The Board is committed to maintaining high standards of corporate governance and in this it is guided by the Quoted Companies Alliance’s Corporate Governance Code (the “QCA Code”). The QCA Code sets out 10 principles that are listed below together with a short explanation of how the Company applies each of the principles and reasons for any non-compliance.
Business Model and Strategy for Promotion of Long-Term Value
The Board considers that the highest medium and long-term value can be delivered to its shareholders by creating a diverse portfolio of holdings with exposure to commodities across multiple stages of the natural resource cycle, from exploration to production, and with a degree of geographical and commodity diversity. The Company’s objective focusses on opportunities to add and realise value in reasonably short timeframes, and considers the generation of multiple sustainable income streams to be its prime task, as this can underpin value and underwrite the higher risk parts of its project pipeline such as exploration.
Cash flows from dividends and buy-backs, royalties and operations are supplemented by the conversion of its unlisted asset interests, once they have reached a stage of maturity where this is possible, to more liquid and more fungible forms.
The Company wishes to fund the business primarily through internal cash flows from its investments in manganese and gold, but will also raise new capital, where possible and in order to minimize shareholder dilution through debt or hybrid structures. The Company looks forward to adding revenues from ferrosilicon and potentially copper/cobalt to this mix. The Company has many years of transactional expertise that allow it on occasion to seize short-term or opportunistic opportunities.
The Company delivers this with tightly controlled overheads and through the formation of joint ventures or the sale of partial or total interests in projects into new holding structures in exchange for shares or royalties. In this way it aims to minimize the cash burn for which it is directly responsibleand aims to partner with specialist or management teams that can add value.
The Company takes into consideration economic, political, country, financial and project risks, as well as environmental and community factors, when executing its business strategy.
Key challenges include the volatility of commodity prices, country risk in areas where the Company operates, the length of time between discovery and production during which a project absorbs expenditure without producing revenues, and the cyclical factors in the funding and securities markets whereby from time to time equity finance is available, if at all, on highly unfavourable terms. The Company addresses these primarily through its strategy of project diversity and its focus on cash flow generation, but also by directing itself, particularly in its portfolio of retained assets, towards high margin and high grade operations.
Understanding Shareholder Needs and Expectations
The Board understands the needs and expectations of its various shareholders, who all share a desire to maximise the value and growth of the business, but may do so with different time frames and outcomes in mind.
The Board recognizes that in order to ensure a good match between the shareholder profile and the Company’s Business Model and the plans for implementation of that model, it needs to manage shareholder expectations and communicate clearly Company plans, expectations and timelines.
The Company does this by giving regular updates on developments via RNS announcements, an occasional newsletter, Twitter at @RRR_RedRock, Company interviews with and a website at Proactive Investor, the use of other similar services, and informal and formal meetings including phone-in meetings, in order to serve the needs of private and institutional investors as well as analysts.
The Company also participates in the UK Investor Show and other relevant industry investor shows, including Investor Presentation Evenings, so that shareholders can meet us in person to answer their queries, and management can provide information on current developments at the Company
The Company takes into consideration shareholders’ views and suggestions and uses all opportunities to encourage shareholders to call or email the management direct at their publicly available numbers and addresses.
Group site visits are offered to shareholders expressing interest in particular operations.
Shareholders are also encouraged to attend the Company’s Annual General Meetings of which the shareholders are notified via Company’s website as well as e-mail or post, where they have an opportunity to share their views on the business and ask questions. Management try to contact as many shareholders as possible before the meeting to encourage their attendance.
Consider Wider Social Responsibilities
The Business Model of the Company is to deliver shareholder value through various stages of mineral exploration projects, as well as through investments and corporate transactions, JVs and partnerships.
The Company also recognizes duties to other parties, including direct and indirect employees, business partners, consultants and contractors as well as suppliers, service providers, and regulators.
The Board recognises that the long-term success of the Company will be enhanced by good relations with different internal and external groups and to understand their needs, interest and expectations, the Board has established a range of processes and systems to ensure that there is ongoing two-way communication, control and feedback processes in place with to enable appropriate and timely response.
