The following statement was reviewed and updated on 11 August 2022
The Board of Directors of Serabi monitors the business affairs of the company on behalf of shareholders. The Board currently consists of the Non – Executive Chairman, Managing Director, Finance Director and five further non-executive Directors. None of the non-executive Directors has held an executive position with the Company in the past. The Directors have responsibility for the overall corporate governance of the company and recognise the need for the highest standards of behaviour and accountability. The Directors are committed to the principles underlying best practice in corporate governance and have adopted the Corporate Governance Code (“the QCA Code”) prepared by the Quoted Companies Alliance (“QCA”). In addition, the Company as a result of the listing of its shares on the TSX is obliged to company with Canadian National Policy 58-201 – Corporate Governance Guidelines which establishes corporate governance guidelines that apply to all public companies. The Company has instituted its own corporate governance practices in light of these guidelines.
The Board of Directors is responsible for the stewardship of the Company through consultation with management of the Company. Any responsibility that is not delegated to management or to the committees of the board of directors remains with the board of directors, subject to the powers of the shareholders’ meetings. The frequency of board of directors’ meetings, as well as the nature of agenda items, varies depending on the state of the Company’s affairs and in light of opportunities or risks which the Company faces. Members of the board of directors are in frequent contact with one another and meetings of the board of directors are held as deemed necessary.
The Company is also subject to the UK City Code of Takeovers and Mergers.
Corporate Governance Report
The QCA Code sets out 10 principles of Corporate Governance that the Company should adopt. These are listed below together with a short explanation of how the Company applies each of the principles:
Business Model and Strategy
Serabi’s objective is to become a pre-eminent junior gold mining company, securing future growth through expansion of its existing projects and, taking advantage of its position as a gold producer, to become involved with and successfully develop other carefully selected opportunities.
With this in mind the Company,
- is focussed on pursuing gold mining opportunities in Brazil appropriate to the Group’s size and capabilities,
- will identify and evaluate high quality opportunities through exploration or acquisition,
- expects to plan, finance and build new mines in a timely and cost-effective manner, and
- will seek continuous operational improvements to maximise value.
In this way it anticipates that this will lead to value creation for all stakeholders
|Shareholders||Host government and government agencies||Local communities||Employees|
|Deliver capital appreciation through investment of cash flow in accretive growth to grow long term cash generation which can also support distributions to shareholders.||Generation of tax and royalty receipts to sustain a high-quality oversight and regulatory regime.||Provide improvements to infrastructure, education and healthcare to improve the living standards and opportunities for local populations.||Generate a stable and secure work environment in which employees learn, are mentored and can progress and develop their careers.|
In seeking to execute its strategy it faces a number of key challenges including:
- the availability of commercially viable projects within the jurisdictions that the Group seeks to operate and of a size that is appropriate for the Group,
2. the availability of personnel with the skills necessary to develop and operate new projects,
3. the availability of finance to acquire, develop and build new projects.
Further information regarding the Business Model and Strategy can be found in the Company’s 2021 Annual Report a copy of which is available on the Company’s website at www.serabigold.com.
Understanding Shareholder Needs and Expectations
The Board is committed to providing shareholders with clear and timely information on Serabi’s activities, strategy and financial position. General communication with shareholders is coordinated by the Chief Executive Officer and the Chief Financial Officer together with the Business Development Manager.
The Company publishes on its website a range of information which helps current and potential shareholders to make an assessment of the Group’s position and prospects:
- Investor presentations
- Independent technical reports on the operations and projects
- Estimations of the Company’s Mineral Resources
- Annual and quarterly financial statements
- Quarterly operations reviews
- Business strategy
- Governance and policy materials
- All regulatory and other announcements relating to equity issues, Board changes, etc.
- Shareholder information
- Contact details for the Company
The Board maintains a regular dialogue with the Company’s major institutional investors, providing them with such information on the Company’s progress as commercial confidentiality, market abuse rules and other legal requirements permit.
The Company acknowledges that the majority of its private investors hold their shares via nominee shareholders and may not be able to fully exploit their shareholder rights effectively. The Company attends selected industry events at which management are available to engage with private investors and provides published interviews with media outlets to coincide with key news flow and events.
The Company’s Executive Directors are generally available to receive shareholder enquiries and shareholders may also contact the Company’s brokers and investor relations advisers who are also available to facilitate engagement with its private investors.
The Board is kept informed of the views and concerns of major shareholders by briefings from the CEO and the CFO and the Company’s brokers. Analyses of the share register are also periodically circulated to the Board, together with significant investment reports from analysts.
Considering Wider Stakeholder and Social Responsibilities
The Board recognises that the long term success of the Company is reliant upon the efforts of the employees of the Company and its contractors, suppliers, regulators and other stakeholders. The Board and management have put in place a range of processes and systems to ensure that there is close oversight and contact with its key resources and relationships.
The Company has staff dedicated to ensuring that it has active relationships with local communities who are within the vicinity of its operations to understand their concerns and expectations, thereby seeking to ensure mutually beneficial co-operation for both sides. The Company is subject to oversight by a number of different governmental and other bodies who directly or indirectly are involved with the licensing and approval process of mining operations in Brazil. Additionally, given the nature of the Company’s business, there are other parties who, whilst not having regulatory power, nonetheless have interest in seeing that the Company conducts its operations in a safe, responsible, ethical and conscientious manner. The Company makes all reasonable efforts, directly or through its advisers, to engage in and maintain active dialogue with each of these governmental and non-governmental bodies, to ensure that any issues faced by the Company, including but not limited to regulations or proposed changes to regulations, are well understood and ensuring to the fullest extent possible that the Company is in compliance with all appropriate regulation, standards and specific licensing obligations, including environmental, social and safety, at all times.
Since 1 January 2021, the Group’s management has held regular meetings, in particular, with representatives of the National Mining Agency (“ANM”), the State Environmental Agency (“SEMAS”), the Federal Environmental Agency (“IBAMA”), the Federal Land Agency (“INCRA”), and the Federal Agency for Indigenous People (“FUNAI”) and representatives from some of these bodies have visited the Group’s current operational development projects. In the wake of public concerns following the Brumadinho dam disaster in January 2019, the Group organised a visit for local dignitaries and journalists to the Group’s operations to provide reassurance regarding the Group’s operating practices and confirmation that an incident of a similar nature to Brumadinho was not possible with Serabi’s operation.
Regular dialogue has been held with local community leaders and on 6 February 2020, the Group hosted a public hearing attended by over 500 people as part of the approval process for its Coringa gold project.
In addition to its other roles and responsibilities, the Company’s senior management, its Audit Committee and the Board are responsible for ensuring that procedures are in place and are being implemented effectively to identify, evaluate and manage the significant risks faced by the Company. Details of the Board’s assessment of the Principal Operational Risks and Uncertainties are set out on pages 44 to 51 in the 2021 Annual Report (a copy of which is available on the Company’s website)
The Board engaged the services of Deloitte Touche Tohmatsu Consultores Ltda in Brazil (“Deloitte”), in the fourth quarter of 2021, to establish an internal audit function to mitigate the potential risk of inaccurate financial reporting, financial irregularities or fraud. The Executive Directors have established appropriate reporting and control mechanisms to ensure the effectiveness of the Company’s control systems.
A Well Functioning Board of Directors
The Board is currently comprised of the Chief Executive, Mike Hodgson, the Financial Director, Mr Clive Line and seven Non-executive Directors. Of the Non-executive Directors, Mr Michael Lynch-Bell, the Chairman, Mr Luis Azevedo and Mr Aquiles Alegria are considered to be independent, whilst Mr Nicolas Bañados and Mr Mark Sawyer, under the QCA Code, by virtue of being appointed representatives of significant shareholders, are not considered to be independent. Biographical details of the current Directors are set out on the Company’s website and in the Company’s 2021 Annual Report. Executive and Non-executive Directors are subject to re-election usually at the Company’s Annual General Meeting, at intervals of no more than three years. Summary terms and conditions of each of the Directors are disclosed annually in the Company’s Annual Reports Copies of this document is available on the Company’s website at www.serabigold.com.
The Board meets on a regular basis and during 2021 met a total of 11 times. The Company has established an Audit and Compliance Committee, a Remuneration Committee and a Project Steering Committee, particulars of which are set out in the 2021 Annual Report. The Board has not at this time felt it necessary to establish a separate Nominations Committee and considers that this responsibility can be currently discharged by the Remuneration Committee or, if the circumstances so dictate, the Board as a whole The Board is responsible for the stewardship of the Company through consultation with management of the Company. Any responsibility that is not delegated to management or to the committees of the Board remains with the Board, subject to the rights of the shareholders. The frequency of Board meetings, as well as the nature of agenda items, varies depending on the state of the Company’s affairs and in light of opportunities or risks which the Company faces. Members of the Board are in frequent contact with one another and meetings of the Board are held as deemed necessary.
Additionally, the Board has appointed an Executive Committee to oversee and co-ordinate the day-to-day running of the Group. It is empowered to make decisions over a number of areas without reference to the full Board and specifically to deal with all matters relating to the daily operation of the Group.
The Executive Committee comprises the Chief Executive and the Finance Director. The Executive Committee is responsible for the daily operation of the Group and for making recommendations to the Board regarding short and medium-term budgets, targets and overall objectives and strategies for the Group.
The Chief Executive and the Finance Director are full time employees of the Company whilst each of the Non-executive Directors are considered to be part time but are expected to provide as much time to the Company as is required.
The Board is satisfied that, as a whole, it is able to exercise independent judgement. The Articles of Association of the Company have already been specifically amended to restrict the role of the Directors in any situation where there is considered to be a conflict of interest and requiring such conflicted Director(s) to abstain from voting and participation in any meeting or voting where the matter giving rise to the conflict is to be considered. The Company has also entered into Relationship Agreements with each of Fratelli Investments Limited (“Fratelli”) and Greenstone Resources II LP (“Greenstone”), its two principal shareholders, details of which are set out in the Annual Information Form filed by the Company on SEDAR on 9 April 2020 and available on the Company’s website. The Relationship Agreements inter alia require that (i) the Company is capable of carrying on its business independently of each of Fratelli and Greenstone; (ii) transactions between any member of the Group and any member of either Fratelli or Greenstone are made at arm’s length on a normal commercial basis and approved by Directors independent of Fratelli or Greenstone as appropriate; (iii) any disputes between Fratelli and /or Greenstone and any member of the Group shall be dealt with by a committee of the independent Directors; (iv) the selection, approval and removal of senior management and Executive Directors shall be subject to the approval of a majority of the Non-executive Directors of the Company; and (v) neither Fratelli nor Greenstone shall take any action as a result of which there would be fewer than two Directors independent of Fratelli and Greenstone.
The Board of the Company may meet without management when any Board meetings are held and at any other time if so requested by the Chairman. The Audit and Compliance Committee and the Remuneration Committee are both comprised solely of Non-executive Directors and the Remuneration Committee will as a matter of its normal business meet without management during the course of the year. Other Non-executive Directors are generally invited to attend meetings of the Remuneration and Audit and Compliance Committees to permit joint consideration of matters without the presence of management and whilst subject matter will generally be confined to the areas of audit, controls and remuneration the Chairman invites participation on other topics at these meetings. Accordingly, forums do occur every three to four months that comprise meetings of the Non-executive Directors.
Attendance at Board and Committee Meetings
During 2021, the Board held 11 Board meetings. Attendance by each of the Directors at these meetings and meetings of its committees are as set out in the table below.
(Attended / Held)
Audit Committee meetings
Remuneration Committee meetings
Appropriate Skills and Experience of the Directors
The Company believes that the current balance of skills in the Board as a whole reflects a very broad range of commercial and professional skills across geographies and industries and each of the Directors has previous experience in public markets.
The Company has an established and stable Board which it considers to be well suited to its fundamental objective of enhancing and preserving long term shareholder value and ensuring that the Company conducts its business in an ethical and safe manner. The Board is considered to be of sufficient number to provide more than adequate experience and perspective to its decision-making process and given the size and nature of the Company, the Board does not consider at this time that it is appropriate to increase the size of the Board or amend its composition. The Board is however conscious of the different perspectives that individuals from different cultural backgrounds and with different work and life experiences can bring. For this reason, when considering any change to its composition it will actively seek to further increase its current diversity to become more inclusive, taking into account considerations such as gender, age and ethnicity to ensure that the Board benefits from a broad range of perspectives and experiences appropriate to its activities and needs.
As the Board is not currently anticipating any change to its size or composition, it has not yet implemented a written policy regarding the identification and nomination of women directors. In the event that one of the existing members of the Board stands down from their current position, the Company will, at that time, give further consideration to the specific selection of a female member of the Board and the adoption of a formal policy relating to the positive appointment of additional female members of the Board for future opportunities.
The Board does consider that its current composition already encompasses significant diversity. Of its seven members, its membership covers three nationalities, and includes two Directors with strong technical mining and geological expertise, two Directors with financial backgrounds, one Director with a legal background specialising in natural resources sector I Brazil and two Directors bringing investment banking and corporate finance experience. All of the Board members have spent significant time, and in some cases, all of their careers working within the natural resources industries. With the exception of Mr Lynch-Bell, who was appointed in August 2022, the current Non-executive Directors have served for periods of between four to nine years which the Board considers is an indicator of an appropriate level of turnover and renewal while maintaining continuity and knowledge.
The Board has not adopted a target regarding the number of women on the Board of Directors. The Board of Directors does expect more diversity on the Board of Directors over time and each future appointment will be made on the basis of ensuring that its Board is able to provide the widest possible experience and perspective that is consistent with achieving the highest level of professionalism and continues to enhance and preserve long term shareholder value and ensure that the Company conducts its business in an ethical and safe manner. Today, none (zero per cent) of the Company’s Directors are women.
The Board is responsible for: (a) ensuring that all new Directors receive a comprehensive orientation, that they fully understand the role of the Board and its committees, as well as the contribution individual Directors are expected to make (including the commitment of time and resources that the Company expects from its Directors) and that they understand the nature and operation of the Company’s business; and (b) providing continuing education opportunities for all Directors, so that individuals may maintain or enhance their skills and abilities as Directors, as well as to ensure that their knowledge and understanding of the Company’s business remains current.
Given the size of the Company and the in-depth experience of its Directors, the Company has not deemed it necessary to develop a formal process of orientation for new Directors but encourages all its Directors to visit the Company’s operations to ensure familiarity and proper understanding. The Directors conduct a discussion of the business of the Company at Board meetings to ensure that new directors are provided with an overview of the Company’s operations.
From time to time, corporate officers, and legal, financial and other experts, whose presence and knowledge can, in the opinion of management and/or the Board, assist the Board in making a more informed decision, are invited to attend Board meetings to describe matters in their areas of expertise. The Board ensures that any new Board member receives a written memorandum (the “Memorandum”) prepared by the Company’s lawyers setting out their responsibilities as a Director and ensures that each Director is conversant with the regulations of any stock exchange on which the Company’s shares are traded.
Directors are entitled to attend seminars that they determine necessary to keep themselves up-to-date with current issues relevant to their services as Directors of the Company.
Evaluation of Board Performance
The Board has determined that it shall itself be responsible for assessing the effectiveness and contributions of the Board as a whole, its committees (which currently comprise the Audit Committee, the Remuneration Committee and the Project Steering Committee) and individual directors. The size of the Board allows for open discussion. The Chairman has regular dialogue with the Chief Executive whereby the Board’s role and effectiveness can be considered. The Finance Director also has regular dialogue with the Head of the Audit Committee whereby that Committee’s effectiveness can be considered.
Over a period between November 2021 and February 2022, an independent evaluation was undertaken by Board Excellence , an international board practice. The core objectives were to complete an assessment of the Board’s effectiveness, performance and compliance with
- The QCA Corporate Governance Code
- TSX Governance requirements
- Relevant aspects of the UK Corporate Governance Code (2018)
- UK Financial Reporting Council Guidance on Board effectiveness (July 2018)
- Internationally recognised board best practices
- Board Excellence’s own experience and board best practices
The report highlighted the need to improve the current system of corporate governance. The recommendation of Board Excellence was that this should be undertaken under the guidance and leadership of an independent chairperson. The Board has acknowledged this and other recommendations made by Board Excellence and has initiated a process for the identification of suitable candidate to be appointed to the role of chairperson. Other areas that the review highlighted for action included
- increased levels of independence and diversity
- a reduction in the size of the Board whilst prioritising gender diversity
- for the Audit Committee to assume a greater role in Group’s risk management framework including Cyber risks
- that on at least an annual basis the Board review and agree its strategy and establishes a set of key financial and non-financial KPIs to monitor performance against that strategy on a monthly basis.
- that an annual cycle be established for consideration by the Board of key matters such as risk management, strategy, budget approval and succession planning.
- outsourcing of the Company Secretarial function
- developing templates for the preparation of Board papers
development of an appropriate succession plan for the senior executives
The Board through its actions and direction has sought to establish a corporate culture that places emphasis on the Group’s and the Board’s cultural priorities:
- Social responsibility – working closely with communities to ensure that the Group’s operations bring enhancements to the lives of those that might be most affected by the Group’s presence in the area;
- Transparency – the Group should be open in its dealings with all stakeholders, clear in its objectives and aims and cognisant and sympathetic to the needs and requirements of stakeholders;
- Health and Safety – whilst recognising the inherent risks that are present in the industry, actively encouraging a working environment and work practices within the Group’s operations, that strive to minimise and eliminate risk to personnel wherever possible;
- Risk management – the Board encourages, through its decision making process, that management properly evaluates and considers the implications of decisions (operational, financial or otherwise) on the long-term future of the business, seeking to ensure that risk is adequately managed and minimised; and
- Sustainability – the Board considers that it has a responsibility to stakeholders to ensure that the business is able to deliver long-term benefits whether, financial, social or environmental and ensuring that decisions do not have longer-term implications that would jeopardise the long-term sustainability of the Group.
Maintenance of Governance Structures and Processes
Ultimate authority for all aspects of the Company’s activities rests with the Board, with the responsibilities of the Executive Directors arising as a consequence of delegation by the Board.
The Board has adopted appropriate delegations of authority which set out matters which are reserved to the Board.
The Chairman is responsible for the effectiveness of the Board, while management of the Company’s business and primary contact with shareholders has been delegated by the Board to the Chief Executive Officer and the Finance Director.
Audit and Compliance Committee
The Audit and Compliance Committee (“the AC Committee”) reviews the principles, policies and practices adopted in the preparation of the financial statements of Serabi Gold plc and its subsidiaries, as well as ensuring any other formal announcements relating to the financial performance of the Group comply with relevant statutory and regulatory requirements. As part of this review, it focuses in particular on areas of judegment, appropriateness of policies, going concern matters, and any other areas it identifies as risks (e.g. on the grounds of materiality or uncertainty). The AC Committee also has responsibility for any internal audit function but at this time has determined that in view of the size of the organisation, a separate internal audit team is not required
The AC Committee is also responsible for assisting the Board in discharging its responsibilities with respect to the integrity of the Group’s financial statements, the effectiveness of the systems of governance, risk management and internal control, and monitoring the effectiveness and independence of the external auditors. It receives reports from the executive management and auditors relating to the quarterly and annual accounts and the accounting and internal control systems in use throughout the Company.
The AC Committee shall meet not less than four times in each financial year and it has unrestricted access to the Company’s auditors. The AC Committee is required to consist of not less than three Non-executive Directors.
During 2021, the AC Committee considered the key areas of risk and judgement relevant to the Group. These included:
- the liquidity and going concern of the Group:
- the recoverability of state taxes:
- revenue estimation and adjustments:
- mineral resource estimations:
- unaccounted for cash withdrawals:
- travel and expense advances and reimbursement of expenses:
- future mine development capital:
- the valuation and impairment of the Group’s assets;
- the valuation of stocks of material comprising work in progress;
- the policy for capitalisation of development costs and policies for amortisation;
- determination of the potential recoverability of past tax losses.
- approving the estimation and accounting treatment for derivative transactions.
In addition to matters raised at the AC Committee meetings, Serabi’s management submits working papers and notes outlining the key issues, which are circulated to the AC Committee for consideration ahead of the meetings.
The AC Committee is comprised of Messrs. Lynch-Bell (Chair), Sawyer and Bañados. All members of the AC Committee are financially literate in that they have the ability to read and understand a set of financial statements that are of the same breadth and level of complexity of accounting issues as can be reasonably expected to be raised by the Company’s financial statements.
Mr Lynch-Bell is a Chartered Accountant who spent a 38-year career with Ernst & Young (EY), having led its Global Oil and Gas, UK IPO and Global Oil and Gas and Mining transaction advisory practices. He was a member of EY’s assurance Practice from 1974 to 1996, when he transferred to the Transaction Advisory Practice. He was also UK Alumni sponsor and a member of the firm’s Europe, Middle East, India, and Africa and Global Advisory Councils. He retired from EY as a partner in 2012 and continued as a consultant to the firm until November 2013
Mr Sawyer co-founded Greenstone Resources in 2013 after a 16 year career in the mining sector. Prior to establishing Greenstone, Mr Sawyer was GM and Co-Head Group Business Development at Xstrata plc where he was responsible for originating, evaluating and negotiating new business development opportunities for Xstrata. Prior to Xstrata Mr Sawyer held senior roles at Cutfield Freeman & Co (a boutique corporate advisory firm in the mining industry) and at Rio Tinto plc.Mark qualified as a lawyer and has a law degree from the University of Southampton.
Mr Bañados is Managing Partner of Galgo Capital, a private equity firm based in Latin America. Formerly, he held the position of Managing Director of Private Equity and Venture Capital at Megeve Investments and Fratelli Investments. He has more than 20 years of experience investing in Latin America and serves as Director for several companies including Haldeman Mining Company, Minera Las Cenizas, Minera Bornita, Aenza and others. He has an MBA from The Wharton School at the University of Pennsylvania and also received a Master degree in Financial Economics from Universidad Católica de Chile.
The Remuneration Committee is responsible for determining and agreeing with the Board the framework for the remuneration of the Chief Executive, all other Executive Directors, the Chairman of the Company (if an Executive Director), the Company Secretary and such other members of the Executive Management as it feels appropriate to consider. Furthermore, it is responsible for setting the structure and determining the total individual remuneration packages of each Director including, where appropriate, bonuses, incentive payments and share options with due regard to the interests of the shareholders and the overall performance of the Group and the Company’s overall philosophy and policy with respect to executive compensation.
The Remuneration Committee determines the level of compensation the Chief Executive Officer and the Chief Financial Officer are to receive on an annual basis and relies on the Company’s economic performance and the responsibilities and risks involved in being an effective Chief Executive Officer and Chief Financial Officer of a gold production and development company. The Remuneration Committee considers current compensation of both the Chief Executive Officer and the Chief Financial Officer to adequately cover such responsibilities and risks.
It also considers recommendations from the Executive Directors in respect of proposals for bonuses, incentive payments and share options to be awarded to senior managers within the Group and makes recommendations on the overall remuneration plans adopted by the Company. The remuneration of the Non-executive Directors is a matter that is dealt with by the Board as a whole.
The Remuneration Committee has expertise in, among other things, evaluating overall compensation policies, plans and practices, as well as setting compensation for executive officers; overseeing and administering equity compensation plans; and establishing employment, retention and severance arrangements for executive officers.
The Remuneration Committee comprises Messrs. Sawyer (Chair), Bañados and Lynch-Bell. Mr Lynch-Bell is an independent Director and Mr Bañados and Mr Sawyer whilst not independent by virtue of their positions with an affiliated entity of the Company have no executive position within the Company and are thus considered independent and objective for the purposes of the Remuneration Committee.
The Remuneration Committee expects to meet at least twice a year, or more frequently as required. In 2021, the Remuneration Committee met three times. The Committee evaluated and made recommendations to the Board in respect of bonuses for key executives relating to both their individual and the Group’s performance during the preceding year against pre-determined targets. It also established and recommended targets in respect of the 2021 calendar year for Executive Directors and senior management and evaluated and made recommendations for the award of conditional share awards for senior management and Directors.
Full disclosure of the policies can be found in the Remuneration Report on pages 64 to 74 of the 2021 Annual Report.
The Remuneration Committee is responsible for the following matters:
• to review the performance objectives and determine and agree the appropriate levels of remuneration for the Executive
Directors, and the senior management of the Group;
• to determine the remuneration of the Chairman of the Board, Non-executive Directors, as well as Chairmen and members of all Board Committees, subject to the condition that no person shall participate in discussions relating to his or her own remuneration;
• to review the design and management of Group salary structures and incentive schemes, and to ensure proper authorisation for any awards made under such schemes;
• to review the recommendations of the Chief Executive of the Group as to the grant of share awards and other bonuses, and to approve such awards as appropriate; and
• to review and approve the Remuneration Report in the Serabi Gold plc Annual Report.
The Company does not currently have a Nomination Committee. The Board as a whole is responsible for identifying and recommending candidates for the Board of the Company. The Board reviews and makes determination with respect to:
(i) the size and composition of the Board;
(ii) the organization and responsibilities of the appropriate committees of the Board;
(iii) the evaluation process for the Board and committees of the Board and the Chairpersons of the Board and such committees; and
(iv) creating a desirable balance of expertise and qualifications among Board members.
In the nomination process, the Board assesses its current composition and requirements going forward in light of the stage of the Company and the skills required to ensure proper oversight of the Company and its operations.
The Board has not at this time considered that the size and complexity of the Company warrants a requirement for a separate Nomination Committee. It is currently envisaged that should any appointment be undertaken the Remuneration Committee would fulfil the role of the Nomination Committee.
Project Steering Committee
The Group has established a Project Steering Committee, the role of which is to recommend a governance and reporting framework for the Group’s portfolio of producing assets, its existing exploration portfolio, including the Coringa Gold Project, and assess and review any proposed mergers and acquisitions.
The Project Steering Committee is chaired by the Chief Executive Officer and certain of the Group’s substantial shareholders are entitled to appoint nominees to the Project Steering Committee with the Board appointing other qualified representatives.
The Project Steering Committee makes recommendations to the Board on matters including, but not limited to:
•the overall development strategy that might enhance value for shareholders whilst ensuring the Group’s mineral projects are developed in accordance with a credible financing plan;
•the monitoring through formal monthly reviews of i) performance against target costs and schedules, ii) health, safety and environmental performance and, iii) project controls;
•matters which may or will require further approvals from the Board such as capital overruns and major contract awards;
•material changes to the approved scopes, cost and/or schedule when risk or opportunity events occur;
•the permitting plan and progress in respect of material permits, including any material communication received from government or permitting agencies in respect of key permits and approvals;
•overall HSE performance including system implementation and review of material incidents (high potential risk incidents, lost time injuries and reportable environmental incidents);
•stakeholder management and progress against key elements of the stakeholder plan;
•the execution plan including contracting strategy, detailed permitting register, controls/reporting, critical path, control budget and use of contingency;
•the staffing plan; and
•the financing plan and strategy including equity, debt, royalty or off-take financing.
The Project Steering Committee convened several times during 2021 and meets as frequently as it considered necessary and in particular if there is a need to consider and discuss investment opportunities and project developments in advance of presenting these to the Board as a whole.
