The Company and the Board are committed to achieving and demonstrating the highest standards of corporate governance, notwithstanding the size and nature of the Group. The Board reviews and seeks to continuously improve the governance framework and practices as Group resources, skills, and capabilities grow.
The Group presently has only one fulltime employee, being the Executive Chairman and Managing Director. All activities are provided to the Group either by consultants or part time/casual employees.
The Board agreed to merge the roles of Chairman and Managing Director as an interim measure to better manage costs and, due to the overriding requirement of the Group to seek new funding, and, given the particular skills and experience of the individual concerned, to best present the commercial and technical merits of its projects to potential investors. The Board will reassess the arrangement regularly to determine when the roles should again be separated.
The present governance structure of the Group is represented by the following diagram.
A description of the Group’s main corporate governance practices in place as at 30 June 2015 is set out below. Unless otherwise disclosed in this Corporate Governance Statement, the Group seeks to comply with the ASX Corporate Governance Council Principles and Recommendations, 3rd Edition.
The Company is currently reviewing its governance practices to comply as far as is practicable with these latest recommendations.
Recommendation 1.1 (a): Role of the Board and of Management
The specific responsibilities of the Board are set out in a Board Charter, which is part of its documented Corporate Governance Plan. Responsibilities not listed as being reserved for the Board are delegated to the Chief Executive Officer (CEO) and Managing Director. The Board reserves the right to add to or amend its and the CEO’s responsibilities as it sees fit.
Day-to-day management of the Group’s affairs and the implementation of the corporate strategy and policy initiatives are formally delegated by the Board to the Executive Chairman and Managing Director. This delegation is reviewed as the Board considers appropriate.
Recommendation 1.1 (b): Matters Expressly Reserved for the Board.
The Executive Chairman and Managing Director is responsible for the attainment of the Company’s goals and vision for the future, in accordance with the strategies, policies, programs and performance requirements approved by the Board.
Recommendation 1.2 (a): Undertake Appropriate Checks Before Appointing a Director.
No new appointment of a director has occurred during the period of this report.
Recommendation 1.2 (b): Provide Security Holders with Relevant Information About Director Candidates
Information pertaining to directors standing in future for re-election that will be provided to security holders will include relevant biographical details. The majority of this information is available at all times on the Company’s website or in its annual report.
Recommendation 1.3: Written Terms of Employment Agreements
All directors, including the Managing Director and CEO, have written and signed agreements setting out the terms of their employment. The material terms of employment of the Executive Chairman and Managing Director were disclosed at the time of his engagement.
Recommendation 1.4: The Company Secretary Should Be Accountable Directly to the Board
The Company Secretary is accountable directly to the Board, not only through the Executive Chairman, but because the Chairman is not an independent director, also directly to the Board and to individual directors as required.
Recommendation 1.5: A Listed Entity Should Have a Diversity Policy
The Company does not at present have a formal diversity policy. The Board is committed to diversity within its own make-up and in its future team of employees and intends to develop a diversity policy in due course.
Recommendation 1.6 (a): Board Performance Evaluation
At present, the Board evaluates its collective performance after each meeting. No performance evaluation process of individual directors has been undertaken to date. The Board recognizes the advantages of such a process and intends to gradually introduce a more structured evaluation process.
Recommendation 1.6 (b): Disclosure of Board Performance Evaluation
Please note the information provided under Recommendation 1.6 (a).
Recommendation 1.7: Performance Evaluation of Senior Executives
At present, the Company has only one senior executive who is also Chairman and Managing Director. This executive commenced his role at the beginning of 2015 and no formal evaluation of his performance has been undertaken to date.
The Board operates in accordance with the broad principles set out in its charter which is available from the corporate governance information section of the Company website at www.auraenergy.com.au. The charter details the Board’s composition and responsibilities.
The Board has been constituted so that it has an effective composition, size and commitment to adequately discharge its responsibilities and duties, given the Company’s current size and the scale of operations.
Recommendation 2.1: Nomination Committee
The Board has a Nomination Committee comprising of its four directors, two of whom were determined to be independent as defined by the ASX criteria, at the balance date. The Committee has a charter. It has not met formally during the year. Instead, the Board has addressed its composition, range of skills and effectiveness as part of its regular business.
The Company considers that each of the directors possesses skills and experience suitable for guiding the Company and that, collectively, the current range of skills, knowledge, experience and independence of the Board is adequate for the Company’s current strategy, size and operations.
Recommendation 2.2: Skills Matrix
The Board does not at present have a formal skills matrix but acknowledges the usefulness of this and will consider the creation of one.
