<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1999
Commission file number 0-31986 (82-689)
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GLAMIS GOLD LTD.
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(Exact name of Registrant as specified in its charter)
British Columbia, Canada None.
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(Jurisdiction of incorporation (IRS Employer Identification No.)
or organization)
5190 Neil Road, Suite 310, Reno, Nevada, USA 89502
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(Address of Principal Executive Offices)
Registrant's Telephone Number: (775) 827- 4600
Securities registered or to be registered pursuant to Section 12(b) of the Act.
<TABLE>
<CAPTION>
Name of Each Exchange
Title of Class On Which Registered
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<S> <C>
Common Shares Without Par Value New York Stock Exchange, Inc.
The Toronto Stock Exchange
</TABLE>
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting securities held by non-affiliates of
the registrant (based on the closing sale price of the common shares of $2.00 on
March 24, 2000, as reported by the New York Stock Exchange, Inc.) was $139.9
million.
As of March 24, 2000 the Registrant had 69,962,832 common shares outstanding.
1 of 141
Exhibit Index Appears on Page 79
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DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE COMPANY'S DEFINITIVE PROXY STATEMENT FOR ITS ANNUAL MEETING OF
SHAREHOLDERS ON MAY 3, 2000, WHICH WILL BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION WITHIN 120 DAYS AFTER THE CLOSE OF THE FISCAL YEAR, ARE
INCORPORATED BY REFERENCE IN PART III HEREOF.
CURRENCY
All amounts are expressed in United States dollars unless otherwise noted.
COPIES OF FORM 10-K
A copy of this Form 10-K, including the financial statements and schedules
hereto, can be obtained, without charge, by sending a written request to the
Vice President, Investor Relations, at:
Glamis Gold Ltd.,
5190 Neil Road, Suite 310
Reno, Nevada
USA 89502
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TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY ................................................................. 4
ITEM 1 - BUSINESS - Introduction ......................................... 6
Summary of Business ................................................. 6
Operating Summary ................................................... 8
Summary of Reserves & Other Mineralization .......................... 9
Production Method ................................................... 12
Other Considerations ................................................ 15
Executive Officers of the Company ................................... 21
ITEM 2 - PROPERTIES ...................................................... 22
Other Lands ......................................................... 29
ITEM 3 - LEGAL PROCEEDINGS ............................................... 32
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ............. 32
ITEM 5 - MARKET INFORMATION AND RELATED SHAREHOLDER MATTERS .............. 33
ITEM 6 - SELECTED FINANCIAL INFORMATION .................................. 39
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ................................. 40
Results of Operations for 1999,1998 & 1997 .......................... 41
Liquidity and Capital Resources ..................................... 45
Capital Expenditures ................................................ 46
Environmental, Regulatory, and Other Risk Factors ................... 47
ITEM 7A- QUALITATIVE AND QUANTITATIVE
DISCLOSURES ABOUT MARKET RISK ....................................... 48
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ..................... 50
Index to Financial Statements ....................................... 50
ITEM 9 - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE ............ 78
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY ................ 78
ITEM 11 - EXECUTIVE COMPENSATION ......................................... 79
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT ...................................................... 79
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ................. 79
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K ................................................. 79
</TABLE>
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GLOSSARY
CONTAINED OUNCES: The ounces of metal in reserves obtained by
multiplying tonnage by grade.
CUT-OFF GRADE: The grade below which mineralized material
will be considered waste rather than ore.
DEVELOPMENT: The preparation of a known commercially
mineable deposit for mining.
DORE: A precious metals smelter product in bar or
bullion form that is subsequently refined to
high purity gold and silver.
GEOCHEMICAL SURVEY: The sampling of rocks, stream sediments, and
soils in order to locate anomalous
concentrations of metallic elements or
minerals. The samples are usually assayed by
various methods to determine the quantities
of elements or minerals in each sample.
GEOPHYSICAL SURVEY: The exploration of an area in which physical
properties relating to geology are used.
Geophysical methods include seismic,
magnetic, gravity and induced polarization
techniques.
MINEABLE RESERVES:(1) That portion of the proven and probable
reserves which may be mined and sold at a
profit, taking into account all mining
parameters.
MINERALIZED: Mineral-bearing; the metallic minerals may
have been either a part of the original rock
unit or injected at a later time.
NET SMELTER RETURNS: Gross sales proceeds received from the sale
of production obtained from a property, less
the costs of insurance, smelting, refining
(if applicable) and the cost of
transportation of production from the mine or
mill to the point of sale.
ORE: A metal or mineral or a combination of these
of sufficient value as to quality and
quantity to enable it to be mined at a
profit.
ORE BODY: The portion of a mineralized deposit that can
be economically mined and processed for a
profit.
RESERVES: Proven and Probable Reserves together.
OZ/T: Troy ounces of metal per ton of material. One
oz/t is equivalent to 31.103 grams per ton or
34.286 grams per tonne.
PATENTED MINING CLAIM: A mineral claim which has been surveyed, and
which grants the land within the surveyed
area to the grantee.
PROBABLE RESERVES:(1) The material for which tonnage and grade are
computed partly from specific measurements,
samples or production data, and partly from
projection for a reasonable distance on
geological evidence, and for which the sites
available for inspection, measurement and
sampling are too widely or otherwise
inappropriately spaced to outline the
material completely as to establish its grade
throughout.
PROVEN RESERVES:(1) The material for which tonnage is computed
from dimensions revealed in outcrops or
trenches or underground workings or drill
holes and for which the grade is computed
from the results of adequate sampling, and
for which sites for inspection, sampling and
measurement are so spaced and the geological
character so well defined that the size,
shape and mineral content are established,
for which the computed tonnage and
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grade are judged to be accurate within limits
which shall be stated and for which it shall
be stated whether the tonnage and grade of
proven ore or measured ore are in situ or
extractable, with dilution factors shown, and
reasons for the use of these dilution factors
clearly explained.
RECOVERY RATE: The percentage of metals or minerals which
are recovered from ore during processing.
STRIPPING RATIO: The ratio of waste rock to ore that will be
experienced in mining an ore body.
UNPATENTED LODE MINING CLAIM: A mineral claim located on land owned by the
United States which grants the exclusive
possession of the minerals in place within
the claim area to the recorded owner.
(1) The definitions of mineable, proven and probable reserves are those used
in Canada by provincial securities regulatory authorities and are set
forth in National Policy No. 2A of such regulatory authorities. The
reader should be aware that the definition standards enunciated in
National Policy No. 2A differ in certain respects from those set forth in
SEC Industry Guide 7, which contains the definitions and parameters of
disclosure for issuers engaged in significant mining operations.
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PART I
ITEM 1 - BUSINESS
INTRODUCTION
Glamis Gold Ltd. (the "Company") was incorporated under the laws of the Province
of British Columbia on September 14, 1972 under the name Renniks Resources Ltd.
(N.P.L.). Since incorporation, the Company has undergone several capital
reorganizations and on December 12, 1977 the name of the Company was changed to
Glamis Gold Ltd.
The Company's head and executive offices are located at 5190 Neil Road, Suite
310, Reno, Nevada, USA 89502.
The Company acquired all of the issued and outstanding shares of Mar-West
Resources Ltd. ("Mar-West") on October 19, 1998. Mar-West was a Canadian
corporation engaged in exploration that held mineral properties located
primarily in Central America. Mar-West became a wholly-owned subsidiary of the
Company upon completion of the transaction.
Effective February 26, 1999, the Company completed the acquisition of Rayrock
Resources Inc. ("Rayrock"). This Canadian corporation's primary assets were
three producing gold mines in Nevada and an operating copper mine in Chile.
Rayrock became a wholly-owned subsidiary of the Company upon completion of the
transaction and has since been merged into the Company and therefore no longer
exists.
The Company's operations are conducted through its wholly-owned Nevada
subsidiary Glamis Gold, Inc. and Glamis Gold, Inc.'s wholly-owned subsidiaries:
Chemgold, Inc., a California corporation, Glamis Rand Mining Company, Glamis
Daisy Mining Company, Glamis Dee Mining Company, Glamis Marigold Mining Company,
Glamis Exploration, Inc., and Glamis Imperial Corporation; each Nevada
corporations; its wholly-owned Mexican subsidiary, Minera Glamis Mexico S.A. de
C.V., and Mar-West Resources Ltd.
In this Report, unless the context indicates otherwise, the term the "Company"
refers to the Company together with all of its subsidiaries.
SUMMARY OF BUSINESS
The Company is engaged in exploration, mine development, and the mining and
extraction of precious metals. The primary mining method used is open-pit mining
with heap leaching extraction. The Company initiated heap leaching in California
in 1981 and considers itself a leader in the use of this process. See Item 1,
"Business Operating Summary - Processing," for a description of the heap
leaching process.
The Company produces gold from two mines located in California and three mines
located in Nevada. In March 1999 the Company acquired an operating copper mine
("Mina Ivan") in Chile as part of the acquisition of Rayrock. The interest in
this mine was sold in October 1999. See Item 2 - "Properties" - for a
description of the mines and processing facilities.
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The Company has two other properties in development. The San Martin Project in
Honduras was acquired in 1998 as part of the Mar-West transaction. During 1999
the proven and probable reserves were expanded to over 1.0 million ounces of
contained gold, and a feasibility study was prepared and approved by the Board
of Directors. The project is currently under construction with a planned
start-up in the fourth quarter of 2000. The Company also holds a 100% interest
in a property located in Imperial County, California (the "Imperial Project")
which is currently being permitted for future mining activities. See Item 2 -
"Properties - Other Lands" for a description of these projects.
The Company's approach to the acquisition of mining properties has generally
been to review undeveloped precious metal properties that others have explored
in sufficient detail to demonstrate that the properties have significant
potential gold mineralization or to review companies which own such properties.
In 1998, a strategic plan was adopted to seek out growth opportunities which
take advantage of lower acquisition costs available as a result of the lower
gold price and weak junior share market conditions. To that end, the Company
completed the acquisition of Mar-West, and in early 1999, the acquisition of
Rayrock. Since these transactions, the Company has also been engaged in
early-stage exploration in Nevada and Central America.
Based on the ounces of gold contained in the proven and probable reserves as at
December 31, 1999 on the properties in which the Company has an interest, and
the Company's ownership interests and rights in such properties, the Company
estimates its gold reserves to be approximately 3.74 million contained ounces.
See "Summary of Reserves and Other Mineralization - Proven and Probable Mineable
Reserves"
OTHER INFORMATION
The Company's mining operations are subject to the normal risks of mining, and
its profits are subject to changes in the price of gold, which fluctuates
widely, as well as other numerous factors beyond the Company's control.
The imposition of a gross royalty on all production from federal lands in the
United States, which has been proposed in the past, if enacted, would adversely
affect the profitability of the operations of the Rand, Marigold, Daisy and Dee
mines and the Imperial Project.
The Company's mining operations are subject to health, safety and environmental
legislation and regulations, changes in which could cause additional expenses,
capital expenditures, restrictions and delays in the Company's activities, the
extent of which cannot be predicted. Certain of the Company's properties have
not been surveyed and therefore in accordance with the laws of the jurisdiction
in which the properties are located, their existence and area could be in doubt.
In addition to the United States, the Company now has interests in Mexico,
Honduras, Guatemala, El Salvador and Panama which may be affected by changes in
the political and economic environment in these countries. For a more detailed
description, see "Other Considerations."
SEGMENT INFORMATION
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Information regarding operating segments (producing mines, exploration and
development properties, and corporate) and geographic information (North America
and Latin America) is found in Note 13 of the consolidated financial statements
which form part of this report.
FORWARD-LOOKING STATEMENTS
Safe Harbor Statement under the United States Private Securities Litigation
Reform Act of 1995: Except for the statements of historical fact contained
herein, the information presented constitutes "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements, including but not limited to those with respect to
the price of gold, the timing and amount of estimated future production, costs
of production, capital expenditures, reserve determination, costs and timing of
the development of new deposits, the Company's hedging practices and permitting
time lines, involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the actual results of current exploration activities, conclusions
of economic evaluations, changes in project parameters as plans continue to be
refined, future prices of gold, as well as those factors discussed in the
section entitled "Other Considerations".
.
OPERATING SUMMARY
GOLD PRODUCTION
The following table describes, for the fiscal years ended December 31, 1999,
1998, and 1997, gold production from the Company's mining operations.
<TABLE>
<CAPTION>
GOLD PRODUCTION
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MINE YEAR ENDED DECEMBER 31,
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1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Picacho(1) 6,684 16,275 33,239
Rand(2) 70,978 87,015 94,243
Daisy(3) 28,302 n/a n/a
Dee(3) 31,154 n/a n/a
Marigold (66.7%)(3) 37,942 n/a n/a
Cieneguita Project 834 2,823 1,189
-------- -------- --------
Total Production 175,894 106,113 128,671
======== ======== ========
</TABLE>
(1) 385,974 ounces of gold have been produced from the Picacho Mine since
commencement of production in 1980 to December 31, 1999.
(2) 695,502 ounces of gold have been produced from the Rand Mine since
commencement of production in 1987 to December 31, 1999.
(3) The Company's share of production is for the ownership period only (March
1, 1999 through December 31, 1999).
TOTAL CASH COST OF PRODUCTION PER OUNCE OF GOLD PRODUCED
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The following table describes for the years ended December 31, 1999, 1998, and
1997 the total cash cost of production related to the Company's mining
operations. Total cash cost of production includes mining, processing, direct
mine overhead costs and royalties, and excludes selling, general and
administrative costs at the corporate level, depreciation and depletion and
end-of-mine reclamation accruals.
<TABLE>
<CAPTION>
TOTAL CASH COST OF PRODUCTION PER OUNCE OF GOLD PRODUCED
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MINE YEAR ENDED DECEMBER 31,
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1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Picacho (1) $ 172 $ 147 $ 204
Rand (1) $ 210 $ 228 $ 244
Daisy (2) $ 195 n/a n/a
Dee (2) $ 273 n/a n/a
Marigold (2) $ 218 n/a n/a
------ ------ ------
Average For All Mines $ 219 $ 215 $ 235
====== ====== ======
</TABLE>
(1) In the third quarter 1999 the Company changed its method of calculating
cost of production to conform to the Gold Institute standard. Previous
periods have been restated for consistency. This entailed including
royalties in cash cost of production (previously disclosed separately) and
excluding reclamation accruals.
(2) Costs for Daisy, Dee and Marigold Mines are for the period March 1 -
December 31, 1999 only.
Total cost of production includes the total cash costs of production as defined
above and includes depreciation, depletion and end-of-mine reclamation accruals.
<TABLE>
<CAPTION>
TOTAL COST OF PRODUCTION PER OUNCE OF GOLD PRODUCED
- --------------------------------------------------------------------------------
MINE YEAR ENDED DECEMBER 31,
- --------------------------------------------------------------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Picacho $ 282 $ 243 $ 323
Rand $ 299 $ 317 $ 324
Daisy* $ 312 n/a n/a
Dee* $ 315 n/a n/a
Marigold* $ 268 n/a n/a
------ ------ ------
Average For All Mines $ 297 $ 305 $ 324
====== ====== ======
</TABLE>
* Costs for Daisy, Dee and Marigold Mines are for the period March 1 -
December 31, 1999 only.
SUMMARY OF RESERVES AND OTHER MINERALIZATION
PROVEN AND PROBABLE MINEABLE RESERVES
The following tables describe the Company's proven and probable mineable
reserves as at December 31, 1999, 1998, and 1997. Mineable reserves do not
reflect losses in the heap leaching or milling process, but do include allowance
for dilution of ore in the mining process. Proven and probable mineable reserves
as at December 31, 1999 and 1998 for all properties were calculated based on a
gold price of $300 per ounce. For December 31, 1997 the reserves for the Rand
Mine were calculated based on a gold price of $325 per ounce and for the
Imperial Project on a gold price of $350 per ounce. The ounces of gold which
will actually be recovered from these reserves will depend on actual gold grades
encountered and recovery rates.
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Reference should be made to the Glossary on page [4] for a description of terms
used herein
PROVEN AND PROBABLE MINEABLE RESERVES (1)
<TABLE>
<CAPTION>
AS AT DECEMBER 31, 1999
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TONS PROVEN GOLD GRADE CONTAINED
MINE OR PROJECT & PROBABLE (OZ/T) (AVERAGE) OUNCES OF GOLD
- --------------- ----------- ---------------- --------------
<S> <C> <C> <C>
Rand Mine 25,922,000 0.022 560,600
Dee Mine 1,403,900 0.157 220,815
Marigold Mine (66.7%) 12,727,300 0.032 408,900
San Martin Project 43,289,400 0.025 1,082,900
Imperial Project 88,053,400 0.017 1,468,629
----------- -----------
Combined) 171,396,000 0.022 3,741,844
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
AS AT DECEMBER 31, 1998
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TONS PROVEN GOLD GRADE CONTAINED
MINE OR PROJECT & PROBABLE (OZ/T) (AVERAGE) OUNCES OF GOLD
- --------------- ----------- ---------------- --------------
<S> <C> <C> <C>
Rand Mine 33,373,000 0.021 710,000
San Martin Project 23,039,500 0.029 605,000
Imperial Project 92,449,000 0.016 1,477,000
----------- -----------
Combined(1) 148,861,500 0.019 2,792,000
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
AS AT ENDED DECEMBER 31, 1997
---------------------------------------------------
TONS PROVEN GOLD GRADE CONTAINED
MINE OR PROJECT & PROBABLE (OZ/T) (AVERAGE) OUNCES OF GOLD
- --------------- ----------- ---------------- --------------
<S> <C> <C> <C>
Rand Mine 44,528,000 0.023 938,160
Imperial Project 95,128,200 0.016 1,515,545
----------- -----------
Combined(1) 139,656,200 0.018 2,453,705
=========== =========== ===========
</TABLE>
(1) The proven and probable mineable reserves and contained ounces calculated
therefrom as at December 31, 1999, 1998 and 1997 were determined by the
Company and verified by Mine Reserves Associates, Inc., an entity which is
not affiliated with the Company.
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OTHER MINERALIZATION
In addition to the proven and probable mineable reserves described above, the
Company has delineated certain other mineralization. Other mineralization has
not been included in the proven and probable mineable reserve estimates because
even though enough drilling has been performed to indicate a sufficient amount
and grade to warrant further exploration or development expenditures, these
resources have not been subjected to an economic feasibility analysis and
therefore do not qualify as proven and probable reserves. Accordingly, they are
not yet known to be commercially mineable ore bodies and cannot be considered
such unless and until further drilling and metallurgical work have been
conducted and economic and technical feasibility factors have been examined and
favorably determined. Other mineralization has been calculated solely by the
Company.
OTHER MINERALIZATION
<TABLE>
<CAPTION>
AS AT DECEMBER 31,
1999 1998 1997
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TONS GOLD GRADE TONS GOLD GRADE TONS GOLD GRADE
MINE OR PROJECT (IN MILLIONS) (OZ/T) (IN MILLIONS) (OZ/T) (IN MILLIONS) (OZ/T)
- --------------------- ------------- ---------- ------------- ---------- ------------- ----------
(average) (average) (average)
<S> <C> <C> <C> <C> <C> <C>
Rand Mine 14.28 0.019 15.82 0.017 18.69 0.021
Picacho Mine -- -- -- -- 0.16 0.037
Marigold Mine (66.7%) 6.15 0.027 n/a n/a n/a n/a
Dee Mine 10.10 0.049 n/a n/a n/a n/a
San Martin Project 3.90 0.068 4.03 0.032 n/a n/a
Imperial Project 3.15 0.020 1.97 0.012 12.42 0.016
Cieneguita Project -- -- 3.30 0.048 -- --
------ ------ ------ ------ ------ ------
Totals 37.58 0.033 25.12 0.022 31.12 0.019
====== ====== ====== ====== ====== ======
</TABLE>
EFFECTS OF MINING AND DEVELOPMENT DURING FISCAL 1999
The effects of mining and development at each of the Company's mines and
projects during the period January 1, 1999 to December 31, 1999 are as follows:
RAND MINE - During fiscal 1999, 7,206,700 tons of ore containing
145,602 ounces of gold were mined and placed on the heap leach pads
at the Rand Mine and 70,978 ounces of gold were recovered.
MARIGOLD MINE - During the period March 1, 1999 through December 31,
1999, 2,998,000 tons of ore containing 79,900 ounces of gold were
mined. A 126 drill hole exploration program added 42,000 ounces of
proven and probable reserves.
DEE MINE - During the period March 1, 1999 through December 31, 1999,
526,000 tons of ore containing 41,400 ounces of gold were mined.
Underground reserves increased during the year by a net 29,500 ounces
due to delineation drilling and reclassification of surface mineable
reserves to underground reserves.
IMPERIAL PROJECT - During fiscal 1999, there was no development
drilling. The ounces of contained gold were re-determined at an
estimated 1,465,600 ounces. The average grade of ore for the project
was calculated at 0.017 ounces of gold per ton. The Company is
awaiting decisions on its permit application for the Imperial
Project.
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SAN MARTIN PROJECT - Development drilling added 477,900 contained
ounces of gold to the proven and probable reserves at the San Martin
Project during 1999.
PICACHO MINE - There are no gold reserves remaining at the Picacho
Mine, as mining of the last known ore body was completed in January,
1998.
DAISY MINE - There are no gold reserves remaining at the Daisy Mine,
as mining of the last known ore body was completed in December 1999.
Limited exploration drilling occurred on the neighboring Reward
Project.
EXPLORATION AND DEVELOPMENT EXPENDITURES
The following table lists the amount of expenditures incurred by the Company on
exploration and mine development activities during the years ended December 31,
1999, 1998, and 1997.
EXPLORATION AND DEVELOPMENT EXPENDITURES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
MINE YEAR ENDED DECEMBER 31,
- ----------------------------------- ----------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Rand Mine $ 3,373 $ 946 $ 584
Imperial Project 821 1,184 1,167
San Martin Project 4,649 346 --
Marigold Mine 2,017 -- --
Daisy Mine 435 -- --
Dee Mine 3,703 -- --
Cerro Blanco Project, Guatemala 578 178 --
Panama Projects 626 -- --
Projects in the United States(1) 988 26 340
Other miscellaneous projects(1) 519 8 586
-------- -------- --------
$ 17,709 $ 2,688 $ 2,677
======== ======== ========
</TABLE>
(1) During 1997, the Company wrote off $581,486 on the project in Indonesia and
$308,967 on the Mina prospect in Nevada because they did not meet the
Company's investment criteria.
PRODUCTION METHODS
The Company employs both open pit and underground mining methods at its
operations. Open pit mining is used at all of the Company's mines with the Dee
Mine also employing underground methods.
SURFACE (OPEN PIT) MINING
Open pit mining is accomplished through a series of unit operations that provide
for excavation of the mineral deposit. Typically, mining progresses downward in
horizontal lifts or benches that vary in thickness from 20 to 30 feet as
required by the particular characteristics of the deposit. First, the ground to
be excavated is drilled using large track-mounted blast hole drills. Drill
cuttings are sampled and assayed to determine the areas containing ore-grade
mineralization.
The blast holes are then charged with an explosive - ANFO - which is a blend of
ammonium nitrate and fuel oil. Some conditions require the use of specialty
blasting agents and emulsions.
<PAGE> 13
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Once blasted, the broken material is excavated using wheel loaders or hydraulic
shovels with bucket capacities ranging between 13 and 27 cubic yards. The
material is placed in off-road haul trucks with payloads varying between 85 and
190 tons. Ore is transported to specialized facilities for processing, and
overburden is transported to storage areas pending final placement.
Bulldozers, graders, and water trucks are used to develop and maintain the roads
and accesses needed to support the mining operation. Dust suppression is
accomplished by application of water on haul roads and at the active working
faces. During and following mining activities, reclamation of disturbed areas is
achieved by recontouring and re-vegetation as appropriate for the site.
UNDERGROUND MINING
There are three different methods of underground mining utilized at the Dee
mine, the choice being primarily dependent upon the size of the particular stope
being mined. For small ore bodies, standard longitudinal stoping is used.
Typically, the following steps are followed to remove an ore body.
First, an undercut drift is driven across the bottom of the ore pod in the
longest direction (longitudinal) of the ore body. Second, once the drift is
finished, a crosscut is driven 90 degrees to the drift and is terminated at the
edge of the ore pod. Third, a slot raise is driven vertically from the
intersection of the undercut drift and the crosscut drift to the top of the ore
pod. Fourth, a slot is formed at one end of the ore pod, and finally, longhole
rings are drilled and blasted, producing a series of slices parallel to the
first slot, allowing all ore in the pod to be mined.
For larger ore bodies, a slightly different approach is used, referred to as
transverse stoping. First, an undercut drift is driven along the bottom of the
ore pod, but along one edge, rather than down the center. This drift is referred
to as the lateral access drift. Second, at intervals along the lateral access
drift, a series of primary undercuts 90 degrees to the access drift are driven
across the ore body. Third, these drifts are widened to the appropriate width
and form the base of the primary vertical stopes which are mined out using
vertical longhole drilling and blasting. Pillars are left between the primary
stopes. When these primary stopes are mined out, they are backfilled with
cemented fill, and the pillars, now secondary stopes, are mined.
For flat-lying ore pods, a third method called Drift/Slash & Bench Stoping is
used. It consists of first driving a topcut drift along the long section of the
ore pod, then slashing to widen the topcut drift until the entire top of the ore
pod is mined out, and finally, benching down to the next level (usually 10- to
20 feet) and again slashing to width.
Modification to these methods is used for irregular shapes or extremely large
ore pods, but modification utilizes the same basic elements of driving drifts
along the length of the ore body and driving raises and/or crosscuts to form the
initial slot.
PROCESSING
HEAP LEACHING
The Company primarily uses the heap leach method to extract gold from low-grade
ores. This
<PAGE> 14
-14-
process involves piling relatively coarse ore on an impervious membrane and
allowing a dissolving fluid (a weak cyanide solution in the case of gold
recovery) to seep down through the pile. The valuable metals are contained in
the leaching solution that drains from the bottom of the pile and is
subsequently collected on carbon and then recovered by electrolysis and
smelting.
Many aspects of ores have a large influence on the leachability or recovery of
the contained precious metals. For example, the presence of certain clays may
hinder the movement of solutions through the pile and lack of fractures or
porosity in the ore may shield the contained metals from the leaching solution,
making them largely unrecoverable. The best leaching ores are those that are
fractured, oxidized, and free of chemicals that consume the cyanide.
Because of the nature of the ore at the Company's operating mines, crushing of
low-grade ores is not currently needed. As a result, the ore is taken from the
pits and unloaded directly from trucks onto leach piles. Alkalinity of the ore
is controlled by adding modifying reagents. The modifying reagents are used to
increase the alkalinity of the ore, because the weak cyanide leaching solution
used in the process is unstable in anything but an alkaline environment.
Sprinklers or drippers are placed on top of the leach pile and the leaching
solution is applied.
Drain pipes which collect the leaching solution are buried at the base of the
heap. The drainage system is usually segmented to allow parts of the piles to be
leached independently. Each segment also contains a leak detection system so
that if a leak in the liner occurs, the area of the leak can be isolated. Ore is
piled in successive layers on the leach pad. When one layer of the pile has been
adequately leached, another layer of ore is placed on top and the leaching
process continues.
The gold-bearing solutions drain from the leach pile and are collected in a
pregnant solution pond. From there, the solution is pumped through columns of
granular, activated carbon and a gold-oxygen-cyanide complex is captured in the
carbon pores. The leaching solution is then returned to the heap and utilized
for further leaching. The carbon is removed and treated with a hot caustic or
caustic-cyanide solution that releases the gold complex from the carbon. The
solution is then passed through an electrowinning circuit where the gold is
deposited on steel wool batts. The batts are removed and broken down into a
sludge. The sludge, or the steel wool plus gold, is smelted in a crucible and
poured into a mold, forming a dore bar. The dore bars are sent to a refiner for
further processing.
MILLING
The Dee gold mine employs a 1,200 ton per day milling process to recover gold
from higher grade ores that cannot be effectively processed by heap leaching.
Ore is first crushed in a two stage system that produces a coarse gravel sized
product. This material is then subjected to two milling stages using ball mills
and a rod mill which grind the ore into a slurry paste.
The slurry is pumped to agitation tanks where it is leached in the presence of
cyanide and granular carbon. Gold and silver contained in the slurry are
dissolved by the cyanide and adsorbed onto the carbon. The carbon is separated
from the slurry using screens. The loaded carbon is then further treated for the
removal of precious metals in the same manner as used in the heap leaching
process.
<PAGE> 15
-15-
The barren slurry (or tailings) is pumped to a lined tailings impoundment where
remaining water is recycled to the mining process. At mine closing the tailings
impoundment will be reclaimed.
OTHER CONSIDERATIONS
GOLD SALES
The dore produced by the Rand, Marigold, Daisy, and Dee mines and gold
precipitates produced at the Picacho Mine are further refined by third parties
before being sold as bullion (99.99% pure gold). The gold bullion is either sold
at the spot price for delivery two days later or delivered against an existing
forward sales or option contract to one of various precious metal merchants for
delivery to the London, U.K. market. For more information on our hedging program
see Item 7 - "Management's Discussion and Analysis of Financial Conditions and
Results of Operations - Hedging" and Item 7A - "Qualitative and Quantitative
Disclosures About Market Risk".
The Company's profitability is strongly influenced by the price of gold which
fluctuates widely and is affected by a number of factors outside of the
Company's control, including expectations for inflation, levels of interest
rates, demand for gold, producer supply, Central Bank gold sales policies,
global or regional political and economic conditions and production expectations
in major gold producing regions. The average London Bullion Market price for
1999 was $279 per ounce as compared to $294 in 1998 and $331 in 1997. The
following table sets forth for the calendar years indicated the annual high and
low gold prices per troy ounce on the London Bullion Market.
<TABLE>
<CAPTION>
CALENDAR YEAR LONDON BULLION MARKET
----------------- ------------------------
HIGH LOW
-------- --------
<S> <C> <C>
1999 $ 326.25 $ 252.80
1998 312.90 273.40
1997 366.55 283.00
1996 414.80 367.40
1995 396.95 372.40
1994 396.25 369.65
1993 406.60 325.20
1992 359.60 330.35
1991 403.70 343.50
</TABLE>
The London final price for gold on December 30, 1999 was $290.25 per ounce and
on March 24, 2000 the London final fixing price was $284.85 per ounce.
ENVIRONMENTAL AND REGULATORY FACTORS
The United States mining operations of the Company are subject to extensive
federal, state and local laws and regulations governing exploration development
and production. In addition such mining operations are subject to inspection and
regulation by the Mining, Safety and Health Administration of the Department of
Labor under provisions of the Federal Mine Safety and Health Act of 1977, which
is designed to ensure operational safety and employee health and safety. The
United States government also regulates the environmental impact of the mining
industry through the Clean Air Act, the Clean Water Act, the Toxic Substances
Control Act, the Resource Conservation and Recovery Act of 1976 and the Federal
Land Policy and Management Act of 1976. In addition to imposing air quality
standards and other pollution controls, the most significant provisions of the
above legislation deal with mineral land reclamation and waste discharges from
mines, mills and further processing operations. The Company is also subject to
<PAGE> 16
-16-
extensive health and safety regulations at the state level, as well as state
legislation and regulation with respect to the environmental impact of its
mining operations in California and Nevada..
Compliance with such laws and regulations has increased the costs of planning,
designing, drilling, developing, constructing, operating and closing mining
operations. It is possible that the costs and delays associated with compliance
with such laws and regulations could become such that the Company would not
proceed with the development of a project or continue to operate a mine.
Standard heap leaching techniques have been designed to comply with reclamation
requirements imposed by regulatory authorities. Such authorities generally
require a mining company to return sites to safely-contoured slopes, but usually
do not require backfilling of excavated areas. The Company generally is required
to mitigate long-term environmental impacts by stabilizing, contouring,
reshaping and re-vegetating various portions of a site once mining and
processing are completed. Reclamation efforts are conducted in accordance with
detailed plans, which have been reviewed and approved by the appropriate
regulatory agencies. Whenever feasible, reclamation is conducted concurrently
with mining.
Heap leaching is done with a weak cyanide solution held within a closed circuit,
which includes the leach pads and surface holding ponds. Due to the impervious
qualities of the heap leach pad and the closed nature of the leaching system,
the Company believes that its processing operations will not have a materially
adverse effect on the environment.
The Dee and Marigold Mines have tailings impoundments associated with milling
facilities. The Marigold mill has been closed since early 1999. The #2 tailings
impoundment at Dee, and the Cell A tailings impoundment at Marigold have known
leakage as detected by monitoring wells. Remediation efforts as approved by the
Nevada Department of Environmental Protection are underway, with no additional
measures anticipated to be needed in the future.
Though the Company believes that its mining operations are in compliance with
all present health, safety and environmental rules and regulations, there is
always some uncertainty associated with such due to the complexity and
application of such rules and regulations. The Company does not anticipate that
compliance with existing environmental laws and regulations will have a material
impact on its earnings in the foreseeable future however, possible future
health, safety and environmental legislation, regulations and actions could
cause additional expense, capital expenditures, restrictions and delays in the
activities of the Company, the extent of which cannot be predicted.
During the years ended December 31, 1999, 1998 and 1997, the Company made no
material capital expenditures with respect to environmental compliance except as
required by permits for construction at its mining operations and for
reclamation being carried out concurrently with mining operations. During the
year ended December 31, 1999 the Company had 13 small reportable releases or
spills (hydraulic oil and process solutions) at its operations. In all cases the
appropriate authorities were notified and clean-up was undertaken immediately.
Measures, including procedural changes and education were taken to prevent
re-occurrence of the incidents. No further action is expected with respect to
any of the occurrences.
The Company's unpatented mining claims on federal lands are currently subject to
procedures established by the U.S. General Mining Law of 1872. In the past,
legislation has been introduced
<PAGE> 17
-17-
before the U.S. Congress to make significant revisions to the U.S. Mining Laws
including strict new environmental protection standards and conditions,
additional reclamation requirements and extensive new procedural steps which
would likely result in delays in permitting and which could have a material
adverse effect on the Company's ability to develop minerals on federal lands.
The proposed revisions would also impose royalties on gold production from
unpatented mining claims. Although legislation has not been enacted, attempts to
amend these laws can be expected to continue. The extent of the changes that
actually will be enacted and their potential impact on the Company cannot be
predicted. See Item 7 -"Management's Discussion and Analysis of Financial
Condition and Results of Operations - Environmental, Regulatory and Other Risk
Factors".
