The Board of Directors of Discovery Metals Limited (Company or Discovery Metals) is responsible for establishing the corporate governance framework for the Company, having regard to the ASX Corporate Governance Council Corporate Governance Principles and Recommendations with 2010 Amendments (2nd edition) (ASX Recommendations). The Board is committed to best practice corporate governance principles appropriate for the size, type and activity of Discovery Metals.
Details of the main policies of corporate governance adopted by the Company can be accessed via links in this statement.
In accordance with Listing Rule 4.10, this Corporate Governance Statement discloses the extent to which the Company has followed the ASX Recommendations. Where a Recommendation has not been followed, the Company will disclose the reasons on why the Recommendation has not been followed. Unless otherwise stated, the Company has adhered to the ASX Recommendations for the year to 30 June 2012.
PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
The Board is responsible for the overall corporate governance of the Company.
Functions of the Board and delegations to Management
Discovery Metals has adopted a Board Charter, which sets out the functions reserved to the Board. The Board Charter is available here.
The Company also adopted a Financial Delegations Matrix, which clearly sets out the authorisations delegated to each level of management and staff. The Financial Delegations Matrix is approved by the Board.
Terms of Director’s appointment
Each Director has entered into a formal letter of appointment with the Company, which sets out core terms of the director’s responsibilities and obligations to the Company.
The performance of the Managing Director is reviewed annually by the Board against established key performance indicators that reflect the challenges and growth of the Company. The Board reviewed the Managing Director's performance against these criteria in January 2012.
The performance of Key Management Personnel is conducted regularly by the Managing Director during the year, with a formal process conducted once a year by the Remuneration Committee. Such performance is reviewed by comparing performance against pre-determined measures, examining the effectiveness of the individual and identifying areas for potential improvement. A review of Key Management Personnel was completed in January 2012.
Further details of how the Company assesses the performance of the Managing Director and Key Management Personnel are set out in the Remuneration Report.
PRINCIPLE 2 – STRUCTURE THE BOARD TO ADD VALUE
The Discovery Metals Board comprises the following Directors:
- Gordon Galt (Independent Non-Executive Chairman)
- Stuart Bradley Sampson (Managing Director)
- Morrice Cordiner (Independent Non-Executive Director)
- Ribson Gabonowe (Independent Non-Executive Director)
- Niall Lenahan (Independent Non-Executive Director)
- Jeremy Read (Independent Non-Executive Director)
- John Shaw (Independent Non-Executive Director)
Discovery Metals considers that its Board holds a diverse mix of skills appropriate for its size, type and activity.
All non-executive members of the Discovery Metals Board are independent directors, including the Chairman. The roles of the Chairman and Managing Director are not exercised by the same person.
Conflict of interest
Directors are required to keep the Company informed, on an ongoing basis, of any interest that could potentially conflict with their duty to the Company. Where the Board believes a significant conflict exists, the director concerned does not receive the relevant Board papers, and is not present at the meeting whilst that item is considered.
The Board believes that establishing a separate Nominations Committee at this point in time would contribute little to the Company’s effective governance and accordingly the nomination of new directors and key management personnel is reviewed by the Board as a whole and approved by resolution of the Board.
When the need for a new director is identified, selection is based on the skills and experience of prospective directors, having regard to the present and future needs of the Company and the Company’s Diversity and Equal Opportunity Policy. Any director so appointed must then stand for election at the next general meeting of the Company.
For specific Key Management Personnel appointments, the Board forms specific sub-committees based on the skills and experience of the directors. Such appointment is ultimately reviewed by the Board as a whole.
The Company has established a separate Remuneration Committee (see below).
The Company has a Board Induction Pack to assist new directors in familiarising themselves with the Company. This is updated on an as needs basis.
Independent professional advice
Each director has a right to access all relevant Company information and the Company’s executives. Directors have the right, in connection with their duties and responsibilities as directors, to seek independent professional advice at the Company’s expense. Prior approval of the Chairman is required, which will not be unreasonably withheld.
