Northern Iron

Northern Iron has in place corporate governance practices that are formally embodied in corporate governance policies and codes adopted by the Board (the Policies). The aim of the Policies is to ensure that the Company is effectively directed and managed, that risks are identified, monitored and assessed and that appropriate disclosures are made.

In preparing the Policies, the directors considered the ASX Corporate Governance Council’s “Corporate Governance Principles and Recommendations” (ASX Principles). The Board has adopted these ASX Principles, subject to the departures noted below.

The directors incorporated the ASX Principles into the Policies to the extent that they were appropriate, taking into account the Company’s size, the structure of the Board, its resources, and its proposed activities.

The Board has adopted the following Policies.

Statement and Charters

• Corporate Governance Statement
• Board Charter
• Audit Committee Charter
• Remuneration, Nomination and Governance Committee Charter

Policies and Procedures

• Code of Conduct
• Trading in Company Securities
• Risk Management Policy (within the Board and Audit Committee Charters)
• Shareholder Communication Strategy
• Continuous Disclosure Policy
• Safety Policy
• Environmental Policy

As the Company and its activities grow, the Board may implement additional corporate governance structures and committees.

Set out below is the ‘If not, why not?’ report in relation to matters of corporate governance in which the Company’s practices depart from the ASX Principles and Best Practice Recommendations.

ASX Principle 2

• Recommendation 2.1 recommends that a majority of a company's board should be independent directors. On Listing on ASX the Board will comprise seven directors, only three of whom can be classified as "independent" under the ASX Principles.
  
  Explanation for departure
  
  The Board considers that its current composition (which includes an independent chairman with a casting vote at Board meetings) reflects the range of experience and skills required at this stage of the Company's development.
  
  One of the non-executive directors, Ashwath Mehra, fails to satisfy the independence test under the ASX Principles because his shareholding in the Company after Completion of the Offer will marginally exceed the relevant threshold set by the ASX Corporate Governance Council for this purpose.

ASX Principle 8

• The guidelines for Recommendation 8.2 suggest that non-executive directors should not receive option payments.
  
  Explanation for Departure
  
  The Board believes that this is an effective, low cost means of providing ownership of the Company to non-executive directors, whilst lowering cash compensation and conserving the Company’s cash reserves.

In relation to the above, the director’s believe that, notwithstanding the Company’s departures from the ASX Principles, the Board has implemented suitable practices and procedures with respect to corporate governance, considering the size of the Board and the size and maturity of the Company.

The Board wishes to acknowledge that nothing has come to its attention that would lead it to conclude that its current practices and procedures are not appropriate for an organisation of the size and maturity of the Company.

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