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 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 and adopt, with or without modification, the ordinary
resolution as more particularly set forth in the Management Information
Circular prepared for the purpose of the Meeting authorizing the
issuance of up to 20,390,030 common shares of the Corporation or
securities convertible into common shares pursuant to one or more
private placement in the twelve months commencing July 1, 1999 on the
terms and conditions set forth in the Management Information Circular.
5. to approve and adopt, 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 participation of N.A. Degerstrom, Inc. in
future private placements of the Corporation on the terms and
conditions set forth in the Management Information Circular;
6. to appoint PricewaterhouseCoopers LLP as Auditors for the ensuing
year;
7. to authorize the directors to fix the remuneration to be paid to the
Auditors of the Corporation; and
8. 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 5th 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>
NOTICE OF
- and -
MANAGEMENT INFORMATION CIRCULAR
FOR THE ANNUAL GENERAL AND SPECIAL MEETING OF
COMMON SHAREHOLDERS OF
MINERA ANDES INC.
DATED 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 Option Plan ............................................. -10-
Other Compensation............................................. -15-
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS........................ -15-
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
AND IN MATTERS TO BE ACTED UPON.................................... -16-
PARTICULARS OF MATTERS TO BE ACTED UPON................................. -16-
ATTENDANCE OF ACCOUNTANTS............................................... -24-
GENERAL................................................................. -24-
OTHER BUSINESS.......................................................... -24-
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE................. -24-
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING........................... -24-
CERTIFICATE............................................................. -25-
-i-
<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 common 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,
-1-
<PAGE>
obtain a consent to act as proxy and should provide instructions on how the
shareholder's common 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.
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 common shares.
ADVICE TO BENEFICIAL SHAREHOLDERS
---------------------------------
Shareholders who do not hold their common 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 common 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 common 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
-2-
<PAGE>
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.
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 19, 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 common 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 Common Shares Percentage of Common
Beneficially Owned (1) Shares (1)
=========================== =========================== ====================
<S> <C> <C>
Officers & Directors
Allen V. Ambrose 232,000(2) 1.14%
Spokane, WA
Armand Hansen 171,000(3) 0.84%
Spokane, WA
John Johnson Crabb 70,000(3) 0.34%
Madeira Park, BC
-3-
<PAGE>
=========================== =========================== ====================
Name and Place of Residence Common Shares Percentage of Common
Beneficially Owned (1) Shares (1)
=========================== =========================== ====================
Brian Gavin 240,400(2) 1.18%
Spokane, WA
A.D. (Darryl) Drummond 20,000(4) 0.10%
Vancouver, B.C.
Bonnie L. Kuhn 11,000(5) 0.05%
Calgary, Alberta
Allan J. Marter 20,000(4) 0.10%
Littleton, CO
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) 7,910,965 38.80%
New York, New York
CDS & Co. (8) 3,911,559 19.18%
Toronto, Ontario
All directors and executive 764,400 3.75%
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 common shares
upon payment of Cdn $0.68 per common share (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), and 30,000 common shares upon
payment of Cdn $0.68 per common share (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). The Corporation subsequent to
its December 31, 1998 year end canceled options to acquire 110,000 common
shares upon payment of Cdn $1.15 per common share (these options originally
had an exercise price of Cdn $2.18 but were repriced on February 20, 1998)
and 80,000 common shares upon payment of Cdn $1.15 per common share (these
options originally had an exercise price of Cdn $2.00 but were repriced on
February 20, 1998). The Corporation has filed an application with The
Alberta Stock Exchange to re-grant these options at an exercise price of
Cdn $0.55 per common share.
