Corporate Governance Statement

A listed entity should disclose:
(a) the respective roles and responsibilities of its board and management; and
(b) those matters expressly reserved to the board and those delegated to management.

The Company has established the functions reserved to the Board and has set out these functions in its Board Charter. The Board is responsible for oversight of management and the overall corporate governance of the Company including its strategic direction, establishing goals for management and monitoring the achievement of those goals, monitoring systems of risk management and internal control, codes of conduct and legal compliance.

The Company does not currently employ a Managing Director. The Board is of the view that the Company is not of sufficient size, nor are its operations of such complexity to require a Managing Director at the present time. The Company may appoint a Managing Director at some stage in the future and following this, the responsibility for the operation and administration of the Company will be delegated by the Board to the Managing Director and management team. The Board will ensure that both the Managing Director and the management team are appropriately qualified and experienced to discharge their responsibilities and have procedures in place to monitor and assess their performance. The management team (if appointed) will be responsible for supporting and assisting the Managing Director to conduct the general operations and financial business of the Company in accordance with the delegated authority of the Board and to progress the strategic direction provided by the Board.

A listed entity should:
(a) Undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and
(b) Provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director.

The Company is currently not of a relevant size that justifies the formation of a separate Remuneration and Nomination Committee. Matters typically dealt with by such a Committee are dealt with by the Board of Directors.

The Company undertakes appropriate checks before appointing a new director or executive. These checks include checks about the person’s character, experience, education and any criminal record or bankruptcy record.

The Company provides all the material information to security holders to assist in their decision to elect or re-elect a director. The information provided includes:

• biographical details; including relevant qualifications and skills;
• details of any other directorships;
• any material adverse information revealed by background checks;
• positions or interest that might impact independent judgement; and
• term of the office current served by the director.

Companies should have a written agreement with each director and senior executive setting out the terms of their appointment.

All directors and senior executives are appointed through a written agreement that sets out their duties, rights and responsibilities.

The company secretary of a listed entity should be accountable to the board, through the chair, on all matters to do with the proper functioning of the board.

The Company Secretary, Ms Sarah Smith, is accountable directly to the Board, through the Chairman, on all matters to do with the proper functioning of the Board.

A listed entity should:
(a) Have a diversity policy in place which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them;
(b) Disclose that policy or a summary of it; and
(c) Disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them and either:
(1) The respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes; or
(2) If the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators,” as defined in and published under that Act.

The Company has adopted a diversity policy which can be viewed on its website. Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. The company is committed to diversity and recognises the benefits arising from employee and board diversity.

The Diversity Policy outlines the requirements for the Board to develop objectives for achieving diversity, and annually assess both the objectives and the progress in achieving those objectives. To assist in fostering diversity, the policy includes the requirement for the Company to take diversity of background into account (in addition to candidates’ skills and experience in a variety of the specified fields) when selecting new Directors, senior management and employees.

The Board is responsible for monitoring Company performance in meeting the Diversity Policy requirements and achieving these objectives in the future as director and senior executive positions become vacant and appropriately qualified candidates become available.

Other than as described above, the Company has not yet set measurable objectives for achieving gender diversity. The Company is currently not of a size that justifies the establishment of measurable diversity objectives. As the Company develops, the Board will seek to develop a reporting framework in the future to report the Company’s progress against the objectives and strategies for achieving a diverse workplace which can be used as a guide to be used by the Company to identify new Directors, senior executives and employees.

An executive office holding below the Board level, this being the position of Company Secretary, is held by a female contractor to the Company.

Full details of the Company’s Diversity Policy can be found on the Corporate Governance page of the Company’s website.

A listed entity should:
(a) Have and disclose a process for periodically evaluating the performance of the board, its committees, and individual Directors; and
(b) Disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.

