Announcement PDF TESORO RESOURCES LIMITED ACN 106 854 175 (Company) CORPORATE GOVERNANCE STATEMENT This Corporate Governance Statement (Statement) is current as at 24 September 2021 and has been approved by the Board of the Company on that date. This Corporate Governance Statement discloses the extent to which the Company followed the recommendations set by the ASX Corporate Governance Council in the Corporate Governance Principles and Recommendations (4th Edition) (Recommendations) throughout the financial year commencing on 1 July 2020 and to the date of this Corporate Governance Statement. The Recommendations are not prescriptive, however the Recommendations that have not been followed have been identified and reasons provided for not following them along with what (if any) alternative governance practices the Company adopted in lieu of the recommendation. With the exception of the departures detailed in this Statement, the corporate governance practices of the Company during the reporting period were in accordance with the Recommendations. Due to the current size and nature of the existing Board and the magnitude of the Company’s operations, the Board does not consider that the Company will gain any benefit from individual Board committees and that its resources would be better utilised in other areas as the Board is of the strong view that at this stage the experience and skill set of the current Board is sufficient to perform these roles. Under the Company’s Board Charter, the duties that would ordinarily be assigned to individual committees are currently carried out by the full Board under the written terms of reference for those committees. In addition to the information contained in this Statement, the Company’s website at www.tesororesources.com.au contains additional details of its corporate governance practices and procedures. /1257_7 1 RECOMMENDATIONS (4TH EDITION) COMPLY EXPLANATION Principle 1: Lay solid foundations for management and oversight Recommendation 1.1 (a) A listed entity should have and disclose a board charter which sets out the respective roles and responsibilities of the Board, the Chair and management, and includes a description of those matters expressly reserved to the Board and those delegated to management. YES The Company has adopted a Board Charter that sets out the specific roles and responsibilities of the Board, the Chair and management and includes a description of those matters expressly reserved to the Board and those delegated to management. The Board Charter also sets out requirements as to the Board’s composition, the roles and responsibilities of the Chairman and Company Secretary, the establishment, operation and management of Board Committees, Directors’ access to Company records and information, details of the Board’s relationship with management, details of the Board’s performance review and details of the Board’s disclosure policy. A copy of the Company’s Board Charter is available on the Company’s website. Recommendation 1.2 YES (a) The Company’s Nomination Committee Charter provides guidelines for the appointment and selection of Directors and senior executives and requires the Nomination Committee (or, in its absence, the Board) to ensure appropriate checks (including checks in respect of character, experience, education, criminal record and bankruptcy history (as appropriate)) are undertaken before appointing a person, or putting forward to security holders a candidate for election, as a Director. In the event of an unsatisfactory check, a Director is required to submit their resignation. (b) Pursuant to the Nomination Committee Charter, all material information relevant to a decision on whether or not to elect or re-elect a Director must be provided to security holders in the Notice of Meeting containing the resolution to elect or re-elect a Director. A listed entity should: (a) (a) undertake appropriate checks before appointing a director or senior executive or putting someone forward for election as a Director; and 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. RECOMMENDATIONS (4TH EDITION) Recommendation 1.3 A listed entity should have a written agreement with each Director and senior executive setting out the terms of their appointment. COMPLY YES EXPLANATION The Company’s Nomination Committee Charter requires the Nomination Committee (or, in its absence, the Board) to ensure that each Director and senior executive is personally a party to a written agreement with the Company which sets out the terms of that Director’s or senior executive’s appointment. The Company has written agreements with each of its current Directors and senior executives. Recommendation 1.4 YES The Company Secretary of a listed entity should be accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board. Recommendation 1.5 A listed entity should: (a) have and disclose a diversity policy; (b) (c) through its board or a committee of the board set measurable objectives for achieving gender diversity in the composition of its board, senior executives and workforce generally; and The Board Charter outlines the roles, responsibilities and accountability of the Company Secretary. In accordance with this, the Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board. PARTIALLY (a) The Company has adopted a Diversity Policy which provides a framework for the Company to establish, achieve