SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GOLDEN QUEEN MINING CO. LTD.
(Name of Registrant as Specified In Its Charter)
Golden Queen Mining Co. Ltd.
Green Flag Building, Suite 211-A
104 South Freya
Spokane, Washington 99202
Telephone: (509) 535-4022
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
<PAGE>
GOLDEN QUEEN MINING CO. LTD.
Notice of Annual General Meeting
to be held on June 4, 1997
To Holders of Common Shares:
The Annual General Meeting (the "Meeting") of Golden Queen Mining Co. Ltd.
(the "Company") will be held at the offices of Lawson Lundell Lawson &
McIntosh, 1600 - 925 West Georgia Street, Vancouver, British Columbia, on
Wednesday, June 4, 1997 at 10:30 a.m., Vancouver time, for the following
purposes:
1. To receive the report of the directors, the audited consolidated financial
statements of the Company for the year ended December 31, 1996 and the report
of the auditors thereon;
2. To elect directors for the ensuing year;
3. To appoint auditors for the ensuing year and to authorize the directors to
fix the remuneration to be paid to the auditors; and
4. To transact any other business that may properly come before the Meeting
or any adjournment thereof.
The board of directors has fixed the close of business on April 29, 1997 as
the record date for determining holders of common shares who are entitled to
vote at the Meeting.
The report of the directors, the audited consolidated financial statements of
the Company for the year ended December 31, 1996 and the report of the
auditors thereon are contained in the Annual Report dated December 31, 1996
accompanying this Notice of Annual General Meeting.
Holders of common shares who are unable to be present at the Meeting are
requested to date, execute and return the accompanying form of proxy to
Montreal Trust Company of Canada, 510 Burrard Street, Vancouver, British
Columbia, Canada V6C 3B9 (a self-addressed envelope is enclosed) or to the
Company's registered and records office at 1600 - 925 West Georgia Street,
Vancouver, British Columbia, Canada V6C 3L2, in either case prior to 10:30
a.m., Vancouver time, on Monday, June 2, 1997.
DATED at Spokane, Washington, this 15th day of April, 1997.
BY ORDER OF THE BOARD OF DIRECTORS,
Bernard F. Goodson
Vice-President - Administration and Controller
<PAGE>
GOLDEN QUEEN MINING CO. LTD.
PROXY STATEMENT AND INFORMATION CIRCULAR
Dated as of April 15, 1997
In this Proxy Statement and Information Circular, all references to "$" are
references to United States dollars and all references to "C$" are references
to Canadian dollars.
GENERAL PROXY INFORMATION
Solicitation of Proxies
This Proxy Statement and Information Circular is furnished in connection with
the solicitation of proxies by the management of Golden Queen Mining Co. Ltd.
(the "Company") for use at the Annual General Meeting (the "Meeting") of the
Company to be held on Wednesday, June 4, 1997 at the time and place and for
the purposes set out in the accompanying Notice of Annual General Meeting.
This Proxy Statement and Information Circular and the accompanying Notice of
Annual General Meeting and form of proxy are expected to be mailed to members
of the Company on or about May 7, 1997.
The cost of solicitation will be borne by the Company. The solicitation will
be made primarily by mail. Proxies may also be solicited personally or by
telephone by certain of the Company's directors, officers and regular
employees, who will not receive additional compensation therefor. In
addition, the Company will reimburse brokerage firms, custodians, nominees and
fiduciaries for their expenses in forwarding solicitation materials to
beneficial owners. The total cost of proxy solicitation, including legal fees
and expenses incurred in connection with the preparation of this Proxy
Statement and Information Circular, is estimated to be $10,000.
Voting by Proxies
The form of proxy accompanying this Proxy Statement and Information Circular
confers discretionary authority upon the proxy nominee with respect to any
amendments or variations to matters identified in the Notice of Annual General
Meeting and any other matters which may properly come before the Meeting. As
at the date of this Proxy Statement and Information Circular, management is
not aware of any such amendments or variations, or any other matters to be
presented for action at the Meeting.
If the instructions in a proxy given to management are certain, the shares
represented by proxy will be voted or withheld from voting in accordance with
the instructions of the member as specified in the proxy with respect to the
matter to be acted on. If a choice is not so specified with respect to any
such matter, the shares represented by a proxy given to management are
intended to be voted in favour of the matters referred to in the form of proxy
accompanying this Proxy Statement and Information Circular. A member has the
right to appoint a person (who need not be a member) to attend and act for him
and on his behalf at the Meeting other than the persons designated in the form
of proxy and may exercise such right by inserting the name in full of the
desired person in the blank space provided in the form of proxy and striking
out the names now designated.
