Company Announcements

CORPORATE GOVERNANCE REPORT

Introduction:

As a Standard listed company Caracal is not required to follow the UK Code of Corporate Governance.  However, the Directors recognise the importance of sound corporate governance and are currently in the process of  applying The Quoted Company Alliance Corporate Governance Code for Small and Medium size Companies (2018) (the 'QCA Code') to their corporate processes.  They believe this is the most appropriate recognised governance code for a company of the Company's size and with a Standard Listing on the London Stock Exchange.

They are aware that there are currently several areas of non-compliance which include: (i) the formal developments and publication of Key Performance Indicators ("KPIs") that are relevant to the business (only financial KPIs have been included above), (ii) the adoption of an appropriate Corporate & Social Responsibility ("CSR") policy and (iii) the formal sitting of separate Committees. The Board will, once the funding has been finalised, ensure that all areas on non-compliance are addressed, new processes are implemented and adhered to. The Board's short term focus is to address the issues pertaining to going concern.

The QCA Code has ten principles of corporate governance that the Company is committed to apply within the foundations of the business by the end of the next financial reporting period. These principles are:

1.    Establish a strategy and business model which promote long-term value for shareholders;

2.    Seek to understand and meet shareholder needs and expectations;

3.    Take into account wider stakeholder and social responsibilities and their implications for long term success;

4.    Embed effective risk management, considering both opportunities and threats, throughout the organisation;

5.    Maintain the board as a well-functioning balanced team led by the Chair;

6.    Ensure that between them the Directors have the necessary up to date experience, skills and capabilities;

7.    Evaluate board performance based on clear and relevant objectives, seeking continuous improvement;

8.    Promote a corporate culture that is based on ethical values and behaviours;

9.    Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board; and

10.  Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.

Here follows a short explanation of how the Company applies each of the principles, including where applicable an explanation of why there is a deviation from those principles.

Principle One

Business Model and Strategy

The Group has a mining licence in Kenya and has also acquired several exploration licences in Tanzania. It has a clear strategy of exploring and developing this and future opportunities which has been set out in the Chief Executive's Statement. Further to earlier comments on risk and strategy the company is committed to broadening its area and scope of operations as appropriate.

Principle Two

Understanding Shareholder Needs and Expectations

The Board is committed to maintaining good communication and having constructive dialogue with its shareholders.  Shareholders will be encouraged to attend the AGM and ask the directors questions and the  website will be maintained to ensure all contemporary communications are added timeously.

Principle Three

Considering wider stakeholder and social responsibilities

The Board recognises that the long-term success of the Company is reliant upon open communication with its internal and external stakeholders: investee companies, shareholders, contractors, suppliers, regulators and other stakeholders. The Company has created close ongoing relationships with a broad range of its stakeholders and will ensure that it provides them with regular opportunities to raise issues and provide feedback to the Company.  The Company is committed to delivering lasting benefit to the local communities and environments where we work as well as to our shareholders, employees and contractors. As the company evolves, we anticipate that this aspect of community engagement will evolve further.

Principle Four

Risk Management

The Board is responsible for ensuring that procedures are in place and are being implemented effectively to identify, evaluate and manage the significant risks faced by the Group.   The Group maintains appropriate insurance cover in respect of legal actions against the Directors as well as against material loss or claims against the Group.  The principal risks and uncertainties are as set out in the Strategic Report. 

The Group does not currently have an internal audit function due to the small size of the Group and limited resources available. The requirement for an internal audit function is kept under review.

Principle Five           

A Well-Functioning Board of Directors

The Board will maintain a balance of executives and non-executive directors. At the start of the period there were 4 non-executive Directors including the Chairman and 2 executive Directors. During the period the non-executive Chairman (13^th Jan 2023), Mr Gerard Kisbey-Green and Mr Daniel Kazungu resigned as non-executive Directors and Mr Riaan Lombard resigned as executive Director (12^th June 2023). Mr Simon Grant Rennick joined the Board as executive Chairman (April 2023). At the end of the period the Board consisted of 2 executive and 2 non-executive Directors.  Post the period end Ms Rachel Johnston resigned as non-executive Director. The Board intend to appoint 2 additional non-executive Directors in the future.