and measure diversity objectives, including in respect of gender diversity. The Diversity Policy is available on the Company’s website. (b) The Diversity Policy allows the Board to set measurable gender diversity objectives, if considered appropriate, and to continually monitor both the objectives if any have been set and the Company’s progress in achieving them. (c) Given the current small size of the Board and Company’s employee base and operations, the Board does not presently intend to set measurable gender diversity objectives. The Board will re-consider this matter as the business grows. disclose in relation to each reporting period: (i) the measurable objectives set for that period to achieve gender diversity; (ii) the entity’s progress towards achieving those objectives; and (iii) either: (A) the respective proportions of men and women on the Board, in senior executive positions and across the whole workforce (including how the entity has defined “senior executive” for these purposes); or (i) the Board recently appointed two new Directors, one of whom, Ms Kristie Young, is female, reflecting the Company’s commitment to gender diversity; RECOMMENDATIONS (4TH EDITION) (B) COMPLY EXPLANATION if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in the Workplace Gender Equality Act. (ii) If the entity was in the S&P / ASX 300 Index at the commencement of the reporting period, the measurable objective for achieving gender diversity in the composition of its board should be to have not less than 30% of its directors of each gender within a specified period. (iii) the Board has considered the application of the measurable diversity objectives and determined, given the small size of the Company and the Board, requIring specified objectectives to be met will unduly limit the Company from applying the Diversity Policy as a whole and the Company’s policy of appointing the best person for the job; and the respective proportions of women on the Board, in senior executive positions and across the whole organisation are: Board – 20% Officers (non-Board) – 100% Other Employees – 28% Recommendation 1.6 YES (a) The Company’s Nomination Committee (or, in its absence, the Board) is responsible for evaluating the performance of the Board, its committees and individual Directors on an annual basis. It may do so with the aid of an independent advisor. The process for this is set out in the Performance Evaluation Policy which is available on the Company’s website. (b) The Company’s Nomination Committee Charter requires the Company to disclose whether or not performance evaluations were conducted during the relevant reporting period. The Company undertook a formal performance evaluation in respect of the Board as a whole for the financial year in accordance with the above process. A formal performance review was not undertaken of individual directors other than the Managing Director. 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 for each reporting period whether a performance evaluation has been undertaken in accordance with that process during or in respect of that period. RECOMMENDATIONS (4TH EDITION) Recommendation 1.7 A listed entity should: (a) have and disclose a process for evaluating the performance of its senior executives at least once every reporting period; and (b) disclose for each reporting period whether a performance evaluation has been undertaken in accordance with that process during or in respect of that period. COMPLY YES EXPLANATION (a) The Company’s Nomination Committee (or, in its absence, the Board) is responsible for evaluating the performance of the Company’s senior executives on an annual basis. The Company’s Remuneration Committee (or, in its absence, the Board) is responsible for evaluating the remuneration of the Company’s senior executives on an annual basis. A senior executive, for these purposes, means key management personnel (as defined in the Corporations Act) other than a non-executive Director. The applicable processes for these evaluations can be found in the Company’s Performance Evaluation Policy, which is available on the Company’s website. (b) The Company’s Nomination Committee Charter requires the Company to disclose whether or not performance evaluations were conducted during the relevant reporting period. The Company undertook a performance evaluation in respect of Managing Director, Mr Zeffron Reeves for the financial year in accordance with the applicable process. (a) The Company does not currently have a Nomination Committee. The Company’s Nomination Committee Charter provides for the creation of a Nomination Committee (if it is considered it will benefit the Company), with at least three members, a majority of whom are independent Directors, and which must be chaired by an independent Director. A copy of the Nomination Committee Charter can be found on the Company’s website. Principle 2: Structure the Board to be effective and add value Recommendation 2.1 The Board of a listed entity should: (a) have a nomination committee which: (i) (ii) has at least three members, a majority of whom are independent Directors; and is chaired by an independent Director, and disclose: (iii) the charter of the committee; (iv) the members of the committee; and YES RECOMMENDATIONS (4TH EDITION) (v) (b) COMPLY 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. Recommendation 2.2 A listed