Governance practices and ethical conduct are fundamental to how Erdene operates and are embedded in the culture of the company

Erdene is committed to promoting ethical conduct in the operation of its business. The company understands that to be truly effective, its governance practices must be embedded in the culture and operations of the company. This philosophy is captured in written policies and procedures, which play an integral role in assuring Erdene maintains its standards. These policies and procedures have been adopted by the Board of Directors, and are intended to ensure the integrity of company performance. Erdene’s officers and employees are required to perform each of their duties with integrity, and in compliance with the rules which govern the company’s business.

The following describes the company’s system of corporate governance.

Board Mandate

The Board shall remain committed to ensuring the long-term viability and profitability of the company, as well as the well-being of its employees and of the communities in which it operates. The Board of Directors is responsible for the stewardship of Erdene through the supervision of the business and management of the company. This mandate is accomplished directly and through five committees, the Audit Committee, the Compensation Committee, the Corporate Governance and Disclosure Policy Committee, the Pre-Clearance Committee and the Technical Committee.

The strategic planning and business objectives developed by Erdene’s management are submitted to and reviewed by the full Board of Directors, both on a formal annual basis and on an ongoing basis through regular interim reports from management. The Board also reviews and approves the annual financial statements, annual report, budget, management proxy information circulars, material press releases, decisions as to material acquisitions not within the budget, and the grant of stock options.

Given the size and relative stability of the company’s Board of Directors, there is no formal program for the orientation and education of new recruits to the Board. Erdene does, however, ensure that all new directors receive a complete package outlining the securities law obligations and restrictions on Board members and the company, as well as a copy of all of its policies.

The Board meets a minimum of four times a year and more frequently if required.

Independence from Management

Five of the Board’s seven directors are “independent” within the meaning of applicable securities legislation. An independent director is defined to be a director who has no direct or indirect relationship with the Corporation which could, in the view of the Board, be reasonably expected to interfere with the exercise of a member’s independent judgment.

The Board is satisfied that it maintains adequate and appropriate independence from management. All directors, each of whom has considerable business experience, are expected and encouraged to exercise their independent judgment. To facilitate this, all of the members of the Compensation Committee, the Audit Committee and the Corporate Governance and Disclosure Policy Committee are unrelated directors.

Establishment of Board Committees

There are five standing Committees of the Board; the Audit and Risk Committee, the Compensation Committee, the Corporate Governance and Disclosure Policy Committee, the Pre-Clearance Committee and the Technical Committee. The Board may, from time to time, establish ad hoc committees to address special business issues.

The Audit and Risk Committee presently consists of three directors: Anna Biolik, John Byrne and Layton Croft, all of whom are independent of management. The Audit and Risk Committee is responsible to monitor the company’s accounting and financial reporting processes and the systems in place to manage the principal operational risks faced by Erdene, including internal control and management information systems. This committee is responsible for reviewing and approving the interim consolidated financial statements and for reviewing and recommending the annual consolidated financial statements to the Board of Directors for approval. The Audit and Risk Committee is also responsible to renew and appraise the audit efforts of the Corporation’s external auditor. All of the members of the Audit and Risk Committee are expected to have the ability to read and understand a balance sheet, an income statement and a cash flow statement. At least one member is required to have the ability to analyze and interpret a full set of financial statements including the notes attached thereto in accordance with International Financial Reporting Standards. The Audit and Risk Committee meets a minimum of four times a year.

View the Company’s Audit Committee Charter here.

The Compensation Committee presently consists of three directors: Layton Croft, Ken MacDonald and David Mosher. The mandate of the Compensation Committee is to review the performance, compensation and succession planning of the executive officers of Erdene and to ensure the proper administration of the company’s Incentive Stock Option and Deferred Stock Unit Plans. This committee is also responsible for reviewing and recommending all executive benefits plans and executive prerequisites for approval by the Board of Directors. The Compensation Committee meets twice a year.

View the Company’s Compensation Committee Charter here.

The Corporate Governance and Disclosure Policy Committee presently consists of three directors: Anna Biolik, John Byrne and Layton Croft. This committee oversees all regulatory disclosure requirements and the company’s disclosure practices, including its Insider Trading Policy. This committee is responsible to ensure that appropriate systems, processes and controls for disclosure are in place and to review all news releases and core disclosure documents before their release or filing.

The responsibility for proposing new nominees to the Board and for assessing directors on an ongoing basis is assumed by the full Board of Directors and every director is entitled to bring the matter to the Board. While it is open to any one director to propose new nominees to the Board for consideration, the Corporate Governance and Disclosure Policy Committee reviews the qualifications of candidates for Board membership and the slate of candidates for directors to be nominated for election by Shareholders at annual general meetings of Shareholders. The Corporate Governance and Disclosure Policy Committee meets a minimum of four times a year.

The Pre-Clearance Committee presently consists of Peter Akerley, President and CEO and Robert Jenkins, Chief Financial Officer.  This committee is responsible for pre-clearing trades in the company’s securities by the officers and directors of Erdene, and members of their families who reside with them, in accordance with the company’s Pre-Clearance Policy.

