Southern Hemisphere Mining

Southern Hemisphere Mining Ltd
Corporate Governance Policies

1. Board Charter
2. Corporate Code of Conduct
3. Trading in the Company’s Securities
4. Disclosure Policy
5. Communicating with Shareholders
6. Risk management
7. Audit and Risk Committee Charter
8. Remuneration and Nomination Committee Charter
 

Board Charter

The Board of Directors (“Board”) of Southern Hemisphere Mining Limited (“Company”) consider that the essential responsibility of directors is to oversee the Company’s activities for the benefit of shareholders, employees and other stakeholders and to protect and enhance shareholder value.

1. ROLE AND RESPONSIBILITIES OF THE BOARD
1.1 Purpose and Role

The primary role of the Board is to efficiently operate the Company’s mining and exploration operations to create long-term sustainable value for shareholders.

1.2 Responsibilities

The Board is responsible for the overall direction, management and corporate governance of the Company. The Board is also responsible for:

  1. Overseeing the management and corporate governance of the Company including its strategic direction.
  2. Adopting a strategic planning process, contributing to the development of, and approving a strategic plan that reflects the opportunities and risks of the Company’s business.
  3. Monitoring the Company’s organisational performance and the achievement of strategic goals and objectives.
  4. Appointing, and, if necessary, removing senior management including the managing director and the chief financial officer.
  5. Assessing the performance of senior management against the Company’s strategic plan, ensuring appropriate resources are available to senior management and that they are adequately experienced and trained.
  6. Reviewing and approving the Company’s business plans, annual budget and financial plans including major capital expenditure initiatives.
  7. Approving and monitoring the progress of major capital expenditure and other corporate projects including acquisitions and divestments.
  8. Monitoring and ensuring compliance with legal and regulatory requirements and the Company’s Code of Conduct.
  9. Monitoring financial performance and reporting including approval of the annual, half yearly and quarterly reports.
  10. Reviewing and approving the Company’s risk management systems and internal controls and ensuring that reporting procedures are effective.
  11. Delegating appropriate powers to executive directors and senior management to ensure the effective day-to-day management of the business.

The Board has established an Audit and Risk Committee and a Nomination and Remuneration Committee to assist and advise the Board on specific matters set out in the Charter of those Committees.

2. COMPOSITION AND APPOINTMENT OF DIRECTORS
2.1 Composition

There will be a minimum of 3 directors with a broad range of business expertise. The Board will comprise persons with a mix of qualifications, skills and experience. Each director must be qualified as required by the Business Corporations Act (British Columbia) to become, act or continue to act as director. There is no requirement for directors to hold shares in the Company.

Membership of the Board is disclosed in the annual report including whether a director is independent or not.

2.2 Appointment and orientation of new directors

Directors are appointed under the terms of the Articles of the Company. Appointments to the Board are based on merit and against criteria to maintain a balance of skills, expertise and experience. The chairman reviews the composition of the Board and the performance of each director to ensure that it continues to have a mix of skills and experience necessary for the conduct of the Company's activities.

Each director appointed to the Board is provided with a package of information on the Company, the responsibilities of a Board member and the Company’s corporate governance practices.

Each director appointed to the Board is able to meet with management of the Company to gain an understanding of the operating and strategic issues facing the Company and the business environment in which it operates.

2.3 Access to information and independent advice

Directors have access to any information they consider necessary to fulfil their responsibilities and to exercise independent judgement when making decisions. Directors have access to management to seek explanations and information from management. Directors may also seek explanations and information from the Company’s auditors as required.

Any director may, subject to discussion and agreement with other independent directors or the chairman, request the engagement of an outside advisor (at the Company’s expense) for independent professional advice they consider necessary to fulfil their responsibilities.

2.4 Meetings

The Board holds regular monthly meetings. Additional meetings may be convened as circumstances require.

Directors are expected to attend meetings of the Board and its committees on which they serve and to spend the time needed to properly discharge their duties and responsibilities and to review meeting materials before Board meetings and meetings of committees on which they serve.

Directors are encouraged to ask questions of, request information from, and raise any issue of concern with management. Senior management will be regularly involved in Board discussions.

2.5 Conflicts

Directors must disclose to the Board, and keep the Board advised on an ongoing basis, of any actual or potential conflict of interest or duty as soon as the situation arises.

If a conflict exists then it is expected that any director to whom the conflict relates will remove him or herself from any deliberations regarding the matter to which the conflict relates.

Directors are expected to inform the chairman of any proposed appointment to the board or executive of another public company as soon as possible.

2.6 Review of Board performance

The Board will conduct an annual review of its effectiveness and of its committees and the contribution of individual directors.

The Board will determine the manner and form of the performance review.

The Board will review this charter annually and make any amendments it determines to be necessary or desirable.

