Corporate Governance

Under the AIM Rules, URU Metals Limited (“URU” or the “Company”) is required to maintain on its website details of a recognised corporate governance code, how the Company complies with this code and an explanation of any deviations from the code. The information will  be reviewed annually and the website will include the date on which the information was last reviewed. In the future, we expect that this information will be reviewed at the same time as the Annual Report and Accounts are prepared.

Following my appointment as Non-Executive Chairman of URU (announced on September 27th 2018 ), I am pleased to present the Corporate Governance Statement of the Company. My role as Chairman is to lead the board and to oversee its function and direction with overall responsibility for implementing an appropriate corporate governance regime at the Company, until such time as a full-time candidate is appointed. The Board recognises the importance of effective corporate governance and the need to communicate this to shareholders and other stakeholders. Accordingly, this statement sets out the key features of the URU governance policy and structures and explains how we seek to ensure that this provides a framework for creating sustainable growth over the medium to long term.

The key governance related matter that occurred during the financial year ended 31 March  was the appointment of Kyle Appleby as Non-exectuive Director to the Board and the retirement of Henry Kloepper as Chairman. The Board successfully implemented this transition and acted effectively in order to ensure continuity.

It has not been possible to incorporate all of the annual report and accounts disclosures required by the QCA code in the Company’s annual report and accounts for the year ended 31 March 2018 but as noted above the Company intends to include all of these disclosures in the Company’s annual report and accounts for the financial year ended 31 March 2019.

Corporate Governance Report

The QCA Code sets out 10 principles that should be applied.  These are listed below together with a short explanation of how the Company applies each of the principles and where it departs from these principles:

Principle One

Business Model and Strategy

The Board has concluded that the highest medium and long term value can be delivered to its shareholders by the adoption of a single strategy for the Company:  

URU Metals’ mission is to identify and invest in quality mineral exploration and development projects to become a leading mineral exploration and development company.

In the immediate future, URU will endeavour to achieve its vision by continuing to explore and  develop its flagship Zebedelia Nickel Property. The Company will continue to look for additional acquisition and/or investmenmt opportunities as the arise.

Our Strategy

The key pillars of our strategy are:

  1. Advancing the Company’s 100% owned Zebedelia project. URU Metals plans to delineate a compliant mineral resource estimate. The Company will then look to advance the project through feasibility studies and into production and cash flow generation.
  2. Strategic Investments. Where appropriate, URU Metals will act as an active investor and will strive to advance corporate actions that deliver value–adding outcomes (for example, project development to increase company valuation or to achieve a listing).

The Company has other projects and assets it continues to develop. At this stage however, due to the early nature of such projects, these are considered non-core (and so are not detailed in the key pillars of the strategy above) as the Company’s resources are primarily focussed on Zebedelia.

The Company operates in an inherently high risk and heavily regulated sector and this is reflected in the principal risks and uncertainties identified in the Company’s annual report (for the year ended 31 March 2018 and historically). In executing the Company’s strategy and operational plans, management will typically confront a range of day-to-day challenges associated with these risks and uncertainties, and will seek to deploy the identified mitigation steps to manage these risks as they manifest themselves.

Principle Two

Understanding Shareholder Needs and Expectations

The Board is committed to maintaining good communication and having a constructive dialogue with its shareholders.  Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company.  In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting.  Investors also have access to current information on the Company though its website, www.urumetals.com. As further detailed under Principle Five, following the Governance Review the Board is currently undertaking a search and selection process – as well as speaking to potential candidates within the Board’s own network – to identify a new independent non-exeutive director to join the board. The Board cannot predict the outcome of such process, or when a suitable candidate will be identified, but will endeavour to appoint a UK based director. The Board believes that such a figure will assist the Company in communicating with shareholders and improve accessibility.

As part of the Governance Review the Company has agreed to instruct UK legal counsel, in conjunction with BVI advisers, to update the Company’s memorandum and articles of association, and introduce certain obligations on the Company to make it more accountanble to shareholders, and more effective in the way it communicates with them. The proposed new Memorandum and Articles will adopt changes including (but not limited to):

  • A requirement for the Company to hold an annual general meeting once in each calendar year;
  • A requirement for each Director to stand for re-election (i) at the AGM in the year of their respective election, or (ii) if already appointed, in the first year after the Memorandum and Articles are adopted, and thereafter not less than every three years.
  • Protection consistent with Rule 9 of the UK City Code on Takeovers and Mergers to prevent shareholders (and parties acting in concert with such parties) from acquiring, without consent, an interest in shares of the Company equal to or greater than 30 per cent.; and
  • Capping the right of the Company to issue unlimited new shares for cash other than on a pre-emtive basis (the exact thresholds for standing authorities remain to be determined and agreed between the board and advisers and a further announcement in this regard will be made in due course).

