<PAGE> 1
PROXY STATEMENT
PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-11(c) or
section 240.14a-12
CONSOLIDATED SILVER CORPORATION
(Name of Registrant as Specified in Its Charter)
MICHAEL B. WHITE, SECRETARY
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per Each Party to the Controversy Pursuant to Exchange Act
Rule 14a-6(i)(3).
[X] 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: NONE
----
(2) Aggregate Number of Securities to Which Transaction Applies: NONE
----
(3) Per Unit Price or Other Underlying Value of Transaction Computed Pursuant
to Exchange Act Rule 0-11: $750,000 PROPERTY SALE
----------------------
(4) Proposed Maximum Aggregate Value of Transaction: $750,000
--------
Set Forth the Amount on Which the Filing Fee Is Calculated and State How It Was
Determined.
Filing Fee: $150
----
PURSUANT TO 0-11(C)(2), THE FILING FEE IS 1/50 OF ONE PERCENT (1%) OF THE
AGGREGATE CASH VALUE TO BE RECEIVED BY THE REGISTRANT
WHICH IS $750,000. 1/50 OF ONE PERCENT (1%) OF $750,000 IS $150.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule0-11(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:
<PAGE> 2
CONSOLIDATED SILVER CORPORATION
6500 Mineral Drive
Coeur d'Alene, Idaho 83814-8788
OCTOBER 16, 1995
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Consolidated Silver Corporation, which will be held at 10:00 a.m., Pacific
Standard Time, on Tuesday, November 14, 1995, in the lower level conference
facility at Washington Mutual Financial Center, 601 West Main Avenue, Spokane,
Washington.
At the Annual Meeting, Shareholders will be asked to approve the sale of certain
mining properties, consisting of patented and unpatented mining claims together
with certain plant, facilities, and equipment located thereon ("Silver Summit
Mine"), to Sunshine Precious Metals, Inc.; to elect six directors to the Board
of Directors; to approve certain amendments to the Amended Articles of
Incorporation; and approve the appointment of Coopers & Lybrand as the Company's
independent auditors. For information with respect to these matters, please
refer to the Notice of Meeting and Proxy Statement which are enclosed. In
addition, reports of the Corporation's operations and other matters of interest
will be made at the meeting.
Your Board of Directors respectfully recommends that you vote to approve the
sale of the Silver Summit Mine to Sunshine Precious Metals, Inc.; to elect the
directors nominated; to approve the amendments to the Amended Articles of
Incorporation; and to approve the appointment of Coopers & Lybrand.
Hecla Mining Company is the record and beneficial owner of 7,418,300 shares
(approximately 78.45%) of the outstanding Common Stock of Consolidated Silver
Corporation. It is Hecla's intention to vote all of its shares in favor of each
matter to be considered by the Shareholders thereby assuring approval.
It is important that your shares be represented at the meeting whether or not
you are personally able to attend. You are, therefore, urged to complete, date,
and sign the accompanying Proxy and mail it in the enclosed, postage-paid
envelope as promptly as possible.
Thank you for your cooperation.
Sincerely,
Ralph R. Noyes, President
<PAGE> 3
CONSOLIDATED SILVER CORPORATION
6500 Mineral Drive
Coeur d'Alene, Idaho 83814-8788
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 14, 1995
TO THE SHAREHOLDERS OF CONSOLIDATED SILVER CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Consolidated
Silver Corporation will be held on Tuesday, November 14, 1995, in the lower
level conference facility at Washington Mutual Financial Center, 601 West Main
Avenue, Spokane, Washington, at 10 a.m., Pacific Standard Time, for the
following purposes:
1. To consider and vote upon the sale of Silver Summit Mine (as defined in
Proxy Statement) to Sunshine Precious Metals, Inc.
2. To elect six members to the Board of Directors to serve for one-year
terms or until their respective successors are elected and qualified.
3. To consider and vote upon the adoption of certain amendments to the
Amended Articles of Incorporation (except as set forth in propositions
4 through 7, below).
4. To consider and to vote upon the adoption of an amendment to the Amended
Articles of Incorporation to increase the authorized common and alter
the terms of the preferred stock.
5. To consider and vote upon the adoption of an amendment to the Amended
Articles of Incorporation to eliminate the right of certain shareholders
to a position on the Company's Board of Directors.
6. To consider and vote upon the adoption of an amendment to the Amended
Articles of Incorporation with respect to indemnification and liability
of Directors.
7. To consider and vote upon the adoption of an amendment to the Amended
Articles of Incorporation to eliminate cumulative voting rights of
common shares.
8. To consider and vote upon the selection of Coopers & Lybrand as the
Company's independent auditors for 1995.
9. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on October 2, 1995, as
the record date for the determination of the Shareholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournment or adjournments
thereof. The stock transfer books of the Corporation will not be closed.
Hecla Mining Company is the record and beneficial owner of 7,418,300 shares
(approximately 78.45%) of the outstanding Common Stock of Consolidated Silver
Corporation. It is Hecla's intention to vote all of its shares in favor of
each matter to be considered by the Shareholders thereby assuring approval.
Shareholders are requested to complete, sign, and return the enclosed Proxy in
the enclosed envelope. Your prompt response will be appreciated.
By order of the Board of Directors,
MICHAEL B. WHITE, Secretary
October 16, 1995
<PAGE> 4
Whether or not you plan to attend the Annual Meeting, please complete, sign and
date the accompanying Proxy and mail it at once in the enclosed envelope, which
requires no additional postage if mailed in the United States. Your proxy will
be revocable, either in writing or by voting in person at the Annual Meeting,
at any time prior to its exercise.
<PAGE> 5
CONSOLIDATED SILVER CORPORATION
PROXY STATEMENT
SUMMARY OF CERTAIN PORTIONS OF THE PROXY STATEMENT
There are several matters to be considered at this Annual Meeting of
Shareholders. The first matter to be acted upon is the sale of certain
mining properties, consisting of patented and unpatented mining claims
together with certain plant, facilities and equipment located thereon
(hereinafter "Silver Summit Mine") to Sunshine Precious Metals, Inc.
("Sunshine"). A copy of the Purchase Agreement is attached to the Proxy
Statement as Exhibit I. After careful deliberation, the Board of
Directors has decided to sell the Silver Summit Mine and redirect the
Company's efforts to an aggressive program of exploration of silver
projects in Mexico. The first step in that process is the sale of the
Silver Summit Mine to provide the needed cash for the acquisition of the
Ojo Caliente Property from Hecla Mining Company. It is the Company's
intent to immediately apply for listing of the Company 's stock for
trading on the Vancouver Stock Exchange ("VSE"). It is management's
belief that listing the Company's stock on the VSE will both provide a
measure of liquidity to Shareholders which they have not enjoyed for
several years and give the Company access to a key source of venture
capital funding for junior resource companies engaged in Latin American
mineral exploration.
In addition to action upon the sale to Sunshine, the Shareholders will be
asked to consider and vote upon the election of six (6) directors to the
Board of Directors, various amendments to the Articles of Incorporation,
and the appointment of Coopers & Lybrand as the Company's independent
auditor.
<PAGE> 6
CONSOLIDATED SILVER CORPORATION
6500 Mineral Drive
Coeur d'Alene, Idaho 83814-8788
--------------------------------
PROXY STATEMENT
Relating to
Annual Meeting of Shareholders
to be held on November 14, 1995
-------------------------------------------
INTRODUCTION
This Proxy Statement is being furnished by the Board of Directors of
Consolidated Silver Corporation (the "Company") to holders of shares of the
Company's Common Stock, par value $.10 per share (the "Common Stock") in
connection with the solicitation by the Board of Directors of Proxies to be
voted at the Annual Meeting of Shareholders of the Company to be held on
November 14, 1995, and any adjournment or adjournments thereof (the "Annual
Meeting") for the purposes set forth in the accompanying Notice of Annual
Meeting. This Proxy Statement is first being mailed to Shareholders on or about
October 16, 1995.
Hecla Mining Company ("Hecla") is the record and beneficial owner of 7,418,300
shares (approximately 78.45%) of the outstanding Common Stock of Consolidated
Silver Corporation. It is Hecla's intention to vote all of its shares in favor
of each matter to be considered by the Shareholders thereby assuring approval.
Although approval of each matter to be considered by the Shareholders is
assured, the Company is required by Idaho corporate law to submit each of the
matters to be considered to the vote of all Shareholders.
PURPOSES OF ANNUAL MEETING
SALE OF MINERAL PROPERTY
At the Annual Meeting, Shareholders entitled to vote (See "Voting at Annual
Meeting") will be asked to consider and vote upon the sale of the Silver Summit
Mine to Sunshine Precious Metals, Inc. (See "1. Sale of Silver Summit Mine to
Sunshine"). Shareholders voting in favor of the sale of the Silver Summit Mine
will be unable to exercise dissenters' rights (See "Notice of Dissenters'
Rights").
ELECTION OF DIRECTORS
At the Annual Meeting, Shareholders will be asked to consider and to take action
on the election of six members to the Board of Directors to serve for one-year
terms or until their respective successors are elected and qualified (See "2.
Election of Directors").
<PAGE> 7
AMENDMENTS TO AMENDED ARTICLES OF INCORPORATION
At the Annual Meeting, Shareholders will be asked to consider and vote upon the
adoption of certain amendments to the Company's Amended Articles of
Incorporation to change the name to ConSil Corp.; change the registered agent in
Idaho; reword the Company's purpose; and regarding Directors' authority to
modify bylaws (See "3. Certain Amendments to Amended Articles of
Incorporation").
AMENDMENT TO AMENDED ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED COMMON
STOCK AND ALTER THE TERMS OF PREFERRED STOCK
At the Annual Meeting, Shareholders will be asked to consider and vote upon the
adoption of an amendment to the Company's Amended Articles of Incorporation to
increase the number of authorized common stock and to increase the authorized
preferred stock and alter the terms of the preferred stock (See "4. Amendment
of the Company's Amended Articles of Incorporation To Increase Authorized Common
Stock And Alter The Terms Of Preferred Stock").
AMENDMENT TO AMENDED ARTICLES OF INCORPORATION TO ELIMINATE THE RIGHT OF CERTAIN
SHAREHOLDERS TO A POSITION ON THE COMPANY'S BOARD OF DIRECTORS
At the Annual Meeting, Shareholders will be asked to consider and vote upon the
adoption of an amendment to the Company's Amended Articles of Incorporation to
eliminate the right of certain of the Company's Shareholders to a position on
the Company's Board of Directors in order to eliminate potential conflicts with
the Vancouver Stock Exchange's listing requirements (See "5. Amendment of the
Company's Amended Articles of Incorporation To Eliminate The Right Of Certain
Shareholders To A Position On The Company's Board of Directors").
AMENDMENT TO AMENDED ARTICLES OF INCORPORATION REGARDING INDEMNIFICATION AND
LIABILITY OF DIRECTORS
At the Annual Meeting, Shareholders will be asked to consider and vote upon the
adoption of an amendment to the Company's Amended Articles of Incorporation to
limit liability of and indemnify the Company's Directors (See "6. Amendment of
the Company's Amended Articles of Incorporation With Regard To Indemnification
And Liability of Directors").
AMENDMENT TO AMENDED ARTICLES OF INCORPORATION ELIMINATING CUMULATIVE VOTING
RIGHTS OF COMMON SHARES
At the Annual Meeting, Shareholders will be asked to consider and vote upon the
adoption of an amendment to the Company's Amended Articles of Incorporation to
eliminate cumulative voting rights of common shares in the election of Directors
(See "7. Amendment to the Company's Amended Articles of Incorporation
Eliminating Cumulative Voting Rights of Common Shares in the Election of
Directors").
<PAGE> 8
SELECTION OF INDEPENDENT AUDITORS
At the Annual Meeting, Shareholders will be asked to consider and vote upon the
selection of Coopers & Lybrand as the Company's independent auditors for 1995
(See "8. Selection of Auditors").
AS YOUR VOTE IS IMPORTANT, IT IS REQUESTED THAT YOU COMPLETE AND SIGN THE
ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE RETURN ENVELOPE PROVIDED. SHARES
CANNOT BE VOTED AT THE MEETING UNLESS THE OWNER IS PRESENT TO VOTE OR IS
REPRESENTED BY PROXY.
VOTING AT ANNUAL MEETING
1. RECORD DATE. The Board of Directors of the Company has fixed the close of
business on October 2, 1995, as the record date for the purpose of
determining Shareholders of the Company entitled to notice of and to vote
at the Annual Meeting. At the close of business on that date, the Company
had 9,455,689 issued and outstanding shares of Common Stock (see "Recent
Market Prices"). A majority of such shares will constitute a quorum for
the transaction of business at the Annual Meeting. Proxies which are
submitted but are not voted for or against (because of abstention, broker
nonvotes or otherwise) will be treated as present for all matters
considered at the meeting.
2. SOLICITATION OF PROXIES. The accompanying proxy is solicited on behalf of
the Board of Directors of the Company, and the cost of solicitation will
be borne by the Company. Following the original mailing of the Proxies and
soliciting materials, directors, officers and employees of the Company may,
but do not presently intend, to solicit proxies by mail, telephone,
telegraph, or personal interviews. The Company may request brokers,
custodians, nominees, and other record holders to forward copies of the
proxies and soliciting materials to persons for whom they hold shares of
the Company and to request authority for the exercise of proxies. In such
cases, the Company will reimburse such holders for their reasonable
expenses. The Company does not intend to utilize the services of an
outside proxy solicitation firm.
3. REVOCATION OF PROXY. Any proxy delivered in the accompanying form may be
revoked by the person executing the proxy by written notice to that effect
received by the Secretary of the Company at any time before the authority
thereby granted is exercised, by execution of a proxy bearing a later date
presented at the meeting, or by attendance of such person at the Annual
Meeting.
4. HOW PROXIES WILL BE VOTED. Proxies received by the Board of Directors in
the accompanying form will be voted at the Annual Meeting as specified
therein by the person giving the proxy. If no specification is made with
respect to the matters to be voted upon at the meeting, the shares
represented by such proxy will be voted FOR the approval of the Sale of the
Silver Summit Mine to Sunshine Precious Metals, Inc.; FOR the nominees to
the Board of Directors in the election of Directors; FOR the approval of
the
<PAGE> 9
amendments to the Amended Articles of Incorporation; FOR the approval of
the Amended Articles of Incorporation to increase common and preferred
stock; FOR the approval of the Amended Articles of Incorporation to
eliminate certain shareholder's right to a director's position; FOR the
approval of the Amended Articles of Incorporation limiting liability of and
indemnifying directors; FOR approval of the amendment to the Company's
Amended Articles of Incorporation eliminating cumulative voting rights of
common shares in the election of Directors; and FOR approval of the
appointment of Coopers & Lybrand as the Company's independent auditors for
the year 1995.
All shares represented by valid proxy will be voted at the discretion of
the proxy holders on any other matters that may properly come before the
meeting. However, the Board of Directors does not know of any matters to
be considered at the meeting other than those specified in the Notice of
Meeting.
5. VOTING POWER. Shareholders of the Common Stock of the Company are entitled
to one vote for each share held.
In the election of directors, owners of Common Stock have cumulative voting
rights. Under cumulative voting procedures, each Shareholder has the right
to vote in person or by proxy the number of shares registered in his name
for as many persons as there are directors to be elected, or to cumulate
such shares and to give one candidate as many votes as shall equal the
number of directors to be elected multiplied by the number of his shares,
or distribute the votes so cumulated among as many candidates as he may
desire.
6. PRINCIPAL SHAREHOLDERS. The following table sets forth the identity of the
record owners of more than five percent (5%) of the outstanding shares of
any class of the Company as of October 1, 1995:
COMMON
STOCK PERCENT
SHAREHOLDER OWNED OUTSTANDING
----------- --------- -----------
Hecla Mining Company 7,418,300 78.45%
The Company does not know of any other person who held more than five
percent (5%) of the Company's outstanding Common Stock as of October 1,
1995, or as of the date of the preparation of this Proxy Statement.
7. REQUIRED APPROVALS. At a meeting of the Board of Directors of the Company
held June 16, 1995, the Directors unanimously adopted a resolution
approving the sale of the Silver Summit Mine to Sunshine Precious Metals,
Inc., and an amendment to the Company's Amended Articles of Incorporation
increasing the authorized shares of Common Stock from 10,000,000 to
20,000,000 shares. At a meeting of the Board of Directors of the Company
held August 31, 1995, the Directors unanimously adopted resolutions
approving the slate of directors for election; all other proposed
<PAGE> 10
amendments of the Amended Articles of Incorporation; and the appointment
of Coopers & Lybrand as the Company's independent auditors for the year
1995.
The election of directors will be accomplished by determining the six nominees
receiving the highest total votes. Although each of the companies that were
parties to the consolidation of the Company's properties are entitled to a
representative on the Board pursuant to the Amended Articles of Incorporation
so long as the Company retains thirty percent (30%) of the shares originally
received, all parties holding such right have agreed to waive that right in
light of the proposed amendment to the Amended Articles of Incorporation
abolishing that right.
Approval of the amendments to the Amended Articles of Incorporation (except as
to the elimination of cumulative voting for directors) and approval of auditors
will be determined by the affirmative vote of a majority of the shares entitled
to vote thereon. The amendment relating to the elimination of cumulative voting
will require the affirmative vote of the holders of at least three-fourths (3/4)
of the shares entitled to vote thereon.
RECENT MARKET PRICES
The Common Stock of the Company is traded on the over-the-counter market and
quotations are published on the National Association of Securities Dealers
Automated Quotation (NASDAQ) Bulletin Board and in the National Quotation Bureau
"pink sheets" under the symbol CSLV. There has not been an established trading
market for the Common Stock and the below-described quotations, when available,
do not constitute a reliable indication of the price that a holder of the Common
Stock could expect to receive upon sale of any particular quantity thereof.
The following table sets forth the high and low bid and ask prices of the
Company's Common Stock as provided by the National Quotation Bureau for the
quarterly periods indicated. The prices reported by the National Quotation
Bureau represent prices between dealers, do not include retail markups,
markdowns, or commissions and do not necessarily represent actual transactions.
BID ASKED
------------- -------------
1995 HIGH LOW HIGH LOW
1st Quarter $ .50 $ .25 $1.00 $ .625
2nd Quarter $ .75 $ .55 $ .85 $ .65
3rd Quarter $1.20 $ .70 $1.40 $ .80
1994
1st Quarter $ .50 $ .25 $1.00 $ .75
2nd Quarter $ .50 $ .25 $1.00 $ .875
3rd Quarter $ .50 $ .25 $1.00 $.8125
4th Quarter $ .50 $ .25 $1.00 $.8125
<PAGE> 11
BID ASKED
----------------- -----------------
1993 HIGH LOW HIGH LOW
1st Quarter $ .0625 $ .0625 $ .50 $ .50
2nd Quarter $ .375 $ .0625 $ .75 $ .50
3rd Quarter $ .50 $ .25 $ .875 $ .75
4th Quarter $ .50 $ .125 $ .875 $ .625
The approximate number of holders of record of the Company's common stock as of
October 2, 1995, were 3,600.
