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FILED PURSUANT TO RULE 424(B)(4)
REGISTRATION NO. 333-41641
PROSPECTUS
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SUNSHINE MINING AND REFINING COMPANY
UP TO 25,000,000 SHARES OF COMMON STOCK
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This Prospectus relates to the reoffer and resale by certain selling
stockholders named herein (the "Selling Stockholders") of up to an aggregate of
25,000,000 shares (the "Shares") of common stock, par value $.01 per share (the
"Common Stock"), of Sunshine Mining and Refining Company, a Delaware corporation
(the "Company"), which are issuable (i) upon the conversion and pursuant to
certain payment terms of the Company's currently outstanding $15,000,000 Senior
Convertible Notes (the "Notes") and (ii) upon the exercise of certain warrants
to purchase Common Stock (the "Warrants"). This Prospectus does not purport to
cover the initial issuance by the Company of the Notes, Warrants or shares of
Common Stock to be issued (i) upon conversion and pursuant to certain payment
terms of the Notes or (ii) upon exercise of the Warrants, but only the reoffer
and resale of the Shares by the Selling Stockholders.
The Shares being registered represent a current estimate of the number of
Shares subject to issuance from time to time by the Company pursuant to the
terms of the Notes and Warrants. No assurance can be given that all such Shares
will be issued because the issuance of a portion of the Shares is subject to,
among other factors, the Company's determination to make interest and mandatory
prepayments on the Notes in Shares rather than cash and the then current bid
price of the Shares.
The Shares offered hereby have been approved for listing on the New York
Stock Exchange ("NYSE"). The Company's Common Stock is traded on the NYSE under
the symbol "SSC." On January 20, 1998, the reported closing sale price of the
Company's Common Stock was $ 15/16 per share.
SEE "RISK FACTORS" WHICH BEGINS ON PAGE 2 FOR CERTAIN FACTORS THAT SHOULD
BE CONSIDERED BY PROSPECTIVE INVESTORS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is January 20, 1998
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RISK FACTORS
Investors should carefully consider the following matters in connection
with an investment in the securities in addition to the other information
contained or incorporated by reference in this Prospectus. Information contained
or incorporated by reference in this Prospectus contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which can be identified by the use of forward-looking terminology such
as "may," "will," "expect," "anticipate," "estimate" or "continue" or the
negative thereof or other variations thereon or comparable terminology. The
following matters constitute cautionary statements identifying important factors
with respect to such forward-looking statements, including certain risks and
uncertainties, that could cause actual results to differ materially from those
in such forward-looking statements. Reference should be made to (i) the Annual
Report on Form 10-K for the fiscal year ended December 31, 1996, and the
Amendment to that Annual Report filed on Form 10-K/A on October 16, 1997
(collectively, the "Annual Report"), (ii) the Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1997 and June 30, 1997, each as amended by
Amendments on Form 10-Q/A to the identified Quarterly Reports filed on October
16, 1997, and the Quarterly Report on Form 10-Q for the quarter ended September
30, 1997 (collectively, the "Quarterly Reports"), (iii) the Prospectus/Proxy
Statement on Form S-4 for the Special Meeting of Stockholders of the Company
held on March 29, 1996 (the "Prospectus/Proxy Statement"), (iv) the
Post-Effective Amendment No. 4 on Form S-3 to Form S-4 dated November 12, 1997,
(v) the Proxy Statement for the Annual Meeting of Stockholders of the Company
held on June 10, 1997, and (vi) all financial statements and notes thereto
contained in the foregoing (all of which are incorporated herein by reference)
for a more detailed discussion of the following matters.
OPERATING LOSSES
Substantially all of the Company's revenues are derived from the sale of
silver mined from its Sunshine Mine near Kellogg, Idaho. Accordingly, the
Company's earnings are directly related to the price of silver. Silver prices
have been depressed since 1985, and as a result the Company has experienced
losses from operations for each of the last ten years. The Company reported net
losses of $25.9 million, $15.5 million, and $4.9 million in each of 1996, 1995
and 1994, respectively. The Company expects to fund its losses for fiscal 1997
from the Company's cash and cash equivalents and silver bullion held for
investment. On a pro forma basis after giving effect to the sale of the Notes,
at September 30, 1997, Sunshine's cash and silver bullion held for investment
totaled approximately $25.7 million.
