Consolidated Nevada Goldfields Corporation
INFORMATION CIRCULAR
SOLICITATION OF PROXY
This Information Circular is furnished in connection with the
solicitation by the management of
Consolidated Nevada Goldfields Corporation (hereinafter referred to
as the "Company") of the proxies to be used
at the Annual Meeting of the shareholders of the Company to be
held on Tuesday, July 15, 1997, at 10:00 a.m.
(Toronto time), at the offices of Cassels Brock & Blackwell,
Scotia Plaza, Suite 2100, 40 King Street West,
Toronto, Ontario, M5H 3C2.
The solicitation will be by mail and possibly supplemented
by telephone or other personal contact to
be made without special compensation by regular officers and employees
of the Company. The Company does not
reimburse shareholders, nominees or agents for the cost incurred
in obtaining from their principals
authorization to execute forms of proxy. No solicitation will be
made by specifically engaged employees or
soliciting agents. The cost of solicitation will be borne by the
Company.
REVOCABILITY OF PROXY
Any shareholder returning the enclosed form of proxy may
revoke the same at any time insofar as it has
not been exercised. In addition to revocation in any
other manner permitted by law, a proxy may be revoked by
instrument in writing executed by the shareholder or by his
attorney authorized in writing or, if the
shareholder is a corporation, under its corporate seal or by an
officer or attorney thereof duly authorized,
and deposited at the offices of the Registrar and Transfer
Agent at any time up to and including the last
business day preceding the day of the meeting, or any adjournment
thereof, at which such proxy is to be used,
or with the Chairman of such meeting on the day of the meeting,
or adjournment thereof and upon any of such
deposits the proxy is revoked.
EXERCISE OF DISCRETION BY PROXYHOLDERS
The persons named in the enclosed form of Proxy will, on a poll,
vote or withhold from voting, or vote
as instructed, the common shares of the Company (the "Common Shares")
in respect of which they are appointed
in accordance with the instructions of the shareholders appointing them.
In the absence of such direction such
Common Shares will, on a poll, be voted IN FAVOUR of those matters set
out in the enclosed proxy and at the
discretion of the proxyholder with respect to other matters that may
come before the meeting. THE ENCLOSED FORM
OF PROXY CONFERS DISCRETIONARY AUTHORITY UPON THE PERSONS NAMED
THEREIN WITH RESPECT TO AMENDMENTS OR VARIATIONS
TO MATTERS IDENTIFIED IN THE PROXY AND WITH RESPECT TO OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING.
At the time of printing of this Information Circular, the directors
and senior officers know of no such
amendment, variation or other matter expected to come before the
meeting other than those set out herein. If
any matters which are not now known to the directors and senior
officers should properly come before the
meeting, the persons named in the accompanying form of Proxy will
vote on such matters in accordance with their
best judgment.
The persons named in the enclosed form of proxy are officers of
the Company. A shareholder has the right
to appoint a person (who need not be a shareholder) to attend and act
for him on his behalf at the meeting other
than the persons designated in the enclosed form of proxy. Such right
may be exercised by striking out the names
of the persons designated in the enclosed form of proxy and by inserting
in the blank space provided for that
purpose the name of the desired person or by completing another proper
form of proxy and, in either case,
delivering the completed and executed proxy to the Company or its
transfer agent prior to the close of business
on the date preceding the day of the meeting, or any adjournment
thereof.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The following information relates to the authorized and
issued capital of the Company and other related
information.
Authorized Capital: Unlimited number of Common
Shares without par value and 20,000,000 preference
shares with a par value of Cdn.$1.00 each.
Issued and Outstanding: 131,100,646 Common Shares
and no preference shares.
Only common shareholders of record on June 10, 1997
(the "Record Date") shall be entitled to receive
notice of and vote at the meeting. Any transferee of Common Shares
after the Record Date shall be entitled to
vote his, her or its shares if the procedure set forth in the
accompanying notice of meeting is followed. Each
Common Share carries one vote.