THE FOLLOWING PROPOSALS ARE SUBMITTED TO THE SHAREHOLDERS FOR CONSIDERATION AT
THE ANNUAL MEETING OF SHAREHOLDERS:
1. SALE OF SILVER SUMMIT MINE TO SUNSHINE
HISTORY
The Company was formed for the purpose of consolidating contiguous mineral
properties located in the central portion of the Silver Belt, Evolution Mining
District, Shoshone County, Idaho, so that further deep level development of the
area could be undertaken without concern for potential conflicts of ore
ownership which might otherwise arise due to complicated extralateral and
intralimital rights problems which would have existed had the consolidation not
occurred. The consolidation was completed on January 31, 1969.
The mining properties consist of approximately 1,019 acres. The properties are
more particularly described in Exhibit A to the Purchase Agreement appended
hereto as Exhibit I (collectively herein the properties are referred to as
"Silver Summit Mine" or the "Property").
The Silver Summit Mine property, currently a part of Consolidated Silver
Corporation, consists of a 300-ton-per-day flotation mill, various surface
support buildings and equipment, a mile-long adit (tunnel) providing access to
the top shaft level at which point a hoist serves a 5,500 foot production shaft.
A 1,000 foot offset winze, equipped with a hoist, located 1,500 feet from the
bottom of the 3,000 foot level of the main shaft also provides access to the
4,000 foot level (approximately 1,338 feet below sea level) which was the lowest
producing level in the Silver Summit Mine. The mine also serves as a secondary
exit for the Sunshine Mine, which connects with the Consolidated Silver
property.
The Company's properties are bordered on the west by the Sunshine Unit Area and
on the east by the Coeur d'Alene Mines Corporation's Coeur Mine. All of the
Company's holdings are south of the Osburn fault, the major regional structural
feature in the Coeur d'Alene District. The Polaris fault and the Chester and
Silver Summit vein systems are the principal structures within the area. These
geologic features trend east-west through the Company's holdings.
<PAGE> 12
On August 1, 1980, the Shareholders of the Company approved a lease of the
properties to a joint venture composed of certain substantial shareholders of
the Company. This lease was terminated by the Lessees effective February 11,
1988. On November 1, 1988, the Company entered into a new Mining Lease and
Agreement (the "Agreement") of its properties to ASARCO. Due to continued
depressed metals prices and lack of exploration success, the Agreement between
the Company and ASARCO was terminated effective August 17, 1992.
On July 13, 1993, the Company terminated an agreement entered into with Merger
Mines Corporation on July 2, 1968, for the lease of approximately 288 acres
consisting of 13 patented and five unpatented mining claims.
There had been no ore production since the Company was formed in 1969 until the
final months of 1980. Total production amounted to 1,998 tons of ore in 1980
and 27,584 tons of ore in 1981. The Lessees, under the 1980 lease agreement
suspended ore production in early 1982 due to depressed metals prices. There
are currently about 70,000 tons of mineralized material averaging 20 ounces of
silver per ton, mostly located above the 4,000 foot level. However, it is the
Company's belief a considerable increase in the price of silver in combination
with the discovery of additional reserves are needed for the mineralized
material to be mined profitably.
In excess of $17.2 million was expended on the project by the Lessees, under
the 1980 lease agreement, since it commenced work in the spring of 1980. Work
consisted of rehabilitation of existing mine workings and surface plant, shaft
sinking, and exploration and development activities primarily on the 5,400 foot
level of the mine. In addition, 25,824 feet of exploration diamond drilling was
completed. The only mineralization of consequence found in the program was
considered by the joint venture to be inadequate for commercial production. On
November 16, 1987, the joint venture announced its election to terminate the
lease which became effective February 11, 1988. The net book value of the
Company's cost basis in the property, plant, and equipment was zero at December
31, 1994. Because of the previous unsuccessful exploration, the high cost of
additional deep exploration on the Property and the considerable increase in
silver prices required to develop deep reserves, Management decided to seek a
purchaser for the Property and focus its efforts on exploration for larger and
lower cost silver reserves in Mexico.
TERMS OF AGREEMENT
The agreement to sell the Silver Summit Mine to Sunshine Precious Metals, Inc.
("Sunshine") provides for the conveyance of the sub-surface mineral rights and
the mill site to Sunshine for $750,000 and a retained variable production
royalty based on defined Net Smelter Returns from any future production from the
Property. The terms of the Royalty are set forth in Exhibit B to the Agreement
which is attached as Exhibit I.
The terms of the transaction between Sunshine and the Company were negotiated
by Management of the Company with representatives of Sunshine. Negotiations
were undertaken at an arms-length basis with neither the Company nor the
Company's major shareholder, Hecla, having any affiliation with Sunshine.
The terms of the transaction have also been approved by the Company's Board
of Directors. In determining that the payment of $750,000 and the sliding
scale net smelter return royalty was adequate and fair consideration for the
sale of Silver Summit property,
<PAGE> 13
Management and the Board considered a number of factors including the previous
unsuccessful exploration at the property, the considerable increase in silver
price that would be necessary to develop additional mineralized material at the
property and the fact that the net book value of the Company's cost basis in the
property, plant and equipment was zero at December 31, 1994. With respect to
the sale of the property, Management contacted two potential purchasers and only
Sunshine made any offer for the purchase of the property. In the case of
Sunshine's offer, the Company was advised that Sunshine valued the property more
for guaranteeing a secondary escapeway through the property from the adjacent
Sunshine Mine rather than for its mineral value. However, if Sunshine were to
develop and mine the property, the Company and its shareholders would share in
the proceeds of any metal or mineral sales from the property through the
reserved net smelter return royalty. The net smelter return royalty varies from
2% to 4% of gross proceeds (less certain minor deductions) realized from the
property depending upon the price of silver. The net smelter return royalty is
2% at a silver price of $4.99 or less per ounce and increases to a 4% net
smelter return royalty at a silver price of $7.00 or more per ounce.
Sunshine has acknowledged that the Company has advised Sunshine that the
Property was used by Consolidated Silver Corporation and previous owners or
lessees for mining activities; and that due to past and present use of the
Property, there may be Hazardous Substances, as defined, or environmental
conditions associated with the Property. Except as specifically provided or
disclosed in the Agreement, the Company makes no warranty or representation of
any type or character, written or implied, regarding Hazardous Substances
situated on or environmental conditions associated with the Property, or that
the Company has complete knowledge or information about these matters. Sunshine
has agreed to accept the Property in an "as is" condition.
The Company and Sunshine have agreed to an allocation of their respective
environmental liabilities whereby: (1) Sunshine assumes all environmental,
reclamation, and permit-related responsibilities, obligations, and liabilities
occurring on the Property which arise from or relates to any Hazardous Substance
Law caused by, or arising from, or relating to activities on or operations or
ownership of or conditions existing on the Property, whether prior to or after
the Closing Date of the Agreement; (2) the Company assumes all environmental and
reclamation liability occurring off-site (i.e., at any location except on the
Property) which arises from or relates to any Hazardous Substance caused by, or
arising from, or relating to activities on or operations or ownership of or
conditions existing on the Property prior to the Closing Date of the Agreement;
and (3) Sunshine assumes all environmental and reclamation liability occurring
off-site (i.e., at any location except on the Property) which arises from or
relates to any Hazardous Substance caused by, or arising from, or relating to
activities on or operations or ownership of or conditions existing on the
Property on or after the Closing Date of the Agreement.
In entering into the terms set out in the Agreement, neither the Company nor
Sunshine admitted any liability to any third parties regarding the matters
addressed. The Company and Sunshine also agreed and acknowledged that
invocation of the cross indemnities outlined therein may, depending on the
facts, require the parties to allocate between them responsibility for certain
claims, obligations, or liabilities.
POSSESSION. Sunshine currently has possession of the Property for which it is
paying a monthly fee of $5,000 to be credited toward the Purchase Price.
<PAGE> 14
CLOSING. Closing is to take place on the first business day following approval
of the Agreement by the Company's Shareholders but in no event later than
November 1, 1995, unless mutually extended. The Company and Sunshine have
agreed to extend the closing date to no later than November 17, 1995.
AN AFFIRMATIVE VOTE OF HOLDERS OF A MAJORITY OF THE COMMON STOCK ENTITLED TO
VOTE AT THE MEETING IS REQUIRED FOR APPROVAL OF THE SALE. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE SALE OF THE SILVER SUMMIT MINE. (SEE
"NOTICE OF DISSENTERS' RIGHTS").
OJO CALIENTE PROJECT
In accordance with applicable law, the Company is not seeking Shareholder
approval of the agreement described below with respect to the Ojo Caliente
Project. However, the following information is provided to inform shareholders
concerning the direction of the Company should the transaction with Sunshine be
approved.
The Company plans to use the proceeds of the sale and other available cash to
invest in silver exploration projects. In this regard, the Company also
announced that it has entered into an agreement to acquire Hecla's right to earn
a 50 percent interest in Minera El Morro, S.A. de C.V., which holds the Ojo
Caliente silver exploration project in Zacatecas, Mexico. The agreement will
be effective upon Shareholder approval of the transaction with Sunshine. The
other investor in the project is Minera Portree de Zacatecas, S.A. de C.V., a
Mexican exploration company. Consolidated Silver will acquire Hecla's interest
in the project by reimbursing Hecla an amount equal to that spent on the
property by Hecla.
The Ojo Caliente project includes at least four zones of mineralization that
have never been systematically explored. The main veins have been mapped and
sampled recently by Hecla. The geology is similar to veins in the nearby
Zacatecas District, which has produced more than 600 million ounces of silver.
Past underground silver production in the Ojo Caliente area occurred in the
1600s. The exploration plan for 1995 consists of 12 drill holes totaling about
7,000 feet, which will test two of the four vein systems at depth.
The Company will pay to Hecla in cash at Closing the aggregate of all
expenditures incurred by Hecla or Minera Hecla in its acquisition and for
exploration costs related to the Ojo Caliente Project to date in
consideration of Hecla's grant of its rights pursuant to the Ojo Caliente
Agreement. Hecla's expenditures are expected to be less than $800,000. In
return, should the Company decide to seek a partner to assist in developing the
Ojo Caliente Project or putting it into production, Hecla will have the first
opportunity to provide that assistance.
Prior to entering into the Agreement with Hecla, the Company hired an
independent exploration geologist to consult with Management and the Board of
Directors to review and confirm the geologic assessment and drilling program
conducted by Hecla on the Ojo Caliente Project. The terms of the acquisition
of Hecla's interest in the Mexican project, including the purchase terms, were
negotiated between Hecla and the Company with the assistance of the Company's
independent geologist consultant and an independent attorney retained by the
Company. The Company was advised that Hecla intended that the transaction
provided Hecla with the ability to recoup only the amount of
<PAGE> 15
its investment to date in the project and that Hecla would have a potential
to benefit as a shareholder in the Company and by retaining a first right of
refusal should the Company desire to sell the Ojo Caliente Project or utilize a
third party to develop the project. Although the transaction bears the high
level of risk inherent in mining exploration transactions, the price was deemed
to be reasonable and fair for the Company in the judgment of the Board of
Directors based upon the independent consultant's reports, the geographic
location relative to other large silver deposits, and the geologic setting. The
Board of Directors was advised of the relationship and interest of Hecla at the
time the Board considered the transaction as required by Idaho Code Section
30-1-41. The transaction as summarized herein was thereafter unanimously
approved by the Board of Directors, including the affirmative vote of the two
independent Board members who have no affiliation with Hecla and who are
experienced in the mining industry and are familiar with the types of
transactions common to the exploration and development of mining projects.
The Closing of the transactions pursuant to the Ojo Caliente Agreement is to
take place within three (3) business days after the later of the Company's
Annual Meeting of Shareholders or the closing of the Company's agreement with
Sunshine, but in no event later than November 30, 1995.
NOTICE OF DISSENTERS' RIGHTS
RIGHT OF SHAREHOLDERS TO DISSENT AND OBTAIN PAYMENT FOR SHARES
Pursuant to Idaho Code Section 30-1-80(a)(2), any Shareholder of a corporation
shall have the right to dissent from and to obtain payment for his shares in
the event of any sale, lease, exchange or other disposition of all or
substantially all of the property and assets of the corporation not made in the
usual or regular course of its business. The sale of the Silver Summit Mine to
Sunshine meets this criteria for the right of Shareholders to dissent and
obtain payment for their shares. Shareholders who wish to dissent and demand
payment for their shares must refrain from voting their shares in favor of the
proposed sale.
A shareholder's failure to vote against this proposal will not constitute a
waiver of appraisal or similar rights, and a vote against the proposal will be
deemed to satisfy notice requirements pursuant to Idaho law. A further notice
of Dissenter's Rights and form for Demand of Payment will be sent to all
Shareholders who refrained from voting in favor of the proposed sale.
A copy of Idaho Code Sections 30-1-80 and 30-1-81 is annexed to this Proxy
Statement as Exhibit II.
2. ELECTION OF DIRECTORS
At the meeting, six (6) Directors are to be elected who shall hold office until
the next Annual Meeting of Shareholders and until their respective successors
shall have been elected and qualified. There were no meetings of the Board of
Directors in 1994, and are no standing audit, nominating or compensation
committees of the Board of Directors.
<PAGE> 16
The proxies appointed in the accompanying proxy intend to vote, unless directed
to the contrary therein, in their discretion, cumulatively for the election to
the Board of Directors of the six persons named below, all of whom Management
believe are willing to serve the Company in such capacity. However, if any
nominee at the time of election is unable or unwilling to serve, or is otherwise
unavailable for election, such that substitute nominees are designated, the
proxies in their discretion intend to vote cumulatively for all or a lesser
number of such other nominees.
The nominees for Directors, together with certain information with respect to
them, are as follows:
Common Shares Owned
Beneficially,
Year First Became Directly or
Name Age A Director Indirectly, as of
Sept. 1, 1995
- ----------------------------------------------------------------
Ralph R. Noyes 47 1991 5,000
Michael B. White 44 1989 1,000
Gerald G. Carlson 49 Proposed None
Robert Stuart Angus 46 Proposed None
William J. Weymark 42 Proposed None
Charles F. Asher 73 1992 None
RALPH R. NOYES has been President of the Company since 1991 and Vice President
of Metal Mining with Hecla since 1988.
MICHAEL B. WHITE has been Vice President of the Company since 1992 and Secretary
of the Company since 1982. Mr. White is Vice President-General Counsel and
Secretary of Hecla.
GERALD G. CARLSON, PHD., P.ENG., has served as Vice President of the Company
since June 16, 1995. Prior to this, he was Vice President of Exploration and
Director of Dentonia Resources Ltd. from February 1994. He is also a director
of Ballatar Explorations Ltd. He has previously been involved in managing and
financing a number of other junior exploration companies, has acted as an
independent consultant, and until 1993, was Adjunct Professor in Economic
Geology at the University of British Columbia. He has extensive experience in
exploration in North, South, and Central America; Australia; and Asia.
ROBERT STUART ANGUS is an attorney and partner in the Canadian law firm of
Smith, Lyons, Torrance, Stevenson & Mayer. He is located in Vancouver, British
Columbia. He serves on the board of directors of Yamana Resources Inc., a
Canadian mining exploration company focusing on South American properties.
WILLIAM J. WEYMARK, B.SC., P.ENG. has been Vice President, Operations, of
Vancouver Wharves since 1991. Prior to that, he was Vice President and General
Manager of Curraugh Resources, a large lead, zinc and silver open-pit mine in
the Yukon. He is also a director of Gold City Resources Ltd.
CHARLES F. ASHER is President of Plainview Mining Company. He has served as a
director of Merger Mines Corporation and Verna Mae Mining Company since 1987.
<PAGE> 17
COMPENSATION OF DIRECTORS AND OFFICERS
During the past three fiscal years, none of the officers have received any
compensation directly or indirectly for service to the Company in such
positions. Directors receive an attendance fee of $150 per directors' meeting
attended. There were no meetings of the Board of Directors in 1994.
OTHER TRANSACTIONS WITH MANAGEMENT
Hecla receives a fee for general and administrative expenses provided to the
Company. During the years ended December 31, 1994 and 1993, Hecla received
$26,885, $28,082, respectively.
3. CERTAIN AMENDMENTS TO AMENDED ARTICLES OF INCORPORATION
AMENDMENT OF THE COMPANY'S AMENDED ARTICLES OF INCORPORATION TO CHANGE
CORPORATE NAME.
RESOLVED: THAT ARTICLE I OF THE AMENDED ARTICLES OF INCORPORATION SHALL BE
AMENDED AS FOLLOWS:
I.
Name
The name of this corporation is and shall be ConSil Corp.
DISCUSSION
The decision to change the name of the Company stems from the Company's desire
to list the stock of the Company on the Vancouver Stock Exchange. There
presently exists a British Columbia corporation with a name so similar to the
Company's current name as to prevent listing the Company under its present name.
The Board of Directors have chosen a new corporate name as similar as possible.
It is the Directors' belief that the name change will have no adverse impact or
loss of goodwill to the Company. This is especially so in light of the fact
that Shareholders and the brokerage community routinely refer to the Company as
"ConSil".
AMENDMENT OF THE COMPANY'S AMENDED ARTICLES OF INCORPORATION TO CHANGE
THE LOCATION OF THE REGISTERED OFFICE IN THE STATE OF IDAHO.
RESOLVED: THAT ARTICLE II OF THE AMENDED ARTICLES OF INCORPORATION SHALL BE
AMENDED TO READ AS FOLLOWS:
II.
Registered Office
The location and post office address of the corporation's registered
office in the State of Idaho shall be 6500 Mineral Drive, Coeur
d'Alene, Idaho 83814-8788.
AMENDMENT OF THE COMPANY'S AMENDED ARTICLES OF INCORPORATION TO REWORD
THE CORPORATE PURPOSE.
RESOLVED: THAT ARTICLE IV OF THE AMENDED ARTICLES OF INCORPORATION SHALL BE
AMENDED TO READ AS FOLLOWS:
<PAGE> 18
IV.
Purpose
The purpose of this corporation shall be to transact any and all
lawful business for which corporations may be incorporated under
the Idaho Business Corporation Act, in general, to have and
exercise all the powers conferred by the laws of Idaho upon
corporations formed under the Idaho Business Corporation Act, and
to do any and all things herein set forth to the same extent as
natural persons might or could do.