The operating losses and cash flow deficiencies of the Company are expected
to continue until silver prices recover substantially or the Company's
exploration efforts at the Sunshine Mine or its other properties are successful
in developing significant additional production. Absent the foregoing, the
Company may eventually be required to further curtail operations or cease its
mining activities at the Sunshine Mine altogether. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations," "Business and
Properties" and the Consolidated Financial Statements (including the Notes
thereto) of the Company appearing in the Annual Report and Quarterly Reports.
VOLATILITY OF SILVER PRICES
The Company's earnings are directly related to the price of silver, and the
value of the Common Stock has historically moved in correlation with movements
in silver prices. Silver prices are subject to fluctuation and are affected by
numerous factors beyond the control of the Company, which alone or in
combination may cause the price of silver to rise or fall. These factors
include, among others, expectations for inflation, speculative activities,
levels of silver production and demand for silver as a component of manufactured
goods. The following table sets forth for the periods indicated the high, low
and average closing spot prices per ounce
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of silver on the Commodity Exchange, Inc. ("COMEX") and also translates the
average price as stated into constant 1996 dollars.
<TABLE>
<CAPTION>
CONSTANT
NOMINAL DOLLARS 1996 DOLLARS
-------------------------- ------------
YEAR HIGH LOW AVERAGE AVERAGE
- ---- ------ ----- ------- ------------
<S> <C> <C> <C> <C>
1983................................................ $14.74 $8.38 $11.46 $17.05
1984................................................ 10.17 6.25 8.15 11.39
1985................................................ 6.89 5.48 6.14 8.19
1986................................................ 6.32 4.85 5.49 7.13
1987................................................ 11.25 5.35 6.99 8.85
1988................................................ 8.06 6.01 6.53 7.91
1989................................................ 6.20 5.02 5.47 6.28
1990................................................ 5.35 3.94 4.82 5.16
1991................................................ 4.55 3.51 4.03 4.11
1992................................................ 4.32 3.63 3.94 3.88
1993................................................ 5.44 3.52 4.31 4.18
1994................................................ 5.78 4.61 5.28 5.01
1995................................................ 6.10 4.38 5.20 4.76
1996................................................ 5.84 4.71 5.21 5.21
</TABLE>
On January 20, 1998, the closing price of spot silver as reported on the
COMEX was $5.64 per ounce. In constant 1996 dollars, the average spot silver
price from 1990 through 1996 has been approximately $4.62.
DEPENDENCE ON EXPLORATION SUCCESS
Substantially all of the Company's revenues are derived from the Sunshine
Mine which at current silver prices is not profitable. Therefore, the future
earnings of the Company are presently dependent on the success of exploration at
the Sunshine Mine and at the Company's other exploration projects. No assurance
can be given that the Company's exploration program will prove successful. See
"Business and Properties -- Operations -- Exploration Activities at the Sunshine
Mine" included in the Annual Report.
IMPRECISION OF RESERVE ESTIMATES
The ore reserve estimates presented in the Annual Report and Quarterly
Reports are estimates made by the Company's geologic personnel, and no assurance
can be given that the indicated quantity of in situ silver will be realized. No
independent consultants have been retained by the Company to review and verify
such estimates. Reserve estimates are expressions of judgment based largely on
data from diamond drill holes and underground openings, such as drifts or raises
which expose the mineralization on 1, 2 or 3 sides, sampling and similar
examinations. Reserve estimates may change as ore bodies are mined and
additional data is derived. The Company's estimates of proven and probable
reserves for the Sunshine Mine are as of January 1, 1997.
