<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
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)
- --------------------------------------------------------------------------------
(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, 355 BURRARD STREET
VANCOUVER, BRITISH COLUMBIA
V6C 2G8
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the extraordinary general meeting (the "Meeting") of
the members ("shareholders") of Cornucopia Resources Ltd. (the "Company") will
be held at The Pan Pacific Hotel, in Governor General Suite B, Level R, 999
Canada Place in Vancouver, British Columbia, on May 19, 1999, at the hour of
10:00 A.M. (Vancouver time) for the following purposes:
1. To receive and consider the report of the directors and the consolidated
financial statements of the Company together with the auditor's report
thereon for the financial year ended December 31, 1998.
2. To fix the number of directors at five.
3. To elect directors for the ensuing year.
4. To appoint the auditor for the ensuing year.
5. To authorize the directors to fix the remuneration to be paid to the
auditor.
6. To consider and, if thought fit, to approve a special resolution approving
the disposition of the Company's 25% interest in the Ivanhoe Venture, to be
implemented by a sale of all of the issued and outstanding shares of
Touchstone Resources Company to Great Basin Gold Ltd., which sale
represents a disposition of substantially all of the undertaking of the
Company, on terms and conditions substantially as set out in the Proxy
Statement accompanying this Notice, subject to approval of all applicable
regulatory authorities, as more fully set forth in the Proxy Statement
accompanying this Notice.
7. To consider and, if thought fit, to approve a special resolution
consolidating all of the Company's common shares without par value from TWO
HUNDRED MILLION (200,000,000) common shares without par value into TWENTY
MILLION (20,000,000) common shares without par value, every TEN (10) common
shares without par value being consolidated into ONE (1) common share
without par value, as more fully set forth in the Proxy Statement
accompanying this Notice.
8. To consider and, if thought fit, to approve an ordinary resolution
increasing the Company's authorized common share capital to its
pre-consolidation level of TWO HUNDRED MILLION (200,000,000) common
shares without par value and altering the Company's Memorandum
accordingly, as more fully set forth in the Proxy Statement accompanying
this Notice.
9. To consider and, if thought fit, approve a special resolution authorizing a
change of the name of the Company to "Stockscape Technologies Ltd." or such
other name as decided upon by the directors and acceptable to the Registrar
of Companies for British Columbia and that the Memorandum of the Company be
altered accordingly.
<PAGE>
-2-
10. To consider and, if thought fit, to approve an ordinary resolution
approving the adoption of a stock option plan, the particulars of which are
more fully set out in the Proxy Statement accompanying this Notice, to
replace the Company's existing stock option plan.
11. To transact such further or other business as may properly come before the
Meeting and any adjournments thereof.
TAKE NOTICE that pursuant to the COMPANY ACT (British Columbia) you may, until
l0:00 a.m. (Vancouver time) on May 17, 1999, give the Company notice of dissent
by registered mail addressed to the Company at Suite 540, 355 Burrard Street,
Vancouver, British Columbia, V6C 2G8, with respect to the special resolution to
approve the disposition of the Company's 25% interest in the Ivanhoe Venture.
As a result of giving a notice of dissent you may, on receiving notice of
intention to act, require the Company to pay you the fair market value of your
shares in accordance with Section 207 of the COMPANY ACT (British Columbia).
Further particulars of your rights of dissent are set out in the Proxy Statement
accompanying this Notice.
The accompanying 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.
If you are unable to attend the Meeting in person, please complete, sign and
date the enclosed form of proxy and return the same in the enclosed return
envelope provided for that purpose within the time and to the location set out
in the form of proxy accompanying this Notice.
DATED this - day of April, 1999.
BY ORDER OF THE BOARD
_____________________________________
ANDREW F. B. MILLIGAN
President and Chief Executive Officer
<PAGE>
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PRELIMINARY PROXY STATEMENT
OF
CORNUCOPIA RESOURCES LTD.
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Currency Exchange Rates . . . . . . . . . . . . . . . . . . . . . . . . . 2
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. . . . . . . . . . . . . . . . 2
PERSONS MAKING THE SOLICITATION. . . . . . . . . . . . . . . . . . . . . . . . 3
VOTING OF PROXIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
REVOCABILITY OF PROXY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF. . . . . . . . . . . . . . . . . . 4
VOTES NECESSARY TO PASS RESOLUTIONS AT THE MEETING . . . . . . . . . . . . . . 4
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SELECTED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 6
MANAGEMENT'S DISCUSSION AND ANALYSIS . . . . . . . . . . . . . . . . . . . . . 7
Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . 9
PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Ivanhoe Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Other Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Dispositions and Investments in Other Properties. . . . . . . . . . . . .13
DIRECTORS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Business Experience and Principal Occupation of Directors, Executive
Officers and Significant Employees . . . . . . . . . . . . . . . . . . .15
Board and Committee Meetings. . . . . . . . . . . . . . . . . . . . . . .16
Certain Relationships and Transactions. . . . . . . . . . . . . . . . . .17
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Summary of Executive Compensation . . . . . . . . . . . . . . . . . . . .17
Summary Compensation Table Annual Compensation. . . . . . . . . . . . . .18
Stock Incentive Transactions During 1998. . . . . . . . . . . . . . . . .18
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End
Option Values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Table of Option and SAR Repricings. . . . . . . . . . . . . . . . . . . .19
Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . .20
Management Agreements and Termination of Employment and
Change-In-Control Arrangements . . . . . . . . . . . . . . . . . . . . .20
Compensation Committee Interlocks and Insider Participation . . . . . . .21
Board of Compensation Committee Report on Executive Compensation. . . . .21
STOCK INCENTIVE PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Share Option Program. . . . . . . . . . . . . . . . . . . . . . . . . . .22
Stock Incentive Plan. . . . . . . . . . . . . . . . . . . . . . . . . . .22
Share Purchase Plan . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Share Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Share Bonus Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Comparative Shareholder Return Performance Graph. . . . . . . . . . . . .24
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS. . . . . . . . . . . . . . . . .25
MANAGEMENT/EMPLOYMENT AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . .25
INDEBTEDNESS TO COMPANY OF DIRECTORS, EXECUTIVE OFFICERS AND
SENIOR OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
TRADING HISTORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
APPOINTMENT OF AUDITOR . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
SHAREHOLDER PROPOSAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
PARTICULARS OF OTHER MATTERS TO BE ACTED UPON. . . . . . . . . . . . . . . . .26
Disposition of Ivanhoe Joint Venture Interest . . . . . . . . . . . . . .26
Material Terms of Sale Agreement . . . . . . . . . . . . . . . . . .27
Reasons for Disposition of Ivanhoe Joint Venture . . . . . . . . . .27
Sale of Undertaking. . . . . . . . . . . . . . . . . . . . . . . . .28
Rights of Dissent. . . . . . . . . . . . . . . . . . . . . . . . . .28
Consolidation and Name Change . . . . . . . . . . . . . . . . . . . . . .28
Reason for Consolidation and Name Change . . . . . . . . . . . . . .29
Adoption of New Stock Incentive Plan. . . . . . . . . . . . . . . . . . .30
Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
</TABLE>
<PAGE>
-(ii)-
APPENDIX "A" - STOCKSCAPE TECHNOLOGIES INC.
APPENDIX "B" - RESOLUTIONS
APPENDIX "C" - SECTION 207 OF THE COMPANY ACT
APPENDIX "D" - PRO FORMA FINANCIAL STATEMENTS AT DECEMBER 31, 1998
APPENDIX "E" - STOCKSCAPE TECHNOLOGIES LTD. FINANCIAL STATEMENTS AT
SEPTEMBER 30, 1998
APPENDIX "F" - CORNUCOPIA RESOURCES LTD. FINANCIAL STATEMENTS AT
DECEMBER 31, 1998, COMPARED WITH DECEMBER 31, 1997
APPENDIX "G" - STOCK INCENTIVE PLAN
<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 - , 1999, except as otherwise indicated)
GENERAL INFORMATION
This 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 and Extraordinary
General Meeting (the "Meeting") of the shareholders to be held at 11:00 a.m.
(Vancouver time) on May 19, 1999, 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 12, 1999, and delivered to the British Columbia Superintendent of
Brokers in accordance with Section 111 of the COMPANY ACT (British Columbia).
This 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 16,
1999.
April 2, 1999 has been fixed as the record date for the determination of
shareholders entitled to notice of and to vote at the Meeting and at any
adjournment thereof. As at April 2, 1999, there were - registered
shareholders and 41,591,834 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 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 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 Proxy
Statement. This 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 ensure they will be voted, proxies must be received at the office
of CIBC Mellon Trust Company at Mall Level, 1177 West Hastings Street,
Vancouver, British Columbia, V6E 2K3 not less than 48 hours prior to the 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.
<PAGE>
-2-
All references in this Proxy Statement to dollars or $ are to United States
dollars, unless otherwise specified. References to C$ are to Canadian dollars.
CURRENCY EXCHANGE RATES
Unless otherwise indicated, all currency amounts herein are stated in United
States dollars, with the exception of the disclosure contained in Appendix "A"
to this Proxy Statement regarding Stockscape Technologies Ltd., which is in
Canadian 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 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rate at December 31, 1.5333 1.4305 1.3706 1.3640 1.4018
- --------------------------------------------------------------------------------
Average Annual Rate 1.4831 1.3844 1.3630 1.3724 1.3659
- --------------------------------------------------------------------------------
High During Year 1.5845 1.4399 1.3865 1.4267 1.4090
- --------------------------------------------------------------------------------
Low During Year 1.4040 1.3345 1.3287 1.3275 1.3085
- --------------------------------------------------------------------------------
</TABLE>
The closing rate on March 22, 1999 for United States dollars was $1.5070.
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 quoted on the Nasd OTC Bulletin Board (OTCBB) and
until delisting on March 31, 1999, were posted and called for trading on the
Toronto Stock Exchange. 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.
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,
1998;
2. The Company's Annual Report to the shareholders for the year ended
December 31, 1998;
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998;
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998; and
5. The Company's Current Report on Form 8-K dated March 11, 1999.
<PAGE>
-3-
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 Proxy Statement shall
be deemed to be incorporated by reference into this 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 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 Proxy Statement.
The Company hereby undertakes to provide without charge to each person to
whom this 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
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 at the Company's e-mail address at
http://[email protected]. In order to ensure timely delivery
of the documents, any request should be made not later than 7 business days
prior to the date of the Meeting.
PERSONS MAKING THE SOLICITATION
This 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.
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.
<PAGE>
-4-
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. As at April 2, 1999,
41,591,834 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, 1999 will be
entitled to receive notice of and vote at the Meeting.
To the knowledge of the directors and senior officers of the Company, the
only 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 is Vista Gold Corp., of Denver,
Colorado, which holds 2,777,777 Common Shares representing 6.68% of the
shares presently issued and outstanding. On completion of the acquisition of
Stockscape Technologies Ltd., as disclosed under "Particulars of Other
Matters to be Acted Upon", A. R. Rule Investments B.C. Ltd. will hold shares
carrying more than 55% 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
(6 persons) is 102,200 shares, representing less than 1% of the Common Shares
issued and outstanding. This figure does not include - Common Shares of the
Company which are issuable upon exercise of stock options granted under the
new Stock Incentive Plan for which shareholder approval will be sought at the
Meeting. See "Share Option Program", "Compensation of Directors" and
"Particulars of Other Matters to be Acted Upon". 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 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 resolutions referred to in the accompanying Notice
of Meeting and a 75% majority of the votes cast at the Meeting (in person or
by proxy) is required in order to pass the special resolutions referred to in
the accompanying Notice of Meeting.
THE COMPANY
ORGANIZATION AND CURRENT STATUS
The Company was organized on November 14, 1985, under the laws of the Province
of British Columbia, Canada by the statutory amalgamation of Cyrano Resources
Inc. and Cornucopia Resources Ltd., two British Columbia companies which were
incorporated in 1980 and 1982, respectively. While historically the Company has
been involved in the exploration and development of precious metal deposits, the
Company is currently undergoing a major reorganization of its business and
capital. See "Particulars of Other Matters to be Acted Upon". At present the
Company's principal and only active mining asset is its 25% interest in the
Ivanhoe Venture in Nevada's Carlin Trend, which will be sold as part of the
reorganization. The Company also retains a 100% interest in certain mineral
claims located in southeast Alaska and direct or indirect interests in other
mineral properties. See "Properties of the Company".
<PAGE>
-5-
The Company conducts its business affairs in the United States through its
wholly-owned subsidiary, Cornucopia Resources Inc., a Nevada corporation, and
through the latter company's wholly-owned subsidiaries: Touchstone Resources
Company ("Touchstone"), a Nevada corporation; and Red Mountain Resources, Inc.
("Red Mountain"), a Colorado corporation. The following chart sets forth the
organization of the Company and its direct and indirect subsidiaries:
-------------------------
CORNUCOPIA RESOURCES LTD.
NASD OTC Bulletin Board
(British Columbia)
-------------------------
-------------------------
100%
CORNUCOPIA RESOURCES INC.
(Nevada)
-------------------------
- ---------------------------- ----------------------------
100% 100%
TOUCHSTONE RESOURCES COMPANY RED MOUNTAIN RESOURCES, INC.
(Nevada)
(Colorado)
(Sold on March 2, 1999)
- ---------------------------- ----------------------------
HISTORICAL DEVELOPMENT
Since its inception, the Company has been primarily involved in the exploration
and development of precious metal deposits in the United States. The Company's
principal project since 1987 has been the exploration, development and
subsequent production of gold at the Ivanhoe property in the Carlin Trend,
Nevada. In late 1993, the Company expanded its exploration activities to
include West Africa. During 1995 and 1996, the Company's primary focus was on
the Mineral Ridge Mine in Silver Peak, Nevada and exploration activities on
three concessions in West Africa through an affiliate. After an unsuccessful
attempt to acquire mining concessions in Zaire, the Company decided in late
1996, to concentrate most of its efforts on North American properties.
On October 21, 1998, the Company sold its interest in the Mineral Ridge Mine by
a sale of all of the shares of Mineral Ridge Resources Inc., a Nevada
corporation wholly-owned by the Company, to Vista Gold Corp., ("Vista Gold") in
exchange for $250,000, by way of private placement by Vista Gold, shares of
Vista Gold, plus the assumption by Vista Gold of all the liabilities of the
Company with respect to the mine. See "Dispositions and Investments in Other
Properties".
In 1992, the Company sold half of its 50% working interest in the Ivanhoe
Venture to Newmont Mining Corporation ("Newmont"), thus leaving the Company with
a 25% interest in the Ivanhoe Venture. Newmont, by separate agreement, acquired
the remaining 50% interest in the Ivanhoe Venture. Mining of the Hollister
deposit on the Ivanhoe Property ceased in May 1992, but residual leaching of the
heap continued to June 1996, and reclamation activities continued thereafter.
In August, 1997, Newmont's 75% interest in the Ivanhoe Venture was transferred
from Newmont to Great Basin Gold Ltd. ("Great Basin"), and the Company, through
Touchstone, entered into a Venture Agreement with Great Basin. Great Basin is a
British Columbia reporting company the shares of which are listed for trading on
the Vancouver Stock Exchange in Canada and the OTCBB in the United States.
On March 2, 1999, as part of the Company's reorganization, the Company entered
into an agreement with Great Basin pursuant to which the Company agreed to sell
to Great Basin, subject to shareholder
<PAGE>
-6-
approval, all of the issued and outstanding shares of Touchstone. Because the
Company's interest in the Ivanhoe Venture is its sole remaining active mining
asset, the sale of that asset represents a major change in the status of the
Company as a mining entity and a sale of substantially all of the Company's
present undertaking. Details of the agreement are disclosed under
"Particulars of Other Matters to be Acted Upon".
NEW BUSINESS
Concurrent with the disposition of its remaining active mining asset the
Company plans to acquire a private British Columbia company, "Stockscape
Technologies Ltd.", ("Stockscape") which is a privately-held Internet
investment research provider in its third year of operations. Stockscape
maintains a home page at www.stockscape.com with links to other web pages
that contain up-to-date information on financial markets, including
information on specific sectors of the market, and new developments
concerning public companies. Stockscape's customer base comprises publicly
traded companies which subscribe for Stockscape's services. Stockscape
maintains web pages organized by market sector and works with subscribing
companies to post and maintain up-to-date information concerning such
companies as well as investment research available from other sources.
Stockscape's present customer base is primarily composed of resource
companies, but management is seeking to expand beyond the resource sector.
Stockscape offers access to all of its web pages free of charge to Internet
users and derives its revenue from fees paid by subscribing companies.
Stockscape hopes to generate additional revenue from the sale of advertising
on its web pages. Stockscape is at a start-up stage in its development, has
not generated operating profits to date and the development costs it has
incurred are carried on its deficit account.
More detailed disclosure on Stockscape and its business is provided in
Appendix "A" to this Proxy Statement. As part of the reorganization, and one
of the conditions precedent to completion of the acquisition by the Company
of Stockscape, the Company proposes to consolidate its issued and outstanding
common shares on a 10-for-1 basis. See "Particulars of Other Matters to be
Acted Upon".
SELECTED HISTORICAL FINANCIAL INFORMATION
The following selected historical financial information has been derived from
the consolidated financial statements of the Company for the periods indicated
and should be read in conjunction with the consolidated financial statements and
notes in Appendix "F" and in Appendix "D". The unaudited pro forma consolidated
information is as at December 31, 1998, after giving effect to the proposed
acquisition of Stockscape.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
(2)
---------------------------
PRO FORMA CONSOLIDATED AS
AT DECEMBER 31, 1998 1998 1997
(UNAUDITED)(1) ---------------------------
<S> <C> <C> <C>
OPERATING DATA
Revenues 152,317 70,394 71,138
Gross profit (loss) from operations (68,306) -- 19,433
Interest and other income 986 70,394 51,705
Income (loss) (270,424) (707,607) (18,464,625)
Income (loss) per share (.01) (.02) (.49)
Weighted average number of common shares outstanding 18,159,483 39,291,535 37,514,204
<PAGE>
-7-
BALANCE SHEET AND OTHER DATA
(AT PERIOD END)
Total assets 5,307,065 2,271,874 18,357,596
Book Value Per Share .29 .05 .07
Working capital 1,585,044 284,001 (13,970,445)
Provision for site restoration -- -- 172,908
Capital Lease Obligations -- -- 42,436
Shareholders' Equity 5,101,804 2,170,597 2,588,145
Increase (decrease) in cash (1,389,842) (892,783) (2,873,581)
</TABLE>
(1) The pro forma financial information for the fiscal year ended December 31,
1998, is prepared on the basis of accounting principles generally accepted
in Canada. Significant differences to accounting principles generally
accepted in the United States of America are explained in note 7 of the
consolidated financial statements of Cornucopia Resources Ltd. As the
proposed transaction will result in the former shareholders of Stockscape
owning greater than 50% of the Company's common shares, accounting
principles applicable to reverse takeovers have been used in the
compilation of the pro forma consolidated balance sheet to record the
acquisition by Stockscape of Cornucopia using the purchase method, with
Cornucopia deemed to be the purchased entity.
(2) As at the date of this preliminary Proxy Statement the Company's audit for
fiscal 1998 is in progress. Accordingly, the selected financial data for
1998 is unaudited. Audited financial data and audited consolidated
financial statements will be included in the definitive Proxy Statement
when filed and mailed to shareholders.