To the knowledge of the directors and senior officers of the
Company, the following are the names of all
persons or companies who or which beneficially own, directly or
indirectly, or exercise control or direction
over, equity shares carrying more than 10% of the voting rights
attached to all shares of the Company:
Name and Municipality of Residence
Number of Shares(1)(2)
Percentage
Gwalia Consolidated Ltd. and Sons of
Gwalia Ltd. (combined)(3) Perth,
Australia
17,212,114
13.13%
GRDM Group (4) Mexico
56,051,091
42.75%
(1) Before giving effect to the issuance of 11,246,785 Common
Shares upon exercise of 11,246,785 common
share purchase warrants. Each such common share purchase
warrant is exercisable at any time by the
holders thereof on or before 5:00 p.m. (Toronto time) on
October 10, 1997 at a price of $1.30 per share.
(2) In addition, James M. Bishop, a director of the
Company, holds interests in partnerships or other
ventures that are shareholders of the Company equal to, in
aggregate, 12,840,917 Common Shares
representing 9.80% of the outstanding Common Shares. The
partnerships and other ventures include Nixon
Fork Joint Venture and Caithness Resource Ltd. The beneficial
interest in such shares may vary and is
dependent upon the number of partners and participants in
such partnerships and joint ventures at a
particular time.
(3) Gwalia Consolidated Ltd. and Sons of Gwalia Ltd. are
under common control and management. Either or
both of Gwalia Consolidated Ltd. and Sons of Gwalia Ltd. also
hold outstanding 3% convertible
debentures entitling them to acquire an additional 380,000
Common Shares. Sons of Gwalia Ltd. also
holds 1,416,463 share purchase warrants, each such warrant
exercisable into one Common Share on the
same terms described in note (1) above.
(4) The GRDM Group includes Grupo Acerero del Norte,
S.A. de C.V. ("GAN"), Grupo Real del Monte S.A. de C.V.
("GRDM"), the shareholders of GRDM and certain other parties,
collectively. GRDM and GAN are private
Mexican companies. GAN and GRDM own 28,268,190 Common Shares
and 26,363,968 Common Shares,
respectively, of the 56,051,091 Common Shares owned by the
GRDM Group, representing 21.6% and 20.1%,
respectively, of the outstanding Common Shares. Certain
directors of the Company are also shareholders
of GAN which owns or holds directly or indirectly, an
interest in 54,632,158 Common Shares. These
directors are Manuel Ancira, Alonso Ancira, Xavier Autrey
and Adolfo Autrey. See "Election of
Directors". GAN also holds 1,880,500 share purchase
warrants, each such warrant exercisable into one
Common Share on the same terms as described in note (1) above.
PERFORMANCE GRAPH
The Common Shares trade on
The Toronto Stock Exchange (the "TSE") and elsewhere.
The following graph shows the yearly percentage change
in the cumulative shareholder return on the
Common Shares compared to the cumulative total return of the
TSE 300 Index and the TSE Gold and Precious Metals
Group Index for the past six fiscal years, assuming Cdn.$100
investments on June 30, 1991 and reinvestment of
dividends during the period.
5 Year Cumulative Total Return(1)
1991
1992
1993
1994
1995
1996
July 1 - Dec.
31/96(1)
Consolidated Nevada Goldfields Corporation
100
51.67
66.67
143.34
93.34
141.68
108.34
TSE 300 Index
100
101.11
122.17
126.97
146.23
166.61
197.66
TSE Gold & Precious Metals Group
100
93.54
180.14
185.74
205.93
218.30
223.70
(1) In December, 1996, the Board of Directors approved the
change of financial year-end of the Company from
June 30 to December 31. As a result, the Company's most
recently completed financial year-end was six
months in length (July 1, 1996 to December 31, 1996).
<PAGE>
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED ON
No director or senior officer, present or nominated, or person
who has been a director or senior officer
since the beginning of the Company's last financial period,
or any associate or affiliate of such persons, or
any person on behalf of whom this solicitation is made, has any
interest, direct or indirect, by way of
beneficial ownership of securities or otherwise, in any matter
to be acted upon at the meeting, other than the
election of directors.
ELECTION OF DIRECTORS
Pursuant to the Articles of the Company, the number of
directors may be determined from time to time by
resolution of the directors. Management is proposing only a
slaight of eleven (11) nominees for election to
the Board of Directors at the present time although the Company
is entitled to elect up to a maximum of twelve
(12) directors leaving one position on the board vacant.