Principle Three

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 has put in place a range of processes and systems to ensure that there is close oversight and contact with its key resources and relationships. In particular, in March 2018 the Company appointed SP Angel Corporate Finance LLP as its nominated adviser and broker, and since this date has maintained effective communications with key indivuduals performing this regulatory function. Further, in 2017 the Company appointed leading UK law firm Hill Dickinson LLP as its legal counsel and has established what the Directors consider to be a strong working relationship with the Partner with primary responsibility for the Company’s legal work and AIM compliance.

The board has identified URU’s stakeholders to include employees and consultants working for the Company, the local communities in countries in which it operates, local governments, suppliers, customers and partners. The Company’s CEO contacts these stakeholders in order to gain their feedback on URU’s operations. Any concerns raised are communicated to the Board and dealt with appropriately.

For example, senior level employees of the Company participate in a structured Company-wide annual assessment process which is designed to ensure that there is an open and confidential dialogue to help ensure successful two way communication with agreement on goals, targets and aspirations of the employee and the Company.  These feedback processes help to ensure that the Company can respond to new issues and opportunities that arise to further the success of employees and the Company.  The Company has close ongoing relationships with a broad range of its stakeholders and provides them with the opportunity to raise issues and provide feedback to the Company. In relation to its local employees and contractors in South Africa the Company seeks to adopt industry best practice in relation to its industrial relations and working environment, and communicates this to local management and partners on the ground at site. Following the Governance Review the Company has identified the need for a Project Manager, based in South Africa, to properly communicate and implement the Company’s policies, and provide the records and data needed by the Company to demonstrate its policies are not only adopted, but are being followed in all circumstances. A search and selection process in relation to the appointment of this individual is being commenced and I hope a further announcement in this regard can be made shortly.

As further detailed under Principle Five, following the Governance Review the Board is currently undertaking a search and selection process – as well as speaking to potential candidates within the Board’s own network – to identify a new independent non-exeutive director to join the board. The Board cannot predict the outcome of such process, or when a suitable candidate will be identified, but will endeavour to appoint a UK based director. The Board believes that such a figure will assist the Company in communicating with advisers, and also provide scrutiny in relation to the Company’s key relationships with partners and suppliers, including but not limited to the Company’s partners and operating team working on the development of the Zebedelia project.

Principle Four

Risk Management

In addition to its other roles and responsibilities, the Audit and Compliance Committee is responsible to the Board for ensuring that procedures are in place and are being implemented effectively to identify, evaluate and manage the significant risks faced by the Company. The risk assessment matrix below sets out those risks, and identifies their ownership and the controls that are in place.  This matrix is updated as changes arise in the nature of risks or the controls that are implemented to mitigate them. The Audit and Compliance Committee reviews the risk matrix and the effectiveness of scenario testing on a regular basis.  The following principal risks and controls to mitigate them, have been identified:

Principal Risks and Uncertainties

URU Metals is exposed to a number of risks and uncertainties, which could have a material financial, operational and reputational impact on its long–term performance and on the Company’s ability to develop its project portfolio. The risks that management has assessed as “high” are summarized below.

Category

Risk

Detail

Mitigation Measure/Comments

Strategic

Mineral Reserve and Resource estimates

Mineral Reserves and Mineral Resources estimates are based on several assumptions, including geological, mining, metallurgical and other factors. There can be no assurance that the anticipated tonnages or grades will be achieved. This is particularly the case at exploration– stage projects.

 

Mineral Reserves and Mineral Resources will be prepared to internationally recognized code compliant standards by Qualified Persons under NI 43–101 requirements.

 

License transfers

The timing of transfer of mineral licenses can be uncertain and regulatory approval cannot be foreseen.

At current time, management is working on the licenses’ eventual transfer and the Company is in compliance with all regulatory requirements.

