<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
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 (S) 240.14a-11(c) or (S) 240.14a-12
MINERA ANDES
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] 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:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<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 Main Boardroom at the
offices of Armstrong Perkins Hudson at 1600, 407 - 2nd Street S.W., Calgary,
Alberta, T2P 2Y3 at the hour of 10:00 a.m (Calgary time), on June 23, 2000, 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, 1999, 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
30,000,030 common shares of the Corporation or securities convertible into
common shares pursuant to one or more private placements in the twelve
months commencing June 30, 2000 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., Allen Ambrose and Brian Gavin in
future private placements of the Corporation on the terms and conditions
set forth in the Management Information Circular;
6. 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 an
amendment to the Corporation's stock option plan;
7. to approve and adopt, with or without modification, the special resolution
as more particularly set forth in the Management Information Circular
prepared for the purpose of the Meeting relating to amending the Articles
of Amalgamation of the Corporation in order to permit the Corporation to
hold shareholder meetings outside Alberta;
8. to appoint PricewaterhouseCoopers LLP as Auditors for the ensuing year at
renumeration to be fixed by the directors; and
9. 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 1st day of May,
2000.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Allen Ambrose
-----------------
Allen V. Ambrose, President
IMPORTANT
It is desirable that as many shares as possible be represented at the meeting.
If you do not expect to attend and would like your shares represented, please
complete the enclosed instrument of proxy and return it as soon as possible in
the envelope provided for that purpose. All proxies, to be valid, must be
deposited at the office of the Registrar and Transfer Agent of the Corporation,
Montreal Trust Company of Canada, 6th Floor, Western Gas Tower, 530 - 8th Avenue
S.W., Calgary, Alberta, T2P 3S8, at least forty eight (48) hours prior to the
meeting or any adjournment thereof.
<PAGE>
[LOGO OF MINERA ANDES]
NOTICE OF
- and -
MANAGEMENT INFORMATION CIRCULAR
FOR THE ANNUAL GENERAL AND SPECIAL MEETING OF
COMMON SHAREHOLDERS OF
MINERA ANDES INC.
DATED JUNE 23, 2000
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:
ARMSTRONG PERKINS HUDSON
1600, 407 - 2nd Street S.W.
Calgary, Alberta, T2P 2Y3
In the Main Boardroom
Friday, June 23, 2000
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......................... -6-
Compensation of Directors........................................... -6-
Compensation of Officers............................................ -6-
Stock Option Plan................................................... -13-
Other Compensation.................................................. -19-
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS......................... -19-
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS AND IN MATTERS TO BE ACTED
UPON..................................................................... -20-
PARTICULARS OF MATTERS TO BE ACTED UPON.................................. -20-
Report to Shareholders.............................................. -20-
Number of Directors................................................. -20-
Election of Directors............................................... -20-
Approval of the Issuance of Common Shares........................... -24-
Approval of the Issuance of Common Shares for Private Placement to
Insiders............................................................ -27-
Amendment to Stock Option Plan...................................... -30-
Approval of Amendment to the Articles of Amalgamation to Allow
Shareholders Meetings to be Held Outside Alberta.................... -32-
Appointment of Auditor.............................................. -33-
ATTENDANCE OF ACCOUNTANTS................................................ -33-
GENERAL.................................................................. -33-
FINANCIAL STATEMENTS..................................................... -33-
INCORPORATION OF DOCUMENTS BY REFERENCE.................................. -33-
OTHER BUSINESS........................................................... -34-
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.................. -34-
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING............................ -35-
CERTIFICATE.............................................................. -36-
-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 23, 2000
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 23, 2000, at
10:00 a.m. (Calgary time) in the Main Boardroom, at the offices of Armstrong
Perkins Hudson, 1600, 407 - 2nd Street S.W., Calgary, Alberta, T2P 2Y3 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 19,
2000.
Although it is expected that the solicitation of proxies will be primarily by
mail, proxies may also be solicited personally or by telephone, telegraph or
personal interview by regular employees of the Corporation, at a nominal cost.
In accordance with National Policy No. 41, arrangements have been made with
brokerage houses and other intermediaries, clearing agencies, custodians,
nominees and fiduciaries to forward solicitation materials to the beneficial
owners of the common shares held of record by such persons and the Corporation
may reimburse such persons for reasonable fees and disbursements incurred by
them in doing so. The costs thereof will be borne by the Corporation.
APPOINTMENT AND REVOCATION OF PROXIES
-------------------------------------
The persons named in the enclosed Instrument of Proxy, Allen V. Ambrose,
President, of Spokane, Washington and Bonnie L. Kuhn, Secretary, of Calgary,
Alberta, have been selected by the directors of the Corporation and have
indicated their willingness to represent as proxy the shareholder who appoints
them. A SHAREHOLDER HAS THE RIGHT TO DESIGNATE A PERSON (WHO NEED NOT BE A
SHAREHOLDER) OTHER THAN ALLEN V. AMBROSE OR BONNIE L. KUHN, BEING THE MANAGEMENT
DESIGNEES, TO REPRESENT HIM OR HER AT THE MEETING. Such right may be exercised
by inserting in the space provided for that purpose on the Instrument of Proxy
the name of the person to be designated and deleting therefrom the names of the
management designees, or by completing another proper form of proxy. Such
shareholder should notify the nominee of the appointment, obtain a consent to
act as proxy and should provide instructions on how the shareholder's 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.
-1-
<PAGE>
A form of proxy will not be valid for the Meeting or any adjournment thereof
unless it is completed and delivered to the Montreal Trust Company of Canada,
6th Floor, Western Gas Tower, 530 - 8th Avenue S.W., Calgary, Alberta, T2P 3S8,
at least forty-eight (48) hours prior to the Meeting or any adjournment thereof.
Late proxies may be accepted or rejected at any time prior to the commencement
time of the Meeting by the Chairman of the Meeting in his discretion and the
Chairman is under no obligation to accept or reject any particular late proxy.
