Corporate Governance Statement

The Board of Directors of Colonial Resources Limited is responsible for the corporate governance of the Company. The Board guides and monitors the business activities and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable. The Company has adopted systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company's needs.

The Corporate Governance Statement has been structured with reference to the Australian Stock Exchange Corporate Governance Council’s (“Council”) “Principles of Good Corporate Governance and Best Practice Recommendations” to the extent that they applicable to the Company. The following is a summary of the Company’s adherence to the Council’s principles and recommendations:

Principle 1. Lay the foundations for management and oversight
The Company complies with this recommendation.

Principle 2. Structure the board to add value
The Company complies with this recommendation.

Principle 3. Promote ethical and responsible decision making
The Company complies with this recommendation.

Principle 4. Safeguard integrity in financial reporting
The Company currently does not comply with this recommendation of having at least three non-executive directors on the Audit Committee. The Company is a small company with limited resources, and has not had an operating business. The Company’s Audit and Compliance Committee is comprised of the Company’s non-executive chairman and executive director. Following listing, the Company’s Audit and Compliance Committee will be reconstituted to comprise at least three non-executive directors.

Principle 5. Make timely and balanced disclosure
The Company complies with this recommendation.

Principle 6. Respect the rights of shareholders
The Company complies with this recommendation.

Principle 7. Recognise and manage risk
The Company complies with this recommendation.

Principle 8. Encourage enhanced performance
The Company complies with this recommendation.

Principle 9. Remunerate fairly and responsibly
The Company complies with this recommendation except for the grant of Director Options to Directors. The objective of granting Director Options is to ensure maximum stakeholder benefit is achieved from retention of a high quality board and to provide incentive for Directors to identify new commercial opportunities for the Company.

Principle 10. Recognise the legitimate interests of stakeholders
The Company complies with this recommendation.

Information about the Company's corporate governance practices is available by contacting the Company directly. It is anticipated that these policies will also be made available on the Company's website once this site is established.

The Board of Directors

The Company's Constitution provides that the number of Directors shall not be less than three. There is no requirement for any share holding qualification.

If the Company's activities increase in size, nature and scope, the size of the Board will be reviewed periodically and the optimum number of Directors required to adequately supervise the Company's activities will be determined within the limitations imposed by the Constitution and as circumstances demand.

The membership of the Board, its activities and composition is subject to periodic review. The criteria for determining the identification and application of a suitable candidate for the Board shall include quality of the individual, background of experience and achievement, compatibility with other Board members, credibility within the Company's scope of activities, intellectual ability to contribute to Board duties 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. Under the Company's Constitution the tenure of a director (other than managing director, and only one managing director where the position is jointly held) is subject to reappointment by shareholders not later than the third anniversary following his or her last appointment. Subject to the requirements of the Corporations Act, the Board does not subscribe to the principle of retirement age and there is no maximum period of service as a Director. A managing director may be appointed for the period and on any terms the Directors think fit and, subject to the terms of any agreement entered into, the appointment may be revoked on notice.

The Board has an audit committee. It considers that the Company is not currently of a size, nor are its affairs of such complexity, to justify the formation of other separate or special committees at this time. The Board as a whole is able to address the governance aspects of the full scope of the Company's activities and to ensure that it adheres to appropriate ethical standards.

Appointments to Other Boards

Directors are required to take into consideration any potential conflicts of interest when accepting appointments to other boards.

Independent Professional Advice

The Board has determined that individual Directors have the right in connection with their duties and responsibilities as Directors, to seek independent professional advice at the Company's expense. With the exception of expenses for legal advice in relation to Director's rights and duties, the engagement of an outside adviser is subject to prior approval of the Chairman and this will not be withheld unreasonably.

Continuous Review of Corporate Governance

Directors consider, on an ongoing basis, how management information is presented to them and whether such information is sufficient to enable them to discharge their duties as Directors of the Company. Such information must be sufficient to enable the Directors to determine appropriate operating and financial strategies from time to time in light of changing circumstances and economic conditions. The Directors recognise that mineral exploration is a business with inherent risks and that operational strategies adopted should, notwithstanding, be directed towards improving or maintaining the net worth of the Company.