<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant /X/
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CORNUCOPIA RESOURCES LTD
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERRILL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
CORNUCOPIA RESOURCES LTD.
Suite #540, The Marine Building, 355 Burrard Street
Vancouver, British Columbia, Canada V6C 2G8
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of the members
("shareholders") of Cornucopia Resources Ltd. (the "Company") will be held
at The Pan Pacific Hotel, Level R, in the Governor General Suite B, #300 -
999 Canada Place, Vancouver, British Columbia, on Thursday, May 21, 1998, at
the hour of 11:00 A.M., Vancouver time, for the following purposes:
1. To receive and consider the report of the directors to the shareholders
and the consolidated financial statements of the Company together with
the auditor's report thereon for the financial year ended December 31,
1997.
2. To elect directors for the ensuing year.
3. To appoint the auditor for the ensuing year.
4. To authorize the directors to fix the remuneration to be paid to the
auditors.
5. To consider and, if thought fit, to pass an ordinary resolution (of
disinterested shareholders) to approve the repricing of incentive stock
options granted to insiders of the Company, as set forth in the
Information Circular (Proxy Statement) accompanying this Notice of
Meeting.
6. To transact such further or other business as may properly come before
the meeting and any adjournments thereof.
An Information Circular (Proxy Statement) and Proxy Form accompany this
Notice of Meeting.
The share transfer books of the Company will not be closed, but the Board of
Directors has fixed April 2, 1998 as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual General Meeting
and at any adjournment thereof. A complete list of the shareholders entitled
to vote at the Annual General Meeting will be open to examination by any
shareholder, for any purpose germane to the Annual General Meeting, during
ordinary business hours for a period of 10 days prior to the Annual General
Meeting, at the Company's transfer agent, CIBC Mellon Trust Company, 1177
West Hastings Street, Mall Level, Vancouver, British Columbia, Canada,
V6E 2K3.
The accompanying Information Circular (Proxy Statement) provides additional
information relating to the matters to be dealt with at the meeting and is
deemed to form part of this Notice of Meeting.
If you are unable to attend the meeting in person, please complete, sign and
date the enclosed Proxy Form and return the same in the enclosed return
envelope provided for that purpose within the time and to the location set
our in the Proxy Form accompanying this Notice. If you receive more than one
Proxy Form because you own shares registered in different names or addresses,
each Proxy Form should be completed and returned.
DATED at Vancouver, British Columbia, this - day of April, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
___________________________________________
ANDREW F. B. MILLIGAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
CORNUCOPIA RESOURCES LTD.
SUITE #540, THE MARINE BUILDING, 355 BURRARD STREET,
VANCOUVER, BRITISH COLUMBIA, CANADA V6C 2G8
INFORMATION CIRCULAR
(PROXY STATEMENT)
(As at March 31, 1998, except as otherwise indicated)
GENERAL INFORMATION
This Information Circular (Proxy Statement) is furnished to the members
("shareholders") by the Board of Directors of Cornucopia Resources Ltd. (the
"Company") in connection with the solicitation of proxies to be voted at the
Annual General Meeting (the "Meeting") of the shareholders to be held at
11:00 a.m. (Vancouver time) on Thursday, May 21, 1998 or at any adjournment
thereof, for the purposes set forth in the Notice of Meeting. Advance notice
of the Meeting was published in The Province newspaper in Vancouver, British
Columbia, on March -, 1998 and delivered to the British Columbia
Superintendent of Brokers in accordance with Section 111 of the COMPANY ACT
(British Columbia).
This Information Circular (Proxy Statement) and the accompanying Proxy Form
are being delivered to Canadian intermediaries holding Common Shares on
behalf of another person or company and are being mailed to registered
shareholders on or about April 17, 1998.
April 2, 1998 has been fixed as the Record Date for the determination of
shareholders entitled to notice of and to vote at the Meeting and at any
adjournment thereof. As at April 2, 1998 there were - registered
shareholders and 38,663,540 common shares without par value of the Company
(the "Common Shares") outstanding. A registered shareholder is entitled to
one vote for each Common Share that such registered shareholder holds on the
Record Date on the proposals to be acted upon at the Meeting and any other
matter to come before the Meeting. A registered shareholder's instructions
on his Proxy Form as to the exercise of voting rights will be followed in
casting such shareholder's votes. IN THE ABSENCE OF ANY INSTRUCTIONS, THE
PROXY AGENT NAMED ON THE PROXY FORM WILL CAST THE SHAREHOLDER'S VOTES IN
FAVOR OF THE RESOLUTIONS SET FORTH HEREIN AND IN THE NOTICE OF MEETING. The
enclosed Proxy Form confers discretionary authority upon the persons named
therein with respect to other matters which may properly come before the
Meeting.
No person has been authorized to give any information or to make any
representation other than those contained in this Information Circular (Proxy
Statement) in connection with the solicitation of proxies and, if given or
made, such information or representations must not be relied upon as having
been authorized by the Company. The delivery of this Information Circular
(Proxy Statement) shall not create, under any circumstances, any implication
that there has been no change in the information set forth herein since the
date of this Information Circular (Proxy Statement). This Information
Circular (Proxy Statement) does not constitute the solicitation of a proxy by
anyone in any jurisdiction in which such solicitation is not authorized or in
which the person making such solicitation is not qualified to do so or to
anyone to whom it is unlawful to make such offer or solicitation.
In order to be voted, proxies must be received at the office of CIBC Mellon
Trust Company at 1177 West Hastings Street, Mall Level, Vancouver, British
Columbia, V6E 2K3 not less than 48 hours prior to the
<PAGE>
-2-
time the Meeting is to be held. However, the chairman of the Meeting has the
discretion to accept proxies filed less than 48 hours prior to the
commencement of the Meeting.
The principal executive offices of the Company are located at Suite #540,
355 Burrard Street, Vancouver, British Columbia, Canada, V6C 2G8.
All references in this Information Circular (Proxy Statement) to dollars or $
are to United States dollars, unless otherwise specified.
CURRENCY EXCHANGE RATES
Unless otherwise indicated, all currency amounts herein are stated in United
States dollars. The following table reflects the rate of exchange of the Bank
of Canada for Canadian dollars per one United States dollar in effect at the end
of the following periods and the average rates of exchange during such periods.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
United States Dollars 1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rate at December 31, 1.4305 1.3706 1.3640 1.4018 1.3255
- -------------------------------------------------------------------------------
Average Annual Rate 1.3844 1.3630 1.3724 1.3659 1.2939
- -------------------------------------------------------------------------------
High During Year 1.4399 1.3865 1.4267 1.4090 1.3443
- -------------------------------------------------------------------------------
Low During Year 1.3345 1.3287 1.3275 1.3085 1.2428
- -------------------------------------------------------------------------------
</TABLE>
On March 31, 1998, the noon rate of exchange quoted by the Bank of Canada for
United States dollars conversion was $-.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") and files reports and
other information with the Securities and Exchange Commission (the "Commission")
in accordance therewith. Such reports, proxy statements and other information
filed by the Company are available for inspection and copying at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C., 20549, and at the Commission's Regional Offices at 7 World Trade Center,
Suite 1300, New York, New York, 10048, and at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois, 60661-2511. Copies of such material may
be obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C., 20549, at prescribed rates. The
Commission maintains a World Wide Web site on the Internet at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
Company's Common Shares are traded on the Toronto Stock Exchange and the Nasdaq
SmallCap Market. Material filed by the Company can be inspected at the offices
of the National Association of Securities Dealers, Inc. Reports Section, 1735 K
Street, N.W., Washington, D.C., 20006.
<PAGE>
-3-
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File
No. 0-16778) are incorporated by reference in this Proxy Statement;
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
2. The Company's Annual Report to the shareholders for the year ended
December 31, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Information Circular
(Proxy Statement) shall be deemed to be incorporated by reference into this
Information Circular (Proxy Statement) and to be a part hereof from the date
of filing of such document. Any statement contained herein or in a document
all or a portion of which is incorporated or deemed incorporated by reference
shall be deemed to be modified or superseded for purposes of this Information
Circular (Proxy Statement) to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Information Circular
(Proxy Statement).
The Company hereby undertakes to provide without charge to each person to
whom this Information Circular (Proxy Statement) has been delivered, upon the
written or oral request of any such person, a copy of any and all of the
foregoing documents incorporated herein by reference (other than exhibits to
such documents which are not specifically incorporated by reference into the
information that this Information Circular (Proxy Statement) incorporates).