3. THE BOARD AND MANAGEMENT
3.1 Delegation to the managing director

Responsibility for the day-to-day management of the Company is delegated by the Board to the managing director, who is accountable to the Board.

The managing director will manage the Company in accordance with the strategy, plans and policies approved by the Board.

The Board has procedures in place to assess the performance of the managing director.

Where possible, the roles of the chairman and the managing director will be separate.

3.2 Responsibilities of the chairman

The chairman of the Board is appointed by the directors.

The chairman is responsible for:

  1. Chairing Board meetings and general meetings;
  2. Providing leadership to the Board and the Company;
  3. Facilitating effective discussions at Board meetings;
  4. Overseeing shareholder communications; and
  5. Ensuring there are processes and procedures in place to evaluate the performance of the Board, its committees and individual directors and that such evaluations are done.
3.3 Responsibilities of the managing director

The managing director is responsible for:

  1. Managing the business of the Company to ensure ongoing viability;
  2. Developing with the Board, and then implementing and monitoring strategic plans for the Company;
  3. Developing, implementing and monitoring annual budgets, business plans and financial plans;
  4. Implementing and monitoring all major capital expenditures, and other corporate projects including acquisitions, mergers and divestments, including the issue of securities;
  5. Developing and approving all material reporting and external communications by the Company;
  6. Acting as the primary channel of communication between the Board and senior management;
  7. Developing strategies for the development of the Company’s projects and, at the direction of the Board, overseeing the development of such projects;
  8. Developing and ensuring that appropriate systems and processes for the identification, assessment reporting and management of risks (including internal control and management information systems) are implemented, maintained and monitored and that these systems and processes are effective;
  9. Promoting and marketing the Company to investors;
  10. Advising the Board in relation to all relevant issues affecting the Company and its operational and financial performance;
  11. Establishing the agenda for Board meetings, in consultation with the other directors;
  12. Ensuring the proper implementation of the Company’s policies, procedures and systems; and
  13. Otherwise carrying out the day-to-day management of the Company.
4. APPOINTMENT OF AN EXTERNAL AUDITOR

The Board is responsible for the appointment of the external auditor.

The Company requires its external auditor to review, test and challenge its accounting policies, accounting processes and internal financial controls. Key aspects of the appointment and selection process are:

  1. The external auditor should be a respected accountancy firm with access to expert international accounting standards research relevant to mining and resource industries, demonstrable audit and quality control processes and substantial resources to carry out the assignment in Canada, Chile and Australia and if necessary, other jurisdictions.
  2. The Board will annually review the external auditor’s performance and independence and periodically benchmarks the cost and scope of the external audit engagement.
  3. The appointed external auditor must present an annual external audit proposal to the Board.

On engagement, the external auditor will have unfettered access to management, staff, records and company facilities and is permitted reasonable agreed time to conduct its audit.

Due to the current size and nature of the Company’s activities, the Board has not adopted a policy for rotation of external engagement partners, including auditors. The Board does not believe that such a policy would bring about significant efficiencies or enhancements. As the nature and scale of the Company’s activities change over time, the Board will look to adopt a formal policy when it is appropriate for the Company.

5. REPORTING

Proceedings of all Board meetings are minuted and signed by the Chairman or the chairman of the meeting. Board minutes are circulated to Directors and approved by the Board at the subsequent meeting.

CORPORATE CODE OF CONDUCT

Southern Hemisphere Mining Ltd and its subsidiaries (together the "Company") are committed to the highest standard of business conduct to ensure that the Company is considered reputable by the industry and other outside entities. This Code outlines the minimum standards of behaviour that must be followed by all employees of the Company. For the purposes of this Code "employees" includes directors, senior management, contractors and consultants.

The Board is responsible for ensuring that all employees are aware of the Code and that any person who does not comply with the Code is dealt with appropriately by executive management. Appropriate action may be counselling, disciplinary action or termination of employment.

All employees are all responsible for maintaining the Code and have a responsibility to report breaches of the Code to executive management or an appropriate Board member.

1. HONESTY INTEGRITY AND FAIRNESS

Employees must act honestly and with integrity in dealings on behalf of the Company, and always act in good faith and in the best interests of the Company. The Company cares about results and equally how those results were obtained. Employees do not use coercive or misleading practices or falsify or wrongly withhold information.

Employees must not enter into any arrangement or participate in any activity that would conflict with the interests of the Company or prejudice the performance of their duties.

All employees are under an obligation to use the Company’s funds, offices, vehicle, data, records, communications, computing facilities and any other Company property, only for the purpose of the Company’s business and not for any private or improper purpose, unless specifically authorised to do so by a director of the Company.

2. RESPECT FOR THE LAW

Respect for the law means that all employees accept and comply with the spirit, as well as the letter, of the laws and regulations, customs and business practices wherever the Company operates. Employees must notify a supervisor, manager or Board member (as appropriate) on becoming aware of any breach of law or regulation, or instances of unethical behaviour.

