Corporate Governance

Corporate Governance QCA Code 2018

Corporate Governance – The Quoted Companies Alliance Code (‘QCA Code’). Updated September 2018

Eurasia Mining has adopted the QCA Code as a Corporate Governance framework to ensure adequate corporate governance standards as befits the nature of the Company’s business and the stage attained in the continuing evolution of the Company, and in-line with its corporate strategy and business goals. The QCA Code sets out ten principles by which the code may be applied to any company. These principles are outlined below as a demonstration of how the Company meets these requirements.

 

Delivering Growth

Eurasia has established a strategy designed to promote long term value and a return on investment for its shareholders, a strategy which also aims to build the Company to an increasingly profitable enterprise while maintaining good corporate governance and social and environmental responsibility standards. The Company’s aim is to achieve these goals through self-funded exploration for marketable resource projects in various commodities, by developing these projects to operating mines, or by joint venturing or straightforward sale of these assets to realise a return on investment.

Principle 1:

The Company is currently focused on developing two key assets; The West Kytlim mine produces Platinum group minerals (‘PGM’) and gold in the Ural Mountains, Russia, while the Monchetundra Project is being developed towards production of PGM, gold and base metals near the town of Monchegorsk, on the Kola Peninsula, Russia. Further non-core assets are also being progressed and the Company remains active in identifying further opportunities across a range of commodities and jurisdictions. The Company intends to achieve these goals while maintaining corporate governance principles in line with those outlined in the QCA Code. The key challenges in achieving this are set out below.

Principle 2:

Eurasia seek to maintain open, direct and two-way communication with its shareholders through various channels including the Company website, twitter feed, company presentations, investor events, video blogs filmed on site at the Company’s projects, live and recorded video and audio interviews, and lastly direct communication by phone and email through the Company’s contact information. The Company employs sub-contracted public relations professionals and maintains several third-party contracts to better disseminate Company newsflow. Through shareholder feedback the Company ensures that it remains in touch with the information requirements of our shareholders, their expectations regarding their investment, and the motivation behind their voting decisionsDirector’s consider shareholder’s motivations and expectations to be broadly correlated with that of the Company and the Company’s strategy. Shareholders information requirements can therefore be summarised as either operational in nature, or commercial. The Company aims to update on key events within these categories frequently, and in a timely manner as events materialise. Directors recognise that shareholders require complete and timely information as a necessary input to their investment decisions. Shareholders make regular contact through the Company’s main office contact details where their calls or emails are dealt with in a timely manner by a member of staff sufficiently senior to comment on technical and commercial mattersContact details for the company are available here.

Principle 3:

Experienced and knowledgeable long-standing employees are a recognised key asset within the Company and our Corporate Governance principles seek to cultivate a productive and fulfilling working environment within the Company.

The Company’s mining operation is a further key asset and attention is paid to its impact on society and the various stakeholders important to the project’s continuous success. These include sub- contractors to the Company, and officials within the Russian sub-soil licensing and other agencies. The mining operation is in a remote area and where possible employs local persons but does not otherwise impact on a local population. The Company is devoted to maintaining the strictest environmental policies as required by the Russian sub-soil licensing agencies.

Key personnel from the Company’s subsidiary maintain communication with representatives from the nearest village to the mining operation, the town of Kytlim in order to ensure feedback on potential issues. The mining community in this area of the Urals is relatively small and there is general communication between companies operating nearby mines, and with all suppliers to the industry generally. Communication with officials from sub-soil licensing agencies and their sub-contractors is generally more formal, and within the reporting structures designed by those agencies to protect the environment, the country’s natural resources and the rights of local populations. Any issue arising from any stakeholder will immediately be dealt with, or communicated to the required level to allow for action to be taken. No such events have occurred in the history of the mining operation and where an issue may arise it is reported in full to senior management and Directors.

Managing relationships within the Company’s workforce, and its outward interactions with local communities, service providers, and the environment, all have the potential to impact on the Company’s ability to achieve its medium to long term goals – managing these relationships is considered a fundamental facet of good Corporate Governance.