(3) Includes stock options entitling the holder to acquire 20,000 common shares
upon payment of Cdn $0.68 per common share (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), and 20,000 common shares upon
payment of Cdn $0.68 per common share (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). The Corporation subsequent to
its December 31, 1998 year end canceled options to acquire 60,000 common
shares upon payment of Cdn $1.15 per common share (these options originally
had an exercise price of Cdn $2.18 but were repriced on February 20, 1998)
and 40,000 common shares upon payment of Cdn $1.15 per common share (these
options originally had an exercise price of Cdn $2.00 but were repriced on
February 20, 1998). The Corporation has filed an application with The
Alberta Stock Exchange to re-grant these options at an exercise price of
Cdn $0.55 per common share.
(4) Includes stock options entitling the holder to acquire 20,000 common shares
upon payment of Cdn $0.68 per common share (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). The Corporation subsequent to
its December 31, 1998 year end canceled options to acquire 60,000 common
shares upon payment of Cdn $1.15 per common share (these options originally
had an
-4-
<PAGE>
exercise price of Cdn $2.18 but were repriced on February 20, 1998), and
40,000 common shares upon payment of Cdn $1.15 per common share (these
options originally had an exercise price of Cdn $2.00 but were repriced on
February 20, 1998). The Corporation has filed an application with The
Alberta Stock Exchange to re-grant these options at an exercise price of
Cdn $0.55 per common share.
(5) Includes stock options entitling the holder to acquire 10,000 common shares
upon payment of Cdn $0.68 per common share (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). The Corporation subsequent to
its December 31, 1998 year end canceled options to acquire 60,000 common
shares upon payment of Cdn $1.27 per common share (these options originally
had an exercise price of Cdn $1.73 but were repriced on February 20, 1998).
The Corporation has filed an application with The Alberta Stock Exchange to
re-grant these options at an exercise price of Cdn $0.55 per common share.
(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. 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.
Two (2) 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 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
full-time 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
-5-
<PAGE>
the President and those officers whose compensation in the last fiscal year was
$100,000 Cdn or more (the "Named Executive Officers"); in this case Allen V.
Ambrose, President and Brian Gavin, Vice President, Exploration.
<TABLE>
<CAPTION>
======================================================================================================================
Statement of Executive Compensation
-----------------------------------
Annual Compensation Long-Term Compensation
======================================================================================================================
Awards Payouts
-------------------
Securities
Other Granted
Performance Annual Under Restricted
Name and Right Compen- Option Shares or LTIP(2) All other
Principal ($) sation /SARS(1) Restricted Payouts Compensation
Position Year Salary($) (Bonus) ($) Granted# Share-Units ($) ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allen V. January 1, 1996 - 64,715 Nil 9,464(3)(4) 160,000 Nil Nil Nil
Ambrose December 31, 1996
President and
Director
------------------------------------------------------------------------------------------------------
January 1, 1997 - 89,126 Nil 11,436(6)(8) 80,000 Nil Nil Nil
December 31, 1997
------------------------------------------------------------------------------------------------------
January 1, 1998 96,200 Nil 9,660(9)(11) 220,000(12) Nil Nil Nil
- December 31,
1998
- ---------------------------------------------------------------------------------------------------------------------
Brian Gavin January 1, 1996 - 113,239 Nil 13,624(3)(5) 160,000 Nil Nil Nil
Vice December 31, 1996
President,
Exploration
------------------------------------------------------------------------------------------------------
January 1, 1997 - 117,510 Nil 13,762(7)(8) 80,000 Nil Nil Nil
December 31, 1997
------------------------------------------------------------------------------------------------------
January 1, 1998 122,600 Nil 11,112(10)11) 220,000(12) Nil Nil Nil
- 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.
(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
-6-
<PAGE>
(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). These options were subsequently canceled in April,
1999; 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). These options were subsequently canceled in April,
1999.
</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:
-7-
<PAGE>
<TABLE>
<CAPTION>
OPTIONS GRANTED DURING THE FISCAL YEAR ENDED DECEMBER 31, 1998
=====================================================================================================================
Number Potential Realizable
of % of Total Value at Assumed
Common Options Market Exercise Annual Rates of
Shares Granted to Price Price Per Stock Price
Reserved Employees as at Date Common Appreciation For
Name of Under in Fiscal of Grant Share Option Term(6)
Optionee Option Year Cdn $ Cdn $ Expiry Date 5% 10%
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Allen V. 30,000 92% $1.40 $1.10(5) March 2, 2003 $20,604 $34,641
Ambrose(3)
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 May 5, 1999 the closing price of the common shares on The Alberta Stock
Exchange was Cdn $0.68.
