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The following is an edited extract from the Company's 2005 Annual Report:

The Board of Directors of Redbank Mines Limited is responsible for its corporate governance, that is, the system by which its affairs are directed and managed. On behalf of the shareholders by whom they are elected and to whom they are accountable, the Board guides and monitors the business and affairs of the Company, sets how business objectives are set and achieved, how risk is monitored and performance is optimised.

The Board has adopted the spirit and intent of the Principles of Good Corporate Governance and Recommendations of the ASX Corporate Governance Council. Given the nature of its activities and its circumstances however, the Company has consciously not implemented a number of the Recommendations, but rather has adopted what it considers to be good governance practices that are more appropriate to its circumstances, recent history and the reality of its limited financial resources.

The Company is essentially a high risk mineral and exploration and mine development company. It presently has a project in the process of being commissioned (Redbank Copper Project) and one advanced exploration project (Mt Kasi Gold Project), a small number of employees and until the Redbank Copper Project is fully operational, limited income. Notwithstanding these limitations, the Directors recognise the need for high standards of corporate behaviour and accountability. To this end the Board has adopted an open and transparent disclosure policy in relation to its financial affairs and its affairs generally, which it believes provides shareholders, employees, the investing public and suppliers with full and adequate disclosure of the state of its affairs and the manner in which it conducts its business activities. The Company's governance practices will be kept under review as the nature and size of its activities develop.

Company Background and Context

Redbank Mines Limited, was formed as Burdekin Resources NL 1993 for the specific purpose of exploring and developing mineral resource projects, and except for a period between 1999 and 2002 when it ventured into technology investments, this remains the key activity of the Company. Significant losses were incurred as part of the process of closing down and or divesting of the technology investments, resulting in a depleted balance sheet and heightened financial risk. Presently the risk profile of the Company remains that of a speculative, high risk enterprise with an exposure to cyclical commodity markets, particularly gold, and since the acquisition of the Redbank Copper Project completed in December 2005, copper. Companies in this sector are subject to rapid swings in investor sentiment depending on the economic cycle, commodity prices and market conditions generally.

The Company is now fully focused on rebuilding its fortunes by the development of the Redbank Copper Project and further exploration at Redbank and at the Mt Kasi Gold Project.

Board of Directors

The Board seeks to optimise medium to long term financial gains for shareholders when making business decisions. This is based on the belief that this will ultimately result in the interests of all stakeholders being appropriately addressed, compared to taking a short term view. Given the current size of operations, the Board currently undertakes a more active rather than a passive role. The Board comprises three executive directors with professional management and technical exploration and project development roles and two non-executive directors. One of those non executive directors provides technical services to the Company on commercial terms. Such an arrangement is typical of companies in the junior resources sector where, on account of the inherently high operating and financial risk, the provision of professional services under consultancy arrangements allows for a better understanding of the Company's underlying business and mitigates the risk otherwise attaching to an independent director position.

Although the Board is yet to adopt a formal Board Charter as such, it recognises the importance of adopting corporate governance policies that will promote investor and capital market confidence in the Company. Emphasis has been placed on ensuring that the internal control and financial management systems adopted are adequate to ensure that a satisfactory level of accountability is established and areas of significant business risk are identified and managed.

The Board is responsible for setting the strategic direction of the Company, establishing goals for management and monitoring the achievement of these goals. The executive directors are responsible to the Board for the day to day management of the Company, with the Managing Director/Chief Executive Officer having direct accountability to the Board.

In addition, the Board has sole responsibility for the following:

• appointing and removing the executive directors including the Managing Director/Chief Executive Officer, and the Company Secretary and approving their remuneration;
• reviewing the adequacy of financial and other resources for management to adequately carry out approved plans and business plans;
• adopting operating and capital expenditure budgets at the commencement of each operating period and monitoring progress against plans;
• reviewing and approving financial and other reporting to regulatory bodies, shareholders ands other organisations;
• ensuring satisfactory arrangements are in place for auditing the Company's financial affairs and other regulatory compliance requirements;
• reviewing systems of internal compliance and control, risk management and compliance with legislative requirements; and
• ensuring that an ethical corporate culture and value system is promoted internally that is conducive to the Company acting legally, ethically and responsibly in all matters.