In addition to revocation in any other manner permitted by law, a shareholder
who has given a proxy may revoke it, any time before it is exercised, by
instrument in writing executed by the shareholder or by his attorney authorized
in writing and deposited either at the registered office of the Corporation at
any time up to and including the last business day preceding the day of the
Meeting, or any adjournment thereof, at which the proxy is to be used, or with
the chairman of the Meeting on the day of the Meeting or any adjournment
thereof. In addition, a proxy may be revoked by the shareholder personally
attending at the meeting and voting his 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
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.
-2-
<PAGE>
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 1, 2000
unless otherwise indicated (the "Effective Date"), the issued and outstanding
share capital of the Corporation consists of 30,000,030 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 15, 2000 (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 1, 2000 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>
Common Shares Percentage of
Name and Place of Residence Beneficially Owned /(1)/ Common Shares /(1)/
====================================================================================
<S> <C> <C>
Officers & Directors
Allen V. Ambrose 407,200/(2)/ 1.34%
3303 North Sullivan Road
Spokane, Washington 99216
Armand Hansen 291,000/(3)/ 0.96%
3303 North Sullivan Road
Spokane, Washington 99216
John Johnson Crabb 190,000/(3)/ 0.63%
4950 Gonzales Road
Madeira Park, British Columbia
V0H 2H0
Brian Gavin 410,400/(2)/ 1.35%
3303 North Sullivan Road
Spokane, Washington 99216
A.D. (Darryl) Drummond 140,000/(4)/ 0.46%
422, 470 Granville Street
Vancouver, British Columbia
V6C 1V5
Bonnie L. Kuhn 91,000/(5)/ 0.30%
1600, 407 - 2nd Street S.W.
Calgary, Alberta T2P 2Y3
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
Common Shares Percentage of
Name and Place of Residence Beneficially Owned /(1)/ Common Shares /(1)/
==============================================
<S> <C> <C>
Allan J. Marter 140,000/(4)/ 0.46%
1660 Lincoln Street, Suite 3000
Denver, Colorado 80264
----------------------------------------------
5% or Greater Shareholders
Neal A. and Joan L. Degerstrom 5,100,000/(6)(7)/ 17.00%
3303 North Sullivan Road
Spokane, Washington 99216
All directors and executive 1,669,600/(8)/ 5.07%
officers as a group (7 persons)
</TABLE>
Notes:
(1) Common shares which the person or group has the right to acquire within 60
days after May 1, 2000 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:
(a) 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 on March 8,
1999);
(b) stock options entitling the holder to acquire 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 on March 8,
1999); and
(c) stock options entitling the holder to acquire 210,000 common shares
upon payment of Cdn $0.55 per common share granted effective June 3,
1999. Effective April 7, 1999, the Corporation canceled options to
acquire 190,000 common shares of which options to acquire 110,000
common shares were exercisable 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 options to acquire 80,000
common shares were exercisable 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).
(3) Includes:
(a) 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 on March 8,
1999);
(b) stock options entitling the holder to acquire 20,000 common shares
upon payment of Cdn $0.68 per common share
-4-
<PAGE>
(these options originally had an exercise price of Cdn $1.10 but were
repriced on March 8, 1999); and
(c) stock options entitling the holder to acquire 120,000 common shares
upon payment of Cdn $0.55 per common share granted effective June 3,
1999. Effective April 7, 1999, the Corporation canceled options to
acquire 100,000 common shares of which options to acquire 60,000
common shares were exercisable 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 option to acquire 40,000
common shares were exercisable 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).
(4) Includes:
(a) 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 on March 8,
1999); and
(b) stock options entitling the holder to acquire 120,000 common shares
upon payment of Cdn $0.55 per common share granted effective June 3,
1999. Effective April 7, 1999, the Corporation canceled options to
acquire 100,000 common shares of which options to acquire 60,000
common shares were exercisable 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 options to acquire 40,000
were exercisable 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).
(5) Includes:
(a) 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 on March 8,
1999); and
(b) stock options entitling the holder to acquire 80,000 common shares
upon payment of Cdn $0.55 per common share granted effective June 3,
1999. Effective April 7, 1999, the Corporation canceled options to
acquire 60,000 common shares which were exercisable 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).
(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").
-5-
<PAGE>
(7) Does not include 1,213,409 common shares reserved for issuance to
Degerstrom upon the satisfaction of certain performance criteria.
(8) The directors and officers collectively hold options entitling the holders
to acquire 290,000 common shares at an exercise price of Cdn$0.68 and
options entitling the holders to acquire 980,000 common shares at an
exercise price of Cdn$0.55.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
-------------------------------------------------
A. Compensation of Directors
The Corporation has six directors. During the fiscal period ended December 31,
1999, 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. The directors are reimbursed for expenses incurred in attending any
directors meetings.
Two (2) of the directors were, at December 31, 1999, executive officers of the
Corporation. Subsequent to the year end, Allan J. Marter resigned as Chief
Financial Officer. 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, 1999, a total of 770,000 stock options
were granted to directors of the Corporation. These stock options were granted
effective June 3, 1999. In addition, a total of 90,000 stock options were
repriced from Cdn$1.44 to Cdn$0.68 and a total of 110,000 stock options were
repriced from Cdn$1.10 to Cdn$0.68.
B. Compensation of Officers
1. Cash
During the fiscal period ended December 31, 1999, 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
except for Allan J. Marter continue to be employed. Allan J. Marter resigned as
Chief Financial Officer on March 29, 2000. 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, 1999, was
$254,779. 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 the President and those
officers whose compensation in the last fiscal year was $100,000 Cdn or more
(the "Named Executive Officers"); in this case Allen V. Ambrose, President and
Brian Gavin, Vice President, Exploration.