Written or telephone requests should be directed to Investor Relations,
Cornucopia Resources Ltd., Suite 540, 355 Burrard Street, Vancouver, British
Columbia, V6C 2G8; telephone (604) 687-0619; facsimile (604) 681-4170; or to
the Company's e-mail address at http://www.cornucopia-resources.com. In
order to ensure timely delivery of the documents, any request should be made
7 business days prior to the date of Meeting.
PERSONS MAKING THE SOLICITATION
This Information Circular (Proxy Statement) is furnished in connection with
the solicitation of proxies by the management of the Company on behalf of the
Board of Directors for use at the Meeting and at any adjournments thereof.
The solicitation will be conducted by mail and may be supplemented by
telephone or other personal contact to be made without special compensation
by officers and employees of the Company. The cost of solicitation will be
borne by the Company.
VOTING OF PROXIES
The persons named as proxyholders in the enclosed Proxy Form are directors of
the Company.
A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A SHAREHOLDER)
TO ATTEND AND ACT FOR HIM AND ON HIS BEHALF AT THE MEETING OTHER THAN THE
PERSONS DESIGNATED IN THE ACCOMPANYING FORM OF PROXY. TO EXERCISE THIS RIGHT,
THE SHAREHOLDER MAY INSERT THE NAME OF THE DESIRED PERSON IN THE BLANK SPACE
PROVIDED IN THE PROXY AND STRIKE OUT THE OTHER NAMES OR MAY SUBMIT ANOTHER
PROXY.
<PAGE>
-4-
THE SHARES REPRESENTED BY PROXIES IN FAVOUR OF MANAGEMENT WILL BE VOTED ON ANY
BALLOT (SUBJECT TO ANY RESTRICTIONS THEY MAY CONTAIN) IN FAVOUR OF THE MATTERS
DESCRIBED IN THE PROXY.
REVOCABILITY OF PROXY
Any shareholder returning the enclosed Proxy Form may revoke the same at any
time insofar 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 registered office of the
Company, at 10th Floor, 595 Howe Street, Vancouver, British Columbia, V6C 2T5,
at any time up to and including the last business day preceding the day of the
Meeting, or any adjournment thereof, or with the chairman of the Meeting on the
day of the Meeting.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The Company is authorized to issue 200,000,000 Common Shares without par value
and 100,000,000 preferred shares without par value, issuable in series. No
preferred shares have been issued, and only the holders of the Common Shares
will have voting rights at the Meeting. 38,663,540 Common Shares are issued and
outstanding. The holders of Common Shares are entitled to one vote for each
Common Share held. Holders of Common Shares of record at the close of business
on April 2, 1998 will be entitled to receive notice of and vote at the Meeting.
To the knowledge of the directors and senior officers of the Company, there is
no person who beneficially owns, directly or indirectly, or exercises control or
direction over shares carrying more than 5% of the voting rights attached to all
shares of the Company.
The total number of Common Shares of the Company beneficially owned, directly or
indirectly, or over which control or direction is exercised, by the current
directors and executive officers of the Company, as a group (8 persons) is
1,212,200 shares, representing approximately 3.14% of the Common Shares issued
and outstanding. This figure includes 1,110,000 Common Shares of the Company
which are issuable upon exercise of currently exercisable stock options held by
such persons. For information with respect to the holdings of the directors and
officers individually, see "Election of Directors of the Company" and "Executive
Compensation".
VOTES NECESSARY TO PASS RESOLUTIONS
AT THE ANNUAL GENERAL MEETING
Pursuant to the COMPANY ACT (British Columbia), the quorum for the
transaction of business at the Meeting consists of two persons present and
being, or representing by proxy, registered shareholders holding not less
than one-twentieth of the Company's issued Common Shares. Under the
Company's Articles and the COMPANY ACT (British Columbia), a majority (over
50%) of the votes cast at the Meeting (in person or by proxy) is required in
order to pass the ordinary resolution referred to in the accompanying Notice
of Meeting.
THE COMPANY
The Company was organized under the COMPANY ACT (British Columbia) on
November 14, 1985.
<PAGE>
-5-
The Company is engaged in the acquisition, exploration and development of
precious mineral resources properties. The Company's principal asset is its
Mineral Ridge Mine in Nevada. Mechanical completion of the open-pit heap leach
gold mine occurred in May, 1997 and the first gold was poured in June, 1997.
Due to depressed gold prices and current market conditions, mining operations
were temporarily shut down in November, 1997. Annual gold production at
Mineral Ridge is expected to average 50,000 ounces once the mine is placed into
full production. In addition, the Company also has a 25% joint venture interest
in the Ivanhoe Venture in Nevada's Carlin Trend.
As at March 31, 1998 the Company owned approximately 14% of the outstanding
common shares of Carlin Resources Corp. ("Carlin"), a Vancouver Stock Exchange
listed company, which has operations and mineral property interests in the
Republic of Ghana, Burkina Faso and Niger, West Africa. Until September 20,
1996, through voting interests and common management, the Company was able to
exercise effective control of Carlin and, accordingly, its accounts were
consolidated in the Company's consolidated financial statements. From September
20, 1996 to April 30, 1997, the accounts of Carlin were accounted for by the
equity method and thereafter, due to the sale of 2.1 million shares of Carlin
reducing the Company's ownership of Carlin to 14% from 34%, application of the
cost method.
ELECTION OF DIRECTORS
The directors of the Company are elected at each annual general meeting and hold
office until the next annual general meeting or until their successors are
appointed. In the absence of instructions to the contrary, the enclosed proxy
will be voted for the nominees herein listed.
The Company has a Compensation Committee and is required to have an Audit
Committee. Members of these committees are as set out below: See "Board and
Committee Meetings."
Management of the Company proposes to nominate each of the following persons for
election as a director. Information concerning such persons, as furnished by
the individual nominees, is as follows:
<TABLE>
<CAPTION>
Number of Common
Shares beneficially
Name and Country of Position with Date of owned or, directly or Percentage
Ordinary Residence Company Age Appointment indirectly, controlled(1) of Class
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sargent H. Berner Director 57 October 12, 1990 110,000(4) LESS THAN
Vancouver, B.C., 1%
Canada
David S. Jennings Director 55 June 3, 1986 175,000(3) LESS THAN
Bowen Island, B.C., 1%
Canada
Andrew F.B. Milligan Director, 73 November 17, 1986 547,200(2) 1.42%
Vancouver, B.C., President and
Canada Chief
Executive
Officer
Charles J.G. Russell Director 64 July 16, 1991 100,000(3) LESS THAN
Guernsey, U.K. 1%
<PAGE>
-6-
Stephen R. Sopher Director 63 March 9, 1990 145,000(4) LESS THAN
Oakville, Ontario, 1%
Canada
David R. Williamson Director 56 October 16, 1989 100,000(3) LESS THAN
London, England 1%
</TABLE>
(1) Based upon information furnished to the Company by individual directors.
Unless otherwise indicated, such shares are held directly.
(2) Includes 500,000 shares issuable upon exercise of currently exercisable
incentive stock options.
(3) Represents shares issuable upon exercise of a currently exercisable
incentive stock option.
(4) Includes 100,000 shares issuable upon exercise of a currently exercisable
incentive stock option.
BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATION OF DIRECTORS,
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The present and principal occupations of the Company's directors and executive
officers during the last five years are set forth below.
SARGENT H. BERNER is a partner of DuMoulin Black, a law firm in Vancouver,
British Columbia. Mr. Berner is also a director of Aurizon Mines Ltd., Cream
Minerals Ltd., Emperor Gold Corporation, Valerie Gold Resources Ltd. and Sultan
Minerals Inc. which are Vancouver-based companies listed on the Vancouver Stock
Exchange. Aurizon Mines Ltd. is also listed on the Toronto and Montreal Stock
Exchanges.
DAVID S. JENNINGS, a geologist and business executive, has been President of
Farallon Resources Ltd. since July, 1991 and President and Chief Executive
Officer of Quartz Mountain Gold Corp. since May, 1988; Dr. Jennings was
Vice-President, Exploration of the Company from September, 1991 to February
29, 1996. He was also Vice-President of Carlin Resources Corp. from November,
1994 to February 28, 1996. Dr. Jennings is also a director of Quartz
Mountain Gold Corp., which trades on Canadian Unlisted Exchange, and Farallon
Resources Ltd., Zim-Gold Resources Ltd., B.A.S.M. Resources Ltd. and Advanced
Projects Limited, which are Vancouver-based companies with shares listed on
the Vancouver Stock Exchange.