Recommendation 2.3: Director Independence and Length of Service
The names of the directors considered by the Board to be independent directors are Brett Fraser and Julian Perkins. Details of these directors, their experience, expertise, qualiﬁcations, term of ofﬁce and independent status are set out in the Directors’ Report. Robert Beeson was, at the date of signing the Directors’ Report, a non-executive director who was not considered independent by the Board at that time.
Recommendation 2.4: Majority of Independent Directors
At present, independent directors comprise 50% of the Board. One other director is non-executive but does not at present fully meet the factors relevant to assessing independence that are provided by the ASX Corporate Governance Principles, 3rd Edition. The Board nevertheless believes, and consciously strives to achieve that it always acts in the best interests of the Company and its security holders generally.
Recommendation 2.5: The Chair to be Independent and Not Also the CEO
With effect from January 2015, Peter Reeve was appointed by the Board to be both Executive Chairman and CEO, and shortly afterwards to be also Managing Director. Although the Board recognized at the time that this conflicts with Recommendation 2.5, it nevertheless believed and continues to believe that this arrangement is in the best interests of the Company and shareholders at this time. The Board believes that Mr. Reeve possesses the skills, experience and network to successfully lead the Company through this period of extreme financial difficulty for junior minerals companies and that, to raise the necessary finance from sources both local and international, his appointment as Executive Chairman and its consequent status would be of assistance. The Board and Mr Reeve acknowledged at the outset that this was not to be a long term arrangement and the non-executive directors will decide when it is appropriate to separate the powers of Chairman and CEO again.
Recommendation 2.6: Induction program for New Directors
The Company does not have a formal induction program or a professional development program for new directors at present. Directors do nominate themselves for specific professional development activities from time to time and the Board considers each such proposal on its merits. Current Board policy is for the cost of approved professional development activities to be shared 50/50 between the director and the Company.
Recommendation 3.1 (a): Code of Conduct
The Company has a Code of Conduct (The Code) which has been endorsed by the Board and applies to all directors and employees. The Code is periodically 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. The Code outlines the responsibility and accountability of Company personnel to report and investigate reports of unethical practices.
Recommendation 3.1 (b): Disclosure of The Code
The Code provides a framework for decisions and actions in relation to ethical conduct in employment. It addresses the accountabilities of managers, supervisors and employees for adherence to the Code and for the reporting of breaches, actual or suspected. Guidelines for personal and professional behavior are set out. There is a comprehensive section on conflict of interest, with examples and what to do if uncertain about whether disclosure is called for. The Code also covers public and media comment, the use of Company resources, security of information, intellectual property and copyright, discrimination and harassment, corrupt conduct, insider trading, as well as a number of other general guidelines for behaviour.
Recommendation 4.1 Audit Committee
The Company has an Audit and Risk Committee. The members of the Audit and Risk Committee at the date of this report are:
Two of these directors are independent. All three are non-executive directors. The Chairman is independent and is not the Chair of the Board. Details of each director’s qualiﬁcations and attendance are set out in the Directors’ Report.
The Committee’s primary roles,as set out in its Charter, is to assist the Board in fulfilling its statutory and fiduciary responsibilities relating to:
All members of the Committee are ﬁnancially literate and have an appropriate understanding of the mining and exploration sector in which the Group operates.
The Committee has authority, within the scope of its responsibilities, to seek any information it requires from any employee or external party.
Recommendation 4.2: CEO and CFO Declaration About Financial Records
The Board receives from its CEO and CFO a declaration that, in their opinion, the financial records of the Company have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the Company and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. The Board does not approve the Company’s financial statements without first having received such a declaration and having itself received and reviewed the final version of the financial statements.
Recommendation 4.3: External Auditor to Attend AGM
The Company holds an Annual General Meeting which is attended in person by a representative from the external auditor who is available to answer any questions arising from security holders.
Recommendation 5.1 (a): Written Policy for Compliance with Continuous Disclosure Obligations
The Company does not have a current formal written policy on continuous disclosure. The Company at present has only one full-time employee, the Executive Chairman and Managing Director, and a small number of consultants and part-time employees. The Executive Chairman and Managing Director, as well as the other directors, the part-time Company Secretary and the part-time Chief Financial Officer, are fully acquainted with the continuous disclosure requirements of the Company and the topic is a constant feature of Board Meetings and informal dialogue between these persons. It is the intention of the Board to introduce a formal policy document in due course, the content of which will be along the lines indicated below under Recommendation 5.1 (b).
