HOME COMPANY PROJECTS NEWS INVESTORS CONTACT CORPORATE GOVERNANCE (The information in this section is disclosed for the purposes of AIM Rule 26. Last reviewed on 22nd June 2021.) Griffin is incorporated in Bermuda, a jurisdiction which does not have a formal overarching corporate governance code. Under common law in Bermuda, shareholders are entitled to have the affairs of the Company conducted in accordance with general law and the Company’s memorandum of association and bye-laws. Nevertheless, the Company and its directors having reviewed and considered the various corporate governance codes and have adopted the Corporate Governance Code published by the UK Quoted Company Alliance and the principles contained therein (“QCA”). In effect, the directors continue to seek to add value, manage risks and minimise costs to ensure the long term sustainability of the Company and its business. The board of directors (the”Board”) includes two non-executive directors, one of which in the Board’s judgement is considered to be independent and free from any business or other relationship which could materially interfere with the exercise of their independent judgement as their shareholdings are less than 0.2% of the Company’s issued share capital. The Board meets regularly and is responsible for the overall strategy of the Group, its performance, management and major financial matters. All directors are subject to re-appointment annually at each annual general meeting of the Company’s shareholders. The Board has formally established an audit committee and a remuneration committee. In view of the size of the Company and stability of the Board of directors and senior executives, a nomination committee, as recommended by the QCA Code, has not been established but will be appointed as the need arises. As required by Bermuda company law, all the directors are shareholders in the Company to align their interests with that of the shareholders. Various safeguards and checks have been instigated as part of the Company’s system of financial controls. These include: Preparation of regular financial reports and management accounts; Preparation and review of capital and operational budgets; Preparation of regular operational reports; Prior approval of capital and other significant expenditure; Regular review and assessment of foreign exchange risk and requirements; and Regular review of commodity prices and assessment of hedging requirements The directors recognise the principles in the QCA code and have applied these where appropriate. In this regard: Strategy: In view of the significant potential of the Caijiaying Mine and surrounding areas and given the Company’s knowledge and expertise in China, the directors and management are focused on the further development of the Caijiaying Mine, investigation of prospective areas near the Caijiaying Mine and other potential projects in China. In addition the Company’s directors and management continue to evaluate other mining companies and projects worldwide for potential acquisitions. Shareholder expectations: The Chairman and Finance Director maintain regular contact with significant shareholders and the Company retains an office in London as a point of contact for all shareholders and potential shareholders in order to gauge the needs and expectations of shareholders in the Company. Stakeholders: The Company through Hebei Hua Ao has invested heavily in the local community in China and continues to maintain and further implement best practices for the protection of the environment and for the benefit of the local community. Risks: The Company and its directors have identified and keep under consideration the risks facing the Company and its subsidiaries (“the Group”). These risks and how they are managed are detailed in the directors’ report in the annual reports. Board of directors, structure: The board of directors is headed by a Chairman, who whilst not employed by the Company, spends a significant part of his time on the Company’s business. The Company has no Chief Executive Officer. The board also includes a full time executive Finance Director. Following the passing of Rupert Crowe in February 2021, the board currently has one independent director and is seeking to readdress this in order to, inter alia, ensure compliance with the principles of the QCA Code. Board of directors, skills: The existing board of directors brings a balance of skills and experience to the Company, including legal, financial, mining, geological and market expertise. Details of each director are given in the biographies under Board and Management. Board performance: The non-executive directors regularly consider the effectiveness and performance of the Chairman and Finance Director and vice-versa. A remuneration committee has been appointed with a brief to set performance criteria. All nominations are considered by the main board of directors of the Company. Corporate culture: Both the Chairman and Finance Director regularly visit the Group’s operations to meet with management and other personnel. The Board of directors meets at least once a year at the Caijiaying Mine and elsewhere during the year,Covid-19 restrictions allowing. The safety of all personnel working at the Group’s operations is a priority with formal procedures in place to prevent and report any safety and environmental issues. The Group will not deal with any organization or individual which it believes to be involved with slavery. The