ANDREW F.B. MILLIGAN, a business executive, has been President and Chief
Executive Officer of the Company since September, 1991. Mr. Milligan was
Chairman of the Company from April, 1987 to June, 1989 and was President of the
Company from November, 1986 to April, 1987. Mr. Milligan was Chairman of Carlin
Resources Corp. from November, 1994 to June, 1997 and was a director of Carlin
Resources Corp. from November, 1994 to January, 1998 and he is also a director
of Advanced Projects Limited and Lysander Gold Corporation, all of which are
Vancouver-based mining companies with shares listed on the Vancouver Stock
Exchange.
CHARLES J.G. RUSSELL retired in December, 1995 after serving as President of
Diamond Fields Resources Ltd. between September, 1993 and February, 1994 and
Vice-President of Ivanhoe Capital Corp. since January, 1993. Mr. Russell held
the positions of Senior Vice-President and director of Galactic Resources Ltd.
from June, 1987 to September, 1992. In January, 1993, Galactic filed an
assignment in
<PAGE>
-7-
bankruptcy under Canadian law. Galactic's publicly filed reports indicate
that Galactic encountered financial difficulties associated in part with
environmental problems at the Summitville Mine, a gold mine in Colorado
operated by a wholly-owned subsidiary of Galactic. Mr. Russell is also a
director of Lysander Gold Corporation with shares listed on the Vancouver
Stock Exchange and Quartz Mountain Gold Corp. which trades on the Canadian
Unlisted Exchange.
STEPHEN R. SOPHER, is a professional geologist and private investor. Mr. Sopher
was President and C.E.O. of Lysander Gold Corporation from May, 1995 to June,
1997 and a director from January, 1994 until September, 1997. Mr. Sopher was
Executive Vice-President and a director of TVX Gold Inc., from January, 1991 to
September, 1992. Prior to the merger of TVX Gold Inc., with Inco Gold Ltd. in
early 1991, Mr. Sopher was Vice-President Exploration of Inco Exploration and
Technical Services, Inc. Mr. Sopher joined Inco Limited in 1961 and in 1970 was
transferred to Brazil to organize and manage Inco's exploration program. In
1987 he became Managing Director, South America. Mr. Sopher is a registered
Professional Engineer of Ontario, a member of the American Institute of Mining,
Metallurgical and Petroleum Engineers, Inc. and also the founding member of the
Brazil-Canada Chamber of Commerce. Mr. Sopher is also a director of
Consolidated Logan Mines, which is listed on the Vancouver Stock Exchange.
DAVID R. WILLIAMSON, a mining engineer and business executive, is principal of
his own business, David Williamson Associates Limited, financial consultants to
the mining industry and publishers of International Mining Review, based in
London, England. In 1982 Mr. Williamson joined Shearson Lehman Hutton and
formed their metals and mining research team. From 1987 to 1989 he held the
positions of Executive Director of Shearson Lehman Hutton and director of Metals
and Mining Research for Shearson Lehman Hutton Commodities. He is also a former
governor of the Camborne School of Mines in England. Mr. Williamson is a
director of Crown Resources Corporation, Asia Pacific Resources Ltd. and South
Crofty Holdings Ltd., which are publicly traded mining companies listed on The
Toronto Stock Exchange.
GLENN H. FRIESEN (age 41) is a Certified General Accountant and has been Chief
Financial Officer of the Company since February, 1998 and Corporate Controller
from May, 1997 to February, 1998. Mr. Friesen was Chief Financial Officer of
Power Smart Inc. from 1991 to 1996 and Controller of Skyline Gold Corp. from
1989 to 1991.
KARYN E. BACHERT (age 46) has been Corporate Secretary of the Company since
June, 1992 and was Assistant Secretary of the Company from November, 1988 to
June, 1992. Ms. Bachert has been employed by the Company since January, 1987.
Ms. Bachert was Corporate Secretary of Carlin Resources Corp. from November,
1994 to June, 1997.
David Williamson is a director of Crown Resources Corporation, David Jennings
and Charles J.G. Russell are directors of Quartz Mountain Gold Corp., and
Sargent H. Berner is a director of Aurizon Mines Ltd., which are companies
having a class of securities registered pursuant to Section 12 of the United
States Securities Exchange Act of 1934 (the "Exchange Act"), or subject to the
requirements of Section 15(d) of the Exchange Act.
Section 16(a) of the Exchange Act requires the officers and directors, and
persons who own more than 10% of a registered class of equity securities of a
reporting company to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Officers, directors and
shareholders owning greater than 10% of the common stock of such a company are
required by SEC
<PAGE>
-8-
regulation to furnish the Company with copies of all reports
filed pursuant to Section 16(a). Based solely upon a review of the reports
furnished to the Company, the Company is not aware of any transactions that were
not reported on a timely basis or any failure to file any required form.
BOARD AND COMMITTEE MEETINGS
The Board of Directors of the Company held seven meetings during the year
ended December 31, 1997. All other proceedings of the Board of Directors
were conducted by resolutions consented to in writing by all the directors
and filed with the minutes of the proceedings of the directors. Such
resolutions consented to in writing by all the directors are, according to
the COMPANY ACT (British Columbia) and the Articles of the Company, as valid
and effectual as if they had been passed at a meeting of the directors duly
called and held.
The Company had an Executive Committee of its Board of Directors for the
1996 - 1997 term but did not appoint an Executive Committee for the 1997 - 1998
term. The function of the Executive Committee is to deal with matters
requiring approval by the Company's directors during the intervals between
meetings of the Board of Directors. There were no meetings of the Executive
Committee in 1997.
Pursuant to the requirements of the COMPANY ACT (British Columbia), the Company
also has an Audit Committee of its Board of Directors presently consisting of
Charles J.G. Russell, Sargent H. Berner and Andrew F.B. Milligan. The function
of the Audit Committee is to review financial statements with the auditors and
to report thereon to the Board of Directors. During 1997, one meeting of the
Audit Committee was held.
The Company has a Compensation Committee made up of Stephen R. Sopher, Sargent
H. Berner and Charles J.G. Russell. The function of the Compensation Committee
is to investigate and recommend to the directors appropriate levels and types of
compensation for directors and officers of the Company. During 1997, there were
two meetings held by this Committee.
The Company does not have a standing Nominating Committee.
During 1997, each incumbent director attended at least 75% of the aggregate of
(i) the total number of meetings of the Board of Directors held during the
period for which he was a director and (ii) the total number of meetings held by
all committees of the Board of Directors during the period on which he served.
The total number of all regular and committee meetings of the Board of Directors
in 1997 was ten.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
The services of Andrew F.B. Milligan, a director, President and Chief Executive
Officer of the Company, are provided to the Company pursuant to a
Consultant/Management Agreement with Glencoe Management Ltd. dated December 1,
1991 and amended on December 19, 1992, June 29, 1994, and June 1, 1995. Mr.
Milligan is the principal shareholder of Glencoe Management Ltd. which receives
management fees from the Company. See "Summary of Executive Compensation".
The services of Bobbi-Jo (B.J.) Gordon former Vice-President, Finance and Chief
Financial Officer of the Company were provided to the Company pursuant to an
Employment Agreement dated February 1,
<PAGE>
-9-
1997 and terminated on January 31, 1998. (See "Summary of Executive
Compensation" and "Management Agreements and Termination of Employment and
Change-In-Control Agreements").
David S. Jennings, a director of the Company, is the principal shareholder of
7557 Management Group Ltd., ("7557"), a management company which receives fees
for providing the services of Dr. Jennings. During the year ended December 31,
1997, management fees of nil ($11,005 - 1996 fiscal year; $80,662 - 1995 fiscal
year) were paid to 7557 for such services at a rate of C$600 per day. These
fees vary monthly based on services rendered during the month.
The services of James M. Carter, formerly a director and Executive Vice
President and Chief Financial Officer of the Company, were provided to the
Company pursuant to a Management Agreement dated June 1, 1993, amended on June
29, 1994 and June 1, 1995 and terminated on February 6, 1998. (See "Summary of
Executive Compensation" and "Management Agreements and Termination of Employment
and Change-In-Control Agreements").
Sargent H. Berner, a director of the Company, is a partner in the Vancouver law
firm of DuMoulin Black, which received fees for legal services provided to the
Company for the year ended December 31, 1997 of $155,758 ($74,217 - 1996 fiscal
year; $57,343 - 1995 fiscal year).
