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Corporate Governance Policy

Ferrowest's prime focus is the development of the Yalgoo Iron Project and the Company shall be managed to implement its business plans in accordance with its Mission Statement & Corporate Goals.

The Board of Ferrowest are committed to high standards of Corporate Governance in the performance of their duties. The following summary identifies the main Corporate Governance Policies of the Company:

The Directors are accountable to the shareholders of the Company as a whole for the performance of Ferrowest.

The Board has determined that its primary function is in:

• Establishing, monitoring and reviewing the strategic direction of the Company;
• Delegating management authorities;
• Approving master budgets and allocating financial resources;
• Reviewing financial performance to budget and amending where required;
• Approving material transactions, significant management initiatives, investment strategies and major capital purchases or divestments;
• The appointment or termination of key personnel; and
• Evaluating corporate risk;

Day to day operation of the Company is delegated to the Managing Director, who is accountable to the Board. The Board also retains certain powers that it does not delegate to management. The delegation of authority and responsibility is clearly defined.

The Board has been structured to offer expertise across a range of technical disciplines that are key to implementation of the Company's business plans at this stage of its development.

The Board will seek to nominate persons to the Board who have the suitable qualifications, experience and skills to augment the capabilities of the Board.

While your Board concurs with the principle of having a majority of non-executive and independent directors on the Board, it is considered that a Board with a majority of executive directors can add more value to the management of the Company at this stage in its development.

The Board will seek to maximise non-executive and independent representation on the Board in the future, within the constraints of prudent management practice.

The role of Chairman is held by an independent non-executive director.

The Board operates an Audit Committee.

The current Audit Committee members are:

• Mr. Bob Duffin (Audit Committee Chairman)
• Mr. Philip Evers
• Mr. Barry Wyatt

The Board does support the normal view that the Chairman of the Company should not be the Chairman of the Audit Committee but with the current make-up of the board, the Chairman of the board is the only member not providing operational services to the Company. Therefore the Board deems him to be the most independent member for the purposes of chairing the Audit Committee under the current structure. The Audit Committee is in the process of establishing a formal charter.

The Board also operates a Remuneration Committee.

The current members of the Remuneration Committee are:

• Graeme Johnston (Remuneration Committee Chairman)
• Mr. Philip Evers
• Mr. Brett Manning

Given the relatively small size of the Company and Board, the Board will not establish a Nomination Committee at this stage, retaining these responsibilities as a full Board function.

The Company has a Code of Conduct that binds directors, officers and employees.

The Company makes directors, officers and employees aware of their responsibilities under the Corporations Act 2001 when trading in the shares of the Company.

Good communication with shareholders is important to the Board and it intends to keep shareholders informed of the Company's activities.

The Company will implement a systematic risk assessment program in parallel with the studies into the Yalgoo Iron Project.

The shareholders of the Company approved total fees payable to non-executive directors of $250,000 per annum at a General Meeting of the Company held on 3 November 2005.

The Board has resolved that the current director's fees that will be payable from the date that the ASX grants quotation of the Company's shares on the ASX to be:

• Non-executive directors - $38,150pa
• Non-executive chair - $54,500pa

These amounts include an allowance for statutory superannuation.

Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred as a result of attendance at Board meetings and the discharge of other director related duties.

Board members are not provided any additional remuneration in respect of any standing Board Committee memberships.