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AIM Rule 26

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The information included in this section is disclosed pursuant to AIM Rule 26 of the AIM Rules for Companies and was last updated on the 27.09.2018

Company Description:

Click HERE for a description of the Company

Director Biographies:

Click HERE for Director Biographies

Key Management Remuneration
Key Management of the Company are Directors and Officers and their personal compensation includes the following:
  For the year ended,   December 31, 2016   December 31, 2015 Total Accrued
Compensation
Management and consulting fees:      
  William Dawes 106,966 21,843 128,809
  Alexander Lemon 106,966 21,843 128,809
  Sandra Evans 24,327 21,644 -
Total Management and consulting fees 238,260 65,329 257,618
Share-based awards      
  William Dawes 35,855 12,854 -
  Alexander Lemon 35,855 12,854 -
  Derek Linfield 21,513 10,618 -
  David Berg 12,908 8,383 -
  Adrian Reynolds 12,908 8,383 -
  Eugene Chen 12,908 5,030 -
  Sandra Evans 4,303 - -
Total share-based awards 136,248 58,122 -


As at November 14, 2017, the following options were held by the Directors and Officers of the Company:
  Date of Grant(1) Exercise Price
Canadian Dollars
Number of
Options(2)
William Dawes June 15, 2016
Nov 1, 2017
$                   0.06
$ 0.07
1,750,000
705,000
Alexander Lemon June 15, 2016
Nov 1, 2017
$                   0.06
$ 0.07
1,750,000
705,000
Derek Linfield June 15, 2016
Nov 1, 2017
$                   0.06
$ 0.07
1,050,000
680,000
David Berg June 15, 2016
Nov 1, 2017
$                   0.06
$ 0.07
630,000
180,000
Adrian Reynolds June 15, 2016
Nov 1, 2017
$                   0.06
$ 0.07
630,000
180,000
Eugene Chen June 15, 2016
Nov 1, 2017
$                   0.06
$ 0.07
630,000
180,000
Sandra Evans (CFO) June 15, 2016
Nov 1, 2017
$                   0.06
$ 0.07
210,000
50,000
Total     9,330,000

1. At June 14, 2016, all outstanding options issued to Directors and Officers were cancelled.
2. The options vest over a 2 year period and are expensed using the black-scholes model.

Country of Incorporation:

Canada (Alberta)

There are significant differences between UK corporate law and those applicable to the Company by means of its incorporation in Alberta, Canada.

Share Issues:

The Company is not required under Canadian law to offer new Common Shares to existing Shareholders on a pre-emptive basis as is required of companies incorporated under the UK Companies Act. The Company is subject to a number of anti-dilution provisions under the rules of the TSX-V. Should the Company cease to be listed on the TSX-V, the Company has undertaken pursuant to the nominated advisor and broker agreement to adopt appropriate anti-dilution provisions for as long as the Company remains on Aim.

Rule 17 of the Aim Rules:

When acquiring shares in the Company, shareholders are entitled under Canadian securities laws to categorise themselves as "objecting" ("Obos") or "non-objecting" ("Nobos"). By registering as such, which they usually do through the entity through which they acquired their shares, Obos are noting that they object to their interest and their details being disclosed to the Company. In respect of interests up to 10 percent of the issued share capital of the Company after which level Canadian securities law makes disclosure mandatory. Nobos on the other hand are noting the fact that they do not object to their shareholdings and their details being disclosed to the Company.

Rule 17 of the AIM Rules requires, inter alia, that an AIM quoted company must notify the market of any changes of which it is aware to its Shareholders' interests in three percent or more of the Common Shares and changes thereto ( of any movements through a percentage point upwards or downwards).The Shareholders approved on the 19th November 2015 a resolution, effective from Admission, to change the Company's constitution to require that Shareholders holding interests in three percent or more of the Company's Common Shares inform the Company thereof and to inform the Company of relevant subsequent changes thereto.

Country of Operation:

Malawi

Current constitutional documents:

Click HERE for the Articles of Incorporation and Bylaws

Trading Platforms:

The Company's Common Shares are also listed and posted for trading on the
TSX Venture Exchange.

