Our shareholders include institutional shareholders (63% of shares) and private shareholders (37% of shares). Shareholders are the owners of the Group, and the Board is ultimately accountable to them for performance. Gem Diamonds’ strategy aims to maximise shareholder value in a sustainable manner. Shareholders represent a potential source of funding for future expansion opportunities.

The Chairperson, Senior Independent Director and Executive Directors engage regularly with shareholders at requested meetings, during roadshows to larger investors and at the AGM, which is attended by all Directors. The investor relations function is the responsibility of the Chief Legal and Commercial Officer. Feedback from these meetings is reported back to the Board at the Board meetings.

Shareholder interests include:

• Growth opportunities.
• Sustainable returns and capital allocation.
• Cash flow generation and balance sheet strength.
• Corporate governance and ethics.
• ESG considerations including climate change and tailings facility management.
• Responsible environmental and social practices.
• Fair executive remuneration practices.

ENGAGEMENTS POST THE AGM

At the Group AGM in June, Resolution 14 (Authority to allot shares) passed with 71.99% of participating shareholders voting in favour, while Resolution 15 (The disapplication of pre-emption rights) and Resolution 16 (The further disapplication of pre-emption rights) did not pass with the proportion of votes against these resolutions exceeding 20%.

The Board is disappointed in the outcome of these votes given that these resolutions followed the provisions of the Pre-Emption Group’s Statement of Principles for the disapplication of pre-emption rights and reflected UK listed company market practice. In accordance with Provision 4 of the UK Corporate Governance Code, the Company engaged with the significant shareholder who voted against these resolutions. This is the second consecutive year that these resolutions were not passed, and due to the standing policy of this shareholder on these matters, it is unlikely to be resolved. The Board will continue to regularly consider their approach to this matter.

MAJORITY INTEREST IN SHARES

On 15 February 2022, the Company was notified of the following major interests (at or above 3%) in the issued ordinary shares of the Company in accordance with the DTR 5:

There were no further updates at the date of this report. Changes in major interests in the Company are updated on the Company’s website as and when they occur. The shareholder base comprises 140.5 million issued ordinary shares of US$0.01 each. There are institutional shareholders that hold 88.9 million shares (63%) and private shareholders who hold 51.6 million shares (37%).

Our strength lies in the quality of our workforce that is instrumental in running our operations and delivering our strategy. With a remote mining location and a small pool of local talent, the retention and development of skills is always a priority. Regular engagement with our workforce ensure that we understand and address their needs.

Management engages with the workforce through daily informal interactions, via the Company’s website and other electronic channels, and through the quarterly Letšeng newsletter. Visible field leadership visits and regular ‘toolbox talks’ with smaller shift teams provide further opportunities for engagement. During 2021, Group and contractor management was often unable to physically visit the operations due to travel restrictions and had to use virtual engagement channels.

A 24-hour ‘Stop for Safety’ campaign was held at Letšeng in June to address and engage with employees and contractors to understand root causes of the deterioration in safety performance following an increase in the frequency of safety incidents in H1. This provided a critical opportunity for employees to engage directly with senior management and executives. Following feedback from these engagements, 225 safety interventions were actioned in 2021. Refer to our safety case study for more details.

Mazvi Maharasoa, a non-Executive Director, is the Board’s representative who engages with the broader workforce and provides direct feedback to the Board on the key concerns raised. In 2021, she chaired several meetings with employee representatives. Matters raised during these meetings were addressed at Board and senior management level and employees were kept informed throughout the process. In response to these employee engagements, management adjusted the communications strategy to include more in-person meetings, which were felt to be lacking due to COVID-19 social distancing requirements and restrictions on large gatherings.

Employees and contractors value:

• Fair treatment and remuneration.
• Health and safety, including safe working conditions during COVID-19.
• Opportunities for advancement.
• Skills development.

Key employee projects for 2021

A tailor-made leadership programme was launched at Letšeng during the last quarter of 2021. The programme focuses on developing key competencies specific to our operations. In addition, emphasis was placed on developing skillsets to support a culture of continuous improvement.

Management trialled a new shift roster and considered how to change shifts to better meet the needs of employees. The shift roster was amended to allow for longer off periods for employees to spend more continuous time with their families.

Management reviewed and amended the Letšeng succession planning policy. The revised policy was approved in November 2021 and will be implemented in 2022. The main change to the policy was the introduction of a formal Succession Committee that will review and monitor compliance to the succession management policy and guidelines. Notable succession success stories for 2021 include the local appointments of the Head of Operations and Head of Finance at Letšeng.

Motooane Thinyane was appointed as the Head of Operations in March 2021. The appointment followed his successful career at Letšeng over the previous seven years as engineering manager. During 2020 he assumed responsibility for the operation when COVID-19 travel restrictions impacted the ability of Group management to travel to site, and successfully led the operation through this challenging period.

Makhomo Motaung was appointed as Head of Finance in March 2021. She was first employed at Letšeng in June 2011 as a financial accountant. She was promoted to finance manager in 2014 and stepped up to lead the finance team at the beginning of 2020.

These two appointments mark an important milestone for Letšeng as all Executive Management positions are held by Basotho nationals. It is a testament to the continued focus and dedication to the Group's diversity, inclusion and localisation policies.

