Corporate Governance Policies

 

Ethical standards

Chatham Rock Phosphate Limited (the “Company”) expects its directors and employees to act legally, ethically and with integrity in a manner consistent with the Company’s policies, guiding principles and values. The Company has put measures in place to assist with achieving this expectation. This section provides an overview, with more detailed information included as separate embedded document links.

 

For more detailed information see our Code of Conduct

 

Role of the board

The Board of Directors of the Company is elected by the shareholders to supervise the management of the Company. The Board establishes the Company's objectives, overall policy framework within which the business of the Company is conducted and confirms strategies for achieving these objectives, monitors management's performance and ensures that procedures are in place to provide effective internal financial control. The Board is responsible for guiding the corporate strategy and direction of the Company and has overall responsibility for decision-making.  The Board delegates responsibility for implementing the Board’s strategy and for managing the operations of the Company to the Chief Executive Officer (CEO) and President.

 

Also see Director’s Position Description

 

 

Board composition and performance

The Board currently comprises eight directors including the Chair and the CEO. The Board meets monthly on a scheduled basis, and more frequently communicates by phone and email to prioritise and respond to issues as they arise. Board meetings are frequently held by conference call to reduce travel costs. The Chair of the Board is Robert Goodden. The Chair’s role includes managing the Board; ensuring the Board is well informed and effective; acting as the link between the Board and Chris Castle, the CEO; and ensuring effective communication with shareholders.  The Company does not at present have a formal director-training programme.

 

Board committees

The Board has an Audit committee comprising Linda Sanders, Jill Hatchwell.  It has a compensation committee comprising Robert Goodden and Robin Falconer. The Board has delegated certain of its responsibilities to these Committees.  The decisions of these Committee are reported back to the Board in order to allow the other members of the Board to question committee members. 

The Company has determined that it is not appropriate, nor in the best interests of its security holders to establish a Nomination Committee at this time. The Company considers it appropriate to deal with potential nominations at the full Board level and then leave the ultimate decision on Board composition to shareholders through any Board appointee being subject to re-election at the Company’s next annual meeting.

 

See Audit Committee Mandate

 

Reporting and disclosure

Management accounts are prepared prior to each Board meeting and reviewed by the Board throughout the year to monitor performance against budget targets and objectives. The Board must ensure the Company makes all disclosures required at law in its Annual Report.

 

Director remuneration

Directors are not paid fees but receive compensation on the basis of professional services provided. The Company does not have a remuneration policy however the remuneration of all directors is disclosed each year in the Company’s Annual Report and Information Circular for the Company’s annual shareholders meeting. Subject to shareholder approval and the relevant TSX-V and NZX Listing Rules and Policies, the directors may be remunerated other than in cash by way of an issue of equity securities.

 

Also see Compensation Committee Mandate

 

Operations

Chris Castle manages the Company’s wholly owned subsidiary Chatham Rock Phosphate (CRP) through an agreement with Aorere Resources Ltd (AOR). The Agreement has been in place since 2004 and regularly renewed since 2006 and there has been no alteration to the Agreement’s terms since just prior to CRP listing on the NZAX market in 2006 which altered the manner of fees payable to CRP for its services.  Under this Agreement, CRP has contracted Aorere Resources Ltd (AOR) to act as an investment consultant and provide certain other services.  AOR’s duties and responsibilities include:

  • Provision of investment advisory services including identification and acquisition of an appropriate business or mineral exploration projects
  • Assisting CRP to raise equity funds
  • Ensuring that CRP receives appropriate legal, accounting and taxation advisory support
  • Provision of administrative and company secretarial services to CRP
  • Provision of research facilities and a database (which shall at all times remain the property of AOR) to assist the board of CRP to make investment decisions.

If specialist advice is required in relation to any of CRP’s activities, AOR shall engage such professional assistance considered necessary at CRP’s cost.  For these services CRP pays fees to AOR based on independent advice provided to the CRP board.

 

Risk management

The Board reviews management practices in relation to identification and management of significant business risk areas and regulatory compliance. The Board regularly reports the risks associated with its investments on its website.  The Company obtains directors' and officers' liability insurance to cover directors acting on behalf of the Company.

 

Meetings of Directors

The board meets every six weeks, with most meetings held by conference call to reduce travel costs. The board has two sub-committees (audit and remuneration) that meet whenever required.

 

Shareholder relations

The Company aims to ensure that shareholders are informed of all major developments affecting the Company affairs. Information is communicated to shareholders in the Annual Report, Interim Reports and Information Circular for the Company’s annual shareholders meeting, and regular TSX-V and NZX announcements. The Company maintains an email address register on which any shareholder or stakeholder may request to be included. All announcements (other than those of an administrative nature) are sent to all recipients on the email register. The Company also maintains its website to provide comprehensive information about its operations, activities and investments.

 

Stakeholder interests

The Company does not currently have any employees or material creditors. The Board will remain cognisant of stakeholder interests as they develop and consider policies to deal with different stakeholders accordingly. The Company will maintain public information as described in these policies to give stakeholders access to relevant information.