(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 Cdn $2.18 but were
repriced on February 20, 1998 to Cdn $1.15. Subsequent to the
Corporation's year end of December 31, 1998 these options were
canceled.
(8) These options originally had an exercise price of Cdn $2.00 but were
repriced on February 20, 1998 to Cdn $1.15. Subsequent to the
Corporation's year end of December 31, 1998 these options were
canceled.
</TABLE>
The options repriced were done so using a combination of the six month weighted
average closing price for the Corporation's common shares and current market
prices at the time of the repricing. The Alberta Stock Exchange Circular No. 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:
-8-
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION VALUES FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
=================================================================================================================
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, and 190,000 granted to each of Allen Ambrose and
Brian Gavin were canceled subsequent to the Corporation's year end on
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
-9-
<PAGE>
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.
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 common 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
-10-
<PAGE>
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 common 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) Common Shares Reserved for Issuance Under the Plan
The common shares to be offered under the Plan consist of common shares of the
Corporation's authorized but unissued common shares. The aggregate number of
common 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 common shares. The number
and kind of common shares available for grants under the Plan is subject to
adjustment by the Board of Directors if the outstanding common 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 common shares subject
thereto will again become available for the purpose of the Plan. No fractional
common 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, 126,000 of these stock options have
expired, and 1,075,000 of these options have been canceled.
(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.
-11-
<PAGE>
(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 common 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 common 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 common 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
common 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 common share paid by the investing public for common
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 common 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 common 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 common
-12-
<PAGE>
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 common shares subject to an option under this Plan, unless
and until the certificates for such common 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 common shares issuable upon
exercise of such option until certificates representing such common 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 (12) 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.
(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 common
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 common shares acquired by exercise of a Nonstatutory
Stock Option, the amount by which the sale proceeds exceed the market value of
the common 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
-13-
<PAGE>
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 common 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 common 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 common shares will be treated as long-term
capital gain and any loss will be long-term capital loss.
Generally, if an optionee disposes of common 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 common 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 common 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 in Shares Under Per Common Share
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
-14-
<PAGE>
====================================================================================================================
Group Number of Common Exercise Price
(number of persons in Shares Under Per Common Share
group) Option Date of Grant Expiry Date $Cdn
- ---------------------------- -------------------- ------------------------ --------------------- -------------------
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(8) 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. Subsequent to the Corporation's
year end of December 31, 1998 these options were canceled.
(5) These options originally had an exercise price of Cdn $2.00 but were
repriced to Cdn $1.15 on February 20, 1998. Subsequent to the Corporation's
year end of December 31, 1998 these options were canceled.
(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. Subsequent to the Corporation's
year end of December 31, 1998 these options were canceled.
(8) These options originally had an exercise price of Cdn $1.19 but were
repriced to Cdn $0.68 subsequent to the Corporation's year end on December
31, 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.
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.
-15-
<PAGE>
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 further
private placements 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 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).
(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 common 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.
-16-
<PAGE>
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>
===================================================================================================================
Common
Shares Percentage
Name, Age and Position Beneficially of Common
Municipality of Residence Held Principal Occupation During Past Five Years Owned (6) Shares (6)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allen V. Ambrose, 42 President Director and President of the Corporation 232,000(2) 1.14%
Spokane, Washington and Director 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 November 171,000(3) 0.84%
Spokane, Washington 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 A director and officer of the Corporation 11,000(5) 0.05%
Calgary, Alberta and Director 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.
