<PAGE> 1
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
SUNSHINE MINING AND REFINING COMPANY
(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)(4) 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> 2
SUNSHINE MINING AND REFINING COMPANY
877 West Main Street, Suite 600
Boise, Idaho 83702
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 1997
The 1997 Annual Meeting of Stockholders of Sunshine Mining and
Refining Company (the "Company"), will be held on June 10, 1997 at 10:00 a.m.,
local time, at the Coeur d'Alene Resort, Coeur d'Alene, Idaho to conduct the
following business:
1. To elect seven (7) members of the Board of Directors of the
Company to serve until the next annual meeting of stockholders or
until their respective successors are elected and qualified;
2. To approve a proposal to amend the Certificate of Incorporation of
the Company (the "Certificate") to increase the authorized Common
Stock to 600,000,000;
3. To approve alternative proposals to amend the Certificate to
effect a one-for-three, one-for-five or one-for-eight reverse
stock split of the issued and outstanding shares of the Company's
Common Stock at the discretion of the Board of Directors;
4. To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.
Only Stockholders of record at the close of business on April 14,
1997, will be entitled to notice of and to vote at the Meeting. A list of
these stockholders will be available for inspection for ten (10) days preceding
the meeting at the office of the Secretary of the Company, 877 West Main
Street, Suite 600, Boise, Idaho 83702, and at the meeting.
Whether or not you plan to attend the Meeting, please date and sign
the enclosed proxy card and return it in the accompanying envelope, which
requires no postage if mailed in the United States. If you attend the meeting
in person, you may withdraw your proxy and vote your shares.
By Order of the Board of Directors
Rebecca L. Saunders
Secretary
[_______________________], 1997
1
<PAGE> 3
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement and the form of proxies are first being mailed to
stockholders on or about April 18 , 1997, in connection with the solicitation
of proxies by Sunshine Mining and Refining Company, a Delaware corporation (the
"Company") for use at the 1997 Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 10:00 a.m., local time, on June 10, 1997, at the Couer
d'Alene Resort, Couer d'Alene, Idaho, and at any adjournment or adjournments
thereof. The Company held its last annual meeting on July 30, 1996.
VOTING SECURITIES AND RECORD DATE
The close of business on April 14, 1997, has been fixed as the record
date (the "Record Date"), at which [______ ____] shares of Common Stock of the
Company were outstanding and entitled to vote. Each share of Common Stock is
entitled to one vote.
The presence, in person or by proxy, of a majority of the Common Stock
will constitute a quorum at the Annual Meeting and any adjournment(s) thereof.
The favorable vote of a majority of the shares of Common Stock represented at
the meeting is required to elect the directors. The proposed amendments to the
Certificate must be approved by a majority of all outstanding shares of Common
Stock, which have no appraisal or similar rights with respect to any of the
matters being voted on at the Annual Meeting.
With regard to the election of directors, votes may be cast in favor
or withheld; votes that are withheld will be excluded entirely from the vote
and will have no effect. Abstentions may be specified on all other proposals
and will be counted as present for purposes of the item on which the abstention
is noted. Since the amendments to the Certificate require the approval of a
majority of the outstanding shares, abstentions will have the effect of a
negative vote. Under the rules of the New York Stock Exchange, Inc., brokers
who hold shares in street name for customers have the authority to vote on
certain items when they have not received instructions from beneficial owners.
Brokers that do not receive instructions are entitled to vote on the election
of directors and on the amendments to the Certificate. A broker non-vote will
have the same effect as a vote against the proposed amendments to the
Certificate and will have no effect on the outcome of the election of
directors.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
To the knowledge of the Company, no person owns five percent (5%) or
more of the Company's Common Stock.
The following table presents certain information regarding the number of
shares of Common Stock beneficially owned by each director, nominee, Named
Executive Officer, and by all directors and officers as a group as of the
Record Date. All individuals have sole voting and investment power with
respect to the shares owned.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF INDIVIDUAL TITLE OF CLASS BENEFICIAL OWNERSHIP OF CLASS
- ------------------ -------------- -------------------- --------
<S> <C> <C> <C>
G. Chris Andersen Common Stock 151,767(1) --(3)
V. Dale Babbitt Common Stock 90,889(1) --(3)
Harry F. Cougher Common Stock 309,425(1) --(3)
William W. Davis Common Stock 684,418(1) --(3)
George M. Elvin Common Stock 399,713(1)(2) --(3)
Daniel D. Jackson Common Stock 136,177(1) --(3)
Robert H. Peterson Common Stock 171,154(1) --(3)
Oren G. Shaffer Common Stock 92,625(1) --(3)
John S. Simko Common Stock 917,843(1) --(3)
Robert B. Smith. Jr. Common Stock 265,000(1) --(3)
All officers and directors as a group Common Stock 3,219,011(3) 1.26
</TABLE>
- ----------------
(1) Includes the following shares subject to purchase pursuant to stock
options and warrants exercisable within sixty days: Mr. Andersen,
131,839 shares; Mr. Babbitt, 85,088 shares; Mr. Cougher, 300,300
shares; Mr. Davis, 601,218 shares; Mr. Elvin 70,000 shares; Mr.
Jackson, 135,059 shares; Mr. Peterson, 150,749 shares; Mr. Simko,
866,873 shares; Mr. Shaffer, 80,875 shares; and Mr. Smith, 80,000
shares.
(2) Includes 173,913 shares that may be acquired upon the exchange of the
Company's 8% Senior Exchangeable Notes ("8% Notes"), 17,800 shares
owned by Mr. Elvin's wife and 120,000 shares owned by a partnership in
which Mr. Elvin shares investment and voting powers.
(3) Less than 1%.
(4) Includes 2,502,001 shares subject to purchase pursuant to stock
options and warrants exercisable within 60 days and 173,913 shares
acquirable upon exchange of 8% Notes.
2
<PAGE> 4
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes based on its review of Forms 3, 4 and 5, furnished to
the Company for the fiscal year ended December 31, 1996 and written
representations that no other reports were required for such fiscal year that
all Section 16(a) filing requirements applicable to its officers and directors
were complied with.
ELECTION OF DIRECTORS
The following seven (7) persons are nominated for election as directors.
Each nominee is presently a director of the Company.
