SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
MINERA ANDES INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: Set forth the amount on which
the filing fee is calculated and state how it was determined.
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] 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.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
MINERA ANDES INC.
3303 North Sullivan Road
Spokane, Washington, 99216 U.S.A.
NOTICE
------
OF THE ANNUAL GENERAL AND SPECIAL MEETING OF COMMON SHAREHOLDERS
TO THE SHAREHOLDERS:
TAKE NOTICE that an Annual General and Special Meeting of the Shareholders of
Minera Andes Inc. (the Corporation") will be held in the Waterton Room at the
Westin Hotel, 320 - 4th Avenue S.W., Calgary, Alberta, at the hour of 10:00 a.m
(Calgary time), on June 26, 1998, for the following purposes:
1. to receive and consider the annual report of the board of directors to the
shareholders and the audited financial statements of the Corporation, for
the fiscal year ended December 31, 1997, and the report of the Auditors
thereon;
2. to fix the number of directors to be elected for the ensuing year;
3. to elect a Board of Directors for the ensuing year;
4. to approve an amendment to the Corporation's Stock Option Plan;
5. to appoint Auditors for the ensuing year;
6. to authorize the directors to fix the remuneration to be paid to the
Auditors of the Corporation; and
7. to transact any such other business as may properly be brought before the
Meeting or any adjournment thereof.
Shareholders who are unable to attend the Meeting in person are requested to
date and sign the enclosed form of Instrument of Proxy and return it in the
envelope provided for that purpose.
DATED at the City of Spokane, in the State of Washington, this 15th day of May,
1998.
BY ORDER OF THE BOARD OF DIRECTORS
"Allen V. Ambrose"
Allen V. Ambrose, President
IMPORTANT
It is desirable that as many shares as possible be represented at the meeting.
If you do not expect to attend and would like your shares represented, please
complete the enclosed instrument of proxy and return it as soon as possible in
the envelope provided for that purpose. All proxies, to be valid, must be
deposited at the office of the Registrar and Transfer Agent of the Corporation,
Montreal Trust Company of Canada, 6th Floor, Western Gas Tower, 530 - 8th Avenue
S.W., Calgary, Alberta, T2P 3S8, at least forty eight (48) hours prior to the
meeting or any adjournment thereof.
<PAGE>
[Minera Logo]
NOTICE OF
- and -
MANAGEMENT INFORMATION CIRCULAR
FOR THE ANNUAL GENERAL AND SPECIAL MEETING OF
COMMON SHAREHOLDERS OF
MINERA ANDES INC.
DATED JUNE 26, 1998
THIS NOTICE AND MANAGEMENT INFORMATION CIRCULAR IS FURNISHED IN CONNECTION WITH
THE SOLICITATION BY THE MANAGEMENT OF MINERA ANDES INC. OF PROXIES TO BE VOTED
AT THE ANNUAL GENERAL AND SPECIAL MEETING OF ALL COMMON SHAREHOLDERS
TO BE HELD AT:
THE WESTIN HOTEL
320 - 4th Avenue S.W.
Calgary, Alberta, T2P 2S6
In the Waterton Room
Friday, June 26, 1998,
Minera Andes Inc. Meeting: 10:00 a.m. (Calgary Time)
<PAGE>
TABLE OF CONTENTS
Page #
SOLICITATION OF PROXIES..................................................... -1-
APPOINTMENT AND REVOCATION OF PROXIES....................................... -1-
ADVICE TO BENEFICIAL SHAREHOLDERS........................................... -2-
VOTING OF PROXIES........................................................... -2-
VOTING SHARES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............................. -3-
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS............................ -5-
Compensation of Directors............................................... -5-
Compensation of Officers................................................ -5-
Stock Options........................................................... -7-
Long-term Incentive Plans............................................... -8-
Stock Appreciation Rights and Restricted Shares......................... -8-
Stock Option and SAR Repricing.......................................... -8-
Pension and Retirement Plans and Payments made
upon Termination of Employment........................................ -8-
Employment and Management Contracts..................................... -9-
Stock Option Plan....................................................... -9-
Description of the Plan................................................ -10-
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS........................... -15-
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
AND IN MATTERS TO BE ACTED UPON................................... -15-
PARTICULARS OF MATTERS TO BE ACTED UPON.................................... -15-
CERTIFICATE................................................................ -21-
<PAGE>
MINERA ANDES INC.
3303 North Sullivan Road
Spokane, Washington
U.S.A.
99216
MANAGEMENT INFORMATION CIRCULAR
-------------------------------
FOR THE ANNUAL GENERAL AND SPECIAL MEETING OF COMMON SHAREHOLDERS
June 26, 1998
ALL AMOUNTS OF MONEY WHICH ARE REFERRED TO IN THIS MANAGEMENT INFORMATION
CIRCULAR ARE EXPRESSED IN LAWFUL MONEY OF THE UNITED STATES UNLESS OTHERWISE
SPECIFIED
NOTE: Shareholders who do not hold their shares in their own name, as registered
shareholders, should read "Advice to Beneficial Shareholders" within for an
explanation of their rights.
SOLICITATION OF PROXIES
-----------------------
THIS MANAGEMENT INFORMATION CIRCULAR IS PROVIDED IN CONNECTION WITH THE
SOLICITATION OF PROXIES BY THE MANAGEMENT OF MINERA ANDES INC. ("the
Corporation") of proxies for the Annual General and Special Meeting of the
Shareholders of the Corporation (the "Meeting") to be held on June 26, 1998, at
10:00 a.m. (Calgary time) in the Waterton Room, at the Westin Hotel, 320 - 4th
Avenue S.W., Calgary, Alberta, or at any adjournment thereof for the purposes
set forth in the accompanying Notice of Meeting. The Management Information
Circular will be mailed on or about May 20, 1998.
Although it is expected that the solicitation of proxies will be primarily by
mail, proxies may also be solicited personally or by telephone, telegraph or
personal interview by regular employees of the Corporation, at a nominal cost.
In accordance with National Policy No. 41, arrangements have been made with
brokerage houses and other intermediaries, clearing agencies, custodians,
nominees and fiduciaries to forward solicitation materials to the beneficial
owners of the common shares held of record by such persons and the Corporation
may reimburse such persons for reasonable fees and disbursements incurred by
them in doing so. The costs thereof will be borne by the Corporation.
APPOINTMENT AND REVOCATION OF PROXIES
-------------------------------------
The persons named in the enclosed Instrument of Proxy, Allen V. Ambrose,
President, of Spokane, Washington and Bonnie L. Kuhn, Secretary, of Calgary,
Alberta, have been selected by the directors of the Corporation and have
indicated their willingness to represent as proxy the shareholder who appoints
them. A SHAREHOLDER HAS THE RIGHT TO DESIGNATE A PERSON (WHO NEED NOT BE A
SHAREHOLDER) OTHER THAN ALLEN V. AMBROSE OR BONNIE L. KUHN, BEING THE MANAGEMENT
DESIGNEES, TO REPRESENT HIM OR HER AT THE MEETING. Such right may be exercised
by inserting in the space provided for that purpose on the Instrument of Proxy
the name of the person to be designated and deleting therefrom the names of the
management designees, or by completing another proper form of proxy. Such
shareholder should notify the nominee of the appointment, obtain a consent to
act as proxy and should provide instructions on how the shareholder's shares are
to be voted. In any case, the form of proxy should be dated and executed by the
shareholder or an attorney authorized in writing, with proof of such
authorization attached, where an attorney executed the proxy form.
<PAGE>
-2-
A form of proxy will not be valid for the Meeting or any adjournment thereof
unless it is completed and delivered to the Montreal Trust Company of Canada,
6th Floor, Western Gas Tower, 530 - 8th Avenue S.W., Calgary, Alberta, T2P 3S8,
at least forty-eight (48) hours prior to the Meeting or any adjournment thereof.
Late proxies may be accepted or rejected at any time prior to the commencement
time of the Meeting by the Chairman of the Meeting in his discretion and the
Chairman is under no obligation to accept or reject any particular late proxy.
In addition to revocation in any other manner permitted by law, a shareholder
who has given a proxy may revoke it, any time before it is exercised, by
instrument in writing executed by the shareholder or by his attorney authorized
in writing and deposited either at the registered office of the Corporation at
any time up to and including the last business day preceding the day of the
Meeting, or any adjournment thereof, at which the proxy is to be used, or with
the chairman of the Meeting on the day of the Meeting or any adjournment
thereof. In addition, a proxy may be revoked by the shareholder personally
attending at the meeting and voting his shares.
ADVICE TO BENEFICIAL SHAREHOLDERS
---------------------------------
Shareholders who do not hold their shares in their own name (referred to herein
as "Beneficial Shareholders") are advised that only proxies from shareholders of
record can be recognized and voted upon at the Meeting. Beneficial Shareholders
who complete and return a proxy must indicate thereon the person (usually a
brokerage house) who holds their shares as a registered shareholder. Every
intermediary (broker) has its own mailing procedure, and provides its own return
instructions, which should be carefully followed. The Instrument of Proxy
supplied to Beneficial Shareholders is identical to that provided to registered
shareholders. However, its purpose is limited to instructing the registered
shareholder how to vote on behalf of the Beneficial Shareholder.
All references to shareholders in this Management Information Circular and the
accompanying Instrument of Proxy and Notice of Meeting are to shareholders of
record unless specifically stated otherwise. Where documents are stated to be
available for review or inspection, such items will be shown upon request to
registered shareholders who produce proof of their identity.
VOTING OF PROXIES
-----------------
The persons named in the enclosed Instrument of Proxy are directors and\or
officers of the Corporation who have indicated their willingness to represent as
proxy the shareholder who appoints them. Each shareholder may instruct his Proxy
how to vote his shares by completing the blanks on the Instrument of
Proxy.
All common shares represented at the meeting by properly executed proxies will
be voted (including the voting on any ballot), and where a choice with respect
to any matter to be acted upon has been specified in the instrument of proxy,
the common shares represented by the proxy will be voted in accordance with such
specification. IN THE ABSENCE OF ANY SUCH SPECIFICATION, THE MANAGEMENT
DESIGNEES, IF NAMED AS PROXY, WILL VOTE IN FAVOUR OF THE MATTERS SET OUT
THEREIN.
The enclosed instrument of proxy confers discretionary authority upon the
management designees, or other persons named as proxy, with respect to
amendments to or variations of matters identified in the notice of meeting and
any other matters which may properly come before the Meeting. As of the date
hereof, the Corporation is not aware of any amendments to, variations of or
other matters which may come before the Meeting. In the event that other matters
come before the Meeting, then the management designees intend to vote in
accordance with the judgment of the management of the Corporation.
<PAGE>
-3-
VOTING SHARES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-------------------------------------------
The authorized share capital of the Corporation consists of an unlimited number
of Common Shares and an unlimited number of Preferred Shares (non-voting). As of
the effective date of this Management Information Circular, being May 5, 1998
unless otherwise indicated (the "Effective Date"), the issued and outstanding
share capital of the Corporation consists of 19,936,433 Common Shares. To date,
no Preferred Shares have been issued.
The Corporation will prepare a list of shareholders of record at the close of
business on May 14, 1998 (the "Record Date"). A holder of Common Shares named on
that list will be entitled to vote such Common Shares at the Meeting on the
basis of one vote for each Common Share held except to the extent that, (i) the
holder transfers his or her Common Shares after the close of business on the
Record Date, and (ii) such transferee produces properly endorsed share
certificates to the Secretary or Transfer Agent of the Corporation or otherwise
establishes his or her ownership of the Common Shares, at least ten (10) days
prior to the Meeting, in which case the transferee may vote those Common Shares
at the Meeting.
The By-laws of the Corporation provide that holders present not being less than
two (2) in number and holding or representing not less than ten (10%) percent of
the issued Common Shares of the Corporation, shall constitute a quorum for the
meeting in respect of holders of Common Shares.
The following table sets forth certain information regarding the beneficial
ownership, as of May 5, 1998 of the Common Shares by (i) each person known by
the Corporation to own beneficially more than 5% of the Common Shares, (ii) each
director of the Corporation, (iii) each officer of the Corporation and (iv) all
directors and executive officers as a group. Except as otherwise noted, the
Corporation believes the persons listed below have sole investment and voting
power with respect to the Common Shares owned by them.
<TABLE>
<CAPTION>
Shares Beneficially Percentage of
Name and Place of Residence Owned (1) Common Shares (1)
- --------------------------- ------------------- -----------------
<S> <C> <C>
Officers & Directors
Allen V. Ambrose 422,200 (2) 2.12%
Spokane, WA
Armand Hansen 316,000 (3) 1.59%
Spokane, WA
John Johnson Crabb 170,000 (3) 0.85%
Madeira Park, B.C.
Brian Gavin 440,400 (2) 2.20%
Spokane, WA
A.D. (Darryl) Drummond 120,000 (4) 0.60%
Vancouver, B.C.
Bonnie L. Kuhn 71,000 (5) 0.37%
Calgary, Alberta
Allan J. Marter 120,000 (4) 0.60%
Littleton, CO
<PAGE>
-4-
Shares Beneficially Percentage of
Name and Place of Residence Owned (1) Common Shares (1)
- --------------------------- ------------------- -----------------
<S> <C> <C>
5% or Greater Shareholders
Neal A. and Joan L. Degerstrom 5,000,000 (6)(7) 25.08%
3303 North Sullivan Road
Spokane, WA 99216
Cominco Ltd. 1,315,791 (8)(9) 6.60%
Toronto, Ontario
CEDE & Co. (10) 6,144,441 30.82%
New York, New York
CDS & Co. (10) 4,528,652 22.72%
Toronto, Ontario
All directors and executive 1,659,600 8.32%
officers as a group (8 persons)
Notes:
(1) Common Shares which the person or group has the right to acquire within 60
days after May 5, 1998 are deemed to be outstanding in determining the
beneficial ownership of the person or group and in calculating percentage
ownership of the person or group, but are not deemed to be outstanding as
to any other person or group.
(2) Includes stock options entitling the holder to acquire 50,000 shares upon
payment of Cdn $1.44, 110,000 shares upon payment of Cdn $1.15 (these
options originally had an exercise price of Cdn $2.18 but were repriced
subsequent to the Corporation's year end on December 31, 1997), 80,000
shares upon payment of Cdn $1.15 (these options originally had an exercise
price of Cdn $2.00 but were repriced subsequent to the Corporation's year
end on December 31, 1997) and 30,000 shares upon payment of Cdn $1.10.
(3) Includes stock options entitling the holder to acquire 20,000 shares upon
payment of Cdn $1.44, 60,000 shares upon payment of Cdn $1.15 (these
options originally had an exercise price of Cdn $2.18 but were repriced
subsequent to the Corporation's year end on December 31, 1997), 40,000
shares upon payment of Cdn $1.15 (these options originally had an exercise
price of Cdn $2.00 but were repriced subsequent to the Corporation's year
end on December 31, 1997) and 20,000 shares upon payment of Cdn $1.10.
(4) Includes stock options entitling the holder to acquire 60,000 shares upon
payment of Cdn $1.15 (these options originally had an exercise price of Cdn
$2.18 but were repriced subsequent to the Corporation's year end on
December 31, 1997), 40,000 shares upon payment of Cdn $1.15 (these options
originally had an exercise price of Cdn $2.00 but were repriced subsequent
to the Corporation's year end on December 31, 1997) and 20,000 shares upon
payment of Cdn $1.10.
(5) Includes stock options entitling the holder to acquire 60,000 shares upon
payment of Cdn$1.27 (these options originally had an exercise price of Cdn
$1.73 but were repriced subsequent to the Corporation's year end on
December 31, 1997) and 10,000 shares upon payment of Cdn $1.10.
(6) The Common Shares are owned beneficially by Mr. and Mrs. Degerstrom by
virtue of their combined majority control of the record owner, N.A.
Degerstrom, Inc. ("Degerstrom").
(7) Includes 1,333,334 Common Shares held in escrow at December 31, 1997. Does
not include 1,213,409 Common Shares reserved for issuance to Degerstrom
upon the satisfaction of certain performance criteria.
(8) Includes 438,597 Common Shares reserved for issuance to Cominco Ltd. upon
the exercise of share purchase warrants at a price of Cdn$1.53 (these
warrants originally had an exercise price of Cdn $3.98 but were repriced
subsequent to the Corporation's year end on December 31, 1997).
(9) The Chairman of the Board of Cominco Ltd. is Norman B. Keevil and the
President and Chief Executive Officer is David A. Thompson. Cominco Ltd. is
a public corporation.
(10) The parties named are intermediaries. The beneficial ownership of the
Common Shares listed is not known.
</TABLE>
<PAGE>
-5-
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
------------------------------------------------
A. Compensation of Directors
The Corporation has six directors, three of whom are executive officers. During
the fiscal period ended December 31, 1997, the Corporation paid no cash
compensation (including salaries, director's fees, commissions, bonuses paid for
services rendered, bonuses paid for services rendered in a previous year, and
any compensation other than bonuses earned by the directors for services
rendered) to the directors for services rendered as such.
Three (3) of the directors were, at December 31, 1997, and currently are
executive officers of the Corporation. Executive officers of the Corporation who
also act as directors do not receive any additional compensation for services
rendered in their capacity as directors other than as paid by the Corporation to
such executive officers in their capacity as executive officers. See
"Compensation of Officers". The Corporation does carry liability insurance for
its directors.
During the fiscal year ended December 31, 1997, a total of 380,000 stock options
were granted to directors
of the Corporation.
B. Compensation of Officers
1. Cash
During the fiscal period ended December 31, 1997, the Corporation employed three
(3) executive officers, Allen V. Ambrose, President, Brian Gavin, Vice
President, Exploration and Allan J. Marter, Chief Financial Officer all of whom
continue to be employed. The aggregate cash compensation (including salaries,
directors' fees, commissions, bonuses paid for services rendered, bonuses paid
for services rendered in a previous year, and any compensation other than
bonuses earned) paid to such executive officers and corporations controlled by
them, by the Corporation and its subsidiaries for services rendered during the
fiscal period ended December 31, 1997, was $279,789. Other than as herein set
forth, the Corporation did not pay any additional compensation to its executive
officers (including personal benefits and securities or properties paid or
distributed which compensation was not offered on the same terms to all fulltime
employees).
The following table sets forth total compensation paid by the Corporation and
its subsidiaries, as the case may be, for that portion of the last three fiscal
years in which the above were in existence in respect of the President and those
officers whose compensation in the last fiscal year was $100,000 Cdn or more
(the "Named Executive Officers"); in this case Allen V. Ambrose, President and
Brian Gavin, Vice President, Exploration.
<PAGE>
-6-
<TABLE>
<CAPTION>
Statement of Executive Compensation
-----------------------------------
Long-Term Compensation
----------------------------------------------
Awards Payouts
----------------------- --------
Securities
Annual Compensation Granted
------------------------------------- Under
Performance Option Restricted
Right Other Annual /SARS (1) Shares or LTIP (2) All other
Name and Principal ($) Compensation Granted Restricted Payouts Compensation
Position Year Salary ($) (Bonus) ($) # Share-Units ($) ($)
- ------------------- ---------------- ---------- ----------- ----------------- ---------- ----------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allen V. Ambrose January 1, 1995- 57,354.51 Nil 6,969 (3)(5) Nil Nil Nil Nil
President and December 31,
Director 1995
January 1, 1996- 64,715 Nil 9,464 (4)(7) 160,000 Nil Nil Nil
December 31,
1996
January 1, 1997- 89,126 Nil 11,436 (9)(11) 80,000 Nil Nil Nil
December 31,
1997
Brian Gavin January 1, 1995- 99,610.07 Nil 9,916.20 (3)(6) Nil Nil Nil Nil
Vice President, December 31,
Exploration 1995
January 1, 1996- 113,239.92 Nil 13,624.80 (4)(8) 160,000 Nil Nil Nil
December 31,
1996
January 1, 1997- 117,510 Nil 13,762 (10)(11) 80,000 Nil Nil Nil
December 31,
1997
Notes:
(1) "SARS" or "Stock appreciation right" means a right granted by the
Corporation, as compensation for services rendered, to receive a payment of
cash or an issue or transfer of securities based wholly or in part on
changes in the trading price of publicly traded securities of the
Corporation.
(2) "LTIP " or "long term incentive plan" means any plan which provides
compensation intended to serve as incentive for performance to occur over a
period longer than one financial year, but does not include option or stock
appreciation right plans or plans for compensation through restricted
shares or restricted share units.
(3) Allen V. Ambrose and Brian Gavin, as employees of Degerstrom provided
services under the Operating Agreement dated March 15, 1995 among
Degerstrom, the Corporation, Minera Andes S.A. and NAD (S.A.) ("Operating
Agreement"), which services were invoiced to the Corporation under the said
agreement. The compensation Degerstrom paid to Mr. Ambrose was invoiced 89%
to the Corporation and Mr. Gavin's compensation was invoiced 100% to the
Corporation.
(4) Allen V. Ambrose and Brian Gavin, as employees of Degerstrom provided
services under the Operating Agreement, which services were invoiced to the
Corporation under the said agreement. The compensation Degerstrom paid to
Mr. Ambrose was invoiced 99% to the Corporation and Mr. Gavin's
compensation was invoiced 100% to the Corporation, including the employer
portion of FICA Social Security, Washington Unemployment Insurance,
Washington Workers Compensation, FICA Medicare, FUTA and Argentine
benefits, in the case of Brian Gavin.
(5) From January to March 1995, Degerstrom invoiced the Corporation on a flat
rate basis for items including the employer portion of FICA Social
Security, Washington Unemployment Insurance, Washington Workers
Compensation and FICA Medicare. In addition, included in the flat rate
charged to the Corporation were benefits received by Allen V. Ambrose
including 401 K Base, 401 K Match and medical insurance. These charges were
$5,970; no break down is available. From April to December 1995, the
following benefits were provided to Allen V. Ambrose and billed by
Degerstrom to the Corporation:
401 K Base 2,763.00
401 K Match 921.00
Medical Insurance 3,285.00
(6) From January to March 1995, Degerstrom invoiced the Corporation on a flat
rate basis for items including the employer portion of FICA Social
Security, Washington Workers Compensation, FICA Medicare and Argentine
benefits. In addition, included in the flat rate charged to Degerstrom were
benefits received by Brian Gavin including 401 K Base, 401 K Match and
medical insurance. These charges were $10,644; no break down is available.
From April to December 1995, the following benefits were provided to Brian
Gavin and billed by Degerstrom to the Corporation:
<PAGE>
-7-
401 K Base 4,973.40 401 K Match 1,657.80 Medical Insurance 3,285.00
(7) From January 1996 to December 1996 the following benefits were provided to
Allen V. Ambrose and billed by Degerstrom to the Corporation: 401 K Base
3,813.00 401 K Match 1,271.00 Medical Insurance 4,380.00
(8) From January 1996 to December 1996 the following benefits were provided to
Brian Gavin and billed by Degerstrom to the Corporation:
401 K Base 6,933.60
401 K Match 2,311.20
Medical Insurance 4,380.00
(9) From January 1997 to December 1997 the following benefits were provided to
Allen V. Ambrose and billed by Degerstrom to the Corporation:
401 K Base 5,292.00
401 K Match 1,764.00
Medical Insurance 4,380.00
(10) From January 1997 to December 1997 the following benefits were provided to
Brian Gavin and billed by Degerstrom to the Corporation: 401 K Base
7,036.00 401 K Match 2,345.00 Medical Insurance 4,380.00 (11) Allen V.
Ambrose and Brian Gavin, as employees of Degerstrom provided services under
the Operating Agreement, which services were invoiced to the Corporation
under the said agreement. The compensation Degerstrom paid to Mr. Ambrose
was invoiced 100% to the Corporation and Mr. Gavin's compensation was
invoiced 100% to the Corporation, including the employer portion of FICA
Social Security, Washington Unemployment Insurance, Washington Workers
Compensation, FICA Medicare, FUTA and Argentine benefits, in the case of
Brian Gavin.
</TABLE>
2. Stock Options
The Named Executive Officers of the Corporation were granted 160,000 Stock
Options during the fiscal period ended December 31, 1997. The following table
sets forth stock options granted during the fiscal year ended December 31, 1997,
to the Named Executive Officers:
<TABLE>
<CAPTION>
OPTIONS GRANTED DURING THE FISCAL YEAR ENDED DECEMBER 31, 1997
--------------------------------------------------------------
Potential Realizable
Number of Value at Assumed
Common % of Total Annual Rates of
Shares Options Market Price Exercise Price Stock Price
Reserved Granted to as at Date of Per Common Appreciation for
Under Employees in Grant Share Option Term (6)
Name of Optionee Option Fiscal Year Cdn $ Cdn $ Expiry Date 5% 10%
- -------------------- ----------- ------------- ------------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Allen V. Ambrose(3) 80,000 11.75 $2.55 $2.00(5) February 17, $25,220 $52,960
President 2000
Brian Gavin(4) 80,000 11.75 $2.55 $2.00(5) February 17, $25,220 $52,960
Vice President, 2000
Exploration
Notes:
(1) On May 5, 1998 the closing price of the Common Shares on The Alberta Stock
Exchange was Cdn $1.55.
(2) All amounts in this table are in Canadian dollars.
(3) Executive Officer who is also a director.
(4) Executive Officer of the Corporation and Director of MASA.
(5) Subsequent to December 31, 1997, The Alberta Stock Exchange consented to
the above options being repriced to Cdn $1.15 per Common Share.
(6) In accordance with rules of the Securities and Exchange Commission, these
amounts are the hypothetical gains or "option spreads" that would exist for
the respective options based on assumed rates of annual compound stock
price appreciation of 5% and 10% from the date the options were granted
over the full option term.
</TABLE>
<PAGE>
-8-
The following table sets forth details of the fiscal year-end value of
unexercised options on an aggregated basis held by the Named Executive Officers
for the fiscal year ended December 31, 1997:
<TABLE>
<CAPTION>
AGGREGATED OPTION VALUES FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
Value of Unexercised In-
the-Money Options at
Unexercised Options
Securities Aggregate at Most Recent Year Most Recent Year End
Acquired on Value End (#) (Cdn $)(1)(2)(5)
Exercise Realized Exercisable Exercisable
Name (#) ($) /Unexercisable /Unexercisable
- ------------------- ----------- ---------- ------------------- ------------------------
<S> <C> <C> <C> <C>
Allen V. Ambrose, 0 0 240,000 0\0
President
Brian Gavin, 0 0 240,000 0\0
Vice President,
Exploration
Notes:
(1) Value of unexercised in-the-money options calculated using the closing
price of Common Shares on The Alberta Stock Exchange on December 31, 1997,
less the exercise price of in-the-money stock options.
(2) On December 31, 1997 the last day the Common Shares traded in 1997, the
closing price of the Common Shares on The Alberta Stock Exchange was Cdn
$1.20.
(3) The amounts are in Canadian dollars.
(4) Further options to acquire Common Shares of the Corporation were granted in
March of 1998.
(5) The above options were repriced subsequent to the Corporation's year end of
December 31, 1997.
</TABLE>
3. Long-term Incentive Plans
The Corporation has not had and does not currently have any long term incentive
plans, other than stock options to be granted from time to time by the board of
directors under the provisions of the Corporation's
stock option plan. See "Stock Option Plan".
4. Stock Appreciation Rights and Restricted Shares
No stock appreciation rights or restricted shares were granted by the
Corporation to the Named Executive Officers of the Corporation during the fiscal
periods ended December 31, 1995, December 31, 1996 or December 31, 1997.
Furthermore, no stock appreciation rights were exercised.
5. Stock Option and SAR Repricing
The Corporation did not make any downward repricing of stock options or stock
appreciation rights either during the fiscal periods ended December 31, 1995,
December 31, 1996 or December 31, 1997.
6. Pension and Retirement Plans and Payments made upon Termination of
Employment
The Corporation does not have in place any pension or retirement plan. The
Corporation has not provided compensation, monetary or otherwise, during the
preceding fiscal year, to any person who now acts or has previously acted as a
Named Executive Officer of the Corporation, in connection with or related to the
retirement, termination or resignation of such person and the Corporation has
provided no compensation to such persons as a result of a change of control of
the Corporation, its subsidiaries or affiliates. The Corporation is not party to
any compensation plan or arrangement with a Named
<PAGE>
-9-
Executive Officer resulting from the resignation, retirement or the termination
of employment of such person.
7. Employment and Management Contracts
(a) N.A. Degerstrom, Inc. ("Degerstrom") provides management services to the
Corporation and acts as operator of the Corporation's properties and
projects pursuant to an operating agreement entered into on March 15, 1995
("Operating Agreement"). Under the Operating Agreement, Degerstrom operates
and manages the exploration program on all properties and provides related
offsite administrative assistance as required. This agreement allows the
Corporation to minimize its overhead by providing for reimbursement to
Degerstrom of direct out of pocket and certain allocated indirect costs and
expenses and the payment of a management fee of 15%. During the year ended
December 31, 1997 administrative fees were paid to Degerstrom of $58,997 on
total costs incurred by the Corporation of $841,131. Equipment rentals of
$50,270 were included in the total costs for 1997.
(b) The Corporation has entered into an agreement dated April 30, 1996, as
amended on October 31, 1997 with Waiata Resources located in Littleton,
Colorado. The agreement provides that Allan J. Marter, who is the principal
of Waiata Resources ("Waiata") and a director and officer of the
Corporation, will provide financial advisory services to the Corporation
including the oversight of the accounting function and reporting, joint
venture negotiations and documentation, business and financial planning and
the review and evaluation of investment opportunities. Waiata will receive
a retainer of $2,800 per month which will entitle the Corporation of up to
five days of advisory services from Allan J. Marter per month. Additional
advisory services would be paid at the pro rata rate based on $560.00 per
day. The agreement may be terminated by the Corporation upon thirty days
written notice.
C. Stock Option Plan
The Board of Directors of the Corporation has adopted a stock option plan (the
"Plan") which was approved with amendments by the shareholders of the
Corporation at the Annual and Special Meeting of Shareholders held on June 26,
1996. The Corporation maintains a Plan for the benefit of its employees and
others who provide services to the Corporation. The Board of Directors believes
the availability of stock incentives is an important factor in the Corporation's
ability to attract and retain experienced and competent employees and to provide
an incentive for them to exert their best efforts on behalf of the Corporation.
As of May 5, 1998, out of a total of 2,000,000 shares reserved for issuance
under the Plan, only 174,000 shares remained available for grant. The Board of
Directors believes additional shares will be needed under the Plan to provide
appropriate incentives to key employees and others. Accordingly, on May 13, 1998
the Board of Directors approved an amendment to the Plan, subject to shareholder
approval, to reserve an additional 1,000,000 shares for the Plan, thereby
increasing the total number of shares reserved for issuance under the Plan from
2,000,000 to 3,000,000 shares. The amendment to the Plan has been conditionally
approved by The Alberta Stock Exchange ("ASE"). Certain provisions of the Plan
are described below.
<PAGE>
-10-
(a) Description of the Plan
(i) General
The Plan is not subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA") or to the qualification requirements of Section
401(a) of the Internal Revenue Code of 1986, as amended, (the "Code"). Certain
stock options granted under the Plan may be treated as incentive stock options
as defined in Section 422 of the Code ("Incentive Stock Options"). Other stock
options, including all options granted under the Plan to individuals who are not
employees of the Corporation or any of its subsidiaries are not Incentive Stock
Options and are referred to in this Management Information Circular as
"Nonstatutory Stock Options".
The purpose of the Plan is to advance the interests of the Corporation and its
subsidiaries and affiliates by encouraging the directors, officers, employees
and consultants of the Corporation and its subsidiaries to acquire shares in the
Corporation, thereby increasing their proprietary interest in the Corporation,
encouraging them to remain associated with the Corporation and its subsidiaries
and furnishing them with additional incentive in their efforts on behalf of the
Corporation and its subsidiaries in the conduct of their affairs.
(ii) Shares Reserved for Issuance Under the Plan
The shares to be offered under the Plan consist of shares of the Corporation's
authorized but unissued Common Shares. The aggregate number of shares to be
delivered upon the exercise of all options granted under the Plan shall not
exceed 10% of the Corporation's issued and outstanding Common Shares from time
to time, up to a maximum of 2,000,000 shares (3,000,000 shares if the resolution
to increase the number of shares is approved by the shareholders). The number
and kind of shares available for grants under the Plan is subject to adjustment
by the Board of Directors if the outstanding shares of the Corporation are
increased, decreased, changed into or exchanged for a different number or kind
of securities of the Corporation through re-organization, merger,
re-capitalization, re-classification, stock dividend, subdivision or
consolidation.
If any option granted under the Plan expires or terminates for any reason
without having been exercised in full, the unpurchased shares subject thereto
will again become available for the purpose of the Plan. No fractional shares
are issued under the Plan on any such adjustment.
To the Effective Date an aggregate of 1,826,000 stock options have been granted
to the directors, officers, employees and consultants of the Corporation or its
subsidiaries pursuant to the Corporation's Plan. To the Effective Date 75,000
stock options have been exercised and 126,000 stock options have expired.
<PAGE>
-11-
(iii) Administration
The Plan is interpreted and administered by the Board of Directors. A majority
of the Board of Directors constitutes a quorum, and the acts of a majority of
the directors present at any meeting at which a quorum is present, or acts
unanimously approved in writing, shall be the acts of the directors.
Subject to the provisions of the Plan, the Board of Directors has authority to
construe and interpret the Plan and all option agreements entered into
thereunder, to define the terms used in the Plan and in all option agreements
entered into thereunder, to prescribe, amend and rescind rules and regulations
relating to the Plan and to make all other determinations necessary or advisable
for the administration of the Plan. All determinations and interpretations made
by the Board of Directors are binding and conclusive on all participants in the
Plan and on their legal personal representatives and beneficiaries.
Each option granted under the Plan is to be evidenced by an agreement, signed on
behalf of the Corporation and by the optionee, in a form approved by the Board
of Directors.
(iv) Participation and Types of Grants
Directors, officers, management, consultants and employees of the Corporation
are eligible for selection to participate in the Plan (such persons hereinafter
collectively referred to as "Participants"). The Board of Directors determines
to whom options shall be granted, the terms and provisions of the respective
option agreements, the time or times at which such options shall be granted, and
the number of shares to be subject to each option. An individual who has been
granted an option may, if the Participant is otherwise eligible, and if
permitted under the policies of the stock exchange or stock exchanges on which
the Common Shares of the Corporation are listed, be granted an additional option
or options if the directors so determine. The rules of any stock exchange upon
which the Corporation's Common Shares are listed are applicable relative to
options granted to Participants.
(v) Exercise Price
The Board of Directors determines the exercise price of the shares covered by
each option granted under the Plan. The exercise price of options granted under
the Plan may not be less than the closing price of the Corporation's Common
Shares on the stock exchange or stock exchanges on which the Common Shares of
the Corporation are listed on the last trading day immediately preceding the day
on which the stock exchange is notified of the proposed issuance of the option,
less any discounts permitted by the policy or policies of such stock exchange or
stock exchanges.
However, if an option is granted within six months of a public distribution of
the Corporation's shares by way of prospectus, then the minimum exercise price
of such option may, if the policy of such stock exchange or stock exchanges
requires, be the greater of the closing price of the Corporation's shares on the
last trading day immediately preceding the day on which the stock exchange is
notified of the proposed issuance of the option, as provided above, and the
price per share paid by the investing public for shares of the Corporation
acquired by the public during such public distribution, determined in accordance
with the policy or policies of such stock exchange or stock exchanges.
<PAGE>
-12-
(vi) Duration and Exercise of Options
The option period is a period of time fixed by the Board of Directors, not to
exceed the maximum period permitted by any stock exchange on which the
Corporation's shares are then listed or other regulatory body having
jurisdiction, provided that the option period may be reduced with respect to any
option as provided in "Termination of Employment or Service, Death and
Assignment" below.
Except as set forth in "Termination of Employment or Service, Death and
Assignment" below, no option may be exercised unless the Participant is at the
time of such exercise a director, officer, employee or consultant of the
Corporation or any of its subsidiaries or affiliates. Provided, however, that
any other provision to the contrary, an option granted to a consultant in
connection with specific services provided or to be provided by that consultant
may be exercised only after the date of completion of such service and prior to
30 days following the date of completion of such service.
Options may be exercised in amounts and at times determined by the Board of
Directors. The exercise of any option will be contingent upon receipt by the
Corporation at its head office of a written notice of exercise, specifying the
number of shares with respect to which the option is being exercised,
accompanied by cash payment, certified check or bank draft for the full purchase
price of such shares with respect to which the option is exercised. No
Participant or his legal representatives, legatees or distributees will be, or
will be deemed to be, a holder of any shares subject to an option under this
Plan, unless and until the certificates for such shares are issued to such
persons under the terms of the Plan.
No person entitled to exercise an option has any of the rights or privileges of
a shareholder of the Corporation in respect of any shares issuable upon exercise
of such option until certificates representing such shares are issued and
delivered.
(vii) Termination of Employment or Service, Death and Assignment
If a Participant ceases to be a director, officer, employee or consultant of the
Corporation or any of its subsidiaries or affiliates for any reason (other than
death), the Participant may exercise any option then held within 90 days
following the Participant's ceasing to be a director, officer, employee or
consultant, but only if and to the extent that the Participant was entitled to
exercise the option at the date of such
cessation.
In the event of the death of a Participant, any option then held by the
Participant will be exercisable within the twelve months following the
Participant's death, but only: (a) by the person or persons to whom the
Participant's rights under the option pass by the Participant's will or the laws
of descent and distribution; and (b) if and to the extent that the Participant
was entitled to exercise the option at the date of the Participant's death.
(viii) Amendment and Termination of the Plan
The Board of Directors may, at any time, suspend or terminate the Plan. The
Board of Directors may also at any time amend or revise the terms of the Plan,
provided that no such amendment or revision may alter
the terms of any options theretofore granted under the Plan.
<PAGE>
-13-
(b) Summary of United States Federal Income Tax Consequences
(1) Nonstatutory Stock Options
A. General. Under United States federal income tax law now in effect, no income
is realized by the grantee of a Nonstatutory Stock Option until the option is
exercised. When a Nonstatutory Stock Option is exercised, the optionee realizes
ordinary compensation income, and the Corporation generally becomes entitled to
a deduction, in the amount by which the market value of the shares subject to
the Nonstatutory Stock Option at the time of exercise exceeds the exercise
price. With respect to options exercised by certain executive officers, the
Corporation's deduction can in certain circumstances be limited by the
$1,000,000 cap on deductibility set forth in Section 162(m) of the Code. The
Corporation is required to withhold on all amounts treated as ordinary income to
optionees. Upon the sale of shares acquired by exercise of a Nonstatutory Stock
Option, the amount by which the sale proceeds exceed the market value of the
shares on the date of exercise will constitute capital gain which will be
taxable at varying rates depending on the holding period.
B. Exercise by "Insiders". The tax consequences described above also apply to an
optionee who is an "insider" for purposes of Section 16(b) of the Securities
Exchange Act of 1934, as amended, unless both (a) the grant of the option was
not approved by either the Board of Directors or a committee composed solely of
two or more non-employee directors and (b) the insider exercises the option
within six months of the date of grant.
(2) Incentive Stock Options
A. General. Under federal income tax law now in effect, no income will be
recognized by an optionee upon either grant or exercise of an Incentive Stock
Option. The amount by which the market value of shares issued upon exercise of
an Incentive Stock Option exceeds the exercise price, however, is included in
the optionee's alternative minimum taxable income and may, under certain
conditions, be taxed under the alternative minimum tax. If the optionee holds
shares acquired upon exercise of an Incentive Stock Option for two years after
the date of grant and one year after the date of exercise (the "holding
periods"), and if the optionee has been an employee of the Corporation (or of
any parent or subsidiary of the Corporation) at all times from the date of grant
to the date three months before exercise, then any gain realized by the optionee
upon sale or exchange of the shares will be treated as long-term capital gain
and any loss will be long-term capital loss.
Generally, if an optionee disposes of shares acquired upon exercise of an
Incentive Stock Option within the holding periods and all requirements other
than the holding period rules are met (an "early disposition"), the optionee
will recognize ordinary compensation income for the year of disposition equal to
the excess of the market value of the shares on the date of exercise over the
option's exercise price. The remainder of the gain realized upon the early
disposition, if any, will be capital gain and will be taxed at varying rates
depending on the holding period. A special rule limits the amount of ordinary
compensation income that must be recognized to the amount of gain realized by
the optionee upon the early disposition. As a result, the optionee will not be
required to recognize the entire spread between the exercise price and the
market value on the date of exercise as ordinary compensation income if the
early disposition results in either a loss or a gain smaller than the spread at
exercise. If shares acquired upon exercise of an Incentive Stock Option are
disposed of in an early disposition, the Corporation ordinarily will be entitled
to a deduction in the year of disposition equal to the amount of ordinary
compensation income recognized by the optionee.