MINING RISKS AND INSURANCE
The Company's operations may be affected by risks and hazards generally
associated with the mining industry, including fires, cave-ins, rock bursts,
flooding, industrial accidents, mechanical or electrical failures, and unusual
or unexpected rock formations. Such risks could result in damage to, or
destruction of, mineral properties or producing facilities, personal injury,
environmental damage, delays in mining, monetary losses and possible legal
liability. Although the Company maintains insurance at levels consistent with
its historical experience and industry practice, no assurance can be given that
such insurance will continue to be available at economically feasible premiums.
Insurance for environmental risks (including potential for pollution or other
hazards as a result of the disposal of waste products occurring from production)
is not generally available to the Company or to other companies within the
industry.
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GOVERNMENT REGULATION
The Company's activities are subject to extensive federal, state, and local
laws and regulations controlling not only the mining of and exploration for
mineral properties, but also the possible effects of such activities upon the
environment. Except as described under "Legal Proceedings -- Environmental
Matters" included in the Annual Report and under "Legal Proceedings" included in
the Quarterly Reports, the Company is not aware of any material violations of
environmental laws, regulations, permits or licenses issued with respect to the
Company's operations. Future legislation and regulations could cause additional
expense, capital expenditures, restrictions and delays in the mining, production
or development of the Company's properties, the extent of which cannot be
predicted.
RISKS INHERENT IN FOREIGN OPERATIONS
The Company presently conducts international operations and anticipates
that it will continue to conduct significant international operations in the
future. Foreign properties, operations or investments may be adversely affected
by local, political and economic developments, exchange controls, currency
fluctuations, royalty and tax increases, retroactive tax claims, renegotiation
of contracts with governmental entities, expropriation, import and export
regulations and other foreign laws or policies governed by operations of
foreign-based companies, as well as by laws of policies of the United States
affecting foreign trade, taxation and investment. In addition, as certain of the
Company's operations are governed by foreign laws, in the event of a dispute,
the Company may be subject to the exclusive jurisdiction of foreign courts or
may not be successful in subjecting foreign persons to the jurisdiction of
courts in the United States. The Company may also be hindered or prevented from
enforcing the rights with respect to a governmental instrumentality because of
the doctrine of sovereign immunity.
DILUTION; EFFECT OF SALES OF COMMON STOCK ON MARKET PRICE
As of December 31, 1997, there were 255.1 million shares of Common Stock
outstanding (excluding 4.7 million treasury shares). The Company has previously
registered with the Commission an aggregate of approximately 54.9 million shares
of Common Stock for resale by certain stockholders of the Company, including (i)
approximately 30 million shares estimated to be issuable upon conversion of
outstanding Eurobonds at a current conversion price of $1.00 per share; (ii)
approximately 7.3 million shares issuable upon exercise of outstanding warrants
at a current exercise price of $1.38 per share; (iii) approximately 10.1 million
shares issuable upon exercise of outstanding warrants at a current exercise
price of $2.12 per share; (iv) approximately 2.1 million shares issuable upon
exercise of outstanding warrants at a current exercise price of $2.875 per
share; (v) approximately 900,000 shares issuable upon conversion of outstanding
convertible notes at a current conversion price of $1.66 per share; and (vii)
approximately 4.5 million shares issuable upon exercise of outstanding options
at an average exercise price of approximately $1.50 per share. In addition, the
Company has reserved a significant number of shares of Common Stock for future
issuance pursuant to the exercise of outstanding warrants and options. There can
be no assurance that the sale of shares of Common Stock previously registered or
to be registered for resale or the issuance of the shares of Common Stock which
have been reserved for future issuance will not have a material adverse effect
on the then prevailing market price of the Common Stock. Furthermore, issuance
of the shares of Common Stock would result in significant dilution to the
stockholders of the Company.
THE COMPANY
The Company is one of the world's leading silver producers. The Company
owns the Sunshine Mine in the Coeur d'Alene Mining District near Kellogg, Idaho
and the Pirquitas Mine in northwest Argentina. The Sunshine Mine, in operation
for over 100 years, has produced more silver than any other primary silver
producing mine in North America. Preliminary pre-feasibility studies at
Pirquitas have already resulted in the classification as proven and probable
reserves of 66.9 million ounces of silver.