<TABLE>
<CAPTION>
POSITION(S) WITH COMPANY, PRINCIPAL OCCUPATION
NAME AGE <SAND BUSINESS HISTORIES
---- ---
<S> <C> <C>
G. Chris Andersen . . . . 58 Director since May 1983; Partner of Andersen, Weinroth & Co. LP since
January 1996; until August 1995, was Vice Chairman -- PaineWebber
Incorporated for more than five years prior thereto.
V. Dale Babbitt . . . . . 60 Director since December 1992; President (for more than the past five
years) and CEO of N.L. Terteling Family Interest, Inc. (dba) J.A. Terteling
& Sons Co., the Managing General Partner for investments consisting of
mining interests, oil & gas, real estate and securities.
George M. Elvin . . . . . 54 Director since June 1994. Financial Consultant (for more than the past
five years) and since August 1992 is the owner and President of Windsor IBC,
Inc. a brokerage firm member of the NASD.
Daniel D. Jackson . . . . 68 Director since May 1983; Principal, Jackson Capital LLC since 1996;
Advisory Director of Hambrecht & Quist since 1996; previously Managing Director of
Hambrecht & Quist, Inc., a San Francisco, California based investment
banking firm (1990-1996).
Oren G. Shaffer . . . . . 54 Director since June 1993. Since October 1994, Executive Vice-President and
Chief Financial Officer of Ameritech Corporation; previously was President of
Vigrocap, Inc., a venture capital company (October 1991 to October 1994);
and was Executive Vice President, Chief Financial Officer and Director of
Goodyear Tire and Rubber Co. from January, 1990 to October 1992.
John S. Simko . . . . . . 58 Director, Chairman and Chief Executive Officer since 1996; Director,
President and Chief Executive Officer of the Company since 1992; previously (since
1984) served the Company as Senior Vice President and General Counsel.
Robert B. Smith, Jr. . . 60 Director since June 1993. Mr. Smith has been a private investor since 1984
and Trustee of the Dalkon Shield Trust since 1989.
</TABLE>
Directors are elected annually to serve until the next annual meeting of
stockholders or until their respective successors are elected.
CERTAIN OTHER MATTERS
No family relationships exist between any director, executive officer or
person nominated to become a director or executive officer.
Mr. Andersen is a director of United Waste, Terex, Inc. and Headway Corp.
Services, Inc.; Mr. Jackson is an advisory director of CCC Information Services
Group, Inc.; Mr. Shaffer is a director Taiwan Equity Fund, Inc.; and Mr. Smith
is a director of Securacom Inc. Each of these companies has a class of
securities registered pursuant to Section 12 of the Securities and Exchange Act
of 1934.
MEETINGS AND COMMITTEES
The Board of Directors of the Company held five (5) meetings during 1996,
and all members attended at least seventy-five percent (75%) of the meetings
of the Board and all committees on which they served.
The Audit Committee, consisting of Messrs. Smith and Elvin, with Mr. Smith
as Chairman, has the authority to recommend to the Board of Directors the
independent accountants to perform the annual audit of the Company; to review
the performance of such auditors; to develop the general policies and
procedures used by the Company with respect to internal auditing, accounting
and financial controls; and to provide the independent auditors with access to
the Board of Directors. One (1) meeting of the Audit Committee was held during
1996.
The Compensation and Transaction Committee, consisting of Messrs. Jackson
and Babbitt, with Mr. Jackson as Chairman, has the authority to establish all
compensation, including salaries, bonuses and the terms and
3
<PAGE> 5
conditions of the same for all executive officers of the Company; to administer
the stock option plans and determine the individuals to receive, and the amount
of and times of granting of, stock options; to establish the terms and
conditions of any employment contract executed between the Company and its
officers; and to establish insurance, pension, retirement and other benefits
for officers of the Company. The Committee reviews transactions between the
Company and directors, officers or employees of the Company that exceed
$50,000, and recommends persons to serve as directors and officers of the
Company. If nominees to the Board of Directors are recommended by
stockholders, these recommendations will be considered by the Committee.
Recommendations by stockholders should be submitted to the Secretary of the
Company and should identify the recommended nominee by name and provide
detailed background information. One (1) meeting of this Committee was held
during 1996.
The Finance Committee, consisting of Messrs. Andersen, Shaffer, Elvin and
Simko, with Mr. Andersen as Chairman, has the authority to review all proposed
changes to the capital structure of the Company and to make all decisions
concerning investments of funds by the Company. No meetings of the Finance
Committee were held during 1996.
MANAGEMENT REMUNERATION AND TRANSACTIONS
COMPENSATION OF EXECUTIVE OFFICERS
The following are the executive officers (the "Named Executive Officers")
of the Company:
<TABLE>
<CAPTION>
POSITION(S) WITH COMPANY, PRINCIPAL OCCUPATION
NAME AGE AND BUSINESS HISTORIES
---- --- ----------------------
<S> <C> <C>
John S. Simko 58 Director, Chairman and Chief Executive Officer since December, 1996; Director,
President and Chief Executive Officer of the Company since December 1992;
previously (since 1984) served the Company as Senior Vice President and General
Counsel.
William W. Davis 43 Executive Vice President and Chief Financial Officer since December, 1995, and
Senior Vice President and Chief Financial Officer of the Company since
September 1992. Previously, from 1983, served in various capacities as an
employee of the Company.
Robert H. Peterson 59 Senior Vice President and Chief Operating Officer-Refining of the Company since
September 1992. Previously since 1980, served in various capacities as an
employee of the Company.
Harry F. Cougher 54 Senior Vice President and Chief Operating Officer-Mining since January 1994.
Previously, since 1984, served in various capacities as an employee of the
Company.
</TABLE>
- ----------------
The following table sets forth the total compensation paid by the
Company, or accrued for the account of each of the "Named Executive Officers"
for calendar years 1996, 1995, and 1994. There were no other executive
officers whose salary and bonus for the year ended December 31, 1996, exceeded
$100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
<ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------------------------------- ------------- --------
(A) (B) (C) (D) (G) (H) (I)
SECURITIES
UNDERLYING LTIP ALL OTHER
SALARY BONUS OPTIONS/SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($) ($) (2)
--------------------------- ---- ------ ----- ------------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
John S. Simko, 1996 297,534 0 650,000 0 13,500
Chairman & Chief Executive 1995 297,832 0 100,000 0 15,525
Officer 1994 271,527 0 65,000 0 14,370
William W. Davis, 1996 201,890 0 400,000 0 13,500
Exec. Vice Pres. & Chief 1995 177,650 0 100,000 0 15,525
Financial Officer 1994 166,096 25,000(1) 50,000 0 14,370
Robert H. Peterson, 1996 182,312 0 25,000 0 13,500
Sr. Vice Pres. & Chief 1995 182,348 0 75,000 0 15,525
Operating Officer-Refining 1994 169,861 0 0 0 14,250
Harry F. Cougher 1996 114,348 0 100,000 0 10,291
Sr. Vice Pres. & 1995 114,354 0 100,000 0 11,765
Chief Operating Officer-Mining 1994 100,677 0 500,000 0 8,925
- ----------------
</TABLE>
(1) Cash bonus paid to Mr. Davis in December, 1994.