<PAGE>
-14-
B. Exercise by "Insiders". The tax consequences described above also apply to an
optionee who is an "insider" for purposes of Section 16(b) of the Exchange Act,
unless both (a) the grant of the Incentive Stock Option was not approved by
either the Board of Directors or a committee composed solely of two or more
non-employee directors and (b) the insider exercises the Incentive Stock Option
within six months of the date of grant. Optionees who are insiders should
consult their individual tax advisers before exercising an Incentive Stock
Option in either of those cases.
The following stock options are outstanding to officers, directors, employees
and consultants of the Corporation as of December 31, 1997:
<TABLE>
<CAPTION>
Number of Exercise Price Per
Group Common Shares Common Share
(number of persons in group) Under Option Date of Grant Expiry Date $Cdn
- ---------------------------- --------------- --------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
2 Named Executive Officers 100,000 January 10, 1996 (3) January 10, 1998 1.44
220,000 August 16, 1996 (4) August 16, 1999 2.18
160,000 February 17, 1997 (5) February 17, 2000 2.00
4 Directors (1) 40,000 January 10, 1996 (3) January 10, 1998 1.44
240,000 August 16, 1996 (4) August 16, 1999 2.18
160,000 February 17, 1997 (5) February 17, 2000 2.00
60,000 August 29, 1997 (6) August 29, 2000 1.73
17 Others (2) 65,000 January 10, 1996 (3) January 10, 1998 1.44
90,000 August 16, 1996 (4) August 16, 1999 2.18
180,000 February 17, 1997 (5) February 17, 2000 2.00
60,000 August 29, 1997 (6) August 29, 2000 1.73
------------
Total 1,375,000
============
Notes:
(1) Directors who are not Named Executive Officers.
(2) Includes non Named Executive Officers, employees, consultants of the
Corporation and its subsidiaries.
(3) These options initially expired on January 10, 1998, however, the term was
extended to January 10, 2001, subsequent to the Corporation's year end on
December 31, 1997.
(4) These options originally had an exercise price of Cdn $2.18 but were
repriced to Cdn $1.15 subsequent to the Corporation's year end on December
31, 1997.
(5) These options originally had an exercise price of Cdn $2.00 but were
repriced to Cdn $1.15 subsequent to the Corporation's year end on December
31, 1997.
(6) These options originally had an exercise price of Cdn $1.73 but were
repriced to Cdn $1.27 subsequent to the Corporation's year end on December
31, 1997.
</TABLE>
D. Other Compensation
During the Corporation's fiscal period ended December 31, 1997, the Corporation
accrued and/or paid fees to a law firm for the provision of ongoing legal
services to the Corporation amounting to approximately $84,898. Bonnie L. Kuhn,
the Secretary and Director of the Corporation, is an associate
of such firm.
Other than as set forth herein, the Corporation did not pay any additional
compensation to the executive officers or directors (including personal benefits
and securities or properties paid or distributed which compensation was not
offered on the same terms to all full time employees) during the last completed
fiscal
year.
<PAGE>
-15-
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
------------------------------------------------
No director, executive officer, senior officer or any of their respective
associates or affiliates or any proposed nominee director is or has been at any
time since the beginning of the last completed fiscal year, indebted to the
Corporation or any of its subsidiaries nor has any such person been indebted to
any other entity where such indebtedness is the subject of a guarantee, support
agreement, letter of credit or similar arrangement or understanding, provided by
the Corporation or any of its subsidiaries.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
AND IN MATTERS TO BE ACTED UPON
-------------------------------
Other than as set forth herein or as previously disclosed there are no material
interests, direct or indirect, of the current directors, senior officers, and
shareholders who beneficially own, directly or indirectly, more than ten (10%)
percent of the outstanding Common Shares or any known associate or affiliates of
such persons, in any matter to be acted upon nor in any transaction which has
materially affected the Corporation.
PARTICULARS OF MATTERS TO BE ACTED UPON
---------------------------------------
To the knowledge of the board of directors of the Corporation, the only matters
to be brought before the Meeting are those matters set forth in the accompanying
Notice of Meeting relating to the receipt of financial statements and the
Auditors' Report thereon, the election of directors, the approval of the
amendment to the Corporation's Stock Option Plan and the appointment of
auditors.
(a) Report to Shareholders
The board of directors of the Corporation have approved all of the information
in the Report to Shareholders that accompanies this present Management
Information Circular, including the consolidated audited financial statements
delivered therewith for the fiscal year ended December 31, 1997.
(b) Number of Directors
For this forthcoming year, it is proposed that the board of directors shall
consist of six (6) members. At the Meeting, shareholders will be asked to
consider and, if thought fit, approve an ordinary resolution
fixing the number of directors to six (6).
In order to be effective, an ordinary resolution requires the approval of a
majority of the votes cast by shareholders who vote in respect of the
resolution.
Unless otherwise indicated in the Proxy, it is management's intention to vote
the proxies in favour of the resolution fixing the number of directors to six
(6).
(c) Election of Directors
At the Meeting, it will be proposed that six (6) directors be elected to hold
office until the next Annual General Meeting of Shareholders or until their
successors are elected or appointed. There are presently six (6) directors of
the Corporation, each of whose terms of office will expire at the Meeting. It is
the intention of the management designees, if named as proxy, to vote for the
election of the following persons to the board of directors. Management does not
contemplate that any of such nominees will be unable to serve as directors;
however, if for any reason any of the proposed nominees do not stand for
election or are unable to serve as such, proxies in favour of management
designees will be voted for another
<PAGE>
-16-
are to be withheld from voting in the election of directors. Each director
elected will hold office until the next Annual General Meeting of Shareholders
or until his successor is duly elected, unless his office is earlier vacated in
accordance with the Bylaws of the Corporation.
In order to be effective, an ordinary resolution requires the approval of a
majority of the votes cast by shareholders who vote in respect of the
resolution.
The following sets forth the name of each of the persons proposed to be
nominated for election as a director, all positions and offices in the
Corporation, presently held by him or her, his or her municipality of residence,
his or her principal occupation at the present and during the preceding five
years, the period during which he or she has served as a director, and the
number of voting Common Shares of the Corporation that he or she has advised are
beneficially owned by him or her, directly or indirectly, or over which control
or direction is exercised, as of the Effective Date hereof (except as otherwise
noted, the Corporation believes the persons listed below have sole investment
and voting power with respect to the Common Shares owned by them).
<TABLE>
<CAPTION>
Principal Shares Percentage
Name, Age and Municipality Occupation During Beneficially of Common
of Residence Position Held Past Five Years Owned (6) Shares (6)
- -------------------------- ------------------- ----------------------------- ------------ ----------
<S> <C> <C> <C> <C>
Allen V. Ambrose, 41 President and Director and President of 422,200 (2) 2.12%
Spokane, Washington Director the Corporation since
November 6, 1995. Mr. Ambrose
is an Exploration Manager/
Geologist with N.A.
Degerstrom, Inc. and Director
of Cadre Resources Ltd. -
which is a mining company
Armand Hansen, 62 (1) Director A director of the Corporation 316,000 (3) 1.59%
Spokane, Washington since November 6, 1995. Mr.
Hansen has served as Vice
President of Operations for
Mining Contracting with N.A.
Degerstrom, Inc. for the past
16 years. He is also Director
and Officer of Aresco Inc.,
equipment manufacturing
company since 1989
Bonnie L. Kuhn, 32 Secretary and A director and officer of the 71,000 (5) 0.37%
Calgary, Alberta Director Corporation since June 19,
1997. Solicitor with Ogilvie
and Company, Barristers and
Solicitors, since 1994.
Director of Talon Petroleums
Ltd. an oil & gas exploration
company since September 1997.
John Johnson Crabb, 72 (1) Director A director of the Corporation 170,000 (3) 0.85%
Madeira Park, B.C. since November 6, 1995. Mr.
Crabb was a Mining Executive/
Geologist and Director with
Inland Resources, Inc., a
mining company from 1985 to
November 1995; Director of
Cadre Resources Ltd. from
April 1995 to March 1996
A.D. (Darryl) Drummond, 61 Director A director of the Corporation 120,000 (4) 0.60%
Ph.D., P. Eng. since June 26, 1996. Mr.
