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:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] 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 USA
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 Brownlee Room at the
Westin Hotel, 320 - 4th Avenue SW, Calgary, Alberta, at the hour of 10:00 a.m
(Calgary time), on June 25, 1999, 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, 1998, 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 ordinary resolution authorizing the issuance of up to
20,390,030 common shares of the Corporation pursuant to one or more private
placements;
5. to appoint Auditors for the ensuing year and to authorize the directors to
fix the remuneration to be paid to the Auditors of the Corporation; and
6. 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 _____ day of May
1999.
BY ORDER OF THE BOARD OF DIRECTORS
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
SW, Calgary, Alberta, T2P 3S8, at least forty eight (48) hours prior to the
meeting or any adjournment thereof.
<PAGE>
MINERA ANDES INCORPORATED
NOTICE OF
- and -
MANAGEMENT INFORMATION CIRCULAR
FOR THE ANNUAL GENERAL AND SPECIAL MEETING OF
COMMON SHAREHOLDERS OF
MINERA ANDES INC.
JUNE 25, 1999
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 SW
Calgary, Alberta, T2P 2S6
In the Brownlee Room
Friday, June 25, 1999
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
USA 99216
MANAGEMENT INFORMATION CIRCULAR
-------------------------------
FOR THE ANNUAL GENERAL AND SPECIAL MEETING OF COMMON SHAREHOLDERS
June 25, 1999
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 25, 1999, at
10:00 a.m. (Calgary time) in the Brownlee Room, at the Westin Hotel, 320 - 4th
Avenue SW, 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, 1999.
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 SW, 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, 1999
unless otherwise indicated (the "Effective Date"), the issued and outstanding
share capital of the Corporation consists of 20,390,030 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, 1999 (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, 1999 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>
===================================== ===================== =======================
Name and Place of Residence Shares Beneficially Percentage of Common
Owned (1) Shares (1)
===================================== ===================== =======================
<S> <C> <C>
Officers & Directors
Allen V. Ambrose 422,200 (2) 2.04%
Spokane, WA
Armand Hansen 271,000 (3) 1.32%
Spokane, WA
John Johnson Crabb 170,000 (3) 0.83%
Madeira Park, BC
Brian Gavin 430,400 (2) 2.08%
Spokane, WA
A.D. (Darryl) Drummond 120,000 (4) 0.59%
Vancouver, B.C.
Bonnie L. Kuhn 71,000 (5) 0.35%
Calgary, Alberta
Allan J. Marter 120,000 (4) 0.59%
Littleton, CO
<PAGE>
-4-
===================================== ===================== =======================
Name and Place of Residence Shares Beneficially Percentage of Common
Owned (1) Shares (1)
===================================== ===================== =======================
5% or Greater Shareholders
Neal A. and Joan L. Degerstrom 5,100,000 (6)(7) 25.01%
3303 North Sullivan Road
Spokane, WA 99216
CEDE & Co. (8) 7,911,357 38.80%
New York, New York
CDS & Co. (8) 3,911,559 19.18%
Toronto, Ontario
All directors and executive 1,604,600 7.51%
officers as a group (7 persons)
===================================== ===================== =======================
Notes:
(1) Common Shares which the person or group has the right to acquire within 60 days
after May 5, 1999 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 $0.68 (these options originally had an exercise price of Cdn. $1.44 but were
repriced subsequent to the Corporation's year end on December 31, 1998), 110,000
shares upon payment of Cdn $1.15 (these options originally had an exercise price
of Cdn $2.18 but were repriced on February 20, 1998), 80,000 shares upon payment
of Cdn $1.15 (these options originally had an exercise price of Cdn $2.00 but were
repriced on February 20, 1998) and 30,000 shares upon payment of Cdn $0.68 (these
options originally had an exercise price of Cdn. $1.10 but were repriced
subsequent to the Corporation's year end on December 31, 1998).
(3) Includes stock options entitling the holder to acquire 20,000 shares upon payment of
Cdn $0.68 (these options originally had an exercise price of Cdn. $1.44 but were
repriced subsequent to the Corporation's year end on December 31, 1998), 60,000
shares upon payment of Cdn $1.15 (these options originally had an exercise price
of Cdn $2.18 but were repriced on February 20, 1998), 40,000 shares upon payment
of Cdn $1.15 (these options originally had an exercise price of Cdn $2.00 but were
repriced on February 20, 1998) and 20,000 shares upon payment of Cdn $0.68 (these
options originally had an exercise price of Cdn. $1.10 but were repriced
subsequent to the Corporation's year end on December 31, 1998).