Composition of the Board and Independence of Directors

• The Company's Constitution provides that the number of directors must be at least 3 or the number of Directors in office (not counting alternates) when the decision is made, whichever is greater.
• There is no maximum number of directors and no requirement for directors to own shares in the Company.
• At the date of this report the Company has five directors comprising three executive directors, Mr J G Vitale, Dr James Searle and Ms S J Field, and two non-executive directors, Mr K W McGrath (Chairman), and Mr Mike Kitney.
  
  
The Board has adopted the following definition of an independent director: An independent director is a director who is a non-executive director (ie not a member of management) and:


• is not a substantial shareholder of the Company or an officer of, or otherwise associated, directly or indirectly, with a substantial shareholder of the Company;
• has not within the last three years been employed in an executive capacity by the Company or another group member, or been a Director after ceasing to hold any such employment;
• is not a principal of a professional adviser to the Company or another group member;
• is not a significant supplier or customer of the Company or another group member, or an officer of or otherwise associated, directly or indirectly, with a significant supplier or customer;
• has no significant contractual relationship with the Company or another group member other than as a Director of the Company; and
• is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the Director's ability to act in the best interests of the Company.
  
  
Mr Kitney is the principal of a metallurgical consulting firm that has in the past and intends in the future to provide the Company with technical advice and monitoring services based on arms length commercial terms. In accordance with a strict interpretation of the above definition he may not be regarded as an independent non-executive director. Other than his services as a director, Mr McGrath has not provided the Company with any professional services and accordingly, he is regarded by the Board as independent non-executive director.

In the case of Mr Kitney, although by virtue of the metallurgical consulting services provided by his firm he does not strictly fall within the Company's definition of an independent director, he has a number of other more substantial clients and the level of financial dependency on fees generated from the provision of services to the Company is low. Other directors are satisfied that the payment of fees for professional services provided by Mr Kitney's firm in no way impedes his independence of mind and independence of judgement in discharging his duties as a non-executive director in the interest of all shareholders.

The Directors acknowledge the benefits that can arise where there is a division of responsibilities between the role of chairman and chief executive officer. Accordingly these roles are separated.

The relevant expertise, professional qualifications and experience of each member of the present Board is detailed in the Directors' Report within the Company's annual report. The mix of competencies and experience of present Board members reflects the project development status and 'brownfields' exploration focus of the Company's activities. The mix of skill sets and competencies will be reviewed as the Company's Redbank Copper Project is further developed and advanced exploration endeavours progress at Mt Kasi. The Board schedules to meet regularly and will meet on an as required basis to address specific matters as and when they may arise.

Board Committees, Election and Retirement of Directors

The Board has considered the Company's size and management structure and recently established a formal audit committee and nomination and remuneration committee. The Audit Committee comprises Mr Kitney as chair and Mr McGrath. Mr McGrath is chair of the Nomination and Remuneration Committee and is joined on this committee by Mr Kitney and Mr Vitale. Where appropriate, external professional advice is called upon by these committees.

Directors are initially appointed by the full Board subject to election by the shareholders at the next general meeting. The criteria for determining the suitability of a candidate for the Board includes the background, experience and achievement of the individual, credibility within the Company's sphere of activities, intellectual ability to contribute to the discharge of the Board's processes and duties and responsibilities.

Under the Company's Constitution, except for the Managing Director, one third of the directors are subject to re-appointment by shareholders every year. There is no maximum period of tenure. The Managing Director may be appointed on any terms the Directors deem fit and for any period, and subject to the terms of any agreement entered into, the Board may revoke or terminate any appointment as an executive of the Company.

The procedures for the election and retirement of Directors are governed by the Company's Constitution and the Listing Rules of the Australian Stock Exchange Limited.

The Board meets regularly with the Company's external auditors to review internal control systems and procedures and to consider their recommendations in this area. Both the chief executive officer and the chief financial officer have stated to the Board during a formal board meeting that the Company's financial report presents a true and fair view, in all material respects, of the company's financial condition and operational results are in accordance with relevant accounting standards.

With prior approval of the Chairman, individual directors of the Company are at liberty to seek independent professional advice on any matter to do with the discharge of their duties at the Company's expense.

The Company does not have a scheme to provide retirement benefits, other than statutory superannuation to non-executive directors.

