for the issue of Shares pursuant to this Prospectus;
• the Company raising at least $4 million via a prospectus;
• the Company obtaining conditional approval (subject only to the imposition of conditions usual for such approvals) from ASX for its Shares to be reinstated to quotation; and the Company obtaining any approvals or consents required under the law of South Australia

The Company confirms that the Conditions Precedent listed above have been satisfied and the agreement has been completed.

Confirmation of Conditions Precedent Under Musgrave Minerals Limited Farm-in and Joint Venture Agreement Have Been Satisfied

Pursuant to a Mining Farm-In and Joint Venture Agreement dated 21 December 2017 (JV Agreement), the Company may earn and acquire up to a 75% interest in a silver, lead and zinc prospective tenement, EL 5497 (MGV Tenement) (and related rights and information), from Musgrave Minerals Limited ACN 143 890 671 (ASX Code: MGV) (Musgrave).

The JV Agreement is subject to:

• the Company conducting due diligence in respect of the MGV Tenements and being satisfied in its absolute discretion with such due diligence;
• the Company obtaining all shareholder approvals required under the Corporations Act and the ASX Listing Rules in order for its Shares to be reinstated to quotation on ASX including for a significant change to the nature or scale of the Company's activities, and for the issue of Shares pursuant to this Prospectus;
• the Company raising at least $4 million via a prospectus;
• the Company obtaining conditional approval (subject only to the imposition of conditions usual for such approvals) from ASX for its Shares to be reinstated to quotation; and
• the Company obtaining any approvals or consents required under the Mining Act 1971 (SA),

The Company confirms that the Conditions Precedent listed above have been satisfied and the agreement has been completed.

Confirmation Statement Regarding Exploration Activities

The Company confirms that there are no legal, regulatory, statutory or contractual impediments to the Company entering the tenements number EL 5306, EL 5717 and EL 5497 and carrying out exploration activities.

The Company will be able to spend its cash in accordance with its commitments purposes of Listing Rule 1.3.2 (b).

Heritage Clearances in relation to EL 5497 (Musgrave Tenement)

This statement relates to the status of heritage clearances for the Musgrave tenement (EL 5497) under the Barngarla Native Title Mining Agreement dated 1 December 2014 between Musgrave Minerals Ltd (Musgrave) and the Barngarla Aboriginal Corporation, as summarised in section 9.2 of the Replacement Prospectus.

For the purpose of the Mining Farm-in and Joint Venture Agreement dated 21 December 2017 between Musgrave and Petratherm (Farm-In Agreement), exploration costs include costs incurred in respect of both ground disturbing and non-ground disturbing activities.

The Barngarla Native Title Mining Agreement requires Musgrave/Petratherm to obtain clearance only for ground disturbing exploration activities.

We are instructed that in undertaking exploration under the terms of the Farm-In Agreement to incur the required earn-in expenditure for the purposes of that Agreement:

• 1. Petratherm is able to and will conduct non-ground disturbing exploration activities over the tenement as a whole; and
• 1. to the extent that Petratherm will conduct ground disturbing exploration, Petratherm will undertake those activities only on the existing cleared parts of the tenement.

Confirmation of No Material Subsequent Events

The Directors of the Company confirm that they are not aware of any material subsequent events that would alter the Company's consolidated statement of financial position as set out in the Replacement Prospectus.

Confirmation of Compliance with the ASX Listing Rules

The Directors of Petratherm Limited confirm that the Company is in compliance with the ASX Listing Rules.

In particular, the Directors confirm that the Company complies with ASX listing rule 3.1 regarding continuous disclosure. The Directors acknowledge that there is a requirement that when the Company becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity's securities, the entity must immediately tell ASX that information.

Confirmation of the issue of securities under the prospectus

The Company confirms that the initial public offer of Shares and Options under its replacement prospectus (Prospectus) (Offer) dated 14 February 2018 has closed and that 119,597,500 Shares have been issued with respect to the Offer. The Company further confirms that 1,250,000 ordinary shares have been issued to SAEX Pty Ltd as the vendors to the Offer. The ordinary shares were issued with an issue price of $0.04.