(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 on February 20, 1998), 40,000 shares upon payment of Cdn $1.15
(these options originally had an exercise price of Cdn $2.00 but were repriced on
February 20, 1998) and 20,000 shares upon payment of Cdn $0.68 (these options
originally had an exercise price of Cdn. $1.10 but were repriced subsequent to the
Corporation's year end on December 31, 1998).
(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 on February 20, 1998) and 10,000 shares upon payment of Cdn $0.68 (these
options originally had an exercise price of Cdn. $1.10 but were repriced
subsequent to the Corporation's year end on December 31, 1998).
(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) Does not include 1,213,409 Common Shares reserved for issuance to Degerstrom upon
the satisfaction of certain performance criteria.
(8) The parties named are intermediaries. The beneficial ownership of the Common
Shares listed is not known.
</TABLE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
------------------------------------------------
A. Compensation of Directors
The Corporation has six directors, two of whom are executive officers. During
the fiscal period ended December 31, 1998, 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, 1998, 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
<PAGE>
-5-
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, 1998, a total of 120,000 stock options
were granted to directors of the Corporation.
B. Compensation of Officers
1. Cash
During the fiscal period ended December 31, 1998, 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, 1998, was $278,702. 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 $100,000 Cdn or more
(the "Named Executive Officers"); in this case Allen V. Ambrose, President and
Brian Gavin, Vice President, Exploration.
<TABLE>
<CAPTION>
=================================================================================================================================
Statement of Executive Compensation
-----------------------------------
Annual Compensation Long-Term Compensation
- ------------------- ---------------- ---------- ------------ -------------- ----------------------- --------- ---------------
Awards Payouts
----------------------- ---------
Name and Year Salary Performance Other Annual Securities Restricted LTIP All other
Principal Position ($) Right Compensation Granted Shares or (2) Compensation
($) ($) Under Restricted Payouts ($)
(Bonus) Option Share-Units ($)
/SARS (1)
Granted #
- ------------------- ---------------- ---------- ------------ -------------- ---------- ------------ --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allen V. Ambrose January 1, 64,715 Nil 9,464(3)(4) 160,000 Nil Nil Nil
President and 1996 -
Director December 31,
1996
---------------- ---------- ------------ -------------- ---------- ------------ --------- ---------------
January 1, 89,126 Nil 11,436(6)(8) 80,000 Nil Nil Nil
1997 -
December 31,
1997
---------------- ---------- ------------ -------------- ---------- ------------ --------- ---------------
January 1, 96,200 Nil 9,660(9)(11) 220,000(12) Nil Nil Nil
1998 -
December 31,
1998
- ------------------- ---------------- ---------- ------------ -------------- ---------- ------------ --------- ---------------
Brian Gavin January 1, 113,239 Nil 13,624 (3)(5) 160,000 Nil Nil Nil
Vice President, 1996 -
Exploration December 31,
1996
---------------- ---------- ------------ -------------- ---------- ------------ --------- ---------------
January 1, 117,510 Nil 13,762(7)(8) 80,000 Nil Nil Nil
1997 -
December 31,
1997
---------------- ---------- ------------ -------------- ---------- ------------ --------- ---------------
January 1, 122,600 Nil 11,112(10)(11) 220,000(12) Nil Nil Nil
1998 -
December 31,
1998
=================================================================================================================================
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.
<PAGE>
-6-
(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, 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.
(4) 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
(5) 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
(6) 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
(7) 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
(8) 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.
(9) From January 1998 to December 1998 the following benefits were provided to Allen V. Ambrose and billed by Degerstrom to
the Corporation:
401 K Base 3,360.00
401 K Match 1,920.00
Medical Insurance 4,380.00
(10) From January 1998 to December 1998 the following benefits were provided to Brian Gavin and billed by Degerstrom to the
Corporation:
401 K Base 4,284.00
401 K Match 2,448.00
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 and FUTA.