CALCULATION OF RESERVES
There are numerous uncertainties inherent in estimating proven and probable
mineable reserves including many factors beyond the control of the Company. The
estimation of reserves is in part a subjective process and the accuracy of any
reserve estimate is a function of the quality of available data and of
engineering, metallurgical and geological interpretation and judgment. Results
of drilling, testing and production subsequent to the date of an estimate may
justify revision of such estimates. Assumptions about prices are subject to
great uncertainty and prices of gold and silver have fluctuated widely in recent
years. Should the Company determine that there has been a significant reduction
in reserves in the future, material write-downs of the Company's investment in
mining properties and/or increased amortization charges may be required.
INSURANCE AND MINING RISKS
Mining operations are generally subject to a number of risks and hazards,
including environmental hazards, industrial accidents, labor disputes,
encountering unusual or unexpected geologic conditions, slope failures,
instability in underground openings, changes in the regulatory environment and
natural phenomena such as inclement weather conditions, floods, blizzards,
earthquakes and rock slides.
The open-pit mining operations which the Company carries out are generally
subject to such risks, with the primary risk being slope failure. The Company
has not experienced any slope failure that has materially and adversely affected
its open-pit mines. However, no assurance can be given that such will not occur.
A major slope failure could materially reduce production from the affected area
for some time, although for large open-pits, because mining is done in phases
whereby pit walls are pushed back to final pit boundaries, a slope failure in
one area would not necessarily affect mining in another area or overall pit
design.
The underground mining operations of the Company are subject to many of the
aforementioned risks, the most significant of which is potential instability of
underground openings. Failure of the ground or support mechanisms could occur
that would halt further development of stoping operations. Depending on the
specifics of a ground failure, operations could be impacted for a material
length of time.
The Company carries insurance against property damage, including boiler and
machinery insurance, and also comprehensive general liability insurance,
including special liability policies, applicable to motor vehicles. It is also
insured against dishonesty, gold and silver bullion thefts, as well as losses of
goods in transit. The property damage and boiler and machinery insurance
policies include coverage for business interruption, resulting from an insured
loss, subject to a two-day waiting period and a maximum indemnification period
of one year. See Item 2 - "Properties" and "Title
<PAGE> 18
-18-
Matters" below for information pertaining to title insurance held on certain of
the Company's mining properties.
The Company's insurance coverage specifically excludes environmental pollution
risks. The Company believes that it has taken adequate precautions to minimize
the risk of environmental pollution, however, there is some risk that the weak
cyanide solution applied to heaps may leak into the adjacent land surface which
could result in the Company's operations for the affected heap leach pad being
shut down. See also "Other Considerations - Regulatory and Environmental
Factors" and Item 7 -"Management Discussion and Analysis of Financial Condition
and Results of Operations - Environmental, Regulatory, and Other Risk Factors."
TITLE MATTERS
Title to mining properties in the western United States involves certain
inherent risks due to the impossibility of conclusively determining the validity
of unpatented claims from real estate records, as well as the potential for
problems arising from the frequently ambiguous conveyancing history
characteristic of many mining properties. Although the Company believes it
conducted reasonable investigations (in accordance with standard mining industry
practice) of the validity of ownership of and the ability of its sellers to
transfer mining claims and other interests to it, there can be no assurance that
it holds good and marketable title to all of its U.S. properties. The Company
has conducted limited reviews of title and obtained representations regarding
ownership from sellers. The Company's practice is, if possible, to obtain title
insurance with respect to its major producing properties. This insurance,
however, is not sufficient to cover loss of investment or future profits. In
addition, certain of the Company's properties have not been surveyed and
therefore in accordance with the laws of the jurisdiction in which the
properties are located, their existence and area could be in doubt. These
uncertainties could result in legal challenges to the Company's ownership of its
operating, development or exploration properties which, if successful, could
have a material adverse effect on the Company's business, operations and
prospects.
In Honduras, site of the San Martin project, all mineral resources are owned by
the state. Title to minerals can be held separately from title to the surface.
Rights to explore for and to extract minerals are granted by the state through
issuance of mining concessions. The Company has received its mining concessions
for the San Martin project. The term of these concessions is indefinite, to
remain in force as long as the Company meets its legal obligations. The Company
has also acquired surface rights from private owners in the mining and
processing areas at the San Martin site. However, there are few surveys and many
of the tracts of land have no written title documents. Accordingly, there is a
risk that the Company may not own good and marketable title to the lands
necessary to conduct operations at the San Martin site.
In Guatemala, where the Company is drilling the Cerro Blanco Project, mining
rights are also held by the state and are separate from surface rights. There
are two distinct options for obtaining exploration rights and one for obtaining
mining rights. Reconnaissance licenses are granted for a period of one year and
are not renewable. The holder has the exclusive right to apply for exploration
and/or exploitation concessions at the termination of the twelve-month period.
Exploration concessions are granted for three years but may be extended for a
further four years upon application. Exploitation concessions are granted for a
period of twenty-five years. The failure to obtain appropriate concessions on a
timely basis could have a material adverse effect on the Company's exploration
or development activities.
<PAGE> 19
-19-
PERMITTING
The Company is seeking governmental permits for certain of its development and
mining projects. Obtaining such permits is a complex and time consuming process
involving numerous federal, state and local agencies. The time involved and
success in obtaining such permits is contingent upon many variables not within
the Company's control. The failure to obtain such permits could have a material
adverse effect on the Company's business, operations and prospects.
SUPPLIES, UTILITIES AND TRANSPORTATION
The principal supplies needed for the operation of the Company's mines are
explosives, diesel fuel, chemical reagents (including cyanide, lime and sodium
hydroxide), equipment parts and lubricants.
Power is supplied to the Company's mines by power companies or diesel
generators. Each mine has access to adequate water. Each of the Company's mines
has good road access by either paved or gravel roads from state highways. All
supplies are subject to market price changes. Further, there can be no assurance
that the Company will continue to be able to obtain necessary supplies or power
supplied by third parties, and the failure of such supplies or increases in the
costs therefore could have a material adverse effect on the Company's business,
operations, and prospects.
COMPETITION
The Company competes with other mining companies for the acquisition of mining
claims and leases. There is significant and increasing competition for a limited
number of gold acquisition opportunities both within the United States and
worldwide. As a result of this competition, the Company may be unable to acquire
attractive gold mining properties on terms acceptable to it.
FOREIGN POLITICAL AND ECONOMIC CONDITIONS
The Company has active mining and property interests in Mexico, Honduras,
Guatemala, El Salvador and Panama. Accordingly, the Company's operations may be
affected by any political or economic instability that arises in these
countries. The risks include, but are not limited to: terrorism, military
repression, expropriation, extreme fluctuations in currency exchange rates and
high rates of inflation. Also, changes in mining or investment policies or
shifts in political attitude may adversely affect the Company's business in such
country. In addition, the Company's operations can be affected in varying
degrees by government regulations with respect to production, price controls,
export controls, income taxes, expropriation of property, maintenance of mining
claims and concessions, environmental legislation, land use policies, land
claims of local people and water use and mine safety. The effect of these
factors on the Company's operations cannot be predicted.
LEASE COMMITMENTS
The Company leases its corporate offices at 5190 Neil Road in Reno, Nevada. The
current lease is for approximately 13,000 square feet at an annual base rent of
$272,000, subject to annual increases, expiring June 30, 2004.
EMPLOYEES
<PAGE> 20
-20-
At December 31, 1999, the Company employed approximately 275 persons located as
follows:
<TABLE>
<CAPTION>
LOCATION NUMBER
- ------------------------------------------- ------
<S> <C>
Imperial Project 2
Picacho Mine 8
Rand Mine 96
Daisy Mine 8
Dee Mine 47
Marigold Mine 88
San Martin Project, Exploration & Corporate 26
------
275
======
</TABLE>
During 1999, several restructuring activities closed the Mar-West office in
Vancouver and the Rayrock offices in Toronto, Reno (exploration) and Valmy,
Nevada, and consolidated these functions in the Company's Reno office.
All mines are non-union. The Rand Mine was unionized until June 1997 when the
International Longshoremen's & Warehousemen's Union (Local 30) was decertified.
The Company competes with other mining companies in connection with the
recruitment and retention of qualified employees. At the present time a
sufficient supply of qualified workers is available for operations at each of
the Company's mines. The continuation of such supply depends upon a number of
factors, including, principally, the demand occasioned by other projects. There
can be no assurance that the Company will continue to be able to attract
qualified employees. There is a risk that increased labor costs could have a
materially adverse effect on its operating costs.
EXECUTIVE OFFICERS OF THE COMPANY
The following sets forth the executive officers of the Company as of March 1,
2000.
<TABLE>
<CAPTION>
Name Age Position and Term Served
- ---- --- ------------------------
<S> <C> <C>
A. Dan Rovig 61 Chairman of the Board since November 1998;
President and Chief Executive Officer
November 1989 to August 1997. Mr. Rovig
served as a consultant to the Company
1997-1998 before being appointed Chairman
of the Board.
C. Kevin McArthur 45 President and Chief Executive Officer of
the Company since January 1998; Chief
Operating Officer July 1997 to December
1997; President of Rand Mining Co. December
1995 to July 1997; Vice-President of
Chemgold, Inc., October 1990 to December
1995.
Charles A. Jeannes 41 Senior Vice-President Administration,
General Counsel and Secretary of the
Company since April 1999; Vice President
and General Counsel at Placer Dome North
America, August 1997 to April 1999; Vice
President, General Counsel and Corporate
</TABLE>
<PAGE> 21
-21-
<TABLE>
<S> <C> <C>
Secretary at Placer Dome U.S. Inc.,
November 1995 to August 1997.
James S. Voorhees 46 Vice President and Chief Operating Officer
of the Company since June 1999; Director of
Project Management, Newmont Mining Company,
August 1997 to May 1999; General Manager,
Twin Creeks Mine, Newmont Mining Company,
February 1997 to July 1997; General
Manager, Mesquite Gold Mine, Santa Fe
Pacific Minerals, January 1995 to January
1997.
Steven L. Baumann 41 Vice President, Latin America Operations
since January 1999; Vice President, General
Manager, Chemgold, Inc., August 1997 to
December 1999; General Manager, Chemgold,
Inc., December 1995 to August 1997; Mine
Operations Manager, Chemgold, Inc., April
1994 to December 1995.
David L Hyatt 56 Vice President, Investor Relations since
March 2000; Vice President, Nevada
Operations April 1999 to March 2000; Vice
President, General Manager Glamis Rand
Mining Co., August 1997 to April 1999;
Production Manager, Glamis Rand Mining Co.
November 1996 to August 1997; Mine Manager,
McLaughlin Mine, Homestake Mining Company,
March 1987 to August 1996.
Cheryl S. Maher 49 Vice President Finance, Chief Financial
Officer and Treasurer since March 2000;
Treasurer, September 1999 to present,
Assistant Treasurer, April 1999 to
September 1999; Consultant and practicing
C.P.A., January 1998 to February 1999;
Consultant, Vice President Finance and
Controller, ConSil Corp., August 1996 to
December 1997; consultant and practicing
C.P.A., December 1992 to July 1996.
</TABLE>
ITEM 2 - PROPERTIES
CHEMGOLD, INC. (PICACHO MINE, CALIFORNIA)
PROPERTY
Chemgold, Inc. ("Chemgold"), a wholly-owned subsidiary of Glamis Gold, Inc.,
holds a leasehold interest (the "Picacho Lease") in 31 contiguous patented
mining claims (approximately 600 acres) and 75 unpatented lode mining claims
(approximately 1,150 acres) located in Imperial County, California,
approximately 18 miles northwest of Yuma, Arizona. Access to the property is by
gravel road from Yuma. The Picacho Lease is between Chemgold and Picacho
Development Corp., a California company. The Picacho Lease had a term of 20
years from September 24, 1979 and contained a right of renewal for a further 20
years. The lease expired in September 1999 and the terms are currently being
renegotiated.
RECLAMATION ACTIVITIES
Proven and probable mineable reserves for the Picacho Mine were exhausted in
January 1998, when mining of the last known ore body at the Picacho Mine was
completed, on target with life-of-mine projections. Four completely processed
ore heaps have been leached out and neutralized to California State requirements
and reclamation of these sites has been completed. It is expected that leaching
of the fifth ore heap located on the property will be completed during 2000
after which all
<PAGE> 22
-22-
operations, other than reclamation, at the Picacho Mine will be terminated.
Reclamation is expected to be completed by the year 2002, with continued
re-vegetation monitoring thereafter.
PRODUCTION
Certain key operating statistics for the Picacho Mine are set forth in the
following table:
PICACHO MINE PRODUCTION RESULTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Ore mined (tons) -nil- 73,100 1,140,200
Waste mined (tons) -nil- 14,200 506,800
Stripping ratio n/a 0.19:1 1.21:1
Average gold assay (ounces/ton) n/a 0.035 0.044
Ounces of gold produced 6,684 16,275 33,239
Total cash cost of production per ounce $ 172 $ 147 $ 204
</TABLE>
GLAMIS RAND MINING COMPANY
PROPERTY
Glamis Rand Mining Company ("Rand") is a wholly-owned subsidiary of Glamis Gold
Inc. and operates the Rand Mine located in Kern County, California,
approximately 100 miles northeast of Los Angeles.
The property consists of 135 patented mining claims and 537 unpatented claims
covering approximately 13.8 square miles. Rand owns all or a portion of 42 of
the patented and 390 of the unpatented claims. The balance is held under lease.
Royalty rates are 6% of net smelter returns on production from properties leased
from Yellow Aster Mining and Milling Company, with a minimum payment of $4,000
per month. Other leases have advance minimum royalties as well as net smelter
return royalties. These have no significant minimum required payments, and the
royalties average 1.5%. Royalty expense at Rand during 1999 amounted to
$960,849.
The Rand Mine is an open-pit heap-leach operation. Mining has occurred on three
areas within the property; the Yellow Aster Pit, the Lamont Pit, and the Baltic
Pit. Mining has been completed in the Baltic Pit. The primary source of all
remaining ore is the Yellow Aster Pit and a minor amount of ore is expected to
come from the Lamont pit in the final year of mining.
OPERATIONS
Mining at the Rand Mine utilizes 27 cubic yard hydraulic shovels and 190 ton
haulage trucks. The fleet of five trucks and two shovels mined 12,870,300 tons
of waste and 7,206,700 tons of ore in 1999. The average grade of ore was 0.020
ounces per ton resulting in 145,602 ounces of gold being stacked on the heap.
Rand produced 70,978 ounces during 1999.
There are five heap leach pads within the property, two of which are still
active, the Rand and the Baltic heaps. The other three have been or are in the
process of being rinsed and/or reclaimed. Although the Baltic heap has room for
an additional 3,800,000 tons of ore, planned operations call for the Rand heap
to receive the bulk of all remaining ore over the remaining mine life.
<PAGE> 23
-23-
PERMITTING
All environmental regulatory permits, licenses and authorizations required to
carry out planned operations at the Rand Mine and to process the proven and
probable ore reserves have been obtained and are in good standing.
EXPLORATION
Exploration activities during 1999 consisted of trenching in lands to the south
of the mine. Additional trench work and limited reverse circulation drilling
will be completed in 2000.
PRODUCTION
Certain key operating statistics for the Rand Mine are set forth in the
following table:
RAND MINE PRODUCTION RESULTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Ore mined (tons) 7,206,700 7,992,700 7,102,700
Waste mined (tons) 12,870,300 9,569,500 13,583,500
Stripping ratio 1.79:1 1.20:1 1.91:1
Average gold assay (ounces/ton) 0.020 0.017 0.019
Ounces of gold produced 70,978 87,015 94,243
Total cash cost of production per ounce $ 210 $ 228 $ 244
</TABLE>
GLAMIS DAISY MINING COMPANY
The Glamis Daisy Mining Company ("Daisy") is a 100%-owned subsidiary of Glamis
Gold, Ltd. The Daisy Mine was acquired through the Rayrock acquisition in 1999.
PROPERTY
The Daisy Mine is an open-pit heap-leach operation. The Daisy property is
located in Nye County, Nevada, approximately six miles southeast of Beatty. The
property package consists of unpatented mining claims covering 13.7 square
miles. Most of the claims are subject to gross royalties ranging from 1% to 2%
of net smelter returns per annum. Royalties paid during the period from March 1
to December 31, 1999 totaled $233,583.
Three of the known mineralized zones have been mined: West Zone, Mother Lode and
Secret Pass. Mining in the Secret Pass Zone was completed in December 1999, and
mining in the Mother Lode and West Zone were completed prior to that. All mining
in 1999 was completed utilizing a contractor.
The Reward Project, which covers about 1.6 square miles and is located about six
miles southwest of Daisy, was acquired from Barrick Bullfrog Inc., a subsidiary
of Barrick Gold Corporation, in February 1998. Permits to mine Reward have been
received and development of this property could commence with an improvement in
the price of gold
<PAGE> 24
-24-
OPERATIONS
During 1999, Daisy produced 28,302 ounces for the Company's account during the
period March 1 to December 31, 1999.
A contractor conducted the mining operations with Daisy employees supervising
the mining and operating the heap leaching and the carbon column gold adsorption
plant. Loaded carbon is transported to the Marigold mine, where gold is removed
from the carbon and refined into dore for sale. Pending a decision on the Reward
project, mining at the property will remain in a temporary suspension mode, with
leaching and rinsing of the heaps being the primary activities taking place.
Reclamation of the waste stockpiles will also occur during this time.
EXPLORATION
Very little exploration took place in 1999 at Daisy. Thirty eight holes were
completed at the Reward Project and adjacent lands in 1999.
DAISY MINE PRODUCTION RESULTS
<TABLE>
<CAPTION>
MARCH 1 -
DECEMBER 31, 1999
-----------------
<S> <C>
Ore mined (tons) 1,884,321
Waste mined (tons) 1,237,200
Stripping ratio 0.66:1
Average gold assay (ounces/ton) 0.023
Ounces of gold produced 28,302
Total cash cost of production per ounce $ 195
</TABLE>
GLAMIS DEE MINING COMPANY
The Glamis Dee Mining Company ("Dee") is a 100%-owned subsidiary of Glamis Gold,
Ltd. The Dee Mine was acquired in March 1999 as part of the acquisition of
Rayrock.
PROPERTY
The Dee property, located in Elko County, Nevada, consists of 6.3 square miles
of unpatented mining claims along the Carlin Trend in northeastern Nevada. The
property lies immediately south of Meridian's Rossi property and immediately
northwest of Newmont's Bootstrap property.
Pursuant to the terms of a lease agreement with respect to unpatented claims on
4.5 square miles of the property, Dee pays gross royalties ranging from 4% to 6%
of net smelter returns, with a minimum, semi-annual royalty payment of $100,000.
Royalty payments amounted to $587,000 in 1999.
GLAMIS-BARRICK AGREEMENT
The Glamis-Barrick Agreement, originally entered into as the Dee-Barrick
Agreement, was signed in 1997. The agreement allows Barrick to earn a 60%
interest in the Dee property (outside of an excluded area in which the current
Dee operations are being conducted) by spending $4 million by October 10, 2000
and a total of $6.5 million by October 10, 2004. Barrick
<PAGE> 25
-25-
also pays Dee an annual fee of $275,000 while this agreement is in place. Dee is
free to exploit any and all ore reserves within the exclusion area.
OPERATIONS
Prior to 1999, the Dee Mine had been an open pit mine using an oxide mill with
heap leach facilities for a small portion of the ore mined. Rayrock had planned
to mine the deeper ore beneath the Dee pit using underground mining methods.
Following the acquisition of Rayrock in March of 1999, a plan was approved by
the Company to proceed with the underground mining of the remaining deep
reserves, while continuing the operation of a smaller open pit fleet to complete
mining of two small open pit areas.
In April 1999, a contract was awarded to American Mine Services of Boulder
Colorado to develop and mine the Dee north underground ore body. On November 1,
1999 this contract was terminated and another contractor, Small Mine Development
of Boise, Idaho, was hired to continue mining and developing the underground
mine.
In preparation for the mining of higher-grade underground ore, the oxide mill
was significantly modified. These modifications were initiated by Rayrock, and
were completed in late 1999 by the Company. Total capital expenditures for these
modifications were $340,000. The total capital development cost for the
underground mine itself in 1999 was approximately $4.6 million.
During calendar year 1999, the Dee mill processed 433,491 tons of mill ore and
an additional 171,174 tons of low-grade ore were placed on heap leach pads to
produce a total of 38,332 ounces of gold. From March 1 to December 31, 1999,
31,154 ounces were produced for the Company's account. Of the 433,491 tons of
ore processed in 1999, 49,687 tons came from development of the underground
mine.
A significant portion of the open pit mining activity is directed at completing
reclamation work at the property. Much of the overburden is suitable for cover
material on the closed leach pads and is utilized as such; part is being used to
raise the tailings lift of the #1 tailings dam.
PERMITTING
All environmental regulatory permits, licenses and authorizations required to
carry out planned operations at the Dee Mine and to process the proven and
probable ore reserves have been obtained and are in good standing.
EXPLORATION
Exploration outside of the exclusion area is conducted by Barrick as part of
their earn-in. Within the exclusion area, exploration has been limited to
development drilling for the underground mine.
<PAGE> 26
-26-
DEE MINE PRODUCTION RESULTS
<TABLE>
<CAPTION>
MARCH 1 -
DECEMBER 31, 1999
-----------------
<S> <C>
Leach ore mined & stacked (tons) 136,000
Ore milled 362,500
Waste mined 2,635,400
Stripping ratio 5.7:1
Ave. gold assay - leach (oz/ton) 0.022
Ave. gold assay - mill (oz/ton) 0.10
Ounces of gold produced 31,154
Total cash cost of production per ounce $ 273
</TABLE>
GLAMIS MARIGOLD MINING COMPANY
Glamis Marigold Mining Company ("Marigold") owns the Company's 66 2/3% interest
in the Marigold Mine, which was acquired through the acquisition of Rayrock in
March, 1999. The Company is the operating partner; Homestake Mining Company
holds the remaining 33 1/3 % interest.
PROPERTY
The mine is located in Humboldt County, 40 miles southeast of Winnemucca, Nevada
at the north end of the Battle Mountain-Eureka Trend that extends through
central Nevada. Located five miles south of Valmy, Nevada, the property consists
of 28.9 square miles, including 13 square miles of leased patented land. The
remaining 15.9 square miles are unpatented mining claims, 6.1 square miles of
which are not subject to royalties.
Royalty rates on leased land range from 3% to 5% of net smelter returns, with
rates rising to 7% or 8% on certain parcels depending on the price of gold. The
rate for the remaining life of mine is anticipated to average approximately
6.5%. Total royalty payments in 1999 were $1,455,232.
OPERATIONS
The Marigold Mine produced 54,377 ounces of gold (100%) during the portion of
1999 that the Company was the owner, at a total cash cost of production of $218
per ounce. For the full calendar year 1999, the mine produced 74,220 ounces of
gold compared to the prior year's production of 71,936 ounces. Production came
from both mill operations and run-of-mine heap leach operations. In 1999 the
mill produced 15,850 ounces and the remaining 58,370 ounces came from heap leach
production. The prior year's ounces were split at 27,818 ounces from the mill
and 44,118 ounces from the heap leach.
The oxide mill operated during the winter months of 1998-1999 and was shut down
in March 1999. After the Company acquired the Marigold Mine, it was determined
that operation of the mill was not economical until adequate mill feed becomes
available to have the mill processing continuously. The mill production was
therefore suspended, and it will remain idle until higher-grade ore zones are
encountered in the pit. The Company believes this may occur in late 2001, at
which time the economics of operating the mill will be re-addressed.
With the suspension of production from the mill, the Marigold Mine became a 100%
run-of-mine heap leach operation. During 1999, essentially all of the production
for the Company's account came from the operation of the heap leach pads.
<PAGE> 27
-27-
The mining fleet at Marigold consists of three 992 front-end loaders, nine 85 to
100 ton haul trucks and miscellaneous ancillary equipment. Ore production came
primarily from East Hill South, East Hill North, Top Zone Stage I, Old Marigold
and East Hill South Stage 2 pits. For 1999 the combined production from these
pits was 90,397 contained ounces. The average stripping ratio for 1999 was
2.42:1
Capital expenditures in 1999 were $1.65 million for fixed assets - primarily for
the purchase of two used haul trucks and expansion of the leach pads.
The mine has operated with a plan of operations approved by the Bureau of Land
Management ("BLM") and appropriate agencies since it began mining in 1988. This
plan of operations was based on an environmental assessment. In 1998 it was
decided that further amendments to the plan of operation could only be achieved
through the preparation of an Environmental Impact Statement ("EIS") which will
cover most of the presently anticipated operations throughout its remaining
life. The Draft EIS was issued by the BLM on February 11, 2000. No significant
issues were raised in the Draft EIS. The BLM is now accepting public comment on
the Draft EIS and will address those comments in the Final EIS. The Company has
been advised by the BLM that the Final EIS and a Record of Decision on the
Company's proposed operations will be issued by August 2000.
EXPLORATION
Exploration activities during 1999 were primarily aimed at expanding reserves in
and around existing pits. These efforts resulted in the addition of over 84,000
ounces to proven and probable reserves at an average grade of 0.030 ounces of
gold per ton.
Some deep drilling was completed on the south end of the Marigold property in
accordance with agreements with certain leaseholders to test deep potential.
Although no economic gold was detected, results were encouraging as some gold
anomalies were encountered at depth, and favorable host rocks were found.
MARIGOLD MINE PRODUCTION RESULTS
<TABLE>
<CAPTION>
MARCH 1 -
GLAMIS' SHARE -MARIGOLD MINE (66.7%) DECEMBER 31, 1999
-----------------
<S> <C>
Ore mined (tons) 2,016,800
Waste mined (tons) 4,685,800
Stripping ratio 2.42:1
Average gold assay (ounces/ton) 0.023
Ounces of gold produced 37,942
Total cash cost of production per ounce $ 218
</TABLE>
OTHER LANDS
SAN MARTIN PROJECT (MINERALES ENTRE MARES HONDURAS, S.A.)
Minerales Entre Mares Honduras is a wholly-owned subsidiary of Glamis Gold Ltd.
which was acquired through the acquisition of Mar-West in October 1998. The
property is located about 55 miles north of the capital city of Tegucigalpa,
Honduras. During 1999 the Company expanded
<PAGE> 28
-28-
the reserves at San Martin to over one million contained ounces of gold and
prepared a feasibility study for mining operations.
PROPERTY
The property consists of 14,100 hectares of land around the soon-to-be-mined
Rosa and Palo Alto deposits. San Martin is located in an area that receives an
average annual rainfall of approximately one meter.
On March 13, 2000, the Company received the final permits to mine at San Martin.
Authorization to construct was previously received and earthwork construction
and equipment procurement for the mine has begun.
PLANNED OPERATIONS
San Martin will be an open-pit heap-leach mine and is designed to be a low cost
operation. The Company currently expects the total tonnes mined per year during
the first 6 years will vary between 4 and 5.1 million tonnes, over 80% of which
is expected to be ore. Conventional loaders and haul trucks will form the
primary mining fleet. Ore will be crushed and agglomerated before placement on
an adjacent heap leach pad for leaching. As of December 31, 1999 the Company had
spent $19.9 million on acquisition, mine development and plant and equipment at
San Martin. An additional $24.5 million is expected to be spent during 2000 to
bring the mine into production.
PERMITTING
All environmental and regulatory permits, licenses and authorizations required
to carry out planned operations at San Martin have been received.
EXPLORATION
Exploration activities currently consist of rock chip sampling, soil geochemical
analysis and geologic mapping to refine target areas for exploration drilling on
the property, currently expected to commence in the spring of 2000. Drilling
will also take place in an effort to expand the Palo Alto deposit to the
southeast and west, where mineralization has previously been discovered.
IMPERIAL PROJECT, CALIFORNIA
PROPERTY
Glamis Imperial Corporation, a wholly-owned subsidiary of Glamis Gold Inc. holds
664 unpatented lode claims and 281 millsite claims in eastern Imperial County,
California, totaling approximately 11,400 acres. Imperial is planned to be a
run-of-mine heap leach project producing upwards of 120,000 ounces per year over
a 10 year mine life.
PERMITTING
A feasibility study on the Imperial Project completed in April 1996 showed that
the project was financially sound and would provide a positive return on
investment. The Company's financial analysis using current gold prices continues
to indicate a positive return.
<PAGE> 29
-29-
The Company has been seeking permits for this project for more than five years.
Although there is no opposition to the mine on technical grounds, objections by
a local Native American tribe that the project would impair historical Native
American cultural resources have delayed a decision by the BLM on the Company's
permit application.
In light of these objections, the BLM submitted the Imperial Project plan to the
Advisory Council on Historic Preservation ("ACHP") for a recommendation as to
the project's impact on historic resources. In a non-binding recommendation, the
ACHP in 1999 concluded that the Imperial Project would significantly impair
Native American historic resources and recommended that the BLM deny the
project. The BLM is now considering the ACHP recommendation and has advised that
it will complete the EIS and issue its decision whether or not to approve the
project during 2000.
The Company disputes the factual and legal conclusions contained in the ACHP
recommendation. The Company is considering its options and remedies if the BLM
does not approve the Imperial Project, including the institution of legal
proceedings to protect its investment and property rights.
PLANNED OPERATIONS
At December 31, 1999, approximately $13,644,000 has been expended on
acquisition, exploration and development for the Imperial Project. Additional
major capital expenditures for the Imperial Project have been postponed until
all permits are received. Assuming permits are received and gold prices are
acceptable, the Company anticipates spending approximately $50.0 million in
initial capital to bring the project into operation. The first gold production
is anticipated within twelve months after the final permits are received.
CIENEGUITA PROJECT, CHIHUAHUA, MEXICO
During 1999, 834 ounces of gold were produced at the Cieneguita property
compared to 2,823 in 1998 and 1,189 in 1997, but economic production was never
achieved.
The Company had not established proven and probable reserves at Cieneguita as of
December 31, 1999. A scoping study completed in 1998 indicated a bulk base metal
operation was not feasible. A small, near-surface precious metal resource was
recognized during this study. Additional analysis in 1999 established this
resource to have limited potential, not meeting the Company minimum criteria to
move the project towards commercial development.
Consequently, the decision was made to discontinue work on the project and the
Company wrote-off the remaining investment. Reclamation of the pilot operation
began in July 1999. Mine workings were reclaimed to be safe, drain runoff freely
and minimize erosion. The process facility was dismantled, heaps fully
detoxified and reclaimed to normal topography.
EXPLORATION
The Company expended $4.0 million on various exploration activities in 1999.
Exploration efforts were focused on:
- The Cerro Blanco Property in Guatemala
- The Marigold Mine property in Humbolt County, Nevada
<PAGE> 30
-30-
- The Rand Mine property in Kern County, California
- Various Nevada prospects
- The San Martin Project area in Honduras
- Various Central American prospects
At the Cerro Blanco property in southern Guatemala, the 1999 exploration
activity included mapping, sampling, metallurgical testwork and drilling of
nearly 6,735 meters of mostly reverse circulation drill holes. Based on all the
drilling results to date, a geologic resource has been calculated for the Cerro
Blanco deposit. Using a cut-off grade of 0.3 grams per tonne, the geologic
resource amounts to 2.6 million ounces of gold at an average grade of 0.96 grams
per tonne. Of this total resource, 54% of the gold ounces fall into the measured
and indicated category and 46% are inferred. At a 1.0 gram per tonne cut-off
grade, the resource is 1.2 million ounces of gold at an average grade of 1.97
grams per tonne, 66% of which is measured and indicated and 34% inferred.
Metallurgical testing indicates that the high-grade portion of the resource will
likely require milling to achieve optimum gold recovery. Initial test work
indicates 85% gold recovery and 78% silver recovery can be expected with a
nominal 150-mesh grind. The lower grade portions may be amenable to dump
leaching although at a much-reduced recovery rate. In 2000, the Company plans
additional drilling and metallurgical test work in an effort to expand the
resource and determine whether to proceed with a feasibility study on the
project.
Near the Marigold Mine, the Company drilled 78,130 feet in 126 reverse
circulation drill holes within the approximately 28 square mile land-holding
area. Additionally, one core hole was completed to a depth of 2,385 feet.
Twenty-one miles of geophysical lines were run and consultants completed a
structural geological study of the property. The deep hole encountered weak gold
mineralization and provided needed geological information about additional
target zones. The reverse circulation drilling program added approximately
84,000 ounces of gold to proven and probable reserves. Other reverse circulation
drilling encountered ore-grade intercepts worthy of follow-up drilling. Drilling
will continue in 2000 in an attempt to both add additional reserves and further
explore the large land holding.
Trenching was started in late December about two miles south of the active Rand
Mine operations. The trenching is designed to complement information obtained
from recent mapping and a ground magnetic geophysical survey in the area.
Additional trenching is planned for 2000, and follow-up drilling will be
conducted in this area. Drilling in 2000 is also planned in an area about two
miles west of the trenching. This drilling will attempt to expand a previously
identified resource and will obtain samples of the resource material for
metallurgical testing. Additional drilling is planned near old underground
workings east of the active Yellow Aster Pit.
Within Nevada , the Company worked on three "grass roots" prospects in 1999. In
a central Nevada prospect, seventeen reverse circulation drill holes totaling
8,685 feet were completed. Drilling in 2000 is planned to further evaluate both
the high-grade and disseminated targets in the area. In another prospect in
northeastern Nevada, mapping and rock chip sampling identified "Carlin-style"
gold mineralization. In 2000, limited drilling is planned to test some of the
better targets at this prospect. Mapping and sampling commenced on the third
prospect in west-central Nevada. Additional mapping and sampling is planned in
2000.
Near the San Martin project site in central Honduras, exploration work consisted
of mapping and
<PAGE> 31
-31-
sampling in 1999. In 2000, additional mapping and sampling will be conducted
within the Company's land holdings, and prospective areas will be drilled.
Within Central America in general, the Company has exploration concessions or
applications for exploration concessions in Guatemala, Honduras, El Salvador and
Panama. Over 1,400 meters of core drilling was completed in a prospect in Panama
as well as a geophysical program and mapping and sampling. In 2000, the Company
plans continued evaluation of these prospects and other prospects in Central
America.
ITEM 3 - LEGAL PROCEEDINGS
There are no material legal proceedings currently pending.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the 4th quarter of 1999 to be voted upon by
security holders.
<PAGE> 32
-32-
PART II
ITEM 5 - MARKET INFORMATION AND RELATED SHAREHOLDER MATTERS
STOCK EXCHANGES (TSE/NYSE:GLG)
The Common Shares of the Company were first sold to the public under a
prospectus dated May 2, 1973 at Cdn.$0.50 per share. The Company's common shares
are listed on The Toronto Stock Exchange and The New York Stock Exchange.