CORPORATE GOVERNANCE
The Toronto Stock Exchange Committee on Corporate Governance in Canada has
issued a series of proposed guidelines for effective corporate governance (the
"TSE Report"), and the Toronto Stock Exchange now requires listed companies to
disclose their corporate governance system in their annual reports or
information circulars.
Management of the Company has reviewed the TSE Report and the Company's own
corporate governance practices, with input and guidance from the Board of
Directors. The Company's policy and practices are compared to the TSE Report in
Appendix "A" to this Circular, which indicates and explains differences between
the Company's corporate governance system and that set out in the TSE Report.
The present Board of Directors is composed of six directors, five of whom would
be considered unrelated directors by the TSE Report.
The TSE Report defines a significant shareholder as a shareholder with the
ability to exercise a majority of votes for the election of the board of
directors. The Company does not have a significant shareholder.
In addition, in respect of the year 2000 computer problem, the Company uses
current or near current versions of software by major developers for office
productivity, accounting, internet and database applications. Published
statements by these software developers have been obtained assuring that these
programs are year 2000 compliant and management believes that the risk
associated with these internal programs is low.
Operationally, the Company uses two software programs for crusher operations and
mine modeling and planning. These programs are not date sensitive however, the
vendors have been contacted directly for confirmation of year 2000 compliance.
<PAGE>
-10-
EXECUTIVE COMPENSATION
The Company's executive and employee compensation program is administered by
the Compensation and/or Executive Committees. The Compensation Committee
establishes or recommends general compensation levels and policies for
executive officers and employees of the Company. The Stock Incentive Plan is
administered by the Executive Committee or, in the absence of this committee,
by executive officers of the Registrant on behalf of the Board of Directors.
The Registrant's Board designates the Members of each committee on an annual
basis.
SUMMARY OF EXECUTIVE COMPENSATION
During 1997, there were four executive officers of the Company: Andrew F.B.
Milligan, James M. Carter, James A. Currie, and Bobbi-Jo (B.J.) Gordon. The
following table sets forth certain summary information concerning the
compensation awarded to, earned by, or paid to the Chief Executive Officer
and the two executive officers of the Company whose combined salary and bonus
for 1997 exceeded C$100,000 for services in all capacities to the Company
during the year ended December 31, 1997, (collectively, the "Named Executive
Officers"). The aggregate value of other annual compensation paid to the
Named Executive Officers during 1997 did not exceed 10% of the aggregate cash
compensation set forth in the table below.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
Securities All other
Name and Principal Position Year Salary Bonus(1) Under Options Compensation(2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Andrew F.B. Milligan(3) 1997 $155,530 -- 500,000 (4) --
President and Chief Executive 1996 158,474 $47,542 450,000 --
Officer 1995 157,389 31,478 50,000
James A. Currie(5) 1997 $112,448 -- 400,000 $8,143
Executive Vice President 1996 107,850 $18,332 50,000 924
and Chief Operating Officer 1995 88,041 -- 100,000 828
Bobbi-Jo (B.J.) Gordon(6) 1997 $88,604 -- 150,000 $4,991
Vice-President, Finance and
Chief Financial Officer
</TABLE>
(1) Granted in respect of performance in the previous year.
(2) Represents life insurance premiums paid on behalf of the named
executive officers.
(3) The services of Mr. Milligan are provided under an Agreement dated
December 1, 1991, as amended on June 1, 1995, between the Company and
Glencoe Management Ltd., a company owned and controlled by Mr. Milligan.
(4) This represents the repricing of the stock options of Mr. Milligan
granted in 1995 and 1996. See "Table of Option and SAR Repricings"
below.
(5) The services of Mr. Currie were provided under an Agreement dated
November 17, 1997, between the Company and Anacortes Management Ltd. and
terminated on February 6, 1998.
<PAGE>
-11-
(6) The services of Ms. Gordon were provided under an agreement with the
Company dated February 1, 1997, and terminated on January 31, 1998.
STOCK INCENTIVE TRANSACTIONS DURING 1997
The following table sets out the details of all stock option grants to the
Named Executive Officers during the most recently completed financial year.
<TABLE>
<CAPTION>
Percent of Potential Realizable
Number of Total Value at Assumed Annual
Securities Options Rates of Stock Price
Underlying Granted to Appreciation for
Options Employees in Exercise Expiration Options Term
Name Granted Fiscal Year Price Date 5% 10%
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James A. Currie 150,000 15.0% C$1.06 Feb 27, 2002 C$43,928 C$97,071
James A. Currie 250,000 25.1% C$0.80 June 19, 2002 C$55,256 C$122,102
Bobbi-Jo (B.J.) Gordon 150,000 15% C$1.08 Feb 2, 2002 C$44,757 C$98,903
</TABLE>
Note: During 1997 a total of 992,000 options were granted under the
Company Stock Incentive Plan. The Plan provides that all options are
issued at an exercise price equal to the closing price the common
shares on the Toronto Stock Exchange on the trading day immediately
preceding the date of grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION VALUES
The following table sets out the details of all stock options exercised
during the most recently completed financial year by the Named Executive
Officers and the financial year end values of the stock options held by the
Named Executive Officers.
<TABLE>
<CAPTION>
Shares
Acquired
on
Exercise Number of Securities Value of Unexercised
(No. of Value Underlying Unexercised In-The-Money Options
Name Shares) Realized Options at 12/31/97(1) at 12/31/97
- -------------------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew F.B. Milligan -- -- 500,000 -- Nil --
James A. Currie -- 400,000(2) -- Nil --
Bobbi-Jo (B.J.) -- -- 150,000(3) -- Nil --
Gordon
</TABLE>
(1) During 1997 a total of 1,020,000 options either expired or were
surrendered.
(2) Mr. Currie surrendered options upon the grant of replacement options.
Mr. Currie was granted an additional option of 250,000 after his
appointment as Executive Vice President of the Company.
(3) Options granted in February, 1997 and expired in March, 1998.
<PAGE>
-12-
COMPENSATION OF DIRECTORS
The Company pays outside directors a fee of C$650 for each meeting attended, in
person or by telephone and an additional C$350 for outside directors who chair
committee or board meetings. In addition, the directors may be reimbursed for
actual expenses reasonably incurred by them in connection with attending
meetings of the board. Directors are also eligible to receive bonus shares or
options to purchase Common shares of the Company.
MANAGEMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
1. The services of Andrew F.B. Milligan, a director, President and Chief
Executive Officer of the Company, are provided to the Company pursuant
to a Consultant/Management Agreement with Glencoe Management Ltd. dated
December 1, 1991, and amended on December 19, 1992, June 29, 1994 and
June 1, 1995. Mr. Milligan is the principal shareholder of Glencoe
Management Ltd. This agreement has a three year term and includes
provisions by which Mr. Milligan will be entitled to receive an amount
equal to three years' management fees, and will also be entitled to
participate in all employee insurance and benefit plans in place for a
period of up to three years if the Company should terminate the
agreement or the employment of the executive officer without cause. In
addition, the executive officer may elect to be paid a sum equal to the
difference between the market value and the exercise price of any
outstanding stock options held by him at the date of his termination,
upon surrender of such options; or may retain the options for a period
of up to 30 days following termination of his employment. The estimated
cost of the termination arrangements for Mr. Milligan, based upon 1997
compensation, would be approximately $492,000. The Company has no
present intention to terminate this agreement.
2. Until February 6, 1998, the services of James A. Currie, who was
Executive Vice President and Chief Operating Officer of the Company
since June, 1997 and Vice-President, Mining of the Company from
December, 1994 to June, 1997, were provided to the Company pursuant to a
Consulting Agreement between the Company and Anacortes Management Ltd.
dated November 17, 1997. This Agreement was terminated on February 6,
1998.
3. Until January 31, 1998, the services of Bobbi-Jo (B.J.) Gordon, who was
Vice-President, Finance and Chief Financial Officer of the Company since
February 1, 1997, were provided to the Company pursuant to an Employment
Agreement dated February 1, 1997. This agreement included provisions
by which Ms. Gordon was entitled to receive an amount equal to one years
salary, and was also entitled to participate in all employee health,
insurance and benefit plans in place for a one year period should the
Company terminate the agreement or the employment of the executive
officer without cause, or should she resign based on the sole reason
that there has been a takeover of control of the Company she would be
entitled to receive an amount equal to three years' salary and
employment benefits. In addition, Ms. Gordon was entitled to retain any
stock options held by her at the date of termination for a period of up
to 30 days following termination of her employment.
