AIM Rule 26 company information

The Board of directors of the Company recognises the importance of high standards of corporate governance in order to achieve its strategic goals and standards. Accordingly, the Company has adopted and applies the principles of best practice as set out in QCA Code 2023 in so far as is practical for the Company’s size and composition of the Board.

The Board believes that the QCA Code provides the Company with the principles which will both enable and ensure that a proper culture of governance is set and maintained which will in turn enable the Company to achieve these standards thus building a successful and long-term business for all stakeholders.

The Company is a mineral exploration and development company whose primary objectives are the discovery, delineation, acquisition and development of economic diamond deposits in the Finnish sector of the Karelian Craton and exploration for Nickel, Copper and PGEs in Northern Ireland in order to create value for its shareholders. Its strategy to achieve this is to explore in politically stable and geographically attractive countries such as Finland.

To accomplish its strategy the Company employs experienced individuals with a track record of success of discovering world class ore bodies together with suitably qualified technical personnel and consultants, experienced drilling and geophysical and other contractors and uses accredited international laboratories and technology to interpret assay and other technical results.

Additionally, the Company ensures as far as possible to obtain adequate working capital to carry out its work obligations and commitments. By co-ordinating all of the above this should result in a satisfactory return and value for shareholders.

A limited statement, not in accordance with Principle 1, was included in the annual report and accounts for the year to 31 May 2024.

The Board is committed to high standards of corporate governance and integrity in all of its activities and operations and promotes a culture of good ethical values and behaviour.

The Group conducts its business with integrity, honesty and fairness and requires its partners, contractors and suppliers to meet similar ethical standards. Individual staff members must ensure that they apply and maintain these standards in all their actions.

The Chairman of the Board regularly monitors and reviews the Group’s ethical standards and cultural environment and where necessary takes appropriate action to ensure proper standards are maintained. The Group is fully committed to complying with all relevant health, safety and environment rules and regulations as these apply to its operations. It is an objective of the Group that all individuals are aware of their responsibilities in providing a safe and secure working environment.

The Group has included a statement in accordance with Principle 2 in the annual report and accounts for the year to 31 May 2024.

Primary responsibility for effective communication with shareholders lies with the Chairman and Managing Director; however, all Directors are available to meet with shareholders at the annual general meeting. The Company gives high priority to shareholders needs and expectations by means of a comprehensive investor relations programme.

This is achieved through publications such as the Annual and Interim Reports, News Releases and the Company’s website, www.kareliandiamondresources.com. Extensive information about the Company and its activities is given on the Company’s website and in the Annual Report and Consolidated Financial Statements. Notifiable items are issued to the market on a timely basis through a Regulatory Information Service and, in addition, corporate information is regularly updated on the Company’s website.

The Chairman and Managing Director are active in meeting with private investors from time to time; and engages in regular dialogue with the Company’s broker with view to gauging shareholder sentiment and how successful the Company has been in communicating with shareholders. The Board regards the Annual General Meeting of the Company as an important opportunity for shareholders, Directors and management to meet, exchange views and discuss the progress of the Company. Shareholders are encouraged to attend for these purposes. The Board encourages constructive feedback from its shareholders on their needs and expectations for the Company through the question and answer sessions at its annual general meeting.

We seek at all times to provide open and realistic communications with shareholders while ensuring compliance with our regulatory obligations.

The Company is very much aware of its corporate social responsibilities and their implications for both short-term and long-term success. The Board identifies a number of stakeholder groups with which it has established an effective working relationship including employees, suppliers, communities and regulatory bodies. In regard to each such group the Company has identified the needs, interests and expectations of these groups and works towards fulfilling these requirements by way of meetings, discussions and feedback where appropriate.

In relation to its exploration activities and in particular its drilling operations the Company works to minimise the impact these operations have on the local environment and ensures that it is in full compliance with all relevant health, safety and environmental laws and regulations.

The Company has an open and compliant approach to its dealings with the regulators concerned with the admission of the Company’s shares to trading on the AIM Market. The Board seeks to identify suppliers that provide the right balance of capabilities and cost and are identified purely on an arms-length commercial basis. The Company’s suppliers will be paid in line with agreed payment terms and the Board will act in an ethical manner in all dealings and expect the same from its suppliers. The Board recognises that as it develops, there will be wider stakeholder and social responsibilities which will have to be taken into account, in particular in relation to the communities in which it becomes active. The Board will seek constructive feedback from all its stakeholders and any stakeholder may contact the Company at info@kareliandiamondresources.com.

The Board is responsible for ensuring that an effective risk management and internal control system is in place and for reviewing its effectiveness on an ongoing basis. Its purpose in relation to risk management is to both manage and mitigate risk while in relation to internal controls its purpose is to safeguard shareholder’ investments and the Group assets. Details of the Company’s risk management objectives, policies and processes are set out in detail in on pages 17 and 18 of the Group’s annual report and consolidated financial statements for the year ended 31 May 2024. In addition, further details are set out on page 50 to 53 of the same report detailing the system of internal control, general industry risk and the main components of this category applicable to the Company and how it impacts on operations. General industry risk as and where applicable to the Company’s operations is reviewed on an ongoing basis.

The Board along with senior management and the audit committee reviews and evaluates both internal controls and risk management on an ongoing basis. The Board intends to keep its risk control procedures under constant review, particularly with regard to the need to embed internal control and risk management procedures further into the operations of the business and to deal with areas of improvement which come to management’s and the Board’s attention.