entity should have and disclose a Board skills matrix setting out the mix of skills that the Board currently has or is looking to achieve in its membership. EXPLANATION YES The Company does not have a Nomination Committee as the Board considers that the Company will not currently benefit from its establishment. In accordance with the Company’s Board Charter, the full Board undertakes out the duties that would ordinarily be carried out by the Nomination Committee under the Nomination Committee Charter, including the following processes to address succession issues and to ensure the Board has the appropriate balance of skills, experience, independence and knowledge of the entity to enable it to discharge its duties and responsibilities effectively: (i) devoting time at least annually to discuss Board succession issues and updating the Company’s Board skills matrix; and (ii) all Board members being involved in the Company’s nomination process, to the maximum extent permitted under the Corporations Act and ASX Listing Rules. (iii) ensuring that the Board is comprised of directors who contribute to the successful management of the Company and discharge their duties having regard to the law and the highest standards of corporate governance. Pursuant to the Nomination Committee Charter, the Nomination Committee (or, in its absence, the Board) is required to prepare a Board skills matrix setting out the mix of skills that the Board currently has (or is looking to achieve) and to review this at least annually ensure the Board is comprised of Directors with an appropriate mix of skills to discharge its obligations effectively and to add value and to ensure the Board has the ability to deal with new and emerging business and governance issues. RECOMMENDATIONS (4TH EDITION) COMPLY EXPLANATION The Company has a Board skill matrix setting out the mix of skills and diversity that the Board currently has or is looking to achieve in its membership, which currently includes geological, technical and engineering, project development, commercial, legal and corporate governance, health and safety and risk, financial accounting, capital markets and IR/PR. The Board undertakes an evaluation of the Board skills matrix on an annual basis to ensure that the Directors collectively have the skills and experience needed to execute the Company’s business strategy and to identify any gaps in the skills and experience of the Board. The Board will then assess all future candidates for Board positions and the performance of its current membership on this basis. The Board Charter requires the disclosure of each Board member’s qualifications and expertise. Full details as to each Director and senior executive’s relevant skills and experience are available in the Company’s Annual Report. Recommendation 2.3 YES (a) The Board Charter requires the disclosure of the names of Directors considered by the Board to be independent. The Company discloses those Directors it considers to be independent in its Annual Report and on the Company’s website. The Board considers there are currently two independent Directors, Mr John Toll and Ms Kristie Young. Messrs Zeffron Reeves and Linton Putland are not considered independent as they are employed in executive capacities. Mr Geoffrey McNamara is not considered independent as he is a substantial shareholder in the Company. (b) Not applicable. (c) The current Directors were appointed: 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 or relationship of the type described in Box 2.3 of the ASX Corporate Governance Principles and Recommendations (4th Edition), but the Board is of the opinion that it does not compromise the independence of the Director, the nature of the interest, position or relationship in question and an explanation of why the Board is of that opinion; and (c) the length of service of each Director John Toll – 3 October 2017 Zeffron Reeves – 29 January 2020 Linton Putland – 14 September 2021 Geoffrey McNamara – 29 January 2020 RECOMMENDATIONS (4TH EDITION) COMPLY EXPLANATION Kristie Young – 14 September 2021 Recommendation 2.4 NO The Board comprises a total of 5 directors, only two of whom, Mr John Toll and Ms Kristie Young, are considered to be independent. Messrs Zeffron Reeves and Linton Putland are not considered independent as they are employed in an executive capacity. Mr Geoffrey McNamara is not considered independent as he is a substantial shareholder in the Company. YES The Board Charter provides that, where practical, the Chair of the Board should be an independent Director and should not be the CEO/Managing Director. The current Chair of the Company, Mr John Toll, is an independent Director and is not the CEO/Managing Director. YES In accordance with the Company’s Board Charter, the Nominations Committee (or, in its absence, the Board) is responsible for the approval and review of induction and continuing professional development programs and procedures for Directors to ensure that they can effectively discharge their responsibilities. The Company Secretary is responsible for facilitating inductions and professional development including receiving briefings on material developments in laws, regulations and accounting standards relevant to the Company. A majority of the Board of a listed entity should be independent Directors. Recommendation 2.5 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. Recommendation 