DISCUSSION
This amendment is not intended to alter the Company's purpose in any manner.
Its purpose is merely for the sake of corporate flexibility and simplification
of the Amended Articles of Incorporation.
AMENDMENT TO THE COMPANY'S AMENDED ARTICLES OF INCORPORATION GIVING THE
BOARD OF DIRECTORS POWER TO MODIFY OR ALTER EXISTING BYLAWS OR ADOPT NEW
BYLAWS SUBJECT TO RATIFICATION BY THE SHAREHOLDERS AT THE NEXT ANNUAL OR
SPECIAL MEETING.
RESOLVED: THAT AN ARTICLE X BE ADDED TO THE AMENDED ARTICLES OF INCORPORATION
TO READ AS FOLLOWS:
X.
Bylaws
The Board of Directors shall have the power to modify and alter
existing Bylaws or adopt new Bylaws subject to ratification by
the Shareholders at the next Annual or Special Meeting.
DISCUSSION
At present, the Directors may modify or alter existing Bylaws or adopt new
Bylaws unilaterally. This new provision presents a check on the power of the
Board of Directors by requiring the Shareholders to ratify any such Board action
with regard to the Bylaws.
THE AFFIRMATIVE VOTE OF HOLDERS OF A MAJORITY OF THE COMMON SHARES ENTITLED TO
VOTE AT THE MEETING IS REQUIRED FOR APPROVAL OF THE ABOVE-DESCRIBED AMENDMENTS
TO THE AMENDED ARTICLES OF INCORPORATION AS SET FORTH IN THIS PROPOSAL. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSAL.
4. AMENDMENT OF THE COMPANY'S AMENDED ARTICLES OF INCORPORATION TO INCREASE
AUTHORIZED COMMON STOCK AND ALTER THE TERMS OF PREFERRED STOCK.
RESOLVED: THAT ARTICLE V SHALL BE AMENDED AS FOLLOWS:
<PAGE> 19
V.
Shares
The authorized capital stock of the corporation shall consist of
two classes of stock, designated as "Common Stock" and "Preferred
Stock."
The total number of shares of Common Stock that the corporation
will have authority to issue is Twenty Million (20,000,000), $.10
per share par value. All of the Common Stock authorized herein
shall have equal voting rights and powers without restrictions in
preference.
The total number of shares of Preferred Stock that the corporation
will have authority to issue is Ten Million (10,000,000). The
Preferred Stock shall have a par value of $.25 per share. The
Preferred Stock shall be entitled to preference over the Common
Stock with respect to the distribution of assets of the corporation
in the event of liquidation, dissolution or winding-up of the
corporation, whether voluntarily or involuntarily, or in the event
of any other distribution of assets of the corporation among its
shareholders for the purpose of winding-up its affairs. The
authorized but unissued shares of Preferred Stock may be divided
into and issued in designated series from time to time by one or
more resolutions adopted by the Board of Directors. The Directors
in their sole discretion shall have the power to determine the
relative powers, preferences, and rights of each series of Preferred
Stock issued by the corporation.
DISCUSSION
The Company is currently authorized to issue 10,000,000 shares of its Common
Stock, par value $.10 per share, of which 9,455,689 shares were issued and
outstanding and held of record by approximately 3,600 Shareholders as of
October 2, 1995, and no shares are reserved for issuance upon the exercise of
outstanding options, warrants, and conversion of outstanding notes.
The Board of Directors has determined that it would be advisable and in the best
interest of the Company to increase the number of authorized shares of Common
Stock from 10,000,000 shares to 20,000,000 shares in order to provide the
Company with an adequate supply of authorized but unissued shares of Common
Stock for general corporate needs including obtaining additional financing,
possible stock dividends, employee incentive and benefit plans or consummation
of acquisitions at times when the Board, in its discretion, deems it
advantageous to do so. At present, the Company has no commitment for the
issuance of additional shares.
Accordingly, on June 16, 1995, the Company's Board of Directors approved an
amendment to the Company's Amended Articles of Incorporation which would
authorize an increase in the Company's capital stock from 10,000,000 shares to
20,000,000 shares. If the amendment is approved by the Shareholders, the
Amended Articles of Incorporation will be amended to reflect the increase.
All shares of Common Stock are equal with respect to voting, liquidation,
dividend and other rights. Owners of shares of Common Stock are entitled to one
vote for each share they own at any Shareholders' meeting. Holders of shares
of Common Stock are entitled to receive such dividends as may be declared by the
Board of Directors out of funds legally available therefor, and upon liquidation
<PAGE> 20
are entitled to participate pro rata in a distribution of assets available for
such a distribution to Shareholders. There are no conversion, preemptive or
other subscription rights or privileges with respect to any shares. Although
the Board of Directors would authorize the issuance of additional shares of
Common Stock based on its judgment as to the best interests of the Company and
its Shareholders, the issuance of authorized shares of Common Stock could have
the effect of diluting the voting power and book value per share of the
outstanding Common Stock.
Authorized shares of Common Stock in excess of those shares outstanding
(including, if authorized, the additional Common Stock provided for in the
Proposal) will remain available for general corporate purposes, may be privately
placed and could be used to make a change in control of the Company more
difficult. Under certain circumstances, the Board of Directors could create
impediments to, or frustrate, persons seeking to effect a takeover or transfer
in control of the Company by causing such shares to be issued to a holder or
holders who might side with the Board of Directors in opposing a takeover bid
that the Board of Directors determines is not in the best interests of the
Company and its shareholders, but in which unaffiliated shareholders may wish
to participate. In this connection, the Board of Directors could issue
authorized shares of Common Stock to a holder or holders which, when voted
together with the shares held by members of the Board of Directors and the
executive officers and their families, could prevent the majority shareholder
vote required by the Company's Restated Articles of Incorporation to effect
certain matters. Furthermore, the existence of such shares might have the
effect of discouraging any attempt by a person, through the acquisition of a
substantial number of shares of Common Stock, to acquire control of the Company,
since the issuance of such shares should dilute the Company's book value per
share and the Common Stock ownership of such person. One of the effects of the
Proposal, if approved, might be to make a tender offer more difficult to
accomplish. This may be beneficial to Management in a hostile tender offer,
thus having an adverse impact on shareholders who may want to participate in
such tender offer.
The additional authorized shares of Common Stock resulting from the Proposal
would, when issued, have the same rights as the issued and outstanding existing
shares of Common Stock. Shareholders of the Company do not have preemptive
rights nor will they as a result of the Proposal.
If the Proposal is approved, the additional, authorized Common Stock, as well
as the currently authorized but unissued Common Stock, would be available for
issuance in the future for such corporate purposes as the Board of Directors
deems advisable from time to time without the delay and expense incident to
obtaining Shareholder approval, unless such action is required by applicable law
or by the rules of the National Association of Securities Dealers, Inc., or of
any stock exchange upon which the Company's shares may then be listed. It
should be noted that subject to the limitations discussed above, all of the
types of Board action with respect to the issuance of additional shares of
Common Stock that are described in the preceding paragraphs can currently be
taken and that the power of the Board of Directors to take such actions would
not be enhanced by the Proposal, although the Proposal would increase the number
of shares of Common Stock that are available for the taking of such action.
While the Board of Directors is seeking this authority from the Shareholders,
at this time, other than as stated herein, it has no present agreement,
commitment, plan or intent to issue any of the additional shares provided for
in the Proposal. If, however, the need arises in the future to issue
<PAGE> 21
additional shares, there may not be sufficient time to call a Shareholders'
meeting to approve the increase in authorized Common Stock.
On August 31, 1995, the Company's Board of Directors approved an amendment to
the Company's Amended Articles of Incorporation and recommended adoption by the
Shareholders that would authorize the Company to issue, from time to time as
determined by the Board of Directors, up to 10,000,000 shares of Preferred
Stock, with a par value of $.25 per share ("Preferred Shares"). This Proposal
is intended to replace the existing preferred shares as currently structured.
The current preferred shares are redeemable and are required to be redeemed by
the Company from a "fund" equal to 40 percent of the retained net earnings of
the Company after payment of all dividends on preferred shares, but before
payment of dividends on common shares. Dividends on the preferred shares are
cumulative and payable at the rate of $6 per share beginning with the year in
which the Company receives income by reason of production from the Company's
property.
The Directors are of the opinion that the current preferred share structure is
unduly burdensome to the Company and could severely restrict the Company's
future financing efforts. In connection with this proposed amendment to the
Articles of Incorporation on August 31, 1995, Hecla exchanged its 12,500 shares
of preferred stock for 1,250,000 shares of the Company's Common Stock. On the
date hereof, no shares of preferred stock are outstanding.
If the proposed amendment is approved, the Board of Directors would be empowered
without the necessity of further action or authorization by the Company's
Shareholders (unless such action or authorization is required in a specific case
by applicable laws or regulations or stock exchange rules) to authorize the
issuance of the Preferred Shares from time to time in one or more series or
classes, and to fix by resolution the designations, preferences, limitations,
and relative rights of each such series or class. Each series or class of
Preferred Shares would, as determined by the Board of Directors at the time of
issuance, rank senior to the Company's shares of Common Stock with respect to
dividends and redemption and liquidation rights. Although Preferred Shares are
currently authorized by the Company's Amended Articles of Incorporation, no
shares of Preferred Stock are currently outstanding. The existing rights and
preferences of the Preferred Stock will be eliminated pursuant to the proposed
amendment.
The Preferred Shares will provide authorized and unissued shares of Preferred
Stock which may be used by the Company for any proper corporate purpose. Such
purpose might include, without limitation, issuance as part or all of the
consideration required to be paid by the Company in the acquisition of other
businesses or properties, or issuance in public or private sales for cash as a
means of obtaining additional capital for use in the Company's business and
operations. There are no transactions currently under review by the Board of
Directors which contemplate the issuance of Preferred Shares.
It is not possible to state the precise effects of the authorization of the
Preferred Shares upon the rights of the holders of the Company's Common Stock
until the Board of Directors determines the respective preferences, limitations
and relative rights of the holders of each class or series of the Preferred
Shares. Such effects might include, however: (a) reduction of the
<PAGE> 22
amount otherwise available for payment of dividends on Common Stock to the
extent dividends are payable on any issued Preferred Shares; (b) restrictions
on dividends on the Common Stock; (c) dilution of the voting power of the Common
Stock to the extent that the Preferred Shares had voting rights; (d) conversion
of the Preferred Shares into Common Stock at such prices as the Board
determines, which could include issuance at below the fair market value or
original issue price of the Common Stock; and (e) the holders of Common Stock
not being entitled to share in the Company's assets upon liquidation until
satisfaction of any liquidation preference granted to holders of the Preferred
Shares.
Although the Board of Directors would authorize the issuance of additional
Preferred Shares based on its judgment as to the best interests of the Company
and its Shareholders, the issuance of authorized Preferred Shares could have the
effect of diluting the voting power and book value per share of the outstanding
Common Stock. In addition, the Preferred Shares could, in certain instances,
render more difficult or discourage a merger, tender offer or proxy contest and
thus potentially have an "anti-takeover" effect, especially if Preferred Shares
were issued in response to a potential takeover. In addition, issuances of
authorized Preferred Shares can be implemented, and have been implemented by
some companies in recent years, with voting or conversion privileges intended
to make acquisition of the Company more difficult or more costly. Such an
issuance could deter the types of transactions which may be proposed or could
discourage or limit Shareholders' participation in certain types of transactions
that might be proposed (such as a tender offer), whether or not such
transactions were favored by the majority of the Shareholders, and could enhance
the ability of officers and directors to retain their positions.
THE AFFIRMATIVE VOTE OF HOLDERS OF A MAJORITY OF THE COMMON SHARES ENTITLED TO
VOTE AT THE MEETING IS REQUIRED FOR APPROVAL OF THE ABOVE-DESCRIBED AMENDMENT
TO THE AMENDED ARTICLES OF INCORPORATION AS SET FORTH IN THIS PROPOSAL. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSAL.
5. AMENDMENT OF THE COMPANY'S AMENDED ARTICLES OF INCORPORATION TO ELIMINATE
THE RIGHT OF CERTAIN SHAREHOLDERS TO A POSITION ON THE COMPANY'S BOARD OF
DIRECTORS.
RESOLVED: THAT ARTICLE VI OF THE AMENDED ARTICLES OF INCORPORATION SHALL BE
AMENDED TO READ AS FOLLOWS:
VI.
Directors
The number of directors of this corporation, who need not be
Shareholders, shall be not less than three, but in no event shall
the number of directors exceed nine. The number, qualifications,
terms of office, manner of elections, time and place of meeting
and the powers and duties of the directors shall be such as are
prescribed by the Bylaws of this corporation.
<PAGE> 23
DISCUSSION
The Company is interested in becoming a listed company on the Vancouver Stock
Exchange. The Company's Management and Board of Directors have noted the small
volume of trading which occurs in the Company's stock on the National
Association of Securities Dealers Automated Quotation Service ("NASDAQ"), and
the small number of brokers making a market in the Company's stock. The Company
believes that listing the Company's stock on a recognized exchange, such as the
Vancouver Stock Exchange, will enhance the value of the shares, provide a ready
market for current shareholders or potential investors wishing to transact or
invest in the Company's stock, and enhance the Company's ability to raise
additional capital. While there can be no assurance the Company's attempts to
be listed on the Vancouver Stock Exchange will be successful, the Directors are
mindful of current provisions of Article VI of the Amended Articles of
Incorporation that guarantee certain Shareholders the right to a position on the
Company's Board of Directors would be deemed unacceptable to the Vancouver Stock
Exchange. The provisions of the current Article VI benefitted the original
contributors of mineral properties unitized into the Silver Summit Mine, so long
as each continued to hold at least 30% of the shares originally distributed to
it, in order to assure each of these Shareholders a voice in matters relating
to the operation and distribution of proceeds from the unitized properties.
Only Hecla and Plainview Mining Company have continued to hold at least 30% of
the shares of the Company originally distributed to it. If the sale of the
Silver Summit Mine is approved by the Company's Shareholders (see "1. Sale of
Silver Summit Mine to Sunshine"), the original purpose of Article VI will no
longer exist and may hamper future efforts as discussed herein. Pursuant to
that end, the Board believes this amendment to be necessary to eliminate
potential conflicts with the Vancouver Stock Exchange's listing requirements.
The parties affected by this amendment, Hecla and Plainview Mining Company, have
each consented to this amendment. Accordingly, upon approval of this amendment,
no Shareholders will be guaranteed a board position. However, Charles F. Asher,
the President of Plainview Mining Company, and Ralph R. Noyes and Michael B.
White, each officers of Hecla, have been nominated to stand for election to
serve as Directors (see "2. Election of Directors").
THE AFFIRMATIVE VOTE OF HOLDERS OF A MAJORITY OF THE COMMON SHARES ENTITLED TO
VOTE AT THE MEETING IS REQUIRED FOR APPROVAL OF THE ABOVE-DESCRIBED AMENDMENT
TO THE AMENDED ARTICLES OF INCORPORATION AS SET FORTH IN THIS PROPOSAL. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSAL.
6. AMENDMENT OF THE COMPANY'S AMENDED ARTICLES OF INCORPORATION WITH REGARD
TO INDEMNIFICATION AND LIABILITY OF DIRECTORS.
RESOLVED: THAT AN ARTICLE IX SHALL BE ADDED TO THE AMENDED ARTICLES OF
INCORPORATION TO READ AS FOLLOWS:
IX.
Indemnification and Liability of Directors
A Director of the Company shall not be personally liable to the Company or its
Shareholders for monetary damages as a Director except for liability as
specifically set forth in the Idaho Business Corporations Act. Further, the
Company is authorized to indemnify, agree to indemnify, or obligate itself to
advance or reimburse expenses incurred by its Directors, Officers, employees,
or agents to the full extent of the laws of the State of Idaho as may now or
hereafter exist.
<PAGE> 24
DISCUSSION
These provisions did not exist under Idaho law when the Company was
incorporated. Indemnification and limitation of liabilities are now permitted
under Idaho law and is considered "state of the art" under corporate laws of
most states. These provisions are being proposed to conform the Articles of
Incorporation to contemporary corporate law and to enable the Company to more
effectively attract competent directors and Management personnel.
THE AFFIRMATIVE VOTE OF HOLDERS OF A MAJORITY OF THE COMMON SHARES ENTITLED TO
VOTE AT THE MEETING IS REQUIRED FOR APPROVAL OF THE ABOVE-DESCRIBED AMENDMENT
TO THE AMENDED ARTICLES OF INCORPORATION AS SET FORTH IN THIS PROPOSAL. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSAL.
7. AMENDMENT TO THE COMPANY'S AMENDED ARTICLES OF INCORPORATION ELIMINATING
CUMULATIVE VOTING RIGHTS OF COMMON SHARES IN THE ELECTION OF DIRECTORS TO
THE COMPANY'S BOARD OF DIRECTORS.
RESOLVED: THAT AN ARTICLE XI SHALL BE ADDED TO THE AMENDED ARTICLES OF
INCORPORATION TO READ AS FOLLOWS:
XI.
Voting
The holders of any of the Corporation's capital stock shall possess voting power
for the election of Directors and for all other purposes, subject to such
limitations as may be imposed by law and by any provision of the Articles of
Incorporation in the exercise of their voting power. The holders of capital
stock shall be entitled to one vote for each share held. Cumulative voting for
the election of Directors is hereby expressly prohibited.
DISCUSSION
In the election of Directors, owners of Common Stock have cumulative voting
rights. Under cumulative voting procedures, each Shareholder has the right to
vote in person or by proxy the number of shares registered in his name for as
many persons as there are directors to be elected, or to cumulate such shares
and to give one candidate as many votes as shall equal the number of directors
to be elected multiplied by the number of his shares, or distribute the votes
so cumulated among as many candidates as he may desire.
The Common Stock of the Company does now, but if this proposal is approved will
not have, cumulative voting rights, meaning that the holders of more than 50
percent of the shares voting in an election of directors may elect all of the
directors if they choose to do so. In such event, the holders of the remaining
shares aggregating less than 50 percent would not be able to elect any
directors.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF THREE-FOURTHS (3/4) OF THE COMMON SHARES
ENTITLED TO VOTE IS REQUIRED FOR THE APPROVAL OF THIS PROPOSAL. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSAL.
<PAGE> 25
8. SELECTION OF AUDITORS
From the Company's inception through the year ended December 31, 1994, the
Company has retained Coopers & Lybrand as its independent auditors. It shall
be the Company's practice to refer to the Shareholders the selection of the firm
to audit its annual financial statements.
The Board of Directors recommends a vote for the appointment of Coopers &
Lybrand as the independent auditors for the Company for the year 1995. It is
expected that a representative of Coopers & Lybrand will be present at the
Annual Meeting, will have an opportunity to make a statement, and there will be
an opportunity to ask questions of the representative.