It is expected that such vacancy will be filled by the
Board of Directors in due course or as circumstances permit or
warrant. Each nominee, if elected, is to hold
office until the next annual meeting or until his or her successor
is elected or appointed. Proxies given
pursuant to this solicitation by management will be voted FOR the
election as directors of the following
proposed nominees, all of whom are presently directors of
the Company.
The names of all nominees, their principal occupation or
employment, the dates upon which they became
directors of the Company and the number of Common Shares
beneficially owned by them, directly or indirectly,
as of the date hereof, are as follows:
Name, residence and other
positions, if any, held in the
Company(2)
Previous serviceas a director
Shares beneficially
owned, directly or
indirectly, or over
which control or
direction is exercised
Principal occupation and, if
not at present an elected
director, occupation during
the past five years
Richard C. Atkinson
1990 1,847
Professional Engineer; Chief
Executive Officer, Les
Entreprises de Richard
Atkinson Ltee.
Alonso Ancira(3)
October, 1996 Nil
Vice Chairman of GAN
Christopher J. Lalor(1)
1991 Nil
Executive Director, Gwalia
Consolidated Ltd.
Wendell W. Robinson
1993 Nil
Investment Manager,
Rockefeller & Company
James M. Bishop
1993 Nil
Chairman and CEO, Caithness
Resources
Peter Marrone
1994 Nil
Partner, Cassels Brock &
Blackwell (law firm)
Manuel Ancira(3)
October, 1996 Nil
Director of Operations of GAN
Adolfo Autrey(3)
October, 1996 Nil
Chairman of Grupo Casa Autrey
Xavier D. Autrey(3)
October, 1996 Nil
Chairman of GAN, GRDM and Grupo
Fianciero Inverlat
William J. Braithwaite
October, 1996 Nil
Partner, Stikeman, Elliott
(law firm)
Richard N. Lawler
October, 1996 Nil
Executive Officer and
President of Hoogovens
Technical Services Inc.
(1) Christopher J. Lalor is a director and officer of Gwalia
Consolidated Ltd. Gwalia Consolidated Ltd.,
directly and through its subsidiaries, holds 17,212,114
Common Shares and is entitled to receive an
additional 1,416,463 Common Shares upon the exercising of
1,416,463 share purchase warrants.
(2) All information is as at the date hereof.
(3) Mr. Alonso Ancira, Mr. Manuel Ancira, Mr. Adolfo
Autrey and Mr. Xavier Autrey are also shareholders of
GAN which directly or indirectly, holds 54,632,158 Common
Shares and is entitled to receive an
additional 1,880,500 Common Shares upon the exercise of 1,880,500
share purchase warrants.
(4) See also "Voting Shares and Principal Holders Thereof"
as to additional shareholdings held, to the
knowledge of the directors and senior officers, indirectly by
the directors.
The following directors are members of the Company's audit
committee: Mr. Manuel Ancira, Mr. Richard C.
Atkinson, Mr. Xavier Autrey and Mr. Christopher J. Lalor.
The Board of Directors has a compensation committee
which is composed of the following directors: Mr. Alonso Ancira,
Mr. Adolfo Autrey, Mr. James M. Bishop and Mr.
Wendell W. Robinson. The following directors are members of the Company's
executive committee: Mr. Alonso
Ancira, Mr. Manuel Ancira, Mr. Xavier Autrey, Mr. Peter Marrone
and Mr. Wendell W. Robinson.
APPOINTMENT OF AUDITORS
Unless otherwise instructed, the proxies given pursuant to
this solicitation will be voted FOR the
reappointment of KPMG, Chartered Accountants, Denver as
auditors of the Company to hold office for the ensuing
financial year, at a remuneration to be fixed by the directors
of the Company. KPMG were first appointed
auditors of the Company on July 7, 1987.
EXECUTIVE COMPENSATION
The aggregate compensation received by the Company's present
and past named executive officers during the most
recently completed financial six month period ended December 31,
1996 was U.S.$370,595 including all salaries,
fees, commissions, bonuses and severance payments.
<PAGE>
The summary of the executive compensation of the named
executive officers of the Company for the three most
recently completed financial years is as follows:
Executive Compensation Table
Annual Compensation
Long Term Compensation
Name and Principal Position
Year
Salary
Bonus
Other Annual Compensation
Securities Under
Options Granted(#)
All Other Compensation
Geoffrey Hoyl (1)President and Chief
Executive Officer
1996(2) 1996 1995
96,539 185,961 131,947
50,000 40,000 Nil
NilNilNil
NilNilNil
NilNilNil
G. Chaun Cadwell (3)Vice President and Chief
Operating Officer
1996(2)
75,700
Nil
Nil
Nil
Nil
James R. Maronick Vice President, Finance,
Secretary, Treasury
and Chief Financial
Officer
1996(2) 1996 1995
49,423 78,269 54,730
Nil 10,000 Nil
2,666 5,296 1,280
NilNil 100,000
NilNilNil
Christopher PuchnerVice-President,
Exploration
1996(2) 1996 1995
57,185 90,153 86,670
10,000 Nil Nil
2,641 4,507 4,333
NilNil20,000
NilNilNil
(1) Mr. Hoyl resigned as an officer and director of the Company on
April 11, 1997. Mr. Alex Bissett was
recently appointed President and Chief Executive Officer
of the Company.
(2) In December, 1996, the Board of Directors approved the
change in the Company's financial year-end from
June 30 to December 31. Figures shown are for the financial
year ended December 31, 1996 which was six
months in length (July 1, 1996 - December 31, 1996).
(3) Mr. Cadwell was appointed Vice President and Chief
Operating Officer of the Company on June 10, 1996.
(4) The Company has a 401(k) Savings Plan, pursuant to
which the Company matches the contribution of
employees up to a maximum of 6% of their salary.
(5) Amounts shown in United States dollars except for
Securities Under Options Granted.
Other Compensation Matters
There were no long term incentive awards made to any executive
officer of the Company during the
financial six month period ended December 31, 1996. There are no
pension plan benefits in place for the
executive officers or directors except as set forth in the
foregoing.
<PAGE>
Employment Contracts
The Company has no employment contracts in place. Additionally,
the Company has no compensatory plan
or arrangement with respect to its executive officers that
results or will result from the resignation,
retirement or any other termination of employment of such executive
officer's employment with the Company from
a change of control of the Company or a change in the
responsibilities of the executive officer following a
change of control.
Composition of the Compensation Committee
The compensation committee constitutes Alonso Ancira,
Adolfo Autrey, James M. Bishop and Wendell W.
Robinson. The compensation committee and Board of Directors
intend to remunerate executive and other officers
on the basis of the amount of time and attention such officers
devote to the affairs of the Company, comparable
amounts paid to officers of similar companies performing similar
functions and other criteria that the
compensation committee and Board of Directors consider relevant
from time to time.
Stock Option Plan
Plan Terms and Granted Options
The Company has a stock option plan (the "Plan") which was
modified in December, 1994 pursuant to which
5,000,000 Common Shares are reserved for issuance in
accordance with the Plan. The Plan was modified in
December, 1994 such that the exercise price of such shares
shall be the closing market price of the Common Shares
on The Toronto Stock Exchange on the day preceding the day on
which the option was granted. The duration of the
options may not exceed ten years and the options terminate upon
the expiration of three months if a participant
ceases to be an officer, employee or a director of the Company.
Further, the options are not assignable. The
Company did not grant any stock options during the financial
six month period ended December 31, 1996.
Options Exercised and Aggregate Remaining
The following table summarizes each option exercised during
the most recently completed financial year by each
of the named executive officers and the financial year end
value of unexercised options on an aggregated basis:
Unexercised Options at December 31, 1996
Value of Unexercised in-the-money
Options atDecember 31, 1996(1)
Securities Acquired On Exercise(#)
Aggregate Value Realized(Cdn$)
Exercisable (#)
Unexercisable (#)
Exercisable (Cdn$)
Unexercisable (Cdn$)
Geoffrey Hoyl(2)
Nil
Nil
400,000
Nil
$180,000
Nil
James R. Maronick
Nil
Nil
100,000
Nil
Nil
Nil
Christopher
Puchner
Nil
Nil
120,000
Nil
$4,000
Nil
Chaun Cadwell
Nil
Nil
150,000
Nil
Nil
Nil
(1) Based on the closing price of the Common Shares on
The Toronto Stock Exchange on December 31, 1996 of Cdn.
$1.30.