Principle 4:

The leading risks at the operational level relate to the reliability of our resource and reserve estimations and our ability to manage the mining operation to achieve its goals. These risks are mitigated by ensuring we employ qualified and knowledgeable personnel who are adequately resourced and supported by effective management. Resource exploration involves inherent risks stemming from the fact that information relating to the mineralisation is not immediately available, and is expensive to obtain. Recognising this risk and then managing it effectively is a critical aspect of a successful exploration geology business.

The company’s annual audit provides an opportunity to reassess the chief risks facing the business at both a corporate and operational level. These are agreed by directors and delineated and audited on an annual basis, thus ensuring adequate recognition and articulation of each risk category.

 
Maintaining a dynamic management framework

Principle 5:

The board comprises an executive chairman and managing director, and two non-executive directors. One retirement, that of Michael Martineau as non-executive Chairman occurred in the 2017 calendar year and the board are now active in replacing that appointment. Gary Fitzgerald is an independent non-executive director while non-executive director Dmitry Suschov is a significant shareholder in the Company.

The board meets when an executive decision requires board approval, and in any event no less than once per six-week period. Board members are regularly consulted on executive decisions which would benefit from specific input relevant to a board members area of expertise. All board members are aware of and comfortable with the time and resource requirements associated with their position. Relevant information relating to a board discussion is carefully prepared and circulated in advance of board meetings. Minutes are kept and then circulated directly after all board meetings. Minutes are noted on a prescribed form, which includes heading information such as attendance. An attendance record for each director is also maintained and annualised for distribution within the board.

The attendance of the board at meetings within the last 12 months (9 meetings inclusive of AGM and all board meetings conducted remotely) is as follows:

Christian Schaffalitzky – 100% attendance

Dmitry Suschov – 100% attendance

Gary Fitzgerald – 100% attendance

Separately, the company secretary, who is also the group financial controller, is considered a key position necessary in preserving a functional and ergonomic management framework within the Company and across the group of companies.

Two non-executive directors, Dmitry Suschov and Gary Fitzgerald form the remuneration committee and determine the conditions of employment and annual remuneration of the executive directors. The audit committee is comprised of the same two non-executive directors and is chaired by Gary Fitzgerald. The committee meets annually before and after the company’s annual audit.

Principle 6:

The board has an effective combination of commercial and technical experience, being led by a chair with a strong background in geology, and in developing successful resource projects and companies, with support from non-executive directors with strong experience in commercial functions in a range of markets, commodities and jurisdictions. A further appointment, of an individual with a background in mining is now underway as a response to the company’s recent change of focus – from pure exploration to development and mining. Board members retire on a rota and declare themselves eligible for reappointment at the company’s AGM.

The current board members are listed below;

CHRISTIAN SCHAFFALITZKY

Executive Chairman and Managing Director

EurGeol, FIMMM, PGeo, CEng. 40 years experience in mineral exploration. Founder of CSA international. Numerous discovery credits including Lisheen zinc deposit in Ireland. Also chairman at Kibo Mining Plc and non-executive director of Two Shields Investments and MetalNRG.

DMITRY SUSCHOV

Non-Executive Director

Commodities trading veteran (primarily various grades of metallurgical and thermal coals) who has successfully built a major Pulverized Coal Injection (PCI) franchise throughout Asia, Europe and America with an annual turnover of up to $100 million, therby accumulating around 2.5% of the global PCI market share. He is also an investment banker with extensive experience in the Russian resources industry having previously worked with IG Capital, MDM Bank, PricewaterhouseCoopers and Ernst&Young as mining & metals leader in corporate finance for Russia and CIS.

GARY FITZGERALD

Non-Executive Director

30 years experience in investment management and prior director of Framlington Investment Management.


The board considers the skill sets currently within the board to be sufficient for the successful running of the business, and the delivery of the stated corporate strategy and goals for the benefit of shareholders through the medium to long term, however, it is recognised that a further appointment would benefit the board in having a greater breadth of experience, particularly with respect to mining, and mine engineering. In this light a further appointment is currently being actively pursued. In addition, where more specialised skills are required, the board has access to a network of individuals and organisations with whom it can consult for further information. This can include input to operational decisions relating to the company’s operating mine, or advice of a commercial nature. Each board members long standing career in the industry is invaluable in this regard.

