Corporate Governance

Corporate Responsibility

The board of directors (the "Board") believes that sound corporate governance practices are essential to the well being of the Company and its shareholders, and that these practices should be reviewed regularly to ensure that they are appropriate.

Statement of Corporate Governance Practiece

Responsibilities of the Board of Directors and Mandate

Pursuant to the Business Corporations Act (British Columbia), the Board is required to supervise the management of the affairs and business of the Company. The Board's principal responsibilities are to supervise and evaluate management, to oversee the conduct of the Company's business, to set policies appropriate for the business of the Company and to approve corporate strategies and goals. The Board is to carry out its mandate in a manner consistent with the fundamental objective of enhancing shareholder value.

In discharging its duty of stewardship over the Company, the Board has the following roles and responsibilities:

The Board monitors financial performance and considers reviews and approves all significant strategic decisions, including all major decisions relating to acquisitions, divestitures and financing. The Board expects the Company's senior officers to manage the business of the Company on a day-to-day basis and to keep the Board informed of all significant developments affecting the Company. The Board receives from management regular reports on the Company's compliance with various legal requirements and internal control procedures, operational/management reports and any other relevant reports.
The Company's overall strategy is developed by management and is reviewed on a quarterly basis by the Board which considers the business of the Company and the political risks and opportunities inherent in it.
The Board identifies the principal risks to the Company, and reviews and assesses the methods and systems for managing such risks. In particular, the Audit Committee is responsible for reviewing the adequacy of the Company's systems for identifying and managing financial risk and is currently undertaking periodic reviews of other major risk areas.
The Board regularly considers the integrity, quality and continuity of management required to achieve the Company's goals. The Board is responsible for reviewing succession planning, senior management development and the performance of management personnel against their respective annual objectives. Annually, the Compensation Committee measures management's performance and total compensation against the objectives set in the annual budget.
The Board annually reviews the Company's relations with shareholders, employees, financial analysts, the media and other stakeholders. The Company's goal is to outline procedures and practical guidelines for public disclosure and dissemination of material and non-material information about the Company and its subsidiaries. Senior officers are often available to shareholders and, through the investor relations function, they aim to provide clear and accessible information on the Company's operations and investments. The President is responsible for ensuring the consistency and accuracy of information released to analysts and others and that all such information is in the public domain.
The Audit Committee reviews and provides recommendations to the Board on the adequacy of the internal controls. Management and external auditors provide to the Audit Committee regular reports on the Company's control environment. The internal control procedures are reviewed in detail to ensure they will meet the anticipated new rules and standards.

Board Committees

The Board has established an Audit Committee and a Compensation Committee.

The Audit Committee operates under the guidelines of the Audit Committee charter, which states that each member of the Audit Committee is to be considered financially literate and that at least one member must have considerable accounting and related financial experience. The Audit Committee reviews the annual and quarterly financial statements of the Company, oversees the annual audit process and the Company's internal accounting controls and the resolution of issues identified by the Company's auditors. It recommends to the Board a firm of independent auditors to be nominated for appointment by the shareholders at the Company's next annual general meeting. In addition, the Audit Committee meets annually with the external auditors of the Company, both with and without the presence of any other members of management. Further information on the Audit Committee, including a copy of its charter, can be found in the Company's AIF, which is available on SEDAR at www.sedar.com.

The Compensation Committee recommends the salary and benefits of the executive officers of the Company, determines the general compensation structure, policies and programs of the Company, administers the Company's stock option plan, and delivers an annual report to shareholders on executive compensation.

Shareholder Feedback and Concerns

The Company manages a shareholder relations program under the direction of its President, Mr. Ferguson, with the assistance of the Company's Board and advisors. The program involves meeting with a broad spectrum of investors, including briefing sessions for analysts, investment fund managers, members of the press and the public to discuss reported financial results and other announcements by the Company. Shareholders, other stakeholders and the public are informed of developments in the Company by the issuance of press releases, all of which are reviewed and approved by the Chief Executive Officer, the President and the Board.

Management of the Company is available routinely to shareholders to respond to questions and concerns. Shareholder concerns are dealt with on an individual basis, provided a legitimate request for information is made. The response will depend ultimately on the kind of information requested. Significant concerns are brought to the attention of the management of the Company or the Board.

Ethical Business Conduct

Code of Conduct

The Board has adopted a code of conduct (the "Code") for directors, officers and other employees of the Company. A copy of the Code can be found on SEDAR at www.sedar.com. Compliance with the Code is encouraged at every level of the Company. Employees who are aware of Code breaches must, under the Code, report them to their supervisors or superiors, as the case may be. Employees who breach the Code may be subject to disciplinary action up to and including termination. Matters serious enough in nature are brought to the attention of the Board as management must submit recommendations regarding actions to be taken with respect to alleged breaches to the next level of management for written recommendations as to what actions are to be taken.

The Code contains conflict of interest provisions which require employees (including officers) to disclose in writing to their immediate supervisors all business, commercial or financial interests or activities which might reasonably be regarded as creating an actual or potential conflict with their duties of employment. An employee in a situation of conflict of interest is given sufficient time to address the conflict; however, any decision on disciplinary action, including potential termination of an employee in a conflict of interest situation, is at the discretion of management.
The Company's policy relating to directors specifically requires that where a director has any direct or indirect interest in a proposed contract or transaction with the Company, or holds any office or possesses any property whereby, directly or indirectly, a duty or interest might be created that is in conflict with his duty or interest as a director to the Company, the director must disclose the nature and extent of that interest and any inherent conflict associated therewith at the earliest opportunity at a meeting of the Board.

Assessments of Directors

Directors of the Company are assessed on an annual basis by the Chairman for effectiveness and contribution to the Company.

Board of Committees

Frequency of Meetings

The Board ordinarily meets at a minimum on a quarterly basis. However, the frequency of Board meetings and the nature of the agenda items will vary depending on the state of affairs and opportunities available to the Company or to risks or issues which the Company faces.