<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From __________________to___________________
Commission File Number 1-10012
SUNSHINE MINING AND REFINING COMPANY
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 75-2231378
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
877 W. Main, Suite 600, Boise, Idaho 83702
- - --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number including area code (208) 345-0660
----------------
- - --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed
since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
<TABLE>
<CAPTION>
Number of Shares Outstanding
Title of Each Class of Common Stock at October 30, 1995
- - ------------------------------------ ------------------------
<S> <C>
Common Stock, $.01 par value 193,071,928
</TABLE>
Page 1 of 16
<PAGE> 2
SUNSHINE MINING AND REFINING COMPANY
CONSOLIDATED BALANCE SHEETS
(In Thousands)
ASSETS
<TABLE>
<CAPTION>
September 30,1995 December 31,1994
-------------------- --------------------
<S> <C> <C>
Current assets:
Cash and cash investments $ 18,993 $ 26,581
Silver bullion 8,987 8,408
Accounts receivable 2,013 416
Inventories (Note 2) 1,698 3,151
Marketable securities 39 1,097
Other current assets 1,455 1,367
-------------------- --------------------
Total current assets 33,185 41,020
Property, plant and equipment, at cost 138,002 137,798
Less accumulated depreciation,
depletion and amortization (69,113) (66,390)
-------------------- --------------------
68,889 71,408
Investments and other assets 3,415 4,229
-------------------- --------------------
Total assets $ 105,489 $ 116,657
==================== ====================
</TABLE>
See accompanying notes.
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<PAGE> 3
SUNSHINE MINING AND REFINING COMPANY
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30,1995 December 31,1994
------------------------ --------------------
<S> <C> <C>
Current liabilities:
Accounts payable 719 435
Accrued expenses $ 1,804 $ 2,048
------------------------ --------------------
Total current liabilities 2,523 2,483
Long-term debt 1,519 1,519
Accrued pension and other postretirement benefits 6,561 6,811
Other long-term liabilities and deferred credits 5,440 5,436
Stockholders' equity:
Cumulative redeemable preferred stock--
aggregate redemption value:
September 30, 1995 - $126,071
December 31, 1994 - $119,675 81,928 80,707
Common stock--$.01 par value;
400,000 shares authorized; shares issued:
September 30, 1995 - 196,726
December 31, 1994 - 196,659 1,967 1,967
Paid-in capital 623,325 623,181
Deficit (617,737) (605,410)
------------------------ --------------------
89,483 100,445
------------------------ --------------------
Less treasury stock, at cost:
3,664 shares 37 37
------------------------ --------------------
89,446 100,408
Total liabilities and
stockholders' equity $ 105,489 $ 116,657
======================== ====================
</TABLE>
See accompanying notes.
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<PAGE> 4
SUNSHINE MINING AND REFINING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1995 AND 1994
(In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
QUARTER NINE MONTHS
------------------------------- ---------------------------------
1995 1994 1995 1994
----------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
Operating revenues $ 5,149 $ 5,009 $ 13,178 $ 12,492
Costs and expenses:
Cost of sales 4,233 4,977 14,203 12,035
Depreciation, depletion
and amortization 1,047 970 2,724 3,232
Exploration 1,702 563 4,045 1,408
Selling, general and
administrative expense 1,386 1,393 4,263 4,114
Curtailment gain on postretirement benefits
other than pensions (Note 3) - - - (6,936)
----------- ------------- ------------ --------------
8,368 7,903 25,235 13,853
----------- ------------- ------------ --------------
Operating income (loss) (3,219) (2,894) (12,057) (1,361)
Other income (expense):
Interest income 291 363 1,024 792
Interest expense (232) (322) (575) (953)
Other, net 260 25 502 830
----------- ------------- ------------ --------------
319 66 951 669
----------- ------------- ------------ --------------
Net income (loss) (2,900) (2,828) (11,106) (692)
Preferred dividend requirements (2,500) (2,591) (7,617) (7,902)
----------- ------------- ------------ --------------
Income (loss) applicable to common shares $ (5,400) $ (5,419) $ (18,723) $ (8,594)
=========== ============= ============ ==============
Income (loss) per common share $ ($0.03) $ ($0.03) $ ($0.10) $ ($0.05)
=========== ============= ============ ==============
Weighted average common
shares outstanding 193,059 189,072 193,031 184,188
=========== ============= ============ ==============
</TABLE>
See accompanying notes.
