CHINALCO YUNNAN COPPER RESOURCES LIMITED SUMMARY OF CORPORATE GOVERNANCE General The Board of the Company has considered and established various board policies with particular emphasis on the policies for the governance of the Company. This statement outlines the main corporate governance policies which the directors have adopted. Co-Chairmen The Company previously had appointed co-chairmen. The Board has adopted certain protocols in light of this appointment (and in the event that this occurs again in the future) which include:
Committees The Company does not have any formally constituted committees of the board of directors. The directors consider that the Company is not of a size nor are its affairs of such complexity to justify the formation of special or separate committees. The Board as a whole is able to address the governance aspects of the Company's activities and ensure that it adheres to appropriate ethical standards. This statement outlines the main corporate governance policies which the directors have adopted. Composition of the Board The Board currently comprises four directors. There is no requirement for any director's shareholding qualification. As the Company's activities increase in size, nature and scope, the size of the board will be reviewed periodically. The optimum number of directors required to adequately supervise the Company's activities will be determined within the limitation imposed by the constitution. Board Membership The Board acts as a nomination committee. Members of the board have been brought together to provide a blend of qualifications, skills and national and international experience for managing a Company operating within the mining industry. Appointment and Retirement of Directors The Company's constitution provides that directors are subject to retirement by rotation, by order of length of appointment. Retiring directors are eligible for re-election by shareholders at the annual general meeting of the Company. Duties of Directors Directors are expected to accept all duties and responsibilities associated with the running of a public Company, to act in the best interests of the Company and to carry out their duties and responsibilities with due care and diligence. Directors are required to take into consideration conflicts when accepting appointments to other boards. Accordingly, directors wishing to accept appointment to other boards must first seek approval from the board, approval of which will not be unreasonably withheld. Independent Professional Advice The Board has determined that individual directors may, in appropriate circumstances engage outside advisers at the Company's expense. The engagement of an outside adviser is subject to the prior approval of the board, which will not be unreasonably withheld. Compensation Arrangements The Board is responsible for reviewing and negotiating the compensation arrangements of senior executives and consultants. Audit Committee The Board does not presently have an audit committee. All matters which might be dealt with by such a committee are reviewed by the directors meeting as a board. Internal Management Controls The Company's assets are located in Australia, Chile and Laos. Control over the operations is exercised by senior management. The Board also monitors the performance of outside consultants engaged from time to time to complete specific projects and tasks. Identifying Significant Business Risks The Board regularly monitors the operational and financial performance of the Company's activities. It monitors and receives advice on areas of operation and financial risk and considers strategies for appropriate risk management. All operational and financial strategies adopted are aimed at improving the value of the Company's shares, however, the directors recognise that mineral exploration and evaluation is inherently risky. Level of Compliance with ASX Best Practice Policies on Corporate Governance The Company does not presently comply with all of the ASX Best Practice Policies on Corporate Governance and by virtue of its size and the composition of the Board is unlikely to do so in the foreseeable future. The following table outlines the areas where the Company has departed from ASX Best Practice Policies on Corporate Governance and the reasons for so doing: Principle 2 Recommendation 2.1 Notification of Departure The Board does not have a majority of independent directors. It is comprised of four independent directors and no non-independent director. Explanation for Departure The existing structure is considered appropriate given the small size of the Company and the associated economic restrictions this places on the Company. The existing structure is aimed at maximising the financial position of the Company by keeping its operating costs to a minimum. Principles 2 and 9 Recommendations 2.4 and 9.2 Notification of Departure Separate nomination and remuneration committees have not been formed. However, the Company has adopted Nomination and Remuneration Committee Charters. Explanation of Departure The role of the nomination and remuneration committees is carried out by the full board in accordance with the appropriate charters. The Board considers that at this stage, no efficiencies or other benefits would be gained by establishing separate committees. Principle 4 Recommendation 4.2 and 4.3 Notification of Departure A separate audit committee has not been formed. Explanation for Departure The role of the audit committee is carried out by the full board. The Board considers that given its size, no efficiencies or other benefits would be gained by establishing a separate audit committee.
