Corporate Governance

Corporate

Our Corporate Governance Guidelines set out an amended series of guidelines for effective corporate governance. The guidelines address matters such as the constitution and independence of corporate boards, the function to be performed by boards and their committees and the effectiveness of their board members. National Instrument 58-101 – Disclosure of Corporate Governance Practices (“NI-58-101“) requires the disclosure by each listed corporation of its approach to corporate governance with reference to the guidelines, as it is recognized that the unique characteristics of individual corporations will result in varying degrees of compliance.

Ethical Business Conduct

The role of the Board is to oversee the conduct of the Company’s business, to set corporate policy and to supervise management, which is responsible to the Board for the day-to-day conduct of business.

However, given the size of the Company, all material transactions are addressed at Board level.
The Board discharges six specific responsibilities as part of its overall stewardship responsibility.

These are:

Strategic Planning Process

Given the Company’s size, the strategic plan is elaborated directly by management, with input from, and the assistance of, the Board.

Managing Risk

The Board directly oversees most aspects of the business of the Company and thus does not require the elaboration of systems or the creation of committees to effectively monitor and manage the principal risks of all aspects of the business of the Company.

Appointing, Training and Monitoring Senior Management

No formal system of selection, training and assessment of management has been established; however, the Board monitors management’s performance, which is measured against the overall strategic plan, through reports and regular meetings with management.

Communication Policy

It is and always has been the unwritten policy of the Board to communicate effectively with its shareholders, other stakeholders and the public generally through statutory filings and mailings, as well as news releases. The Company’s shareholders are provided the opportunity to make comments to the Board by telephone or written communications, or at shareholder meetings. The Board has recently adopted a disclosure policy with the objective of ensuring that communications to the investing public about the Company are in compliance with all applicable regulatory requirements, are timely, factual and accurate, and are broadly disseminated in accordance with all applicable legal and regulatory requirements. The policy provides guidance on the disclosure of material information, a process for the review of Company documents, confidentiality requirements, and other requirements concerning press releases, designation of spokespersons, and other communication with third parties. Information relating to the Company is filed on the System for Electronic Data Analysis and Retrieval (“SEDAR”) and can be accessed on the internet at www.sedar.com, as well as on the Company’s website.

Insider Trading Policy

The Company’s insider trading policy regulates trading in the Company’s securities by directors, officer, employees, and certain third party contractors. The policy also imposes restrictions in the disclosure and use of material non-public information concerning the Company.

Ensuring the Integrity of the Company’s Internal Control and Management System

The Company has adopted a number of policies to assist the Board in effectively tracking and monitoring the implementation and operation of approved strategies. Such policies include a whistle-blower and complaints policy describing how to submit complaints, who manages the complaints, and how confidentiality is maintained.

SEC I

Purpose

The Audit Committee (the “Committee“) is appointed by the Board of Directors (the “Board“) of the Corporation.

The Committee has the authority to conduct any investigation appropriate to its responsibilities, and it may request the external auditors as well as any officer of the Corporation, or outside counsel for the Corporation, to attend a meeting of the Committee or to meet with any members of, or advisors to, the Committee. The Committee shall have unrestricted access to the books and records of the Corporation and has the authority to retain, at the expense of the Corporation, special legal, accounting, or other consultants or experts to assist in the performance of the Committee’s duties.

The Committee shall review and assess the adequacy of this Charter annually and submit any proposed revisions to the Board for approval.

In fulfilling its responsibilities, the Committee will carry out the specific duties set out in Part III of this Charter.

SEC II

Authority of the Audit Committee

The Committee shall have the authority to:

engage independent counsel and other advisors as it determines necessary to carry out its duties;
set and pay the compensation for advisors employed by the Committee; and
communicate directly with the external auditors.

SEC III

Responsibilities

Independent Auditors

1.

The Committee shall recommend to the Board the external auditors to be nominated, shall set the compensation for the external auditors, provide oversight of the external auditors and shall ensure that the external auditors report directly to the Committee.

2.

The Committee shall be solely responsible for overseeing the work of the external auditors, including the resolution of disagreements between management and the external auditors regarding financial reporting.

3.

The Committee shall review the external auditors’ audit plan, including scope, procedures and timing of the audit.

4.

The Committee shall review the results of the annual audit with the external auditors, including matters related to the conduct of the audit.

5.

The Committee will receive timely reports from external auditors on important accounting policies and practices, and review significant written correspondence between the Corporation and auditors.

6.

The Committee shall pre-approve all non-audit services not prohibited by law to be provided by the external auditors.

7.

The Committee shall review fees paid by the Corporation to the external auditors and other professionals in respect of audit and non-audit services on an annual basis.

8.

The Committee shall review and approve the Corporation’s hiring policies regarding partners, employees and former partners and employees of the present and former auditors of the Corporation.

9.

The Committee shall monitor and assess the relationship between management and the external auditors and monitor and support the independence and objectivity of the external auditors.

1.

4.

The Committee shall review the results of the annual audit with the external auditors, including matters related to the conduct of the audit.

7.

The Committee shall review fees paid by the Corporation to the external auditors and other professionals in respect of audit and non-audit services on an annual basis.

2.

5.

The Committee will receive timely reports from external auditors on important accounting policies and practices, and review significant written correspondence between the Corporation and auditors.

8.

