Governance

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

The Company has a portfolio of gold, copper and silver  exploration and production assets in Azerbaijan. The Company  has a clear strategy of growing a sustainable mining business in  Azerbaijan which is fully set out in the chairman’s statement,  the president and chief executive’s review, the strategic  report, the sustainability and environment report and other  sections of this annual report. As with any other company in  the extractive industries, a key challenge is to replace the  mineral resources mined. The Company maintains an active  geological exploration programme to identify new mineral  resources. However, this programme was severely curtailed in  2024 due to the cost containment measures adopted arising  from the partial shut-down of processing throughout much of  2024. This programme is being restarted in 2025 as funds permit. 

The Company seeks to grow shareholder value by developing new mines within its mining concessions. During 2024, the development continued of Gilar, a major new underground mine at Gedabek. The Group also commenced work on restarting production at Demirli, a brownfield copper project, which was acquired in 2022. The Company also seeks to promote long term value for shareholders by producing mineral resource estimates for its mineral deposits to JORC standards. In 2024, the Company published maiden JORC mineral resource estimates for both its Xarxar and Garadag mineral deposits. The Group also has a small equity interest in Libero Copper & Gold Corporation which is exploring the Mocoa copper deposit in Colombia.

A key challenge is the safe working of its operations, and this annual report sets out measures adopted by the Company in 2024 to address this challenge.

Principle 2
Establish a strategy and business model which promote long-term value for shareholders

The Board maintains an extensive two-way dialogue with  its shareholders. The Board meets shareholders at its annual  general meeting each year. Directors and senior management  regularly meet shareholders at investor events and other  forums. Individual meetings are held with larger shareholders  who occasionally visit the Company’s operations in Azerbaijan. 

The Company also regularly updates shareholders on its  activities through press releases via the LSE RNS and RNS  Reach systems. Podcasts and video interviews by senior  management are also disseminated via well-known investor  websites such as Proactive. The Company has an active  and effective investor relations programme that includes  institutional roadshows and presentations.

The Company  website is monitored and regularly updated to be a current  and comprehensive source of information to stakeholders.  The Company also uses social media to communicate with  shareholders and has a dedicated LinkedIn account.

Principle 3
Establish a strategy and business model which promote long-term value for shareholders

The Company takes its wider responsibilities for corporate  and social responsibilities very seriously and has contributed  to the economic and social development of the local communities  in which it operates. This includes refurbishing schools and  building infrastructure in the region and assisting local agriculture.  The Company regularly meets with community leaders in the  areas in which it operates. The Company also established a  community relations department at Gedabek in 2023 to liaise  with the local community. A full time, dedicated government  affairs and community relations manager heads the department.

A health, safety and environmental review was carried out by  a third party at the Gedabek mine site in July 2023 following  concerns by local residents that there was contamination  of the local environment. No material environmental  contamination was found. In November 2023, the Company  agreed an action plan with the Government of Azerbaijan to  address associated recommendations contained in the final report of the environmental review. Actions to implement all  the recommendations in the final report continued in 2024  with all the immediate and short-term recommendations  broadly completed by 31 December 2024. Various long-term  recommendations are still being addressed in 2025. 

In addition, the Company uses the annual report and  financial statements, the interim statements and its website to provide further information  to shareholders and wider stakeholders.

Principle 4
Establish a strategy and business model which promote long-term value for shareholders

The Company and its directors have identified and keep  under consideration the risks facing the Company. It has an  established framework of internal financial controls including  an audit committee to address financial risks. The Company  does not have a formal corporate risk management programme  for non-financial risks although the Board regularly discuss  and review exposure and management of all risks. The requirement for a formal risk management programme is kept under  review and the Company may reassess the need to establish  such a programme in the future.

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 and the Group  and the Board review the adequacy of the cover regularly. 

1. country risk;
2. operational risk;
3. commodity price risk;
4. foreign currency risk; and
5. liquidity and interest rate risk.

One of the main corporate risks is the safe operation of its  mines and processing operations. To address this specific  risk, the Company has a well-developed and adequately  staffed health, safety and environmental (“HSE”) department  to ensure safe and clean working at its mines and processing  sites. This department was strengthened in early 2025.  The Company also has a health, safety, environmental and  technical (“HSET”) committee comprising John Monhemius  and Reza Vaziri. The committee’s primary function is to assist  the Board in fulfilling its HSE oversight responsibilities. Its  oversight responsibilities are set out in section 9 on page 50. 

The HSET committee, chaired by John Monhemius, convened  twice during 2024 at the Gedabek mining site. The committee  discussed all aspects of the safe operation of its mines  and processing plants and any reportable safety incidents  together with recommendations and follow-up actions from  previous meetings. 

The Company established a sustainability committee in 2024.  The committee is chaired by John Monhemius. This convened twice during 2024 at the Gedabek mine site. The committee  discusses all aspects of the sustainability of the Group’s  operations. An outside expert on sustainability matters has  also been appointed and attended the second meeting of  the committee in 2024. The consultant will also attend all  future committee meetings.  