(2) Includes income received pursuant to the Company's Employees Savings and
Security Plan (the "Savings Plan") in which all employees of the Company,
other than those covered by collective bargaining agreement, may
participate, and the Sunshine Defined Contribution Plan (the "DC Plan").
Payments to Mr. Simko under the Savings Plan were $4,500,
4
<PAGE> 6
$4,500, and $4,620 in 1996, 1995, and 1994, respectively; and under the DC
Plan were $9,000, $11,025 and $9,750 in 1996, 1995, and 1994. Payments to
Mr. Davis under the Savings Plan were $4,500, $4,500, and $4,620 in 1996,
1995, and 1994, respectively; and under the DC Plan were $9,000 ,$11,025
and $9,750 in 1996, 1995, and 1994, respectively. Payments to Mr. Peterson
under the Savings Plan were $4,500, $4,500, and $4,500 in 1996, 1995, and
1994, respectively; and under the DC Plan were $9,000, $11,025 and $9,750
in 1996, 1995, and 1994, respectively. Payments to Mr. Cougher under the
Savings Plan were $3,430, $3,360 and $2,945 for 1996, 1995, and 1994,
respectively; and under the DC Plan were $6,861, $5,980 and $8,405 for
1996, 1995, and 1994, respectively. The Savings Plan is an individual
account plan which provides for deferred compensation as described in
Section 401(k) of the Internal Revenue Code and is subject to and complies
with all of the principal protective provisions of Titles I and II of the
Employee Retirement Income Security Act of 1974 ("ERISA"). The DC Plan
replaced the Company's Defined Benefit Pension Plan as of January 1, 1994,
and is subject to and complies with ERISA.
OPTIONS GRANTS IN 1996
Incentive stock options were granted to executive officers in the year
ended December 31, 1996, as follows:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERMS
------------------------------------------ ------------------
% OF TOTAL
OPTIONS
NUMBER OF SECURITIES GRANTED TO EXERCISE OR
UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SH)(1) DATE 5%($) 10%($)
---- --------------------------- ----------- ----------- -------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
John Simko, CEO . 650,000 shares - Common 19.2 1.50 12/07/05 $484,717 $1,159,211
William W. Davis . 400,000 shares - Common 11.8 1.50 12/07/05 $298,288 $ 713,361
Harry F. Cougher . 100,000 shares - Common 2.9 1.50 12/07/05 $ 74,572 $ 178,340
Robert H. Peterson 25,000 shares - Common 0.7 1.50 12/07/05 $ 18,643 $ 44,595
- ---------------
</TABLE>
(1) The options are exercisable on or after July 30, 1996.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in fiscal 1996
by the Named Executive Officers and the value of such officers' unexercised
options at December 31, 1996.
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
- ----------------------------------------------------------------------------------------------------------
SHARES VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON REALIZED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
EXERCISE (#) ($) OPTIONS/SARS AT FY-END (#) AT FY-END ($)
------------ -------- --------------------------- ----------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John S. Simko, CEO . . . . 0 0 865,000 0 0 0
William W. Davis . . . . . 0 0 600,000 0 0 0
Robert H. Peterson . . . . 0 0 150,000 0 0 0
Harry F. Cougher . . . . . 0 0 300,000 0 0 0
- ----------------
</TABLE>
PENSION PLANS
On December 31, 1993, the Company froze its Defined Benefit Pension Plan
(the "Pension Plan"), which was replaced as of January 1, 1994, by the
Company's DC Plan. The Pension Plan was maintained for the benefit of
employees, except those covered by a collective bargaining agreement. The
following table shows the estimated annual benefits payable under the Pension
Plan as in effect on December 31, 1993; after which date benefits ceased to
accrue. The examples assume retirement at age 65 after assumed periods of
service, and a fixed level of social security benefits.
<TABLE>
<CAPTION>
RETIREMENT BENEFIT AT AGE 65
----------------------------
YEARS OF SERVICE
----------------
REMUNERATION 5 10 15 20 25 30
------------ ---------- ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
75,000 $6,000 $12,000 $18,500 $24,000 $30,000 $36,500
100,000 8,000 16,000 25,000 33,000 41,000 49,000
150,000 13,000 25,000 38,000 51,000 64,000 76,000
200,000 17,000 34,000 52,000 69,000 86,000 103,000
250,000 22,000 43,000 65,000 87,000 109,000 115,641
300,000 26,000 52,000 79,000 105,000 115,641 115,641
350,000 31,000 61,000 92,000 115,641 115,641 115,641
</TABLE>
5
<PAGE> 7
The years of credited service at December 31, 1993, for Mr. Simko was nine
years; for Mr. Davis was ten years; for Mr. Peterson was thirteen years; and
for Mr. Cougher was nine years. Employees who are age 55 and who have fifteen
years of employment with the Company are eligible for early retirement, and
will receive approximately 75% of the accrued benefits they would have received
at age 65. Mr. Simko's employment contract provides that he shall be eligible
for early retirement notwithstanding that he will have less than fifteen years
of service with the Company upon expiration of his employment contract. See
"EMPLOYMENT CONTRACTS".
COMPENSATION OF DIRECTORS
Directors of the Company who are not employees receive an annual retainer
of 3,350 troy ounces of silver or 50 troy ounces of gold and 235 troy ounces of
silver or 3.5 troy ounces of gold per day for each Board or committee meeting
attended. During 1996, directors received gold valued as follows: Messrs.
Andersen ($25,998), Babbitt ($27,324), Elvin ($26,102), Jackson ($27,324),
Shaffer ($25,998), and Smith ($27,324). All non-employee directors
automatically receive an option for 25,000 shares of Common Stock on December 7
of each year during the term of the 1995 Employee Nonqualified Stock Option
Plan.
EMPLOYMENT CONTRACTS
Effective January 1, 1994, each of Messrs. Simko, Davis and Cougher entered
into written employment agreements (the "Employment Agreements") with the
Company for a term of three years. In December, 1995, the Employment
Agreements for Messrs. Simko, Davis and Cougher were amended to extend the term
to December 31, 1999.
In the event of the disability or death, the Employment Agreements provide
for the continued payment of the base compensation for the remaining term,
subject to reduction for disability payments separately provided by the
Company. The employees receive such annual incentive compensation based on the
performance of the Company or other criteria as may be awarded in the
discretion of the Board of Directors, and participate in any employee benefit,
welfare, deferred compensation, stock option plan, or any other plan or
arrangement of the Company now or hereafter adopted for the benefit of officers
or employees generally. In addition, Mr. Simko's agreement provides that he is
deemed to have qualified for early retirement under the Company's Pension Plan
notwithstanding that at the expiration of the agreement he shall have less than
15 years of service with the Company.
Pursuant to the Employment Agreements, the Company will indemnify each
employee in the event that he is made, or threatened to be made, a party to any
action or proceeding, including any action by or in the right of the Company by
reason of the provision of services by him to the Company. Claims or
controversies arising under the Employment Agreements will be resolved through
arbitration, and all resulting legal and accounting fees and other expenses
will be paid by the Company.
COMPENSATION AND TRANSACTION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The following non-employee directors served on the Compensation and
Transaction Committee of the Company's Board of Directors during the last
completed fiscal year: Daniel D. Jackson, and V. Dale Babbitt. Oren G.
Shaffer was elected to the Committee in December, 1996. There are no
compensation committee interlocks.
COMPENSATION AND TRANSACTION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Committee is responsible for reviewing executive compensation and
recommending appropriate changes to the Board of Directors to retain key
executives and to reward performance that benefits the Company's stockholders.
The Board annually approves increases in base salaries and awards of incentive
compensation, if any, for any executive or employee whose overall compensation
would exceed $100,000.
The Committee believes in compensating executives based on business
performance and their respective contributions. However, the Committee also
recognizes the pressure on cash costs, including salaries, created by the
prolonged slump in silver prices. The Company's executive compensation in
general is lower than the mining industry, particularly Hecla Mining Company
and Coeur d'Alene Mines Corporation (the "Peer Companies").
The Committee annually reviews base salaries and performance and
recommended changes are presented to the full Board. The Committee also reviews
the appropriateness of alternative pay systems to reward performance, maintain
competitiveness and align the executives' interest with those of the
stockholders, including cash bonuses, stock bonuses, stock grants, stock
options or other forms of compensation.
Recent changes to the Internal Revenue Code have been made relating to
the disallowance of deduction for remuneration to certain executive officers in
excess of $1,000,000. The compensation paid to the Company's executives is
less than this limit, and will be fully deductible.
6
<PAGE> 8
Several key objectives were established for executive officers in 1996.
They were stated in a general, rather than quantitative, manner because
fluctuating precious metals markets and the uncertainty of exploration results
complicate quantification efforts. Because each of the key objectives could
contribute to the profitability of the Company and the increase in shareholder
worth, each objective was given relatively equal consideration by the
Committee.
The key objectives were stated as follows:
(1) Increase silver production from the Sunshine Mine at a reduced cash
production cost per ounce of silver in 1996 and return it to full
production by 1996 year end;
(2) Strengthen the Company's financial condition and balance sheet to
enable the Company to control exploration and development of
Pirquitas and to be in position to bid on other appropriate
properties;
(3) Further development and metallurgical testing on Pirquitas in order
to begin a feasibility study in 1997;
(4) Continue exploration activities on existing projects and identify and
acquire control of new exploration projects;
(5) Eliminate all outstanding preferred shares in exchange for common and
warrants to strengthen the balance sheet, eliminate the annual
dividend charge and remove the potential for significant additional
common stock dilution;
(6) Increase investor awareness of Sunshine Mining & Refining Company to
enhance shareholder worth;
(7) Return company to profitability.
The prolonged slump in silver prices continued in 1996 resulting in a year
end silver price of $4.74 per ounce. This hampered efforts to return to
profitability and negatively impacted the Common Stock price. To strengthen
the Company's financial condition, approximately $27 million in net proceeds
was raised through the issuance of Senior Exchangeable Notes due 2000 (the
"Eurobonds") in Europe to non-U.S. persons pursuant to Regulation S of the
Securities Act of 1933, as amended. Cash production costs per ounce of silver
declined in 1996 primarily due to an increase in silver production of 846
thousand ounces over 1995, as the development of the West Chance ore body
advanced.
Progress was made in other categories, including: The Company established
a large resource at Pirquitas through its extensive drilling and underground
sampling program, along with promising results from initial metallurgical
testing; increased investor awareness through direct mailings, meetings with
analysts, and participation at investment conferences; and shareholder approval
of the Merger to eliminate the Company's outstanding Preferred Stock which
improved the book value per Common share and eliminated the annual charge for
Preferred dividend requirements.
After comparison of compensation for executives in similar positions in
other companies and in recognition of their efforts in working diligently
toward the Company's objectives, the Committee recommended and the Board
approved increases in salary to Messrs. Davis and Cougher of $20,000 and
$16,000, respectively, together with a 12% bonus payable in 1997.
In December, 1996, after reviewing compensation for CEO's of the peer
companies and other mining companies, and in recognition of the Company's
progress toward meeting the key objectives, including a successful Eurobond
offering, elimination of the Preferred Stock, increasing investor awareness of
the Company, and in his election to and service as President of the Silver
Institute, the Committee recommended and the Board approved, the election of
Mr. Simko as Chairman of the Company; an increase in salary to $350,000 and
that a bonus of 15% be paid in 1997. His overall compensation remains below
similar positions in the peer companies.
Daniel D. Jackson
V. Dale Babbitt
7
<PAGE> 9
PERFORMANCE GRAPH
The accompanying chart compares the returns on investments since December
31, 1991, on the Standard and Poors 500, industry peer group, and the Company's
Common Stock. The comparable company index includes the Company, Hecla Mining
Company and Couer d'Alene Mines Corporation.
