Our shareholders include institutional and private shareholders. The shareholders are the owners of the Group, and the Board is ultimately accountable to them for performance. They offer a potential avenue for the funding of future expansion opportunities. Our strategy aims to maximise shareholder value in a sustainable manner.

The Chairperson, Senior Independent Director and Executive Directors regularly interact with shareholders at requested meetings, during roadshows to larger investors, and at the Annual General Meeting (AGM), which is attended by all Directors. The CFO is responsible for the investor relations function and is supported by an independent investor relations consultancy. Feedback and concerns from investors are considered at Board meetings.

Shareholder interests include:

• growth opportunities;
• sustainable returns and capital allocation;
• cash flow generation and balance sheet strength;
• ESG considerations including corporate governance and ethics, responsible environmental and social practices, as well as climate change and residue storage facility (RSF) management; and
• fair executive remuneration practices.

Engagements post the AGM

At the Group AGM on 7 June 2023, the Board noted the proportion of the votes cast against Resolution 2 relating to the approval of the 2022 Directors’ Remuneration Report (Resolution 2 passed with 69.0% of participating shareholders voting in favour) and Resolution 12 referring to the authority of Directors to allot shares (Resolution 12 passed with 69.5% of participating shareholders voting in favour). In accordance with Provision 4 of the UK Corporate Governance Code, the Company is required to engage with significant shareholders who vote against resolutions.

The 2022 Directors' Remuneration Report described the implementation of the Remuneration Policy approved at the 2021 AGM. Prior to finalising the 2021 Remuneration Policy, the Board consulted its largest shareholders, and adapted the Remuneration Policy to align with shareholder feedback. However, the Board is aware that one significant shareholder has a structurally different view on how the Remuneration Policy should be implemented, and this impacted their vote on Resolution 2 on the 2022 Directors' Remuneration Report at the 2023 AGM.

The Board is also aware that this same significant shareholder has a policy of not supporting resolutions referring to the authority of Directors to allot shares, and this shareholder also voted against Resolution 12. This resolution reflected UK-listed company market practice and the Board considers the flexibility afforded by the authority to allot shares to be in the best interest of the Company.

The Board, through the CEO, engaged with this shareholder since the 2023 AGM to help ensure any continuing concerns are understood and considered the feedback during the Board's Remuneration Committee's deliberations over the 2024 Remuneration Policy that will be presented to shareholders for approval at the 2024 AGM. The significant shareholder has a standing position on Resolution 12, and the Board will regularly consider its approach to this matter.

Majority interest in shares

On 13 February 2024, 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 Disclosure Guidance and Transparency Rules (DTR) 5:

¹ C Elphick is interested in these ordinary shares by virtue of his interest as a potential beneficiary in a discretionary trust which has an indirect interest in these ordinary shares.

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 periodically. The shareholder base comprises 139.7 million issued ordinary shares of US$0.01 each (excluding the 1.5 million treasury shares held by Gem Diamonds). Institutional shareholders hold 99.6 million shares (71.3%) while private shareholders hold 40.1 million shares (28.7%).

Our employees and contractors are responsible for running our operations and delivering on our strategy. Operating in a remote region in a small country with limited resources makes the retention and development of local skills a priority. Gem Diamonds aims to provide regular communication to employees on all matters relevant to them and to facilitate platforms where employees can express their needs. The well-being of employees is a priority, and a full-time counsellor was employed at Letšeng during 2023 to assist the workforce with mental wellness.

Engagement with employees through daily informal interactions, the employee app LetšGem, the Employee Engagement Committee, the Group’s website, the quarterly Letšeng newsletter and frequent pre-shift “toolbox” talks with smaller shift teams provide opportunities to interact. Regular site visits to Letšeng are also undertaken by the Board and executives.

Mazvi Maharasoa, a non-Executive Director, is the Board’s representative with delegated responsibility to engage with the broader workforce and provide direct feedback to the Board on key concerns raised. Mazvi chairs the Group-wide Employee Engagement Committee that includes employee representatives from all companies in the Group. The Committee provides a platform for the Board to effect two-way communication to ensure that the workforce’s voice is heard in the boardroom and that Board expectations can be communicated to employees directly.

The Letšeng right-sizing process in 2023 was not brought to the Committee by employee representatives as an item for discussion, the Board was interested in receiving feedback on employees’ experience of the process. With participation from the chairperson of the Remuneration Committee, Mazvi led the discussion and received positive feedback from representatives. The view was that the process was managed fairly, first and foremost with employee well-being in mind, and that employees were at all times kept informed on its progress. No significant matters were raised by employees during any of the Committee engagements in 2023 that required action from the Board.

