SCHEDULE 14A INFORMATION
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
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Sect. 240.14a-11(c) or Sect. 240.14a-12
Nord Resources Corporation
Name of Registrant as Specified In Its Charter
N/A
Name of Person(s) Filing Proxy Statement if other than the Registrant
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
<PAGE>
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
such 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>
NORD RESOURCES CORPORATION
201 Third Street NW, Suite 1750,
Albuquerque, New Mexico 87102
Notice of Annual Meeting of Shareholders
To be held on September 8, 1999
To the Shareholders of
NORD RESOURCES CORPORATION:
The 1999 Annual Meeting (the "Meeting") of shareholders of Nord
Resources Corporation (the "Corporation") will be held at New York
Helmsley, 212 E. 42nd Street, New York, New York 10017 on September 8,
1999 at 10:30 a.m. for the purpose of considering and voting upon the:
1. Election of seven (7) directors for a one year term;
2. Approval of the sale of the Corporation's 50% ownership interest
in the Sierra Rutile titanium dioxide mine in Sierra Leone to an
affiliate of MIL (INVESTMENTS) S.A.R.L.; and
3. Transaction of such other business as may properly come before
the meeting or any adjournment thereof.
The close of business on July 22, 1999 has been fixed as the
record date for the determination of shareholders entitled to notice
of and to vote at the Meeting and at any adjournment thereof.
Your proxy is important to ensure a quorum at the meeting. Thus,
whether or not you expect to be present, you are requested to date,
sign and mail the enclosed proxy in the postage-paid envelope which
has been provided for that purpose. The proxy may be revoked by you
at any time before it is exercised and the giving of your proxy will
not affect your right to vote in person if you attend the meeting.
By Order of the
Board of Directors,
/s/ Ray W. Jenner
Ray W. Jenner
Secretary
Albuquerque, New Mexico
July 26, 1999
<PAGE>
NORD RESOURCES CORPORATION
201 Third Street NW, Suite 1750,
Albuquerque, New Mexico 87102
PROXY STATEMENT
For the Annual Meeting of Shareholders
To be Held on September 8, 1999 at 10:30 a.m.
GENERAL INFORMATION
This Proxy Statement is furnished to the shareholders of Nord
Resources Corporation (the "Corporation") in connection with the
solicitation by its Board of Directors (the "Board") of proxies in the
accompanying form to be used at the annual meeting of shareholders to
be held at New York Helmsley, 212 E. 42nd Street, New York, New York
on September 8, 1999 (the "Meeting") and any adjournments thereof.
The Corporation has one class of shares outstanding, namely common
shares, of which there were 23,505,488 outstanding as of the close of
business on July 22, 1999, which date has been fixed as the record
date for the determination of shareholders entitled to notice of, and
to vote at the Meeting. Each share is entitled to one vote and
cumulative voting is not permitted. Shares cannot be voted at the
Meeting unless the shareholder is present in person or represented by
proxy. A list of shareholders of record entitled to vote at the
meeting will be available for examination by any shareholder for any
purpose germane to the Meeting, for a period of 10 days prior to the
Meeting, during normal business hours at the offices of Spitzer &
Feldman P.C., 405 Park Avenue, New York, New York and at the offices
of the Corporation at 201 Third Street NW, Suite 1750, Albuquerque,
New Mexico 87102. The list will also be available at the Meeting.
All shares represented by properly executed proxies received by
the Board pursuant to this solicitation will be voted in accordance
with the shareholder's directions specified on the enclosed proxy. If
no directions have been specified by marking the appropriate squares
on the accompanying proxy card, the shares will be voted in accordance
with the Board's recommendations. A shareholder signing and returning
a proxy has the power to revoke it at any time prior to its exercise
by delivering to the Corporation a later dated proxy or by giving
notice to the Corporation in writing or in open meeting, but without
affecting any vote previously taken.
The holders of a majority of the Corporation's outstanding
shares, present in person or represented by proxy and entitled to
vote, constitute a quorum for the transaction of all business at the
Meeting. Abstentions and broker non-votes are included in determining
if a quorum is present at the Meeting. An affirmative vote of a
majority of the shares present and voting at the Meeting is required
for Items 1 and 3. An affirmative vote of a majority of the shares
present and voting at the Meeting (not including the shares owned by
MIL) is required for Item 2.
This Proxy Statement and the accompanying proxy card were first
mailed to shareholders on or about July 26, 1999.
1
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth the only persons known by the
Board to be beneficial owners of more than 5% of the outstanding
Common Shares of the Corporation:
Shares Beneficially Owned
as of July 8, 1999
Name and Address of
Beneficial Owner Number % of Class
MIL (INVESTMENTS) S.A.R.L. 7,004,200 (1) 29.8%
Boulevard Royal 25B
L-2449
Luxembourg, Luxembourg
Summo USA Corporation 1,600,000 (2) 6.8%
1776 Lincoln Street
Suite 900
Denver, Colorado 80203
1 MIL (INVESTMENTS) S.A.R.L. ("MIL") acquired 3,160,000 shares from
the Corporation pursuant to a Stock Purchase and Sale Agreement
dated April 15, 1996, 840,000 shares in a Loan Conversion on June
4, 1996, 2,000,000 shares in a Stock Purchase and Sale Agreement
dated October 2, 1996 and 1,004,200 shares purchased on the open
market. The transactions with the Corporation were private
placements in reliance upon the transaction "safe harbor"
afforded by Regulation S, as promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
If the transaction described in Item 2 occurs, then all of MIL's
shares of the Corporation's Common Stock will be surrendered to
the Corporation and canceled, at which point, MIL will no longer
own any shares of the Corporation.
In the event that the transaction to sell the SRL interest to MIL
does not close for any reason other than MIL's breach of the
Purchase and Sale Agreement, the Corporation has agreed that MIL
shall have the right to acquire additional shares of the
Corporation equal to a pro rata number of any shares issued by
the Corporation, that would re-establish MIL's percentage
ownership of the Corporation's shares at the 31.5% which existed
as at February 26, 1999. Any such purchase would occur at a
price based on the mean average of the Corporation's shares on
the New York Stock Exchange, provided, however, that the minimum
price will be no less than $0.75 per share and the maximum price
no more than $1.00 per share. On June 8, 1999, the Corporation
issued 1,600,000 shares of common stock pursuant to an agreement
to purchase the Johnson Camp Mine copper mining facility in
Cochise County, Arizona. Thus, if the SRL transaction is not
consummated, the Corporation would be required to sell an
additional 735,766 shares to MIL if MIL exercises such right.
2 The Corporation issued 1,600,000 shares of Common Stock to Summo
USA Corporation ("Summo") as a part of the consideration paid in
connection with the acquisition of the Johnson Camp Mine copper
2
<PAGE>
mining facility in Cochise County, Arizona by the Corporation's
wholly-owned subsidiary, Nord Copper Corporation. The
Corporation issued the shares as a private placement under
Regulation D, as promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended.
ITEM I - ELECTION OF DIRECTORS
Seven directors are to be elected to hold office until the next
annual meeting and until their successors are elected and qualified.
The Board has nominated for election as directors the seven persons
named below, all of whom presently serve as members of the Board. The
shares represented by proxy, unless the giver of the proxy dictates
otherwise, will be voted at the Meeting in favor of the election of
the nominees named below.
Each of the nominees named below has consented to and is, at
present, available for election. If any nominee should for any reason
become unavailable for election, proxies in the accompanying form will
be voted for a substitute nominee designated by the Board. There are
no family relationships among any nominees or directors or among them
and any officer of the Corporation or any of its subsidiaries.
In connection with various agreements with MIL, the size of the
Board is required to be seven members. MIL has the right to
designate three nominees to the Board (the "MIL Nominees") and the
Board (excluding the MIL Nominees) has the right to nominate the four
remaining nominees. MIL is obligated to vote its shares for the four
Board nominees at the Meeting. The Corporation has agreed to nominate
and use its best efforts and to take such actions as may be necessary
to obtain the election of the MIL Nominees at each annual or special
meeting of stockholders called for the purpose of filling positions on
the Board. Such actions shall include, without limitation, soliciting
proxies for the election of directors (including the MIL Nominees) and
recommending the MIL Nominees for election to the Board in the same
manner as all other nominees of the Board for election as directors.
If any MIL Nominee shall resign, be removed or be unable to serve for
any reason prior to the expiration of such MIL Nominee's term as a
director, MIL is required to notify the Board of a replacement MIL
Nominee and the Board is required to take all action necessary to
cause such replacement MIL Nominee to be elected or appointed to fill
the unexpired term of the withdrawing MIL Nominee. In addition, the
size of the Board cannot be increased or decreased without the
approval of at least two of the MIL Nominees.
If the proposal to sell the Corporation's 50% interest in SRL to
an affiliate of MIL as described in Item 2 is approved by a majority
of the Corporation's shareholders present and voting at the meeting
(not including the shares owned by MIL), MIL has agreed to cause the
MIL nominees to tender their resignations to the Board. The
Corporation has not yet determined whether to accept all or any of
such resignations.
Set forth below is certain information for each nominee for
election as a director and each executive officer named in the Summary
Compensation Table and employed by the Corporation on July 22, 1999.
3
<PAGE>
Shares Beneficially Owned
As of July 1, 1999 (1)
Director
Directors Age Since Number % of Class
W. Pierce Carson 56 1994 671,040 (2) 2.8%
Edgar F. Cruft 66 1971 303,869 (3) 1.3%
Terence H. Lang 62 1978 179,633 (4) (9)
Leonard Lichter 71 1974 66,000 (5) (9)
Marc Franklin (10) 45 1996 65,000 (6) (9)
James Askew (10) 51 1998 50,000 (6) (9)
Francis Waldron (10) 55 1998 0 (9)
Other Named Executive Officer
Ray W. Jenner 47 1998 19,500 (7) (9)
All nominees for election of 1,355,042 (8) 5.5%
directors and other named
executive officers as a
group (8 persons)
1 Ownership includes sole voting and investment power except as
otherwise noted. When applicable, the number of shares
beneficially owned includes the number of unissued shares which
the listed person (or group) has a right to acquire within 60
days after July 1, 1999. In determining the number of shares
outstanding for computing the percent of class owned by a listed
person (or group), the number of shares outstanding of the
Corporation has been increased by the number of unissued shares
which the listed person (or group) has a right to acquire from
the Corporation within 60 days after July 1, 1999.
2 Includes options to purchase 615,000 shares.
3 Includes options to purchase 246,525 shares. Dr. Cruft's wife
and children own an additional 57,727 shares as to which Dr.
Cruft disclaims beneficial ownership.
4 Includes options to purchase 162,775 shares. Mr. Lang's wife
owns an additional 21,348 shares as to which Mr. Lang disclaims
beneficial ownership.
5 Includes options to purchase 65,000 shares.
6 Consists of options to purchase shares.
7 Includes options to purchase 17,500 shares.
4
<PAGE>
8 Includes options to purchase 1,221,800 shares held by directors
and named executive officer as a group.
9 Represents less than 1% of the shares outstanding.
10 Director is a MIL Nominee. MIL is indirectly 100% owned by Jean-
Raymond Boulle. There is no family relationship between any of
the MIL Nominees and Jean-Raymond Boulle. MIL, as of July 1,
1999, beneficially owned 7,004,200 shares of Common Stock of the
Corporation, which amount represents 29.8% of the issued and
outstanding shares of Common Stock. Jean-Raymond Boulle also
owns directly 10,000 shares.
Nominees for Election of Directors
Dr. Carson, who holds a Ph.D. in Economic and Structural Geology,
was appointed President and Chief Executive Officer of the
Corporation effective June 1, 1997. He is also President, Chief
Executive Officer and a director of Nord Pacific Limited ("Nord
Pacific"), a company which is 28.6% owned by the Corporation. He has
been President and a director of Nord Pacific since its inception in
1990 and Chief Executive Officer since 1997. Prior thereto,
beginning in 1980, he was Senior Vice President of Pacific operations
for the Corporation.
Dr. Cruft holds a Ph.D. in Geochemistry and is a founder of the
Corporation. He served as its Chairman since the Corporation's
inception in 1972 and as Chief Executive Officer from inception until
May 31, 1997. He was President of the Corporation from inception to
1985 and from 1988 until May 31, 1997. Dr. Cruft is also Chairman of
Nord Pacific.
Mr. Lang served as Senior Vice President-Finance and Treasurer
upon joining the Corporation in 1978 until his retirement on December
31, 1997. Prior thereto, he had 15 years of experience in financial
planning and management in the business equipment industry, holding
several financial management positions with NCR Corporation. Mr. Lang
is also a director of Nord Pacific.
Mr. Lichter, an attorney and a CPA, is a principal in the law
firm of Spitzer & Feldman P.C., New York, New York, which is counsel
to the Corporation. He is also a director of Nord Pacific.
Mr. Askew, a mining engineer, is President and Chief Executive
Officer and a director of Golden Star Resources Ltd., a publicly owned
mining company, and President of International Mining and Finance
Corporation, a private mining and venture capital company. He was a
founder and the Chief Executive Officer of Golden Shamrock Mines
Limited and sits on a number of boards of mining and exploration
companies in North America, Europe and Australia. Mr. Askew is a MIL
nominee.
Mr. Franklin has been employed since 1975 by J&S Franklin
Holdings and Management Services Ltd., London, England, a manufacturer
of military and civil equipment, and has served as a director and has
been a shareholder of such corporation since 1977. Mr. Franklin is a
MIL nominee.
Mr. Waldron has been employed by the MONY Group Inc., formerly
Mutual of New York, in various capacities since 1968 and is currently
Senior Vice President, International Operations, a position he has
held since 1994. Mr. Waldron is also President and Chief Operating
Officer of MONY International Holdings, MONY Life Insurance Company of
the Americas and MONY Bank and Trust Company. Mr. Waldron is a MIL
nominee and is a director of Diamond Fields International Ltd.
5
<PAGE>
Other Named Executive Officer
Mr. Ray W. Jenner, Vice President - Finance and Chief Financial
Officer of the Corporation and Nord Pacific since February 1998 is
also a director of Nord Pacific. He is a chartered accountant who
holds a Bachelor of Commerce Degree in Management Science and a
Bachelor of Science Degree in Physics and Mathematics. He has 25 years
experience in domestic and international financial environments, and
for 14 years was Vice President and Treasurer of Echo Bay Mines where
he was involved in raising equity and securing debt financing both in
Canada and the United States. Prior to Echo Bay, he spent ten years
with Price Waterhouse in Canada, Australia and Indonesia.
Information Concerning the Board of Directors
The Board held four meetings during 1998 and each current
director, with the exception of Mr. Waldron, who was appointed to the
Board on November 11, 1998, attended at least 75% of the meetings of
the Board and the Committees.
The Corporation has an Audit Committee and a Compensation
Committee but does not have a Standing Nominating Committee.
Initially, the members of the Audit Committee in 1998 were
Messrs. Lichter, Max Boulle, and Lang. In November, 1998, Mr. Boulle
resigned from the Board. Mr. Waldron was appointed to the Audit
Committee on June 3, 1999. The Audit Committee meets independently
with representatives of the Corporation's independent auditors and
senior management. The Audit Committee reviews the general scope of
the Corporation's annual audit, the fee charged by the independent
auditors and other matters relating to internal control systems. In
addition, the Audit Committee is responsible for recommending the
engagement or discharge of the Corporation's independent auditors.
The Committee held two meetings in 1998.
The members of the Compensation Committee in 1998 were Dr. Cruft
and Messrs. Askew and Franklin. The Compensation Committee is
responsible for approving and reporting to the Board on the annual
compensation for all officers. The Compensation Committee also is
responsible for granting or recommending to the Board the grant of
stock options and other funding and awards to be made under the
Corporation's existing compensation plans. The Committee did not meet
in 1998 and all compensation matters were discussed at and resolved by
the Board.
Members of the Board who are not employed by the Corporation,
except Mr. Lichter, receive an annual retainer of $10,000, plus $1,000
for attending each meeting of the Board and $800 for attending each
meeting of a Committee of the Board. Mr. Lichter, counsel to the
Corporation, charges his time and expenses to the Corporation through
Spitzer & Feldman P.C.
6
<PAGE>
The Corporation has a deferred compensation program for
directors, other than directors who are employees of the Corporation,
its subsidiaries or affiliates or are affiliated with entities which
provide services to the Corporation. Under this program, a qualifying
director who has served as a director for ten years will receive a
lifetime payment, beginning at the later of age 65 or his termination
as a director, in an amount equal to the annual retainer paid to the
director during his last year of service as a director. A qualifying
director may elect to receive a reduced payment beginning at age 62,
provided he is not a director at that time. Messrs. Askew, Franklin
and Waldron are eligible for this program.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), requires the Corporation's directors, executive
officers and beneficial holders of more than 10% of the Corporation's
Common Stock to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of
the common stock of the Corporation. Based on the Corporation's
review of copies of such forms it received from directors, executive
officers and beneficial holders of more than 10% of the Corporation's
common stock and on written representations from certain of such
persons, the Corporation believes that, during the year ended December
31, 1998, all filing requirements under Section 16(a) of the Exchange
Act were made by such persons on a timely basis.
The Corporation paid $191,768 for legal services during 1998 to
the firm of Spitzer & Feldman P.C. in which Mr. Lichter, a director,
is a principal.
7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the
Corporation's Chief Executive Officer and the other most highly paid
executive officers (collectively, "Named Executive Officers") for the
fiscal years ended December 31, 1998, 1997 and 1996.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation Awards
------------------------------------------------------
Securities
Annual Underlying
Compensation(1) Options All Other
Name and Principle Position Year Salary (Shares) Compensation ($)
<S> <C> <C> <C> <C>
Edgar F. Cruft 1998 119,200 (2) 78,750 (5) 59,861 (9)
Chairman 1997 346,771 (2) 127,775 (6) 91,537 (9)
1996 576,874 (2) 33,750 (5) 25,379 (9)
W. Pierce Carson 1998 350,000 (3) -- 54,961 (10)
President & CEO 1997 300,580 (3) 615,000 (7) 71,375 (10)
Ray W. Jenner 1998 153,125 35,000 (8) 48,189 (11)
VP-Finance & CFO
Terence H. Lang 1998 -- 45,000 (5) 50,000 (12)
Sr VP-Finance & Treasurer 1997 271,615 77,775 (6) 19,493 (12)
(1997 and 1996) 1996 261,555 -- 5,709 (12)
</TABLE>
______________________________
1 Non-cash benefits for each of the Named Executive Officers were
less than 10% of their aggregate compensation.
2 Includes $55,760 salary earned in 1998 as chairman and $112,904
and $166,810 salary earned in 1997 and 1996, respectively, as
Chairman of Nord Pacific. Dr. Cruft was also President and Chief
Executive Officer of the Corporation until June 1, 1997.
3 Includes $200,000 and $213,080 salary earned in 1998 and 1997,
respectively, as President and Chief Executive Officer of Nord
Pacific.
8
<PAGE>
4 Number of shares subject to options granted under stock option
plans for the periods presented.
5 Replaced expired option for identical number of shares and
exercise price.
6 Includes options to replace expired options to purchase 77,775
shares for identical exercise prices.
7 Includes 200,000 options which became exercisable on May 27,
1999.
8 Includes 17,500 shares which become exercisable on January 30,
2000.
9 Included in "All Other Compensation" for Dr. Cruft are
contributions under 401(k) Retirement and Savings Plan
totaling $842 in 1998, $23,099 in 1997, including $20,820
contributed by Nord Pacific Limited under its plan, and
$24,921 in 1996, including $20,820 contributed by Nord
Pacific. Also includes the dollar value of life insurance
premiums paid by the Corporation with respect to the benefits
for Dr. Cruft totaling $3,780, $6,776 and $458 for 1998, 1997
and 1996 respectively, debt forgiveness of $50,000 in both
1998 and 1997 respectively, as part of the restructuring of
management as of June 1, 1997, and the fair market value of
$10,627 for an automobile transferred in 1997 to Dr. Cruft.
10 Included in "All Other Compensation" for Dr. Carson are
contributions under a 401(k) Retirement and Savings Plan
totaling $10,000 in 1998 contributed by Nord Pacific Limited
under its plan, and $20,760 contributed by Nord Pacific in
1997. Also includes the dollar value of life insurance
policies paid by the Corporation with respect to benefits to
Dr. Carson of $5,110 in 1998 and $4,925 in 1997 of which
$4,325 was paid by Nord Pacific, the fair market value of an
automobile provided Dr. Carson of $3,350 in 1998 and $3,850
in 1997 paid by Nord Pacific and cash compensation paid by
Nord Pacific of $36,501 and $41,840 in 1998 and 1997 as a
living allowance since Nord Pacific requires Dr. Carson to
spend a portion of his time in Australia.
11 Included in "All Other Compensation" for Mr. Jenner are
matching contributions under a 401(k) Retirement and Savings
Plan of $4,813. Also includes the fair market value of
$1,252 for an automobile provided Mr. Jenner, the dollar
value of life insurance premiums paid by the Corporation of
$761 and relocation costs of $41,363.
12 Included in "All Other Compensation" for Mr. Lang are
matching contributions under a 401(k) Retirement and Savings
Plan of $4,996 and $4,750 for 1997 and 1996, respectively.
Also included are the dollar value of life insurance premiums
paid by the Corporation with respect to benefits to Mr. Lang
of $5,955 and $959 in 1997 and 1996, respectively, the fair
market value of an automobile provided Mr. Lang of $6,768 in
1997 and debt forgiveness of $50,000 in each of 1999 and 1998
as part of the restructuring of management as of June 1,
1997.
9
<PAGE>
The Corporation had established a loan program to fund the
exercise of stock options Dr. Cruft and Mr. Lang, who were
executive officers. Such loans were limited to $150,000 for each
executive, are callable on 90 day notice by the Board and bear
interest, payable quarterly, at 1/2% over the yield on funds
invested by the Corporation. The largest amount of indebtedness
outstanding during 1998 from Messrs. Cruft and Lang was $100,000
each. $50,000 of Dr. Cruft's loan was forgiven on each of June
1,1999, June 1, 1998 and June 1, 1997 as part of the
restructuring of management as of June 1, 1997. $50,000 of Mr.
Lang's loan was forgiven in each of January 1, 1999 and January
1, 1998 as part of the restructuring of management as of June 1,
1997. The amount currently outstanding from Mr. Lang is $50,000.
See "Employment Agreements".
OPTION GRANTS IN 1998
The following table presents information concerning options
granted in 1998 to Named Executive Officers under the
Corporation's employee option plans.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------------
Potential Realizable
Number of Value at Assumed
Securities % of Total Annual Rates of Stock
Underlying Options Price Appreciation
Options Granted Exercise Expiration for Option Term ($) (6)
NAME Granted (1) in 1998 (4) Price (5)($) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Edgar F. Cruft 45,000 (2) 25.2 6.67 01/20/00 -- --
33,750 (2) 18.9 4.88 10/25/00 -- --
Ray W. Jenner 35,000 (3) 19.6 1.38 01/30/08 30,265 76,699
Terence H. Lang 45,000 (2) 25.2 6.67 01/20/00 -- --
</TABLE>
_________________________
1 All options are exercisable at July 1, 1999 unless otherwise noted.
2 Replaced expired option for identical number of shares and exercise price.
3 Options to purchase 17,500 shares become exercisable on January 30, 2000.
4 The Corporation granted options to purchase 178,750 shares in 1998,
including options to purchase123,750 shares issued to replace expired
options for the identical number of shares and exercise price.
5 Exercise price is equal to market price at date of grant, other than
the replacement grants noted in footnote 2 above, the exercise price of
all of which are in excess of market price at date of their grant.
10
<PAGE>
6 Dollar amounts under these columns are the result of
calculations based on assumed annualized rates of stock
appreciation of 5% and 10% as prescribed by the Securities
and Exchange Commission. The assumed rates are not intended
by the Corporation to forecast possible future appreciation,
if any, of its stock price, which will be determined by
future events and unknown factors.
11
<PAGE>
AGGREGATED OPTION EXERCISES IN 1998 AND YEAR-END OPTION
VALUES
The following table presents information concerning options exercised
during 1998 by the Named Executive Officers and the value of their
respective unexercised options at December 31, 1998.
<TABLE>
<CAPTION>
Value (1)
Unexercised in-
the-Money
Securities Underlying Options at
Unexercised Options December 31,
at December 31, 1998 1998
Shares Acquired Value Exercisable/ Exercisable/
NAME On Exercise Realized Unexercisable Unexercisable
<S> <S> <S> <C> <C>
Edgar F. Cruft None N/A 246,525 --
W. Pierce Carson None N/A 215,000 --
400,000
Ray W. Jenner None N/A 17,500 --
17,500
Terence H. Lang None N/A 162,775 --
__________________________
1 Based on closing sale price of $1.09375 for the Corporation's
Common Stock on December 31, 1998 on the New York Stock Exchange
Composite Tape.
</TABLE>
12
<PAGE>
EMPLOYMENT AGREEMENTS
Effective May 31, 1997, Dr. Cruft retired as President and Chief
Executive Officer ("CEO") of the Corporation. He continues to retain
the title of Chairman of the Board. Effective June 1, 1997, the Board
of Directors appointed Dr. Pierce Carson President and Chief Executive
Officer, titles he currently holds with Nord Pacific Limited.
Further, effective December 31, 1997, Terence H. Lang retired and
resigned as Senior Vice President-Finance and Treasurer. In February
1998, the Board of Directors appointed Raymond W. Jenner Vice
President-Finance and Chief Financial Officer.
The Corporation has an Employment Agreement (the "Carson
Agreement") with Dr. Carson describing among other things his duties
as President and CEO, his compensation level and perquisites. The
term of the Agreement is from June 1, 1997 through and including May
31, 2000, and automatically extends from year to year unless
terminated on 90 days prior notice. (See "Compensation of CEO"
below).
The Corporation also has a Continuation of Employment Agreement
(the "Cruft Continuation") with Dr. Cruft which runs from June 1, 1998
until May 31, 2000, and automatically extends from year to year unless
terminated on 90 days prior notice. Under the terms of the Cruft
Continuation, Dr. Cruft serves as Chairman of the Board and devotes no
less than 12.5% of his time to the Corporation. For these services,
Dr. Cruft is compensated at a rate of $50,000 per year plus
reimbursements for office expenses, part-time secretarial, and travel
and other expenses incurred on behalf of the Corporation, and, in
1997, also received title to the vehicle provided by the Corporation
at no cost. Dr. Cruft also receives retirement benefits totaling
$226,653 per year under the terms of the Corporation's non-qualified
retirement plan. This benefit will be paid for the longer of 10 years
or for the life of Dr. Cruft and his spouse. Further Dr. Cruft
received options to purchase 50,000 shares of the Corporation's Common
Stock at $4.00 per share. At May 31, 1997, Dr. Cruft owed $150,000 to
the Corporation under the terms of a loan program as described under
"Compensation of Executive Officers". As per the terms of the Cruft
Continuation, $50,000 of his loan was forgiven on each of June 1,
1997, June 1, 1998 and June 1, 1999.
On January 1, 1998, under the terms of the Corporation's non-
qualified retirement plan, Mr. Lang began receiving retirement
benefits. As per the terms of the retirement plan, he elected to
exercise the lump sum payment option. Under the terms of the option,
the Corporation paid to Mr. Lang in cash the present value of his
future benefits, less 12% of such amount in a lump sum payment, but
only to the extent that funds were available in the related trust
established to fund Mr. Lang's benefit. This payment totaled
$877,800. Since the amount received by Mr. Lang was less than the
total accrued benefit, Mr. Lang receives payments totaling $7,247
monthly. This benefit will be paid for the longer of 10 years or for
the life of Mr. Lang and his spouse. Further, at December 31, 1997,
he owed the Corporation $150,000 as described under "Compensation of
Executive Officers" in this document. $50,000 of his loan was
forgiven on January 1, 1998 and $50,000 on January 1, 1999. The
$50,000 balance will be forgiven on January 1, 2000 so long as Mr.
Lang does not voluntarily terminate his involvement with the
Corporation as a director.
13
<PAGE>
DEFINED BENEFIT RETIREMENT PLAN
The non-qualified retirement agreement with Dr. Carson designated
by the Board provides annual payments for a period of 15 years
beginning at age 62, or on termination of employment, whichever is
later (or anytime after age 55 in the event the provisions of the
agreement with respect to early retirement are satisfied). The
payments are equal to 5% plus 1.5% for each year of service to a
maximum of 30 years times Dr. Carson's average annual compensation
over this last three years of employment. The compensation covered by
the plan is based on Dr. Carson's annual salary disclosed in the
Summary Compensation Table. The portion of the percentage earned
through years of service vests at the rate of 20% per year, beginning
at six years of service, and becomes fully vested in the event of a
change in control of the Corporation as defined in the agreements. If
Dr. Carson dies prior to reaching retirement, the agreements provide
for payment of a death benefit to his beneficiary in an amount equal
to three times the compensation earned during the year prior to this
death, in lieu of the above payments after retirement.
The following table illustrates the estimated annual benefit
payable upon retirement to Dr. Carson at specified levels of
compensation and years of service to the Corporation.
<TABLE>
<CAPTION>
Years of Service
Compensation 10 15 20 25 30
<C> <C> <C> <C> <C> <C>
$ 250,000 $ 50,000 $ 68,750 $ 87,500 $ 106,250 $ 125,000
$ 300,000 $ 60,000 $ 82,500 $ 105,000 $ 127,500 $ 150,000
$ 350,000 $ 70,000 $ 96,250 $ 122,500 $ 148,750 $ 175,000
$ 400,000 $ 80,000 $ 110,000 $ 140,000 $ 170,000 $ 200,000
$ 450,000 $ 90,000 $ 123,750 $ 157,500 $ 191,250 $ 225,000
</TABLE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Philosophy
The Corporation applies a consistent philosophy to compensation
for all employees, including senior management. This philosophy is
based on the premise that the achievements of the Corporation result
from the coordinated efforts of all individuals working toward common
objectives. The Corporation strives to achieve those objectives
through teamwork that is focused on meeting the periodic goals
established by the Corporation, the expectations of customers and
stockholders. The compensation program goals are to enable the
Corporation to attract, retain and reward key personnel who contribute
to the long-term success of the Corporation and to align compensation
with business objectives and performance. The Corporation's
compensation program for executive officers is based on the same
principles applicable to compensation decisions for all employees of
the Corporation.
14
<PAGE>
Competitive Compensation
The Corporation is committed to providing a compensation program
that helps attract and retain key personnel of outstanding ability.
The Corporation ensures that its compensation is competitive by
comparing its compensation practices with those of other similar
companies and reflects this review in its determination of
compensation.
Compensation of CEO
Dr. Carson is compensated by the Corporation at $150,000 per
year. This compensation rate became effective June 1, 1997, the date
of Dr. Carson's appointment as President and CEO of the Corporation.
Dr. Carson's salary increases to $225,000 per year upon achievement of
positive cash flow from operations for three consecutive months of the
Corporation's 50% owned affiliate, Sierra Rutile Limited. Further,
Dr. Carson was issued options to purchase 600,000 shares of the
Corporation's Common Stock, 200,000 shares at $4.00 per share, 200,000
shares at $5.00 per share and 200,000 shares at $6.00 per share, which
options expire on May 31, 2002 (see "Compensation of Executive
Officers").
Compensation and Performance
Executive officers are rewarded based upon corporate performance
and individual performance. Corporate performance is evaluated by
reviewing the extent to which strategic and business plan goals are
met, including such factors as operating profit or loss and
performance relative to competitors. Individual performance is
evaluated by reviewing organizational and management development
progress against set objectives and the degree to which teamwork and
Corporation values are fostered.
Compensation Vehicles
The Corporation has a successful history of using a simple total
compensation program that consists of cash, equity based compensation
and retirement plans. Having a compensation program that allows the
Corporation to successfully attract and retain key employees permits
it to mine and produce its industrial minerals at competitive levels
of production and costs, to provide useful products and services to
customers, enhance stockholder value, motivate technological
innovation, foster teamwork and adequately reward employees. The
vehicles are:
Cash Based Compensation - The Corporation sets base salary for
employees by reviewing the aggregate of base salary and annual bonus
for competitive positions in the market, and by reviewing the
employee's historical compensation and the effect of inflation on such
compensation.
Stock Option Program - The purpose of this program is to provide
additional incentives to employees to work to maximize stockholder
value. The option program also utilizes vesting periods to encourage
key employees to continue in the employ of the Corporation. The
Corporation grants stock options annually to a broad-based population
representing approximately 50% of the total employee pool.
15
<PAGE>
Deferred Compensation for Senior Executives - The Corporation has
entered into separate retirement agreements with its senior
executives. The agreements provide benefits to the senior executives
upon retirement based on several factors, including the number of
years of service to the Corporation. The purpose of these retirement
agreements is to provide incentive to the senior executives to
continue to provide their services to the Corporation.
401-K Plan - The Corporation provides a retirement and savings plan
for its salaried U.S. employees pursuant to Section 401(k) of the
Internal Revenue Code. Each employee may contribute up to 15% of his
or her salary to this plan, to a maximum of $10,000 in 1998. Under
the plan, the Corporation makes a matching contribution on behalf of
each participating employee of 100% of the lower of the first 6% of
each employee's salary or the percentage actually contributed by the
employee. This plan enables the Corporation to attract and retain
employees upon whom the Corporation relies in operating its business.
Compensation Committee
Dr. Edgar F. Cruft, Chairman
James Askew
Marc Franklin
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee in 1998 were Dr. Cruft
and Messrs. Askew and Franklin. Dr. Cruft, Chairman of the
Compensation Committee, is Chairman of the Board. He retired as
President and CEO effective June 1, 1997. He served as an officer of
the Corporation from 1969 until June 1997.
STOCKHOLDER RETURN ON COMMON STOCK
The following graph compares the total annual return on the
Corporation's Common Stock with the total annual return of the Dow
Jones Equity Market Index and the Dow Jones Mining Index. The
presentation assumes $100 was invested on December 31, 1995 in the
Corporation's Common Stock and in each of the indices and any
dividends were reinvested.
16
<PAGE>
<TABLE>
Comparison of Five-Year Cumulative Total Returns
Performance Graph for
Nord Resources Corporation
Prepared by the Center for Research in Security Prices
Produced on 04/26/1999 including data to 12/31/1998
[DELETED GRAPH]
<CAPTION>
Legend
CRSP Total Returns Index for: 12/1993 12/1994 12/1995 12/1996 12/1997 12/1998
<S> <C> <C> <C> <C> <C> <C>
Nord Resources Corporation 100.0 133.3 48.7 87.2 39.7 20.5
NYSE Stock Market (US Companies} 100.0 100.0 135.5 164.3 218.3 262.0
NYSE Stocks (SIC 100-1099 US + 100.0 90.6 105.5 109.4 79.0 63.1
Foreign Metal Mining
</TABLE>
17
<PAGE>
YEAR 2000 COMPLIANCE
In January 1998, the Corporation initiated a Year 2000 project to
address the issue of computer programs and embedded computer chips
being unable to distinguish between the year 1900 and the year 2000
("Year 2000 Issues"). The project involves converting to Year 2000
compliant accounting software, testing existing software, hardware and
operational systems and communicating with third-party customers,
suppliers and service providers to ensure that they are taking
appropriate action with respect to their Year 2000 Issues.
The Corporation has installed Year 2000 compliant accounting
software and is in the process of converting from its existing system.
The Corporation anticipates that the implementation of this software
will be completed by September 30, 1999. The Corporation's local area
network and PC hardware and non-accounting software, such as
spreadsheets and word processing, have been tested and, to the best of
the Corporation's knowledge, are Year 2000 compliant. Other non-
information technology systems, such as the telephone system and other
office equipment, have been assessed for Year 2000 readiness and are
compliant
The Corporation believes that the computer systems and
applications it maintains would not have a material impact on the
operations of the Corporation or its revenues in the event that the
systems fail to operate in the Year 2000. A contingency plan to
replace any non-compliant systems has been developed. If the
conversion to Year 2000 compliant accounting software is not complete
by December 31, 1999, the Corporation temporarily may be able to use
compliant spreadsheet software until the installed year 2000 compliant
accounting software is operational. A decision regarding the
implementation of such contingency plan will be made by September 30,
1999.
The Corporation is communicating with third party customers and
suppliers and has received notification from its building manager, its
bank, the New York Stock Exchange and other service providers
indicating that they expect to be Year 2000 compliant. Due to the
general uncertainty inherent with respect to Year 2000 Issues,
resulting in part from the uncertainty of the Year 2000 readiness of
third-party customers, suppliers, and service providers, the
Corporation is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on the
Corporation's results of operations or financial condition.
The estimated total cost of Year 2000 testing and compliance is
expected to be approximately $50,000, which includes costs related to
the purchase and conversion to Year 2000 compliant accounting
software. No costs directly related to Year 2000 Issues have been
incurred as of December 31, 1998. The costs of the project and the
expected completion dates are based on management's current estimates.
18
<PAGE>
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP ("KPMG") has been chosen to act as
independent auditors for the Corporation by the Audit Committee and to
serve in such capacity for the fiscal year ending December 31, 1999.
A representative of KPMG is expected to be present at the annual
meeting and will have the opportunity to make a statement, if he so
desires, and to respond to appropriate questions.
On April 27, 1998, with the approval of the Audit Committee, the
Corporation terminated its relationship with Deloitte & Touche LLP
("D&T"), independent certified public accountants. On May 8, 1998,
KPMG was appointed to act as independent auditors for the Corporation
for the fiscal year ended December 31, 1998.
In the report of D&T for the year ended December 31, 1997, D&T
disclaimed an opinion regarding the Corporation's financial statements
for those years, because of the possible material effects of the
Corporation's ability to continue as a going concern and the inability
of the auditors of Sierra Rutile Limited ("SRL"), the Corporation's
50% owned subsidiary, to express an opinion on the financial
statements of SRL.
During the two-year period ended December 31, 1998, and the
interim period from that date to July 8, 1999, there were no
disagreements with the auditors on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of
the auditors, would have caused them to make reference to the subject
matter of the disagreement in connection with their report, except
that during the audit of the Corporation's financial statements for
1997, D&T had a disagreement with management over the Corporation's
accounting for its investment in and advances to SRL. The Corporation
had accounted for its investment using the cost method for 1995, 1996
and the nine-month period ended September 30, 1997. As a result of
changes in the political environment in Sierra Leone subsequent to
September 30, 1997, D&T believed that the Corporation should change
its method of accounting for its investment in SRL from cost to the
equity method which would require restatement of the Corporation's
financial statements for 1995 and 1996. The matter was reviewed by
management and discussed with the Audit Committee and, as a result
thereof, management conformed to the position of D&T and recorded
adjustments to the Corporation's financial statements to account for
the Corporation's investment in and advances to SRL under the equity
method and the disagreement was resolved to the satisfaction of D&T.
ITEM II - APPROVAL OF THE SALE OF THE CORPORATION'S 50%
INTEREST IN SIERRA RUTILE LIMITED
Overview
The Board unanimously recommends that the shareholders approve
the proposal to sell the Corporation's 50% interest in Sierra Rutile
Limited and its related entities ("SRL") to an entity controlled by
MIL (INVESTMENTS) S.A.R.L. ("MIL"), the largest shareholder of the
Corporation. A Purchase and Sale Agreement for the sale of the
Corporation's interest in SRL to MIL was executed on June 16, 1999
("Purchase and Sale Agreement"), and provides for consideration to be
paid to the Corporation, consisting of (a) a cash payment of
$1,250,000, (b) a 5% carried interest in the acquiring entity, (c) the
release of the Corporation from its current guaranty obligation of
approximately $6,000,000 to the development bank lenders to SRL, and
(d) the redemption and cancellation of MIL's 7,004,200 shares in the
Corporation, which shares currently represent approximately 29.8% of
the issued and outstanding shares of the Corporation. The sale is
subject to several conditions, the most important of which are: (a)
the approval by a majority of the Corporation's shareholders present
and voting at the Meeting (not including the shares owned by MIL), and
(b) the consent of the development bank lenders to SRL to the release
of the Corporation from its guaranty of SRL's obligation to repay 50%
of the development bank loans, and the substitution by MIL of a
guaranty or other undertaking of MIL and/or its principal, Jean-
Raymond Boulle or such other entity satisfactory to the development
banks.
19
<PAGE>
The Board believes that SRL, which shut down its operations in
January 1995 in Sierra Leone, West Africa, as a result of being
overrun by rebels, represents a significant drain on the limited
resources of the Corporation. In view of the ongoing political,
military and economic instability and civil conflict in Sierra Leone,
the prohibitive costs associated with maintaining and providing
security for SRL's mine and assets, rehabilitating assets and
restarting operations, the amount of capital required to fund SRL's
repayment obligations to the development banks, and the amount of
capital the Corporation must set aside as security for the guarantee
of SRL's outstanding development bank loans, the Board has determined
that the Corporation can no longer afford to fund SRL from its own
resources without risking the viability of the Corporation as a going
concern. On that basis, and with the understanding that an
independent appraisal has determined the transaction to be fair to the
shareholders of the Corporation, the Board recommends that the
shareholders approve the sale of the Corporation's interest in SRL
pursuant to the Purchase and Sale Agreement described in more detail
herein.
Background
The Corporation owns a 50% interest in the SRL titanium dioxide
mine in Sierra Leone, West Africa. All of the interest in the mining
operations is owned through Nord Rutile Company, a limited partnership
of which the Corporation owns a 1% limited partnership interest and
the Corporation's wholly-owned subsidiary, Nord Rutile Corporation,
owns a 99% interest, as general partner. The transaction will be
effectuated by the purchaser, SRL Acquisition No. 1 Ltd. ("Acquisition
Ltd."), a newly formed British Virgin Islands company, acquiring all
the interest in Nord Rutile Company from the Corporation and Nord
Rutile Corporation.
SRL was principally engaged in the mining and processing of
rutile and ilmenite, both industrial minerals, and was the largest
producer of natural rutile in the world until the mine was shut down
in 1995. SRL marketed these products throughout the United States,
Europe and the Far East. Both rutile and ilmenite are used in the
production of more highly concentrated titanium dioxide, which is used
as a pigment in the manufacture of paint and in many types of paper
and plastic products. Titanium dioxide is also used in the production
of fiberglass, enamels and coated fabrics. Rutile is used to a lesser
extent in welding rod electrode coatings and in the production of
titanium metal. SRL has leased a total of 224 square miles from the
government of Sierra Leone until the year 2014, when the lease is
subject to a renewal option of fifteen years on terms to be
established at the time of renewal.
Exploration and development work on SRL's mining facilities began
in Sierra Leone in 1971 and culminated in limited production in 1979.
At its full capacity following various expansion programs and
processing improvements, annual rutile production at SRL was
approximately 150,000 tonnes per annum. The Board determined that
further expansion would be necessary in order to meet projected
increased demand for titanium dioxide pigment and implemented the
initial stages of a capital improvement program to increase its
overall production of Ti02 feedstock to over 200,000 tonnes annually
with a scheduled start-up of increased production capability in the
fourth quarter of 1995. Pursuant to loan agreements entered into in
November 1992 with the International Finance Corporation (a subsidiary
of the World Bank), Overseas Private Investment Corporation (an agency
of the United States of America), Commonwealth Development Corporation
(a statutory corporation incorporated in the United Kingdom), and
Deutsche Investitions - Und Entwicklungdgesellschaft MBH (a private
limited company incorporated under the laws of the Federal Republic of
Germany), SRL received approximately $48,000,000 in loan commitments,
a significant portion of which was to be used as working capital, and
to fund previous capital expenditures as part of the Corporation's
plans for the expansion of SRL's production facilities. Including
prior loans outstanding to the Export-Import Bank of the United
States, at the time of the shutdown of the mine in 1995, the
outstanding indebtedness to the development banks was $45,522,838.
Fifty percent of this debt was guaranteed by each of the shareholders
of SRL.
20
<PAGE>
SRL has been 50% owned by the Corporation and Consolidated Rutile
Limited ("CRL") since November 17, 1993, when, in an effort to reduce
substantially the Corporation's domestic bank debt and obtain capital
to fund additional mining opportunities, the Corporation sold a 50%
interest in SRL to CRL for a cash investment and other consideration.
CRL, which is controlled by Iluka Resources Limited, is a major
producer of rutile, ilmenite and zircon with operations in Australia
and the United States. Under the terms of the agreement with CRL,
both the Corporation and CRL have equal representation on the board of
directors of SRL and each own equal interests in SRL and its related
entities.
The potential sale of the Corporation's SRL interest to MIL was
discussed with CRL prior to the execution of the Purchase and Sale
Agreement. CRL did not evince an interest in acquiring the 50%
interest in SRL and, in fact, has facilitated the sale to MIL by
agreeing not to exercise certain remedies available to it under the
Joint Venture Agreement between the Corporation and CRL relating to
SRL and consenting in writing to the transfer prior to execution of
the Purchase and Sale Agreement.
Sale Decision
SRL operated under a relatively stable environment throughout its
involvement in Sierra Leone through the end of 1994. However, in
January 1995, SRL's mining operation was attacked and overrun by rebel
forces. Due to concern for the safety of SRL's employees, the minesite
was evacuated. Substantial damage was done to the minesite and there
was extensive looting. Mining operations remained suspended, as
security could not be assured for personnel in and around the
minesite. In 1996 a civilian president was elected and in December
1996, a peace accord between the government and the opposing faction
was signed. However, on May 25, 1997 the democratically elected
government was overthrown by a military coup. On October 23, 1997 an
accord was reached between the Economic Community of West Africa
States ("ECOWAS"), a coalition of sixteen West African countries and
the Armed Forces Revolutionary Council ("AFRC") of Sierra Leone. The
accord provided, among other things, for the reinstatement of the
democratically elected government of President Kabbah; immediate
cessation of hostilities; disarmament, demobilization, and
reintegration of combatants; provision of humanitarian assistance; the
return of refugees and displaced persons; and the broadening of the
power base in Sierra Leone. Although this accord was signed,
sporadic, isolated acts of aggression continued to occur. After
several abortive attempts for a peaceful resolution, in February 1998,
ECOWAS provided a military force ("ECOMOG"), to forcibly remove the
AFRC from power and President Kabbah and his government were
reinstated in Sierra Leone on March 10, 1998. Throughout 1998 there
were sporadic outbreaks of rebel activity, especially in the northern
and eastern parts of the country. In December 1998, fighting broke
out between ECOMOG forces and Revolutionary United Front ("RUF")
rebels in the areas surrounding the capital city of Freetown. On
January 6, 1999 rebels attacked Freetown and took control of the
eastern part of the city, destroying much of the city and terrorizing
the civilian population. Nigerian led ECOMOG forces ultimately pushed
the rebels out of Freetown and the surrounding area. On May 24, 1999,
the government and the rebel forces negotiated a cease fire in order
to initiate peace talks brokered by the Government of Togo, ECOWAS,
the Organization of African Unity and the United Nations. Peace talks
between the government and the opposing faction resumed in Lome, Togo
in May 1999. On July 7, 1999, in a ceremony held at the Palace of
Congress in Lome, a peace agreement was signed by President Kabbah and
Foday Sankoh, the leader of the rebel forces. The new agreement calls
for the rebel forces to be given a power-sharing role with Sierra
Leone's elected government and also provided for a "reprieve" from
prosecution for war crimes. Until the peace accord can be fully
implemented, however, the Nigerian led ECOMOG forces will reportedly
remain in Sierra Leone.
21
<PAGE>
As a result of the continuing uncertainty resulting from the
political, military and economic situation in Sierra Leone and the
suspension of full production at SRL's mining facility, significant
uncertainty exists as to the Corporation's ability to recover its
investment in SRL. The costs associated with resuming operations of
SRL's mining facility in Sierra Leone are considerable. Although
SRL's major processing assets remain substantially intact, significant
restoration efforts would be required to repair much of the equipment
which has been idle for over four years. In 1998, the Corporation
completed a feasibility study, a portion of which described certain
rehabilitation procedures which are critical to the mine reopening
plan at SRL. These procedures include development of a master plan
for the rehabilitation of the mine and repair of the powerhouse and a
dam located in the Lanti mining deposit. At the time of discontinuance
of operations, SRL was in the process of a major expansion of the
facility, including construction of a second dredge and new
powerhouse. The feasibility study indicates approximately $112
million would be required for asset rehabilitation, completion of a
new powerhouse and dredge, mine development and working capital in
order to resume operations at the mine.
Because of the continued political, military and economic
instability in Sierra Leone and the uncertainty as to when the mine
can be reopened, the Corporation's investment in SRL was completely
written off in the Corporation's audited financial statements.
The Board believes that retaining ownership of the interest in
SRL has and will continue to represent a significant drain on the
Corporation's resources without the prospect of recovering the
Corporation's investment. While SRL has not generated any significant
revenue since the suspension of its operations in 1995, the
Corporation has continued to provide significant amounts of money for
the protection and maintenance of the mine site, the payment of 50% of
SRL's loan obligations to development bank lenders, and the
establishment of cash reserves to guarantee SRL's future payments of
principal and interest. From January 1995 through June 30, 1999, the
Corporation has provided funding to SRL in the amount of $35,614,797.
Based on these factors described in more detail below, the Board
believes that it is in the best interests of the Corporation to sell
its interest in SRL.
The Board engaged NM Rothschild & Sons LLC ("Rothschild"), a
leading investment banking firm with substantial experience and
contacts in the mining industry, and particularly in Africa, to
perform investment banking services in connection with a possible sale
of the Corporation's interest in SRL and to evaluate SRL for the
purpose of establishing its fair market value. Rothschild, on behalf
of the Corporation, attempted in 1998 and early 1999 to solicit
proposals to purchase the Corporation's interest in SRL. Such
solicitations included discussions with a number of major mineral
sands companies, but did not generate any purchase or joint venture
interest.
Transaction Specifics
The only offer received for the Corporation's interest in SRL was
from MIL. Thereafter the parties negotiated and concluded an
agreement in principle on February 26, 1999, subject to the execution
of a definitive agreement and contingent upon the approval of the
Board. On June 16, 1999, the Purchase and Sale Agreement, was entered
into by the Corporation, as seller, and by MIL and an affiliate of
MIL, as buyer, pursuant to which the Corporation will sell, and MIL's
affiliate will purchase the Corporation's 50% ownership interest in
SRL.
22
<PAGE>
The Purchase and Sale Agreement provides for consideration to be
paid to the Corporation for the Corporation's interest in SRL
consisting of (a) a cash payment of $1,250,000, (b) a 5% carried
interest in the acquiring entity, (c) the release of the Corporation
from its current guaranty obligation of approximately $6,000,000 to
the development bank lenders to SRL, and (d) the redemption and
cancellation of MIL's 7,004,200 shares in the Corporation, which
shares currently represent approximately 29.8% of the issued and
outstanding shares of the Corporation.
The closing of the transaction is subject to several conditions,
the most important of which are: (a) the approval of a majority of the
Corporation's shareholders present and voting at the Meeting (not
including the shares owned by MIL), and (b) the consent of the
development bank lenders to SRL to the release of the Corporation from
its guaranty of 50% of SRL's obligation to repay the development bank
loans and the substitution by MIL of a guaranty or other undertaking
of MIL and/or its principal, Jean-Raymond Boulle or such other entity
satisfactory to the development banks. The Corporation has further
covenanted that, until the closing, it will not take any action
intended to cause the business of SRL to be conducted inconsistently
with past practice and shall notify and consult with MIL regarding any
major decisions affecting the operation of SRL.
If the sale to MIL is consummated, the shares evidencing MIL's
29.8% interest in the Corporation will be canceled and the other
existing shareholders percentage interest in the Corporation would
increase from 70.3% to 100%.
In the event that the transaction to sell the SRL interest to MIL
does not close for any reason other than MIL's breach of the Purchase
and Sale Agreement, the Corporation has agreed that MIL shall have the
right to acquire additional shares of the Corporation equal to a pro
rata number of any shares issued by the Corporation, that would
reestablish MIL's percentage ownership of the Corporation's shares at
the 31.5% which existed as at February 26, 1999. Any such purchase
would occur at a price based on the mean average of the Corporation's
shares on the New York Stock Exchange, provided, however, that the
minimum price will be no less than $0.75 per share and the maximum
price no more than $1.00 per share. On June 8, 1999, the Corporation
issued 1,600,000 shares of common stock pursuant to an agreement to
purchase the Johnson Camp Mine copper mining facility in Cochise
County, Arizona. Thus, if the SRL transaction is not consummated, the
Corporation would be required to sell an additional 735,766 shares to
MIL if MIL exercises such right.
The Purchase and Sale Agreement is terminable if the transaction
has not closed by August 20, 1999. The Corporation has agreed to use
its best efforts to obtain shareholder approval of the Purchase and
Sale Agreement at the meeting.
Fairness Opinion
The Corporation's agreement to the consideration to be paid by
MIL for the Corporation's interest in SRL is based on an assessment of
the financial value of its interest in SRL and the Corporation's
strategic business objectives. To ensure that the Corporation
received fair market value from MIL in exchange for the Corporation's
interest in SRL, the Corporation engaged Rothschild to evaluate the
fairness, from a financial point of view, to the shareholders of the
consideration to be paid by MIL pursuant to the Purchase and Sale
Agreement. Rothschild is one of the world's leading independent
merchant banking organizations with substantial experience in advising
clients on mergers and acquisitions, divestitures, project finance,
equity offerings and other capital market operations. Rothschild has
participated in a significant number of transactions involving mining
and resource companies, particularly in emerging markets, and has
extensive experience in undertaking valuations and fairness opinions
relating to mining industry transactions.
23
<PAGE>
In formulating an opinion on the matter, Rothschild, among other
things, (i) reviewed and considered the feasibility study for the
restart plan of SRL produced by IMC Mackay & Schnellman, (ii) reviewed
and considered certain financial and operating data, including
financial forecasts concerning SRL and provided by the management of
SRL, and (iii) held discussions with the managements of SRL and the
Corporation regarding the past and present operations and financial
condition and prospects of SRL and the Corporation, including, without
limitation, information relating to certain strategic, financial, and
operating benefits anticipated from the sale of the Corporation's
interest in SRL.
In an opinion letter dated June 21, 1999 ("Rothschild Fairness
Opinion"), Rothschild concluded that:
"[T]he consideration to be paid by Buyer pursuant
to the Agreement in respect of the transaction is
fair, from a financial point of view, to the
shareholders of Seller."
A copy of the Rothschild Fairness Opinion setting forth the
assumptions made, the matters considered, the scope and limitations on
the review undertaken and the procedures followed by Rothschild in
rendering its opinion is attached to the Proxy Statement as Exhibit A.
In addition to the Rothschild Fairness Opinion, Rothschild prepared a
valuation report dated June 1999 ("Rothschild Valuation Report")
relating to the proposed sale which report shall be made available for
inspection and copying at the Corporation's principal offices in
Albuquerque, New Mexico during regular business hours by any
interested shareholder or his representative who has been so
designated in writing. The Corporation will also mail a copy of the
Rothschild Valuation Report upon written request to any interested
shareholder or his representative who has been so designated in
writing.
Related Party Purchaser/Conflict of Interest
MIL is an affiliate of the Corporation by virtue of its 29.8%
ownership of the outstanding shares of the Corporation. MIL acquired
3,160,000 shares from the Corporation pursuant to a Stock Purchase and
Sale Agreement dated April 15, 1996, 840,000 shares in a Loan
Conversion on June 4, 1996, 2,000,000 shares in a Stock Purchase and
Sale Agreement dated October 2, 1996 and 1,004,200 shares purchased on
the open market.
Under various agreements currently in effect with MIL, MIL has
the right to nominate three persons to the Board while the Board
(excluding the MIL nominees) retains the right to designate the
remaining four nominees. MIL is obligated to vote its shares for the
four Board nominees through and including voting at the meeting. In
addition, the size of the Board cannot be increased or decreased
without the approval of at least two MIL nominees.
Pursuant to the Purchase and Sale Agreement, MIL will be able to
vote its shares in support of the Board's recommendation to sell the
Corporation's interest in SRL, but an affirmative vote by majority of
the Corporation's shareholders present and voting at the Meeting (not
including the shares owned by MIL) is required to approve the
transaction.
MIL's affiliation with the Corporation is the predicate for a
derivative suit filed on December 2, 1998 ("Derivative Action") by MIL
on behalf of the Corporation in the District Court of Dallas County,
Texas, naming as Defendants Nord Pacific, W. Pierce Carson, Edgar F.
Cruft, Terence H. Lang, and Hicor Corporation. Counsel for Messrs.
Carson, Cruft and Lang removed the case on December 31, 1998 to the
United States District Court for the Northern District of Texas,
Dallas Division. Together with its Notice of Removal, Messrs. Carson,
Cruft, and Lang filed a Motion to Realign the Corporation as party
defendant and, in addition, filed a Motion to Dismiss the case for
lack of personal jurisdiction and, alternatively, to transfer venue of
the case to the United States District Court for the District of New
Mexico at Albuquerque. The Corporation, Pacific and each individual
defendant is being represented under directors and officers liability
policies. On behalf of Nord Pacific, on January 13, 1999, a Motion to
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Dismiss the case was filed, asserting that the Court lacked personal
jurisdiction over Nord Pacific and that the Plaintiff had failed to
state a claim upon which relief could be granted against Nord Pacific.
On January 13, 1999, the Plaintiff filed a Motion to Remand the case
to the 298th Judicial District Court of Dallas County, Texas, a Motion
for Leave to Amend the Complaint and a Response to the Corporation's
Motion to Realign the Parties. All of these Motions have not yet been
considered by the Court. The Plaintiff's Original Petition and Jury
Demand objects to a number of alleged corporate events involving the
Corporation's relationship with Nord Pacific, although the Corporation
has asserted that all of such actions had been approved by MIL's
nominees to the Corporation's Board of Directors. Causes of action
are alleged against Messrs. Carson, Cruft, and Lang for breach of
fiduciary duties, negligence and gross negligence. The damages sought
in connection with those causes of action are stated to be "in excess
of the minimum jurisdictional limits of this Court of not more than
$50 million." No specific causes of action are alleged against Nord
Pacific. Nonetheless, a prayer for punitive damages against all
defendants is alleged in the amount of $50 million. On July 8, 1999,
the Plaintiff's case was dismissed by the Court without prejudice to
MIL's right to restore the case to the Court's docket if the SRL
transaction does not close. Prior to its dismissal, the Corporation
contested the claims vigorously and, if they are recommenced, expects
the claims to be ultimately dismissed for lack of jurisdiction by the
courts in Texas.
An action was instituted on behalf of the Corporation and Nord
Pacific in the Supreme Court, New York County on January 15, 1999
("New York Action"), seeking a determination that MIL is not entitled
to demand representation on the Board of Directors of Nord Pacific and
that the failure to designate such a representative does not
constitute a violation or breach of any of the Corporation's
obligations to MIL. The time within which to respond to that
complaint has been extended.
If the SRL transaction closes, the Corporation, Nord Pacific and
MIL have agreed to cause the Derivative Action and the New York Action
to be dismissed, with prejudice.
The above-referenced related party interest and potential
conflict of interest of the Board and MIL has been fully disclosed to
the entire Board. After considerable discussion and deliberation the
Board, having the understanding that the sale of the Corporation's
interest in SRL is clearly in the best interests of the shareholders
of the Corporation, that MIL's is the only offer for the Corporation's
interest in SRL, and that the consideration offered by MIL for said
interest in SRL is deemed to be fair by an independent financial
consultant, concluded that it was in the best interests of the
shareholders of the Corporation to consummate the transaction with MIL
notwithstanding the conflict of interest, upon the terms and
conditions of the Purchase and Sale Agreement negotiated at arms
length subject to the direct supervision of the Board.
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Financial Burden of Maintaining SRL
Due to the lengthy suspension of its operations, SRL has relied
and will continue to rely on funds from the Corporation and its other
50% owner to sustain its operations. From January 1995 through June
30, 1999, the Corporation provided SRL with $35,614,797, as its 50%
share of funding required by SRL for support of a limited maintenance
force, payment to vendors, costs of security at the mine and payments
of principal and interest on the outstanding development bank loans.
Due to the continuing unstable political, military and economic
situation in Sierra Leone, it is doubtful that the SRL mining facility
will restart operations at any time in the near future. The best case
scenario used in the fairness opinion is a restart in 2003. If the
sale of the Corporation's interest in SRL is not approved by the
shareholders and consummated pursuant to the Purchase and Sale
Agreement, SRL will continue to represent a significant drain on the
Corporation's resources without any reasonable prospect of the
Corporation receiving a return on its investment, thus risking the
viability of the Corporation as a going concern.
At the time of the mine shutdown in January 1995, SRL owed the
development banks $45,522,838, including $12,529,960 owed to the
Export-Import Bank of the United States from a prior financing. Since
that time, the Corporation has funded the repayment of its one-half
share of $33,415,373 of principal, plus interest and fees of
$5,674,288. In May 1998, SRL's debt agreements were amended. The
amendments provided for a reduction in the interest rate payable on
SRL's loans outstanding to a fixed rate of 6.875% as opposed to the
variable rate in effect prior to the amendments. The amendments also
provided that the current remaining balance of the loans would be
payable in two installments of $3,026,866 in September 1999 and 2000,
with the balance of $6,053,733 due in September 2001. The total
remaining principal payable by SRL to the development banks as of the
date of the proxy statement aggregates $12,107,465. The loans are
guaranteed 50% by the Corporation and 50% by CRL.
The amendments require that the Corporation comply with certain
financial covenants, including a covenant to maintain cash, cash
equivalents and/or marketable securities with an aggregate value equal
to 150% of its guaranteed portion of the outstanding loans. Since
December 31, 1998, the Corporation has been in violation of this
covenant. As a result, the lenders could demand repayment of the
loans, although as of the date of this proxy statement they have not
done so.
New Strategic Business Plan
The Board's recommendation to sell the Corporation's interest in
SRL is consistent with its development of a strategic business plan of
the Corporation focused on the acquisition of other mining properties
which require less financial commitment and which the Corporation
believes can be profitable when metal prices recover, without concern
as to local political and military conditions.
The Corporation's operating assets currently consist of (a) a 50%
ownership in SRL, (b) a 28.5% ownership in Nord Pacific, which is
principally engaged in the production of copper and the exploration
for gold, copper, nickel, cobalt and other minerals in Australia,
Papua New Guinea, Mexico, and North America, and (c) ownership of a
newly-acquired copper mining facility in Arizona described below.
Nord Pacific owns a 40% interest in the Girilambone Copper mine which
has been in production since May 1993, and a 50% interest in the
Girilambone North Copper mine which has been in production since July
1996. Nord Pacific also owns a 50% interest in the Tritton Copper
Project in Australia, a 100% interest in the Tabar Islands Gold
Project and a 35% interest in the Ramu Nickel-Cobalt Project in Papua-
New Guinea, all of which are considered to be in the development
stage, and various interests in certain exploration properties.
On June 8, 1999, Nord Copper Corporation ("NCC"), a wholly-owned
subsidiary of the Corporation, acquired from Arimetco, Inc. a copper
mining facility ("Johnson Camp Mine") located in Cochise County, in
southeastern Arizona 65 miles east of Tucson, which includes 2,723
acres consisting of patented and unpatented mining claims and fee
simple lands. The total consideration paid by the Corporation and NCC
was (a) $310,000 in cash, (b) the issuance of 1,600,000 unregistered
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shares of the Corporation's common stock and (c) a promissory note
("Promissory Note") from NCC in the amount of $1,550,000, payable in
three principal payments of $500,000, $500,000 and $550,000, due on
June 8, 2000, June 8, 2001 and June 8, 2002, respectively, together
with interest at the rate of 8% per annum payable quarterly. In
addition to the purchase price, NCC assumed the obligation to pay up
to $1,000,000 out of revenues from the Johnson Camp Mine to Arimetco,
Inc., at a rate of two cents per pound of copper sold, except that no
payment is due where the copper price is less than $1.00 per pound..
The payment of the Promissory Note is guaranteed by the Corporation
and is secured by a lien on the Johnson Camp Mine until the Promissory
Note is paid in full.
Since 1975 the Johnson Camp Mine has produced over 150 million
pounds of cathode copper from open pit mining, heap leaching and
solvent extraction-electrowinning (SX-EW) processing of oxide ores.
Although significant reserves remain, mining operations ceased in
1997. Heap leaching continues and the mine has been producing one to
two million pounds of copper cathode annually.
Under an arrangement with Nord Pacific, which operates a SX-EW
copper mining facility in Australia and was instrumental in
identifying and assessing the Johnson Camp Mine opportunity, Nord
Pacific will participate in management of the Johnson Camp Mine and
will be entitled to 20% of cash flow after the Corporation has fully
recovered its past and future investment in the property.
The Corporation continues to seek other acquisitions in the metal
mining business that are consistent with its business objectives.
Recommendation of the Board of Directors
The Board has carefully weighed the options of retaining the
Corporation's interest in SRL. Resumption of the Sierra Leone
operations would depend upon a number of conditions including, (1)
Sierra Leone having an acceptable political environment within which
to operate, (2) SRL having adequate levels of security in and around
the mine site area, (3) SRL successfully renegotiating its operating
agreements with the government of Sierra Leone, (4) SRL having
adequate capital to meet the equity required, and (5) SRL obtaining
adequate levels of additional debt financing at acceptable terms.
In view of the continuing uncertainty in Sierra Leone, which
could continue well into the foreseeable future, the limited resources
of the Corporation and the significant amounts of capital that would
be required to retain ownership and restart the mine, without a
reasonable prospect of receiving a return on the Corporation's
investment in SRL, it is the unanimous recommendation of the Board
that the shareholders approve the proposal to sell said interest
pursuant to the Purchase and Sale Agreement.
In addition, the Board is not confident that the Corporation can
afford to maintain SRL until such time as the political climate and
the security of the mine site reach acceptable levels without risking
the ongoing viability of the Corporation as a going concern.
It is the unanimous recommendation of the Board that the
shareholders approve the sale of the Corporation's interest in SRL as
proposed herein for the basic and inherent reason that no other
alternative is currently or feasibly available to accomplish the
stated goals of the Corporation of relieving the financial burden on
the Corporation's resources associated with maintaining ownership in
SRL and focusing on the acquisition of other mining properties which
require less financial commitment and contain minimal political and
country risk. A vote against this proposal will endanger the
Corporation's viability and attainment of its goals designed to limit
the risk to its ongoing viability, promote the growth of the
Corporation and enhance the value of its stock.
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<PAGE>
The value of the Corporation's 50% interest in SRL as a separate
entity on the Corporation's 1998 audited financial statements is zero.
In accordance with Delaware Corporation Law Section 271, the
Corporation's 50% interest in SRL does not represent all or
substantially all of the Corporation's property and assets, and thus,
this transaction is not required by Delaware state law or by the By-
Laws of the Corporation to be submitted to a shareholder vote.
However, due to the related-party interest and conflict, the potential
impact on the Corporation, the advice of counsel and by resolution by
the Board, the sale of SRL is submitted to the Corporation's
shareholders for approval by a majority of the shares present and
voting at the Meeting (not including the shares owned by MIL)
although, under Delaware law, only the affirmative vote of at least a
majority of the total number of shares present and voting at the
annual meeting would be required to adopt this proposal. If the
shareholders do not approve the divestiture proposal, the proposed
transaction will be abandoned.
OTHER MATTERS
The Board is not aware of any matter not referred to in the
enclosed form of proxy that will be presented for action at the
meeting. If any such matter properly comes before the meeting, the
proxies in the accompanying form will be voted with respect thereto in
accordance with the judgement of the person or persons voting such
proxies.
The Corporation's Transfer Agent is to perform certain services
in connection with the solicitation of the proxies, including
tabulation of proxies and personal or telephone inquiries to
shareholders or brokers, banks or other persons acting as custodians.
For these services, the Transfer Agent will receive a fee at its
customary rate and reimbursement of certain out-of-pocket expenses.
Brokers, banks and other persons acting as custodians may be
reimbursed for certain expenses incurred by them in obtaining
instructions from beneficial owners of the Corporation's Common
Shares. In addition to use of the mails, directors and officers of
the Corporation may, without compensation other than their regular
compensation, solicit proxies from shareholders by telephone or in
person. All costs of solicitation will be borne by the Corporation.
SHAREHOLDER PROPOSALS
A proposal by a shareholder intended for inclusion in the
Corporations proxy statement for the 2000 annual meeting must be
received by the Corporation at the address noted immediately above, to
the attention of Ray W. Jenner, Secretary, on or before January 1,
2000, in order to be eligible for such inclusion.
ANNUAL REPORT
The Corporation's 1998 Annual Report to Shareholders, which
includes a copy of the Corporation's Annual Report on Form 10-K for
1998 (including the financial statements and schedules thereto), as
filed with the Securities and Exchange Commission ("1998 Annual
Report") is being delivered concurrently with this Proxy Statement.
Shareholders are urged to review carefully the financial information
contained in the 1998 Annual Report.
Please sign the proxy and return it promptly in the enclosed
envelope to which no postage need be affixed if mailed within the
United States.
Albuquerque, New Mexico
July 26, 1999
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PROXY - NORD RESOURCES CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
SEPTEMBER 8, 1999
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints W. PIERCE CARSON and EDGAR F.
CRUFT and each or any one of them (with powers of substitution),
proxies for the undersigned to vote all shares of Common Stock held of
record on July 22, 1999, of NORD RESOURCES CORPORATION (the
"Corporation") which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Shareholders (the
"Meeting") to be held at the New York Helmsley, 212 E. 42nd Street,
New York, New York 10017 on September 8, 1999, and at any adjournment
thereof, upon the matters set forth in the Notice of and Proxy
Statement for said Meeting, copies of which have been received by the
undersigned, and in their discretion, upon all other matters which may
properly come before said Meeting. Without otherwise limiting the
generality of the foregoing, said proxies are directed to vote as
follows:
__X__ Please mark your votes
as in this example. FOR AGAINST ABSTAIN
1. Election of Directors: _____ _____ _____
For, except vote withheld from the following
nominee(s):_____________________
Nominee(s) : W. Pierce Carson
Edgar F. Cruft
James Askew
Marc Franklin
Terence H. Lang
Leonard Lichter
Francis Waldron
2. Approve the sale of the Corporation's _____ _____ _____
50% ownership interest in the Sierra
Rutile titanium dioxide mine in Sierra
Leone to an affiliate of MIL (INVESTMENTS)
S.A.R.L.
3. In their discretion to act upon such _____ _____ _____
other matters as may properly come
before the Annual Meeting or any
adjournment thereof.
This proxy, when properly executed, will be
voted in the manner directed herein by the
shareholder. If no specification is made,
this proxy will be voted in favor of the
above proposals.
Your proxy is important to assure a quorum at
the Annual Meeting whether or not you plan to
attend the Meeting in person. You may revoke
this proxy at any time, and the giving of it
will not effect your right to attend the
Annual Meeting and vote in person.
<PAGE>
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
SIGNATURE(S)_________________________DATE_______
NOTE: Please sign exactly as name appears. When shares are held as
joint tenants, both should sign. When signing as attorney, 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 and if a partnership, please sign in the
partnership name by authorized person.
EXHIBIT 99
June 21, 1999
Board of Directors
Nord Resources Corporation
201 Third Street, N.W.
Suite 1750
Albuquerque, NM 87102
Dear Sirs:
You have requested our opinion ("Opinion") as to the fairness,
from a financial point of view, to the shareholders (the
"Shareholders") of Nord Resources Corporation (the "Company"),
other than MIL (Investments) S.A. ("MIL"), of the consideration
(the "Consideration") which is proposed to be paid by SRL
Acquisition No. 1 Limited ("Buyer") as designee of MIL
pursuant to the Sale and Purchase Agreement between the Buyer
and the Company (the "Agreement") pursuant to which the Buyer
is to acquire all of the interests of the Company in Nord
Rutile Company and related entities ("NR Company") for (i)
US$1,250,000 in cash; (ii) an assumption of the obligations of
the Company and Nord Rutile Corporation as limited partner and
general partner, respectively, of NR Company; (iii) an
assumption of the obligations of the Company with respect to
the related entities; (iv) the issuance by the Buyer to the
Company of one B Share of the Buyer; (v) MIL surrendering to
the Company for redemption and cancellation all MIL Shares,
representing 7,004,200 shares of common stock of the Company
outstanding; and (vi) the procurement of the release of the
Company of its obligations to the Development Banks (the
"Transaction").
Capitalized terms used herein but not defined herein shall have the
meanings ascribed to such terms in the Agreement.
In formulating our Opinion, we have reviewed, among other things, the
Agreement and the terms and conditions of the Transaction set forth
therein and have (i) reviewed and considered the feasibility study for
the Restart Plan of Sierra Rutile Limited produced by IMC Mackay &
Schnellmann ("IMC") in April 1997 (the "Feasibility Study") which was
provided to us by the Company and SRL; (ii) reviewed and considered a
revised version of the feasibility study prepared by SRL in November
1998 (the "SRL Study"), which was provided to us by SRL; (iii)
reviewed and considered certain financial and operating data,
including financial forecasts, concerning SRL publicly available or
prepared and provided to us by the management of SRL; (iv) held
discussions with the managements of SRL and the Company regarding the
past and current operations and financial condition and prospects of
SRL and the Company, including, without limitation, information
relating to certain strategic, financial and operating benefits
anticipated from the Transaction; and (v) considered such other public
information and factors we deemed appropriate. We have not considered
any benefit other than the Consideration which the Company or the
Buyer may receive pursuant to the Transaction.
Rothschild Inc. N M Rothschild & Sons (Washington) LLC
1251 Avenue of the Americas 1101 Connecticut Avenue NW
New York, New York 10020 Washington, DC 20036
Telephone: (212) 403-3500 Telephone: (202) 862-1660
<PAGE>
Board of Directors
Nord Resources Corporation
June 21, 1999
Page 2
In connection with this review, we have not assumed any obligation
independently to verify any information utilized, reviewed or
considered by us in formulating our Opinion and have relied on it
being accurate and complete in all material aspects. With respect to
the financial forecasts for SRL provided to us by SRL, we have assumed
for purposes of our Opinion that the forecasts have been reasonably
prepared on bases reflecting the best available estimates and
judgments of SRL's management at the time of preparation as to the
future financial performance of SRL. We have also assumed that there
has not occurred any material change in SRL's assets, financial
condition, results of operation, business or prospects since the date
on which SRL's most recent financial projections were made available
to us. We have not assumed responsibility for making an independent
evaluation, appraisal or physical inspection of any assets or
liabilities (contingent or otherwise) of SRL and have been provided
with and relied upon the completeness and accuracy of the Feasibility
Study and the SRL Study made available to us. It is agreed that any
such independent verification of the information provided to us
orally, in writing, or electronically or publicly available is beyond
the scope of our assignment. Our Opinion is based on economic,
monetary and market and other conditions as in effect on, and the
information made available to us as of, the date hereof. Accordingly,
although subsequent developments may affect this Opinion, we have not
assumed any obligations to update, revise or reaffirm this Opinion.
We have further assumed that the Transaction will be consummated
substantially in accordance with the terms and conditions described in
the Agreement without any further amendments thereto and without
waiver of any of the conditions or obligations thereunder.
We have been retained to render this Opinion and are being compensated
therefor. We have received customary compensation for advisory
services rendered to the Company previously.
This Opinion is directed to the Board of Directors of the Company in
its consideration of the fairness of the Transaction and does not
constitute a recommendation to any of the Shareholders as to how any
Shareholder of the Company should vote with respect to the Transaction
at any meeting called to approve the Transaction.
Based upon the foregoing and other factors we deem relevant and in
reliance thereon, it is our Opinion that as of the date hereof the
Consideration to be paid by the Buyer pursuant to the Agreement in
respect of the Transaction is fair, from a financial point of view, to
the Shareholders, other than MIL or any affiliate thereof.
Very truly yours,
N M Rothschild & Sons (Washington) LLC
Rothschild Inc.