John Johnson Crabb, 73 (1) Director A director of the Corporation since November 70,000(3) 0.34%
Madeira Park, B.C. 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 June 26, 20,000(4) 0.10%
Ph.D., P. Eng. 1996. Mr. Drummond is a Professional
Vancouver, British Columbia 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
-17-
<PAGE>
===================================================================================================================
Common
Shares Percentage
Name, Age and Position Beneficially of Common
Municipality of Residence Held Principal Occupation During Past Five Years Owned (6) Shares (6)
- -------------------------------------------------------------------------------------------------------------------
Allan J. Marter, 51 (1) Chief A director and officer of the Corporation 20,000(4) 0.10%
Littleton, Colorado Financial since June 19, 1997. Mr. Marter is a
Officer and financial advisor in the mining industry and
Director 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 common shares
upon payment of Cdn $0.68 per common share (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), and 30,000 common shares upon
payment of Cdn $0.68 per common share (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). The Corporation subsequent to
its December 31, 1998 year end canceled options to acquire 110,000 common
shares upon payment of Cdn $1.15 per common share (these options originally
had an exercise price of Cdn $2.18 but were repriced on February 20, 1998)
and 80,000 common shares upon payment of Cdn $1.15 per common share (these
options originally had an exercise price of Cdn $2.00 but were repriced on
February 20, 1998). The Corporation has filed an application with The
Alberta Stock Exchange to re-grant these options at an exercise price of
Cdn $0.55 per common share.
(3) Includes stock options entitling the holder to acquire 20,000 common shares
upon payment of Cdn $0.68 per common share (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), and 20,000 common shares upon
payment of Cdn $0.68 per common share (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). The Corporation subsequent to
its December 31, 1998 year end canceled options to acquire 60,000 common
shares upon payment of Cdn $1.15 per common share (these options originally
had an exercise price of Cdn $2.18 but were repriced on February 20, 1998)
and 40,000 common shares upon payment of Cdn $1.15 per common share (these
options originally had an exercise price of Cdn $2.00 but were repriced on
February 20, 1998). The Corporation has filed an application with The
Alberta Stock Exchange to re-grant these options at an exercise price of
Cdn $0.55 per common share.
(4) Includes stock options entitling the holder to acquire 20,000 common shares
upon payment of Cdn $0.68 per common share (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). The Corporation subsequent to
its December 31, 1998 year end canceled options to acquire 60,000 common
shares upon payment of Cdn $1.15 per common share (these options originally
had an exercise price of Cdn $2.18 but were repriced on February 20, 1998),
and 40,000 common shares upon payment of Cdn $1.15 per common share (these
options originally had an exercise price of Cdn $2.00 but were repriced on
February 20, 1998). The Corporation has filed an application with The
Alberta Stock Exchange to re-grant these options at an exercise price of
Cdn $0.55 per common share.
(5) Includes stock options entitling the holder to acquire 10,000 common shares
upon payment of Cdn $0.68 per common share (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). The Corporation subsequent to
its December 31, 1998 year end canceled options to acquire 60,000 common
shares upon payment of Cdn $1.27 per common share (these options originally
had an exercise price of Cdn $1.73 but were repriced on February 20, 1998).
The Corporation has filed an application with The Alberta Stock Exchange to
re-grant these options at an exercise price of Cdn $0.55 per common share.
(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>
-18-
<PAGE>
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 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 commencing July
1, 1999, 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.
-19-
<PAGE>
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:
================================= ================================
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.
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 common 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 common 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 common 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, except as disclosed
below.
-20-
<PAGE>
In accordance with Policy 5.2, no common 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 common 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 common shares of the Corporation purchased during the twelve
(12) months preceding the agreement day by placees who are non-arm's length
with the Corporation when combined with the number of common shares
proposed to be purchased by non-arm's length placees in the proposed
private placement exceeds 20% of the issued and outstanding common 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 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 common 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 ("Common Shares") 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
Common 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
-21-
<PAGE>
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 connection 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.
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.