(2) Mr. Hoyl resigned as an officer and director of the
Company on April 11, 1997. The board of directors has
agreed that Mr. Hoyl's options will terminate 24 months from
the date of Mr. Hoyl's resgination. Under
the terms of the Company's stock option plan, options terminate
upon the expiration of three months upon
an option holder ceasing to be an officer, employee or a
director of the Company. The Plan also provides
that the board of directors may, at its sole discretion,
extend such termination period by an additional
12 months.
Other Compensation
No other compensation was paid by the Company to the named
executive officers during the most recently completed
financial six month period ended December 31, 1996, including
personal benefits and securities or property paid
or distributed other than pursuant to a formal plan, which
compensation is not offered on the same terms to all
full time employees and there are no plans or other arrangements
in place with respect to the termination of
employment or change in responsibilities of the named executive officers.
Compensation of Directors
The directors who are not otherwise officers of the Company
receive U.S.$2,000 per meeting for meetings
attended and are reimbursed for expenses incurred to attend a
meeting or to otherwise participate in the affairs
of the Company. No amount was paid as fees to directors for the
financial six month period ended December 31,
1996.
None of the directors of the Company, in their capacity
as a director of the Company and its subsidiaries
during the most recently completed financial year, were
compensated pursuant to any other arrangement or in
lieu of any standard arrangement including the granting of
stock options under the Company's Stock Option Plan.
During the financial six month period ended December 31, 1996,
no options were granted to directors.
During the most recently completed financial year the law
firm of Cassels Brock & Blackwell, of which
Mr. Peter Marrone currently is a senior partner, was paid fees
for legal services rendered as solicitors for
the Company.
Report on Executive Compensation
The Company's compensation committee is composed of four
non-executive directors who are identified
above. It is the responsibility of the compensation committee to
determine the level of compensation in respect
of the Company's senior executives with a view to providing such
executives with a competitive compensation
package having regard to performance. Performance is defined to
include achievement of the Company's strategic
objective of growth and the enhancement of shareholder value through
increases in the stock price resulting
from increases in reserves and production, continued low cost
production and enhanced annual cash flow and
earnings. The compensation that has been awarded is believed
to be comparable to compensation of other
executives of other companies in the similar pursuit of precious
metals reserves and production.
In establishing compensation for executive officers, the
compensation committee takes into
consideration individual performance, responsibilities, length of
service and levels of compensation provided
by industry competitors. Such compensation is composed
primarily of three components; namely, base salary,
performance bonuses and the granting of stock options with an
emphasis on base salary and the granting of stock
options versus cash bonuses. Performance bonuses are considered
from time to time having regard to the
above-referenced objectives.
Having regard to all relevant factors, it was determined by
the compensation committee rather than
paying executive officers cash bonuses, the most appropriate
way to compensate them and to encourage the
creation of shareholder value was to increase their earnings
from previous levels and to provide stock options
where appropriate.
The compensation committee is also responsible for reviewing
the Company's manpower and succession
plans to ensure that adequate plans are in place. With the
rapid growth of the Company this role has taken on
added importance and the compensation committee are pleased to
report that important personnel additions have
been made in both the technical and senior financial areas of
the Company.
Submitted by:
Alonso Ancira
Adolfo Autrey
James M. Bishop
Wendell W. Robinson
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
As a company listed on the TSE, the Company adheres to the
substantive requirements of the corporate
governance policy of the TSE. The Board of Directors and its
committees participate in all decision making
processes in the management of the Company. The Board of Directors
of the Company has adopted the following
statement of corporate governance practices:
The Board acknowledges its responsibility for the
stewardship of the Company in the following ways:
(i) The Board participates in strategic planning as the
acceptor and/or adopter of the strategic
plans proposed and developed by management. The strategic
planning process has been the
responsibility of management. The Board will undertake
periodic reviews of the strategic
planning process.
(ii) The Board has considered and does in its
deliberations consider the principal risks of the
Company's business in the mining industry particularly
having regard to sensitivity to metal
prices, political risks given the diverse location of the
Company's mining operations,
environmental and operational risks, and receives periodic
reports from management as to the
Company's assessment and management of those risks.
(iii) The Board has, from time to time, considered
succession issues and takes responsibility for
appointing and monitoring senior officers of the Company.
The Board has also recently
appointed an executive search committee, the details of
which are more particularly set out
below.