-6-
<PAGE>
<TABLE>
<CAPTION>
Statement of Executive Compensation
Annual Compensation Long-Term Compensation
-------------------
Awards Payouts
Securities
Granted Restricted All
Performance Other Under Shares or other
Right Annual Option Restricted LTIP(2) Compen-
Name and ($) Compensation /SARS(1) Share- Payouts sation
Principal Position Year Salary ($) (Bonus) ($) Granted Units ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allen V. Ambrose January 1, 1997 89,126 Nil 11,436/(4)(6)/ 80,000 Nil Nil Nil
President and Director -December 31, 1997
January 1, 1998 96,200 Nil 9,660/(7)(9)/ 220,000/(13)/ Nil Nil Nil
-December 31, 1998
January 1, 1999 92,302/(15)/ Nil 8,960/(10)(12)/ 290,000/(14)/ Nil Nil Nil
-December 31, 1999
Brian Gavin January 1, 1997 117,510 Nil 13,762/(5)(6)/ 80,000 Nil Nil Nil
Vice President, -December 31, 1997
Exploration
January 1, 1998 122,600 Nil 11,112/(8)(9)/ 220,000/(13)/ Nil Nil Nil
-December 31, 1998
January 1, 1999 105,502/(15)/ Nil 9,620/(11)(12)/ 290,000/(14)/ Nil Nil Nil
-December 31, 1999
</TABLE>
Notes:
(1) "SAR"s 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.
-7-
<PAGE>
(4) 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
(5) 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
(6) 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.
(7) 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
(8) 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
(9) 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.
(10) From January 1999 to December 1999 the following benefits were provided to
Allen V. Ambrose and billed by Degerstrom to the Corporation:
401 K Base $2,748
401 K Match $1,832
-8-
<PAGE>
Medical Insurance $4,380
(11) From January 1999 to December 1999 the following benefits were provided to
Brian Gavin and billed by Degerstrom to the Corporation:
401 K Base $3,144
401 K Match $2,096
Medical Insurance $4,380
(12) 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.
(13) 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 on March 8, 1999). In addition, includes the following stock
options which were repriced during 1998:
(a) 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
(b) stock options entitling 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.
(14) Includes stock options granted on June 3, 1999 entitling the holder to
acquire 210,000 common shares of the Corporation at an exercise price of
Cdn $0.55. In addition, includes the following stock options which were
repriced during 1999:
(a) stock options entitling the holder to acquire 50,000 common shares of
the Corporation at an exercise price of Cdn $0.68 (these options
originally had an exercise price of Cdn $1.44 but were repriced on
March 8, 1999); and
(b) stock options 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 on
March 8, 1999).
2. Stock Options
-9-
<PAGE>
The Named Executive Officers of the Corporation were granted 210,000 stock
options each and each had 80,000 stock options repriced during the fiscal period
ended December 31, 1999. The following table sets forth stock options granted
and the stock options repriced during the fiscal year ended December 31, 1999,
to the Named Executive Officers:
OPTIONS GRANTED DURING THE FISCAL YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Name of Number % of Total Market Exercise
Optionee of Options Price Price Per Potential Realizable
Common Granted to as at Common Expiry Date Value at Assumed
Shares Employees Date Share Annual Rates of
Reserved in Fiscal of Grant Cdn $ Stock Price
Under Year Cdn $ Appreciation for
Option Option Term /(7)/
5% 10%
<S> <C> <C> <C> <C> <C> <C> <C>
Allen V. 210,000 45.3% $0.61 $0.55 June 3, 2004 $47,992 $90,806
Ambrose/(3)/
President 50,000 68.3% $0.50 $0.68/(5)/ January 10, 2001 Nil Nil
30,000 56% $0.50 $0.68/(6)/ March 2, 2003 Nil $ 1,562
Brian Gavin/(4)/ 210,000 45.3% $0.61 $0.55 June 3, 2004 $47,992 $90,806
Vice President,
Exploration 50,000 68.3% $0.50 $0.68/(5)/ January 10, 2001 Nil Nil
30,000 56% $0.50 $0.68/(6)/ March 2, 2003 Nil $ 1,562
</TABLE>
Notes:
(1) On May 1, 2000 the closing price of the common shares on the Canadian
Venture Exchange Inc. was Cdn$0.22.
(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) In February of 1999, The Alberta Stock Exchange (now the Canadian Venture
Exchange Inc.) consented to the above options being repriced to Cdn $0.68
per common share from $1.44 per common share.
(6) In February of 1999, The Alberta Stock Exchange (now the Canadian Venture
Exchange Inc.) consented to the above options being repriced to Cdn $0.68
per common share from $1.10 per common share.
(7) 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.
On March 8, 1999, the Corporation's Board of Directors repriced certain options
previously granted to Mr. Ambrose, Mr. Gavin and certain of the Corporation's
directors, employees and consultants. These options were originally granted in
January 1996 and March 1998 at exercise prices of Cdn$1.44 and Cdn$1.10 per
share, respectively, and were repriced at an exercise price of Cdn$0.68 per
share, as calculated below.
The purpose of the Plan is to provide long term incentives to encourage the
Corporation's directors, officers and consultants to remain with the Corporation
and promote the Corporation's success. In taking the action to reprice the
existing options, the Board of Directors determined that options with exercise
prices at the then
-10-
<PAGE>
current market value provided better incentives to the Corporation's directors,
officers and consultants for performance than options with exercise prices well
in excess of such prices.
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 policies of The Alberta Stock Exchange
provided for circumstances in which stock options could be repriced. The policy
provided 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 was 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. The Alberta Stock
Exchange considered Cdn $0.68 reflected the current market price and allowed the
options to be repriced.
The following table sets forth details of the fiscal year-end value of
unexercised options on an aggregated basis held by the Named Executive Officers
for the fiscal year ended December 31, 1999:
AGGREGATED OPTION VALUES FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Name Securities Aggregate Unexercised Options at Value of Unexercised
Acquired on Value Most Recent Year End In-the-Money Options at
Exercise Realized (#) Most Recent Year End
(#) ($) Exercisable (Cdn $)/(1)(2)(4)/
/Unexercisable Exercisable
/Unexercisable
<S> <C> <C> <C> <C>
Allen V. Ambrose, 0 0 290,000/Nil 0/0
President
Brian Gavin, 0 0 290,000/Nil 0/0
Vice President,
Exploration
</TABLE>
Notes:
(1) Value of unexercised in-the-money options calculated using the closing
price of common shares on the Canadian Venture Exchange Inc. on December
31, 1999, less the exercise price of in-the-money stock options.
(2) On December 31, 1999 the last day the common shares traded in 1999, the
closing price of the common shares on the Canadian Venture Exchange Inc.
was Cdn $0.18. The exercise price of these options was greater than the
closing price on December 31, 1999.
(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 on March 8, 1999 to an exercise price of $0.68 and
210,000 were granted to each of Allen Ambrose and Brian Gavin effective
June 3, 1999.
3. Long-term Incentive Plans
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<PAGE>
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, 1997, December 31, 1998 or December 31, 1999.
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 during the fiscal period ended December 31, 1997. During
the fiscal year ended December 31, 1998 the Corporation repriced options to
acquire 190,000 common shares of the Corporation held by each of the Named
Executive Officers. During the fiscal year ended December 31, 1999 the
Corporation repriced options to acquire 80,000 common shares of the Corporation
held by each of the Named Executive Officers effective March 8, 1999. The
80,000 options held by each of the Named Executive Officers were repriced to
$0.68, from $1.44 as to 50,000 options, and from $1.10 as to 30,000 options.
See "Stock Options".
6. Pension and Retirement Plans and Payments made upon Termination of
Employment
The Corporation does not have in place any pension or retirement plan. The
Corporation has not provided compensation, monetary or otherwise, during the
preceding fiscal year, to any person who now acts or has previously acted as a
Named Executive Officer of the Corporation, in connection with or related to the
retirement, termination or resignation of such person and the Corporation has
provided no compensation to such persons as a result of a change of control of
the Corporation, its subsidiaries or affiliates. The Corporation is not party
to any compensation plan or arrangement with a Named Executive Officer resulting
from the resignation, retirement or the termination of employment of such
person.
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, 1999 administrative fees were paid to
Degerstrom of $48,240 on total costs incurred by the Corporation of
$492,325. Equipment rentals of $6,070 were included in the total costs for
1999.
(b) The Corporation had entered into an agreement dated April 30, 1996, as
amended on October 31, 1997 with Waiata Resources located in Littleton,
Colorado. The agreement provided that Allan J. Marter, who is the
principal of Waiata Resources ("Waiata") and a director and officer of the
Corporation, would 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 received a
retainer of $2,800 per month which entitled the Corporation of up to five
days of advisory services from Allan J. Marter per month. Additional
advisory services were paid at the pro rata rate based on $560 per day.
The agreement provided for termination by the Corporation upon thirty days
-12-
<PAGE>
written notice. This agreement has since been terminated upon the
resignation of Allan J. Marter as Chief Financial Officer, effective March
29, 2000.
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 the 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.
As of May 1, 2000, out of the total 3,000,000 shares provided for issuance under
the Plan only 820,000 shares remain available for grant. The Board of Directors
believes additional shares will be needed under the Plan to provide appropriate
incentives to key employees and others. Accordingly on April 26, 2000 the Board
of Directors approved amendment to the Plan, subject to regulatory and
shareholder approval, to provide for an additional 3,000,000 shares to be
granted under the terms of the Plan, thereby increasing the total number of
shares that may be issued under the plan from 3,000,000 to 6,000,000 shares. The
amendment to the Plan has been approved by the Canadian Venture Exchange Inc.
("CDNX"). Certain provisions of the Plan are described below.
(a) Description of the Plan
(1) General
The Plan is not subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA") or to the qualification requirements of Section
401(a) of the Internal Revenue Code of 1986, as amended, (the "Code"). Certain
stock options granted under the Plan may be treated as incentive stock options
as defined in Section 422 of the Code ("Incentive Stock Options"). Other stock
options, including all options granted under the Plan to individuals who are not
employees of the Corporation or any of its subsidiaries are not Incentive Stock
Options and are referred to in this Management Information Circular as
"Nonstatutory Stock Options".
The purpose of the Plan is to advance the interests of the Corporation and its
subsidiaries and affiliates by encouraging the directors, officers, employees
and consultants of the Corporation and its subsidiaries to acquire 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.
-13-
<PAGE>
(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 2,180,000 stock options have been granted
to the directors, officers, employees and consultants of the Corporation or its
subsidiaries pursuant to the Corporation's Plan of which 180,000 stock options
have been exercised. To the Effective Date, 820,000 stock options were
available for grant under the Plan.
(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.
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<PAGE>
Each option granted under the Plan is to be evidenced by an agreement, signed on
behalf of the Corporation and by the optionee, in a form approved by the Board
of Directors.
(iv) Participation and Types of Grants
Directors, officers, management, consultants and employees of the Corporation
are eligible for selection to participate in the Plan (such persons hereinafter
collectively referred to as "Participants"). The Board of Directors determines
to whom options shall be granted, the terms and provisions of the respective
option agreements, the time or times at which such options shall be granted, and
the number of 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
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<PAGE>
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 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.
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<PAGE>
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
(i) 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, (the 'Exchange Act") unless both (a) the grant
of the option was not approved by either the Board of Directors or a committee
composed solely of two or more non-employee directors and (b) the insider
exercises the option within six months of the date of grant.
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<PAGE>
(ii) 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
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<PAGE>
are insiders should consult their individual tax advisers before exercising an
Incentive Stock Option in either of those cases.