 

Also see Corporate Policy Disclosure

 

Principal Business Risks

Prospective investors are cautioned that an investment in the Company is speculative and may involve a high degree of risk. An investment in this company is designed for people who can bear the loss of their entire investment. The principal risks are:

  • The Company presently has one major investment focus; developing an undersea rock phosphate prospect (“the Project”).  Thus it does not offer a range of investment options to spread investment risks.
  • This Project is at an embryonic stage of development and may not be successful.
  • Even if the Project is initially successful there is a risk that it could subsequently fail, for example if fertiliser prices subsequently fall making the Project uneconomic or unforeseen issues with extracting at the prospect arise.
  • The Company will at times be exposed to currency risks, including the international traded price of fertiliser commodities. For example, if the New Zealand dollar increases significantly in value these offshore prices will fall in value in New Zealand dollar terms which will have an adverse effect on both the financial position and in time the reported operating results of the Company.
  •  The Company is investing venture capital in the early stages of the Project that will need very large sums of money to become commercially successful. Even if the early results are successful, if sourcing the subsequent capital required for the next stages of these projects is not achieved then the Company could lose its entire investment.
  • There is a risk that whilst the underlying performance of the Company and its investments may be quite successful, this may not be reflected in the share price of the Company, meaning that the returns experienced by an individual shareholder may differ from the underlying performance of the Company.
  • The Company has no employees and is reliant on its key personnel, being its directors and advisers, to develop the Project.
  • An active trading market may not develop for listed securities of the Company.

However, shareholders should note that risk would be minimised to the extent that it can be by the following strategies:

  • The Company’s investment in the Project is financed solely from equity sources (the Company has no borrowings and no present intention to obtain borrowings);
  • The Project has been extensively researched;
  • There will be frequent monitoring of commodity prices and market conditions generally; and
  • Expert technical assistance has been engaged by the Company to advise it on various risks associated with the Project.

The above list is a general guide only and is not exhaustive.

Also see the Company’s Exploration Environmental Policy and Health and Safety Policy

 

Key Performance Drivers

The Company's goal is to develop the Project to the point where it generates profit and dividends/royalties, or alternatively can be profitably exited, either by trade sale or a takeover of the Company. If this strategy is successful, the value of the Company will increase and this should translate into an improved financial outcome measured both in terms of profit and increases in the net asset value of the Company. For this strategy to be successful, the key performance drivers of the company are:

  • To have the financial resources and expertise to add value to the Project;
  • To attract significant further capital to advance the Project - this will require industry expertise, marketing skills and strong negotiating abilities; and
  • To secure key partners to extract the resource at the Project, process the resource and buy the resource.

 

Returns to Investors

The Company is presently small with limited resources and no profitable trading operations. This is expected to remain the situation for the next few years. Any incoming cash flows for the next few years will be ploughed back into developing the Project. Accordingly it is not proposed to pay dividends for the foreseeable future.

Assuming a scenario where the Company is successful, the returns to investors should logically be reflected in increasing share values reflecting the improved financial position of the Company. Any improvement in financial position will be determined by the underlying performance of the Project and accordingly the activities and risks of the Company that are discussed above demonstrate the key factors that will determine returns through increased share values. However, even in these circumstances, if investors don't consider the Company to be an attractive investment, or if market conditions are generally depressed, there can be no certainty that the value of the Company's shares will reflect any increased underlying value of the Project.

The nature of returns intended by the Company are accordingly through capital growth meaning returns on an investment in the Company will most likely only be received through a longer term holding of securities of the Company.

1. Code of Conduct

a. Statement of Standards

The Company is committed to operating in accordance with the best standards of professional and business ethics. The Company has the responsibility to protect and enhance its value to its shareholders through responsible management and by being a good corporate citizen.

Every person acting on behalf of the Company represents the Company and is expected to act responsibly and in a manner which will reflect the Company’s dedication to honesty, integrity and reliability, and enhance the Company’s reputation for performance of its obligations.

Any Company representative aware of any contravention of this Code of Conduct (“Code”) is expected to report the matter promptly to the Chief Executive Officer. This code details the specific terms of the Company’s commitment to uphold high moral and ethical standards and to specify the basic norms of behavior for those conducting its business.

All incoming Directors, Officers and advisers will be asked to acknowledge their commitment to the letter and spirit of the Code of Conduct and its associated corporate policies and will be required to sign the acknowledgement indicating compliance with the Code of Conduct. Any independent third party, such as consultants, agents or independent contractors retained to do work or represent CRP interests may also be asked to acknowledge the Code of Conduct principles and corporate policies applicable to their work.

Compliance with the Law - The Company and Directors, Officers and advisers acting on its behalf shall comply with the lawful requirements which apply to the Company in any jurisdiction where it carries on business.

Health and Environment - It is the Company’s policy that it will conduct its business with regard for the protection of human health and sensitivity for the environment, including compliance with local environmental standards and legal requirements. It is the policy of CRP to maintain safe working conditions, comply with health and safety legislation, maintain equipment and premises in safe condition, and ensure all Directors, Officers and advisers comply with safety procedures acceptable to the authorities in the particular countries of operation.

The Company’s policy concerning the work environment prohibits the use of alcohol, illegal drugs and other illegal substances in the work place, as well as the use of such substances off the work site that would adversely affect job performance and affect health and safety. All Directors, Officers and advisers are responsible for ensuring there is a safe and secure working environment.

Personal Gain - Directors, Officers and advisers shall not use their status to obtain personal gain or benefit from other staff members or from those doing or seeking to do business with the Company.

Dealing with Others - All dealings between Directors, Officers and advisers acting for the Company and public officials and other persons must be conducted in a manner that will not compromise the integrity or question the reputation of any public official or other person, the individual or the Company.

Conflicts of Interest - The Company requires that Directors, Officers and advisers avoid all situations in which their personal interests conflict or might appear to conflict with their duties with the Company. Directors, Officers and advisers should avoid acquiring any interests in or participating in any activities that would tend to deprive the Company of the time or attention required to perform their duties properly; or create a distraction that might affect their judgment or ability to act solely in the Company’s best interests.