There have been no changes in accounting methods over the five year period prior
to the Company's most recent year end.
The Company uses the U.S. dollar as its reporting currency. Monetary assets and
liabilities are translated at the exchange rate in effect at the date of the
balance sheet and non-monetary assets and liabilities at the rate in effect on
the dates of the related transactions. Revenue and expenses are translated at
rates approximating exchange rates at the time of transactions.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OVERVIEW
Since its incorporation the Company's primary focus has been the exploration,
development and mining of precious metal deposits. On March 2, 1999 a major
reorganization was announced which, if approved by shareholders, will result in
a change in the Company's business focus and a restructuring of the Company's
remaining active mining property interest into an investment in an arm's length
entity.
On October 21, 1998, the Company sold its 100% interest in the Mineral Ridge
mine by a sale of all of the shares of Mineral Ridge, a Nevada corporation
wholly-owned by the Company, to Vista Gold . As consideration, the Company
received 1,562,500 Vista Gold common shares, Vista Gold subscribed to a private
placement of 2,777,777 common shares of the Company for a deemed value of
$250,000 and assumed all of the liabilities of the Company with respect to the
mine. See "The Company - Historical Development".
At present, the Company's principal and only active mining asset is its interest
in the Ivanhoe property in Nevada's Carlin Trend. As part of the reorganization
of the Company an agreement dated March 2, 1999 was entered into with Great
Basin pursuant to which the Company will sell its wholly-owned subsidiary
Touchstone, which holds the Ivanhoe property, to Great Basin, in exchange for
2,750,000 common shares and 250,000 share purchase warrants of Great Basin.
As part of its proposed reorganization the Company plans to complete acquisition
of Stockscape, a British Columbia company, a privately-held Internet investment
research provider with an established website at Stockscape.com. As a condition
precedent to the Stockscape acquisition the Company will be required to
consolidate its issued and outstanding Common Shares on a 10-for-1 basis. At
the annual
<PAGE>
-8-
general meeting shareholders will be asked to pass a special resolution
approving the consolidation. This resolution must be passed by a majority of
75% of the votes cast on the resolution: See "The Company" and "Particulars
of Other Matters to be Acted Upon".
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998, COMPARED TO YEAR ENDED DECEMBER 31, 1997
REVENUES
Revenues from interest and other income were $70,394 and $51,705 in the years
ended December 31, 1998 and 1997, respectively. The increase was due to an
accrual of investment income on the reclamation bond for Mineral Ridge.
During the year ended December 31, 1998, revenues from dore shipments from
the Mineral Ridge mine were $3.1 million. These amounts continued to be
recorded as an offset to capital expenditures as the Mineral Ridge mine had
not yet met tests that qualified the project as being in full commercial
production for accounting purposes. As a result, no amounts from the sale of
gold and silver from the Mineral Ridge mine have been included under revenue
on the Consolidated Statement of Loss and Deficit.
EXPENSES
General and administrative expenses declined to $968,455 in the year ended
December 31, 1998, from $1,987,525 for the year ended December 31, 1997. The
decrease was due to reduction in the Vancouver, British Columbia, office
staff costs and reductions in other expense areas such as investor relations,
rent, insurance and travel. Significant reductions were made in 1998 in the
general and administrative expenses of Mineral Ridge but, as discussed above,
these items were capitalized and are therefore not reported on the
Consolidated Statement of Loss and Deficit.
During the year 1997, the Company recorded an expense of $476,341 due to the
write down of its investment in Carlin Resources Corp. ("Carlin") shares. In
1998 the Company sold all of its share holdings in Carlin and recorded a
gain thereon of $25,177. At December 31, 1998, the Company recorded a
$15,695 write down of its investment in Vista Gold shares to adjust to year
end market value.
In October 1998 the Company sold Mineral Ridge and realized a $180,972 gain
on sale. At December 31, 1997, the Company recorded a write down of $16
million against the Mineral Ridge mine calculated using an undiscounted cash
flow analysis based on gold price assumptions prevailing at the time.
The equity method of accounting for the investment in Carlin Resources was
applicable for a portion of the period ended December 31, 1997, and a loss of
$71,897 was recorded thereunder. No corresponding loss was applicable to the
year ended December 31, 1998.
LOSS PER COMMON SHARE
The Company's net loss for the year ended December 31, 1998, was $707,607
compared to a net loss of $2,044,217 in the same period in 1997. The net
profit for the fourth quarter 1998, was $64,127 compared to net loss of
$17,662,514 for the fourth quarter 1997.
The weighted average number of common shares for the year ended December 31,
1998, was 39.3 million which results in a loss of $0.02 per share.
<PAGE>
-9-
LIQUIDITY AND CAPITAL RESOURCES
A low gold price and problems originating in 1997 with construction delays
and water supply at Mineral Ridge led to covenant breaches and repayment
defaults under the Company's mine debt financing facility and the
reclassification of the entire loan as a current liability. These events led
the Company to report a significant working capital deficiency since
September 1997.
The agreement with Vista Gold completing the sale of the Company's
wholly-owned subsidiary Mineral Ridge included agreements for the release of
all of the Company's obligations under the $14.4 million Mine Debt Financing
Facility, the $1.3 million account payable to its mining contractor and $0.6
million holdback payable to its construction contractor.
The Company had positive working capital of $284,101 at December 31, 1998
compared to a $13,970,445 working capital deficiency at December 31, 1997.
Cash and cash equivalents decreased by a net amount of $892,783 in the year
ended December 31, 1998. Significant uses of cash were to fund accounts
payable reductions, net capital expenditures on resource assets at the
Mineral Ridge mine, and for operations, primarily general and administrative
expenses and staff costs. These expenditures were financed by a reduction in
accounts receivable, the private placement by Vista Gold and by drawing down
cash balances.
IVANHOE JOINT VENTURE
Since the sale of Mineral Ridge, the Company has focused its activities on
the Ivanhoe property where its joint venture partner Great Basin has earned a
75% interest under the Venture Agreement. After the earn-in by Great Basin
the Company would be expected to commit to exploration budgets set by Great
Basin which would have resulted in cash calls. Provisions in the Venture
Agreement would allow the Company the option of not participating in
exploration program budgets but at the cost of dilution of its interest. For
example, by opting out of the proposed programs for exploration and
reclamation for 1999, the Company would have suffered dilution from a 25%
interest to a 19% interest. The Company has entered into a Sale Agreement
dated March 2, 1999, with Great Basin pursuant to which the Company will sell
its wholly-owned subsidiary, Touchstone, to Great Basin in exchange for
shares of Great Basin. See "Particulars of Other Matters to be Acted Upon".
ACQUISITION OF STOCKSCAPE
Under the terms of a Share Exchange Agreement to be entered into between the
Company and the shareholders of Stockscape, the Company will acquire all of
the issued and outstanding shares of Stockscape by issuing 10,000,000
post-consolidation Common Shares of the Company (the "Payment Shares"). The
parties have agreed that the Payment Shares will be issued for a deemed value
of C$0.50 per share making the overall deemed value of the transaction C$5
million. Both the shareholders of Stockscape and Stockscape are entirely at
arm's length to the Company. The acquisition of Stockscape is conditional
upon the completion of due diligence by both parties and the execution and
delivery of definitive documentation. The Payment Shares will be subject to
trading restrictions under U.S. securities legislation for a minimum of two
years.
In its third year of operation, Stockscape has financed its development and
operations by equity financing and a loan payable to one of its shareholders.
As Stockscape's policy is to expense business and software development costs,
a deficit of C$813,043 has accumulated as at December 31, 1998. Business and
software development costs over the upcoming twenty four months are expected
to be financed from revenues and from equity financing issued by the combined
entity. The acquisition of Stockscape is also subject to conditions
precedent, one of which is the commitment for a financing of up to
C$2,000,000 and representing 4,000,000 units (the "Units"), each Unit
consisting of one common
<PAGE>
-10-
share and two share purchase warrants of the Company, to be completed at the
time of closing of the acquisition of Stockscape.
RISKS AND UNCERTAINTIES
There can be no certainty that the Company could successfully pursue
financing options or rely on joint venture partners to supply the funds
required to explore and develop its properties. There can be no assurance
that the Company will be successful in obtaining approvals for the proposed
major reorganization or that the terms of any financing obtained will be
favorable. The Company has no unused banking commitments or lines of credit
which could provide significant increases in its working capital.
In the event that the sale of Touchstone is not approved, certain obligations
to reclaim the Ivanhoe property will continue to be the responsibility of the
Company. Reclamation on the Ivanhoe Property is being carried out by Newmont
and as at December 31, 1998, $5,495,093 was spent. Currently, under a three
party agreement between Newmont, Touchstone and Great Basin, reclamation
expenses are shared one third by each party. Under the Venture Agreement, if
the budget exceeds $6,000,000, Newmont will contribute 75%, Great Basin
18.75% and the Company 6.25% of the remaining excess reclamation costs.
NEW BUSINESS
For risk factors relating to and the effect of the acquisition of Stockscape
on shareholder liquidity reference should be made to "Risk Factors" and
"Liquidity and Capital Resources" in Appendix "A" attached to this Proxy
Statement.
MARKET FOR SECURITIES
The common shares of the Company commenced trading on the OTCBB (Symbol
CNPGF) effective October 29, 1998. Cornucopia remains a reporting company
under the United States SEC rules. The Company has made application to the
Toronto Stock Exchange (TSE) to delist its Common Shares because after giving
effect to the reorganization the Company would not have met the continued
listing requirements. The TSE has advised the Company that the shares will
be delisted following the close of business on March 31, 1999.
YEAR 2000 COMPUTER RISK
The Company uses current or near current versions of software by major
developers for office productivity, accounting, internet and database
applications. To gain further certainty as to year 2000 compliance, the
Company will either purchase upgrades which are currently available or obtain
published statements by these software developers assuring that these
programs are year 2000 compliant.
PROPERTIES
IVANHOE PROPERTY
OWNERSHIP, AND LOCATION
On December 31, 1998, the Company owned a 25% interest in the Ivanhoe
Property through its wholly-owned subsidiary, Touchstone. On March 2, 1999,
the Company entered into an agreement with Great Basin whereby Great Basin
agreed to acquire all of the outstanding shares of Touchstone in exchange for
shares and share purchase warrants of Great Basin. The transaction is
subject to regulatory approval and shareholder approval and upon such
approvals the Company will have no further direct interest in the Ivanhoe
Property. See "Particulars of Other Matters to be Acted Upon".
<PAGE>
-11-
The Ivanhoe Property, which is approximately 50 miles northeast of Battle
Mountain, Nevada, is located at the northwestern end of the Carlin Trend in
an area between Little Antelope Creek on the south to the Midas Trough on the
north. The property currently consists of 510 unpatented mining claims and
covers approximately 9,231 acres. Access to the property is available either
via an eleven mile road from Midas, a county road from Battle Mountain, or a
road from the Dee Mine six miles southeast of the property. The Ivanhoe
Venture's interest in the property is by way of option agreements, mining
leases, operating rights agreements and staked mining claims. Pursuant to an
agreement dated August 13, 1997, Great Basin has earned a 75% interest in the
property by incurring expenditures totaling $5 million.
PROPERTY HISTORY
In early 1995, Newmont completed an in-house pre-feasibility analysis of the
Hollister gold deposit and concluded that the known deposits did not meet
Newmont's size and investment criteria for near-term development.
As a result of the above, on July 11, 1995, Newmont advised the Company of
its decision to withdraw from the Ivanhoe Venture. Upon notification by
Newmont of its decision to withdraw, the Company entered into an option
agreement with Newmont on the same date to acquire Newmont's interest in the
Ivanhoe Property. Thereafter, the Company entered into an agreement dated
August 13, 1997 with Great Basin Gold Inc. whereby Great Basin may earn up to
a 75% interest in the Ivanhoe Property by paying $1 million to Newmont (paid)
as a contribution to the reclamation fund, spending $2.8 million by August
12, 1999, on exploration and related costs and by purchasing 1.1 million
units in the capital stock of Cornucopia Resources Ltd. for C$1.00 per unit
(completed). The reclamation fund consisted of $4.5 million of which
$3,000,000 has been contributed by Newmont, $500,000 by the Company and
$1,000,000 by Great Basin. Any eventual reclamation costs incurred on the
Ivanhoe Property greater than $4,500,000 are to be funded as to $500,000 each
by Newmont, Great Basin and the Company. Further overruns, if any, are to be
funded as to 75% by Newmont, 18.75% by Great Basin and 6.25% by the Company.
Under the terms of the agreement with Great Basin dated March 2, 1999, Great
Basin will now meet all reclamation costs attributed to Touchstone in excess
of the original contribution of $500,000.
GEOLOGY
The Carlin Trend, which includes the Ivanhoe Project at its northern end, is
a northwest-trending, 50 mile long metallogenic corridor. The key ore
controls for Carlin-type gold deposits are a combination of favorable
structural preparation of favorable host rocks. In addition, because of the
postulated role of magmatic activity as a heat and/or metal source, the
occurrence of associated intrusive rocks is another important geologic factor
for the Carlin Trend gold deposits.
Favorable Carlin Trend geologic conditions are observed at the Ivanhoe
Property. The Ivanhoe Property geologic units include Lower Paleozoic
sedimentary and mid-Tertiary intrusive rocks covered by a thin veneer of
Tertiary volcanic and volcano-sedimentary rocks. At Ivanhoe and on the rest
of the Carlin Trend, the best host rocks for gold mineralization occur in the
Lower Paleozoic stratigraphy below the Tertiary rocks. Structure is an
important ore control, and typically occurs at the Ivanhoe Property as
high-angle faults with east-west, north-northwest and northeast trends. The
intersection zones of these faults are especially critical controls for gold
mineralization.
Ivanhoe contains at least two areas known to host significant gold
mineralization. The Hollister mine area has a large low-grade gold system
associated with the Tertiary volcanic rocks and underlying upper plate
Ordovician Valmy Formation quartzites and cherts. This mineralization is
interpreted to be a near surface leakage from a deeper high grade gold system
below. A 1994 core intercept in the west Hollister area by Newmont of 2.4
feet grading 33.541 oz. Au/ton, is a high grade feeder vein to the overlying
volcanic hosted disseminated gold mineralization. There are at least 34 such
historic high grade
<PAGE>
-12-
intercepts in the Valmy Formation requiring follow-up drilling to delineate
the Hollister feeder vein system.
The 40 mg Hatter Stock represents the second target area and has another
significant, although less well studied, leakage anomaly associated with it
and the surrounding Valmy Formation. Assays from younger cross cutting veins
in the Hatter intrusive include 10 feet of 0.731 oz. Au/ton and 20 feet of
0.736 Au/ton and Valmy rocks low-grade intercepts such as 525 feet at 0.012
oz. Au/ton in brittle shear or Fault zones on the west flank of the stock
host.
IVANHOE EXPLORATION PROGRAM
The primary goal of the exploration program at Ivanhoe is to locate high
grade gold deposits similar to Franco-Nevada's Ken Snyder Mine to the
northwest and Barrick's Meikle Mine to the southeast which are mineable by
underground methods. As well, exploration will be based on comparisons to
the Goldstrike area (ie. Post-Betze and associated deposits) and the Ken
Snyder Mine at Midas further northwest on the Carlin Trend. The comparison
with Goldstrike is based upon similarities in the size and tenor of the gold
leakage anomalies in the Hatter areas; ore controlling structures; Lower
Paleozoic stratigraphy; and association of mineralization with an
intermediate composition intrusive body (ie. the Hatter stock). The
comparison with Ken Snyder is based on the similarity in style and mineralogy
of feeder veins intersected beneath the Hollister deposit to those at the
Midas discovery.
Great Basin has identified two primary exploration targets, the Hollister and
Hatter areas, to explore for modest depth feeder veins in the Valmy Formation
below the Hollister deposit and deeper, lower plate targets below both the
Hollister and Hatter target areas. To date, Great Basin has completed new,
detailed surface mapping, and extensive new cross section construction that
has defined key ore controlling vein structures beneath Hollister.
An initial drilling program at Hollister in 1998 tested one of these vein
systems containing a 1994 Newmont core intercept of (+) 30 Opt gold. Using
a N40E oriented fence of six vertical core holes on 25 foot spacings, the
drilling cross-cut high-grade intercepts in the northern Clementine area of
the deposit. Hole IH-004 pierced a very high grade vein zone of 4.6 feet
grading 11.129 ounces gold per ton and 103.4 ounces silver per ton within a
thicker interval of 10.6 feet assaying 4.964 Opt gold per ton and 47.8 ounces
silver per ton. Another intercept of 12.6 feet grading 1.635 ounces gold and
39.0 ounces silver was discovered downhole.
The early-1998 discovery of Ken Snyder-style veining in the Valmy Formation
at Hollister has made this target a high priority for the upcoming
exploration program. The continuing Ivanhoe exploration program will focus
on testing this high grade gold-silver system in upper plate Valmy Formation
in the Hollister area. Drilling will build on relogging of drill holes and
geocompilation of the vein system geometry.
During the 1999 exploration season Great Basin plans a $1.5 to 2.5 million
exploration program to build on reinterpretation of the multiple vein
intercepts in the Hollister area, by drilling angled core holes to establish
the presence and continuity of this high-grade gold-silver system. Drill
holes will test projected intersections of major ore-controlling northeast,
east and north trending fault zones. Depending on results, 15 to 25 angled
core holes with an average length of 1,000 feet are planned for 1999.
OTHER PROPERTIES
YAKOBI ISLAND PROPERTY
The Yakobi Island property is located approximately 70 miles west of Juneau
in the Sitka Recording District, at the northernmost end of the Alexander
Archipelago of Southeast Alaska. The property
<PAGE>
-13-
consisted of 39 unpatented federal claims and 11 patented federal claims at
Bohemia Basin. It also includes a 1.95 acre Alaska Tidelands Lease which
covers a 200-foot dock at the Lower Camp access to Bohemia Basin. The Company
held an undivided 100 percent interest in certain patented and unpatented
mineral claims on the Yakobi Island property. In August 1997, all rental
payments on the unpatented claims held by the Company on this property were
allowed to lapse. The Company intends to hold its interest in the patented
claims and maintain the tideland lease for use of the dock at Bohemia Basin.
The Company is in discussions with a Land Trust for the sale of the Yakobi
Island properties. If concluded, the agreement would provide for clean up
activities on the site and proceeds to the Company for the 155 acre property
at appraised value, less an administrative fee payable to the Land Trust.
SOUTH MONITOR PROPERTY
The South Monitor property, which consists of 147 unpatented mining claims,
is located in west-central Nevada between the Ellendale and Hannapah Mining
Districts at the southern end of the Monitor Range, Nye County. The property
is held by the Company and Gold Exploration General Partnership, whose
general partner is Nassau Ltd. Each partner holds a 50% interest in the
property. The partners have elected to farm the property out to larger
exploration companies who have the resources to fully explore the property's
mineral potential.
The South Monitor property is without a known body of commercial ore and the
Company's activities on the property to date have been exploratory in nature.
RED MOUNTAIN PROPERTY
The Company acquired this property as a result of the amalgamation of
Cornucopia Resources Ltd. and Cyrano Resources Inc. in November 1985.