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<PAGE> 5
SUNSHINE MINING AND REFINING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1995 AND 1994
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
------------------- ----------------------
<S> <C> <C>
Cash used by operating activities:
Net loss $ (11,106) $ (692)
Adjustments to reconcile loss from operations
to net cash used by operations:
Depreciation, depletion and amortization 2,724 3,232
Exploration Expenditures 4,045 1,408
Curtailment gain on postretirement benefits - (6,936)
Realized and unrealized (gains) losses on
marketable equity securities (134) -
Issuances of common stock for interest
on Silver Indexed Bonds and other 143 379
Net (increase) decrease in:
Silver bullion (579) 102
Accounts receivable (1,597) (751)
Inventories 1,453 (2,252)
Other assets and deferred charges 148 (63)
Net increase (decrease) in:
Accounts payable and accrued expenses 40 (1,331)
Accrued pension and other postretirement benefits (250) 79
Other liabilities and deferred credits 4 (415)
------------------- ----------------------
Net cash used by operations (5,109) (7,240)
------------------- ----------------------
Cash provided (used) by investing activities:
Additions to property, plant and equipment and
exploration expenditures (4,249) (1,512)
Proceeds from investments 1,770 52
------------------- ----------------------
Net cash provided by investing activities (2,479) (1,460)
------------------- ----------------------
Cash provided by financing activities:
Issuance of common stock (Note 4) - 29,735
Decrease in restricted cash - 236
Principal repayments and retirements of long-term debt - (305)
------------------- ----------------------
Net cash provided by financing activities - 29,666
------------------- ----------------------
Increase (decrease) in cash and cash investments (7,588) 20,966
Cash and cash investments, January 1 26,581 4,304
------------------- ----------------------
Cash and cash investments, September 30 $ 18,993 $ 25,270
=================== =====================
Supplemental cash flow information -
Interest paid in cash $ 146 $ 329
=================== =====================
</TABLE>
See accompanying notes.
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<PAGE> 6
SUNSHINE MINING AND REFINING COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 1995
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements
of Sunshine Mining and Refining Company ("Sunshine" or the "Company")
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Certain previously reported amounts have been
reclassified to conform to the September 1995 presentation. Operating
results for the nine month period ended September 30, 1995 are not
necessarily indicative of the results that may be expected for the
year ended December 31, 1995. For further information, refer to the
consolidated financial statements and footnotes thereto included in
Sunshine's report on Form 10-K for the year ended December 31, 1994.
2. INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
September 30 December 31
1995 1994
------------ -----------
<S> <C> <C>
Precious Metals Inventories:
Work in process $ 723 $ 2,241
Finished goods 256 173
Materials and supplies inventories 719 737
--------- ---------
$ 1,698 $ 3,151
========= =========
</TABLE>
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<PAGE> 7
3. CURTAILMENT GAIN
During the first nine months of 1994, the Company recognized a
curtailment gain of $6.9 million due to the termination of certain
employee postretirement medical benefits. See "Management's
Discussion and Analysis of Financial Condition."
4. COMMON STOCK OFFERING
During the first nine months of 1994, the Company realized net
proceeds of $30.1 million from a Rights Offering of Units to its
stockholders. See "Management's Discussion and Analysis of Financial
Condition."
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<PAGE> 8
SUNSHINE MINING AND REFINING COMPANY
Management's Discussion and Analysis of Financial
Condition and Results of Operations for the
Nine Months Ended September 30, 1995 and 1994
LIQUIDITY AND CAPITAL RESOURCES
As the price of silver since 1985 has been only slightly in excess of,
or less than, the Company's cash cost to produce an ounce of silver, the
Company's operations have not been able to generate cash flow sufficient to
cover its costs of exploration, research, general and administrative expenses,
and interest, as well as non-cash charges such as depreciation, depletion, and
amortization. Until such time as the price of silver increases significantly
or higher production is achieved at a lower cost, the Company will continue to
generate a negative cash flow from operations. However, the Company had
approximately $30.7 million of working capital, including approximately $28.0
million of cash and silver bullion held for investment at September 30, 1995.
These balances are deemed adequate to fund the Company's expected cash
requirements for several years.
The Company anticipates capital expenditures in its existing
operations over the next twelve months to be approximately $1 million. If the
Company successfully develops new reserves in the West Chance Area of the
Sunshine Mine, as presently anticipated, capital expenditures would increase by
approximately $4 million. Exploration expenditures for the first nine months of
1995 totaled approximately $4.0 million, and are anticipated to continue at a
comparable rate for the next twelve months.