AIM Securities in Issue:

111,102,218

This section was updated on 16.11.2018.

Securities not in public hands:

50.77 %

This section was updated on 12th October 2018.

Restrictions on transfer of the Securities:

Trading restriction for onward sale of Placing Shares to residents of Canada is four months and one day post Admission, thereafter no restriction on transfer of Common Shares. No restrictions apply to existing shares (i.e. non Placing Shares) nor in respect of transfers occurring through CREST.

Significant Shareholders:
Shareholder Name Shares Held % Holding
Talaxis Ltd 14,285,715 12.99%
Resources Early Stage Opportunity Company Ltd 13,102,167 11.92%
Leo Mining & Exploration Limited (Note 1) 8,546,205 7.78%
Mr Richard Sneller 5,500,000 5.00%
Mr Myles McNulty 5,000,000 4.55%
Jub Capital Ltd 3,123,515 2.84%
Rare Earth Elements Fund 3,000,000 2.73%
Metals Exploration Fund 3,000,000 2.73%

Note 1 : William Dawes and Alexander Lemon, both executive directors of Mkango, each hold a 17.3% interest in Leo Mining and Exploration Ltd

This section was last updated on 12.10.2018.

Financials:

Click HERE for the financial statements of the Company

Notifications:

Click HERE for all notifications made by the Company

Corporate Governance Code:


The Company is subject, among other laws and regulations, to instruments published by relevant Canadian securities regulators. One such instrument, NI 58-101 - Disclosure of Corporate Governance Practices, prescribes certain disclosure by the Company of its corporate governance practices in addition NP 58-201 - Corporate Governance Guidelines, provides non-prescriptive guidelines on corporate governance practices for reporting issuers such as the Company. This section sets out the Company's approach to corporate governance and addresses the Company's compliance with NI 58-101 and NP 58-201.

As a result of its listing on the TSX-V and being a reporting issuer in the Canadian province of Alberta, the Company has established corporate governance practices and procedures appropriate for a publicly listed company of its size and stage. The Company complies with relevant Canadian corporate governance standards to the extent that the Directors reasonably consider appropriate for a company of Mkango Resources' size and type. In particular, the Company has established and properly constituted an Audit Committee and a Remuneration Committee. The Audit committee has been tasked with ensuring compliance to the AIM Rules. Pursuant to the Business Corporations Act (Alberta) and the Company's current bylaws, not less than 25 percent of the members of each of these committees must be Canadian residents.

The Company annually reports on compliance with the relevant Canadian rules and regulations in the circular it sends to shareholders in connection with it's annual meeting.

CORPORATE GOVERNANCE

Corporate governance relates to the activities of the Board, the members of which are elected by and are accountable to the Shareholders, and takes into account the role of the individual members of management who are appointed by the Board and who are charged with the day to day management of the Corporation.

The Board is committed to sound corporate governance practices, which are both in the interest of its Shareholders and contribute to effective and efficient decision making.

Pursuant to National Instrument 58-101 - Disclosure of Corporate Governance Practices ("NI 58-101"), the Corporation is required to disclose its corporate governance practices as summarized below.

Board of Directors

The Board facilitates its exercise of independent supervision over the Corporation's management through frequent meetings. The Board is currently composed of eight directors, six of whom are considered to be independent for purposes of NI 58-101. The independent members of the Board are Derek Linfield, Adrian Reynolds, Susan Muir, Sandra du Toit and Shaun Treacy. Alexander Lemon is not considered an independent director as he is the President of the Corporation and William Dawes is not considered independent as he is the CEO of the Corporation.

The Board may meet independently of management as needed. Although they are permitted to do so, the independent directors do not hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance. To facilitate independent judgment among the Board, the Board encourages open and transparent discussions in carrying out its various functions. Furthermore, the Board is in regular formal and informal contact and independent directors are continually provided with the opportunity to be fully apprised of the Corporation's plans and to question management as required.