Company has formal procedures regarding the avoidance of bribery and corruption. The Group engages personnel regardless of race or gender. Governance structures: The general manager of Caijiaying Mine reports directly to the Chairman, who in turn reports directly to the board of directors. The general manager of Caijiaying Mine oversees operations at Caijiaying with individual department heads reporting directly to him. The Company has appointed a Chief Financial Officer in China who reports to both the general manager of Caijiaying Mine and directly to the Finance Director, who in turn reports to the board of directors. Individual department managers are able to communicate directly to the Chairman concerning any issues of concern. The board of directors has responsibility for setting the overall strategy of the Group, its performance, management and financial matters including, inter alia, the approval of budgets, significant capital expenditure and financial reports. Shareholder communications: In addition to the publication of annual and interim reports, regulatory news releases and maintaining a web site, as aforementioned, the Company communicates directly with major shareholders and maintains an office in London, in part, as a point of contact with shareholders. AUDIT COMMITTEE To comply with Corporate Governance requirements set by AIM in 2018 an audit committee was formed comprising the non-executive directors Dal Brynelsen and Adam Usdan. THE ROLE OF THE AUDIT COMMITTEE The Audit Committee assists the Board in its oversight of the Company’s financial reporting, internal control and risk management. In this regard, the Audit Committee is charged with carrying out the following. Financial Reporting The Audit Committee monitors the integrity of the financial statements of the Company, including its annual and interim reports, preliminary results and any other formal announcement relating to its financial performance whilst reviewing significant financial reporting issues and judgements contained within those announcements. The Audit Committee also reviews summary financial statements, significant financial returns to regulators and any financial information contained in certain other documents, such as announcements of a price sensitive nature. The Audit Committee reviews and challenges where necessary: The consistency of, and any changes to, accounting policies, both on a year on year basis and across the Company and its Group; The methods used to account for significant or unusual transactions where different approaches are possible; Whether the Company has followed appropriate accounting standards and made appropriate estimates and judgements, taking into account the views of the external auditor; The clarity of disclosure in the Company’s financial reports and the context in which statements are made; and All material information presented with the financial statements, such as the operating and financial review and the corporate governance statement (insofar as it relates to the audit and risk management). Internal Controls and Risk Management Systems The Audit Committee: Keeps under review the effectiveness of the Company’s internal controls and risk management systems; and Reviews and approve the statements to be included in the Annual Report concerning internal controls and risk management. Whistle blowing The Audit Committee reviews the Company’s arrangements for its employees to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters. The Audit Committee ensures that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action. External Audit The Audit Committee: Considers and make recommendations to the Board, to be put to shareholders for approval at the annual general meeting, in relation to the appointment, re-appointment and removal of the Company’s external audi The Audit Committee oversees the selection process for new auditors and if an auditor resigns the Audit Committee shall investigate the issues leading to this and decide whether any action is required; Oversees the relationship with the external auditor including (but not limited to): (i) Approval of their remuneration, whether fees for audit or non audit services and that the level of fees is appropriate to enable an adequate audit to be conducted; (ii) Approval of their terms of engagement, including any engagement letter issued at the start of each audit and the scope of the audit; (iii) Assesses annually the auditors independence and objectivity taking into account relevant national, professional and regulatory requirements and the relationship with the auditor as a whole, including the provision of any non-audit services; (iv) Satisfies that there are no relationships (such as family, employment, investment, financial or business) between the auditor and the Company (other than in the ordinary course of business); (v) Agree with the Board a policy on the employment of former employees of the Company’s auditor, then monitoring the implementation of this policy; (vi) Monitors the auditor’s compliance with relevant ethical and professional guidance on the rotation of audit partners, the level of fees paid by the Company compared to the overall fee income of the firm, office and partner and other related requirements; and (vii) Assesses annually the auditors qualifications, expertise and resources and the effectiveness of the audit process which shall include a report from the external auditor on their own internal quality