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<PAGE> 9
Preferred Stock
The dividend on Sunshine's $11.94 (Stated Value) Cumulative Redeemable
Preferred Stock (the "Preferred Stock") has neither been declared nor paid
since December 31, 1990. Given current silver prices, the Company does not
expect any resumption of dividends in the foreseeable future. Dividends are
cumulative. The amount of aggregate redemption value disclosed on the balance
sheet includes $40 million in dividends in arrears.
The Certificate of Designation of Rights and Preferences (the
"Certificate") governing the Preferred Stock prohibits partial redemptions
while dividends are in arrears. Therefore, the Company has not made annual
redemptions of approximately 808 thousand shares of the Preferred Stock since
1991.
Pursuant to the Certificate, the Company may make dividend payments
and redemptions of the Preferred Stock using cash or by issuing shares of its
common stock valued in accordance with a specified formula. There are no
penalties for the Company failing to make dividend payments or partial
redemptions.
The Company recently announced that it had reached agreements with
each of the three largest holders of Preferred Stock on the terms of a
transaction which would result in the conversion of the entire outstanding
issue (approximately 7,166,000 shares) of Preferred Stock into common stock of
the Company. If completed pursuant to the terms of the agreements, the
transaction would eliminate the Preferred Stock and extinguish all dividend
arrearages, redemption requirements, and other rights of the Preferred Stock.
The terms of the transaction provide for Sunshine to be merged with
and into its wholly-owned subsidiary, Sunshine Merger Company, after the
approval by the holders of a majority of the outstanding shares of the
Preferred Stock voting as a class and the holders of a majority of the
outstanding shares of common stock voting as a class. The three holders
who have agreed to support the transaction hold approximately 25% of the
Preferred Stock outstanding.
- 9 -
<PAGE> 10
After the merger, the subsidiary would immediately change its name to
Sunshine Mining and Refining Company. Pursuant to the terms of the merger,
each common share of Sunshine would automatically become a common share of the
new company, and each Preferred share would be converted to (a) newly-issued
shares of common stock, the quantity to be determined by a formula, and (b)
either .9 shares of common stock for each Preferred share, or, at the option of
the Preferred holder, two warrants to purchase common stock.
The Company has filed Proxy Prospectus materials with the Securities
and Exchange Commission (the "SEC") and expects to mail the Prospectus to
shareholders after the SEC review process is completed.
Operating, Investing, and Financing Activities
Cash used in operating activities in the first nine months of 1995 was
$5.1 million compared to $7.2 million in the first nine months of 1994. Cash
operating losses increased in the first nine months of 1995 by $1.7 million.
This is offset by changes in working capital components, principally
inventories.
Approximately $2.5 million of cash was used by investing activities in
the first nine months of 1995 compared to $1.5 million in the 1994 period. The
$1.0 million increase was primarily due to increased exploration expenditures
of $2.6 million partially offset by the sale of certain marketable securities.
Cash provided by financing activities was $30 million in the first
quarter of 1994 as a result of the Company's Rights Offering. There was no
cash provided by financing activities in the first nine months of 1995.
Other
Beginning in 1996 the Company will be subject to the provisions of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
("SFAS No. 121"). The Company's current method of accounting for permanent
- 10 -
<PAGE> 11
impairment of its mining properties is consistent with the provisions of SFAS
No. 121.
RESULTS OF OPERATIONS
THE THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1994
Consolidated operating revenues increased approximately $140 thousand
for the third quarter of 1995 compared to the third quarter of 1994 due to mark
to market increases on work in process inventories and investment bullion
during the quarter ($730 thousand increase in the third quarter of 1995
compared to $669 thousand increase in the same period in 1994), and an increase
in by-product revenues.
Cost of sales decreased $744 thousand (15%) (from $5.0 million in the
third quarter of 1994 to $4.2 million in the third quarter of 1995) due to
lower unit production costs. Unit production costs decreased primarily due to
increases in silver production from 1994 to 1995 (571 thousand ounces produced
from 29,056 tons at 20.27 ounces per ton in 1995 versus 469 thousand ounces
from 25,599 tons at 18.92 ounces per ton in 1994). Production in the third
quarter more nearly approximates production objectives during this exploration
period.