Revocability of Proxies
A member executing the enclosed form of proxy has the power to revoke it by
instrument in writing executed by the member or his attorney authorized in
writing or, where the member is a corporation, by a duly authorized officer or
attorney of the corporation. The instrument of revocation must be delivered
to the registered and records office of the Company, at the address specified
in the Notice of Annual General Meeting, at any time up to and including the
last business day preceding the date of the Meeting or any adjournment
thereof, or to the chairman of the Meeting on the day of the Meeting or any
adjournment thereof.
Voting Securities and Certain Owners and Management
As at April 15, 1997, there were 22,208,400 outstanding common shares of the
Company ("Common Shares"), each of which carries the right to one vote at
meetings of the members of the Company. Holders of the outstanding Common
Shares whose names are entered on the register of members of the Company at
the close of business on April 29, 1997, the record date, will be entitled to
attend in person or appoint a proxy nominee to attend the Meeting and such
persons will be entitled to vote on a show of hands and, on a poll, will be
entitled to one vote for each of the Common Shares held on that date.
Pursuant to the British Columbia Company Act (the "Company Act") and the
Company's Articles, the affirmative vote of a majority of the votes cast by
the holders of Common Shares represented in person or by proxy at the Meeting
is required for the election of directors and the approval of all other
matters presented for action at the Meeting.
The following table sets out, as at April 15, 1997, the names of, and number
of Common Shares beneficially owned by, or over which control or direction is
exercised by, persons known to the Company to own, or exercise control or
direction over, more than five percent of the outstanding Common Shares; the
names of, and number of shares beneficially owned by, or over which control or
direction is exercised by, each director and officer of the Company; and the
number of shares beneficially owned by, or over which control or direction is
exercised by, all directors and officers as a group. At such date, an
aggregate of 27,874,500 Common Shares were outstanding or deemed to be
outstanding pursuant to presently exercisable options, warrants and conversion
rights.
Amount and Nature of
Ownership (all direct
beneficial ownership unless
Nature of Owner otherwise noted) Percent of Class
- ---------------- ---------------------------- ----------------
Steven W. Banning (1), (2) 1,000,000 3.59%
Bernard F. Goodson (3) 100,000 0.36%
Richard W. Graeme (4) 200,000 0.72%
Gordon C. Gutrath (1), (5) 195,000 0.70%
Jerrold W. Schramm (1), (6) 90,000 0.32%
Chester Shynkaryk (1), (7) 389,508 1.40%
Edward G. Thompson (1), (8) 183,200 0.66%
Christopher M. T.
Thompson (1),(9) 462,866 1.66%
- ---------------------------------------------------------------------------
All directors and executive
officers as a group
(eight persons) (10) 2,620,574 9.40%
- ---------------------------------------------------------------------------
Ventures Trident II, L.P.(11) 4,758,061 17.07%
Goodman & Company Ltd.(12) 3,831,000 13.74%
Landon T. Clay (13) 1,511,033 5.42%
(1) Currently a director of the Company.
(2) Includes presently exercisable options to purchase 603,333 Common Shares.
(3) Includes presently exercisable options to purchase 33,333 Common Shares.
(4) Includes presently exercisable options to purchase 133,333 Common Shares.
(5) Includes presently exercisable options to purchase 90,000 Common Shares.
(6) Includes presently exercisable options to purchase 90,000 Common Shares.
(7) Includes presently exercisable options to purchase 175,000 Common Shares.
(8) Includes presently exercisable options to purchase 130,000 Common Shares.
(9) Includes presently exercisable options to purchase 130,000 Common Shares.
(10) Includes presently exercisable options to purchase 1,666,666 Common
Shares.
(11) VenturesTrident II, L.P. is an investment limited partnership, the
general partner of which is Fulcrum Management Partners II, L.P. Fulcrum
Management Partners II, L.P. makes voting decisions with respect to such
Common Shares.
(12) Includes presently exercisable special warrants to purchase 1,025,000
Common Shares.
(13) Consists of Common Shares held in five trusts to which Mr. Clay is
related. Mr. Clay is also one of two general partners of Fulcrum
Management Partners II, L.P., the general partner of VenturesTrident II,
L.P. The Common Shares held beneficially and of record by Ventures
Trident II, L.P. have not been attributed to Mr. Clay in the foregoing
table. Includes an aggregate of 686,100 Common Shares issuable on the
conversion of presently convertible debentures.
ELECTION OF DIRECTORS
Each of the persons whose name appears in the table below is proposed by the
management of the Company to be nominated for election as a director of the
Company to serve until the next Annual General Meeting of the members or until
he sooner ceases to hold office. Pursuant to the Company Act, a majority of
the directors of the Company must be ordinarily resident in Canada and at
least one director must be ordinarily resident in British Columbia.
The following information concerning the respective nominees has been
furnished by them.