Trading information is set out below:
THE TORONTO STOCK EXCHANGE
The high and low sale prices for the Common Shares of the Company on The Toronto
Stock Exchange for each quarter during the years ended December 31, 1999, 1998
and 1997 are as follows:
TRADING HISTORY ON THE TORONTO STOCK EXCHANGE
<TABLE>
<CAPTION>
Sales Price (Cdn$) Volume
-------------------- ----------
Low High
------ ------
<S> <C> <C> <C>
Year ending December 31, 1999
1st Quarter $ 2.05 $ 3.50 7,233,752
2nd Quarter 1.85 3.50 10,202,903
3rd Quarter 2.22 3.99 2,435,534
4th Quarter 2.40 4.85 4,335,884
Year ending December 31, 1998
1st Quarter $ 4.80 $ 6.80 352,045
2nd Quarter 5.00 7.40 300,812
3rd Quarter 3.00 5.50 637,108
4th Quarter 2.75 4.85 1,544,102
Year Ended December 31, 1997
1st Quarter $ 9.15 $11.75 1,546,540
2nd Quarter 8.75 10.80 328,860
3rd Quarter 8.50 10.00 476,440
4th Quarter 4.60 9.70 368,795
</TABLE>
The price of the Common Shares as reported by The Toronto Stock Exchange at the
close of business on December 31, 1999 was Cdn.$2.60 per share and on March 24,
2000 was Cdn.$2.95 per share.
NEW YORK STOCK EXCHANGE, INC.
The high and low sale prices for Common Shares of the Company on The New York
Stock Exchange for each quarter during the years ended December 31, 1999, 1998,
and 1997 are as follows:
<PAGE> 33
-33-
TRADING HISTORY ON THE NEW YORK STOCK EXCHANGE
<TABLE>
<CAPTION>
Sales Price (US$) Volume
-------------------------- ---------
Low High
--------- ---------
<S> <C> <C> <C>
Year ending December 31, 1999
1st Quarter $ 1.3125 $ 2.4375 6,822,000
2nd Quarter 1.2500 2.4375 7,051,900
3rd Quarter 1.5000 2.7500 5,773,700
4th Quarter 1.6250 3.3125 7,562,900
Year ending December 31, 1998
1st Quarter $ 3.5625 $ 4.7500 1,973,200
2nd Quarter 3.3125 4.9375 1,927,400
3rd Quarter 1.8750 3.8750 3,454,000
4th Quarter 1.6875 3.3750 5,400,300
Year Ended December 31, 1997
1st Quarter $ 6.8750 $ 8.7500 4,811,000
2nd Quarter 6.2500 7.8760 2,721,400
3rd Quarter 6.5625 7.3750 3,887,800
4th Quarter 2.8750 6.9375 6,032,800
</TABLE>
The price of Common Shares as reported by New York Stock Exchange, Inc. at the
close of business on December 31, 1999 was $1.8125 and on March 24, 2000 was
$2.00 per share.
SHAREHOLDERS
As at March 24, 2000 the Company had 4,124 registered shareholders.
DIVIDENDS
No dividends are planned to be declared or paid in 2000 due to the loss incurred
in 1999. No dividends were declared or paid in 1999 or 1998. The Company paid
dividends totaling $0.05 per Common Share during the fiscal year ended December
31, 1997. If dividends are declared it is the Company's policy to declare and
pay such dividends in United States funds.
The declaration and payment of future dividends is dependent upon the Company's
financial condition and other factors considered by the Board of Directors. See
"Certain Tax Matters - Canadian Federal Income Tax Considerations" for
information with respect to Canadian withholding tax applicable to non-Canadian
shareholders.
INVESTMENT CANADA ACT
There is no law or governmental decree or regulation in Canada that restricts
the export or import of capital, or affects the remittance of dividends,
interest or other payments to a non-resident holder of common shares of the
Company, other than withholding tax requirements (see "Certain Tax Matters",
below).
There is no limitation imposed by Canadian law or by the charter or other
constituent documents of the Company on the right of a non-resident to hold or
vote common shares of the Company, other than as provided in the Investment
Canada Act (Canada) (the "Investment Act"). The following discussion summarizes
the principal features of the Investment Act for a non-resident who proposes to
acquire common shares of the Company. It is general only, it is not a substitute
for independent advice from an investor's own advisor, and it does not
anticipate statutory or regulatory amendments.
<PAGE> 34
-34-
The Investment Act generally prohibits implementation of a reviewable investment
by an individual, government or agency thereof, corporation, partnership, trust
or joint venture that is not a "Canadian" as defined in the Investment Act (a
"non-Canadian"), unless after review the minister responsible for the Investment
Act (the "Minister") is satisfied that the investment is likely to be of net
benefit to Canada. An investment in common shares of the Company by a
non-Canadian other than a "WTO Investor" (as defined in the Investment Act and
used in this discussion) when the Company was not controlled by a WTO Investor,
would be reviewable under the Investment Act if it was an investment to acquire
control of the Company and the value of the assets of the Company was
Cdn.$5,000,000 or more, or if an order for review was made by the federal
cabinet on the grounds that the investment related to Canada's cultural heritage
or national identity. An investment in common shares of the Company by a WTO
Investor, or by a non-Canadian when the Company was controlled by a WTO
Investor, would be reviewable under the Investment Act if it was an investment
to acquire control of the Company and the value of the assets of the Company in
2000 exceeds approximately Cdn.$192,000,000. A non-Canadian would acquire
control of the Company for the purposes of the Investment Act if the
non-Canadian acquired a majority of the common shares of the Company. The
acquisition of less than a majority but one third or more of the common shares
of the Company would be presumed to be an acquisition of control of the Company
unless it could be established that, on the acquisition, the Company was not
controlled in fact by the acquiror through the ownership of common shares.
Certain transactions relating to common shares of the Company would be exempt
from the Investment Act, including:
(a) acquisition of common shares of the Company by a person in
the ordinary course of that person's business as a trader
or dealer in securities,
(b) acquisition of control of the Company in connection with
the realization of security granted for a loan or other
financial assistance and not for a purpose related to the
provisions of the Investment Act, and
(c) acquisition of control of the Company by reason of an
amalgamation, merger, consolidation or corporate
reorganization following which the ultimate direct or
indirect control in fact of the Company, through the
ownership of common shares, remained unchanged.
CERTAIN TAX MATTERS
The following paragraphs summarize certain United States and Canadian federal
income tax considerations in connection with the receipt of dividends paid on
Common Shares of the Company and certain Canadian federal income tax
considerations in connection with a disposition of Common Shares by
non-residents of Canada. These tax considerations are stated in brief and
general terms and are based on United States and Canadian law currently in
effect. There are other potentially significant United States and Canadian
federal income tax considerations, including proposals to amend some of the
rules summarized herein, and state, provincial or local income tax
considerations with respect to ownership and disposition of the Common Shares
which are not discussed herein. The tax considerations relative to ownership and
disposition of the Common Shares may vary from taxpayer to taxpayer depending on
the taxpayer's particular status. Accordingly, prospective purchasers should
consult with their tax advisors regarding tax considerations which may apply to
their particular situation.
<PAGE> 35
-35-
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain possible United States federal
income tax consequences, under current law, generally applicable to a U.S.
Holder (as defined below) of Common Shares of the Company who holds such shares
as capital assets. This discussion does not address all potentially relevant
federal income tax matters and it does not address consequences peculiar to
persons subject to special provisions of federal income tax law, such as
tax-exempt organizations, qualified retirement plans, financial institutions,
insurance companies, real estate dealers, nonresident alien individuals and
shareholders who acquired their stock through the exercise of employee stock
options or otherwise as compensation. In addition, this discussion does not
cover any state, local or foreign tax consequences. For a discussion of certain
Canadian Federal Income tax considerations, see "Canadian Federal Income Tax
Considerations" below.
The following discussion is based upon the sections of the Internal Revenue Code
of 1986, as amended (the "Code"), Treasury Regulations, published Internal
Revenue Service ("IRS") rulings, published administrative positions of the IRS
and court decisions that are currently applicable, any or all of which could be
materially and adversely changed, possibly on a retroactive basis, at any time.
In addition, this discussion does not consider the potential effects, both
adverse and beneficial, of any recently proposed legislation which, if enacted,
could be applied, possibly on a retroactive basis at any time. The following
discussion is for general information only and it is not intended to be, nor
should it be construed to be, legal or tax advice to any holder or prospective
holder of Common Shares of the Company and no opinion or representation with
respect to the United States federal income tax consequences to any such holder
or prospective holders is made. Accordingly, holders and prospective holders of
Common Shares of the Company should consult their own tax advisors about the
federal, state, local and foreign tax consequences of purchasing, owning and
disposing of Common Shares of the Company.
U.S. HOLDERS
As used herein, a "U.S. Holder" includes a holder of Common Shares of the
Company who is a citizen or individual resident of the United States, a
corporation or partnership created or organized in or under the laws of the
United States or of any political subdivision thereof or a trust or estate the
income of which is taxable in the United States irrespective of source. For
taxable years beginning after December 31, 1996 (or for the immediately
preceding taxable year if the trustee of a trust so elects), a trust is a U.S.
Holder for federal income tax purposes if, and only if (i) a court within the
United States is able to exercise primary supervision over the administration of
the trust and (ii) one or more United States persons have the authority to
control all substantial decisions of the trust.
<PAGE> 36
-36-
DISTRIBUTIONS ON COMMON SHARES OF THE COMPANY
U.S. Holders receiving dividend distributions (including constructive dividends)
with respect to Common Shares of the Company are required to include in gross
income for United States federal income tax purposes the gross amount of such
distributions to the extent that the Company has current or accumulated earnings
and profits, without reduction for any Canadian income tax withheld from such
distributions. Such Canadian tax withheld may be credited, subject to certain
limitations, against the U.S. Holder's United States Federal income tax. (See
more detailed discussion at "Foreign Tax Credit" below). To the extent that
distributions exceed current or accumulated earnings and profits of the Company,
they will be treated first as a return of capital up to the U.S. Holder's
adjusted basis in the Common Shares and thereafter as gain from the sale or
exchange of the Common Shares. Preferential tax rates for net long term capital
gains are applicable to a U.S. Holder which is an individual, estate or trust.
Dividends paid on Common Shares of the Company will not generally be eligible
for the dividends received deduction provided to corporations receiving
dividends from certain United States corporations. A U.S. Holder which is a
corporation may, under certain circumstances, be entitled to a 70% deduction of
the United States source portion of dividends received from the Company (unless
the Company is deemed a "passive foreign investment company," as defined below
or in certain other circumstances) if such U.S. Holder owns shares representing
at least 10% of the voting power and value of the Company. The availability of
this deduction is subject to several complex limitations which are beyond the
scope of this discussion.
FOREIGN TAX CREDIT
A U.S. Holder who pays (or has withheld from distributions) Canadian income tax
with respect to the ownership of Common Shares of the Company may be entitled,
at the option of the U.S. Holder, to either a deduction or a tax credit for such
foreign tax paid or withheld. Generally, it will be more advantageous to claim a
credit because a credit reduces United States federal income taxes on a
dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income
subject to tax. This election is made on a year-by-year basis and generally
applies to all foreign income taxes paid by (or withheld from) the U.S. Holder
during the year. There are significant and complex limitations which apply to
the credit, among which is the general limitation that the credit cannot exceed
the proportionate share of the U.S. Holder's United States income tax liability
that the U.S. Holder's foreign source income bears to his or its worldwide
taxable income. In the determination of the application of this limitation, the
various items of income and deduction must be classified into foreign and
domestic sources. Complex rules govern this classification process. There are
further limitations on the foreign tax credit for certain types of income such
as "passive income", "high withholding tax interest", "financial services
income", "shipping income", and certain other classifications of income.
Furthermore, the rules for foreign tax credits or deductions are subject to
further modification under the United States - Canada Income Tax Treaty. The
availability of the foreign tax credit and the application of the limitations on
the credit are fact specific and holders and prospective holders of Common
Shares of the Company should consult their own tax advisors regarding their
individual circumstances.
DISPOSITION OF COMMON SHARES OF THE COMPANY
A U.S. Holder will recognize a gain or loss upon the sale of Common Shares of
the Company equal to the difference, if any, between (a) the amount of cash plus
the fair market value of any property received, and (b) the shareholder's tax
basis in the Common Shares of the Company. This gain or loss will be capital
gain or loss if the Common Shares are a capital asset in the hands of the U.S.
<PAGE> 37
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Holder, will be a short-term, mid-term or long-term capital gain or short-term
or long-term capital loss, depending upon the holding period of the U.S. Holder.
Gains and losses are netted and combined according to special rules in arriving
at the overall capital gain or loss for a particular tax year. Deductions for
net capital losses are subject to significant limitations. For U.S. Holders
which are individuals, any unused portion of such net capital loss may be
carried over to be used in later tax years until such net capital loss is
thereby exhausted. For U.S. Holders which are corporations (other than
corporations subject to Subchapter S of the Code), an unused net capital loss
may be carried back three years from the loss year and carried forward five
years from the loss year to be offset against capital gains .
OTHER CONSIDERATIONS
In the following circumstance, the above sections of this discussion may not
describe the United States federal income tax consequences resulting from the
holding and disposition of Common Shares of the Company.
PASSIVE FOREIGN INVESTMENT COMPANY
As a foreign corporation with U.S. Holders, the Company could potentially be
treated as a passive foreign investment company ("PFIC"), as defined in Section
1297 of the Code, depending upon the percentage of the Company's income which is
passive, or the percentage of the Company's assets which produce, or are held
for the production of, passive income. U.S. Holders owning common shares of a
PFIC are subject to an additional tax on distributions and to an interest charge
based on the value of deferral of tax for the period during which the common
shares of the PFIC are owned, in addition to treatment of gain realized on
disposition of common shares of the PFIC as ordinary income, rather than capital
gain, similarly subject to an additional tax and interest charge.
However, if the U.S. Holder makes a timely election to treat a PFIC as a
qualified electing fund ("QEF") with respect to such shareholder's interest
therein, the above-described rules generally will not apply. Instead, the
electing U.S. Holder would include annually in his gross income his pro rata
share of the PFIC's ordinary earnings, and net capital gain regardless of
whether such income or gain was actually distributed. A U.S. holder is not
required to make a QEF election simply because another U.S. Holder makes the
election. Gain realized on disposition of common shares of a QEF is treated as
capital gain if the shares are a capital asset of the disposing shareholder.
In addition, under recently enacted tax legislation, a U.S. Holder may make a
mark-to-market election for certain PFICs with marketable stock, thereby
potentially avoiding the adverse tax consequences of PFIC characterization. The
election may be made for tax years beginning after December 31, 1997. Under such
an election, the shareholder would determine his, her or its income or loss with
respect to the PFIC stock as of the close of each taxable year. For example, an
electing shareholder would include in income each year an amount equal to the
excess, if any, of the fair market value of the PFIC stock as of the close of
the taxable year over the shareholder's adjusted basis in such stock. Any income
included in income pursuant to the mark-to-market election would be treated as
ordinary income. Alternatively, for tax years where the shareholder's adjusted
basis in the PFIC stock exceeds its fair market value, an electing shareholder
may be entitled to a deduction, subject to certain limitations. Special rules
apply to U.S. Holders who own their interests in a PFIC through intermediate
entities or persons.
<PAGE> 38
-38-
The Company believes that it has not been a PFIC for its years ended December
31, 1999, 1998, or 1997. The Company's determination in this respect has been
made after a review of the regulations regarding a PFIC and the application of
those rules to its own past and present circumstances. The Company may have been
a PFIC in earlier years. If the Company concludes that it is a PFIC in the
current year or in a subsequent year, it intends to make information available
to enable a U.S. Holder to make a QEF or mark-to-market election in that year.
There can be no assurance that the Company's determination concerning its PFIC
status will not be challenged by the IRS, or that it will be able to satisfy
record keeping requirements which will be imposed on QEFs. U.S. taxpayers who
hold the Company's shares may wish to consult with a personal tax advisor
concerning the possible application of the PFIC provisions to their personal
circumstances.
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
Dividends paid on Common Shares held by non-residents of Canada will generally
be subject to Canadian withholding tax. This withholding tax is levied at the
basic rate of 25%, although this rate may be reduced by the terms of any
applicable tax treaty. The Canada - U.S. tax treaty provides that the
withholding rate on dividends paid to U.S. residents on Common Shares is
generally 15% unless the holder is a company which owns at least 10% of the
common shares, in which case the withholding rate is 5%.
Generally, a non-resident of Canada who holds Common Shares as capital property
will not be subject to Canadian federal income tax on capital gains realized on
the disposition of his Common Shares unless the holder either alone or together
with persons with whom the holder does not deal with at arm's length owns 25% or
more of the outstanding Common Shares at any time in the previous 60 months. The
Canada-U.S. tax treaty would generally exempt a capital gain realized by a
resident of the United States from taxation by Canada.
ITEM 6 - SELECTED FINANCIAL INFORMATION
The financial information set forth in the tables below includes the accounts of
the Company and its subsidiaries on a consolidated basis as at the specified
dates. This financial information was prepared in accordance with accounting
principles generally accepted in Canada. The selected financial information
should be read in conjunction with and is qualified by the consolidated
financial statements and the notes thereto which form part of this Report.
Reference should be made to Note 15 of such financial statements for a
reconciliation of Canadian and U.S. generally accepted accounting principles.
<PAGE> 39
-39-
SELECTED YEARLY DATA
<TABLE>
<CAPTION>
* SIX
MONTHS * YEAR
YEAR ENDED ENDED ENDED
DECEMBER 31, DEC 31 JUNE 30
-----------------------------------------------------------------------------
1999 1998 1997 1996 1995 1995
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Production statistics:
Total cash cost per ounce ($) (1) 219 215 235 219 284 211
Ounces of gold produced 175,894 106,113 128,671 121,591 44,809 101,562
Average gold price realized per ounce ($) 282 310 328 384 383 384
Operating summary ($000):
Revenues 57,462 32,869 42,235 46,739 17,155 39,032
Net earnings (loss) (21,285) (2,007) (8,279) 4,059 (1,861) 2,688
Cash generated from (used in) operations 6,191 9,331 12,067 12,941 (205) 12,916
Financial Status ($000):
Working capital 61,631 34,156 36,430 38,724 15,138 22,376
Total assets 163,732 119,161 101,643 107,974 69,758 73,846
Long-term liabilities 17,906 4,740 4,707 2,729 2,625 2,641
Shareholders' equity 138,204 110,359 92,429 100,888 64,609 67,639
Per common share ($):
Net earnings (loss) (0.33) (0.06) (0.27) 0.15 (0.07) 0.10
Book value 1.98 2.84 2.97 3.25 2.45 2.56
Dividends -- -- 0.05 -- 0.044 0.044
</TABLE>
* The Company changed its year end to December 31 effective 1995.
(1) In the third quarter 1999 the Company changed its method of calculating
cost of production to conform to the Gold Institute standard. Previous
periods have been restated for consistency. This entailed including
royalties in cash cost of production (previously disclosed separately) and
excluding reclamation accruals.
Supplementary quarterly data can be found following the consolidated financial
statements at Item 8.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This management discussion and analysis of the financial results of the
Company's operations for the years 1997 through 1999 should be read in
conjunction with and is qualified by the consolidated financial statements and
notes thereto (the "financial statements") which form a part of this Report.
This financial information was prepared in accordance with accounting principles
generally accepted in Canada. Reference should be made to Note 15 of such
financial statements for a reconciliation of Canadian and U.S. generally
accepted accounting principles.
The following discussion contains statements which are not historical facts, and
by their nature are considered "forward looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. See also "Forward
Looking Statements" at the end of Part I.
OVERVIEW
The Company's emphasis on cost-effective production resulted in steadily
improving cash costs of production in 1999. Although the average price of gold
continued to drop, these cost-reduction programs assured a solid base of
continuing operations and a sound platform for ongoing growth.
<PAGE> 40
-40-
The 1998 acquisition of Mar-West Resources Ltd. ("Mar-West") with its portfolio
of late-stage development properties underwrote the Company's greatest success
this year: the San Martin Project. In 1999, the Company increased reserves at
San Martin to 1,082,900 contained ounces of gold, produced a feasibility study
recommending construction, and received Board approval on October 6, 1999 to
commence construction. Construction and operating permits have been received and
the work has commenced.
The acquisition of Rayrock Resources Inc. ("Rayrock") effective February 26,
1999 brought immediate benefits by way of three producing gold mines in Nevada.
The Company's share of the Marigold Mine's production (66.7%), and the
wholly-owned Dee and Daisy mines added over 97,000 ounces of gold to Glamis'
production during the ten months of ownership. The Company also acquired the
Ivan copper mine in Chile as part of the Rayrock purchase. However, it was
determined that the sale of Mina Ivan was in the Company's best interests, as
copper production is not in line with long-term objectives. As a result, Mina
Ivan was sold in October 1999 for $21.1 million. This sale, along with the
proceeds of the sales of other non-core assets of Rayrock, resulted in a net
purchase price of the core Rayrock gold assets of less than $25 per ounce of
gold.
RESULTS OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 1999, 1998, AND 1997
SUMMARY
The Company incurred a 1999 net loss of $21.3 million ($0.33 per share)
including write-offs of $8.2 million ($0.13 per share) compared to a $2.0
milllion ($0.06 per share) net loss in 1998 and a $8.3 million ($0.27 per share)
net loss in 1997. The 1999 results include a non-recurring loss of $5.1 million
attributable to the Ivan copper mine, acquired as part of the Rayrock
acquisition in March 1999, which was sold in October 1999. The results for 1999
also reflect continuing lower average London Bullion Market prices for gold
($279 in 1999, $294 in 1998 and $331 in 1997) and increased exploration expense
of $4.0 million.
Net cash flows provided by operations continue to be positive ($6.2 million in
1999) and the Company's working capital is $61.6 million. The Company plans
approximately $35 million in capital expenditures and exploration costs in 2000,
all from internally generated funds. This includes construction of the San
Martin Mine for approximately $24.5 million, scheduled for completion in the
fourth quarter of 2000.
GOLD PRODUCTION
The Company produced 175,894 ounces of gold from five mines during 1999. This
includes ten months of production from the Marigold, Dee and Daisy mines,
acquired in March 1999. The increase of 69,781 ounces over 1998 production
(106,113 ounces) is directly attributable to production from these mines, which
offset a decrease in production at both the Rand and Picacho mines. Production
for the year ended December 31, 1998 decreased by 22,558 ounces from the 128,671
ounces produced in the year ended December 31, 1997.
The production for the year ended December 31, 1999 was somewhat below the
projection made
<PAGE> 41
-41-
in last year's report anticipating production of 200,000 ounces of gold for
fiscal 1999. The Company estimates that gold production for the year ended
December 31, 2000 will amount to 238,000 ounces. Production from the Imperial
Project is not included in the 2000 projections since construction of this
project remains dependent upon a conclusion to the permitting process.
Following is a discussion of the Company's gold production during 1999:
RAND MINE
Production from the Rand Mine declined to 70,978 for the year ended December 31,
1999 from 87,015 ounces of gold in the year ended December 31, 1998, and 94,243
ounces of gold in the year ended December 31, 1997. 1999 production was impacted
by a planned stripping campaign in the first quarter which took longer than
expected. The decrease in production at the Rand Mine between 1998 and 1997 was
the result of the 1997 year-end mine plan revision in response to lower gold
prices. In order to reduce costs, the Rand Mine eliminated reserves from the
proven and probable categories, which were not economically feasible to mine at
then-existing gold prices.
PICACHO MINE
The Picacho Mine continues to produce during its reclamation. The mine produced
6,684 ounces of gold during the year ended December 31, 1999 compared to the
16,275 ounces of gold produced during the year ended December 31, 1998, but over
13% more ounces than forecast. The 1998 production also exceeded forecast. The
production for the year ended December 31, 1997 of 33,239 ounces was the last
year of full production for Picacho. Reclamation is expected to be complete by
the year 2002, with continued re-vegetation monitoring thereafter.
MARIGOLD MINE (66.7% GLAMIS-OWNED)
The Company is the operator at the Marigold Mine, a joint venture operation with
Homestake Mining Co. Marigold, acquired in March 1999, produced 37,942 ounces
for the Company's account for the ten months ended December 31, 1999.
DEE MINE
The Dee Mine was also acquired in March 1999. Dee's production of 31,154 ounces
for the Company's account period March 1 to December 31, 1999 was primarily from
open-pit production. The Dee underground project, begun in the second quarter of
1999 and entering production late in 1999, is expected to produce the majority
of gold ounces from Dee in the future.
DAISY MINE
The acquisition of the Daisy Mine in March 1999 provided the Company 28,302
ounces of gold production in the ten months ended December 31, 1999. Mining was
completed at Daisy in December 1999, but ounces will continue to be produced
over the next two years as the mine is reclaimed.
CIENEGUITA PROJECT
Production at Cieneguita totaled 834 ounces of gold during 1999. Cieneguita
produced 2,823 ounces in 1998 and 1,189 ounces in 1997 but economic production
was never achieved.
<PAGE> 42
-42-
Consequently, the decision was made to discontinue operations. The rinsing of
the heap is complete and the mine totally reclaimed. Some additional work
remains to be done at the processing facility.
IMPERIAL PROJECT
Permitting activities continued on the Imperial Project, however permits to
operate have still not been issued. The Company continues to seek project
approval and to explore all available means of protecting its interests in the
project.
REVENUES
Revenues from production increased to $57.5 million for the year ended December
31, 1999 reflecting the additional gold production from the Marigold, Dee and
Daisy mines and copper revenues from Mina Ivan. Revenues for the year ended
December 31, 1998 were $32.9 million compared to $42.2 million for 1997.
Increased gold production generated $19.4 million of the increased revenues
offset by a $3.3 million decrease due to realized gold price. Average revenue
realized per ounce of gold continued to drop to $282 per ounce in 1999 from $310
in 1998 and from $328 in 1997. This follows a parallel drop in the average
market price of gold. The decline in gold prices accounted for $1.9 million of
the $9.3 million decrease in revenues from 1997 to 1998. The remaining $7.4
million of the decrease resulted from reduced production.
COST OF PRODUCTION
The Company's total cash cost of production includes mining, processing, direct
mine overhead costs and royalties, and excludes selling, general and
administrative costs at the corporate level, depreciation and depletion costs
and end-of-mine reclamation accruals. Total production costs include
depreciation and depletion and end-of-mine reclamation accruals.
The Company's total cash cost of production for the year ended December 31, 1999
was $47.6 million compared to $23.3 million and $30.2 million for the years
ended December 31, 1998 and 1997, respectively. The increase in costs was
directly attributable to the increased production as a result of the Rayrock
acquisition. The reduction in costs between 1997 and 1998 reflects the cessation
of mining at the Picacho mine in January of 1998 and the reduction in operating
shifts at the Rand Mine as a result of lowered reserves.
The average total cash cost per ounce of gold production increased slightly to
$219 in 1999 from $215 per ounce in 1998. The average cash cost per ounce in
1997 was $235 per ounce. The decrease between 1997 and 1998 was primarily due to
the cessation of mining at Picacho, resulting in reduced labor and operating
costs and reduced royalty costs, as well as cost reductions at the Rand Mine.
The Company is projecting an average total cash cost of production of $200 per
ounce in 2000.
Royalty expense of $2.6 million is included in the cost of production for the
year ended December 31, 1999 and costs of production for 1998 and 1997 have been
restated to reflect the change. For the year ended December 31, 1998 royalty
expense was $2.0 million compared to $2.9 million incurred during 1997. Royalty
expense declined in 1998 as a result of lower gold prices, fewer ounces produced
and a higher proportion of the production coming from Rand,
<PAGE> 43
-43-
which has a lower royalty rate. The increased expense in 1999 was attributable
to the production from Marigold, Dee and Daisy.
OTHER INCOME AND EXPENSES
Depreciation and depletion charges totaled $14.7 million during 1999 compared to
$8.9 million for the year ended December 31, 1998. Changes in the depreciation
and depletion expense is attributable to changes in production as charges are
made on a "unit of production" basis. The increase in gold production costs
accounted for $12.4 million of increased expense while expenses relating to
copper production, at the since-divested Mina Ivan, were $2.3 million. The
decrease in charges from $11.0 million incurred in the year ended December 31,
1997 to the $8.9 million incurred in 1998 was a result of the decrease in
production and the corresponding reduction in depreciation and depletion charged
on a units of production basis. Additionally, cutbacks in mine staffing
generated fewer hours of equipment operation and, consequently, a reduction in
depreciation based on equipment hours of operation.
Exploration costs in the year ended December 31, 1999 totaled $4.0 million
compared to the $34,000 spent in 1998 and the $0.9 million spent during 1997.
Increased exploration expense was incurred in Central America ($2.2 million) and
Nevada ($1.2 million) as a result of the Company's acquisitions of Mar-West and
Rayrock.
Selling general and administrative expenses increased to $6.0 million in 1999
from $2.6 million in the year ended December 31, 1998, and $4.0 million incurred
during 1997. The 1999 expense included a restructuring charge of $866,000 in the
third quarter and significant relocation expenses, staffing changes and
consolidation of corporate office functions in the Reno office during the year
which were a result of the Mar-West acquisition in late 1998 and the Rayrock
acquisition in early 1999.
The Company incurred write-downs of $8.2 million during 1999. The significant
items were $6.8 million of mine development costs written off at the Rand Mine
and $1.0 million related to closing the Cieneguita project. These write-offs
were the result of the Company's determination that certain remaining deferred
costs at Rand would not be covered by the estimated future cash flows, and that
the entire project at Cieneguita was not economic. During 1998 a loss of $1.1
million was incurred from the sales or write-downs of the Company's investments
in various junior exploration companies. This compares to the $4.6 million
written off in 1997 on the Company's investment in two junior exploration
companies as well as a $1.5 million write-down on the Cieneguita project.
Interest and other income increased to $2.9 million in 1999, primarily as a
result of the Company's cash balances. Interest and other income for 1998 and
1997 totaled $1.5 million and $1.3 million respectively, again, primarily from
investment income on the Company's cash balances.
Interest expense and amortization of financing costs for the year ended December
31, 1999 was $160,000, compared to $63,000 and $49,000 in the years ended
December 31, 1998 and December 31, 1997, respectively. Expense for 1999 was for
mortgages and loans acquired with Rayrock, interest on capital leases for
equipment at Marigold, and financing costs for letters of
<PAGE> 44
-44-
credit backing reclamation bonds. Expenses in 1998 and 1997 related primarily to
a letter of credit backing reclamation bonds.
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL AND CASH FLOW
The Company had working capital of $61.6 million at December 31, 1999 compared
to $34.2 million at December 31, 1998 and $36.4 million at December 31, 1997.
The long-term liabilities consist of reserves for reclamation of $13.6 million
and deferred taxes of approximately $4.3 million at December 31, 1999.
Reclamation reserves were $2.5 million and $2.2 million at December 31, 1998 and
1997 respectively. Deferred taxes totaled $2.2 million and $2.5 million for
December 31, 1998 and 1997, respectively. The increases are directly
attributable to the Rayrock acquisition.
During 1999 cash flow from operations totaled $6.2 million compared to $9.3
million in 1998 and $12.1 million in 1997. The difference between 1999 and 1998
is due to further declines in the gold price and the use of cash at Mina Ivan
($3.6 million) offset by increased revenues as a result of an increased number
of ounces produced by way of acquisition of the three Nevada mines (Marigold,
Dee and Daisy). The decrease in cash flow between 1998 and 1997 is also
attributable to the decrease in the realized price per ounce of gold as well as
fewer ounces of gold being produced.
CAPITAL RESOURCES
Effective February 26, 1999, the Company completed the acquisition of 100% of
the issued and outstanding shares of Rayrock Resources Inc. The Company issued
29,277,820 common shares and paid Cdn$52,883,000 (approximately $35,000,000).
The Company acquired interests in three open-pit gold mines in Nevada as well as
the Ivan copper mine in Chile.
On October 19, 1998 the Company acquired all of the issued and outstanding
shares of Mar-West Resources, Ltd. The Company issued 7,539,905 common shares to
Mar-West shareholders and paid $4.3 million in cash. See Note 3 to the
consolidated financial statements regarding the Mar-West and Rayrock
acquisitions. In July 1998, the Company completed the purchase of the remaining
40% interest in the Cieneguita Project held by the Company's joint venture
partner, Aquiline Resources Inc. The Company paid $0.6 million in cash and
canceled debt and issued 25,000 common shares at $4.25 per share.
No dividends are planned to be declared or paid in 2000 due to the losses
incurred in 1999 and 1998. No dividends were paid or declared in 1999 or 1998. A
dividend of $0.05 per share was paid on March 28, 1997 to shareholders of record
at March 14, 1997.
In the course of its business, the Company may issue debt or equity securities
to meet the growth plans of the Company if it determines that additional
resources could be obtained under favorable financial market conditions. No
assurance can be given that additional funding will be available or, if
available, will be on terms acceptable to the Company.
CAPITAL EXPENDITURES
During the year ended December 31, 1999, a total of $17.6 million was expended
on capital
<PAGE> 45
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projects and investments as compared to $6.5 million spent in 1998 and $11.5
million spent during 1997. Major expenditures during the fiscal year 1999 were
as follows:
<TABLE>
<CAPTION>
(in millions)
<S> <C>
Deferred stripping at Rand Mine $ 3.1
Land acquisition, exploration and construction
at the San Martin Mine 7.2
Dee Mine Underground Project 4.6
Imperial Project planning, permitting, development 0.8
Capital expenditures at Mina Ivan 1.3
Other 0.6
-----
$17.6
</TABLE>
Capital expenditures and funds for exploration in 2000 are estimated to be
approximately $35 million. The primary expenditures are expected to be for the
construction of the San Martin Mine in Honduras (approximately $24.5 million).
Additional expenditures are planned at the Rand Mine where the Company plans to
spend $3.4 million on deferred stripping and $0.7 million on equipment, and $2.4
million at the Marigold Mine, primarily for leach pad construction and
additional equipment.
Exploration and development expenditures are budgeted at approximately $3.0
million, of which $1.5 million is targeted for the Marigold property and other
Nevada exploration. Central American exploration is budgeted at $1.0 million.
The Company believes that estimated cash flows from operations and current cash
reserves will be sufficient to fund all these anticipated expenditures.
HEDGING
As at December 31, 1999, the Company had sold forward 65,000 ounces of gold for
delivery during 2000 at an average price of $288 per ounce, as well as 79,000
ounces of gold call options at strike prices averaging $290 per ounce expiring
during 2000 and 2001. The call options can be converted to spot-deferred
positions at the Company's discretion. The Company also owns put options on
36,000 ounces of gold exercisable at an average price of $275 per ounce at
various dates during 2000. See Item 7A - "Qualitative and Quantitative
Disclosures About Market Risk".