At Letšeng, a full-time psychologist was appointed to assist employees cope with mental health issues, especially related to the impact of COVID-19. An employee wellness provider was appointed to assist employees in the Johannesburg office. Refer to our case study on how we have responded to the COVID-19 pandemic.

The ‘Stop for Safety’ day in June 2021 (Refer to Annual Report and Accounts 2021) indicated the need for further engagements to address certain specific concerns among employees and contractors. Monthly follow-up sessions were held with employees led by Letšeng management to provide feedback on the actions taken to address the concerns raised.

Providers of capital allow the Group to invest in capital projects and expansion opportunities. Insurance enables the transfer of certain risk elements as part of the Group’s risk mitigation strategy.

The finance department engages with bankers and funders on an ongoing basis regarding facilities, compliance with covenants and debt renegotiations. At each operation, the finance team interacts with insurance brokering consultants around renewal anniversaries with oversight from Group risk management.

Providers of finance interests include:

• Responsible management of the Group’s financial position to ensure commitments can be met as they fall due.
• ESG practices and regulatory compliance.
• Effective management of tailings storage facilities.
• Transparency in reporting potential material matters in a timeous manner.

The risk perception of the mining industry by banks, funders and insurers has increased significantly since the start of COVID-19. A number of international catastrophic tailings storage facility failures has also reduced the risk appetite for the mining industry. This led to tighter lending criteria as well as increased exclusions, deductibles and premiums on insurance policies which were further affected by insurance claims due to the civil unrest experienced in South Africa in July 2021. Aggregate limits are being imposed on insurance policies and Director and Officer liability cover is becoming more difficult to secure. Insurers will likewise be assessing climate change risks in determining whether to provide cover or adjust premiums for extreme weather risk. The Group has implemented a new risk transfer strategy to address these challenges. Refer to Annual Report and Accounts 2021 in the CFO review for more details.

Letšeng submitted a business interruption claim to its insurers for insured losses arising out of the 30-day COVID-19-related shutdown period in 2020 when the mine was required by Lesotho regulations to be placed on care and maintenance. This claim has been rejected by the insurer and Letšeng intends to pursue the matter further.

The Group-wide debt refinancing was successfully concluded with the renewal of the Group’s revolving credit facilities for an amount of US$77.0 million for a three-year period. US$32.3 million of the facilities are Sustainability-Linked Loans (SLLs) where the margin and resultant interest rate will decrease if the Group meets certain carbon reduction and water conservation key performance indicators (KPIs) that are aligned to the Group’s sustainability strategy. Refer to Annual Report and Accounts 2021 for more information on how we manage our carbon and water footprints.

Letšeng’s PACs play a vital role in the success of the operation and we are committed to ensuring that these communities develop and benefit from the operation.

Letšeng’s Community Liaison Officer (CLO) engages with the surrounding communities, government officials and community elected representatives. PACs select community representatives who sit on the CSRI subcommittee of the Letšeng Board, creating a direct link between communities’ needs and Board decision-making. In addition to regular community engagement forums, a grievance mechanism is in place for PAC members to submit grievances directly to mine management. Social and environmental impact assessments and community needs analyses identify the most pressing community needs and concerns through consultation processes facilitated through independent external specialists. The needs and concerns identified through these independent studies form the foundation of our CSI strategies and community engagement plans.

Community needs and concerns include:

• Basic infrastructure provision and local economic development.
• Improved access to education, skills development and healthcare.
• Regular engagement with PACs and updates regarding progress on community projects.
• Responsible and safe mining, environmental and social practices.
• Local employment opportunities.
• COVID-19-related support through PPE provision and other critical aid during the pandemic.
• Operational support in response to climate-related impacts, such as extreme weather events.

A community needs analysis was conducted during the year. Refer to Annual Report and Accounts 2021 for further details on our approach to community engagement and investment.

Letšeng continued to support surrounding communities during the COVID-19 pandemic, details of which can be found on our Annual Report and Accounts 2021.

Gem Diamonds’ relationship with its customers supports demand for its unique diamonds and helps to ensure the best prices are achieved.

We interact with customers regularly in the normal course of business, at tenders, and communicate through the Company website and press releases. Customers also have access to our electronic tender platform which is used to provide specific tender-related information.

Customers care about:

• Consistent availability of large, high-quality diamonds.
• Regular and transparent tenders.
• The ability to participate in tenders safely during COVID-19.
• Responsible environmental and social practices.

Six tenders were held in Antwerp in 2021, with the first trial viewing held in Dubai in September. The response from the Dubai diamond market was overwhelmingly positive and it made a significant contribution to the results achieved during this tender.

Refer to Annual Report and Accounts 2021 where we describe our participation in the GIA’s blockchain initiative to link the source of rough diamonds to the final polished diamonds.

Mining is a highly regulated industry and the Government of the Kingdom of Lesotho is a 30% shareholder in Letšeng, the Group’s flagship mine. It is therefore essential that good relationships are maintained with these key stakeholders to ensure ongoing economically sustainable operations.

Engagements with regulators are held as required by relevant legislation and we interact with government regularly regarding operational challenges where support is required, employment and progress on community initiatives, and to support local and national COVID-19 priorities.

Government and regulator priorities include:

• Health and safety.
• Good governance and ethics.
• Responsible environmental and social practices.
• Community relationships and investments.
• Local employment and procurement.
• Contribution to Lesotho gross domestic product (GDP) through dividends, royalties and tax contributions.
• Support for government COVID-19 priorities.