Vancouver, British Columbia Drummond is a Professional
Engineer; President of D.D.H.
Geomanagement from 1981 to
present; Director of Cadre
Resources Ltd. from November
1994 to February 1995;
Director of All North
Resources Ltd. from May 1995
to July 9, 1996; Director of
International All-North
Resources Ltd. from July 10,
1996 to present; Director of
The Quinto Mining Corporation
from September 11, 1996 to
present
<PAGE>
-17-
Principal Shares Percentage
Name, Age and Municipality Occupation During Beneficially of Common
of Residence Position Held Past Five Years Owned (6) Shares (6)
- -------------------------- ------------------- ----------------------------- ------------ ----------
<S> <C> <C> <C> <C>
Allan J. Marter, 50 (1) Chief Financial A director and officer of the 120,000 (4) 0.60%
Littleton, Colorado Officer and Corporation since June 19,
Director 1997. Mr. Marter is a
financial advisor in the
mining industry and Principal
of Waiata Resources from
April, 1996 to present. From
1992 to April, 1996, employed
as a director with Endeavour
Financial Inc. Director of
Addwest Minerals Interna-
tional, Ltd. formerly Alina
International Industries Ltd.
from February 28, 1997 to
present. Has provided
financial advisory services to
the Corporation through Waiata
Resources since April 30,
1996.
Notes:
(1) Member of Audit Committee.
(2) Includes stock options entitling the holder to acquire 50,000 shares upon
payment of Cdn $1.44, 110,000 shares upon payment of Cdn $1.15 (these
options originally had an exercise price of Cdn $2.18 but were repriced
subsequent to the Corporation's year end on December 31, 1997), 80,000
shares upon payment of Cdn $1.15 (these options originally had an exercise
price of Cdn $2.00 but were repriced subsequent to the Corporation's year
end on December 31, 1997) and 30,000 shares upon payment of Cdn $1.10.
(3) Includes stock options entitling the holder to acquire 20,000 shares upon
payment of Cdn $1.44, 60,000 shares upon payment of Cdn $1.15 (these
options originally had an exercise price of Cdn $2.18 but were repriced
subsequent to the Corporation's year end on December 31, 1997), 40,000
shares upon payment of Cdn $1.15 (these options originally had an exercise
price of Cdn $2.00 but were repriced subsequent to the Corporation's year
end on December 31, 1997) and 20,000 shares upon payment of Cdn $1.10.
(4) Includes stock options entitling the holder to acquire 60,000 shares upon
payment of Cdn $1.15 (these options originally had an exercise price of Cdn
$2.18 but were repriced subsequent to the Corporation's year end on
December 31, 1997), 40,000 shares upon payment of Cdn $1.15 (these options
originally had an exercise price of Cdn $2.00 but were repriced subsequent
to the Corporation's year end on December 31, 1997) and 20,000 shares upon
payment of Cdn $1.10.
(5) Includes stock options entitling the holder to acquire 60,000 shares upon
payment of Cdn$1.27 (these options originally had an exercise price of Cdn
$1.73 but were repriced subsequent to the Corporation's year end on
December 31, 1997) and 10,000 shares upon payment of Cdn $1.10.
(6) Common Shares which the person or group has the right to acquire within 60
days after May 5, 1998 are deemed to be outstanding in determining the
beneficial ownership of the person or group and in calculating percentage
ownership of the person or group, but are not deemed to be outstanding as
to any other person or group.
</TABLE>
The audit committee of the Corporation currently consists of Armand Hansen,
Allan J. Marter and John Johnson Crabb. The general function of the audit
committee is to review the overall audit plan and the Corporation's system of
internal controls, to review the results of the external audit, and to resolve
any potential dispute with the Corporation's auditors. The Board of Directors of
the Corporation met one time during 1997. The audit committee met one time
during 1997. (No director attended fewer than 75% of the aggregate of all
meetings of the Board of Directors and the audit committee of which the director
was a member during 1997.) The Corporation does not have an executive committee
or a compensation committee at this time.
Unless otherwise indicated in the Proxy, it is management's intention to vote
the proxies in favour of the election of the above directors.
<PAGE>
-18-
E. Amendment to Stock Option Plan
As stated above in "Compensation of Executive Officers and Directors - Stock
Option Plan" the Directors of the Corporation have adopted a stock option plan
(the "Plan") the purpose of which is to afford the persons who provide services
to the Corporation, whether directors, officers, employees or consultants of the
Corporation or it's subsidiaries, an opportunity to obtain a proprietary
interest in the Corporation by permitting them to purchase Common Shares of the
Corporation and to aid in attracting, as well as retaining and encouraging the
continued involvement of such persons with the Corporation. Currently, the
maximum number of shares to be delivered upon exercise of all options granted
under the Plan has been set at 2,000,000 Common Shares. On May 13, 1998 the
Board of Directors approved an amendment to the Plan, subject to shareholder
approval, to reserve an additional 1,000,000 shares for the Plan, thereby
increasing the total number of shares reserved for issuance under the Plan from
2,000,000 to 3,000,000 shares. The amendment to the Plan has been conditionally
approved by the ASE. The Corporation is seeking the approval of the shareholders
to amend the Plan to allow for the increase of the maximum number of Common
Shares to be delivered upon exercise of all options granted under the Plan from
2,000,000 to 3,000,000.
The Plan is available for review at the offices of Ogilvie and Company located
at 1600, 407 - 2nd Street S.W., Calgary, Alberta, and at the offices of the
Corporation during normal business hours.
At the Meeting, the shareholders will be asked to consider and, if thought fit,
approve by ordinary resolution, the amendment to the Plan to increase the
maximum number of Common Shares to be delivered upon exercise of all options
granted under the Plan from 2,000,000 to 3,000,000.
In order to be effective, an ordinary resolution requires the approval of a
majority of the votes cast by shareholders who vote in respect of the
resolution.
The text of the resolution approving the amendment to the Plan to be considered
at the meeting will be substantially as follows:
Be it resolved that:
1. The following amendment to the stock option plan of the Corporation
approved by the Board of Directors on May 13, 1998 and set forth
below:
Paragraph 3 under the heading "Shares Subject to Plan" be and is
hereby deleted and replaced with the following:
"3. Shares Subject to Plan
Subject to adjustment as provided in Section 15 hereof, the
shares to be offered under the Plan shall consist of shares of
the Corporation's authorized but unissued Common Shares. The
aggregate number of shares to be delivered upon the exercise of
all options granted under the Plan (the "Options") shall not
exceed 10% of the Corporation's issued and outstanding Common
Shares from time to time, to a maximum of 3,000,000 shares. If
any Option granted hereunder shall expire or terminate for any
reason without having been exercised in full, the unpurchased
shares subject thereto shall again be available for the purpose
of this Plan."
be and is hereby approved, confirmed and ratified;
<PAGE>
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2. The making by the Board of Directors of such additions, deletions and
modifications to the Plan as may be necessary or advisable to give
effect to these resolutions or as may be required by applicable
regulatory authorities, be and is hereby approved;
3. Any officer or director of the Corporation be and is hereby authorized
to execute all such deeds, documents and other writings and perform
such acts as may be necessary in order to give effect to the amendment
of the Plan and the Board of Directors from time to time is authorized
to grant options in the capital stock of the Corporation pursuant to
and in accordance with the Plan as amended;
4. The Corporation is authorized to reserve and issue up to 1,000,000
additional Common Shares in the capital of the Corporation for
issuance upon exercise of stock options pursuant to the Plan, as
amended."
Unless otherwise indicated in the Proxy, it is management's intention to vote
the proxies in favour of the resolution approving the amendment to the Plan.
F. Appointment of Auditor
On recommendation of the Board of Directors and by resolution of the
Shareholders of the Corporation, dated June 19, 1997, the Corporation replaced
its auditors, MacKay & Partners, Chartered Accountants, of Vancouver, British
Columbia, with Coopers & Lybrand, L.L.P., of Spokane, Washington, effective
until the next annual general meeting of the Shareholders of the Corporation or
until a successor is appointed. There were no disagreements, or unresolved
issues on any matter of accounting principles or practices, financial
statements, disclosure or auditing scope or procedure during the period in which
MacKay & Partners, Chartered Accountants, audited the financial statements of
the Corporation. MacKay & Partners, Chartered Accountants, were initially
appointed auditors of the Corporation in November 1994.