The Company is a Delaware corporation. The Company's principal executive
office and mailing address are 877 W. Main Street, Suite 600, Boise, Idaho 83702
and its telephone number is (208) 345-0660.
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RECENT DEVELOPMENTS
ISSUANCE OF NOTES
On November 24, 1997, the Company completed a private placement of the
Notes and Warrants to Stonehill Partners, L.P., GRS Partners, Aurora Limited
Partnership and Stonehill Offshore Partners (collectively, the "Investors"). The
Notes and Warrants were purchased pursuant to a purchase agreement dated as of
November 24, 1997, and in connection with the sale of such Notes and Warrants,
the Company granted registration rights covering the Shares to the Investors
pursuant to a registration rights agreement (the "Registration Rights
Agreement") dated as of November 24, 1997, between the Company and the
Investors. In January 1998, Stonehill Institutional Partners, L.P. purchased the
Notes and Warrants (including the registration rights related thereto) held by
GRS Partners and Aurora Limited Partnership.
The Notes rank senior to all subordinated obligations of the Company and
are convertible into shares of Common Stock. The initial conversion price of the
Notes is $0.95, subject to reset and adjustment as set forth in the terms of the
Notes. In addition, the Company may, at its option, make interest payments,
mandatory prepayments and certain other payments in respect of the Notes in
shares of Common Stock. Interest on the Notes accrues at an initial rate of 10%
per annum (subject to adjustment) and is payable semi-annually. The Notes are
guaranteed by Sunshine Argentina, Inc. and Sunshine Exploration, Inc.,
subsidiaries of the Company, and may be guaranteed by Sunshine Precious Metals,
Inc. ("SPMI"), also a subsidiary of the Company, upon the retirement or
refinancing of SPMI's 8% Senior Exchangeable Notes due 2000. The Notes amortize
in twelve equal quarterly installments commencing February 24, 2000 and mature
on November 24, 2002.
Warrants to purchase an aggregate of 1,500,000 shares of Common Stock were
also issued to the Investors on November 24, 1997. The Warrants are exercisable
beginning on the first date on which none of the Notes remain outstanding until
November 24, 2002 (subject to extension as set forth in the Warrants). The
exercise price of the Warrants is equal to 110% of the lowest conversion price
last in effect under the Notes. The number of shares of Common Stock issuable
upon exercise of the Warrants is subject to adjustment based on certain
anti-dilution provisions set forth in the Notes and Warrants.
The Notes and the Warrants are subject to limitation on transfer which
prohibit any transfer of the Notes or Warrants which would result in there being
more that 10 holders of the Notes or Warrants, respectively. In addition, both
the Notes and Warrants limit the number of shares of Common Stock which may be
issued in respect of the Notes and Warrants. Such shares (which constitute the
Shares offered hereby) may not exceed the maximum number (the "Maximum Number")
of shares of Common Stock that can be issued without obtaining stockholder
approval under the rules of the NYSE. In the event an issuance of shares of
Common Stock under the terms of the Notes or Warrants would exceed the Maximum
Number, the Company is required to make a cash payment in lieu thereof.
The Company believes the sale of the Notes gives the Company more than
sufficient liquidity to carry out the additional test work required to bring the
Pirquitas Mine through its final feasibility studies and to do a significant
amount of drilling at the La Joya del Sol in southern Argentina and at its other
properties. The Company anticipates that additional capital may also be
subsequently required to finance its contemplated exploration and development
program. Although no assurance can be given that the additional financing will
be available, the Company believes that advances in the status of its properties
in Argentina and the major improvements to date at the Sunshine Mine, along with
the prospects of silver prices improving significantly in the next year, will
allow the Company access the capital markets on significantly better terms next
year. Although there can be no assurance in this regard.
NEW MINING TECHNIQUES
The Company has been implementing mechanized cut and fill mining over the
last two years as development of the West Change area of the Sunshine Mine has
proceeded. The Company also expects to use the methodology in the development of
future undeveloped areas in the mine, and in the extraction of a portion of the
reserves in the mine not contained in the West Chance. The benefits of the
method are two-fold.