Board, Committee and Director review
The Board is committed to periodically reviewing the Board, its Committees and the Directors’ performance and effectiveness. In August 2011, the Board commenced a structured review utilising an independent consulting group to provide assistance. The Company has progressively implemented recommendations suggested by the independent consultants throughout the reporting period.
PRINCIPLE 3 – PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING
Code of Conduct
Discovery Metals has adopted a Code of Conduct to guide executives, management and employees in carrying out their duties and responsibilities. The Code of Conduct sets out the principles and standards which the Board, management and employees of the Company are expected to adopt when dealing with each other, shareholders and the community as a whole.
The Code of Conduct is available here.
Diversity and Equal Opportunity
Discovery Metals has adopted a Diversity and Equal Opportunity Policy, a copy of which is available here.
The Company acknowledges the expectation to address gender diversity within the Company.
In light of the type, size, attributes of the industry and activities of the Company, the Board does not currently consider it appropriate to set a quota-based target for the proportion of women to sit on the Board or to hold senior executive positions. This is because:
- there are currently no vacant Board positions or senior executive positions available;
- there are no current expectations that such positions will become vacant in the upcoming reporting periods; and
- the Board does not consider it prudent to increase the size of the Board or senior executive positions during the upcoming reporting periods.
The Company will revisit this statement in 12 months’ time and/or when a vacancy becomes available.
The Company further notes that between October 2011 and April 2012, it went through an extensive and comprehensive recruitment process with external recruitment agencies to identify female directors with sufficient mining and finance expertise. No suitable female candidates were available. In the event that a future vacancy arises, the Company will proactively:
1) establish and select from a diverse range of candidates, including female candidates; and
2) make a decision based on the merit of the candidates.
Regarding gender diversity in the Company for the current reporting period to 30 June 2012, the Company had:
- No female directors out of a total of 7 directors;
- No females holding senior executive positions out of a total of 5 senior executive positions;
- 64 female employees out of a total of 494 employees in the Company.
Securities Trading Policy
Discovery Metals has adopted a Securities Trading Policy which specifies when directors, employees, their related parties and other people associated with the Company and its subsidiaries may deal in Discovery Metals securities.
Dealing in the Company’s securities is not permitted at any time during a closed trading period, or whilst in possession of insider information.
The Securities Trading Policy is available here.
PRINCIPLE 4 – SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
Audit & Financial Risk Committee
The Board has established an Audit & Financial Risk Committee (AFR Committee). The AFR Committee has a formal charter, which is available here. The AFR Committee comprises:
- Niall Lenahan (AFR Chairman)
- Morrice Cordiner (AFR Member)
- John Shaw (AFR Member)
The AFR Committee is comprised of independent non-executive directors and is chaired by an independent non-executive director. All members of the AFR Committee have a good knowledge of finance and accounting practices (see details of each AFR Committee Member’s respective skills and experience on the Board of Directors page).
The AFR Committee meets as required, but at a minimum at least twice a year. The Managing Director and Chief Financial Officer are invited to attend the AFR Committee meetings.
The Board and AFR Committee also, to a certain extent, rely on the auditors (Ernst & Young) to ensure compliance with relevant accounting standards, and give full co-operation to its auditors without absolving itself of its responsibility. Where appropriate, the Board and the AFR Committee engage independent experts or professional advisors to assist with the identification and/or management of any key risk areas identified.
PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE
Discovery Metals has adopted a Continuous Disclosure Policy, which is available here.
Discovery Metals is committed to providing up-to-date information to its shareholders and the broader investment community in accordance with its continuous disclosure obligations under the ASX Listing Rules and the Corporations Act 2001 (Cth).
The Managing Director has primary responsibility for ensuring the market is properly informed.
In accordance with Listing Rule 5.6 and the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code), Discovery Metals has procedures in place to ensure it obtains the relevant competent person's signoff in relation to the disclosure of exploration results, Mineral Resources and Ore Reserves.