The Company and Ms. Gordon entered an agreement on January 31, 1998
which provided for a payment of C$90,508 (paid) and thereby ended her
employment with the Company, with further amounts payable under the
agreement of $24,445, of which $21,318 is payable at the option of
<PAGE>
-13-
the Company in cash or shares in the capital of the Company. Ms.
Gordon's stock option expired on March 3, 1998.
4. David S. Jennings, a director of the Company, is the principal
shareholder of 7557 Management Group Ltd., a management company which
received fees for providing the services of Mr. Jennings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Andrew F. B. Milligan served as a member of the Compensation Committee
during 1996 and part of 1997. As of June, 1997, the Compensation Committee
is made up on non-executive directors of the Company.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's compensation program for its executive officers is administered
and reviewed by the Compensation Committee (the "Committee") of the Board of
Directors. In 1995, the Committee used information and a report prepared by
outside consultants to assist in determining appropriate executive
compensation practices for the most senior executive officers. The report
used two groups of Canadian mining companies, using annual revenues and
number of employees as measures. The report augmented information by
including recent salary surveys carried out for comparable mining companies,
and publicly available compensation information for Canadian mining companies.
The Committee reviewed the information and confirmed that the base salaries
and benefits provided to the two senior officers were comparable to those
provided by similar companies. However, it was determined that the Company
was deficient, in relation to comparable companies, in not providing
short-term incentives such as a bonus plan. Thus, the Committee recommended
and the Board of Directors approved additional potential annual compensation
through short term incentive awards (ie bonus plan). The award of a bonus is
based on the performance of the Executive reaching strategic goals of the
company, such as achieving recognition in the market-place, development of
ore reserves, securing additional financing, accomplishing significant
acquisitions, etc. The objectives for the individual are intended to be
specific, measurable, achievable, relevant and timely.
In 1996, the Committee reviewed and concluded that the annual salary and
benefits for the chief executive officer and the executive vice-president
remained in line with salaries and benefits offered by comparable companies.
The Committee did not recommend any increase in base salaries or benefits for
those positions in 1996. The Committee reviewed the performance of the
president and chief executive officer and the executive vice president (in
their absence) and recommended a bonus based on job description and
achievement of objectives in 1995. The Board of Directors approved the
recommendations of the Committee. The Committee did not recommend any
increase in base salaries or benefits or the payment of any bonuses in 1997.
STOCK INCENTIVE PLANS
SHARE OPTION PROGRAM
The Company grants, and has in the past granted, to directors, officers and
employees of the Company, options to purchase Common Shares subject to and in
accordance with the prevailing policies of the
<PAGE>
-14-
stock exchanges on which the Company's shares were then listed. Options are
granted based on the assessment by the Company's Board of Directors of the
optionee's past and present contribution to the success of the Company. The
Company's shares are presently listed for trading in Canada on The Toronto
Stock Exchange. The exercise price of options accordingly is subject to the
approval by The Toronto Stock Exchange and will generally not be less than
the market price of the shares at the time the options are granted. These
options are not transferable and are exercisable from the date granted, or
are exercisable in accordance with vesting schedules specified in each option
agreement, until the earliest of (i) such number of years (up to five years)
from the date of the grant, (ii) 30 days after the option holder leaves his
position with the Company, and (iii) such number of days (up to one year)
following the death of the optionee as is specified in each optionee's option
agreement.
During the past year the Company has granted incentive options to two senior
officers under the Share Option Program, subject to regulatory and
shareholder approval. Shareholders will be asked to approve the granting of
these options by ordinary resolution at the Annual General Meeting: See
"Particulars of Other Matters to be Acted Upon".
STOCK INCENTIVE PLAN
On June 24, 1988 the shareholders of the Company approved the adoption of a
Stock Incentive Plan which was subsequently approved by the stock exchanges
on which the Company's shares were then listed. The Stock Incentive Plan, as
subsequently amended, consists of a Share Purchase Plan, a Share Option Plan
and a Share Bonus Plan for directors, executive officers and employees of the
Company. The purpose of the Stock Incentive Plan is to advance the interest
of the Company by encouraging equity participation in the Company by
directors, executive officers and employees of the Company through
acquisition of the Common Shares.
Subject to certain limits stated in the Share Option Plan and the Share Bonus
Plan, the number of Common Shares available or made available for the Share
Purchase Plan, the Share Option Plan and the Share Bonus Plan, individually
and collectively, will be determined from time to time by the Company's Board
of Directors, but the aggregate maximum number of Common Shares which the
Company may at any time reserve for issuance under the Stock Incentive Plan,
as a whole, will not exceed 4,750,000.
The Stock Incentive Plan is administered by the Company's Board of Directors.
The Board has the right to amend, modify or terminate the Stock Incentive
Plan, in whole or in part, if and when it is advisable in the absolute
discretion of the Board of Directors, but the Plan can not be amended more
than once every six months, other than to comport with changes in the U.S.
Internal Revenue Code, the U.S. Employee Retirement Income Security Act, or
the rules thereunder. However, any amendment of the Stock Incentive Plan
which would materially modify the requirements as to eligibility for
participation in any plan comprised in the Stock Incentive Plan or which
would materially change the number or value of Common Shares that may be
granted under the Share Option Plan will be effective only upon the approval
of the shareholders of the Company, and any amendment to the Stock Incentive
Plan requires any necessary approval of any regulatory body having
jurisdiction over the securities of the Company.
It is presently contemplated that future stock options granted by the Company
will generally be granted pursuant to the Share Option Plan, rather than the
Share Option Program. The Company does not have any immediate plans to
implement the Share Purchase Plan.
<PAGE>
-15-
(a) SHARE PURCHASE PLAN
Participants in the Share Purchase Plan are to be full time or seasonal
full-time employees of the Company who have completed at least one year (or
less, at the option of the Company Board of Directors) of continuous service
and who have been designated by the Company's Board of Directors as
participants in the Share Purchase Plan.
An employee may contribute up to 10 per cent of his annual basic salary to
the Share Purchase Plan. The Company makes contributions based on a
proportion of the employee's contribution on a quarterly basis. During the
first year of the employee's participation, the Company's contribution will
equal one-sixth of the participant's contribution and, thereafter, will
increase to one-third of the participant's contribution.
At the end of each calendar quarter each participant will then be issued
Common Shares having a value equal to the amount contributed to that date by
the participant and the Company to the Share Purchase Plan. Common Shares
issued to a participant will be held in safekeeping and delivered to the
participant six months after issue.
If, prior to the delivery of such Common Shares, the participant's employment is
terminated other than due to death, disability or normal retirement (in which
cases the Common Shares will be delivered), such Common Shares will be purchased
for cancellation or sold at market and the participant will receive, without
interest, an amount equal in value to the lesser of (i) his contribution and
(ii) a portion of the proceeds of any sale of such shares equal to six-sevenths
of the proceeds if the shares were issued during the first year of
participation, or three-quarters of the proceeds if the shares were issued
thereafter. Any portion of a participant's contribution then held in trust for
a participant will be returned to him or his estate, as the case may be in the
event of his termination of employment, for any reason. During calendar 1996 no
Common Shares were purchased by participants under the Share Purchase Plan.
(b) SHARE OPTION PLAN
The number of shares subject to option under the Share Option Plan is limited
to a maximum of 4,750,000. Options granted pursuant to the Share Option Plan
are to be either options intended to qualify under Section 422 of the United
States Internal Revenue Code (the "Code") or options designated by the
Company that do not so qualify.
Participants in the Share Option Plan are the Company's President and Chief
Executive Officer; Executive Vice President; Vice-President, Finance;
Vice-President, Exploration; Vice-President, Mining; Members of the Executive
Committee; Non-Executive directors; and full-time or part-time employees of
the Company who, by the nature of their jobs, are, in the opinion of the
Company's Board of Directors, in a position to contribute to the success of
the Company or who, by virtue of their length of service to the Company, are,
in the opinion of the Company's Board of Directors, worthy of special
recognition.
