Corporate Governance

Corporate Governance Statement

This statement outlines the main Corporate Governance practices that were in place throughout the financial year, which comply with the ASX Corporate Governance Council recommendations, unless otherwise stated.

 

Board of Directors

The Board has five directors, three of whom are non-executive directors including the Chairman, and two executive directors.

The Board is responsible for the overall Corporate Governance of the Company including its strategic direction, establishing goals for management and monitoring the achievement of these goals. The Company is not currently considered to be of size, nor are its affairs of such complexity to justify the establishment of separate committees. Accordingly, all matters which may be capable of delegation to a committee are dealt with by the full Board.

The Board meets regularly in order to retain full and effective control over the Company and monitor the executive management. The Board has established a framework for the management of the Company including a system of internal control, a business risk management process and the establishment of appropriate ethical standards.

Each director has the right to seek independent professional advice on matters relating to his position as a director of the Company at the Company's expense, subject to prior approval of the Chairman which shall not be unreasonably withheld.

 

Conflict of Interest

Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the Board believes that a significant conflict exists, the director concerned does not receive the relevant board papers and is not present at the meeting whilst the item is considered. The Board has developed procedures to assist directors to disclose potential conflicts of interest.

 

Composition of the Board

The procedures for election and retirement of the directors are governed by the company's Articles of Association and the Listing Rules of Australian Stock Exchange Limited.

 

The composition of the Board is determined using the following principles:

• The Board shall comprise a majority of non-executive directors.
• The Board shall comprise directors with a range of expertise encompassing the current and proposed activities of the Company.
• Where a vacancy is considered to exist, the Board selects an appropriate candidate through consultation with external parties, consideration of the needs of the shareholder base and consideration of the needs of the Company. Such appointments are referred to shareholders at the next available opportunity for re-election in general meeting.
• While the Board supports in principle the recommendation that a majority of the Board of large companies should be independent directors, it is not considered that in a company of the size of Tectonic Resources that it is possible at this time to adopt the ASX recommendation. The Company is committed to maintaining a Board of a size which has the ability to respond very quickly to the opportunities which may arise as a result of its activities.
• Before agreeing to join the Board, each nominated director must demonstrate their willingness to commit the necessary time required to discharge their responsibilities.
• The terms and conditions of the appointment of non-executive directors are set out in a letter of appointment.

 

Audit Committee

The Company is not of a size nor are its financial affairs of such complexity to justify a separate Audit Committee of the Board of Directors. All matters, which might properly be dealt with by such a committee, are the subject of scrutiny at full Board meetings.

 

Auditors

The Board meets with the Auditors on an as required basis, primarily to discuss any issues that may arise from the audit/review of statutory financial reports. It is the responsibility of the Board to review the performance of the auditors. The external auditors were appointed in September 1987. The lead external audit engagement partner was last rotated in 2006.

 

Internal control framework

The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective internal control system will preclude all errors and irregularities. To assist in discharging this responsibility, the Board has instigated an internal control framework that can be described under the following headings:

 

Financial Reporting

There is a comprehensive budgeting system with forecasts approved by the directors. Monthly actual results are reported against this forecast and presented to the Board regularly. The company reports to shareholders half yearly. Procedures are also in place to ensure that price sensitive information is reported to the ASX in accordance with Continuous Disclosure Requirements.

 

Quality and integrity of personnel

The Company conducts a comprehensive review of the ability and experience of potential employees prior to appointment. Informal appraisals are conducted regularly with continuous feedback and on the job monitoring and training for all employees.

 

Operational reporting

Where the Company has operating sites, the Managing Director is in regular contact with senior site personnel on an informal basis. In addition, formal monthly reporting together with monthly site visits by executive management aids control in this area.

 

Continuous Disclosure

The Company is committed to complying with the continuous disclosure principles contained in the ASX Listing Rules and the Corporations Law.

The continuous disclosure principles adopted by the Company ensure that:

• shareholders and the market are kept informed of full and timely information about its activities;
• inadvertent disclosure of market sensitive information is prevented.