The Red Mountain property, situated approximately 13 miles from Silverton and
Ouray, Colorado, consisted of 48 patented mining claims and 51 unpatented
lode claims in Ouray and San Juan Counties in Southwestern Colorado. The
Company determined that it was not interested in retaining the property and
executed a quit-claim effective September 27, 1989, which reconveyed its
interest in the property to Frank W. Baumgartner and Sial Exploration Inc.
The Division of Minerals and Geology (previously the Colorado Mined Land
Reclamation Division) inspected the property in 1992 and 1993 and concluded
that a full release of funds in trust of $60,000 was dependent on further
evaluation of the revegetation on the property. In 1994, weather conditions
prohibited inspection by the authorities. Another inspection was performed
in 1995 when it was determined that further monitoring of vegetation was
required prior to full release of the reclamation bond. In 1996, the Company
received a release from Baumgartner for $50,000 of the funds held in trust.
No inspection was performed in 1997 or 1998 and the $10,000 balance will be
held in trust by the Forestry Department until restoration of the land is
considered complete.
DISPOSITIONS AND INVESTMENTS IN OTHER PROPERTIES
MINERAL RIDGE MINE
The Mineral Ridge Mine was 100% owned by the Company until its sale to Vista
Gold Corp. ("Vista Gold") on October 21, 1998, for consideration of $250,000
and 1,562,500 common shares of Vista at a deemed value of $250,000, plus the
assumption by Vista Gold of all of the liabilities of the Company with
respect to the mine. The Mineral Ridge properties are located near the town
of Silver Peak, approximately 35 miles (56.35 kilometers) southwest of
Tonopah, in Esmeralda County, Nevada. The
<PAGE>
-14-
3,130 acre (1,266 hectares) land package consists of a total of 195 claims on
four contiguous parcels of land in Esmeralda County (collectively referred to
as the "Mineral Ridge Mine").
CARLIN RESOURCES CORP.
As at January 1, 1997 the Company held an aggregate of 3,635,639 common
shares of Carlin Resources Corp., ("Carlin") a Vancouver Stock Exchange
listed company. Effective April 29, 1997, the Company sold 2,100,000 shares
of Carlin through a broker for net proceeds of C $0.59 per share. The broker
was appointed to sell the balance of the 1,535,639 common shares of Carlin.
As at December 31, 1997, the Company held 14.6% or 1,561,139 shares of
Carlin. After a writedown of $476,341 in 1997, the carrying value of the
investment in Carlin was reduced to nil. An outstanding inter-company
advance of approximately $202,700 (C $290,000) included in accounts
receivable on the balance sheet at its estimated realizable value as at
December 31, 1997, was recovered in 1998 together with 1,000,000 Carlin
shares. During the first and second quarters of 1998, the Company endeavored
unsuccessfully to find a buyer for its block of 2,561,139 Carlin shares. In
order to raise funds for working capital, the shares were sold to two
directors of the Company in September, 1998.
DIRECTORS OF THE COMPANY
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 58 October 12, 10,000(3) LESS THAN 1%
Vancouver, B.C., 1990
Canada
Andrew F.B. Milligan Director, 74 November 17, 47,200(2) LESS THAN 1%
Vancouver, B.C., President and 1986
Canada Chief Executive
Officer(4)
David R. Williamson Director 57 October 16, Nil(3) 0%
London, England 1989
John J. Brown Proposed 66 N/A Nil 0%
Vancouver, B.C., Director
Canada
A. Murray Sinclair Proposed 37 N/A Nil 0%
Vancouver, B.C., Director
Canada
</TABLE>
(1) Based upon information furnished to the Company by individual directors.
Unless otherwise indicated, such shares are held directly.
<PAGE>
-15-
(2) Does not include - shares issuable upon exercise of an incentive stock
options granted under a Plan subject to shareholder approval.
(3) Does not include - shares issuable upon exercise of an incentive stock
option granted under a Plan subject to shareholder approval.
BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATION OF DIRECTORS,
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The present and principal occupations during the last five years of the
Company's directors and executive officers 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.
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, 1999 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.
A. MURRAY SINCLAIR is a partner of Quest Management Corp., a private
management company and of Quest Ventures., a private merchant banking
company, both of which positions he has held since 1996. Previously, Mr.
Sinclair was managing director of Quest Oil & Gas Inc., an oil and gas
company the shares of which are listed on the Toronto Stock Exchange. He
holds a Bachelor of Commerce degree from Queen's University (1984). Mr.
Sinclair is also a director of the following reporting companies: Arapaho
Capital Corp., Arlington Ventures Ltd., Belvedere Resources Ltd., Brandale
Food Services Inc., Breakwater Resources Ltd., Brimstone Gold Corp., Can West
Exploration Inc., Magnifoam Technology Inc., Marchwell Capital Corp., New
Inca Gold Ltd., Pickle Crow Resources Inc., Profco Resources Ltd., Rhodelta
Software Inc., Roseland Resources Ltd., RTO Enterprises Inc., Santa Cruz
Minerals Inc., Ventel, Inc.
JOHN J. BROWN, is the President and sole director of Stockscape Technologies
Ltd. A chartered accountant with a Bachelor of Commerce degree, Mr. Brown is
also a Director and the President of Pacific Opportunity Company Ltd., a
financial consulting and merchant banking firm in Vancouver, Canada. He is a
director and chief financial officer of KeyWest Energy Corporation, a
director of United States Lime & Minerals, Inc., director and chief financial
officer of Rio Amarillo Mining Ltd. and President and director of
International Mahogany Corp. and Golden Sitka Resources Ltd. Mr. Brown was
an investment advisor with a Canadian brokerage firm, was a senior partner
with the public auditing firm of Deloitte & Touche, Chartered Accountants, in
Vancouver, and for many years was a Director of the British Columbia
Automobile Association and the Canadian Automobile Association and is a past
Chairman of BCAA.
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
<PAGE>
-16-
Resources Ltd. and Crew Development Corporation, which are publicly traded
mining companies listed on Nasdaq and on The Toronto Stock Exchange.
GLENN H. FRIESEN (age 42) 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. He was also employed in various corporate
accounting positions from 1981 to 1886 at Westar Mining Ltd.
KARYN E. BACHERT (age 47) 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.
Sargent H. Berner is a director of Aurizon Mines Ltd., and John F. Brown is a
director of United States Lime & Minerals, Inc., companies which have 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 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 three meetings during the year
ended December 31, 1998. 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 or
1998 - 1999 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. The board of Directors
determined in June, 1997, that an Executive Committee was not required in
light of the frequency of Board meetings.
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. Mr. Russell has indicated his intention not to stand for
nomination to the Board of Directors of the Company for the upcoming year and
accordingly the Board of Directors elected at the Annual General Meeting will
appoint a replacement director to the Audit Committee. The function of the
Audit Committee is to review financial statements with the auditors and to
report thereon to the Board of Directors. During 1998, one meeting of the
Audit Committee was held.
The Company has a Compensation Committee which, during the past year, was
made up of Stephen R. Sopher, Sargent H. Berner and Charles J.G. Russell.
Mr. Sopher and Mr. Russell have indicated their intention not to stand for
nomination to the Board of Directors of the Company for the upcoming year
<PAGE>
-17-
and accordingly the Board of Directors elected at the Annual General Meeting
will appoint replacement directors to the Compensation Committee. 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 1998, there was one meeting held by this
Committee.
The Company does not have a standing Nominating Committee.
During 1998, 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 1998 was five.
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, June 1, 1995 and May
20, 1998. Mr. Milligan is the principal shareholder of Glencoe Management
Ltd. which receives management fees from the Company. See "Summary of
Executive Compensation".
David S. Jennings, a former director of the Company, is the principal
shareholder of 7557 Management Group Ltd., ("7557"), a management company
which received fees for providing the services of Dr. Jennings. During the
year ended December 31, 1998, no fees were paid to 7557.
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 Arrangements".
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, 1998 of $60,570.
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 Company on behalf of the Board of Directors. The
Company's Board designates the members of each committee on an annual basis.
SUMMARY OF EXECUTIVE COMPENSATION
During 1998, there were four executive officers of the Company: Andrew F.B.
Milligan, James A. Currie, Bobbi-Jo Gordon and Glenn H. Friesen. The
following table sets forth certain summary information concerning the
compensation awarded to, earned by, or paid to the Chief Executive Officer
and the three executive officers of the Company each of whose combined salary
and bonuses for 1998 exceeded C$100,000 for services in all capacities to the
Company during the years ended December 31, 1998, 1997 and 1996
(collectively, the "Named Executive Officers"). The aggregate value of other
<PAGE>
-18-
annual compensation paid to the Named Executive Officers during 1998 did not
exceed 10% of the aggregate cash compensation set forth in the table below.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
SALARY BONUS(1) SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR $ $ UNDER OPTIONS COMPENSATION(2)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Andrew F.B. Milligan(3) 1998 145,488 -- -- --
President and Chief 1997 155,530 -- 500,000(4) --
Executive Officer 1996 158,474 47,542 450,000 --
James A. Currie(5) 1998 -- -- -- --
Executive Vice President 1997 112,448 -- 400,000 $8,143
and Chief Operating Officer 1996 107,850 18,332 50,000 924
Bobbi-Jo Gordon(7) 1998 87,297 --
Vice President, Finance and 1997 88,604 -- -- $24,445
Chief Financial Officer 1996 -- -- 150,000 4,991
Glenn Friesen 1998 45,653 -- 150,000 --
Chief Financial Officer 1997 -- -- -- --
1996 -- -- -- --
James A. Carter(6) 1998 -- -- -- --
former Executive Vice 1997 5,400 -- -- $365
President and Chief 1996 132,062 39,168 240,000 1,109
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 subsequently amended, and May 20, 1998, 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. Mr. Currie resigned his position as
Executive Vice-President of the Company in February, 1998, and remained
a director of the Company's subsidiary Touchstone Resources Company
until November, 1998.
(6) The services of Mr. Carter were provided under an agreement with the
Company dated June 1, 1993 and amended June 1, 1995, which terminated
January 31, 1997. All options held by Mr. Carter expired on June 30,
1997, pursuant to his termination agreement.
(7) The services of Ms. Gordon were provided under an agreement with the
Company dated February 1, 1997. Ms. Gordon resigned her position as
Vice-President, Finance and Chief Financial Officer of the Company in
January, 1998, and the stock option granted to her in 1997 expired on
March 2, 1998.
STOCK INCENTIVE TRANSACTIONS DURING 1998
The following table sets out the details of all stock option grants to the
Named Executive Officers during the most recently completed financial year.
These stock options were granted outside of the Company's Stock Incentive
Plan.
<PAGE>
-19-
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED
UNDERLYING TO EMPLOYEES IN
NAME OPTIONS GRANTED FISCAL YEAR EXERCISE PRICE EXPIRATION DATE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Andrew F. B. Milligan 500,000 39% C$0.15 Sept. 9, 2003
Glenn H. Friesen 115,000 9% C$0.15 Sept. 9, 2003
</TABLE>
Note: During 1998 a total of 150,000 options were granted under the
Company's Stock Incentive Plan. These options were granted at an
exercise price equal to the closing price of the Company's common
shares on the Toronto Stock Exchange on the trading day immediately
preceding the date of grant. On -, 1999, as part of the corporate
reorganization described below, outstanding directors' and employees'
options granted both under and outside of the Company's Stock
Incentive Plan were cancelled, and replaced by new incentive options
to purchase post-consolidation shares at a price of $0.50 (Cdn.) per
Share granted under the new Stock Incentive Plan for which shareholder
approval will be sought. See "Share Option Program", "Compensation of
Directors" and "Particulars of Other Matters to be Acted Upon".
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 NUMBER OF SECURITIES VALUE OF UNEXERCISED
EXERCISE VALUE UNDERLYING UNEXERCISED IN-THE MONEY OPTIONS AT
NAME (#) REALIZED OPTIONS AT 12/31/98(1) 12/31/98
- --------------------------------------------------------------------------------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew F.B. Milligan -- -- 500,000(3) -- Nil --
James A. Currie -- -- 400,000(2)(3) -- Nil --
Glenn H. Friesen -- -- 35,000(3) -- Nil --
</TABLE>
(1) During 1998 a total of 630,000 options either expired or were surrendered.
(2) Option exercisable until May 19, 1999.
(3) On - , 1999, as part of the corporate reorganization described below,
outstanding directors' and employees' options granted both under and
outside of the Company's Stock Incentive Plan were cancelled, and replaced
by new incentive options to purchase post-consolidation shares at a price
of $0.50 (Cdn.) per Share granted under the new Stock Incentive Plan for
which shareholder approval will be sought: See "Share Option Program",
"Compensation of Directors" and "Particulars of Other Matters to be Acted
Upon".
TABLE OF OPTION AND SAR REPRICINGS
The following table sets forth stock options of Named Executive Officers which
were repriced under the Company's Stock Option Plan (the "Stock Option Plan") or
otherwise during the ten year period preceding the date of this Proxy Statement.
<PAGE>
-20-
<TABLE>
<CAPTION>
LENGTH OF
MARKET PRICE ORIGINAL
SECURITIES OF SECURITIES EXERCISE OPTION TERM
UNDER AT TIME OF PRICE AT TIME NEW REMAINING AT
OPTIONS/SARS REPRICING OR OF REPRICING EXERCISE DATE OF
DATE OF REPRICED OR AMENDMENT OR AMENDMENT PRICE REPRICING OR
NAME REPRICING AMENDED (#) (C$/SECURITY) (C$/SECURITY) (C$/SECURITY) AMENDMENT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Andrew Oct 21-97 500,000 0.68 1.75/ 0.68 2 1/4 years/
F.B. 1.69(1) 3 1/4 years(1)
Milligan
James A. Oct 21-97 400,000 0.68 1.06/ 0.68 4 1/2 years(2)
Currie 0.80(2)
Bobbi-Jo Oct 21-97 150,000 0.68 1.08 0.68 4 1/4 years
Gordon
Glenn H. Oct 21-97 35,000 0.68 0.95 0.68 4 1/2 years
Friesen
</TABLE>
(1) Two stock options were repriced, one exercisable for 50,000 shares at
C$1.75 per share expiring on January 4, 2000 and one exercisable for
450,000 shares at C$1.69 per share expiring on January 4, 2001.
(2) Two stock options were repriced, one exercisable for 150,000 shares at
C$1.06 per share expiring on February 27, 2002 and one exercisable for
250,000 shares at C$0.80 per share expiring on June 19, 2002.
Stock options are a significant component of the compensation received by the
Named Executive Officers and serve to provide incentive to such individuals to
act in the best interests of the Company and its shareholders. Since the market
price of the Company's shares was well below the exercise price, the stock
options ceased to offer the desired incentive and were repriced.
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. These fees were waived in 1998. 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, June 1, 1995 and
May 20, 1998. Mr. Milligan is the principal shareholder of Glencoe
Management Ltd. The agreement includes provisions by which Mr. Milligan is
entitled to receive an amount equal to three years' management fees, and 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 Mr. Milligan without cause. In order to facilitate the
reorganization contemplated herein, Mr. Milligan has agreed that in the
event the reorganization receives all required approvals, effective June 1,
1999, Glencoe Management Ltd. will accept a 44.4% reduction in salary and
the substitution of a 3 year fixed term employment contract in lieu of the
three year severance provisions of the current Consultant/Management
Agreement. As consideration, for relinquishing these benefits, Glencoe
Management Ltd. will be granted 400,000 warrants to purchase 400,000 Common
Shares of the Company on a post-
<PAGE>
-21-
consolidation basis at a price of C$0.50, in addition to any other
options to which Mr. Milligan may be entitled in his continuing capacity
as a director and officer of the Company.
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 February 1, 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 her employment without cause. The
Company and Ms. Gordon entered into an agreement on January 31, 1998 under
which a total of C$100,948 was paid and an additional C$28,523 was settled
by way of issuance on May 4, 1998 of 150,517 shares. Ms. Gordon's stock
option expired on March 3, 1998.
4. David S. Jennings, a former director of the Company, is the principal
shareholder of 7557 Management Group Ltd., a management company which
received fees for providing the services of Dr. Jennings. No fees were
paid to Dr. Jennings or to 7557 during 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since June, 1997, the Compensation Committee has been made up of non-executive
directors of the Company.
BOARD OF 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 provided
information with respect to two groups of Canadian mining companies, using
annual revenues and number of employees as measures. The report also included
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 Company's 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 through a 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 1998, the Committee reviewed and concluded that the annual salary and
benefits for the executive officers remained in line with salaries and benefits
offered by comparable companies. The Committee did not recommend any increase
in base salaries or benefits or the award of any bonuses for 1998.
<PAGE>
-22-
The change in direction and business of the Company resulting from the
disposition of its remaining active mining asset and acquisition of Stockscape
will require a re-evaluation of the Company's compensation arrangements and the
basis for them. It is expected that a newly constituted Compensation Committee
will review such matters following the Company's upcoming annual general
meeting.
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 regulatory authorities having
jurisdiction with respect to the Company and the stock exchanges on which the
Company's shares are listed for trading at the time of such grants. 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.
While the Company's shares were listed for trading on The Toronto Stock Exchange
the exercise price of options was subject to the approval by The Toronto Stock
Exchange and was generally not less than the market price of the shares at the
time the options were granted. During the past year the Company granted
incentive options to directors and employees for the purchase of an aggregate
1,290,000 shares under the Share Option Program of which 1,140,000 were subject
to regulatory and shareholder approval. In connection with the Company's
proposed reorganization, all these options were cancelled, and have been
replaced by new incentive options for the purchase of post-consolidation shares
under a new Stock Incentive Plan, as described below.
STOCK INCENTIVE PLAN
On - , 1999 the Board of Directors approved a Stock Incentive Plan, subject to
shareholder approval, which is intended to replace the Stock Incentive Plan
adopted by the Company's shareholders on June 24, 1988, and approved by the
stock exchanges upon which the Company's shares were then listed. As with the
previous Stock Incentive Plan, the new Plan approved by the Directors consists
of a Share Purchase Plan, a Share Option Plan and a Share Bonus Plan for
directors, executive officers and employees of the Company. As in the past, 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. In
contrast to the previous Stock Incentive Plan, however, there will be no maximum
number of Common Shares which the Company may at any time reserve for issuance
under the Stock Incentive Plan. The setting of a limit on the number of shares
which could be reserved for issuance under a stock option plan was a requirement
imposed by stock exchanges on which the Company's shares were previously listed
and which no longer applies to the Company.
The Stock Incentive Plan will be administered by the Company's Board of
Directors as before. 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. However, amendments 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 require 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.
<PAGE>
-23-
(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. To date, no Common
Shares have been purchased by participants under the Share Purchase Plan.
(b) SHARE OPTION PLAN
The number of shares subject to option under the Share Option Plan, previously
limited to a maximum of 4,750,000, will now be determined by the Board of
Directors, subject to any necessary approval of any regulatory authority having
jurisdiction over the Company. 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 officers, 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.
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 order to ensure that the Registrant will receive the benefits
intended from the grant of options, no option is exercisable until it has
vested. The vesting schedule for each option is specified by the Company's
Board of Directors at the time of grant of the option.
Options 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 - 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.
<PAGE>
-24-
Subject to approval of the Stock Incentive Plan by the shareholders at the
Meeting, the following options have been granted to date at an exercise price
of C$0.50 per share (post-consolidation):
<TABLE>
<CAPTION>
NAME OF OPTIONEE POSITION WITH COMPANY NUMBER OF SHARES EXPIRATION DATE
- ---------------- --------------------- ---------------- ---------------
<S> <C> <C> <C>
</TABLE>
(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 may 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 -% of the total number of Common
Shares of the Company that were issued and outstanding on -, 1999.