Exploration expense increased $1.1 million (202%) for the third
quarter of 1995 compared to the same period in 1994 in keeping with the
Company's plan to increase exploration spending at the Sunshine mine and as
well as other sites in Arizona, Colorado, Argentina, and Peru.
Depreciation, depletion and amortization increased approximately $77
thousand. Higher depletion expense is a result of higher production figures in
the quarter.
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<PAGE> 12
THE NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1994
Consolidated operating revenues increased approximately $686 thousand
(5.5%) for the first nine months of 1995 compared to the first nine months of
1994 due to higher sales volume (2.0 million ounces in the first nine months of
1995 compared to 1.9 million ounces in the same period of 1994) due to the
inventory drawdown discussed below.
During the first quarter of 1995 the Company suspended operation of
its silver refinery. As a result, the Company began selling silver and copper
concentrate to a third-party smelter instead of refining silver bullion and
copper metal for sale to commercial and industrial customers. This resulted in
a shorter processing time before sales recognition, causing a drawdown of
work-in-process inventories versus an inventory buildup in the first nine
months of 1994. Cost of sales increased $2.2 million from the first nine months
of 1995 compared to 1994, due to this drawdown in inventories and an increase
in unit production costs. Unit production costs increased primarily due to
declines in silver production from 1994 to 1995 (1.3 million ounces produced
from 79,025 tons at 17.46 ounces per ton in 1995 versus 1.6 million ounces from
78,655 tons at 21.44 ounces per ton in 1994). Mine production declined due to
a reduction in mill head grades as a result of extensive underground
development activities. Additionally, the operation experienced earlier than
expected mineout and adverse mining conditions in many of the mine's productive
stopes. Production levels have been improving gradually since April, and the
third quarter production more nearly approximates production objectives during
this exploration period.
Exploration expense increased $2.6 million (187%) for the first nine
months of 1995 compared to the same period in 1994 in keeping with the
Company's plan to
- 12 -
<PAGE> 13
increase exploration spending at the Sunshine mine and as well as other sites
in Arizona, Colorado, Argentina, and Peru.
Depreciation, depletion and amortization declined by approximately
$508 thousand. Lower depletion expense is a result of lower production figures
in the nine month period.
Interest income increased by $232 thousand (29.3%) due to higher cash
balances after the Company's rights offering in March 1994.
Interest expense was reduced $378 thousand (39.7%) due to the
reduction of approximately $8 million (84%) in the aggregate principal amount
of debt outstanding in the first quarter of 1994.
Sunshine's net income in 1994 included a $6.9 million gain on the
curtailment of certain postretirement medical benefits for certain of its
employees and retirees.
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<PAGE> 14
SUNSHINE MINING AND REFINING COMPANY
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
By letter dated July 17, 1995, Sunshine and Sunshine Precious
Metals, Inc. ("SPMI"), its wholly owned subsidiary, were
notified that they have been identified by the United States
Department of the Interior, Fish and Wildlife Service, as PRPs
for alleged natural resource damage in the Coeur d'Alene
Basin. The letter further served as notice that the
Department of the Interior intends to bring suit against
Sunshine, SPMI and other identified PRPs to recover natural
resource damages under CERCLA. The Department of Interior has
not set forth any amount of damages. The Company believes
that the settlement by SPMI of all natural resource claims
with the State of Idaho in May, 1986, bars these claims.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
99.1 Agreement between Sunshine and Elliott
Associates, L.P. dated October 19, 1995
("ELLIOTT") whereby ELLIOTT agrees to
vote all of its shares of Preferred Stock
for the proposed merger of Sunshine and its
wholly owned subsidiary.
99.2 Agreement between Sunshine and Grace
Holdings, L.P. dated October 23, 1995
("GRACE") whereby GRACE agrees to vote all
of its shares of Preferred Stock for the
proposed merger of Sunshine and its wholly
owned subsidiary.
99.3 Agreement between Sunshine and Lloyd I.
Miller, III dated October 20, 1995
("MILLER") whereby Miller agrees to vote
all of his shares of Preferred Stock for
the proposed merger of Sunshine and its
wholly owned subsidiary.
27 Financial Data Schedule.
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<PAGE> 15
(b) Reports on Form 8-K
None
- 15 -
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
SUNSHINE MINING AND REFINING COMPANY
Dated: November 6, 1995 By: /s/ William W. Davis
--------------------------------
William W. Davis
Senior Vice President,
Chief Financial Officer and
Chief Accounting Officer
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<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibits Description
- - -------- -----------
<S> <C>
99.1 Agreement between Sunshine and Elliott Associates, L.P. dated October
19, 1995 ("ELLIOTT") whereby ELLIOTT agrees to vote all of its shares of
Preferred Stock for the proposed merger of Sunshine and its wholly owned
subsidiary.