Directors, Officers and advisers are prohibited from using or disclosing any information about CRP or any of its subsidiary or associated companies for personal gain or at the expense of the Company.

Directors, Officers and advisers shall disclose in writing all business, commercial, and financial interests or activities where such an interest or activity might reasonably be regarded as creating an actual or potential conflict with their duties. Every Director, Officer and staff member of the Company who is charged with managerial or supervisory responsibility is required to see that actions taken and decisions made within their jurisdiction are free from the influence of any interest that might reasonably be regarded as conflicting with those of the Company.

Company Property  - The Company’s assets are not intended for personal use, and any such use requires written authorisation from the Chief Executive Officer or Chief Financial Officer. All transactions relating to the Company and its assets and liabilities are to be recorded on a timely basis.

Directors, Officers and advisers have a collective responsibility to protect the Company’s assets from fraud and theft and ensure records are accurate, timely and complete. Therefore, every Director, Officer and adviser has the responsibility to report, in line with this Code and the Corporate Accountability Policy, any knowledge of:

  1. use of Company funds or property for any illegal, improper or unethical purpose (for example, fraud, theft of corporate property or embezzling funds, misappropriating funds, assets or corporate information, bribes, kickbacks or influence payments or misdirecting funds to related parties);
  2. tampering with any of the Company’s accounting or audit-related records or documents (in any format, including electronic records such as e-mails) or destroying any accounting or audit-related records or documents except as otherwise permitted or required by the Company’s records retention policy;
  3. fraud or deliberate error in the preparation, evaluation, review or audit of any of the Company’s financial statements;
  4. fraud or deliberate error in the recording and maintaining of the Company’s financial records (for example, overstating expense reports, falsifying time sheets, preparing erroneous invoices, misstating inventory records or describing an expenditure for one purpose when, in fact, it is being made for something else);
  5. deficiencies in or non-compliance with the Company’s internal accounting controls (for example, circumventing review and approval procedures);
  6. misrepresentations or false statements to or by a senior officer or accountant regarding a matter contained in the Company’s financial records, financial reports or audit reports;
  7. deviation from full and fair reporting of the Company’s financial condition, results of operations or cash flows; and
  8. any effort to mislead, deceive, manipulate, coerce or fraudulently influence any internal or external accountant or auditor in connection with the preparation, examination, audit or review of any financial statement or records of CRP.

Confidentiality - Unless already published or in the public domain, all confidential information including, but not limited to, records, reports, papers, plans and other information of the Company and all subsidiary and affiliated companies, is to be regarded as confidential. Directors, Officers and advisers are prohibited, either during or after termination of their contract, from revealing such information without proper authorisation. Inside information obtained as a result of the individuals’ position shall not be removed, disclosed to others nor used for personal financial gain.

Work Environment - The Company must provide conditions of employment and management practices that will earn and support superior performance by its Directors, Officers and advisers. Each individual’s contribution must be respected and appropriately rewarded. All Officers and advisers must be given every reasonable opportunity to grow to the full extent of their abilities.

Directors, Officers and advisers are expected to support and promote the Company policy of providing a work environment in which individuals are treated with respect, provided with equality of opportunity based on merit and kept free of all forms of discrimination. Discrimination will not be tolerated at any level in the Company or in any element of the contractual relationship. This includes areas such as recruitment, promotion, training, salary, benefits and terminations. Officers and advisers are to be treated as individuals and given opportunities based on merit and abilities.

Differences such as age, race, sex, colour, religion, political belief, marital or family status and physical limitations are to be respected. Advisers can expect to have their dignity honoured and their rights protected and are entitled to freedom from sexual and all other forms of personal harassment and are expected to sustain an environment that encourages personal respect. In recognition of our international presence, we respect the cultures and customs of the places where we operate without compromising consistent ethical standards.

Corporate Accountability  - The audit committee of the Board of directors of the Company is responsible for establishing procedures for:

  1. the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls and auditing matters; and
  2. the confidential, anonymous submission by advisers of the Company of concerns regarding questionable accounting or auditing matters;

and in connection therewith, the Board has adopted this Policy. The Board has adopted this Policy to ensure that the Audit Committee has the responsibility of overseeing this Policy and compliance by all the Company’s Advisers (as defined below). The Audit Committee has delegated the day-to-day administration of this Policy to the Chief Executive Officer (the “Designated Officer”).

Reporting of complaints - All directors, officers and advisers of the Company and its subsidiaries are required to promptly report any complaints.

Confidentiality – The Company is fully committed to maintaining procedures for the anonymous and confidential reporting of complaints by advisers and members of the public. All reports of complaints will be treated on a confidential basis. Generally, a report of a complaint will only be disclosed to those persons who have a need to know in order to properly carry out an investigation of such complaint in accordance with the procedures referred to in this Policy.

Prohibition of retaliation  - There will be no retaliation or other action taken against any adviser who, in good faith, reports a complaint. Anyone engaging in retaliatory conduct will be subject to disciplinary action by the Company, which may include termination.

More specifically, neither the Company, nor any person acting on behalf of CRP or in a position of authority in respect of the Company’s advisers will take any disciplinary measure against, demote, terminate or otherwise adversely affect the employment of advisers or threaten to do so with the intent to compel an adviser to abstain from reporting a complaint or with the intent to retaliate against the adviser because the adviser has reported a complaint. Engaging in retaliatory conduct may be considered an offence under various Canadian, New Zealand and other applicable laws.

Policy review - This Policy and its effectiveness will be reviewed by the Audit Committee at least annually, with recommendations regarding updates or amendments, if any, being made to the Board as required.

Inquiries – Any questions with respect to the general application of this Policy should be made to the Chief Executive Officer.