The Board has developed an informal process for performance evaluation whereby the performance of all Directors is reviewed regularly by the Chair. The Board as a whole may then hold a facilitated discussion during which each Board member has the opportunity to raise any matter, suggestion for improvement or criticism with the Board as a whole. The Chair of the Board may also meet individually with each Board member to discuss their performance. Non-executive Directors may also meet to discuss the performance of the Chair or the Managing Director, where relevant. Directors whose performance is consistently unsatisfactory may be asked to retire.

Due to the changes to the Board during the period, no formal performance evaluations for the Board or its directors was undertaken during the reporting period. Going forward, however, it is the Company’s intention that all Directors will receive annual individual performance evaluations in accordance with the Board Charter and Evaluation Policy.

The board of a listed entity should:
(a) Have a nomination committee which:
(1) Has at least three members, a majority of whom are independent Directors; and
(2) Is chaired by an independent director, and disclose:
(3) The charter of the committee;
(4) The members of the committee; and
(5) As at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

(b) If it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively.

The Board is currently not of a relevant size that justifies the formation of a separate Nomination Committee. Matters typically dealt with by such a committee detailed in a separate charter which describes its role, composition, functions and responsibilities, are dealt with by the Board of Directors. A copy of the charter is set out on the Company website.

The Board oversees the appointment and induction process for Directors and the selection, appointment and succession planning process of the Company’s Managing Director, where relevant. When a vacancy exists or there is a need for a particular skill, the Board, determines the selection criteria that will be applied. The Board will then identify suitable candidates, with assistance from an external consultant if required, and will interview and assess the selected candidates. Directors are initially appointed by the Board and must stand for re-election at the Company’s next Annual General Meeting of shareholders. Directors must then retire from office and nominate for re-election at least once every three years with the exception of the Managing Director.

A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.

Given the current size and stage of development of the Company the Board has not yet established a formal board skills matrix. Gaps in the collective skills of the Board are regularly reviewed by the Board as a whole, with the Board proposing candidates for directorships having regard to the desired skills and experience required by the Company as well as the proposed candidates’ diversity of background.

A listed entity should disclose:
(a) The names of the Directors considered by the board to be Independent Directors;
(b) If a Director has an interest, position, association or relationship that might cause doubts about their independence as a director but the board is of the opinion that their independence isn’t compromised, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and
(c) The length of service of each Director.

The Board has considered the guidance to Principle 2 and in particular the relationships affecting independent status. In its assessment of independence, the Board considers all relevant facts and circumstances. Relationships that the Board will take into consideration when evaluating independence are whether a Director:

• is a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder of the Company;
• is employed, or has previously been employed in an executive capacity by the Company or another Company member, and there has not been a period of at least three years between ceasing such employment and serving on the Board;
• has within the last three years been a principal of a material professional advisor or a material consultant to the Company or another Company member, or an employee materially associated with the service provided;
• is a material supplier or customer of the Company or other Company member, or an officer of or otherwise associated directly or indirectly with a material supplier or customer; or
• has a material contractual relationship with the Company or another Company member other than as a Director.

The following Directors are currently considered by the Board to be independent:
Mr Robert McCauley; and
Mr Robin Armstrong.

A majority of the board of a listed entity should be Independent Directors.

The Board comprises of a majority of independent directors. There are currently 3 directors on the Board, all 2 of which are considered independent being Mr Robert McCauley and Mr Robin Armstrong.

The chair of the board of a listed entity should be an Independent Director and, in particular, should not be the same person as the CEO of the entity.

The Chairman of Hardey Resources is Mr Terence Clee. Mr Clee is not an independent director. The Company intends to seek out and appoint an independent chairman in the future as operations expand; however, the Company believes that the current Board structure is best suited to enable the Company to deliver shareholder value.

A listed entity should have a program for inducting new Directors and provide appropriate professional development opportunities for Directors to develop and maintain the skills and knowledge needed to perform their role as Directors effectively.

The Board is responsible for conducting new Director inductions. The process for this is outlined in 2.1 above. Professional development opportunities are considered on an individual Director basis, with opportunities provided to individual Directors where appropriate.

The Board may seek independent external professional advice as considered necessary at the expense of the Company, subject to prior consultation with the Chairman.