Completion of Agreement

Completion has occurred in respect of all of the Agreements, shares and options issued or cash consideration paid to the relevant parties as applicable.

Confirmation of the issue of securities

We confirm that the following securities have been issued on 6 April 2018

• 1,250,000 shares to SAEX Pty Ltd
• 1,000,000 options to Yoix Pty Ltd, <ST O'Loughlin Family A/C>
• 1,000,000 options to JonEric Pty Ltd
• 1,000,000 options to Mr Derek Carter + Mrs Carlsa Carter <Cater Family A/C>
• 8,487,583 options to Taycol Nominees Pty Ltd <211 A/C>

Capital Structure of the Company

The capital structure of the Company following the completion of the Offer as at 10 April 2018 is as follows:

Ordinary Fully Paid Shares	171,001,652
Options	14,987,583

Restricted Securities

The table below shows a breakdown of the vendor shares subject to ASX restrictions by the escrow period.

Escrow Period / Entity	SAEX PTY LTD	TOTAL
24 months from the date ofquotation on the ASX	1,250,000	1,250,000
No Escrow	0	0
TOTAL	1,250,000	1,250,000

The table below shows a breakdown of the Director and Promotor options subject to ASX restrictions by the escrow period.

Escrow Period / Entity	Simon	Donald	Derek	Taylor	TOTAL
	O'Loughlin	Stephens	Carter	Collison
24 months from the date	1,000,000	1,000,000	1,000,000	8,487,583	11,487,583
of quotation on the ASX
No Escrow	625,000	625,000	0	0	1,250,000
TOTAL	1,625,000	1,625,000	1,000,000	8,487,583	12,737,583

Unquoted Securities - Options

The table below shows a breakdown of the unquoted options and unquoted options that had not been issued prior to the application for admission, but to be issued prior to the commencement of official quotation.

Entity/Unlisted	Unquoted Options	Unquoted Options	TOTAL
Options	Before Application	Issued Prior to
		Commencement
Andrew Haythorpe	2,250,000	0	2,250,000
Simon O'Loughlin	625,000	1,000,000	1,625,000
Donald Stephens	625,000	1,000,000	1,625,000
Derek Carter	0	1,000,000	1,000,000
Taylor Collison	0	8,487,583	8,487,583
Limited
TOTAL	3,500,000	11,487,583	14,987,583

Confirmation of the issue of securities

We confirm that the following securities have been issued on 6 April 2018

• 1,250,000 shares to SAEX Pty Ltd
• 1,000,000 options to Yoix Pty Ltd, <ST O'Loughlin Family A/C>
• 1,000,000 options to JonEric Pty Ltd
• 1,000,000 options to Mr Derek Carter + Mrs Carlsa Carter <Cater Family A/C>
• 8,487,583 options to Taycol Nominees Pty Ltd <211 A/C>

Updated Statement of Commitments

Use of Funds (A$)	Notes	FundsAvailablePostAcquisition	PostCompletion of theOffer /Year 1	Year 2Spend	TotalSpend
Pre-offer Cash	1	$632,233	Spend
Total Funds Raised Under TheOffer		$4,783,900
Total Funds Available		$5,416,133
Expenses of the Offer	2	$213,849	-	-	$213,849
Capital Raising Fees	3	$286,310	-	-	$286,310
Exploration expenditure	4	$2,567,000	$994,000	$1,573,000	$2,567,000
Environmental rehabilitationexpenditure	5	$241,000	$241,000	-	$241,000
Working Capital/Capital availableto manage growth	6	$1,061,974	$530,987	$530,987	$1,061,974
Secretarial, professional andconsultancy fees		$400,000	$200,000	$200,000	$400,000
Directors Fees	7	$246,000	$123,000	$123,000	$246,000
Administration expenditure	8	$400,000	$200,000	$200,000	$400,000
Total Funds Applied		$5,416,133	$2,288,987	$2,626,987	$5,416,133

Notes:

• 1. Represents cash on hand as at 31 December 2017, (actual cash levels at the date of the Completion of the Issue will likely differ from the above).
• 1. As invoiced by Taylor Collison Limited
• 1. Estimated costs
• 1. Budgeted expenditure relates to the MGV Tenement and the SAEX Tenements only. The use of development expenditure and working capital is more fully described in Section 3 of the Prospectus.
• 1. Budgeted expenditure for environmental rehabilitation of the Paralana 2 Geothermal Well as agreed by the Group and Joint Venture Partner, Beach Energy
• 1. The use of development expenditure and working capital is more fully described in Section 3 of the Prospectus.
• 1. Refer to section 1.16 of the Prospectus
• 1. Administration expenditure includes audit fees, share register maintenance, listing fees and other expenses from ordinary activities.

Updated Pro Forma Consolidated Statement of Financial Position

		Reviewed
		Petratherm	Pro Forma
	Refer	31 December 2017	At Subscription
		$	$
CURRENT ASSETS
Cash and cash equivalents	1	632,233	4,915,974
Trade and other receivables		7,941	7,941
Other current assets		9,323	9,323
TOTAL CURRENT ASSETS		649,497	4,933,238
NON CURRENT ASSETS
Exploration assets	2	-	50,000
TOTAL NON CURRENT ASSETS		-	50,000
TOTAL ASSETS		649,497	4,983,238
CURRENT LIABILITIES
Trade and other payables		34,733	34,733
Provisions		241,000	241,000
TOTAL CURRENT LIABILITIES		275,733	275,733
TOTAL LIABILITIES		275,733	275,733
NET ASSETS		373,764	4,707,505
SHAREHOLDERS EQUITY
Issued capital	3	34,760,564	38,828,342
Reserves	3	130,034	589,397
Accumulated losses	3	(34,516,834)	(34,710,234)
TOTAL EQUITY		373,764	4,707,505

1. Cash and cash equivalents

	$
Balance at 31 December 2017 (Reviewed)	632,233
Proforma adjustments
Issue of Shares pursuant to this Prospectus	4,783,900
Costs of the offer	(500,159)
Proforma cash and cash equivalents	4,4,915,974
2.Exploration assets
Balance at 31 December 2017 (Reviewed)	$-
Proforma adjustments
Acquisition of tenements	50,000
Proforma exploration assets	50,000

3. Consolidated Statement of Changes in Equity

	IssuedCapital	Reserves	AccumulatedLosses
	$	$	$	$
Balance at 31 December 2017
(Reviewed)	34,760,564	130,034	(34,516,834)	373,764
Pro forma transactions
Share Consolidation on a two to one
basis	-	-	-	-
Issue of 119,597,500 Offer Shares in the
Company pursuant to this Prospectus	4,783,900	-	-	4,783,900
Expenses of the offer	(426,619)	-	(73,540)	(500,159)
Acquisition of tenements pursuant to
agreement	50,000	-	-	50,000
Fair value of share options to Lead
Manager on successful capital raise
pursuant to their Mandate Letter	(339,503)	339,503	-	-
Fair value of 3,000,000 share options to
Directors	-	119,860	(119,860)	-
Pro forma balance - Subscription	38,828,342	589,397	(34,710,234)	4,707,505

Confirmation of Corporate Governance Principles

The Group has reviewed its corporate governance and reporting practices under the principles outlined in the by the ASX Corporate Governance Council, Corporate Governance Principles and Recommendations (3rd Edition). The disclosures in this Corporate Governance Statement reflect this and, as at the date of this statement, the Group complies with the 3rd Edition Recommendations (unless otherwise stated).

The Group details below the corporate governance practices in place currently, all of which comply with the principles and recommendations of the ASX corporate governance council unless otherwise stated. Some of the charters and policies that form the basis of the corporate governance practices of the Group may be located on the Group's website, http://petratherm.com.au

Principle 1: Lay solid foundations for management and oversight

Recommendation 1.1

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;
• 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 Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board.

Day to day management of the Group's affairs and the implementation of the corporate strategy and policy initiatives are managed by the Board due to the size and nature of the Group.

