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AIM HZM 6.50 GBX
TSX HZM 0.11 CAD
Developing the next major nickel project in Brazil

CORPORATE GOVERNANCE STATEMENT


NOTE FROM THE CHAIRMAN


Horizonte is committed to good corporate governance and accountability to all stakeholders. We believe robust governance improves performance and mitigates risk and is therefore an important factor in achieving the medium to long-term success of the Company.

Horizonte’s primary listing is on the London Alternative Investment Market (AIM). The Company abides by the AIM rule 26 regulation in respect to reporting and has therefore chosen to adhere to the Quoted Company Alliance’s (QCA) Corporate Governance Code for Small and Mid-Size Quoted Companies.

In Brazil the Company has been a member of the Brazilian Association of Mineral Exploration Companies (ABPM) since 2013 and in 2020 it became a member of the Brazilian Mining Institute (IBRAM).

Creating a culture of good governance is led from the top, by Horizonte’s Board, and is cultivated in every part of the organisation. Our accountability to all stakeholders has been strengthened in 2020 by our increased transparent reporting with the addition of a standalone Sustainability Report which can be found on the Company’s website www.horizonteminerals.com

David Hall

31 March 2021

QCA CODE

In line with the Company’s development and long-term strategic objectives, Horizonte complies with the QCA Corporate Governance Code for small and Mid-sized companies. The ways in which Horizonte has applied the QCA code are detail below with references made to our Annual Report where necessary.

Principle 1. Establish a strategy and business model which promotes long-term value for shareholders

Horizonte Minerals is a nickel-focused resources company developing two Tier 1 in northern Brazil. The Araguaia Ferronickel (FeNi) Project and the Vermelho Nickel-Cobalt Project are both high grade, lowest cost quartile and long mine life projects. These projects provide Horizonte with a potential scalable production profile of up to 50,000m tonnes of nickel per year.

As a critical component in both stainless steel and new battery technology, nickel is a key enabler of the global clean energy transition. As a key player in this sustainability driven supply chain, Horizonte is focussed on developing its operations to produce low-carbon nickel ethically, safely and responsibly.

Horizonte is listed on the London Stock Exchange Alternative Investment Market (AIM) and the Toronto Stock Exchange.

The Company’s business plan is to advance Araguaia towards construction and ultimately bring the asset into production in order to enhance shareholder value whilst simultaneously advancing the Company’s second asset, Vermelho towards defining economic feasibility. A Feasibility Study was published late in 2018 on Araguaia and during 2019 a significant financing partner, Orion Mine Finance invested $25m to advance the project, undertake early works, build the team in anticipation for construction and advance the wider project finance negotiations. A Pre-Feasibility Study was published on 17 October 2019 on Vermelho which was a significant milestone in moving the project forwards.

The Company intends to become a globally significant producer of nickel in the form of ferronickel as well as nickel and cobalt sulphate. The strategy is to continue to progress the development of the 100% owned Araguaia project towards construction as well as continuing the feasibility work on the Vermelho project. The Company also evaluates on an ad hoc basis with a view to eventual acquisition, exploration and development of mineral projects in jurisdictions in which it holds a presence, and/or in sectors in which management has expertise.

The exploration and mining business is controlled by a number of global factors, principally supply and demand which in turn is a key driver in global metal prices; these factors are beyond the control of the Group. At every stage of the exploration process the projects are rigorously reviewed, both internally and by qualified third party consultants to determine if the results justify the next stage of exploration expenditure, ensuring that funds are only applied to high priority targets.

The Group’s licences and operations are located in foreign jurisdictions. As a result, the Group is subject to political, economic and other uncertainties. Brazil is the current focus of the Group’s activity and offers stable political frameworks and actively supports foreign investment. It has a well-developed exploration and mining code with proactive support for foreign companies.

A summary of the Company’s strategic objectives can be found on page [ ] of the 2020 Annual Report.

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

The Board attaches great importance to providing shareholders with clear and transparent information on the Company's activities, strategy and financial position. General communication with shareholders is co-ordinated by the Chief Executive Officer and Chief Financial Officer. In addition, the Chairman and Lead Independent Director provide a further avenue for engagement with investors.