Examples of complaints - By way of example, complaints which should be reported pursuant to this Policy include without limitation:

  1. use of Company funds or property for any illegal, improper or unethical purpose (for example, fraud, theft of corporate property or embezzling funds, misappropriating funds, assets or corporate information, bribes, kickbacks or influence payments or misdirecting funds to related parties);
  2. tampering with any accounting or audit-related records or documents (in any format, including electronic records such as e-mails) or destroying any accounting or audit-related records or documents except as otherwise permitted or required by the Company’s records retention policy;
  3. fraud or deliberate error in the preparation, evaluation, review or audit of any ofthe Company’s financial statements;
  4. fraud or deliberate error in the recording and maintaining of the Company’s financial records (for example, overstating expense reports, falsifying time sheets, preparing erroneous invoices, misstating inventory records or describing an expenditure for one purpose when, in fact, it is being made for something else);
  5. deficiencies in or non-compliance with the Company’s internal accounting controls (for example, circumventing review and approval procedures);
  6. misrepresentations or false statements to or by a senior officer or accountant regarding a matter contained in the Company’s financial records, financial reports or audit reports;
  7. deviation from full and fair reporting ofthe Company’s financial condition, results of operations or cash flows; and
  8. any effort to mislead, deceive, manipulate, coerce or fraudulently influence any internal or external accountant or auditor in connection with the preparation, examination, audit or review of any financial statement or records of the Company.

Reporting complaints - Advisers may report complaints by either internal or external means, following the procedures set out below. Both processes are confidential.

An Adviser wishing to report a complaint using internal means may refer a complaint to the Designated Officer, who will treat all disclosures in confidence and will involve only those individuals who need to be involved in order to investigate such complaint.

An Adviser may refer a Complaint to one or both of the Chair of the Audit Committee and a member of the Audit Committee, if it has not been effectively addressed after being raised internally with the Designated Officer or if the complaint relates to the conduct of a Designated Officer.  A member of the public should report their complaint directly to the Designated Officer or the independent Directors.

Publicising the Process for Reporting Complaints -  A copy of this Policy will be posted on the Company’s website. The Company will also make known to its advisers and members of the public the process for reporting complaints on a confidential basis on an ongoing basis. This information will make it clear that no adviser will be penalised for making a good-faith report of a complaint, nor will the Company tolerate retaliation against an Adviser who makes a good-faith report of a complaint.

Manner of Investigation - The Designated Officer will review and assess the seriousness of all complaints promptly and determine, in consultation with others, if necessary, the manner in which complaints will be investigated, using internal and/or external resources, and will determine who will lead such investigation. In most instances, investigation of a complaint under this Policy will be led by the Chief Executive Officer in collaboration with one of the independent directors. If upon initial assessment of the complaint it appears that the Complaint could materially affect the financial statements of the Company or the integrity of the Company’s system of internal controls, the Designated Officer will advise the Chair of the Audit Committee immediately. It is anticipated that in the ordinary course, the Designated Officer will complete their assessment of each complaint and assign the investigation of such complaint generally within ten business days of receiving such complaint.

Persons assigned the investigation of complaints will:

  1. treat each report of a complaint, as well as its investigation and disposition on a confidential basis in accordance with the Policy;
  2. if so desired by the person reporting the complaint, take all reasonable steps to ensure that such person’s anonymity is maintained;
  3. will involve in each investigation only those persons who need to be involved in order to properly carry out such investigation; and
  4. conduct each investigation in a timely manner.

Monitoring the Status of the Investigation  - The investigation of all complaints will be monitored on an ongoing basis by the Designated Officer.  Depending on the nature of a complaint and its materiality as determined in the first instance by the Designated Officer, and in particular, with respect to any Complaint or Complaints that could materially affect the financial statements of the Company or the integrity of the Company’s system of internal controls, the Designated Officer will keep the Chair of the Audit Committee and the Chief Financial Officer (except to the extent any such persons are allegedly implicated in the Complaint) apprised of the status of the investigation for purposes of ensuring compliance with regulatory requirements, including the timely and continuous disclosure obligations of the Company and the certification obligations of the Chief Executive Officer and Chief Financial Officer of the Company.

Report to the Audit Committee - On a quarterly basis (as of the end of each fiscal quarter), or more frequently upon request, the Designated Officer and/or the independent directors as appropriate will provide an update on the status of any complaints received.  The Audit Committee may request special treatment for any particular complaint, including the retention of outside counsel or other advisers in accordance with the terms of the Audit Committee Charter.

Retention of complaints and investigations –   All complaints will be fully documented in writing by the person(s) assigned to investigate the complaint. Such documentation will be marked as “Privileged and Confidential” and will include:

  1. the original report of the complaint;
  2. a summary/log of the investigation;
  3. copies of any reports issued in connection with the complaint;
  4. a log of any communications with the complainant; and
  5. a summary of the disposition of the complaint.

Such documentation will be maintained in accordance with the Company’s records retention policy. Such documentation will be available for inspection by the Designated Officer, members of the Audit Committee, the external auditors and any external legal counsel or other advisers hired in connection with the complaints. Disclosure of such documentation to any other person, and in particular any third party, will require the prior approval of the Chief Executive Officer to ensure that privilege of such documentation is properly maintained.

2. Director’s Position Description

Every Director of the Company in exercising his powers and discharging his duties shall:

  • act honestly and in good faith with a view to the best interests of the Company.
  • exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Fiduciary Duty or the Duty of Loyalty - The fiduciary duty requires a Director to be honest in dealing with other Directors and with the Company. In fact, a Director must disclose all information he or she has to the Board. The collegial structure of the Board and the practical delegation of responsibilities to committees will suffer if Directors deprive their fellow Directors of important information they need to carry out their responsibilities and practice due diligence.