99.2 Agreement between Sunshine and Grace Holdings, L.P. dated October 23,
1995 ("GRACE") whereby GRACE agrees to vote all of its shares of Preferred
Stock for the proposed merger of Sunshine and its wholly owned subsidiary.
99.3 Agreement between Sunshine and Lloyd I. Miller, III dated October 20,
1995 ("MILLER") whereby Miller agrees to vote all of his shares of Preferred
Stock for the proposed merger of Sunshine and its wholly owned subsidiary.
27 Financial Data Schedule.
</TABLE>
<PAGE> 1
Exhibit 99.1
AGREEMENT
THIS AGREEMENT is entered into as of October 19, 1995, by and between
SUNSHINE MINING AND REFINING COMPANY (the "Company"), whose address is 877 W.
Main St., Suite 600, Boise, Idaho 83702; and ELLIOTT ASSOCIATES, L.P., whose
address is 712 Fifth Avenue, 36th Floor, New York, New York 10019 ("Elliott"),
who is the beneficial owner of 535,800 shares of $11.94 (Stated Value)
Preferred Stock of the Company (the "Preferred Stock").
For good and valuable consideration, the parties hereto, intending to
be legally bound, agree as follows:
1. Elliott hereby covenants and agrees to vote all of the shares
of Preferred Stock beneficially held by it FOR the merger proposal (the "Merger
Proposal") as outlined in the term sheet attached herewith and incorporated
herein by reference, at a special meeting of shareholders of the Company, and
any adjournment thereof, at which the Merger Proposal may be presented for the
approval of shareholders.
2. Elliott agrees that it will not join nor participate as a
party in that certain litigation commenced against the Company by Harbor
Finance Partners, a Colorado partnership, and currently pending in Delaware
Chancery Court, New Castle County, identified as Case No. CA 14159, nor in any
similar litigation.
3. This Agreement, and all obligations hereunder, including
without limitation paragraph 2, shall expire upon the earlier of (i) the 120th
day after the date hereof, provided that the merger ("Merger") described in the
Merger Proposal has not occurred, or (ii) the date, if any, upon which the
Merger Proposal is either withdrawn or materially modified by the Company.
4. This Agreement shall be binding upon the parties' successors
and assigns. This Agreement shall be interpreted pursuant to the laws of the
state of Delaware.
5. By executing this Agreement, the undersigned each represent
and warrant that it has been duly authorized to execute this Agreement and to
be bound thereby.
ELLIOTT ASSOCIATES, L.P.
DATED: October 19, 1995 By: PAUL E. SINGER
---------------- -----------------------------
Paul E. Singer, General
Partner
SUNSHINE MINING AND REFINING COMPANY
By: WILLIAM W. DAVIS
-----------------------------
William W. Davis, Senior
Vice-President and Chief
Financial Officer
<PAGE> 2
PREFERRED STOCK
PROPOSED TRANSACTION
Merge SSC into special purpose sub, with each Preferred share replaced by (a)
Sunshine Common Stock issuable pursuant to the formula described below, and (b)
.9 share of common stock or, at the option of the holder, 2 Warrants as
described below:
SUNSHINE COMMON STOCK
The number of shares of Common stock will be
that number of shares determined by dividing
the closing price on Sunshine Common stock
on the latest date practical prior to
mailing the prospectus into $10.50 (at a
1 7/8 Common stock price, 5.6 shares).
If the average closing price of the Common
stock on the NYSE for the first 120 trading
days after the Effective Date of the Merger
is less than the initial price used to
determine the number of shares issuable,
additional Common shares will be issued as
soon as practical after the end of the
120-trading day period. The additional
number of shares issuable will be determined
by the following formula, where:
X = Average Common stock closing price on
the NYSE for first 120 trading days
after issuance, and
Y = Average Common shares initially
issuable per Preferred share
$10.50 - Y. In no event will the total of
------ initial shares
X
issuable, plus additional shares issuable,
exceed 8.4.
WARRANTS
Shares purchasable 1
Exercise Price 110% of the Common stock closing price on
the latest date practical prior to mailing
the prospectus; resettable to 110% of
average closing price of the Common stock on
the NYSE for the first 120 trading days
after the Effective Date of the Merger, if
such price is less than the initial price.