The Committee shall review and approve the Corporation’s hiring policies regarding partners, employees and former partners and employees of the present and former auditors of the Corporation.

3.

The Committee shall review the external auditors’ audit plan, including scope, procedures and timing of the audit.

6.

The Committee shall pre-approve all non-audit services not prohibited by law to be provided by the external auditors.

9.

The Committee shall monitor and assess the relationship between management and the external auditors and monitor and support the independence and objectivity of the external auditors.

Financial Accounting and Reporting Process

1.

The Committee will review the annual audited financial statements for compliance with accounting principles, report to the Board, and recommend approval before filing with regulators. They will also review interim financial statements and discuss significant accounting issues with management and auditors as needed. The Committee will ensure the accuracy and completeness of the financial statements and effectiveness of the audit function.

2.

The Committee shall review management’s discussion and analysis relating to annual and interim financial statements, earnings press releases, and any other public disclosure documents that are required to be reviewed by the Committee under any applicable laws prior to their being filed with the appropriate regulatory authorities.

3.

The Committee shall meet no less frequently than annually with the external auditors and the Chief Financial Officer or, in the absence of a Chief Financial Officer, with the officer of the Corporation in charge of financial matters, to review accounting practices, internal controls and such other matters as the Committee, Chief Financial Officer or, in the absence of a Chief Financial Officer, with the officer of the Corporation in charge of financial matters, deems appropriate.

4.

The Committee shall be satisfied that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s financial statements other than earnings press releases, and periodically assess the adequacy of these procedures.

5.

The Committee shall establish procedures for:

the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters; and
the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters.

6.

The Committee shall inquire of management and the external auditors about significant risks or exposures, both internal and external, to which the Corporation may be subject, and assess the steps management has taken to minimize such risks.

7.

The Committee shall review the post-audit or management letter containing the recommendations of the external auditors and management’s response and subsequent follow-up to any identified weaknesses.

8.

The Committee shall ensure that there is an appropriate standard of corporate conduct including, if necessary, adopting a corporate code of ethics for senior financial personnel.

9.

The Committee shall provide oversight to related party transactions entered into by the Corporation.

1.

4.

7.

2.

5.

The Committee shall establish procedures for:

the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters; and
the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters.

8.

The Committee shall ensure that there is an appropriate standard of corporate conduct including, if necessary, adopting a corporate code of ethics for senior financial personnel.

3.

6.

9.

The Committee shall provide oversight to related party transactions entered into by the Corporation.

Other Responsibilities

1.

The Committee and its membership shall meet all applicable legal, regulatory and listing requirements, including, without limitation, securities laws, the listing requirements of the TSX Venture Exchange, the Company Act (British Columbia) and all applicable securities regulatory authorities.

2.

The Committee shall be composed of three or more directors as shall be designated by the Board from time to time, one of whom shall be designated by the Board to serve as Chair.

3.

The Committee shall meet at least quarterly, at the discretion of the Chair or a majority of its members, as circumstances dictate or as may be required by applicable legal or listing requirements. A minimum of two and at least 50% of the members of the Committee present either in person or by telephone shall constitute a quorum.

4.

If a quorum is not present within 30 minutes of the appointed meeting time, the meeting is adjourned to the same time the following business day at the same location. If a quorum is still not present at the adjourned meeting within 30 minutes of the appointed time, it is adjourned to the same time on the next business day at the same location. If a quorum is not present at the second adjourned meeting, the present members constitute the quorum.

5.

If and whenever a vacancy shall exist, the remaining members of the Committee may exercise all of its powers and responsibilities so long as a quorum remains in office.

6.

The Committee decides when and where to hold meetings and how to conduct them. A meeting can be called with 48 hours’ notice using various communication methods. Notice is not required if all members are present or have waived notice.

7.

Any member of the Committee may participate in a meeting of the Committee by means of conference telephone or other communication equipment, and the member participating in a meeting pursuant to this paragraph shall be deemed, for purposes hereof, to be present in person at the meeting.

8.

The Committee shall keep minutes of its meetings which shall be submitted to the Board. The Committee may, from time to time, appoint any person who need not be a member, to act as a secretary at any meeting.

9.

The Committee may invite such officers, directors and employees of the Corporation and its subsidiaries as it may see fit, from time to time, to attend meetings of the Committee.

10.

Any matters to be determined by the Committee shall be decided by a majority of votes cast at a meeting of the Committee called for such purpose. Actions of the Committee may be taken by an instrument or instruments in writing signed by all members of the Committee, and such actions shall be effective as though they had been decided by a majority of votes cast at a meeting of the Committee called for such purpose. All decisions or recommendations of the Committee shall require the approval of the Board prior to implementation.

1.

4.

7.

2.

The Committee shall be composed of three or more directors as shall be designated by the Board from time to time, one of whom shall be designated by the Board to serve as Chair.

5.

If and whenever a vacancy shall exist, the remaining members of the Committee may exercise all of its powers and responsibilities so long as a quorum remains in office.

8.

10.

3.

6.

9.

The Committee may invite such officers, directors and employees of the Corporation and its subsidiaries as it may see fit, from time to time, to attend meetings of the Committee.

Auditors

SHIM & Associates LLP Chartered Professional Accountants Vancouver, Canada

Legal Council

Virgil Hlus Attorney, Clark Wilson LLP

Transfer Agent and Registrar

Olympia Trust Company, Vancouver Canada

Corporate