All employees must comply with the ethical and technical requirements of all regulatory and professional bodies, promote ethical behaviours and not engage in conduct likely to bring discredit on company.

The Company seeks to maintain an approach that preserves the integrity of any laws or regulations under which it operates.

3. CARE AND DILIGENCE

Employees are obliged to conduct themselves ethically and to achieve the highest quality in their work. All employees must exercise due care and diligence in fulfilling the functions of their individual position and level of responsibility. They must use the powers of office for a proper purpose, in the best interests of the Company as a whole and must not take improper advantage of their position. All employees have an obligation to be independent in judgment and actions and to take all reasonable steps to be satisfied as to soundness of all decisions taken.

4. AVOID CONFLICTS OF INTEREST

Employees must avoid situations that could compromise their ability to act with objectivity and exercise independent judgement. Employees must avoid situations where private interests could conflict or appear to conflict with their obligations to the Company. It is the responsibility of all employees to disclose any personal interest they may have in a project, company or other matter where the employee is involved in the assessment, negotiations or other activity relating to that matter.

Employees must take care that relationships formed with others while conducting business on the Company's behalf do not lead to a situation in which impartiality or allegiances could be or appear to be compromised.

Employees must make sure that all transactions with suppliers, customers and others doing business with the Company are conducted in a transparent and arms length manner without favour or preference based on any personal considerations.

5. CONFIDENTIALITY

Employees must ensure that confidential information contained in Company records is strictly maintained and not disclosed to any other party within the Company or otherwise without the approval of management. It is the responsibility of all employees not to misuse confidential information.

6. GOOD CORPORATE CITIZEN

As a good corporate citizen the Company strives to act responsibly on matters such as sustainable development, health, safety, environmental and community responsibilities.

The Company competes fairly in the situations and markets in which it operates. It does not use coercive or misleading practices or falsify or wrongly withhold information.

The Company is committed to endeavour to ensure that all employees are treated fairly, equitably and honestly. The Company will not tolerate harassment or unlawful discrimination.

7. ENVIRONMENT, HEALTH AND SAFETY

The Company will maintain a safe working environment for all employees.

All employees must have regard to matters of health and safety and apply all relevant laws and regulations and apply appropriate standards.

TRADING IN THE COMPANY'S SECURITIES

1. PURPOSE OF THE TRADING POLICY

Southern Hemisphere Mining Ltd ("Company") and its subsidiaries have adopted a trading policy that imposes certain restrictions on directors and all employees trading in the Company’s securities. This policy has been adopted to prevent trading in contravention of the insider trading provisions of the relevant law, in particular when employees of the Company are in possession of price-sensitive information.

The purpose of this policy is to ensure that the Company’s employees are aware of the legal restrictions of trading securities while such a person is in possession of unpublished price sensitive information concerning the Company or any of its subsidiaries. In addition, the policy is intended to minimise the possibility that misunderstandings or suspicions arise that the Company’s employees are trading while in possession of unpublished price sensitive information.

The policy also ensures that the Company is able to meet its reporting obligations under the ASX Listing Rules and other relevant law.

The policy was announced on November 13, 2013 and is available in the announcements section of the website.

DISCLOSURE POLICY

1. PURPOSE OF THE DISCLOSURE POLICY

This document summarise the policies and processes of Southern Hemisphere Mining Ltd ("Company") in relation to the release of market announcements and media releases to ensure compliance with the disclosure requirement of the Australian Securities Exchange and to ensure accountability for that compliance.

This policy covers the key obligations of directors and employees, the procedures for authorising disclosure and for monitoring compliance.

2. CONSIDERATION OF DISCLOSURE MATTERS
2.1 The Board

The Board considers whether there are any matters requiring disclosure in respect of each item of business that it considers at Board meetings. The Board also considers whether, since the last Board meeting, directors have become aware of information which should be disclosed. Additionally, the Board notes all matters which were disclosed since the last meeting.

2.2 Managing Director

The Managing Director is primarily responsible for ensuring that the Company complies with its disclosure obligations and for deciding what information will be disclosed.

The Managing Director should consult with other directors and as appropriate, other personnel, before making a decision to disclose the information or not, to take any necessary steps to protect its confidentiality or take steps to prevent a false market such as requesting a trading halt.

The Managing Director will liaise with the Company Secretary if there are matters that are required to be announced to the market and authorises the final form of announcement.

Depending on the nature of the announcement, the sensitivity of the information and the availability of the Board, the Managing Director will determine whether the Board as a whole should be involved in the review of the release.

2.3 Directors and employees

All directors and employees must notify the Managing Director as soon as possible of any information regarding the Company that may need to be released. Until a decision as to whether or not to disclose information has been made, Directors and employees must treat the information as strictly confidential.