Further information about the directors can be found on the company website at www.caracalgold.com. The biographical details of these Directors are set out within Principle Six below. All Directors are subject to re-election in accordance with the Company's articles of association ("Articles"). The Company's Articles state that one-third of the Directors shall retire by rotation and be subject to re-election at each Annual General Meeting.

The Board meets formally in person and by telephone multiple times throughout the year and at least four times per year. The Board also holds regular informal project appraisal and strategy discussions, to examine operations, opportunities and assess risks.

The directors encourage a collaborative Board culture to ensure that each decision reached is always in the Company's and its shareholders' best interests and that any one individual opinion never dominates the decision-making process. The Board seeks, so far as possible, to achieve decisions by consensus and all directors are encouraged to use their independent judgement and to challenge all matters whether strategic or operational.

The Group currently does not have a separate Remuneration and Audit Committee but all three Directors are active on each Committee.   These Committees will be reconstituted in the near future on appointment of an increased number of directors. The Committees operated for a short time during the period under review but issues pertaining to both these Committees have now formed part of the main Board until the appointment of more directors as mentioned previously.

Attendance at Board and Committee Meetings

The Group will report annually in the Directors' Report on the number of Board and committee meetings held during the year and the attendance record of individual Directors. Directors meet formally and informally both in person and by telephone. To date the following directors have attended the following meetings:

Principle Six

Appropriate Skills and Experience of the Directors

The Company believes that the Directors have wide ranging experience working for/and/or advising businesses operating within the natural resources sector.  They also have an extensive network of relationships to reach key decision-makers to help achieve their strategy.

The Board recognises that it currently does not meet the requirements of the diversity targets as detailed out in Policy Statement PS 22/3 of the Listing Rules and DTR requirements, on gender or ethnicity.  It has no female or ethnic minority representation on the current Board.  It is aware, that as it grows, it will look to recruit and develop a diverse and more gender-balanced team.

Although there is no formal process to keep Directors' skill sets up to date at present the Board will look to implement access to training where skill gaps have been highlighted. However, the Company's lawyers and brokers provide regular updates on governance, financial reporting and Listing rules and the Board is able to obtain advice from other external bodies when necessary.

Board Advice During the Period

During the period the Board received advice from Marriot Harrison with respect to corporate governance and compliance.

Biographies of the current Board are as included below.  The Company have not included the Directors who are not in position at the date of this report and accounts.

Simon Grant Rennick - Chairman (born 1957, aged 66)

Mr Grant Rennick is a graduate of the Cambourne School of Mines. His expertise encompasses not only mining and minerals but also metals, agriculture, and property. He has managed mining companies, both public and private, in Uganda, Malawi, Kenya, Mexico and Botswana; metal trading businesses in Bermuda and in the UK; was a co-founder of Industrial Mineral Finance House which provides consultancy services covering all aspects of the industrial minerals' sector; and established a property development business (since sold).

Robert Andrew McCrae, Executive Director (born 1973, aged: 50)

Robert McCrae has over 25 years' experience in the mining and exploration industry in Africa. Mr McCrae qualified with a BCom Economics and Financing from the University of Witwatersrand. He has been involved in the exploration, development and financing of projects in over 15 African countries across a broad range of commodities including precious metals, gemstones, base metal, bulk commodities and industrial minerals. He has managed both the development of these projects for both private and listed companies and has acted in roles of project owner as well as project/construction contractor. Mr McCrae was the founding shareholder of Mining Project Development ltd, which owned the Zanaga Iron Ore Project in the Republic of Congo prior to its acquisition by Glencore.

