Corporate Governance

The Board of Directors is responsible for the corporate governance of the company. The Board guides and monitors the business activities and affairs of the company on behalf of the shareholders by whom they are elected and to whom they are accountable. The company has adopted systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the company’s needs. The Corporate Governance Statement has been structured with reference to the Australian Stock Exchange Corporate Governance Council’s (Council) Principles of Good Corporate Governance and Best Practice Recommendations to the extent that they applicable to the company.

Information about the company’s corporate governance practices are set out below. These practices were implemented following Bathurst Resources’ IPO in January 2008.

Board of Directors

The company’s Constitution provides that the number of directors shall not be less than three. There is no requirement for any shareholding qualification.

If the company’s activities increase in size, nature and scope, the size of the Board will be reviewed periodically and the optimum number of directors required to adequately supervise the company’s activities will be determined within the limitations imposed by the Constitution and as circumstances demand.

The membership of the Board, its activities and composition is subject to periodic review. The criteria for determining the identification and application of a suitable candidate for the Board shall include quality of the individual, background of experience and achievement, compatibility with other board members, credibility within the company’s scope of activities, intellectual ability to contribute to board duties and physical ability to undertake board duties and responsibilities.

Directors are initially appointed by the full Board, subject to election by shareholders at the next annual general meeting. Under the company’s Constitution the tenure of a director (other than managing director, and only one managing director where the position is jointly held) is subject to reappointment by shareholders not later than the third anniversary following his or her last appointment. Subject to the requirements of the Corporations Act 2001, the Board does not subscribe to the principle of retirement age and there is no maximum period of service as a director. A managing director may be appointed for the period and on any terms the directors think fit and, subject to the terms of any agreement entered into, the appointment may be revoked on notice.

The company is not currently of a size, nor are its affairs of such complexity, to justify the formation of other separate or special committees at this time. The Board as a whole is able to address the governance aspects of the full scope of the company’s activities and to ensure that it adheres to appropriate ethical standards.

Appointments to other boards

Directors are required to take into consideration any potential conflicts of interest when accepting appointments to other boards.

Independent professional advice

The Board has determined that individual directors have the right in connection with their duties and responsibilities as directors, to seek independent professional advice at the company’s expense. With the exception of expenses for legal advice in relation to director’s rights and duties, the engagement of an outside adviser is subject to prior approval of the Chairman and this will not be withheld unreasonably.

Continuous review of corporate governance

Directors consider, on an ongoing basis, how management information is presented to them and whether such information is sufficient to enable them to discharge their duties as directors of the company. Such information must be sufficient to enable the directors to determine appropriate operating and financial strategies from time to time in light of changing circumstances and economic conditions. The directors recognise that coal exploration and production is a business with inherent risks and that operational strategies adopted should, notwithstanding, be directed towards improving or maintaining the net worth of the company.

ASX Principles of Good Corporate Governance

The Board has reviewed its current practices in light of the ASX Principles of Good Corporate Governance and Best Practice Guidelines 2004 with a view to making amendments where applicable after considering the company’s size and the resources it has available.

As the company’s activities develop in size, nature and scope, the size of the board and the implementation of any additional formal corporate governance committees will be given further consideration.

The Board and management have established a range of policies, practices and arrangements that reflect the recommendations.

Those policies, practices and arrangements are reviewed regularly. Some of those arrangements are set out below: