Corporate Governance Statement
To the extent applicable, and to the extent able (given the current size and structure of the Company and the Board), the Company has adopted the Quoted Companies Alliance Corporate Governance Code. Details of how the Company complies with the Code, and the reasons for any non-compliance, are set out in the table below, together with the principles contained in the Code.
No key governance matters have arisen since the publication of the last Annual Report.
In light of the Company’s size and nature, the Board considers that the current Board is a cost effective and practical method of directing and managing the Company. As the Company’s activities develop in size, nature and scope, the size of the Board and the implementation of additional corporate governance policies and structures will be reviewed. Further disclosures under the Code are included on the Company’s website.
Principle 1: Establish a strategy and business model which promote long term value for shareholders.
The Company’s strategy is to identify mining projects which can be developed to create value and income for shareholders. In June 2017 this strategy was successfully demonstrated when the Company’s Australian gold exploration assets were floated on the Australian Securities Exchange (ASX) with the name Calidus Resources Limited. Since 30 September 2019 the Company’s shares in Calidus have been demerged and transferred to the Company’s shareholders by way of a capital reduction. The demerger has permitted the Board to examine other projects, and in particular the Diamond Creek phosphate mine in Utah, USA, where the Company has completed the staged acquisition of a controlling 51% equity interest since 30 September 2020. The Company has also concentrated preparations for mining at its other primary project, the Nayéga manganese project in Togo. The Company has agreed in principle offtake related finance to expand production at Nayéga, and is also investigating the use of manganese from Nayéga for battery metal purposes.
Principle 2: Seek to understand and meet shareholder needs and expectations
The Company endeavours to communicate with shareholders on a regular basis to understand and meet their needs and expectations. Predominantly, communication is through RNS announcements, but also through direct communication; conference calls; website content; corporate presentations; media coverage and social media. The CEO, Russell Lamming, attends and presents at investor forums wherever possible as well as holding discussions with mining analysts, shareholders and investment managers. Management welcomes the opportunity to engage with shareholders throughout the year and invite all shareholders to attend the Annual General Meeting, although this has been impacted by the current Covid-19 pandemic.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success.
Keras’ management are aware of their responsibility as an employer and a mining company, and are committed to upholding best practice across the business. The Company cares about its stakeholders and is focused on looking to create value and benefits for all whilst seeking to manage and mitigate the potential impacts that Keras’ operations may have. Keras’ assets are diverse in commodity and location but have important similarities – mining essential resources that can contribute to a more sustainable future, running simple operations with minimal processing requirements and looking to maintain a low carbon footprint. Management are focused on meeting their commitments across the ESG space and will continue to be proactive in this area as they look to develop and sustain a positive legacy.
Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation.
The risks facing the Company are detailed in the Strategic Report. The Board seeks to mitigate such risks so far as it is able to do, but certain important risks cannot be controlled by the Board. In particular, products the Company is seeking to identify and ultimately mine are traded globally at prices reflecting supply and demand rather than the cost of production. So far as the Company is concerned, the substantial decline in the price of iron ore rendered two previous projects non-viable, both of which had appeared to have substantial value on a discounted cash flow basis, and they were abandoned. While the Company will only invest in exploration projects where there is a legal right to convert an initial exploration licence to a mining licence, in practice it may be difficult to obtain such conversion for political reasons. There is no legal way that the Company can protect itself against this possibility.
Principle 5: Maintain the Board as well-functioning, balanced team led by the chair.
The Company will only begin to earn material income during the current year. For cost reasons the Board has been reduced to three directors. All of the directors have demonstrated their commitment to the Company by supporting fund raisings, with the result that they own, in aggregate, some 22.3% of the ordinary issued share capital. It follows that none of the directors is considered to be independent.
Russell Lamming, the CEO, works full time for the Company. The other directors, Brian Moritz (the Chairman) and Dave Reeves, are non-executive directors. As Dave Reeves is resident in Australia, physical Board meetings are held when he is in the United Kingdom and on an ad hoc basis. Where required at other times, Board meetings are normally conducted with Dave Reeves present by telephone.
The CEO holds frequent informal discussions with the non-executive directors. Throughout the year such discussions average approximately two per week. Discussions with Brian Moritz are normally held in the Company’s offices in Cobham, Surrey, while those with Dave Reeves are normally held by telephone.
Non-executive directors are committed to devote 30 days per annum to the Company, but in fact exceed that required time commitment. Prior to 1 April 2019 each of the non-executive directors has reduced his fees drawn to half of the contracted amount, to £15,000 per annum for Brian Moritz and £12,000 per annum for Dave Reeves. Subsequently fees were increased to £42,000 per annum for Brian Moritz and £24,000 per annum for Dave Reeves, still below the median for AIM companies, but more in line with the time commitments and efforts of the non-executive directors.