procedures; Meets regularly with the external auditor, including once at the planning stage before the audit and once after the audit at the reporting stage. The Audit Committee is required to meet the external auditor at least once a year, without management being present, to discuss their remit and any issues arising from the audit; reviews and approves the annual audit plan and ensures that it is consistent with the scope of the audit engagement; (e) Reviews the findings of the audit with the external auditor. This includes but is not limited to, the following: (i) Discussion of any major issues which arose during the audit, (ii) Any accounting and audit judgements, and (iii) Levels of errors identified during the audit. (f) Reviews the effectiveness of the audit; (g) Reviews the representation letter(s) requested by the external auditor before they are signed by management; (h) Reviews the management letter and management’s response to the auditor’s findings and recommendations; and (i) Develops and implements a policy on the supply of non audit services by the external auditor, taking into account any relevant ethical guidance on the matter. In order to fulfil these duties, the Audit Committee receives regular financial and other reports from management and has unfettered access to employees of the Company and its subsidiaries. REMUNERATION COMMITTEE To comply with Corporate Governance requirements set by AIM in 2018, a remuneration committee (the “Remuneration Committee”) was formed comprising the non executive directors Dal Brynelsen and Adam Usdan. The Role of the Remuneration Committee The Remuneration Committee is responsible for determining and agreeing with the Board the broad policy for the remuneration and employment terms of the executive directors, Chairman and other senior executives and, in consultation with the Chairman, for determining the remuneration packages of such other members of the executive management of the Group, as it is designated to consider. The Committee is also responsible for the review of, and making recommendations to, the Board in connection with share option plans and performance related pay and their associated targets and for the oversight of employee benefit structures across the Group. Apart from the one executive director, all the other Company executives are either employed by operating subsidiaries or independent contractors (contracting through professional service companies). Almost all of these executives or service companies are employed or retained by Hebei Hua Ao. As such, and as an operating mining company, Hebei Hua Ao has always applied remuneration standards commensurate with local and international mining industry standards and, far more importantly, the legal and cultural traditions of the People’s Republic of China. The remuneration of non executive directors is a matter for the Board. No director may be involved in any decision as to their own remuneration. This Remuneration Committee report includes a summary of the remuneration policy and the Annual Report on Remuneration. Directors’ Remuneration Policy With only one executive director in the Group, it would be inflexible, bureaucratically cumbersome and therefore inappropriate to have an extensive and prescriptive formula for determining one employee’s total compensation package. Accordingly the executive director’s remuneration is considered by the Remuneration Committee, with the assistance of outside executive compensation consultants, on a year by year basis. Nevertheless, having been formed in 2018, the Remuneration Committee is currently assessing various remuneration policies to attract and retain future high-calibre executives and motivate them to develop and implement the Group’s business strategy in order to optimise long-term shareholder value. It is the intention that this policy will build on past practice and apply in the future. The policy is being framed around the following key principles: Total rewards will be set at levels that are sufficiently competitive to enable the recruitment and retention of high-calibre executives; Total incentive-based rewards will be earned through the achievement of performance conditions consistent with shareholder interests; The design of long-term incentives will be prudent and will not expose shareholders to unreasonable financial risk; In considering the market positioning of reward elements, account will be taken for the performance of the Group and of each individual executive director; and Reward practice will conform to best practice standards as far as reasonably practicable. When formulating the scale and structure of remuneration, the Remuneration Committee considers a number of different factors including market practice and external market data of the level of remuneration offered to directors of similar type and seniority in other companies of the size and activities of the Company. In addition, the pay and employment conditions of employees are also considered when determining directors’ remuneration. The Remuneration Committee may also seek advice from external consultants where appropriate and the services of FIT Remuneration Consultants were retained during 2018/2019. No director was involved in deciding the level and composition of their own remuneration. The executive director receives an amount of fixed pay made up of a base salary, fixed fees from subsidiary companies and pension contribution. Long-term performance is