Mr McCrae has held senior executive management positions with a number of Australian Securities Exchange listed mining and exploration companies, including CEO of Minbos Resources, which had several high-grade phosphate projects in Angola and the Democratic Republic of Congo and COO of Black Mountain Resources which operated a high grade vermiculite mine and phosphate exploration project located in Uganda. He was also a founder of Luiri Gold Limited, which explored and developed gold projects in Zambia and where he was also involved on the listing onto the Toronto Stock Exchange. Between 1994 and 2006, Mr McCrae was Director, Business Development of MDM Engineering (Pty) ltd, an African focused natural resource contracting and process engineering companies in Africa, which was responsible for the construction of processing plants for a number of major gold and copper operations throughout Africa.

Stefan Muller, non-executive Director (born 1971, aged: 52)

Mr. Müller has extensive corporate and financial experience having supported over 250 capital market transactions during his career and served on the boards of a number of national and international companies.  He started his career at Dresdner Bank AG in international securities trading before becoming Senior Vice President at Bankhaus Sal Oppenheim (Europe's largest private bank at the time).  He subsequently worked in asset management before founding DGWA - Deutsche Gesellschaft für Wertpapieranalyse GmbH (German Institute for Asset and Equity Allocation and Valuation), a German Investment Banking Boutique focused on the global mining and resources industry, where he is still CEO.  He is also a board member of the German Federation of International Mining and Mineral Resources (FAB), and a member of the DIN Technical Committee, which is establishing a new ISO standard for lithium.  His corporate and financial experience will support the Company in delivering on its growth strategy.

Principle Seven

Evaluation of Board Performance

Internal evaluation of the Board, the Committees and individual Directors will be undertaken on an annual basis in the form of peer appraisal and discussions to determine the effectiveness and performance against targets and objectives. As a part of the appraisal the appropriateness and opportunity for continuing professional development whether formal or informal is discussed and assessed.

Principle Eight

Corporate Culture

The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of the Group as a whole which in turn will impact the Group's performance. The Directors are very aware that the tone and culture set by the Board will greatly impact all aspects of the Group and the way that consultants or other representatives behave. The corporate governance arrangements that the Board has adopted are designed to instil a firm ethical code to be followed by Directors, consultants and representatives alike throughout the entire organisation. The Group strives to achieve and maintain an open and respectful dialogue with representatives, regulators, suppliers and other stakeholders. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Group to successfully achieve its corporate objectives. The Board places great importance on this aspect of corporate life and seeks to ensure that this flows through everything that the Group does. The Directors are focused on ensuring that the Group  maintains an open culture facilitating comprehensive dialogue and feedback and enabling positive and constructive challenge. The Group has adopted, a code for Directors' dealings in securities which is appropriate for a company whose securities are traded on this main market and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016.

Issues of bribery and corruption are taken seriously. The Group has a zero-tolerance approach to bribery and corruption and has recently put an anti-bribery and corruption policy in place to protect the Group, its employees and those third parties to which the business engages with.

Principle Nine

Maintenance of Governance Structures and Processes

The Group's governance structures are appropriate for a company of its size. The Board also meets regularly and the Directors continuously maintain an informal dialogue between themselves.  The Chairman is responsible for the effectiveness of the Board as well as primary contact with shareholders, while the execution of the Group's investment strategy is a matter reserved for the Chief Executive. The current Governance structure is outlined below:

Audit committee

The committee met once during the period and seized to function after the Chairman of the committee resigned. The company will reinstate the committee in due course.  Currently, the Board act as the Audit Committee.

The Audit Committee comprised the three directors: Simon Games-Thomas, Rachel Johnston and H.E. Dan Kazungu and the Chief Financial Officer and met once during the period.  This responsibility has now been taken over by the Board who will follow the committee's terms of reference which are in accordance with the UK Corporate Governance Code. The committee has been established to review the company's financial and accounting policies, interim and final results and annual report prior to their submission to the board, together with management reports on accounting matters and internal control and risk management systems. It reviews the auditors' management letter and considers any financial or other matters raised by both the auditors and employees.

The committee considers the independence of the external auditors and ensures that, before any non-audit services are provided by the external auditors, they will not impair the auditors' objectivity and independence. Before the current auditors were appointed, they had acted as the Company's Reporting Accountants. Any future work by the auditors for non-audit services will need to be approved by the Board to ensure it does not affect the independence or objectivity of the external auditor.