THE FOREGOING SUMMARY IS NOT A COMPLETE DESCRIPTION OF THE FEDERAL INCOME TAX
ASPECTS OF THE PLAN. MOREOVER, THE FOREGOING SUMMARY RELATES ONLY TO FEDERAL
INCOME TAX; THERE MAY ALSO BE FEDERAL ESTATE AND GIFT TAX CONSEQUENCES
ASSOCIATED WITH THE PLAN, AS WELL AS FOREIGN, STATE AND LOCAL TAX CONSEQUENCES.
The following stock options are outstanding to officers, directors, employees
and consultants of the Corporation as of December 31, 1999:
<TABLE>
<CAPTION>
Group Number of Exercise Price
(number of persons in Common Shares Date of Grant Expiry Date Per Common
group) Under Option Share $Cdn
<S> <C> <C> <C> <C>
2 Named Executive 100,000 January 10, 1996/(3)/ January 10, 2001 0.68
Officers 60,000 March 2, 1998/(4)/ March 2, 2003 0.68
420,000 June 3, 1999 June 3, 2004 0.55
5 Directors/ (1)/ 40,000 January 10, 1996/(3)/ January 10, 2001 0.68
90,000 March 2, 1998/(4)/ March 2, 2003 0.68
560,000 June 3, 1999 June 3, 2004 0.55
15 Others /(2)/ 50,000 January 10, 1996/(3)/ January 10, 2001 0.68
70,000 March 2, 1998/(4)/ March 2, 2003 0.68
271,000 June 3, 1999 June 3, 2004 0.55
179,000 June 3, 1999 June 3, 2004 0.59
Total 1,840,000
</TABLE>
Notes:
(1) Directors who are not Named Executive Officers.
(2) Includes employees, consultants of the Corporation and its subsidiaries
whose holdings are not previously disclosed.
(3) These options originally had an exercise price of Cdn $1.44 but were
subsequently repriced to Cdn $0.68 on March 8, 1999.
(4) These options originally had an exercise price of Cdn $1.10 but were
repriced to Cdn $0.68 on March 8, 1999.
D. Other Compensation
During the Corporation's fiscal period ended December 31, 1999, the Corporation
accrued and/or paid fees to a law firm for the provision of ongoing legal
services to the Corporation amounting to approximately $114,144. Bonnie L.
Kuhn, the Secretary and Director of the Corporation, is a partner 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
------------------------------------------------
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<PAGE>
No director, executive officer, senior officer or any of their respective
associates or affiliates or any proposed nominee director is or has been at any
time since the beginning of the last completed fiscal year, indebted to the
Corporation or any of its subsidiaries nor has any such person been indebted to
any other entity where such indebtedness is the subject of a guarantee, support
agreement, letter of credit or similar arrangement or understanding, provided by
the Corporation or any of its subsidiaries.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
---------------------------------------------
AND IN MATTERS TO BE ACTED UPON
-------------------------------
Other than as set forth herein in "Particulars of Matters to be Acted Upon -
Approval of the Issuance of Common Shares for Private Placement to Insiders" and
"Amendment to Stock Option Plan" 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 since the commencement
of the Corporation's last financial year.
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, the approval of a private placement with Degerstrom, the
approval to hold shareholders meetings in Spokane, Washington 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, 1999.
(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
-20-
<PAGE>
from voting in the election of directors. Each director elected will hold
office until the next Annual General Meeting of Shareholders or until his
successor is duly elected, unless his office is earlier vacated in accordance
with the Bylaws of the Corporation.
In order to be effective, an ordinary resolution requires the approval of a
majority of the votes cast by shareholders who vote in respect of the
resolution.
The following sets forth the name of each of the persons proposed to be
nominated for election as a director, all positions and offices in the
Corporation, presently held by him or her, his or her municipality of residence,
his or her principal occupation at the present and during the preceding five
years, the period during which he or she has served as a director, and the
number of voting common shares of the Corporation that he or she has advised are
beneficially owned by him or her, directly or indirectly, or over which control
or direction is exercised, as of the Effective Date hereof (except as otherwise
noted, the Corporation believes the persons listed below have sole investment
and voting power with respect to the common shares owned by them).
<TABLE>
<CAPTION>
Common
Shares Percentage
Name, Age and Municipality Position Beneficially of Common
of Residence Held Principal Occupation During Past Five Years Owned /(6)/ Shares /(6)/
===================================================================================================================================
<S> <C> <C> <C> <C>
Allen V. Ambrose, 43 President Director and President of the Corporation since 407,200/(2)/ 1.34%
Spokane, Washington and Director 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, 64 /(1)/ Director A director of the Corporation since November 6, 291,000/(3)/ 0.96%
Spokane, Washington 1995. Mr. Hansen has served as Vice President of
Operations for Mining Contracting with N.A.
Degerstrom, Inc. for the past 17 years. He is also
Director and Officer of Aresco Inc., an equipment
manufacturing company, since 1989
Bonnie L. Kuhn, 34 Secretary A director and officer of the Corporation since June 91,000/(5)/ 0.30%
Calgary, Alberta and Director 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, from September
1997 to September 1999
John Johnson Crabb, 74 /(1)/ Director A director of the Corporation since November 6, 190,000/(3)/ 0.63%
Madeira Park, B.C. 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, 63 Director A director of the Corporation since June 26, 1996. 140,000/(4)/ 0.46%
Ph.D., P. Eng. Mr. Drummond is a Professional Engineer;
Vancouver, British Columbia President of D.D.H. Geomanagement from 1981 to
present; Director of Cadre Resources Ltd. from
November 1994 to February 1995; Director of All
North Resources Ltd. from May 1995 to July 9,
1996; Director of International All-North Resources
Ltd. from July 10, 1996 to present; Director of The
Quinto Mining Corporation from September 11,
1996 to present
Allan J. Marter, 52 /(1)/ Director A director and officer of the Corporation since June 140,000/(4)/ 0.46%
Littleton, Colorado 19, 1997. On March 29, 2000, Mr. Marter resigned
as Chief Financial Officer. Mr. Marter was a
</TABLE>
-21-
<PAGE>
<TABLE>
<CAPTION>
Name, Age and Municipality Position Principal Occupation During Past Five Years Common
of Residence Held Shares Percentage
Beneficially of Common
Owned /(6)/ Shares /(6)/
<S> <C> <C> <C> <C>
financial advisor in the mining industry and
principal of Waiata Resources from April, 1996 to
present. From 1992 to April, 1996, employed as a
director with Endeavour Financial Inc. Director of
Addwest Minerals International, Ltd. formerly Alina
International Industries Ltd. from February 28, 1997
to present. Director of Latitude Minerals Corp. from
September 1999 to present. Director of Golden
Phoenix Minerals Inc. from October 1999 to
present. Vice President and Chief Financial Officer
of Golden Star Resources Ltd. from November 9,
1999 to present. Has provided financial advisory
services to the Corporation through Waiata
Resources from April 30, 1996 through March 29,
2000.
</TABLE>
Notes:
(1) Member of Audit Committee.
(2) Includes:
(a 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 on March 8,
1999);
(b stock options entitling the holder to acquire 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 on March 8,
1999); and
(c stock options entitling the holder to acquire 210,000 common shares
upon payment of Cdn $0.55 per common share granted effective June 3,
1999. Effective April 7, 1999, the Corporation canceled options to
acquire 190,000 common shares of which options to acquire 110,000
common shares were exercisable 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 options to acquire 80,000
common shares were exercisable 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).
(3) Includes:
(a 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 on March 8,
1999);
(b 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 on March 8,
1999); and
-22-
<PAGE>
(c stock options entitling the holder to acquire 120,000 common shares
upon payment of Cdn $0.55 per common share granted effective June 3,
1999. Effective April 7, 1999, the Corporation canceled options to
acquire 100,000 common shares of which options to acquire 60,000
common shares were exercisable 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 option to acquire 40,000
common shares were exercisable 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).
(4) Includes:
(a 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 on March 8,
1999); and
(b stock options entitling the holder to acquire 120,000 common shares
upon payment of Cdn $0.55 per common share granted effective June 3,
1999. Effective April 7, 1999, the Corporation canceled options to
acquire 100,000 common shares of which options to acquire 60,000
common shares were exercisable 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 options to acquire 40,000
were exercisable 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).
(5) Includes:
(a 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 on March 8,
1999); and
(b stock options entitling the holder to acquire 80,000 common shares
upon payment of Cdn $0.55 per common share granted effective June 3,
1999. Effective April 7, 1999, the Corporation canceled options to
acquire 60,000 common shares which were exercisable 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).
(6) Common shares which the person or group has the right to acquire within 60
days after May 1, 2000 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.
-23-
<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 three times during 1999. The audit committee met one
time during 1999. (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 1999). The Corporation does not have an executive 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 June
30, 2000, providing for the issuance of up to 30,000,030 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. If the Corporation issues
securities convertible into common shares, the terms of such securities,
including conversion rights, and voting rights shall be determined by the Board
of Directors. 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 Ontario Securities Commission Policy 5.2 ("Policy 5.2"), a
corporation is required 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
transaction exceeding twenty-five percent (25%) of the outstanding common
shares. 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 30,000,030 common shares or securities convertible into common
shares of the Corporation to subscribers during the period commencing on June
30, 2000 and ending on the day of the next annual general meeting of
shareholders.
The price per common share shall be determined in accordance with the policies
of the Canadian Venture Exchange (the "Exchange") and Policy 5.2. The Exchange
policies provide that the price per security must not be lower than the closing
market price of the common shares on the Exchange on the trading day prior to
the date on which a press release is issued announcing the proposed private
placement, less the applicable
-24-
<PAGE>
discount as follows, provided no common share shall be sold for net proceeds of
less than $0.10 per common share:
Market Price/(1)/ Maximum Discount
Therefrom
Up to $0.50 25%
$0.51 to $2.00 20%
Above $2.00 15%
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.
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
-25-
<PAGE>
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 30,000,030
common shares of the Corporation ("Common Shares") valued at the
maximum allowable discount permitted under the policies of the
Canadian Venture Exchange Inc. 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 and the policies of the
Canadian Venture Exchange Inc., no Common Share of the Corporation
shall be issued for net proceeds of less than $0.10 per Common Share),
in connection with one or more private placements of the Corporation
in the twelve (12) month period commencing June 30, 2000 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;
-26-
<PAGE>
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. 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.
(e) Approval of the Issuance of Common Shares for Private Placement to
------------------------------------------------------------------
Insiders
--------
The Corporation anticipates that if private placement transactions are to occur
that N.A. Degerstrom, Inc. ("Degerstrom"), Allen Ambrose and/or Brian Gavin
could participate in any of the private placement transactions. Degerstrom,
which is a large private mining contractor in North America with offices in
Spokane, Washington, is a principal shareholder of the Corporation, owning 17%
of the issued and outstanding common shares of the Corporation. Allen Ambrose
is the President and a director of the Corporation and owns 1.34% of the issued
and outstanding common shares of the Corporation. Brian Gavin is the Vice
President Exploration for the Corporation and owns 1.35% of the issued and
outstanding common shares of the Corporation. The Corporation therefore wishes
to obtain shareholder approval to allow Degerstrom, Allen Ambrose and Brian
Gavin 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 June 30, 2000 until the next annual meeting of the shareholders. In
addition, if Degerstrom participates in any private placement conducted by the
-27-
<PAGE>
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 in which Degerstrom, Allen
Ambrose and/or Brian Gavin 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, Allen Ambrose and/or
Brian Gavin 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 disinterested 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 (director and officer of the Corporation), and Brian
Gavin (officer of the Corporation) 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, Allan Ambrose and/or Brian Gavin participation will be substantially
as follows:
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 of the Canadian Venture Exchange
Inc. and pursuant to Ontario Securities Commission Policy 5.2 and in
any event for net proceeds of less than $0.10 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"), Allen Ambrose and Brian Gavin may
participate in any one or more private placements of the Corporation
in the twelve (12) month period commencing June 30, 2000, at such
prices and subject to such terms as
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<PAGE>
the directors may from time to time determine, whereunder:
(a) Degerstrom, Allen Ambrose and Brian Gavin may individually or
collectively 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, Allen Ambrose and/or Brian Gavin. On application
to approve an issuance of common shares to Degerstrom, Allen Ambrose and/or
Brian Gavin, the Exchange may approve such issuance subject to conditions in its
discretion.
