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Introduction

DiamonEx Limited ("Company") has adopted various systems of control and accountability as the basis for the administration of corporate governance. The Company's Board and management is committed to implementing the highest standards of corporate governance. In determining what those standards should involve the Company has turned to the ASX Corporate Governance Council's Principles of Good Corporate Governance and Best Practice Recommendations.

The Company advises that its practices are not entirely consistent with those ASX guidelines. While seeking to implement optimal corporate governance practices, the Company does not accept that "one size fits all" in relation to the effectiveness and efficiency of the practices recommended by the Council. The Company is working towards compliance but does not consider that some practices are appropriate for the Company due to the current size and nature of its operations.

The Company is in the process of developing a set of corporate governance practices that will customise the best practice recommendations to the needs of the Company. Practices, policies and procedures already adopted are summarised below. Other policies under development are also noted.

The following information is set out in this website, generally in order corresponding with the ASX Principles and Recommendations:

		Corporate governance disclosures and explanations these can be found on the Company's website (www.diamonex.com.au) and Annual Financial Report;
		Statement of Board and Management Functions;
		Remuneration & Nomination Committee;
		Policy and procedure for selection and appointment of new directors;
		Summary of code of conduct for directors and key executives;
		Summary of policy on securities trading;
		Audit & Risk Management Committee Charter;
		Policy and procedure for selection of external auditor and rotation of audit engagement partners;
		Summary of policy and procedure for compliance with continuous disclosure requirements;
		Summary of arrangements regarding communication with and participation of shareholders;
		Summary of Company's risk management policy and internal compliance and control system;
		Process for performance evaluation of the Board, Board committees, individual directors and key executives;and
		Corporate Code of Conduct.

A copy of the Ten Essential Corporate Governance Principles and the Best Practice Recommendations can be found on the ASX's website at www.asx.com.au.

STATEMENT OF BOARD AND MANAGEMENT FUNCTIONS

1. Role of the Board

The Board's key objectives are to:

		To effectively represent the interests of all shareholders; and
		To ensure the Company is properly governed.

2. Responsibility of the Board

The Board is collectively responsible for ensuring the success of the Company by:

		supervising the Company's framework of control and accountability systems to enable risk to be assessed and managed;
		ensuring the Company is properly managed by: - appointment and removal of the Managing Director, the Chief Financial Officer and the Company Secretary; - input into and final approval of management's development of corporate strategy, goals and performance objectives; - reviewing and ratifying systems of risk management and internal compliance and control, codes of conduct, and legal compliance; - monitoring senior management's performance and implementation of strategy, and ensuring appropriate resources are available; - to act with honesty, integrity and fairness;
		approving and monitoring the progress of major capital expenditure, capital management, acquisitions and disposals (including farm-in, farm-out and joint venture agreements);
		approval of budgets;
		approving and monitoring financial and other reporting;
		overall corporate governance of the Company, including conducting regular reviews of the balance of responsibilities within the Company to ensure division of functions remain appropriate to the needs of the Company;
		liaising with the Company's external auditors and the Audit & Risk Management Committee;
		adopting a formal code of conduct to be followed by the all directors, employees and contractors. The key aspects of this code are: - to act with honesty, integrity and fairness; - to act in accordance with the law; and - the use Company resources and property appropriately; and
		monitoring, and ensuring compliance with, all of the Company's legal obligations, in particular those obligations relating to the environment, native title, cultural heritage and occupational health and safety

The Board must convene regular meetings with such frequency as is sufficient to appropriately discharge its responsibilities.

The Board, and each individual director is entitled to seek independent professional advice at the Company's expense, subject to the reasonableness of the costs and Board consent in the conduct of their duties for the Company.

3. Composition of the Board

Within the cost limits appropriate to a company of DiamonEx's size, the board has been structured to provide optimum experience and oversight of the company's operations. The Board is currently comprised of 6 directors, of whom 4 hold their positions in a non executive capacity.

The composition of the Board is subject to review in the following ways:

		The Company's constitution provides that at every Annual General Meeting, one third of the Directors (excluding the Managing Director) are to retire from office. Each retiring Director under the Constitution is eligible for re-election.
		The full Board considers its composition on a regular basis to ensure that it has available an appropriate mix of skills and experience to ensure the interest of shareholders are served. The performance of the Board as a whole and that of individual Directors is subject to continuous assessment by the Chairman.

4. The Chairperson

The chairperson is responsible for leadership of the Board, for the efficient organisation and conduct of the Board's function and for the briefing of all directors in relation to issues arising at Board meetings. The chairperson is also responsible for shareholder communication and arranging Board performance evaluation.

5. Independence

The Chairperson, Mr Greg King, is an executive director and is not considered to be independent using the ASX's definition of independence.

The non-executive directors, along with all directors, are responsible for reviewing and challenging executive performance. They are also responsible for contributing to the development of strategy.

