Being an AIM listed company, Caledon Resources is not required to comply with the Combined Code; however, the Company has given consideration to the provisions set out in Section 1 of the Combined Code ("the Code") on Corporate Governance annexed to the Financial Services Authority Listing Rules. The Directors support the objectives of the Code and intend to comply with those aspects which they consider relevant to the Group's size and circumstances. Below is a brief description of the role of the board and its committees, including a statement regarding the group's system of internal financial control.

THE WORKINGS OF THE BOARD AND ITS COMMITTEES

Board of Directors

The Board currently comprises an Interim Non-Executive Chairman, (David Weill), two Executive Directors (Mark Trevan, Managing Director, and Peter Seear, Chief Operating Officer) and four further Non-Executive Directors (Stephan Dattels, Nick Clarke, Graham Mascall and George Salamis).

The Board considers that Nick Clarke, Graham Mascall and George Salamis are independent of management and free from any business or other relationships which could materially interfere with the exercise of their independent judgement.

An agreed procedure exists for Directors in the furtherance of their duties to take independent professional advice. Newly appointed Directors are made aware of their responsibilities through the Company Secretary. The Company does not make any provision for formal training of new Directors.

The Board is responsible for establishing and maintain the Group's system of internal financial controls. Internal financial control systems are designed to meet the particular needs of the group concerned and the risk to which it is exposed, and by its very nature can provide reasonable, but not absolute, assurance against material misstatement or loss.

The Directors are conscious of the need to keep effective internal financial control, particularly in view of the limited cash resources of the Group. Due to the relatively small size of the Group's operations, the Directors are very closely involved in the day-to-day running of the business and as such have less need for a detailed formal system of internal financial control. The Directors have reviewed the effectiveness of the procedures presently in place and consider that they are still appropriate to the nature and scale of the operations of the Group.

Board meetings

Board meetings are held on average every two months. Decisions concerning the direction and control of the business are made by the Board, and a formal schedule of matters specifically reserved for the Board is in place.

The Board is responsible, inter alia, for setting and monitoring Group strategy, reviewing trading performance, ensuring adequate funding, examining major acquisition opportunities, formulating policy on key issues and reporting to the shareholders.

Audit Committee

The Audit Committee is chaired by Graham Mascall and includes Nicholas Clarke. Meetings are held on average once a year and are also attended, by invitation, by the executive directors.

The Audit Committee is responsible for reviewing a wide range of financial matters including the annual and half year results, financial statements and accompanying reports before their submission to the Board and monitoring the controls which ensure the integrity of the financial information reported to the shareholders.

Remuneration Committee

The Remuneration Committee is chaired by Nicholas Clarke and includes Graham Mascall. Meetings are held on average twice a year. The Committee is responsible for making recommendations to the Board, within agreed terms of reference, on the Company's framework of executive remuneration and its cost. The Remuneration Committee determines the contract terms, remuneration and other benefits for the Executive Directors, including performance related bonus schemes and compensation payments. The Board itself determines the remuneration of the Non-executive Directors.

Health, Safety and Environment Committee

The Company's Health, Safety and Environment Committee ('HSE committee') is composed of four members and is chaired by Nicholas Clarke, an independent Non-executive Director. The other members of the committee are Mark Trevan, Managing Director, and George Salamis and Graham Mascall, both of whom are Non-executive Directors.

The HSE Committee assists the Board in formulating the Group's health, safety and environment policies as they affect the Group's operations, including monitoring compliance with national and international standards and reviewing management's investigations of incidents or accidents that occur in order to assess whether policy improvements are required.

The HSE committee meets formally at least twice a year and otherwise as required.

The Nomination Committee

The Company's Nomination Committee comprises Graham Mascall and Nicholas Clarke.

This Committee makes recommendations to the Board concerning, inter alia, the appointment of new Directors and proposals for the reappointment of Directors at the Annual General Meeting. Prior to 19 April 2008, when the Board resolved to appoint the Nomination Committee and adopt its Terms of Reference, these decisions were undertaken by the full Board.

Share Dealing Code

Caledon operates a strict policy on employee and Director share dealing which complies with the requirements of the FSA's Model Code in the UK and the ASX. In compliance with ASX requirements, the detailed policy can be found here