Principle 6: Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities.
CVs of the directors are disclosed in the Annual Report. Each of the directors maintains up to date skills by a combination of technical journals and courses. As an exploration and mining Company the main skills required by the Board are in the area of geology and mining. Russell Lamming is a qualified geologist and Dave Reeves is a qualified mining engineer, each with a long history of achievement in this area. Importantly, each of them has also been in charge of the construction and operation of mines.
As the Company moves into mining rather than exploration the management team has been strengthened by the appointment of Graham Stacey as Chief Operating Officer with main responsibility for Togo operations. Graham has wide experience of mining in Africa, and has previously been an executive director of an AIM listed mining company. In Utah the Company has nominated Jean du Plessis as a director of Falcon Isle with responsibility for mining and processing. Jean has wide experience of managing such operations in South Africa and the USA.
Brian Moritz is a Chartered Accountant. In addition to his financial skills he has been registered as a Nominated Adviser and has wide experience of corporate transactions.
The advice of Azets, a top 10 accounting firm, is sought on technical accounting matters, in particular in relation to compliance with IFRS.
Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement.
The Board has successfully achieved major objectives by:
- Capitalising the value of its Australian exploration assets, floating them on the ASX and demerging the resulting shares by distributing them to Keras shareholders
- Progressing the Nayéga project in Togo from exploration to be fully prepared for commercial mining on grant of the exploitation permit.
- Acquiring a controlling stake in the Diamond Creek high grade organic phosphate mine, in Utah, USA and commencing production.
The Board will concentrate on achieving profitable production and positive cash flow from its existing projects while continuing to seek other mining projects. Given the current state of the Company’s development the directors believe that the Board operates efficiently and cost effectively and that the cost of an external review process is not justified. Nevertheless, it is intended that the Board will be strengthened in due course to reflect its progress from exploration to mining.
Principle 8: Promote a corporate culture that is based on ethical values and behaviours.
So far as possible the Company recruits locally for staff. The contractor for the Nayega mine in Togo is a local company, which is also responsible for transportation of product from the mine to the port of Lome.
The Board is conscious of the fact that parts of Africa may be viewed as corrupt areas in which to operate. Nevertheless, the Company has adopted a comprehensive anti-corruption and whistle blowing policy which is strictly applied.
In Utah, the Group’s phosphate product from Diamond Creek is a natural organic fertilizer which plays its part in reducing reliance on artificial manufactured fertilizers. A local contractor is also used for the mining, processing and transportation of the phosphate products.
Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the board.
The corporate governance structures which the Company is able to operate are restricted by the small size of the Board, which is itself dictated by the current size of the Company’s operations. With this limitation, the Board is dedicated to upholding the highest possible standards of governance and probity.
The chairman, Brian Moritz:
- leads the Board and is primarily responsible for the effective working of the Board;
- in consultation with the Board ensures good corporate governance and sets clear expectations with regards to Company culture, values and behaviour;
- takes overall responsibility for the Company’s financial affairs, including the completion of annual and interim financial statements and liaison with the independent auditors.
The CEO, Russell Lamming:
- is primarily responsible for developing Keras’ strategy in consultation with the Board, for its implementation and for the operational management of the business;
- is primarily responsible for new projects and expansion;
- runs the Company on a day-to-day basis;
- implements the decisions of the Board;
- monitors, reviews and manages key risks;
- is the Company’s primary spokesperson, communicating with external audiences, such as investors, analysts and the media;
The remuneration committee is chaired by Dave Reeves and comprises Dave Reeves and Brian Moritz. It meets on an ad hoc basis when required.
The audit committee is chaired by Brian Moritz and comprises Brian Moritz and Dave Reeves. It normally meets twice per annum to consider the interim and final results. In the latter case the auditors are present, and the meeting considers and takes action on any matters raised by the auditors arising from their audit.
Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.
The Board communicates with its stakeholders through social media and webcasts, as well as by announcements on RNS. It welcomes the ability to meet and engage with shareholders at general meetings, but this was not possible in 2020 due to Covid 19 restrictions.
The audit committee normally meets twice per annum, on its own to consider and approve the interim results, and with the auditors to consider the annual report and matters raised by the auditors based on their audit. So far as possible recommendations by the auditors are immediately implemented. As the CEO is also present as an observer at such meetings, no further report is submitted to the Board.
The remuneration committee meets on an ad hoc basis when required. Fees paid to the non-executive directors are settled by the Chief Executive Officer, as both non-executive directors comprise the remuneration committee.