PRINCIPLE 6 – RESPSECT THE RIGHTS OF SHAREHOLDERS
Shareholder Communications Policy
Discovery Metals has adopted a Shareholder Communications Policy, a copy of which is available here.
Discovery Metals aims to ensure that its shareholders, on behalf of whom the Board acts, are informed of all information necessary to assess the performance of the directors and the Company. Information is communicated to shareholders and the market through:
- the Annual Report;
- other periodic reports (Half Year and Quarterly Reports), which are lodged through the ASX/BSE and are available for shareholder scrutiny;
- other announcements made in accordance with the ASX Listing Rules;
- special purpose information memoranda issued to shareholders, as appropriate;
- the Annual General Meeting and other meetings, as appropriate;
- the Company’s website.
Discovery Metals email alert service
Discovery Metals’ shareholders are encouraged to sign up to the Discovery Metals Email Alert Service. Please click here to sign up for the Email Alert Service.
Discovery Metals shareholders are encouraged to attend the Company’s Annual General Meeting (AGM). Shareholders can view the Managing Director’s AGM presentation on the Company’s website. Shareholders are given the opportunity to ask questions at the AGM. The external auditor attends the AGM and is available to answer questions in relation to the conduct of the audit.
PRINCIPLE 7 – RECOGNISE AND MANAGE RISK
Non-Financial Risk Committee
The Board has established a Non-Financial Risk Committee (NFR Committee). The NFR Committee has a formal charter, which is available here. The NFR Committee comprises:
- Jeremy Read (NFR Chairman)
- Ribson Gabonowe (NFR Member)
- John Shaw (NFR Member)
The NFR Committee is comprised of independent non-executive directors and is chaired by an independent non-executive director. All members of the NFR Committee have a good knowledge of risk management practices (see details of each NFR Committee Member’s respective skills and experience on the Board of Directors page).
The NFR Committee meets as required, but at a minimum at least twice a year. The Managing Director, Chief Financial Officer and General Manager Technical are invited to attend the NFR Committee meetings.
Further, the Company’s Audit & Financial Risk Committee monitors the Company’s financial risks.
The Company's commitment to sustainability is led by the Board. The NFR Committee monitors the Sustainability Policy and processes of the Company. The Boseto Operations Sustainability Team is well underway with devleopment and implementation of systems and processes, supported by a team of external consultants in the areas of:
- risk management;
- health and safety;
- environment; and
Risk Management Policy
Discovery Metals has a Risk Management Policy, a copy of which is available here.
The Company has designed and implemented a risk management and internal control system to manage the Company’s material business risks. The Board, AFR Committee and NFR Committee receive regular reports from management in respect of the effectiveness of the Company’s material business risks.
Section 295A Corporations Act
The Board receives assurances from the Discovery Metals Managing Director and Chief Financial Officer that any declaration as to the financial records and statements made pursuant to s295A of the Corporations Act 2001 (Cth) has been founded on a system of risk management and internal controls and that the system is operating effectively in all material respects in relation to financial reporting risks.
PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY
- Morrice Cordiner (REM Chairman)
- Niall Lenahan (REM Member)
- Jeremy Read (REM Member)
The REM Committee is comprised of independent non-executive directors and is chaired by an independent non-executive director. The REM Committee meets as required, but at a minimum at least twice a year.
The remuneration levels of directors and senior executives are reviewed by the REM Committee and approved by resolution of the Board (with abstentions from relevant directors where there is a conflict of interest). Where the Board or REM Committee considers that particular expertise or information is required, appropriate external advice may be taken and reviewed prior to a final decision by the Board.
The Board policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The Board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required.
Non-Executive Director Fees
The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders. Fees for non-executive directors are not linked to the performance of the consolidated group. However, to align directors’ interest with shareholder interest, the directors are encouraged to hold shares in the Company.
A copy of the Company's Constitution is available here.