Corporate Governance

The Board of Directors of Desert Mines and Metals Limited (the “Company”) is responsible for monitoring the business undertakings of the Company and protecting the rights and interests of shareholders. High standards of corporate governance are considered essential to give effect to these responsibilities. The Board has appointed a Corporate Governance Committee currently comprising the Chairman, the General Manager and the Company Secretary. The Company’s corporate governance policies are set and reviewed from time to time by the Board having regard to any changing circumstances of the Company and the best interests of shareholders. They comply with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (the ‘Principles’) as revised and reissued in August 2007.

This statement outlines the Company’s corporate governance policy for the financial year ended 30 June 2009. Any documents referenced in this statement as being available on the Company’s website can be found on this site.

1 LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

1.1 Functions reserved for the Board and those delegated to senior executives

The Board’s key objective is to increase of shareholder value by the successful exploration for and/or production of minerals. The Board focuses the Company’s activities on pursuing exploration opportunities in the mineral resource sector which are judged to have the potential for success, without exposing the Company to undue risk. Desert Energy’s principal current focus is on its uranium prospects. The Company’s main approach is to add shareholder value by the discovery of economic mineral deposits.

The Board is accountable to shareholders for the performance of the Company, and its responsibilities include:

(a) approval of corporate strategy including approval of budgets and monitoring performance against such budgets;

(b) determining the capital structure of the Company;

(c) appointing and determining the duration, remuneration and other terms of appointment of the chief executive(s) and other senior management;

(d) evaluating the performance of the chief executive(s) and other senior management;

(e) approval of financial and other periodic reporting requirements;

(f) approval of a risk management strategy and framework and monitoring their effectiveness;

(g) corporate governance systems and practices within the company;

(h) approval of investments, corporate acquisitions, new joint ventures; and

(i) appointment of the external auditors and principal advisors.

Remuneration and other terms of engagement for the directors are formalised in consulting agreements with their respective companies and the terms of these agreements are summarised in the annual Remuneration Report forming part of the Directors Report which accompanies the annual financial report.

Any new directors, who may be appointed to the Board, will be provided with a letter of appointment including their remuneration details together with copies of Company and Board policies, the Constitution and access to prior Board minutes and papers. New directors will also be advised of their confidentiality and disclosure obligations, share trading policy guidelines, indemnity and insurance arrangements.

Senior executives

The role of the two Executive Directors sharing the role of chief executive during the year under review has been to manage the Company’s exploration activities and business development on a day to day basis pursuant to authority delegated by the Board and implementation of Board and corporate policy and planning in accordance with approved exploration programmes and budgets. The Executive Directors report to the Board regularly and are under an obligation to make sure that all reports which they present give a true and fair view of the Company’s exploration and corporate activities.

1.2 The process for evaluating the performance of senior executives

The Board is responsible for setting the Executive Directors’ performance objectives and for evaluating their performance against them. The Chairman carries out an annual review of the adequacy of their remuneration and participation in share incentive arrangements.

The Board is responsible for the appointment of the Company Secretary, evaluating his performance on an annual basis and determining his remuneration.

2 STRUCTURE THE BOARD TO ADD VALUE

2.1 Board members’ independence

None of the Company’s three Directors are independent in terms of the Relationships affecting Independent Status (the “Categories”) in Recommendation 2.1 of the Principles. Notwithstanding this apparent non-compliance the Board is of the opinion that the objectives and current strategy of the Company are well served by retaining the current composition of the Board, irrespective of the Directors’ degree of independence. A determination with respect to independence is made by the Board on an annual basis. In addition the Directors are required on an ongoing basis to disclose relevant personal interests and conflicts of interest which may in turn trigger a review of a director’s independent status.

2.2 Chairman’s independence

As detailed above the chairman is considered not to be independent.

2.3 Roles of chairman and chief executive officer

The Company has complied with this Principle - the chief executive officer role is filled by the two Executive Directors.

Role of the Chairman

The Chairman is responsible for the effective conduct of meetings of directors and general meetings of shareholders. The Chairman is also responsible for settling the agenda for Board meetings with the Executive Directors. Any director of the Board may request an item of business to be included on the agenda.
While the Executive Directors are responsible to the Board as a whole and they also liaise with the Chairman regularly.

2.4 The Board should establish a nomination committee

A Nomination Committee has been established. The Board considers that it is in the best interests of the Company to determine the criteria for the selection of new directors based on any perceived “gaps” in the skill set of the Board as and when a casual vacancy arises.
Retirement and rotation of directors is governed by the Corporations Act and the constitution of the Company. Each

year, one-third of the directors must retire and offer themselves for re-election. Any casual vacancy filled between general meetings will be subject to a shareholder vote at the next Annual General Meeting of the Company.

Re-appointment of directors is not automatic. Shareholders are provided with relevant information on each of the candidates for election or, where applicable, re-election.

2.5 Board performance

Due to the size and composition of the Board, the Company does not have a formal process for the performance evaluation of the Board, its committees or individual directors.

Accordingly, no formal performance evaluation for the Board or its members took place in the reporting period.

New directors will have access to all employees to gain full background on the Company’s operations.

All directors have access to company records and information and receive regular detailed financial and operational reports from management. The Chairman regularly consults with the Executive Directors and the Company Secretary and may consult with and request additional information from any employee.

The Board collectively, and each director individually, has the right to seek independent professional advice at the expense of the Company to assist with the discharge of their duties. While the Chairman’s prior approval is required, it may not be unreasonably withheld.