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than ten
percent (10%) of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the SEC. Officers, directors
and greater than ten percent (10%) beneficial owners are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms filed
by them.
Based solely on its review of copies of such forms furnished to the Company, on
written representations that no filings on Form 5 reports were required, and
that all other required reports were timely filed, the Company believes that
during the fiscal year ended December 31, 1994, the Company's officers,
directors and greater than ten percent (10%) beneficial owners complied with all
Section 16(a) filing requirements applicable to them.
ADDITIONAL SHAREHOLDER INFORMATION
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any proposal which a Shareholder intends to present at the next Annual Meeting
of Shareholders must be received by the Company within a reasonable time prior
to the next annual meeting, if it is to be included in the Company's proxy
statement and form of proxy relating to the next annual meeting.
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
The Company's Annual Report to the Securities and Exchange Commission (Form 10-
K) is available to Shareholders on the record date free of charge for the
Company's most recent fiscal year. Requests should be addressed to:
MICHAEL B. WHITE
CONSOLIDATED SILVER CORPORATION
6500 MINERAL DRIVE
COEUR D'ALENE, IDAHO 83814-8788.
<PAGE> 26
Exhibit I
PURCHASE AGREEMENT
between
CONSOLIDATED SILVER CORPORATION
-and-
SUNSHINE PRECIOUS METALS, INC.
DATED: July 1, 1995
<PAGE> 27
PURCHASE AGREEMENT
INDEX
SECTION PAGE*
1 Purchase And Sale Of Property............................1
2 Property.................................................1
3 Assumption Of Obligations And Liabilities By Sunshine....1
4 Purchase Price...........................................2
5 Possession...............................................2
6 Representations And Warranties Of Con Sil
a. Organization.........................................2
b. Qualification........................................2
c. Authorization and Approval of Agreement..............2
d. Ability to Carry Out Agreement.......................3
e. Governmental Licenses, Permits and Approvals.........3
f. Legal Proceedings; Compliance with Laws..............3
g. Broker's Fee.........................................4
h. Machinery and Equipment..............................4
i. Material Agreements and Instruments..................4
j. Title to Real Property...............................4
7 Representations And Warranties Of Sunshine
a. Organization.........................................5
b. Authorization and Approval of Agreement..............5
c. Ability to Carry Out Agreement.......................5
d. Broker's Fee.........................................6
8 Covenants Of Con Sil
a. Conduct of Business..................................6
b. Access to Properties, Books and Records..............6
c. Liens................................................7
d. Closing Letter.......................................7
9 Covenants Of Sunshine
a. Conduct of Business..................................7
b. Compliance with Law and Permits......................7
c. Maintenance of Property..............................7
d. Liens................................................7
e. Indemnity............................................8
f. Confidentiality......................................8
*Page numbers refer to original executed document.
<PAGE> 28
PURCHASE AGREEMENT
INDEX (Continued)
SECTION PAGE*
10 Closing..................................................8
11 Transfers And Deliveries By Sunshine
a. The Consideration....................................9
b. Written Opinion......................................9
c. Executed Counterparts...............................10
12 Transfers And Deliveries By Con Sil
a. Physical Possession.................................10
b. Bill of Sale........................................10
c. Deed................................................10
d. Written Opinion.....................................10
e. Certificates of Title or Origin.....................11
f. Closing Letter......................................11
13 Prorations
a. Ad Valorem Taxes....................................11
b. Utilities...........................................11
c. Other Proratable Expenses...........................11
14 Conditions To Obligations Of Sunshine
a. Shareholder Approval................................11
b. Satisfactory Proceedings............................11
c. Representations and Warranties Correct..............11
15 Conditions To Obligations Of Con Sil
a. Shareholder Approval................................12
b. Satisfactory Proceedings............................12
c. Representations and Warranties Correct..............12
d. Assumption..........................................12
16 Further Assurances Of Con Sil And Sunshine..............12
17 Books, Records And Miscellaneous........................12
*Page numbers refer to original executed document.
<PAGE> 29
PURCHASE AGREEMENT
INDEX (Continued)
SECTION PAGE*
18 Fees And Expenses
a. Fees................................................13
b. Expenses............................................13
19 Survival Of Representations And Warranties; Covenants
And Agreements
a. Representations and Warranties......................13
b. Covenants, Conditions and Agreements................13
20 Indemnification.........................................13
21 Environmental Matters...................................14
22 Shareholder Consent.....................................17
23 Termination Of Agreement................................17
24 Liability On Termination................................17
25 Surrender Of Possession On Termination..................17
26 Miscellaneous
a. Exhibits and Schedules..............................18
b. No Assignment, Successors, Assigns, Etc.............18
c. Governing Law.......................................18
d. Counterparts........................................19
e. Notices.............................................19
f. Amendment...........................................19
g. Entire Agreement....................................19
h. Waiver..............................................19
Exhibit A - Properties
Exhibit B - Royalty Deed
Exhibit C - Licenses and Permits (not appended)
Exhibit D - Legal Proceedings (not appended)
Exhibit E - Agreements and Instruments (not appended)
Exhibit F - Deed (not appended)
*Page numbers refer to original executed document.
<PAGE> 30
PURCHASE AGREEMENT
THIS AGREEMENT is made the 1st day of July, 1995, between Consolidated
Silver Corporation, an Idaho corporation ("Con Sil"), and Sunshine Precious
Metals, Inc., a Delaware corporation ("Sunshine").
RECITALS
WHEREAS, Con Sil is the owner of certain mining properties consisting of
patented and unpatented mining claims, together with certain plant, equipment
and facilities located thereon; and
WHEREAS, Sunshine desires to purchase from Con Sil and Con Sil desires to
sell to Sunshine those certain assets owned by Con Sil located in Shoshone
County, Idaho, upon the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual promises,
covenants and conditions herein contained, the parties hereto agree as follows:
1. PURCHASE AND SALE OF PROPERTY. Upon the terms and subject to the
conditions set forth herein, Con Sil hereby agrees to sell, convey, assign,
transfer and deliver to Sunshine and Sunshine hereby agrees to purchase,
acquire and accept from Con Sil as of 12:01 a.m. PST (the "Effective Time")
on the Closing Date, as defined in Section 10, all right, title and
interest in and to the Property, as defined in Section 2 hereof.
2. PROPERTY. The assets to be sold by Con Sil to Sunshine pursuant to this
Agreement (the "Property") shall include, without limitation, all of Con
Sil's transferable right, title and interest in and to all property and
assets, real and personal, set forth in Exhibit "A" attached hereto and by
this reference incorporated herein.
3. ASSUMPTION OF OBLIGATIONS AND LIABILITIES BY SUNSHINE. Except as set forth
in this Agreement or the exhibits hereto, Sunshine shall not assume or be
responsible for any obligation or liability of Con Sil whether fixed or
contingent, known or unknown, except to the extent required by agreement(s)
between Sunshine and another party or parties. Sunshine shall be entitled
to claim and assert any defense by way of counterclaim, off-set, statute
of limitations, or otherwise, or any other rights of Con Sil with respect
to any and all such debts, obligations and liabilities of Con Sil, to the
same extent as Con Sil would be entitled to do absent the assumption
thereof by Sunshine.
4. PURCHASE PRICE. The Purchase Price payable to Con Sil as consideration for
the sale of the Property shall be paid as follows:
a. SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($750,000) to be paid at the rate
of FIVE THOUSAND DOLLARS ($5,000) per month from the date hereof with
the balance due at Closing.
<PAGE> 31
b. As additional consideration Sunshine shall pay Con Sil a Production
Royalty under the terms of the Royalty Deed set forth in Exhibit "B"
attached hereto.
5. POSSESSION. Sunshine shall be entitled to immediate possession of the
Property upon execution of this Agreement. Sunshine shall have free and
unrestricted access to the Property and shall have the exclusive right to
enter upon and occupy the Property for all purposes reasonably incident to
exploring for, developing, mining (by underground mining, surface mining
or any other method), extracting, milling, stockpiling, storing,
processing, removing and marketing therefrom all ores, minerals and
materials of every nature or sort including the right of placing,
constructing, maintaining, using and, thereafter, removing such structures,
facilities, equipment, roadways, haulageways and other improvements as may
be necessary, useful or convenient for the full enjoyment of all of the
rights granted to Sunshine herein.
6. REPRESENTATIONS AND WARRANTIES OF CON SIL. Con Sil represents and warrants
to Sunshine that:
a. Organization. Con Sil is a corporation duly organized, validly
existing and in good standing under the laws of the State of Idaho and
has all requisite power and authority (corporate and other) to own,
use or deal in the Property.
b. Qualification. Con Sil is duly qualified to do business and is in
good standing in those states or other jurisdictions where
qualification is required in connection with the ownership of, use of
or dealing in the Property.
c. Authorization and Approval of Agreement. The execution, delivery and
performance by Con Sil of this Agreement and all documents
contemplated hereby have been duly and effectively authorized by all
necessary corporate action on the part of Con Sil, and, except for
approval by its directors and stockholders, no consent, approval or
other action is required by Con Sil's Certificate of Incorporation,
By-Laws or otherwise.
d. Ability to Carry Out Agreement. Con Sil is not a party to, subject
to or bound by any judgment, order, writ, injunction or decree of any
court or governmental body which would (i) prevent the carrying out
of this Agreement, or (ii) materially adversely affect its ownership
and use of the Property. Neither the execution and delivery of this
Agreement by Con Sil, nor the performance of Con Sil's obligations
hereunder, will constitute a violation of, or be in conflict with, or
result in the breach of, or constitute a default under, or create (or
cause the acceleration of the maturity of) any debt, obligation or
liability pursuant to, or result in the creation or imposition of any
security interest, lien or other encumbrance upon the Property under
(i) any term or provision of the Certificate of Incorporation or By-
Laws of Con Sil, (ii) any obligation of Con Sil under any loan or
financing agreement, lease or other agreement or instrument of any
kind to which Con Sil is a party. No consent or approval of any
federal, state or
<PAGE> 32
local authority is required for Con Sil's consummation of the sale of
the Property.
e. Governmental Licenses, Permits and Approvals. Con Sil has attached
as Exhibit "C" hereto a list of all federal, state and local
governmental licenses, permits, contracts, agreements and approvals
currently held or being applied for by Con Sil pertaining to the
Property and all agreements and contracts between or among any
federal, state or local governmental authority, agency or
instrumentality and Con Sil relating to the Property and which are not
listed on other Exhibits hereto. All such licenses, permits,
contracts, agreements and approvals are in full force and effect
unless otherwise indicated in Exhibit "C";
f. Legal Proceedings; Compliance with Laws. Except as set forth in
Exhibit "D", attached hereto, no litigation, proceedings or
governmental investigation is pending or, to the knowledge of a
principal officer of Con Sil or Con Sil, threatened with respect to
Con Sil or the Property, nor is Con Sil operating under or subject to,
or in default with respect to, any order, writ, injunction, or decree
of any court or governmental agency or body as of the date of this
Agreement. To the best of Con Sil's knowledge, it has substantially
complied with all laws, rules and regulations, federal, state and
local, which affect the Property. There are no outstanding material
commitments to federal, state or local governmental authorities for
corrective action which require Con Sil to act with respect to health,
safety or the environment and which relate to the operation or
condition of the Property, except as disclosed in Exhibits "C" and
"D". The disclosures in Exhibit "D" relate to certain environmental
investigations and proceedings and the possibility that claims
relating to such investigations and proceedings may be asserted in the
future with respect to the Property. Prior to the date hereof, Con
Sil has not received any notice or claim that it is a potentially
responsible party in any proceedings set forth in Exhibit "D" and, to
the best of its knowledge, Con Sil is not aware that any such claims
have been made against Con Sil.
g. Broker's Fee. Con Sil has not caused to be incurred for or by
Sunshine any liability for any fee or commission in the nature of a
finder's, originator's or broker's fee in connection with the subject
matter of this Agreement.
h. Machinery and Equipment. All machinery, equipment, supplies,
fixtures, vehicles and all other personal property located in or on
the Property are sold in the condition existing at the Effective Time.
Con Sil makes no warranty or representation, express or implied, as
to merchantability, fitness for a particular purpose or otherwise.
i. Material Agreements and Instruments. Except as set forth in other
Exhibits to this Agreement, Con Sil has attached as Exhibit "E" hereto
a list and brief description of all contracts, indentures,
guarantees, agreements, or other instruments relating to the Property
to which Con Sil is a
<PAGE> 33
party as of the date hereof and which are to be assigned and assumed
by Sunshine pursuant to this Agreement. Con Sil is not in default or
breach, in any material respects, under any of the foregoing and to
the best of Con Sil's knowledge no event has occurred which, with the
lapse of time or the giving of notice or both would constitute such
a material default or breach by Con Sil except as set forth in Exhibit
"E". Con Sil has provided to Sunshine copies of all such material
contracts, indentures, guarantees, agreements, or other instruments
listed in Exhibit "E".
j. Title to Real Property. As to the real property described in Exhibit
"A", with the exception of the unpatented mining claims, Con Sil
warrants as follows:
i) Con Sil has, to the best of its knowledge, good and marketable
title in fee simple or such lesser estate indicated on Exhibit
"A".
ii) Con Sil has not, prior to the time of this Agreement, conveyed
any interest in said property to any third party except as
indicated on Exhibit "A".
iii) The property is free from all liens, encumbrances and charges
done, made, or suffered by Con Sil or its agents, except for a)
current taxes and assessments not delinquent, and b) liens,
encumbrances, and charges which do not materially detract from
the value of or interfere with the use of the properties subject
thereto or affected thereby.
iv) Sunshine shall have quiet enjoyment against Con Sil and its
agents.
v) As to the unpatented mining claims, Con Sil warrants that, to the
best of its knowledge, information and belief, said claims have
been located and maintained in compliance with all applicable
laws in the State of Idaho and the United States of America; that
the land subject to the unpatented claims has not now been
claimed by any third party; that Con Sil has filed all required
proofs of labor with respect to the same; provided, however, Con
Sil does not warrant against a claim of invalid discovery by any
third party.
7. REPRESENTATIONS AND WARRANTIES OF SUNSHINE. Sunshine represents and
warrants to Con Sil that:
a. Organization. Sunshine is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority (corporate and other) to
carry on its business as now being conducted.
b. Authorization and Approval of Agreement. The execution, delivery and
performance by Sunshine of this Agreement and all documents
contemplated hereby have been duly and effectively authorized by all
necessary corporate action on
<PAGE> 34
the part of Sunshine, and no consent, approval or other action by its
stockholders is required by Sunshine's Certificate of Incorporation,
By-Laws or otherwise.
c. Ability to Carry Out Agreement. Sunshine is not a party to, subject
to, or bound by any judgment, order, writ, injunction, or decree of
any court or governmental body which would prevent the carrying out
of this Agreement. Neither the execution and delivery of this
Agreement nor the performance of Sunshine's obligations hereunder will
constitute a violation of, or be in conflict with, or result in the
breach of, or constitute a default under (i) any term or provision of
the Certificate of Incorporation or By-Laws of Sunshine, (ii) any
obligation of Sunshine under any loan or financing agreement, lease
or other agreement or instrument of any kind to which Sunshine is a
party, or (iii) any statute or law. No consent or approval of any
Federal, state or local authority is required for the consummation
or validity of the purchase of the Property.
d. Broker's Fee. Sunshine has not caused to be incurred for or by Con
Sil any liability for any fee or commission in the nature of a
finder's, originator's or broker's fee in connection with the subject
matter of this Agreement.
8. COVENANTS OF CON SIL. It is covenanted and agreed that between the date
hereof and the Closing Date:
a. Conduct of Business. Con Sil shall not, without the prior written
consent of Sunshine:
i. enter into any agreement (other than agreements entered into in
the ordinary course of business) which will become an obligation
of Sunshine or would otherwise affect the Property;
ii. lease, mortgage, or otherwise encumber any of the Property; or
iii. enter into discussions or negotiations with any third party
concerning the sale of any of the Property or timber rights
associated with the Property prior to the Closing Date, or grant
options or rights, or enter into any contract or commitment to
sell any of the Property or timber rights.
b. Access to Properties, Books and Records. Con Sil has made and will,
during normal business hours and subject to reasonable notification
by Sunshine to Con Sil, and subject to Con Sil's reasonable
requirements and rules, permit Sunshine and Sunshine's authorized
officers, employees, attorneys, engineers, accountants and other
agents and representatives to have access to the properties, books
and records, and documents relating to the Property. Con Sil shall
have the right, in lieu thereof, where such information is included
within Con Sil's other corporate records, to make copies of or
provide such information from such books and records and documents
as Sunshine may from time to time reasonably request.
c. Liens. Con Sil will have discharged or released by the Closing Date
all mortgages, liens (except liens, if any, for taxes not yet due and
inchoate liens of materialmen, mechanics, workmen, repairmen,
employees or other similar liens arising in the ordinary course of
<PAGE> 35
business which are not delinquent or which are bonded, all of which
it agrees to discharge in due course unless such are to be assumed by
Sunshine as provided herein), security interests and encumbrances on
the Property and properties.
d. Closing Letter. Con Sil shall provide Sunshine a letter from the Vice
President of Con Sil at Closing to the effect that from the date of
signing this Agreement to the Effective Time there has been no
material change in respect to the Property, except for changes
resulting from Sunshine's activities pursuant to its right of
possession of the Property, and that all disclosures in Exhibits "A",
"C", "D", and "E" are current as of the Effective Time.
