managing director and other senior executives. This annual remuneration review encompasses performance reviews of those individuals. 

## Principle 2: Structure the board to add value 

Principle 2 states that “companies should have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties.” The Company’s board is so structured, and its directors believe that they have adequately discharged their responsibilities and duties to the benefit of shareholders. 

The preferred skills and experiences for a director of the Company include: 

• mineral resources; 

• corporate and business development; and 

• public company administration. 

The board has established a framework for the management of the consolidated entity including a system of internal control, a business risk management process, and the establishment of appropriate ethical standards. 

The full board holds regular meetings to discuss operational matters, plus strategy meetings and any extraordinary meetings at such other times as may be necessary to address any specific significant matters that may arise. 

The board reviews its composition on an annual basis to ensure that it has an appropriate mix of expertise and experience. When a vacancy occurs, for whatever reason, or where it is considered that the board would benefit from the services of a new director with particular skills, the board will select appropriate candidates with relevant qualifications, skills and experience. External advisers may be used to assist in such a process. The board will then appoint the most suitable candidate who must stand for election at the next general meeting of shareholders. 

The terms and conditions of the appointment and retirement of directors are not formally set out in a letter of appointment. However matters such as remuneration, expectations, terms, the procedures for dealing with conflicts of interest and the availability of independent professional advice are clearly understood by all directors, who are experienced public company directors. 

Information regarding directors’ experience and responsibilities is included in the Directors’ Report section of the Annual Report. 

Each director has the right to seek independent professional advice at the Company’s expense. However, prior approval of the Chairman is required, which will not be unreasonably withheld. 

## Independent directors (2.1) 

In assessing whether a director is classified as independent, the board considers the independence criteria set out in the ASX Corporate Governance Council Recommendation 2.1 and other facts, information and circumstances deemed by the board to be relevant. 

Using the ASX Best Practice Recommendations on the assessment of the independence of directors, the board considers that of a total of seven directors during the financial year ended 30 June 2011, four were considered to be independent (Mr Reg Gillard, Mr Neil Fearis, Mr Sean Harvey and Mr Michael Bohm). Mr Mark Calderwood is the managing director of the Company and is not considered to be independent. Mr Colin Carson and Mr Rhett Brans are employed in executive roles and are not considered to be independent. 

## Chairman and Chief Executive Officer (CEO) (2.2, 2.3) 

The Chairman is responsible for leading the board, ensuring directors are properly briefed in all matters relevant to their role and responsibilities, facilitating board discussions and managing the board’s relationship with the Company’s senior executives. The board considers that the Chairman, Mr Reg Gillard, is independent as discussed in the above paragraph. 

The CEO is Mr Mark Calderwood, Managing Director, who is responsible for implementing Company strategies and policies. 

## Nomination committee (2.4) 

The board of directors of the Company does not have a nomination committee. The board is of the opinion that due to the nature and size of the Company, the functions performed by a nomination committee can be adequately handled by the full board. 

When a new director is to be appointed the board reviews the range of skills, experience and expertise on the board, identifies its needs and prepares a short-list of candidates with appropriate skills and experience. Where necessary, advice is sought from independent search consultants. 