For persons who would be deemed "Insiders" under the provisions of the United
States Securities Exchange Act of 1934 ("U.S. Insiders") of the Company, the
Plan presently provides a formula which determines the timing, pricing and
amount of options to be granted, and specifies that shares received upon the
exercise of options must be held for at least six months from the date of
granting the underlying options, prior to disposition. For persons other
than U.S. Insiders of the Company ("discretionary optionees"), the date of
grant, the number of Common Shares, the exercise price per Common Share and
certain other terms of options are determined by the Company's Board of
Directors. In all cases the
<PAGE>
-16-
exercise price of options granted under the Share Option Plan will not be
less than the fair market value per Common Share on the date of or
immediately preceding the grant, except as permitted by the rules and
policies of the stock exchange on which the Common Shares are then listed in
the case of options which are not intended to qualify as "incentive stock
options" within the meaning of the Code. In order to ensure that the
Registrant will receive the benefits intended from the grant of options, no
option is exercisable until it has vested. For options granted to
discretionary optionees, the vesting schedule for each option is specified by
the Company's Board of Directors at the time of grant of the option.
The base number of shares allocated to U.S. Insiders under the Share Option
Plan is as follows:
<TABLE>
<CAPTION>
Office Held Number of Shares
-------------------------------------------------------
<S> <C>
President and CEO 500,000
Executive Vice President 400,000
Vice-President, Finance 150,000
Vice-President, Exploration 150,000
Vice-President, Mining 150,000
Members of Executive Committee 175,000
Non-Executive Directors 100,000
</TABLE>
All options to U.S. Insiders are granted at an exercise price equal to the
closing price for the Company's Common Shares on the Toronto Stock Exchange
on the trading day immediately preceding the date of grant, and are
exercisable for a term of five years. Additional options are allocated to
U.S. Insiders on each anniversary date of the initial grant of their options,
if necessary, in order to make up any difference between the number of shares
remaining subject to option on the anniversary date, and the base number
applicable to each insider on that date.
Options held by discretionary optionees are exercisable for any period
specified by the Company's Board of Directors up to a maximum of five years
after the date of grants. In all cases, any Common Shares not purchased
pursuant to an option prior to the participant's termination of employment or
directorship or death may be exercised, to the extent entitled, within 30
days after the termination of employment or directorship or within up to one
year after death (as specified in the particular option agreement). An
option is not transferable, except by will or the laws of descent and
distribution.
(C) SHARE BONUS PLAN
The Share Bonus Plan permits the Company's Board of Directors to enter into
agreements for the issuance of Common Shares to full-time or seasonal
full-time employees of the Company who have rendered meritorious service
which contributed to the success of the Company. The Company's Board of
Directors shall determine in its sole and absolute discretion to enter into
agreements with such full-time or seasonal full-time employees, on any terms
and conditions, subject to any provisions and restrictions, and for such cash
consideration, if any, as the Company's Board of Directors may determine for
the issuance of any number of Common Shares to any such employee. No shares
can be issued pursuant to the Share Bonus Plan unless the employee has
entered into such an agreement with the Company's Board of Directors.
The maximum number of Common Shares that may be issued under the Share Bonus
Plan, in any calendar year, may not exceed 0.5% of the total number of Common
Shares of the Company that were
<PAGE>
-17-
issued and outstanding on December 31, 1994. During calendar 1997 no Common
Shares were issued pursuant to the Share Bonus Plan. On February 6, 1998, an
aggregate of 107,500 Common Shares were granted and issued pursuant to the
Share Bonus Plan.
COMPARATIVE SHAREHOLDER RETURN PERFORMANCE GRAPH
The graph below (as required by the Regulation) compares the yearly
percentage change in the cumulative total shareholder return on the Company's
shares against the cumulative total shareholder return on the TSE Gold &
Precious Minerals Sub-Index and TSE 300 Stock Index for the five fiscal years
immediately prior to the beginning of the present financial year, assuming a
$100 initial investment with all dividends reinvested to the cumulative
returns.
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL SHAREHOLDER RETURN ("CSR") ON COMMON SHARES
OF THE CORPORATION AND THE TSE 300 STOCK INDEX
[GRAPHIC]
Yearly % Change in CSR Total Dividends & (End Price - Opening Price)
= ---------------------------------------------
(for a given period) Opening Price
*Assumes that the initial value of investment on The Toronto Stock Exchange
in the Corporation's common shares and in each of the indices was $100 on
commencement of the 5 year period and that all dividends were reinvested.
See the "Relative Values" in the table below.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
TSE 300 Gold & Mineral
Stock Price Stock Price Cornucopia Closing Price
----------- ----------- ------------------------
Index Relative Index Relative Relative
Year Value Value Value Value C$ Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1992 3,350.44 100 5,250.06 100 1.60 100
- ---------------------------------------------------------------------------------------------
1993 4,321.43 129 10,698.96 204 2.55 159
- ---------------------------------------------------------------------------------------------
1994 4,213.61 126 9,586.36 183 1.55 97
- ---------------------------------------------------------------------------------------------
1995 4,713.54 141 10,413.61 198 1.75 109
- ---------------------------------------------------------------------------------------------
1996 5,927.03 177 11,302.64 215 0.97 61
- ---------------------------------------------------------------------------------------------
1997 6,699.44 200 6,378.87 122 0.26 16
- ---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-18-
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
Save and except as set out elsewhere herein, no insider or proposed nominee
for election as a director of the Company and no associate or affiliate of
the foregoing persons has or has had any material interest, direct or
indirect, in any transaction since the commencement of the Company's last
completed financial year or in any proposed transaction which in either such
case has materially affected or will materially affect the Company.
MANAGEMENT/EMPLOYMENT AGREEMENTS
No management functions of the Company are performed to any substantial
degree by a person other than the directors or senior officers of the
Company. The services of Andrew F.B. Milligan, a director, President and
Chief Executive Officer of the Company, are provided to the Company pursuant
to a Consultant/Management Agreement with Glencoe Management Ltd. dated
December 1, 1991 as amended on December 19, 1992, June 29, 1994 and June 1,
1995. Mr. Milligan is the principal shareholder of Glencoe Management Ltd.
which receives management fees from the Company (see "Executive
Compensation"). Also the services of James A. Currie, a former executive
officer of the Company and B.J. Gordon, a former executive officer of the
Company were provided pursuant to Management and Employment Agreements (see
"Executive Compensation" and "Management Agreements and Termination of
Employment and Change-In-Control Agreements").
INDEBTEDNESS TO COMPANY OF DIRECTORS,
EXECUTIVE OFFICERS AND SENIOR OFFICERS
Save and except as set out elsewhere herein, there is no indebtedness of any
director, executive officer, senior officer, proposed nominee for election as
a director or associate of them, to or guaranteed or supported by the Company
or any of its subsidiaries either pursuant to an employee stock purchase
program of the Company or otherwise, during the most recently completed
financial year.
APPOINTMENT OF AUDITOR
Unless otherwise instructed, the proxies given pursuant to this solicitation
will be voted for the appointment of KPMG, Chartered Accountants, of 777
Dunsmuir Street, Vancouver, British Columbia, V7Y 1K3, as the auditor of the
Company to hold office for the ensuing year at a remuneration to be fixed by
the directors. KPMG have been auditors of the Company since October 28, 1991.
A representative of KPMG is expected to attend the Annual General Meeting and
will have the opportunity to make any statement such representative may
desire to make and to respond to any appropriate questions of shareholders.
SHAREHOLDER PROPOSAL
Any shareholder who intends to present a proposal at the 1999 Annual General
Meeting of shareholders for inclusion in the Company's Information Circular
(Proxy Statement) and Proxy Form relating to such meeting must submit such
proposal by January 31, 1999 to the Company at its principal executive
offices.
<PAGE>
-19-
PARTICULARS OF OTHER MATTERS TO BE ACTED UPON
(a) STOCK OPTION REPRICINGS
On October 21, 1997, the Board of Directors resolved that all stock options
of the Company be repriced to reflect the current market price and that the
exercise price of such options be reduced to C$0.68 per share. The Company
received approval from The Toronto Stock Exchange of the stock option
repricings on December 31, 1997, subject to approval of the shareholders for
all repriced stock options held by insiders. The details of the repriced
stock options held by all insiders that were repriced and the details of the
repricing are set out in the table below:
<TABLE>
<CAPTION>
Market Price Exercise Length of
Securities of Securities Price at Original Option
Under at Time of Time of New Term Remaining
Options/SARs Repricing or Repricing or Exercise at Date of
Date of Repriced or Amendment Amendment Price Repricing or
Name Repricing Amended (#) ($/Security) ($/Security) ($/Security) Amendment
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Andrew F.B. Oct 21-97 500,000 $0.68 C$1.75/ C$0.68 2 1/4 years/
Milligan C$1.69(1) 3 1/4 years(1)
James A. Oct 21-97 400,000 $0.68 C$1.06/ C$0.68 4 1/2 years(2)
Currie C$0.80(2)
Bobbi-Jo Oct 21-97 150,000 $0.68 C$1.08 C$0.68 4 1/4 years
(B.J.)