2.6 A listed entity should have a program for inducting new Directors and for periodically reviewing whether there is a need for existing directors to undertake professional development to maintain the skills and knowledge needed to perform their role as Directors effectively. Principle 3: Instil a culture of acting lawfully, ethically and responsibly Recommendation 3.1 A listed entity should articulate and disclose its values. YES The Company is committed to conducting all of its business activities fairly, honestly with a high level of integrity, and in compliance with all applicable laws, rules and regulations. The Board, management and employees are dedicated to high ethical standards and recognise and support the Company’s commitment to compliance with these standards. The Company’s values are set out in its Code of Conduct and are available on the Company’s website. RECOMMENDATIONS (4TH EDITION) Recommendation 3.2 A listed entity should: (a) have and disclose a code of conduct for its Directors, senior executives and employees; and (b) ensure that the Board or a committee of the Board is informed of any material breaches of that code. Recommendation 3.3 COMPLY YES (a) have and disclose an anti-bribery and corruption policy; and (b) ensure that the Board or committee of the Board is informed of any material breaches of that policy. The Company has a Corporate Code of Conduct which applies to the Company’s Directors, senior executives and employees. The Company’s Corporate Code of Conduct is available on the Company’s website. Any material breaches of the Code of Conduct are required to be reported to the Board or a committee of the Board. YES The Company has a Whistleblower Protection Policy which is available on the Company’s website. Any material breaches of the Whistleblower Protection Policy are required to be reported to the Board. YES (a) The Company has an Anti-Bribery and Anti-Corruption Policy which is available on the Company’s website. (b) Any material breaches of the Anti-Bribery and AntiCorruption Policy are required to be reported to the Board. (a) The Company’s Audit and Risk Committee Charter requires the establishment of an Audit and Risk Committee with at least three members, all of whom must be nonexecutive Directors, and a majority of the Committee must be independent Directors. The Committee must be chaired by an independent Director who is not the Chair. ensure that the Board or a committee of the Board is informed of any material incidents reported under that policy. Recommendation 3.4 A listed entity should: (a) (b) A listed entity should: (a) have and disclose a whistleblower policy; and (b) EXPLANATION Principle 4: Safeguard the integrity of corporate reports Recommendation 4.1 The Board of a listed entity should: (a) have an audit committee which: (i) has at least three members, all of whom are non-executive Directors and a majority of whom are independent Directors; and (ii) is chaired by an independent Director, who is not the Chair of the Board, and disclose: (iii) the charter of the committee; YES RECOMMENDATIONS (4TH EDITION) (iv) COMPLY the relevant qualifications and experience of the members of the committee; and (b) (v) (b) 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; or if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. Recommendation 4.2 YES 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 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. Recommendation 4.3 A listed entity should disclose its process to verify the integrity of any periodic corporate report it releases to the market that is not audited or reviewed by an external auditor. EXPLANATION The Company does not currently have an Audit and Risk Committee as the Board considers the Company will not currently benefit from its establishment. In accordance with the Company’s Board Charter, the Board undertakes the duties that would ordinarily be carried out by the Audit and Risk Committee under the Audit and Risk Committee Charter including the processes to independently verify the integrity of the Company’s periodic reports which are not audited or reviewed by an external auditor, as well as the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. The Board will devote time at annual Board meetings to fulfilling the roles and responsibilities associated with maintaining the Company’s internal audit function and arrangements with external auditors. All members of the Board will be involved in the Company’s audit function to ensure the proper maintenance of the entity and the integrity of all financial reporting. The Company’s Audit and Risk Committee Charter requires the CEO and CFO (or, if none, the person(s) fulfilling those functions) to provide a sign off on these terms. The Board ensures that before it approved the entity’s financial statements for a financial period it receives declarations that the financial records of the entity have been properly maintained and that the financial statement 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 operation effectively. YES The Company undertakes the following process to verify the integrity of the information in periodic corporate reports (to the extent that the information contained in the reports are not audited or reviewed by an external auditor): (i) All periodic corporate reports are initially prepared by the Company’s