Material information in relation to the Company in made publicly available via the London Stock Exchange’s Regulatory News Service (RNS) and via the System for Electronic Document Analysis and Retrieval (SEDAR) in Canada. The Company also makes available corporate presentations, CEO video interviews and other non-material news on its website and social media channels.

The Company recognises the importance of a continual dialogue with its shareholders. All shareholders have the opportunity ask questions via the dedicated email address info@horizonteminerals.com and at the Company’s Annual General Meeting.

Further details on how the Company engaged with shareholders throughout 2020 are available of page 27 of the 2020 Annual Report.

Principle 3 - Take into account wider stakeholder and social responsibilities and their implications for long-term success

Horizonte promotes the sustainable development of its two long mine life nickel projects to benefit our employees, shareholders, communities and the Brazilian government. Through continual formal and informal engagement with all our stakeholder groups, we have been able to determine their perspective and priorities and align these with our strategy and key business objectives. With this knowledge and alignment, the Board is able to consider a full range of impacts on all stakeholder groups in its decision-making process.

A more detailed summary of our stakeholder engagement is available of pages 14 & 15 of the 2020 Annual Report.

Horizonte’s commitment to sustainability is highlighted in the Company’s first standalone Sustainability Report published in August 2020. Not only does the report highlight our ESG achievements but it discusses our approach to accountable and transparent corporate governance, maintaining a safe workplace, minimising our environmental impact and providing value for all stakeholders as well as outlining our commitment to future goals.

A more detailed summary of our key sustainability management topics is available of pages 14 and 15 of our 2019 Sustainability Report. These sustainability management topics have been determined by a comprehensive materiality assessment undertaken in conjunction with our stakeholders as detailed in our approach to our Sustainability Report outlined on page 7.

Principle 4 - Embed effective risk management, considering both opportunities and threats, throughout the organisation

The Board is responsible for putting in place and communicating a sound system to manage risk and implement internal control. The Board has considered mechanisms by which the business and the financial risks facing the Group are managed and reported to the Board. The principal business and financial risks have been identified and control procedures implemented. The Board acknowledges its responsibility for reviewing the effectiveness of the systems that are in place to manage risk.

The Board has delegated certain authorities around risk management to the Audit Committee, which has its own formal terms of reference. The Committee meets at least twice per year to coincide with the annual audit and the publication of its financial results and to assess the effectiveness of the Group’s system of internal controls. The Audit Committee is chaired by David Hall, and comprises only independent non-executive Directors.

The Board recognises the importance of both financial and non-financial controls and has reviewed the Group’s control environment and any related shortfalls during the year. Since the Group was established, the Directors are satisfied that, given the current size and activities of the Group, adequate internal controls have been implemented. Whilst they are aware that no system can provide absolute assurance against material misstatement or loss, in light of the current activity and proposed future developments of the Group, continuing reviews of internal controls will be undertaken to ensure that they are adequate and effective.

The Board considers risk assessment to be important in achieving its strategic objectives. The Board’s current assessment of the principal risks are set out on pages 18-21 of the 2020 Annual Report and are monitored by the Board at their meetings.

Principle 5 - Maintain the board as a well-functioning, balanced team led by the chair

The Board comprises a group of experienced Directors with a diverse skillset relevant to the development of a mining company. Each Director has a wealth of experience and depth of knowledge in the mining industry and complementary fields including law, business development and capital markets. This diversity of skills and experience across multiple jurisdictions and professional disciplines provides the Company with effective leadership and direction. Each Director keeps their skillset up to date through a combination of continual professional development and attendance at seminars and conferences relevant for the industry Horizonte operates in. All Directors retire on rotation at regular intervals in accordance with the Company’s Articles of Association.

We understand the importance of an independent board and this independence is constantly reviewed. Of the current six members: one Executive Director and five Non-Executive Directors: Mr Owen Bavinton, Mr William Fisher and Mr Allan Walker are considered independent despite several of these members holding shares or options in the Company. Due to Horizonte’s size and the nature of junior exploration companies the Company deemed it acceptable to remunerate directors with options as the Company historically did not have sufficient financial strength to attract the required depth in experience from board directors. The shareholdings held by the directors have been acquired on the market over the years and so represent arms-length transactions and align their interests with shareholders. Their shareholdings are also relatively small and are not deemed large enough to distort any independence.