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 $100 on
commencement of the 5 year period and that all dividends were reinvested.
<PAGE>
-25-
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
TSE 300 GOLD & MINERAL
STOCK PRICE STOCK PRICE CORNUCOPIA CLOSING PRICE
YEAR INDEX VALUES INDEX VALUE C$
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1993 4,321.43 10,698.96 2.55
- ----------------------------------------------------------------------------
1994 4,213.61 9,586.36 1.55
- ----------------------------------------------------------------------------
1995 4,713.54 10,413.61 1.75
- ----------------------------------------------------------------------------
1996 5,927.03 11,302.64 0.97
- ----------------------------------------------------------------------------
1997 6,699.44 6,378.87 0.26
- ----------------------------------------------------------------------------
1998 6,485.94 5,921.27 0.045
- ----------------------------------------------------------------------------
</TABLE>
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, June 1, 1995 and May 20,
1998. Mr. Milligan is the principal shareholder of Glencoe Management Ltd. (see
"Executive Compensation"). The services of James A. Currie, a former executive
officer of the Company and B.J. Gordon, a former executive officer of the
Company also 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.
TRADING HISTORY
The Common Shares of the Company were listed and traded in Canada on The Toronto
Stock Exchange under the symbol "CNP" until March 31, 1999 and are quoted in the
United States on the OTCBB under the symbol "CNPGF". The following table sets
out the market price range of the Company's common shares as reported on The
Toronto Stock Exchange and as quoted on the OTCBB for the periods indicated:
<PAGE>
-26-
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
TSE OCTBB (U.S.)
----------------------------------------------------------------------
YEAR HIGH LOW VOLUME HIGH LOW VOLUME
MONTHLY SUMMARY (CDN.$) (CDN.$) (#) (U.S.$) (U.S.$) (#)
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 April 0.295 0.16 1,372,300 .219 .125 2,320,300
May 0.20 0.08 1,120,700 .156 .031 3,068,200
June 0.10 0.04 3,205,500 .094 .031 1,902,100
July 0.11 0.05 1,059,000 .094 .031 1,829,300
August 0.15 0.06 654,500 .094 .031 1,323,300
September 0.15 0.08 632,400 .094 .063 1,375,500
October 0.13 0.08 252,100 .094 .030 884,800
November 0.09 0.045 632,600 .055 .030 866,900
December 0.08 0.035 601,480 .062 .020 1,965,313
1999 January 0.05 0.04 313,800 .034 .025 674,500
February 0.065 0.035 244,500 .040 .020 1,251,500
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
1999 WEEKLY SUMMARY HIGH LOW VOLUME HIGH LOW VOLUME
(CDN.$) (CDN.$) (#) (U.S.$) (U.S.$) (#)
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
March 1 - 5 0.125 0.06 596,200 .080 .030 613,900
March 8 - 12 0.105 0.080 233,000 .080 .055 313,400
March 15 - 19 0.10 0.080 80,500 .070 .050 158,800
March 22 - 26 - - - - - -
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
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 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 2000 Annual General
Meeting of shareholders for inclusion in the Company's Proxy Statement and Proxy
Form relating to such meeting must submit such proposal by -, 2000 to the
Company at its principal executive offices.
PARTICULARS OF OTHER MATTERS TO BE ACTED UPON
1. DISPOSITION OF IVANHOE JOINT VENTURE INTEREST
The Company has entered into an agreement dated March 2, 1999 (the "Sale
Agreement"), subject to shareholder approval, pursuant to which the Company will
sell its wholly-owned subsidiary, Touchstone Resources Company, ("Touchstone")
to Great Basin Gold Ltd., ("Great Basin") its joint venture partner in the
Ivanhoe project, in exchange for 2,750,000 common shares (the "Great Basin
Shares") and 250,000 share purchase warrants of Great Basin. The share purchase
warrants will entitle the Company to purchase additional shares of Great Basin
at $2.00 per share for one year. Touchstone holds the Company's 25% joint
venture interest in the Ivanhoe project, which is its only asset, and is party
to a joint venture agreement dated August 13, 1997 with Great Basin Gold Inc., a
subsidiary of Great Basin Gold Ltd. of Vancouver, British Columbia.
<PAGE>
-27-
MATERIAL TERMS OF SALE AGREEMENT
1. Resale of the Great Basin Shares and any shares issued upon exercise of the
share purchase warrants issued in consideration ("Warrant Shares") will be
restricted, by agreement, for a period of six months (the "Prohibition
Period").
2. Following the Prohibition Period the Company is entitled to sell, without
restriction or notice to Great Basin, up to 25,000 of the Great Basin
Shares and the Warrant Shares (collectively, the "Shares") in any 30
calendar day period or to carry over any or all of that number of Shares to
the next 30 calendar day period and thereafter for up to four such periods,
so that, in effect, the Company may sell up to 100,000 Great Basin Shares
during the last 30 days of a 120 calendar day period.
3. Notwithstanding the foregoing, the Company is entitled to sell up to
100,000 Great Basin Shares in any 30 calendar day period provided that it
first gives to Great Basin the right to cause such Shares to be acquired by
a person designated by Great Basin at a price at least equal to the five
day average closing price of Great Basin's Shares on the five trading days
before it received such notice, less a 10% discount. If Great Basin does
not exercise that right, the Company is free to sell up to 100,000 Great
Basin Shares by private sale or on the market for a period of 45 days.
4. Under the terms of the agreement, Great Basin has an assignable right to
purchase any shares in Great Basin in excess of 2,000,000 (fully-diluted)
held from time to time by the Company at a price based on the 5 day average
closing price of Great Basin's Shares, plus 10%, subject to a minimum price
of $1.00 per share. The agreement provides for adjustments to the price in
the event that the five day average closing price post-sale is more than a
specified percentage of the price paid.
5. The Company has agreed to a voting trust in favour of Great Basin
management for a period of two years and will be given representation to
the board of directors of Great Basin.
6. The Company will have the right to participate in future financings of
Great Basin in order to maintain its equity interest if so desired.
7. Completion of the purchase and sale is subject to conditions precedent in
favour of both parties which include the requisite regulatory and
shareholder approvals, satisfactory due diligence review of and favorable
opinions on matters material to the transaction.
REASONS FOR DISPOSITION OF IVANHOE JOINT VENTURE INTEREST
As a result of the unfavorable market conditions for junior resource issuers
in the past twenty-four months the Company has been unable to raise the
necessary capital to fund its share of the reclamation costs for the
Hollister area of the Ivanhoe property as contemplated under the Purchase
Agreement between the Company, Great Basin and Newmont Mining Company, or to
enable it to participate in the current drilling program proposed by Great
Basin. In those circumstances, the Company faced an inevitable dilution of
its 25% interest in the Ivanhoe project, pursuant to the terms of its
agreements with Great Basin. The Board of Directors continues to be of the
view, based on exploration results to date, that the Ivanhoe property is
highly prospective for hosting a Carlin-type mineral deposit. Nevertheless,
taking into account the present state of the capital markets for an issuer in
the Company's position, the Board decided that it was in the best interests
of the Company to sell its interest in the Ivanhoe property before suffering
material dilution and a further loss of negotiating strength. A sale of the
Company's joint venture interest to Great Basin will result in 100% of the
project being held by Great Basin, which is expected to assist Great Basin in
financing further exploration and development of the property. At the same
time, the Company, by virtue of its shareholding in Great Basin, will still
be in a position to
<PAGE>
-28-
realize a benefit from any discovery on the project, or any other projects
which Great Basin may undertake.
Coupled with the Company's holding of 1.57 million shares of Vista Gold Corp.
acquired by the Company on sale of Mineral Ridge, the shares in Great Basin will
represent a continued stake in the two projects which formed the backbone of the
Company in earlier days and which the Board believes could be valuable
investments if and when the price of gold recovers from present levels.
SALE OF UNDERTAKING
Because the Company's interest in the Ivanhoe venture is its sole remaining
active mining asset, the sale of that asset represents a major change in the
status of the Company as a mining entity and a sale of substantially all of the
Company's undertaking. Such a sale requires special approval of the
shareholders of the Company, which management will seek in the form of a special
resolution approving the transaction. The text of the resolution to be approved
(the "Disposition Resolution") is set out as item 2 in Appendix "B" to this
Proxy Statement.
RIGHTS OF DISSENT
Pursuant to the COMPANY ACT (British Columbia), a registered shareholder has
until two days before the Meeting to exercise its right to dissent to the
disposition by the Company of its 25% interest in the Ivanhoe Project by
delivering to the Company by registered mail a notice of dissent addressed to
the Company at its registered office at 10th Floor, 595 Howe Street, Vancouver,
British Columbia, V6C 2T5. As a result of giving a notice of dissent, a
registered shareholder may, upon passage of the Disposition Resolution and
receipt from the Company of a notice of its intention to act thereupon, require
the Company to purchase all of his or her shares in respect of which the notice
of dissent was given.
A registered shareholder of the Company has the right to give a notice of
dissent with respect to the Disposition Resolution pursuant to Section 126(5) of
the COMPANY ACT (British Columbia.). If a registered shareholder gives such
notice of dissent, then Section 207 of the COMPANY ACT (British Columbia)
applies. The essence of these provisions is that a dissenting, registered
shareholder can require the Company to purchase all of his or her shares in
respect of which he or she gives notice of dissent. The price to be paid for
such shares is their fair value as of the day before the date on which the
Disposition Resolution is passed.
A shareholder's right to give a notice of dissent with respect to the
Disposition Resolution will lapse if not exercised 2 days before the meeting at
which such resolution is to be passed. This right may only be exercised by the
registered holder of shares. Further, a notice of dissent ceases to be
effective if the shareholder giving it votes in favour of the resolution. Any
shareholder who is uncertain of his or her rights under Sections 126(5) and 207
of the COMPANY ACT (British Columbia) and who wishes to exercise any of those
rights should consult legal counsel in British Columbia. A copy of Section 207
of the COMPANY ACT is attached as Appendix "C" to this Proxy Statement.
The directors of the Company may elect not to proceed with the transactions
contemplated in the Disposition Resolution if a significant number of notices
of dissent are received.
2. CONSOLIDATION AND NAME CHANGE
At the Meeting shareholders will be asked to consider and, if thought fit, to
pass a special resolution approving:
1. The consolidation of the Company's authorized and issued common share
capital from TWO HUNDRED MILLION (200,000,000) common shares to TWENTY
MILLION (20,000,000)
<PAGE>
-29-
common shares, (i.e.) one (1) new common share for ten (10)
pre-consolidation common shares without par value;
2. An increase in the Company's authorized common share capital to its
pre-consolidation level of TWO HUNDRED MILLION (200,000,000) common
shares without par value; and
3. A change of the Company's name to "STOCKSCAPE TECHNOLOGIES LTD.".
The text of the resolutions to be approved is set out as items 2, 3 and 4 in
Appendix "B" to this Proxy Statement.
REASON FOR CONSOLIDATION AND NAME CHANGE
The common share consolidation and name change are fundamental to the Company's
reorganization and are conditions precedent to completion of the acquisition by
the Company of Stockscape Technologies Ltd. ("Stockscape"). Stockscape is an
Internet investment research provider and, after acquisition of Stockscape, the
business of Stockscape will become the Company's primary business. Detailed
disclosure on Stockscape and its business is provided in Appendix "A" to this
Information Circular.
Under the terms of the agreement (the "Share Exchange Agreement") between the
Company and A. R. Rule Investments B.C. Ltd. dated March 1, 1999, the Company
will acquire all of the issued and outstanding shares of Stockscape by issuing
10,000,000 post-consolidation Common Shares of the Company (the "Payment
Shares").
Stockscape is a private British Columbia company wholly owned by A.R. Rule
Investments B.C. Ltd. (the "Vendor"). A.R. Rule Investments B.C. Ltd. is a
privately-held British Columbia company controlled by Arthur R. (Rick) Rule.
Both Vendor and Stockscape are entirely at arm's length to the Company.
The parties have agreed that the Payment Shares will be issued for a deemed
value of Cdn. $0.50 per share making the overall deemed value of the transaction
C$5 million. The high and low sale prices of the Common Shares of the Company
on The Toronto Stock Exchange on March 1, 1999, the day preceding the date of
the issue of the news release announcing the transaction, were C$0.06 and
C$0.06, respectively.
The Company presently has 41,591,834 Common Shares issued and outstanding and
assuming no exercises of outstanding options and warrants prior to
consolidation, will have 4,159,183 Common shares outstanding post-consolidation.
The issuance of the 10,000,000 Common Shares to A. R. Rule Investments B.C.
Ltd. will result in the creation of a control block to be held by A. R. Rule
Investments B.C. Ltd. representing approximately 55% of the issued and
outstanding shares of the Company upon completion of this transaction. It is a
term of the Share Exchange Agreement that management nominate as directors of
the Company those persons named in this proxy circular as management nominees.
If such nominees are elected the board will be comprised of Andrew F.B.
Milligan, Sargent H. Berner, David R. Williamson, A. Murray Sinclair, and John
J. Brown. It is anticipated that at least one additional new director will be
added to the Board subsequent to the Meeting.
The Agreement includes representations and warranties of both parties which are
typical for a transaction of this nature. Under the Agreement, the Vendor has
agreed:
(a) to carry on the business of Stockscape in the ordinary course and not enter
into any transactions out of the ordinary course of business without the
consent of the Company prior to Closing; and
<PAGE>
-30-
(b) to arrange a private placement financing for the Company of up to four
million (4,000,000) units of the Company at $0.50 per unit, each unit to
consist of one post-consolidation common share of the Company and two
common share purchase warrants each entitling the holder to acquire one
additional common share in the capital of the Company (referred to herein
as the "Financing"); and
Under the Agreement, the Company has agreed:
(a) to take all steps as may be reasonably required to obtain all necessary
consents and approvals to the acquisition, share consolidation and name
change; and
(b) to cause certain individuals to be named as management nominees in this
Proxy Statement.
In addition to the usual conditions precedent in a transaction of this nature,
the Vendor's obligations under the Agreement are conditional on the common share
capital of the Company having been consolidated on a ten (10) old for one (1)
new basis and the name of the Company having been changed to "Stockscape.com,
Inc." or other name satisfactory to the Vendor. The Vendor has agreed that the
name "Stockscape Technologies Ltd." is satisfactory.
Similarly, the Company's obligations under the Agreement are conditional on the
usual conditions precedent in a transaction of this nature and the following:
(a) the receipt by the Company of an independent fairness opinion satisfactory
to the Company respecting the acquisition;
(b) shareholder approval of those aspects of the transaction requiring such
approval;
(c) conversion into shares or forgiveness of all outstanding indebtedness of
Stockscape to its shareholders or affiliates;
(d) the Company shall have obtained irrevocable commitments respecting the
Financing; and
(e) approval of the Board of Directors following completion of the Company's
due diligence investigations.
Attached hereto as Appendix "D" is a copy of the pro-forma financial statements
of the Company as at December 31, 1998, which present the financial situation of
the Company at such date assuming completion of the acquisition of Stockscape
and related matters. Financial statements of Stockscape at September 30 and
December 31, 1998 appear in Appendix "E" and financial statements of the Company
at December 31, 1998 compared with December 31, 1997, are attached hereto as
Appendix "F".
(f) ADOPTION OF NEW STOCK INCENTIVE PLAN
As a result of the Company's shares being delisted from the TSE the Company's
former Stock Incentive Plan, and in particular the mechanism specific therein
for pricing of options, was considered to be no longer appropriate, and a new
Stock Incentive Plan has been adopted by the Board of Directors, subject to
approval by the Company's shareholders.
At the Meeting, shareholders will be asked to consider and, if thought fit, pass
an ordinary resolution in the form set out as Item 5 in the attached
Appendix "B" to this Proxy Statement to ratify and approve the adoption of the
new Stock Incentive Plan, as described under "Stock Incentive Plan" herein,
which Plan confers on the Board of Directors discretion to grant options at such
times and for such number of shares as the Board sees fit. The form of the Plan
is attached as Appendix "G" to this Proxy Statement.
<PAGE>
-31-
Shareholder approval of the Plan will constitute approval to the exercise of
options granted under it, and in the absence of such approval such options will
not be exercisable.
(g) 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.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 1998 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, 1999.
BY ORDER OF THE BOARD OF DIRECTORS
________________________________________
ANDREW F. B. MILLIGAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
APPENDIX "A"
STOCKSCAPE TECHNOLOGIES LTD.
THE COMPANY
Stockscape Technologies Ltd. ("Stockscape" or "Stockscape.com") was
incorporated on July 9, 1996 as "523833 B.C. Ltd." by registration of a
memorandum and articles with the Registrar of Companies under the COMPANY ACT
(British Columbia) and changed its name to "Stockscape Technologies Ltd." on
October 17, 1996. It commenced operations as an Internet investment research
provider in October, 1996. The registered and records office of Stockscape is
located at Suite 2900, 595 Burrard Street, Vancouver, British Columbia,
V7X 1J5, Canada and its head office and principal place of business is
located at Suite 410, 325 Howe Street, Vancouver, British Columbia, V6C 1Z7,
Canada.
Stockscape has no subsidiaries.
BUSINESS OF THE COMPANY
DESCRIPTION AND GENERAL DEVELOPMENT
Since its inception Stockscape has been engaged in providing Internet
investment research and web-site design services. It has established and
maintains a web site at www.stockscape.com with links to other web sites that
contain up-to-date information on financial markets, including information on
specific sectors of the market, and new developments concerning public
companies. Stockscape's customer base comprises publicly traded companies
which subscribe for Stockscape's various services.
Stockscape offers access to all of its web pages free of charge to Internet
users and derives its revenue primarily from fees paid by sponsoring
companies for services including the design, construction and maintenance of
web-sites for sponsor companies and Internet marketing campaigns such as its
"Investor Harvest Program" and "Investor Email Blast": (See "Products").
Stockscape also receives revenue from commissions it receives from the sale
of newsletter subscriptions over the Internet. A third and growing source of
revenue is from the sales of advertising space in its e-mail publications.
Stockscape currently has a dedicated user community of approximately 40,000,
comprised largely of individual investors. Stockscape acts as the aggregator
and disseminator of financial information, organized and presented in a user
friendly format, for this investor community. To provide the range of
financial information required by its diverse investor community Stockscape
has established and maintains web pages organized by market sector, has
established a newsletter marketing network, "NewsStand Express", which
matches segments of its investor communities with financial publications
focussed on their areas of interest, provides its users with live market data
through its own quote servers and communicates proactively with its members
through the use of e-mail communications.
SUMMARY AND ANALYSIS OF FINANCIAL OPERATIONS
SELECTED FINANCIAL INFORMATION
The following table sets out selected financial information for the periods
indicated and should be considered in conjunction with the more complete
information contained in the financial statements and related notes attached
as Appendix E to this Proxy Statement. Unless otherwise indicated, all
currency amounts in this Appendix "A" are stated in Canadian dollars.