The Company Secretary has been appointed as the person responsible for all communications with the ASX and keeps the Board advised on what matters require disclosure to the market. The Company Secretary's responsibilities extend to keeping the Board informed of new developments with regard to disclosure as well as updating the disclosure policy as changes occur.

The Company's authorised spokespersons are the Chairman and Managing Director. The Company Secretary is the only person authorised to release information to the ASX.

The Managing Director is the person responsible for communications with major shareholders and institutional investors, with the Company Secretary responsible for communications with retail investors and stakeholders.

The Company Secretary ensures that all presentations to investors and other interested parties are announced to the market through the ASX prior to those presentations being made. The Managing Director will not divulge any information to those attending presentations that has not previously been released to the market.

It is the responsibility of the Company Secretary to ensure that all announcements to the ASX are posted on the Company's website as soon as possible after the announcement has been made.

 

Ethical Standards

Tectonic recognises the need for directors and employees to observe the highest standards of behaviour and business ethics in conducting its business, and intends to maintain a reputation of integrity.

Environment

The Company is subject to environmental regulation under State legislation in respect to its exploration and mining activities which are conducted in Western Australia. The Company is committed to the protection of the environment and to compliance with all applicable environmental laws, rules and regulations under the Western Australian Mining Act 1978 and Environmental Protection Act 1986. Licence requirements relating to waste disposal, water and air pollution exist in relation to the company's activities.

 

People and Safety

The Board acknowledges that the safety of the Company's employees has the highest priority and ensures that the necessary resources are available to management to fully comply with their statutory obligations and provide a safe workplace through training and education.

 

Employment Practices

The Company is aware of its obligations under both federal and state legislation in regard to fair employment practices and strictly adheres to guidelines associated with those practices. The Company will not allow discrimination, harassment or intimidation of employees on the basis of race, religion, gender or marital status. The Company has established procedures which allow all employees to be aware of their responsibilities in relation to employee discrimination matters, and has put in practice the necessary guidelines to ensure that employees have access to support in the event of discrimination or harassment.

 

Business Risks

The Board adopts practices designed to identify significant areas of business risk and to effectively manage those risks in accordance with the Company's risk profile.

Where necessary, the Board draws on the expertise of appropriate external consultants to assist in dealing with or mitigating risk.

The Company's main areas of risk, and its approach to managing these risks, are set out hereunder.

 

Mining, exploration and development

The Company's current major areas of focus are the Phillips River mining leases.
Ongoing expenditure is required to establish further ore resources in the various projects areas through drilling and other exploration techniques.

The Board meets regularly to monitor the exploration program and review results.

 

Fluctuating prices

The Company's anticipated revenues will be subject to fluctuating commodity prices. The Company has developed appropriate risk management programs to control the effect of volatility in the price of the commodities.

 

Title to assets

The Company's ability to continue operation and exploration of its areas of interest is dependent upon its retaining title to the subject property. The Board engages the services of an independent tenement manager to oversee this important function.

 

The Role of Shareholders

The Board of Directors aims to ensure that shareholders are informed of all major developments affecting the Company's state of affairs. Information is communicated to shareholders as follows:

 

• The annual report is distributed to all shareholders (unless a shareholder has specifically requested not to receive the document). The Board ensures that the annual report includes relevant information about the operations of the Company during the year, changes in the state of affairs of the Company and details of future developments, in addition to the other disclosures required by the Corporations Law.
• The half-yearly report contains summarised financial information and a review of the operations of the Company during the period. The half-year financial report is prepared in accordance with the requirements of the applicable Accounting Standards and the Corporations Law and is lodged with the Australian Securities Investment Commission and the Australian Stock Exchange.
• The financial report is sent to any shareholder who requests it. The Company also lodges quarterly reports in line with Australian Stock Exchange requirements.

 

Proposed major changes in the Company which may impact on share ownership rights are submitted to a vote of shareholders.

The Company provides regular briefing of stock brokers, media and other market related information services.

The Board encourages the participation of shareholders at General Meetings to ensure a high level of accountability and identification with the consolidated entity's strategy and goals. Important issues are presented to the shareholders as single resolutions.

The shareholders are responsible for voting on the appointment of directors.