technical and accounting teams; RECOMMENDATIONS (4TH EDITION) COMPLY EXPLANATION (ii) Draft periodic corporate reports are initially reviewed by the Managing Director; (iii) Following Managing Director review, the Company’s NonExecutive Directors review the draft periodic corporate reports and are able to interrogate the executive and Managing Director on the content of periodic corporate reports; (iv) The Board receives declarations 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 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; Pursuant to the Board Charter, all Directors have the ability to seek external advice on the content of periodic corporate reports if considered necessary. Principle 5: Make timely and balanced disclosure Recommendation 5.1 YES The Company has a Continuous Disclosure Policy, which is available on the Company’s website. Recommendation 5.2 A listed entity should ensure that its board receives copies of all material market announcements promptly after they have been made. YES Pursuant to the Company’s Continuous Disclosure Policy, all members of the Board will receive material market announcements promptly after they have been made. Recommendation 5.3 YES All substantive investor or analyst presentations will be released on the ASX Market Announcement Platform ahead of such presentations. A listed entity should have and disclose a written policy for complying with its continuous disclosure obligations under listing rule 3.1. A listed entity that gives a new and substantive investor or analyst presentation should release a copy of the presentation materials on the ASX Market Announcements Platform ahead of the presentation. RECOMMENDATIONS (4TH EDITION) COMPLY EXPLANATION Principle 6: Respect the rights of security holders Recommendation 6.1 YES A listed entity should provide information about itself and its governance to investors via its website. Recommendation 6.2 YES A listed entity should have an investor relations program that facilitates effective two-way communication with investors. Recommendation 6.3 The Company has adopted a Shareholder Communications Strategy which aims to promote and facilitate effective two-way communication with investors. The Strategy outlines a range of ways in which information is communicated to shareholders and is available on the Company’s website. YES Shareholders are encouraged to participate at all general meetings and AGMs of the Company via its Notice of Meeting made available to all shareholders. YES All substantive resolutions at securityholder meetings will be decided by a poll rather than a show of hands. YES The Shareholder Communication Strategy provides that security holders can register with the Company to receive email notifications when an announcement is made by the Company to the ASX, including the release of the Annual Report, half yearly reports and quarterly reports. Links are made available to the Company’s website on which all information provided to the ASX is immediately posted. A listed entity should disclose how it facilitates and encourages participation at meetings of security holders. Recommendation 6.4 A listed entity should ensure that all substantive resolutions at a meeting of security holders are decided by a poll rather than by a show of hands. Recommendation 6.5 A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically. Information about the Company and its governance is available on the Company’s website. Shareholders queries should be referred to the Company Secretary at first instance. RECOMMENDATIONS (4TH EDITION) COMPLY EXPLANATION Principle 7: Recognise and manage risk Recommendation 7.1 YES (a) The Board of a listed entity should: (a) have a committee or committees to oversee risk, each of which: (i) (ii) has at least three members, a majority of whom are independent Directors; and is chaired by an independent Director, and disclose: (iii) the charter of the committee; (b) (iv) (v) (b) the members of the committee; and 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 if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the process it employs for overseeing the entity’s risk management framework. Recommendation 7.2 The Board or a committee of the Board should: (a) (b) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound and that the entity is operating with due regard to the risk appetite set by the Board; and disclose in relation to each reporting period, whether such a review has taken place. YES (a) The Company does not currently have an Audit and Risk Committee. The Company has an Audit and Risk Committee Charter that provides for the establishment of an Audit and Risk Committee with at least three members, all of whom must be non-executive Directors, and majority of the Committee must be independent Directors. The Committee must be chaired by an independent Director who is not the Chair. A copy of the Audit and Risk Committee Charter is available on the Company’s website. The Company does not have an Audit and Risk Committee as the Board considers the Company will not currently benefit from its establishment. In accordance with the Company’s Board Charter, the Board undertakes out the duties that would ordinarily be carried out by the Audit and Risk Committee under the Audit and Risk Committee Charter including the following processes to oversee the entity’s risk management framework.