<PAGE>
-2-
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31 SEPTEMBER 30
(1) (1)
---------------------------------------------------
1998 1997 1998 1997
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 68,946 $ 11,740 $ 170,157 $ 15,250
Gross profit (5,419) (72,914) (167,337) (169,508)
Sales and Marketing
Expenses 27,176 43,057 140,141 27,791
General and Administrative
Expenses 37,319 35,451 178,095 60,257
Net Income (Loss) (69,914) (151,422) (485,573) (257,556)
Working Capital (5,111) 18,206 (14,063) 11,890
Property, Plant and
Equipment 95,314 93,259 100,753 75,805
Other Intangibles 8,269 2,889 6,992 3,081
Long Term Liabilities 654,015 265,000 579,311 90,832
Share Capital
Dollar Amount 257,500 257,500 257,500 257,500
Number of Securities 1,700,000 1,700,000 1,700,000 1,700,000
</TABLE>
(1) As at the date of this preliminary Proxy Statement the Stockscape audit
for fiscal 1998 is in progress. Accordingly, the selected financial data
for 1998 is unaudited. Audited financial data and audited financial
statements for Stockscape will be included in the definitive Proxy
Statement when filed and mailed to shareholders.
RESULTS OF OPERATIONS
This discussion and analysis of the results of operations and financial
condition of Stockscape should be read in conjunction with the accompanying
financial statements and the related notes.
THREE MONTHS ENDED DECEMBER, 1998 COMPARED WITH THREE MONTHS ENDED DECEMBER,
1997
The loss during the three months ended December 31, 1998 was $69,914 compared
to the loss in the quarter ended December 31, 1997 of $151,422. Revenues for
the quarter were $68,946, an increase of 487% over the same quarter in the
prior year of $11,740. Stockscape's expenses also increased as the growth
continued, but not as much as the revenues. The gross loss decreased to
$5,419 for the quarter, compared to a loss of $72,914 in the same quarter of
the prior year. Marketing and sales costs were lower in the current quarter
by 37% as an advertising program which was undertaken in the prior year was
absent in the current year. The general and administrative costs were
consistent with the prior year as they were up only 5%, from $35,451 in the
quarter ended December 31, 1997 to $37,319 in the quarter ended December 31,
1998.
SEPTEMBER 30, 1998 COMPARED WITH SEPTEMBER 30, 1997
During the second full year of operations of Stockscape, the year ended
September 30, 1998, the revenue base was increased from $15,250 in 1997 to
$170,157 in 1998. This growth was the result of increased marketing efforts.
Stockscape charges monthly fees for maintenance, after a set up has been
completed and paid for at the beginning of a relationship with a new client,
such that the monthly maintenance income grows on a cumulative basis. During
the year ended 1998, $140,141 was spent on sales and
<PAGE>
-3-
marketing efforts, compared to $27,791 spent in 1997. The main portion of
these expenses was for staff and contract sales people engaged in a direct
selling effort.
The general and administrative costs increased from $60,257 in 1997 to
$178,095 in 1998. The increase in revenues was 1,016%, the increase in sales
and marketing was 404% and the increase in the administrative costs was 196%.
These numbers are high due to the start up phase that Stockscape was going
through. However, it is considered that they also reflect the growth of
Stockscape towards a profitable level.
SEPTEMBER 30, 1997 COMPARED WITH SEPTEMBER 30, 1996
Stockscape was incorporated on July 9, 1996 and up to the first year ended
September 30, 1996 the only costs incurred were those associated with setting
up the company and planning for operations. By the year ended September 30,
1997, the first full year of operations, Stockscape had revenue of $15,250
and an operating loss of $257,556. The costs were mainly comprised of
salaries and wages of the employees. Marketing costs of $27,791 were
incurred in the year and were focused on visiting companies who were in need
of a website, primarily in the resources industry. General and
administrative costs of $60,257 included costs of management and
administration of the company.
LIQUIDITY AND CAPITAL RESOURCES
As a private company, Stockscape has been funded from inception by its sole
shareholder through a mix of debt and equity. As at the end of the fiscal
year (September 30, 1998), Stockscape had received funding of $579,311 in
loans and $257,500 through common share subscriptions. At that time, the
Company had current assets of $147,693 and current liabilities of $161,756,
for a working capital deficiency of $14,063. Included in the current
liabilities was $82,247 of unearned revenue to be earned by September 30,
1999.
By December 31, 1998, the shareholder had agreed to increase the loan amount
outstanding by $74,704 to a total loan amount of $654,015, and the working
capital deficiency had decreased to $5,111.
The shareholder has agreed to fund at least an additional $170,985 to
maintain the future operations of the company until a further financing has
been completed or the company achieves positive cash flows from operations.
In addition, the shareholder has agreed to convert $825,000 of the total
amount of this loan into common shares of Stockscape.
Future funding for the operations and growth of Stockscape is planned to be
from a financing contemplated concurrently with the transaction with
Cornucopia of $2 million, and from the operations of Stockscape.
All of the shares of Stockscape are held by A. R. Rule Investments (B.C.)
Ltd., a private company owned and controlled by Arthur R. ("Rick") Rule, of
Carlsbad, California. There has been no public market for its common stock
and there can be no assurance that an active trading market for the shares of
the combined entity will develop or be sustained following the acquisition of
Stockscape by Cornucopia or that the market price of Cornucopia's common
shares will not decline below any price that may develop initially after the
closing of the transaction. The stock market in general and the technology
and Internet sectors in particular have experienced extreme price and volume
fluctuations which have affected the market price for many companies in those
sectors and which have been unrelated to the operating performance of these
companies. These market fluctuations, as well as general economic, political
and market conditions, may have a material adverse effect on the market price
of the Cornucopia shares.
<PAGE>
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STATED BUSINESS OBJECTIVES
The basis of Stockscape's business plan is to continue to expand and organize
the financial content available through its web-site, Stockscape.com, with a
view to attracting additional users. Increasing the volume of traffic on its
site, combined with its ability to communicate with its investor community
and to identify segments of that community in a way that is relevant for its
current and potential public company customer base will, it is intended, make
the Stockscape.com web-site and marketing products more attractive to
advertisers and sponsor companies, thereby generating additional revenue. In
furtherance of its plan, one of Stockscape's primary objectives and the focus
of its resources in the near term will be the expansion of its dedicated
investor user base from its current approximately 40,000 to a target of
1,000,000, within the next two years. Contingent upon a successful marketing
campaign it is anticipated that advertising commitments could be obtained,
based on a dedicated user base of 1,000,000, which would generate sufficient
revenues on a monthly basis to meet monthly operating expenses. Achievement
of that goal is dependent upon the Company obtaining the financing necessary
to mount a concerted marketing campaign. A secondary objective and one which
Stockscape considers will, to a large extent, follow upon increasing its user
base and expanding the financial content available through its web site, is
to expand its public company customer base to cover a broad range of industry
sectors.
Stockscape is at a start-up stage in its development, has not generated
operating profits to date and the development costs it has incurred are
carried in its deficit account. It is not expected that cash flow from sales
of its services and products will be sufficient to pay its operating costs in
the foreseeable future.
MILESTONES
The following events must occur to achieve the objective of increasing revenues:
1. Appointment to the board of directors of the Company of additional persons
with related industry backgrounds. This is expected to be completed by
the end of the second quarter of 1999.
2. Implementation of a marketing campaign aimed at expanding the financial
content of the Stockscape.com web site (targeting independent financial
newsletters). The estimated cost of this campaign is approximately
$30,000 to $50,000. It is expected that this will be completed,
contingent upon obtaining the necessary financing, by the end of the
third quarter of 1999.
3. The implementation of a major marketing campaign aimed at expanding
dedicated investor user base. The cost and extent of the campaign will be
contingent upon obtaining the necessary financing and is intended to be
completed by the end of the third quarter of 2001.
4. Hiring of additional sales and programming personnel to accommodate
anticipated increased advertising commitments, client company base, and
newsletter base. Costs will be dependent upon degree of success obtained
in achieving prior milestones. Timing will be contingent on availability
of financing.
ACQUISITIONS AND DISPOSITIONS
Stockscape has made no material acquisitions or dispositions since its
incorporation and has no present intention to make any material acquisition
or disposition relating to its current business.
<PAGE>
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MANAGEMENT
The following directors, officers, employees and contractors are those whose
expertise may be considered most important to Stockscape's ability to achieve
its stated business objectives:
John J. Brown is the President of Stockscape and oversees its administration.
Mr. Brown is also President of Pacific Opportunity Company Ltd. which
controls the financial administration of Stockscape. As the sole director
and officer of Stockscape, Mr. Brown is involved in all significant decisions
relating to the Stockscape business.
Trevor Newton oversees the operations of Stockscape, including marketing,
content and product development.
Arthur R. ("Rick") Rule, through A. R. Rule Investments (B.C.) Ltd., is the
sole shareholder and financier of Stockscape. Mr. Rule is the President of
Global Resource Investments Ltd., a brokerage firm located in California and
specializing in resources-based investments. Mr. Rule's financial assistance
and business connections and experience have allowed Stockscape to continue
to grow towards profitability. Mr. Rule also assists in the marketing area
by introducing potential new clients to Stockscape.
ORGANIZATIONAL STRUCTURE
John J. Brown
Director
President
Trevor Newton
Manager
Senior Senior Senior Senior Administration Marketing
Programmer Programmer Programmer Programmer Manager Manager
PRODUCTS
In its first two years of operations Stockscape has developed three important
marketing products particularly suited to the e-commerce environment:
"NewsStand Express", "Investor Harvest Program", and "Investor Email Blast".
"NewsStand Express" is a financial newsletter marketing network, whereby,
through various proprietary web-based marketing methodologies Stockscape
introduces potential subscribers to publishers by matching investors with
high-profile financial publications on a trial program basis. Investors
wishing to continue to receive the information after the trial program ends
then subscribe for the publication.
"Investor Harvest Program" is a web-based marketing campaign and lead
generation program offered by Stockscape. Companies interested in increasing
their shareholder base or expanding their consumer audience can contract with
Stockscape to design and place a series of advertisements in association with
the information Stockscape provides to its investment communities.
Stockscape's demographic and other information about its investor community
permits it to provide a specifically targeted, cost-effective, campaign.
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Through its "Investor Email Blast" program Stockscape can disseminate
corporate announcements, news releases and information about special
promotions to thousands of potential investors.
Research and development of the foregoing products was conducted in part by
outside contractors, all of whom are now employed by Stockscape. Development
costs consist primarily of salaries and are not capitalized. Stockscape
plans to continue to refine and enhance its current publishing and marketing
products and, contingent upon adequate funding, to research and develop new
products based on evolving publishing and marketing models.
PROPRIETARY PROTECTION
Trademarks have been registered in Canada and the United States for the name
"STOCKSCAPE". The Canadian trademark was registered on July 2, 1998 under
registration number TMA 496,924. The US trademark is in the final stages of
being approved. These trademarks are intended to protect the use of the name
of the Company and it's website. Stockscape asserts common law trademark
rights in respect of its various program names and has no present intention
to register those trademarks. Because of the rapidly evolving nature of
e-commerce and web-based marketing, current methodologies must be continually
refined or become obsolete. As a result Stockscape does not consider
protection of its current proprietary methodogies and programs a priority.
See "Risk Factors".
OPERATIONS
Stockscape's operations are based in Vancouver, British Columbia, Canada.
The company leases office space for its technical group, marketing team and
management staff all of whom are directly employed by Stockscape. Four of
the company's eight employees are programmers involved in the research and
development of the programs required to implement the Stockscape marketing
and publishing products.
MARKET
The market for the investment research services provided by Stockscape.com.
consists of specific niches within the investment community. Examples of
such riches include the mining investment community, the oil and gas
investment community, the information technology investment community, the
offshore investment community, and other defined segments. Stockscape.com
focuses on microcap investments as opposed to blue chip or more conservative
stocks. It is not the intention of the company to expand its content to
compete with broad-focus, mainstream, investment sites.
While the population of investors with some exposure in the microcap
investment community is limited and not all of these investors have internet
access, this population is anticipated to continue growing in future. The
company's primary audience is North American, with 60% originating from the
United States, 10% from Canada, and 30% from overseas. All of the
Stockscape.com users are English speaking, and the Stockscape.com site and
web pages are presented in English. Stockscape.com has no current plans to
expand beyond this market.
The Stockscape.com client (revenue) market presently consists of all microcap
companies in North America (although Stockscape does not intend to limit its
client base to companies in this geographical region). While there are more
than 10,000 public companies in North America that fall into the microcap
category, Stockscape estimates that no more than approximately 20% of these
companies would make suitable candidates for its products or services. The
number may be further reduced by the fact that Stockscape.com. targets only
those client companies which it considers to be characterized by strong
management teams and sufficient working capital.
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Stockscape.com faces significant competition in the on-line financial
publishing business and also in the delivery of web-based services to public
companies. Some of its competitors on the webservices side include Stock
Research Group, Stockhouse, and Gigweb. On the financial publishing side,
the same three companies are also competitors, as are financial sites
including Yahoo Finance, MarketWatch, Silicon Investor, and several others.
Stockscape.com's competitive advantage lies in its unique relationships with
traditional publishers and independent newsletter writers. Stockscape plans
to capitalize on this competitive advantage to increase the usership of its
site, and thereby indirectly attract more public companies as clients.
MARKETING PLAN AND STRATEGIES
Usership of the Stockscape.com community will be increased through the
marketing of Newsstand Express and various other features of the company's
site(s). Stockscape.com's average cost of acquisition per user to date has
been approximately US$5. A user is defined as an investor who has
voluntarily given their personal information including name, address, phone
number and email address to Stockscape.com, and requested access to the
Stockscape site's features or the delivery of specific financial publications
via email.
It has historically been the case that a large portion of the cost of
acquisition is offset by Newsstand Express sponsor companies, who derive
value from the sponsorship based on the generation of opt-in qualified leads.
The marketing campaign for Newsstand Express will take the form of
traditional and nontraditional advertising, but will be primarily direct mail
based and web-based.
Simultaneously a sales campaign will be undertaken to increase the number of
client companies whose sites are hosted and maintained, and to sell the
increased advertising inventory which results from the marketing of Newsstand
Express. This campaign will be a combination of direct marketing, trade show
appearances, and affiliate programs.
DIVIDEND RECORD
Stockscape has not, since the date of its incorporation, declared or paid any
dividends on its Common Shares and does not currently intend to pay
dividends. Earnings will be retained to finance further development of its
business.
DIRECTORS AND OFFICERS
The name and municipality of residence of the sole director and officer of
Stockscape, the position held by him with Stockscape, his principal
occupation for the past five years and other reporting issuers in which he
holds positions as a director or officer are set forth below:
<PAGE>
-8-
Name and Municipality of Principal Occupation During Other Reporting
Residence The Past Five Years Issuers
- --------------------------- ---------------------------- ------------------
John J. Brown A Chartered Accountant since United States Lime
Vancouver, British Columbia 1959, Mr. Brown is President & Minerals,
Director, President of Pacific Opportunity Inc.(Director)
Company Ltd., a private International
financial services and Mahogany Corp.
merchant banking company, (President and
which also manages Director)
Stockscape. Mr. Brown does Golden Sitka
not hold any securities of Resources
Stockscape. Ltd.(President and
Director)
Rio Amarillo
Mining Ltd.
(Director and CFO)
Key West Energy
Ltd.(Director)
CORPORATE CEASE TRADE ORDERS AND SANCTIONS
To the best of the knowledge of Stockscape, no director, officer or promoter
of Stockscape was a director, officer or promoter of any reporting company
during the past five years that was struck off the register of companies by
the British Columbia Registrar of Companies or other similar authority or was
the subject of a cease trade or suspension order for a period of more than 30
consecutive days.
To the best of the knowledge of Stockscape, no director, officer or promoter
of Stockscape during the past ten years has been the subject of any penalties
or sanctions by a court or securities regulatory authority related to the
trading in securities, the promotion, formation or management of a publicly
traded company or involving theft or fraud.
EXECUTIVE COMPENSATION
During each of 1997 and 1998 there were no employees of Stockscape whose
combined salary and bonuses exceeded $100,000. In 1997 and 1998 Stockscape
paid $50,899 and $54,051 to Pacific Opportunity Company Ltd. ("Pacific"), a
private British Columbia company controlled by John J. Brown, the sole
director and officer of Stockscape, for office administration, accounting,
secretarial and management services. During the first quarter ended December
31, 1998, $15,051 was paid to Pacific for such services.
EMPLOYMENT CONTRACTS
Stockscape has no employment contracts with any of its directors, officers or
employees. Stockscape has no compensatory plan or arrangement in respect of
compensation received or that may be received by the executive officers to
compensate such executive officer in the event of the termination of
employment (resignation, retirement, change of control), or in the event of a
change in responsibilities following a change in control, where in respect of
any of the executive officers the value of such compensation exceeds $100,000.
Stockscape does not have a long-term incentive plan or "LTIP", pursuant to
which cash or non-cash compensation intended to serve as an incentive for
performance (whereby performance is measured by reference to financial
performance or the price of Stockscape's securities), was paid or distributed
to the Named Executive Officers during the most recently completed financial
year.
<PAGE>
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COMPENSATION OF DIRECTORS
Stockscape has no arrangements, standard or otherwise, pursuant to which
directors are compensated by Stockscape for their services in their capacity
as directors, or for committee participation, involvement in special
assignments or for services as consultant or expert during the most recently
completed financial year or subsequently, up to and including the date hereof.
INDEBTEDNESS TO STOCKSCAPE OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR
OFFICERS
There is no indebtedness of any director, executive officer, senior officer,
or associate of them, to or guaranteed or supported by Stockscape either
pursuant to an employee stock purchase program of Stockscape or otherwise,
during the most recently completed financial year.
OPTIONS TO PURCHASE SECURITIES
Stockscape has no outstanding options, warrants or other rights to purchase
shares.
RISK FACTORS
The acquisition of Stockscape by the Company is considered speculative due to
the nature of Stockscape's business and the present stage of its development.
Shareholders should consider carefully the risk factors set out below.
See "General" for a cautionary statement regarding risks and uncertainties
relating to forward looking statements in this Appendix "A".
EARLY DEVELOPMENT Stockscape is in the early stage of developing its
STAGE. business. Stockscape has realized relatively
insignificant revenues to date. From inception in
October, 1996 through September 30, 1998, its total
revenues were $185,407 of which 85% is attributable to
its operations in fiscal 1998. As at December 31,
1998, it has accumulated losses of approximately
$813,043. Stockscape has not achieved profitability on
a quarterly or annual basis to date, and it anticipates
that it may continue to incur net losses for the
foreseeable future. The extent of these losses will be
dependent, in part, on Stockscape's net revenues, if
any, from advertisers and e-commerce transactions.
Stockscape expects its operating expenses to increase
significantly, especially in the areas of customer
generation, brand marketing and e-commerce promotion.
If net revenue does not increase or increases in
operating expenses precede or are not immediately
followed by commensurate increases in net revenue,
Stockscape's business, results of operations and
financial condition will be materially and adversely
affected. At its present stage of development period-
to-period comparisons of Stockscape's operating results
will not be meaningful and the results for any period
should not be relied upon as an indication of future
performance. There can be no assurance that
Stockscape's operating losses will not increase in the
future or that Stockscape will ever achieve or sustain
profitability.