Examples of information that might need to be disclosed include:

  1. An acquisition or disposal of assets of the Company.
  2. Any event that may affect the Company’s earnings or profitability such as lower than expected production levels or higher cash inputs, litigation being commenced by or against the Company, significant unbudgeted capital expenditure commitments arising or proposed changes to the nature of the Company’s business.
  3. Proposed changes to the capital structure or senior management of the Company.
2.4 Company Secretary

The Company Secretary is responsible for liaising with the ASX in relation to ASX Listing Rule matters. The Company Secretary:

  1. consults with the Managing Director regarding matters for announcement to the markets; and
  2. prepares announcements and lodges them with the ASX in consultation with the Managing Director.

The Company Secretary circulates announcements to all members of the Board after the announcement is released to the market. All announcements are posted on the Company’s website as soon as practicable after release on ASX.

The Company Secretary maintains a register and a copy of all announcements that have been released.

3. SPECIFIC ISSUES REGARDING CONTINUOUS DISCLOSURE
3.1 Confidential information

All directors and employees must not disclose confidential information to any person except with the express consent of the Company or in circumstances required by law. This obligation is confirmed in the Company’s Code of Conduct.

The Managing Director is responsible for determining whether the conditions permitting non-disclosure in ASX Listing Rule 3.1 apply and in particular, whether confidentiality has been lost.

The Managing Director is responsible for ensuring that the Company’s share price is monitored on a continuous basis. If there are unexpected movements in the share price then the Managing Director will determine whether the cause of that movement relates to the unauthorised release of confidential information and take whatever action is required to ensure that the Company is in compliance with its disclosure obligations, in particular, preventing a false market.

3.2 Media enquiries and public speeches

All directors and employees are aware that care must be taken not to make comments to the media or others that could result in rumours or speculation about the Company.

It is Company policy to limit media contact to the Chairman and the Managing Director.

Other directors and employees may only confer with the media in relation to a particular matter concerning the Company if they have obtained approval from the Managing Director.

It is also important that any speeches or external addresses do not result in rumours or speculation about the Company or contain unauthorised disclosure. The text of speeches and external addresses with potential ASX Listing Rule 3.1 disclosure implications must receive the prior authorisation of the Managing Director.

Relevant information must be given to ASX and released to the market before it is provided to the media (even on an embargoed basis).

3.3 Market Rumours

The Managing Director must be notified of any information relating to market rumours or possible leaks relating to the Company as soon as possible. The Managing Director will then take steps to ascertain as far as practicable the nature of the potential leak or rumour and the degree that the leak or rumour exists in the market.

The Managing Director will assess whether it is appropriate for the Company to respond to the leak or rumour. If it is appropriate, the Managing Director will prepare an announcement to be released on ASX.

If ASX verbally queries the Company on a leak or rumour, the Company Secretary must immediately advise the Managing Director of the query. If ASX requires a formal written response to explain a leak or rumour then the Company Secretary will immediately copy the request to all directors. The Managing Director, in consultation with the Company Secretary and, where appropriate, other directors will oversee the response to an ASX enquiry. Given that such enquiries usually require a quick response this procedure may not always be followed.

4. INDUCTION OF DIRECTORS AND OTHER KEY PERSONNEL

All directors and senior management are briefed on the following matters:

  1. the roles and responsibilities of directors, officers and employees of the Company regarding disclosure;
  2. who has primary responsibility for ensuring that the Company complies with its disclosure obligations and for deciding what information is disclosed;
  3. the type of information that needs to be disclosed;
  4. safeguarding confidentiality of corporate information to avoid premature disclosure;
  5. media contact and comment;
  6. measures for seeking to avoid the emergence of a false market in the Company’s securities; and
  7. external communications such as broker road shows and responses to shareholder queries.

SHAREHOLDER COMMUNICATIONS POLICY

1. PURPOSE

Southern Hemisphere Mining Ltd ("Company") commits to communicating effectively with its shareholders by giving them access to balanced and understandable information about the Company and its activities. The Company encourages participation by shareholders at general meetings and commits to dealing promptly with shareholder enquiries.

The purpose of this policy is to help shareholders to understand how to access relevant information about the Company.

2. MARKET ANNOUNCEMENTS

The Company Secretary is responsible for liaising with the ASX. This role includes responsibility for ensuring that compliance with continuous disclosure requirements of the ASX Listing Rules and overseeing and co-ordinating information disclosure to ASX, analysts, brokers, shareholders and the public.

All information disclosed to the market is placed on the Company’s website as soon as possible after release. When analysts are briefed on the Company’s activities, the material used in the presentation (if not previously released) is released to ASX and then placed on the Company’s website. Procedures have been established for reviewing whether any price sensitive information has been inadvertently disclosed, and if so, this information is also disclosed.

3. ANNUAL AND OTHER PERIODIC REPORTS

The Company’s annual report is available electronically. It will only be sent to shareholders who request a copy. Other periodic reports – such as half-yearly and quarterly activities and cash flow reports - are lodged with ASX and are available on the Company’s website. The Company will send a copy of these reports to shareholders who request a copy.