9. COVENANTS OF SUNSHINE. It is covenanted and agreed that between the date
hereof and the Closing Date:
a. Conduct of Business.
i. Sunshine shall perform or cause to be performed all work upon the
Property in a good and workmanlike manner and in accordance with
sound mining and engineering practices.
ii. Sunshine shall not, without the prior written consent of Con Sil,
lease, mortgage, or otherwise encumber or assign any interest in
the Property.
b. Compliance with Law and Permits. All work performed or caused to be
performed by Sunshine upon the property shall be in substantial
compliance with all applicable federal, state and local laws, rules
and regulations and Sunshine shall comply with all licenses and
permits set forth in Exhibit "C".
c. Maintenance of Property. Sunshine shall take or cause to be taken such
steps as shall be necessary to maintain the Property in good standing.
d. Liens. Sunshine agrees to keep the Property free and clear from any
liens arising from Sunshine's operations and pay promptly for all
labor performed, and for all supplies, material and equipment used or
placed on the Property by or for it, provided that any such lien
placed upon the Property shall not be a breach of this section
provided that Sunshine, in good faith, is diligently contesting the
validity of such lien.
e. Indemnity. Sunshine shall indemnify and save harmless Con Sil from
and against any and all claims, demands, suits or causes of action in
law or equity of whatsoever kind and character resulting from any act,
operations or negligence of Sunshine on the Property or in connection
therewith between the date hereof and the Closing Date.
f. Confidentiality. In the event of the termination of this Agreement,
Sunshine shall promptly return to Con Sil all documents, work papers,
and other material obtained by Sunshine or on its behalf from Con Sil
or Con Sil's representatives as a result of this Agreement or in
connection herewith, whether so obtained before or after the execution
hereof, and Sunshine shall not retain any copy or other reflection of
any such documents, work papers and other material. Sunshine shall
at all times prior to the Closing Date, and in the event of
<PAGE> 36
termination of this Agreement, cause any information so obtained to
be kept confidential and will not use, or permit the use of, such
documents, work papers and other materials in its business or in any
other manner or for any other purpose, unless such information
(i) becomes generally available to the public other than as a result
of a disclosure by Sunshine or its representatives, (ii) was available
to Sunshine on a non-confidential basis prior to its disclosure to
Sunshine by Con Sil or its representatives, or (iii) becomes available
to Sunshine on a non-confidential basis from a source other than Con
Sil or its representatives, provided that such source is not bound by
a confidentiality agreement with Con Sil or its representatives;
provided, further, that to the extent information obtained by Sunshine
as a result of this Agreement, whether so obtained before or after the
execution hereof, relates to Con Sil or any affiliate, Sunshine's
obligation hereunder shall survive for a period of three years from
the date of this Agreement and shall not terminate on the Closing Date
or upon termination of this Agreement.
g. Sunshine shall permit Con Sil's representative access to the Property
and to all information (including, without limitation, all exploration
results) generated or acquired by Sunshine with respect to the
Property.
10. CLOSING. The Closing shall take place at 9:00 a.m., local time, in the
offices of Con Sil located at 6500 Mineral Drive, Coeur d'Alene, Idaho,
83814, on the first business day following approval of the Agreement by the
Con Sil shareholders, or such other date mutually agreed upon in writing
by the parties hereto (the "Closing Date"), provided that the Closing must
occur prior to November 1, 1995, unless extended by mutual written
agreement.
11. TRANSFERS AND DELIVERIES BY SUNSHINE. Sunshine shall execute, where
applicable, and deliver to Con Sil at the Closing the following:
a. The Consideration provided for in Section 4 hereto consisting of:
i. Seven hundred fifty thousand dollars ($750,000) less the sum of the
monthly five thousand dollars ($5,000) payments made from the date of
this Agreement until Closing; and
ii. the Royalty Deed set forth in Exhibit "B".
b. Written Opinion of the legal counsel of Sunshine, dated as of the
Closing Date, substantially stating, in his opinion, that Sunshine's
corporate existence and good standing are as represented in Section
7 hereof; that Sunshine has taken all corporate action necessary to
authorize the execution and performance of this Agreement; that this
Agreement and the instruments delivered by Sunshine to Con Sil
pursuant to or in connection with this Agreement have been duly
executed and delivered by Sunshine and are valid, binding and
enforceable against Sunshine in accordance with their respective
terms (except to the extent that enforcement is affected by laws
pertaining to bankruptcy, reorganization, insolvency and creditors'
rights and by the availability of injunctive relief and specific
performance); that neither the execution and delivery by Sunshine of
this Agreement nor its compliance herewith, will conflict with
Sunshine's Certificate of Incorporation or By-Laws, or to his
knowledge will result in a default
<PAGE> 37
under or breach of the terms, conditions or provisions of any
agreement or instrument to which Sunshine is a party or by which it
may be bound; and that neither the execution and delivery of this
Agreement by Sunshine nor its compliance herewith will result in a
violation of any statute, regulation, law, ordinance, or, to the best
of his knowledge, order, writ, judgment or decree of any court, agency
or governmental authority; that Sunshine is not a party to or affected
by any pending legal, administrative or other action which materially
affects Sunshine's execution, delivery and performance of this
Agreement.
c. Executed Counterparts of all transfers and assignments and assumptions
(where required) to transfer or assign to Sunshine the Property.
12. TRANSFERS AND DELIVERIES BY CON SIL. Con Sil shall execute, where
applicable, and deliver to Sunshine at the Closing, unless otherwise
provided herein, the following:
a. Physical Possession of all tangible property constituting part of the
Property.
b. Bill of Sale for such, if any, of the personal property requiring a
transfer of title to Sunshine.
c. Deed conveying to Sunshine the interests in patented mining claims,
certain fee property and unpatented mining claims to be conveyed
hereunder, in the form of Exhibit "F" hereto.
d. Written Opinion of legal counsel for Con Sil, dated as of the Closing
Date, substantially stating, in his opinion, that Con Sil's corporate
existence and good standing are as stated in Section 6 hereof; that
Con Sil has taken all corporate action necessary to authorize the
execution and performance of this Agreement; that this Agreement and
the instruments delivered by Con Sil to Sunshine pursuant to or in
connection with this Agreement have been duly executed and delivered
by Con Sil and are valid, binding and enforceable against Con Sil in
accordance with their terms (except to the extent that enforcement is
affected by laws pertaining to bankruptcy, reorganization, insolvency
and creditors' rights and by the availability of injunctive relief and
specific performance); that neither the execution and delivery by Con
Sil of this Agreement nor its compliance herewith will conflict with
Con Sil's Certificate of Incorporation or By-Laws or result in the
creation or imposition of any lien, charge or encumbrance upon the
Property or, to the best of his knowledge, result in a default under,
or a breach of the terms, conditions or provisions of, any agreement
or instrument affecting ownership and use of the Property to which
Con Sil is a party or by which it is bound; that Con Sil is not a
party to, nor subject to or bound by, any judgment, injunction or
decree of any court or governmental authority which may restrict or
interfere with the performance of this Agreement or such other
instruments and documents; that except as set forth in Exhibit "D"
hereto, to the best of his knowledge, Con Sil is not a party to, or
affected by, any pending legal, administrative or other action, which
materially adversely affects the Property;
<PAGE> 38
e. Certificates of Title or Origin (or like documents) with respect to
any item of equipment for which a certificate of title or origin is
required;
f. Closing Letter as provided for in Section 8d.
13. PRORATIONS. Expenses which will require proration will be prorated as
follows:
a. Ad Valorem Taxes. All ad valorem taxes (both real and personal
property) shall be prorated between the parties as of the Closing Date
and cash settlement therefore shall be made at Closing.
b. Utilities. Con Sil will request that utility companies take meter
readings or follow similar procedures to invoice Con Sil for services
provided through the Effective Time, which invoices shall be paid by
Con Sil. Other utility bills received after the Effective Time which
require proration will be paid by Sunshine. Sunshine will invoice Con
Sil for its pro rata share of such invoices and will be promptly
reimbursed by Con Sil.
c. Other Proratable Expenses. Invoices received after the Effective Time
for other proratable expenses will be paid by Sunshine. Sunshine will
invoice Con Sil for its pro rata share of such invoices and will be
promptly reimbursed by Con Sil.
14. CONDITIONS TO OBLIGATIONS OF SUNSHINE. The obligation of Sunshine to close
under this Agreement is subject to the satisfaction at or prior to the
Closing Date of each of the following conditions precedent, unless waived
by Sunshine:
a. Shareholder Approval. The Con Sil Shareholders shall have approved
this Agreement.
b. Satisfactory Proceedings. All actions to be taken by Con Sil in
connection with the transactions contemplated hereby and all
instruments and documents required to be delivered by Con Sil in
connection therewith or incident thereto shall be satisfactory to
Sunshine and its counsel.
c. Representations and Warranties Correct. The representations and
warranties of Con Sil contained in Section 6 of this Agreement shall
be true and correct on and as of the Closing Date in all material
respects.
15. CONDITIONS TO OBLIGATIONS OF CON SIL. The obligation of Con Sil to close
under this Agreement is subject to the satisfaction at or prior to the
Closing Date of each of the following conditions precedent, unless waived
by Con Sil:
a. Shareholder Approval. The Con Sil Shareholders shall have approved
this Agreement and the holders of no more than 333,000 shares of Con
Sil Common Stock shall have exercised dissenters' rights.
<PAGE> 39
b. Satisfactory Proceedings. All actions to be taken by Sunshine in
connection with the transactions contemplated hereby and all
instruments and documents required to be delivered by Sunshine in
connection therewith or incident thereto shall be satisfactory to Con
Sil and its counsel.
c. Representations and Warranties Correct. All representations and
warranties of Sunshine contained in Section 7 of this Agreement shall
be true and correct on and as of the Closing Date in all material
respects.
d. Assumption. Sunshine shall have assumed the contracts, permits, leases and
obligations set forth in Sections C and E.
16. FURTHER ASSURANCES OF CON SIL AND SUNSHINE. After the Closing Date, Con
Sil shall perform such other actions, and shall execute, acknowledge and
deliver such assignments, transfers, consents and other documents as
Sunshine reasonably requests to convey title to purchaser and protect
Sunshine's right, title and interest in, and enjoyment of, the Property
intended to be assigned and transferred to Sunshine pursuant to this
Agreement; and Sunshine shall perform all such other action and shall
execute, acknowledge and deliver all such other documents as Con Sil may
reasonably request to perfect and protect Con Sil's rights under this
Agreement. Each party agrees to cooperate with the other party, at its own
cost and expense, with respect to the defense of any claims or litigation
commenced by any third party against the other party subsequent to the
Closing Date which relates to Con Sil or the Property, and shall provide
such witnesses and documents as the other party reasonably requests.
17. BOOKS, RECORDS AND MISCELLANEOUS. On the Closing Date, or as soon
thereafter as is practicable, Con Sil shall turn over to Sunshine all of
the books, records, maps, personal property tax returns and files, or
copies thereof (the "Documents") which relate solely to the Property. Both
prior to and after the Closing Date, Con Sil agrees to make its books and
records relating to the Property available for inspection by Sunshine at
any reasonable time upon reasonable request, or, in lieu thereof and at Con
Sil's option, shall make such copies or provide such information from such
books and records as Sunshine may from time to time reasonably request.
After the Closing Date, the Documents will be retained by Sunshine in part
for Con Sil's benefit and will be available for review and copying by Con
Sil for any proper purpose upon reasonable notice during Sunshine's normal
business hours. Con Sil or Sunshine, as the case may be, shall use their
best efforts not to destroy any Documents without 30 days prior written
notice to the other, for a period of 5 years after the Closing Date.
18. FEES AND EXPENSES.
a. Fees. Sunshine shall pay all transfer fees payable in connection with
the purchase and sale hereunder, and all recordation and filing fees
and other fees relating to the documents.
b. Expenses. Each of the parties hereto will pay its own expenses
incident to the preparation and carrying out of this Agreement and the
expenses and fees involved in the preparation and delivery of all
documents, reports and opinions required to be delivered by or on
behalf of it hereunder, whether or not the transactions contemplated
hereby are consummated.
<PAGE> 40
19. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; COVENANTS AND AGREEMENTS.
a. Representations and Warranties. The representations and warranties
set forth in Sections 6 and 7 shall survive the Closing Date from the
Effective Time until December 31, 1996, at which time they shall
automatically terminate and shall not merge into any of the deeds,
assignments, bill of sale or other instruments delivered at Closing.
b. Covenants, Conditions and Agreements. The Covenants and Conditions
set forth in Sections 8 and 9 (except for Sections 8c, 8e, 9e, and
9f), shall terminate as of and shall not survive the Closing Date.
c. Except as otherwise provided in Sections 19a and 19b, all the
obligations of each party under Section 20 shall survive the Closing
Date.
20. INDEMNIFICATION. The parties hereto shall be indemnified as follows:
a. Con Sil shall defend, indemnify and hold harmless Sunshine, its
officers, directors, successors and assigns against all damages,
claims, losses, liabilities, costs and expenses which arise out
of the breach of the representations and warranties, the covenants
and agreements which survive the Closing pursuant to Section 19
except for loss of profits; consequential, incidental or special
damages.
b. Sunshine shall defend, indemnify and hold harmless Con Sil, its
officers, directors, successors and assigns against all damages,
claims, losses, liabilities, costs and expenses which arise out of the
breach of the representations and warranties, the covenants and
agreements which survive the Closing pursuant to Section 19 except for
loss of profits; consequential, incidental or special damages.
c. The right of either party to indemnification hereunder is contingent
on receipt by the indemnifying party of a promptly delivered written
notice of a claim for indemnification from the party seeking such
indemnification.
d. Upon receipt of a notice claiming indemnification the indemnifying
party shall proceed to assume the defense with respect to any third
party litigation then pending with respect to such claims.
e. The party seeking indemnification for any third party claims pursuant
to this Section shall have the right, at its sole cost and expense,
to participate in any legal action in respect of which indemnification
is sought, provided, however, that the party from whom indemnification
is sought shall have the sole right to settle or otherwise dispose of
such legal action in any manner it deems appropriate without the
consent of the other party.
f. In the event that, after receipt of notice under Section 20c above,
the indemnifying party fails to assume the defense of any action
brought by a third party where the obligation to defend is owed to the
party seeking indemnification, then the party seeking indemnification
shall be entitled to its reasonable attorney's fees in addition to
recoveries allowed under this Section.
<PAGE> 41
21. ENVIRONMENTAL MATTERS. Sunshine acknowledges that Con Sil has advised
Sunshine that: (i) the Property was used by Con Sil and previous owners
or lessees for mining activities; and (ii) due to the past and present use
of the Property, there may be Hazardous Substances or environmental
conditions associated with the Property. Except as specifically provided
or disclosed in this Section 21, Con Sil makes no warranty or
representation of any type or character, written or implied, regarding
Hazardous Substances situated on or environmental conditions associated
with the Property, or that Con Sil has complete knowledge or information
about these matters. Sunshine hereby agrees to accept the Property in an
"as is" condition. Con Sil and Sunshine hereby agree to an allocation of
their respective environmental liabilities whereby: (1) Sunshine hereby
assumes all environmental, reclamation, and permit-related
responsibilities, obligations and liabilities occurring on the Property
which arises from or relates to any Hazardous Substance Law caused by or
arising from or relating to activities on or operations or ownership of or
conditions existing on the Property, whether prior to or after the Closing
Date; (2) Con Sil hereby assumes all environmental and reclamation
liability occurring off-site (i.e., at any location except on the
Property) which arises from or relates to any Hazardous Substance caused
by or arising from or relating to activities on or operations or ownership
of or conditions existing on the Property prior to the Closing Date; and
(3) Sunshine hereby assumes all environmental and reclamation liability
occurring off-site (i.e., at any location except on the Property) which
arises from or relates to any Hazardous Substance caused by or arising from
or relating to activities on or operations or ownership of or conditions
existing on the Property on or after the Closing Date.
In the case of (1) or (3) above, Sunshine agrees to protect, indemnify, and
hold harmless Con Sil and shall have the right and duty to defend Con Sil
against all claims and actions by governmental agencies and other third
parties, and to discharge all obligations and liabilities of Sunshine or
Con Sil to such governmental agencies and other third parties. In the case
of (2) above, Con Sil agrees to protect, indemnify, and hold harmless
Sunshine and shall have the right and duty to defend Sunshine against all
claims and actions by governmental agencies and other third parties, and
to discharge all obligations and liabilities of Con Sil or Sunshine to such
governmental agencies and other third parties.
Any indemnification sought under this Section 21 shall be governed in
applicable part by the provisions of Section 20c through f.
In entering into the agreements set out in this Section, neither Con Sil
nor Sunshine is admitting any liability to any third parties regarding the
matters addressed in this Section. Con Sil and Sunshine also agree and
acknowledge that invocation of the cross indemnities outlined here may,
depending on the facts, require the parties to allocate between themselves
responsibility for certain claims, obligations or liabilities.
As used herein "Hazardous Substance" means any substance, material, or
waste (i) which contains gasoline, diesel fuel, or other petroleum
hydrocarbons, (ii) which is flammable, explosive, radioactive, corrosive,
carcinogenic, hazardous, toxic, or a pollutant or contaminant, (iii) the
presence of which on the Property causes or threatens to cause a nuisance
or health hazard affecting the Property, or (iv) the presence of which on
the Property requires investigation or remediation under any Hazardous
Substance Law, as the same may hereafter be amended, and shall include
without limitation:
<PAGE> 42
a. those substances included within the definitions of "hazardous
substances", "hazardous materials", "toxic substances", "pollutant or
contaminant" or "solid waste" in CERCLA, RCRA, and the Hazardous
Materials Transportation Act, 49 U.S.C. Sections 1801, et seq., as
amended, and in the regulations promulgated pursuant to said laws,
b. those substances listed in the United States Department of
Transportation Table (49 C.F.R. 172.101 and amendments thereto) or by
the Environmental Protection Agency (or any successor agency) as
hazardous substances or materials (40 C.F.R. part 302 and amendments
thereto),
c. such other substances, materials, and wastes which are or become
regulated under applicable local, state, or federal law, or the United
States government, or which are classified as hazardous, dangerous,
infectious or toxic under federal, state or local laws or regulations,
d. any material, waste or substance which is (A) petroleum, (B) asbestos,
(C) polychlorinated biphenyls or (D) designated as a "hazardous
substance" or "oil" pursuant to Section 311 of the Clean Water Act,
33 U.S.C. Sections 1251, et seq., (33 U.S.C. 1321) or listed pursuant
to Section 307 of the Clear Water Act (33 U.S.C. 1317), and
e. any "pesticide" as defined in the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. 136(U);
"Hazardous Substance Law" means CERCLA; the RCRA; the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1801, et seq., as amended; the Clean
Water Act, 33 U.S.C. Sections 1251, et seq., as amended; the Clean Air Act,
42 U.S.C. Sections 7401, et seq., as amended; the Toxic Substances Control
Act, 15 U.S.C. Sections 2601, et seq., as amended; the National
Environmental Policy Act, 42 U.S.C. Sections 4321, et seq., as amended; the
Occupational Safety and Health Act, 29 U.S.C. Sections 651, et seq., as
amended; the Hazardous Materials Transportation Act, 49 U.S.C. Sections
1801, et seq., as amended; and any other federal, state, or local law,
common law, ordinance, regulation, rule or interpretation thereof, whether
currently in force or enacted in the future, which pertains to health,
public welfare, industrial hygiene, hazardous waste or environmental
conditions or which regulates or proscribes the use, storage, disposal,
clean-up, transportation, release or threatened release into the
environment or presence of materials or substances which have been
determined to be a nuisance or dangerous, toxic or hazardous or a pollutant
or contaminant. The term includes any licenses, permits, plans, or
approvals generated pursuant to or as a result of any of the above.
22. SHAREHOLDER CONSENT. The parties acknowledge that consummation of the sale
of the Property contemplated by this Agreement is subject to the approval
by the holders of a majority of the issued and outstanding shares of Con
Sil.