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There can be a reduction in direct mining costs from the method if the ore body
has characteristics to allow the benefits of the method to be fully implemented.
This would normally mean that the ore body has sufficient continuity and strike
length to allow the crew and equipment to access multiple headings in each
shift.
However, the biggest benefit of the method is the ability to rapidly
develop an ore body and put it into production, as has been demonstrated in the
West Chance area. Using the Company's traditional development methodology would
likely have required an additional one to two years to bring the ore body into
full production. Full production itself provides the biggest cost benefit to the
mine versus its recent history as fixed costs, which represented 40-50% of total
costs in 1996, are spread over a larger base of production.
USE OF PROCEEDS
The Company will not receive any proceeds from the resale of the Shares.
The Company may, in the future, receive proceeds from the exercise of the
Warrants, but only if and to the extent the Warrants are exercised. Management
cannot predict the amount of proceeds, if any, that may be generated from the
exercise of the Warrants. The net proceeds that may be realized by the Company
upon exercise of the Warrants will not be utilized for any specific purpose
other than to contribute to the Company's working capital and to continue the
operations of the Company in accordance with the business strategy identified by
management. In addition, the Company may have its indebtedness reduced as a
result of conversion of the Notes, but only if the Notes are converted and then
only in an amount equal to the outstanding principal amount of such Notes
converted. Based upon the current outstanding principal amount of such Notes and
assuming that all such Notes are converted, the aggregate reduction in the
Company's indebtedness (on a consolidated basis) would be approximately $15.0
million. The Company incurred such indebtedness in order to fund the Company's
exploration and development program at the Pirquitas Mine in northwest
Argentina, its evaluation program at the Joya del Sol in southern Argentina, as
well as exploration on its numerous properties.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of (i) 600 million
shares of Common Stock, par value $.01 per share, of which 255.1 million shares
were outstanding (excluding 4.7 million treasury shares) at December 31, 1997
and were held of record by approximately 30,000 holders, and (ii) 20 million
shares of Preferred Stock, $1.00 par value, issuable in one or more series, with
such dividend rates, liquidation preferences, redemption, conversion and voting
rights and such further designations, powers, preferences, rights, limitations
and restrictions as may be fixed and determined by the Board of Directors of the
Company, all without a vote of the Company's stockholders. No shares of
Preferred Stock are outstanding. The Company's outstanding capital stock is
fully paid and nonassessable and none of the authorized capital stock is
entitled to preemptive rights.
The Company also has outstanding warrants to purchase Common Stock which
are all currently exercisable, except for the Warrants which are exercisable
when the Notes are no longer outstanding.
For a summarized description of recent transactions which have affected the
capital stock of the Company, see the Prospectus/Proxy Statement, the
Consolidated Statements of Stockholders Equity contained in the Consolidated
Financial Statements appearing in the Annual Report and the November 12
Post-Effective Amendment No. 4 on Form S-3.
COMMON STOCK
Subject to the rights of holders of any outstanding shares of Preferred
Stock, holders of shares of the Common Stock are entitled to share equally in
dividends from sources legally available when, as and if declared by the Board
of Directors. The Company's payment of cash dividends on its shares of capital
stock is restricted.
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Each stockholder is entitled to one vote for each share of Common Stock
held by such holder. Because stockholders are not entitled to cumulate their
votes, stockholders holding a majority of the outstanding Common Stock, and any
shares of voting preferred stock which may be issued, are able to elect all
members of the Board of Directors of the Company. Holders of Common Stock have
no preemptive rights, and shares of Common Stock have no redemption, sinking
fund or conversion privileges.
In the event of any liquidation, dissolution or winding up of the affairs
of the Company, subject to the rights of holders of any Preferred Stock, the
holders of Common Stock are entitled to receive pro rata any assets of the
Company after the satisfaction of corporate liabilities.