Expiration 5 years from issuance
<PAGE> 1
EXHIBIT 99.2
AGREEMENT
THIS AGREEMENT is entered into as of October 23, 1995, by and between
SUNSHINE MINING AND REFINING COMPANY (the "Company"), whose address is 877 W.
Main St., Suite 600, Boise, Idaho 83702, and GRACE HOLDINGS, L.P., whose
address is 1000 West Diversy Parkway, Suite 233, Chicago, Illinois 60614
("Grace"), who is the beneficial owner of 844,200 shares of $11.94 (Stated
Value) Preferred Stock of the Company (the "Preferred Stock").
For good and valuable consideration, the parties hereto, intending to
be legally bound, agree as follows:
1. Grace hereby covenants and agrees to vote all of the shares of
Preferred Stock beneficially held by it FOR the merger proposal (the "Merger
Proposal") in accordance with the term sheet attached herewith and incorporated
herein by reference, at a special meeting of shareholders of the Company, and
any adjournment thereof, at which the Merger Proposal may be presented for the
approval of shareholders.
2. Grace hereby agrees that, upon consummation of the merger (the
"Merger") as contemplated in the Merger Proposal, it will dismiss with
prejudice its litigation currently pending against the Company in The United
States District Court for the District of Delaware, identified as Case No. CA
95-38, each party bearing its own costs and attorney fees.
3. Grace agrees that it will not join nor participate as a party
in that certain litigation commenced against the Company by Harbor Finance
Partners, a Colorado partnership, and currently pending in Delaware Chancery
Court, New Castle County, identified as Case No. CA 14159, nor in any similar
litigation.
4. This Agreement, and all obligations hereunder, including
without limitation paragraph 3, shall expire upon the earlier of (i) the 120th
day after the date hereof, provided that the Merger has not occurred, or (ii)
the date, if any, upon which the Merger Proposal is either withdrawn or
materially modified by the Company.
5. This Agreement, shall be binding upon the parties' successors
and assigns. This Agreement shall be interpreted pursuant to the laws of the
State of Delaware.
6. By executing this Agreement the undersigned each represent and
warrant that it has been duly authorized to execute this Agreement and to be
bound thereby.
<PAGE> 2
GRACE HOLDINGS, L.P.
DATED: October 23, 1995 By: BRADFORD T. WHITMORE
---------------- ----------------------------
Bradford T. Whitmore
SUNSHINE MINING AND REFINING COMPANY
By: WILLIAM W. DAVIS
---------------------------
William W. Davis, Senior
Vice-President and Chief
Financial Officer
<PAGE> 3
PREFERRED STOCK
PROPOSED TRANSACTION
Merge SSC into special purpose sub, with each Preferred share replaced by (a)
Sunshine Common Stock issuable pursuant to the formula described below, and (b)
.9 share of common stock or, at the option of the holder, 2 Warrants as
described below:
SUNSHINE COMMON STOCK
The number of shares of Common stock will
be that number of shares determined by
dividing the closing price on Sunshine
Common stock on the latest date practical
prior to mailing the prospectus into
$10.50 (at a 1 7/8 Common stock price, 5.6
shares).
If the average closing price of the Common
stock on the NYSE for the first 120
trading days after the Effective Date of
the Merger is less than the initial price
used to determine the number of shares
issuable, additional Common shares will be
issued as soon as practical after the end
of the 120-trading day period. The
additional number of shares issuable will
be determined by the following formula,
where:
X = Average Common stock closing price on
the NYSE for first 120 trading days
after issuance, and
Y = Average Common shares initially
issuable per Preferred share
$10.50 - Y. In no event will the total of
------ initial shares
X
issuable, plus additional shares issuable,
exceed 8.4.
WARRANTS
Shares purchasable 1
Exercise Price 110% of the Common stock closing price on
the latest date practical prior to mailing
the prospectus; resettable to 110% of
average closing price of the Common stock
on the NYSE for the first 120 trading days
after the Effective Date of the Merger, if
such price is less than the initial price.
Expiration 5 years from issuance
<PAGE> 1
EXHIBIT 99.3
AGREEMENT
THIS AGREEMENT is entered into as of October 20, 1995, by and between
SUNSHINE MINING AND REFINING COMPANY (the "Company"), whose address is 877 W.