(12) Includes stock options granted on March 2, 1998 entitling the holder to acquire 30,000 common shares of the Corporation
at an exercise price of Cdn.$0.68 (these options originally had an exercise price of Cdn.$1.10 but were repriced
subsequent to the Corporation's year end on December 31, 1998). In addition, includes the following stock options which
were repriced during 1998:
1. stock options entitling the holder to acquire 110,000 common shares of the Corporation at an exercise price of
Cdn.$1.15 (these options originally had an exercise price of Cdn.$2.18 but were repriced on February 20, 1998), and
2. stock options entitle the holder to acquire 80,000 common shares of the Corporation at an exercise price of
Cdn.$1.15 (these options originally had an exercise price of Cdn.$2.00 but were repriced on February 20, 1998).
</TABLE>
2. Stock Options
The Named Executive Officers of the Corporation were granted 30,000 stock
options each and each had 190,000 stock options repriced during the fiscal
period ended December 31, 1998. The following table sets forth stock options
granted and the stock options repriced during the fiscal year ended December 31,
1998, to the Named Executive Officers:
<PAGE>
-7-
OPTIONS GRANTED DURING THE FISCAL YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
========================================================================================================================
Potential
Realizable Value at
Number of % of Total Assumed Annual
Common Options Market Price Exercise Rates of Stock
Shares Granted to as at Date Price Per Price Appreciation
Reserved Employees in of Grant Common Share for Option Term (6)
Name of Optionee Under Option Fiscal Year Cdn $ Cdn $ Expiry Date 5% 10%
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Allen V. Ambrose(3) 30,000 92% $1.40 $1.10(5) March 2, 2003 $20,604 $34,641
President
---------------------------------------------------------------------------------------------------
110,000 71% $1.10 $1.15(7) August 16, 1999 $3,726 $13,255
---------------------------------------------------------------------------------------------------
80,000 49% $1.10 $1.15(8) February 17, 2000 $5,024 $14,480
- ------------------------------------------------------------------------------------------------------------------------
Brian Gavin(4) 30,000 92% $1.40 $1.10(5) March 2, 2003 $20,604 $34,641
Vice President,
Exploration
---------------------------------------------------------------------------------------------------
110,000 71% $1.10 $1.15(7) August 16, 1999 $3,726 $13,255
---------------------------------------------------------------------------------------------------
80,000 49% $1.10 $1.15(8) February 17, 2000 $5,024 $14,480
========================================================================================================================
Notes:
(1) On April 8, 1999 the closing price of the Common Shares on The Alberta Stock Exchange was Cdn $0.65.
(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, 1998, The Alberta Stock Exchange consented to the above options being repriced to Cdn
$0.68 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.
(7) These options originally had an exercise price of $2.18 but were repriced on February 20, 1998 to $1.15.
(8) These options originally had an exercise price of $2.00 but were repriced on February 20, 1998 to $1.15.
</TABLE>
The options were repriced using a combination of the six month weighted average
closing price for the options and current market prices. The Alberta Stock
Exchange Circular Number 6 provides for circumstances in which stock options may
be repriced. The policy provides that The Alberta Stock Exchange may consider an
application to amend the exercise price to any option previously approved by The
Alberta Stock Exchange and which has been outstanding for less than twelve (12)
months only in the event there is a difference of at least twenty-five percent
(25%) between the exercise price previously approved by The Alberta Stock
Exchange and the weighted average trading price of the issuers listed securities
during the six month period preceding the date of the application for the
amendment. In this case, The Alberta Stock Exchange reviewed the weighted
average closing price for the six months prior to the application for repricing
being made and determined that the options could be repriced at current market
levels with the applicable discount. The Alberta Stock Exchange considered CDN
$1.15 reflected the current market price and allowed the options to be
discounted; which the Corporation chose not to do.
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, 1998:
<PAGE>
-8-
AGGREGATED OPTION VALUES FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
===============================================================================================================
Value of Unexercised
Unexercised Options In-the-Money Options at
Securities Aggregate at Most Recent Year Most Recent Year End
Acquired on Value End (#) (Cdn $)(1)(2)(4)
Exercise Realized Exercisable Exercisable
Name (#) ($) /Unexercisable /Unexercisable
- ---------------------- ------------------ -------------- ------------------------ -------------------------
<S> <C> <C> <C> <C>
Allen V. Ambrose, 0 0 270,000 0\0
President
- ---------------------- ------------------ -------------- ------------------------ -------------------------
Brian Gavin, 0 0 270,000 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, 1998, less the exercise price of in-the-money stock options.
