Corporate Governance

The Board of Directors of Latin Gold Limited is responsible for corporate governance of the consolidated entity. The Board guides and monitors the business and affairs of Latin Gold Limited on behalf of the shareholders by whom they are elected and to whom they are accountable.

Board Objectives

The Board will develop strategies for the Company, review strategic objectives, and monitor the performance against those objectives. The overall goals of the corporate governance process are to:

drive shareholders value;
assure a prudential and ethical base to the Company's conduct and activities;
ensure compliance with the Company's legal and regulatory obligations.

Consistent with these goals, the Board assumes the following responsibilities;

developing initiatives for profit and asset growth;
reviewing the corporate, commercial and financial performance of the Company on a regular basis;
acting on behalf of, and being accountable to, the Shareholders; identifying business risks and implementing actions to manage those risks;
and developing and effecting management and corporate systems to assure quality.

The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors' participation in Board discussions on a fully informed basis.

Management of the Board

The full Board will hold scheduled meetings on at least a bi monthly basis and any additional meetings at such time as may be necessary to address specific matter that may arise. In between meetings, decisions will be adopted by way of written resolution.

On a six monthly basis, as an agenda item at the scheduled Board meeting, the Board will conduct a review of its processes to ensure that it is able to, and is carrying out, its functions in the most effective manner.

Delegation to Management

Day to day management of the consolidated entity's affairs and the implementation of the corporate strategy and policy initiatives are formally delegated by the Board to the Executive Directors and Officers of Latin Gold.

Chairman

The Chairman is responsible for leading the Board, ensuring Directors are properly briefed in all matters relevant to their role and responsibilities, facilitating Board discussions and managing the Board's relationship with its committees.

Structure of the Board

The skills, experience and expertise relevant to the position of director held by each director in office at the date of the annual report is included in the Directors' Report.

Election of Board members is substantially the province of the Shareholders in general meeting. However, the Company commits to the following principles:

the Board to comprise of Directors with a blend of skills, experience and attributes appropriate for the Company and its business;
the principal criterion for the appointment of new Directors being their ability to add value to the Company and it business.

The Board has accepted the following definition of an Independent Director:

"An Independent Director is a director who is not a member of management, is a non-executive director and who:
is not a substantial shareholder (under the meaning of Corporations Law) 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 consultant, supplier or customer of the Company or another group member, or an officer of or otherwise associated, directly or indirectly, with a significant consultant, supplier or customer;
has no significant contractual relationship with the Company or another group member other than as a director of the Company;
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."

The current Board structure is considered to best serve the Company in meeting its objectives, given its small capitalisation, limited resources and existing operations. The composition of the Board is reviewed on an annual basis (as an agenda item in the final scheduled meeting for each calendar year) to ensure that the Board has the appropriate mix of expertise and experience.

Ther are procedures in place, as agreed by the board, to enable directors to seek independent professional advice on issues arising in the course of their duties at the company's expense.

The term in office held by each director in office at the date of this report is as follows:

Name Term in office

Peter McAleer 3

Jim Malone 4

Simon Titchener 4

Howard Dawson 7 months

Nomination Arrangements

Given the size and scope of the operations of the Company, the full Board has assumed those responsibilities that are ordinarily assigned to a Nomination Committee.

Where a vacancy is considered to exist, the Board will select an appropriate candidate through consultation with external parties and consideration of the needs of shareholders and the Company. Such appointments will be referred to shareholders for re-election at the next annual general meeting. All Directors, except the Managing Director, are subject to re-election by shareholders at least every three years.

When a vacancy exists, through whatever cause, or where it is considered that the Board would benefit from the services of a new director with particular skills, the Board will determine the selection criteria for the position based on the skills deemed necessary for the Board to best carry out its responsibilities. The Board will then appoint the most suitable candidate (assuming one is available) who must stand for election at the next annual general meeting.

External Audit

The Company in general meeting is responsible for the appointment of the external auditors of the Company, and the Audit Committee from time to time will review the scope, performance and fees of those external auditors. The nomination of external auditors is the responsibility of the Board.

The auditors of Latin Gold will have open access to the Board of Directors at all times.

Audit Committee

The Board has established an audit committee in July 2001, which operates under a charter of the Board. It is the Board's responsibility to ensure that an effective internal control framework exists within the entity. This includes both internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial and non information. The Board has delegated the responsibility for the establishment and maintenance of a framework of internal control of the economic entity to the audit committee.

The members of the audit committee at the end of the year and date of this report were:

P McAleer

B Dixon

Stanton Partners - auditor representative

Qualifications of audit committee members

Mr McAleer is the Chair of the both the Board and Audit Committee. He has been Chair of the Audit Committee since its inception in July 2001.

Mr Dixon holds the office of joint Company Secretary. He was appointed to the Audit Committee on 10 October 2003. Mr Dixon has a degree in Commerce and is a Chartered Accountant who has extensive experience as an auditor in a big four firm.

The Audit Committee also invites a member of its Auditor, Stanton Partners to attend its meetings.

For details on the number of meetings of the Audit Committee held during the year and the attendees at those meetings, refer to the Directors' Report.

Performance

During the reporting period the entity did not have a formal process for evaluation of Directors and Executives due to their only being four in total. The Chairman will undertake an annual assessment of the performance of the individual directors and meet privately with each director to discuss this assessment.

Remuneration Arrangements

It is the company's objective to provide maximum stakeholder benefit from the retention of a high quality board by remunerating directors fairly and appropriately with reference to relevant employment market conditions. To assist in achieving the objective the Board links the nature and amount of executive directors' emoluments to the company's financial and operational performance. The expected outcome of this remuneration structure are:

Retention and Motivation of Directors
Performance rewards to allow Directors to share the rewards of the success of Latin Gold Limited

For details of remuneration of Directors and Executives please refer to the Directors' Report.