4. SHAREHOLDER MEETINGS

Shareholder meetings, notably Annual General Meetings, are an opportunity for shareholders to hear from and question the Board and management of the Company.

The Board encourages participation of shareholders at shareholder meetings. Prior to the meeting, the Company will send a notice of meeting and related explanatory information to shareholders. The Company will ask the external auditor to attend and to be available to answer questions about the conduct of, and arising from the Company’s audit.

The Company will allow shareholders a reasonable time to ask questions of the Board and the external auditor.

5. COMPANY WEBSITE

The Company maintains a website which contains general information about the Company and its operations.

6. GENERAL INTERACTION WITH SHAREHOLDERS

The Company commits to dealing with shareholder enquiries promptly and courteously and takes measures to ensure that its share registry’s also do so.

7. SHAREHOLDER PRIVACY

The Company recognises that privacy is important and will not disclose shareholder details unless required by law. Shareholder details will only be used in accordance with applicable privacy laws.

RISK MANAGEMENT STATEMENT

1. MANAGEMENT OF RISKS
  1. Southern Hemisphere Mining Ltd (“Company”) regards business risks as threats to the achievement of its various strategies, objectives and goals. The Company’s risk management system covers all policies, processes, practices and procedures established by management and/or the Board to provide reasonable assurance that:
  2. Established corporate and business strategies and objectives are met.
  3. Risk are identified, assessed and adequately monitored and managed.
  4. Significant financial, managerial and operating information is accurate, relevant, timely and reliable.
  5. Material changes to the Company’s risk management profile are promptly identified.
  6. Policies, standards, procedures and applicable laws, regulations and licences are complied with.
2. RESPONSIBILITY FOR RISK MANAGEMENT
2.1 Role of the Board

Risk management is a core function of the Board. The Board is responsible for reviewing and approving processes for the identification, assessment, reporting and management of risks and reviewing and approving procedures for the maintenance and monitoring of these processes.

On a quarterly basis the Board will assess the significant business risks applicable to the Company and its ongoing operations. Additionally, the Board will review the Company’s risk profile and the effectiveness of the implementation of the risk management and internal control system.

2.2 Role of Senior Management

The Managing Director and the Chief Financial Officer are responsible for:

  1. Developing appropriate systems and assessment procedures for the identification, assessment, reporting and management of risks;
  2. Ensuring that appropriate systems and processes for the identification, assessment, reporting and management of risks (including internal control and management information systems) are implemented;
  3. Assisting senior management and the Board in the effective discharge of their responsibilities with regard to the Company’s risk management and internal control environment;
  4. At appropriate intervals, determining the efficiency and effectiveness of the Company’s risk management processes including its system of internal accounting and operating controls and identifying opportunities to improve operating performance;
  5. At appropriate intervals, determining if the Company is managing risks in a manner consistent with the Company’s objectives; and
  6. Ensuring that regular reports are presented to the Board or the audit committee as to the performance of the company’s risk control processes.

Other senior executives, including the Company Secretary, are responsible for managing risk within those areas under their control, including the dissemination of the risk management process to operational managers.

Collectively, senior management is responsible for:

  1. Identifying strategic risks that impact on the Company’s business;
  2. Assessing and prioritising risks;
  3. Developing, implementing and maintaining strategic risk (including internal control and management information systems) management plans;
  4. Reviewing the effectiveness of the Company’s procedures for the identification, assessment, reporting and management of risks and its system of internal accounting and operating controls; and
  5. Reporting to the Board on the management of the Company’s material business risks.
3. ROLE OF THE AUDIT AND RISK COMMITTEE

To assist the Board in discharging its responsibility in relation to risk management, the Board has delegated certain responsibilities to the Audit and Risk committee. The responsibilities of this committee are set out set out in its charter. In summary the Audit and Risk Committee is responsible for monitoring and assessing the risk exposure of the Company for regulatory, systems & IT, business and operational risks through effective risk management structures.

4. RISK PROFILE

The Company’s business is speculative and is subject to a number of risks. The key risks associated with the Company are set out in the Company’s Australian prospectus issued in December 2009. Some of these risks include:

Exploration risk

Exploration is by its nature a high risk undertaking. There is no guarantee that any resources discovered will lead to a commercial mining operation. There can be no assurance that the Company's exploration of the licences currently controlled by the Company or any other exploration projects that may be acquired in the future will result in the delineation or discovery of mineral resources.

Development and mining risk

Possible future development of a mining operation at any of the Company’s projects is dependent on a number of factors including, but not limited to, the acquisition and/or delineation of economically recoverable ore bodies, favourable geological conditions, receiving the necessary approvals from all relevant authorities and parties, seasonal weather patterns, unanticipated technical and operational difficulties encountered in extraction and production activities, mechanical failure of operating plant and equipment, unexpected shortages or increases in the price of consumables, spare parts and plant and equipment, cost overruns, access to the required level of funding and contracting risk from third parties providing essential services.