Directorships

The following directors are also directors of the reporting issuers (or equivalents) shown below:

Name Other Directorship of Reporting Issuer Name of Trading Market
Adrian Reynolds Geodrill Limited TSX

Attendance

The following table sets forth the attendance by directors of formal board meetings held during the year ended December 31, 2017:

Name Board Meetings Attended (in person or by telephone)
David Berg 7/7
Eugene Chen 6/7
Adrian Reynolds 7/7
Derek Linfield 7/7
William Dawes 7/7
Alexander Lemon 7/7

Position Descriptions

While the Board has not codified written descriptions of the Chair of the Board and each committee, the Chief Executive Officer or the Chief Financial Officer, the Corporation and the Board delineate the roles and responsibilities of each position through frequent and transparent communication with each other regarding such roles and responsibilities.

Orientation and Continuing Education

The Corporation takes appropriate steps to assist new directors of the Corporation to develop an understanding of (i) the role of the Board and its committees; (ii) the contribution that directors are expected to make to the Board; and (iii) the nature and operation of the Corporation's business. The Corporation also provides all directors appropriate opportunities when required to maintain or enhance their skills and abilities as directors and ensure that their knowledge and understanding of the Corporation's business remains current.

In order to orient new directors regarding the role of the Board, its committees and directors, including the business and operations of the Corporation, all potential new directors are given the opportunity to meet with the Chief Executive Officer and other directors to ask questions and become familiar with the Corporation prior to being elected as a director.

Ethical Business Conduct

The Board has not adopted a written code for the directors, officers and employees. The Board has found that the fiduciary duties placed on individual directors by the Corporation's governing corporate legislation and the common law and the restrictions placed by applicable corporate legislation on an individual director's participation in decisions of the Board in which the director has an interest have been sufficient to ensure that the Board operates independently of management and in the best interests of the Corporation.

Under corporate legislation, a director is required to act honestly and in good faith with a view to the best interests of the Corporation and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. In addition, as some of the directors of the Corporation also serve as directors and officers of other companies engaged in similar business activities, directors must comply with the conflict of interest provisions of the ABCA, as well as the relevant securities regulatory instruments, in order to ensure that directors exercise independent judgment in considering transactions and agreements in respect of which a director or officer has a material interest. Any interested director would be required to declare the nature and extent of his interest and would not be entitled to vote at meetings of directors, which evoke such a conflict.

Nomination of Directors

The Board has not appointed a nominating committee. The Board determines new nominees to the Board although no formal process has been adopted. The nominees are generally the result of recruitment efforts by the Board including both formal and informal discussions among the directors and officers.

Compensation

A copy of the Remuneration Committee Charter is set out below, describing the responsibilities, powers and operation of the Remuneration Committee. The Remuneration Committee Charter was amended by the Board on August 28, 2018 to make changes of a housekeeping nature. The table below lists the members of the Remuneration Committee and their independence:

Name Independent
Adrian Reynolds Yes
Susan Muir(1) Yes
Sandra du Toit Yes
Shaun Treacy Yes
Note: (1) Chair of Remuneration Committee.

Relevant Education and Experience

All the members of the Remuneration Committee have been involved in providing legal advice to or the financing, administration and operation of managing public companies or significant operations of private companies, which provides relevant experience to serve on the Remuneration Committee.

Other Board Committees

The Corporation has no standing committees at this time, other than the Audit Committee and the Remuneration Committee (as defined below). Assessments The Board monitors the adequacy of information given to directors, communication between the Board and management and the strategic direction and processes of the Board. The Board through the careful selection of its members and from fostering a culture of openness has established an environment where its members are given ongoing feedback on their performance.

AUDIT COMMITTEE

National Instrument 52-110 - Audit Committees ("NI 52-110") requires the Corporation, as a venture issuer, to disclose annually in its information circular certain information concerning the constitution of its audit committee (the "Audit Committee") and its relationship with its independent auditor, as set forth in the following:

Audit Committee Charter

A copy of the Audit Committee Charter can be found HERE.