Main St., Suite 600, Boise, Idaho 83702; and LLOYD I. MILLER, III, whose
address is 4550 Gordon Dr., Naples, Florida 33940 ("Miller") who is the
beneficial owner of 430,100 shares of $11.94 (Stated Value) Preferred Stock of
the Company (the "Preferred Stock").
For good and valuable consideration, the parties hereto, intending to
be legally bound, agree as follows:
1. Miller hereby covenants and agrees to vote all of the shares
of Preferred Stock beneficially held by it FOR the merger proposal (the "Merger
Proposal") as outlined in the term sheet attached herewith and incorporated
herein by reference, at a special meeting of shareholders of the Company, and
any adjournment thereof, at which the Merger Proposal may be presented for the
approval of shareholders.
2. Miller agrees that it will not join nor participate as a party
in that certain litigation commenced against the Company by Harbor Finance
Partners, a Colorado partnership, and currently pending in Delaware Chancery
Court, New Castle County, identified as Case No. CA 14159, nor in any similar
litigation.
3. This Agreement, and all obligations hereunder, including
without limitation paragraph 2, shall expire upon the earlier of (i) the 120th
day after the date hereof, provided that the merger ("Merger") described in the
Merger Proposal has not occurred, or (ii) the date, if any, upon which the
Merger Proposal is either withdrawn or materially modified by the Company.
4. This Agreement shall be binding upon the parties' successors
and assigns. This Agreement shall be interpreted pursuant to the internal laws
of the state of Delaware.
5. By executing this Agreement, the undersigned each represent
and warrant that it has been duly authorized to execute this Agreement and to
be bound thereby.
DATED: October 20, 1995 LLOYD I. MILLER, III
---------------- ------------------------------------
Lloyd I. Miller, III
SUNSHINE MINING AND REFINING COMPANY
By: WILLIAM W. DAVIS
-----------------------------
William W. Davis, Senior
Vice-President and Chief
Financial Officer
<PAGE> 2
PREFERRED STOCK
PROPOSED TRANSACTION
Merge SSC into special purpose sub, with each Preferred share replaced by (a)
Sunshine Common Stock issuable pursuant to the formula described below, and (b)
.9 share of common stock or, at the option of the holder, 2 Warrants as
described below:
SUNSHINE COMMON STOCK
The number of shares of Common stock will
be that number of shares determined by
dividing the closing price on Sunshine
Common stock on the latest date practical
prior to mailing the prospectus into
$10.50 (at a 1 7/8 Common stock price, 5.6
shares).
If the average closing price of the Common
stock on the NYSE for the first 120
trading days after the Effective Date of
the Merger is less than the initial price
used to determine the number of shares
issuable, additional Common shares will be
issued as soon as practical after the end
of the 120-trading day period. The
additional number of shares issuable will
be determined by the following formula,
where:
X = Average Common stock closing price on
the NYSE for first 120 trading days
after issuance, and
Y = Average Common shares initially
issuable per Preferred share
$10.50 - Y. In no event will the total of
------ initial shares
X
issuable, plus additional shares issuable,
exceed 8.4.
WARRANTS
Shares purchasable 1
Exercise Price 110% of the Common stock closing price on
the latest date practical prior to mailing
the prospectus; resettable to 110% of
average closing price of the Common stock
on the NYSE for the first 120 trading days
after the Effective Date of the Merger, if
such price is less than the initial price.
Expiration 5 years from issuance
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COLIDATED BALANCE SHEET AT SEPTEMBER 30, 1995 (UNAUDITED) AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000833376
<NAME> SUNSHINE MINING AND REFINING COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 18,993
<SECURITIES> 39
<RECEIVABLES> 2,013
<ALLOWANCES> 0
<INVENTORY> 1,698
<CURRENT-ASSETS> 33,185
<PP&E> 138,002
<DEPRECIATION> 69,113
<TOTAL-ASSETS> 105,489
<CURRENT-LIABILITIES> 2,523
<BONDS> 1,519
<COMMON> 1,967
81,928
0
<OTHER-SE> 5,551
<TOTAL-LIABILITY-AND-EQUITY> 105,489
<SALES> 13,178
<TOTAL-REVENUES> 13,178
<CGS> 14,203
<TOTAL-COSTS> 25,235
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 575
<INCOME-PRETAX> (11,106)
<INCOME-TAX> 0
<INCOME-CONTINUING> (11,106)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,723)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