Diversity of nationality and gender is also of importance to Horizonte. We were delighted to welcome our first female Director, Sepanta Dorri in 2020.

The Company currently feels the formation of a formal Nomination Committee is not necessary, however, all Directors are committed to having a watching brief for identifying potential internal and external candidates as part of the Company’s informal succession planning and commitment to ensuring the Board remains independent, diverse and with the relevant skillset for the stage of the Company’s development.

Principle 6 - Ensure that, between them, the directors have the necessary up-to-date experience, skills and capabilities

The experience and knowledge of each of the Directors gives them the ability to constructively challenge strategy and to scrutinise performance. The Board believes it has the requisite blend of experience in financial and operational matters, as well as improving gender balance, at a Board and Senior Management level to deliver on its strategy.

As it stands, the Board does not believe that any of the Directors have too many directorship roles at other listed companies and hence at risk of “over-boarding” as defined by ISS voting guidelines, but will continue to monitor this on an ongoing basis. The Board is satisfied that the Chairman and each of the non-executive Directors are able to devote sufficient time to the Company’s business and that between the Directors, it has an effective and appropriate balance of skills, experience and capabilities to provide suitable oversight and challenge.

All Directors retire by rotation at regular intervals in accordance with the Company’s Articles of Association.

Each director keeps their skill set up to date through a combination of Continual Professional Development (CPD) and attendance at seminars and conferences relevant for the industry that Horizonte operates in.

Additional details on the Board’s capabilities and their full professional biographies are available on pages 24-26 of the 2020 Annual Report.

Principle 7 - Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

Annual Board appraisal

In accordance with current best practice and the Code, the Board undertakes an annual formal evaluation of its performance and effectiveness and that of each Director and its Committees. This evaluation is conducted by way of a questionnaire from the Chairman, co-ordinated by the Company Secretary and concluded by Chairman interviews where necessary. In addition, the Non-Executive Directors met, informally, without the Chairman present and evaluated his performance. The Board currently considers that the use of external consultants to facilitate the Board evaluation process is unlikely to be of significant benefit to the process, although the option of doing so is kept under review.

The Chairman has stated that he values this annual evaluation opportunity and considers it to be key to his role in creating an effective Board. He has reported that the Board was satisfied that the Board was effective and well run.

Ongoing Board Development

Executive Directors are subject to the Company’s annual review process through which their performance against predetermined objectives is reviewed and their personal and professional development needs considered. Non-executive Directors are encouraged to raise any personal development or training needs with the Chairman or through the Board evaluation process.

The Company Secretary ensures that all Directors are kept abreast of changes in relevant legislation and regulations, with the assistance of the Company’s advisers where appropriate.

Succession Planning

The Board has a minuted emergency succession plan for the Senior Management Team. On an ongoing basis, Board members maintain a watching brief to identify relevant internal and external candidates who may be suitable additions to or backup for current Board members.

Principle 8 - Promote a corporate culture that is based on ethical values and behaviours

Horizonte is committed to good corporate governance and accountability to all stakeholders. Robust corporate governance improves performance and mitigates risk, it is therefore an important factor in achieving the medium to long-term success of the Company.

Creating a culture of good governance is led from the top, by Horizonte’s Board, and is cultivated in every part of the organisation. The Board is committed to ensuring best practice sustainability initiatives are implemented as a day-to- day requirement of the successful running and progression of the Company.

Horizonte has created an organisational structure that ensures sustainability practices run throughout the Company, from the corporate level, in London, to the project management in Brazil.

Sustainability is a key part of all our responsibilities and is included as part of all employee’s Key Performance Indicators (KPIs). At the corporate level, sustainable development is carried out by managers with extensive experience in environment, social, governance and communication issues reporting directly to the CEO.

The management of operations in Brazil relies on sustainability management covering the topics of Health and Safety, Environment and Licensing, Community Relations and Land Management, reporting directly to the Project Director for Araguaia.

More details on the Company’s principles and policies can be found on page 17 of the 2019 Sustainability Report, as well as in our Business Integrity Policy.

