Corporate GovernanceThe Company's main corporate governance policies and practices are outlined below:
The Board of Directors
The Company's Board of Directors 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 process are to:
- drive shareholder value;
- ensure a prudential and ethical base to the Company's conduct and activities; and
- ensure compliance with the Company's legal and regulatory obligations.
Consistent with these goals, the Board assumes the following responsibilities:
- develop initiatives for profit and asset growth;
- reviewing the corporate, commercial and financial performance of the Company on a regular basis;
- acting on behalf of, and being accountable to the Shareholders;
- identifying business risks and implementing actions to manage those risks; and
- developing and effecting management and corporate systems to assure quality.
Composition of the Board
Election of Board members is substantially the province of the shareholders in general meeting. However, subject thereto, the Company commits to the following principles:
- the Board to comprise of Directors with a blend of skills, experience and attributes appropriate for the Company and its business; and
- the principal criterion for the appointment of new Directors being their ability to add value to the Company and its business.
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 advisors, has been committed to by the Board.
Independent Professional Advice
Subject to the Chairman's approval (not to be unreasonably withheld), the Directors, at the Company's expense, may obtain independent professional advice on issues arising in the course of their duties.
The remuneration of an executive director will be decided by the Board, without the affected executive director participating in that decision-making process.
The maximum remuneration of non-executive Directors is the subject of a shareholder resolution in accordance with the Company's Constitution, the Corporations Act and the ASX Listing Rules, as applicable. The apportionment of non-executive Directorsí remuneration within that maximum 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 current limit, which may only be varied by shareholders in General Meeting, is an aggregate amount of $ per annum.
The Board may award additional remuneration to non-executive Directors called upon to perform extra services or make special exertions on behalf of the Company.
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 is to have a separately constituted audit committee.
Identification and Management of Risk
The Board's collective experience will enable accurate identification of the principal risks which may affect the Company's business. Key operational risks and their management will be recurring items for deliberation at Board meetings.
The Board is committed to the establishment and maintenance of appropriate ethical standards.
Potential Investment Risk Factors
Investors should be aware that the value of the Company's securities may increase or decrease based on the Company's Exploration and Development activities.
The Company's projects are in an Exploration and Evaluation phase and as a result the Company will be subject to all the risks inherent in undertaking Exploration and Evaluation activities, specifically those activities relating to the Exploration and Evaluation for gold. The future profitability of the Company will be dependent on the success of the results of the Exploration and Evaluation of these projects. No assurances can be given that the Company's Exploration and Evaluation activities will enable the establishment and operation of a viable commercial mining operation.
The Directors have considered and identified the critical areas of risk associated with investing in the Company. The risks identified are not exhaustive and for further clarification of the risks involved, investors should seek advice from their stockbroker, accountant or other professional adviser.
Factors which may affect the Company's financial position, prospects and price of its securities are outlined in the following sections.
Exploration is a high risk activity that requires large amounts of expenditure over extended periods of time. Evaluation of Mineral Resources, involving feasibility studies, carries a lower, but significant risk and the lead time to Development and Production may be prolonged. Currently there are defined Mineral Resources, but no defined Ore Reserves on the tenement packages that are the object of the Joint Ventures in which Hazelwood Resources is involved. There can be no guarantee that planned Exploration and Evaluation programmes will lead to positive Exploration and Evaluation results and the delineation of a commercial deposit or further, a commercial gold mining operation.
The future exploration activities of the Company may be affected by a range of factors including, geological conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and technical difficulties, industrial and environmental accidents, native title process, changing government regulations and many other factors beyond the control of the Company.
The success of the Company will also depend upon the Company having access to sufficient development capital, being able to maintain title to the tenements comprising the Joint Ventures, and obtaining all required approvals for its activities. In the event that exploration programs prove to be unsuccessful this could lead to a diminution in the value of the tenements, a reduction in the cash reserves of the Company and possible relinquishment of the mining tenements.
Commodity Price Risk
Commodity prices inherently fluctuate and are affected by numerous factors beyond the control of the Company. These factors include world demand for particular commodities, forward selling by producers and the level of production costs in major commodity producing regions. Moreover, commodity prices are also affected by macroeconomic factors such as expectations regarding inflation, interest rates and global and regional demand for, and supply of, a commodity.