The Group does not currently have an internal audit function but will continue to monitor the situation and look to hire an internal auditor if this is deemed necessary in the light of the resignation of PKF Littlejohn LLP.

Remuneration committee

The committee met once during the period and ceased to function after the Chairman of the committee resigned. The company will reinstate the committee in due course. Currently, the Board act as the Remuneration Committee.

Before this departure, the Remuneration Committee comprised the three directors: H.E. Dan Kazungu (Chair), Simon Games-Thomas and Rachel Johnston and met once in the period before the Board took over its functions. The primary function of the Committee is to advise the board on overall remuneration packages of the directors after consideration of remuneration policies, employment terms, current remunerations of the Board and advisors and the policies of comparable companies in the Industry. No third parties have provided advice that materially assisted the Remuneration Committee during the year.

The remuneration committee determines the company's policy for the remuneration of executive directors, having regard to the UK Corporate Governance Code and its provisions on directors' remuneration. This is set out in the Directors' Remuneration report.

Principle Ten

Shareholder Communication

The Board is committed to maintaining good communication and having constructive dialogue with its shareholders in compliance with regulations applicable to companies quoted on the LSE's Main Market.  All shareholders are encouraged to attend the Company's Annual General Meeting where they will be given the opportunity to interact with the Directors.

Investors also have access to current information on the Company through its website, www.caracalgold.com, and via the Executive Chairman, who is available to answer investor relations enquiries.

REPORT OF THE BOARD/AUDIT COMMITTEE

This report is prepared in accordance with the Quoted Companies Alliance (QCA) corporate governance code for small and mid-sized quoted companies, revised in April 2018. A summary of the Committee's role and membership can be found in the Governance section of this Annual Report. Only one official committee meeting was held in the year, since this time the whole Board has been acting as the Committee and have met with the external auditors during the planning and at the end of the audit process to ensure the following significant issues were considered.

External Auditor's Fees for Non-Audit Services

There were no fees for Non-Audit Services in the current year.   The external auditor acted as the Company's Reporting Accountant in the prior year. This was approved by the Board as they concluded that it did not affect the independence or objectivity of the external auditor and it was considered to be one-off non-recurring work. Fees paid during the year for audit and non-audit services may be found in note 8 to the accounts.

Objectivity and Independence

The Board/Committee continues to monitor the Auditor's objectivity and independence and is satisfied that PKF and the Company have appropriate policies and procedures in place to ensure that these requirements are not compromised.

Appointment of External Auditor

PKF Littlejohn have stated that they will not be seeking reappointment as the Company's auditors for the next financial year as a result of the disclaimer included within their audit report. The Board have initiated the process of appointing a new audit firm and will update our stakeholders accordingly once the selection process is complete. The Board would like to thank PKF Littlejohn for their professional service and support over the past years.

Internal controls/audit

The Directors acknowledge their responsibility for the Groups' system of internal control and for reviewing their effectiveness.  These internal controls are designed to safeguard the assets of the Group and ensure the reliability of financial information for both internal use and external publication.  Whilst the Directors are aware no system can provide absolute assurance against material misstatement or loss, regular review or internal controls are undertaken to ensure that they are adequate and effective. 

The Group does not currently have an internal audit function due to the small size of the Group and limited resources available. The requirement for an internal audit function is kept under review.

Whistleblowing

The Group has adopted a formal whistleblowing policy which aims to promote a very open dialogue with all its employees which gives every opportunity for employees to raise concerns about possible improprieties in financial reporting or other matters.

The Bribery Act 2010

The Board is committed to acting ethically, fairly and with integrity in all its endeavours and compliance of the code is closely monitored.

Market Abuse Regulations

The Group is required to comply with article 18(2) of the Market Abuse Regulation ("MAR") with reference to insider dealing and unlawful disclosure of inside information. The FCA requires traded companies to maintain insider lists as set out in the MAR.  The Board has put in place a MAR compliance process and has established a Compliance Committee. This and the Company's regulatory announcements are overseen by the Board of Directors.

On Behalf of the Board

Director