Recommendation 5.1 (b): Disclosure of the Policy or a Summary
Although no formal policy currently exists, the Company understands and respects that timely disclosure of price sensitive information is a foundation to the operation of an efﬁcient securities market. It also respects the rights of its shareholders and to facilitate the effective exercise of those rights the Company is committed to:
The Company Secretary has been formally nominated as the person responsible for communications with the ASX. This role includes responsibility for ensuring compliance with the continuous disclosure requirements of ASX’s listing rules.
The Company seeks to provide opportunities for shareholders to participate through electronic means. This includes having information such as the Company announcements, media brieﬁngs, details of Company meetings, press releases and audited ﬁnancial reports for at least the last three years all available on the Company’s website.
The website also includes a feedback mechanism and an option for shareholders to register their email address for inclusion on distribution email updates of Company announcements and/or media releases.
Recommendation 6.1: Provide Information About Itself and its Governance via its Website
The Company has been radically upgrading and redesigning its website in recent months, a process which is now nearing completion. The section on corporate governance is currently under construction and it will include links to details about all directors and senior executives, the constitution, the board and board committee charters and to Company policies. The website already includes links to its annual reports and financial statements, ASX announcements, notices of meetings of security holders and presentations, and much other information relating to projects, structure and history. The website remains partially operational and partially under construction at the time of writing.
Recommendation 6.2: Investor Relations Program
The Company principally engages with its security holders at its AGM or personally as requested by individual security holders, which is a practice that the Company encourages.
Recommendation 6.3: Policies and Processes to Facilitate and Encourage Participation
Questions from security holders, whether or not present at General Meetings, are encouraged and answered as fully as possible. The Company has experienced a pleasing number of questions at such meetings.
Recommendation 6.4: Option to Receive and Send Electronic Communications
The Company does not currently offer this facility but agrees that it is a desirable short-term objective.
Recommendation 7.1: Risk Committee
The Company currently incorporates the duties of a Risk Committee into its Audit and Risk Committee (see Recommendation 4.1)
The Audit and Risk Committee principally oversees financial and general business risk. Technical and operational risk is addressed by the Board as a whole during its meetings.
Recommendation 7.2: Risk Management Framework Review
Management, through the Managing Director, is responsible for designing, implementing and reporting on the adequacy of the Company’s risk management and internal control system. At present, the Company does not have a complete and current formal risk management framework and consequently no review has taken place during the reporting period.
The risks involved in a resources sector company and the speciﬁc uncertainties for the Company are continuously monitored and acted upon by the Executive Chairman and Managing Director, who appraises the Board as to the effectiveness of the Company’s management of its material business risks. Given the very small size of the Company and the very limited range its current activities the Board believes that this is presently the most pragmatic and cost-effective means of managing risk. The Board acknowledges, however, that a more structured and comprehensive risk management system will be required when business activities increase in the near future and plans are being made to create and implement such a system.
Recommendation 7.3: Internal Audit Function
The Company does not at present have an internal audit function. The recognition, evaluation and management of risk is managed on a day to day basis by the Executive Chairman and Managing Director, the Company Secretary and the Chief Financial Officer, overseen and monitored by the Board.
Recommendation 7.4: Disclosure and Management of Material Exposures to Economic, Environmental and Social Sustainability Risks
The Company has identiﬁed the following as the current areas of possible material business risk that management and the Board carefully monitor:
Recommendation 8.1: Remuneration Committee
A charter for a Remuneration Committee currently exists but because there is only one full-time employee, remuneration for the Executive Chairman and Managing Director (a recent appointment) will be evaluated by the three non-executive directors. This issue is under review by the Board.
Recommendation 8.2: Policies and Practices Regarding Remuneration
Information on the remuneration provided to non-executive directors and the executive director, including the principles used to determine remuneration, is provided in the Directors’ Report, under the heading ‘Remuneration Report’.
The Board’s policy is to remunerate non-executive Directors at market rates for comparable companies for time, commitment and responsibilities. The Board, in consultation with independent advisors where considered necessary, determine payments to the Non-executive Directors and reviews their remuneration annually, based on market practice, duties and accountability.
Fees for Non-executive Directors are not linked to the performance of the Group. However, to align directors’ interests with shareholder interests, these directors are encouraged to hold shares in the Company.
Due to shortages of funding on occasion during the period under review, non-executive directors’ fees have at different times been reduced, suspended, or compensated by the issue of shares.
Recommendation 8.3: Equity-based Remuneration Schemes
The Company’s present policy is not to permit participants receiving equity-based remuneration to enter into transactions which limit the economic risk of participation.