Continuing Professional Development (‘CPD’)and membership of institutions which promote best practice in industry is encouraged in all board members, though not compulsory to board membership. As an example the professional accreditations PGeo (‘Professional Geologist’, Institute of Geologists of Ireland) and EurGeol (‘European Geologist’, European Federation of Geologists), attained by the Executive Chairman, are maintained by strict adherence to a program of quantitative and qualitative CPD activities. Likewise the company secretary and financial controller maintains membership of the Association of Chartered and Certified Accountants by following a prescribed CPD program. All board members regularly attend industry events and conferences to keep abreast of developments in their area of expertise. Board members, especially Dmitry Sushov, also speak at and chair discussions at mining industry conferences.

No one board member, or group of board members, dominates decision making within the board. Non-executive director Dmitry Suschov is a major shareholder in the business however individual shareholdings are recognised by all board members as separate to and distinct from rights and responsibilities as effective board members.

The board is further supported by Company secretary Alex Agaev who is an ACCA certified and chartered accountant.

Principle 7:

The remuneration committee is responsible for evaluating the performance of the executive directors. As mentioned above board members retire on a fixed rota, and efforts are made with regard to succession planning and appointment of new board members as required.

New appointments to the board may be suggested by current board members or persons external to the company. The appointment process involves; assessment of suitability based on qualifications and work history, due diligence by the company and its Nomad, a series of meetings with board members and key personnel, and ultimately contract negotiation and appointment.

Board evaluations are internal to the company and on an ad-hoc basis, as befits the small scale of the company currently, but not less than once per year at the time of the company AGM. Adhering to the company’s strategy, achieving the company’s goals, and maintaining good corporate governance standards are the three most prominent identifiers by which board effectiveness is evaluated. Board evaluation procedures are considered appropriate for the size and scale of the business currently and the board recognises that these procedures should be subject to review as and when the board and the Company grow. Board evaluations are not currently made public and it is the Company's intention to reconsider this position, and ensure continued compliancy with the code as the Company transitions from an exploration Company to a mining Company.

Principle 8:

The company is founded on a culture of following and promoting the highest ethical standards with regard to its commercial transactions, business practices, strategy, internal employee relations and outward-facing stakeholder and community relationships. The company operates chiefly in the Russian Federation though it is incorporated in the UK, and governed by the laws of England and Wales. The corporate culture and values extend from the corporate level throughout the organisation irrespective of jurisdiction. An ability to recognise and promote good ethical values and behaviours is seen throughout the organisation as an excellent behavioural asset to an employee or potential employee or indeed board member. The current board members have been chosen with this awareness of the corporate culture and the Company’s ethical standards in mind - new board appointments are also considered in this light. Corporate culture, and high ethical standards with regard to business practices are considered a critical element in attaining the Company’s strategy and goals. These standards are reinforced through the appraisal process. High standards of ethics are considered to create a competitive advantage for the company and are a core element of the Company’s business model, as they ensure the Company’s long-term sustainability. Eurasia is an equal opportunities employer.

Principle 9:

Maintaining governance structures that are fit for use as the Company evolves in size and complexity is an essential element of good corporate governance. Maintenance of the corporate governance code is the sole remit of the chair, who instigates changes in policy, and ensures the code is applied throughout the organisation. Currently the role of chairman is shared with that of chief executive director, a situation which has persisted since the retirement of the company’s non-executive director in 2017. This situation is regarded as temporary, and a departure from complilancy with the code, but given the size and complexity of the organisation a fully independent chairman is not seen as essential to the proper functioning of the board or the fulfilment of the roles of chair and chief executive. The Company is committed to splitting these roles going forward.

Two non-executive directors are appointed and participate in all board level decisions and also provide scrutiny and oversight of the executive director’s roles. The board’s non-executive directors are each skilled in different aspects of commercial finance, with a combined breath of experience across various markets, commodities and jurisdictions. They communicate regularly with the chair and executive directors and provide reliable advice in their areas of expertise. The terms and functions of the audit and remunerations committees are set out below.