Departures from Principle 1:

Recommendation 1.3 - A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.

The Group has not entered into formal contracts with the Directors, therefore has not complied with Recommendation 1.3 of the Corporate Governance Principles and Recommendations. The Group believes this to be appropriate given the size and nature of the Group. All other senior executives are subject to employment agreements with standard commercial terms.

Recommendation 1.5 – Diversity

The Group has not yet developed or disclosed a formal diversity policy and therefore has not complied with recommendation 1.3. The Company believes this to be appropriate at this time, but notes it uses diversity as a driver for staff recruitment. The total proportion of men and women on the board, in senior positions and across the whole organisation is listed below:

Category	Men	Women
Board	3	-
Senior Management (excluding
the managing director	0	-
captured above)
Whole Organisation	3	-

Recommendation 1.6 – Review process for evaluating the Board

The Group does not have a formal process for periodically evaluating the performance of its Board and senior executives and therefore has not complied with recommendation 1.6. The Board however notes that it continually evaluates the composition and performance of the Board at Board meetings.

Recommendation 1.7 – Review process for evaluating performance of senior executives The Company does not currently engage any senior executives, and therefore has nothing to disclose pursuant to Recommendation 1.7

Principle 2: Structure the board to add value

Board composition

At the date of this statement the Board will restructure to consist of the following directors:

Mr Derek Carter, Non-Executive Director, Chairman (to be appointed upon reinstatement 1 April 2018) Mr Simon O'Loughlin, Non-Executive Director (Appointed 24 October 2003) Mr Donald Stephens, Non-Executive Director (Appointed 24 October 2003)

The Board considers this to be an appropriate composition given the size and development of the Group at the present time. The names of Directors including details of their qualifications and experience are set out in the Directors and Key Personnel section of the Prospectus and the Annual Report (when available) and is also available on the Company's website.

The Group undertakes appropriate checks before appointing a person to the Board of the Company. All material information relevant to the decision as to whether or not to elect or re-elect a director is submitted for review by members in the Group's Notice of Annual General Meeting.

The Group has a policy for inducting all new Directors, as well as providing copies of relevant corporate policies and documentation. The Group additionally supports all Directors by allowing the reimbursement for appropriate professional development opportunities to develop and maintain the skills and knowledge needed to perform their role as Directors effectively.

Independence

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. Each director is required by the Company to declare on an annual basis the details of any financial or other relevant interests that they may have in the Company.

The Board has determined that Mr Donald Stephens and Mr Derek Carter (the Company's Chairman) are independent given they have no other material relationship with the Group other than their directorships. The directors have determined that Mr Simon O'Loughlin is not independent. The majority of the directors of the Board is therefore independent, thus the Group has complied with Recommendation 2.4.

Board skills

The Board aims in its membership to maintain a combination of skills and experience that ensure the Board has the expertise to meet both its responsibilities to stakeholders and its strategic objectives. As part of this process, the Board is aware of the need for diversity among its Directors, both in gender and experience. The Board closely assesses diversity criteria when considering Board candidates.

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 Company Experience
	Accounting,Audit,BusinessStrategy,CompetitiveBusiness
Business and Finance	Analysis, Corporate Financing, Financial Literacy, Mergers and
	Acquisitions, Risk Management, Tax – Australia
Sustainability and	Community Relations, Corporate Governance, Health and Safety,
Stakeholder Management	Human Resources, Remuneration
Technical	Engineering Qualifications, Exploration experience

Departures from Principle 2

Recommendation 2.1 – Nomination Committee

The Board has not established a Nomination and Remuneration Committee in accordance with recommendation 2.1 of the Corporate Governance Council. The Board takes ultimate responsibility for these matters and continues to monitor the composition of the Board and the roles and responsibilities of its members. The Group however is conscious of ensuring succession planning for the Group is dealt with at a Board level. The Board (in conjunction with its annual review of performance) annually reviews the size, composition and diversity of the Board and the mix of existing and desired competencies across Board members. In conducting the review, the skills matrix referred to above is used to enable the Board to assess the skills and experience of each Director and the combined capabilities of the Board.