Article Five of the Certificate of Incorporation of the Company requires
the affirmative vote or consent of the holders of (i) a majority of the
Company's shares entitled to vote thereon and (ii) a majority of any series or
class of Preferred Stock entitled to vote as a class thereon, in order to
approve any business combination, including any merger, consolidation, or the
sale, lease, exchange or other disposition of all or substantially all of the
Company's assets (including a disposition in connection with the dissolution or
winding up or liquidation of the Company). Article Five may not be amended,
altered, changed or repealed without the prior affirmative vote or consent of
the holders of (i) 66 2/3% of all shares of stock entitled to vote thereon and
(ii) 66 2/3% of any series or class of preferred stock upon which the right to
vote as a class thereon has been conferred by the resolution or resolutions
adopted by the Company's Board of Directors providing for the issue of such
series or class of preferred stock. Such provisions may have the effect of
delaying, deterring or preventing a change of control of the Company.
The Company currently does not pay cash dividends on its shares of Common
Stock and has not paid cash dividends on its shares of Common Stock since the
third quarter of 1981. Any future declaration of dividends will be at the
discretion of the Board of Directors of the Company, which will consider, among
other factors, current and projected earnings and the liquidity position of the
Company. The Company does not expect any resumption of dividends in the
foreseeable future.
The payment of cash dividends by the Company is subject to certain
restrictions. Certain of the Company's debt securities impose restrictions on
the Company's ability to declare or pay cash dividends and make certain
distributions on its capital stock. Pursuant to the most restrictive of these
provisions, at December 31, 1996, no funds were available for cash dividends on
shares of the Company's capital stock, including its Common Stock.
Meetings of the Stockholders. The By-Laws of the Company provide that the
stockholders shall have annual meetings, at such date and time designated by the
Board of Directors, and special meetings, called by the Chairman of the Board,
the President or by the Board of Directors or by written order of a majority of
the directors. The stockholders must be given written notice of each such
meeting of stockholders. In the case of special meetings, the purpose or
purposes for which the meeting is called shall be given to each stockholder
entitled to vote, not less than ten nor more than sixty days before the meeting.
In order to determine the stockholders entitled to notice of or to vote at any
meeting of stockholders, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty nor less than ten days before the date
of such meeting. The Company shall prepare and make, at least ten days before
every meeting of the stockholders, a complete list of the stockholders entitled
to vote at the meeting. Such list shall be open to the examination of any
stockholder for a period of ten days prior to the meeting.
The holders of a majority of the shares of capital stock issued and
outstanding and entitled to vote, present in person or represented by proxy,
shall constitute a quorum at any meeting of stockholders. When a quorum is
present at any meeting of the stockholders, the vote of the holders of a
majority of the shares of capital stock entitled to vote, present in person or
represented by proxy, shall decide any question brought before such meeting,
unless the question is one upon which a different vote is required by law, the
Certificate of Incorporation or the By-Laws.
Limitation of Liability. As permitted by the Delaware General Corporation
Law (the "DGCL"), the Company's Certificate of Incorporation provides that
directors of the Company shall not be personally liable to the Company or its
stockholders for monetary damages for breach of a fiduciary duty as a director,
including
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gross negligence, except to the extent such exemption from liability is not
permitted by the DGCL. This includes liability for (i) any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) any act or
omission not in good faith or which involves intentional misconduct or a knowing
violation of law, (iii) any transaction from which the director derived any
improper personal benefit or (iv) any act or omission where the liability of the
director is expressly provided by the statute.
As a result of this provision, the Company and its stockholders may be
unable to obtain monetary damages from a director for breach of the duty of
care. Although stockholders may continue to seek injunctive or other equitable
relief for an alleged breach of fiduciary duty by a director, stockholders may
not have an effective remedy against the challenged conduct if equitable
remedies are unavailable.
In addition, the Company's Certificate of Incorporation and By-Laws provide
certain rights of indemnification for all officers and directors.