(iv) The Board has discussed and considered how
the Company communicates with its various
shareholders and periodically reviews and approves the
Company's communications with the
public but has no formal communication policy.
(v) The Board, directly and through its audit
committee, assesses the integrity of the Company's
internal control and management information systems.
(vi) The Board, directly and through its executive
committee, is involved in substantive issues
affecting the Company as they arise and assists management
in decision making relating to these
issues.
Although senior management have extensive experience in
the mining industry, the Board encourages
senior management to participate in appropriate professional and
personal development activities, courses and
programs and the expenses associated with these activities are paid
by the Company. Further, the Board supports
management's commitment to the training and development of all
permanent employees.
The Board currently comprises eleven members of whom all are
outside directors and ten may be considered
to be unrelated directors. The Company does not have a
"significant shareholder" which, as defined by the TSE
governance guidelines, is a shareholder with the ability to
exercise a majority of votes for the election of
directors. Peter Marrone, an outside director, periodically
provides legal services to the Company through
a law firm in which he is a partner and therefore may be
considered a related director. The remaining directors
are unrelated directors.
A nominating committee has not been established to seek out
candidates who would bring independence and
a business experience to the Board as the Company believes that
it has been successful in achieving these
objectives without establishing a formal committee. Further, the
Company believes that the nature of the
relationships of its related directors would not adversely
affect their independence or ability to act in the
best interests of the Company.
Board members are presently compensated on the basis that
non executive directors are paid U.S.$2,000
per meeting attended and expenses are reimbursed at cost.
See "Compensation of Directors".
The Board of Directors expressly assumes responsibility for
developing the Company's approach to
governance issues and is responsible for the responses to governance
guidelines. The Board has not yet
developed a description of the limits of management's responsibilities
relative to the responsibilities of the
Board of Directors. Any responsibility which is not delegated to
management or a Board committee remains with
the Board.
The Board has functioned, and is of the view that it can
continue to function, independently of
management, as required. The Board has appointed a Chair of
the Board who is an unrelated director. Unrelated
directors are also free to add items to agenda or to request
the calling of Board meetings where deemed necessary
and all members of the Board are invited to raise issues not
on the agenda at Board meetings. Board meetings
are held at least four times a year.
The Board has on occasion met without management present and
engages in very frank and open discussion
concerning the Company and management both in the presence of
management and in their absence. If the Board
believed it was appropriate and meaningful it would formalize
the process by which the Board would meet without
management and for handling the Board's overall relationship
with management.
The audit committee is composed of four directors, Messrs.
Manuel Ancira, Richard Atkinson, Xavier
Autrey and Christopher Lalor, all of whom may be considered to be
unrelated directors. The compensation
committee is composed of four directors, Messrs. Alonso Ancira,
Adolfo Autrey, James Bishop and Wendell
Robinson, all of whom may be considered to be unrelated directors.
The executive committee is composed of five
directors, Messrs. Alonso Ancira, Manuel Ancira, Xavier Autrey,
Peter Marrone and Wendell Robinson, four of
whom may be considered to be unrelated directors and all of whom
are outside directors. These committees are
considered by the Board to be adequate, together with the Board,
to ensure proper governance of the Company and
supervision of management.
The roles and responsibilities of the audit committee have
been specifically defined and include review
and approval of unaudited quarterly financial statements and
review of year end audited financial statements
in conjunction with the auditors with a view to recommending
their approval to the Board. It is also responsible
for overseeing management reporting on internal controls.
The audit committee has direct communication
channels with the external auditors and operates as a liaison
between the auditors and the Board. The Company
has also appointed an internal auditor who is responsible for
supervising the preparation of the financial
statements and who reports to the Chief Financial Officer
as well as to the audit committee.
The compensation committee is responsible for establishing
the remuneration payable to executive
officers. The executive committee is responsible for assisting
the executive officers, and the Chief Executive
Officer in particular, in making decisions which may materially
affect the Company. The Chief Executive
Officer and other executive officers are required to consult
with the executive committee before implementing
or agreeing to matters which may materially affect the Company.