The Company takes into consideration the environment in which it operates. Therefore, good relations are cultivated with local governments and communities, aiming to better understand various parties’ aspirations and ensure that the Company’s business activities are compliant not only with local and global laws, including environmental laws, but also where possible take account of local expectations and priorities.
The Company’s approach to managing corporate social responsibility has depended on a project’s development stage, but when the Company was very active in Kenya, in 2009-11, CSR was developed into a separate business function.
To execute and deliver the Company’s strategy, the Risk Management Framework has been developed, which identifies the risks to which the Company has been or could be exposed. This framework has been in use for number of years, changing depending on the Company’s size and its business activities, and serves as an internal control measure. The Risk Management Framework takes into consideration the following key categories of the business, namely, the Management, Regulatory, Financial, Operational, HR, H&S, Political, Environmental and Other Risks. Each category identifies varied risks and addresses those risks separately, assigning a risk score, likelihood, control measures in place and control measures that need to be taken to mitigate the risks, identifying a responsible person and the action deadline. The risk management is an ongoing process and extends to overseas activities as it is appropriate, taking into consideration the local as well as the UK regulatory requirements.
In addition, the Audit Committee overseas the Company’s financial reporting, including accounting policies and internal financial controls and is responsible for ensuring that the financial performance of the Company is properly monitored and reported to the Board.
Close day to day control is also exercised by the Executive Directors to ensure the effectiveness of the Company’s control systems.
A Well Functioning Board of Directors
The Board has responsibility to govern the Company rather than to manage it and in doing so act in the best interests of the Company as a whole. The Board is responsible for formulating, reviewing and approving the Company’s strategy, financial activities and operational performance. Day to day management is delegated to the Executive Directors, responsible for consulting the Board on all significant financial and operational matters. The Board approves the annual budget and amendments to it, issues of shares or other securities and all significant acquisitions and disposals.
The Board comprises four Directors, namely Andrew Bell, the Chairman and CEO, Scott Kaintz, Executive Director and COO/CFO, and two Non-Executive Directors, Michael Nott and Sam Quinn, of whom one, Sam Quinn, is an Independent Non-Executive Director. Biographical details of the current Directors are set out within Principle Six below. One-third of the Executive Directors and Non-Executive Directors retire by rotation under the Articles of Association of the Company and, if eligible, may offer themselves for re-election.
The Directors are of the opinion that the Board comprises a suitable balance and that the recommendations of the QCA Code have been implemented to an appropriate level. The Board acknowledges that, both in having an Executive Chairman who is also the CEO, and in having only one Non-Executive Director who is Independent, best practice, as stated in the QCA Code, is not being followed. However, it is the opinion of the Board as a whole that the current arrangements are appropriate to the Company at its current size and stage of development, and that sufficient experience and compliance structures exist within the Company to ensure that the corporate governance functions that would be part of an independent Chairman’s responsibility are carried out. Principle Nine below elaborates further on this matter.
The Board notes that AIM’s minimum expectations for a board, that it should include a Chairperson, a Finance Director, and Non-Executive Directors, are fulfilled by the current structure, and that the need to contain overhead in a small company mean that the number of board positions has to be limited. The Board also notes that although one Non-Executive Director does not fully meet the definition of independence, he meets some key requirements for independence in that he derives no other benefit from the Company than as Non-Executive Director, and provides no services, and exercises independent judgement.
The question of whether and at what stage it will be appropriate to split the roles of Chairman and CEO as recommended by the Code is regularly reviewed.
The Board, through the Chairman, the Executive Director and the Non-Executive Directors, maintains regular contact with its advisers, brokers and other consultants in order to ensure that the Board develops an understanding of the views of shareholders about the Company. The Board is also supported by the Audit and Renumeration Committees the details of which are set out in Principle Nine.
The necessary information is supplied to the Directors on a timely basis to enable them to discharge their duties effectively. All Directors have access to the advice of the Company’s solicitors and the Company Secretary as well as independent professional advice, at the Company’s expense, as and when required.
The Non-Executive Directors’ have the same legal responsibilities to the Company as any other Director, including attendance at the regular Board Meetings, the Committee Meetings and the General Meetings. The Non-Executive Directors receive formal letters of appointment setting out the key terms, conditions and expectations of their appointment.