23. TERMINATION OF AGREEMENT. This Agreement and the transactions contemplated
hereby will terminate as follows:
a. On October 1, 1995, if the shareholders of Con Sil shall not have
approved the Agreement
<PAGE> 43
b. On November 1, 1995, if the Closing shall not have taken place, unless
such date is extended by mutual agreement.
c. On the Closing Date by Sunshine if the conditions set forth in Section
14 shall not have been met or waived;
d. On the Closing Date by Con Sil if the conditions set forth in Section
15 shall not have been met or waived; or
e. At any time, by mutual consent of the parties hereto;
24. LIABILITY ON TERMINATION. In the event of termination of this Agreement
pursuant to Section 23, neither of the parties hereto shall have any
liability of any kind to the other except that Sunshine shall return all
books, records and documents furnished to it by Con Sil and remain bound
by the obligations contained herein in Section 9e and 9f hereof.
25. SURRENDER OF POSSESSION ON TERMINATION. Upon termination of this Agreement
for any reason:
a. Sunshine will surrender peaceable possession of the Property, and Con Sil
shall thereupon have the right to take full and complete possession
thereof, without further consideration, subject to the rights of Sunshine
to go upon the Property for a period not to exceed six months for the
purpose of removing and disposing of the buildings, structures,
improvements, machinery, equipment and supplies erected or placed in or
upon the Property by Sunshine. Any such property not removed within the
time provided shall become the sole property of Con Sil and Sunshine shall
have no further right, title or interest with respect thereto, except the
termination of this Agreement shall have no effect on the validity of the
Amended Agreement and Easement dated January 8, 1979 by and between
Sunshine and Con Sil.
b. Sunshine shall have the right of reasonable ingress to and egress from the
Property for so long after termination of this Agreement as is necessary
for Sunshine to accomplish reclamation or restoration of the Property
pursuant to law for activities of Sunshine on the Property, or to make such
inspections as may be required of Sunshine by state or federal law.
c. Within a reasonable time after termination, Sunshine agrees to provide Con
Sil with copies of all factual data generated by Sunshine's activities on
the Property prior to termination; however, Sunshine shall not be liable
to Con Sil for the completeness or accuracy thereof.
d. Con Sil shall be entitled to retain all monthly payments made pursuant to
Section 4a. to date of termination.
26. MISCELLANEOUS
a. Exhibits and Schedules. All Exhibits and Schedules attached to this
Agreement shall be deemed part of this Agreement and incorporated herein,
where applicable, as if fully set forth herein.
b. No Assignment, Successors, Assigns, Etc. The terms and conditions of this
Agreement shall inure to the benefit of, and shall be binding upon, the
parties hereto, their respective successors and assigns; provided, however,
that this Agreement shall not be assigned or conveyed by any party to any
<PAGE> 44
person or entity without the prior written consent of the other party
hereto, except that Sunshine may assign this Agreement without consent to
any corporation controlling or controlled by it (the term control shall
mean an ownership and controlling interest of greater than 50.1%). In the
event of an assignment, the assigning party shall not be relieved of any
of its obligations and undertakings contracted for herein.
c. Governing Law. This Agreement shall be construed in accordance with, and
governed by, the law of the state of Idaho applicable to agreements made
and to be performed wholly within this jurisdiction. Venue to enforce any
claim arising from any provision of this Agreement shall lie in Kootenai
County, Idaho.
d. Counterparts. This Agreement may be executed simultaneously in any number
of counterparts, each of which shall be deemed an original and all of which
shall constitute one and the same instrument.
e. Notices. Any notices or other communications, including a notice of change
in address, shall be in writing and shall be considered to have been duly
given on the earlier of (1) the date of actual receipt or (2) three days
after deposit in the first-class certified U.S. mail, postage prepaid,
return receipt requested:
If to Con Sil, to:
Consolidated Silver Corporation
6500 Mineral Drive
Coeur d'Alene, Idaho 83814-8788
Attention: President
If to Sunshine, to:
Sunshine Precious Metals, Inc.
877 West Main - Suite 600
Boise, Idaho 83702
f. Amendment. This Agreement may be amended at any time prior to Closing by
written instrument executed by the parties hereto.
g. Entire Agreement. This Agreement contains the entire understanding of the
parties hereto relating to the subject matter herein.
h. Waiver. Any default, misrepresentation or breach of any covenant or
warranty by a party in connection with this Agreement may be waived in
writing by the other party. No such waiver shall be deemed to extend to
any prior or subsequent default, misrepresentation or breach of any
covenant or warranty, or affect any rights arising by virtue of any prior
or subsequent default, misrepresentation or breach of any covenant or
warranty.
<PAGE> 45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the day and year
first above written.
CONSOLIDATED SILVER SUNSHINE PRECIOUS
CORPORATION METALS, INC.
By: /s/ Ralph Noyes By: /s/ John S. Simko
--------------------------- -------------------------
<PAGE> 46
EXHIBIT A
CONSOLIDATED SILVER CORPORATION
PROPERTY SUMMARY
(OCTOBER 1994)
I. UNPATENTED MINING CLAIMS
Parcel #1:
GO BETWEEN FRACTION IMC #10963 T48N R3E Sec 13
Parcel #2:
Co-owned (50%/50%) with Hayden Hill Consolidated Mining Company:
BARBAROSA IMC # 10957 T48N R3E Sec 22, 23
WESTERN STAR IMC # 10958 T48N R3E Sec 22, 23
Parcel #3:
BOW
BUD
All minerals and metals and mineral-bearing rock in place in any and all
veins, lodes, ledges and other mineral-bearing structures below an
elevation of 900 feet below mean sea level for the following unpatented
claims, conveyed to Consolidated Silver Corporation by deeds from Coeur
d'Alene Mines Corporation (12/20/68, Instrument No. 221764), Plainview
Mining Company (12/20/68, Instrument No. 221765) and Merger Mines
Corporation (1/7/69, Instrument No. 221766):
BILL IMC # 29133
DENNIS IMC # 29140
GARY LEE IMC # 29137
GRUBSTAKE (WEST PORTION) IMC # 29142
HERCULES (WEST PORTION) IMC # 29144
INTREPID IMC # 29145
JACK IMC # 29134
JUMBO (WEST PORTION) IMC # 29143
JUSTIN IMC # 29139
MARCH OF TIME (AMENDED) IMC # 29136
MARK IMC # 29132
PAT IMC # 29138
PAY STREAK (AMENDED) IMC # 29141
RAY IMC # 29135
ROBIN IMC # 29131
<PAGE> 47
II. PATENTED MINING CLAIMS
SURFACE & MINERALS RIGHTS:
Parcel #4:
HOMESTAKE M.S. 3220
All surface and mineral interests except the surface of the following
described parcel of land conveyed to Ductile Iron & Foundry, November
3, 1955, which is recorded in Book 90 of Deeds at page 408, Shoshone
County.
Beginning at the center Section 13, Township 48 North, Range
3 East, B.M., also identical with corner No. 2 Homestake
Lode, Mineral Survey 3220;
thence South 00 degrees 03'10" East, 247.00 feet, to a point;
thence North 61 degrees 11'22" West, 242.78 feet, to a point;
thence North 128.15 feet, to a point on the northerly
sideline of said Homestake Lode;
thence North 89 degrees 30' East, 212.51 feet, to corner No. 2 of
said Homestake Lode, Mineral Survey 3220, the place of
beginning.
Parcel #5:
MAXWELL NO. 3 M.S. 3220
Except that portion of the surface in conflict with the Orvil claim,
M.S. 3292A which was conveyed to Louisiana-Pacific Corporation by
special warranty deed dated February 28, 1992, recorded as Instrument
No. 351156 in the records of Shoshone County, Idaho; a copy of which
is attached as Appendix 1.
Excluding mineral rights to any and all ores and minerals in the
ground north of the Osburn fault, or any downward extension thereof,
but without any right of access thereto through any of the properties.
<PAGE> 48
Parcel #6:
GOETHE M.S. 3271
That portion of the claim situated easterly of that line known as the
"Compromise End Line" (said line being described in that certain
agreement dated February 15, 1951, by and between Hayden Hill
Consolidated Mining Company, Polaris Mining Company, Silver Summit
Mining Company, Lincoln Mining Company, and Silver Dollar Mining
Company, said agreement being recorded in Book J of Leases and
Agreements in the records of Shoshone County, Idaho at Page 155, said
portion conveyed by deed dated December 18, 1968, recorded in Book
134, Pages 326-333, Instrument No. 221772.
Parcel #7:
ORVIL M.S. 3292A
Except that portion of the Orvil claim lying north of the line
described in Tract 2 in those deeds dated January 31, 1969 from
Lincoln Mining Company and Silver Dollar Mining Company, recorded in
Book 134 at Pages 340-345 and Pages 334-339, Instrument Nos. 221772
and 221773, respectively, in the records of Shoshone County, Idaho.
And also excepting that portion of the Orvil claim lying east of the
west side line of section 13, Township 48 North, Range 3 East, B.M.,
Shoshone County, Idaho, which was conveyed to Louisiana-Pacific
Corporation by special warranty deed dated February 28, 1992, recorded
as Instrument No. 351156 in the records of Shoshone County, Idaho.
And also excepting that portion of the Orvil claim lying east of the
west side line of section 13, Township 48 North, Range 3 East, B.M.,
Shoshone County, Idaho, as described in Tract 5 of the deed dated
January 3, 1969, recorded in Book 134, Pages 314-319, Instrument No.
221769 in the records of Shoshone County, Idaho.
<PAGE> 49
MINERAL RIGHTS ONLY:
Parcel #8:
Surface rights to the following claims were conveyed to Louisiana-Pacific
Corporation by special warranty deed dated February 28, 1992, recorded as
Instrument No. 351156 in the records of Shoshone County, Idaho; a copy of which
is attached as Appendix 1.
EMMA NEVADA M.S. 1006
COEUR D'ALENE NELLIE M.S. 1006
GRIZZLY BEAR M.S. 3170
JUMBO NO. 1 M.S. 3170
JUMBO NO. 2 M.S. 3170
JUMBO NO. 3 M.S. 3170
JUMBO NO. 4 M.S. 3170
JUMBO NO. 5 M.S. 3170
JUMBO NO. 6 M.S. 3170
KEY WEST M.S. 3170
PROTECTION FRACTION M.S. 3170
GO BETWEEN M.S. 3220
BERNARDY NO. 4 M.S. 3304
BERNARDY NO. 5 M.S. 3304
BERNARDY NO. 6 M.S. 3304
BERNARDY NO. 7 M.S. 3304
BERNARDY NO. 9 M.S. 3304
BERNARDY NO. 11 M.S. 3304
BERNARDY NO. 12 M.S. 3304
BERNARDY NO. 13 M.S. 3304
SILVER DOLLAR M.S. 3407
HIDDEN TREASURE M.S. 3407
Those portions of the following claims situate easterly of that line known
as the "Compromise End Line" (said line being described in that certain
agreement dated February 15, 1951, by and between Hayden Hill Consolidated
Mining Company, Polaris Mining Company, Silver Summit Mining Company,
Lincoln Mining Company, and Silver Dollar Mining Company, said agreement
being recorded in Book J of Leases and Agreements in the records of
Shoshone County, Idaho at Page 155, said portion conveyed by deed dated
December 18, 1968, recorded in Book 134, Pages 326-333, Instrument No.
221772.
TORPEDO M.S. 3170
<PAGE> 50
Parcel #8 (cont. - surface to L.P.):
BERNARDY NO. 1 M.S. 3304
BERNARDY NO. 2 M.S. 3304
BERNARDY NO. 3 M.S. 3304
BERNARDY NO. 10 M.S. 3304
NORTH M.S. 3220
MAXWELL NO. 1 M.S. 3220
MAXWELL NO. 2 M.S. 3220
MAXWELL FRACTION M.S. 3220
BLUE JAY NO. 1 M.S. 3221
BLUE JAY NO. 2 M.S. 3221
Mineral Rights to the following claims, excluding, however, any and all
ores and minerals in the ground north of the Osburn fault, or any downward
extension thereof, but without any right of access thereto through any of
the properties.
SHOSHONE NO. 1 M.S. 3290
WALLACE NO. 1 M.S. 3290
ANNA NO. 2 M.S. 3292A
AUGUST M.S. 3292A
BELL M.S. 3292A
BUFFALO M.S. 3292A
DES MOINES M.S. 3292A
FRIGGA M.S. 3292A
GOOD HOPE M.S. 3292A
MAY M.S. 3292A
JUNE M.S. 3292A
U.S. M.S. 3292A
ANNA M.S. 3292A
LAST CHANCE M.S. 3292A
LOTTEN M.S. 3292A
MANNIE M.S. 3292A
ORE OR NO GO M.S. 3292A
Excluding from the Anna, Last Chance, Lotten, Mannie and Ore or No Go
claims, those portions lying north of a line described in those
certain deeds to Consolidated Silver Corporation on January 31, 1969
by Silver Dollar Mining Company and Lincoln Mining Company, recorded
in Shoshone County records as Instrument Nos. 221773 and 221774, as
follows:
<PAGE> 51
Parcel #8 (cont. - surface to L.P.):
"Starting at the southeast, or No. 1, corner of the
Ore Grande claim, M.S. 3292A, which coincides with a
point on the north side line of the Orvil claim, M.S.
3292A, which is 131.54 feet northwesterly from the
northeast, or No. 1, corner of said Orvil claim;
Thence North 70 degrees 48' West a distance of 5,138 feet
to a point on the north side line of the Lotten
claim, M.S. No. 3292A, which is approximately 650
feet easterly from the northwest, or No. 1,
corner of said Lotten claim."
TRAIL M.S. 3407
BLUE BELL M.S. 3407
Excluding from the Trail and Blue Bell claims all the contained area
in conflict with the Bartlett claim, M.S. 2083, and the Jumbo No. 3
claim, M.S. 3170.
GERMANIA M.S. 3292A
GOOD HOPE M.S. 3292A [LISTED ABOVE ALSO]
IOWA M.S. 3292A
Excluding from the Iowa, Germania and Good Hope claims, the
extralateral rights to the Chester vein west of a vertical plane
extended indefinitely downward and north and south through the east
end line of the Good Hope claim, and all ores lying within a distance
of 200 feet north or south of the center of the said Chester vein west
of said vertical plane.
Parcel #9:
All minerals and metals and mineral-bearing rock in place in any and all veins,
lodes, ledges and other mineral-bearing structures below an elevation of 900
feet below mean sea level for the following patented claims conveyed to
Consolidated Silver Corporation by deeds from Coeur d'Alene Mines Corporation
(12/20/68, Instrument No. 221764), Plainview Mining Company (12/20/68,
Instrument No. 221765) and Merger Mines Corporation (1/7/69, Instrument No.
221766); and 15% interest and rights to the ores and minerals between mean sea
level and 900 feet below mean sea level on the following patented claims as
described in that certain Quitclaim Deed from American Smelting and Refining
Company, Callahan Mining Corporation, and Day Mines, Inc. to Coeur d'Alene Mines
Corporation, Merger Mines Corporation, Plainview Mining Company, Inc. and
Consolidated Silver Corporation dated January 31, 1972 (recorded on April 11,
1972 as Instrument No. 239511):
<PAGE> 52
Parcel #9 (cont'd)
AETNA M.S. 3261
BERNARDY NO. 8 M.S. 3261
LITTLE GEM M.S. 3261
LUCKY BOY M.S. 3261
LUCKY STONE M.S. 3261
LUCKY STONE NO. 2 M.S. 3261
LUCKY STONE NO. 3 M.S. 3261
LUCKY STONE NO. 4 M.S. 3261
MANITOBA M.S. 3261
MORNING GLORY M.S. 3261
MORNING GLORY FRACTION M.S. 3261
MORNING GLORY NO. 2 M.S. 3261
REID M.S. 3261
WALTERS M.S. 3261
FOURTHOUGHT M.S. 3281
PLAINVIEW FRACTION M.S. 3281
PLAINVIEW NO. 1 M.S. 3281
PLAINVIEW NO. 2 M.S. 3281
SILVER HILL M.S. 3281
TOUGHNUT M.S. 3281
COMMODORE TRUXTON M.S. 3382
<PAGE> 53
III. OTHER PROPERTY
SURFACE RIGHTS ONLY:
Parcel #10:
PORTION OF THE SE/4 NW/4, SECTION 13, TOWNSHIP 48 NORTH, RANGE 3 EAST
Surface rights conveyed to Consolidated Silver Corporation by Hecla Mining
Company by deed dated December 18, 1968, recorded in the records of
Shoshone County in Book 134 at Pages 326-333, Instrument No. 221772,
further described as follows:
Beginning at the center of said Section 13, identical with
the northeast corner of the Homestake Lode, M.S. 3220;
thence South 89 degrees 30' West, 212.51 feet, to a point on the
north side line of said Homestake Lode, the real place of
beginning;
thence South 89 degrees 30' West along the north side line of said
Homestake Lode, 296.98 feet, to corner No. 3 of the Maxwell
Lode, M.S. 3220;
thence North 87 degrees 48'20" West along the north side line of
said Maxwell No. 3 Lode 789.58 feet, to a point on the west
boundary of the Southeast Quarter of the Northwest Quarter
of Section 13;
thence northerly along the west boundary of said quarter
quarter section, 963 feet, more or less to a point on the
southerly said railroad right-of-way line of the Union
Pacific Railroad Company;
thence southeasterly along the southerly right-of-way line,
of said railroad right-of-way 738 feet, more or less, to the
northwest corner of the parcel of ground known as the Jensen
lease;
thence South 25 degrees 27' West , 160.00 feet, to the southwest
corner of said Jensen lease;
thence South 64 degrees 33' East, 82.00 feet, to the southeast
corner of said Jensen lease, identical with the southwest
corner of that parcel of ground known as the Bitco property;
thence South 31 degrees 33' East, 58.33 feet, on and along the
southerly boundary of said Bitco property to a point;
thence South 83 degrees 55'57" East on and along the southerly
boundary of said Bitco property, 151.32 feet, to the
northwest corner of the McKay property;
<PAGE> 54
thence South 250.05 feet, on and along the westerly boundary
of said McKay property to a point on the center of the
Polaris Mill secondary railroad spur track at station 2+11.0
of said secondary spur track;
thence northeasterly around a 10 degrees curve to the left, 121
feet more or less to station 0 + 90.00 of said secondary
spur track;
thence northeasterly around a 7 degrees 22' curve to the left, 90.00
feet, to station 0 + 00, the beginning of said secondary
spur track, identical with station 6 + 24.3 of the main
Polaris Mill railroad spur;
thence North 62 degrees 33'15" East along the center of said
railroad spur, 96.51 feet, to the northwest corner of the
Burns Yaak property;
thence South on and along the west boundary of the Burns
Yaak property, 194.94 feet, to the real place of beginning;
Excluding therefrom all rights-of-way and easements of record.