Composition of the Audit Committee

The table below lists the members of the Audit Committee and their independence and financial literacy:

Audit Committee Members Independent Financially Literate
Adrian Reynolds Yes Yes
Sandra du Toit(1) Yes Yes
Shaun Treacy Yes Yes
Notes: (1) Effective as of the Meeting date.

Relevant Education and Experience

All the members of the Audit Committee have been involved in the financing, administration and operation of managing public companies or significant operations of private companies. All members have the ability to read, analyze, and understand the complexities surrounding the issuance of financial statements.

Audit Committee Oversight

Since the commencement of the Corporation's most recently completed financial year, the Board has not failed to adopt a recommendation of the Audit Committee to nominate or compensate an external auditor.

Pre-Approval Policies and Procedures

The Audit Committee has adopted policies and procedures for the engagement of non-audit services. The Audit Committee has delegated to its members the authority to pre-approve non-audit services, provided, however, that such pre-approval of non-audit services shall be presented to the Audit Committee at its first scheduled meeting following any such pre-approval.

External Auditor Service Fees (by Category)
Nature of Services Fees Paid to Auditor in Year Ended December 31, 2017 Fees Paid to Auditor in Year Ended December 2016
  (US$) (US$)
Audit Fees(1) 31, 2016 35,000
Audit-Related Fees(2) Nil Nil
Tax Fees(3) Nil Nil
All Other Fees(4) Nil Nil
Total 31,625 35,000

Notes:
(1) "Audit Fees" include fees necessary to perform the annual audit and quarterly reviews of the Corporation's financial statements. Audit Fees include fees for review of tax provisions and for accounting consultations on matters reflected in the financial statements. Audit Fees also include audit or other attest services required by legislation or regulation, such as comfort letters, consents, reviews of securities filings and statutory audits.

(2) "Audit-Related Fees" include services that are traditionally performed by the auditor. These audit-related services include employee benefit audits, due diligence assistance, accounting consultations on proposed transactions, internal control reviews and audit or attest services not required by legislation or regulation.

(3) "Tax Fees" include fees for all tax services other than those included in "Audit Fees" and "Audit-Related Fees". This category includes fees for tax compliance, tax planning and tax advice. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions and requests for rulings or technical advice from tax authorities.

(4) "All Other Fees" include all other non-audit services.

Exemption

The Corporation is relying upon the exemption in section 6.1 of NI 52-110 in respect of its reporting obligations under NI 52-110 for the year ended December 31, 2017. This exempts a "venture issuer" (as defined in NI 52-110) from the requirement to comply with Part 3 "Composition of the Audit Committee" and Part 5 "Reporting Obligations" of NI 52-110.

Takeover Code:

The Company is not subject to the UK City Code on Takeovers and Mergers. As a company incorporated in Alberta and listed on the TSX Venture Exchange, it falls under the Canadian law. However, Canadian laws applicable to the Company provide for early warning disclosure requirements and for takeover bid rules made to security holders in various jurisdictions in Canada.

Admission Document and Circulars:

Click HERE for the Company's AIM admission document.

Key Advisers:

Nominated Advisor and Joint Broker:


SP Angel Corporate Finance LLP

Prince Frederick House

35-39 Maddox Street

London

W1S 2PP

Co-Broker

Alternative Resource Capital

8 - 10 Hill Street

London, W1J 5NQ

Canadian Legal Counsel to the Company:

Fasken

Bay Adelaide Centre

333 Bay St #2400

Toronto, ON

M5H 2T6

English Solicitors to the Company:

FASKEN

125 Old Broad St,

London

EC2N 1AR

Auditor:

MNP LLP

Suite 2000, 330 5th Ave. S.W.

Calgary, AB

T2P 0L4

Canadian Registrars and Transfer Agent:

Computershare Trust Company of Canada

Suite 600

530-8th Avenue SW

Calgary

Alberta

TSP 3S8

UK Registrars and Transfer Agent:

Computershare Investor Services plc

The Pavillions

Bridgewater Road

Bristol

BS99 6ZZ