The company secretary role is shared with that of group financial controller and is a pivotal role within the organisation ensuring regulatory compliance and application of good corporate governance principles. The secretary is available to non-executive directors to support their information requirements and decision making and reports directly to the chief executive.

AUDIT COMMITTEE

The Chairman of the Audit Committee is Gary FitzGerald. The Audit Committee may examine any matters relating to the financial affairs of the Group and the Group’s audits, this includes reviews of the annual financial statements and announcements, internal control procedures, accounting procedures, accounting policies, the appointment, independence, objectivity, terms of reference and fees of external Auditors and such other related functions as the Board may require.
The membership of the Audit Committee comprises two non-executive Directors, Dmitry Suschov and Gary Fitzgerald. The external Auditors have direct access to the members of the committee, without presence of the executive Directors, for independent discussions. Two Audit Committee meetings were held during the year; to approve the 2017 Interim report and later the 2017 Annual Financial Statements. The Audit Committee reported that the accounts were in compliance with Inernational Financial Reporting Standards.

REMUNERATION COMMITTEE

The Chairman of the Remuneration Committee is Gary Fitzgerald. The committee comprises two non-executive Directors, Dmitry Suschov and Gary Fitzgerald. It determines the terms and conditions of employment and annual remuneration of the executive Directors. It consults with the Executive Chairman, takes into consideration external data and comparative third-party remuneration and has access to professional advice outside the Company.

The key policy objectives of the Remuneration Committee in respect of the Company’s executive Directors and other senior executives are:-

  • to ensure that individuals are fairly rewarded for their personal contribution to the Company’s overall performance, and
  • to act as an independent committee ensuring that due regard is given to the interests of the Company’s Shareholders and to the financial and commercial health of the Company.

Remuneration of executive Directors comprises basic salary, discretionary bonuses, participation in the Company’s Share Option Scheme and other benefits. The Company’s remuneration policy with regard to options is to maintain an amount of not more than 10% of the issued share capital in options for the Company’s management and employees which may include the issue of new options in line with any new share issues. The remuneration committee did not convene in the 2017 calendar year as no revision was undertaken of compensation for senior staff or directors.

Matters which are reserved strictly for the consideration of the board include, but are not limited to, discussions and decision on Company strategy, major investment decisions in new business development, commercial arrangements including funding requirements, high-level decisions on distribution of funds, and recruitment or dismissal of senior personnel and board members.

The above outline of the Company’s corporate governance framework befits the current scale of the Company, but will be subject to appropriate modifications as the Company grows in line with its stated strategy. An annual review of the corporate governance framework, is undertaken at the board meeting preceding or directly following the Company’s AGM. Changes considered to the current corporate governance framework, to be assessed in due course,  include further appointments to the board, and establishing independent bodies to review and assess board performance.

 

Build trust

Principle 10:

The board seeks to maintain both direct and two-way communication with its shareholders through various channels including the Company website, Twitter feed, Company Presentations, Investor Events, Video Blogs filmed on site at the Company’s projects, Live and recorded video and audio interviews, and lastly direct communication by phone and email through the Company’s contact information. Phone calls to the company’s office are screened and communicated to board members as appropriate. All shareholders may at their discretion chose to attend the company AGM and speak directly to the board and management.

The Company employs Public Relations professionals and maintains several third-party contracts to better disseminate Company news-flow. Through shareholder feedback the Company ensures that the boards communication of the company’s progress is thorough and well understood.

A clear statement on the outcomes of board resolutions is communicated immediately after the Company’s AGM by RNS and posted to the Company's website (please click here for relevant page). This includes a summary of votes for and against the resolutions put before the shareholders, and where a significant number of votes is cast against a resolution this is clearly stated, with an explanation as to possible explanations and remediations regarding that voting. A catalogue of historical annual reports and AGM notices is maintained at an appropriate location on the Company’s website.

 

Health and Safety

The Group has occupational health and safety policies and procedures in place ensuring that all efforts are made to minimise adverse personal and corporate outcomes, through best practice training, implementation and monitoring. No serious incidents occurred in the past year.

UK Code on takeover and mergers

Eurasia Mining is subject to the UK City code on takeovers and mergers, which was revised and extended to apply to all companies listed on the AIM market in October 2013.

Search