(2) On December 31, 1998 the last day the Common Shares traded in 1998, the closing price of the Common Shares on The
Alberta Stock Exchange was Cdn $0.65.
(3) The amounts are in Canadian dollars.
(4) Of the above options, 80,000 granted to each of Allen Ambrose and Brian Gavin were repriced subsequent to the
Corporation's year end of December 31, 1998.
</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, 1996, December 31, 1997 or December 31, 1998.
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, 1996 or
December 31, 1997. The Corporation repriced options to acquire 190,000 common
shares of the Corporation held by each of the Named Executive Officers. See
"Stock Options".
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 Executive Officer resulting
from the resignation, retirement or the termination of employment of such
person.
<PAGE>
-9-
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, 1998 administrative fees were paid to Degerstrom of $54,272 on
total costs incurred by the Corporation of $749,041. Equipment rentals of
$6,070 were included in the total costs for 1998.
(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 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. Subsequently at the Corporation's Annual and Special Meeting of
Shareholders held on June 26, 1998, the shareholders of the Corporation approved
a further amendment increasing the total number of shares reserved for issuance
under the plan from 2,000,000 to 3,000,000 common shares. 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. Certain
provisions of the plan are described below.
(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,
<PAGE>
-10-
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 3,000,000 shares. 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 90,000 of
these stock options have been exercised and 126,000 of these stock options have
expired.
(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.
<PAGE>
-11-
(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.
(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
<PAGE>
-12-
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.
(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,
<PAGE>
-13-
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.
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, 1998:
<TABLE>
<CAPTION>
=====================================================================================================================
Group Number of Common Exercise Price
(number of persons Shares Under Per Common Share
in group) Option Date of Grant Expiry Date $Cdn
- ------------------------------ ------------------- --------------------- -------------------- ------------------
<S> <C> <C> <C> <C>
2 Named Executive Officers 100,000 January 10, 1996(3) January 10, 2001 1.44
220,000 August 16, 1996 (4) August 16, 1999 1.15
160,000 February 17, 1997 (5) February 17, 2000 1.15
60,000 March 2, 1998 (6) March 2, 2003 1.10
4 Directors (1) 40,000 January 10, 1996 (3) January 10, 2001 1.44
240,000 August 16, 1996 (4) August 16, 1999 1.15
160,000 February 17, 1997 (5) February 17, 2000 1.15
60,000 August 29, 1997 (7) August 29, 2000 1.27
90,000 March 2, 1998 (6) March 2, 2003 1.10
15 Others (2) 65,000 January 10, 1996 (3) January 10, 2001 1.44
90,000 August 16, 1996 (4) August 16, 1999 1.15
165,000 February 17, 1997 (5) February 17, 2000 1.15
60,000 August 29, 1997 (7) August 29, 2000 1.27
95,000 March 2, 1998 (6) March 2, 2003 1.10
5,000 March 2, 1998 (6) March 2, 2003 1.19
-------------------
Total 1,610,000
===================
====================================================================================================================
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 originally had an exercise price of Cdn.$1.44 but were subsequently repriced to Cdn.$0.68
subsequent to the Corporation's year end on December 31, 1998.
(4) These options originally had an exercise price of Cdn $2.18 but were repriced to Cdn $1.15 on February 20,
1998.
(5) These options originally had an exercise price of Cdn $2.00 but were repriced to Cdn $1.15 on February 20,
1998.
(6) These options originally had an exercise price of Cdn. $1.10 but were repriced to Cdn. $0.68 subsequent to the
Corporation's year end on December 31, 1998.
(7) These options originally had an exercise price of Cdn $1.73 but were repriced to Cdn $1.27 on February 20,
1998.
</TABLE>
D. Other Compensation
During the Corporation's fiscal period ended December 31, 1998, the Corporation
accrued and/or paid fees to a law firm for the provision of ongoing legal
services to the Corporation amounting to approximately $49,435. Bonnie L. Kuhn,
the Secretary and Director of the Corporation, was an associate of such firm.
<PAGE>
-14-
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.
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 fixing of the number of directors and the election
of directors, the approval of further private placements and the appointment of
auditors and fixing of remuneration of auditors by the board of directors.
(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 audited consolidated financial statements
delivered therewith for the fiscal year ended December 31, 1998.
(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).