If the Company commences production, its operations may be disrupted by a variety of risks and hazards which are beyond its control, including environmental hazards, industrial accidents, technical failures, labour disputes, unusual or unexpected rock formations, flooding and extended interruptions due to inclement or hazardous weather conditions and fires, explosions or accidents. In addition, the Company may be subject to reduced ore treatment rates through the proposed processing plant, higher treatment costs and worse than anticipated metallurgical characteristics. No assurance can be given that the Company will achieve commercial viability through the development and/or mining of its projects and treatment of ore.

Resource and Reserve estimation risk

Resource and Reserve estimates are expressions of judgment based on knowledge, experience and industry practice. As such, Resource and Reserve estimates are inherently imprecise and rely to some extent on interpretations made.

Additionally, estimates may change over time as new information becomes available. If the Company encounters mineralisation or geological formations different from those predicted by past drilling, sampling and interpretations, any estimates may need to be altered in a way that could adversely affect the Company's operations.

Commodity price volatility risk

Commodities prices including the price of manganese fluctuate and are affected by numerous factors beyond the control of the Company. These factors include world and regional supply and demand for commodities, general world economic conditions and the outlook for interest rates, inflation and other economic factors on both a regional and global basis. These factors may have a positive or negative effect on the Company's exploration, project development and production plans and activities, together with the ability to fund those plans and activities.

Exchange rate risk

Commodities are principally sold throughout the world in United States dollars. The Company's future revenue so far as concerns its operations in Chile are likely to be in United States dollars whilst its costs will be payable in either Chilean pesos, Australian dollars or Canadian dollars.

The exchange rates between the various currencies are affected by numerous factors beyond the control of the Company. These factors include economic conditions in the relevant country and elsewhere and the outlook for interest rates, inflation and other economic factors. These factors may have a positive or negative effect on the Company's exploration, project development and production plans and activities, together with the ability to fund those plans and activities.

Licence rights and renewal risk

The licence or tenement interests of the Company are held in Chile. The licences are subject to applications for renewal or grant (as the case may be). The renewal or grant of the terms of each licence is usually at the discretion of the relevant government authority. Additionally, licences are subject to a number of specific legislative conditions. The inability to meet these conditions could affect the standing of a licence or restrict its ability to be renewed.

If a licence is not renewed or granted, the Company may suffer significant damage through the loss of opportunity to develop and discover and mineral resources on that licence.

Sovereign risk

The projects of the Company are located in Chile. Chile is a representative democracy. Commodity exports, and copper in particular, make up a significant proportion of gross domestic product.

The political conditions in Chile are generally stable, however, changes may occur in the political, fiscal and legal systems which may affect the ownership or operations of the Company including changes in exchange rates, control or fiscal regulations, regulatory regimes, political insurrection or labour unrest, inflation or economic recession.

Environmental risk

The Company's projects are subject to rules and regulations regarding environmental matters including obtaining the approval of an Environmental Impact Study or Assessment depending on location and impacts. As with all mineral projects, the Company’s projects are expected to have a variety of environmental impacts should development proceed. Development of any of the Company's projects will be dependent on the Company satisfying environmental guidelines and, where required, being approved by government authorities.

Failure to obtain such approvals will prevent the Company from undertaking its desired activities. The Company is unable to predict the effect of additional environmental laws and regulations that may be adopted in the future, including whether any such laws or regulations would materially increase the Company's costs of doing business or affect its operations in any area.

Water supply risk

The mining and processing of minerals often requires considerable quantities of water. Finding sufficient water and negotiating for its use are risks faced in developing viable mining operations.

Seismic risk

Chile lies adjacent to the convergent boundary between the Nazca and South American tectonic plates. As such it is subject to frequent seismic activity and is home to numerous active volcanoes.

The Company’s projects are potentially at risk from future seismic and volcanic events.

Reliance on key personnel risk

The Company’s success largely depends on the core competencies of its Directors and management and their familiarisation with, and ability to operate in, the mining industry and the Company’s ability to retain its key executives.

Insurance risk

The Company, where economically feasible, intends to insure its operations in accordance with industry practice. However, in certain circumstances, the Company's insurance (if obtained) may not be of a nature or level to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial condition and results of the Company.

Insurance of all risks associated with mineral exploration and development is not always available and where available the costs can be prohibitive.

Future capital needs and additional funding risk

The Company’s ability to raise further capital (equity or debt) within an acceptable time, of a sufficient amount and on terms acceptable to the Company will vary according to a number of factors, including prospectivity of projects (existing and future), the results of exploration, subsequent feasibility studies, development and mining, stock market and industry conditions and the price of relevant commodities and exchange rates.