A listed entity should:
(a) Have a code of conduct for its Directors, senior executives and employees; and
(b) Disclose that code or a summary of it.

The Company recognises the importance of establishing and maintaining high ethical standards and decision making in conducting its business and is committed to increasing shareholder value in conjunction with fulfilling its responsibilities as a good corporate citizen. All Directors, managers and employees are expected to act with the utmost integrity, honesty and objectivity, striving at all times to enhance the reputation and performance of the Company.

The Company has established a Code of Conduct which can be viewed on its website. Unethical practices, including fraud, legal and regulatory breaches and policy breaches are required to be reported on a timely basis to management.

The board of a listed entity should:
(a) Have an audit committee which:
(1) Has at least three members, all of whom are Non-Executive Directors and a majority of whom are Independent Directors; and
(2) Is chaired by an Independent Director, who is not the chair of the board, and disclose:
(3) The charter of the committee;
(4) The relevant qualifications and experience of the members of the committee; and
(5) In relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings.

The Directors do not view that the size of the Company warrants a separate Audit Committee.

All matters that might properly be dealt with by the Audit & Risk Committee are dealt with by the full Board. The Board is of the view that the experience and professionalism of the persons on the Board is sufficient to ensure that all significant matters are appropriately addressed and actioned. Further, the Board does not consider that the Company is of sufficient size to justify the appointment of additional Directors for the sole purpose of satisfying this recommendation as it would be cost prohibitive and counterproductive.

As the operations of the Company develop, the Board will reassess the formation of an Audit Committee.

The Company’s Corporate Governance Plan includes an Audit and Risk Committee Charter, which discloses its specific responsibilities, and processes for safeguarding the integrity of its corporate reporting. The Charter for this committee is disclosed on the Company’s website.

The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity 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 entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

A written declaration has been provided by the Executive Director in accordance with Section 295A of the Corporations Act to the Board in regard to the preparation of financial reports. The declaration confirms that the financial records of the entity 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 performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which operating effectively.

A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer any questions from security holders relevant to the audit.

The Company’s external auditor is invited to, and attends, the Company’s Annual General Meeting. The auditor’s presence is made known as the meeting and shareholders are provided with an opportunity to ask questions of them in relation to the accounts of the Company and the performance and findings of the audit.

A listed entity should:
(a) Have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and
(b) Disclose that policy or a summary of it.

The Company has established policies and procedures to ensure timely disclosure of all material matters and ensure that investors have access to information on financial performance. This ensures the Company is compliant with the information disclosure requirements under the ASX Listing Rules. The policies and procedures include a Continuous Disclosure Policy that includes identification of matters that may have a material impact on the price of the Company’s securities, notifying them to the ASX, posting relevant information on the Company’s website and issuing media releases.

Matters involving potential market sensitive information must first be reported to the Managing Director (or in the absence of a Managing Director, the Chair) either directly or via the Company Secretary. The Managing Director/Chair will advise the Board if the issue is important enough and if necessary seek external advice. In all cases the appropriate action must be determined and carried out in a timely manner in order for the Company to comply with the Information Disclosure requirements of the ASX.

Once the appropriate course of action has been agreed upon, either the Managing Director/Chair or Company Secretary will disclose the information to the relevant authorities, being the only authorised officers of the Company who are able to disclose such information. Board approval is required for market sensitive information such as financial results and material transactions.

A copy of the Continuous Disclosure Policy is available on the Company’s website The Board receives regular reports on the status of the Company’s activities and any new proposed activities. Disclosure is reviewed as a routine agenda item at Board meetings.

A listed entity should provide information about itself and its governance to investors via its website.

In line with adherence to the continuous disclosure requirements of the ASX all shareholders are kept informed of major developments affecting the Company. This disclosure is through regular shareholder communications including the Annual Report, Half Yearly Report, the Company website and the distributions of specific releases covering major transactions and events or other price sensitive information.

The Company values its relationship with shareholders and understands the importance of communication with them in accordance with the requirements of the ASX. To keep shareholders informed, the Company maintains a website at www.hardeyresources.com.au.