<PAGE>
-15-
(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 nominee in their discretion unless the
shareholder has specified in his proxy that his shares 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 Occupation Shares Percentage of
Name, Age and Municipality During Past Beneficially Common Shares
of Residence Position Held Five Years Owned (6) (6)
- ------------------------------ --------------- -------------------------------------- -------------- --------------
<S> <C> <C> <C> <C>
Allen V. Ambrose, 42 President and Director and President of the 422,200 (2) 2.04%
Spokane, Washington Director 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, 63 (1) Director A director of the Corporation since 271,000 (3) 1.32%
Spokane, Washington 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, 33 Secretary and A director and officer of the 71,000 (5) 0.35%
Calgary, Alberta Director Corporation since June 19, 1997.
Associate with Ogilvie and Company,
Barristers and Solicitors, from 1994
to December 31, 1998. From January 1,
1999 to present, a partner with
Armstrong Perkins Hudson, Barristers $
Solicitors. Director of Talon
Petroleums Ltd., an oil and gas
exploration company since September
1997.
- ------------------------------ --------------- -------------------------------------- -------------- ==========
<PAGE>
-16-
====================================================================================================================
Principal Occupation Shares Percentage of
Name, Age and Municipality During Past Beneficially Common Shares
of Residence Position Held Five Years Owned (6) (6)
- ------------------------------ --------------- -------------------------------------- -------------- --------------
John Johnson Crabb, 73 (1) Director A director of the Corporation since 170,000 (3) 0.83%
Madeira Park, B.C. 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, 62 Director A director of the Corporation since 120,000 (4) 0.59%
Ph.D., P. Eng. June 26, 1996. Mr. Drummond is a
Vancouver, British Columbia 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
Allan J. Marter, 51 (1) Chief A director and officer of the 120,000 (4) 0.59%
Littleton, Colorado Financial Corporation since June 19, 1997.
Officer and Mr. Marter is a financial advisor in
Director 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 International, 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 $0.68 (these options
originally had an exercise price of Cdn. $1.44 but were repriced subsequent to the Corporation's year end on
December 31, 1998), 110,000 shares upon payment of Cdn $1.15 (these options originally had an exercise price of Cdn
$2.18 but were repriced on February 20, 1998), 80,000 shares upon payment of Cdn $1.15 (these options originally
had an exercise price of Cdn $2.00 but were repriced on February 20, 1998) and 30,000 shares upon payment of Cdn
$0.68 (these options originally had an exercise price of Cdn. $1.10 but were repriced subsequent to the
Corporation's year end on December 31, 1998).
(3) Includes stock options entitling the holder to acquire 20,000 shares upon payment of Cdn $0.68 (these options
originally had an exercise price of Cdn. $1.44 but were repriced subsequent to the Corporation's year end on
December 31, 1998), 60,000 shares upon payment of Cdn $1.15 (these options originally had an exercise price of Cdn
$2.18 but were repriced on February 20, 1998), 40,000 shares upon payment of Cdn $1.15 (these options originally
had an exercise price of Cdn $2.00 but were repriced on February 20, 1998) and 20,000 shares upon payment of Cdn
$0.68 (these options originally had an exercise price of Cdn. $1.10 but were repriced subsequent to the
Corporation's year end on December 31, 1998).
(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 on February 20, 1998), 40,000 shares upon payment
of Cdn $1.15 (these options originally had an exercise price of Cdn $2.00 but were repriced on February 20, 1998)
and 20,000 shares upon payment of Cdn $0.68 (these options originally had an exercise price of Cdn. $1.10 but were
repriced subsequent to the Corporation's year end on December 31, 1998).
(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 on February 20, 1998) and 10,000 shares upon
payment of Cdn $0.68 (these options originally had an exercise price of Cdn. $1.10 but were repriced subsequent to
the Corporation's year end on December 31, 1998).
(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
<PAGE>
-17-
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 two times during 1998.
The audit committee met three times during 1998. (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 1998). 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.