Principle 9 - Maintain governance structures and processes that are fit for purpose and support good decision making by the board

The Board meets regularly to determine the policy and business strategy of the Company and has adopted a schedule of matters that are reserved as the responsibility of the Board.

The Board considers that there is an appropriate balance between the Executives and Non-executives (both independent and non-independent) and that no individual or small group dominates the Board’s decision making.

The Board has reserved the following matters for sole approval by the Board:

  • Review and approval of the Company’s strategic plan
  • Review and approval of the annual operating plan and financial budget, including any changes during the year
  • Review and approval of the Annual Report, financial statements, MD&A and quarterly financial statements. These documents are also reviewed and approved by the Audit Committee
  • Establishment of expenditure limits and approval of exceptions
  • Hiring, review and compensation of CEO and CFO
  • Director recruitment
  • Appointment of Chairman
  • Appointment of Committee Chairmen and Committee members

The Company has a policy on share dealing and confidentiality of inside information for persons discharging managerial responsibilities and persons closely associated with them, which contains provisions appropriate for a company whose shares are admitted to trading on AIM (particularly relating to dealing during close periods in accordance with Rule 21 of the AIM Rules and MAR) and the Company takes all reasonable steps to ensure compliance by the persons governed by such policy.

The Board continues to monitor its governance framework on an ongoing basis.

Our corporate governance structure is set out below:

  • Board
    • The Board of Horizonte is responsible for setting the vision and strategy for the Company to deliver value to all stakeholders by effectively putting in place its business model.
  • Chairman
    • The primary responsibility of the Chairman is to lead the Board effectively and to oversee the adoption, delivery and communication of the Company’s corporate governance model. The chair has adequate separation from the day-to-day business to be able to make independent decisions. Save in exceptional (and well justified and explained) circumstances, the Chairman should not also fulfil the role of Chief Executive Officer.
  • CEO
    • The Company’s CEO is charged with the delivery of the business model within the strategy set by the Board. The CEO works with the Chairman and NEDs in an open and transparent way and keeps the chair and NEDs up-to-date with operational performance, risks and other issues to ensure that the business remains aligned with the strategy.
  • Non-Executive Directors
    • The Company’s NEDs participate in all board level decisions and play a particular role in the determination and articulation of strategy. The Company’s NEDs provide oversight and scrutiny of the performance of the executive directors, whilst both constructively challenging and inspiring them, thereby ensuring the business develops, communicates and executes the agreed strategy and operates within the risk management framework.
  • Renumeration Committee
    • The remuneration committee comprises David Hall, William Fisher and Allan Walker and is responsible for reviewing the performance of the Executive Director and senior management, and for setting the framework and broad policy for the scale and structure of their remuneration, taking into account all factors which it shall deem necessary. The remuneration committee also recommends the allocation of share options for the Board to approve and is responsible for setting up any performance criteria in relation to the exercise of options granted under any share options schemes adopted by the Group.
  • Audit Committee
    • The audit committee, comprising Owen Bavinton, David Hall, William Fisher and Allan Walker, has primary responsibility for monitoring the quality of internal controls, ensuring that the financial performance of the Group is properly measured and reported on and for reviewing reports from the Group’s auditors relating to the Group’s accounting and internal controls.

Principle 10 - Communicate how the company is governed and is performing by maintaining dialogue with shareholders and other relevant stakeholders

As discussed in Principles 2, 3 and 8 Horizonte has an embedded culture of transparent communication with all stakeholders to ensure accountability of the Board. Maintaining an open dialogue with shareholders and all other relevant stakeholders is an important part of the Company’s reporting and governance framework.

The Board attaches great importance to providing shareholders with clear and transparent information on the Company’s activities, strategy and financial position. Communication with all shareholders is predominately led by the CEO and CFO, but the Chairman and non-executive directors provide additional points of contact for shareholders, particularly at the Company’s AGM. In additional our Head of Communications coordinates shareholder interaction throughout the year. Further details of the Company’s engagement with shareholders during the year is available on page 27 of the 2020 Annual Report.

Other stakeholder engagement is overseen by our Head of ESG, details of which can be found on page 18 of the 2019 Sustainability Report.