6. Executive Directors

Executive Chairman and Managing Director

The executive chairman and managing director are responsible for running the affairs of the Company under delegated authority from the Board and to implement the policies and strategy set by the Board. In carrying out their responsibilities the executive directors must report to the Board in a timely manner and ensure all reports to the Board present a true and fair view of the Company's financial condition and operational results.

POLICY AND PROCEDURE FOR SELECTION AND APPOINTMENT OF NEW DIRECTORS

Candidates for the Board are considered and selected by reference to a number of factors which include, but are not limited to, their relevant experience and achievements, independence, compatibility with other Board members, credibility within the Company's scope of activities, and intellectual and physical ability to undertake Board duties and responsibilities. Directors are initially appointed by the full Board, subject to election by shareholders at the next general meeting.

CODE OF CONDUCT FOR DIRECTORS AND KEY EXECUTIVES

A code of conduct for by all directors and employees is under development. It will require all business affairs to be conducted legally, ethically and with integrity. The code will also provide a mechanism for reporting of a breach of the code by others.

POLICY ON SECURITIES TRADING

The Board is developing a policy and procedure on dealing in the company's securities by directors, officer and employees. The Chairman and all other Board members receive notification of any trading by fellow Directors by receipt of the ASX disclosure announcement of any movement in a director's holdings.

POLICY & PROCEDURE FOR SELECTION OF EXTERNAL AUDITOR & ROTATION OF AUDIT ENGAGEMENT PARTNERS

1. Responsibility

The Board is responsible for the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy arises. Any appointment made by the Board must be ratified by shareholders at the next annual general meeting of the Company.

2. Selection Criteria

Mandatory criteria
Candidates for the position of external auditor of the Company must be able to demonstrate complete independence from the Company and an ability to maintain independence through the engagement period. Further the successful candidate must have arrangement in place for the rotation of the audit engagement partner on a regular basis.

Other criteria
Other than the mandatory criteria mentioned above, the Board may select an external auditor based on criteria relevant to the business of the Company such as experience in the industry in which the Company operates, references, cost and any other matters deemed relevant by the Board.

3. Review

The Board will review the performance of the external auditor on an annual basis.

POLICY AND PROCEDURES FOR COMPLIANCE WITH CONTINUOUS DISCLOSURE REQUIREMENTS

Detailed compliance procedures for ASX Listing Rule disclosure requirements have been adopted by the Company covering the following areas:

		compliance disclosure procedures
		identifies area of risk for the Company
		provides guidelines for identifying disclosure material
		guide for use of trading halts
		guide for decision making process
		details on record keeping
		education of Board and management
		confidentiality
		release of disclosure material
		updating of compliance procedure

ARRANGEMENTS REGARDING COMMUNICATION WITH AND PARTICIPATION OF SHAREHOLDERS

The Company maintains a website at www.diamonex.com.au

Under the heading "Reports and Announcments" the Company makes the following information available on a regular and up to date basis:

		company announcements since listing;
		notices of meetings and explanatory materials;
		annual reports (since listing);
		any current offer documents; and
		press articles and research documents.

Under the heading "Presentations" the Company has any recent presentations that the Company has made. If you are a shareholder and wish to receive copies of information updates by email please send an email to info@diamonex.com.au to register for the email information update.

COMPANY'S RISK MANAGEMENT POLICY AND INTERNAL COMPLIANCE AND CONTROL SYSTEM

The Company has developed a framework for risk management and internal compliance and control systems which cover organisational, financial and operational aspects of the Company's affairs. The full Board shall, for the time being, carry out the functions of the Risk Management Committee. The board does not believe that any marked efficiencies or enhancements would be achieved by the creation of separate risk management committee. The matters considered by the Board include the following:

		To ensure the development of an appropriate risk management policy framework that will provide guidance to management in implementing appropriate risk management practices throughout the Company's operations, practices and systems;
		To define and periodically review risk management as it applies to the Company and clearly identify all the stakeholders;
		To ensure that the board clearly communicate the Company's risk management philosophy, policies and strategies to directors, senior executives, employees, contractors and appropriate stakeholders;
		To ensure that directors and senior executives establish a risk aware culture which reflects the Company's risk policies and philosophies;
		To review methods of identifying broad areas of risk and set parameters or guidelines for business risk reviews; and
		To consider capital raising, treasury and market trading activities with particular emphasis on risk treatment strategies, products and levels of authority.

PROCESS FOR PERFORMANCE EVALUATION OF THE BOARD, BOARD COMMITTEES, INDIVIDUAL DIRECTORS AND KEY EXECUTIVES

The Board is responsible for conducting an annual review of Board and individual director performance. The Chairman undertakes a review of the overall Board performance. The performance of individual directors, including the chairman and key executives is reviewed by all other directors.