The projects of the Company are subject to Australian State and Federal laws and regulations regarding environmental matters. The operations and activities of the Company will be conducted in an environmentally sensitive manner and cannot be carried out without prior approval from and compliance with all relevant environmental authorities. Furthermore, the Company intends to conduct all its activities in a manner that is environmentally responsible and in accordance with all relevant laws.
Interests in tenements in Australia are governed by the respective State legislation and are evidenced by the granting of licences and leases. Each licence or lease is for a specific term and carries with it annual expenditure and reporting commitments, as well as other conditions requiring compliance. Consequently, the Company could lose title to, or its interest in the tenements , if licence conditions are not met or if insufficient funds are available to meet expenditure requirements.
All of the tenements in which the Company may earn an interest will be subject to applications for renewal. The renewal of the term of each tenement is at the discretion of the Western Australian Minister for Industry and Resources.
If a tenement is not renewed, the Company may suffer significant damage through loss of the opportunity to develop and discover any Mineral Resources on the tenements.
Native Title Risk
Tenements that have either been applied for or granted to the Company may be subject to native title applications and accordingly carry the risk of delays both in the granting of the tenement and the ability of the Company to explore the tenements. The Company will endeavour to adhere to all of the requirements of the Heritage Protection Act when exploring tenements that are subject to native title claims.
The Company was incorporated on 28 July 2006 and thus the operational and financial historical performance of the Company is limited. The Company's future prospects must be considered in light of the difficulties commonly encountered in the early stages of a company's development, particularly those companies involved in the exploration for mineral resources.
General Economic Conditions
Changes in interest rates and rate of inflation, exchange rates, relevant taxation legislation and other legal regimes, and government policies may adversely affect the Company.
Operating and Technical Risks
The current and future operations of the Company, including exploration, appraisal and possible production activities, may be affected by a range of factors, including:
- Start up risks;
- Geological conditions;
- Limitation on activities due to adverse seasonal weather conditions;
- Unanticipated operational and technical difficulties encountered in sampling, drilling and production activities;
- Mechanical failure of operating plant and equipment;
- Industrial and environmental accidents, industrial disputes and other force majeure events;
- Unavailability of drilling equipment;
- Unexpected shortages or increases in the cost of consumables, spare parts, plant and equipment;
- Prevention of access due to the inability to obtain consents or approvals, including the need to observe the Native Title Act and the Aboriginal Heritage Act; and
- Contracting risk from third parties providing essential services.
The Company intends to obtain insurance where appropriate, taking into consideration the availability of cover and premium costs and where required by contractual obligations.
Joint Venture Risks
The future viability and success of any of the joint ventures entered into by the Company or its subsidiaries or any future joint ventures entered into by the Company or its subsidiaries could be affected by the financial failure or default of any of the joint venture participants.
There are also a number of specific risks associated with the Company which may adversely affect the Company's financial position, prospects and price of its listed Shares. In particular, the Company is the subject of risks relating to the exploration and development of mineral properties which are not generally associated with other businesses.
Set out below are specific risks that may adversely affect the Company:
- The Company cannot guarantee that those Project Tenements that are applications for tenements will ultimately be granted in whole o in part pursuant to the Mining Act;
- The Western Australian Department of Industry and Resources from time to time reviews the environmental bonds that are placed on tenements. The Directors are not in a position to state whether a review is imminent or whether the outcome of such a review would be detrimental to the funding needs of the Company;
- The exploration costs of the Company are based upon certain assumptions with respect to the method and timing of exploration. By their nature, these estimates and assumptions are subject to significant uncertainties and, accordingly, the actual costs may materially differ from these estimates and assumptions. Accordingly, no assurance can be given that the cost estimates and the underlying assumptions will be realised in practice, which may materially and adversely affect the Company's viability; and
- The Company's success largely depends on the core competencies of its directors, and their familiarisation with, and ability to operate in, the mineral exploration and extraction industry. The loss of one or more of the executive directors, or other key persons or consultants could have a materially adverse effect on the Company's business, financial position and results of operations.