<TABLE>
<CAPTION>
Director
Name, Position and Residence Age Business Experience Since
- ---------------------------- --- ------------------- -------------
<S> <C> <C> <C>
Steven W. Banning (1) 45 Mr. Banning has been the President and December 1995
President, Chief Executive Chief Executive Officer of the Company
Officer and Director since 1995. From 1984 through 1995, he
Veradale, Washington was employed by Pegasus Gold Inc., last
serving as its Vice President, Operations.
Mr. Banning graduated from Montana College
of Mineral Science & Technology in 1974
with a degree in mineral dressing engineering.
Gordon C. Gutrath (1) 59 Since November of 1995, Mr. Gutrath has also August 1987
Director served as the Chairman of Queenstake Resources
Vancouver, British Columbia Ltd., which he founded in 1977. Previously,
he served as its President from 1977 until
November 1995. Mr. Gutrath is a professional
geologist and a registered professional engineer
in British Columbia. He graduated from the
University of British Columbia in 1960
with a degree in geology.
Jerrold W. Schramm (2) 36 Mr. Schramm is partner in the law firm of February 1996
Director Lawson Lundell Lawson & McIntosh, a position he
North Vancouver, British Columbia has held since February 1994. He was an associate
with the firm from August 1987 to January 1994.
He obtained an undergraduate degree in commerce
from the University of British Columbia in 1983
and a law degree from the University of Toronto
in 1986.
Chester Shynkaryk (2) 52 Mr. Shynkaryk served as the President of the November 1985
Director Company from 1985 to 1995. Since 1996, he has
Richmond, British Columbia also served as the President of Visionary
Mining Corporation, a mineral exploration
company.
Christopher M. T. Thompson (1) 49 Since 1992, Mr. Thompson has also served as January 1997
Director the President of Castle Group, Inc. (a gold
Littleton, Colorado mining investment management company) and,
from January 1984 to October 1992, he was
employed by Fulcrum Management, Inc., last
serving as its Chief Financial Officer.
Mr. Thompson received a degree in law and
economics from Rhodes University in South
Africa in 1969 and a Master of Science
degree from Bradford University in the
United Kingdom in 1971.
Edward G. Thompson (2) 60 Mr. Thompson was elected Chairman of the board November 1994
Director of directors of the Company on January 29,
Toronto, Ontario 29, 1997. Since 1990, he has also served as
the President of E. G. Thompson Mining
Consultants Inc., which he owns.
Mr. Thompson graduated from the University of
Toronto in 1959 with a degree in mining geology
and in 1960 earned a degree in economic geology.
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
</TABLE>
An advance notice of meeting inviting nominations for election as directors,
as required by section 135 of the Company Act, was published in The Vancouver
Sun newspaper on April 2, 1997. Copies of such advance notice of meeting have
been delivered to the British Columbia Securities Commission and the Vancouver
Stock Exchange pursuant to the regulations under the Company Act.
APPOINTMENT OF AUDITORS
BDO Dunwoody were appointed the auditors of the Company on November 13, 1996
and presently serve in such capacity. At the Meeting, management of the
Company will propose the reappointment of BDO Dunwoody as auditors of the
Company to hold office until the next annual general meeting of the Company
and will also propose that the directors be authorized to fix the remuneration
to be paid to the auditors.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets out the annual compensation, long term compensation
and all other compensation paid, during the Company's financial years ended
December 31, 1996, May 31, 1996 and May 31, 1995, to: Paul A. Bailly, who was
the Chairman of the board of directors of the Company during the financial
year ended December 31, 1996; Steven W. Banning, the President and Chief
Executive Officer of the Company; Richard W. Graeme, the Vice-President -
Operations of the Company; and Bernard F. Goodson, the Vice-President -
Administration and Controller of the Company (collectively, the "Named
Executive Officers").
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------- ----------------------
Securities
Other Under Options
Name and Principal Financial Annual Granted (2)
Position Year Ended (1) Salary Bonus Compensation (#)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Paul A. Bailly Dec. 31, 1996 - - - 120,000
Former Chairman May 31, 1996 - - - 120,000
May 31, 1995 - - - 50,000
Steven W. Banning Dec. 31, 1996 $118,333 - $2,100 (4) 1,000,000 (5)
President and May 31, 1996 (3) 100,000 - 1,800 (4) 810,000 (5)
Chief Executive Officer May 31, 1995 - - - -
Richard W. Graeme Dec. 31, 1996 $ 64,169 - - 200,000
Vice-President - May 31, 1996 (6) 36,667 - - 200,000
Operations May 31, 1995 - - - -
Bernard F. Goodson Dec. 31, 1996 $ 46,669 - $2,100 (4) 100,000
Vice-President - May 31, 1996 (7) 6,667 - 300 (4) 100,000
Administration and May 31, 1995 - - - -
Controller
</TABLE>
(1) As a result of the change in its financial year end from May 31 to
December 31, the Company's financial year ended December 31, 1996 was
seven months long. The Company's financial year ended May 31, 1996, and
each of its prior financial years, was 12 months long.