The property described above as Parcel #9 is subject to that certain
unrecorded License and Agreement between Consolidated Silver Corporation,
ASARCO, Inc. and Fausett International, Inc., a copy of which is attached as
Appendix 2.
Parcel #11:
PORTION OF THE SW/4 NW/4 OF SECTION 13, TOWNSHIP 48 NORTH, RANGE 3 EAST
Surface rights conveyed to Consolidated Silver Corporation by Silver
Chieftan Company in that deed dated January 3, 1969, recorded in the
records of Shoshone County in Book 134 at Pages 314-319, Instrument No.
221769 and by Lincoln Mining Company in that deed dated January 9, 1969
recorded in the records of Shoshone County in Book 134 at Pages 308-313,
Instrument No. 221768, described as follows:
Beginning at the west one quarter corner of said section 13;
thence northerly along the west side line of section 13 a
distance of 450 feet;
thence easterly to the east side line of the southwest one
quarter of the northwest one quarter (SW 1/4 NW 1/4) of section
13;
thence southerly along said east side line a distance of 450
feet to the east-west centerline of section 13;
thence westerly along said east-west centerline to the west
one quarter corner of said section 13 and the point of
beginning,
together with one-half of the waters of springs and other
waters on said premises and/or in Rosebud Gulch.
<PAGE> 55
Shoshone County, Idaho, Recorder Instrument #351156
SPECIAL WARRANTY DEED
This Special Warranty Deed is executed and delivered this 28th day of
February, 1992, by CONSOLIDATED SILVER CORPORATION, an Idaho corporation
("Grantor") to LOUISIANA-PACIFIC CORPORATION, a Delaware corporation
("Grantee"), whose address is P.O. Box 4000-98, Hayden Lake, Idaho 83835-4000.
Grant, Exceptiones and Reservations. FOR VALUE RECEIVED, Grantor grants,
bargains, sells and conveys to Grantee the surface rights to that certain real
property located in Shoshone County, Idaho, described on Exhibit A, attached
hereto and incorporated herein by this reference together with (i) the right to
lateral and subjacent support subject to ConSil's reserved rights; (ii) the
right to ordinary soil, rock, sand and gravel located within 100 feet of the
surface of said real property; and (iii) the right to reasonable subsurface
access to obtain water and the full benefit of the property rights transferred
herein (the "Property"); EXCEPTING AND RESERVING TO GRANTOR all other subsurface
rights and the "Minerals," and the right to use as much of the surface of the
real property described in Exhibit A as in the reasonable judgment of ConSil is
reasonably necessary for "Access" and "Mining Operations".
For the purposes of this Deed,
A. "Minerals" shall mean all ores, base and precious metals, coal, oil, gas,
other liquid or gaseous hydrocarbons, minerals and mineral bearing
substances of every kind and character, whether currently known to be
valuable or becoming valuable in the future, now known to exist or
hereafter discovered on, in or under the Property, but excluding ordinary
soil and rock, sand and gravel.
B. "Access" shall mean the right of the Grantor to use existing roads on the
Property in connection with Mining operations and Other Operations and the
right to construct new roads, pipelines, powerlines, rail lines or
conveyors, tramways, communication lines and other similar access and
communications facilities to be used in connection with Mining Operations.
C. "Mining operations" shall mean without limitation the right to conduct
geological, geophysical or geochemical exploration and the extraction and
processing of Minerals on the Property by any method now known or
subsequently developed including the right to use water from the Property
for such purposes, and the right to use the Property for excavations,
tunnels, adits, drill holes, wells, surface mine operations, buildings,
tailings, stock piling of ores and mine waste and other facilities as in the
reasonable judgment of Grantor is reasonably necessary for the exploration
and extraction of Minerals.
D. "Other operations" shall mean without limitation forest management and
timber harvesting and other current uses of the land in the vicinity of the
Property now owned or controlled by Grantor and Grantor's affiliates.
<PAGE> 56
TO HAVE AND TO HOLD the said premises, with the appurtenances unto Grantee,
its successors and assigns forever. Grantor covenants with and warrants to
Grantee that Grantor will defend the Property from all lawful claims whatsoever
of persons claiming by, through or under Grantor but not otherwise, subject to
the following exceptions:
(i) Power line and other utility easements of record or in view as of the
date hereof-,
(ii) Reservations or exceptions contained in federal patents OR in ACTS
authorizing the issuance thereof;
(iii) Liens for taxes not yet payable;
(iv) All rights reserved to or vested in any governmental, statutory or
public authority to control or regulate the ConSil Property in any
manner, and all applicable laws, rules and orders of governmental
authority.
(v) The exceptions set forth in Exhibit A to this deed.
This grant and conveyance is subject to the terms and conditions of
that certain agreement by and between Grantor an Grantee dated
February 28, 1992.
IN WITNESS WHEREOF, the Grantor has caused this Special Warranty Deed
to be signed as of the day and year first above written.
CONSOLIDATED SILVER CORPORATION
Attest /s/ Nathaniel K. Adams By /s/ Michael B. White -
--------------------------- -----------------------
Nathaniel K. Adams Michael B. White
Assistant Secretary Vice President
STATE OF IDAHO )
) ss.
County of Kootenai )
On this 28th day of February, 1992, before me, the undersigned, a Notary
Public in and for the State of Idaho, personally appeared MICHAEL B. WHITE
and NATHANIEL K. ADAMS, known or identified to me to be the Vice President
and Assistant Secretary, respectively, of CONSOLIDATED SILVER CORPORATION,
the officers who executed the instrument on behalf of said corporation, and
acknowledged to me that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year in this certificate first above written.
/s/ Lynda R. Rufener
--------------------------
Notary Public
Residing at
My commission Expires:
<PAGE> 57
PARCEL 1:
Coeur d'Alene, Nellie and Emma Nevada Patented Mining Claims, M.S. 1006,
situated in Evolution Mining District in Section 13, 14 and 23, Township
48 North, Range 3 East, B.M., Shoshone County, State of Idaho. Patent
recorded in Book 6, Deeds, page 624, records of Shoshone County, Idaho.
PARCEL 2:
Grizzley Bear, Jumbo No. 1, Jumbo No. 2, Jumbo No. 3, Jumbo No. 4, Jumbo
No. 5, Jumbo No. 6, Key West, Protection Fraction and Torpedo Patented
Mining Claims, M.S. 3170. Patent recorded in Book 65, Deeds, page 339
and situated in Evolution Mining District in Sections 23 and 24, Township
48 North, Range 3 East, B.M., Shoshone County, Idaho.
Excepting that portion of Torpedo Patented Mining Claim lying Westerly of
that line known as the "Compromise Endline" and more particularly
described in Agreement dated February 15, 1951, recorded in Book "J" of
Agreements, page 155, records of Shoshone County, Idaho.
PARCEL 3:
Go Between, Maxwell Fraction, Maxwell No. 1, Maxwell No. 2 and North
Patented Mining Claims, M.S. 3220. Patent recorded in Book 64, Deeds,
page 300 and situated in Evolution Mining District in Sections 13 and 14,
Township 48 North, Range 3 East, B.M., Shoshone County, Idaho.
PARCEL 4:
Blue Jay No. 1 and Blue Jay No. 2, Patented Mining Claims M.S. 3221.
Patent recorded in Book 64, Deeds, page 271 and situated in Evolution
Mining District in Section 24, Township 48 North, Range 3 East, B.M.,
Shoshone County, Idaho.
PARCEL 5:
That portion of the Wallace No. 1 Lode Patented Mining Claim, Mineral
Survey No. 3290, situated in Evolution Mining District and lying in
Section 14 and 23, Township 48 North, Range 3 East, B.M., Shoshone County,
Idaho, more particularly described as follows:
BEGINNING at Corner No. 1 of said Wallace No. I Lode Mining Claim;
THENCE South 12 degrees 7' West, 431.50 feet to Corner No. 2;
THENCE North 66 degrees 7' West, 1122.80 feet to the intersection with the
Westerly endline of Jumbo No. 3 Lode, Survey No. 3170;
THENCE from said intersection, North 16 degrees 23' East, 40.06 feet to
Corner No. 4 of said Jumbo No. 3 Lode;
THENCE North 16 degrees 23' East, 286.08 feet to the intersection with the
Northerly sideline of said Wallace No. 1 Lode (South 66 degrees 07' East,
254.59 feet, from Corner No. 4 thereof);
THENCE South 66 degrees 07' East, 1090.41 feet to Corner No. 1 of said
Wallace No. 1 Lode, the place of beginning.
<PAGE> 58
and that portion of the Wallace No . 1 Patented Mining Claim, M.S. 3290, more
particularly described as follows:
BEGINNING at Corner No. 4 of said Wallace No. 1 Lode;
THENCE South 66 degrees 07' East, 254.59 feet to a point on the Northerly
sideline of the Wallace No. 1 Lode;
THENCE South 16 degrees 23' West, 386.02 feet to Corner No. 4 of the
Jumbo No. 3 Lode, Mineral Survey No. 3170;
THENCE South 16 degrees 23' West, 40.06 feet to the intercept of the
Westerly endline of said Jumbo No. 3 Lode with the Southerly sideline of
Wallace No. 1 Lode;
THENCE North 66 degrees 07' West, 222.20 feet to Corner No. 3 of said
Wallace No. 1 Lode;
THENCE 12 degrees 07' East, 431.50 feet to Corner No. 4 of said Wallace
No. 1 Lode, to the place of beginning.
PARCEL 6:
Shoshone No. 1 Patented Mining Claim, M.S. 3290. Patent recorded in Book
74, Deeds, page 320, records of Shoshone County and situated in Evolution
Mining District in Section 14 and 23, Township 48 North, Range 3 East,
B.M., Shoshone County, Idaho.
PARCEL 7:
Iowa and Germamia Patented Mining Claims, M.S. 3292A and Patent
recorded in November 15, 1951, Instrument No. 153118. Claims situated in
Evolution Mining District in Sections 14 and 23, Township 48 North,
Range 3 East, B.M., Shoshone County, State of Idaho.
PARCEL 8:
New York Patented Mining Claim, M.S. 3292A. Patent recorded in Book 85,
Deeds, page 564. Claim situated in Evolution Mining District in Section
14, Township 48 North, Range 3 East, B.M., Shoshone County, Idaho.
PARCEL 9:
That portion of the Orvil Patented Mining Claim, U.S. Mineral Survey No.
3292A, lying East of the West sideline of Section 13, Township 48 North,
Range 3 East, B.M., Shoshone County, Idaho, except that portion described
as follows:
From Corner No. 2 of the Orvil Claim, go North 63 degrees 45' 18"
West, along Line 2-3 of the Orvil Lode a distance of 296.1 feet and
intersect Line 1-2 of the Maxwell No. 3 Mining Claim, U.S. Mineral
Survey No. 3220, at the real point of beginning;
THENCE North 30 degrees East along Line 1-2 of the Maxwell No. 3
Claim, a distance of 100 feet;
THENCE North 60 degrees West a distance of 250 feet;
<PAGE> 59
THENCE South 30 degrees West a distance of 116.42 feet and intersect
Line 2-3 of the Orvil Claim;
THENCE South 63 degrees 45'18" East along Line 3-2 of the Orvil
Claim a distance of 250.54 feet to the real point of beginning.
PARCEL 10:
DesMoines, Buffalo, Bell, U.S. , August, June, May, Anna No. 2, Good Hope
and Frigga Patented Mining Claims, M. S. No. 3292A. Patent recorded
November 15, 1951, Instrument No. 153118. Claims situated in Evolution
Mining District in Sections 14, Township 48 North, Range 3 East, B.M.,
Shoshone County, Idaho.
PARCEL 11:
Lotten, Mannie, Anna, Last Chance and Ore or No Go Patented Mining
Claims, M.S. 3292A. Patent recorded November 15, 1951, Instrument No.
153118. Claims situated in Evolution Mining District in Section 14,
Township 48 North, Range 3 East, B.M., Shoshone County, Idaho. Except
those portions lying North of a line which is described as follows:
STARTING at the Southeast or No. 1 corner of the Ore Grande Claim,
U.S. Mineral Survey No. 3292A, which coincides with a point on the
North sideline of the Orvil Claim, U.S. Mineral Survey No. 3292A,
which is 131.54 feet Northwesterly from the Northeast, or No. 1
Corner of said Orvil Claim;
THENCE North 70 degrees 48' West, a distance of 5,078.55 feet (shown
on record as 5,138 feet) to a point on the North sideline of the
Lotten Claim, U.S. Mineral Survey No. 3292A, which is approximately
718.03 feet (shown on record as 650 feet) Easterly from the
Northwest, or No. 1, Corner of said Lotten Claim.
PARCEL 12:
Blue Bell, Hidden Treasure, Silver Dollar and Trail Patented Mining Claims,
M.S. 3407, situated in Evolution Mining District in Sections 14 and 23,
Township 48 North, Range 3 East, B.M., Shoshone County, State of Idaho.
Patent recorded as Instrument No. 178880.
EXCEPT: That portion of M.S. 3407 in conflict with the Barlett Mining
Claim, M.S. 2083 and the Jumbo No. 3 Mining Claim, M.S. 3170.
PARCEL 13:
Bernardy No. 4, Bernardy No. 5, Bernardy No. 6, Bernardy No. 7, Bernardy
No. 9, Bernardy No. 11, Bernardy No. 12, Bernardy No. 13, Patented Mining
Claims M.S. 3304, situated in Evolution Mining District and patent recorded
November 23, 1955, Instrument No. 166276. Claims located in Section 23,
Township 48 North, Range 3 East, B.M. , Shoshone County, Idaho.
PARCEL 14:
Those portions of Bernardy No. 1, Bernardy No. 2, Bernardy No. 3, and
Bernardy No. 10, lying Easterly of that line known as the "Compromise End
Line" as established in Agreement recorded in Book 'J' of Leases, page 155.
<PAGE> 60
EXCEPT all minerals in or under said land including but not limited to
metals, oil, gas, coal, stone and mineral rights, mining rights and
easement rights or other matters relating thereto whether expressed or
implied.
The above-described properties are subject to the following encumbrances:
1. Powerline Easement as granted to WASHINGTON WATER POWER COMPANY, a
Corporation, by Instrument recorded July 3, 1911 in Book 41, Deeds, page 577,
records of Shoshone County, Idaho, including the right from time to time to
cut, trim and remove trees, brush, overhanging branches and other obstructions
which may injure or interfere with the Grantee's use, occupation, or enjoyment
of this easement and the operation, maintenance and repair of Grantee's
electrical system.
Affects Parcels 1 and 3.
2 . An Easement affecting said land for the purposes stated herein and
incidental purposes:
In favor of: Idaho Water Company
For: Pipeline
Recorded: August 6, 1959, Instrument No. 178245
Affects: Parcel 2
3. Exceptions as contained in Deed dated December 18, 1968 and recorded
February 17, 1969, Instrument No. 221772, records of Shoshone County, State of
Idaho.
Affects a portion of Parcel 3.
4. Easement granted to Silver Summit Mining Company by Lincoln Mining
Company in Agreement dated July 6, 1949, Book "M" Agreements, page 40.
Affects a portion of Parcel 3.
5. Agreement dated January 31, 1969 by and between Lincoln Mining Company
and Silver Dollar Mining Company and Consolidated Silver Corporation and
recorded February 17, 1969, Instrument No. 221775, records of Shoshone County,
Idaho; Assigned by Instrument No. 238303, records of Shoshone County, Idaho.
6. Lease dated September 25, 1934 and recorded in Book "D" of Leases, page
352, records of Shoshone County, Idaho, with Lincoln Mining Company as Lessor
and, George Harding, Trustee as Lessee. Lease expires January 1, 2033.
Assigned of record to Sunshine Mining Company in assignment recorded as
Instrument No. 238303, records of Shoshone County, Idaho.
7. Agreement of December 9, 1957, by and between Sunshine Mining Company,
Polaris Mining Company, Hayden Hill Consolidated Mining Company, Lincoln Mining
Company, and Silver Dollar Mining Company which agreement is recorded in Book
"K" of Agreements, page 114; Lincoln Mining Company's interest assigned of
record to Sunshine Mining Company by Instrument No. 238303, records of Shoshone
County, Idaho.
8. Unitization Agreement of September 25, 1958, by and between Silver Dollar
Mining Company, Polaris Mining Company and Sunshine Mining Company recorded
in Book "K" of Agreements, page 54, records of Shoshone County, Idaho.
<PAGE> 61
9. Unrecorded Contract dated July 2, 1968, by and between Lincoln Mining
Company, Hecla Mining Company, Merger Mines Corporation, Coeur d'Alene Mines
Corporation, Plainview Mining Company, Silver Dollar Mining Company, Yakima-
Shoshone Mining Company, Silver Chieftan Mining Company, Consolidated Silver
Corporation, and American Smelting and Refining Company as supplemented by
Supplemental Agreement dated July 3, 1961, as disclosed by Assignment recorded
as Instrument No. 238303, records of Shoshone County, Idaho.
10. Effect of Agreement dated January 31, 1969, by and between Lincoln Mining
Company and Silver Dollar Mining Company and recorded as Instrument No. 221777,
records of Shoshone County, Idaho.
11. Effect of Agreement dated January 9, 1969, by and between Lincoln Mining
Company and Silver Chieftan Company, recorded as Instrument No. 221776, records
of Shoshone, County, Idaho.
12. Reservations and Exceptions as contained in Deed dated January 6, 1969,
recorded February 17, 1969, Instrument No. 221768, records of Shoshone County,
Idaho. Affects Parcels 7, 8, and 9.
See copy attached.
13. Reservations and Exceptions as contained in Deed dated January 31, 1969,
recorded February 17, 1969, Instrument No. 221774, records of Shoshone County,
Idaho.
Affects Parcels 5, 10, 11, and 12.
See copy attached.
14. Powerline Easement as granted to WASHINGTON WATER POWER COMPANY, a
Corporation, by Instrument recorded April 10, 1918 in Book 52, Deeds, page
493, records of Shoshone County, Idaho, including the right from time to time
to cut, trim and remove trees, brush, overhanging branches and other
obstructions which may injure or interfere with the Grantee's use, occupation,
or enjoyment of this easement and the operation, maintenance and repair of
Grantee's electrical system.
15. Agreement and Easement by and between Consolidated Silver Corporation
and Russell Dalton, dated June 14, 1977, recorded June 16, 1977, Instrument
No. 268061, records of Shoshone County, Idaho. Said easement for water
gathering point and pipeline.