The fiduciary duty implies a duty of confidentiality. All information about the Board or the Company’s activities should be presumed to be confidential unless released to the public. Directors may not profit at the expense of the Company. They may not divert opportunities or benefits from the Company to themselves or put themselves in a position of conflict by competing with the Company for business opportunities. Directors must disclose their material interest in a party or contracts and should disclose these interests to the full Board and not just a committee.

Duty of Care - These responsibilities imply that the Directors attend meetings regularly, read the documents and briefing notes prepared for them prior to the meetings and follow-up on important matters. The business judgement rule protects boards and directors from those that might second-guess their decisions. However, Directors must ensure that the process by which they made a decision ensures that there was adequate information available, agendas and background documents in place, rigorous review and questioning is documented and that in-depth review where warranted is referred to the appropriate committee.

Overseeing and approving a strategy for the business - The Directors, individually and collectively, have the responsibility to participate in developing and approving the mission of the business, its objectives and goals, and the strategy by which it proposes to reach those goals. Directors must ensure there is congruence between shareholder expectations, Company plans and management performance.

Management of the Board and selection and oversight of senior management - Directors, individually and collectively, are responsible for managing the Board affairs, including planning its composition, selecting its chair, nominating candidates for election to the Board, appointing committees and determining Director compensation. Directors, individually and collectively, have the responsibility for management succession including the appointment, monitoring and replacement of the Chief Executive Officer as well as Chief Executive Officer compensation. Directors have the responsibility for approving the appointment and compensation of senior management acting upon the advice of the Chief Executive Officer.

Monitoring and Acting - Directors, individually and collectively, have the responsibility for monitoring the company’s performance against goals and revising strategy as appropriate.

Approving Policies and Procedures for implementing strategy - Directors, individually and collectively, have the responsibility for approving all significant policies and procedures and ensuring compliance with all laws and regulations, while adhering to the highest ethical and moral standards.

Reporting to shareholders on the performance of the business - Directors, individually and collectively, have the responsibility for the integrity and timely reporting to shareholders in addition to the approval of all dividends.

Approval and completion of routine legal requirements - Directors, individually and collectively, are responsible for ensuring all legal requirements, documents and records have been properly prepared, approved and maintained.

3. Audit Committee Mandate

The Board will elect the audit committee from among its members at the first meeting following the annual meeting of the shareholders.  It will be composed of at least three directors of whom the majority shall not be officers or advisers of the Corporation. A majority of the audit committee will constitute a quorum.

Any member of the committee may be removed or replaced at any time by the Board.  Any member of the committee ceasing to be a director will cease to be a member of the audit committee.  Each member of the audit committee will hold office until the next annual appointment of members with any vacancy filled at the next meeting of the Board.

Audit committee responsibilities

 1. Financial Accounting Matters:

  • Review with management and the external auditors the annual consolidated financial statements, the annual report including the management discussion and analysis and the press release before making recommendations to the Board relating to approval of the statements.  Timing:  year-end.
  • Review with management, and if deemed necessary with the external auditors, interim financial statements, the quarterly report including the management discussion and analysis and the press release before making recommendations to the Board relating to approval of the statements.  Timing:  first three quarters.
  • Review with management, and if deemed necessary with the external auditors, all financial statements included in a prospectus or annual Information Circular or any other public disclosure document containing financial information before making recommendations to the Board relating to the approval of the same.  Timing:  as required.
  • Review annually the accounting principles and practices followed by the Company and any changes in the same as they occur.  Timing:  annually near year-end.
  • Review new accounting principles of the Canadian Institute of Chartered Accountants, which would have a significant impact on the Company's financial reporting as reported to the audit committee by management.  Timing:  annually near year-end or as required.
  • Review estimates and judgments and choices of accounting alternatives, which are material to reported financial information as reported to the audit committee by management.  Timing:  each quarter and year-end.
  • Review the status of material contingent liabilities as reported to the audit committee by management.  Timing:  each quarter and year-end.
  • Review the status of income tax returns and potentially significant tax problems as reported to the audit committee by management.  Timing:  immediately as known.
  • Review any errors or omissions in the current or prior year's financial statements. Timing:  immediately as known.

 

2. Internal Controls: 

Review with management, and if deemed necessary with the external auditors, the adequacy of the Company’s internal controls over financial reporting and disclosure controls and procedures to ensure that: 

  • effective internal controls over financial reporting have been designed to provide a reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the Company’s accounting principles;
  • disclosure controls and procedures have been designed to provide reasonable assurance that material information relating to the Company, including its consolidated subsidiaries, is made known to the board of directors in a timely manner.

 

3. External Auditors:

  • Review with management the performance and independence of the external auditors and report thereon to the Board at least annually, including, where appropriate, a recommendation to replace the external auditor.  Timing:  year-end.
  • Review with management the engagement letter of the external auditors and the scope and timing of the audit work to be performed as outlined in the Audit Plan.  Timing: annually.
  • Review with the external auditors the performance of management involved in the preparation of financial statements and any problems encountered by the external auditors, any restrictions on the auditors' work, the cooperation received in the performance of the audit and the audit findings.  Timing:  year-end.
  • Review the management letter with management and the external auditors, noting any significant recommendations on internal control made by them to management and management's response to the recommendations.  Timing:  mid-year starting in second year.
  • Review with management and the external auditors, estimated and actual audit fees.  Timing:  mid-year.