Unless otherwise directed, it is management's intention to vote the proxies in
favour of an ordinary resolution to appoint the firm of Coopers & Lybrand,
L.L.P., 601 - W. Riverside Avenue, Suite 1600, Spokane, Washington, 99201, as
auditor of the Corporation to hold office until the close of the next annual
general meeting of shareholders or until Coopers & Lybrand, L.L.P., is removed
from office or resigns as provided by law and by the Corporation's by-laws and
to authorize the directors of the Corporation to fix the renumeration of Coopers
& Lybrand, L.L.P., as auditors of the Corporation. Coopers & Lybrand, L.L.P.,
has been the auditor of the Corporation since June 19, 1997.
In order to be effective, an ordinary resolution requires the approval of a
majority of the votes cast by shareholders who vote in respect of the
resolution.
G. Attendance of Accountants
The Corporation has been advised by Coopers & Lybrand L.L.P. that neither that
firm nor any of its associates has any relationship with the Corporation or its
subsidiaries other than the usual relationship that exists between independent
public accountants and clients. Representatives of Coopers & Lybrand L.L.P. will
not be present at the Meeting.
<PAGE>
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H. General
All matters to be brought before the Meeting require, for the passing of same, a
simple majority of the votes cast in person or by proxy at the Meeting by the
holders of Common Shares. The contents and the sending of this Management
Information Circular have been approved by the board of directors of the
Corporation.
The Form 10 KSB of the Corporation will be provided at no charge to any
shareholder upon written request for such report directed to Art Johnson,
Investor Relations at the Corporation's office, 3303 North Sullivan Road,
Spokane, Washington, 99216. The Corporation filed an Annual Report on Form 10
KSB with the Securities and Exchange Commission.
I. Other Business
While there is no other business other than that mentioned in the Notice of
Meeting to be presented for action by the shareholders at the Meeting, it is
intended that the proxies hereby solicited will be exercised upon any other
matters and proposals that may properly come before the Meeting, or any
adjournment or adjournments thereof, in accordance with the discretion of the
persons authorized to act thereunder.
J. Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation's
executive officers, directors and persons who own more than ten percent of the
Common Stock to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Executive officers, directors and
beneficial owners of more than ten percent of the Common Stock are required by
SEC regulation to furnish the Corporation with copies of all Section 16(a) forms
they file. Based solely on a review of the copies of such forms received by the
Corporation and on written representations from certain reporting persons that
they have complied with the relevant filing requirements, the Corporation
believes that all Section 16(a) filing requirements applicable to its executive
officers and directors have been complied with.
K. Shareholder Proposals for 1999 Annual Meeting
Shareholder proposals submitted for inclusion in the 1999 proxy materials and
consideration at the 1999 Annual Meeting of Shareholders must be received by the
Corporation by December 31, 1998. Any such proposal should comply with the rules
promulgated by the Securities and Exchange Commission governing
shareholder proposals submitted for inclusion in proxy materials.
<PAGE>
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CERTIFICATE
The foregoing contains no untrue statement of a material fact and does not omit
to state a material fact that is required to be stated or that is necessary to
make a statement not misleading in the light of the
circumstances in which it was made.
DATED this 15th day of May, 1998.
ON BEHALF OF THE MANAGEMENT OF MINERA ANDES INC.
"ALLEN V. AMBROSE" "ALLAN J. MARTER"
ALLEN V. AMBROSE ALLAN J. MARTER
Chief Executive Officer Chief Financial Officer
<PAGE>
INSTRUMENT OF PROXY
FOR THE ANNUAL GENERAL AND SPECIAL MEETING OF COMMON SHAREHOLDERS
June 26, 1998
The undersigned shareholder of Minera Andes Inc. (the "Corporation") hereby
appoints Mr. Allen V.Ambrose, President and Director of the Corporation, or
failing him Ms. Bonnie L. Kuhn, Secretary and Director of the Corporation, or
instead of either of the foregoing _________________________, as proxyholder of
the undersigned at the Annual General and Special Meeting of Shareholders (the
"Meeting"), to be held on June 26, 1998, and at any adjournment or adjournments
thereof, and at any ballot that may take place in consequence thereof to the
same extent and with the same powers as if the undersigned were personally
present at the Meeting with authority to vote at the said proxyholders'
direction, except as otherwise specified below.
Without limiting the general powers hereby conferred, the undersigned hereby
directs the said proxyholder to vote the common shares represented by this
instrument of proxy in the following manner:
1. FOR [ ] AGAINST [ ] WITHHOLD [ ]
Ordinary resolution setting the number of directors to be elected at six
(6).
2. [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
except as marked to vote for all nominees
to the contrary below. listed below.
Instructions: To withhold authority to vote for any individual, strike a
line through the nominee's name below.
Allen V. Ambrose, Armand Hansen, Bonnie L. Kuhn, John
Johnson Crabb, A.D. Drummond, Allan J. Marter
The election of the directors for the ensuing year.
3. FOR [ ] WITHHOLD [ ]
Appointment of Coopers & Lybrand, L.L.P., as Auditor for the ensuing year
at a remuneration to be fixed by the directors.
4. FOR [ ] AGAINST [ ] WITHHOLD [ ]
The ordinary resolution approving the amendment to the Corporation's stock
option plan as more particularly set forth in the Management Information
Circular.
5. At the discretion of the said proxyholder, upon any amendment or variation
of the above matters or any other matter that may be properly brought
before the Meeting or any adjournment thereof, in such manner as such
proxy, in such proxyholder's sole judgment, may determine.
This Instrument of Proxy is solicited on behalf of the management of the
Corporation. If this Instrument of Proxy is received, the shares it represents
will be voted as the shareholder indicates above. If this Instrument of Proxy is
received but no direction is given above, the shares will be voted in favour of
the above matters.
Each shareholder has the right to appoint a proxyholder other than the persons
designated above, who need not be a shareholder, to attend and act for him and
on his behalf at the Meeting. To exercise such right, the names of the nominees
of management should be crossed out and the name of the shareholder's appointee
should
<PAGE>
be legibly printed in the blank space provided. Such shareholder should notify
the nominee of his appointment, obtain his consent to act as proxy and should
instruct him on how the shareholder's shares are to be voted.
This Instrument of Proxy must be dated and executed by the shareholder or dated
and executed by the shareholder's attorney on behalf of the shareholder if such
attorney is authorized, in writing, to do so. If executed by the shareholder's
attorney, proof of written authorization must be attached to this Instrument of
Proxy.
THE UNDERSIGNED HEREBY revokes any proxies previously given.
DATED this ______ day of ______________________, 1998.
_______________________________________
(signature of shareholder)
_______________________________________
(name of shareholder - Please Print)
_______________________________________
Number of Common Shares Held
NOTES:
1. This Instrument of Proxy will not be
valid and will not be acted upon or
voted unless it is completed as
outlined herein and delivered to the
Corporation c/o the offices of the
Montreal Trust Company of Canada,
6th Floor, Western Gas Tower, 530 -
8th Avenue S.W., Calgary, Alberta,
T2P 3S8, at least forty eight (48)
hours, excluding Saturdays and
holidays, before the time set for
the Meeting or any adjournment
thereof.
2. If the shareholder is an individual,
this Instrument of Proxy must be
executed by the shareholder or his
attorney authorized in writing.
3. If the shareholder is a corporation,
this Instrument of Proxy must be
executed under corporate seal or by
a duly authorized officer or
attorney of the Corporation.
4. Persons signing as executors,
administrators, trustees, etc.
should so indicate and give their
full title as such.
<PAGE>
SUPPLEMENTARY MAIL LIST
RETURN CARD
NOTE: If you wish to be included in the Supplementary Mailing List of Minera
Andes Inc. in order to receive its interim financial statements,
please complete and return this card.
- --------------------------------------------------------------------------------
TO: Minera Andes Inc.
3303 North Sullivan Road
Spokane, Washington
99216 U.S.A.
The undersigned certifies that the undersigned is the owner of securities
of Minera Andes Inc. and requests that the undersigned be placed on the
Supplementary Mailing List of Minera Andes Inc. for its interim financial
statements.
DATED: _______________________________________
NAME: ________________________________________
ADDRESS: _____________________________________
SIGNATURE: ___________________________________
NAME AND TITLE OF PERSON SIGNING IF DIFFERENT
FROM NAME ABOVE:
______________________________________________