ENVIRONMENTAL, REGULATORY AND OTHER RISK FACTORS
RECLAMATION
The Company generally is required to mitigate long-term environmental impacts by
stabilizing, contouring, reshaping and re-vegetating various portions of a site
once mining and processing are completed. Reclamation efforts are conducted in
accordance with detailed plans which have been reviewed and approved by the
appropriate regulatory agencies. Whenever feasible, reclamation is conducted
concurrently with mining. During the past three years, reclamation expenditures
have not been material. Reclamation expenditures in 2000 at the Picacho, Dee and
Daisy mines will be funded in part by production revenues.
<PAGE> 46
-46-
Standard leaching techniques have been designed to comply with reclamation
requirements imposed by regulatory authorities. Due to the impervious qualities
of the heap leach pad and the closed nature of the leaching system, the Company
believes that its mining operations have no materially adverse effect on the
environment.
Tailings impoundments have been constructed at the Company's Dee and Marigold
mines. Milling operations have been suspended indefinitely at the Marigold Mine
and its tailings impoundment is currently inactive. At the Dee Mine, milling
operations are in progress. Tailings impoundments pose certain risks to the
environment including the potential for groundwater contamination and wildlife
mortalities. The Company operates all of its tailings facilities in compliance
with applicable rules and regulations. Upon closure, tailings facilities are
reclaimed in accordance with the state-approved reclamation plan.
Though the Company believes that its mining operations are in compliance with
all present health, safety and environmental rules and regulations there is
always some uncertainty associated with such due to the complexity and
application of such rules and regulations. The Company does not anticipate that
the cost of compliance with existing environmental laws and regulations will
have a material impact on its earnings in the foreseeable future. However,
possible future health, safety and environmental legislation, regulations and
actions could cause additional expense, capital expenditures, restrictions and
delays in the activities of the Company, the extent of which cannot be
predicted. The Company made no material capital expenditures for environmental
control facilities during the current year. During the years ended December 31,
1999, 1998, and 1997, there were no material expenditures other than for design
of monitoring systems at the Rand Mine. The Company estimates that it will make
no material capital expenditures in this area during the year ending December
31, 2000, other than monitoring systems incorporated into leach pad construction
and expansion programs. At the corporate level, an Environmental Compliance
Committee and Policy Statement have been established to assure measurable
standards for internal environmental audits for review by the Board of
Directors. The Committee has been active and is satisfied the Company is
complying with regulatory parameters.
<PAGE> 47
-47-
As of December 31, 1999, the Company had in place $1.1 million of letters of
credit and $2.0 million in certificates of deposit issued as security for future
reclamation costs. The Company also has an arrangement with a bonding company
which has replaced letters of credit in the amount of $4.4 million with bonds
issued as security for future reclamation costs.
REGULATORY
Legislation has been introduced in prior sessions of the U.S. Congress to make
significant revisions to the U.S. General Mining Law of 1872 which would affect
the Company's unpatented mining claims on federal lands, including a royalty on
gold production. Any levy of the type proposed in the past would only apply to
unpatented federal lands and accordingly would have an insignificant effect on
the economics of the Picacho Mine and Rand Mine's production from the Yellow
Aster Pit. It cannot be predicted if these proposals will become law. However,
should a royalty become law, it will adversely affect the profitability of
Rand's production, the Marigold, Dee and Daisy mines, and the Imperial Project.
OTHER RISK FACTORS
The Company's mineral development and mining activities and profitability
involve significant risks due to numerous factors outside of its control
including, but not limited to: the price of gold, changes in the regulatory
environment, various foreign exchange fluctuations, and risks inherent in
mining.
A major external factor that has a marked effect on liquidity, either positive
or negative, is the price of gold bullion in international markets. Because the
Company has very limited production hedged, any sustained changes in the price
of gold over or under these levels will appreciably affect the Company's general
liquidity position, and could substantially increase or decrease revenues,
earnings and cash flow.
OTHER MATTERS
The Year 2000 issue arose because many computerized systems use two digits
rather than four to identify a year. Date sensitive systems may recognize the
year 2000 as 1900 or some other date resulting in errors when information using
year 2000 dates is processed. Although the change in date has occurred, it is
not possible to be certain that all aspects of the Year 2000 issue that may
affect the Company have been fully resolved.
The Company completed its in-house compliance and supplier assessment in the
fourth quarter, 1999. Limited Year 2000-specific costs were incurred by the
Company. Hardware and software upgrades were planned based on business
requirements. Additional expenditures were not material. As of March 1, 2000, no
operational disruptions related to any Year 2000 systems problems have been
noted.
ITEM 7A - QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
As noted in Item 7 "Other Risks" the Company is subject to changes in metals
prices which directly impact its profitability and cash flows. Because the
markets in which the Company sells its products set prices outside of the
Company's control, in appropriate circumstances, it is
<PAGE> 48
-48-
possible to reduce the impact of negative price movements through hedging
transactions. These hedging transactions utilize so-called "derivatives," the
value of which is "derived" from movements in the prices or rates associated
with the underlying product.
The Company's hedging practices allow the Company to protect its cash flows by
use of forward contracts, spot deferred contracts, and options, in any
combination. The Company continuously monitors its position with respect to the
unrealized gains and losses.
During 1999, in light of falling gold prices and the prospect of committing $27
million to the new San Martin project in Honduras, the Company opted to protect
its cash flows during the construction and start-up phases at San Martin from
further weakness in the gold market. To that end, it entered into a moderate
hedging program as described in the table below.
The Company also invests cash balances in short-term investments that are
subject to interest rate fluctuations. Because these investments are in highly
liquid, short-term instruments, any impact of an interest rate change would not
be material.
The table below sets forth the positions of the Company at December 31, 1998 and
1999.
Positions as at December 31, 1998
(dollars in thousands, except for per ounce amounts)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Assets: Derivatives: Gold Put Gold Call Gold Call
Short-term Gold Forward Options Options Options
Investments Sales Purchased Sold Purchased
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Maturity 1999
Investments $ 23,000 -- -- -- --
Ounces -- 3,000 -- 10,000 --
Average Price per
Ounce -- $ 294 -- $ 310 --
Fair Market
Value $ 23,000 $ 17 -- Nil --
- ----------------------------------------------------------------------------------------------------
</TABLE>
Positions as at December 31, 1999
(dollars in thousands, except for per ounce amounts)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Assets: Derivatives: Gold Put Gold Call Gold Call
Short-term Gold Forward Options Options Options
Investments Sales Purchased Sold Purchased
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Maturity 2000
Investments $ 46,252 -- -- -- --
Ounces -- 65,000 36,000 19,000 --
Average Price per
Ounce -- $ 288 $ 275 $ 275 --
Fair Market
Value $ 46,252 $ (552) Nil $ (417) --
Maturity 2001
Investments -- -- -- -- --
Ounces -- -- -- 60,000 --
Average Price per
Ounce -- -- -- $ 295 --
Fair Market
Value -- -- -- $ (824) --
- ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 49
-49-
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Index to Financial Statements Page
- ----------------------------- ----
<S> <C>
Report of Independent Chartered Accountants 52
Consolidated Balance Sheets at December 31, 1999 and 1998 53
Consolidated Statements of Operations for the years ended December 31, 1999, 54
1998, and 1997
Consolidated Statements of Retained Earnings (Deficit) for the years ended
December 31, 1999, 1998, and 1997 55
Consolidated Statements of Cash Flows for the years ended December 31, 1999,
1998 and 1997 56
Notes to Consolidated Financial Statements 57
</TABLE>
<PAGE> 50
-50-
Consolidated Financial Statements of
GLAMIS GOLD LTD.
(Expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
<PAGE> 51
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Glamis Gold Ltd.
We have audited the consolidated balance sheets of Glamis Gold Ltd. as at
December 31, 1999 and 1998 and the consolidated statements of operations,
retained earnings (deficit) and cash flows for each of the years ended December
31, 1999, 1998 and 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 1999
and 1998 and the results of its operations and its cash flows for each of the
years ended December 31, 1999, 1998 and 1997 in accordance with Canadian
generally accepted accounting principles.
Accounting principles generally accepted in Canada vary in certain significant
respects from accounting principles generally accepted in the United States.
Application of accounting principles generally accepted in the United States
would have affected results of operations for each of the years ended December
31, 1999, 1998 and 1997 and shareholders' equity as at December 31, 1999 and
1998 to the extent summarized in note 15 to the consolidated financial
statements.
Signed "KPMG LLP"
Chartered Accountants
Vancouver, Canada
February 18, 2000
<PAGE> 52
-52-
GLAMIS GOLD LTD.
Consolidated Balance Sheets
(Expressed in thousands of United States dollars)
December 31, 1999 and 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 55,169 $ 26,170
Accounts receivable 934 986
Taxes recoverable 529 --
Inventories (note 4) 12,182 10,629
Prepaid expenses and other 439 433
--------------------------------------------------------------------------------------------------------
69,253 38,218
Plant and equipment and mine development costs (note 5) 88,900 79,655
Other assets (note 6) 5,579 1,288
- --------------------------------------------------------------------------------------------------------------
$ 163,732 $ 119,161
==============================================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 6,707 $ 3,583
Taxes payable -- 177
Royalties payable 915 302
--------------------------------------------------------------------------------------------------------
7,622 4,062
Reserve for reclamation costs (notes 6 and 14(c)) 13,558 2,523
Deferred income taxes 4,348 2,217
- --------------------------------------------------------------------------------------------------------------
25,528 8,802
Shareholders' equity:
Share capital (note 7):
Authorized:
200,000,000 common shares without par value
5,000,000 preferred shares, Cdn$10 par value, issuable in Series
Issued and fully paid:
69,864,832 (1998 - 38,860,612) common shares 158,717 109,587
Contributed surplus 63 63
Retained earnings (deficit) (20,576) 709
--------------------------------------------------------------------------------------------------------
138,204 110,359
Commitments and contingencies (notes 5, 6 and 14)
- --------------------------------------------------------------------------------------------------------------
$ 163,732 $ 119,161
==============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
On behalf of the Board:
"C. Kevin McArthur" Director "A. Dan Rovig" Director
- ----------------------- -----------------------
<PAGE> 53
-53-
GLAMIS GOLD LTD.
Consolidated Statements of Operations
(Expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue from production $ 57,462 $ 32,869 $ 42,235
Cost of production 47,550 23,296 30,199
- ----------------------------------------------------------------------------------------------------------
9,912 9,573 12,036
Expenses:
Depreciation and depletion 14,692 8,871 11,040
Reclamation 1,273 557 674
Exploration 4,002 34 926
Selling, general and administrative 5,989 2,558 4,017
Write-down of investments and properties 8,223 1,091 4,583
----------------------------------------------------------------------------------------------------
34,179 13,111 21,240
- ----------------------------------------------------------------------------------------------------------
Loss from operations (24,267) (3,538) (9,204)
Interest and amortization of financing costs (160) (63) (49)
Interest and other income (note 8) 2,890 1,543 1,339
- ----------------------------------------------------------------------------------------------------------
Loss before income taxes (21,537) (2,058) (7,914)
Provision for (recovery of) income taxes (note 9):
Current 60 232 (985)
Deferred (312) (283) 1,350
----------------------------------------------------------------------------------------------------
(252) (51) 365
- ----------------------------------------------------------------------------------------------------------
Net loss for the year $(21,285) $ (2,007) $ (8,279)
==========================================================================================================
Basic loss per share $ (0.33) $ (0.06) $ (0.27)
==========================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 54
-54-
GLAMIS GOLD LTD.
Consolidated Statements of Retained Earnings (Deficit)
(Expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
1999 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Retained earnings, beginning of year $ 709 $ 2,716 $ 12,529
Net loss for the year (21,285) (2,007) (8,279)
Dividends -- -- (1,534)
- ------------------------------------------------------------------------------------------
Retained earnings (deficit), end of year $(20,576) $ 709 $ 2,716
==========================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 55
-55-
GLAMIS GOLD LTD.
Consolidated Statements of Cash Flows
(Expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net cash provided by operating activities (note 10) $ 6,191 $ 9,331 $ 12,067
Cash flows from investing activities:
Business acquisitions, net of cash acquired (note 3)
874 (2,225) --
Proceeds from sale of assets acquired on business acquisition
(note 3(a)) 32,560 -- --
Proceeds from sale of equipment (note 5(b)(i)) 7,204 -- --
Purchase of plant and equipment, net of disposals
(3,440) (4,919) (8,403)
Mineral property acquisition and mine development costs
(11,953) (2,845) (2,272)
Proceeds from sale of investments 351 225 --
Purchase of other assets (792) (440) (792)
---------------------------------------------------------------------------------------------------------
24,804 (10,204) (11,467)
Cash flows from (used in) financing activities:
Proceeds from issuance of common shares 2,211 130 1,354
Repayment of mortgage payable and capital lease obligations
acquired (note 3(a)) (4,207) -- --
Dividends -- -- (1,534)
---------------------------------------------------------------------------------------------------------
(1,996) 130 (180)
- ---------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents during the year
28,999 (743) 420
Cash and cash equivalents, beginning of year 26,170 26,913 26,493
- ---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 55,169 $ 26,170 $ 26,913
===============================================================================================================
Supplemental disclosures of cash flow information:
Cash paid (received) during the year for:
Interest $ 160 $ 47 $ 18
Taxes (616) 164 155
===============================================================================================================
</TABLE>
Non-cash financing and investing activities (note 11).
See accompanying notes to consolidated financial statements.
<PAGE> 56
-56-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
1. NATURE OF OPERATIONS:
The Company and its wholly-owned subsidiaries are engaged in the
exploration, development and extraction of precious metals principally in
the States of California and Nevada in the United States of America, the
State of Chihuahua in the Republic of Mexico, and in Honduras, Guatemala,
Panama and El Salvador in Central America.
2. SIGNIFICANT ACCOUNTING POLICIES:
(a) Generally accepted accounting principles:
These consolidated financial statements have been prepared in
accordance with accounting principles and practices that are
generally accepted in Canada, which conform, in all material
respects, with those generally accepted in the United States, except
as explained in note 15.
(b) Principles of consolidation:
The consolidated financial statements include the accounts of the
Company and its direct and indirect wholly-owned subsidiaries. All
material intercompany transactions and balances have been eliminated.
Investments in other companies are carried at cost less provisions
for impairment in value.
(c) Cash equivalents:
Cash equivalents are highly liquid investments, such as term deposits
with major financial institutions, having maturities of three months
or less at acquisition, that are readily convertible to contracted
amounts of cash.
(d) Inventories:
(i) Finished goods inventory is stated at market less refinery
charges.
(ii) Work-in-progress inventory, which is ore on leach pads, consists
of mining costs related to the ore being processed and is stated
at the lower of cost or net realizable value. These costs are
charged to operations and included in cost of production on the
basis of ounces of gold recovered. Based upon actual gold
recoveries and operating plans, the Company continuously
evaluates and refines estimates used in determining the costs
charged to operations and the carrying value of costs associated
with the ore on the leach pads.
<PAGE> 57
-57-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 2
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
(d) Inventories (continued):
(iii) Supplies and spare parts inventory is stated at the lower of
cost, using the first-in, first-out method, or replacement
cost.
(e) Plant and equipment:
Plant and equipment are stated at cost less accumulated depreciation.
Leach pads are depreciated on a unit-of-production basis over
estimated reserves expected to be processed from the leach pad.
Certain mining equipment is depreciated based on hours used over
their estimated useful lives. All other asset categories are
depreciated using the straight-line method over their estimated
useful lives. Estimated useful lives for mining equipment and major
asset categories range from three to seven years. Maintenance and
repairs on major components of rolling stock are accrued on a per
hour basis and charged to expense. Replacements and major
improvements are capitalized.
(f) Mine development costs:
(i) Property acquisition and mine development costs are recorded at
cost and amortized by the unit-of-production method based on
recoverable gold reserves. If it is determined that the
deferred costs related to a property are not recoverable over
its production life, the unrecoverable portion is charged to
earnings in the period such determination is made.
(ii) Mine development costs for current production are charged to
earnings as incurred. Mining costs associated with waste rock
removal are deferred and charged to cost of production on the
basis of life-of-mine average stripping rates for the mine.
Mine development costs incurred to expand operating capacity,
develop new ore bodies or develop mine areas in advance of
current production are deferred and then amortized on a
unit-of-production basis. General and administrative costs are
expensed as incurred.
(iii) Expenditures incurred on properties identified as having
development potential are deferred on a project basis until the
viability of the project is determined. If a project is
abandoned, the accumulated project costs are charged to
earnings in the period in which the determination is made.
Exploration expenditures on properties not advanced enough to
identify their development potential are charged to earnings as
incurred.
(g) Reserve for reclamation costs:
Minimum standards for mine reclamation have been established by
various governmental agencies which affect certain operations of the
Company. A reserve for mine reclamation costs has been established
for restoring certain mining areas based upon estimates of costs to
comply with existing reclamation standards. Mine reclamation costs
for operating properties are accrued using the unit-of-production
method.
<PAGE> 58
-58-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 3
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
(h) Revenue recognition:
Revenue is recognized when metal is ready for shipment to the
refinery.
(i) Income taxes:
(i) Certain expenses are reported in different periods for
income tax and financial statement reporting purposes. The
principal differences result from certain mine development
costs which are expensed as incurred for income tax
purposes and deferred and charged to operations on the
unit-of-production method for financial statement reporting
purposes.
(ii) No provision has been made for withholding tax to which
undistributed earnings of foreign subsidiaries may be
subject when remitted to the Company. Management intends
that all undistributed income in foreign subsidiaries be
reinvested in those subsidiaries indefinitely to provide
for corporate expansion.
New recommendations issued in 1997 by the Accounting Standards Board
of the Canadian Institute of Chartered Accountants will be adopted
effective January 1, 2000 on a retroactive basis without restatement
of prior year's results.
(j) Translation of foreign currencies:
The Company's Canadian operations are considered self-sustaining
operations for the treatment of foreign exchange translation gains or
losses arising from consolidation. Accordingly, the Company uses the
current rate method to translate the accounts of its Canadian
operations to United States dollars as follows:
(i) Assets and liabilities at rates of exchange in effect at the
end of the period;
(ii) Revenues and expenses at the average exchange rate during the
period;
(iii) Material exchange gains and losses arising from translation are
deferred and included as a separate component of shareholders'
equity.
The Company's subsidiaries outside of the United States are treated
as integrated operations and the related accounts are translated into
United States dollars using the temporal method as follows:
(i) Revenues and expenses at average exchange rates for each
period;
(ii) Monetary items at the rates of exchange prevailing at the
balance sheet dates;
(iii) Non-monetary items at the historical exchange rates; and
(iv) Exchange gains and losses arising from translation are included
in the determination of net earnings for each period, except
for exchange gains or losses relating to non-current monetary
assets or liabilities, which are deferred and amortized over
the remaining life of the asset or liability.
<PAGE> 59
-59-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 4
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
(k) Stock-based compensation:
The Company has a stock option plan and a stock-based management
incentive plan, both of which are described in note 7(b). No
compensation expense is recorded for the stock-based plans when the
options or incentives are granted. Any consideration paid by
employees or directors on exercise of stock options is credited to
share capital. Any compensation liability under the stock-based
management incentive plan is accrued as compensation expense.
(l) Estimates:
The preparation of financial statements in conformity with Canadian
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant areas
requiring the use of management estimates relate to the determination
of mineral reserves, reclamation and environmental obligations,
impairment of assets, useful lives for depreciation, depletion and
amortization, and valuation allowances for deferred tax assets.
Actual results could differ from those estimates.
(m) Statements of cash flow:
During 1998, the Company retroactively adopted the new standard
issued by the Canadian Institute of Chartered Accountants regarding
cash flow statements, which established new standards for the
presentation and disclosure of cash flows and related information.
(n) Comparative figures:
Certain of the prior years' comparative figures have been
reclassified to conform with the presentation adopted for the current
year.
<PAGE> 60
-60-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 5
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- -------------------------------------------------------------------------------
3. BUSINESS ACQUISITIONS:
(a) Rayrock Resources Inc.:
Effective February 26, 1999, the Company completed the acquisition of
Rayrock Resources Inc. ("Rayrock"), a Canadian public company. The
terms of the acquisition gave the shareholders of Rayrock the right
to receive either 2.4 common shares of the Company or 1.6 common
shares of the Company and Cdn$3.00 for each Rayrock share held.
BlackRock Ventures Inc. ("BlackRock"), a significant shareholder of
Rayrock and a company that Rayrock was a significant shareholder of,
agreed to acquire the shares of Magin Energy Inc. ("Magin"), a
company that Rayrock held as a long term investment, in lieu of a
portion of the common shares of the Company otherwise issuable to
BlackRock. Rayrock was principally engaged in the exploration for and
the mining, production and sale of gold from mines in Nevada, USA,
and copper from a mine in northern Chile. The transaction was
accounted for by the purchase method and is summarized below:
<TABLE>
<S> <C>
--------------------------------------------------------------------
Net assets acquired, at fair value:
Cash and cash equivalents $ 45,960
Net non-cash working capital 2,287
Mineral properties 43,337
Magin shares 6,364
Investments and other assets 17,636
--------------------------------------------------------------------
115,584
Mortgage payable and capital lease obligations (4,207)
Accrued reclamation and site restoration costs (10,566)
Deferred income taxes (2,442)
--------------------------------------------------------------------
$ 98,369
====================================================================
Consideration given:
Cash and cash equivalents $ 35,073
Issue of 29,277,820 common shares of the Company 46,919
Magin shares 6,364
Transaction costs 10,013
--------------------------------------------------------------------
$ 98,369
====================================================================
</TABLE>
Subsequent to the acquisition of Rayrock, the Company disposed of the
shares of and loans to the subsidiary that held the Chilean copper
mines, and disposed of the BlackRock investments and certain of the
investments and other assets for total net proceeds of $32,560,000.
In addition, the Company paid the mortgage payable and settled the
capital lease obligations assumed with the acquisition of Rayrock.
<PAGE> 61
-61-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 6
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
3. BUSINESS ACQUISITIONS (CONTINUED):
(b) Mar-West Resources Ltd.:
On October 19, 1998, the Company completed an agreement with Mar-West
Resources Ltd. ("Mar-West"), a Canadian public company, to acquire
all of the issued and outstanding shares of Mar-West pursuant to a
plan of arrangement. The terms of the agreement gave the shareholders
of Mar-West the right to receive either 0.5 common shares of the
Company for each Mar-West share held, or 0.4 common shares of the
Company and Cdn$0.48 cash for each Mar-West share held. Mar-West was
an exploration company holding a 100% interest in the San Martin
Project located in central Honduras, a 100% interest in the Cerro
Blanco Project located in Guatemala, as well as interests in other
mineral properties in Central America. The transaction was accounted
for by the purchase method and is summarized below:
<TABLE>
<CAPTION>
------------------------------------------------------------------
<S> <C>
Net assets acquired, at fair market value:
Cash and cash equivalents $ 3,087
Mineral properties 21,648
Capital assets 179
Net non-cash working capital deficiency (220)
------------------------------------------------------------------
$ 24,694
==================================================================
Consideration given:
Cash $ 4,329
Issue of 7,539,905 common shares of the Company 19,701
Transaction costs 664
------------------------------------------------------------------
$ 24,694
==================================================================
</TABLE>
4. INVENTORIES:
<TABLE>
<CAPTION>
----------------------------------------------------------
1999 1998
----------------------------------------------------------
<S> <C> <C>
Finished goods $ 4,411 $ 4,048
Work-in-progress 6,754 5,835
Supplies and spare parts 1,017 746
----------------------------------------------------------
$ 12,182 $ 10,629
==========================================================
</TABLE>
<PAGE> 62
-62-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 7
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
5. PLANT AND EQUIPMENT AND MINE DEVELOPMENT COSTS:
<TABLE>
<CAPTION>
------------------------------------------------------------
1999 1998
------------------------------------------------------------
<S> <C> <C>
Producing properties, net $ 46,706 $ 37,235
Non-producing properties, net 42,194 42,420
-------- --------
$ 88,900 $ 79,655
======== ========
</TABLE>
(a) Producing properties:
1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Rand Picacho Marigold Dee Daisy
California California Nevada Nevada Nevada Other Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Plant and equipment $ 53,037 $ 8,673 $ 3,774 $ 2,910 $ 2,425 $ 1,541 $ 72,360
Mineral property acquisition costs 14,119 5,799 8,073 2,035 2,166 425 32,617
Mine development costs 20,409 9,275 174 3,634 135 1,852 35,479
- -----------------------------------------------------------------------------------------------------------------------------------
87,565 23,747 12,021 8,579 4,726 3,818 140,456
Less accumulated depreciation
and depletion (61,780) (22,887) (1,460) (1,245) (2,821) (3,557) (93,750)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 25,785 $ 860 $ 10,561 $ 7,334 $ 1,905 $ 261 $ 46,706
===================================================================================================================================
</TABLE>
1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Rand Picacho Marigold Dee Daisy
California California Nevada Nevada Nevada Other Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Plant and equipment $ 52,928 $ 7,930 $ -- $ -- $ -- $ 1,332 $ 62,190
Mineral property acquisition costs 13,887 5,799 -- -- -- 425 20,111
Mine development costs 17,036 9,275 -- -- -- 1,852 28,163
- -----------------------------------------------------------------------------------------------------------------------------------
83,851 23,004 -- -- -- 3,609 110,464
Less accumulated depreciation
and depletion (48,592) (22,462) -- -- -- (2,175) (73,229)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 35,259 $ 542 $ -- $ -- $ -- $ 1,434 $ 37,235
===================================================================================================================================
</TABLE>
At December 31, 1999, all of the Company's producing properties are
held 100%, except for the Marigold Mine, which is 66-2/3% held. The
Company's producing properties are subject to royalties pursuant to
the terms of the underlying acquisition, option or lease agreements,
that range up to 10% of net smelter returns and provide for minimum
payments which vary with the price of gold aggregating approximately
$1,000,000 per year.
<PAGE> 63
-63-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 8
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
5. PLANT AND EQUIPMENT AND MINE DEVELOPMENT COSTS (CONTINUED):
(b) Non-producing properties:
1999
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Cerro
Imperial San Martin Blanco
California Honduras Guatemala Other Total
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Plant and equipment $ 132 $ 1,497 $ 98 $ 21 $ 1,748
Mineral property acquisition costs 3,330 13,370 8,000 563 25,263
Mine development costs 10,182 4,995 -- 6 15,183
----------------------------------------------------------------------------------------------
$ 13,644 $ 19,862 $ 8,098 $ 590 $ 42,194
==============================================================================================
</TABLE>
1998
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Cerro
Imperial San Martin Blanco
California Honduras Guatemala Other Total
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Plant and equipment $ 7,336 $ 68 $ 76 $ -- $ 7,480
Mineral property acquisition costs 3,330 13,167 8,000 563 25,060
Mine development costs 9,361 346 173 -- 9,880
----------------------------------------------------------------------------------------------
$ 20,027 $ 13,581 $ 8,249 $ 563 $ 42,420
==============================================================================================
</TABLE>
(i) Imperial Project:
The Imperial Project consists of a 100% interest in certain
unpatented mining claims located in eastern Imperial County in
the State of California. Gold production is subject to a net
smelter return royalty of 1-1/2%. During 1996, the Company
entered into an agreement for the purchase of equipment
totalling approximately $7,800,000 of which $7,001,000 was paid
as a deposit. During 1999, the equipment was sold for
$7,204,000.
Permits to operate the project have not been issued within the
timeframes reasonably anticipated by the Company. Although no
final decisions on the Company's permit applications have been
made, opposition to the project has been supported by recent
legal interpretations issued by the U.S. Department of the
Interior. The Company continues to seek project approval and to
explore all available means of protecting its investment in the
Imperial Project.
(ii) San Martin Project:
The San Martin Project was acquired in 1998 (note 3(b)) and is
an advanced-stage gold property consisting of a 100% interest
in one exploration concession covering 14,100 hectares in
central Honduras. During 1999, the Company completed a
feasibility study on the San Martin Project and commenced
construction of the mine in December 1999.
<PAGE> 64
-64-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 9
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
5. PLANT AND EQUIPMENT AND MINE DEVELOPMENT COSTS (CONTINUED):
(b) Non-producing properties (continued):
(iii) Cerro Blanco Project:
The Cerro Blanco Project was acquired in 1998 (note 3(b)) and
is an advanced-stage gold property consisting of a 100%
interest in one granted concession and eight concession
applications in southern Guatemala.
6. OTHER ASSETS:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
1999 1998
----------------------------------------------------------------------------------------
<S> <C> <C>
Environmental bonds - restricted deposits (see note below) $5,144 $ 714
Investment in other companies (quoted market value $555,000;
1998 - $530,000) 316 20
Other 119 554
----------------------------------------------------------------------------------------
$5,579 $1,288
========================================================================================
</TABLE>
Environmental bonds - restricted deposits:
During 1997, the Company entered into an agreement with a bonding company
to issue reclamation bonds to regulatory authorities as security for
future reclamation costs for the Company's California operations. The
Company must provide collateral of 25% of the outstanding bond amount as
either a cash deposit or a letter of credit and pay an annual fee of
0.875% of the face amount of the bonds. As at December 31, 1999, the
bonding company had issued reclamation bonds in the amount of $4,377,540
(1998 - $3,894,000) of which the Company provided letters of credit
totalling $1,094,385 (1998 - $687,000). The letters of credit are secured
with cash deposits totalling $1,280,385 which earn interest at fixed rates
between 5.02% and 5.35% (1998 - 5%).
Additional certificates of deposit totaling $3,700,000 are in place as
part of the Company's bonding related to its Nevada mines.
<PAGE> 65
-65-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 10
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
7. SHARE CAPITAL:
(a) Issued and fully paid:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
Number of
shares Amount
---------------------------------------------------------------------------------------------
<S> <C> <C>
Balance as at December 31, 1996 31,004,707 $ 88,296
Issued during the year:
For cash consideration under the terms of directors'
and employees' stock options 218,000 1,354
---------------------------------------------------------------------------------------------
Balance as at December 31, 1997 31,222,707 89,650
Issued during the year:
For cash consideration under the terms of directors'
and employees' stock options 73,000 130
Issued upon acquisition of Mar-West (note 3(b)) 7,539,905 19,701
Issued upon acquisition of remaining 40% interest in
the Cieneguita Project 25,000 106
---------------------------------------------------------------------------------------------
Balance as at December 31, 1998 38,860,612 109,587
Issued during the year:
For cash consideration under the terms of directors'
and employees' stock options 1,726,400 2,211
Issued upon acquisition of Rayrock Resources Inc.
(note 3(a)) 29,277,820 46,919
---------------------------------------------------------------------------------------------
Balance as at December 31, 1999 69,864,832 $ 158,717
=============================================================================================
</TABLE>
(b) Stock options:
The Company has a stock option plan that allows it to grant options
to its employees, officers and directors to acquire up to 7 million
common shares. The exercise price of each option equals the closing
price for the common shares on the Toronto Stock Exchange on the last
trading day before the date of the grant. Options have a maximum term
of five years and terminate thirty days following the termination of
the optionee's employment for cause. In all other cases, they
terminate one year after the event. Once approved and vested, options
are exercisable at any time.
Stock options granted during the year ended December 31, 1999 under
the terms of directors' and employees' stock option plans, and
through the continuance of Rayrock options upon the acquisition of
Rayrock effective February 26, 1999, were at prices ranging from
Cdn$1.99 to Cdn$5.90 per share (1998 - Cdn$0.50 to Cdn$5.15 per
share), with an average exercise price of Cdn$3.07 per share (1998 -
Cdn$2.53 per share).
<PAGE> 66
-66-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 11
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
7. SHARE CAPITAL (CONTINUED):
(b) Stock options (continued):
At December 31, 1999, a total of 1,622,500 common shares for
directors and officers, 272,000 common shares for employees and
3,259,460 common shares granted through continuance of the Mar-West
and Rayrock option plans, were reserved for issuance under options
granted. These options expire at varying dates to June 1, 2004 and
are exercisable at prices ranging from Cdn$1.99 to Cdn$5.90 per
share, with an average exercise price of Cdn$3.25 per share (1998 -
2,610,500 options with an average exercise price of Cdn$4.39 per
share). Of the 1,622,500 outstanding options granted to directors and
officers, a total of 340,000 are subject to shareholder approval.
The continuity of directors' and employees' stock options (in
thousands of shares) is as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
1999 1998 1997
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance outstanding, beginning of year 2,610 1,870 950
Granted during the year 1,995 387 1,273
Granted on conversion of Mar-West employees' and directors'
stock options -- 533 --
Granted on conversion of Rayrock Resources employees' and
directors' stock options 4,470 -- --
Exercised at an average price of Cdn$1.90 (1998 - Cdn$2.62;
1997 - Cdn$8.75) (1,726) (73) (218)
Cancelled during the year (2,195) (107) (135)
-------------------------------------------------------------------------------------------------------
Balance outstanding, end of year 5,154 2,610 1,870
=======================================================================================================
</TABLE>
The Company also has a stock-based management incentive plan that
allows it to grant rights for a holder to receive the appreciation in
the value of the stock-based right over the stated base price in
cash. As at December 31, 1999, the Company had 200,000 stock
appreciation rights outstanding at a base price of Cdn$4.80 per share
that expire July 14, 2003 and 600,001 stock appreciation rights at a
base price of Cdn$2.22 per share that expire February 26, 2002. The
600,001 stock appreciation rights were granted to a former officer of
Rayrock through the continuance of Rayrock stock appreciation rights.
8. INTEREST AND OTHER INCOME
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
1999 1998 1997
------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income $ 1,822 $ 1,740 $ 1,385
Foreign exchange gain (loss) 221 (41) (46)
Gain (loss) on sale of investments 847 (156) --
------------------------------------------------------------------------------------
$ 2,890 $ 1,543 $ 1,339
===================================================================================
</TABLE>
<PAGE> 67
-67-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 12
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
9. INCOME TAXES:
The provision for income taxes differs from the Canadian federal and
British Columbia provincial statutory rate as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
1999 1998 1997
---------------------------------------------------------------------------------------------------------------------
Amount Rate % Amount Rate % Amount Rate %
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income tax benefit computed at
statutory rates $(9,821) (45.6) $ (938) (45.6) $(3,609) (45.6)
Foreign tax rates different from
statutory rate 1,974 9.2 272 13.2 2,742 34.6
Benefit of losses (utilization of
deductions) not reflected in the
accounts 7,844 36.4 -- -- (396) (5.0)
Other (249) (1.2) 615 29.9 1,628 20.6
---------------------------------------------------------------------------------------------------------------------
$ (252) (1.2) $ (51) (2.5) $ 365 4.6
=====================================================================================================================
</TABLE>
(a) Potential future tax benefits:
At December 31, 1999, the Company has Canadian tax pools of
approximately Cdn$8 million, United States operating losses of
approximately $3 million, Mexican operating losses of approximately
Pesos $15 million (approximately $1 million), and certain Honduran
and Guatemalan tax deductions available which may be carried forward
and used to reduce certain taxable income in future years. The
potential income tax benefits related to these items have not been
reflected in the accounts.