The Company reports in its annual report climate related  disclosures in accordance with the Task Force on Climate related Financial Disclosures (‘TCFD’). The responsibility for  these disclosures has been taken over by the IFRS Foundation  following the disbanding of the TCFD in October 2023.

Principle 5
Establish a strategy and business model which promote long-term value for shareholders

The Board is a well-balanced team including specialists of the  major technical disciplines required in the mining industry.  Their names and biographies are set out in this annual report  on page 46. Two of the five directors, being Khosrow Zamani  and Professor John Monhemius, are independent. The Company’s board composition complies with the QCA Code and each  independent director has been assessed and is considered  to be independent by the Board. The biographies of Board  members of the Company are also available on the Company website.

The number of board meetings held during 2024, and the  attendance of the directors are as follows: 

All directors are expected to devote the necessary time commitments required by their position and are expected to attend at least six board meetings each year.

The role and duties of the audit, nomination and remuneration  committees are set out in the respective reports of the committees in section 10 below. The respective reports also  set out the number of times the committees met in the year  and the attendance of the directors. 

The meetings of the health, safety, environment and  technological committee are set out in section 4 above.

Principle 6
Establish a strategy and business model which promote long-term value for shareholders

The directors are all highly experienced with a total over  200 years of experience in all areas of business, particularly  the natural resource industries. All directors are able to seek  outside advice wherever necessary. The Company’s chief  financial officer acted as Company Secretary throughout 2024.  He was supported by an employee of the Company who is  highly experienced in company secretarial and related legal  matters. The Board has a nomination committee which reviews  and considers the Board structure and composition. The  nomination committee meets as required to consider and make  recommendations on the appointment of directors to the Board  and senior management as well as recommendations in relation  to professional training and development. The biographies of  the directors can be found on page 46 of this annual report and  on the Company website. 

The Group has a sustainability committee chaired by  Professor John Monhemius. The Board has contracted with  an outside consultant whose role is to support sustainable  business. The consultant advises on all aspects of sustainability  and on wider aspects of Environmental, Social and  Governance (“ESG”). 

There is no formal process to keep directors’ skill sets up-to‑date  given their wealth of experience. However, appropriate  training is given when necessary. In 2024, a training workshop  for the directors was organised by external climate change  consultants on the identification of climate change risks.

The Company’s broker and NOMAD (S P Angel Corporate  Finance LLP) advised the Board on various regulatory and  commercial matters during 2024. 

Ernst & Young LLP provided tax compliance services which  comprised preparing and submitting the UK tax computations  for the two England and Wales incorporated companies  for the year ended 31 December 2023. Ernst & Young LLP  were the Group’s auditor for the year ended 31 December  2023. Ernst & Young LLP resigned in 2024 and were replaced  by BDO LLP as the Group’s auditor for the year ended  31 December 2024.

Principle 7
Establish a strategy and business model which promote long-term value for shareholders

The Board believes its clear objective is the financial performance  of the business whilst closely ensuring the interests of all other  stakeholders are properly upheld. The financial performance of the business is closely monitored.

The Company reviews  board, committee and individual director performance  on an ongoing basis in the context of their contribution to  the Company’s financial performance. The chairperson will  normally take leadership of the performance assessment  process and allows for feedback from other board members  about their performance.

Principle 8
Establish a strategy and business model which promote long-term value for shareholders

The Company operates to the highest ethical standards.  The Board is very mindful that it operates in the extractive  industries in an emerging market economy. Accordingly,  the Board takes every opportunity, including the induction  process of senior management, to reinforce its high ethical  standards. A large part of the Company’s activities is centred  upon what needs to be an open and respectful dialogue  with employees, clients and other stakeholders. Therefore,  the importance of sound ethical values and behaviour is  crucial to the ability of the Company to successfully achieve  its corporate objectives. The Company is also aware that  the safe operation of its mines and processing plants is  determined in large part by a culture which is highly “safety  conscious”. The Board has taken actions during the year to  promote this culture of safe working such as strengthening  its HSE department and regular safety reviews.

There is no formal mechanism to monitor the Company’s  corporate culture which the Board believes is appropriate  given the size of the business. However, the Board investigates  very thoroughly any instance of serious malpractice etc. which  is brought to its attention. There were no instances during  2024 of any failing of the Company due to poor culture  brought to the attention of the Board.  

The effectiveness of the “safety conscious” culture is monitored  directly by the HSET committee and indirectly through the  number of reported safety incidents etc. The Company has adopted, with effect from the date on  which its shares were admitted to AIM, a code for directors’  and employees’ dealings in securities which is appropriate  for a company whose securities are traded on AIM and is  in accordance with AIM Rule 21 of the requirements of the  Market Abuse Regulation which came into effect in 2016. 

