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 4.10.3, 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 why the Recommendation has not been followed. Unless otherwise stated, the Company has adhered to the ASX Recommendations for the year to 30 June 2014.
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 Delegation of Authority Framework, which clearly sets out the authorisations delegated to each level of senior executives, management and staff. The Delegation of Authority Framework is approved by the Board and reviewed on a regular basis. The Delegation of Authority Framework was updated and approved on 19 June 2014.
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 and/or Chief Executive Officer is reviewed by the Board.
The performance of Key Management Personnel is reviewed by the Managing Director and/or Chief Executive Officer during the year, with a formal process conducted once a year by the Remuneration and Nomination Committee. Such performance is reviewed by comparing performance against pre-determined measures, examining the effectiveness of the individual and identifying areas for potential improvement.
Further details of how the Company assesses the performance of the Managing Director and/or Chief Executive Officer and Key Management Personnel are set out in the Remuneration Report in the Company’s Annual Report.
PRINCIPLE 2 – STRUCTURE THE BOARD TO ADD VALUE
At 30 June 2014, the Discovery Metals’ Board comprised of the following Directors:
- Jeremy Read (Executive Chairman);
- Ribson Gabonowe (Independent Non-Executive Director);
- Russell Luxford (Non-Executive Director).
Subsequently, the following appointment was made to the Discovery Metals’ Board:
- Royston Denysschen (Non-Executive Director).
Discovery Metals considers that its Board holds a diverse mix of skills appropriate for its size, type and activity at this point in the Company’s development. These are set out on the Company’s website and also in the Directors’ Report. The Company intends to undertake an externally facilitated structured review in FY15.
Ribson Gabonowe is currently the only Independent Non-Executive member of the Discovery Metals Board.
Jeremy Read was also an Independent Non-Executive Director, however, on 26 June 2014 he was appointed as the Executive Chairman for the period until 31 December 2014. After which, the Company will appoint a new Independent Non-Executive Chairman on a permanent basis.
Russell Luxford was appointed as a Non-Executive Director pursuant to the share placement made to Blumont Group Limited and Mr Royston Denysschen was appointed a Non-Executive Director pursuant to the share placement made to Transamine Trading S.A.
The roles of Chairman and Chief Executive Officer were not exercised by the same person.
The current Board composition does not comply with the ASX Recommendations but the Company considers that the current composition of the Board is appropriate given the Company’s circumstances and the share placements made to Blumont Group Limited and Transamine Trading S.A. As the proposed convertible note transaction with Blumont Group Limited did not proceed, the Company considers that Russell Luxford is an Independent Non-Executive Director for the year commencing 1 July 2014.
Remuneration and Nomination Committee
The Company has a Remuneration and Nomination Committee. Refer to Principle 8 for a summary of the Remuneration and Nomination Committee.
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. Further, directors are required to disclose any new interests that could potentially conflict with their duty to the Company prior to each Board meeting. 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 Company has a Board Induction Pack to assist new directors in familiarising themselves with the Company. This is updated on an as needed 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 Chairperson is required, which will not be unreasonably withheld.
Further, the Company has entered into Deeds of Indemnity, Insurance and Access with each director and officer of the Company.
Board, Committee and Director review
The Board is committed to periodically reviewing the Board, its Committees and the Directors’ performance and effectiveness. The Board undertook externally facilitated structured reviews in August 2011 and December 2012 and has not undertaken a review in 2013.
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, the activities of the Company and the Company's current operating context, 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.
The Company will revisit this statement in 12 months’ time and/or when any applicable vacancy becomes 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 2013, the Company had:
- No female directors out of a total of 5 directors;
- No females holding senior executive positions out of a total of 3 senior executive positions (Managing Director, Chief Financial Officer and Chief Operating Officer);
- Approximately 79 female employees out of a total of 613 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 and Risk Management Committee
Following the Board Restructure, the Board reconstituted the Audit and Risk Management Committee (ARM Committee).
The ARM Committee has a formal charter (previously the AFR Committee Charter), which is available here. The ARM Committee comprises:
- Russell Luxford (Chairman);
- Ribson Gabonowe; and
- Jeremy Read.
The ARM Committee is comprised of the Executive Chairman and an Independent Non-Executive Director, and is chaired by a Non-Executive Director. All members of the ARM Committee have knowledge of finance and accounting practices as well as risk management practices (see details of each ARM Committee Member’s respective skills and experience on the Board of Directors page).
The current composition of the ARM Committee does not comply with the ASX Recommendation in that a majority of members are not independent but the Company considers the current composition is appropriate given the Company’s circumstances.
The ARM Committee meets as required, but at a minimum at least twice a year. The Chief Executive Officer (interim)/Chief Operating Officer and Chief Financial Officer are invited to attend the ARM Committee meetings.
The Board and ARM 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 ARM 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, the Corporations Act 2001 (Cth) and the Botswana Stock Exchange Listing Rules.
The Chief Executive Officer has primary responsibility for ensuring the market is properly informed.
In accordance with Listing Rule 5.6 and the 2012 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. In July 2013, the Company restated its Ore Reserves and Mineral Resources in accordance with the 2012 edition of the JORC Code.
PRINCIPLE 6 – RESPSECT THE RIGHTS OF SHAREHOLDERS
Discovery Metals has adopted a Shareholders 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 announcements 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 and potential investors 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
Audit and Risk Management Committee
Refer to Principle 4 above for a summary of the Audit and Risk Management Committee.
Risk Management Policy
Discovery Metals has also adopted 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. it is intended that the Board and ARM Committee receive regular reports from management in respect of the effectiveness of the Company’s material business risks.
Section 295A Corporations Act 2001 (Cth)
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
The Board has a Remuneration and Nomination Committee (R&N Committee). The R&N Committee currently comprises:
- Ribson Gabonowe (Chairman);
- Russell Luxford; and
- Jeremy Read.
The R&N Committee is comprised of a Non-Executive Director and Executive Chairman and is chaired by an Independent Non-Executive Director. The R&N Committee meets as required, but at a minimum at least twice a year.
The current composition of the R&N Committee does not comply with the ASX Recommendation in that a majority of members are not independent but the Company considers the current composition is appropriate given the Company’s circumstances.
The remuneration levels of directors and senior executives are reviewed by the R&N Committee and approved by resolution of the Board (with abstentions from relevant directors where there is a conflict of interest). Where the Board or R&N 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.