A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.

The Company has formulated a Security Holder Communication Policy which can be viewed on the Company’s website.

A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.

The Company’s Security Holder Communication Policy addresses security holder attendance at Security Holder Meetings.

A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.

The Company encourages the use of electronic communication and offers Security Holders the option to receive and send electronic communication to the Company and its share registry where possible.

The board of a listed entity should:
(a) Have a committee or committees to oversee risk, each of which:
(1) Has at least three members, a majority of whom are Independent Directors; and
(2) Is chaired by an Independent Director; and disclose:
(3) The charter of the committee;
(4) The members of the committee; and
(5) As at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

(b) If it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework.

The Directors do not view that the size of the Company warrants a separate Risk Committee. All matters that might properly be dealt with by the Risk Committee are dealt with by the full Board.The Board is of the view that the experience and professionalism of the persons on the Board is sufficient to ensure that all significant matters are appropriately addressed and actioned. Further, the Board does not consider that the Company is of sufficient size to justify the appointment of additional Directors for the sole purpose of satisfying this recommendation as it would be cost prohibitive and counterproductive.

The Board is responsible for overseeing the establishment and implementation of effective risk management and internal control systems to manage the Company’s material business risks and for reviewing and monitoring the Company’s application of those systems.

Major risk categories reported include operational risk, environmental risk, sustainability, statutory reporting and compliance, financial risks (including financial reporting, treasury, information technology and taxation), and market related risks. The Company’s Corporate Governance Plan includes a Risk Management Policy. This can be viewed on the Company website.

(a) Review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and
(b) Disclose, in relation to each reporting period, whether such a review has taken place.

The Boards responsible for reviewing the Company’s risk management framework. Risk framework reviews may occur more or less frequently than annually as necessitated by changes in the Company and its operating environment.

A risk framework review has not taken place during the financial year ended 30 June 2017. The Directors are of the view that the current size of the Company and scale of operations does not warrant a formal risk framework review.

A risk framework review is expected to be performed during the Company’s financial year ending 30 June 2018 should the Company’s operations and activities justify this.

A listed entity should disclose:
(a) If it has an internal audit function, how the function is structured and what role it performs; or
(b) If it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk and internal control processes.

Given the Company’s size and current stage of development it does not have an internal audit function.

As set out in Recommendation 7.1, the Board is responsible for overseeing the establishment and implementation of effective risk management and internal control systems to manage the Company’s material business risks and for reviewing and monitoring the Company’s application of those systems

A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.

The Audit and Risk Committee Charter requires the Audit and Risk Committee (or in its absence the Board) to assist management to determine whether the Company has any material exposure to economic, environmental and social sustainability risks, and, if it does, how it manages or intends to manage those risks. The Company discloses this information in its Annual Report.

The board of a listed entity should:
(a) Have a remuneration committee which:
(1) Has at least three members, a majority of whom are Independent Directors; and
(2) Is chaired by an Independent Director; and disclose:
(3) The charter of the committee;
(4) The members of the committee; and
(5) As at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

(b) If it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for Directors and senior executives and ensuring that such remuneration is appropriate and not excessive.

As previously stated in Principle 2, the Board is currently not of a relevant size that justifies the formation of a separate Remuneration & Nomination Committee. Matters typically dealt with by such a committee detailed in a separate charter including the processes to set the level and composition of remuneration for Directors and senior executives and ensuring that such remuneration is appropriate and not excessive, are dealt with by the Board of Directors. A copy of the charter is set out on the Company website.

A listed entity should separately disclose its policies and practices regarding the remuneration of Non-Executive Directors and the remuneration of Executive Directors and other senior executives.

The Company’s policies and practices regarding the remuneration of executive and Non-Executive Directors and other senior executives are disclosed in the Company’s Annual Report.

A listed entity which has an equity-based compensation remuneration scheme should:
(a) Have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and
(b) Disclose that policy or a summary of it.

The Company has no equity based compensation schemes.