                                                 

Financial

Commodity Prices

URU Metals’ financial performance is dependent upon the price of nickel. Adverse movement in commodity prices could have a material impact on operations.

The Board monitors commodity prices and potential impacts on cash flow, project development and the ability of the Company to raise necessary capital. Capital expenditure plans are aligned to prevailing and anticipated market conditions. By targeting projects with resources that fall within the highest grade quartile and lowest cost quartile of producers, the exposure to low commodity prices is somewhat mitigated.

 

Costs and capital expenditure

The Company is exposed to on–going expenditure obligations resulting from its project development activities in South Africa.

Management conducts cash flow analyses and reduces capital expenditure requirements wherever possible. If necessary, project scopes are adjusted or in some cases deferred to preserve capital.

 

Liquidity

URU Metals needs to finance its on–going development and growth, which exposes the Company to liquidity risk. If the Company is not able to obtain sufficient financial resources, it may not be able to

raise sufficient funds to develop projects, acquire additional assets or meet its on– going financial needs.

 

Management monitors liquidity and exploration expenditure. The Board strives to ensure liquidity through timely corporate actions, if and when required.

Operational

Project Execution

The inability to develop near–and longer– term capital projects will impact on URU Metals’ strategic objectives and affect its ability to meet growth and production objectives.

The Company will review its project portfolio on a regular basis and utilizes relevant data, such as code compliant Mineral Reserve and Mineral Resource estimates, to guide development priorities. A balanced portfolio will reduce risks associated with a specific project or commodity. The Company will also make use of experienced contract and consultant personnel with relevant experience in project execution.

Personnel

Management

Loss of key management personnel can impact on the Company’s strategic and operational functionality.

 

The Company seeks to provide competitive salary arrangements to attract and retain the services of these personnel members.

 

Skills Availability

Skills shortages have been a feature of exploration across the board. The inability to attract suitably skilled individuals in the vicinity of URU Metals’ operations can impact on the quality and efficiency of the work performed.

 

Management has implemented retention strategies, including competitive compensation packages, as and when required. The Company also makes use of experienced contract and consultant personnel with relevant experience in project execution.

 

Health and Safety

The mining and resource processing sectors are inherently hazardous. Failure to adopt high levels of safety management can result in a number of negative outcomes, including bodily harm to employees and contractors, and damage to the Company’s reputation.

 

URU Metals takes the health and safety of all those who work for and with the Company very seriously. Measures are based on the principles outlined in the Prospectors and Developers of Canada’s e3 program.

Environmental

Remediation

Unforeseen environmental degradation resulting from the Company’s operational activities may result in liability and/or the requirement to undertake extensive remedial clean up actions.

 

All operational models take environmental responsibilities into account. Third parties are contracted as required to identify environmental risks and mitigation measures.

External

Political, Legal and Regulatory Development

URU Metals may be affected by political or regulatory developments in the countries and jurisdictions in which it operates, including changes to fiscal and other regulatory measures.

 

URU focuses on project development in stable, mining–friendly countries, and liaises with governments on aspects of its operations on a regular basis. URU monitors the political landscape to keep abreast of likely changes in regulatory policies, and adjusts its asset mix accordingly.

 

Community Relations

Disputes regarding land claims, objections to mining may arise with local communities, causing disruption to projects or operations.

URU Metals is committed to the establishment of close working relationships with communities in the areas in which it operates. URU consults with local stakeholders, identifying them prior to the onset of activities. URU will work with stakeholders to define the way in which the Company’s operations will positively impact local communities. URU engages experiences personnel to assist with local community relations.

The Directors have established procedures, as represented by this statement, for the purpose of providing a system of internal control including the Audit Committee mentioned above.  An internal audit function is not considered necessary or practical due to the size of the Company and the close day to day control exercised by the executive directors. However, the Board will continue to monitor the need for an internal audit function. The Board works closely with and has regular ongoing dialogue with the Company financial controller and has established appropriate reporting and control mechanisms to ensure the effectiveness of its control systems.

Principle Five

A Well Functioning Board of Directors

As at the date hereof, the Board comprises myself Jay Vieira, as Non-Executive Chairman, CEO John Zorbas, and Non-Exectuive Director Kyle Appleby. Biographical details of the current Directors are set out within Principle Six below.  All the Directors including the Executive Directors are considered to be part time but are expected to provide as much time to the Company as is required.  The Company recognises the long term need for a permanent Chairperson to be appointed (at which time I will retrun to my role as a mere Non-executive Director!) and has commenced a search and selection process – through third parties and within the Board’s own network – to identify such a candidate (further details of this are set out in relation to Principle Five).

