STATEMENT OF CORPORATE GOVERNANCE

The Board of Directors of Allied Gold Limited has adopted the following set of principles for the corporate governance of the Company. These principles establish the framework of how the Board carries out its duties and obligations on behalf of the shareholders and were in place throughout the financial year.

The Board of Directors

Role of the Board

The Board of Directors is responsible for setting the strategic direction and establishing the policies of Allied Gold Limited and the consolidated entity. It is responsible for overseeing the financial position, and for monitoring the business and affairs of the Company and the consolidated entity on behalf of the shareholders, by whom the directors are elected and to whom they are accountable. It also addresses issues related to internal controls and approaches to risk management.

Composition of the Board

The directors’ report contains details of the directors’ qualifications, experience and special responsibilities.

Under the Constitution the minimum number of directors is three and the maximum is ten. Directors are not appointed for a fixed term. At each annual general meeting one third of the directors other than the Managing Director must resign by rotation, with those serving the longest resigning first. Resigning directors may stand for re-election. Presently the Board comprises four directors. Mr Mark Caruso is the Chairman, which is not an executive role. Mr Jeff Moore is the Managing Director and is responsible for managing the operations of the Company. In this capacity he is responsible for corporate compliance and financial administration. Mr Greg Steemson is a non-executive director. Details of directors’ shareholdings are disclosed in the directors’ report and financial report. There are no retirement schemes other than the payment of statutory superannuation contributions.

Any equity based compensation of directors is required to be approved in advance by shareholders.

Independent professional advice

The Company has procedures enabling any director or committee of the Board to seek external professional advice as considered necessary, at the Company’s expense subject to prior consultation with the Chairman. A copy of any advice sought by a director would be made available to all directors.

Conflict of interest

In the event that a potential conflict of interest may arise, involved directors must withdraw from all deliberations concerning the matter. They are not permitted to exercise any influence over other Board members.

Shareholders relations and communications

The Company’s shareholders are responsible for voting on the appointment of directors. The Board informs shareholders of all major developments affecting the Company by:

1. Preparing half yearly and annual financial reports and making these available to all shareholders.
2. Advising the market of matters requiring disclosure under Australian Stock Exchange Continuous Disclosure Rules.
3. Maintaining a record of significant ASX announcements on the Company’s website.
4. Submitting proposed major changes in the Company’s affairs to a vote of shareholders, as required by the Corporations Law.
5. Reporting to shareholders at annual general meetings on the Company’s activities during the year. All shareholders that are unable to attend these meetings are encouraged to communicate issues or ask questions by writing to the Company.
6. As a consequence of the merger by Plan of Arrangement with Nord Pacific Limited, Allied Gold Limited has more than 300 shareholders resident in the United States of America and accordingly is a foreign private issuer under US Securities Laws. This means that all public announcements made in Australia must also be filed in the United States (and Canada), and the annual financial statements must be filed on Form 20-F. This requires a reconciliation to US GAAP reporting and requires adherence to Sarbannes-Oxley compliance for US reporting.

Board committees

The entire Board undertakes the function of an Audit Committee. The duties of this committee include:

7. to be the focal point of communication between the Board, management and the external auditor;
8. to recommend and supervise the engagement of the external auditor and monitor auditor performance;
9. review the effectiveness of management information and other systems of internal control;
10. review all areas of significant financial risk and arrangements in place to contain those to acceptable levels;
11. review significant transactions that are not a normal part of the Company’s business;
12. review the year end and interim financial information and ASX reporting statements;
13. to monitor the internal controls and accounting compliance with the Corporations Act, ASX Listing Rules, external audit reports and ensure prompt remedial action where required; and
14. review the Company’s financial statements and accounting procedures.

The Company’s auditor is invited to attend the annual general meeting and the Company supports the principle of the auditor being available to answer questions on the conduct of the audit and the content of the audit report.

The Board has not formally constituted a Nomination Committee or a Remuneration Committee. The whole Board conducts the functions of a Nomination Committee and Remuneration Committee.

Internal control framework and business risk management

The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective internal control system will preclude all errors and irregularities. To assist in discharging this responsibility the Board has instigated an internal control framework that includes the following.

15. Financial reporting – there is a comprehensive budgeting and forecasting system with updates provided to the Board at each Board meeting. Periodic reports are provided to the Board. Quarterly, half yearly and annual reports are prepared in accordance with the Corporations Act and ASX Listing Rules.
16. The Managing Director and the Company Secretary are required to confirm in writing that the Company’s financial reports present a true and fair view, in all material respects, of the Company’s financial condition and operational results and are in accordance with relevant accounting standards.
17. The Company has written policies covering health, safety and the environment.

Ethical standards

The Board adopts a proactive approach to promoting the practice of high ethical standards. All directors and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the Company, in the following areas;

18. professional conduct,
19. dealings with suppliers, advisers and regulators,
20. dealings with the community and specifically in dealings with traditional landowners, and
21. dealings with other employees.

Privacy

The company has resolved to comply with the National Privacy Principles contained in the Privacy Act 1988, to the extent required for a company the size and nature of Allied Gold Limited.

ASX Guidelines on Corporate Governance

Pursuant to ASX Listing Rules the Company must provide a statement disclosing the extent to which the ASX best practice recommendations have not been followed in the reporting period. Below the Company provides an explanation of any areas where Allied Gold Limited does not presently comply withy ASX best practice recommendations.

A majority of the Board of directors is not comprised of independent directors under the ASX definition of independent, and the Chairman is not an independent director.

Mr Mark Caruso is the Managing Director of Mineral Commodities Limited, a company that controls 12.8% of the issued shares of the Company. Mr Greg Steemson is a also a director of Mineral Commodities Limited and Mr David Lymburn is the Company Secretary. ASX considers that a person with an interest in a company with a substantial shareholding in the reporting company is not independent.
Mr Jeff Moore as the Managing Director is an executive employee and therefore by definition is not an independent director.

Each individual member of the Board is satisfied that whilst the Company may not comply with a strict interpretation of this particular best practice recommendation, the Board always acts with independence and in accordance with the Statement of Corporate Governance.

The ASX guidelines prescribe that a Company should have a written policy regarding trading in the Company’s securities. The Company does not presently have a written policy. However the practices followed in this respect are as follows;

Directors are bound by disclosure agreements in the form recommended by ASX. The Company adheres to a regime of continuous disclosure as prescribed by the ASX Listing Rules and actively promotes confidentiality in all its dealings, and encourages such a practice with all staff and key consultants. This culture of confidentiality is designed to protect the integrity of the Company’s intellectual property and “commercial in confidence” dealings. Another consequence of this culture is to exclude the notion of insider trading or abuse of confidential information. The ASX guidelines also prescribe that the Company should maintain a dedicated corporate governance information section on its website. Such a dedicated information section is not presently available on the Company’s website, although the annual financial report will be posted to the website and the Statement of Corporate Governance can be viewed there.

Disclaimer / Copyright ©, Allied Gold Limited, 2006 | All Rights Reserved | Designed by Infinite Logic.