LIMITED OPERATING Stockscape has had a very limited operating history
HISTORY. upon which an evaluation of its current business plan
and its prospects can be based. There are a number of
risks, expenses and problems frequently encountered by
companies in the early stages of development, and
particularly by companies entering new and rapidly
developing markets like the Internet. Such risks
include, without
<PAGE>
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limitation, the possibility that the Internet will
fail to achieve broad acceptance as a commercial
medium, lack of acceptance by consumers of e-commerce,
possible failure to generate sufficient
e-commerce-based revenues from its Website, failure or
inadequacy of network infrastructure (including its
server, hardware and software), changes in laws that
adversely affect the Internet and e-commerce generally
and Stockscape's business in particular, direct and
indirect competition for investor communities and
advertisers by entities with greater financial,
technical and marketing resources, failure to attract,
retain and motivate qualified personnel, failure to
properly manage the amount and timing of operating
costs and capital expenditures in the development of
Stockscape's business, operations and infrastructure.
There can be no assurance that Stockscape will be
successful in addressing such risks, and any failure
to do so could have a material adverse effect on
Stockscape's business, results of operations and
financial condition.
FUTURE CAPITAL NEEDS. Stockscape does not currently have available to it the
funds necessary to meet its anticipated capital needs.
However, Stockscape anticipates that the net proceeds
from a financing intended to be completed
contemporaneously with the proposed acquisition of
Stockscape by Cornucopia Resources Ltd. (the "Company"
or "Cornucopia") will be sufficient to meet its working
capital requirements and planned capital expenditures
for the next 18 months.
The Company will need to raise additional funds to fund
further development of its business and to implement
its business plan. There can be no assurance that any
additional financing, including the funds intended to
be raised in the announced financing, will be available
on terms favourable to Stockscape and the Company, or
at all. If adequate funds are not available or are not
available on acceptable terms, the Company may not be
able to fund expansion of the Stockscape business or to
implement its business plan, which would have a
material adverse effect on the Company's business,
results of operations and financial condition.
Additional funds raised through the issuance of equity
or convertible debt securities of the Company will
reduce the percentage ownership of the Company's
current stockholders. Stockholders may experience
additional dilution and securities issued in any future
financings may have rights, preferences or privileges
senior to those of current shareholders of the Company.
POTENTIAL The Company expects operating results of the Stockscape
FLUCTUATIONS IN business to fluctuate significantly in the future as a
QUARTERLY RESULTS. result of a variety of factors, many of which are
beyond Stockscape's control. These factors include
fluctuating demand for the advertising products
Stockscape offers relative to the state of the capital
markets, consumers' acceptance of e-commerce, the level
of traffic on the Stockscape.com site, the introduction
of new or enhanced services by its competitors,
changing personnel requirements to address changes in
technology, competition and promotional campaigns by
Stockscape or any of its competitors, engineering or
development fees required to be paid in connection with
adding new Website development and publishing tools,
general economic conditions, and economic conditions
specific to the Internet or all or a portion of the
technology market. As a strategic response to changes
in the competitive environment, Stockscape may from
time to time make certain pricing, service or marketing
decisions or business combinations that could have a
material adverse effect on Stockscape's business,
results of
<PAGE>
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operations and financial condition. Stockscape expects
to experience seasonality in its business, with user
traffic on the Stockscape.com site potentially being
lower during the summer and year-end vacation and
holiday periods when overall usage of the Web is
lower. Because Web-based e-commerce is an emerging
market, additional seasonal and other patterns may
develop in the future as the market matures. Any
seasonality is likely to cause quarterly fluctuations
in Stockscape's operating results.
DEPENDENCE ON KEY Competition for senior management, experienced sales
PERSONNEL. and marketing personnel, qualified Web engineers and
other employees is and is expected to continue to be
intense, and there can be no assurance that Stockscape
will be successful in attracting and retaining such
personnel. Success of the Stockscape business is
dependent on the contacts, abilities and performance of
its executive officers and other key employees. The
loss of the services of any of its executive officers
or other key employees could have a material adverse
effect on the prospects, business development, and
results of operations and financial condition of
Stockscape.
INTENSE COMPETITION. The market for community based e-commerce on the
Internet is new and rapidly evolving and competition
for visitors, advertisers, strategic partners and E-
Providers is intense and is expected to increase
significantly in the future. Barriers to entry are
relatively insubstantial. Some of the other companies
who are primarily focused on creating a Web-based
investor community on the Internet are Stock Research
Group, Gigweb and Stockhouse. Some of these
competitors are significantly larger than Stockscape
and more established and known in the Internet
industry. Stockscape will likely also face competition
in the future from Web directories, search engines,
shareware archives, content sites, commercial online
service providers ("OSPs"), sites maintained by
Internet service providers ("ISPs") and other
entities. There can be no assurance that Stockscape's
competitors and potential competitors will not develop
investor communities that are equal or superior to
those of Stockscape or that achieve greater market
acceptance than Stockscape's community. Accordingly,
Stockscape will likely face increased competition,
resulting in pressure on its and advertising revenues.
Stockscape also competes, to some degree, with other
information service providers which have established
major financial sites, such as Quicken, Yahoo Finance,
MarketWatch and others, although Stockscape focuses on
publication of niche (as opposed to broad-focus)
investment content.
Many of Stockscape's existing and potential competitors
have longer operating histories, greater name
recognition, larger customer bases and significantly
greater financial, technical and marketing resources
than Stockscape. Entities with which Stockscape might
in future seek to enter into a strategic relationship
may have already established collaborative
relationships with Stockscape's competitors or
potential competitors, and other high-traffic websites.
There can be no assurance that Stockscape will be able
to compete successfully in the internet or that
competition will not have a material adverse effect on
Stockscape's business, results of operations and
financial condition.
TECHNOLOGICAL RISKS. The performance of Stockscape's server and networking
hardware and
<PAGE>
-12-
software infrastructure is critical to Stockscape's
business and its ability to attract Web users and
advertisers to its website. Any system failure that
causes an interruption in service or a decrease in
responsiveness or failure of Stockscape's server and
networking systems to handle the volume of traffic of
Stockscape's website could impair the attractiveness
of its website, thereby reducing Stockscape's
marketing and e-commerce revenues. It is expected
that as the business develops the Company will need to
purchase additional servers and networking equipment
to maintain adequate data transmission speeds, the
availability of which may be limited or the cost of
which may be significant. The successful delivery of
Stockscape's services is also dependent, in
substantial part, upon the ability of Stockscape to
protect its server and network infrastructure against
damage from human error, power loss,
telecommunications failure, sabotage, intentional acts
of vandalism and similar events. The market in which
Stockscape competes is characterized by rapidly
changing technology, evolving industry standards,
frequent new product and service announcements and
enhancements and changing customer demands.
Stockscape's success will depend on its ability to
adapt to rapidly changing technologies and industry
standards, and its ability to continually improve the
speed, performance, features, ease of use and
reliability of its server and networking system. Any
failure to rapidly adapt in a changing environment
would have a material adverse effect on Stockscape's
competitiveness. Introducing new technology into
Stockscape's systems will require significant amounts
of capital, substantial amounts of personnel resources
and will take time to complete. There can be no
assurance that Stockscape will be successful at
integrating such technology into its Website on a
timely basis or without degrading the responsiveness
and speed of its website or that, once integrated,
such technology will function as expected.
GOVERNMENT REGULA- Stockscape is not currently subject to direct
TION AND LEGAL regulation by any government agency, other than
UNCERTAINTIES. regulations applicable to businesses generally, and
there are currently few laws or regulations directly
applicable to access to or commerce on the Internet.
However, due to the increasing popularity and use of
the Internet, a number of legislative and regulatory
proposals are under consideration by U.S. and Canadian
federal, state, provincial, local and foreign
governmental organizations, and it is possible that a
number of laws or regulations may be adopted with
respect to the Internet on matters including user
privacy, user screening, taxation, infringement,
pricing, content regulation and intellectual property
ownership and infringement. The adoption of any such
laws or regulations could slow or reverse the rate of
growth in the use of the Internet, which could, in
turn, decrease the demand for Stockscape's services,
and increase Stockscape's cost of doing business. The
applicability to the Internet of existing laws
governing issues such as property ownership, copyright,
trademark, trade secret, obscenity, libel and personal
privacy is uncertain and developing. Any new
legislation or regulation, or application or
interpretation of existing laws, could have a material
adverse effect on Stockscape's business, results of
operations and financial condition.
A number of legislative proposals have been made at the
U.S. and Canadian federal, state, provincial and local
level that would impose additional taxes on
<PAGE>
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the sale of goods and services over the Internet and
certain jurisdictions have taken measures to tax
Internet-related activities. It is possible that some
type of taxes will be imposed upon Internet commerce
in the future, and there can be no assurance that such
legislation or other attempts at regulating commerce
over the Internet will not substantially impair the
growth of commerce on the Internet and, as a result,
adversely affect Stockscape's opportunity to derive
financial benefit from such activities. Due to the
global nature of the Web, it is possible that,
although transmissions by Stockscape over the Internet
originate primarily in British Columbia, Canada, the
governments of various states in the United States and
foreign countries might claim jurisdiction over
Stockscape or its transmissions. There can be no
assurance that violations of local laws will not be
alleged or charged by state or foreign governments,
that Stockscape might not unintentionally violate such
laws or that such laws will not be modified, or new
laws enacted, in the future. Stockscape is qualified
to do business only in British Columbia, and failure
by Stockscape to qualify as a foreign corporation in a
jurisdiction where it is required to do so could
subject Stockscape to taxes and penalties and could
result in the inability of Stockscape to enforce
contracts in such jurisdictions. Any of the foregoing
developments could have a material adverse effect on
Stockscape's business, results of operations and
financial condition.
LIABILITY FOR Because materials may be downloaded by users of
INFORMATION RETRIEVED Stockscape's Website and subsequently distributed to
FROM THE WEB. others, there is a possibility that claims will be made
against Stockscape for defamation, negligence,
copyright or trademark infringement, personal injury or
other theories based on the nature, content,
publication and distribution of such materials. Such
claims have been brought, and sometimes successfully
pressed, against OSPs in the past. Stockscape could be
exposed to liability with respect to third party
content accessible through Stockscape's Website. If
any third party content provided on Stockscape's
Website contains errors, a claim could be brought
against Stockscape for losses incurred in reliance on
such information. Stockscape could incur significant
costs in investigating and defending against such
claims, regardless of the outcome. Stockscape does not
carry general liability insurance intended to protect
Stockscape from any liability arising out of the
foregoing and insurance may not be available to cover
all such potential claims or may not be adequate to
indemnify Stockscape for all liability that may be
imposed. Any imposition of liability that is not
covered by insurance or is in excess of insurance
coverage would have a material adverse effect on
Stockscape's business, results of operations and
financial condition.
SECURITY RISKS. There can be no assurance that experienced programmers
or "hackers" may not from time to time attempt to
penetrate Stockscape's network security. To date, none
of this activity has occurred. A party who is able to
penetrate Stockscape's network security could
misappropriate proprietary information or cause
interruptions in Stockscape's Website. Concerns over
the security of Internet transactions and the privacy
of users may also inhibit the growth of the Internet
generally, particularly as a means of conducting
commercial transactions. Security breaches or the
inadvertent transmission of computer viruses could
expose Stockscape to loss, litigation and possible
third party liability. There can be no assurance that
any contractual provisions or legal disclaimers
intended to limit Stockscape's liability in such areas
will be
<PAGE>
-14-
successful or enforceable.
RELIANCE ON Stockscape regards certain of its technology and
INTELLECTUAL PROPERTY certain advertising programs, including E-mail Blaster,
AND PROPRIETARY Investor Harvest Program and NewsStand Express as
RIGHTS. proprietary and relies on common law trademark, service
mark, copyright and trade secret laws and restrictions
on disclosure for protection. The Stockscape name is
the subject of a registered trademark in Canada and a
pending trademark registration in the United States.
Apart from the Stockscape trademark the company has no
other registered trademarks and has no present plans to
seek registration of any of its trademarks.
Stockscape's programs have been developed by its
employees and contractors. These contractors are now
employed by the company. While it considers its
current programs and methodologies proprietary, the
nature of the Internet and marketing on the Internet,
necessitates ongoing modification, updating and
evolution of all proprietary technology. Accordingly,
Stockscape does not generally require those involved to
enter into confidentiality or technology transfer
agreements but controls access to and distribution of
its documentation and other proprietary information.
Despite these precautions, it may be possible for a
third party to copy or otherwise obtain and use
Stockscape's proprietary information without
authorization or to develop similar technology
independently. Effective trademark, service mark,
copyright and trade secret protection may not be
available in every country in which Stockscape's
services are distributed or made available through the
Internet, and policing unauthorized use of proprietary
information is difficult. Legal standards relating to
the validity, enforceability and scope of protection of
certain proprietary rights in Internet-related
businesses are uncertain and still evolving, and no
assurance can be given as to the future viability or
value of any proprietary rights of Stockscape. There
can be no assurance that Stockscape's business
activities will not infringe upon the proprietary
rights of others, or that other parties will not assert
infringement claims against Stockscape. Stockscape may
be subjected to claims of alleged infringement of the
trademarks, service marks and other intellectual
property rights of third parties by Stockscape.
Although no such claims have been made to date, such
claims and any resultant litigation could be time
consuming and expensive to defend. Stockscape
currently licenses from third parties certain
technologies incorporated into Stockscape's website.
As stockscape continues to introduce new services that
incorporate new technologies, it may be required to
license additional technology from others. There can
be no assurance that these third party technology
licenses will continue to be available to Stockscape on
commercially reasonable terms, if at all.
DEPENDENCE ON Stockscape's future success is dependent upon continued
CONTINUED GROWTH IN growth in the use of the Internet and the Web. There
USE OF INTERNET. can be no assurance that the number of Internet users
will continue to grow or that e-commerce over the
Internet will become more widespread. Further, there
can be no assurance that the Web infrastructure will
continue to be able to support the demands placed on it
by continued growth or that the performance or
reliability of the Web will not be adversely affected
by continued growth.
CONTROL BY A.R. RULE Upon completion of the acquisition of Stockscape by the
INVESTMENTS (B.C.) Company, A.R. Rule
<PAGE>
-15-
LTD. Investments (B.C.) Ltd. will, in the aggregate,
beneficially own approximately 55% of the outstanding
Common Stock of the Company. As a result, this
shareholder will possess significant influence over
the Company, giving it the ability, among other
things, to elect a majority of the Company's Board of
Directors and approve significant corporate
transactions. Such share ownership and control may
also have the effect of delaying or preventing a
change in control of the Company, impeding a merger,
consolidation, takeover or other business combination
involving the Company, or discourage a potential
acquiror from making a tender offer or otherwise
attempting to obtain control of the Company and could
have a material adverse effect on the market price of
the Company's Common Stock.
YEAR 2000 COMPLIANCE. The "Year 2000 Problem" is pervasive and complex as
virtually every computer operation will be affected in
some way by the rollover of the two-digit year value to
00. The issue is whether computer systems will
properly recognize date-sensitive information when the
year changes to 2000. Systems that do not properly
recognize such information could generate erroneous
data or fail. Stockscape is in the process of working
with its software vendors to ensure that the software
that Stockscape has licensed from third parties will
operate properly in the year 2000.
In addition, Stockscape is working with its external
suppliers and service providers to ensure that they and
their systems will be able to support Stockscape's
needs and, where necessary, inter-operate with
Stockscape's server and networking hardware and
software infrastructure in preparation for the year
2000. Management does not anticipate that Stockscape
will incur significant operating expenses or be
required to invest heavily in computer systems
improvements to be year 2000 compliant.
However, significant uncertainty exists concerning the
potential costs and effects associated with any year
2000 compliance. Any year 2000 compliance problems of
either Stockscape, its customers or vendors could have
a material adverse effect on Stockscape's business,
results of operations and financial condition.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
The only material transactions of Stockscape during the past three years or
proposed transactions in which any director or senior officer, or any
principal shareholder of Stockscape has or had an interest, direct or
indirect, are as follows:
1. Arthur. R. Rule subscribed for common shares of Stockscape as follows:
a) 750,000 shares at $0.01 per share on July 17, 1996;
b) 200,000 shares at $0.25 per share on July 17, 1996.
These shares were subsequently transferred to A.R. Rule Investments (B.C.)
Ltd. ("Rule Investments").
2. Rule Investments subscribed for a further 800,000 shares at $0.25 per share
on March 26, 1999.
3. Rule Investments has advanced a total of C$608,704 in principal amount to
Stockscape for working capital purposes to December 31, 1998. As at
December 31, 1998 principal and accrued
<PAGE>
-16-
interest totalled C$654,015. The loans are interest-bearing at the rate
of 12% per annum and are repayable on demand. Rule Investments has
agreed to continue to fund the working capital requirements of
Stockscape on the same terms, pending completion of the acquisition of
the company by Cornucopia Resources Ltd.
4. Subsequent to December 31, 1998, Rule Investments agreed to accept shares
of Stockscape in satisfaction of up to $825,000 of any outstanding
indebtedness. The shares to be issued will form part of the shares to be
acquired by Cornucopia.
MATERIAL CONTRACTS
Except as otherwise disclosed herein, within the two years prior to the date
hereof Stockscape has not entered into any material contracts other than in
the ordinary course of business.
LEGAL PROCEEDINGS
To the knowledge of Stockscape, there are no material pending legal
proceedings to which Stockscape is or is likely to be a party or of which any
of its assets are or are likely to be subject. However the company is aware
of a claim by an employee which, if not resolved, could result in litigation
involving Stockscape. It is not presently anticipated that such litigation
would have a material affect on the business or operations of Stockscape.
AUDITORS
The auditors of Stockscape are Ellis Foster, Chartered Accountants, at their
principal offices at 1650 First Avenue, Vancouver, British Columbia, Canada,
V6J 1G1.
<PAGE>
APPENDIX "B"
ITEM 1. DISPOSITION OF IVANHOE JOINT VENTURE INTEREST
"BE IT RESOLVED, as a special resolution, that the sale of the Company's
25% joint venture interest in the Ivanhoe property, to be implemented by
the sale of all of the issued and outstanding shares of Touchstone
Resources Company, pursuant to the terms of an agreement dated March 2,
1999 between the Company and Great Basin Gold Ltd. ("Great Basin") in
exchange for 2,750,000 shares in the capital of Great Basin and 250,000 one
year share purchase warrants to purchase an equivalent number of additional
shares in the capital of Great Basin at $2.00 per share, which sale
represents a sale of substantially the whole of the undertaking of the
Company, be and it is hereby authorized and approved."
ITEM 2. CONSOLIDATION OF COMMON SHARES
"BE IT RESOLVED, as a special resolution, that:
1. the Company consolidate all of its issued and unissued common
shares without par value from 200,000,000 common shares without
par value into 20,000,000 common shares without par value, every
ten (10) of such common shares without par value being
consolidated into one (1) common share without par value;
2. no fractional common share of the Company shall be issued in
connection with the consolidation and in the event that the
resultant number of shares held by any shareholder is not a whole
number, then the number of common shares to be received by a
shareholder shall be rounded up or down to the nearest whole
number of common shares;
3. the Members hereby authorize the directors to decide when and
whether or not to proceed with the consolidation, in their
discretion, and authorize any one director or officer of the
Company to do such further acts and file such documents to effect
the consolidation as may seem necessary to such director or
officer."
