Corporate Governance (AIM – Rule 26)

Governance Framework

The board is ultimately responsible for the group’s governance structure and framework and is supported by its four sub-committees, as depicted in the framework below. This framework includes a delegation of authority process where the daily management of the group is delegated to the Chief Executive Officer and the group’s Executive Committee (‘Exco’), without abdicating the board’s responsibility. The group’s Exco comprises the Chief Executive Officer, Financial Director and Executive: Operations and HR. Operationally, Exco is supported by the group’s Operations Committee (‘Opsco’), comprising the general managers at all mining operations and key senior corporate office managers.

The standards of disclosure relating to corporate governance at the group are regulated by the UK Companies Act, the SA Companies Act(¹), AIM Rules, the JSE Listings Requirements and King IV™. The AIM Rules require the group to adopt and comply with a recognised corporate governance code; the group has adopted the King IV Report on Corporate Governance for South Africa 2016 (“KING IV™”). Pan African Resources has benchmarked its governance practices against the principles of King IV™ and has included its 2018 King IV™ checklist.

*This information was last reviewed on 19 September 2018

The Board

The board is responsible and accountable for the performance and affairs of the group and has full control over all subsidiaries and operations. It acts as the focal point for, and custodian of, corporate governance. In doing so, it ensures the group remains a responsible corporate citizen, cognisant of the impact its operations may have on the environment and society in which the group operates, while acting in accordance with its own code of conduct.

Pan African Resources’ unitary board comprises six directors. The Chairman, Keith Spencer, is an independent non-executive director and the responsibilities of the Chairman and the Chief Executive Officer are separate. Executive directors are the Chief Executive Officer and the Financial Director. Exco and Opsco are invited to attend ad hoc presentations to the board.

The Chairman provides independent board leadership and guidance and facilitates suitable deliberation on all matters requiring the board’s attention. He further ensures the board operates efficiently and collectively.
The Chief Executive Officer and Financial Director, supported by Exco and Opsco, are accountable for strategy implementation and the day-to-day operational decisions and business activities. Non-executive directors are not involved in the daily operations of the company.

A formal board charter is in place to regulate the parameters within which the board operates and to ensure the application of good corporate governance in compliance with the group’s code of conduct. The board satisfied its responsibilities during the year in compliance with its charter. A copy of the board charter is available from the Company Secretary on request.

The board ensures the group conducts its business with integrity, leading by example. This commitment is formalised in a code of conduct, which applies beyond the board and includes all employees of the group.

Board Composition

The board reflects a balance of executive and non-executive directors, the majority of whom are independent. More importantly, it reflects considerable experience in mining, business and related activities and collectively has a wealth of industry knowledge, adding depth to board discussions. No single director is positioned to exercise unfettered decision-making, which protects against the influence of possible personal interests and ensures that the interests of all stakeholders are represented and considered.

BALANCE OF BOARD • 67% independent directors

• 33% executive directors

AGES OF BOARD • 17% 30 years to 40 years

• 17% 40 years to 50 years

• 33% 50 years to 60 years

• 33% above 60 years

TENURE OF BOARD • 50% three to six years

• 33% six to nine years

• 17% above nine years

Board Committees

Pan African Resources has an audit committee, remuneration committee, SHEQC committee, and a social and ethics committee to assist the board in discharging its collective responsibility of corporate governance. The non-executive directors perform the function and responsibility of the nominations committee. All committees have satisfied their responsibilities during the year in compliance with formal charters. A copy of these charters is available from the Company Secretary on request.

The table below details the various key issues discussed during the year under review.

Committee Members Key issues discussed in 2018
Audit committee • Hester Hickey (Chairperson)

• Thabo Mosololi

• Keith Spencer

Invitees

• Cobus Loots (Chief Executive Officer)

• Deon Louw (Financial Director)

• External auditors, internal auditors and financial executives

• Approved the group’s integrated annual report for 30 June 2018

• Approved interim report for 31 December 2017

• Reviewed internal and external audit reports

• Monitored the group’s risk appetite and tolerance levels

• Reviewed financial implications of the Elikhulu funding and the Phoenix Platinum disposal

• Approved internal and external audit fees

• Monitored auditor independence

• Monitored internal audit programme

• Evaluate the Financial Director and the finance department

Remuneration committee • Rowan Smith (Chairman)

• Thabo Mosololi

• Keith Spencer

Invitees

• Cobus Loots (Chief Executive Officer)

• Deon Louw (Financial Director)

• Andre van den Bergh (Group executive: HR and Operations)

• Ensuring an effective process for the cessation of large-scale mining at Evander Mines’ underground operations before financial year-end, in compliance with all applicable legislation

• Ensuring that salary adjustments were in line with the group’s remuneration philosophy and within the industry peer benchmarks provided by PwC Remchannel market analysis and other sources

• The group regularly reviews, monitors and ensures compliance in terms of stipulated employment equity targets and other requirements

• Review and implementation of corporate overheads restructuring to appropriately align corporate resources with operational requirements, following the cessation of large-scale mining at Evander Mines’ underground operations and Elikhulu’s commissioning

• Review and replacement of the senior executives’ share option scheme with a new scheme incorporating clear and objective targets and aligning with the interests of shareholders

SHEQC committee • Keith Spencer (Chairman)

• Hester Hickey

• Cobus Loots

• Bert van den Berg

• Mandla Ndlozi

• André van den Bergh

Invitees

• General managers – Barberton Mines and Evander Mines

• Monitored safety performance challenges and improvements at all operations

• Reviewed quantification of specific performance measures that are required to be reported for the sustainability report

• Monitored environmental management and adherence to relevant legislation

• Monitored health indicators at all operations

• Approved independent safety contractors to review our safety controls at the mining operations

• Monitored community and social and labour plan activities

Social and ethics committee • Thabo Mosololi (Chairman)

• Deon Louw

• André van den Bergh

 

• Reviewed and approved the social and ethics charter

• Monitor employees are appropriately trained and informed of the group’s policies and code of conduct

Director Independence

Independence is determined through criteria set out in King IV™, which includes an assessment of the individual directors’ character and judgement as well as any relationships or circumstances that could appear to affect their independence. The board also continuously assesses each director’s performance and tenure if it exceeds nine years. Based on this assessment, the board is satisfied that its independent non-executive directors are independent.

Acts and codes applicable to Pan African Resources

SOUTH AFRICA

• South African Companies Act 71 of 2008 – applicable to South African entities

• JSE Listings Requirements

• King IV™

• Labour Relations Act of 1995

 

UNITED KINGDOM

• UK Companies Act 2006

• LSE AIM Rules for Companies

• UK Bribery Act 2010

 

MINERALS AND ENERGY

• Minerals and Petroleum Resources Act of 2008

• National Energy Act of 2008

• Precious Metals Act of 2005

 

SAFETY, HEALTH AND ENVIRONMENT

• Mine Health and Safety Act of 1996

• Occupational Health and Safety Act of 1993

• Compensation for Occupational Injuries and Diseases Act of 1993
• National Environmental Management Act, 1998 and amendments

• National Water Act, 1998

• National Nuclear Regulator Act, 1999

• National Environmental Waste Act 59 of 2008

• Air Quality Amendment Act 20 of 2004