The Board meets at least 6 times per annum.  It has established an Audit Committee, a Remuneration Committee and a Nominations committee, particulars of which appear hereafter.  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 considers that this is appropriate given the Company’s current stage of operations. It shall continue to monitor the need to match resources to its operational performance and costs and the matter will be kept under review going forward. Jay Vieira  is considered to be an Independent Director.  The Board notes that the QCA recommends a balance between executive and non-executive Directors and recommends that there be at least two independent non-executives.  As detailed in relation to Principle Five, the Company is working to identify candidates who may join as an additional independent director and will make a further announcement in this regard in due course.

Attendance at Board and Committee Meetings

The Company shall report annually on the number of Board and committee meetings held during the year and the attendance record of individual Directors. To date in the current financial year the Directors have a 100% record of attendance at such meetings.  In order to be efficient, the Directors meet formally and informally both in person and by telephone.  Therein the new financial year (starting 1 April 2018) there have been at least bi-monthly meetings of the Board, and the volume and frequency of such meetings is expected to continue at this rate.

Principle Six

Appropriate Skills and Experience of the Directors

The Board currently consists of 3 Directors. The administrative functions of the Company are carried out internally, by experienced executive assistants working with the executive team. The finance function is handled internally. The Company believes that the current balance of skills on 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 experience in public markets.

The Board recognises that it currently has a limited diversity and this will form a part of any future recruitment consideration.

The Board shall review annually the appropriateness and opportunity for continuing professional development whether formal or informal.

Jay Vieira

Non-Executive Chairman

Mr Vieira is Vice President, Corporate and Legal Affairs at Distinct Infrastructure Group Inc. Previously, from 2006 to 2016,  he was a partner with the law firm of Fogler, Rubinoff LLP, Toronto, Ontario, where he focussed on securities and corporate finance. Mr. Vieira is a member of the Canadian and Ontario bar associations and the Law Society of Upper Canada. He was admitted to the Ontario bar in 1999 after obtaining his LL.B. from the University of Windsor Law School. Mr. Vieira holds a B.A. (Hons.) in Humanities from McMaster University.

John Zorbas

Chief Executive Officer

Mr. John Zorbas is a resource entrepreneur with a proven track record in the metals exploration and development industry. He has held senior advisory positions in various facets of business including operations, marketing, sales, strategic planning and structured finance. Mr. Zorbas has been the Company’s Chief Executive Officer since 2 June 2014. He was appointed Non-executive Chairman of Management Resource Solutions PLC in April 2017. In addition he is the CEO and Director of Captor Capital Corp. He also served as the President of MGM Productions Group Inc., as well as Director of both ZorCorp Capital Holdings and Starline Capital Holdings Infrastructure Fund. He served as the Chief Executive Officer and a Director of Monchhichi PLC (former: Mercom Capital PLC) until 23 December 2016. Mr. Zorbas also served as a Director of Millennial Esports Corp. until 20 October 2016 and Stratton Capital Corp. He is a founding shareholder of Asian Coast Development Ltd.  Mr Zorbas holds an Honors Bachelors in Economics from the University of Toronto.

Kyle Appleby

Non Executive Director

Mr. Kyle Appleby, CA, CPA, has over 16 years’ experience in public accounting and has been providing Chief Financial Officer and other financial accounting and compliance services to both public and private companies since 2007.  He is a member in good standing of the Canadian Institute of Chartered Accountants and the Institute of Chartered Accountants of Ontario. He obtained his Chartered Accountant designation in 2001. Mr. Appleby graduated from York University with a Bachelor of Arts in Economics.

Principle Seven

Evaluation of Board Performance

Internal evaluation of the Board, the Committee and individual Directors is undertaken on an annual basis in the form of peer appraisal and discussions to determine the effectiveness and performance of the Board as well as the Directors’ continued independence.

The results and recommendations that come out of the appraisals for the directors shall identify the key corporate and financial targets that are relevant to each Director and their personal targets in terms of career development and training. Progress against previous targets shall also be assessed where relevant.