Principle 3: Act ethically and responsibly

Code of conduct

The Company has developed a Code of Conduct and Ethics (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 Company's stakeholders.

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

The Company has a Share Trading Policy which outlines the restrictions, closed periods and processes required when Directors, Managing Director and key management personnel trade company securities. Broadly, it restricts the purchase and sale of Company securities by Directors and employees during the following time periods:

• I. the period between the end of the March, June, September and December quarters and the release of the Company's quarterly report to ASX for so long as the Company is required by the Listing Rules to lodge quarterly reports; and
• II. 24 hours after the following events:
  • a. Any major announcements;
  • b. The release of the Company's quarterly, half yearly and annual financial results to the ASX; and
  • c. The Annual General Meeting and all other General Meetings.

Any transactions undertaken in the above mentioned periods must be notified to the Board in advance.

The Directors are satisfied that the Group has complied with its policies on ethical standards, including trading in securities.

Principle 4: Safeguard integrity in financial reporting

Audit, Business Risk and Compliance Committee The audit committee will consist of the following directors: Mr Donald Stephens (Committee Chair) Mr Simon O'Loughlin (Non-executive Director) Mr Derek Carter (Non-executive Chairman)

Details of these directors' qualifications and attendance at Audit, Business Risk and Compliance committee meetings are set out annually in the directors' report included in the Annual Report and the Prospectus.

All members of the Audit, Business Risk and Compliance committee are financially literate and have an appropriate understanding of the industries in which the group operates.

The main responsibilities of the committee are to:

• view, assess and approve the annual reports, the half-year financial report and all other financial information published by the company or released to the market;
• assist the board in reviewing the effectiveness of the organisation's internal control environment covering:
  • effectiveness and efficiency of operations;
  • reliability of financial reporting; and
  • compliance with applicable laws and regulations.
• oversee the effective operation of the risk management framework;
• recommend to the board the appointment, removal and remuneration of the external auditors, and review the terms of their engagement, the scope and quality of the audit and assess performance;
• consider the independence and competence of the external auditor on an ongoing basis;
• review and approve the level of non-audit services provided by the external auditors and ensure it does not adversely impact on auditor independence;
• review and monitor related party transactions and assess their propriety; and
• report to the board on matters relevant to the committee's role and responsibilities.

In fulfilling its responsibilities, the Audit, Business Risk and Compliance committee:

• receives regular reports from management and the external auditors;
• meets with the external auditors at least twice a year, or more frequently if necessary;
• reviews the processes the Managing Director and Company Secretary (acting as CFO) have in place to support their certifications to the board;
• reviews any significant disagreements between the auditors and management, irrespective of whether they have been resolved;
• meets separately with the external auditors and the chief internal auditor at least twice a year without the presence of management; and
• provides the external auditors with a clear line of direct communication at any time to either the Chair of the Audit Committee or the Chair of the Board.

The Audit, Business Risk and Compliance committee has authority, within the scope of its responsibilities, to seek any information it requires from any employee or external party.

External auditors

The Company and Audit, Business Risk and Compliance 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. Grant Thornton Audit Pty Ltd ('Grant Thornton') was appointed as the external auditor at the Company's AGM in 2012. It is Grant Thornton'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.

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.

CEO and CFO assurance

The Board receives regular reports on the Group's financial and operational results in conjunction with its Board meetings.

Before the adoption by the Board of the half-year and full-year financial statements, the Board received written declarations from the Managing Director and the Company Secretary that the financial records of the Company have been properly maintained in accordance with section 286 of the Corporations Act, and the Company's financial statements and notes comply with accounting standards and give a true and fair view of the consolidated entity's financial position and performance for the financial period.

Principles 5 and 6: Make timely and balanced disclosures and respect the rights of shareholders

Continuous disclosure and shareholder communication

The Group has written policies and procedures on information disclosure that focus 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. These policies and procedures also include the arrangements the Company has in place to promote communication with shareholders and encourage effective participation at general meetings. A summary of these policies and procedures is available on the Company's website.