The Technical Committee presently consists of four directors: Peter Akerley, Ken MacDonald, Cameron McRae and David Mosher who individually have extensive experience in mining and minerals exploration. This committee will assist management in identifying and reviewing any acquisitions, joint ventures or similar opportunities prior to review by the full board. This committee will meet as opportunities present themselves.

Code of Ethics and Business Conduct

The Company and all its subsidiaries are committed to maintaining a high standard of legal and ethical business conduct.

View the full  Code of Ethics and Business Conduct Policy here.

Disclosure Policy

The Board and Management of Erdene are committed to open, full and fair communications with investors, which is reflected in its formal, written Disclosure Policy. The objective of the Disclosure Policy is to ensure that communications to the investing public about the company are.

View the Company’s Disclosure Policy here

Whistleblower Policy

The Company has also adopted a stand-alone Whistleblower Policy, overseen by the Audit Committee and in coordination with the Corporate Governance and Disclosure Policy Committee. The Whistleblower Policy is designed to ensure all employees will be made to feel comfortable and safe in anonymously reporting any improprieties, regardless of the level at which they may be committed.

View the full Whistleblower Policy here. To contact the Company, please visit the Contact page.

Performance of the Board of Directors

Without convening a special meeting for this purpose, the Board shall periodically perform an assessment exercise addressing its effectiveness, with input from Management. Board remuneration is to be divulged in all Proxy Solicitation Circulars sent to Shareholders prior to meetings.

Majority Voting Policy

The board of directors (“Board”) of Erdene Resource Development Corp. (the “Corporation”) believes that each of its members should carry the confidence and support of its shareholders and is committed to upholding high standards in corporate governance.

Forms of proxy for the vote at a shareholders’ meeting where directors are to be elected will enable the shareholder to vote in favour of, or to withhold from voting for, each nominee on an individual basis. At the meeting, the chair of the meeting will call for a vote by a ballot and the scrutineer will record, with respect to each nominee the number of shares voted in his or her favour and the number of shares withheld from voting. Prior to receiving the scrutineer’s report on the ballot, the chair of the meeting may announce the vote result based on the number of proxies received by the Corporation. At the conclusion of the meeting, the Corporation shall issue a news release providing detailed disclosure of the voting results for the election of directors.

In an uncontested election of directors of the Corporation, each director should be elected by the vote of a majority of the shares represented in person or by proxy at any shareholder’s meeting for the election of directors. Accordingly, if any nominee for director receives a greater number of votes “withheld” from his or her election than votes “for” such election, that director shall promptly tender his or her resignation to the chair of the Board following the meeting. The resignation will be effective when accepted by the Board. In this policy, an “uncontested election” means an election where the number of nominees for director equals the number of directors to be elected.

The Corporation’s corporate governance committee (the “Committee”) shall consider the offer of resignation and recommend to the Board whether or not to accept it. Any director who tenders his or her resignation may not participate in the deliberations of either the Committee or the Board. In its deliberations, the Committee will consider any stated reasons why shareholders “withheld” votes from the election of that director, the length of service and the qualifications of the director, the director’s contributions to the Corporation, the effect such resignation may have on the Corporation’s ability to comply with any applicable governance rules and policies and the dynamics of the Board, and any other factors that the Committee considers relevant.

The Board shall act on the Committee’s recommendation within 90 days following the applicable meeting and announce its decision via news release, after considering the factors considered by the Committee and any other factors that the Board considers relevant. A copy of the news release and advice of the Board’s decision shall be sent to the Toronto Stock Exchange. The Board expects to accept the resignation except in situations where extenuating circumstances would warrant the director to continue to serve on the Board. However, if the Board declines to accept the resignation, it should include in the news release the reasons for its decision.

If a resignation is accepted, the Board may, subject to any corporate law restrictions and the Corporation’s constating documents, (i) leave any resulting vacancy unfilled until the next annual general meeting, (ii) appoint a new director to fill the vacancy created by the resignation who the Board considers will have the confidence of shareholders or (iii) call a special meeting of shareholders at which there will be presented a management slate to fill the vacant position or positions.

If a director does not tender his or her resignation in accordance with this policy, the Board shall not re-nominate that director at the next election.

Adopted by the Board of Directors of Erdene Resource Development Corp. effective April 18, 2013, amended March 6, 2017.

Advanced Notice Policy

View the full Advanced Notice Policy here.

Evolution of Practices

The corporate governance practices described above are subject to changes as Erdene evolves. The Board shall remain sensitive to corporate governance issues and shall continuously seek to set up the necessary measures, control mechanisms and structures to ensure an effective discharge of its responsibilities without creating additional overhead costs and reducing the return on Shareholders’ equity. The Board of Directors recognizes that the company’s existing corporate governance practices do not fully comply with all of the TSX Guidelines. The Board of Directors is committed to complying in all respects with the TSX Guidelines as the company grows in size and when the TSX Guidelines become appropriate for Erdene to adopt entirely.

Business and Affairs of Erdene

View the Company’s Certificate of Arrangement here.  

View the By-law Relating Generally to the Transaction of the Business and Affairs of the Company here

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