<TABLE>
<CAPTION>
Company Name/Index 1991 1992 1993 1994 1995 1996
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUNSHINE MINING & REFINING 100 53.60 300.00 194.94 149.95 112.41
S&P 500 INDEX 100 107.62 118.46 120.03 166.13 203.05
PEER GROUP 100 71.86 158.48 120.18 95.71 79.19
</TABLE>
THE PROPOSAL TO AMEND THE CERTIFICATE TO INCREASE THE
AUTHORIZED COMMON STOCK
The Company currently has 400 million shares of authorized Common Stock.
The Board of Directors has approved an amendment to the Certificate increasing
the amount to 600 million. The full text of the amendment is set forth in
Exhibit A as Item I. If approved by the stockholders, this proposal will be
implemented without regard to the other proposals.
VOTE REQUIRED
The affirmative vote of the majority of the outstanding shares of Common
Stock is required to approve the amendment. If approved, no further
stockholder approval would be required to issue shares of Common Stock.
PURPOSES AND EFFECTS OF THE INCREASE IN AUTHORIZED COMMON STOCK
Additional financing may be required in the future in order to continue
exploration and development activities and to provide equity capital necessary
for project financing of Company properties. The Board determined that it was
in the best interest of the Company to have sufficient shares available for
issuance, if necessary, so future financing would not be delayed pending
stockholder approval.
Stockholders of the Company have no preemptive rights with respect to
additional shares being authorized.
The issuance of any additional shares of Common Stock will have the effect
of diluting the percentage of stock ownership and voting rights of present
holders. The increase in the number of authorized shares of Common Stock may
have a potential anti-takeover effect in that it would enhance the ability of
the Company to issue additional shares which could be used to thwart persons or
otherwise dilute the stock ownership of stockholders seeking to control the
Company. The Company is not aware of any effort to accumulate the Company's
securities or to obtain control of the Company by means of a tender offer,
proxy contest or otherwise.
BOARD RECOMMENDATION
The Board unanimously recommends a vote FOR the adoption of the proposal to
increase the authorized Common Stock.
THE PROPOSAL TO AUTHORIZE A REVERSE STOCK SPLIT AT THE
DISCRETION OF THE BOARD
The Board of Directors has approved the proposed discretionary Reverse
Stock Splits and submits them to the stockholders for approval.
Three Reverse Stock Splits have been proposed: a one-for-three, a
one-for-five and a one-for-eight reverse stock split.
If the Reverse Stock Splits are authorized by the stockholders, the Board
will have the discretion to implement one only during the next 5 years, or
effect no reverse stock split at all.
The purpose of the Reverse Stock Splits is to increase the market value of
the Common Stock. The Board intends to effect a Reverse Stock Split only if it
believes that a decrease in the number of shares outstanding may improve the
trading market for the Common Stock.
The Board has submitted three proposals in order to give it latitude. If
the trading price of the Common Stock increases without a reverse split, a
Reverse Stock Split may not be necessary, or one of lesser proportions would be
required than if the trading price decreased or remains constant.
8
<PAGE> 10
In connection with any determination to effect a Reverse Stock Split, the
Board will also select the Reverse Stock Split that, in its discretion, results
in the greatest marketability of the Common Stock based on prevailing market
conditions and the remaining stock split would be abandoned by the Board
pursuant to Delaware law. No further action on the part of the stockholders
would be required to either effect a reverse stock split or abandon the
alternative. If no Reverse Stock Split is effected by June 10, 2002, the
Board's authority to effect a Reverse Stock Split will also terminate.
Stockholders may approve or reject the proposed Reverse Stock Splits in
whole but not in part. If approved by the stockholders, this proposal would be
implemented without regard to the other proposals.
VOTE REQUIRED
The affirmative vote of the majority of the outstanding shares of Common
Stock is required to approve the proposal.
EFFECTS OF THE REVERSE STOCK SPLIT
Consummation of a Reverse Stock Split will alter the number of authorized
shares of Common Stock, which will be reduced proportionately from 600 million
shares assuming approval of the proposed increase of authorized Common Stock
(or 400 million shares if such approval is not obtained). Voting rights and
other rights of stockholders will not be altered by any Reverse Stock Split,
except where a small stockholder may own only a fractional interest after the
Reverse Stock Split, in which event these stockholders will be paid for the
fractional interest as set forth below and cease to be a stockholder.
Consummation of a Reverse Stock Split will have no material federal tax
consequences to stockholders.
The Common Stock is listed for trading on the New York Stock Exchange (the
"Exchange"). On the Record Date, the reported closing price of the Common
Stock was $[_________] per share.
The Board believes that a decrease in the number of shares of Common Stock
outstanding may increase the trading price of such shares to a price more
appropriate for an exchange-listed security, although no assurance can be given
that the market price of the Common Stock will rise in proportion to the
reduction in the number of outstanding shares resulting from any Reverse Stock
Split.
Although, the Company has not yet experienced identifiable problems in the
marketability and liquidity of its Common Stock, the Board believes that the
current per share price of the Common Stock may limit the effective
marketability of the Common Stock because of the reluctance of many brokerage
firms and institutional investors to recommend lower-priced stocks to their
clients or to hold them in their own portfolios. Certain policies and
practices of the securities industry tend to discourage individual brokers
within those firms from dealing in lower-priced stocks. Certain investors have
indicated they would be more willing to take larger positions in the stock if
the bid-ask spread represented a smaller percentage of the stock price. The
brokerage commission on a sale of lower-priced stock may also represent a
higher percentage of the sale price than the brokerage commission on a
higher-priced issue. Any reduction in brokerage commissions resulting from a
Reverse Stock Split may be offset, however, by increased brokerage commissions
required to be paid by stockholders selling "odd lots" created by such Reverse
Stock Split.
A Reverse Stock Split may be necessary in order to increase the trading
price of the Common Stock to levels acceptable to the Exchange in order to
maintain the listing of the Common Stock on the Exchange. Consideration will
be given to the share price listing requirements of the Exchange in determining
the magnitude of the Reverse Stock Split.
The par value of the Common Stock will remain at $.01 following any Reverse
Stock Split, and the number of shares of Common Stock outstanding will be
reduced. As a consequence, the aggregate par value of the outstanding Common
Stock will be reduced, while the aggregate capital in excess of par value
attributable to the outstanding Common Stock for statutory and accounting
purposes will be correspondingly increased. The resolution approving the
Reverse Stock Split provides that this increase in capital in excess of par
value will be treated as capital for statutory purposes. The conversion ratios
of any of the Company's outstanding securities having a conversion or
redemption feature would be correspondingly adjusted upon consummation of any
Reverse Stock Split.