In addition to reports from the Project Steering Committee, Mr Eduardo Rosselot, a mining engineer and Mr Aquiles Alegria, a geologist and Non-executive Director, undertake visits to the Group’s operations and also assist, as required, with evaluations of new investment opportunities and report to the Board and the Project Steering Committee on their findings.
The Board has not adopted term limits for Directors or other mechanisms of Board renewal. The Board evaluates its performance and composition on a regular basis and will make adjustments as and when indicated. When assessing the independence of each Non-executive Director, length of service is one of the considerations. The Board will when assessing new appointments in the future consider the need to balance the experience and knowledge that each independent Director has of the Company and its operations, with the need to ensure that independent Directors can also bring new perspectives to the business.
In accordance with the Companies Act 2006, the Board complies with: a duty to act within its powers; a duty to promote the success of the Company; a duty to exercise independent judgement; a duty to exercise reasonable care, skill and diligence; a duty to avoid conflicts of interest; a duty not to accept benefits from third parties; and a duty to declare any interest in a proposed transaction or arrangement.
The Board is accountable to the Company’s shareholders and as such it is important for the Board to appreciate the aspirations of the shareholders and equally that the shareholders understand how the actions of the Board and short-term financial performance relate to the achievement of the Group’s longer term goals.
The Board reports to the shareholders on its stewardship of the Company through the publication of quarterly operational updates and the quarterly and full year financial results. News releases are issued throughout the year and the Company maintains a website (www.serabigold.com) on which press releases, corporate presentations and the Report and Financial Statements are available to view. Additionally, this Report and Financial Statements contains extensive information about the Group’s activities. Enquiries from individual shareholders on matters relating to the business of the Company are welcomed. Shareholders and other interested parties can subscribe to receive notification of news updates and other documents from the Company via email. In addition, the Executive Directors meet with major shareholders to discuss the progress of the Company and provide periodic feedback to the Board following meetings with shareholders.
The Annual General Meeting, and other meetings of shareholders that may be called by the Company from time to time, provide an opportunity for communication with all shareholders and the Board encourages the shareholders to attend and welcomes their participation. The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its private shareholders. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition to its Annual Report the Company provides detailed quarterly reports outlining operational and financial performance in each quarter.
The outcome and detailed results of shareholder votes are reported following each meeting of shareholders. There has been no instance in any recent shareholder meeting whereby the votes cast have not been substantially in favour of the resolutions proposed by the Board. In the event that a significant number of the independent votes cast (greater than 20%) were not cast in favour of a resolution, the Board and management would seek to better understand that vote and consider taking actions as a result of that vote.
Composition of the Audit Committee
The Audit Committee comprises Messrs. Lynch-Bell (Chair), Bañados and Sawyer. It is responsible for ensuring that the financial performance of the Group is properly reported on and monitored and for reviewing the auditor’s reports relating to accounts and internal control systems. Each member of the audit committee is considered to be independent within the meaning of Canadian NI 52-110. All members of the audit committee are financially literate in that they have the ability to read and understand a set of financial statements that are of the same breadth and level of complexity of accounting issues as can be reasonably expected to be raised by the Company’s financial statements. The board of directors has unanimously approved the adoption of an Audit Committee Charter which governs the composition, responsibilities, conduct and authority of the Audit Committee.
Composition of the Remuneration Committee
The Remuneration Committee comprises Messrs. Sawyer (Chair), Bañados and Lynch-Bell. It is responsible for determining and agreeing with the Board the framework for the remuneration of the Managing Director, all other Executive Directors, the Company Secretary and such other members of the Executive management as it is designated to consider. It is furthermore responsible for determining the total individual remuneration packages of each director including, where appropriate, bonuses, incentive payments and conditional share awards.
In addition, an Executive Management Committee, comprised of the Chief Executive Officer and Finance Director, directs the day-to-day operations of the company.
The Company has adopted a share dealing code for Directors and relevant employees in accordance with the AIM Rules, MAR and Canadian securities legislation regulations and will take proper steps to ensure compliance by the Directors and those employees.