(b) Deferred income taxes:
Deferred income taxes arising from reporting expenses for tax
purposes at amounts differing from those charged to earnings are as
follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
1999 1998 1997
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Depreciation, depletion and amortization $ (1,577) $ (818) $ 873
Exploration and development cost 455 301 (290)
Revenue not recognized for tax purposes, net 111 58 188
Other 699 176 579
----------------------------------------------------------------------------------------
$ (312) $ (283) $ 1,350
========================================================================================
</TABLE>
<PAGE> 68
-68-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 13
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
10. RECONCILIATION OF NET EARNINGS (LOSS) TO NET CASH PROVIDED BY OPERATING
ACTIVITIES:
The computation of net cash provided by operating activities is as
follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
1999 1998 1997
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net loss for the year $(21,285) $ (2,007) $ (8,279)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and depletion 14,692 8,871 11,040
Reserve for reclamation costs 744 316 628
Write-down of investments and properties 8,223 1,091 4,583
Deferred income taxes (312) (283) 1,350
Loss (gain) on sale of investments (339) 156 --
Other non-cash expenses 298 16 31
Decrease (increase) in accounts receivable 1,214 (646) (134)
Decrease (increase) in taxes recoverable/payable (10) 1,220 (1,540)
Decrease in inventories 2,050 1,230 3,905
Decrease (increase) in prepaid expenses and other 1,167 (11) (164)
Increase (decrease) in accounts payable and accrued
liabilities (864) (530) 807
Increase (decrease) in royalties payable 613 (92) (160)
-----------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 6,191 $ 9,331 $ 12,067
=====================================================================================================
</TABLE>
11. NON-CASH INVESTING ACTIVITIES:
During the years ended December 31, 1999 and 1998, the Company issued
common shares pursuant to the following transactions:
1999:
The acquisition of all the issued and outstanding shares of Rayrock
for consideration as follows (also see note 3(a)):
<TABLE>
<S> <C>
---------------------------------------------------------------------------
Fair value of assets acquired $ 98,369
Less cash and transaction costs paid (45,086)
---------------------------------------------------------------------------
$ 53,283
===========================================================================
---------------------------------------------------------------------------
Non-cash consideration consisted of:
Consideration paid through the issuance of common shares $ 46,919
Consideration paid through the transfer of Magin shares 6,364
---------------------------------------------------------------------------
$ 53,283
===========================================================================
</TABLE>
<PAGE> 69
-69-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 14
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
11. NON-CASH INVESTING ACTIVITIES:
1998:
(a) The acquisition of all the issued and outstanding shares of Mar-West
for consideration as follows (also see note 3(b)):
<TABLE>
<S> <C>
--------------------------------------------------
Fair value of assets acquired $ 24,694
Less cash and transaction costs paid (4,993)
--------------------------------------------------
$ 19,701
==================================================
</TABLE>
(b) The acquisition of the remaining 40% interest in the Cieneguita
Project for consideration as follows:
<TABLE>
<CAPTION>
<S> <C>
-------------------------------------------------------------------------
Fair value of assets acquired $ 733
Less cash and transaction costs paid (319)
-------------------------------------------------------------------------
$ 414
=========================================================================
-------------------------------------------------------------------------
Non-cash consideration consisted of:
Cancellation of amounts receivable $ 308
Consideration paid through the issuance of common shares 106
-------------------------------------------------------------------------
$ 414
=========================================================================
</TABLE>
There were no non-cash investing activities in 1997.
12. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT:
(a) Hedging:
In order to protect against the impact of declining gold prices, the
Company has entered into forward sales and option contracts to
effectively provide a minimum price for a portion of inventories and
future production. Contracted prices on forward sales and options are
recognized in revenues as designated production is delivered to meet
commitments.
As at December 31, 1998, the Company had outstanding call options on
10,000 ounces of gold at $310 per ounce expiring in January 1999 and
had forward sales contracts for 3,000 ounces of gold at $294 per
ounce expiring January 1999.
<PAGE> 70
-70-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 15
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
12. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED):
(a) Hedging (continued):
As at December 31, 1999, the Company had sold call options on 79,000
ounces of gold at an average price of $290 per ounce expiring during
2000 and 2001, had put options on 36,000 ounces of gold exercisable
at an average price of $275 per ounce expiring through December 2000,
and had forward sales contracts for 65,000 ounces of gold for
delivery during 2000 at an average price of $288 per ounce.
At December 31, 1999, the unrealized loss in respect of open forward
sales contracts is approximately $552,000 (1998 - $17,000 gain) and
in respect of open call option contracts on is approximately
$1,241,000 (1998 - nil), which reflects the strike price compared to
the quoted gold price. The value of the Company's put options at
December 31, 1999 was nominal.
(b) Carrying value and fair value of financial instruments:
Except as disclosed elsewhere in these financial statements, the
carrying amounts for the Company's financial instruments approximate
fair values due to the short term to maturity of such instruments.
(c) Credit risk:
The Company monitors the financial condition of its customers and
counterparties to contracts and considers the risk of material loss
to be remote.
13. SEGMENTED INFORMATION:
During 1998, the Company adopted the accounting standards related to
segment disclosures recently approved by the accounting standard-setting
bodies in Canada and the United States. The information presented below is
consistent with those standards. The accounting policies of all segments
are consistent with those outlined in note 2 - significant accounting
policies. The Company has not allocated general and administrative
expenses from the corporate segment.
(a) Operating segments:
The Company has determined its operating segments to be producing
mines and exploration and development properties, based on the way
management organizes and manages its business.
<PAGE> 71
-71-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 16
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
13. SEGMENTED INFORMATION (CONTINUED):
(a) Operating segments (continued):
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Producing Non-
properties producing
1999 Gold Copper properties Corporate Total
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue $ 48,480 $ 8,485 $ 497 $ -- $ 57,462
Cost of production 37,212 9,805 533 -- 47,550
Depreciation and depletion 10,676 2,320 164 1,532 14,692
Write-down of investments and
properties 6,824 -- 1,221 178 8,223
Other operating expenses 1,615 1,545 2,509 5,595 11,264
--------------------------------------------------------------------------------------------------
Loss from operations (7,847) (5,185) (3,930) (7,305) (24,267)
Other income 406 50 175 2,099 2,730
--------------------------------------------------------------------------------------------------
Loss before taxes $ (7,441) $ (5,135) $ (3,755) $ (5,206) $ (21,537)
==================================================================================================
Capital expenditures $ 7,744 $ 1,860 $ 7,797 $ 248 $ 17,649
==================================================================================================
Identifiable assets $ 64,032 $ -- $ 42,194 $ 57,506 $ 163,732
==================================================================================================
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Producing
properties Non-producing
1998 (gold) properties Corporate Total
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 32,869 $ -- $ -- $ 32,869
Cost of production 23,296 -- -- 23,296
Depreciation and depletion 8,782 -- 89 8,871
Write-down of investments and
properties -- -- 1,091 1,091
Other operating expenses 669 -- 2,480 3,149
--------------------------------------------------------------------------------------------
Earnings (loss) from operations 122 -- (3,660) (3,538)
Other income 79 -- 1,401 1,480
--------------------------------------------------------------------------------------------
Earnings (loss) before taxes $ 201 $ -- $ (2,259) $ (2,058)
============================================================================================
Capital expenditures $ 6,290 $ 23,714 $ 87 $ 30,091
============================================================================================
Identifiable assets $ 47,726 $ 42,875 $ 28,560 $ 119,161
============================================================================================
</TABLE>
<PAGE> 72
-72-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 17
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
13. SEGMENTED INFORMATION (CONTINUED):
(a) Operating segments (continued):
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Producing Non-producing
properties development
1997 (gold) properties Corporate Total
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 42,235 $ -- $ -- $ 42,235
Cost of production 30,199 -- -- 30,199
Depreciation and depletion 10,794 -- 246 11,040
Write-down of investments and
properties 1,458 -- 3,125 4,583
Other operating expenses 1,235 -- 4,382 5,617
--------------------------------------------------------------------------------------------
Earnings (loss) from operations (1,451) -- (7,753) (9,204)
Other income (expense) (156) -- 1,446 1,290
--------------------------------------------------------------------------------------------
Earnings (loss) before taxes $ (1,607) $ -- $ (6,307) $ (7,914)
===========================================================================================
Capital expenditures $ (586) $ 11,035 $ 226 $ 10,675
===========================================================================================
Identifiable assets $ 52,693 $ 18,535 $ 30,415 $ 101,643
===========================================================================================
</TABLE>
(b) Geographic information:
<TABLE>
<CAPTION>
---------------------------------------------------------------------
North Latin
1999 America America Total
---------------------------------------------------------------------
<S> <C> <C> <C>
Revenue $ 48,490 $ 8,972 $ 57,462
=====================================================================
Loss from operations $ (17,452) $ (6,815) $ (24,267)
=====================================================================
Loss before taxes $ (14,882) $ (6,655) $ (21,537)
=====================================================================
Identifiable assets $ 134,044 $ 29,688 $ 163,732
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------
North Latin
1998 America America Total
---------------------------------------------------------------------
<S> <C> <C> <C>
Revenue $ 32,869 $ -- $ 32,869
=====================================================================
Loss from operations $ (3,538) $ -- $ (3,538)
=====================================================================
Loss before taxes $ (2,058) $ -- $ (2,058)
=====================================================================
Identifiable assets $ 94,917 $ 24,244 $ 119,161
=====================================================================
</TABLE>
<PAGE> 73
-73-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 18
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- -------------------------------------------------------------------------------
In 1997 and prior years, all revenues and substantially all expenses
and assets were in North America.
14. COMMITMENTS AND CONTINGENCIES:
(a) Operating leases:
The Company has entered into operating leases for office premises and
equipment. Minimum annual lease payments required are approximately
as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------
Minimum lease
Fiscal year payments
--------------------------------------------------------------
<S> <C>
2000 $295
2001 294
2002 297
2003 298
2004 150
</TABLE>
(b) Capital expenditures:
At December 31, 1999, the Company had commenced construction of the
mine at the San Martin Project at an estimated capital cost of
$27,000,000 and had committed to construction contracts totalling
$5,400,000.
(c) Reserve for reclamation costs:
The Company's operations are affected by federal, state and local
laws and regulations concerning environmental protection. Under
current regulations, the Company is required to meet performance
standards to minimize environmental impact from operations and to
perform site restoration and other closure activities. The Company's
provisions for future reclamation and site restoration costs are
based on known requirements. It is not currently possible to estimate
the impact on operating results, if any, of future legislative or
regulatory development.
(d) Year 2000 Issue:
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems
may recognize the year 2000 as 1900 or some other date, resulting in
errors when information using year 2000 dates is processed. In
addition, similar problems may arise in some systems which use
certain dates in 1999 to represent something other than a date.
Although the change in date has occurred, it is not possible to be
certain that all aspects of the Year 2000 Issue that may affect the
Company, including those related to customers, suppliers or other
third parties, have been fully resolved.
<PAGE> 74
-74-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 1*
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
15. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES:
Accounting practices under Canadian and United States generally accepted
accounting principles, as they affect the Company, are substantially the
same, except for the following:
(a) Accounting for income taxes:
United States accounting principles require the use of the asset and
liability method of accounting for income taxes. Under the asset and
liability method, deferred income taxes are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred taxes of a change in tax
rates is recognized in income in the period that includes the
enactment date.
Under United States accounting principles, at December 31, 1999 and
1998, deferred income taxes payable would be increased by
approximately $5,000,000 each year over the amount presented under
Canadian accounting principles, with a coinciding increase to the
carrying value of the San Martin and Cerro Blanco mineral properties.
Under United States accounting principles, the amount reported for
loss for the December 31, 1999 and 1998 fiscal years would be the
same as that presented under Canadian accounting principles. However,
under United States accounting principles, the amount reported for
loss for the December 31, 1997 fiscal year would be increased by
$1,151,000.
The tax effect of the Company's temporary differences that give rise
to the deferred income tax balance as at December 31, 1999 are
deferred tax assets of $8,013,000 (1998 - $2,267,000) primarily for
losses carried forward, Alternative Minimum Tax credit carry
forwards, inventory and the reserve for reclamation costs, for which
a valuation allowance of $4,654,000 (1998 - nil) has been applied,
and deferred tax liabilities of $7,707,000 (1998 - $4,484,000)
primarily for plant and equipment and mine development costs and
revenue not recognized for tax purposes.
<PAGE> 75
-75-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 20
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
15. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (CONTINUED):
(b) Accounting for investments in debt and equity securities:
Statement of Financial Accounting Standards No. 115, Accounting for
Investments in Debt and Equity Securities, requires that portfolio
investments that have readily determinable fair values and are held
principally for sale in the near term be presented at fair value with
their unrealized holding gains and losses included in earnings.
Investments that have readily determinable fair values and, while not
held principally for sale in the near term, are available-for-sale,
must also be presented at fair value with their holding gains and
losses reported in a separate component of shareholders' equity until
realized. Both of these types of investments are presented on a cost
basis under Canadian accounting principles.
Under United States accounting principles, other assets and
unrealized holding gains in shareholders' equity at December 31, 1999
would each be increased by $239,000 (1998 - $510,000).
(c) Accounting for long-lived assets:
Under generally accepted accounting principles in the United States,
the portion of the write-down of investments and properties relating
to mineral properties would have been calculated using discounted
estimated future cash flows. Under such calculation methods, using a
discount rate of 5%, an additional write-down of $500,000 would have
been recorded during 1999.
(d) Stock based compensation:
Under generally accepted accounting principles in the United States,
stock-based compensation is accounted for based on a fair value
methodology although the effects may be disclosed in the notes to the
financial statements rather that in the statement of operations,
which the Company has elected to do. The fair value of stock options
granted to directors, officers and employees during 1999 was
estimated to be $453,000 (1998 - $1,224,000; 1997 - $1,441,000) and
accordingly, would have increased the reported loss by the above
noted amounts.
(e) Comprehensive income:
Generally accepted accounting principles in the United States require
that a company classify items of other comprehensive income by their
nature in a financial statement and display the accumulated balance
of other comprehensive income separately from retained earnings
(deficit) and additional paid-in capital in the equity section of the
balance sheet.
Under United States accounting principles, other comprehensive income
(loss) for the year ended December 31, 1999 would be $271,000 (1998 -
$510,000; 1997 - nil).
<PAGE> 76
-76-
GLAMIS GOLD LTD.
Notes to Consolidated Financial Statements, page 21
(Tables expressed in thousands of United States dollars)
Years ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
15. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (CONTINUED):
A reconciliation of the net loss for the year as shown in these
consolidated financial statements to the net loss for the year in
accordance with United States accounting principles, excluding the effects
of Statement 123, and to comprehensive income (loss) for the year using
United States accounting principles, is as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
1999 1998 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net loss for the year in these consolidated
financial statements $(21,285) $ (2,007) $ (8,279)
Adjustment for income taxes -- -- (1,151)
Adjustment for long-lived assets (500) -- --
---------------------------------------------------------------------------------------
Net loss for the year using United States
accounting principles (21,785) (2,007) (9,430)
Other comprehensive income (loss), net of tax:
Change in unrealized holding gains on
investments (271) 510 --
---------------------------------------------------------------------------------------
Comprehensive loss for the year using United
States accounting principles $(22,056) $ (1,497) $ (9,430)
=======================================================================================
Basic loss per share $ (0.33) $ (0.06) $ (0.30)
=======================================================================================
Diluted loss per share $ (0.33) $ (0.06) $ (0.30)
=======================================================================================
</TABLE>
Shareholders' equity under United States accounting principles would be as
follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
1999 1998
--------------------------------------------------------------------
<S> <C> <C>
Shareholders' equity:
Common stock $ 158,717 $ 109,587
Contributed surplus 63 63
Unrealized holding gains 239 510
Retained earnings (deficit) (21,076) 709
--------------------------------------------------------------------
$ 137,943 $ 110,869
====================================================================
</TABLE>
SUPPLEMENTARY DATA :
<PAGE> 77
-77-
SELECTED QUARTERLY DATA FOR THE YEARS ENDED DECEMBER
31, 1999, 1998, AND 1997 (Expressed in thousands
of dollars, except for per common share amounts)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
----------- ----------- ----------- ----------- --------
(unaudited) (unaudited) (unaudited) (unaudited) (audited)
<S> <C> <C> <C> <C> <C>
Fiscal Year Ended December 31, 1998
Revenue $ 7,986 $ 14,758 $ 15,683 $ 19,036 $ 57,462
Gross profit 658 521 3,380 5,353 9,912
Earnings (loss) from operations (3,526) (4,365) (4,026) (12,347) (24,267)
Net earnings (loss) (3,321) (2,681) (2,961) (12,321) (21,285)
Net earnings (loss) per Common Share (0.07) (0.03) (0.04) (0.19) (0.33)
Fiscal Year Ended December 31, 1998
Revenue $ 8,955 $ 8,189 $ 8,244 $ 7,481 $ 32,869
Gross profit 3,264 2,417 2,709 1,183 9,573
Earnings (loss) from operations 144 (597) (182) (2,903) (3,538)
Net earnings (loss) 334 (142) 205 (2,404) (2,007)
Net earnings (loss) per Common Share 0.01 (0.00) (0.00) (0.07) (0.06)
Fiscal Year Ended December 31, 1997
Revenue $ 11,359 $ 11,092 $ 10,297 $ 9,487 $ 42,235
Gross profit 5,118 4,088 2,120 710 12,036
Earnings (loss) from operations 1,225 (697) (1,557) 8,175 (9,204)
Net earnings (loss) 1,151 (584) (909) 7,937 (8,279)
Net earnings (loss) per Common Share 0.04 (0.02) (0.03) (0.26) (0.27)
</TABLE>
Note: In the third quarter 1999 the Company changed its method of calculating
cost of production to conform to the Gold Institute standard. Previous periods
have been restated for consistency. This entailed including royalties in cash
cost of production (previously disclosed separately) and excluding reclamation
accruals.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Information concerning the Company's Directors is set forth in the section
entitled "Election of Directors" of the Proxy Statement which is to be filed
within 120 days after the end of the Company's fiscal year, and is incorporated
herein by reference. Information concerning the Company's Executive Officers is
set forth in Part I, Item 1 herein under the section entitled "Executive
Officers of the Company":
<PAGE> 78
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ITEM 11 - EXECUTIVE COMPENSATION
Incorporated herein by reference is the section entitled "Executive
Compensation" of the Proxy Statement, but excluding the subsection, "Corporate
Compensation Committee Report on Executive Compensation," which is to be filed
within 120 days after the end of the fiscal year.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference is the section entitled "Stock Ownership of
Certain Beneficial Owners and Management" of the Proxy Statement that is to be
filed within 120 days after the end of the fiscal year.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference is the section entitled "Certain Relationships
and Related Transactions" of the Proxy Statement which is to be filed within 120
days after the end of the fiscal year.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements and Financial Statement Schedules
1. The following consolidated financial statements of the Company
are included in Part II, Item 8:
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Chartered Accountants 52
Consolidated Balance Sheets at December 31, 1999 and 1998 53
Consolidated Statements of Operations for the years ended December
31, 1999, 1998 and 1997. 54
Consolidated Statements of Retained Earnings (Deficit) for the years
ended December 31, 1999, 1998 and 1997. 55
Consolidated Statements of Cash Flows for the years ended December
31, 1999, 1998 and 1997 56
Notes to Consolidated Financial Statements 57
</TABLE>
2. Financial schedules included in Part IV, Item 14:
All schedules are omitted because they are not applicable
or the required information is shown in the financial
statements or notes thereto.
3. Exhibits required to be filed by Item 601 of Regulation
S-K.
<PAGE> 79
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Exhibits 21, 23.1, 23.2 and 27 are filed herewith. All other exhibits are
incorporated by reference as indicated below.
<TABLE>
<CAPTION>
Exhibit No. Exhibit Description
----------- -------------------
<S> <C>
3.1 Certified copy of Memorandum and Articles of the Company as
amended (incorporated herein by reference to the Form 20-F
for the year ended June 30, 1988 and to the Form S-8 dated
March 12, 1988).
4.1 Warrant Indenture between the Company and Canada Permanent
Trust Company dated December 12, 1985 (incorporated herein
by reference to the Form 20-F for the year ended June 30,
1988).
4.2 Trust Deed between the Company and Montreal Trust Company
of Canada dated April 29, 1991 (incorporated herein by
reference to the Form 10-Q for the quarter ended September
30, 1993).
10.1 Mining Lease between Chemgold, Inc. and Picacho Development
Corp. dated September 24, 1979 (incorporated herein by
reference to the Form 20-F for the year ended June 30,
1988).
10.2 Mining Option Agreement between War Eagle Joint Venture and
Chemgold, Inc. dated August 13, 1984 (incorporated herein
by reference to the Form 20-F for the year ended June 30,
1988).
10.7 Imperial County Joint Venture Agreement among the Company,
Glamis Gold, Inc., Amir Mines Ltd. and Amir Mines (U.S.)
Inc. dated November 24, 1987 (incorporated herein by
reference to the Form 20-F for the year ended June 30,
1988).
10.8 Assignment and Novation Agreement among the Company, Glamis
Gold, Inc., Amir Mines Ltd. and Imperial Gold Corporation
dated February 1, 1988 (incorporated herein by reference to
the Form 20-F for the year ended June 30, 1988).
10.9 Mining Lease among Glamis Gold, Inc., Thomas B. Thedford
and Alice J. Thedford dated December 29, 1987 (incorporated
herein by reference to the Form 20-F for the year ended
June 30, 1988).
10.15 Management Agreement between the Company and Chemgold, Inc.
dated August 1, 1983, as amended (incorporated herein by
reference to the Form 20-F for the year ended June 30,
1988).
10.21 Purchase Agreement effective July 2, 1991 between Rand
Mining Company and DRX, Inc. and Westland Minerals
Exploration Co. (incorporated herein by reference to the
Form 10-K for the year ended June 30, 1993).
10.22 Option to Purchase Agreement dated May 18, 1990 between
Rand Mining Company and Echo Bay Explorations, Inc.
(incorporated herein by reference to the Form 10-K for the
year ended June 30, 1993).
10.23 Royalty purchase agreement dated September 28, 1990 between
Glamis Gold Exploration, Inc. and Echo Bay Explorations,
Inc. (incorporated herein by reference to the Form 10-K for
the year ended June 30, 1993).
10.24 Royalty purchase agreement dated August 31, 1990 between
Glamis Gold Exploration, Inc.
</TABLE>
<PAGE> 80
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<TABLE>
<S> <C>
and DRX, Inc. and Westland Minerals Exploration Co.
(incorporated herein by reference to the Form 10-K for the
year ended June 30, 1993).
10.25 Exploration and option to joint venture agreement dated
June 29, 1991 between Glamis Gold Exploration, Inc. and
DRX, Inc. and Westland Minerals Exploration Co.
(incorporated herein by reference to the Form 10-K for the
year ended June 30, 1993).
10.36 Purchase Agreement dated January 27, 1994 between Glamis
Gold Exploration, Inc. and Imperial Gold Corporation
(incorporated herein by reference to the Form 10-Q for the
quarter ended March 31, 1994).
10.46 Letter Agreement dated August 14, 1998 pertaining to the
acquisition of Mar-West Resources Ltd. by the Registrant.
10.47 Arrangement Agreement between the Registrant and Mar-West
Resources Ltd. made as of August 14, 1998.
10.48 Amended Incentive Share Purchase Option Plan dated for
reference September 30, 1995.
10.49 Letter Agreement made between the Registrant and Rayrock
Resources Inc. dated November 19, 1998.
10.50 Amending Agreement between the Registrant and Rayrock
Resources Inc. dated January 23, 1999.
10.51 Arrangement Agreement between the Registrant and Rayrock
Resources Inc. made as of January 25, 1999.
10.52 Audited consolidated balance sheets of Rayrock Resources
Inc. as at December 31, 1998 and December 31, 1997 and the
consolidated statements of earnings, retained earnings and
changes in financial position for each of the years ended
December 31, 1998, 1997 and 1996 dated February 26, 1999.
10.53 Unaudited pro-forma consolidated financial statements of
Glamis Gold Ltd. for the year ended December 31, 1998 dated
February 26, 1999.
10.59 Shareholder Rights Plan dated February 25, 2000.
10.60* Management Agreement between the Registrant and C. Kevin
McArthur dated January 1, 2000.
10.61* Management Agreement between the Registrant and Charles A.
Jeannes dated January 1, 2000
10.62* Management Agreement between the Registrant and James S.
Voorhees dated January 1, 2000 (management contracts to be
numbered)
10.63* Management Agreement between the Registrant and David L.
Hyatt dated January 1, 2000
10.64* Management Agreement between the Registrant and Steven L.
Baumann dated January 1, 2000
</TABLE>
<PAGE> 81
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<TABLE>
<S> <C>
10.65* Management Agreement between the Registrant and Cheryl S.
Maher dated March 1, 2000
* Represents a management contract, compensation plan or
arrangement required to be filed as an exhibit to this
report.
21. List of Subsidiaries
23.1 Consent of Auditors (KPMG LLP Chartered Accountants)
23.2 Consent of Mine Reserves Associates, Inc.
27. Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
Filed on March 8, 2000, regarding adoption of a Shareholder Rights
Plan dated February 25, 2000.
<PAGE> 82
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
GLAMIS GOLD LTD.
By: "C. Kevin McArthur" March 24, 2000
-------------------------------------------------
C. Kevin McArthur, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
By: "A. Dan Rovig" March 24,2000
-------------------------------------------------
A. Dan Rovig
Chairman of the Board
By: "C. Kevin McArthur" March 24, 2000
-------------------------------------------------
C. Kevin McArthur, President,
Chief Executive Officer and Director
(Principal Executive Officer)
By: "James R. Billingsley" March 24, 2000
-------------------------------------------------
James R. Billingsley, Director
By: "Ian S. Davidson" March 24, 2000
------------------------------------------------
Ian S. Davidson, Director
By: "Jean Depatie" March 24, 2000
-------------------------------------------------
Jean Depatie, Director
By: "Leonard Harris" March 24, 2000
-------------------------------------------------
Leonard Harris, Director
<PAGE> 83
By: "Kenneth F. Williamson" March 24, 2000
-------------------------------------------------
Kenneth F. Williamson, Director
By: "Cheryl S. Maher" March 24, 2000
-------------------------------------------------
Cheryl S. Maher, Vice President Finance,
Treasurer and Chief Financial Officer
(Principal Financial & Accounting Officer)
<PAGE> 1
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EXHIBIT 10.60
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of January 1, 2000, by and between Glamis
Gold Ltd. (hereinafter referred to as the "Company") and C. Kevin McArthur
(hereinafter referred to as the "Executive", with the Company and the Executive
hereinafter collectively referred to as the "Parties").
WHEREAS the Company wishes to retain the services of the Executive
and the Executive wishes to be retained by the Company on the terms and
conditions specified herein;
WHEREAS the Executive has worked for the Company or one or more of
its affiliates since February, 1988; and
WHEREAS the Company and the Executive desire to enter into a written
agreement which contains the agreed-upon terms and conditions of employment;
NOW THEREFORE for the good and valuable consideration of the mutual
covenants and agreements hereinafter contained, the Parties mutually covenant
and agree as follows:
1. EMPLOYMENT
1.1 Position. The Company hereby agrees to employ the Executive in
the position of President and Chief Executive Officer ("President"), and the
Executive hereby accepts such employment.
1.2 Services. The Executive shall serve the Company in the capacity
of President to perform such duties and exercise such powers as may be
reasonably required of him or be vested in him by the Board of Directors of the
Company, including but not limited to those duties described in Exhibit A
attached hereto and made a part hereof (the "Services"). During his employment
hereunder, the Executive shall devote his full time and attention and exert his
best efforts, knowledge, skill and energy to his employment hereunder and will
not, without the prior written consent of the Board of Directors, assume other
employment or engage in any other business.
2. TERM
The term of the Executive's employment pursuant to this Agreement
shall commence on the date hereof and shall continue on a month-to-month basis
until terminated pursuant to the provisions of this Agreement.
<PAGE> 2
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3. COMPENSATION
3.1 Base Salary. During the term of his employment, the Executive
shall receive an annual base salary of not less than U.S. $240,000 (less
required statutory and other deductions authorized by the Executive), which base
salary shall be paid in accordance with the Company's normal payroll practices.
The Executive's base salary shall be reviewed by the Compensation Committee of
the Board of Directors on an annual basis thereafter.
3.2 Bonus. If the Company determines to establish a bonus plan for
any of its employees, the Executive shall be entitled to participate in such
bonus plan in accordance with its terms.
3.3 Share Purchase Options. The Parties recognize the existing grant
to the Executive of share purchase options for 200,000 common shares of the
Company ("Shares") under the Company's Amended Share Purchase Option Plan dated
as of September 30, 1995, including any amendments or modifications thereof, or
any successor plan that may be adopted by the Board of Directors of the Company
(the "Plan"), in accordance with the rules and regulations of applicable
regulatory authorities and the Plan, it being understood that upon the full
exercise of the existing share purchase options, the Executive will, subject to
the then prevailing policies and practices of the Company's Compensation
Committee, be granted another share purchase option in respect of not less than
200,000 Shares.
4. BENEFITS AND VACATION
4.1 Benefits. While employed by the Company, the Company shall make
available to the Executive the benefits under the Company's employee benefits
programs which, in its sole discretion, it makes available to other employees of
the Company from time to time. These benefits include, without limitation,
participation in the Glamis Gold, Inc. Profit Sharing and Retirement Plan and
the Glamis Gold, Inc. Group Insurance Benefits Plan.
4.2 Vacation. While employed by the Company, the Executive shall be
entitled to four weeks' vacation per year, to be scheduled at the mutual
convenience of the parties; provided however, that the Executive will forfeit,
without compensation, his right to any part of such vacation entitlement not
used in a calendar year. The Executive shall be entitled to the regular holiday
schedule recognized by the Company location at which he works.
5. REIMBURSEMENT OF EXPENSES
The Executive shall be reimbursed for all expenses incurred by him in
compliance with Company policies, as may be modified from time to time.
6. OFFICER OF THE COMPANY
So long as the Board of Directors, in its sole discretion, shall
desire, the Executive shall serve as an officer of the Company and an officer or
member of the board of directors of any subsidiary or affiliate, without any
additional remuneration to the Executive.
<PAGE> 3
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7. TERMINATION
The following will govern termination of Executive's employment with
the Company:
7.1 Voluntary Termination. The Executive may voluntarily terminate
his employment at any time upon delivery to the Company of a notice to terminate
the Services on a day not less than 60 days after delivery of the notice. In
such case, the Services will terminate at the expiration of such 60-day or
longer period.
7.2 Termination by Company. The Company may terminate the Services
without notice and without any payment in lieu of notice if:
(a) The Executive willfully refuses to perform the Services
hereunder;
(b) The Executive materially breaches Paragraph 8 or
Paragraph 9 of this Agreement;
(c) The Executive engages in acts of dishonesty or fraud in
connection with his services hereunder; or
(d) The Executive engages in other serious misconduct of
such a nature that the continued employment of the Executive may reasonably be
expected to adversely affect the business or properties of the Company;
provided that, if the Company determines that a reason constituting cause for
termination under clauses (a), (b) or (d) has occurred, it shall give the
Executive written notice thereof at least 14 days prior to the proposed date of
termination of employment. If the Executive shall take the necessary steps to
remedy the condition constituting cause within 10 days after the receipt of such
notice, then a reason for termination for cause shall be deemed not to have
occurred. If the Executive shall not remedy the condition constituting cause
within such time period to the reasonable satisfaction of the Company, then
termination shall occur on the date set forth in the notice from the Company.
7.3 Termination for Cause. In addition to those matters referred to
in section 7.2, the Company may, at its sole option, terminate the Services for
Cause by providing three months' written notice to the Executive or a payment in
lieu of such notice. In such case, any outstanding share purchase options held
by the Executive shall expire on the 30th day following the effective date of
termination. As used in this section 7.3, "Cause" shall mean a good faith
determination by the Company that (a) the Executive has failed to perform his
duties in a satisfactory manner, (b) the Executive has been advised of the
deficiencies in his performance and has been unwilling or unable to correct the
deficiencies within a reasonable time and (c) the deficient performance of the
Executive has had or, if allowed to continue, can be reasonably expected to
have, a material adverse effect on the business of the Company.
7.4 Involuntary Termination. The Services may be terminated by reason
of Involuntary Termination. "Involuntary Termination" means:
(a) The termination of the Executive's employment by the
Company, except pursuant to sections 7.2 or 7.3 (it being the intent and
understanding of the Parties that the Company may terminate the Executive's
employment other than for the reasons specified in
<PAGE> 4
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sections 7.2 and 7.3 at any time and for any reason, in which case Executive
shall be entitled to severance as provided herein); or
(b) Resignation from employment by the Executive, at his
sole discretion, following a Change of Control, provided that the resignation
occurs within twelve (12) months from the Change of Control.
7.5 Severance. If the Executive's employment with the Company shall
terminate by reason of an Involuntary Termination, the Executive shall be
entitled to payment (within 14 days of the effective date of termination) of
severance pay and benefits as follows:
7.5.1 Severance Pay. The Company shall pay to the Executive a
lump sum amount equal to the Executive's annual base salary multiplied by two.
7.5.2 Benefits. The Company must, at the election of the
Executive made within ten days after the Termination Date, either:
(a) pay to the Executive a lump sum amount equal to the
aggregate cost to the Executive (without discount or present valuation and
grossed-up to account for income taxes payable by the Executive) of all employee
benefits then payable to or for the benefit of the Executive over the 24 month
period following the termination; or
(b) continue to make the contributions necessary to
maintain the Executive's coverage pursuant to the then-existing employee benefit
plans until the earlier of (i) the end of 24 months following the effective date
of termination of the Services, or (ii) the month after the Executive obtains
comparable replacement benefits at any alternative employment.
7.5.3 Incentive or Bonus. The Company will pay to the Executive
the amount of bonus or incentive pay, if any, paid to the Executive in the year
prior to the year of termination, prorated in proportion to the number of months
in the year before the termination and increased by a percentage equal to the
percentage increase in any such bonus over the preceding two years.
7.5.4 Outplacement Assistance. Professional executive
outplacement services will be provided to the Executive at the Company's
expense. The cost of such services will not exceed 10% of the Executive's annual
base salary.
7.5.5 Share Purchase Options. All share purchase options held by
the Executive at the time of any Involuntary Termination shall expire at the
later of (i) the expiration date of the options in accordance with the terms of
their grant or (ii) 24 months following the effective date of termination.