Each member of the Board is committed to spending sufficient time to enable them to carry out their duties as a Director. The Board meets regularly throughout the year as deemed appropriate formally and informally, in person and by telephone.
Appropriate Skills and Experience of the Directors
The Board consists of four Directors and the Company believes that the current balance of resource sector, technical, financial, accounting, legal and public markets skills as well as experience of the Board as a whole, reflects its business requirements. The Board shall review annually and when required the appropriateness of its mix of skills and experience to ensure that it meets the changing business needs.
The Board recognises that it has limited diversity and will give this factor due consideration if the Board concludes that replacement or additional directors are required.
Andrew Bell, MA, LLB
Chairman and Chief Executive
Andrew Bell began his career as a natural resources analyst at Morgan Grenfell & Co. in the 1970s. His business experience encompasses periods in fund management and advisory work at leading financial institutions, international corporate finance work and private equity. Andrew Bell’s listed company directorships are Regency Mines Plc (AIM), Executive Chairman and Director, Jupiter Mines Ltd (ASX), Non-Executive Director. Andrew Bell is also a former Director of various resource sector companies including Star Striker Ltd (now Intiger Group Ltd)(ASX), and a former Non-Executive Chairman of Greatland Gold Plc (AIM).
Andrew Bell has considerable sector experience, and his skills also include financial, business and legal analysis, as well as experience of public markets.
Scott Kaintz, BSc, MBA
Executive Director, COO and CFO
Scott Kaintz has an MBA from London Business School and Columbia Business School. He started his career as a US Air Force Officer and analyst working across Europe, the Middle East and Central Asia. Scott Kaintz has held operational and managerial roles in the defense industry and worked in corporate finance and investment funds in London, focusing primarily on capital raising efforts and debt and equity investments in small-cap companies. He joined Red Rock Resources Plc in 2011 in a Corporate Finance role and has subsequently become an Executive Director where he works to identify, evaluate and source funding for natural resource development projects. Scott Kaintz is also an Executive Director of Regency Mines Plc, listed on AIM and has the following Non-Executive Directorships at Curzon Energy Plc, listed on LSE, and White Car Ltd, a private company.
Scott Kaintz has skills in financial analysis, modelling and budgeting, and finance, and has worked for a number of years in the public company arena and in the resource sector.
Michael Nott, BSc, MSc, DIC, FIMMM, FMES, FIQ, C.Eng
Michael Nott is a geologist and mining engineer by profession and has 40 years’ experience in the oil & gas, mining, minerals and quarrying industries. His early career was based in Zambia, including nine years with Roan Consolidated Mines Ltd. He was a regional manager for Pioneer Aggregates (UK) Ltd, then an Australian company, and later a Director of Jay Minerals Services Ltd and Hills Aggregates Ltd, becoming Trading Director of ARC (Southern) Ltd and Production Director of C. White Ltd. He is currently a Director of Alba Mineral Resources Plc, listed on AIM and a Director & CEO of Magyar Mining Ltd.
Michael Nott has significant public markets, sector and technical experience.
Sam Quinn, BA, LLB
Sam Quinn has a Bachelor of Laws and Bachelor of Arts and is a qualified lawyer in Western Australia and in England & Wales. He has served as Legal Counsel for and as part of the executive management team of several listed and non-listed gold, silver, copper, iron-ore and diamond exploration and development companies with operations in various jurisdictions. Sam Quinn is an Executive Director of Tectonic Gold Plc, listed on NEX, and has the following Non-Executive Directorships at Blencowe Resources Ltd, Trident Resources Plc, Direct Excellence Ltd, Lionshead Consultants Ltd, Nutrimentum (UK) Ltd, Ceylon Phosphates (UK) Ltd, Parq Capital Management (UK) Ltd, Diamond Manufacturing Corporation Maseru (Pty) Ltd and Ceyphos Fertilisers (Private) Ltd.
Sam Quinn has strong legal expertise, as well as experience in public markets, the resource sector, and in finance.
All Directors, through their involvement in other listed companies as well as the Company, are enabled to keep their skill sets up to date and receive a diversity of opinions and inputs, ensuring an open and not an inward-looking culture at the Company.
The Board promotes open and collaborative interaction between its members. Where a consensus is not reached, an action is not taken.
Legal advice is sought in cases of doubt or where a potential contract or dispute is in question, and the Nomad’s advice is sought on a wide range of issues. Where involvement in a mineral project is considered, the due diligence process will normally include one consultant from a major consultancy to provide an initial or second opinion on technical aspects. The Remuneration Committee normally obtains external reports on comparators before arriving at its decisions.
Evaluation of Board Performance
The internal evaluation of the Board, the Committees and individual Directors, including any succession planning, is undertaken on an annual basis, to determine the effectiveness of their performance and suitability to the changing business requirements. There is also a continuous and ongoing process of evaluation, which historically has resulted in an increase and then reduction in board size and changes in composition, both at executive and non-executive level, as the business grew to 2010 and then shrank in the ensuing poor market for commodities, and as the needs of the business evolved.
The assessment criteria are based on the need to promote the Company’s Business Model, industry practices and the need for balance, the Company’s immediate aspirations as well as the specific skills, knowledge and capabilities that are required to perform certain roles.
The results and recommendations that come out of the appraisals of the Directors and members of the Committees, identify the required changes and actions for the Board and the Committees as units as well as individually for the Directors and members of the Committees.
The Company aims to deliver long-term value to its shareholders through a diverse portfolio of revenue generating mineral exploration projects and investments, corporate transactions, JVs and partnerships. Therefore, the Company aims to ensure an open and respectful dialogue with shareholders and other interested parties for them to have the opportunity to express their views and expectations for the Company. In this dialogue the importance of sound ethical values and behaviour is emphasized, both because it is important if the Company is to successfully achieve its corporate objectives that this culture is transmitted through the whole organization, and also to set a benchmark and send a signal of what it will and will not do in some of the jurisdictions in which the Company operates.
The Board places great importance on this aspect of corporate life, where failure could put the Company at risk, and seeks to ensure that this flows through all its business interactions and at all levels of the Company.
The Board also recognises that its decisions regarding the business model, strategy and risks will impact the corporate culture of the Company and the tone and culture set by the Board will influence behaviour and performance. The corporate governance arrangements that the Board has adopted, together with a punctilious observance of Employment Law, Health and Safety requirements, and other applicable regulatory requirements also form part of the corporate culture, requiring a standard of behaviour when they have interactions with contractors, business partners, service providers, regulators and others. For example, the Company has adopted an Anti-Corruption and Bribery Policy, HR and H&S Policies that dictate the contractors’ accepted behaviours, as well as the Share Dealing Code for Directors and employees, required for AIM listed companies and in accordance with the requirements of the Market Abuse Regulation, which came into effect in 2016.
Maintenance of Governance Structures and Processes
The Board has responsibility to govern the Company rather than to manage it and in doing so act in the best interests of the Company as a whole, establishing and maintaining corporate structures and processes in line with current legislation, its business aspirations and its corporate culture, that are appropriate to its size and complexity, capacity and tolerance for risk.
Description of Roles
The Chairman & CEO is the leading representative of the Company presenting the Company’s aims and policies to the outside world. His responsibilities include taking the Chair at Board Meetings and General Meetings, where he is responsible for ensuring the appropriate supply of information. He is also responsible for leading the development and execution of the Company’s long-term strategy, overseeing matters pertaining to the running of the Company and ensuring that the Company meets all legal requirements and corporate responsibilities. He assists in the response to shareholder inquiries and meets or speaks to shareholders as required. The Company considers that having the same person as Chairman and CEO is appropriate to the Company at its current stage of development, and that sufficient experience and compliance structures exist within the Company to ensure that the governance functions that would be part of an independent Chairman’s responsibility are carried out. Independent and Non-Executive Directors sit on the Audit and Remuneration Committees, particulars of which appear hereafter, and are responsible for reporting to the full Board their conclusions and for keeping up to date with the work of the corporate governance and liaising with those responsible for the Risk and Health and Safety management.