The Reverse Stock Split, if undertaken, would have the following effects
upon the number of shares of Common Stock outstanding and the number of
authorized and unissued shares of Common Stock. With the limited exception of
small stockholders who own only fractional share interests after a Reverse
Stock Split, the proportionate ownership interests of stockholders will not be
affected by a Reverse Stock Split. Stockholders holding seven or fewer shares
of Common Stock may, depending on the proportion of the Reverse Stock Split,
have only a fractional share interest after the Reverse Stock Split. As a
result, those stockholders would receive payment for their fractional interests
as set forth below, and would cease to be stockholders.
9
<PAGE> 11
<TABLE>
<CAPTION>
REVERSE COMMON STOCK AUTHORIZED AND
STOCK SPLIT OUTSTANDING UNISSUED COMMON STOCK(1)
<S> <C> <C>
1 for 3 85,177,830 200,000,000
1 for 5 51,006,700 120,000,000
1 for 8 31,941,700 75,000,000
</TABLE>
(1) Assumes approval of the increase of authorized shares of Common Stock to
600 million followed by a proportionate reduction in authorized shares
in the same ratio as the reverse stock split.
At the Effective Date, each share of the Common Stock issued and
outstanding immediately prior thereto (the "Old Common Stock"), will be
reclassified as and changed into the appropriate fraction of a share of the
Company's Common Stock, par value $.01 (the "New Common Stock"), subject to the
treatment of fractional share interests as described below. Shortly after the
Effective Date, the Company will send transmittal forms to the holders of the
Old Common Stock to be used in forwarding their certificates of Old Common
Stock for surrender and exchange for certificates representing whole shares of
New Common Stock.
No certificates or script representing fractional share interests in the
New Common Stock will be issued, and no such fractional share interest will
entitle the holder thereof to any rights as a stockholder of the Company. In
lieu of any such fractional share interests, each holder of Old Common Stock
who would otherwise be entitled to receive a fractional share of New Common
Stock will, at the discretion of the Board, either be (i) paid cash by the
Company upon surrender of certificates representing Old Common Stock held by
such holder in an amount equal to the product of such fraction multiplied by
the closing price of the Old Common Stock on the Exchange on the Effective Date
(or in the event that Common Stock is not so traded on the Effective Date, such
closing price on the next preceding day on which such stock is traded on the
Exchange); or, alternatively, (ii) the Company will make arrangements with, and
provide assistance to, a third party who shall pool fractional share interests,
sell the same, and return appropriate payment to the holders of fractional
share interests in the amount described in (i) above.
BOARD RECOMMENDATION
The Board unanimously recommends a vote FOR the adoption of the proposal to
authorize the Board in its discretion, to effect a Reverse Stock Split.
INDEPENDENT ACCOUNTANTS
The Company's Board of Directors has appointed Ernst & Young LLP to serve
as the Company's independent public accountants for the current fiscal year. A
representative of Ernst & Young LLP will be present at the Annual Meeting to
answer any questions concerning the Company's financial statements and to make
a statement if he desires to do so.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Company at its principal
executive offices by December 16, 1997, for inclusion in the proxy statement
and proxy relating to that meeting.
VOTING BY PROXIES
A properly executed proxy will be voted in accordance with its terms.
Unless otherwise indicated, the proxy cards will be voted FOR the election of
directors to serve as indicated, FOR the approval of the proposal to amend the
Certificate to increase the authorized Common Stock, FOR the approval of the
proposal to effect a Reverse Stock Split, and in the discretion of the proxy
for any other proposal that may come before the meeting. A proxy may be
revoked at any time before it is voted.
At the date of this Proxy Statement, the Board of Directors knows of no
other matters which will be presented for consideration at the Annual Meeting.
OTHER MATTERS
All expenses in connection with this solicitation of proxies will be borne
by the Company. In addition to solicitation by mail, directors, officers and
regular employees of the Company may solicit proxies by telephone, telegram,
mail or in person. The Company may also reimburse brokers and other
custodians, nominees and fiduciaries holding shares in their names, for their
reasonable expenses in sending material to the beneficial owners of shares and
obtaining their proxies.
Copies of the Company's annual report on Form 10-K for the year ended
December 31, 1996, may be obtained without charge by writing to the Company at
877 West Main Street, Suite 600, Boise, Idaho 83702, Attn: Rebecca L.
Saunders, Secretary, or by telephone request to (208) 345-0660.
SUNSHINE MINING AND REFINING COMPANY
[_________, ____], 1997
10
<PAGE> 12
EXHIBIT A
5. THE INCREASE OF AUTHORIZED COMMON STOCK PROPOSAL.
RESOLVED, that the first paragraph of Article FOURTH of the Company's
Certificate of Incorporation be amended to read in its entirety as follows:
"FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is six hundred twenty million (620,000,000), of
which stock six hundred million (600,000,000) shares of the par value of $0.01
each shall be designated Common Stock and of which Twenty Million (20,000,000)
shares of the par value of $1.00 each shall be designated Preferred Stock."
6. THE REVERSE STOCK SPLIT PROPOSAL.
a. ONE-FOR-THREE REVERSE STOCK SPLIT.