-29-
<PAGE>
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, Allen Ambrose and Brian Gavin.
(f) Amendment to Stock Option Plan
As stated above in "Compensation of Executive Officers and Directors - Stock
Option Plan" the Directors of the Corporation have adopted a stock option plan
(the "Plan") the purpose of which is to afford the persons who provide services
to the Corporation, whether directors, officers, employees or consultants of the
Corporation or it's subsidiaries, an opportunity to obtain a proprietary
interest in the Corporation by permitting them to purchase Common Shares of the
Corporation and to aid in attracting, as well as retaining and encouraging the
continued involvement of such persons with the Corporation. Currently, the
maximum number of shares to be delivered upon exercise of all options granted
under the Plan has been set at 3,000,000 Common Shares. On April 26, 2000 the
Board of Directors approved an amendment to the Plan, subject to shareholder
approval, to provide for an additional 3,000,000 shares for the Plan, thereby
increasing the total number of shares that could be issued under the Plan from
3,000,000 to 6,000,000 shares. The amendment to the Plan has been conditionally
approved by the Canadian Venture Exchange Inc. The Corporation is seeking the
approval of the shareholders to amend the Plan to allow for the increase of the
maximum number of Common Shares to be delivered upon exercise of all options
granted under the Plan from 3,000,000 to 6,000,000.
The Plan is available for review at the offices of Armstrong Perkins Hudson
located at 1600, 407 - 2nd Street S.W., Calgary, Alberta, T2P 2Y3 and at the
offices of the Corporation during normal business hours.
At the Meeting, the shareholders will be asked to consider and, if thought fit,
approve by ordinary resolution, the amendment to the Plan to increase the
maximum number of Common Shares to be delivered upon exercise of all options
granted under the Plan from 3,000,000 to 6,000,000.
In order to be effective, an ordinary resolution requires the approval of a
majority of the votes cast by shareholders who vote in respect of the
resolution.
The text of the resolution approving the amendment to the Plan to be considered
at the meeting will be substantially as follows:
BE IT RESOLVED THAT:
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<PAGE>
1. The following amendment to the stock option plan of the Corporation
approved by the Board of Directors on April 26, 2000 and set forth
below:
Paragraph 3 under the heading "Shares Subject to Plan" be and is
hereby deleted and replaced with the following:
"3. Shares Subject to Plan
Subject to adjustment as provided in Section 15 hereof, the
shares to be offered under the Plan shall consist of shares of
the Corporation's authorized but unissued common shares. The
aggregate number of shares to be delivered upon the exercise of
all options granted under the Plan (the "Options") shall not
exceed 10% of the Corporation's issued and outstanding common
shares from time to time, to a maximum of 6,000,000 shares. If
any Option granted hereunder shall expire or terminate for any
reason without having been exercised in full, the unpurchased
shares subject thereto shall again be available for the purpose
of this Plan."
be and is hereby approved, confirmed and ratified;
2. The making by the Board of Directors of such additions, deletions and
modifications to the Plan as may be necessary or advisable to give
effect to these resolutions or as may be required by applicable
regulatory authorities, be and is hereby approved;
3. Any officer or director of the Corporation be and is hereby authorized
to execute all such deeds, documents and other writings and perform
such acts as may be necessary in order to give effect to the amendment
of the Plan and the Board of Directors from time to time is authorized
to grant options in the capital stock of the Corporation pursuant to
and in accordance with the Plan as amended; and
4. The Corporation is authorized to reserve and issue up to 3,000,000
additional common shares in the
-31-
<PAGE>
capital of the Corporation pursuant to and in accordance with the
Plan.
Unless otherwise indicated in the Proxy, it is management's intention to vote
the proxies in favour of the resolution approving the amendment to the Plan.
(g) Approval of Amendment to the Articles of Amalgamation to Allow
--------------------------------------------------------------
Shareholders Meetings to be Held Outside Alberta
------------------------------------------------
The Articles of Amalgamation currently allow the Corporation to hold shareholder
meetings in Alberta and Vancouver, British Columbia. The Corporation would like
the flexibility to hold its shareholder meetings at the location of its head
office in Spokane, Washington. Pursuant to sections 126(4) and 167(1)(m) of the
Business Corporations Act (Alberta), the shareholders of the Corporation will be
asked to consider and, if thought appropriate, approve and adopt a special
resolution authorizing the board of directors to amend the Articles of
Amalgamation of the Corporation to provide for shareholder meetings to be held
in Spokane, Washington as well as Vancouver, British Columbia and the Province
of Alberta. To pass, a special resolution requires the affirmative vote of not
less than two-thirds (2/3) of the votes cast by the shareholders present at the
Meeting or their proxy.
"BE IT RESOLVED AS A SPECIAL RESOLUTION THAT:
1. The Corporation amend its Articles of Amalgamation to provide for
meetings of shareholders to be held in Vancouver, British Columbia;
Spokane, Washington and anywhere in Alberta;
2. The board of directors, in its sole discretion, may act upon this
resolution to effect a change in the Articles of Amalgamation of the
Corporation, or, if deemed appropriate, may chose not to act upon this
resolution;
3. Should the directors of the Corporation chose to act upon this
resolution, they are authorized to execute and file restated Articles
of the Corporation as directed by the Registrar of Corporations
pursuant to Section 174(1) of the Business Corporations Act (Alberta);
and
4. Any one or more directors are hereby authorized to execute and deliver
and file any and all such applications, declarations, documents and
other
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<PAGE>
instruments and do all such other acts and things that may be
necessary or desirable to give effect to the provisions of this
resolution."