The remuneration of an executive director will be decided by the Board, without the affected executive director participating in that decision making process. Due to the economic entity only employing two executives who are both directors and two non-executive directors the Board sees little benefit in having a separate Remuneration Committee. The Board is responsible for determining and reviewing compensation arrangements for themselves, which may also include share option schemes, superannuation and professional indemnity and liability policies. Any equity based remuneration will only be made with the prior approval of shareholders in general meeting.

The maximum remuneration of non-executive Directors is the subject of Shareholder resolution in accordance with the Company's Constitution, and the Corporations Law as applicable. The appointment of non-executive Director remuneration within that maximum will be made by the Board having regard to the inputs and value of the Company of the respective contributions by each non-executive Director. Total fees for non-executive Directors are not to exceed $65,000 per annum. When setting fees and other compensation for non-executive Directors, the Board will seek independent advice and apply Australian and International benchmarks. The Board may award additional remuneration to non-executive Directors called upon to perform extra services or make special exertions on behalf of the Company.

There is no scheme to provide retirement benefits, other than statutory superannuation, to non-executive directors.

Trading in Company Shares

The Constitution permits Directors to acquire shares in Latin Gold. The Board has established a policy dealing with trading in Shares. The policy prohibits Directors, officers and employees from dealing in Latin Gold shares whilst in possession of price sensitive information or five business days prior to the release of any announcement (including financial reports) to ASX.

Conflict of Interest

In accordance with the Corporations Act 2001 and Latin Gold's constitution Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the Board believes that a significant conflict exists, the director concerned will not receive the relevant Board papers and will not be present at the meeting whilst the item is considered.

Ethical standards

The Board supports the highest standards of corporate governance and requires its members and the staff of Latin Gold to act with integrity and objectivity in relation to:

compliance with the law;
record keeping;
conflicts of interest;
confidentiality; professional conduct;
dealing with suppliers, advisers and regulators;
and dealing with the community and employees.

Continuous disclosure

The consolidated entity has a policy that all shareholders and investors have equal access to the Company's information and has procedures to ensure that all price sensitive information is disclosed to the ASX in accordance with the continuous disclosure requirements of the Corporations Act 2001 and ASX Listing Rules. The Directors are to identify matters that may have a material effect on the price of the Company's security. The Executive Directors and the Company Secretaries are responsible for all communications with the ASX. This role includes responsibility for ensuring compliance with the continuous disclosure requirements in the ASX Listing Rules and overseeing and co-ordinating information disclosures to the ASX, analysts, brokers, shareholders, the media and the public.

Corporate reporting

The Managing Director and Company Secretary will make the following certifications to the Board:

that the Company's financial reports are complete and present a true and fair view, in all material respects, of the financial condition and operational results of the Company and the consolidated entity and are in accordance with relevant accounting standards; and

that the above statement is founded on a sound system of risk management and internal compliance and control and whichimplements the policies adopted by the Board and that the Company's risk management and internal compliance and control is operating efficiently and effectively in all material respects. Latin Gold will adopt this reporting structure for the year ended 30 June 2004.

Environment

The Company aims to ensure that the highest standard of environmental care is achieved and that it complies with all relevant environmental legislation.

In all cases of exploration and mine development/operation Latin Gold will ensure that there is the least amount of interference possible with the environment.

Business risk

The Board monitors areas of operational and financial risk, and considers strategies for appropriate risk management arrangements.

Where necessary, the Board will draw on the expertise of appropriate external consultants to assist in dealing with or mitigating areas of risk which are identified.

The Board is responsible for ensuring there are adequate policies in relation to risk management, compliance and internal control systems. The Company's policies are designed to ensure strategic, operational, legal, reputation and financial risks are identified, assessed, effectively and efficiently managed and monitored to enable achievement of the consolidated entity's business objectives.

Control procedures cover management accounting, financial reporting, project appraisal, environment, IT security, compliance and other risk management issues.

The Company's main areas of risk include:

economic risks;
market conditions exploration success Operating risks Resource estimates Commodity price and exchange rate risks;
Environmental risks;
Title risks;
political and economic climates in areas of operation.
Ongoing capital requirements

Identification and Management of Risk

The Board's collective experience will enable accurate identification of the principal risks which may affect the Company's business. Management of these risks will be discussed by the Board at periodic (at least annual) strategic planning meetings. In addition, key operational risks and their management, will be recurring items for deliberation at Board meetings.

Shareholders

The Board aims to ensure that shareholders are at all times fully informed in accordance with the spirit and letter of the Stock Exchange's continuous disclosure requirements.

Information is communicated to shareholders as follows:

The annual report is distributed to all shareholders. The Board ensures that the annual report includes relevant information about the operations of the consolidated entity during the year, changes in the state of affairs of the consolidated entity and details of future developments, in addition to the other disclosures required by the Corporations Act 2001.
The half-year report contains summarised financial information and a review of the operations of the consolidated entity during the period. The half-year audited financial report is prepared in accordance with the requirements of applicable Accounting Standards and the Corporations Act 2001 and is lodged with the Australian Securities and Investments Commission and the ASX. The financial report is sent to any shareholder who requests it.
Proposed major changes in the consolidated entity which may impact on share ownership rights are submitted to a vote of shareholders.
Notices of all meetings of shareholders. Publicly released documents are made available on the consolidated entity's internet web site at www.Latin Gold.com.au.

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the consolidated entity's strategy and goals. Important issues are presented to the shareholders as single resolutions.

The Shareholders are requested to vote on the appointment and aggregate remuneration of Directors, the granting of options and shares to Directors and changes to the Constitution. Copies of the Constitution are available to any shareholder who requests it.