Executive Remuneration and Performance Measurement

To attract and retain high calibre people with requisite skills and experience, the Company has adopted a policy of remunerating its staff and employees based on average to above average market rates. The levels of remuneration paid to executive directors reflects the fact that they are not vendors of any assets to the company and have never received any vendor consideration in the form of large quantities of vendor shares or options in the Company. The Company retains human resource management consultants and legal advisers from time to time as required to assist with the setting of salary and wage levels and other conditions of employment for its employees.

The Company presently has only one senior executive who is not a director of the Company, namely Mr Craig Hall, project manager for Mt Kasi. Mr Hall is eligible to participate in the Company's Employee Option Plan approved by shareholders in March 2000, under which the exercise of options is linked to prescribed vesting periods as an incentive to stay with the Company. The maximum number of options that may be issued under the plan is 5% of the Company's issued shares, with the quantum of options issued to qualifying executives being at the discretion of the Board. At the date of this report no options had been issued under the plan, however the Board anticipates that options will be issued under the plan during the course of the current financial year.

For further information on the amount of remuneration, the payment of bonuses, mutual obligations in the event of termination and other key terms and conditions, refer to the Company's financial statements.

Non-Executive Directors' Remuneration and Performance Measurement

Until the recent acquisition of the Redbank Copper Project in December 2005, The limited scope of operations during the present exploration phase of activities has rendered specific measurable quantitative performance indicators for non-executive directors difficult to identify and measure. Qualitative measures are less difficult, but entirely subjective at this stage of the Company's pre-production activities. For these reasons the Company has yet to adopt any formal evaluation procedures in relation to the performance of non-executive directors. As the Company's activities develop toward producer status, both measurable and qualitative indicators will become more apparent and meaningful formal evaluation procedures can then be adopted.

The Board believes that in view of:

• the high risk nature of its activities and
• its limited financial resources,
  
  
it is appropriate to also remunerate non-executive directors with options as a means of attracting competent professionals to the Board. Any such option issues are subject to the approval of shareholders. At the date of this report there were no options on issue to non-executive directors.

Ethical Standards

All members of the Board and senior management personnel are individually members of one or more professional bodies with whose ethical standards and practice guidelines they are required to comply. The management of the Company comprises experienced and mature industry practitioners in their respective fields of endeavour. This creates a professional working environment and the adoption of professional peer group standards of ethical behaviour and conduct. The Board has adopted a Code of Conduct for Directors to promote ethical and responsible decision-making by the Directors and all senior personnel. The code is based on the code of conduct for Directors prepared by the Australian Institute of Company Directors of which the majority of Directors are members. The principles of the code are:


• a director must act honestly, in good faith and in the best interests of the Company as a whole;
• a director has a duty to use due care and diligence in fulfilling the functions of office and exercising the powers attached to that office;
• a director must use the powers of office for a proper purpose, in the best interests of the Company as a whole;
• a director must recognise the primary responsibility is to the shareholders as a whole but should, where appropriate, have regard for the interest of all stakeholders of the Company;
• a director must not make improper use of information acquired as a director;
• a director must not take improper advantage of the position as a director;
• a director must not allow personal interests or interests of any associated person, to conflict with the interests of the Company;
• a director has an obligation to be independent in judgement and actions and to take all reasonable steps to be satisfied as to the soundness of all decisions taken as a Board;
• confidential information received by a director in the course of the exercise of directorial duties remains the property of the Company and it is improper to disclose it, or allow it to be disclosed, unless that disclosure has been authorised by the Company, or the person from whom the information is provided, or is required by law;
• a director should not engage in conduct likely to bring discredit upon the Company; and
• a director has an obligation at all times, to comply with the spirit, as well as the letter of the law and with the principles of the Code.

The principles are supported by interpretation guidelines as set out by the Australian Institute of Company Directors.

Related Party Transactions

The Company seeks to minimise related party transactions. The Company has entered into such transactions in respect of the provision of technical and legal services from two non-executive directors. However where such transactions have occurred or are proposed, the transaction is scrutinised by the directors independent to the transaction to ensure the terms of the transaction are based on acceptable commercial terms and result in a net tangible benefit to shareholders.

Integrity of Financial Reporting

Commencing 1 July 2004, the Company's Managing Director and Chief Financial Officer report in writing to the Board that:


• the consolidated financial statements of the Company and its controlled entities for each half and full year present a true and fair view, in all material aspects, of the Company's financial condition and operational results and are in accordance with accounting standards;
• the above statement is found on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and
• the Company's risk management and internal compliance and control framework is operating efficiently and effectively in material respects.