In the absence of contrary direction, the Management Designees intend to vote
proxies in the accompanying form in favour of this special resolution.
(h) 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 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 except for the amendment to the
articles of amalgamation and the approval of the private placement with
Degerstrom, Allen Ambrose and/or Brian Gavin 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 special resolution approving the amendment to the
articles of amalgamation will require, for the passing of same, two-thirds of
the votes in person or by proxy at the Meeting by the holders of common shares.
The ordinary resolution approving the proposed private placement with
Degerstrom, Allen Ambrose and/or Brian Gavin, requires, for the passing of same,
a simple majority of the votes cast in person or by proxy at the Meeting by
disinterested shareholders of common shares. If a majority of the common shares
represented at the Meeting should be withheld from voting for the appointment of
PricewaterhouseCoopers LLP as auditors of the Corporation, the board of
directors will appoint another firm of chartered accountants based upon the
recommendation of the audit committee, which appointment for any period
subsequent to the next annual meeting of shareholders will be subject to
approval by the shareholders at that meeting.
The contents and the sending of this Management Information Circular have been
approved by the board of directors of the Corporation.
FINANCIAL STATEMENTS
--------------------
Shareholders as of the record date of May 15, 2000, will receive with this
Management Information Circular, a copy of the Corporation's 1999 Annual Report,
including audited financial statements for the fiscal year ended December 31,
1999 and a copy of the Corporation's Form 10-QSB including unaudited financial
statements for the first quarter ending March 31, 2000. The financial statements
of the Corporation contained in Form 10-KSB and Form 10-QSB are incorporated
herein by reference.
INCORPORATION OF DOCUMENTS BY REFERENCE
---------------------------------------
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<PAGE>
The following documents filed by the Corporation with the Securities and
Exchange Commission are incorporated herein by reference:
(a) The Corporation's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999.
(b) The Corporation's Quarterly Report on Form 10-QSB for the period ended
March 31, 2000.
All documents subsequently filed by the Corporation pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act are incorporated herein by reference and
constitute a part hereof from their respective dates of filing. The Corporation
will provide without charge to each person to whom this Management Information
Circular is delivered, on the written or oral request of such person, a copy of
any and all of the information that has been incorporated by reference herein
(other than exhibits to such documents which are not specifically incorporated
by reference into the information in this Management Information Circular).
Such requests should be addressed to Art Johnson, Investor Relations at the
Corporation's office, 3303 North Sullivan Road, Spokane, Washington, 99216.
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
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<PAGE>
believes that all Section 16(a) filing requirements applicable to its executive
officers and directors have been complied with.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
---------------------------------------------
Shareholder proposals submitted for inclusion in the 2001 proxy materials and
consideration at the 2001 Annual Meeting of Shareholders must be received by the
Corporation by January 19, 2001. Any such proposal should comply with the rules
promulgated by the Securities and Exchange Commission governing shareholder
proposals submitted for inclusion in proxy materials.
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<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 1st day of May, 2000.
ON BEHALF OF THE MANAGEMENT OF MINERA ANDES INC.
/s/ Allen V. Ambrose
- ---------------------------
ALLEN V. AMBROSE
President
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<PAGE>
MINERA ANDES INC.
INSTRUMENT OF PROXY
-------------------
FOR THE ANNUAL GENERAL AND SPECIAL MEETING OF COMMON SHAREHOLDERS
June 23, 2000
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 23, 2000, 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 except as [ ] WITHHOLD AUTHORITY
marked to the contrary below. to vote for all nominees 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 [ ] 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 30,000,030 common shares of the Corporation or securities
convertible into common shares pursuant to one or more private placements
in the twelve months commencing June 30, 2000 on the terms and conditions
set forth in the Management Information Circular.
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 relating to the approval
of the participation of N.A. Degerstrom, Inc., Allen Ambrose and Brian
Gavin in future
<PAGE>
private placements of the Corporation, 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 amendment
to the Corporation's stock option plan as more particularly set forth in
the Management Information Circular.
6. FOR [ ] AGAINST [ ]
The special resolution amending the Articles of Amalgamation as more
particularly set out in the Management Information Circular to permit the
Corporation to hold shareholder meetings outside Alberta.
7. FOR [ ] WITHHOLD [ ]
Appointment of PricewaterhouseCoopers LLP as Auditor for the ensuing year
at a remuneration to be fixed by the directors.
8. 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
<PAGE>
of Proxy.
THE UNDERSIGNED HEREBY revokes any proxies previously given.
DATED this day of , 2000.
------ ----------------------
----------------------------------------
(signature of shareholder)
----------------------------------------
(name of shareholder - Please Print)
----------------------------------------
Number of Common Shares Held
NOTES:
1. This Instrument of Proxy will not be
valid and will not be acted upon or
voted unless it is completed as
outlined herein and delivered to the
Corporation c/o the offices of the
Montreal Trust Company of Canada, 6th
Floor, Western Gas Tower, 530 - 8th
Avenue S.W., Calgary, Alberta, T2P
3S8, at least forty eight (48) hours,
excluding Saturdays and holidays,
before the time set for the Meeting or
any adjournment thereof.
2. If the shareholder is an individual,
this Instrument of Proxy must be
executed by the shareholder or his
attorney authorized in writing.
3. If the shareholder is a corporation,
this Instrument of Proxy must be
executed under corporate seal or by a
duly authorized officer or attorney of
the Corporation.
4. Persons signing as executors,
administrators, trustees, etc. should
so indicate and give their full title
as such.
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<PAGE>
SUPPLEMENTARY MAIL LIST
RETURN CARD
NOTE: If you wish to be included in the Supplementary Mailing List of Minera
Andes Inc. in order to receive its interim financial statements 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.