Principle 9
Establish a strategy and business model which promote long-term value for shareholders

The Company’s governance structures are appropriate for  a company of its size and all necessary committees such as  audit and remuneration regularly meet. The Board also meets  regularly and the directors continuously maintain an informal  dialogue between themselves.

The Board has audit, nomination and remuneration committees.  The role and duties of the audit, nomination and remuneration  committees are set out in the respective reports of the  committees in section 10 below.  

The Board has a health, safety, environmental and technical  committee which comprises John Monhemius and Reza Vaziri  and meets as required. The committee’s primary function is  to assist the Board in fulfilling its oversight responsibilities in  the following areas:  

• health, safety, environmental and technical issues relating to  the Company;  
• the Company’s compliance with corporate policies that  provide processes, procedures and standards to follow in  accomplishing the Company’s goals and objectives relating  to health, safety and environmental issues, to ensure that  the Company’s operations and work practices comply as far  as is practicable with the best international standards; and  
• the management of risk related to health, safety,  environmental and technical issues..

Principle 10
Establish a strategy and business model which promote long-term value for shareholders

The Company maintains an adequate dialogue with its  shareholders as set out in section 2 above. The Company  is committed to providing full and transparent disclosure  of its activities, via the RNS and RNS Reach systems of the  London Stock Exchange. Furthermore, the historical annual  reports and interim accounts are available on the Company website.

Details of all shareholder communications are provided  on the Company website. The Board holds meetings with larger shareholders and regards the annual general meeting  as a good opportunity to communicate directly with all  shareholders, including presentations on current business  that are subsequently made available on the website.  

The outcome of each vote in the annual general meeting  is always reported to shareholders and released as an RNS  on the market announcements platform. It can also be  obtained on the Company website. 

There is a formal process of maintaining the relationship  between the Company and the Government of Azerbaijan. 

Principle 10.1
Report of the audit committee

The members of the audit committee comprise John Sununu  and Khosrow Zamani. The chief financial officer is invited to  all meetings of the audit committee. A highly experienced  accountant is also employed by the Company to provide  technical advice to the audit committee.

Role of the audit committee  

• The main duties of the audit committee are as follows: 
• provide formal and transparent arrangements for  considering the application of all applicable financial  reporting standards;  
• ensure the interim and full year financial statements are  properly prepared in accordance with all applicable  accounting standards, legal and all other requirements  and reflect best practice; 
• review the findings of any management letter or other  communication from the external auditor regarding  internal controls;  
• ensure the full year financial statements are audited by  the external auditor in accordance with all applicable audit  standards, legal and other requirements; 
• assessment of the need for an internal audit function; and 
• ensure the independence and objectivity of the external  auditor and approve all non-audit work by the external auditor. 

Meetings of the audit committee held in 2024 

The audit committee met two times in 2024: 

• to approve the financial statements for the year ended  31 December 2023; and 
• to approve the financial statements for the six months  ended 30 June 2024. 

John Sununu, Khosrow Zamani and William Morgan  attended all audit committee meetings. Ernst & Young LLP  attended the audit committee meeting to approve the financial statements for the year ended 31 December 2023. 

Appointment of BDO LLP as Group auditors.

In 2024, Ernst & Young LLP resigned as Group auditor. BDO LLP was appointed in their place as auditor of the Group  accounts for the year ended 31 December 2024. Ernst &  Young LLP had been the Group’s auditor since 2009 and  this rotation of auditor is in accordance with best corporate  governance practice. Ernst & Young Holdings (CIS) Azerbaijan  branch office (“E&Y Azerbaijan”) provide certain audit and  other services to the Group. The appointment of BDO LLP  will also ensure that no conflicts arise under the auditor  independence rules in respect of E&Y Azerbaijan continuing  to perform these services.

Non-audit work 

Ernst & Young LLP performed certain tax compliance work  as set out in section 6 above and note 8 to the Group financial  statements. This work was approved by the audit committee  as it did not affect the independence or objectivity of the  external auditor. BDO LLP did not perform any non-audit  work in 2024.

Internal audit  

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 does not currently have a formal whistleblowing  policy due to the small size of the Group. The Group maintains  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. 

Principle 10.2
Report of the remuneration committee 

The remuneration committee comprises Khosrow Zamani and  John Sununu and meets as required. It is the remuneration  committee’s role to establish a formal and transparent  policy on executive remuneration and to set remuneration  packages for individual directors. The committee did not  meet in 2024 as there were no change to the remuneration  of the directors in the year.

The remuneration paid to the directors is disclosed in the  report on directors’ remuneration on page 56. 

Principle 10.3
Report of the nomination committee

The nomination committee comprises Khosrow Zamani  and John Sununu and meets as required. It is the role of  the nomination committee to review and consider the  Board structure and composition and to consider and make  recommendations on the appointment of directors to the  Board. The committee did not meet in 2024 as there were  no changes to the composition of the Board.