Principle Eight

Corporate Culture

The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company.  The Board is very aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave.   The Board seeks to maintain the highest standards of integrity and probity in the conduct of the Company’s operations. These values are enshrined in the written policies and working practices. An open culture is encouraged within the Group, with regular communications to staff regarding progress and staff feedback regularly sought. The Executive team regularly monitors the Group’s cultural environment and seeks to address any concerns than may arise, escalating these to Board level as necessary. The Group is committed to providing a safe environment for its staff and all other parties for which the Group has a legal or moral responsibility in this area. The Company has adopted Health & Safety policies at all of its project sites in line with industry best standards.

A large part of the Company’s activities is centred upon what needs to be an open and respectful dialogue with employees, consultants, clients and other stakeholders, including shareholders. Pressure from different groups, to provide more finance, technical support, to deliver results, work faster, shout more loudly, make the culture of the Company key to its success – being consistent over a period of time, adopting a methodical approach in the face of pressure to behave differently. The Company is conservative – believing long-term shareholder value will only be achieved by technical results and deep understanding of the resource projects the Company invests in or operates, informing decisions regarding future expenditure. It is a fine balance but one the Company strives to get right.

Principle Nine

Maintenance of Governance Structures and Processes

Ultimate authority for all aspects of the Company’s activities rests with the Board, the respective responsibilities of the Chairman, Chief Executive Officer 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.  As an Independent Non-Executive Chairman I am  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.

Audit and Compliance Committee

During the financial year ended 2018 the Audit Committee comprised of Jay Viera and Kyle Appleby was chaired by Kyle Appleby.  This committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported.  It receives reports from the executive management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company.  The Audit Committee shall meet not less than twice in each financial year and it has unrestricted access to the Company’s auditors. In the financial year ended 30 June 2018 the Audit Committee met  twice in compliance with the Committee’s terms of reference.

Remuneration and Nomnation Committee

The Remuneration and Nomnation Committee comprises Kyle Appleby and Jay Vieira. Jay Vieira  chairs this committee.   The Remuneration and Nomination Committee (previously two separate committees) comprises and meets as and when necessary. It keeps under review the skill requirements of the Board and the skill, knowledge, experience, length of service and performance of the Directors. It also reviews their external interests with a view to identifying any actual, perceived or potential conflicts of interests, including the time available to commit to their duties to the Group. It sets and reviews the scale and structure of the Executive Directors’ remuneration packages, including share options and the terms of the service contracts. The remuneration and the terms and conditions of the Non-Executive Directors are determined by the Chief Executive Officer with due regard to the interests of the shareholders and the performance of the Group. The Committee also makes recommendations to the Board concerning the allocation of share options to employees.

The Committee also monitors the independence of each Non-Executive Director and makes recommendations concerning such to the Board. The results of these reviews are important when the Board considers succession planning and the re-election and reappointment of directors. Members of the Committee take no part in any discussions concerning their own circumstances.

The Committee is also responsible for keeping under review the senior management team of the organisation to ensuring the continued ability of the organisation to compete effectively in the marketplace.

Non-Executive Directors

The Board has adopted guidelines for the appointment of Non-Executive Directors which have been in place and which have been observed throughout the year. These provide for the orderly and constructive succession and rotation of the  non-executive directors insofar as the non-executive directors will be appointed for an initial term of three years and may, at the Board’s discretion believing it to be in the best interests of the Company, be appointed for subsequent terms.  

Principle Ten

Shareholder Communication

The Board is committed to maintaining effective communication and having constructive dialogue with its shareholders.  The Company intends to have close ongoing relationships with its private shareholders, institutional shareholders and analysts, and for them to have the opportunity to discuss issues and provide feedback at meetings with the Company.  In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting.

Investors also will have access to current information on the Company though its website, www.urumetals.com The Company proposes in 2018, subject to the necessary formalities (and adoption by the Company of new Memorandum and Articles details of which are set out under Principle Two), to move to electronic communications with shareholders in order to maximise efficiency.

Going forward the Company shall include, when relevant, in its annual report, any matters of note arising from the audit or remuneration committees.

AIM Rule 26

The following information is disclosed in accordance with Rule 26 of the AIM Rules and was last updated on 21st September2018:

View AIM Rule 26
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Contact

URU Metals Limited
Suite 702, 85 Richmond Street West
Toronto, Canada
M5H 2C9

E: URU Metals Limited

P: +1 416 504 3978

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