The Board recently appointed an executive search committee
consisting of Messrs. Wendell Robinson,
Richard Atkinson and Peter Marrone, two of whom may be considered
to be unrelated directors. The committee was
mandated by the Board to perform an executive search in order to
find a replacement for Mr. Geoff Hoyl, the
former President and Chief Executive Officer of the Company, and
to negotiate the terms of employment for that
replacement. The efforts of the executive search committee have
resulted in the recent appointment of Mr. Alex
Bissett as President and Chief Executive Officer of the Company.
<PAGE>
The Board has considered its size with a view to the impact
of size upon its effectiveness and has
concluded that the number of directors, as presently constituted,
is appropriate for a corporation of the size
and complexity of the Company and having regard for the international
scope of its operations. However, the
executive committee has been formed to ensure that management is
able to consult with the directors
particularly in circumstances where it would not be possible or
practicable to consult with all of the directors
or convene a meeting of the entire Board. The Board, as
presently constituted, brings together a mix of skills,
background, ages and attitudes that the Board considers appropriate
to the stewardship of the Company. In
particular, the Board represents many years of experience in
the mining industry in Canada, the United States
and Mexico where its operations are located as well as extensive
legal and corporate finance experience.
The Board has not constituted a committee comprised exclusively
of outside directors, a majority of whom
are unrelated directors, to assess the effectiveness of the Board
as a whole, the committees of the Board and
the contribution of individual directors. As the Company recently
completed a major acquisition resulting in
a restructuring of the Board, it has not yet established procedures
for assessing the performance of the Board
of Directors. The Board proposes to do so in the current
financial year.
The Company does not have a formal process of orientation and
education for new members of the Board.
However, all current members of the Board have had considerable
experience as directors of public companies and
mining companies in particular.
The Board has not adopted a system which would enable an
individual director to engage an outside
advisor at the expense of the company in appropriate circumstances.
If such an engagement were appropriate it
would be subject to the approval of the unrelated directors of the
Board in consultation with the Chairman.
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
None of the directors or senior officers of the Company, proposed
nominees for directors if same are
to be elected, or associates or affiliates of said persons, have been
indebted to the Company at any time since
the beginning of the last completed financial year of the Company
other than pursuant to the employee stock
option plan as described under the heading
"Executive Compensation" herein.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
Since the commencement of the Company's last financial year,
none of the insiders of the Company nor any
proposed nominee for election as director, nor any associate
or affiliate of said persons, has had any material
interest, direct or indirect, in any transaction, which has
materially affected or would materially affect the
Company or any of its subsidiaries which was entered into
where that person was an insider other than as follows:
Subsequent to year end, on March 24, 1997, the Company
entered into loan agreements with two shareholders of
the Company: Caithness Resources, Inc. ("Caithness"),
1114 Avenue of Americas, #3500, New York, NY, 10036 and
GAN, Campos Eliseos No. 1, Col. Chapultepee Polanco,
Mexico, D.F., 11570, to loan the Company $585,000 and
$3,000,000, respectively, bearing interest at
11 percent per annum with principal due on March 24, 1998. GAN
and Caithness hold 29,906,046 or 22.81% and 2,357,047 or 1.80%
of the Common Shares of the Company,
respectively.
<PAGE>
REGISTERED OFFICE
The registered office of the Company is located at Scotia Plaza,
Suite 2100, 40 King Street West,
Toronto, Ontario, M5H 3C2.
MANAGEMENT CONTRACTS
Management functions of the Company are substantially performed by
directors or senior officers of the Company
and not, to any substantial degree, by any other person with whom the
Company has contracted.
INTERIM FINANCIAL STATEMENTS
The Company maintains a supplemental mailing list containing
the names of the holders of the securities of the
Company to whom the interim financial statements of the Company
will be mailed. A form is enclosed with the
material accompanying this Circular permitting shareholders to
request that they be placed on the supplemental
mailing list.
OTHER MATTERS
Management of the Company knows of no other matters to come before
the meeting of shareholders other than those
referred to in the Notice of Meeting. Should any other matters
properly be brought before the meeting, the
shares represented by the proxy solicited hereby will be voted on
such matters in accordance with the best
judgment of the person voting the proxy. The information in this
circular is current to June 11, 1997 unless
otherwise noted.
DATED at Denver, Colorado this 11th day of June, 1997.
BY ORDER OF THE BOARD
(signed) Alex Bissett
President and Chief Executive Officer
FS_TOR01.VOL1:Business Corporate:CON NEVADA:
