Being an AIM listed company, Caledon Resources is not required to comply with the Combined Code; however the company has given consideration to the code 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. Details of these are set out below. 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 three executive and three non-executive directors. With the exception of Mr Salamis, the non-executive directors are independent of management and free from any business or other relationship, which could materially interfere with the exercise of their independent judgement.

The board meets on average every one month and 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.

The board is responsible for establishing and maintaining 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 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.

Audit Committee

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

The committee provides a forum for reporting by the Group's external auditors. The committee is also responsible for reviewing a wide range of matters, including half-year and annual results before their submission to the Board, and for monitoring the controls that are in force to ensure the integrity of information reported to shareholders. The Audit Committee will advise the Board on the appointment of external auditors and on their remuneration for both audit and non-audit work, and will discuss the nature, scope and results of the audit with the external auditors. The committee will keep under review the cost effectiveness and the independence and objectivity of the external auditors.

The Audit Committee is responsible for ensuring the "right tone at the top" and that the ethical and compliance commitments of management and employees are understood throughout the Group.

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,an executive director and George Salamis and Graham Mascall,both of whom are non-executive directors.

The HSE committee will assist the Board in formulating the Group's health, safety and environment policies as they affect the Groups 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 will meet formally at least twice a year and otherwise as required.

The Nomination Committee

On 19 April 2008, the Board resolved to appoint a Nomination Committee, comprising Robert Alford (Committee Chairman), Graham Mascall and Nicholas Clarke, and adopted Terms of Reference for this Committee.

This Committee will make recommendations to the Board concerning, inter alia, the appointment of new Directors and proposals for the reappointment of Directors at the Annual General Meeting. These decisions were previously undertaken by the full Board.