Schedule “B” to the Information Circular of First Point Minerals Corp. (the “Company”)
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The primary function of the Company’s audit committee (the “Committee”) is to assist the Board of Directors (the “Board”) in fulfilling its financial oversight responsibilities by:
(a) ensuring that the Company’s management has designed and implemented an effective system of internal controls;
(b) reviewing the annual and interim financial reports and all other documents provided by the Company to its shareholders and/or applicable regulatory authorities, to ensure:
(i) the integrity of the Company’s financial statements, and
(ii) compliance with regulatory and statutory requirements as they relate to financial statements, taxation matters and the disclosure of material facts.
(c) providing oversight of other financial matters affecting the Company, including:
(i) reviewing the adequacy of the Company’s internal controls regarding finance and accounting;
(ii) reviewing the reasonableness of estimates and judgments that are material to reported financial information;
(iii) reviewing the investments and transactions that could adversely affect the well-being of the Company;
(iv) identifying the risks inherent in the Company’s business and to review and approve management’s risk philosophy and risk management policies;
(v) receiving reports on the periodic findings of any regulatory authority and management’s response and observations thereon, and
(vi) reviewing all related-party transactions.
(d) assessing the qualifications, independence and performance of the Company’s external auditors.
(e) recommending to the Board the selection, and where applicable, the replacement of the external auditors nominated annually for shareholder approval.
(f) reviewing the audit plan of the external auditors prior to the commencement of the audit;
(g) reviewing with the external auditors, upon completion of their audit:
(i) the contents of the audit report;
(ii) the scope and quality of the audit work performed;
(iii) adequacy of the Company’s financial and accounting personnel and the level of co-operation received from such personnel during the audit;
(iv) significant proposed adjustments and recommendations for improving internal accounting controls, accounting principles and management systems;
(v) significant transactions outside the normal business of the Company, and
(vi) the non-audit services provided by the external auditors.
(h) providing an open avenue for communication on a regular basis among the Company’s external auditors, management and the Board.
(i) consulting with the external auditors, without the presence of management, about the quality of the Company’s accounting principles, internal controls and the completeness and accuracy of the Company’s financial statements.
(j) reviewing any significant disagreements between management and the external auditors in connection with the preparation of the financial statements.
Committee composition, meetings and reporting
The Committee shall be comprised of at least three members, the majority of whom shall be independent directors and each of whom shall, to the satisfaction of the Board, be “financially literate”, meaning a person who has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements. At least one member of the Committee shall have accounting or related financial expertise (i.e., able to analyze and interpret a full set of financial statements, including the notes thereto, in accordance with generally accepted accounting principles).
The members of the Committee shall be appointed by the Board at its first meeting following the annual meeting of shareholders. Unless a Chair is elected by the full Board, the members of the Committee may designate a Chair by a majority vote of the full Committee membership. The Board may at any time remove a member from the Committee, and a member of the Committee shall cease to hold such position upon ceasing to be a member of the Board.
The Committee currently consists of the following individuals: Robert A. Watts, Chairman, Patrick Mars and William Myckatyn. Each of Messrs. Watts, Mars and Myckatyn is independent and financially literate. Mr. Watts is a Chartered Accountant with over 30 years experience acting in a senior capacity with a number of publicly-listed exploration and mining companies.
Except as otherwise provided in this mandate, the rules and regulations relating to the calling and holding of and proceedings at meetings of the Committee shall be those, making allowance for the fact that it is a committee, that apply to meetings of the Board, subject to such modifications as may, from time to time, be determined by resolution of the Committee. Until otherwise determined by resolution of the Board:
(i) The quorum for meetings of the Committee shall be two of its members.
(ii) Meetings of the Committee may be called by its Chair or Vice Chair, if any, or by any member of the Committee, or by the external auditor of the Corporation. The Committee may at any time request the attendance of any officer of the Corporation or any person at any meeting of the Committee. Any member of the Committee may request the external auditor of the Corporation to attend every meeting of the Committee held during the member’s term of office.
(iii) The external auditor of the Corporation shall receive notice of every meeting of the Committee and may attend and be heard at any meeting.
(iv) Meetings of the Committee shall be held at least quarterly at such time and place as may be determined from time to time by the Committee or by the Chair or Vice Chair, if any, of the Committee, and notice thereof shall be given in the manner and with the length of notice provided in the resolution(s) of the Board relating to notices of meetings of directors.
Minutes shall be kept of all meetings of the Committee and the Committee shall report to the Board as follows:
(i) In the case of annual statements and any returns that under applicable legislation must be approved by the Board, the Committee shall report thereon to the Board before approval is given.
(ii) All significant actions of the Committee shall be reported to the Board whenever possible at its next succeeding regular Board meeting and shall be subject to revision or alteration by the Board.
(iii) All minutes of the Committee shall be attached to the Board minutes and forwarded to each member of the Board by the Secretary in a timely manner.
The Committee may call a meeting of the Board to consider any matter of concern to the Committee.
The Committee shall have the authority:
(i) to communicate directly with the external auditors and to approve in advance any services to be provided by the external auditors that are not related to the audit.
(ii) to inspect, either directly or through its duly appointed representatives, all of the relevant accounting books, records and systems of the Company and to discuss with the officers and external auditors such books, records, systems and other matters considered appropriate;
(iii) to engage such independent counsel and other outside professional advisors and other experts as it may from time to time deem necessary or advisable for its purposes and to set and cause to be paid by the Company the compensation of any such counsel or advisors;
(iv) to set and cause to be paid by the Company the ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties;
(v) through its Chair, to contact directly any employee of the Company it deems necessary, and any employee or third party may bring before the Committee any matter involving questionable, improper or illegal practices or transactions, and
(vi) to ensure the attendance of the Company’s Chief Executive and Chief Financial officers and other members of management at meetings as appropriate.
Board review of Charter
The Board shall review the adequacy of the Committee’s Charter on at least an annual basis.
External auditor service fees
The aggregate fees billed by the Company’s external auditors in each of the last two fiscal years are as follows:
(1) The aggregate audit fees as billed.
(2) The aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements which are not included under the heading “Audit Fees”.
(3) The aggregate fees billed for professional services rendered for tax compliance, tax advice and tax planning.
(4) The aggregate fees billed for products and services other than as set out under the three previous headings.
The Company is relying on the exemption provisions of Section 6.1 of Multilateral Instrument 52-110 — Audit Committees. These exempt Venture Exchange issuers from the requirement to comply with the restrictions on the composition of its audit committee and the disclosure requirements of its audit committee in an annual information form as prescribed by MI 52-110.