RESOLVED, that, prior to June 10, 2002, on the condition that no other
amendment to the Company's Certificate of Incorporation shall have been filed
subsequent to June 10, 1997 effecting a reverse stock split of the Common
Stock, Article FOURTH of the Company's Certificate of Incorporation be amended
by addition of the following provision:
Simultaneously with the effective date of this amendment (the
"Effective Date"), the authorized shares of the Company's Common Stock, par
value $.01 per share, and each share of such Common Stock issued and
outstanding immediately prior to the Effective Date (the "Old Common Stock")
shall automatically and without any action on the part of the holder thereof be
reclassified as and changed into one-third (1/3) of a share of the Company's
Common Stock, par value $.01 (the "New Common Stock"), subject to the treatment
of fractional share interests as described below. Each holder of a certificate
or certificates which immediately prior to the Effective Date represented
outstanding shares of Old Common Stock (the "Old Certificates," whether one or
more) shall be entitled to receive upon surrender of such Old Certificates to
the Company's Transfer Agent for cancellation, a certificate or certificates
(the "New Certificates," whether one or more) representing the number of whole
shares of the New Common Stock into which and for which the shares of the Old
Common Stock formerly represented by such Old Certificates so surrendered, are
reclassified under the terms hereof. From and after the Effective Date, Old
Certificates shall represent only the right to receive New Certificates (and,
where applicable, cash in lieu of fractional shares, as provided below)
pursuant to the provisions hereof. No certificates or scrip representing
fractional share interests in New Common Stock will be issued, and no such
fractional share interest will entitle the holder thereof to vote, or to any
rights of a shareholder of the Company. A holder of Old Certificates shall
receive, in lieu of any fraction of a share of New Common Stock to which the
holder would otherwise be entitled, a cash payment therefor on the basis of the
closing price of the Old Common Stock on the New York Stock Exchange on the
Effective Date, as reported on the composite tape of the New York Stock
Exchange, Inc. (or in the event the Company's Common Stock is not so traded on
the Effective Date, such closing price on the next preceding day on which such
stock was traded on the New York Stock Exchange). The Company may retain a
third party to collect and pool fractional share interests, sell the same, and
return payment to the holders of the interests. In that event, the cash
payment may be based on the sale price of the pooled fractional interests,
which may be more or less than the closing price of the Old Common Stock on the
Effective Date. If more than one Old Certificate shall be surrendered at one
time for the account of the same stockholder, the number of full shares of New
Common Stock for which New Certificates shall be issued shall be computed on
the basis of the aggregate number of shares represented by the Old Certificates
so surrendered. In the event that the Company's Transfer Agent determines that
a holder of Old Certificates has not tendered all his certificates for
exchange, the Transfer Agent shall carry forward any fractional share until all
certificates of that holder have been presented for exchange such that payment
for fractional shares to any one person shall not exceed the value of one
share. If any New Certificate is to be issued in a name other than that in
which the Old Certificates surrendered for exchange are issued, the Old
Certificates so surrendered shall be properly endorsed and otherwise in proper
form for transfer, and the person or persons requesting such exchange shall
affix any requisite stock transfer tax stamps to the Old Certificates
surrendered, or provide funds for their purchase, or establish to the
satisfaction of the Transfer Agent that such taxes are not payable. From and
after the Effective Date the amount of capital represented by the shares of the
New Common Stock into which and for which the shares of the Old Common Stock
are reclassified under the terms hereof shall be the same as the amount of
capital represented by the shares of Old Common Stock so reclassified, until
thereafter reduced or increased in accordance with applicable law.
FURTHER RESOLVED, that at any time prior to the filing of the foregoing
amendment to the Company's Certificate of Incorporation effecting a
one-for-three Reverse Stock Split, notwithstanding authorization of the
proposed amendment by the stockholders of the Company, the board of directors
may abandon such proposed amendment without further action by the stockholders.
11
<PAGE> 13
b. ONE-FOR-FIVE REVERSE STOCK SPLIT.
RESOLVED, that, prior to June 10, 2002, on the condition that no other
amendment to the Company's Certificate of Incorporation shall have been filed
subsequent to June 10, 1997 effecting a reverse stock split of the Common
Stock, Article FOURTH of the Company's Certificate of Incorporation be amended
by addition of the following provision:
Simultaneously with the effective date of this amendment (the
"Effective Date"), the authorized shares of the Company's Common Stock, par
value $.01 per share, and each share of such Common Stock issued and
outstanding immediately prior to the Effective Date (the "Old Common Stock")
shall automatically and without any action on the part of the holder thereof be
reclassified as and changed into one-fifth (1/5) of a share of the Company's
Common Stock, par value $.01 (the "New Common Stock"), subject to the treatment
of fractional share interests as described below. Each holder of a certificate
or certificates which immediately prior to the Effective Date represented
outstanding shares of Old Common Stock (the "Old Certificates," whether one or
more) shall be entitled to receive upon surrender of such Old Certificates to
the Company's Transfer Agent for cancellation, a certificate or certificates
(the "New Certificates," whether one or more) representing the number of whole
shares of the New Common Stock into which and for which the shares of the Old
Common Stock formerly represented by such Old Certificates so surrendered, are
reclassified under the terms hereof. From and after the Effective Date, Old
Certificates shall represent only the right to receive New Certificates (and,
where applicable, cash in lieu of fractional shares, as provided below)
pursuant to the provisions hereof. No certificates or scrip representing
fractional share interests in New Common Stock will be issued, and no such
fractional share interest will entitle the holder thereof to vote, or to any
rights of a shareholder of the Company. A holder of Old Certificates shall
receive, in lieu of any fraction of a share of New Common Stock to which the
holder would otherwise be entitled, a cash payment therefor on the basis of the
closing price of the Old Common Stock on the New York Stock Exchange on the
Effective Date, as reported on the composite tape of the New York Stock
Exchange, Inc. (or in the event the Company's Common Stock is not so traded on
the Effective Date, such closing price on the next preceding day on which such
stock was traded on the New York Stock Exchange). The Company may retain a
third party to collect and pool fractional share interests, sell the same, and
return payment to the holders of the interests. In that event, the cash
payment may be based on the sale price of the pooled fractional interests,
which may be more or less than the closing price of the Old Common Stock on the
Effective Date. If more than one Old Certificate shall be surrendered at one
time for the account of the same stockholder, the number of full shares of New
Common Stock for which New Certificates shall be issued shall be computed on
the basis of the aggregate number of shares represented by the Old Certificates
so surrendered. In the event that the Company's Transfer Agent determines that
a holder of Old Certificates has not tendered all his certificates for
exchange, the Transfer Agent shall carry forward any fractional share until all
certificates of that holder have been presented for exchange such that payment
for fractional shares to any one person shall not exceed the value of one
share. If any New Certificate is to be issued in a name other than that in
which the Old Certificates surrendered for exchange are issued, the Old
Certificates so surrendered shall be properly endorsed and otherwise in proper
form for transfer, and the person or persons requesting such exchange shall
affix any requisite stock transfer tax stamps to the Old Certificates
surrendered, or provide funds for their purchase, or establish to the
satisfaction of the Transfer Agent that such taxes are not payable. From and
after the Effective Date the amount of capital represented by the shares of the
New Common Stock into which and for which the shares of the Old Common Stock
are reclassified under the terms hereof shall be the same as the amount of
capital represented by the shares of Old Common Stock so reclassified, until
thereafter reduced or increased in accordance with applicable law.