 

§  Receive and review with the external auditors a formal written statement prepared by the external auditors that discloses all relationships, including the nature of and fees for any non-audit services performed for the Company, between the external auditor and the Company and consider whether the nature and extent of such services could impact on the objectivity and independence of the external auditor and, if necessary, recommending that the full board take appropriate action to oversee the independence of the external auditor.  Timing: as required.

 

4. General Audit Matters

  • Inquire of management, and the external auditors as to any activities that may be or may appear to be illegal or unethical. Timing:  each quarter and year-end.
  • Review with management, and if deemed necessary, with the external auditors any material frauds reported to the audit committee. Timing: immediately as known. 
  • Review with the external auditors the adequacy of staffing for accounting and financial responsibilities. Timing:  year-end.
  • Report and make recommendations to the Board as the committee considers appropriate. Timing:  as required.

 

5. Other responsibilities 

The Board may refer to the audit committee such matters and questions relating to the Company and its affiliates as the Board may from time to time see fit.

Any member of the audit committee may require the auditors to attend any or every meeting of the audit committee.  The audit committee will elect a chairman from among its members and review and reassess the adequacy of the formal mandate on an annual basis.

The audit committee will determine times, places, calling of and procedures of its meetings. Notice of every meeting and the circulation of the financial statements to committee members will be at least 48 hours prior to the meeting. The auditors of the Company also will be given such notice of meetings and will be entitled to attend and be heard. Meetings will be convened whenever requested by the auditors, or any member of the audit committee.

At each meeting of the audit committee the independent members will meet without management and consider any matters tabled by any such member. At each meeting attended by the external auditors of the Company, the independent members will meet with the external auditors without management present and consider any matters tabled by any such member or the external auditors.

The audit committee will support the senior management team and the Board in keeping abreast of changes occurring or proposed to regulatory requirements and/or general accounting guidelines, so the Company adopts “best in class” accounting and internal control policies and practices.

All prior resolutions of the Board relating to the constitution and responsibilities of the audit committee are hereby repealed.

Outside of the Mandate but as a matter of routine at each Audit Committee Meeting, the Chief Financial Officer will make a series of reports, which will include;

  • The CFO is not aware of any frauds or thefts of Company property.
  • The CFO is not aware of any activities which may be illegal or unethical.
  • There are no new contingent liabilities except as reported.
  • There are no new tax reassessments or other tax issues except as reported.
  • There are no prior year accounting adjustments except as reported. 

4. Compensation Committee Mandate:

  1. The Board shall elect annually from among its members at the first meeting of the Board following the annual meeting of the shareholders, a committee to be known as the Compensation Committee to be composed of two or more independent directors as the Board may from time to time determine. A majority of the Compensation Committee members will constitute a quorum, with a minimum of two.
  2. Any member of the Compensation Committee may be removed or replaced at any time by the Board. Any member ceasing to be a director shall cease to be a member of the Compensation Committee. Subject to the foregoing, each member of the Compensation Committee shall hold office as such until the next annual appointment of members after his election. Any vacancy occurring in the committee shall be filled at the next meeting of the Board.
  3. The Board of Directors assumes responsibility for the stewardship of the Company, and as part of this stewardship, through the Compensation Committee, assumes responsibility for the following. The responsibilities of the Compensation Committee will include reviewing and making recommendations to the Board with respect to the overall compensation strategy and policies for Directors, Officers and advisers of the Company, more specifically these will include:
    1.  setting the goals and objectives for the compensation of the Chairman and Chief Executive Officer. Timing: annually and as required.
    2.  evaluating the performance of the Chairman and Chief Executive Officer relative to the goals and objectives set and recommending to the Board the compensation level of the Chairman and Chief Executive Officer based on this evaluation. Timing: annually and as required.
    3. reviewing the annual compensation of all other senior executive officers of the Company as recommended by the Chief Executive Officer. The Chief Executive Officer shall attend the Compensation Committee meeting when senior executive salaries are discussed. Timing: annually and as required.
    4. reviewing the Company’s issuance of Stock Options and Compensation Shares and recommending to the Board a prudent level for these instruments and any disbursements therefrom. Timing: as required.
    5. reviewing employment contracts for senior officers and employees and recommendation thereof and/or changes thereto to the Board. Timing: on-going
    6. reviewing the compensation of the Company’s Directors, based on work performed, responsibility assigned and liability incurred as assessed by the Chairman, Chief Executive Officer and the other Directors. Timing: as required.
  4.  In addition, the Board may refer to the Compensation Committee such matters and questions relating to compensation as the Board may from time to time see fit.
  5. Any member of the Compensation Committee may require experts to attend a meeting of the Compensation Committee.
  6. The Compensation Committee shall elect annually a chairman from among its outside director members.
  7. The times of and the places where meetings of the committee shall be held and the calling of and procedure at such meetings shall be determined by the Compensation Committee.

5. Corporate Disclosure Policy

In accordance with good corporate governance practices, the Company has implemented the following as its corporate disclosure policy.

Purpose - The purpose of the Company’s corporate disclosure policy is:

  1.  To ensure that every shareholder (existing and potential) has equal access to information that may affect their investment decisions;
  2. To ensure that material information (both positive and negative) about the Company is disclosed in a timely manner;
  3. To ensure that “insiders” are aware of their responsibilities regarding knowledge of “material facts” or “material changes” prior to such information being made public, and aware of the risks and penalties regarding the inappropriate and unauthorized disclosure of such information; and
  4. To assist “insiders” with determining whether information should be considered a “material fact” or a “material change”.