(2) Represents options to purchase Common Shares.
(3) Mr. Banning's employment with the Company commenced on December 1, 1995;
accordingly, he was employed by the Company for six months during the
financial year ended May 31, 1996.
(4) Automobile allowance.
(5) Pursuant to Mr. Banning's employment agreement, the Company has agreed to
make certain payments to Mr. Banning in connection with the exercise by
him of certain of such options. See "Termination of Employment, Change
in Responsibilities and Employment Contracts".
(6) Mr. Graeme was not employed by the Company until February 1, 1996 and,
accordingly, was employed by the Company for four months during the
financial year ended May 31, 1996.
(7) Mr. Goodson was not employed by the Company until May 1, 1996 and,
accordingly, was employed by the Company for one month during the
financial year ended May 31, 1996.
Table of Aggregated Options Exercised During the Financial Year Ended December
31, 1996 and Financial Year-end Option Values
The following table sets out certain information with respect to options to
purchase Common Shares exercised by the Company's Named Executive Officers
during the financial year ended December 31, 1996 and options held by them at
the end of such year.
<TABLE>
<CAPTION>
Value of
Unexercised
Unexercised in-the-Money
Options at Options
December 31, at December
Securities Aggregate 1996 31, 1996
Acquired on Value (#) (C$)
Exercise Realized Exercisable/ Exercisable/
Name (#) (C$) Unexercisable Unexercisable (1)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Paul A. Bailly - - 120,000/0 336,000/0
Steven W. Banning - - 560,000/440,000 1,568,000/1,232,000
Richard W. Graeme - - 66,666/133,334 186,665/373,335
Bernard F. Goodson - - 33,333/66,667 93,333/186,667
</TABLE>
(1) The closing price of the Common Shares on The Toronto Stock Exchange on
December 31, 1996 was C$2.80.
Table of Options Granted During the Financial Year Ended December 31, 1996
The following table sets out certain information with respect to the options
to purchase Common Shares granted to the Company's Named Executive Officers
during the financial year ended December 31, 1996.
<TABLE>
<CAPTION>
% of Market Value of
Securities Total Options Shares Underlying
Under Granted to Options on
Options Employees in Exercise or the Date
Granted the Financial Base Price of Grant
Name (#) Year (C$/Share) (C$/Share) Expiration Date
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Paul A. Bailly - - - - -
Steven W. Banning 190,000 58.5% 2.43 2.43 October 4, 2001
Richard W. Graeme - - - - -
Bernard F. Goodson - - - - -
</TABLE>
Termination of Employment, Change in Responsibilities and Employment Contracts
During its financial year ended May 31, 1996, the Company, through its
subsidiary, entered into employment agreements with Mr. Banning, Mr. Graeme
and Mr. Goodson. Each of such agreements provides for the payment of salary
and bonuses, the granting of certain options to purchase Common Shares and the
provision of certain benefits, including those offered to employees generally.
In addition, such agreements also contain certain provisions relating to the
compensation of the employee in the event of termination of employment (other
than for cause). If the Company terminates an employee's employment for any
reason other than for cause, the Company is required to pay the employee an
amount equal to 24 months' salary in the case of Mr. Banning and Mr. Graeme
and 12 months' salary in the case of Mr. Goodson. The employee may terminate
his employment upon six months' prior written notice to the Company. The
agreements also provide that if there is a "change in control" (as defined in
the agreements) of the Company and the employee's employment is subsequently
terminated (unless such termination is for cause or by the employee for other
than "good reason" (as defined in the agreements)), the employee is entitled
to receive a lump sum severance payment equal to two times the employee's then
current annual base salary in the case of Mr. Banning and Mr. Graeme and one
times the employee's then current annual base salary in the case of Mr.
Goodson. In addition, all benefits then provided to the employee will be
continued for a period of 24 months after termination in the case of Mr.
Banning and Mr. Graeme and 12 months after termination in the case of Mr.
Goodson. Any existing stock options then held by the employee will vest
immediately and may be exercised by the employee at any time within three
months following the date of his termination.
Pursuant to Mr. Banning's employment agreement, the Company has granted to Mr.
