C. SERVICE AGREEMENTS

On appointment to the Board, all non-executive directors enter into a service agreement with the Company in the form of a Letter of Appointment. The letter summarises the Board policies and terms, including compensation, relevant to the office of director.

Remuneration and other terms of employment for the Managing Director are formalised in service agreements.

The contract with the Managing Director may be terminated early by either party with three months’ notice, subject to termination payments as detailed below:

• Term of agreement – three years commencing 1 June 2009.
• Base salary for the year ended 30 June 2009 of £90,000 is to be reviewed annually.
• Payment of a termination benefit on early termination by the Company, other than for gross misconduct, equal to12 months’ base salary plus an additional one month’s salary for every year of service.

D. SHARE-BASED COMPENSATION

Options
Options over shares in Shield Mining Limited are granted under the Shield Mining Limited Employee Option Plan. The Employee Option Plan is designed to provide long-term incentives for executives to deliver long-term shareholder returns. Under the plan, participants are granted options for no issue price and the exercise prices will be such price as determined by the Board (in its discretion) on or before the date of issue. Options are granted under the plan for no consideration.

There were no options granted in the financial years ended 30 June 2009 and 30 June 2008. No directors or executives received any remuneration from options in 2009 or 2008. One hundred thousand (100,000) options, valued at $4,645 at date of grant, were forfeited during the year due to a staff resignation, with value being nil at date of forfeiture. Three million (3,000,000) options expired at 30 June 2009. No options were exercised during 2009, or subsequent to the end of the financial year.

This is the end of the Audited Remuneration Report.

Loans to Directors and Executives
There were no loans to directors and executives during the financial year.

No option holder has any right under the options to participate in any other share issue of the Company or of any other entity.

EVENTS SUBSEQUENT TO BALANCE SHEET DATE

On 13 August 2009, the Company allotted and issued 21,313,143 ordinary shares, and 21,313,143 unquoted options, exercisable at 20 cents pursuant to its rights issue under the Prospectus dated 22 June 2009 and a concurrent private placement to institutional and sophisticated investors. The company raised $2,131,314 prior to costs associated with the issue and the placement.

The total of shares on issue now stands at 73,223,476, and there are 24,313,143 unquoted options on issue.

INDEMNIFICATION AND INSURANCE OF OFFICERS

The Company has put in place appropriate insurance arrangements in respect of Directors’ and Officers’ Liability Insurance. The insurance policy precludes us from disclosing the amount of the coverage. These insurance premiums relate to insurance of directors and executive officers of the Company. The policy does not specify the premium for individual directors and executive officers.

The Directors’ and Officers’ Liability Insurance provides cover against costs and expenses involved in defending legal actions and any resulting payments arising from a liability to persons (other than the Company or a related body corporate) incurred in their position as director or executive officer unless the conduct involves a wilful breach of duty or an improper use of inside information or position to gain advantage.

No liability has arisen under this indemnity as at the date of this report.

PROCEEDINGS ON BEHALF OF COMPANY

No person has applied for leave of Court to bring proceedings on behalf of the Company, nor was the Company party to any such proceedings during the year.

NON-AUDIT SERVICES

There were no non-audit services provided by the auditors during 2009 and 2008, and consequently there were no fees paid for non-audit services to the external auditors in either financial year.

AUDITOR’S INDEPENDENCE DECLARATION

The lead auditor’s independence declaration for the year ended 30 June 2009 has been received in accordance with section 307C of the Corporations Act 2001 and can be found following this Directors’ Report.

David Netherway
Chief Executive Officer/Managing
Director 21 September 2009