<PAGE> 62
EXHIBIT B
ROYALTY DEED
THIS ROYALTY DEED is made and effective this day ____ of November, 1995,
by between Consolidated Silver Corporation, an Idaho corporation duly qualified
to do business and good standing in the State of Idaho, whose address is 6500
Mineral Drive, Coeur d'Alene, Id 83814 (hereinafter "Con Sil") and Sunshine
Precious Metals, Inc., a Delaware corporation having its address at 815 Park
Boulevard - Suite 100, Boise, Idaho 83712 (herein "GRANTOR").
FOR AND IN CONSIDERATION OF ONE DOLLAR, the receipt of which is hereby
acknowledged, GRANTOR hereby grants unto and agrees to pay to Con Sil a variable
production royalty of the Net Smelter Returns (as that term is hereinafter
defined)(hereinafter the "PRODUCTION ROYALTY") from the sale of minerals from
the Property described in Exhibit "A" (hereinafter the "PROPERTY") of the
Purchase Agreement to which this ROYALTY DEED is attached as Exhibit "C" in
accordance with the following schedule:
Silver Price/oz. Net Smelter
S4.99 or less 2.0%
$5.00 to $5.99 2.5%
S6.00 to $6.99 3.0%
$7.00 or more 4.0%
The Net Smelter percentage utilized for the purpose of calculating the
PRODUCTION ROYALTY payable for any calendar quarter shall be determined by the
average daily quotations of the Handy and Harmon New York official quotation as
published in Metals Week (or its recognized successor in the publications of
silver quotations) for that calendar quarter.
GRANTOR shall, however, have the right to mine and market amounts of
minerals and mineral bearing ores and concentrates reasonably necessary for
sampling, assaying, metallurgical testing and evaluating the minerals potential
of the PROPERTY without initiating the obligation to make PRODUCTION ROYALTY
payments. The term "Net Smelter Returns" shall mean the net amount paid to
GRANTOR by a smelter or other purchaser for Minerals mined from the PROPERTY
after deductions for the following costs paid by or charged to GRANTOR (whether
paid or incurred by GRANTOR or by the smelter or other purchaser in the first
instance): (i) all smelting, refining, treatment, selling, and other costs,
charges and penalties charged by the smelter or other purchaser for such
minerals; (ii) all costs of loading, transporting, and insuring such minerals
and mineral bearing substances from the Property to the smelter or other
purchaser; and (iii) all taxes paid by GRANTOR on such minerals or mineral
bearing substances, except income taxes, including, but not limited to,
production, severance, sales and privilege taxes. Whenever minerals or mineral
bearing substances are delivered for direct sale or future processing thereof
to a processing or sales facility owned or controlled by GRANTOR or which
possesses or sells such minerals or mineral bearing substances for GRANTOR on
a toll basis, the Net Smelter Returns from such sale shall be an amount not less
than the amount which would have been realized by GRANTOR if the sale had been
to the nearest independent purchaser of such product; in such case, GRANTOR may
deduct amounts not to exceed the charges, costs and expenses permitted under the
<PAGE> 63
preceding sentence. GRANTOR shall make PRODUCTION ROYALTY payments within
thirty (30) days after the end of the calendar quarter in which proceeds from
the sale of minerals or mineral bearing substances are realized. At such time,
GRANTOR shall provide Con Sil with a statement showing in reasonable detail the
computation of the PRODUCTION ROYALTY payments. Each quarterly statement
furnished to Con Sil shall be deemed to be correct and binding on Con Sil unless
Con Sil, within ninety (90) days of its receipt, notifies GRANTOR in writing
that Con Sil disputes the correctness of such statement and specifies its
objections in detail. GRANTOR shall maintain true and correct records of all
minerals and mineral bearing substances mined and sold from the PROPERTY, and
GRANTOR shall permit Con Sil to inspect, at Con Sil's expense, the books and
records of GRANTOR which are pertinent to the determination of the PRODUCTION
ROYALTY at any reasonable time during normal business hours, provided such
inspection is conducted by Con Sil or by an accounting firm of recognized
standing, at least one of whose members is a member of the American Institute
of Certified Public Accountants, and provided such inspection does not interfere
unreasonably with GRANTOR's operations or procedures. Con Sil, at its sole risk
and expense, shall have access to the PROPERTY for inspection purposes at such
times, in such manner, and upon such notice to GRANTOR as shall not unreasonably
hinder or interrupt the operations of GRANTOR.
IN WITNESS WHEREOF, GRANTOR has caused this ROYALTY DEED to be executed by
its undersigned authorized representative as of the date first above written.
GRANTOR:
By: Attest:
Name: Name:
Title: Title:
STATE OF IDAHO )
) ss.
County of )
I certify that I know or have satisfactory evidence that _______________
is the person who appeared before me, and said person acknowledged that
(he/she/they) signed this instrument, on oath stated that (he/she/they)
was authorized to execute the instrument and acknowledged it as the (title
or position) of (name of company or corporation, etc.) to be the free and
voluntary act of such party for the uses and purposes mentioned in the
instrument.
DATED: NAME:
------------------------------------------
NOTARY PUBLIC in and for the State of Idaho
residing at
-------------------------------
My appointment expires:
-------------------
<PAGE> 64
EXHIBIT II
30-1-80. RIGHT OF SHAREHOLDERS TO DISSENT AND OBTAIN PAYMENT FOR SHARES.
(a) Any shareholder of a corporation shall have the right to dissent from and
to obtain payment for his shares in the event of any of the following
corporate actions:
(1) Any plan of merger or consolidation to which the corporation is a
party, except as provided in subsection (c) of this section;
(2) Any sale, lease, exchange, or other disposition of all or
substantially all of the property and assets of the corporation not
made in the usual or regular course of its business, including a sale
in dissolution, but not including a sale pursuant to an order of a
court having jurisdiction in the premises or a sale for cash on terms
requiring that all or substantially all of the net proceeds of sale
be distributed to the shareholders in accordance with their respective
interests within one (1) year after the date of sale;
(3) Any plan of exchange to which the corporation is a party, as the
corporation the shares of which are to be acquired;
(4) Any amendment of the articles of incorporation which materially and
adversely affects the rights appurtenant to the shares of the
dissenting shareholder in that it: (i) Alters or abolishes a
preferential right of such shares; (ii) Creates, alters or abolishes
a right in respect of the redemption of such shares, including a
provision respecting a sinking fund for the redemption or repurchase
of such shares; (iii) Alters or abolishes a preemptive right of the
holder of such shares to acquire shares or other securities; (iv)
Excludes or limits the right of the holder of such shares to vote on
any matter, or to cumulate his votes, except as such right may be
limited by dilution through the issuance of shares or other securities
with similar voting rights; or
(5) Any other corporate action taken pursuant to a shareholder vote with
respect to which the articles of incorporation, the bylaws, or a
resolution of the board of directors directs that dissenting
shareholders shall have a right to obtain payment for their shares.
(b) (1) A record holder of shares may assert dissenter's rights as to less
than all of the shares registered in his name only if he dissents with
respect to all the shares beneficially owned by any one (1 ) person,
and discloses the name and address of the persons on whose behalf he
dissents. In that event, his rights shall be determined as if the
shares as to which he has dissented and his other shares were
registered in the names of different shareholders.
<PAGE> 65
(2) A beneficial owner of shares who is not the record holder may assert
dissenter's rights with respect to shares held on his behalf, and
shall be treated as a dissenting shareholder under the terms of this
section and section 30-1-31, Idaho Code, if he submits to the
corporation at the time of or before the assertion of these rights a
written consent of the record holder.
(c) The right to obtain payment under this section shall not apply to the
shareholders of the surviving corporation in a merger if a vote of the
shareholders of such corporation is not necessary to authorize such merger.
(d) A shareholder of a corporation who has a right under this section to obtain
payment for his shares shall have no right at law or in equity to attack
the validity of the corporate action that gives rise to his right to obtain
payment, nor to have the action set aside or rescinded, except when the
corporate action is unlawful or fraudulent with regard to the complaining
shareholder or to the corporation.
30-1-81. PROCEDURES FOR PROTECTION OF DISSENTERS' RIGHTS.
(a) As used in this section:
(1) "Dissenter" means a shareholder or beneficial owner who is entitled
to and does assert dissenters' rights under section 30-1-80, Idaho
Code, and who has performed every act required up to the time involved
for the assertion of such rights.
(2) "Corporation" means the issuer of the shares held by the dissenter
before the corporate action or the successor by merger or
consolidation of that issuer.
(3) "Fair value" of shares means their value immediately before the
effectuation of the corporate action to which the dissenter objects,
excluding any appreciation or depreciation in anticipation of such
corporate action unless such exclusion would be inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment at the average rate currently paid
by the corporation on its principal bank loans, or, if none, at such
rate as is fair and equitable under all the circumstances.
(b) If a proposed corporate action which would give rise to dissenters' rights
under subsection (a) of section 30-1-80, Idaho Code, is submitted to a vote
at a meeting of shareholders, the notice of meeting shall notify all
shareholders that they have or may have a right to dissent and obtain
payment for their shares by complying with the terms of this section, and
shall be accompanied by a copy of sections 30-1-80 and 30-1-81, Idaho Code.
<PAGE> 66
(c) If the proposed corporate action is submitted to a vote at a meeting of
shareholders, any shareholder who wishes to dissent and obtain payment for
his shares shall refrain from voting his shares in approval of such action.
A shareholder who votes in favor of such action shall acquire no right to
payment for his shares under this section or section 30-1-80, Idaho Code.
(d) If the proposed corporate action is approved by the required vote at a
meeting of shareholders, the corporation shall mail a further notice to all
shareholders who refrained from voting in favor of the proposed action.
If the proposed corporate action is to be taken without a vote of
shareholders, the corporation shall send to all shareholders who are
entitled to dissent and demand payment for their shares a notice of the
adoption of the plan of corporate action. The notice shall:
(1) State where and when a demand for payment must be sent and
certificates of certificated shares must be deposited in order to
obtain payment;
(2) Inform holders of uncertificated shares to what extent transfer of
shares will be restricted from the time that demand for payment is
received;
(3) Supply a form for demanding payment which includes a request for
certification of the date on which the shareholder, or the person on
whose behalf the shareholder dissents, acquired beneficial ownership
of the shares; and
(4) Be accompanied by a copy of sections 30-1-80 and 30-1-81, Idaho Code.
The time set for the demand and deposit shall be not less than thirty
(30) days from the mailing of the notice.
(e) A shareholder who fails to demand payment, or fails (in the case of
certificated shares) to deposit certificates, as required by a notice
pursuant to subsection (d) of this section shall have no right under this
section or section 30-1-80, Idaho Code, to receive payment for his shares.
If the shares are not represented by certificates, the corporation may
restrict their transfer from the time of receipt of demand for payment
until effectuation of the proposed corporate action, or the release of
restrictions under the terms of subsection (f) of this section. The
dissenter shall retain all other rights of a shareholder until these rights
are modified by effectuation of the proposed corporate action.
(f) (1) Within sixty (60) days after the date set for demanding payment and
depositing certificates, if the corporation has not effectuated the
proposed corporate action and remitted payment for shares pursuant to
paragraph (3) of this subsection, it shall return any certificates
that have been deposited, and release uncertificated shares from any
transfer restrictions imposed by reason of the demand for payment.
<PAGE> 67
(2) When uncertificated shares have been released from transfer
restrictions, and deposited certificates have been returned, the
corporation may at any later time send a new notice conforming to the
requirements of subsection (d) of this section, with like effect.
(3) Immediately upon effectuation of the proposed corporate action, or
upon receipt of demand for payment if the corporate action has already
been effectuated, the corporation shall remit to dissenters who have
made demand and (if their shares are certificated) have deposited
their certificates, the amount which the corporation estimates to be
the fair value of the shares, with interest if any has accrued. The
remittance shall be accompanied by: (i) The corporation's closing
balance sheet and statement of income for a fiscal year ending not
more than sixteen (16) months before the date of remittance, together
with the latest available interim financial statements; (ii) A
statement of the corporation's estimate of fair value of the shares;
and (iii) A notice of the dissenter's right to demand supplemental
payment.
(g) (1) If the corporation fails to remit as required by subsection (f)
hereof, or if the dissenter believes that the amount remitted is less
than the fair value of his shares, or that the interest is not
correctly determined, he may send the corporation his own estimate of
the value of the shares or of the interest and demand payment of the
deficiency.
(2) If the dissenter does not file such an estimate within thirty (30)
days after the corporation's mailing of its remittance, he shall be
entitled to no more than the amount remitted.
(h) (1) Within sixty (60) days after receiving a demand for payment pursuant
to subsection (g) hereof, if any such demands for payment remain
unsettled, the corporation shall file in an appropriate court a
petition requesting that the fair value of the shares and interest
thereon be determined by the court.
(2) An appropriate court shall be the district court in the county of this
state where the registered office of the corporation is located. If,
in the case of a merger or consolidation or exchange of shares, the
corporation is a foreign corporation without a registered office in
this state, the petition shall be filed in the county where the
registered office of the foreign corporation was last located. If
there is no known registered office, the petition may be filed in Ada
County, Idaho.
(3) All dissenters, wherever residing, whose demands have not been settled
shall be made parties to the proceeding as in an action against their
shares. A copy of the petition shall be served on each such
dissenter. If a dissenter is a nonresident, the copy may be served
on him by registered or certified mail or by publication as provided
by law.
<PAGE> 68
(4) The jurisdiction of the court shall be plenary and exclusive. The
court may appoint one (1) or more persons as appraisers to receive
evidence and recommend a decision on the question of fair value. The
appraisers shall have such power and authority as shall be specified
in the order of their appointment or in any amendment thereof. The
dissenters shall be entitled to discovery in the same manner as
parties in other civil suits.
(5) All dissenters who are made parties shall be entitled to judgment for
the amount by which the fair value of their shares is found to exceed
the amount previously remitted, with interest.
(6) If the corporation fails to file a petition as provided in paragraph
(1) of this subsection (h), each dissenter who made a demand and who
has not already settled his claim against the corporation shall be
paid by the corporation the amount demanded by him, with interest, and
may sue therefor in an appropriate court.
(i) (1) The costs and expenses of any proceeding under subsection (h) of this
section, including the reasonable compensation and expenses of
appraisers appointed by the court, shall be determined by the court
and assessed against the corporation, except that any part of the
costs and expenses may be apportioned and assessed as the court may
deem equitable against all or some of the dissenters who are parties
and whose action in demanding supplemental payment the court finds to
be arbitrary, vexatious, or not in good faith.
(2) Fees and expenses of counsel and of experts for the respective parties
may be assessed as the court may deem equitable against the
corporation and in favor of any or all dissenters if the corporation
failed to comply substantially with the requirements of this section,
and may be assessed against either the corporation or a dissenter, in
favor of any other party, if the court finds that the party against
whom the fees and expenses are assessed acted arbitrarily,
vexatiously, or not in good faith in respect to the rights provided
by this section and section 30-1-80, Idaho Code.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated and
should not be assessed against the corporation, it may award to
counsel reasonable fees to be paid out of the amounts awarded to the
dissenters who were benefitted.
(j) (1) Notwithstanding the foregoing provisions of this section, the
corporation may elect to withhold the remittance required by
subsection (f) of this section from any dissenter with respect to
shares of which the dissenter (or the person on whose behalf the
dissenter acts) was not the beneficial owner on the date of the first
announcement to news media or to shareholders of the terms of the
proposed corporate action. With respect to such shares, the
corporation shall, upon effectuating the corporate action, state to
each dissenter its estimate of the fair value of the shares, state the
rate of interest to be used (explaining the basis thereof), and offer
to pay the resulting amounts on receiving the dissenter's agreement
to accept them in full satisfaction.
<PAGE> 69
(2) If the dissenter believes that the amount offered is less than the
fair value of the shares and interest determined according to this
section, he may within thirty (30) days after the date of mailing of
the corporation's offer, mail the corporation his own estimate of fair
value and interest, and demand their payment. If the dissenter fails
to do so, he shall be entitled to no more than the corporation's
offer.
(3) If the dissenter makes a demand as provided in paragraph (2) of this
subsection (j), the provisions of subsections (h) and (i) of this
section shall apply to further proceedings on the dissenter's demand.
<PAGE> 70
CONSOLIDATED SILVER
CORPORATION
6500 Mineral Drive
Coeur d'Alene, ID
83814-8788
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Ralph R. Noyes and Michael B. White as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of
Common Stock of Consolidated Silver Corporation held on record by the
undersigned on October 2, 1995, at the annual meeting of shareholders to be
held on November 14, 1995, or any adjournment thereof.
1. SALE OF SUMMIT SILVER MINE TO SUNSHINE PRECIOUS METALS, INC.
FOR _____ AGAINST _____ ABSTAIN _____
2. ELECTION OF DIRECTORS (check one):
FOR all nominees listed below (except as marked to the contrary
below)*. _____
WITHHOLD AUTHORITY for Proxies to vote for all nominees listed
below _____
*INSTRUCTION: To withhold authority to vote for any individual nominee check
the nominee's name below.
Ralph R. Noyes _____ Michael B. White _____ Gerald G. Carlson _____
Robert Stuart Angus _____ William J. Weymark _____ Charles F. Asher _____
3. AMENDMENTS TO CHANGE NAME TO CONSIL CORP.; CHANGE THE REGISTERED AGENT IN
IDAHO; REWORD THE COMPANY'S PURPOSE; AND REGARDING DIRECTORS' AUTHORITY TO
MODIFY BYLAWS:
FOR ____ AGAINST ____ ABSTAIN ____
4. AMENDMENT TO INCREASE AUTHORIZED COMMON AND PREFERRED STOCK:
FOR ____ AGAINST ____ ABSTAIN ____
5. AMENDMENT TO ELIMINATE CERTAIN SHAREHOLDERS' RIGHT TO DIRECTORS' POSITIONS:
FOR ____ AGAINST ____ ABSTAIN ____
6. AMENDMENT REGARDING INDEMNIFICATION AND LIABILITY OF DIRECTORS:
FOR ____ AGAINST ____ ABSTAIN ____
7. AMENDMENT TO ELIMINATE CUMULATIVE VOTING RIGHTS OF COMMON SHARES:
FOR ____ AGAINST ____ ABSTAIN ____
<PAGE> 71
8. APPROVAL OF COOPERS & LYBRAND AS INDEPENDENT AUDITORS FOR COMPANY:
FOR ____ AGAINST ____ ABSTAIN ____
9. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted for Proposals 1-9.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
DATED: , 1995.
-------------------------------------
PLEASE MARK, SIGN, DATE, AND RETURN
THE PROXY CARD PROMPTLY USING THE -----------------------------
ENCLOSED ENVELOPE Signature
-----------------------------
Signature if held jointly