Determination of Material Information - When determining whether information is material, a number of factors must be considered including, the nature of the information itself, the volatility of the Company’s securities and prevailing market conditions. As the nature of the business changes, information that was once considered material may be considered immaterial and vice versa. The determination of whether information is material or not should be evaluated on a case by case basis – with the general guiding principle being whether such information would have, or could reasonably be expected to have a significant effect on the market price or value of the Company’s securities. If there is any doubt whether the information is material, the Company will take the position that the information is material and release it publicly.

Some examples of potentially material information are:

  • Changes in share ownership that may affect control of the Company
  • Major reorganisations, amalgamations, or mergers
  • Take-over bids, issuer bids, or insider bids
  • The public or private sale of additional securities
  • Planned repurchases or redemptions of securities
  • Planned splits of common shares or offerings of warrants or rights to buy shares
  • Any share consolidation, share exchange, or stock dividend
  • Changes in the Company’s dividend payments or policies
  • Possible initiation of a proxy fight
  • Material modifications to rights of security holders
  • Unexpected changes in the financial results for any periods
  • Shifts in financial circumstances, such as cash flow reductions, or major asset write-offs or write-downs
  • Changes in the value or composition of the Company’s assets
  • Any material change in the Company’s accounting policies
  • Any development that affects the Company’s resources, products or markets
  • A significant change in capital investment plans or corporate strategy
  • Major labour disputes or disputes with major contractors or suppliers
  • Significant new contracts or business, or significant losses of contracts or business
  • Significant exploration results
  • Changes to the Board of Directors or executive management
  • Commencement of, or developments in, material legal proceedings or regulatory matters
  • Waivers of corporate ethics and conduct rules for officers, directors or advisers
  • Any notice that reliance on a prior audit is no longer appropriate
  • Listing of the Company’s securities on a new quotation system or exchange or the de-listing of the Company’s securities or their movement from one quotation system or exchange to another
  • Significant acquisitions or dispositions of assets, property or joint venture interests
  • Acquisitions of other companies, including a take-over bid for, or merger with, another company
  • Acquisitions or sales of significant land holdings
  • The borrowing or lending of a significant amount of money
  • Any mortgaging or encumbering of the Company’s assets
  • Defaults under debt obligations, agreements to restructure debt, or planned enforcement procedures by a bank or any other creditors
  • Changes in rating agency decisions
  • Significant new credit arrangements
  • Changes in the laws, political stability or business environment in any international jurisdiction where the Company carries on business

The above list is not exhaustive and will be reviewed and amended by the Company on a regular basis.

Disclosure of Material Information - To ensure that every shareholder (existing and potential) has equal access to information that may affect their investment decisions, the Company will disclose all material information as soon as practicably possible. All material changes will be disclosed through the issuance and filing of a press release through a widely circulated news or wire service. Additionally, a material change report will be filed within 10 days of the material change.

In rare instances, delay of disclosure of material information is permitted where immediate release of the information would be unduly detrimental to the Company’s interests (i.e. immediate disclosure might interfere with a Company’s pursuit of a specific objective or strategy, with ongoing negotiations, or with its ability to complete a transaction). In determining whether delaying the release of information is justified, the Company must determine that the release of the information would do more harm to the Company’s business then the general benefit to the market of immediate disclosure. Where the Company has determined to delay the release of the confidential information, it shall consider making a confidential filing with applicable securities regulator. In addition, the Company will monitor the market activity in the Company’s securities very closely – and should it appear to the Company that the confidential information has been leaked or is having an impact on the share price, it will take immediate steps to ensure that a full public announcement is made as soon as possible (with the Company contacting the exchange and requesting a trading halt pending the issuance of a news release).

Limited Disclosure of Material Information - The Company recognises that in some instances it will be necessary to disclose confidential information in the normal course of business. Canadian National Policy 51-201 (Disclosure Standards) has listed examples of instances where the “necessary course of business” exception would apply. Examples include communications with:

  • Vendors, suppliers, or strategic partners on issues such as exploration results, research and development, sales and marketing, and supply contracts;
  • Advisers, officers and board members;
  • Lenders, legal counsel, auditors, underwriters, and financial and other professional advisors to the Company;
  • Parties to negotiations;
  • Labour unions and industry associations;
  • Government agencies and regulators; and
  • Credit rating agencies (provided that the information is disclosed for the purpose of assisting the agency to formulate a credit rating and the agency’s ratings generally are or will be publicly available).

When the Company discloses information in the “necessary course of business” it will ensure that those receiving such information understand that they cannot pass the information along to anyone else (other than in the necessary course of business), or trade on the information, until it has been generally disclosed.

Disclosure of Information at Conferences and on the Company Website - The Company has implemented a strict policy that only information that has been generally disclosed (disclosed via Company press release) shall be used or spoken about at conferences and provided on the Company website.

Disclosure of Forecasts and Forward-Looking Information -The Company has adopted a policy not to provide forecasts of financial performance (i.e. no forecasts on earnings per share, revenue, etc.). However, the Company’s disclosure policy permits the disclosure of “forward-looking” statements, provided that such disclosure:

  •  states that the information is “forward-looking”;
  • contains a list of factors that could cause actual results to differ materially from the forward-looking statement; and
  • a description of the factors or assumptions that were used in making the “forward looking” statement.

Company’s Response to Market Rumours - The Company has adopted a no comment policy with respect to market rumours. The Company’s policy is to have regular communications with the exchange and applicable regulators with respect to any material information that the Company is withholding and the reasons for withholding such information. The Company will diligently respond to any exchange or regulator inquiries, specifically in response to irregular activity with the Company’s securities.