The Company Secretary has been nominated as the person responsible for communications with the Australian Securities Exchange (ASX). This role includes responsibility for ensuring compliance, in conjunction with the full Board, in relation to the continuous disclosure requirements in the ASX Listing Rules. Overseeing and co-ordinating information disclosure to the key stakeholders is delegated to the Company's Non-Executive Director Mr Donald Stephens.

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.

Investors relations and member participation

Shareholders are encouraged to participate at all Annual General Meetings and Extraordinary 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 Company.

The Group aims to promote effective communication to and from security holders. Shareholders of the Group can register to receive email notifications when an announcement is made by the Company to the ASX. Shareholders are also encouraged to register with the Company's share register to communicate electronically.

Principle 7: Recognise and manage risk

The Board is responsible for ensuring that management has developed and implemented a sound system of risk management and internal control.

The Audit, Business Risk and Compliance Committee is responsible for ensuring there are adequate policies in relation to risk management, compliance and internal control systems.

They monitor the Company'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 group-wide objectives in the context of the management of corporate risk;
• reviews and, where necessary, approves guidelines and policies governing the identification, assessment and management of the company's exposure to risk; and
• reviews and approves the delegations of financial authorities and addresses any need to update these authorities on an annual basis.

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

• the risk management and internal control systems, and
• the Group's management of its material business risks.

The Group does not have a separate internal audit function.

Exposure to material economic, environmental and social sustainability risk

The Group's policy it to identify and manage potential or apparent business, economic, environmental and social sustainability risks (if appropriate). The Group at present has not identified specific material risk exposure in these categories. Reports are continually created by management on the efficiency and effectiveness of the Group's risk management and associated internal compliance and control procedures.

Departures from Principle 7

Recommendation 7.2 – Review of risk management framework and associated disclosures The Group has not undertaken a specific review during the year in relation to the Group's risk management framework. As noted above, it is the Board's responsibility to satisfy itself that the Group has a sound system of risk management and internal control. This is continually monitored by the Board at Directors meetings and in communication with management. The Group believes this to be appropriate given the size and nature of the Group at this time.

Principle 8: Remunerate fairly and responsibly

The Board has not established a Remuneration Committee given the size of the Group and number of employees. It is not considered that this is required at this time. The Board therefore fulfils the duties of the committee.

Every employee of the Group signs a formal employment contract at the time of their appointment covering a range of matters including their duties, rights, responsibilities and any entitlements on termination. The standard contract refers to a specific formal job description. The Group's human resources structure is reviewed by the Board on an on-going basis and, where necessary, is revised to accommodate the change in the Group's needs and requirements.

Further information on directors' and executives' remuneration, including principles used to determine remuneration, is set out in the directors' report under the heading 'Remuneration report'. The Group has a policy to distinguish the remuneration of executive and senior staff from that of the non-executive directors. All executive and senior staff are subject to annual reviews, where the remuneration arrangements are reviewed and benchmarked against industry averages. The Group additionally uses the Employee Share Option Plan to provide incentives to employees, which are reviewed annually in conjunction with the available option pool. The Non-Executive Directors remuneration is set from a pool that is approved by shareholders, which presently is set at $300,000 per annum. The Non-Executive Director fees have not been increased since the Company's prospectus in 2008 and the Group has a policy of obtaining shareholder approval for any share based remuneration (such as options) to be granted to Directors in accordance with the ASX Listing Rules.

In accordance with Group policy, participants in equity-based remuneration plans (of which the Group has one, the Employee Share Option Plan) are not permitted to enter into any transactions that would limit the economic risk of options or other unvested entitlements. Details of the Employee Share Option Plan can be found on the Group's website.

The Board assumes responsibility for overseeing management succession planning, including the implementation of appropriate executive development programmes and ensuring adequate arrangements are in place, so that appropriate candidates are recruited for later promotion to senior positions. This includes overseeing processes in relation to meeting diversity objectives for executives and staff below board level.

Kind Regards,

Donald Stephens Company Secretary