No assurance can be given that future funding will be available to the Company on favourable terms (or at all). If adequate funds are not available on acceptable terms the Company may not be able to further develop its Projects and it may impact on the Company's ability to continue as a going concern.

Competition risk

The Company competes with other companies, including major mineral exploration and mining companies. These companies will likely have greater financial and other resources than the Company and, as a result may be in a better position to compete for future business opportunities. Many of the Company's competitors not only explore for and produce minerals, but also carry out downstream operations on these and other products on a worldwide basis. There can be no assurance that the Company can compete effectively with these companies.

Managing growth risk

As the Company and its operations expand, it will need to upscale its operational and financial systems, procedures and controls and expand, retain and manage and train its employees. There is a risk of a material adverse impact on the Company’s financial performance if it is not able to manage its growth.

5. INTEGRITY IN FINANCIAL REPORTING

The Company has established internal financial control systems to provide reasonable assurance regarding the safeguarding of assets; the maintenance of proper accounting records and the reliability of financial information.

The Managing Director and the Chief Financial Officer are required to report in writing to the Board annually that:

the consolidated financial statements of the Company and its controlled entities for each half and full year present a true and fair view, in all material aspects, of the Company’s financial condition and operational results are in accordance with accounting standards;
the Company’s financial reports are founded on a sound system of risk management and internal control; and
the Company’s risk management system is operating efficiently and effectively in all material respects in relation to financial reporting results.

AUDIT AND RISK COMMITTEE CHARTER

1. PURPOSE

This Charter sets out the specific responsibilities delegated by the Board of Southern Hemisphere Mining Ltd (the “Company”) to the Audit and Risk Committee and details the manner in which the Committee will operate. The Audit and Risk Committee is a committee of the Board.

2. ROLE AND AUTHORITY OF THE COMMITTEE
2.1 Role

The role of the Committee is to assist the Board to meet its oversight responsibilities in relation to the Company’s financial reports and statements, risk management framework and system of internal control and to monitor the performance and independence of the external auditor.

2.2 Authority

The Committee reports to the Board. The external auditor reports to the Committee and the Board. The Committee has authority to:

  1. Investigate any activity within its Charter and any matters specifically requested by the Board.
  2. Resolve any disagreements between management and the auditor regarding financial reporting.
  3. Delegate authority to subcommittees.
  4. Obtain outside legal or other independent professional advice as necessary to assist the Committee.
3. MEMBERSHIP AND MEETINGS OF THE COMMITTEE
3.1 Membership and term
  1. The Committee shall be comprised of a minimum of 3 directors, all of whom shall be independent.
  2. Appointment to the Committee will be for 1 year or as determined by the Board. Any member of the Committee may be removed or replaced at any time by the Board.
  3. The duties and responsibilities of a member of the Committee shall be in addition to those duties set out for a director of the Board.
3.2 Chairman of the Committee

The role of the Chairman of the Committee is to provide overall leadership to in reviewing the aims, strategy, policy and direction of the Committee so as to further the best interests of the Company, including:

  1. taking all reasonable steps to ensure that the responsibilities and duties of the Committee, as outlined in its Charter, are well understood by the Committee and its members and executed as effectively as possible;
  2. to act as the principal sounding board and counsel to the Company with respect to audit and risk issues
  3. setting the frequency and agenda for Committee meetings, and receiving and considering input from other Committee members, the chairman of the Board and management;
  4. communicating information and findings of the Committee to the Board;
  5. fostering ethical and responsible decision making by the Committee and its individual members; and encouraging free and open discussion at meetings of the Committee;
  6. chair and manage meetings of the Remuneration and Nomination Committee.
3.3 Meetings
  1. The Committee will meet as frequently as is necessary but not less than four times per year. Any Committee member may call a meeting of the Committee.
  2. The Committee may invite any executive management team member, any other Board member or any other individual to attend a meeting of the Committee, as it considers appropriate. The Managing Director, Chief Financial Officer and representatives
  3. The Committee chairman will report to the Board (at the next Board meeting) following each meeting on the activities, findings and recommendations of the Committee.
  4. Minutes of meetings of Committee will be distributed to all Committee members and the chairman of the Board. Committee meeting materials will be made available to any director upon request, provided that no conflict of interest exists.
  5. A quorum at any meeting of the Committee will be a majority of members. Each member will have one vote and the chairman of the Committee will not have a second or casting vote.
  6. All determinations of the Committee will be made by a majority of its members represented at a meeting.
4. RESPONSIBILITIES

The Committee is responsible for:

4.1 Financial Reporting
  1. Reviewing quarterly, half-yearly and yearly financial reports and statements with management and the external auditor.
  2. Reviewing and making recommendations to the Board regarding significant financial, accounting and reporting issues.
  3. Receiving representation letters from the Managing Director and Chief Financial Officer.
4.2 External Audit
  1. Considering the appointment of the external auditor each year. Any subsequent recommendation on the appointment of the external auditor is put to the Board. If a change is approved it will be put forward to shareholders for their approval.
  2. Reviewing and approving the terms of engagement and fees of the external auditor at the start of each audit.
  3. Considering and reviewing the scope of work, reports and activities of the external auditor.
  4. Reviewing the findings of the audit with the external auditor.
  5. Reviewing the performance of the external auditors taking into account the opinions of management.
4.3 Risk Management, Internal Audit and Internal Control
  1. Review the Company’s risk framework for identifying, monitoring and managing significant business risks.
  2. Considering the effectiveness of the Company’s internal control system.
  3. Reviewing the Company’s insurance policies at least annually having regard to the Company’s business and the insurable risks associated with the Company’s business.
5. ACCESS

The Committee has unrestricted access to all records and staff of the Company and the external auditors.

REMUNERATION AND NOMINATION COMMITTEE CHARTER

1. PURPOSE

This Charter sets out the specific responsibilities delegated by the Board of Southern Hemisphere Mining Ltd (the “Company”) to the Remuneration and Nomination Committee and details the manner in which the Committee will operate. The Nomination & Remuneration Committee is a committee of the Board.

2. ROLE AND AUTHORITY OF THE COMMITTEE
2.1 Role of the Committee in respect of Remuneration matters

The Committee is responsible for all matters related to the compensation of Board members and senior management and for reporting and making recommendations to the Board regarding such matters. The role of the Committee in relation to remuneration matters include:

  1. Determining remuneration policies and remuneration of directors;
  2. Determining executive remuneration and incentive policies;
  3. Determining and reviewing superannuation arrangements;
  4. Determining recruitment, retention and termination policies for directors (including the managing director) and other senior management;
  5. Determining the processes and criteria for evaluating the performance of the managing director and reviewing the managing director’s assessment of all other senior executive reporting directly to the managing director
  6. Determining the processes and criteria for the evaluation of the Board as a whole, committees of the Board and individual directors
  7. Reviewing succession plans for senior management.
2.2 Role of the Committee in respect of Nomination matters

The role of the Committee is to review and make recommendations to the Board in respect of the following nomination matters:

  1. determining the appropriate size and composition of the Board;
  2. developing criteria for the identification of suitable candidates for appointment to the Board;
  3. the appointment and removal of directors;
  4. the processes for evaluating the performance of the Board and key executives
  5. developing a succession plan for the Board
  6. ensuring there is an appropriate induction process in place for new directors and members of senior management and reviewing its effectiveness.
3. MEMBERSHIP AND MEETINGS OF THE COMMITTEE
3.1 Membership and term
  1. The Committee shall be comprised of a minimum of 3 directors, the majority independent.
  2. Appointment to the Committee will be for 1 year or as determined by the Board. Any member of the Committee may be removed or replaced at any time by the Board.
  3. The duties and responsibilities of a member of the Committee shall be in addition to those duties set out for a director of the Board.
3.2 Chairman of the Committee

The role of the Chairman of the Committee is to provide overall leadership to in reviewing the aims, strategy, policy and direction of the Committee so as to further the best interests of the Company, including:

  1. taking all reasonable steps to ensure that the responsibilities and duties of the Committee, as outlined in its Charter, are well understood by the Committee and its members and executed as effectively as possible;
  2. to act as the principal sounding board and counsel to the Company with respect to remuneration and nomination issues
  3. setting the frequency and agenda for Committee meetings, and receiving and considering input from other Committee members, the chairman of the Board and management;
  4. communicating information and findings of the Committee to the Board;
  5. fostering ethical and responsible decision making by the Committee and its individual members; and encouraging free and open discussion at meetings of the Committee;
  6. chair and manage meetings of the Remuneration and Nomination Committee.
3.3 Meetings
  1. The Committee will meet as frequently as is necessary but not less than annually. Any Committee member may call a meeting of the Committee.
  2. The Committee may invite any executive management team member, any other Board member or any other individual to attend a meeting of the Committee, as it considers appropriate.
  3. The Committee chairman will report to the Board (at the next Board meeting) following each meeting on the activities, findings and recommendations of the Committee.
  4. Minutes of meetings of Committee will be distributed to all Committee members and the chairman of the Board. Committee meeting materials will be made available to any director upon request, provided that no conflict of interest exists.
  5. A quorum at any meeting of the Committee will be a majority of members. Each member will have one vote and the chairman of the Committee will not have a second or casting vote.
  6. All determinations of the Committee will be made by a majority of its members represented at a meeting.
4. COMMITTEE MEMBERS’ INTERESTS

A member of the Committee is not entitled to be present when his or her own salary or fee is discussed at a meeting or when his/her performance is being evaluated.

For the latest Appendix 4G (pro forma announcement detailing the Company's corporate governance satement), click this link (PDF)