Banning options to purchase an aggregate of 1,000,000 Common Shares. Because
the Company was unable to grant all of such options on the date that it agreed
to do so, the Company has agreed to pay to Mr. Banning, on the exercise by him
in the future of options to purchase each of 130,000 Common Shares (which were
granted on February 21, 1996), the difference between C$1.51 per share (the
exercise price of such options on the date of grant) and C$1.35 per share (the
market price of the Common Shares on the date the Company agreed to grant such
options to Mr. Banning) and, on the exercise by him in the future of options
to purchase each of 190,000 Common Shares (which were granted on October 4,
1996), the difference between C$2.43 (the exercise price of such options on
the date of grant) and C$1.35 per share.
Composition of the Compensation Committee
The members of the Compensation Committee during the year ended December 31,
1996 were Paul A. Bailly, Chester Shynkaryk and Jerrold W. Schramm. Mr.
Bailly was the Chairman of the Compensation Committee and resigned as a
director of the Company effective January 2, 1997. He has been replaced as a
member, and the Chairman, of the Compensation Committee by Edward G. Thompson.
Mr. Shynkaryk was President of the Company until December 1, 1995 and has
served as the Secretary of the Company since such time. Mr. Schramm is a
partner of the law firm of Lawson Lundell Lawson & McIntosh, the Company's
counsel.
Report on Executive Compensation
The Compensation Committee of the board of directors is responsible for
reviewing and approving the remuneration of the senior management of the
Company, including the President and Chief Executive Officer, and other
executive officers. The guiding philosophy of the Compensation Committee in
the determination of executive compensation is ensuring that the Company is
able to attract the best possible candidates for management positions, given
the high level of competition for competent management in the mining industry,
and to align the interests of management with those of the Company's members.
The Company's executive compensation policies are designed to recognize and
reward individual contribution, performance and level of responsibility and
ensure that the compensation levels remain competitive with other precious
metals development and mining companies. The key components of total
compensation are base salary and incentives.
The Compensation Committee uses industry compensation data as a basis for
determining appropriate base salary ranges for the executive officers. Within
these ranges, the base salaries of the executive officers are established to
reflect the individual executive's proven and expected contribution and
responsibility.
Stock options are granted to executive officers to align the financial
interests of management with the interests of members of the Company and to
encourage executive officers to focus on strategies and results that enhance
shareholder value in the longer term. The number of options to purchase
Common Shares granted to each individual will depend largely on his level of
responsibility and contribution to the Company's performance.
The Compensation Committee considers, on an ongoing basis, the appropriateness
and effectiveness of the Company's executive compensation policies, given
prevailing circumstances. With its decision to pursue the development of its
Soledad Mountain Project, the successful completion of a C$13.75 million
equity financing during the calendar year ended December 31, 1996 and the
success of the Company's ongoing efforts to delineate Project reserves, the
Compensation Committee considers that the Company has reached a significant
stage in its development. It is expected that the Company's executive
compensation policies will be adjusted to include components intended to
reward management for operational and financial performance. In particular,
it is contemplated that, in the future, the Company may pay cash bonuses, to
the extent it has sufficient resources available for this purpose, to
individuals for exceptional performance in meeting specific objective goals.
Submitted by the Compensation Committee.
Edward G. Thompson (Chairman)
Jerrold W. Schramm
Chester Shynkaryk
PERFORMANCE GRAPH
The following line graph and table illustrate the annual percentage change in
the cumulative total return on the Common Shares, assuming an initial
investment of $100, as compared to The Toronto Stock Exchange ("TSE") Gold and
Precious Metals Index, for the period from May 29, 1992 to December 31, 1996:
May 29, May 31, May 31, May 31, May 31, December
1992 1993 1994 1995 1996 31, 1996
----------------------------------------------------------
Company 100.0 100.0 300.2 630.5 1,526.1 1,401.0
TSE Gold and
Precious Metals
Index 100.0 180.6 216.2 219.2 278.6 238.6
COMPENSATION OF DIRECTORS
The Company does not pay directors' fees. While the Company has no written
policy or standard arrangements in this regard, it is currently the policy of
the Company to grant options to purchase Common Shares to its directors under
the Company's 1996 Stock Option Plan (the "Plan"). Generally, each director
is granted options to purchase an aggregate of 90,000 Common Shares and such
additional number of Common Shares as may be appropriate in particular
circumstances given other responsibilities assumed by the director in the
Company's affairs and contributions made by such director to the Company.
The Plan provides for the issuance of options to purchase Common Shares to the
directors, officers and employees of the Company and its subsidiaries. The
Plan is administered by the Compensation Committee of the board of directors
of the Company. The Plan provides that a maximum of 3,300,000 Common Shares
will be reserved, set aside and made available for issuance pursuant to
options granted from time to time under the Plan, provided that, under the
terms of the Plan, no person is entitled to be granted options to purchase
Common Shares constituting more than 5% of the number of outstanding Common
Shares.