7.6 Termination by Reason of Permanent Disability. If, during the
Executive's employment with the Company the Executive becomes Permanently
Disabled, the Company shall have the right, on not less than three months'
written notice to the Executive, or payment in lieu of such notice, to terminate
the Executive's employment. In the event that the Executive's employment is
terminated on account of permanent disability, the Executive shall continue to
be eligible for long-term disability benefits in accordance with the provision
of the long-term
<PAGE> 5
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disability policy then in effect. With this exception, the Executive shall not
be entitled to receive any further compensation or benefits pursuant to this
Agreement other than those accrued to the date of the Executive's termination
hereunder.
As used herein, "Permanently Disabled" means that the Executive, by
reason of illness, disease, mental or physical disability or similar cause as
determined by a qualified medical practitioner mutually agreed to by the
Executive and the Company ("Disability"), is permanently disabled so as to be
unable to fulfil the Executive's duties, responsibilities and obligations
hereunder and such Disability shall continue for any consecutive 180-day period
or for any period of 180 days (whether or not consecutive) in any consecutive
12-month period.
7.7 Termination by Reason of Death. In the event the Executive's
employment with the Company is terminated by reason of the Executive's death,
any portion of his fixed salary pursuant to section 3.1 which is earned but
unpaid as of the date of death shall be paid to the Executive's designated
beneficiary in the event of his death, or if none, to his then living spouse, or
if none, to the duly appointed personal representative of his estate. The
Executive's beneficiary, spouse or estate shall not be entitled to receive any
further compensation or benefits pursuant to this Agreement other than those
accrued to the date of the Executive's termination hereunder.
7.8 Accrued Salary. In the event of any termination of the
Executive's employment hereunder, any portion of his fixed salary pursuant to
section 3.1 which is earned but unpaid as of the date of termination for any
reason shall be paid to the Executive, along with payment for any vacation
benefits then accrued but unused, subject to withholding for statutory
deductions.
7.9 Share Purchase Options. Except as provided in sections 7.3 and
7.5.5 above, the time for expiration of all share purchase options held by the
Executive at the time of any termination of the Executive's employment shall be
governed by the terms of the Plan.
8. RESTRICTIVE COVENANT
During the Executive's employment with the Company and for a period
of two years following the termination of the Executive's employment with the
Company for any reason, including termination occasioned by the expiration of
this Agreement, the Executive shall not interfere with the relationship between
the Company and any of its employees, agents, representatives or parties with
whom it does business.
9. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
9.1 Confidentiality. The Executive acknowledges that the Company may
disclose certain confidential information to the Executive during the term of
this Agreement to enable him to perform his duties hereunder. The Executive
hereby covenants and agrees that he will not, without the prior consent of the
Company, during the term of this Agreement or at any time thereafter, disclose
or permit to be disclosed to any third party by any method whatsoever any of the
confidential information of the Company. For purposes of this Agreement,
"confidential information" shall include, but not be limited to, any scientific
or technical information, design, process, procedure, formula, confidential
business or financial information, records, data, ideas, processes, patents,
models, research, or personnel information.
<PAGE> 6
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9.2 Legal Process Exception. The foregoing section shall not be
applicable if and to the extent Executive is required to testify in a judicial
or regulatory proceeding pursuant to an order of a judge or administrative law
judge issued after Executive and his legal counsel urge that the aforementioned
confidentiality be preserved.
9.3 Intellectual Property. The Executive agrees promptly to reduce to
writing to disclose and assign, and hereby does assign, to the Company, its
parent, subsidiaries, successors, assigns and nominees, all inventions,
discoveries, improvements, copyrightable material, trademarks, programs,
computer software and ideas concerning the same, capable of use in connection
with the business of the Company, which employee may make or conceive, either
solely or jointly with others, during the period of his employment by the
Company, its parent, subsidiaries or successors.
9.4 Patents, Trademarks, etc. The Executive agrees, without charge to
the Company and at the Company's expense, to execute, acknowledge and deliver to
the Company all such papers, including applications for patents, application
soft copyright and trademark registrations, and assignments thereof, as may be
necessary, and at all times to assist the Company, its parent, subsidiaries,
successors, assigns and nominees in every proper way to patent or register said
programs, computer software, ideas, inventions, discoveries, improvements,
copyrightable material or trademarks in any and all countries and to vest title
thereto in the Company, its parent, subsidiaries, successors, assigns or
nominees.
9.5 Covenants. The covenants set forth in this section 9, which are
made by the Executive are in consideration of the employment, or continuing
employment of, and the compensation paid to, the Executive during his employment
by the Company. The foregoing covenants will not prohibit Executive from
disclosing confidential or other information to other employees of the company
or third parties to the extent that such disclosure is necessary to the
performance of his duties under this Agreement.
10. ADDITIONAL REMEDIES
The Executive recognizes that irreparable injury will result to the
Company and to its business and properties in the event of any breach by the
Executive of any of the provisions of sections 8 and 9 of this Agreement or
either of them, and that the Executive's continued employment is predicated on
the commitments undertaken by him pursuant to said paragraphs. In the event of
any breach of any of the Executive's commitments pursuant to sections 8 and 9 or
either of them, the Company shall be entitled, in addition to any other remedies
and damages available, to injunctive relief to restrain the violation of such
commitments by the Executive or by any person or persons acting for or with the
Executive in any capacity whatsoever.
11. NON-ASSIGNMENT
This Agreement is personal to Executive and shall not be assigned by
him. Executive shall not hypothecate, delegate, encumber, alienate, transfer or
otherwise dispose of his rights and duties hereunder. The Company may assign
this Agreement without Executive's consent to any other entity who, in
connection with such assignment, acquires all or substantially all of the
Company's assets or into or with which the Company is merged or consolidated.
<PAGE> 7
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12. WAIVER
The waiver by the Company of a breach by Executive of any provision
of this Agreement shall not be construed as a waiver of any subsequent breach by
Executive.
13. ARBITRATION
Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, except a claimed violation of sections 8 and
9, shall be settled by arbitration in accordance with Title 9 of the U.S. Code
and the Employment Dispute Resolution Rules of the American Arbitration
Association in Reno, Nevada, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. All statutes
of limitations, which would otherwise be applicable, shall apply to any
arbitration proceeding pursuant to this paragraph. All reasonable legal costs of
the Executive relative to the arbitration proceedings shall be paid by the
Company.
14. BENEFIT
The provisions of this Agreement shall inure to the benefit of the
Company, its successors and assigns, and shall be binding upon the Company and
Executive, its and his heirs, personal representatives and successors, including
without limitation Executive's estate and the executors, administrators, or
trustees of such estate.
15. RELEVANT LAW
This Agreement shall be construed and enforced in accordance with the
laws of the State of Nevada.
16. NOTICES
All notices, requests, demands and other communications in connection
with this Agreement shall be made in writing and shall be deemed to have been
given when delivered by hand or 72 hours after mailing at any general or branch
United States Post Office, by registered or certified mail, postage prepaid,
addressed as follows, or to such other address as shall have been designated in
writing by the addressee:
(a) If to the Company:
5109 Neil Road, Suite 310
Reno, Nevada 89502
(b) If to the Executive:
c/o Glamis Gold Ltd.
5190 Neil Road, Suite 310
Reno, Nevada 89502
<PAGE> 8
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17. ENTIRE AGREEMENT
The parties hereto agree that this Agreement contains the whole
agreement and understanding of the parties and supersedes and replaces all oral
or written contracts or representations, and that this Agreement cannot be
amended, modified or supplemented in any respect except by subsequent written
agreement signed by both parties hereto.
18. FURTHER ASSURANCES
The parties hereto shall do such things and sign such documents as
may be necessary and desirable to give full effect and force to this Agreement.
19. MISCELLANEOUS
The Company shall withhold from any amounts payable under this
Agreement such taxes and other amounts as may be required to be withheld
pursuant to any applicable law or regulation.
The Executive hereby acknowledges receipt of a copy of this Agreement
duly signed by the Company.
The Executive agrees that after any termination of his employment, he
will tender his resignation from any positions he may hold as an officer or
director of the Company or any of its affiliated or associated companies.
20. DEFINITIONS
For the purposes of this Agreement,
20.1 "Change of Control" shall mean any of:
(a) a sale, transfer or other disposition of all or
substantially all of the property or assets of the Company other than to an
affiliate, within the meaning of Rule 405 of Regulation C adopted under the
Securities Act of 1933 (Federal).
(b) a merger or consolidation of the Company in which
Glamis Gold Ltd. is not the surviving entity in control of the merged company;
or
(c) any change in the holding, direct or indirect of shares
in the capital of the Company as a result of which a person, or a group of
persons or persons acting jointly or in concert, or persons associated or
affiliated with any such person or group within the meaning of section 13(d)(3)
of the Securities Exchange Act of 1934 (Federal) are in a position to exercise
effective control of the Company, provided that for the purposes of this
Agreement a person or group of persons holding shares and/or other securities in
excess of the number which, directly or
<PAGE> 9
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following conversion thereof, would entitle the holders thereof to cast more
than 30% of the votes attaching to all shares in the capital of the Company
which may be cast to elect directors of the Company shall be deemed to be in a
position to exercise effective control of the Company, and further provided that
at the time of such acquisition, no other person or group of persons shall hold
securities entitled to more than 30% of such votes.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the
day and year first above written.
GLAMIS GOLD LTD. EXECUTIVE
By:
------------------------------- -----------------------------------
Name: C. Kevin McArthur
-----------------------------
Title: Director and Member of
Compensation Committee -----------------------------------
Social Security Number
By: I hereby designate
---------------------------- ----------------
Name: as Beneficiary pursuant to Section
-------------------------- 7.7 of this Agreement.
Title: Director and Member of
Compensation Committee
-----------------------------------
C. Kevin McArthur
<PAGE> 1
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EXHIBIT 10.61
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of January 1, 2000, by and between Glamis
Gold Ltd. (hereinafter referred to as the "Company") and Charles A. Jeannes
(hereinafter referred to as the "Executive", with the Company and the Executive
hereinafter collectively referred to as the "Parties").
WHEREAS the Company wishes to retain the services of the Executive
and the Executive wishes to be retained by the Company on the terms and
conditions specified herein;
WHEREAS the Executive has worked for the Company or one or more of
its affiliates since April, 1999;
WHEREAS the Company and the Executive desire to enter into a written
agreement which contains the agreed-upon terms and conditions of employment;
NOW THEREFORE for the good and valuable consideration of the mutual
covenants and agreements hereinafter contained, the Parties mutually covenant
and agree as follows:
1. EMPLOYMENT
1.1 Position. The Company hereby agrees to employ the Executive in
the position of Senior Vice President, Administration and General Counsel
("Senior Vice President"), and the Executive hereby accepts such employment.
1.2 Services. The Executive shall serve the Company in the capacity
of Senior Vice President to perform such duties and exercise such powers as may
be reasonably required of him or be vested in him by President and CEO,
including but not limited to those duties described in Exhibit A attached hereto
and made a part hereof (the "Services"). During his employment hereunder, the
Executive shall devote his full time and attention and exert his best efforts,
knowledge, skill and energy to his employment hereunder and will not, without
the prior written consent of the President and CEO, assume other employment or
engage in any other business.
2. TERM
The term of the Executive's employment pursuant to this Agreement
shall commence on the date hereof and shall continue on a month-to-month basis
until terminated pursuant to the provisions of this Agreement.
<PAGE> 2
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3. COMPENSATION
3.1 Base Salary. During the term of his employment, the Executive
shall receive an annual base salary of not less than U.S. $200,000 (less
required statutory and other deductions authorized by the Executive), which base
salary shall be paid in accordance with the Company's normal payroll practices.
The Executive's base salary shall be reviewed by the President and CEO on each
anniversary of the Executive's commencement of employment with the Company.
3.2 Bonus. If the Company determines to establish a bonus plan for
any of its employees, the Executive shall be entitled to participate in such
bonus plan in accordance with its terms.
3.3 Share Purchase Options. The Parties recognize the existing grant
to the Executive of share purchase options for 125,000 common shares of the
Company ("Shares") under the Company's Amended Share Purchase Option Plan dated
as of September 30, 1995, including any amendments or modifications thereof, or
any successor plan that may be adopted by the Board of Directors of the Company
(the "Plan"), in accordance with the rules and regulations of applicable
regulatory authorities and the Plan, it being understood that upon the full
exercise of the existing share purchase options, the Executive will, subject to
the then prevailing policies and practices of the Company's Compensation
Committee, be granted another share purchase option in respect of not less than
125,000 Shares.
4. BENEFITS AND VACATION
4.1 Benefits. While employed by the Company, the Company shall make
available to the Executive the benefits under the Company's employee benefits
programs which, in its sole discretion, it makes available to other employees of
the Company from time to time. These benefits include, without limitation,
participation in the Glamis Gold, Inc. Profit Sharing and Retirement Plan and
the Glamis Gold, Inc. Group Insurance Benefits Plan.
4.2 Vacation. While employed by the Company, the Executive shall be
entitled to four weeks' vacation per year, to be scheduled at the mutual
convenience of the parties; provided however, that the Executive will forfeit,
without compensation, his right to any part of such vacation entitlement not
used in a calendar year. The Executive shall be entitled to the regular holiday
schedule recognized by the Company location at which he works.
5. REIMBURSEMENT OF EXPENSES
The Executive shall be reimbursed for all expenses incurred by him in
compliance with Company policies, as may be modified from time to time.
6. OFFICER OF THE COMPANY
So long as the President and CEO, in his sole discretion, shall
desire, the Executive shall serve as an officer of the Company and an officer or
member of the board of directors of any subsidiary or affiliate, without any
additional remuneration to the Executive.
<PAGE> 3
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7. TERMINATION
The following will govern termination of Executive's employment with
the Company:
7.1 Voluntary Termination. The Executive may voluntarily terminate
his employment at any time upon delivery to the Company of a notice to terminate
the Services on a day not less than 60 days after delivery of the notice. In
such case, the Services will terminate at the expiration of such 60-day or
longer period.
7.2 Termination by Company. The Company may terminate the Services
without notice and without any payment in lieu of notice if:
(a) The Executive willfully refuses to perform the Services
hereunder;
(b) The Executive materially breaches Paragraph 8 or
Paragraph 9 of this Agreement;
(c) The Executive engages in acts of dishonesty or fraud in
connection with his services hereunder; or
(d) The Executive engages in other serious misconduct of
such a nature that the continued employment of the Executive may reasonably be
expected to adversely affect the business or properties of the Company;
provided that, if the Company determines that a reason constituting cause for
termination under clauses (a), (b) or (d) has occurred, it shall give the
Executive written notice thereof at least 14 days prior to the proposed date of
termination of employment. If the Executive shall take the necessary steps to
remedy the condition constituting cause within 10 days after the receipt of such
notice, then a reason for termination for cause shall be deemed not to have
occurred. If the Executive shall not remedy the condition constituting cause
within such time period to the reasonable satisfaction of the Company, then
termination shall occur on the date set forth in the notice from the Company.
7.3 Termination for Cause. In addition to those matters referred to
in section 7.2, the Company may, at its sole option, terminate the Services for
Cause by providing three months' written notice to the Executive or a payment in
lieu of such notice. In such case, any outstanding share purchase options held
by the Executive shall expire on the 30th day following the effective date of
termination. As used in this section 7.3, "Cause" shall mean a good faith
determination by the Company that (a) the Executive has failed to perform his
duties in a satisfactory manner, (b) the Executive has been advised of the
deficiencies in his performance and has been unwilling or unable to correct the
deficiencies within a reasonable time and (c) the deficient performance of the
Executive has had or, if allowed to continue, can be reasonably expected to
have, a material adverse effect on the business of the Company.
7.4 Involuntary Termination. The Services may be terminated by reason
of Involuntary Termination. "Involuntary Termination" means:
(a) The termination of the Executive's employment by the
Company, except pursuant to sections 7.2 or 7.3 (it being the intent and
understanding of the Parties that the Company may terminate the Executive's
employment other than for the reasons specified in
<PAGE> 4
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sections 7.2 and 7.3 at any time and for any reason, in which case Executive
shall be entitled to severance as provided herein);
(b) Resignation from employment by the Executive, at his
sole discretion, within thirty (30) days following receipt of notice from the
Company that he must relocate to a place outside Washoe County, Nevada as a
condition of his continued employment by the Company in the capacities described
herein; or
(c) Resignation from employment by the Executive, at his
sole discretion, following a Change of Control, provided that the resignation
occurs within twelve (12) months from the Change of Control.
7.5 Severance. If the Executive's employment with the Company shall
terminate by reason of an Involuntary Termination, the Executive shall be
entitled to payment (within 14 days of the effective date of termination) of
severance pay and benefits as follows:
7.5.1 Severance Pay. The Company shall pay to the Executive a
lump sum amount equal to the Executive's annual base salary multiplied by two.
7.5.2 Benefits. The Company must, at the election of the
Executive made within ten days after the Termination Date, either:
(a) pay to the Executive a lump sum amount equal to the
aggregate cost to the Executive (without discount or present valuation and
grossed-up to account for income taxes payable by the Executive) of all employee
benefits then payable to or for the benefit of the Executive over the 24 month
period following the termination; or
(b) continue to make the contributions necessary to
maintain the Executive's coverage pursuant to the then-existing employee benefit
plans until the earlier of (i) the end of 24 months following the effective date
of termination of the Services, or (ii) the month after the Executive obtains
comparable replacement benefits at any alternative employment.
7.5.3 Incentive or Bonus. The Company will pay to the Executive
the amount of bonus or incentive pay, if any, paid to the Executive in the year
prior to the year of termination, prorated in proportion to the number of months
in the year before the termination and increased by a percentage equal to the
percentage increase in any such bonus over the preceding two years.
7.5.4 Outplacement Assistance. Professional executive
outplacement services will be provided to the Executive at the Company's
expense. The cost of such services will not exceed 10% of the Executive's annual
base salary.
7.5.5 Share Purchase Options. All share purchase options held by
the Executive at the time of any Involuntary Termination shall expire at the
later of (i) the expiration date of the options in accordance with the terms of
their grant or (ii) 24 months following the effective date of termination.
7.6 Termination by Reason of Permanent Disability. If, during the
Executive's
<PAGE> 5
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employment with the Company the Executive becomes Permanently Disabled, the
Company shall have the right, on not less than three months' written notice to
the Executive, or payment in lieu of such notice, to terminate the Executive's
employment. In the event that the Executive's employment is terminated on
account of permanent disability, the Executive shall continue to be eligible for
long-term disability benefits in accordance with the provision of the long-term
disability policy then in effect. With this exception, the Executive shall not
be entitled to receive any further compensation or benefits pursuant to this
Agreement other than those accrued to the date of the Executive's termination
hereunder.
As used herein, "Permanently Disabled" means that the Executive, by
reason of illness, disease, mental or physical disability or similar cause as
determined by a qualified medical practitioner mutually agreed to by the
Executive and the Company ("Disability"), is permanently disabled so as to be
unable to fulfil the Executive's duties, responsibilities and obligations
hereunder and such Disability shall continue for any consecutive 180-day period
or for any period of 180 days (whether or not consecutive) in any consecutive
12-month period.
7.7 Termination by Reason of Death. In the event the Executive's
employment with the Company is terminated by reason of the Executive's death,
any portion of his fixed salary pursuant to section 3.1 which is earned but
unpaid as of the date of death shall be paid to the Executive's designated
beneficiary in the event of his death, or if none, to his then living spouse, or
if none, to the duly appointed personal representative of his estate. The
Executive's beneficiary, spouse or estate shall not be entitled to receive any
further compensation or benefits pursuant to this Agreement other than those
accrued to the date of the Executive's termination hereunder.
7.8 Accrued Salary. In the event of any termination of the
Executive's employment hereunder, any portion of his fixed salary pursuant to
section 3.1 which is earned but unpaid as of the date of termination for any
reason shall be paid to the Executive, along with payment for any vacation
benefits then accrued but unused, subject to withholding for statutory
deductions.
7.9 Share Purchase Options. Except as provided in sections 7.3 and
7.5.5 above, the time for expiration of all share purchase options held by the
Executive at the time of any termination of the Executive's employment shall be
governed by the terms of the Plan.
8. RESTRICTIVE COVENANT
During the Executive's employment with the Company and for a period
of two years following the termination of the Executive's employment with the
Company for any reason, including termination occasioned by the expiration of
this Agreement, the Executive shall not interfere with the relationship between
the Company and any of its employees, agents, representatives or parties with
whom it does business.
9. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
9.1 Confidentiality. The Executive acknowledges that the Company may
disclose certain confidential information to the Executive during the term of
this Agreement to enable him to perform his duties hereunder. The Executive
hereby covenants and agrees that he will not, without the prior consent of the
Company, during the term of this Agreement or at any time
<PAGE> 6
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thereafter, disclose or permit to be disclosed to any third party by any method
whatsoever any of the confidential information of the Company. For purposes of
this Agreement, "confidential information" shall include, but not be limited to,
any scientific or technical information, design, process, procedure, formula,
confidential business or financial information, records, data, ideas, processes,
patents, models, research, or personnel information.
9.2 Legal Process Exception. The foregoing section shall not be
applicable if and to the extent Executive is required to testify in a judicial
or regulatory proceeding pursuant to an order of a judge or administrative law
judge issued after Executive and his legal counsel urge that the aforementioned
confidentiality be preserved.
9.3 Intellectual Property. The Executive agrees promptly to reduce to
writing to disclose and assign, and hereby does assign, to the Company, its
parent, subsidiaries, successors, assigns and nominees, all inventions,
discoveries, improvements, copyrightable material, trademarks, programs,
computer software and ideas concerning the same, capable of use in connection
with the business of the Company, which employee may make or conceive, either
solely or jointly with others, during the period of his employment by the
Company, its parent, subsidiaries or successors.
9.4 Patents, Trademarks, etc. The Executive agrees, without charge to
the Company and at the Company's expense, to execute, acknowledge and deliver to
the Company all such papers, including applications for patents, application
soft copyright and trademark registrations, and assignments thereof, as may be
necessary, and at all times to assist the Company, its parent, subsidiaries,
successors, assigns and nominees in every proper way to patent or register said
programs, computer software, ideas, inventions, discoveries, improvements,
copyrightable material or trademarks in any and all countries and to vest title
thereto in the Company, its parent, subsidiaries, successors, assigns or
nominees.
9.5 Covenants. The covenants set forth in this section 9, which are
made by the Executive are in consideration of the employment, or continuing
employment of, and the compensation paid to, the Executive during his employment
by the Company. The foregoing covenants will not prohibit Executive from
disclosing confidential or other information to other employees of the company
or third parties to the extent that such disclosure is necessary to the
performance of his duties under this Agreement.
10. ADDITIONAL REMEDIES
The Executive recognizes that irreparable injury will result to the
Company and to its business and properties in the event of any breach by the
Executive of any of the provisions of sections 8 and 9 of this Agreement or
either of them, and that the Executive's continued employment is predicated on
the commitments undertaken by him pursuant to said paragraphs. In the event of
any breach of any of the Executive's commitments pursuant to sections 8 and 9 or
either of them, the Company shall be entitled, in addition to any other remedies
and damages available, to injunctive relief to restrain the violation of such
commitments by the Executive or by any person or persons acting for or with the
Executive in any capacity whatsoever.
<PAGE> 7
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11. NON-ASSIGNMENT
This Agreement is personal to Executive and shall not be assigned by
him. Executive shall not hypothecate, delegate, encumber, alienate, transfer or
otherwise dispose of his rights and duties hereunder. The Company may assign
this Agreement without Executive's consent to any other entity who, in
connection with such assignment, acquires all or substantially all of the
Company's assets or into or with which the Company is merged or consolidated.
12. WAIVER
The waiver by the Company of a breach by Executive of any provision
of this Agreement shall not be construed as a waiver of any subsequent breach by
Executive.
13. ARBITRATION
Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, except a claimed violation of sections 8 and
9, shall be settled by arbitration in accordance with Title 9 of the U.S. Code
and the Employment Dispute Resolution Rules of the American Arbitration
Association in Reno, Nevada, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. All statutes
of limitations, which would otherwise be applicable, shall apply to any
arbitration proceeding pursuant to this paragraph. All reasonable legal costs of
the Executive relative to the arbitration proceedings shall be paid by the
Company.
14. BENEFIT
The provisions of this Agreement shall inure to the benefit of the
Company, its successors and assigns, and shall be binding upon the Company and
Executive, its and his heirs, personal representatives and successors, including
without limitation Executive's estate and the executors, administrators, or
trustees of such estate.
15. RELEVANT LAW
This Agreement shall be construed and enforced in accordance with the
laws of the State of Nevada.
16. NOTICES
All notices, requests, demands and other communications in connection
with this Agreement shall be made in writing and shall be deemed to have been
given when delivered by hand or 72 hours after mailing at any general or branch
United States Post Office, by registered or certified mail, postage prepaid,
addressed as follows, or to such other address as shall have been designated in
writing by the addressee:
(a) If to the Company:
5109 Neil Road, Suite 310
Reno, Nevada 89502
<PAGE> 8
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(b) If to the Executive:
c/o Glamis Gold Ltd.
5190 Neil Road, Suite 310
Reno, Nevada 89502
17. ENTIRE AGREEMENT
The parties hereto agree that this Agreement contains the whole
agreement and understanding of the parties and supersedes and replaces all oral
or written contracts or representations, and that this Agreement cannot be
amended, modified or supplemented in any respect except by subsequent written
agreement signed by both parties hereto.
18. FURTHER ASSURANCES
The parties hereto shall do such things and sign such documents as
may be necessary and desirable to give full effect and force to this Agreement.
19. MISCELLANEOUS
The Company shall withhold from any amounts payable under this
Agreement such taxes and other amounts as may be required to be withheld
pursuant to any applicable law or regulation.
The Executive hereby acknowledges receipt of a copy of this Agreement
duly signed by the Company.
The Executive agrees that after any termination of his employment, he
will tender his resignation from any positions he may hold as an officer or
director of the Company or any of its affiliated or associated companies.
20. DEFINITIONS
For the purposes of this Agreement,
20.1 "Change of Control" shall mean any of:
(a) a sale, transfer or other disposition of all or
substantially all of the property or assets of the Company other than to an
affiliate, within the meaning of Rule 405 of Regulation C adopted under the
Securities Act of 1933 (Federal).
(b) a merger or consolidation of the Company in which
Glamis Gold Ltd. is not the surviving entity in control of the merged company;
or
<PAGE> 9
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(c) any change in the holding, direct or indirect of shares
in the capital of the Company as a result of which a person, or a group of
persons or persons acting jointly or in concert, or persons associated or
affiliated with any such person or group within the meaning of section 13(d)(3)
of the Securities Exchange Act of 1934 (Federal) are in a position to exercise
effective control of the Company, provided that for the purposes of this
Agreement a person or group of persons holding shares and/or other securities in
excess of the number which, directly or following conversion thereof, would
entitle the holders thereof to cast more than 30% of the votes attaching to all
shares in the capital of the Company which may be cast to elect directors of the
Company shall be deemed to be in a position to exercise effective control of the
Company, and further provided that at the time of such acquisition, no other
person or group of persons shall hold securities entitled to more than 30% of
such votes.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the
day and year first above written.
GLAMIS GOLD LTD. EXECUTIVE
By:
------------------------------- -----------------------------------
Name: C. Kevin McArthur Charles A. Jeannes
Title: President and CEO
-----------------------------------
Social Security Number
By: I hereby designate
------------------------------- ----------------
Name: A. Dan Rovig as Beneficiary pursuant to Section
Title: Chairman of the Board 7.7 of this Agreement
-----------------------------------
Charles A. Jeannes
<PAGE> 10
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EXHIBIT 10.62
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of January 1, 2000, by and between Glamis
Gold Ltd. (hereinafter referred to as the "Company") and James S. Voorhees
(hereinafter referred to as the "Executive", with the Company and the Executive
hereinafter collectively referred to as the "Parties").
WHEREAS the Company wishes to retain the services of the Executive
and the Executive wishes to be retained by the Company on the terms and
conditions specified herein;
WHEREAS the Executive has worked for the Company or one or more of
its affiliates since June, 1999;
WHEREAS the Company and the Executive desire to enter into a written
agreement which contains the agreed-upon terms and conditions of employment;
NOW THEREFORE for the good and valuable consideration of the mutual
covenants and agreements hereinafter contained, the Parties mutually covenant
and agree as follows:
1. EMPLOYMENT
1.1 Position. The Company hereby agrees to employ the Executive in
the position of Vice President and Chief Operating Officer ("COO"), and the
Executive hereby accepts such employment.
1.2 Services. The Executive shall serve the Company in the capacity
of COO to perform such duties and exercise such powers as may be reasonably
required of him or be vested in him by President and CEO, including but not
limited to those duties described in Exhibit A attached hereto and made a part
hereof (the "Services"). During his employment hereunder, the Executive shall
devote his full time and attention and exert his best efforts, knowledge, skill
and energy to his employment hereunder and will not, without the prior written
consent of the President and CEO, assume other employment or engage in any other
business.
2. TERM
The term of the Executive's employment pursuant to this Agreement
shall commence on the date hereof and shall continue on a month-to-month basis
until terminated pursuant to the provisions of this Agreement.
<PAGE> 1
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EXHIBIT 10.62
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of January 1, 2000, by and between Glamis
Gold Ltd. (hereinafter referred to as the "Company") and James S. Voorhees
(hereinafter referred to as the "Executive", with the Company and the Executive
hereinafter collectively referred to as the "Parties").
WHEREAS the Company wishes to retain the services of the Executive
and the Executive wishes to be retained by the Company on the terms and
conditions specified herein;
WHEREAS the Executive has worked for the Company or one or more of
its affiliates since June, 1999;
WHEREAS the Company and the Executive desire to enter into a written
agreement which contains the agreed-upon terms and conditions of employment;
NOW THEREFORE for the good and valuable consideration of the mutual
covenants and agreements hereinafter contained, the Parties mutually covenant
and agree as follows:
1. EMPLOYMENT
1.1 Position. The Company hereby agrees to employ the Executive in
the position of Vice President and Chief Operating Officer ("COO"), and the
Executive hereby accepts such employment.
1.2 Services. The Executive shall serve the Company in the capacity
of COO to perform such duties and exercise such powers as may be reasonably
required of him or be vested in him by President and CEO, including but not
limited to those duties described in Exhibit A attached hereto and made a part
hereof (the "Services"). During his employment hereunder, the Executive shall
devote his full time and attention and exert his best efforts, knowledge, skill
and energy to his employment hereunder and will not, without the prior written
consent of the President and CEO, assume other employment or engage in any other
business.
2. TERM
The term of the Executive's employment pursuant to this Agreement
shall commence on the date hereof and shall continue on a month-to-month basis
until terminated pursuant to the provisions of this Agreement.
<PAGE> 2
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3. COMPENSATION
3.1 Base Salary. During the term of his employment, the Executive
shall receive an annual base salary of not less than U.S. $180,000 (less
required statutory and other deductions authorized by the Executive), which base
salary shall be paid in accordance with the Company's normal payroll practices.
The Executive's base salary shall be reviewed by the President and CEO on each
anniversary of the Executive's commencement of employment with the Company.
3.2 Bonus. If the Company determines to establish a bonus plan for any
of its employees, the Executive shall be entitled to participate in such bonus
plan in accordance with its terms.
3.3 Share Purchase Options. The Parties recognize the existing grant
to the Executive of share purchase options for 100,000 common shares of the
Company ("Shares") under the Company's Amended Share Purchase Option Plan dated
as of September 30, 1995, including any amendments or modifications thereof, or
any successor plan that may be adopted by the Board of Directors of the Company
(the "Plan"), in accordance with the rules and regulations of applicable
regulatory authorities and the Plan, subject to the following conditions:
(a) the share purchase options have been priced as of June 1,
1999 but will not be exercisable until approval by the
shareholders of revisions to the Plan at the annual
shareholders meeting in May, 2000;
(b) subject to the provisions of subsection (a) above, fifty
percent (50%) of the share purchase options will be vested
immediately and the remaining fifty percent (50%) will be
vested on June 1, 2000; and
(c) upon the full exercise of the existing share purchase
options, the Executive will, subject to the then prevailing
policies and practices of the Company's Compensation
Committee, be granted another share purchase option in
respect of not less than 100,000 Shares.
4. BENEFITS AND VACATION
4.1 Benefits. While employed by the Company, the Company shall make
available to the Executive the benefits under the Company's employee benefits
programs which, in its sole discretion, it makes available to other employees of
the Company from time to time. These benefits include, without limitation,
participation in the Glamis Gold, Inc. Profit Sharing and Retirement Plan and
the Glamis Gold, Inc. Group Insurance Benefits Plan.
4.2 Vacation. While employed by the Company, the Executive shall be
entitled to four weeks' vacation per year, to be scheduled at the mutual
convenience of the parties; provided however, that the Executive will forfeit,
without compensation, his right to any part of such vacation entitlement not
used in a calendar year. The Executive shall be entitled to the regular holiday
schedule recognized by the Company location at which he works.
5. REIMBURSEMENT OF EXPENSES
The Executive shall be reimbursed for all expenses incurred by him in
compliance with
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Company policies, as may be modified from time to time.
6. OFFICER OF THE COMPANY
So long as the President and CEO, in his sole discretion, shall
desire, the Executive shall serve as an officer of the Company and an officer or
member of the board of directors of any subsidiary or affiliate, without any
additional remuneration to the Executive.
7. TERMINATION
The following will govern termination of Executive's employment with
the Company:
7.1 Voluntary Termination. The Executive may voluntarily terminate
his employment at any time upon delivery to the Company of a notice to terminate
the Services on a day not less than 60 days after delivery of the notice. In
such case, the Services will terminate at the expiration of such 60-day or
longer period.
7.2 Termination by Company. The Company may terminate the Services
without notice and without any payment in lieu of notice if:
(a) The Executive willfully refuses to perform the Services
hereunder;
(b) The Executive materially breaches Paragraph 8 or
Paragraph 9 of this Agreement;
(c) The Executive engages in acts of dishonesty or fraud in
connection with his services hereunder; or
(d) The Executive engages in other serious misconduct of
such a nature that the continued employment of the Executive may reasonably be
expected to adversely affect the business or properties of the Company;
provided that, if the Company determines that a reason constituting cause for
termination under clauses (a), (b) or (d) has occurred, it shall give the
Executive written notice thereof at least 14 days prior to the proposed date of
termination of employment. If the Executive shall take the necessary steps to
remedy the condition constituting cause within 10 days after the receipt of such
notice, then a reason for termination for cause shall be deemed not to have
occurred. If the Executive shall not remedy the condition constituting cause
within such time period to the reasonable satisfaction of the Company, then
termination shall occur on the date set forth in the notice from the Company.