(d) Approval of the Issuance of Common Shares
Management intends to place before the meeting an ordinary resolution
authorizing the Corporation to enter into one or more private placement
agreements with subscribers during the twelve (12) month period following the
date of the shareholders meeting, providing for the issuance of up to 20,390,030
Common Shares of the Corporation or securities convertible into Common Shares
representing approximately 100% of the number of Common Shares issued and
outstanding as at the date hereof at such price per common share, including any
applicable discounts, as the directors of the Corporation may approve and the
applicable regulatory authorities or stock exchange may permit. It is not the
current intention of management to issue the entire number of Common Shares
authorized pursuant to the proposed resolution; however, pursuant to The Alberta
Stock Exchange Circular No. 6 ("Circular"), The Alberta Stock Exchange has the
discretion to require a corporation to obtain shareholder approval to issue
common shares or securities convertible into common shares, if such issuance
results in an aggregate number of common shares, issued pursuant to the private
placement transactions during any six month period exceeding twenty-five percent
(25%) of the outstanding common shares. A similar provision is also set forth in
the Ontario Securities Commission Policy 5.2 ("Policy 5.2"); however, it
requires that shareholders approval be obtained in such circumstances; there is
no discretion. Prior to the next annual meeting of shareholders, the Corporation
may wish to enter into agreements to issue more than 25% of the outstanding
Common Shares so as to provide the Corporation with sufficient working capital
to fund its activities.
Management of the Corporation considers that it will be in the best interests of
the Corporation to obtain a "blanket" authorization from the shareholders for
additional private placements to be entered into during the next twelve (12)
months. Such approval will eliminate the need to obtain shareholder approval for
each specific private placement, thereby reducing the time required to obtain
regulatory approvals for, and decreasing the Corporation's administrative costs
relating to, such private placements.
The private placements will only be negotiated if management of the Corporation
believes the subscription price is reasonable for the circumstances and if the
funds are required by the Corporation to continue or expand its activities. No
change in the control of the Corporation is anticipated as a result of the
private placements.
Accordingly, at the Meeting, shareholders will be asked to consider and, if
thought fit, pass a resolution approving the issuance from time to time of up to
an additional 20,390,030 Common Shares or securities convertible into Common
Shares of the Corporation to subscribers during the period commencing on July 1,
1999 and ending on the day of the next annual general meeting of shareholders.
The price per Common Share shall be determined in accordance with the policies
of The Alberta Stock Exchange (the "Exchange") and Policy 5.2. The Exchange
Circular provides that the price per security must not be lower than the closing
market price of the Common Share on the Exchange on the trading day prior to the
date on which notice of the proposed private placement is given to the Exchange,
less the applicable discount as follows:
<PAGE>
-18-
================================= ================================
Market Price(1) Maximum Discount Therefrom
================================= ================================
Up to $0.50 25%
$0.51 to $1.00 20%
$1.01 to $2.00 18%
$2.01 to $5.00 15%
Over $5.00 10%
================================= ================================
Note:
(1) The amounts in this table are in Canadian dollars.
The Ontario Securities Commission Policy 5.2 provides that the price per
security of a common share issued in a private placement shall not be lower than
the base price of the shares offered less the maximum discount as follows,
provided that no common share shall be sold for net proceeds of less than $0.20
per share:
================================= ================================
Base Price(1)(2) Maximum Discount Therefrom
================================= ================================
$0.50 or less 25%
$0.51 to $2.00 20%
Above $2.00 15%
================================= ================================
Notes:
(1) The amounts in this table are in Canadian dollars.
(2) Base price is defined in Policy 5.2 as the:
"Base Price" means the Weighted Average Price of the relevant
securities of the issuer for the most recent ten days preceding the
agreement day or other relevant day on which actual trading occurred
on a published market provided that if trading has not occurred on at
least five days during the 90 days preceding the agreement day or
other relevant day, then the Base Price shall be nil;"
"Weighted Average Price" of an issuer's securities for any period
means the price determined by multiplying the daily volume of trading
of such securities on a published market for each day which is
included in the average by the closing price on such market of the
relevant securities for each respective day and dividing the sum of
all such products by the total number of securities traded;"
Issuance of shares reserved hereunder may result in dilution to existing
shareholders. Directors, officers and other insiders of the Corporation or
associates and affiliates thereof may participate in any such private placement,
although presently there is no intention in that regard.
While none of the following circumstances are currently expected to arise as a
result of any of the private placement transactions contemplated herein, in
accordance with Ontario Securities Commission Policy 5.2, no shares of the
Corporation shall be issued pursuant to any private placement transaction in the
following circumstances without the further prior approval of disinterested
shareholders of the Corporation:
(a) more than 50 % of the shares of the Corporation being sold are proposed to
be purchased by placees who are non-arm's length with the Corporation; or
(b) the number of shares of the Corporation purchased during the 12 months
preceding the agreement day by placees who are non-arm's length with the
Corporation when combined with the number of shares proposed to be
purchased by non-arm's length placees in the proposed private placement
<PAGE>
-19-
exceeds 20% of the issued and outstanding shares of that class of the
Corporation calculated after giving effect to the proposed private
placement (but without giving effect to the exercise of any warrants
forming part of any private placement); or
(c) the private placement may result in, or such placement is part of, a
transaction involving a change in the effective control of the Corporation
(and for the purpose of making that determination any warrants forming part
of the private placement shall be deemed to have been exercised).
The Corporation is seeking the approval of the shareholders, by ordinary
resolution, of the above issuance of securities. In order to be effective, the
resolution must be passed by the affirmative vote of a simple majority of the
votes cast by shareholders, present in person or by proxy at the Meeting. If the
resolution is passed, the resolution shall only be effective until the next
annual meeting of shareholders of the Corporation.
The text of the resolution to be considered at the meeting approving the
issuance of shares will substantially be as follows:
Be it resolved that:
1. subject to compliance with applicable securities laws and to receipt
of necessary regulatory approval and stock exchange approval, the
directors of the Corporation are authorized to issue up to 20,390,030
Common Shares of the Corporation valued at the maximum allowable
discount permitted under the policies and bylaws of The Alberta Stock
Exchange and pursuant to Ontario Securities Commission Policy 5.2 or
such lesser discount as deemed appropriate by the directors of the
Corporation (provided that, in accordance with Ontario Securities
Commission Policy 5.2, no Common Share of the Corporation shall be
issued for net proceeds of less than $0.20 per share), in connection
with one or more private placements of the Corporation in the twelve
(12) month period commencing July 1, 1999 at such prices and subject
to such terms and with such arms length or non-arms length parties as
the directors may from time to time determine without further approval
of the shareholders of the Corporation;
2. the issuance of the Common Shares may be made through an offering of
Common Shares, special warrants, units, notes, purchase warrants, any
other securities convertible into Common Shares or any combination
thereof as the directors in their sole discretion may determine;
3. this resolution shall be valid only until the next annual meeting of
shareholders of the Corporation; and
4. any one director or officer of the Corporation be and is hereby
authorized and directed to execute and deliver all documents and
instruments and to do all other acts and things necessary or desirable
in connecting with the matters contemplated by this resolution.
The Exchange has neither approved nor disapproved any proposed issuance of
Common Shares. On application to approve an issuance of Common Shares, the
Exchange may approve such issuance subject to conditions in its discretion.
<PAGE>
-20-
Unless otherwise indicated in the Proxy, it is management's intention to vote
the proxies in favour of the resolution approving the issuance of the above
Common Shares.
(e) Appointment of Auditor
Unless otherwise directed, it is management's intention to vote the proxies in
favour of an ordinary resolution to appoint the firm of PricewaterhouseCoopers,
LLP, 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 PricewaterhouseCoopers, LLP, 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 remuneration of
PricewaterhouseCoopers, LLP, as auditors of the Corporation.
PricewaterhouseCoopers, LLP, 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.
ATTENDANCE OF ACCOUNTANTS
-------------------------
The Corporation has been advised by PricewaterhouseCoopers, LLP 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
PricewaterhouseCoopers, LLP will not be present at the Meeting.
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.
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.
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.
<PAGE>
-21-
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
---------------------------------------------
Shareholder proposals submitted for inclusion in the 2000 proxy materials and
consideration at the 2000 Annual Meeting of Shareholders must be received by the
Corporation by December 31, 1999. 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>
-22-
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 5th day of May 1999.
ON BEHALF OF THE MANAGEMENT OF MINERA ANDES INC.
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 25, 1999
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 25, 1999, 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 PricewaterhouseCoopers, LLP, as Auditor for the ensuing year
at a remuneration to be fixed by the directors.
4. FOR [ ] AGAINST [ ] WITHHOLD [ ]
Approving and adopting, with or without modification, the ordinary
resolution as more particularly set forth in the Management Information
Circular prepared for the purpose of the Meeting relating to the approval
of the reservation of common shares or securities convertible into common
shares for future private placements, on the terms and conditions 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.
<PAGE>
-2-
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 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 ______________________, 1999.
- -------------------------------------
(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 SW, 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.