Gordon
Sargent H. Oct 21-97 100,000 $0.68 C$0.69 C$0.68 3 1/4 years
Berner
David S. Oct 21-97 175,000 $0.68 C$1.75/ C$0.68 2 1/4 years/
Jennings C$1.69(3) 3 1/4 years(3)
Stephen R. Oct 21-97 100,000 $0.68 C$1.69 C$0.68 3 1/4 years
Sopher
Charles J.G. Oct 21-97 100,000 $0.68 C$0.87/ C$0.68 2 weeks/
Russell C$1.75(4) 2 1/4 years(4)
David R. Oct 21-97 100,000 $0.68 C$1.75/ C$0.68 2 1/4 years/
Williamson C$1.69(5) 3 1/4 years(5)
Robert F. Oct 21-97 175,000 $0.68 C$1.75 C$0.68 2 1/2 years
Dunlop
Karyn E. Oct 21-97 35,000 $0.68 C$1.69/ C$0.68 2 1/4/3 1/4/
Bachert C$1.75/ 4 1/4 years(6)
C$1.08(6)
Nathan A. Oct 21-97 150,000 $0.68 C$1.06 C$0.68 4 1/4 years
Tewalt
<PAGE>
-20-
Glenn H. Oct 21-97 35,000 $0.68 C$0.95 C$0.68 4 1/2 years
Friesen
</TABLE>
(1) Two stock options were repriced, one exerciseable for 50,000 shares at
C$1.75 per share expiring on January 4, 2000 and one exerciseable for
450,000 shares at C$1.69 per share expiring on January 4, 2001.
(2) Two stock options were repriced, one exerciseable for 150,000 shares at
C$1.06 per share expiring on February 27, 2002 and one exerciseable for
250,000 shares at C$0.80 per share expiring on June 19, 2002.
(3) Two stock options were repriced, one exerciseable for 35,000 shares at
C$1.75 per share expiring on January 4, 2000 and one exerciseable for
140,000 shares at C$1.69 per share expiring on January 4, 2001.
(4) Two stock options were repriced, one exerciseable for 50,000 shares
exerciseable at C$0.87 per share expiring on November 5, 1997 and one
exerciseable for 50,000 shares at C$1.75 per share expiring on January
4, 2000.
(5) Two stock options were repriced, one exerciseable for 30,000 shares at
C$1.75 per share expiring on January 4, 2000 and one exerciseable for
70,000 shares at C$1.69 per share expiring on January 4, 2001.
(6) Three stock options were repriced: one for 10,000 shares exerciseable
at C$1.75 per share expiring on January 4, 2000; one for 13,000 shares
exerciseable at C$1.69 per share expiring on January 4, 2001; and one
for 12,000 shares exerciseable at C$1.08 per share expiring on February
2, 2002.
A significant component of the compensation of the insiders of the Company
consists of stock options. The directors do not consider that the recent
performance of the Company's share price accurately reflects the performance
of its directors, officers or employees. The directors consider that the
most significant influences on the Company's share trading price has been the
drop in the price of gold and the current junior stock investment climate,
both of which are unrelated to performance of the directors, officers and
employees of the Company. As a result, the directors considered that it was
appropriate to reprice stock options of directors, officers and employees so
that they continue to provide incentive to such employees to act in the best
interests of the shareholders.
At the Meeting, shareholders will be asked to consider and, if thought fit,
pass an ordinary resolution approving the repricing of all of the stock
options of the Company held by insiders so that they become exerciseable at
$0.68 per share in the form set out as item 1 in the attached Appendix "B" to
this Information Circular (Proxy Statement). Persons whose stock options are
being repriced are not entitled to vote on this resolution.
(b) OTHER MATTERS
Management of the Company is not aware of any matter to come before the
Meeting other than as set forth in the Notice of Meeting. If any other
matter properly comes before the Meeting, it is the intention of the persons
named in the enclosed Proxy Form to vote the shares represented thereby in
accordance with their best judgment on such matter.
<PAGE>
-21-
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 1997 IS
AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO INVESTOR
RELATIONS, CORNUCOPIA RESOURCES LTD., SUITE 540 - 355 BURRARD STREET,
VANCOUVER, BRITISH COLUMBIA, CANADA, V6C 2G8.
DATED at Vancouver, British Columbia this - day of April, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
________________________________________
ANDREW F.B. MILLIGAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
APPENDIX "A"
<TABLE>
<CAPTION>
Does the
TSE Corporate Governance Corporation
Committee Guidelines Align? Comments
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Board of Directors should explicitly
assume responsibility for the
stewardship of the corporation and
specifically for:
(a) Adoption of a strategic planning Yes Strategic planning matters are dealt with at
process. regular board meetings. Each year the Board
reviews a strategic plan and one year
operating plan and budget.
(b) Identification of specific risks and Yes Financial risks are reviewed by the Audit
implementing risk management Committee. The establishment of an
systems. Environmental Committee is planned for
1998.
(c) Succession planning and monitoring Yes The Compensation Committee is responsible
senior management. for succession and management development.
(d) Communications policy. Yes The Board of Directors has developed a
policy to communicate effectively with
shareholders, employees and regulators.
(e) Integrity of internal control and Yes The Audit Committee in co-operation with
management of information the external auditors is responsible for
systems. recommending improvements in the
corporation's internal controls and
management information systems.
2. Majority of directors should be Yes Andrew F. B. Milligan, President and Chief
"unrelated" (independent of Executive Officer, is the only Board Member
management). who is related.
3. Disclose for each director whether Yes Andrew F. B. Milligan - related - is President
he or she is related, and how that and Chief Executive Officer.
conclusion was reached.
For the remainder of the proposed directors,
none of them or their associates have:
- Been employed by the Company.
- Material contracts with the Company.
<PAGE>
-2-
- Received remuneration from the
Company in excess of directors fees other
than:
David S. Jennings and David R.
Williamson - consulting fees for special
assignments requested by the Board.
Sargent H. Berner - legal fees for services
rendered by DuMoulin Black.
4. (a) Appoint a committee responsible for The Board has yet to establish a Corporate
appointment/assessment of Governance Committee.
directors.
(b) Composed exclusively of outside,
non-management directors, the
majority of whom are unrelated.
5. Implement a process for assessing This is under consideration.
the effectiveness of the Board of
Directors, its committees and
individual directors.
6. Provide orientation and education Yes The President carries out this responsibility.
programs for new directors.
7. The Board of Directors should Yes In view of the Company's diverse operations
examine its size and where and continuing need to access international
appropriate reduce the number of capital markets, the Board of Directors
directors, with a view to improving believes the appropriate size for the Board is
effectiveness. between six and eight members. During 1997
the number of directors has been reduced
from eight to six by attrition.
8. Review compensation of directors Yes Reviewed on an annual basis.
to reflect risk and responsibility.
9. (a) Committees should generally be In view of the relatively small size of the
composed of non-management Company and the specialized nature of its
directors. business, it is not currently practicable to
have all Committees composed of outside
directors. However, the Compensation
Committee is composed of outside directors.
(b) Majority of committee members See 9(a).
should be unrelated.
10. Assign a committee responsible for Not yet appointed.
approach to Corporate Governance.
<PAGE>
-3-
11. Define limits to management's
responsibilities by developing
mandates for:
(a) the Board of Directors. Yes The Board of Directors has overall
responsibility for the management or
supervision of the management of the affairs
of the Company.
(b) the Chief Executive Officer. Yes Terms of reference have been established for
the Chief Executive Officer which includes
implementation of strategic, business and
operational plans.
(c) Board of Directors should approve Yes The business and operational plans of the
Chief Executive Officer's corporate Company are reviewed regularly. These
objectives. plans include the general mandate to optimize
assets in the best interest of shareholders.
12. Establish structures and procedures Not yet implemented.
to ensure the Board of Directors can
function independently of
management.
13. (a) Establish an Audit Committee with The Audit Committee is mandated to:
a specifically defined mandate.
- Consider and review internal controls,
audit functions and the financial
statements.
- Confirm and assure the independence of
the internal operations management and
corporate auditors.
- Review matters that may have a material
impact on financial statements,
compliance, policies, and reports
prepared to manage and monitor
compliance policies.
(b) All members should be non- Yes
management directors.