The Executive Director and COO, whose responsibilities encompass those of a Finance Director/CFO, is responsible for the day to day management of the business, works with the Chairman to develop and execute the long-term strategy of the business, and is responsible for its implementation. He also develops budgets and identifies changes in the financial outlook of the Company, and recommends responses. He shares responsibility for ensuring that the Company meets its legal requirements and corporate responsibilities, and oversees the Annual Report, website, and various staffing and compliance issues. He works jointly with the Chairman on shareholder and communication issues.
The Audit Committee considers the Company’s financial reporting, accounting policies and internal financial controls. It is also responsible for ensuring that the financial performance of the Company is properly monitored and reported on. The Committee reviews the annual and half-yearly financial statements, to ensure that they adequately comply with appropriate accounting policies, practices and legal requirements, to recommend to the Board their adoption and to consider the independence of and to oversee the management’s appointment of the external auditor.
The Audit Committee is comprised of Michael Nott, Non-Executive Director as Chairman and Sam Quinn, Non-Executive Director. The Audit Committee meets at least twice a year, once with the auditor. The Chairman attends the Audit Committee’s meetings as requested by the Committee.
The Remuneration Committee is responsible for making recommendations to the Board on Executive Directors’ remuneration. It comprises two suitably qualified Non-Executive Directors, namely Michael Nott as Chairman and Sam Quinn. The Executive Chairman – attends the Remuneration Committee’s meetings as requested by the Committee, which meets at least twice a year.
The Board has not established a Nominations Committee. Matters that would normally be dealt with by the Nominations Committee will be discussed by the Remuneration Committee and referred to the Board as a whole.
Non-Executive Appointment Trems
The Non-Executive Directors have the same legal responsibilities to the Company as any other Director, including attendance at the regular Board Meetings, the Committees’ Meetings and the General Meetings.
Matters Reserved for the Board
The Board is responsible for formulating, reviewing and approving the Company’s strategy, financial activities and operating performance. Day to day management is delegated to the Executive Directors, responsible for consulting the Board on all significant financial and operational matters. The Board approves the annual budget and amendments to it, issues of shares or other securities and all significant acquisitions and disposals.
Corporate governance is an ongoing and proactive process that encompasses the regulatory requirements and the changing needs of the business.
Shareholder and Stakeholder Communication
The Board recognises that it is accountable to shareholders for the performance and activities of the Company and is committed to providing effective communication with its shareholders.
Significant developments are disseminated through Stock Exchange Announcements, Press Releases and Twitter at @RRR_RedRock as well as Company Interviews, Broker Notes, Video Updates and Presentations, all of which are available on the Company’s website www.rrrplc.com, where the shareholders may sign up to receive news releases directly by e-mail.
Shareholders are also encouraged to attend the Company’s Annual General Meetings of which the shareholders are notified via Company’s website as well as e-mail or post, which is viewed by the Board as an important forum for communication between the Company and its shareholders.
The Company participates in the UK Investor Show and the other relevant industry investor shows, including Investor Presentation Evenings, for shareholders to meet management in person to answer their queries, provide information on the current developments of the Company and to take into consideration shareholders’ views and suggestions. The Company has held an open day for shareholders to visit the Company’s offices and gain an insight into the Company’s activities. The shareholders also have access to the Company where all management including Andrew Bell, CEO are available to answer investor relations enquiries via e-mail email@example.com or telephone on 02077479990.
The Board recognises that the long-term success of the Company also relies on good relations with other parties with whom it has business, as well as shareholders, and to understand their needs, interest and expectations, the Board expects the management to maintain ongoing two-way communication, control and feedback processes, so that appropriate and timely responses and actions can be implemented. All enquiries to the Company can be addressed by correspondents to firstname.lastname@example.org or by telephone on 02077479990, indicating where necessary the Director or other person to whom the enquiry is directed.
Results of Shareholder Voting
From the Annual General Meeting held 22 December 2017 at 11am, all resolutions (which can be read in the Annual Report under Notice of Meeting) were duly passed.
The Company shall include, when relevant, in its annual report, any matters of note arising from the Audit or Remuneration Committees.