The Board of the Company currently comprises of one Executive Directors, and three Non-Executive Directors. Biographies of each of the Directors are set out on page 9 of the Group’s Annual Report and Consolidated Financial Statements for the year ended 31 May 2024.

The Board is responsible to its shareholders for the overall management of the Group and meets at least six times a year to deal with matters including the Groups strategy, trading and capital budgets, approval of financial statements, major capital expenditure and risk management policies. There is an agreed procedure for Directors to take independent legal advice. The Company Secretary is responsible for ensuring that the Board of Directors’ procedures are followed, and all Directors have direct access to the Company Secretary. All Directors receive regular and timely reports and information in advance of board meetings and any further supporting papers and information are readily available to all Directors on request.

The Board has a process whereby each year every Director will meet the Chairman to review the conduct of the Board of Directors’ meetings and the general corporate governance of the Group. The three Non-Executive Directors are regarded as independent, and have no material interest in the Group. Non-executive directors are expected to spend a minimum of one day a month on company activities in addition to preparation for and attendance at board and sub-committee meetings. The Company notes that Principle 6 of the 2023 QCA Code state, inter alia, that shareholders should be given the opportunity to vote annually on the (re-) election of all individual directors to the Board. For practical reasons, this has not been feasible for the financial year ended 31 May 2025 however the Board is committed to complying with this element of Principle 6 of the QCA Code going forward and from the financial years ending 31 May 2026 and onwards, the Company will put all directors up for re-election at the Company’s annual general meeting.

The Board, having fully considered the corporate needs of the Group is satisfied that it has an appropriate balance of experience and skills to carry out its duties. The Chairman of the Company oversees this process and reviews the Board composition to ensure it has the necessary experience, skills and capabilities. The current Non-Executive directors have a wide range of financial and technical skills based on both qualifications and experience including significant fundraisings, financial management, technical expertise and the discovery and bringing into production of operating mines.

The Company Secretary provides Directors with updates on key developments relating to the Company, the sector in which the Company operates, legal and governance matters including advice from the Company’s broker, lawyers and advisors. Details of each director’s relevant experience, skills and personal qualities can be found here. Each board member keeps their skills up to date through a combination of courses, continuing professional development through professional bodies and reading.

The Groups’ corporate governance structures and processes are set out in detail on pages 13 to 19 of the Group’s Annual Report and Consolidated Financial Statements for the year ended 31 May 2024.

The main headings covered include:

• Board of Directors;
• Board Committees;
• Internal Control;
• Risk Management
• Communication with Shareholders
• Political Donations
• Accounting records
• Disclosure of Information to auditor

The Chairman is responsible for overseeing the running of the Board, ensuring strategic focus and compliance with good corporate governance and practice, the Managing Director is responsible for implementing Board strategy and overseeing the management of the Company on a day-to-day basis. The Company Secretary is responsible for ensuring that Board procedures are followed, and applicable rules and regulations are complied with. The Company has an Audit Committee, with two independent directors as the members. The terms of reference of the Audit Committee can be found here. [REQUIRED: Link to Audit Committee terms of reference]

The Company has a Remuneration Committee, with two independent directors as the members. The Company has an Executive Committee, with the Chairman, Managing Director, and an independent director as the members.

The Company does not have a Nomination Committee. Any board or senior management appointments are identified and managed by the whole Board. The Board believes this is the most appropriate approach for a company of this size.

The Company proposes to keep its systems and controls under review to ensure compliance with best practice, while also having regard to its size and the resources available.

The Board through its Chairman evaluates its ongoing performance based on the requirements of the business and corporate governance standards.

The Company has an annual process for evaluating the effectiveness of the Board and Directors’ performance. This process includes the use of internal reviews and periodic external facilitation. The results of such reviews are used to determine whether any alterations are needed at either a board or senior management level or whether any additional training would be beneficial. These evaluations were not undertaken in previous years. It is intended that these evaluations shall be undertaken annually, after the end of each financial year but prior to the publication of the respective annual report and accounts.

Director’s performance is measured by way of such matters as:

• Commitment
• Independence;
• Relevant experience;
• Impartiality;
• Specialist knowledge;
• Good personal qualities; and
• Their effectiveness on the Board

All Directors other than the Chairman and Managing Director must stand for reappointment by shareholders in accordance with the Company’s Articles of Association.

The Company’s approach to succession planning is to consider appropriate talented individuals on an ongoing basis with the objective of from time to time inviting such individuals to join the Board.

The Company, having regard to the terms and conditions of both existing and new employees seeks to ensure that all employees are properly rewarded and motivated to perform their duties in the best interests of the company and ultimately shareholders in both the short and long term.

In addition the Company takes into consideration the practices of other companies of similar size and scope.

The Company gives high priority to communication with both shareholders and all other stakeholder groups. This is achieved through publications such as the annual and interim report, news releases and the company’s website which is regularly updated. The Company encourages shareholders to attend the Annual General Meeting (AGM) to meet, exchange views and discuss the progress of the Group. The Directors are available after the conclusion of the formal business of the AGM to meet, listen to shareholders and discuss any relevant matters arising.

The Company’s website is regularly updated to include the latest and historical annual and half-yearly reports, and announcements (which can be found here), as are notices of general meetings for the last five years. During the annual general meetings, shareholders have the chance to communicate with the directors of the Company.

The results of general meetings are published on an ongoing basis.