Role of Auditor

Under CLERP 9 the Company's auditor is required to attend the annual general meeting to be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor's report. Shareholders are also permitted submit written questions of the auditors ahead of the Annual General Meeting, to be answered at the Company's Annual General Meeting.

Communication with Shareholders

The Company places considerable importance on effective communications with shareholders. The Company's communication strategy requires communication with shareholders and other stakeholders in an open, regular and timely manner so that the market has sufficient information to make informed investment decisions on the operations and results of the Company. The strategy provides for the use of systems that ensure a regular and timely release of information about the Company is provided to shareholders. Mechanisms employed include:


• announcements lodged with ASX;
• ASX Quarterly Cash Flow Reports;
• Half Yearly Report;
• presentations at the Annual General Meeting/General Meetings; and
• Annual Report

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and understanding of the Company's strategy and goals.

OTHER CORPORATE POLICIES

Dealings in Company Securities

The Constitution permits directors to acquire shares in the Company provided strict guidelines are adhered to. The Company's share trading policy imposes basic trading restrictions on all employees of the Company with 'inside information', and additional trading restrictions on the directors of the Company.

'Inside Information' is information that:

• is not generally available; and
• if it were generally available, it would, or would be likely to influence investors in deciding whether to buy or sell the Company's securities.

If an employee possesses inside information, the person must not:


• trade in the Company's securities;
• advise others or procure others to trade in the Company's securities; or
• pass on the inside information to others - including colleagues, family or friends - knowing (or where the employee or director should have reasonably known) that the other persons will use that information to trade in, or procure someone else to trade in, the Company's securities.

This prohibition applies regardless of how the employee or director learns the information.

In addition to the above, directors must notify the Company Secretary as soon as practicable, but not later than 5 business days, after they have bought or sold the Company's securities or exercised options. In accordance with the provisions of the Corporations Act 2001 and the Listing Rules of the ASX, the Company on behalf of the directors must advise the ASX of any transactions conducted by them in the securities of the Company.

Breaches of this policy will be subject to disciplinary action, which may include termination of employment.

Employee Health and Safety

The Company is committed to the implementation and maintenance of a system of safe work practices, provision of appropriate plant and equipment and a healthy working environment.

Employee Training

The Company considers that the attraction and retention of high quality technical and management staff is the key to its future growth and development. Accordingly, the Company is committed to improving skills of all personnel through on-the-job and formal training. Attendance at external training programs, which enhance workplace skills and increase productivity and technical competence, is encouraged.

Environment

Environmental management has been adopted as an integral part of the formal planning process in all aspects of the Company's exploration and mining activities. The Company is committed to conducting all its affairs in an environmentally responsible manner.

Risk Management

The Company conducts regular reviews of risk exposures in relation to all areas of activity. A reporting system based on functional areas of responsibility has been instituted to allow management to regularly monitor and control all areas of activity. The reporting system also allows management to make changes to operating plans and budgets as required by changing circumstances, and helps with disaster anticipation and planning procedures. In addition, regular formal business risk assessment is conducted by the Company's external insurers to ensure the Company's risk management program is adequate to minimise the impact of accidental loss or damage. The Board acknowledges that it has overall responsibility for the internal control framework, but recognises that no cost effective internal control system will preclude all errors and irregularities.

Ethics and Conduct

The Company has adopted ethical policy guidelines which represent the Company's formal policy on ethics and conduct in the workplace. The guidelines are aimed at maintaining high ethical standards and corporate behaviour and accountability within the Company. All employees and directors are expected to:


• respect the laws of the jurisdictions in which the Company and its subsidiaries operate and act in accordance with them;
• respect confidentiality and not misuse Company information, assets or facilities;
• value and maintain professionalism in the discharge of their duties;
• avoid real or perceived conflicts of interest;
• act in the best interests of shareholders;
• by their actions contribute to the Company's reputation as a good corporate citizen which seeks the respect of the communities and environments in which it operates;
• perform their duties in ways that minimise environmental impacts and maximise workplace safety;
• exercise fairness, courtesy, respect, consideration and sensitivity in all dealings within their workplace and with customers, suppliers and the public generally; and
• act with honesty, integrity, decency and responsibility at all times.