FURTHER RESOLVED, that at any time prior to the filing of the foregoing
amendment to the Company's Certificate of Incorporation effecting a
one-for-five Reverse Stock Split, notwithstanding authorization of the
proposed amendment by the stockholders of the Company, the board of directors
may abandon such proposed amendment without further action by the stockholders.
12
<PAGE> 14
c. One-for-Eight Reverse Stock Split.
RESOLVED, that, prior to June 10, 2002, on the condition that no other
amendment to the Company's Certificate of Incorporation shall have been filed
subsequent to June 10, 1997 effecting a reverse stock split of the Common
Stock, Article FOURTH of the Company's Certificate of Incorporation be amended
by addition of the following provision:
Simultaneously with the effective date of this amendment (the
"Effective Date"), the authorized shares of the Company's Common
Stock, par value $.01 per share, and each share of such Common Stock
issued and outstanding immediately prior to the Effective Date (the
"Old Common Stock") shall automatically and without any action on the
part of the holder thereof be reclassified as and changed into
one-eighth (1/8) of a share of the Company's Common Stock, par value
$.01 (the "New Common Stock"), subject to the treatment of fractional
share interests as described below. Each holder of a certificate or
certificates which immediately prior to the Effective Date represented
outstanding shares of Old Common Stock (the "Old Certificates,"
whether one or more) shall be entitled to receive upon surrender of
such Old Certificates to the Company's Transfer Agent for
cancellation, a certificate or certificates (the "New Certificates,"
whether one or more) representing the number of whole shares of the
New Common Stock into which and for which the shares of the Old Common
Stock formerly represented by such Old Certificates so surrendered,
are reclassified under the terms hereof. From and after the Effective
Date, Old Certificates shall represent only the right to receive New
Certificates (and, where applicable, cash in lieu of fractional
shares, as provided below) pursuant to the provisions hereof. No
certificates or scrip representing fractional share interests in New
Common Stock will be issued, and no such fractional share interest
will entitle the holder thereof to vote, or to any rights of a
shareholder of the Company. A holder of Old Certificates shall
receive, in lieu of any fraction of a share of New Common Stock to
which the holder would otherwise be entitled, a cash payment therefor
on the basis of the closing price of the Old Common Stock on the New
York Stock Exchange on the Effective Date, as reported on the
composite tape of the New York Stock Exchange, Inc. (or in the event
the Company's Common Stock is not so traded on the Effective Date,
such closing price on the next preceding day on which such stock was
traded on the New York Stock Exchange). The Company may retain a
third party to collect and pool fractional share interests, sell the
same, and return payment to the holders of the interests. In that
event, the cash payment may be based on the sale price of the pooled
fractional interests, which may be more or less than the closing price
of the Old Common Stock on the Effective Date. If more than one Old
Certificate shall be surrendered at one time for the account of the
same stockholder, the number of full shares of New Common Stock for
which New Certificates shall be issued shall be computed on the basis
of the aggregate number of shares represented by the Old Certificates
so surrendered. In the event that the Company's Transfer Agent
determines that a holder of Old Certificates has not tendered all his
certificates for exchange, the Transfer Agent shall carry forward any
fractional share until all certificates of that holder have been
presented for exchange such that payment for fractional shares to any
one person shall not exceed the value of one share. If any New
Certificate is to be issued in a name other than that in which the Old
Certificates surrendered for exchange are issued, the Old Certificates
so surrendered shall be properly endorsed and otherwise in proper form
for transfer, and the person or persons requesting such exchange shall
affix any requisite stock transfer tax stamps to the Old Certificates
surrendered, or provide funds for their purchase, or establish to the
satisfaction of the Transfer Agent that such taxes are not payable.
From and after the Effective Date the amount of capital represented by
the shares of the New Common Stock into which and for which the shares
of the Old Common Stock are reclassified under the terms hereof shall
be the same as the amount of capital represented by the shares of Old
Common Stock so reclassified, until thereafter reduced or increased in
accordance with applicable law.
FURTHER RESOLVED, that at any time prior to the filing of the foregoing
amendment to the Company's Certificate of Incorporation effecting a
one-for-eight Reverse Stock Split, notwithstanding authorization of the
proposed amendment by the stockholders of the Company, the board of directors
may abandon such proposed amendment without further action by the stockholders.
13
<PAGE> 15
SUNSHINE MINING AND REFINING COMPANY
877 WEST MAIN STREET, SUITE 600
BOISE, IDAHO 83702
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF SUNSHINE MINING AND REFINING COMPANY
The undersigned hereby appoints John S. Simko, William W. Davis and
Robert H. Peterson, or any of them, with full power of substitution, as Proxies
and hereby authorizes them to represent and to vote as designated below all of
the shares of Common Stock, par value $.01, of Sunshine Mining and Refining
Company (the "Company") held of record by the undersigned on April 14, 1997,
at the Annual Meeting of Stockholders to be held on June 10, 1997, or any
adjournment(s) thereof.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
G. CHRIS ANDERSEN, V. DALE BABBITT, GEORGE M. ELVIN, DANIEL D. JACKSON,
OREN G. SHAFFER, JOHN S. SIMKO, ROBERT B. SMITH, JR.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee
write that nominee's name on the space provided below.)
______________________________________________________________
<TABLE>
<S> <C> <C> <C>
For Against Abstain
2. To Amend the Company's Certificate of Incorporation [ ] [ ] [ ]
(the "Certificate") to increase the authorized Common Stock
to 600 million shares.
3. Alternative proposals to amend the Certificate to effect a For Against Abstain
one-for-three, one-for-five or one-for-eight reverse stock [ ] [ ] [ ]
split of the issued and outstanding shares of the Company's
Common Stock at the discretion of the Board of Directors.
</TABLE>
4. In their discretion, to vote upon such other business as may properly
come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED. IF NO DIRECTION IS MADE, THE PROXIES WILL VOTE "FOR" EACH OF THE
PROPOSALS AND "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR.
Please sign exactly as name appears below.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in the partnership name by
authorized person.
Date __________________________, 1997
___________________________________________
Signature
___________________________________________
Signature if held jointly
Please mark, sign, date and promptly return
this proxy card using the enclosed envelope.
