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.
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. In November 2019 the Company’s shares in Calidus were 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 in December 2020, and the balance of 49% equity interest in March 2022. This is now the Company’s main project.
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, Graham Stacey, 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.
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. Keras 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 our operations may have. The Company is focused on mining an essential resource that can contribute to a more sustainable future and importantly sustainable agriculture. With the Diamond Creek mine Keras is running a simple operation with minimal processing requirements and will look to maintain our low carbon footprint. The Company is focused on meeting its commitments across the ESG space and will continue to be proactive in this area as it looks 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. The Board has four Directors and Russell Lamming, Graham Stacey and Brian Moritz have demonstrated their commitment to the Company by supporting fund raisings, with the result that they own, in aggregate, some 10% of the ordinary issued share capital. Claire Parry is an Independent Non-Executive Director.
Graham Stacey, the CEO since 1 June 2022, works full time for the Company, with primary responsibility for the Diamond Creek phosphate mine in Utah, USA, which is now owned 100% by the Company. The other directors, Russell Lamming (Chairman), Brian Moritz and Claire Parry, are non-executive directors. As some directors are resident in different time zones, Board meetings are normally conducted by video conference or by telephone.
The CEO is in constant touch with the Directors. He also holds frequent informal discussions with the non-executive directors. Throughout the year such discussions average approximately two per week.
Non-executive directors are committed to devote 24 days per annum to the Company, but they may in fact exceed that required time commitment. Basic fees for each non-executive director are £24,000 per annum, which include serving on the Audit and Remuneration Committees. Extra fees are paid to non-executive directors for providing services in addition to the role of non-executive director. Russell Lamming acts as Chairman, and also oversees the operations of the Company’s subsidiary in Togo, and he receives further fees of £24,000 per annum (total £48,000 per annum). Brian Moritz oversees the Company’s finance and accounting function and acts as Company Secretary, and he receives further fees of £12,000 per annum (total £36,000 per annum). It is believed that these fees are below the median for AIM companies
Principle 6: Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities.
CVs of the directors are disclosed elsewhere in this 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 Graham Stacey is a qualified mining engineers. Each has a long history of achievement in this area and both have been in charge of the construction and operation of mines.
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.
Claire Parry is also a Chartered Accountant. The advice of Azets, a top 10 UK 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 a major objective by acquiring a phosphate mine in Utah, USA, constructing a processing plant 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.
Principle 8: Promote a corporate culture that is based on ethical values and behaviours.
So far as possible the Company recruits locally for staff.
In Utah, the Group’s product is a natural organic fertilizer which plays its part in reducing reliance on artificial manufactured fertilizers.
Company has adopted a comprehensive anti-corruption and whistle blowing policy and an ethical policy which is strictly applied.
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, Russell Lamming:
- 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, Graham Stacey:
- 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 Claire Parry Reeves and comprises Claire Parry 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 Claire Parry. 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.
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 the non-executive directors comprise the remuneration committee.