14. Implement a system to enable Yes This is encouraged where appropriate, with
individual directors to engage approval from the Board of Directors.
outside advisors at corporation
expense.
</TABLE>
<PAGE>
APPENDIX "B"
ITEM 1. STOCK OPTION REPRICINGS
"BE IT RESOLVED, as an ordinary resolution, that the shareholders
hereby approve the repricing of all outstanding stock options of the
Company held by the insiders of the Company as listed below to make
such stock options exerciseable at $0.68 per share.
<TABLE>
<CAPTION>
Shares Under New Exercise
Name Options (#) Price ($/Share) Expiry Date
------------------------------------------------------------------------------
<S> <C> <C> <C>
Andrew F.B. Milligan 500,000 $0.68 Jan 4-2000 (50,000)/
Jan 4-2001 (450,000)
James A. Currie 400,000 $0.68 Feb 27-2002 (150,000)
June 19, 2002 (250,000)
Sargent H. Berner 100,000 $0.68 Jan 4-2001
David S. Jennings 175,000 $0.68 Jan 4-2000 (35,000)
Jan 4-2001 (140,000)
Stephen R. Sopher 100,000 $0.68 Jan 4-2001
Charles J.G. Russell 50,000 $0.68 Jan 4-2000 (50,000)
David R. Williamson 100,000 $0.68 Jan 4-2000 (30,000)
Jan 4-2001 (70,000)
Karyn E. Bachert 35,000 $0.68 Jan 4-2001 (13,000)
Jan 4-2000 (10,000)
Feb 2-2002 (12,000)
Nathan A. Tewalt 150,000 $0.68 Feb 27-2002
Glenn H. Friesen 35,000 $0.68 May 20-2002"
</TABLE>
<PAGE>
PROXY
ANNUAL GENERAL MEETING OF MEMBERS OF
CORNUCOPIA RESOURCES LTD. (THE "COMPANY")
TO BE HELD AT The Pan Pacific Hotel
Level R, Governor General Suite B
#300 - 999 Canada Place
Vancouver, British Columbia
ON THURSDAY, MAY 21, 1998, AT 11:00 AM
THE UNDERSIGNED MEMBER OF THE COMPANY HEREBY APPOINTS, ANDREW F.B. MILLIGAN,
President and a Director of the Company, or failing this person, SARGENT H.
BERNER, a Director of the Company, or in the place of the foregoing,
______________________________ as proxyholder for and on behalf of the Member
with the power of substitution to attend, act and vote for and on behalf of the
Member in respect of all matters that may properly come before the Meeting of
the Members of the Company and at every adjournment thereof, to the same extent
and with the same powers as if the undersigned Member were present at the said
Meeting, or any adjournment thereof.
RESOLUTIONS (For full detail of each item, please see the enclosed Notice of
Meeting and Information Circular (Proxy Statement))
<TABLE>
<CAPTION>
For Withhold
<S> <C> <C>
1. To elect Sargent H. Berner as Director
------- ----------
To elect David S. Jennings as Director
------- ----------
To elect Andrew F.B. Milligan as Director
------- ----------
To elect Charles J.G. Russell as Director
------- ----------
To elect Stephen R. Sopher as Director
------- ----------
To elect David R. Williamson as Director
------- ----------
2. To appoint KPMG as Auditors of the Company
------- ----------
For Against
3. To authorize the Directors to fix the auditors' remuneration
------- ----------
4. To approve the repricing of all stock options held by insiders
of the Company to make them exerciseable at C$0.68 per
share.
------- ----------
5. To transact such other business as may properly come
before the Meeting.
------- ----------
</TABLE>
THE UNDERSIGNED MEMBER HEREBY REVOKES ANY PROXY PREVIOUSLY GIVEN TO ATTEND AND
VOTE AT SAID MEETING.
SIGN HERE:
--------------------------------------------------------
PLEASE PRINT NAME:
--------------------------------------------------------
DATE:
--------------------------------------------------------
NUMBER OF SHARES
REPRESENTED BY PROXY:
--------------------------------------------------------
IF THE NUMBER OF SHARES REPRESENTED BY THIS PROXY FORM IS NOT INDICATED BY THE
MEMBER, THEN IT SHALL BE DEEMED TO REPRESENT THAT NUMBER INDICATED ON THE
AFFIXED LABEL.
THIS PROXY FORM IS NOT VALID UNLESS IT IS SIGNED AND DATED.
SEE IMPORTANT INFORMATION AND INSTRUCTIONS ON REVERSE.
<PAGE>
INSTRUCTIONS FOR COMPLETION OF PROXY
1. THIS PROXY IS SOLICITED BY THE MANAGEMENT OF THE COMPANY.
2. IF SOMEONE OTHER THAN THE MEMBER OF THE COMPANY SIGNS THIS PROXY FORM on
behalf of the named Member of the Company, documentation acceptable to the
Chairman of the Meeting must be deposited with this proxy form,
authorizing the signing person to do such. If the proxy form is not
dated by the Member, it shall be deemed to be dated the date of receipt by
the Company or CIBC Mellon Trust Company.
3. (i) IF A REGISTERED MEMBER WISHES TO ATTEND THE MEETING TO VOTE ON THE
RESOLUTIONS IN PERSON, REGISTER YOUR ATTENDANCE WITH THE COMPANY'S
SCRUTINEERS AT THE MEETING.
(ii) IF THE SECURITIES OF A MEMBER ARE HELD BY A FINANCIAL INSTITUTION AND
THE MEMBER WISHES TO ATTEND THE MEETING TO VOTE ON THE RESOLUTIONS IN
PERSON, cross off the management appointee name or names, insert the
Member's name in the blank space provided, do not indicate a voting
choice by any resolution, sign and date the proxy form and return the
proxy form to the financial institution or its agent. At the Meeting,
a vote will be taken on each of the resolutions as set out on this
proxy form and the Member's vote will be counted at that time.
4. IF A MEMBER CANNOT ATTEND THE MEETING BUT WISHES TO VOTE ON THE
RESOLUTIONS, the Member can APPOINT ANOTHER PERSON, who need not be a
Member of the Company, to vote according to the Member's instructions. To
appoint someone other than the person named, cross off the management
appointee name or names and insert your appointed proxyholder's name in
the space provided, sign and date the proxy form and return the proxy
form. Where no instruction on a resolution is specified by the Member,
this proxy form confers discretionary authority upon the Member's
appointed proxyholder.
5. IF THE MEMBER CANNOT ATTEND THE MEETING BUT WISHES TO VOTE ON THE
RESOLUTIONS and to APPOINT ONE OF THE MANAGEMENT APPOINTEES named, leave
the wording appointing a nominee as shown, sign and date the proxy form
and return the proxy form. Where no instruction is specified by a Member
on a resolution shown on the proxy form, a nominee of management acting as
proxyholder will vote the securities as if the Member had specified an
affirmative vote.
6. The securities represented by this proxy form will be voted or withheld
from voting in accordance with the instructions of the Member on any poll
of a resolution that may be called for and, if the Member specifies a
choice with respect to any matter to be acted upon, the securities will be
voted accordingly. With respect to any amendments or variations in any
of the resolutions shown on the proxy form, or matters which may properly
come before the Meeting, the securities will be voted, if so authorized,
by the proxyholder appointed, as the proxyholder in his/her sole
discretion sees fit.
7. If a registered Member has returned the proxy form, the Member may still
attend the Meeting and vote in person should the Member later decide to do
so. To attend, and vote at the Meeting, the Member must record his/her
attendance with the Company's scrutineers at the Meeting and revoke the
proxy form in writing.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO BE REPRESENTED AT THE MEETING, THIS PROXY FORM MUST BE RECEIVED AT THE
OFFICE OF "CIBC MELLON TRUST COMPANY" BY MAIL OR BY FAX NO LATER THAN FORTY
EIGHT (48) HOURS (EXCLUDING SATURDAYS, SUNDAYS AND HOLIDAYS) PRIOR TO THE TIME
OF THE MEETING, OR ADJOURNMENT THEREOF OR MAY BE ACCEPTED BY THE CHAIRMAN OF
THE MEETING PRIOR TO THE COMMENCEMENT OF THE MEETING. THE MAILING ADDRESS OF
CIBC MELLON TRUST COMPANY IS 1177 WEST HASTINGS STREET, MALL LEVEL, VANCOUVER,
B.C., V6E 2K3 AND ITS FAX NUMBER IS (604) 688-4301.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