The Corporation anticipates that if a private placement transaction is to occur
that N.A. Degerstrom, Inc. ("Degerstrom") could participate in the private
placement transaction. Degerstrom, which is a large private mining contractor in
North America with offices in Spokane, Washington, is a principal shareholder of
the Corporation, owning 25.01% of the issued and outstanding common shares of
the Corporation. The Corporation therefore wishes to obtain shareholder approval
to allow Degerstrom to participate for more than 50% of any securities being
sold or proposed to be sold with respect to any private placement conducted by
the Corporation from July 1, 1999 until the next annual meeting of the
shareholders. In addition, if Degerstrom participates in any private placement
conducted by the Corporation within the twelve (12) month period from the
meeting date, the Corporation wishes to receive shareholder approval to allow
Degerstrom to acquire, within any twelve (12) month period of a private
placement, common shares, including any common shares purchased on a private
placement, which exceed 20% of the Corporation's issued and outstanding common
shares. Any private placement conducted by the Corporation and which Degerstrom
may participate is subject to the same pricing conditions as set forth above and
stock exchange approval.
The Corporation is seeking the approval of disinterested shareholders, by
ordinary resolution, of the participation by Degerstrom in any private
placements of the Corporation within the next twelve (12) months. This approval
is required by Policy 5.2. 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. In accordance with Policy 5.2, Degerstrom will
not be voting in respect of this resolution. In addition, Allen Ambrose and
Brian Gavin who are employees of Degerstrom and Armand Hansen who is an
employee, director and officer of Degerstrom confirm they will not vote in
respect of this resolution.
The text of the resolution to be considered at the meeting approving the
Degerstrom participation will be substantially as follows:
-22-
<PAGE>
BE IT RESOLVED THAT:
1. provided that no common shares of the Corporation ("Common Shares")
shall be issued at a discount greater than the maximum allowable
discount permitted under the policies and by-laws of The Alberta Stock
Exchange and pursuant to Ontario Securities Commission Policy 5.2 and
in any event for net proceeds of less than $0.20 per Common Share and
subject to compliance with applicable securities laws and to receipt
of necessary regulatory approval and stock exchange approval, N.A.
Degerstrom, Inc. ("Degerstrom") may participate in any 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 as
the directors may from time to time determine, whereunder:
(a) it may acquire more than 50% of the Common Shares being sold
pursuant to any private placement; and
(b) the number of Common Shares purchased during the twelve (12)
months preceding any private placement by Degerstrom, when
combined with the number of Common Shares proposed to be
purchased by Degerstrom in any proposed private placement may
exceed 20% the issued and outstanding Common Shares of the
Corporation after giving effect to any proposed private placement
(but without giving effect to the exercise of any warrants
forming part of any private placement)
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 connection with the matters contemplated by this resolution.
The Exchange has neither approved nor disapproved any proposed issuance of
common shares to Degerstrom. On application to approve an issuance of common
shares to Degerstrom, the Exchange may approve such issuance subject to
conditions in its discretion.
Unless otherwise indicated in the Proxy, it is management's intention to vote
the proxies in favour of the resolution approving the participation of
Degerstrom.
-23-
<PAGE>
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 shares 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 shares 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
-24-
<PAGE>
that all Section 16(a) filing requirements applicable to its executive
officers and directors have been complied with.
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.
-25-
<PAGE>
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
-26-
<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 [ ]
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 [ ]
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 authorizing the issuance
of up to 20,390,030 common shares of the Corporation or securities
convertible into common shares pursuant to one or more private placement in
the twelve months commencing July 1, 1999 on the terms and conditions set
forth in the Management Information Circular.
5. FOR [ ] AGAINST [ ]
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 participation of N.A. Degerstrom, Inc. in future private placements
of the Corporation, on the terms and conditions set forth in the Management
<PAGE>
Information Circular.
6. 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 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.
<PAGE>
SUPPLEMENTAL 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
for the ensuing year, 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 for the ensuing year.
DATED:
Name (please print)
Address
Signature
Name and title of person signing if
different from name above.
