Corporate Governance Policy

The Board of Directors (the “Board”) of Baffinland Iron Mines Corporation (the “Company” or “Baffinland”) has adopted these guidelines to reflect the Company’s commitment to good corporate governance, and to comply with Toronto Stock Exchange ("TSX") guidelines, the Ontario Securities Commission’s (the “OSC”) instruments and policies and other legal requirements. The Company’s Corporate Governance Committee (the “Governance Committee”) shall periodically review these guidelines and propose modification to the Board for consideration as appropriate.

1.0 DIRECTOR RESPONSIBILITIES

1.1 Basic Responsibilities

The business affairs of the Company are managed under the direction of the Board, which represents and is accountable to the shareholders and other stakeholders of the Company. The Board’s responsibilities are active and not passive and include the responsibility to regularly evaluate the strategic direction of the Company, management policies and the effectiveness with which management implements its policies.

The basic responsibility of the directors in exercising their powers and discharging their duties is to act honestly and in good faith and with a view to the best interests of the Company and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. In discharging this obligation, the directors must inform themselves of all relevant information reasonably available to them.

The Governance Committee shall maintain a Charter of Expectations of Directors.

1.2 Board and Committee Meetings

Directors are expected to prepare for and use reasonable efforts to participate in all Board meetings and meetings of committees on which they serve. The Board and each committee shall meet as frequently as necessary to properly discharge their responsibilities.

The Chair, in consultation with the Chief Executive Officer and the Corporate Secretary, shall prepare the agenda for each Board or committee meeting. While the agenda will initially be set by the Chair of the Board or the applicable committee, each director is free to suggest the inclusion of items on the agenda.

Information and data that are important to the Board’s understanding of the business to be conducted at a Board or committee meeting should, to the extent practical, be distributed in writing to the directors sufficiently in advance of the meeting to permit meaningful review, and directors are expected to review in detail the provided materials in advance of each meeting.

1.3 Meetings of Non-Management Directors

The non-management directors shall meet without directors who are also employees or officers of the Company following every regularly scheduled meeting and at such other times as they deem appropriate.

The non-management directors shall designate a director from among their number to preside at all sessions of the non-management directors.

2.0 COMPOSITION AND SELECTION OF THE BOARD

2.1 Size and Composition of the Board

The Articles of Amendment of the Company provide for a minimum of one and a maximum of twelve directors. The current size of the Board is eight; which the Board currently believes is appropriate. The Board shall assess its size from time to time to determine whether its size continues to be appropriate.

2.2 Board Membership Criteria

The Board shall have a majority of directors who are "unrelated" directors according to the applicable TSX guidelines and OSC Instruments and policies. The Board shall monitor its compliance with the TSX guidelines and OSC instruments and policies relating to board composition on an ongoing basis. Each unrelated director is expected to notify the Chair of the Governance Committee, as soon as reasonably practicable, in the event that his or her personal circumstances change in a manner that may affect the Board’s evaluation of such director’s status as an unrelated director.

The Governance Committee is responsible for periodically reviewing with the Board, the composition of the Board as a whole, and whether the Company is being well served by the directors taking into account the director's independence, age, skills, experience and availability for service to the Company.

The Governance Committee shall recommend director nominees to the Board in accordance with the policies and principles in its Charter.

Every independent member of the Board must also be a member on at least one of the Board’s committees.

The Governance Committee is responsible for maintaining a matrix of directors required skills and core competencies.

2.3 Membership on Other Boards

Directors are strongly encouraged to inform the Chair of the Board and the Chair of the Governance Committee in advance of accepting an invitation to serve on another public company board. It is the opinion of the Board that no director should serve on more than six other for-profit company boards. In addition, the Chief Executive Officer of the Company should not serve on more than three other public company boards. It shall also be the policy of the Company that no more than two directors should serve together on the board of another company.

2.4 Ownership of Company Securities

Directors are encouraged to own shares of the Company and to maintain such shares during their board tenure.

2.5 Changes in Current Job Responsibility

Directors, including employee directors, who retire from or change the job or the principal responsibility they held when they were selected for the Board shall advise the Governance Committee in order to give the Board an opportunity, through the Governance Committee, to review whether it is appropriate for such director to continue to be a member of the Board under such circumstances.

2.6 Term Limits and Mandatory Retirement

The Board has not established any term limits to an individual’s membership on the Board or any mandatory retirement age. As an alternative to term limits and a mandatory retirement age, the Governance Committee shall, as part of its periodic assessment of the composition of the Board, review a director’s continuing contribution to the Board and the appropriateness of such directors' continuation on the Board.

3.0 BOARD COMMITTEES

3.1 Composition and Responsibilities

The Board will have at all times an Audit Committee, a Compensation Committee and a Governance Committee, and any other committees the Board deems appropriate. All of the members of the Audit Committee, the Compensation Committee and the Governance Committee will be unrelated directors according to the applicable TSX guidelines and OSC instruments and policies. The members of the Audit Committee, the Compensation Committee and the Governance Committee shall be appointed by the Board. Each committee shall appoint a Chair of such committee, if the Board has not appointed a Chair.

3.2 Charters

The Board shall adopt charters setting forth the purposes, goals and responsibilities of each of the Audit Committee, the Compensation Committee and the Governance Committee and any other committees the Board deems appropriate, as well as qualifications for committee membership, procedures for committee member appointment and removal, committee structure and operations and committee reporting to the Board.

4.0 DIRECTOR ACCESS TO OFFICERS, EMPLOYEES AND INDEPENDENT ADVISORS

4.1 Access to Management and Employees

Directors shall have full and unrestricted access to officers and employees of the Company. For clarity purposes, “unrestricted access” means that the director shall have access to employees in order to obtain information and shall not be construed as having any authority over such employee or as having the authorization to direct or instruct such employee.

4.2 Access to Independent Advisors

The Board and each committee shall have the power to hire independent legal, financial or other advisors as they may deem necessary, without consulting or obtaining the approval of any officer of the Company in advance, subject to the requirement that individual directors obtain the approval of the Governance Committee prior to engaging any such advisors. The Company shall provide sufficient funding to the Board and to each committee, as determined by the Board and each of its committees, to exercise their functions and provide compensation for the services of their advisors and, in the case of the Audit Committee, independent auditors.

5.0 DIRECTOR ORIENTATION AND CONTINUING EDUCATION

All new directors shall be provided with these Corporate Governance Policies and will participate in the Company’s orientation initiatives as soon as practicable after the annual or other meeting at which new directors are elected or appointed. The initiatives may include presentations by senior management and outside advisors as appropriate to familiarize new directors with the Company’s business, its strategic plans, its significant financial, accounting and risk management issues and its compliance programs as well as their fiduciary duties and responsibilities as directors.

Directors are encouraged to be a member of a professional director organization and/or have a subscription with an organization that provides educational materials on corporate governance and/or directors’ responsibilities, current trends and other relevant director information.

6.0 ANNUAL PERFORMANCE EVALUATION

The Governance Committee, on behalf of the Board, shall conduct an annual evaluation of the Board, of each individual director and of each committee to determine whether each of them is functioning effectively, and will submit a report to the full Board at the end of the review.

The assessment will focus on the contribution to the Company by the Board, each individual director and each committee. The Governance Committee will establish the criteria to be used in such evaluations.