The Plan provides that the exercise price of each option granted shall not be
less than the market price of the Common Shares on the TSE when the option is
granted. The Plan provides that all options granted under such plan will
expire not later than five years after the date of grant and, unless otherwise
specifically determined at the time of the grant of any option, all options
granted under the Plan expire 39 months after the date on which they are
granted.
Options granted to employees of the Company and its subsidiaries under the
Plan will vest, as to one-third of the number of Common Shares issuable upon
the exercise of the options granted, on the date of grant and, as to an
additional one-third of such number of Common Shares, on each of the next two
anniversaries of such date. Options granted under the Plan to other persons
vest immediately on the date of grant.
Options granted under the Plan are not transferable, other than by will or
other testamentary instrument or the laws of succession. The Plan provides
that where an optionee is dismissed, removed or otherwise ceases to be a
director, officer or employee of the Company or its subsidiaries (other than
for cause or as a result of his or her retirement or death), all unexercised
options held by such person terminate on the earlier of 60 days after the
optionee ceases to be a director, officer or employee of the Company or its
subsidiaries or the normal expiry date of such unexercised options. Under the
Plan, an optionee who retires at or after the age of 60 or after 20 years of
employment by the Company or any of its subsidiaries may exercise vested
options held by him or her at the date of retirement in accordance with the
terms of such options as though the optionee had not retired. Options held by
an optionee under the Plan at the time of his or her death will terminate on
the earlier of one year after the date of death of the optionee or the normal
expiry date of such options. In the event that an optionee is dismissed as a
director, officer or employee of the Company or one of its subsidiaries for
cause, all unexercised options held by such person immediately terminate.
The following table sets out certain information with respect to options to
purchase Common Shares granted to the directors of the Company, other than the
Company's Named Executive Officers, since the commencement of the Company's
financial year ended December 31, 1996.
<TABLE>
<CAPTION>
% of Total Market
Options Value of
Granted Securities
to All Underlying
Employees Exercise Options on
Securities in the or Base the Date of
Under Options Financial Price Grant Date of Expiration
Name of Director Granted (#) Year (C$/Share) (C$/Share) Grant Date
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jerrold W. 90,000 45.0% 2.70 2.70 January 29, January 29,
Schramm 1997 2002
Edward G. 40,000 20.0% 2.70 2.70 January 29, January 29,
Thompson 1997 2002
</TABLE>
There are no other arrangements under which directors of the Company were
compensated by the Company during the year ended December 31, 1996 for their
services in their capacity as directors and, without limiting the generality
of the foregoing, no additional amounts are payable under any standard
arrangements for committee participation or special assignments, except that
the Articles of the Company provide that the directors are entitled to be paid
reasonable travelling, hotel and other expenses incurred by them in the
performance of their duties as directors. The Company's Articles also provide
that if a director is called upon to perform any professional or other
services for the Company that, in the opinion of the directors, is outside of
the ordinary duties of a director, such director may be paid a remuneration to
be fixed by the directors and such remuneration may be either in addition to
or in substitution for any other remuneration that such director may be
entitled to receive.
The aggregate direct remuneration paid or payable by the Company and its
subsidiary (the financial statements of which are consolidated with those of
the Company) to the directors and senior officers of the Company during the
financial year ended December 31, 1996 was $233,367.
Since January 1, 1996, options to purchase an aggregate of 980,000 Common
Shares were granted to the directors and senior officers of the Company as a
group. The exercise price of such options ranged from C$1.51 per share to
C$3.20 per share. During the same period, an aggregate of 120,000 options to
purchase Common Shares held by directors and senior officers of the Company
was exercised at an exercise price of C$1.51 per share. During the period
from January 1, 1996 to April 15, 1997, the closing price of the Common Shares
on the TSE ranged from a low of C$1.29 per share to a high of C$3.95 per
share.
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
AND CORPORATE REIMBURSEMENT INSURANCE
The Company has purchased insurance for the benefit of the directors and
officers of the Company and its subsidiary against any liability incurred by
them in their capacity as directors and officers, subject to certain
limitations. The premium, which currently amounts to $51,000 annually, is
paid by the Company. The policy provides coverage, to a maximum total
liability in any policy year of $2,000,000, in respect of insured losses
incurred by the Company, its subsidiary and each director and officer of the
Company and its subsidiary. Certain claims are subject to a deductible of
$75,000 applicable with respect to all losses resulting from the same event or
related events. The Articles of the Company provide that the Company will
indemnify each director of the Company, and the Secretary of the Company, from
and against, among other things, all costs, charges and expenses incurred by
them in an action to which they are made a party by reason of being or having
been a director, or the Secretary of the Company, as the case may be.