7.3 Termination for Cause. In addition to those matters referred to
in section 7.2, the Company may, at its sole option, terminate the Services for
Cause by providing three months' written notice to the Executive or a payment in
lieu of such notice. In such case, any outstanding share purchase options held
by the Executive shall expire on the 30th day following the effective date of
termination. As used in this section 7.3, "Cause" shall mean a good faith
determination by the Company that (a) the Executive has failed to perform his
duties in a satisfactory manner, (b) the Executive has been advised of the
deficiencies in his performance and has been unwilling
<PAGE> 4
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or unable to correct the deficiencies within a reasonable time and (c) the
deficient performance of the Executive has had or, if allowed to continue, can
be reasonably expected to have, a material adverse effect on the business of the
Company.
7.4 Involuntary Termination. The Services may be terminated by reason
of Involuntary Termination. "Involuntary Termination" means:
(a) The termination of the Executive's employment by the
Company, except pursuant to sections 7.2 or 7.3 (it being the intent and
understanding of the Parties that the Company may terminate the Executive's
employment other than for the reasons specified in sections 7.2 and 7.3 at any
time and for any reason, in which case Executive shall be entitled to severance
as provided herein); or
(b) Resignation from employment by the Executive, at his
sole discretion, following a Change of Control, provided that the resignation
occurs within twelve (12) months from the Change of Control.
7.5 Severance. If the Executive's employment with the Company shall
terminate by reason of an Involuntary Termination, the Executive shall be
entitled to payment (within 14 days of the effective date of termination) of
severance pay and benefits as follows:
7.5.1 Severance Pay. The Company shall pay to the Executive a
lump sum amount equal to the Executive's annual base salary multiplied by two.
7.5.2 Benefits. The Company must, at the election of the
Executive made within ten days after the Termination Date, either:
(a) pay to the Executive a lump sum amount equal to the
aggregate cost to the Executive (without discount or present valuation and
grossed-up to account for income taxes payable by the Executive) of all employee
benefits then payable to or for the benefit of the Executive over the 24 month
period following the termination; or
(b) continue to make the contributions necessary to
maintain the Executive's coverage pursuant to the then-existing employee benefit
plans until the earlier of (i) the end of 24 months following the effective date
of termination of the Services, or (ii) the month after the Executive obtains
comparable replacement benefits at any alternative employment.
7.5.3 Incentive or Bonus. The Company will pay to the Executive
the amount of bonus or incentive pay, if any, paid to the Executive in the year
prior to the year of termination, prorated in proportion to the number of months
in the year before the termination and increased by a percentage equal to the
percentage increase in any such bonus over the preceding two years.
7.5.4 Outplacement Assistance. Professional executive
outplacement services will be provided to the Executive at the Company's
expense. The cost of such services will not exceed 10% of the Executive's annual
base salary.
7.5.5 Share Purchase Options. All share purchase options held by
the Executive at the
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time of any Involuntary Termination shall expire at the later of (i) the
expiration date of the options in accordance with the terms of their grant or
(ii) 24 months following the effective date of termination.
7.6 Termination by Reason of Permanent Disability. If, during the
Executive's employment with the Company the Executive becomes Permanently
Disabled, the Company shall have the right, on not less than three months'
written notice to the Executive, or payment in lieu of such notice, to terminate
the Executive's employment. In the event that the Executive's employment is
terminated on account of permanent disability, the Executive shall continue to
be eligible for long-term disability benefits in accordance with the provision
of the long-term disability policy then in effect. With this exception, the
Executive shall not be entitled to receive any further compensation or benefits
pursuant to this Agreement other than those accrued to the date of the
Executive's termination hereunder.
As used herein, "Permanently Disabled" means that the Executive, by
reason of illness, disease, mental or physical disability or similar cause as
determined by a qualified medical practitioner mutually agreed to by the
Executive and the Company ("Disability"), is permanently disabled so as to be
unable to fulfil the Executive's duties, responsibilities and obligations
hereunder and such Disability shall continue for any consecutive 180-day period
or for any period of 180 days (whether or not consecutive) in any consecutive
12-month period.
7.7 Termination by Reason of Death. In the event the Executive's
employment with the Company is terminated by reason of the Executive's death,
any portion of his fixed salary pursuant to section 3.1 which is earned but
unpaid as of the date of death shall be paid to the Executive's designated
beneficiary in the event of his death, or if none, to his then living spouse, or
if none, to the duly appointed personal representative of his estate. The
Executive's beneficiary, spouse or estate shall not be entitled to receive any
further compensation or benefits pursuant to this Agreement other than those
accrued to the date of the Executive's termination hereunder.
7.8 Accrued Salary. In the event of any termination of the
Executive's employment hereunder, any portion of his fixed salary pursuant to
section 3.1 which is earned but unpaid as of the date of termination for any
reason shall be paid to the Executive, along with payment for any vacation
benefits then accrued but unused, subject to withholding for statutory
deductions.
7.9 Share Purchase Options. Except as provided in sections 7.3 and
7.5.5 above, the time for expiration of all share purchase options held by the
Executive at the time of any termination of the Executive's employment shall be
governed by the terms of the Plan.
8. RESTRICTIVE COVENANT
During the Executive's employment with the Company and for a period
of two years following the termination of the Executive's employment with the
Company for any reason, including termination occasioned by the expiration of
this Agreement, the Executive shall not interfere with the relationship between
the Company and any of its employees, agents, representatives or parties with
whom it does business.
<PAGE> 6
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9. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
9.1 Confidentiality. The Executive acknowledges that the Company may
disclose certain confidential information to the Executive during the term of
this Agreement to enable him to perform his duties hereunder. The Executive
hereby covenants and agrees that he will not, without the prior consent of the
Company, during the term of this Agreement or at any time thereafter, disclose
or permit to be disclosed to any third party by any method whatsoever any of the
confidential information of the Company. For purposes of this Agreement,
"confidential information" shall include, but not be limited to, any scientific
or technical information, design, process, procedure, formula, confidential
business or financial information, records, data, ideas, processes, patents,
models, research, or personnel information.
9.2 Legal Process Exception. The foregoing section shall not be
applicable if and to the extent Executive is required to testify in a judicial
or regulatory proceeding pursuant to an order of a judge or administrative law
judge issued after Executive and his legal counsel urge that the aforementioned
confidentiality be preserved.
9.3 Intellectual Property. The Executive agrees promptly to reduce to
writing to disclose and assign, and hereby does assign, to the Company, its
parent, subsidiaries, successors, assigns and nominees, all inventions,
discoveries, improvements, copyrightable material, trademarks, programs,
computer software and ideas concerning the same, capable of use in connection
with the business of the Company, which employee may make or conceive, either
solely or jointly with others, during the period of his employment by the
Company, its parent, subsidiaries or successors.
9.4 Patents, Trademarks, etc. The Executive agrees, without charge to
the Company and at the Company's expense, to execute, acknowledge and deliver to
the Company all such papers, including applications for patents, application
soft copyright and trademark registrations, and assignments thereof, as may be
necessary, and at all times to assist the Company, its parent, subsidiaries,
successors, assigns and nominees in every proper way to patent or register said
programs, computer software, ideas, inventions, discoveries, improvements,
copyrightable material or trademarks in any and all countries and to vest title
thereto in the Company, its parent, subsidiaries, successors, assigns or
nominees.
9.5 Covenants. The covenants set forth in this section 9, which are
made by the Executive are in consideration of the employment, or continuing
employment of, and the compensation paid to, the Executive during his employment
by the Company. The foregoing covenants will not prohibit Executive from
disclosing confidential or other information to other employees of the company
or third parties to the extent that such disclosure is necessary to the
performance of his duties under this Agreement.
10. ADDITIONAL REMEDIES
The Executive recognizes that irreparable injury will result to the
Company and to its business and properties in the event of any breach by the
Executive of any of the provisions of sections 8 and 9 of this Agreement or
either of them, and that the Executive's continued employment is predicated on
the commitments undertaken by him pursuant to said paragraphs. In the event of
any breach of any of the Executive's commitments pursuant to sections 8 and 9 or
either of them, the Company shall be entitled, in addition to any other remedies
and damages
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available, to injunctive relief to restrain the violation of such commitments by
the Executive or by any person or persons acting for or with the Executive in
any capacity whatsoever.
11. NON-ASSIGNMENT
This Agreement is personal to Executive and shall not be assigned by
him. Executive shall not hypothecate, delegate, encumber, alienate, transfer or
otherwise dispose of his rights and duties hereunder. The Company may assign
this Agreement without Executive's consent to any other entity who, in
connection with such assignment, acquires all or substantially all of the
Company's assets or into or with which the Company is merged or consolidated.
12. WAIVER
The waiver by the Company of a breach by Executive of any provision
of this Agreement shall not be construed as a waiver of any subsequent breach by
Executive.
13. ARBITRATION
Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, except a claimed violation of sections 8 and
9, shall be settled by arbitration in accordance with Title 9 of the U.S. Code
and the Employment Dispute Resolution Rules of the American Arbitration
Association in Reno, Nevada, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. All statutes
of limitations, which would otherwise be applicable, shall apply to any
arbitration proceeding pursuant to this paragraph. All reasonable legal costs of
the Executive relative to the arbitration proceedings shall be paid by the
Company.
14. BENEFIT
The provisions of this Agreement shall inure to the benefit of the
Company, its successors and assigns, and shall be binding upon the Company and
Executive, its and his heirs, personal representatives and successors, including
without limitation Executive's estate and the executors, administrators, or
trustees of such estate.
15. RELEVANT LAW
This Agreement shall be construed and enforced in accordance with the
laws of the State of Nevada.
16. NOTICES
All notices, requests, demands and other communications in connection
with this Agreement shall be made in writing and shall be deemed to have been
given when delivered by hand or 72 hours after mailing at any general or branch
United States Post Office, by registered or certified mail, postage prepaid,
addressed as follows, or to such other address as shall have
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been designated in writing by the addressee:
(a) If to the Company:
5109 Neil Road, Suite 310
Reno, Nevada 89502
(b) If to the Executive:
c/o Glamis Gold Ltd.
5190 Neil Road, Suite 310
Reno, Nevada 89502
17. ENTIRE AGREEMENT
The parties hereto agree that this Agreement contains the whole
agreement and understanding of the parties and supersedes and replaces all oral
or written contracts or representations, and that this Agreement cannot be
amended, modified or supplemented in any respect except by subsequent written
agreement signed by both parties hereto.
18. FURTHER ASSURANCES
The parties hereto shall do such things and sign such documents as
may be necessary and desirable to give full effect and force to this Agreement.
19. MISCELLANEOUS
The Company shall withhold from any amounts payable under this
Agreement such taxes and other amounts as may be required to be withheld
pursuant to any applicable law or regulation.
The Executive hereby acknowledges receipt of a copy of this Agreement
duly signed by the Company.
The Executive agrees that after any termination of his employment, he
will tender his resignation from any positions he may hold as an officer or
director of the Company or any of its affiliated or associated companies.
20. DEFINITIONS
For the purposes of this Agreement,
20.1 "Change of Control" shall mean any of:
(a) a sale, transfer or other disposition of all or
substantially all of the property or assets of the Company other than to an
affiliate, within the meaning of Rule 405 of
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Regulation C adopted under the Securities Act of 1933 (Federal).
(b) a merger or consolidation of the Company in which
Glamis Gold Ltd. is not the surviving entity in control of the merged company;
or
(c) any change in the holding, direct or indirect of shares
in the capital of the Company as a result of which a person, or a group of
persons or persons acting jointly or in concert, or persons associated or
affiliated with any such person or group within the meaning of section 13(d)(3)
of the Securities Exchange Act of 1934 (Federal) are in a position to exercise
effective control of the Company, provided that for the purposes of this
Agreement a person or group of persons holding shares and/or other securities in
excess of the number which, directly or following conversion thereof, would
entitle the holders thereof to cast more than 30% of the votes attaching to all
shares in the capital of the Company which may be cast to elect directors of the
Company shall be deemed to be in a position to exercise effective control of the
Company, and further provided that at the time of such acquisition, no other
person or group of persons shall hold securities entitled to more than 30% of
such votes.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the
day and year first above written.
GLAMIS GOLD LTD. EXECUTIVE
By:
------------------------------- -----------------------------------
Name: C. Kevin McArthur James S. Voorhees
Title: President and CEO
-----------------------------------
Social Security Number
By: I hereby designate
------------------------------- ----------------
Name: A. Dan Rovig as Beneficiary pursuant to Section
Title: Chairman of the Board 7.7 of this Agreement
-----------------------------------
James S. Voorhees
<PAGE> 1
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EXHIBIT 10.63
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of January 1, 2000, by and between Glamis
Gold Ltd. (hereinafter referred to as the "Company") and David L. Hyatt
(hereinafter referred to as the "Executive", with the Company and the Executive
hereinafter collectively referred to as the "Parties").
WHEREAS the Company wishes to retain the services of the Executive
and the Executive wishes to be retained by the Company on the terms and
conditions specified herein;
WHEREAS the Executive has worked for the Company or one or more of
its affiliates since November 20, 1996;
WHEREAS the Company and the Executive desire to enter into a written
agreement which contains the agreed-upon terms and conditions of employment;
NOW THEREFORE for the good and valuable consideration of the mutual
covenants and agreements hereinafter contained, the Parties mutually covenant
and agree as follows:
1. EMPLOYMENT
1.1 Position. The Company hereby agrees to employ the Executive in
the position of Vice President Investor Relations ("Vice President"), and the
Executive hereby accepts such employment.
1.2 Services. The Executive shall serve the Company in the capacity
of Vice President to perform such duties and exercise such powers as may be
reasonably required of him or be vested in him by the Senior Vice President
Administration, including but not limited to those duties described in Exhibit A
attached hereto and made a part hereof (the "Services"). During his employment
hereunder, the Executive shall devote his full time and attention and exert his
best efforts, knowledge, skill and energy to his employment hereunder and will
not, without the prior written consent of the Company, assume other employment
or engage in any other business.
2. TERM
The term of the Executive's employment pursuant to this Agreement
shall commence on the date hereof and shall continue on a month-to-month basis
until terminated pursuant to the provisions of this Agreement.
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3. COMPENSATION
3.1 Base Salary. During the term of his employment, the Executive
shall receive an annual base salary of not less than U.S. $120,000 (less
required statutory and other deductions authorized by the Executive), which base
salary shall be paid in accordance with the Company's normal payroll practices.
The Executive's base salary shall be reviewed by the Senior Vice President
Administration on an annual basis thereafter.
3.2 Bonus. If the Company determines to establish a bonus plan for
any of its employees, the Executive shall be entitled to participate in such
bonus plan in accordance with its terms.
3.3 Share Purchase Options. The Parties recognize the existing grant
to the Executive of share purchase options for 100,000 common shares of the
Company ("Shares") under the Company's Amended Share Purchase Option Plan dated
as of September 30, 1995 (the "Plan"). Upon the full exercise of the existing
share purchase options, the Executive will, subject to the then prevailing
policies and practices of the Company's Compensation Committee, be granted
another share purchase option in respect of not less than 100,000 Shares.
4. BENEFITS AND VACATION
4.1 Benefits. While employed by the Company, the Company shall make
available to the Executive the benefits under the Company's employee benefits
programs which, in its sole discretion, it makes available to other employees of
the Company from time to time. These benefits include, without limitation,
participation in the Glamis Gold, Inc. Profit Sharing and Retirement Plan and
the Glamis Gold, Inc. Group Insurance Benefits Plan.
4.2 Vacation. While employed by the Company, the Executive shall be
entitled to two weeks' vacation per year, to be scheduled at the mutual
convenience of the parties; provided however, that the Executive will forfeit,
without compensation, his right to any part of such vacation entitlement not
used in a calendar year. The Executive shall be entitled to the regular holiday
schedule recognized by the Company location at which he works.
5. REIMBURSEMENT OF EXPENSES
The Executive shall be reimbursed for all expenses incurred by him in
compliance with Company policies, as may be modified from time to time.
6. OFFICER OF THE COMPANY
So long as the Senior Vice President Administration, in his sole
discretion, shall desire, the Executive shall serve as an officer of the Company
and an officer or member of the board of directors of any subsidiary or
affiliate, without any additional remuneration to the Executive.
7. TERMINATION
The following will govern termination of Executive's employment with
the Company:
<PAGE> 3
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7.1 Voluntary Termination. The Executive may voluntarily terminate
his employment at any time upon delivery to the Company of a notice to terminate
the Services on a day not less than 60 days after delivery of the notice. In
such case, the Services will terminate at the expiration of such 60-day or
longer period.
7.2 Termination by Company. The Company may terminate the Services
without notice and without any payment in lieu of notice if:
(a) The Executive willfully refuses to perform the Services
hereunder;
(b) The Executive materially breaches Paragraph 8 or
Paragraph 9 of this Agreement;
(c) The Executive engages in acts of dishonesty or fraud in
connection with his services hereunder; or
(d) The Executive engages in other serious misconduct of
such a nature that the continued employment of the Executive may reasonably be
expected to adversely affect the business or properties of the Company;
provided that, if the Company determines that a reason constituting cause for
termination under clauses (a), (b) or (d) has occurred, it shall give the
Executive written notice thereof at least 14 days prior to the proposed date of
termination of employment. If the Executive shall take the necessary steps to
remedy the condition constituting cause within 10 days after the receipt of such
notice, then a reason for termination for cause shall be deemed not to have
occurred. If the Executive shall not remedy the condition constituting cause
within such time period to the reasonable satisfaction of the Company, then
termination shall occur on the date set forth in the notice from the Company.
7.3 Termination for Cause. In addition to those matters referred to
in section 7.2, the Company may, at its sole option, terminate the Services for
Cause by providing three months' written notice to the Executive or a payment in
lieu of such notice. In such case, any outstanding share purchase options held
by the Executive shall expire on the 30th day following the effective date of
termination. As used in this section 7.3, "Cause" shall mean a good faith
determination by the Company that (a) the Executive has failed to perform his
duties in a satisfactory manner, (b) the Executive has been advised of the
deficiencies in his performance and has been unwilling or unable to correct the
deficiencies within a reasonable time and (c) the deficient performance of the
Executive has had or, if allowed to continue, can be reasonably expected to
have, a material adverse effect on the business of the Company.
7.4 Involuntary Termination. The Services may be terminated by reason
of Involuntary Termination. "Involuntary Termination" means:
(a) The termination of the Executive's employment by the
Company, except pursuant to sections 7.2 or 7.3 (it being the intent and
understanding of the Parties that the Company may terminate the Executive's
employment other than for the reasons specified in sections 7.2 and 7.3 at any
time and for any reason, in which case Executive shall be entitled to severance
as provided herein); or
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(b) Resignation from employment by the Executive, at his
sole discretion, following a Change of Control, provided that the resignation
occurs within twelve (12) months from the Change of Control.
7.5 Severance. If the Executive's employment with the Company shall
terminate by reason of an Involuntary Termination, the Executive shall be
entitled to payment (within 14 days of the effective date of termination) of
severance pay and benefits as follows:
7.5.1 Severance Pay. The Company shall pay to the Executive a
lump sum amount equal to the Executive's annual base salary.
7.5.2 Benefits. The Company must, at the election of the
Executive made within ten days after the Termination Date, either:
(a) pay to the Executive a lump sum amount equal to the
aggregate cost to the Executive (without discount or present valuation and
grossed-up to account for income taxes payable by the Executive) of all employee
benefits then payable to or for the benefit of the Executive over the 12 month
period following the termination; or
(b) continue to make the contributions necessary to
maintain the Executive's coverage pursuant to the then-existing employee benefit
plans until the earlier of (i) the end of 12 months following the effective date
of termination of the Services, or (ii) the month after the Executive obtains
comparable replacement benefits at any alternative employment.
7.5.3 Incentive or Bonus. The Company will pay to the Executive
the amount of bonus or incentive pay, if any, paid to the Executive in the year
prior to the year of termination, prorated in proportion to the number of months
in the year before the termination and increased by a percentage equal to the
percentage increase in any such bonus over the preceding year.
7.5.4 Outplacement Assistance. Professional executive
outplacement services will be provided to the Executive at the Company's
expense. The cost of such services will not exceed 10% of the Executive's annual
base salary.
7.5.5 Share Purchase Options. All share purchase options held by
the Executive at the time of any Involuntary Termination shall expire at the
later of (i) the expiration date of the options in accordance with the terms of
their grant or (ii) 12 months following the effective date of termination.
7.6 Termination by Reason of Permanent Disability. If, during the
Executive's employment with the Company the Executive becomes Permanently
Disabled, the Company shall have the right, on not less than three months'
written notice to the Executive, or payment in lieu of such notice, to terminate
the Executive's employment. In the event that the Executive's employment is
terminated on account of permanent disability, the Executive shall continue to
be eligible for long-term disability benefits in accordance with the provision
of the long-term disability policy then in effect. With this exception, the
Executive shall not be entitled to receive any further compensation or benefits
pursuant to this Agreement other than those accrued to the
<PAGE> 5
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date of the Executive's termination hereunder.
As used herein, "Permanently Disabled" means that the Executive, by
reason of illness, disease, mental or physical disability or similar cause as
determined by a qualified medical practitioner mutually agreed to by the
Executive and the Company ("Disability"), is permanently disabled so as to be
unable to fulfil the Executive's duties, responsibilities and obligations
hereunder and such Disability shall continue for any consecutive 180-day period
or for any period of 180 days (whether or not consecutive) in any consecutive
12-month period.
7.7 Termination by Reason of Death. In the event the Executive's
employment with the Company is terminated by reason of the Executive's death,
any portion of his fixed salary pursuant to section 3.1 which is earned but
unpaid as of the date of death shall be paid to the Executive's designated
beneficiary in the event of his death, or if none, to his then living spouse, or
if none, to the duly appointed personal representative of his estate. The
Executive's beneficiary, spouse or estate shall not be entitled to receive any
further compensation or benefits pursuant to this Agreement other than those
accrued to the date of the Executive's termination hereunder.
7.8 Accrued Salary. In the event of any termination of the
Executive's employment hereunder, any portion of his fixed salary pursuant to
section 3.1 which is earned but unpaid as of the date termination for any reason
shall be paid to the Executive, along with payment for any vacation benefits
then accrued but unused, subject to withholding for statutory deductions.
7.9 Share Purchase Options. Except as provided in sections 7.3 and
7.5.5 above, the time for expiration of all share purchase options held by the
Executive at the time of any termination of the Executive's employment shall be
governed by the terms of the Glamis Gold Ltd. Amended Share Purchase Option Plan
dated as of September 30, 1999, including any amendments or modifications
thereof, or any successor plan that may be adopted by the Board of Directors of
the Company.
8. RESTRICTIVE COVENANT
During the Executive's employment with the Company and for a period
of two years following the termination of the Executive's employment with the
Company for any reason, including termination occasioned by the expiration of
this Agreement, the Executive shall not interfere with the relationship between
the Company and any of its employees, agents, representatives or parties with
whom it does business.
9. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
9.1 Confidentiality. The Executive acknowledges that the Company may
disclose certain confidential information to the Executive during the term of
this Agreement to enable him to perform his duties hereunder. The Executive
hereby covenants and agrees that he will not, without the prior consent of the
Company, during the term of this Agreement or at any time thereafter, disclose
or permit to be disclosed to any third party by any method whatsoever any of the
confidential information of the Company. For purposes of this Agreement,
"confidential information" shall include, but not be limited to, any scientific
or technical information, design, process, procedure, formula, confidential
business or financial information, records, data, ideas,
<PAGE> 6
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processes, patents, models, research, or personnel information.
9.2 Legal Process Exception. The foregoing section shall not be
applicable if and to the extent Executive is required to testify in a judicial
or regulatory proceeding pursuant to an order of a judge or administrative law
judge issued after Executive and his legal counsel urge that the aforementioned
confidentiality be preserved.
9.3 Intellectual Property. The Executive agrees promptly to reduce to
writing to disclose and assign, and hereby does assign, to the Company, its
parent, subsidiaries, successors, assigns and nominees, all inventions,
discoveries, improvements, copyrightable material, trademarks, programs,
computer software and ideas concerning the same, capable of use in connection
with the business of the Company, which employee may make or conceive, either
solely or jointly with others, during the period of his employment by the
Company, its parent, subsidiaries or successors.
9.4 Patents, Trademarks, etc. The Executive agrees, without charge to
the Company and at the Company's expense, to execute, acknowledge and deliver to
the Company all such papers, including applications for patents, application
soft copyright and trademark registrations, and assignments thereof, as may be
necessary, and at all times to assist the Company, its parent, subsidiaries,
successors, assigns and nominees in every proper way to patent or register said
programs, computer software, ideas, inventions, discoveries, improvements,
copyrightable material or trademarks in any and all countries and to vest title
thereto in the Company, its parent, subsidiaries, successors, assigns or
nominees.
9.5 Covenants. The covenants set forth in this section 9, which are
made by the Executive are in consideration of the employment, or continuing
employment of, and the compensation paid to, the Executive during his employment
by the Company. The foregoing covenants will not prohibit Executive from
disclosing confidential or other information to other employees of the company
or third parties to the extent that such disclosure is necessary to the
performance of his duties under this Agreement.
10. ADDITIONAL REMEDIES
The Executive recognizes that irreparable injury will result to the
Company and to its business and properties in the event of any breach by the
Executive of any of the provisions of sections 8 and 9 of this Agreement or
either of them, and that the Executive's continued employment is predicated on
the commitments undertaken by him pursuant to said paragraphs. In the event of
any breach of any of the Executive's commitments pursuant to sections 8 and 9 or
either of them, the Company shall be entitled, in addition to any other remedies
and damages available, to injunctive relief to restrain the violation of such
commitments by the Executive or by any person or persons acting for or with the
Executive in any capacity whatsoever.
11. NON-ASSIGNMENT
This Agreement is personal to Executive and shall not be assigned by
him. Executive shall not hypothecate, delegate, encumber, alienate, transfer or
otherwise dispose of his rights and duties hereunder. The Company may assign
this Agreement without Executive's consent to any other entity who, in
connection with such assignment, acquires all or substantially all of the
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Company's assets or into or with which the Company is merged or consolidated.
12. WAIVER
The waiver by the Company of a breach by Executive of any provision
of this Agreement shall not be construed as a waiver of any subsequent breach by
Executive.
13. ARBITRATION
Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, except a claimed violation of sections 8 and
9, shall be settled by arbitration in accordance with Title 9 of the U.S. Code
and the Employment Dispute Resolution Rules of the American Arbitration
Association in Reno, Nevada, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. All statutes
of limitations, which would otherwise be applicable, shall apply to any
arbitration proceeding pursuant to this paragraph. All reasonable legal costs of
the Executive relative to the arbitration proceedings shall be paid by the
Company.
14. BENEFIT
The provisions of this Agreement shall inure to the benefit of the
Company, its successors and assigns, and shall be binding upon the Company and
Executive, its and his heirs, personal representatives and successors, including
without limitation Executive's estate and the executors, administrators, or
trustees of such estate.
15. RELEVANT LAW
This Agreement shall be construed and enforced in accordance with the
laws of the State of Nevada.
16. NOTICES
All notices, requests, demands and other communications in connection
with this Agreement shall be made in writing and shall be deemed to have been
given when delivered by hand or 72 hours after mailing at any general or branch
United States Post Office, by registered or certified mail, postage prepaid,
addressed as follows, or to such other address as shall have been designated in
writing by the addressee:
(a) If to the Company:
5109 Neil Road, Suite 310
Reno, Nevada 89502
(b) If to the Executive:
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c/o Glamis Gold Ltd.
5190 Neil Road, Suite 310
Reno, Nevada 89502
17. ENTIRE AGREEMENT
The parties hereto agree that this Agreement contains the whole
agreement and understanding of the parties and supersedes and replaces all oral
or written contracts or representations, and that this Agreement cannot be
amended, modified or supplemented in any respect except by subsequent written
agreement signed by both parties hereto.
18. FURTHER ASSURANCES
The parties hereto shall do such things and sign such documents as
may be necessary and desirable to give full effect and force to this Agreement.
19. MISCELLANEOUS
The Company shall withhold from any amounts payable under this
Agreement such taxes and other amounts as may be required to be withheld
pursuant to any applicable law or regulation.
The Executive hereby acknowledges receipt of a copy of this Agreement
duly signed by the Company.
The Executive agrees that after any termination of his employment, he
will tender his resignation from any position he may hold as an officer or
director of the Company or any of its affiliated or associated companies.
20. DEFINITIONS
For the purposes of this Agreement,
20.1 "Change of Control" shall mean any of:
(a) a sale, transfer or other disposition of all or
substantially all of the property or assets of the Company other than to an
affiliate, within the meaning of Rule 405 of Regulation C adopted under the
Securities Act of 1933 (Federal).
(b) a merger or consolidation of the Company in which
Glamis Gold Ltd. is not the surviving entity in control of the merged company;
or
(c) any change in the holding, direct or indirect of shares
in the capital of the Company as a result of which a person, or a group of
persons or persons acting jointly or in concert, or persons associated or
affiliated with any such person or group within the meaning of section 13(d)(3)
of the Securities Exchange Act of 1934 (Federal) are in a position to exercise
<PAGE> 9
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effective control of the Company, provided that for the purposes of this
Agreement a person or group of persons holding shares and/or other securities in
excess of the number which, directly or following conversion thereof, would
entitle the holders thereof to cast more than 30% of the votes attaching to all
shares in the capital of the Company which may be cast to elect directors of the
Company shall be deemed to be in a position to exercise effective control of the
Company, and further provided that at the time of such acquisition, no other
person or group of persons shall hold securities entitled to more than 30% of
such votes.
IN WITNESS WHEREOF the Parties have executed this Agreement on the
day and year first above written.
GLAMIS GOLD LTD. EXECUTIVE
By:
------------------------------- -----------------------------------
Name: C. Kevin McArthur David L. Hyatt
Title: President and CEO
-----------------------------------
Social Security Number
By: I hereby designate
------------------------------- ----------------
Name: Charles A. Jeannes as Beneficiary pursuant to Section
Title: Senior VP Administration 7.7 of this Agreement
-----------------------------------
David L. Hyatt
<PAGE> 1
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EXHIBIT 10.64
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of January 1, 2000, by and between Glamis
Gold Ltd. (hereinafter referred to as the "Company") and Steven L. Baumann
(hereinafter referred to as the "Executive", with the Company and the Executive
hereinafter collectively referred to as the "Parties").
WHEREAS the Company wishes to retain the services of the Executive
and the Executive wishes to be retained by the Company on the terms and
conditions specified herein;
WHEREAS the Executive has worked for the Company or one or more of
its affiliates since October 9, 1989;
WHEREAS the Company and the Executive desire to enter into a written
agreement which contains the agreed-upon terms and conditions of employment;
NOW THEREFORE for the good and valuable consideration of the mutual
covenants and agreements hereinafter contained, the Parties mutually covenant
and agree as follows:
1. EMPLOYMENT
1.1 Position. The Company hereby agrees to employ the Executive in
the position of Vice President Operations, Latin America ("Vice President"), and
the Executive hereby accepts such employment.
1.2 Services. The Executive shall serve the Company in the capacity
of Vice President to perform such duties and exercise such powers as may be
reasonably required of him or be vested in him by the Vice President & Chief
Operating Officer, including but not limited to those duties described in
Exhibit A attached hereto and made a part hereof (the "Services"). During his
employment hereunder, the Executive shall devote his full time and attention and
exert his best efforts, knowledge, skill and energy to his employment hereunder
and will not, without the prior written consent of the Company, assume other
employment or engage in any other business.
2. TERM
The term of the Executive's employment pursuant to this Agreement
shall commence on the date hereof and shall continue on a month-to-month basis
until terminated pursuant to the provisions of this Agreement.
<PAGE> 2
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3. COMPENSATION
3.1 Base Salary. During the term of his employment, the Executive
shall receive an annual base salary of not less than U.S. $120,000 (less
required statutory and other deductions authorized by the Executive), which base
salary shall be paid in accordance with the Company's normal payroll practices.
The Executive's base salary shall be reviewed by the Vice President & Chief
Operating Officer on an annual basis thereafter.
3.2 Bonus. If the Company determines to establish a bonus plan for
any of its employees, the Executive shall be entitled to participate in such
bonus plan in accordance with its terms.
3.3 Share Purchase Options. The Parties recognize the existing grant
to the Executive of share purchase options for 100,000 common shares of the
Company ("Shares") under the Company's Amended Share Purchase Option Plan dated
as of September 30, 1995 (the "Plan"). Upon the full exercise of the existing
share purchase options, the Executive will, subject to the then prevailing
policies and practices of the Company's Compensation Committee, be granted
another share purchase option in respect of not less than 100,000 Shares.
4. BENEFITS AND VACATION
4.1 Benefits. While employed by the Company, the Company shall make
available to the Executive the benefits under the Company's employee benefits
programs which, in its sole discretion, it makes available to other employees of
the Company from time to time. These benefits include, without limitation,
participation in the Glamis Gold, Inc. Profit Sharing and Retirement Plan and
the Glamis Gold, Inc. Group Insurance Benefits Plan.
4.2 Vacation. While employed by the Company, the Executive shall be
entitled to four weeks' vacation per year, to be scheduled at the mutual
convenience of the parties; provided however, that the Executive will forfeit,
without compensation, his right to any part of such vacation entitlement not
used in a calendar year. The Executive shall be entitled to the regular holiday
schedule recognized by the Company location at which he works.
5. REIMBURSEMENT OF EXPENSES
The Executive shall be reimbursed for all expenses incurred by him in
compliance with Company policies, as may be modified from time to time.
6. OFFICER OF THE COMPANY
So long as the President and CEO, in his sole discretion, shall
desire, the Executive shall serve as an officer of the Company and an officer or
member of the board of directors of any subsidiary or affiliate, without any
additional remuneration to the Executive.
7. TERMINATION
The following will govern termination of Executive's employment with
the Company:
<PAGE> 3
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7.1 Voluntary Termination. The Executive may voluntarily terminate
his employment at any time upon delivery to the Company of a notice to terminate
the Services on a day not less than 60 days after delivery of the notice. In
such case, the Services will terminate at the expiration of such 60-day or
longer period.
7.2 Termination by Company. The Company may terminate the Services
without notice and without any payment in lieu of notice if:
(a) The Executive willfully refuses to perform the Services
hereunder;
(b) The Executive materially breaches Paragraph 8 or
Paragraph 9 of this Agreement;
(c) The Executive engages in acts of dishonesty or fraud in
connection with his services hereunder; or
(d) The Executive engages in other serious misconduct of
such a nature that the continued employment of the Executive may reasonably be
expected to adversely affect the business or properties of the Company;
provided that, if the Company determines that a reason constituting cause for
termination under clauses (a), (b) or (d) has occurred, it shall give the
Executive written notice thereof at least 14 days prior to the proposed date of
termination of employment. If the Executive shall take the necessary steps to
remedy the condition constituting cause within 10 days after the receipt of such
notice, then a reason for termination for cause shall be deemed not to have
occurred. If the Executive shall not remedy the condition constituting cause
within such time period to the reasonable satisfaction of the Company, then
termination shall occur on the date set forth in the notice from the Company.