ITEM 3. INCREASE IN AUTHORIZED CAPITAL
"BE IT RESOLVED, as an ordinary resolution, that:
1. the Company increase its authorized common shares without par
value from 20,000,000 common shares without par value to
200,000,000 common shares without par value such that the
authorized capital of the Company shall be 300,000,000 shares
divided into 200,000,000 common shares without par value and
100,000,000 preferred shares without par value, issuable in
series and that the Memorandum of the Company be altered
accordingly so that it will be in the form set out in Schedule
"A" attached hereto;"
ITEM 4. CHANGE OF NAME
"BE IT RESOLVED, as a special resolution, that the name of the Company be
changed from "Cornucopia Resources Ltd." to "Stockscape Technologies Ltd."
or to such other name as decided upon by the directors and acceptable to
the Registrar of Companies for British Columbia and that the Memorandum of
the company be altered accordingly."
ITEM 5. ADOPTION OF STOCK INCENTIVE PLAN
"BE IT RESOLVED, as an ordinary resolution, that the adoption of a new
Stock Incentive Plan, in the form attached as Appendix G to this Proxy
Statement be and is hereby ratified and approved."
<PAGE>
SCHEDULE "A" TO APPENDIX "B"
OF THE PROXY STATEMENT OF CORNUCOPIA RESOURCES LTD. DATED -,1999
COMPANY ACT
ALTERED MEMORANDUM
(AS ALTERED BY SPECIAL AND ORDINARY RESOLUTIONS PASSED ON THE - DAY OF -, 1999)
1. The name of the company is "STOCKSCAPE TECHNOLOGIES LTD.".
2. The authorized capital of the company consists of Three Hundred Million
(300,000,000) shares divided into Two Hundred Million (200,000,000) common
shares without par value and One Hundred Million (100,000,000) preferred
shares without par value. The special rights and restrictions attached to
the preferred shares are as set out in the Articles of the Company.
<PAGE>
APPENDIX "C"
SECTION 207 OF
THE COMPANY ACT (BRITISH COLUMBIA)
DISSENT PROCEDURE
207.(1) If,
(a) being entitled to give notice of dissent to a resolution as
provided in section 37, 103, 126, 222, 244, 249 or 289, a member
of a company (in this Act called a "dissenting member") gives
notice of dissent,
(b) the resolution referred to in paragraph (a) is passed, and
(c) the company or its liquidator proposes to act on the authority of
the resolution referred to in paragraph (a),
the company or the liquidator shall first give to the dissenting member notice
of the intention to act and advise the dissenting member of his rights under
this section.
(2) On receiving a notice of intention to act in accordance with
subsection (1), a dissenting member is entitled to require the company to
purchase all of the dissenting members shares in respect of which the notice
of dissent was given.
(3) The dissenting member shall exercise the right given by
subsection (2) by delivering to the registered office of the company, within
14 days after the company, or the liquidator, gives the notice of intention
to act,
(a) a notice that the dissenting member requires the company to
purchase all of the dissenting member's shares referred to in
subsection (2); and
(b) the share certificates representing all of those and, on delivery
of that notice and those share certificates, the dissenting
member is bound to sell those shares to the company and the
company is bound to purchase them.
(4) A dissenting member who has complied with subsection (3), the
company, or, if there has been an amalgamation, the amalgamated company, may
apply to the court, and the court may
(a) require the dissenting member to sell, and the company or the
amalgamated company to purchase, the shares in respect of which
the notice of dissent has been given;
(b) fix the price and terms of the purchase and sale, or order that
the price and terms be established by arbitration, in either case
having due regard for the rights of creditors;
(c) join in the application any other dissenting member who has
complied with subsection (3); and
(d) make consequential orders and give directions it considers
appropriate.
(5) The price that must be paid to a dissenting member for the shares
referred to in subsection (2) is their fair value as of the day before the
date on which the resolution referred to in
<PAGE>
-2-
subsection (1) was passed, including any appreciation or depreciation in
anticipation of the vote on the resolution, and every dissenting member who
has complied with subsection (3) must be paid the same price.
(6) The amalgamation or winding up of the company, or any change in
its capital, assets or liabilities resulting from the company acting on the
authority of the resolution referred to in subsection (1), shall not affect
the right of the dissenting member and the company under this section or the
price to be paid for the shares.
(7) Every dissenting member who has complied with subsection (3)
(a) may not vote, or exercise or assert any rights of a member, in
respect of the shares for which notice of dissent has been given,
other than under this section,
(b) may not withdraw the requirement to purchase the shares, unless
the company consents, and
(c) until the dissenting member is paid in full, may exercise and
assert all the rights of a creditor of the company.
(8) If the court determines that a person is not a dissenting member,
or is not otherwise entitled to the right provided by subsection (2), the
court, without prejudice to any acts or proceedings that the company, its
members or any class of members may have taken during the intervening period,
may make the order, it considers appropriate to remove the limitations
imposed on the person by subsection (7).
(9) The relief provided by this section is not available if,
subsequent to giving his notice of dissent, the dissenting member acts
inconsistently with his dissent, but a request to withdraw the requirement to
purchase the dissenting member's shares is not an act inconsistent with the
dissent.
(10) A notice of dissent ceases to be effective if the dissenting
member consents to or votes in favour of the resolution of the company to
which the dissent relates, unless the consent or vote is given solely as a
proxy holder for a person whose proxy required an affirmative vote.
<PAGE>
APPENDIX "D"
UNAUDITED PRO FORMA BALANCE SHEET AND NOTES AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
STOCKSCAPE CORNUCOPIA PRO FORMA PRO FORMA STOCKSCAPE
DECEMBER 31/98 DECEMBER 31/98 ADJUSTMENTS CONSOLIDATED
PRO FORMA
------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE SHEETS
ASSETS
Cash and cash equivalents 5,279 103,949 1,304,376 1,413,604
Segregated cash 33,026 0 33,026
Accounts receivable 56,528 25,844 82,372
Prepaid expenses and deposits 5,818 21,180 26,998
Investments 0 234,305 234,305
- ----------------------------------------------------------------------------------------------------------
100,650 385,278 1,790,304
- ----------------------------------------------------------------------------------------------------------
Investments 0 3,437,500 3,437,500
Capital assets 62,163 11,701 73,864
Resource assets 0 4 4
Patents & trademarks 5,393 0 5,393
- ----------------------------------------------------------------------------------------------------------
TOTAL ASSETS 168,205 3,834,483 5,307,065
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
LIABILITIES
Current Liabilities
Accounts payable and accrued
liabilities 63,646 101,277 164,923
Unearned Revenue 40,337 0 40,337
- ----------------------------------------------------------------------------------------------------------
103,983 101,277 205,260
TOTAL LIABILITIES 103,983 101,277 205,260
- ----------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL
Common shares 594,479 38,119,366 1,304,376 5,632,061
(38,119,366)
3,733,206
- ----------------------------------------------------------------------------------------------------------
594,479 38,119,366 5,632,061
Deficit (530,257) (34,386,160) 34,386,160 (530,257)
- ----------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 64,222 3,733,206 5,101,804
- ----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' 168,205 3,834,483 5,307,065
EQUITY
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
1. PROPOSED ACQUISITION AND BASIS OF PRESENTATION
The accompanying unaudited pro forma consolidated financial statements of
Cornucopia Resources have been compiled from and include:
(a) the unaudited consolidated balance sheet of Cornucopia Resources Ltd.
("Cornucopia") as at December 31, 1998.
(b) the unaudited balance sheet of Stockscape Technologies Ltd.
("Stockscape") as at December 31, 1998.
For more detailed information, readers should refer to the financial statements
of Cornucopia Stockscape included elsewhere in this Information Circular.
These pro forma consolidated financial statements give effect to the proposed
transactions, as detailed in the Share Exchange Agreement between Cornucopia and
Stockscape, described in notes 3,4 and 5 below. The pro forma consolidated
balance sheets have been presented as though the transactions occurred on
December 31, 1998.
In the opinion of management, the pro forma consolidated financial statements
include all the adjustments necessary for fair presentation in accordance with
Canadian generally accepted accounting principles.
THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS ARE NOT INTENDED TO REFLECT THE
RESULTS OF OPERATIONS OR THE FINANCIAL POSITION OF THE COMPANY WHICH WOULD HAVE
RESULTED HAD THE TRANSACTIONS BEEN EFFECTED ON THE DATES INDICATED ABOVE.
FURTHER, THE PRO FORMA FINANCIAL INFORMATION IS NOT NECESSARILY INDICATIVE OF
THE RESULTS OF OPERATIONS OR THE FINANCIAL POSITION THAT MAY BE OBTAINED IN THE
FUTURE.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) These pro forma financial statements for the fiscal year ended December 31,
1998, are prepared on the basis of accounting principles generally accepted
in Canada. Significant differences to accounting principles generally
accepted in the United States of America are explained in note 7 of the
consolidated financial statements of Cornucopia Resources Ltd.
(b) The unaudited balance sheet of Stockscape has been translated into United
States dollars using the rate of exchange prevailing at December 31, 1998.
(c) As this proposed transaction will result in the former shareholders of
Stockscape owning greater than 50% of Cornucopia's common shares,
accounting principles applicable to reverse takeovers have been used in the
compilation of this pro forma consolidated balance sheet to record the
acquisition by Stockscape of Cornucopia using the purchase method, with
Cornucopia deemed to be the purchased entity.
3. SALE OF TOUCHSTONE RESOURCES CO.
The Company has entered into an agreement dated March 2, 1999 (the "Sale
Agreement"), subject to shareholder approval, pursuant to which the Company will
sell its wholly-owned subsidiary, Touchstone Resources Company, ("Touchstone")
to Great Basin Gold Ltd., ("Great Basin") its joint venture partner in the
Ivanhoe project, in exchange for 2,750,000 common shares (the "Great Basin
Shares") and 250,000 share purchase warrants of Great Basin. The share purchase
warrants will entitle the Company to purchase additional shares of Great Basin
at $2.00 per share for one year.
<PAGE>
4. SHARE CONSOLIDATION
At the Meeting shareholders will be asked to consider and, if thought fit, to
pass a special resolution approving:
(a) The consolidation of the Company's authorized and issued common share
capital from TWO HUNDRED MILLION (200,000,000) common shares to TWENTY
MILLION (20,000,000) common shares, (i.e.) one (1) new common share for ten
(10) pre-consolidation common shares without par value;
(b) An increase in the Company's authorized common share capital to its
pre-consolidation level of TWO HUNDRED MILLION (200,000,000) common
shares without par value; and
5. ACQUISITION OF STOCKSCAPE
The common share consolidation and name change are fundamental to the Company's
reorganization and are conditions precedent to completion of the acquisition by
the Company of Stockscape Technologies Ltd. ("Stockscape"). Stockscape is an
Internet investment research provider and, after acquisition of Stockscape, the
business of Stockscape will become the Company's primary business. Detailed
disclosure on Stockscape and its business is provided in Appendix "A" to this
Information Circular.
(a) Under the terms of the Share Exchange Agreement between the Company and
[Vendors] dated March 1, 1999, the Company will acquire all of the
issued and outstanding shares of Stockscape by issuing 10,000,000
post-consolidation Common Shares of the Company (the "Payment Shares").
The parties have agreed that the Payment Shares will be issued for a deemed
value of Cdn. $0.50 per share making the overall deemed value of the transaction
C$5 million. The high and low sale prices of the Common Shares of the Company
of The Toronto Stock Exchange on March 1, 1999, the day preceding the date of
the issue of the news release announcing the transaction, were C$0.06 and
C$0.06, respectively.
(a) This business combination will be accounted for under the purchase
method with Cornucopia deemed to be the purchased entity.
(b) Subsequent to the acquisition of all of the outstanding shares of
Stockscape, Cornucopia will change its name to "-".
(c) All existing options of Cornucopia will be canceled in connection with
the Company's proposed reorganization, and will be replaced by new
incentive options for the purchase of post-consolidation shares.
(d) This business combination is subject to regulatory approval.
(e) Further conditions precedent to the acquisition are commitments for a
financing of up to 4 million units of the Company to be completed
contemporaneously with the acquisition The 4,000,000 unit financing will
be done on a post-consolidation basis at C$0.50 per unit to raise
maximum proceeds of C$2,000,000. Each unit will consist of one common
share and two share purchase warrants. One share purchase warrant will
be exercisable in the first year to acquire one additional common share
in the capital of the Company at C$0.65. The second warrant will be
exercisable for a period of two years to acquire one additional common
share at C$0.95. The warrants will have forced conversion features.
<PAGE>
6. SHARE CAPITAL
(a) Authorized share capital:
200,000,000 common shares without par value.
(b) Issued and outstanding.
<TABLE>
<CAPTION>
NUMBER OF AMOUNT
SHARES
<S> <C> <C>
Balance, December 31, 1998, per Cornucopia
financial statements 41,594,834 $38,119,366
Consolidation of common shares on a 1 new for 10 old
basis (note 4a) (37,435,351) --
----------------------------
4,159,483 38,119,366
Reduction in the book value of the continuing
company's stated share capital to that of Stockscape. -- (37,524,887)
----------------------------
4,159,483 594,479
Issuance of common shares to the shareholders of
Stockscape in exchange for their shares of Stockscape
(note 5a) 10,000,000 3,733,206
Issuance of common shares in private placement
condition precedent to Share Exchange Agreement 4,000,000 1,304,376
----------------------------
Pro forma balance, December 31, 1998 18,159,483 $5,632,061
----------------------------
----------------------------
</TABLE>
<PAGE>
APPENDIX "E"
STOCKSCAPE TECHNOLOGIES LTD. FINANCIAL STATEMENTS
AT SEPTEMBER 30, 1998
<PAGE>
APPENDIX "F"
CORNUCOPIA RESOURCES LTD. FINANCIAL STATEMENTS
AT DECEMBER 31, 1998 COMPARED WITH DECEMBER 31, 1997
<PAGE>
APPENDIX "G"
CORNUCOPIA RESOURCES LTD.
STOCK INCENTIVE PLAN
PART 1 - INTRODUCTION:
1.01 PURPOSE: The purpose of the Stock Incentive Plan (the "Plan") is to
establish a plan to advance the interests of Cornucopia Resources Ltd. (the
"Company") by encouraging equity participation in the Company by directors
and certain full-time and part-time employees of the Company or subsidiaries
of the Company through acquisition of common shares without par value in the
Company. The Plan is to consist of a share purchase plan (the "Share Purchase
Plan"), a share option plan (the "Share Option Plan"), and a share bonus plan
(the "Share Bonus Plan").
1.02 MEANING OF SHARES AND MAXIMUM NUMBER OF SHARES: As used in the Plan,
"Shares" means common shares without par value of the Company as constituted
on the day following the implementation by the Company of the share
consolidation proposed for approval by the shareholders of the Company at the
Annual and Extraordinary General Meeting of the shareholders to be held on or
about May 19, 1999, subject to Sections 2.09 and 3.11. Subject to Section
4.02, the number of Shares available or made available for the Share Purchase
Plan, Share Option Plan and Share Bonus Plan, individually and collectively,
will be determined from time to time by the Board of Directors, but the
aggregate maximum number of Shares which the Company may at any time reserve
for issuance under the Plan to any individual shall not exceed -% of the
issued and outstanding Shares of the Company at such time.
PART 2 - SHARE PURCHASE PLAN:
2.01 PARTICIPANTS: Participants in the Share Purchase Plan will be
full-time or seasonal full-time employees of the Company or any of its
subsidiaries (including employees who are officers thereof, whether or not
directors) who have been continuously employed by the Company or any of its
subsidiaries for at least 12 consecutive months and who have been designated
by the Company as participants in the Share Purchase Plan. The Board of
Directors shall have the right in its absolute discretion to waive such
12 month period or refuse any employee or group of employees the right of
participation or continued participation in the Share Purchase Plan.
2.02 DIRECTORS' AUTHORITY TO ESTABLISH AND PARTICIPANTS' RIGHT TO ELECT TO
PARTICIPATE IN THE SHARE PURCHASE PLAN AND PARTICIPANT'S CONTRIBUTION: The
Board of Directors of the Company shall have the authority to implement a
Share Purchase Plan for the benefit of designated Participants. Any such
Participant may elect to contribute money (the "Participant's Contribution")
to the Share Purchase Plan for any 12 month period commencing on any of
January l, April l, July 1 or October 1 in any calendar year (any of which
dates is hereinafter called the "Commencement Date") if the Participant, at
least two weeks prior to the Commencement Date, delivers to the Company a
written direction in form and substance satisfactory to the Company:
(a) Authorizing the Company to deduct, or authorizing any subsidiary
of the Company to deduct and remit to the Company, from the
Participant's salary in 12 equal installments the Participant's
Contribution commencing on the Commencement Date; and
<PAGE>
-2-
(b) directing the Company to register a municipal address specified
by the Participant as the Participant's address on the
shareholders' register for any Shares issued to the Participant
in accordance with the Share Purchase Plan.
The Participant's Contribution shall not exceed 10 percent of the
Participant's basic annual salary from the Company and/or its subsidiaries
before deductions, exclusive of any overtime pay, bonuses or allowances of
any kind whatsoever (the "Basic Annual Salary") as at the Commencement Date.
No adjustment shall be made to the Participant's Contribution until the next
12 month period in which the Participant elects to participate and then only
if a new written direction has been delivered to the Company for such 12
month period. The Participant's Contribution shall be held by the Company in
trust for the purposes of the Share Purchase Plan.
2.03 COMPANY'S CONTRIBUTION: Immediately prior to the date any Shares are
issued to a Participant in accordance with Section 2.05, the Company will
credit the Participant with and thereafter hold in trust for the Participant
an amount (the "Company's Contribution") equal to:
(a) For the first 12 months after an employee has been designated as
a Participant in the Share Purchase Plan - one-sixth of the
Participant's Contribution then held in trust by the Company; and
(b) thereafter - one-third of the Participant's Contribution then
held in trust by the Company.
2.04 AGGREGATE CONTRIBUTION: The Participant's Contribution plus the
Company's Contribution shall be the "Aggregate Contribution". The Company
shall not be required to segregate the Aggregate Contribution from its own
corporate funds or to pay interest thereon.
2.05 ISSUE OF SHARES: On March 31, June 30, September 30 and December 31 in
each calendar year the Company will issue to each Participant fully paid and
non-assessable Shares equal in value to the Aggregate Contribution held in
trust on such date by the Company converted into Shares at the Issue Price on
such dates. If such conversion would otherwise result in the issue to a
Participant of a fraction of a Share the Company will issue only such whole
Shares as are issuable. "Issue Price" means the simple average of the high
and low trading prices of the Shares for the three months prior to the date
of issue on the stock exchange on which the Shares are then listed or other
securities market having the highest trading volume for the Shares during
such three-month period. The Company shall hold any unused balance of the
Aggregate Contribution in trust for a Participant until used in accordance
with the Share Purchase Plan.
2.06 SAFEKEEPING AND DELIVERY OF SHARES: All Shares issued to a Participant
in accordance with the Share Purchase Plan will be held in safekeeping by the
Company and will be delivered, subject as provided in the Plan, to such
Participant upon the expiry of a period (the "Holding Period") of six months
following the date of issue of such Shares. If the Company receives on
behalf of a Participant in respect of any Shares so held:
(a) Cash dividends (less any sums required to be withheld pursuant to
applicable income tax legislation);
(b) options or rights to purchase additional securities of the
Company or any other Company;
<PAGE>
-3-
(c) any notice of meeting, proxy statement and proxy for any meeting
of holders of Shares of the Company; or
(d) other or additional Shares or other securities (issued by the
Company to holders of Shares by way of dividend or otherwise);
then the Company shall forward to such Participant at his last known address
according to the records of the Company any of the money or items listed in
Subsections 2.06(a) and (c), and in Subsection 2.06(b) if allowed by
applicable securities laws; and shall hold in safekeeping any additional
securities referred to in Subsection 2.06(d) and shall deliver such
securities to a Participant with delivery of the Shares in respect of which
such additional securities were issued.