Company Secretary

The Board is responsible for the appointment of the Company Secretary. The Company Secretary is responsible for providing directors with ongoing guidance and advice on commercial and corporate governance matters. The Company Secretary also provides guidance in the preparation of the semi annual and annual accounts.

3. PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING

3.1 Code of conduct

The Company has a code of conduct and is committed to achieving the following objectives:

(a) ensuring that all of its business affairs are conducted legally, ethically and with integrity;

(b) ensuring that the Company itself and its joint venturers who act as operators of projects in which the Company has an interest adopt high standards of occupational health and safety, environmental management and ethics;

(c) managing its legal obligations and the reasonable expectations of stakeholders effectively through the development and implementation of a risk management framework which incorporates these key areas; and

(d) fostering and maintaining a culture of ownership, care, professional excellence, confidentiality, integrity and freedom from any conflict or perceived conflict of interest in each of the Company’s employees and consultants.

Director Conflict of Interest

All directors are required to disclose any actual or potential conflict of interest upon appointment and are required to keep these disclosures to the Board up-to-date.

3.2 Trading in company securities

The Desert Energy Board policy is that directors, officers and employees are prohibited from dealing in the Company’s shares when they possess inside information. Prior approval of the Chairman is required by any Director or officer of the Company wishing to trade any securities in Desert Energy . ‘Inside information’ is information that, if it were generally available, would or would be likely to influence investors in deciding whether to buy or sell the Company’s securities.

4. SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

4.1 Audit committee

Desert Energy has established an audit committee.

The Audit Committee and the Board monitors the form and content of the Company's financial statements; it also maintains an overview of the Company’s internal financial control and audit system and risk management systems.

Additionally, on an annual basis, the Board, in line with its overall responsibility to shareholders, reviews the performance and independence of the external auditor and the continuation of that appointment. The Board also approves the remuneration and terms of engagement of the external auditor. Any appointment of a new external auditor will be submitted for ratification by shareholders at the next annual general meeting of the Company.

Corporate governance recommendations 4.2 and 4.3 do not apply as there is no audit committee.

5. MAKE TIMELY AND BALANCED DISCLOSURE

5.1 Compliance with ASX disclosure requirements

Compliance procedures to ensure timely and balanced disclosure of information in line with the Principles have been noted and adopted by the Company. The Company Secretary is charged with ensuring that any necessary steps which need to be taken by the Company are brought before the Board for discussion and, subject to amendment, approval.

The Company Secretary, assisted by the General Manager, is responsible for non-material and standard form disclosures to the market. In addition he is responsible for communications with the ASX.

Commentary on Financial Results

The Company provides commentary in the Directors’ Report accompanying its half yearly and yearly results in a clear and objective manner to ensure that shareholders and potential shareholders have access to the information needed to make an informed assessment of the Company’s activities and results.

6. RESPECT THE RIGHTS OF SHAREHOLDERS

6.1 Communication with and participation of Shareholders

The Board aims to ensure that shareholders are fully informed by communicating to shareholders through:

(a) continuous disclosure reporting to the ASX;

(b) the quarterly, half yearly and annual reports; and

Shareholders are given the option to receive information such as the Annual Report and Notices of Meeting /Explanatory Memoranda in print or electronic form.

Desert Energy Limited maintains a website at www.desertenergy.com.au and complies with the continuous disclosure requirements of the ASX Listing Rules. Shareholders may find all recent information on the Company under various headings on the Company’s website, including latest ASX releases, details of its projects and its Corporate Profile. Shareholders may also request a copy of the Company’s ASX recent releases.

7. RECOGNISE AND MANAGE RISK

7.1 Oversight and management of material business risks

The Company has a management policy in place for the identification and effective management of risk. The policy caters for the management of risk by the Board and management being principally the risks involved in exploration for uranium, gold, base metal and platinum group metals.

7.2 Design and implementation of systems to manage material business risks

Management has established a register of business risks and identified the material business risks affecting the Company. To the extent possible in a Company with a very small number of staff, internal controls are in place to mitigate against any material business risks. Risks of a strategic, financial and operational nature (such as ability to raise capital to fund exploration, commodity price and currency fluctuations, adequate levels of insurance, contract documentation, resourcing, and meeting financial reporting and compliance obligations) are reviewed on a regular basis by the Board as and when applicable.

Potential operational risks involved in running the Company are managed by the Board. Due to the size of the Company, the Board does not consider it practicable to establish a separate committee to focus on these issues but has designated that the Corporate Governance Committee be charged with the overall responsibility for the implementation of the policy and report to the Board on whether those risks are being managed effectively.

7.3 Compliance with Corporations Act Section 295A

The Board receives a declaration from an Executive Director Director and the General Manager covering the matters set out in section 295A of the Corporations Act 2001 and in accordance with the terms stipulated in Recommendation 7.3.

8. REMUNERATE FAIRLY AND RESPONSIBLY

8.1 Remuneration committee

The Company has constituted a remuneration committee to review Director remuneration.
The Remuneration Committee and the Board reviews, on an annual basis, executive remuneration and incentive policies. In addition, the Board reviews and approves the audited remuneration report set out in the Directors’ Report. The Board where needed consults external consultants and specialists.

8.2 Distinguishing remuneration structure

Remuneration for non-executive directors is fixed. Non-executive directors do not receive any retirement benefits, except that, as part of their fixed remuneration. For information about non-executive director remuneration practice, please refer to the audited remuneration report set out in the Directors’ Report.

Executive Directors

For information about the remuneration of the Executive Directors, reference can be made to the audited remuneration report set out in the Directors’ Report.