7.3 Termination for Cause. In addition to those matters referred to
in section 7.2, the Company may, at its sole option, terminate the Services for
Cause by providing three months' written notice to the Executive or a payment in
lieu of such notice. In such case, any outstanding share purchase options held
by the Executive shall expire on the 30th day following the effective date of
termination. As used in this section 7.3, "Cause" shall mean a good faith
determination by the Company that (a) the Executive has failed to perform his
duties in a satisfactory manner, (b) the Executive has been advised of the
deficiencies in his performance and has been unwilling or unable to correct the
deficiencies within a reasonable time and (c) the deficient performance of the
Executive has had or, if allowed to continue, can be reasonably expected to
have, a material adverse effect on the business of the Company.
7.4 Involuntary Termination. The Services may be terminated by reason
of Involuntary Termination. "Involuntary Termination" means:
(a) The termination of the Executive's employment by the
Company, except pursuant to sections 7.2 or 7.3 (it being the intent and
understanding of the Parties that the Company may terminate the Executive's
employment other than for the reasons specified in sections 7.2 and 7.3 at any
time and for any reason, in which case Executive shall be entitled to severance
as provided herein); or
<PAGE> 4
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(b) Resignation from employment by the Executive, at his
sole discretion, following a Change of Control, provided that the resignation
occurs within twelve (12) months from the Change of Control.
7.5 Severance. If the Executive's employment with the Company shall
terminate by reason of an Involuntary Termination, the Executive shall be
entitled to payment (within 14 days of the effective date of termination) of
severance pay and benefits as follows:
7.5.1 Severance Pay. The Company shall pay to the Executive a
lump sum amount equal to the Executive's annual base salary.
7.5.2 Benefits. The Company must, at the election of the
Executive made within ten days after the Termination Date, either:
(a) pay to the Executive a lump sum amount equal to the
aggregate cost to the Executive (without discount or present valuation and
grossed-up to account for income taxes payable by the Executive) of all employee
benefits then payable to or for the benefit of the Executive over the 12 month
period following the termination; or
(b) continue to make the contributions necessary to
maintain the Executive's coverage pursuant to the then-existing employee benefit
plans until the earlier of (i) the end of 12 months following the effective date
of termination of the Services, or (ii) the month after the Executive obtains
comparable replacement benefits at any alternative employment.
7.5.3 Incentive or Bonus. The Company will pay to the Executive
the amount of bonus or incentive pay, if any, paid to the Executive in the year
prior to the year of termination, prorated in proportion to the number of months
in the year before the termination and increased by a percentage equal to the
percentage increase in any such bonus over the preceding year.
7.5.4 Outplacement Assistance. Professional executive
outplacement services will be provided to the Executive at the Company's
expense. The cost of such services will not exceed 10% of the Executive's annual
base salary.
7.5.5 Share Purchase Options. All share purchase options held by
the Executive at the time of any Involuntary Termination shall expire at the
later of (i) the expiration date of the options in accordance with the terms of
their grant or (ii) 12 months following the effective date of termination.
7.6 Termination by Reason of Permanent Disability. If, during the
Executive's employment with the Company the Executive becomes Permanently
Disabled, the Company shall have the right, on not less than three months'
written notice to the Executive, or payment in lieu of such notice, to terminate
the Executive's employment. In the event that the Executive's employment is
terminated on account of permanent disability, the Executive shall continue to
be eligible for long-term disability benefits in accordance with the provision
of the long-term disability policy then in effect. With this exception, the
Executive shall not be entitled to receive any further compensation or benefits
pursuant to this Agreement other than those accrued to the
<PAGE> 5
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date of the Executive's termination hereunder.
As used herein, "Permanently Disabled" means that the Executive, by
reason of illness, disease, mental or physical disability or similar cause as
determined by a qualified medical practitioner mutually agreed to by the
Executive and the Company ("Disability"), is permanently disabled so as to be
unable to fulfil the Executive's duties, responsibilities and obligations
hereunder and such Disability shall continue for any consecutive 180-day period
or for any period of 180 days (whether or not consecutive) in any consecutive
12-month period.
7.7 Termination by Reason of Death. In the event the Executive's
employment with the Company is terminated by reason of the Executive's death,
any portion of his fixed salary pursuant to section 3.1 which is earned but
unpaid as of the date of death shall be paid to the Executive's designated
beneficiary in the event of his death, or if none, to his then living spouse, or
if none, to the duly appointed personal representative of his estate. The
Executive's beneficiary, spouse or estate shall not be entitled to receive any
further compensation or benefits pursuant to this Agreement other than those
accrued to the date of the Executive's termination hereunder.
7.8 Accrued Salary. In the event of any termination of the
Executive's employment hereunder, any portion of his fixed salary pursuant to
section 3.1 which is earned but unpaid as of the date termination for any reason
shall be paid to the Executive, along with payment for any vacation benefits
then accrued but unused, subject to withholding for statutory deductions.
7.9 Share Purchase Options. Except as provided in sections 7.3 and
7.5.5 above, the time for expiration of all share purchase options held by the
Executive at the time of any termination of the Executive's employment shall be
governed by the terms of the Glamis Gold Ltd. Amended Share Purchase Option Plan
dated as of September 30, 1999, including any amendments or modifications
thereof, or any successor plan that may be adopted by the Board of Directors of
the Company.
8. RESTRICTIVE COVENANT
During the Executive's employment with the Company and for a period
of two years following the termination of the Executive's employment with the
Company for any reason, including termination occasioned by the expiration of
this Agreement, the Executive shall not interfere with the relationship between
the Company and any of its employees, agents, representatives or parties with
whom it does business.
9. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
9.1 Confidentiality. The Executive acknowledges that the Company may
disclose certain confidential information to the Executive during the term of
this Agreement to enable him to perform his duties hereunder. The Executive
hereby covenants and agrees that he will not, without the prior consent of the
Company, during the term of this Agreement or at any time thereafter, disclose
or permit to be disclosed to any third party by any method whatsoever any of the
confidential information of the Company. For purposes of this Agreement,
"confidential information" shall include, but not be limited to, any scientific
or technical information, design, process, procedure, formula, confidential
business or financial information, records, data, ideas,
<PAGE> 6
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processes, patents, models, research, or personnel information.
9.2 Legal Process Exception. The foregoing section shall not be
applicable if and to the extent Executive is required to testify in a judicial
or regulatory proceeding pursuant to an order of a judge or administrative law
judge issued after Executive and his legal counsel urge that the aforementioned
confidentiality be preserved.
9.3 Intellectual Property. The Executive agrees promptly to reduce to
writing to disclose and assign, and hereby does assign, to the Company, its
parent, subsidiaries, successors, assigns and nominees, all inventions,
discoveries, improvements, copyrightable material, trademarks, programs,
computer software and ideas concerning the same, capable of use in connection
with the business of the Company, which employee may make or conceive, either
solely or jointly with others, during the period of his employment by the
Company, its parent, subsidiaries or successors.
9.4 Patents, Trademarks, etc. The Executive agrees, without charge to
the Company and at the Company's expense, to execute, acknowledge and deliver to
the Company all such papers, including applications for patents, application
soft copyright and trademark registrations, and assignments thereof, as may be
necessary, and at all times to assist the Company, its parent, subsidiaries,
successors, assigns and nominees in every proper way to patent or register said
programs, computer software, ideas, inventions, discoveries, improvements,
copyrightable material or trademarks in any and all countries and to vest title
thereto in the Company, its parent, subsidiaries, successors, assigns or
nominees.
9.5 Covenants. The covenants set forth in this section 9, which are
made by the Executive are in consideration of the employment, or continuing
employment of, and the compensation paid to, the Executive during his employment
by the Company. The foregoing covenants will not prohibit Executive from
disclosing confidential or other information to other employees of the company
or third parties to the extent that such disclosure is necessary to the
performance of his duties under this Agreement.
10. ADDITIONAL REMEDIES
The Executive recognizes that irreparable injury will result to the
Company and to its business and properties in the event of any breach by the
Executive of any of the provisions of sections 8 and 9 of this Agreement or
either of them, and that the Executive's continued employment is predicated on
the commitments undertaken by him pursuant to said paragraphs. In the event of
any breach of any of the Executive's commitments pursuant to sections 8 and 9 or
either of them, the Company shall be entitled, in addition to any other remedies
and damages available, to injunctive relief to restrain the violation of such
commitments by the Executive or by any person or persons acting for or with the
Executive in any capacity whatsoever.
11. NON-ASSIGNMENT
This Agreement is personal to Executive and shall not be assigned by
him. Executive shall not hypothecate, delegate, encumber, alienate, transfer or
otherwise dispose of his rights and duties hereunder. The Company may assign
this Agreement without Executive's consent to any other entity who, in
connection with such assignment, acquires all or substantially all of the
<PAGE> 7
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Company's assets or into or with which the Company is merged or consolidated.
12. WAIVER
The waiver by the Company of a breach by Executive of any provision
of this Agreement shall not be construed as a waiver of any subsequent breach by
Executive.
13. ARBITRATION
Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, except a claimed violation of sections 8 and
9, shall be settled by arbitration in accordance with Title 9 of the U.S. Code
and the Employment Dispute Resolution Rules of the American Arbitration
Association in Reno, Nevada, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. All statutes
of limitations, which would otherwise be applicable, shall apply to any
arbitration proceeding pursuant to this paragraph. All reasonable legal costs of
the Executive relative to the arbitration proceedings shall be paid by the
Company.
14. BENEFIT
The provisions of this Agreement shall inure to the benefit of the
Company, its successors and assigns, and shall be binding upon the Company and
Executive, its and his heirs, personal representatives and successors, including
without limitation Executive's estate and the executors, administrators, or
trustees of such estate.
15. RELEVANT LAW
This Agreement shall be construed and enforced in accordance with the
laws of the State of Nevada.
16. NOTICES
All notices, requests, demands and other communications in connection
with this Agreement shall be made in writing and shall be deemed to have been
given when delivered by hand or 72 hours after mailing at any general or branch
United States Post Office, by registered or certified mail, postage prepaid,
addressed as follows, or to such other address as shall have been designated in
writing by the addressee:
(a) If to the Company:
5109 Neil Road, Suite 310
Reno, Nevada 89502
(b) If to the Executive:
c/o Glamis Gold Ltd.
5190 Neil Road, Suite 310
Reno, Nevada 89502
<PAGE> 8
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17. ENTIRE AGREEMENT
The parties hereto agree that this Agreement contains the whole
agreement and understanding of the parties and supersedes and replaces all oral
or written contracts or representations, and that this Agreement cannot be
amended, modified or supplemented in any respect except by subsequent written
agreement signed by both parties hereto.
18. FURTHER ASSURANCES
The parties hereto shall do such things and sign such documents as
may be necessary and desirable to give full effect and force to this Agreement.
19. MISCELLANEOUS
The Company shall withhold from any amounts payable under this
Agreement such taxes and other amounts as may be required to be withheld
pursuant to any applicable law or regulation.
The Executive hereby acknowledges receipt of a copy of this Agreement
duly signed by the Company.
The Executive agrees that after any termination of his employment, he
will tender his resignation from any position he may hold as an officer or
director of the Company or any of its affiliated or associated companies.
20. DEFINITIONS
For the purposes of this Agreement,
20.1 "Change of Control" shall mean any of:
(a) a sale, transfer or other disposition of all or
substantially all of the property or assets of the Company other than to an
affiliate, within the meaning of Rule 405 of Regulation C adopted under the
Securities Act of 1933 (Federal).
(b) a merger or consolidation of the Company in which
Glamis Gold Ltd. is not the surviving entity in control of the merged company;
or
(c) any change in the holding, direct or indirect of shares
in the capital of the Company as a result of which a person, or a group of
persons or persons acting jointly or in concert, or persons associated or
affiliated with any such person or group within the meaning of section 13(d)(3)
of the Securities Exchange Act of 1934 (Federal) are in a position to exercise
effective control of the Company, provided that for the purposes of this
Agreement a person or group of persons holding shares and/or other securities in
excess of the number which, directly or following conversion thereof, would
entitle the holders thereof to cast more than 30% of the
<PAGE> 9
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votes attaching to all shares in the capital of the Company which may be cast to
elect directors of the Company shall be deemed to be in a position to exercise
effective control of the Company, and further provided that at the time of such
acquisition, no other person or group of persons shall hold securities entitled
to more than 30% of such votes.
IN WITNESS WHEREOF the Parties have executed this Agreement on the
day and year first above written.
GLAMIS GOLD LTD. EXECUTIVE
By:
------------------------------- -----------------------------------
Name: C. Kevin McArthur Steven L. Baumann
Title: President and CEO
-----------------------------------
Social Security Number
By: I hereby designate
---------------------------- ----------------
Name: Charles A. Jeannes as Beneficiary pursuant to Section
Title: Senior VP Administration 7.7 of this Agreement
-----------------------------------
Steven L. Baumann
<PAGE> 1
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EXHIBIT 10.65
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of March 1, 2000, by and between Glamis
Gold Ltd. (hereinafter referred to as the "Company") and Cheryl S. Maher
(hereinafter referred to as the "Executive", with the Company and the Executive
hereinafter collectively referred to as the "Parties").
WHEREAS the Company wishes to retain the services of the Executive
and the Executive wishes to be retained by the Company on the terms and
conditions specified herein;
WHEREAS the Executive has worked for the Company or one or more of
its affiliates since March 1, 1999;
WHEREAS the Company and the Executive desire to enter into a written
agreement which contains the agreed-upon terms and conditions of employment;
NOW THEREFORE for the good and valuable consideration of the mutual
covenants and agreements hereinafter contained, the Parties mutually covenant
and agree as follows:
1. EMPLOYMENT
1.1 Position. The Company hereby agrees to employ the Executive in
the position of Vice President, Finance, Chief Financial Officer and Treasurer
("Vice President"), and the Executive hereby accepts such employment.
1.2 Services. The Executive shall serve the Company in the capacity
of Vice President to perform such duties and exercise such powers as may be
reasonably required of her or be vested in her by the Senior Vice President
Administration, including but not limited to those duties described in Exhibit A
attached hereto and made a part hereof (the "Services"). During her employment
hereunder, the Executive shall devote her full time and attention and exert her
best efforts, knowledge, skill and energy to her employment hereunder and will
not, without the prior written consent of the Company, assume other employment
or engage in any other business.
2. TERM
The term of the Executive's employment pursuant to this Agreement
shall commence on the date hereof and shall continue on a month-to-month basis
until terminated pursuant to the provisions of this Agreement.
<PAGE> 2
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3. COMPENSATION
3.1 Base Salary. During the term of her employment, the Executive
shall receive an annual base salary of not less than U.S. $135,000 (less
required statutory and other deductions authorized by the Executive), which base
salary shall be paid in accordance with the Company's normal payroll practices.
The Executive's base salary shall be reviewed by the Senior Vice President
Administration on an annual basis thereafter.
3.2 Bonus. If the Company determines to establish a bonus plan for any
of its employees, the Executive shall be entitled to participate in such bonus
plan in accordance with its terms.
3.3 Share Purchase Options. The Parties recognize the existing grant to the
Executive of share purchase options for 40,000 common shares of the Company, and
a supplemental grant concurrent with the execution of this Agreement of 60,000
share purchase options, for a total grant of 100,000 share purchase options (the
"Shares"), under the Company's Amended Share Purchase Option Plan dated as of
September 30, 1995 (the "Plan"). The Executive acknowledges that the second
grant of 60,000 share purchase options have been priced as of February 29, 2000
but will not be exercisable until approval by the shareholders of revisions to
the Plan at the annual shareholders meeting on May 3, 2000. Upon the full
exercise of the existing share purchase options, the Executive will, subject to
the then prevailing policies and practices of the Company's Compensation
Committee, be granted another share purchase option in respect of not less than
100,000 Shares.
4. BENEFITS AND VACATION
4.1 Benefits. While employed by the Company, the Company shall make
available to the Executive the benefits under the Company's employee benefits
programs which, in its sole discretion, it makes available to other employees of
the Company from time to time. These benefits include, without limitation,
participation in the Glamis Gold, Inc. Profit Sharing and Retirement Plan and
the Glamis Gold, Inc. Group Insurance Benefits Plan.
4.2 Vacation. While employed by the Company, the Executive shall be
entitled to three weeks' vacation per year, to be scheduled at the mutual
convenience of the parties; provided however, that the Executive will forfeit,
without compensation, her right to any part of such vacation entitlement not
used in a calendar year. The Executive shall be entitled to the regular holiday
schedule recognized by the Company location at which she works.
5. REIMBURSEMENT OF EXPENSES
The Executive shall be reimbursed for all expenses incurred by her in
compliance with Company policies, as may be modified from time to time.
6. OFFICER OF THE COMPANY
So long as the Senior Vice President Administration, in his sole
discretion, shall desire, the Executive shall serve as an officer of the or
member of the board of directors of any subsidiary or affiliate of the Company,
without any additional remuneration to the Executive.
<PAGE> 3
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7. TERMINATION
The following will govern termination of Executive's employment with
the Company:
7.1 Voluntary Termination. The Executive may voluntarily terminate
her employment at any time upon delivery to the Company of a notice to terminate
the Services on a day not less than 60 days after delivery of the notice. In
such case, the Services will terminate at the expiration of such 60-day or
longer period.
7.2 Termination by Company. The Company may terminate the Services
without notice and without any payment in lieu of notice if:
(a) The Executive willfully refuses to perform the Services
hereunder;
(b) The Executive materially breaches Paragraph 8 or
Paragraph 9 of this Agreement;
(c) The Executive engages in acts of dishonesty or fraud in
connection with her services hereunder; or
(d) The Executive engages in other serious misconduct of
such a nature that the continued employment of the Executive may reasonably be
expected to adversely affect the business or properties of the Company;
provided that, if the Company determines that a reason constituting cause for
termination under clauses (a), (b) or (d) has occurred, it shall give the
Executive written notice thereof at least 14 days prior to the proposed date of
termination of employment. If the Executive shall take the necessary steps to
remedy the condition constituting cause within 10 days after the receipt of such
notice, then a reason for termination for cause shall be deemed not to have
occurred. If the Executive shall not remedy the condition constituting cause
within such time period to the reasonable satisfaction of the Company, then
termination shall occur on the date set forth in the notice from the Company.
7.3 Termination for Cause. In addition to those matters referred to
in section 7.2, the Company may, at its sole option, terminate the Services for
Cause by providing three months' written notice to the Executive or a payment in
lieu of such notice. In such case, any outstanding share purchase options held
by the Executive shall expire on the 30th day following the effective date of
termination. As used in this section 7.3, "Cause" shall mean a good faith
determination by the Company that (a) the Executive has failed to perform his
duties in a satisfactory manner, (b) the Executive has been advised of the
deficiencies in his performance and has been unwilling or unable to correct the
deficiencies within a reasonable time and (c) the deficient performance of the
Executive has had or, if allowed to continue, can be reasonably expected to
have, a material adverse effect on the business of the Company.
7.4 Involuntary Termination. The Services may be terminated by reason
of Involuntary Termination. "Involuntary Termination" means:
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(a) The termination of the Executive's employment by the
Company, except pursuant to sections 7.2 or 7.3 (it being the intent and
understanding of the Parties that the Company may terminate the Executive's
employment other than for the reasons specified in sections 7.2 and 7.3 at any
time and for any reason, in which case Executive shall be entitled to severance
as provided herein); or
(b) Resignation from employment by the Executive, at his
sole discretion, following a Change of Control, provided that the resignation
occurs within twelve (12) months from the Change of Control.
7.5 Severance. If the Executive's employment with the Company shall
terminate by reason of an Involuntary Termination, the Executive shall be
entitled to payment (within 14 days of the effective date of termination) of
severance pay and benefits as follows:
7.5.1 Severance Pay. The Company shall pay to the Executive a
lump sum amount equal to the Executive's annual base salary.
7.5.2 Benefits. The Company must, at the election of the
Executive made within ten days after the Termination Date, either:
(a) pay to the Executive a lump sum amount equal to the
aggregate cost to the Executive (without discount or present valuation and
grossed-up to account for income taxes payable by the Executive) of all employee
benefits then payable to or for the benefit of the Executive over the 12 month
period following the termination; or
(b) continue to make the contributions necessary to
maintain the Executive's coverage pursuant to the then-existing employee benefit
plans until the earlier of (i) the end of 12 months following the effective date
of termination of the Services, or (ii) the month after the Executive obtains
comparable replacement benefits at any alternative employment.
7.5.3 Incentive or Bonus. The Company will pay to the Executive
the amount of bonus or incentive pay, if any, paid to the Executive in the year
prior to the year of termination, prorated in proportion to the number of months
in the year before the termination and increased by a percentage equal to the
percentage increase in any such bonus over the preceding year.
7.5.4 Outplacement Assistance. Professional executive
outplacement services will be provided to the Executive at the Company's
expense. The cost of such services will not exceed 10% of the Executive's annual
base salary.
7.5.5 Share Purchase Options. All share purchase options held by
the Executive at the time of any Involuntary Termination shall expire at the
later of (i) the expiration date of the options in accordance with the terms of
their grant or (ii) 12 months following the effective date of termination.
7.6 Termination by Reason of Permanent Disability. If, during the
Executive's employment with the Company the Executive becomes Permanently
Disabled, the Company shall have the right, on not less than three months'
written notice to the Executive, or payment in
<PAGE> 5
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lieu of such notice, to terminate the Executive's employment. In the event that
the Executive's employment is terminated on account of permanent disability, the
Executive shall continue to be eligible for long-term disability benefits in
accordance with the provision of the long-term disability policy then in effect.
With this exception, the Executive shall not be entitled to receive any further
compensation or benefits pursuant to this Agreement other than those accrued to
the date of the Executive's termination hereunder.
As used herein, "Permanently Disabled" means that the Executive, by
reason of illness, disease, mental or physical disability or similar cause as
determined by a qualified medical practitioner mutually agreed to by the
Executive and the Company ("Disability"), is permanently disabled so as to be
unable to fulfil the Executive's duties, responsibilities and obligations
hereunder and such Disability shall continue for any consecutive 180-day period
or for any period of 180 days (whether or not consecutive) in any consecutive
12-month period.
7.7 Termination by Reason of Death. In the event the Executive's
employment with the Company is terminated by reason of the Executive's death,
any portion of his fixed salary pursuant to section 3.1 which is earned but
unpaid as of the date of death shall be paid to the Executive's designated
beneficiary in the event of his death, or if none, to his then living spouse, or
if none, to the duly appointed personal representative of his estate. The
Executive's beneficiary, spouse or estate shall not be entitled to receive any
further compensation or benefits pursuant to this Agreement other than those
accrued to the date of the Executive's termination hereunder.
7.8 Accrued Salary. In the event of any termination of the
Executive's employment hereunder, any portion of his fixed salary pursuant to
section 3.1 which is earned but unpaid as of the date termination for any reason
shall be paid to the Executive, along with payment for any vacation benefits
then accrued but unused, subject to withholding for statutory deductions.
7.9 Share Purchase Options. Except as provided in sections 7.3 and
7.5.5 above, the time for expiration of all share purchase options held by the
Executive at the time of any termination of the Executive's employment shall be
governed by the terms of the Glamis Gold Ltd. Amended Share Purchase Option Plan
dated as of September 30, 1999, including any amendments or modifications
thereof, or any successor plan that may be adopted by the Board of Directors of
the Company.
8. RESTRICTIVE COVENANT
During the Executive's employment with the Company and for a period
of two years following the termination of the Executive's employment with the
Company for any reason, including termination occasioned by the expiration of
this Agreement, the Executive shall not interfere with the relationship between
the Company and any of its employees, agents, representatives or parties with
whom it does business.
9. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
9.1 Confidentiality. The Executive acknowledges that the Company may
disclose certain confidential information to the Executive during the term of
this Agreement to enable her to perform her duties hereunder. The Executive
hereby covenants and agrees that she will not,
<PAGE> 6
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without the prior consent of the Company, during the term of this Agreement or
at any time thereafter, disclose or permit to be disclosed to any third party by
any method whatsoever any of the confidential information of the Company. For
purposes of this Agreement, "confidential information" shall include, but not be
limited to, any scientific or technical information, design, process, procedure,
formula, confidential business or financial information, records, data, ideas,
processes, patents, models, research, or personnel information.
9.2 Legal Process Exception. The foregoing section shall not be
applicable if and to the extent Executive is required to testify in a judicial
or regulatory proceeding pursuant to an order of a judge or administrative law
judge issued after Executive and her legal counsel urge that the aforementioned
confidentiality be preserved.
9.3 Intellectual Property. The Executive agrees promptly to reduce to
writing to disclose and assign, and hereby does assign, to the Company, its
parent, subsidiaries, successors, assigns and nominees, all inventions,
discoveries, improvements, copyrightable material, trademarks, programs,
computer software and ideas concerning the same, capable of use in connection
with the business of the Company, which Executive may make or conceive, either
solely or jointly with others, during the period of her employment by the
Company, its parent, subsidiaries or successors.
9.4 Patents, Trademarks, etc. The Executive agrees, without charge to
the Company and at the Company's expense, to execute, acknowledge and deliver to
the Company all such papers, including applications for patents, application
soft copyright and trademark registrations, and assignments thereof, as may be
necessary, and at all times to assist the Company, its parent, subsidiaries,
successors, assigns and nominees in every proper way to patent or register said
programs, computer software, ideas, inventions, discoveries, improvements,
copyrightable material or trademarks in any and all countries and to vest title
thereto in the Company, its parent, subsidiaries, successors, assigns or
nominees.
9.5 Covenants. The covenants set forth in this section 9, which are
made by the Executive are in consideration of the employment, or continuing
employment of, and the compensation paid to, the Executive during her employment
by the Company. The foregoing covenants will not prohibit Executive from
disclosing confidential or other information to other employees of the Company
or third parties to the extent that such disclosure is necessary to the
performance of her duties under this Agreement.
10. ADDITIONAL REMEDIES
The Executive recognizes that irreparable injury will result to the
Company and to its business and properties in the event of any breach by the
Executive of any of the provisions of sections 8 and 9 of this Agreement or
either of them, and that the Executive's continued employment is predicated on
the commitments undertaken by her pursuant to said paragraphs. In the event of
any breach of any of the Executive's commitments pursuant to sections 8 and 9 or
either of them, the Company shall be entitled, in addition to any other remedies
and damages available, to injunctive relief to restrain the violation of such
commitments by the Executive or by any person or persons acting for or with the
Executive in any capacity whatsoever.
11. NON-ASSIGNMENT
<PAGE> 7
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This Agreement is personal to Executive and shall not be assigned by
her. Executive shall not hypothecate, delegate, encumber, alienate, transfer or
otherwise dispose of his rights and duties hereunder. The Company may assign
this Agreement without Executive's consent to any other entity which, in
connection with such assignment, acquires all or substantially all of the
Company's assets or into or with which the Company is merged or consolidated.
12. WAIVER
The waiver by the Company of a breach by Executive of any provision
of this Agreement shall not be construed as a waiver of any subsequent breach by
Executive.
13. ARBITRATION
Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, except a claimed violation of sections 8 and
9, shall be settled by arbitration in accordance with Title 9 of the U.S. Code
and the Employment Dispute Resolution Rules of the American Arbitration
Association in Reno, Nevada, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. All statutes
of limitations, which would otherwise be applicable, shall apply to any
arbitration proceeding pursuant to this paragraph. All reasonable legal costs of
the Executive relative to the arbitration proceedings shall be paid by the
Company.
14. BENEFIT
The provisions of this Agreement shall inure to the benefit of the
Company, its successors and assigns, and shall be binding upon the Company and
Executive, its and her heirs, personal representatives and successors, including
without limitation Executive's estate and the executors, administrators, or
trustees of such estate.
15. RELEVANT LAW
This Agreement shall be construed and enforced in accordance with the
laws of the State of Nevada.
16. NOTICES
All notices, requests, demands and other communications in connection
with this Agreement shall be made in writing and shall be deemed to have been
given when delivered by hand or 72 hours after mailing at any general or branch
United States Post Office, by registered or certified mail, postage prepaid,
addressed as follows, or to such other address as shall have been designated in
writing by the addressee:
(a) If to the Company:
5109 Neil Road, Suite 310
Reno, Nevada 89502
<PAGE> 8
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(b) If to the Executive:
c/o Glamis Gold Ltd.
5190 Neil Road, Suite 310
Reno, Nevada 89502
17. ENTIRE AGREEMENT
The parties hereto agree that this Agreement contains the whole
agreement and understanding of the parties and supersedes and replaces all oral
or written contracts or representations, and that this Agreement cannot be
amended, modified or supplemented in any respect except by subsequent written
agreement signed by both parties hereto.
18. FURTHER ASSURANCES
The parties hereto shall do such things and sign such documents as
may be necessary and desirable to give full effect and force to this Agreement.
19. MISCELLANEOUS
The Company shall withhold from any amounts payable under this
Agreement such taxes and other amounts as may be required to be withheld
pursuant to any applicable law or regulation.
The Executive hereby acknowledges receipt of a copy of this Agreement
duly signed by the Company.
The Executive agrees that after any termination of his employment,
she will tender her resignation from any position she may hold as an officer or
director of the Company or any of its affiliated or associated companies.
20. DEFINITIONS
For the purposes of this Agreement,
20.1 "Change of Control" shall mean any of:
(a) a sale, transfer or other disposition of all or
substantially all of the property or assets of the Company other than to an
affiliate, within the meaning of Rule 405 of Regulation C adopted under the
Securities Act of 1933 (Federal).
(b) a merger or consolidation of the Company in which
Glamis Gold Ltd. is not the surviving entity in control of the merged company;
or
(c) any change in the holding, direct or indirect of shares
in the capital of the Company as a result of which a person, or a group of
persons or persons acting jointly or in
<PAGE> 9
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concert, or persons associated or affiliated with any such person or group
within the meaning of section 13(d)(3) of the Securities Exchange Act of 1934
(Federal) are in a position to exercise effective control of the Company,
provided that for the purposes of this Agreement a person or group of persons
holding shares and/or other securities in excess of the number which, directly
or following conversion thereof, would entitle the holders thereof to cast more
than 30% of the votes attaching to all shares in the capital of the Company
which may be cast to elect directors of the Company shall be deemed to be in a
position to exercise effective control of the Company, and further provided that
at the time of such acquisition, no other person or group of persons shall hold
securities entitled to more than 30% of such votes.
IN WITNESS WHEREOF the Parties have executed this Agreement on the
day and year first above written.
GLAMIS GOLD LTD. EXECUTIVE
By:
------------------------------- -----------------------------------
Name: C. Kevin McArthur Cheryl S. Maher
Title: President and CEO
-----------------------------------
Social Security Number
By: I hereby designate
------------------------------- ----------------
Name: Charles A. Jeannes as Beneficiary pursuant to Section
Title: Senior VP Administration 7.7 of this Agreement
-----------------------------------
Cheryl S. Maher
<PAGE> 1
-136-
EXHIBIT NO. 21 LIST OF SUBSIDIARIES
The following is a list of the subsidiaries of the Company
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
---- -----------------------------
<S> <C>
Chemgold, Inc. California
Entre Mares El Salvador S.A. de C.V. El Salvador
Entre Mares de Guatemala S.A. Guatemala
Glamis Daisy Mining Company Nevada
Glamis Dee Mining Company Nevada
Glamis El Salvador Holdings Ltd. Cayman Islands
Glamis Exploration, Inc. Nevada
Glamis Guatemala Holdings Ltd. Cayman Islands
Glamis Gold, Inc. Nevada
Glamis Honduras Holdings Ltd. Cayman Islands
Glamis Holdings (Cayman) Ltd. Cayman Islands
Glamis Imperial Corporation Nevada
Glamis Marigold Mining Company Nevada
Glamis Panama Holdings Ltd. Cayman Islands
Glamis Rand Mining Company Nevada
International Mineral Finance Corporation Barbados
Mar-West Resources Ltd. British Columbia
Minera Glamis Mexico S.A. de C.V. Mexico
Minerales Entre Mares de Honduras S.A. Honduras
Minera Rayrock de Panama S.A. Panama
Rayrock Finance Company. Ireland
U.S. Mineral Finance Co. Nevada
</TABLE>
<PAGE> 1
-137-
Exhibit 23.1
To the Board of Directors
Glamis Gold Ltd.:
We consent to incorporation by reference in the Registration Statements on Form
S-8 of Glamis Gold Ltd. of our report dated February 18, 2000 relating to the
consolidated balance sheets of Glamis Gold Ltd. as at December 31, 1999 and
1998, and the related consolidated statements of operations, retained earnings,
and cash flows for each of the years ended December 31, 1999, 1998, and 1997,
which report appears in the December 31, 1999 annual report on Form 10-K of
Glamis Gold Ltd.
Signed: "KPMG LLP"
Chartered Accountants
Vancouver, Canada
March 24, 2000
<PAGE> 1
-138-
CONSENT OF MINE RESERVES ASSOCIATES, INC. EXHIBIT 23.2
TO THE BOARD OF DIRECTORS OF GLAMIS GOLD LTD.
We consent to the incorporation by reference in the Registration Statements on
Form S-8 of Glamis Gold Ltd. in respect of its Incentive Share Purchase Option
Plan date for reference September 30, 1995 of our verification of the ore
reserves of Glamis Gold Ltd. as such appears on page 10 of the Report on Form
10-K of Glamis Gold Ltd. for the Period ended December 31, 1999.
DATED this 24th day of March 2000.
"SIGNED"
MINE RESERVES ASSOCIATES, INC.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GLAMIS GOLD
LTD. CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10K
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 56,169
<SECURITIES> 0
<RECEIVABLES> 1,463
<ALLOWANCES> 0
<INVENTORY> 12,182
<CURRENT-ASSETS> 69,253
<PP&E> 182,650
<DEPRECIATION> 93,750
<TOTAL-ASSETS> 163,732
<CURRENT-LIABILITIES> 7,622
<BONDS> 0
0
0
<COMMON> 158,717
<OTHER-SE> (20,576)
<TOTAL-LIABILITY-AND-EQUITY> 163,732
<SALES> 57,462
<TOTAL-REVENUES> 57,462
<CGS> 47,550
<TOTAL-COSTS> 47,550
<OTHER-EXPENSES> 34,179
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 160
<INCOME-PRETAX> (21,537)
<INCOME-TAX> (252)
<INCOME-CONTINUING> (21,285)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,285)
<EPS-BASIC> (0.33)
<EPS-DILUTED> (0.33)
</TABLE>