2.07 EARLY DELIVERY OF SHARES: Any Shares issued to a Participant but held
in safekeeping by the Company will be distributed to a Participant or his
estate prior to the expiry of the Holding Period only upon:
(a) The Participant's retirement in accordance with the Company's
retirement policy, as determined from time to time by the Board
of Directors;
(b) the Participant's total disability, as determined in accordance
with the Company's disability policy, as determined from time to
time by the Board of Directors; or
(c) the Participant's death.
2.08 TERMINATION OF EMPLOYMENT: If a Participant shall cease to be employed
by the Company or any of its subsidiaries for any reason or shall receive
notice from the Company of the termination of his employment the Participant
shall be deemed to be no longer a Participant in the Share Purchase Plan; and
(a) Any portion of the Participant's Contribution then held in trust
for the Participant shall be paid to the Participant or his
estate, as the case may be;
(b) any portion of the Company's Contribution then held in trust for
the Participant shall be paid to the Company; and
(c) except as provided in Section 2.07, any Shares then held in
safekeeping for a Participant shall, subject to Section 260 of
the Company Act (British Columbia), be purchased for cancellation
by the Company at the Issue Price thereof or sold at market and
an amount equal to the lesser of:
(i) the Participant's Contribution; and
(ii) the portion of the proceeds received on any sale of such
Shares equal to:
(A) six-sevenths of the proceeds if the Shares were issued
within 12 months after the Participant was designated
as a Participant in the Share Purchase Plan; or
<PAGE>
-4-
(B) three-quarters of the proceeds if the Shares were
issued after the Participant's first year of
participation in the Share Purchase Plan;
shall be paid to the Participant and the balance shall be paid to
the Company.
2.09 AMALGAMATION, CONSOLIDATION OR MERGER: If the Company amalgamates,
consolidates with or merges with or into another company each Participant for
whom Shares are held in safekeeping will receive on the date any Shares would
otherwise be delivered to the Participant in accordance with Section 2.06 or
2.07 the securities, property or cash to which the Participant was entitled
on such amalgamation or merger.
PART 3 - SHARE OPTION PLAN:
Options granted pursuant to the Share Option Plan are either options intended
to qualify under Section 422A of the United States Internal Revenue Code of
1986, as amended ("Qualified Options") or options designated by the Company
that do not so qualify ("Non-Qualified Options"). Qualified Options and
Non-Qualified Options are hereafter collectively referred to as "options".
3.01 ELIGIBILITY: Participants in the Share Option Plan will be individuals
who are:
(a) Full-time, seasonal full-time or part-time employees of the
Company or any of its subsidiaries (including employees who are
officers thereof, whether or not directors) who, by the nature of
their jobs, are, in the opinion of the Board of Directors, in a
position to contribute to the success of the Company or any of
its subsidiaries or who, by virtue of their length of service to
the Company or to any of its subsidiaries, are, in the opinion of
the Board of Directors, worthy of special recognition; or
(b) Directors of the Company or any of its subsidiaries,
provided, however, that Qualified Options may only be granted to full-time
employees of the Company or any of its subsidiaries.
Options may also be granted in substitution for outstanding options of
another company in connection with a merger, consolidation, acquisition of
property or stock, or other reorganization between such other company and the
Company or any of its subsidiaries. In addition, options may be granted in
exchange for outstanding options whether such outstanding options be granted
under the Share Option Plan or any other stock option plan of the Company, or
under any incentive stock option agreement with the Company.
Subject to the terms and conditions of the Share Option Plan, the Board of
Directors may make grants of options in their discretion to eligible
participants under the Share Option Plan.
3.02 LAPSED OPTIONS: In the event that options granted under the Share
Option Plan are surrendered, terminate or expire without being exercised in
whole or in part, new options may be granted covering the Shares not
purchased under such lapsed options.
3.03 NUMBER OF OPTIONED SHARES PER PARTICIPANT: The determination regarding
the number or value of optioned Shares that may be granted to each
Participant pursuant to a grant of options will take
<PAGE>
-5-
into consideration the Participant's present and potential contribution to
the success of the Company, provided that:
(a) Such number or value of optioned Shares shall not exceed that
permitted by the rules and policies of any stock exchanges on
which the Shares are then listed; and
(b) the aggregate fair market value (determined at the date of grant)
of Shares for which Qualified Options granted hereunder first
become exercisable or vest during any calendar year shall not
exceed U.S. $100,000.
3.04 PRICE: The option price per Share for options will be fixed by the
Board of Directors at a price to be determined by the Board of Directors in
its sole discretion, provided that:
(a) The option price per Share shall not be less than that required
by the rules and policies of any stock exchanges on which the
Shares are then listed; and
(b) if an employee owns more than 10% of the total combined voting
power of all classes of shares of the Company or any subsidiary,
the option price per Share for a Qualified Option shall be equal
to or greater than 110% of the value otherwise determined in this
Section 3.04. The attribution of stock ownership rules in
Section 425(d) of the United States Internal Revenue Code of
1986, as amended (the "Code") are incorporated herein by this
reference and apply for purposes of calculating the 10% voting
power limitation.
3.05 EXERCISE OF OPTIONS: The period during which an option may be
exercised (the "Option Period") shall be determined by the Board of Directors
at the time the option is granted and may be up to five years from the date
the option is granted, except as the same may be reduced pursuant to the
provisions of Sections 3.08 and 3.09.
In order to ensure that the Company will receive the benefits
contemplated in exchange for the options granted hereunder no option shall be
exercisable until it has vested. The vesting schedule for each option shall
be specified in an option agreement as provided for in Section 3.10 hereof,
provided, however, that the Board of Directors shall have the right with
respect to any one or more Participants in the Share Option Plan to
accelerate the time at which a discretionary option may be exercised.
Options shall be exercisable, either all or in part, at any time
after vesting. If less than all of the shares included in the vested portion
of any option are purchased the remainder may be purchased at any subsequent
time prior to the expiration of the Option Period.
Except as set forth in Sections 3.08 and 3.09, no option may be
exercised unless the Participant is at the time of such exercise a full-time,
seasonal full-time or part-time employee or a director of the Company or any
of its subsidiaries and shall have continuously so served since the grant of
his option. Absence on leave, with the approval of the Company or any of its
subsidiaries, shall not be considered an interruption of service for any
purpose of the Share Option Plan.
The exercise of any option will be contingent upon receipt by the
Company of cash payment for the full purchase price of such Shares. No
Participant or his legal representatives, legatees or distributees will be, or
will be deemed to be, a holder of any Shares subject to an option
<PAGE>
-6-
under the Share Option Plan, unless and until certificates for such Shares
are issued to him or them under the terms of the Share Option Plan.
3.06 SUBSEQUENT OPTIONS: After an option is fully exercised, any grant of a
subsequent option by the Company to the Participant, whether such subsequent
option be granted under the Share Option Plan or any other stock option plan
of the Company, shall be subject to the rules and policies of any stock
exchanges on which the Shares are then listed.
3.07 RENEGOTIATION OF OPTIONS: An option, to the extent that it has not
been exercised, may be renegotiated, subject to the rules and policies of any
stock exchanges on which the Shares are then listed.
3.08 TERMINATION OF EMPLOYMENT OR DIRECTORSHIP: If a Participant shall
cease to be a full-time, seasonal full-time or part-time employee or a
director of the Company or any of its subsidiaries for any reason (other than
death), he may exercise his option to the extent that he was entitled to
exercise it at the date of his ceasing to be such an employee or a director
for such period as is determined by the Board of Directors, and in the
absence of any such determination, for a period of 30 days from the date on
which the Participant ceased to be an employee or director.
3.09 DEATH OF PARTICIPANT: In the event of the death of a Participant, or
in the event of the death of a Participant within 30 days after his ceasing
to be a full-time, seasonal full-time or part-time employee or a director of
the Company or any of its subsidiaries, the option theretofore granted to him
shall be exercisable only within a period of up to one year after such death
and then only:
(a) by the person or persons to whom the Participant's rights under
the option shall pass by the Participant's will or by the laws of
descent and distribution; and
(b) to the extent that he was entitled to exercise the option at the
date of his death.
3.10 OPTION AGREEMENT: Upon the grant of an option to a Participant, the
Company and the Participant shall enter into an option agreement setting out
the number of optioned Shares granted to the Participant and incorporating
the terms and conditions of the Share Option Plan and any other requirements
of regulatory bodies having jurisdiction over the securities of the Company.
Each option agreement shall also state whether the option evidenced thereby
is a Qualified Option or a Non-Qualified Option.
3.11 STOCK DIVIDEND, REORGANIZATION OR LIQUIDATION: Until the Participant
becomes a record holder of the Shares covered by each outstanding option, the
number of such Shares and the option price per Share shall be proportionately
adjusted for any increase or decrease in the number of issued shares of the
Company resulting from a subdivision or consolidation of shares, payment of a
stock dividend, or any other increase or decrease in the number of shares
effected by the Company without receipt of any, or for a nominal,
consideration.
If the Shares of the Company are changed into the same number of
Shares with a different par value, the shares resulting from any such change
shall be deemed to be Shares within the meaning of the Share Option Plan, and
each option shall apply to the same number of such new shares resulting from
such change as applied to old Shares immediately prior to such change.
<PAGE>
-7-
If the Company is the surviving or resulting Company in any
"reorganization" as that term is defined in Section 368 of the Code, each
outstanding option shall apply to such securities of the Company after the
reorganization as a holder of the number of Shares subject to the option
would be entitled under the terms of the reorganization. If, pursuant to the
terms of any reorganization in which the Company is not the surviving or
resulting Company, options granted hereunder are assumed by the surviving or
resulting company, each option shall continue in full force and effect, and
shall apply to such securities of the surviving company as a holder of the
number of Shares subject to the option would be entitled under the terms of
the reorganization. Should any such surviving or resulting company assume
options granted hereunder, the type and terms of securities of the surviving
or resulting company to which options would then be deemed to apply shall be
fixed solely by the terms of any applicable reorganization agreement and
holders of options shall have no rights whatsoever concerning the type and
terms of the substituted securities to which options would then apply. In
particular, holders of options shall have no rights as to the setting of
distribution, payment, expiration or maturity dates of any preferred stock,
certificates of contingent interest, bonds, debentures, warrants, rights,
options or other securities of any surviving or resulting company, with
respect to the date or dates of exercise of such options, and any such
distribution, payment, expiration or maturity dates shall be determined
solely by the terms of the reorganization agreement. In the event of any
dissolution or liquidation of the Company, or of any reorganization in which
the Company is not the surviving or the resulting company, and in connection
with which no assumption of or substitution of new options for the options
granted hereunder is made, each outstanding option shall terminate as of the
effective date of such dissolution, liquiation or reorganization. In lieu of
assuming any option, any resulting or surviving company may substitute new
options ("Substitute Options") for options granted hereunder, as contemplated
by Section 425 of the Code, and in such event each outstanding option shall
terminate as of the date of effectiveness of the corresponding Substitute
Option. In the event of any such reorganization, surviving original options
or Substitute Options shall have the same vesting dates as the corresponding
options granted hereunder.
The foregoing adjustments in the Shares shall be made by the Board
of Directors, or by any successor administrator of the Stock Incentive Plan,
or by the applicable terms of any assumption or substitution document, and
any adjustments so made shall be final, binding, and conclusive.
Except as provided in this Section 3.11, no Participant shall have
rights by reason of any subdivision or consolidation of shares of any class
including the Shares, or the payment of any stock dividend on Shares, or any
other increase or decrease in the number of Shares, or by reason of any
liquidation, dissolution, corporate combination or division; and any issue by
the Company of shares of any class including the Shares, or securities
convertible into shares of any class including the Shares, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
or price of the Shares subject to any option.
The grant of an option shall not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure or to merge, consolidate,
dissolve or liquidate, or to sell or transfer all or any part of its business
or assets.
PART 4 - SHARE BONUS PLAN:
4.01 PARTICIPANTS AND THE PLAN: Where the Board of Directors in its
discretion decides that any full-time or seasonal full-time employee of the
Company or any of its subsidiaries has rendered meritorious services which
contributed to the success of the Company or any of its subsidiaries, the
Board of Directors shall have the right in its sole and absolute discretion
to enter into any agreement
<PAGE>
-8-
with any such full-time or seasonal full-time employee, on any terms and
conditions, subject to any provisos and restrictions, and for such cash
consideration, if any, as the Board of Directors may determine for the
issuance of any number of Shares (subject to Sections 1.02 and 4.02) to any
such employee. No Shares shall be issued pursuant to the Share Bonus Plan
unless the employee has entered into such an agreement with the Board of
Directors.
4.02 NUMBER OF SHARES: The maximum number of Shares that may be issued under
the Share Bonus Plan in any calendar year shall be - shares, being - percent
(-%) of the total number of issued and outstanding shares on - .
PART 5 - GENERAL:
5.01 TRANSFERABILITY: All benefits, rights and options accruing to any
Participant in accordance with the terms and conditions of the Plan shall not
be transferable other than as specifically provided in Section 3.09 in the
event of the death of the Participant. During the lifetime of a Participant
all benefits, rights and options shall not be transferable and may only be
exercised by the Participant.
5.02 EMPLOYMENT: In the case of employees nothing contained in the Plan
shall confer upon any Participant any right with respect to employment or
continuance of employment with the Company or any of its subsidiaries, or
interfere in any way with the right of the Company or any of its subsidiaries
to terminate the Participant's employment at any time. Participation in any
Plan by a Participant is voluntary.
5.03 RECORD KEEPING: The Company shall maintain a register in which shall
be recorded:
(a) The name and address of each Participant;
(b) the Plan in which the Participant participates;
(c) any Participant's Contributions;
(d) the number of Shares held in safekeeping for a Participant; and
(e) the number of Shares subject to an option granted to a
Participant and the number of Shares subject to the option
remaining outstanding.
5.04 SECURITIES REGULATION AND TAX WITHHOLDING:
(a) Where necessary to effect exemption from registration of the
Shares under securities laws applicable to the securities of the
Company, a Participant shall be required, upon the acquisition of
any Shares pursuant to the Plan, to acquire the Shares with
investment intent (i.e. for investment purposes) and not with a
view to their distribution, and to present to the Board of
Directors an undertaking to that effect in a form acceptable to
the Board of Directors. The Board of Directors may take such
other action or require such other action or agreement by such
Participant as may from time to time be necessary to comply with
applicable securities laws. This provision shall in no way
obligate the Company to undertake the registration of any options
or the Shares under any securities laws applicable to the
securities of the Company.
<PAGE>
-9-
(b) The Board of Directors and the Company may take all such measures
as they deem appropriate to ensure that the Company's obligations
under the withholding provisions under income tax laws applicable
to the Company and other provisions of applicable laws are
satisfied with respect to the issuance of Shares pursuant to the
Plan or the grant or exercise of options under the Share Option
Plan.
(c) Issuance, transfer or delivery of certificates for Shares
purchased pursuant to the Plan may be delayed, at the discretion
of the Board of Directors, until the Board of Directors is
satisfied that the applicable requirements of securities and
income tax laws have been met.
5.05 ADMINISTRATION OF THE PLAN: The Plan will be administered by the Board
of Directors. The Board of Directors is authorized to interpret the Plan and
may from time to time amend or rescind rules and regulations required for
carrying out the Plan. Any such interpretation or construction of any
provision of the Plan shall be final and conclusive. All administrative
costs of the Plan shall be paid by the Company. The senior officers of the
Company are authorized and directed to do all things and execute and deliver
all instruments, undertakings and applications and writings as they in their
absolute discretion consider necessary for the implementation of the rules
and regulations established for administering the Plan.
5.06 AMENDMENT OF THE PLAN: The Board of Directors reserves the right to
amend, modify or terminate any part of the Plan at any time if and when it is
advisable in the absolute discretion of the Board of Directors. All
amendments to the Plan will be subject to any necessary approval of any
regulatory body having jurisdiction over the securities of the Company.
5.07 NO REPRESENTATION OR WARRANTY: The Company makes no representation or
warranty as to the future market value of any Shares issued in accordance
with the provisions of the Plan.
5.08 EFFECTIVE DATE AND TERM: The Plan shall be effective as of the date
the Board of Directors of the Company approve the Plan, and options,
benefits and rights may be granted by the Board of Directors from time to
time thereafter up to and including a date which is ten years from the
effective date of the Plan.
5.09 NECESSARY APPROVALS: The obligation of the Company to issue and
deliver any Shares in accordance with the Plan is subject to any necessary
approval of any regulatory authority having jurisdiction over the securities
of the Company. If any Shares cannot be issued to any Participant for
whatever reason, the obligation of the Company to issue such Shares shall
terminate and any Participant's Contribution held in trust for a Participant
and any option exercise price paid to the Company will be returned to the
Participant.
5.10 INTERPRETATION: The Plan shall be governed by and construed in
accordance with the laws of the Province of British Columbia.
<PAGE>
PROXY
ANNUAL AND EXTRAORDINARY 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 WEDNESDAY, MAY 19, 1999, AT 10:00 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 Against
<S> <C> <C>
1. To determine the number of Directors at six.
For Withhold
2. To elect Sargent H. Berner as Director __________ __________
To elect Andrew F.B. Milligan as Director __________ __________
To elect David R. Williamson as Director __________ __________
To elect A. Murray Sinclair as Director __________ __________
To elect John J. Brown as Director __________ __________
For Against
2. To appoint KPMG as Auditors of the Company. __________ __________
3. To authorize the Directors to fix the
auditors' remuneration. __________ __________
4. To consider and if thought fit to approve a
special resolution approving the disposition
of the Company's 25% interest in the Ivanhoe
Venture, to be implemented by a sale of all of
the issued and outstanding shares of
Touchstone Resources Company to Great Basin
Gold Ltd., on terms and conditions
substantially as set out in the Proxy
Statement accompanying this Proxy. __________ __________
5. To consider and if thought fit to approve a
special resolution consolidating all of the
Company's common shares without par value from
200,000,000 common shares into 20,000,000
common shares, every 10 common shares being
consolidated into 1 common share, as set out
in the Proxy Statement accompanying this
Proxy. __________ __________
6. To consider and if thought fit to approve an
ordinary resolution increasing the Company's
authorized common share capital to its pre-
consolidation level of 200,000,000 common
shares without par value and altering the
Company's Memorandum accordingly, as set out
in the Proxy Statement accompanying this
Proxy. __________ __________
7. To consider and if thought fit to approve a
special resolution authorizing a change of the
name of the Company to "Stockscape
Technologies Ltd." or such other name as
decided upon by the Directors. __________ __________
8. To consider and if thought fit to pass an
ordinary resolution to approve the adoption of
a stock option plan, as set out in the Proxy
Statement accompanying this Proxy. __________ __________
9. To transact such other business as may
properly come before the Meeting. __________ __________
</TABLE>
<PAGE>
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.
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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.
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