The Articles also provide that the Company may indemnify, among others,
directors of the Company's subsidiary and other officers of the Company and
its subsidiary. Any such indemnification pursuant to the Company's Articles
is subject to the limitations set out in the Company Act.
REPORT ON CORPORATE GOVERNANCE
During 1995, the TSE adopted a requirement that listed corporations report
annually to their shareholders on their corporate governance practices and
policies in relation to the guidelines (the "Guidelines") set out in the
"Report of The Toronto Stock Exchange Committee on Corporate Governance"
published in December 1994 and now incorporated in the TSE's listing
requirements. The following is an explanation of the Company's system of
corporate governance in relation to the Guidelines.
Mandate and Responsibility of the Board
The board of directors of the Company (the "Board") is responsible for
supervising management in carrying on the business and affairs of the Company.
Directors are required to exercise their powers with reasonable prudence in
the best interests of the Company. The Board has expressly confirmed its
commitment to the principles set out in the Guidelines and has accepted and
confirmed its responsibility for overseeing management's performance in the
following particular areas as set out in the Guidelines:
(1) the strategic planning process of the Company;
(2) identification and management of the principal risks associated with the
business of the Company;
(3) planning for succession of management;
(4) the Company's policies regarding communications with its shareholders and
others;
(5) the establishment by the Company of, and compliance with, appropriate
environmental policies; and
(6) the integrity of the internal controls and management information system
of the Company.
In carrying out its mandate, the Board relies primarily on management to
provide it with regular detailed reports on the operations of the Company and
its financial position. The Board reviews and assesses these reports and
other information provided to it at meetings of the full Board and its
committees.
Mr. Banning is a member of the Board, giving the Board direct access to
information on his areas of responsibility. Other management personnel attend
Board meetings on request to provide information and answer questions.
The reports and information provided to the Board on a regular basis discuss
the Company's operations with respect to the exploration and development of
the Soledad Mountain Project and include such matters as the drilling program,
permitting process, property acquisitions, staff additions and changes,
financing and investor relations activities, expenditures and results of
operations and the procedures followed to monitor and manage the risks
associated with the Company's operations. At least semi-annually, management
reports to the Board on its strategic and business plan, performance relative
to that plan and any changes in the plan.
From time to time, members of the Board may be involved with management in
developing recommendations to the full Board on particular issues such as
acquisitions or financings. Certain areas of the Board's responsibility are
delegated to regular or special committees of the Board which report back to
the full Board on their considerations.
Composition of the Board
The Guidelines recommend that a board of directors should be constituted with
a majority of individuals who qualify as "unrelated directors". An unrelated
director is defined as a director who is independent of management and is free
from any interest and any business or other relationship which could, or could
reasonably be perceived to, materially interfere with the director's ability
to act with a view to the best interests of the corporation, other than
interests and relationships arising from shareholding. Based on this
definition, the Board has determined that five of the Company's six directors
qualify as unrelated directors. Mr. Banning, the President and Chief
Executive Officer, is a related director. Although Mr. Schramm is a partner
in a law firm that provides legal services to the Company, the Board takes the
view that Mr. Schramm is an unrelated director, for the purposes of the
Guidelines, on the basis that such relationship could not reasonably be
perceived to materially interfere with his ability to act with a view to the
best interests of the Company. The Board does not have a "significant
shareholder" within the meaning of the Guidelines.
The Chairman of the Board, Edward G. Thompson, is not a member of management
of the Company.
Committees of the Board
The Board has had two standing committees: the Audit Committee and the
Compensation Committee. These committees are comprised entirely of unrelated
directors with the exception of the Audit Committee, of which the President
and Chief Executive Officer is a member. The Company does not have an
Executive Committee.
The Audit Committee reviews and recommends for approval by the Board the
Company's annual and six-month interim financial statements and all external
financial reporting. It also reviews and follows up on major findings of
financial audits to ensure the Company has an effective system of internal
controls. The Audit Committee has direct access to the Company's external
auditors to discuss and review specific issues as appropriate.
The Compensation Committee has responsibility for matters relating to
executive and director compensation and planning for the succession of
management of the Company.
The Board as a whole takes responsibility for developing the Company's
approach to corporate governance issues, including, among other things, the
Company's response to the Guidelines. The Board as a whole assesses and will
make any changes necessary to improve Board effectiveness and will consider
and, if deemed advisable, establish a formal process of identifying,
recruiting, appointing, re-appointing and providing ongoing development for
directors.
Decisions Requiring Approval of the Board
Although the Board has delegated responsibility for the day to day management
of the Company to the President and Chief Executive Officer, there are certain
significant decisions which require the prior approval of the Board. These
include decisions with respect to major capital expenditures, the appointment
of and compensation for Company officers, the adoption and amendment of
incentive plans, share issues and repurchases, financing arrangements and
material acquisitions and divestitures. Significant disclosure documents are
also subject to Board review and approval.