Unintentional Disclosure - In the event that the Company makes an unintentional disclosure of material information, it will take immediate steps to ensure that a full public announcement is made. The Company will contact the exchange and request that the stock be halted pending the issuance of a press release. Pending the public release of the material information, the Company will advise those parties who have knowledge of the information that the information is material and that it has not been generally disclosed.

Insider Trading and Tipping  - Any person who has a special relationship with the Company, which would include all directors, officers, advisers, persons engaging in professional or business activities for or on behalf of the Company and anyone who learns of material information from someone that the person knows or should know is a person in a special relationship with the Company, is prohibited from trading in the securities (including the exercise of any options) of the Company if they have knowledge of a material fact or material change about the Company that has not been generally disclosed. In addition, an appropriate amount of time should have elapsed after the material fact or material change has been disclosed before those with a special relationship with the Company trade securities of the Company. The Company suggests that an appropriate amount of time would be 24 hours from the time of general disclosure.

In addition, the Company has a policy where it will not issue options to anyone during a period where material information regarding the business and affairs of the Company exists, but has not been publicly disclosed.

All insiders will be provided with a copy of the Company’s disclosure policy and will be required to submit an acknowledgement to the Company stating that they have read the policy and agree to comply with its terms.

General - This policy applies to any person who has a special relationship with the Company, which would include all directors, officers, advisers, persons engaging in professional or business activities for or on behalf of the Company and anyone who learns of material information from someone that the person knows or should know is a person in a special relationship with the Company, if they have knowledge of a material fact or material change about the Company that has not been generally disclosed.

Specifically, all insiders should be aware of these trade restrictions and in the event that the insider wishes to exercise options or buy/sell securities of the Company, the insider will be required to advise in writing.

The Chief Executive Officer has been designated as the contact person should anyone have any questions regarding the Company’s corporate disclosure policy.

Blackout Periods - The Company has chosen to implement a regime where all sales or purchases of securities by Directors, Officers or advisers of the Company require the specific approval of the Chief Executive Officer (or in his absence, the Chairman of the Audit Committee).  If the Chief Executive Officer wishes to transact in the Company’s securities, he must obtain approval from the Chairman of the Audit Committee. A register comprising all requests and responses will be maintained by the Chief Executive Officer and advised to the Board at their next subsequent meeting. Any approval remains in place for a period of 10 days only from the approval date noted below, unless such approval is revoked earlier.

6. Exploration Environmental Policy

The Company’s wholly owned subsidiary CRP maintains the following policies:

Planning

  • To include environmental considerations in CRP’s decision-making.
  • To provide adequate resources for advisers at all levels to fulfil their responsibilities as directed under this policy.
  • To implement procedures to enable all activities to be carried out in an environmentally responsible way.
  • To conduct regular reviews of CRP’s environmental performance and act on the results.

Practices

  • To use environmental protocols for CRP’s key activities.
  • To assess the environmental impacts of CRP’s activities.
  • To plan, design, operate and complete any operation in a manner that reduces environmental risks.
  • To use appropriate and effective methods for minimising and mitigating the impact of CRP’s activities in the environment.
  • To monitor environmental compliance in a professional manner.
  • To abide by applicable environmental laws in the country or area in which the particular operations are conducted.

People

  • To appoint advisers and contractors on criteria which includes that they have the appropriate skills and experience to carry out work in a way that is compatible with good environmental performance.
  •  To specify the need for all staff and contractors to carry out their work in accordance with this Environmental Policy.
  • To communicate with affected individuals, community and government groups about CRP’s activities as relevant.
  • To show intelligent consideration for local cultures and customs.
  • CRP will hold advisers and contractors accountable for their environmental performance.

7. Health and Safety Policy

CRP aims to be the premier supplier of direct application phosphate to the New Zealand and global agricultural sector.  CRP is passionate about the benefit of direct application fertiliser to sustainable farming and agricultural practices.  CRP’s objectives remain to:

  • Achieve consent of the Chatham Rise project and develop the asset
  •  Diversify our product mix to include other phosphate resources
  • Maintain our involvement at the forefront of the marine minerals sector to leverage our expertise as a project pioneer
  • Develop a pathway for CRP products for the agricultural and retail sectors

Occupational Health and Safety issues rank equally with CRP’s corporate objectives. CRP is committed to development and maintenance of effective health and safety programmes. Through regular internal and external auditing it is CRP’s intent to achieve the highest possible standards for occupational health and safety in the minerals industry. To achieve a health and safety performance consistent with this Policy, CRP has adopted the following principles:


1. Planning

  • To include health and safety considerations in CRP’s decision-making,
  • To provide adequate resources for advisers at all levels to fulfill their responsibilities as directed under this policy.
  • To implement procedures to enable all activities to be carried out in a safe way.
  • To conduct regular reviews of the CRP’s health and safety performance and act on the results.

2. Practices

  • To ensure workers are consulted in the development of safe work practices.
  • To ensure workers are properly trained and advised of hazards and procedures to be followed in the event of an emergency.
  • To monitor health and safety compliance in a professional manner. Management will ensure that no job is given a priority such that it is carried out using either unsafe work methods or a hazardous environment.
  • To abide by applicable health and safety laws and regulations.
  • To comply with the principles of the health and safety policy of the appropriate industry representative organisations.

3. People

  • To appoint workers and contractors on criteria which includes that they have the appropriate skills and experience to carry out work in a way that is compatible with good health and safety performance.
  • To specify the need for all workers and contractors to carry out their work in accordance with this health and safety policy.
  • To advise workers of their responsibilities to safeguard their own health and safety.
  • To communicate with affected individuals, community and government groups about CRP’s activities as relevant.