Towards the end of 2023, MMIC initiated consultations with their employees ahead of the insourcing of the mining activities by Letšeng. The process was managed appropriately within the local legal framework, and the inclusive approach was pivotal to the successful conclusion of the transaction and transition.

Employee interests include:

• fair treatment and safe working conditions;
• competitive remuneration; and
• skills development and opportunities for advancement.

Banks and other funders allow the Group to invest in capital projects and expansion opportunities. Insurance providers allow us to mitigate certain risk elements, and form part of the Group’s overall risk management 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 regularly interacts with insurance brokers, with detailed engagement around renewal anniversaries with oversight from Group risk management.

In December 2021, the Group-wide debt refinancing was successfully concluded with the renewal of the Group’s revolving credit facilities for an amount of US$71.0 million for a three-year period. US$29.9 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). These KPIs are aligned to the Group’s sustainability strategy.

The Group’s revolving credit facilities expire in December 2024, but the facility agreement contains a 24-month extension option subject to lender credit approvals. The process to either extend or renew these facilities will commence in Q2 2024.

Providers of finance interests include:

• responsible management of the Group’s financial position to ensure commitments can be met as they fall due;
• maintaining required covenants;
• performance against sustainability and climate-related targets for the SLLs;
• ESG practices and regulatory compliance, including effective management of residue storage facilities; and
• transparency in reporting potential material matters in a timeous manner.

Refer to the CFO Review in the Annual Report and Accounts 2023 for more details.

We are committed to ensuring that our PACs benefit from our operations and we recognise that the strength of our relationships with our PACs helps in safeguarding our social licence to operate.

We take a multi-level approach to stakeholder engagement, including monthly engagements with local community leaders, quarterly meetings with residents of local villages, and regular forums with district-level stakeholders and leadership. Letšeng’s Community Liaison Officer (CLO) engages with the surrounding communities, government officials and community-elected representatives.

PACs select their community representatives, who sit on the Corporate Social Responsibility Investment (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 issues directly to mine management.

Social and environmental impact assessments (SEIAs) and community needs analyses identify the most pressing community needs and concerns. They are conducted through consultation processes facilitated by independent external specialists. The needs and concerns identified through these independent studies form the foundation of our corporate social investment (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 and updates regarding progress on community projects;
• responsible and safe mining;
• environmental and social practices;
• responsible tailings management and disaster response mechanisms;
• local employment opportunities; and
• operational support in response to climate-related impacts, such as extreme weather events.

In 2023, the Group procured US$1.6 million of goods from PACs located around Letšeng and US$34.2 million of goods from the broader Mokhotlong region. From 2016 to 2023 the Group has invested US$4.8 million in needs-based and sustainable CSI initiatives. In 2023, the Group invested US$0.4 million in CSI projects in small and medium enterprise development, education and basic infrastructure provision.

Gem Diamonds’ sound customer relationships support demand for our unique diamonds and help to ensure that the very best prices are achieved. We interact with customers regularly in the normal course of business and at tenders, and communicate through the Company website and press releases. Customers can access 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;
• transparency and traceability of the provenance of rough diamonds; and
• responsible environmental and social practices.

Eight large and four rough diamond tender viewings were held in Antwerp in 2023. We were able to rely on our loyal customer base for support during the year while the diamond market was under significant pressure.

Suppliers and business partners provide the products and services we require to run our operations and achieve our strategic objectives, and we therefore build strong relationships with core suppliers. We are very aware of the increased importance of ensuring responsible business across supply chains, and recognise the significant impact that suppliers and business partners may have on our reputation. To this end, we ensure that formal written contracts are in place, and that negotiations are undertaken applying the principles of fairness, transparency, and responsibility that drive the culture of our procurement supply chain.

Suppliers and business partners care about:

• fair payment terms;
• local procurement opportunities; and
• responsible environmental and social practices.

Refer to the CFO Review in the Annual Report and Accounts 2023 for more details on Letšeng’s insourcing of its mining activities.

The Government of the Kingdom of Lesotho is a 30% shareholder in Letšeng. We respect and adhere to regulations in all countries in which we operate and maintain good relationships with governments and regulators. Engagements with regulators are held as appropriate. We interact with government regularly regarding operational challenges where support is required, regarding employment and progress on community initiatives, and to support local and national development priorities.

Government and regulator priorities include:

• responsible environmental and social practices and the health and safety of employees;
• good governance and ethics;
• community relationships and investments;
• local employment and procurement; and
• contribution to Lesotho’s GDP through dividends, royalties and tax contributions.

We have continued to work well with the newly elected Lesotho Government following the national elections held in Lesotho in October 2022. In difficult years such as 2023, it is especially important to communicate in an open, honest and transparent manner with our government partners as we need their support in guiding the operations through tough times in order to ensure the delivery of sustainable value for all stakeholders.