Recruitment of New Directors and Assessment of Board Performance
The Board recruits new directors as needed from time to time. Any appointment
of a new director requires Board approval and is subject, ultimately, to
approval by the members of the Company at the next annual general meeting of
members of the Company. The Board is responsible for evaluating the
effectiveness of the Board and the performance of directors.
Shareholder Feedback and Concerns
Under the direction of the President and Chief Executive Officer, the Company
undertakes a comprehensive investor relations program. The scope of the
program includes presentations to and meetings with institutional investors,
discussions with individual shareholders and the maintenance of an ongoing
dialogue with gold industry analysts and other stakeholders. Regular reports
with respect to these matters are made to the Board by the President and Chief
Executive Officer.
Board's Expectations of Management
The process of setting the Board's expectations of management begins with the
development of a strategic plan for the Company. Once the strategic plan has
been approved by the Board, it is management's responsibility to successfully
implement the plan. Management reviews periodically with the Board its
progress to date on the implementation of the strategic plan. On an annual
basis, management also prepares an operating and financial plan for the
upcoming year against which short term performance is measured. Performance
in relation to the annual plan and other short term objectives is reviewed
with the Board on a regular basis.
In the Board's opinion, the current corporate governance practices of the
Company are adequate and appropriate for a company at its stage of development
and are consistent with both the spirit and intent of the Guidelines. The
Board will continue to review, and change where necessary, its approach to
corporate governance.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
VenturesTrident II, L.P. ("VT II") is a limited partnership that owns
4,758,061 Common Shares, representing approximately 21.4% of the Common Shares
outstanding on April 15, 1997. On May 23, 1996, VT II purchased 500,000
special warrants on the same terms and conditions as other purchasers who
participated in the Company's offering of 5,500,000 special warrants. All of
such special warrants were exercised during the Company's financial year ended
December 31, 1996. On such exercise, VT II acquired an aggregate of 500,000
Common Shares and 250,000 warrants, each such warrant entitling its holder to
purchase a Common Share at a price of C$2.90 until November 28, 1997.
AVAILABILITY OF DOCUMENTS
The Annual Report of the Company dated December 31, 1996 accompanying this
Information Circular contains, among other things, the Company's audited
consolidated financial statements for the financial year ended December 31,
1996, the auditor's report on such statements and Management's Discussion and
Analysis of Results of Operations. Additional copies of the Annual Report and
this Proxy Statement and Information Circular, as well as the most recent
interim financial statements subsequent to the Company's annual financial
statements, may be obtained upon request from the Vice-President -
Administration and Controller, Suite 211-A, Green Flag Building, 104 South
Freya, Spokane, Washington, 99202.
The contents and sending of this Proxy Statement and Information Circular have
been approved by the board of directors.
BY ORDER OF THE BOARD OF DIRECTORS,
Bernard F. Goodson
Vice-President - Administration and Controller
<PAGE>
GOLDEN QUEEN MINING CO. LTD.
PROXY
THIS PROXY IS SOLICITED BY THE MANAGEMENT OF GOLDEN QUEEN MINING CO. LTD.
("THE COMPANY") FOR USE AT THE ANNUAL GENERAL MEETING OF MEMBERS OF THE
COMPANY TO BE HELD ON JUNE 4, 1997 AND ANY ADJOURNMENT THEREOF.
I, the undersigned, hereby appoint Steven W. Banning or failing him, Bernard
F. Goodson, or instead of either of them, _______________________________, as
proxy nominee, with full power of substitution, to attend, vote and act on my
behalf in respect of all (or ________________________________) of the common
shares of the Company ("Common Shares") registered in my name or designated in
a duly executed omnibus proxy, as the case may be, at the Annual General
Meeting (the "Meeting") of members of the Company to be held on June 4, 1997
and at any adjournment of that Meeting. I direct that such Common Shares
shall be voted, or withheld from voting, as specified below (and, if not so
specified, to be voted for the following):
1. To elect as directors: For Withhold Vote
Steven W. Banning
Gordon C. Gutrath
Jerrold W. Schramm
Chester Shynkaryk
Christopher M. T. Thompson
Edward G. Thompson
For Withhold Vote
2. To appoint BDO Dunwoody as auditors:
For Withhold Vote
3. To authorize the directors to fix
the remuneration of the auditors:
Signed this _____ day of _________________________, 1997.
________________________________________________
(Signature of Registered Holder of Common Shares)
________________________________________________
(Print Name)
If this proxy is not dated, it is deemed to bear the date that it was mailed
to the member.
THIS IS YOUR PROXY. PLEASE COMPLETE AND RETURN IN THE ENVELOPE PROVIDED.