incentivised by way of the grant of share options. The Board seeks to strengthen the alignment of director, employee and shareholder interests. Executive directors’ remuneration for 2020 The executive directors’ (Finance Director) base salary was last increased with effect from 1st January 2014. No bonuses were paid to the Finance Director in 2020 in view of the challenges facing the Company during the Covid 19 pandemic. A bonus equivalent to two months of the executive directors’ base salary was awarded to the finance director in recognition of short term performance in 2019. In 2020, Roger Goodwin (Finance Director and Company Secretary) received a basic salary of £315,000 (2019: £315,000) and pension contributions of £30,000 (2018: £30,000). In addition, he received directors’ fees of $201,000 (2020: $212,000) from subsidiary companies. The service contract between the Company and Roger Goodwin provides for three months’ notice by either side or six months in the event of a change of control of the Company. Chairman The Chairman has dedicated a significant portion of his time to the Group and its operations. His services are provided through a service entity, Keynes Capital, being the registered business name of Keynes Investments Pty Ltd as trustee for the Keynes Trust. In addition to the services of the Chairman, Keynes Capital provides supporting services to the Company in Australia, including support staff and offices. The Chairman, Mladen Ninkov, is a director and employee of Keynes Investments Pty Ltd. Under a consultancy agreement with the Company, Keynes Capital received fees of $2,801,000 (2019: $2,598,000), for the provision of advisory and support services to Griffin and its subsidiaries in 2020. An additional payment equal to two months fees was made in 2019 in recognition of good services provided. The consultancy agreement with Keynes Capital runs from 1st July 2019 to 30th June 2021. In addition to the above, the Chairman received directors’ fees from subsidiary companies of $201,000 in 2020 (2019: $212,000). Long Term Incentives In November 2018, with the unanimous agreement of all the issued option holders, the exercise periods were extended for outstanding share purchase options over: 4,350,000 new ordinary shares (vested) exercisable at £0.40 per new ordinary share; 10,732,500 new ordinary shares (vested) exercisable at £0.30 pence per new ordinary share; and 6,666,667 new ordinary shares (since vested) exercisable at £0.30 pence per new ordinary share from 31st December 2018 in respect of the options exercisable at 40 pence per share and from 31st December 2020 in respect of the options exercisable at 30 pence per share, to the 31st December 2022. This was aimed at preventing the need, in the short-term, for the majority of the option holders, once exercising their options, to sell a significant portion of the resulting issued shares to meet the associated subscription costs and personal income tax liabilities imposed on such exercise. The options exercisable into new ordinary shares of the Company at an exercise of £0.40 per share were granted on 13 February 2014 and have all now vested. The options exercisable into new ordinary shares of the Company at an exercise of £0.30 per share were granted on 6 February 2015, all of which have vested following the granting of a new mining licence over Zone II at the Caijiaying Mine in December 2020. * The following directors and senior executives agreed to the extension of options in which they have an interest. Name Number of options exercisable at 40 pence per new ordinary share. All vested Number of options exercisable at 30 pence per new ordinary share. Vested Roger Goodwin Finance director 500,000 1,500,000 Dal Brynelsen Director – 900,000 Rupert Crowe Director – 900,000 Adam Usdan Director – 1,166,666 Mark Hine Chief Operating Officer – 250,000 Non-executive directors The non-executive Directors’ fees were last reviewed with effect from 1 July 2019 fees and were held at £66,125 per annum. In addition to the above Mr Dal Brynelsen received fees of $177,000 (2019: $188,000) for acting as a director of Hebei Hua Ao. Since the 2020 year end Mr Dal Brynelsen has agreed to forego the fees from the Company in view of the fees he receives from Hebei Hua Ao. In addition to the above Mr Rupert Crowe received fees of $30,000 (2019 $50,000) for geological services over and above that expected from him as part of his services as a non executive director. Total Directors’ Remuneration The table below sets out the total remuneration payable to the Directors: 2020 2019 Fees Salary Pension contributions Total Fees Salary Pension Contributions Total $000 $000 $000 $000 $000 $000 $000 $000 Mladen Ninkov* 201 – – 201 212 – – 212 Dal Brynelsen 262 – – 262 271 – – 271 Rupert Crowe 114 – – 114 134 – – 134 Roger Goodwin 201 402 38 641 212 465 38 715 Adam Usdan 84 – – 84 84 – – 84 Total 862 402 38 1,302 913 465 38 1,416 *Keynes Capital, the registered business name of Keynes Investments Pty Ltd as trustee for the Keynes Trust, received fees under a consultancy agreement of $2,801,000 (2019: $2,298,000) for the provision of advisory and support services to Griffin Mining Limited and its subsidiaries during the year. Mladen Ninkov is a director and employee of Keynes Investments Pty Ltd. No share options were granted to the directors in 2020 or 2019. No options were exercised by the directors in 2020 or 2019. © 2018 GRIFFIN MINING LIMITED. ALL RIGHTS RESERVED.