The Delaware Business Combination Act. The Company is subject to the
provisions of Section 203 of the DGCL. Section 203 prohibits a publicly held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. A "business
combination" includes mergers, asset sales and certain other transactions
resulting in a financial benefit to the interested stockholder. Subject to
certain exceptions, an "interested stockholder" is a person who, together with
affiliates and associates, as defined therein, owns, or within three years did
own, 15% or more of the corporation's voting stock. This statute contains
provisions enabling a corporation to avoid the statute's restrictions if the
stockholders holding a majority of the shares of the corporation's voting stock
approve an amendment to the corporation's certificate of incorporation or
bylaws. The Company does not intend to "elect out" of this statute.
Miscellaneous. The Common Stock is listed on the NYSE. American Stock
Transfer & Trust Company is the transfer agent and registrar for the Common
Stock.
PREFERRED STOCK
The Board of Directors is authorized, subject to any limitations prescribed
by Delaware law, to provide for the issuance of Preferred Stock in one or more
series, to establish from time to time the number of shares to be included in
each such series, to fix the rights, preferences and privileges of the shares of
each wholly unissued series and any qualifications, limitations or restrictions
therein, and to increase or decrease the number of shares of any such series
(but not below the number of shares of such series then outstanding), without
any further vote or action by the stockholders. The Board of Directors may
authorize the issuance of Preferred Stock with voting or conversion rights that
could adversely affect the voting power or other rights of the holders of Common
Stock. Thus, the issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of the Company. The Company has no
current plan to issue any shares of Preferred Stock.
PLAN OF DISTRIBUTION
The Company will not receive any of the proceeds of the sale of the Shares
offered hereby. The Shares may be sold from time to time to purchasers directly
by the Selling Stockholders. Alternatively, the Selling Stockholders may from
time to time offer the Shares through brokers, dealers or agents who may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders and/or the purchasers of the Shares for whom they may act
as agent. The Selling Stockholders and any such brokers, dealers or agents who
participate in the distribution of the Shares may be deemed to be
"underwriters", and any profits on the sale of the Shares by them and any
discounts, commissions or concessions received by any such brokers, dealers or
agents might be deemed to be underwriting discounts and commissions under the
Securities Act.
The Shares offered hereby may be sold from time to time by the Selling
Stockholders, or, to the extent permitted, by pledgees, donees, transferees or
other successors in interest. The Shares may be disposed of
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from time to time in one or more transactions through any one or more of the
following: (i) the purchasers directly, (ii) in ordinary brokerage transactions
and transactions in which the broker solicits purchasers, (iii) through
underwriters or dealers who may receive compensation in the form of underwriting
discounts, concessions, or commissions from the Selling Stockholders or such
successors in interest and/or from the purchasers of the Shares for whom they
may act as agent, (iv) the writing of options on the Shares, (v) the pledge of
the Shares as security for any loan or obligation, including pledges to brokers
or dealers who may, from time to time, themselves effect distributions of the
Shares or interests therein, (vi) purchases by a broker or dealer as principal
and resale by such broker or dealer for its own account, (vii) a block trade in
which the broker or dealer so engaged will attempt to sell the Shares as agent
but may position and resell a portion of the block as principal to facilitate
the transaction and (viii) an exchange distribution in accordance with the rules
of such exchange or transactions in the over the counter market. Such sales may
be made at prices and at terms then prevailing or at prices related to the then
current market price or at negotiated prices and terms. In effecting sales,
brokers or dealers may arrange for other brokers or dealers to participate. The
Selling Stockholders or such successors in interest, and any underwriters,
brokers, dealers or agents that participate in the distribution of the Shares,
may be deemed to be "underwriters" within the meaning of the Securities Act, and
any profit on the sale of the Shares by them and any discounts, commissions or
concessions received by any such underwriters, brokers, dealers or agents may be
deemed to be underwriting commissions or discounts under the Securities Act. At
any time a particular offer of the Shares is made, a revised Prospectus or
Prospectus Supplement, if required, will be distributed which will set forth the
aggregate amount and type of Shares being offered and the terms of the offering,
including the name or names of any underwriters, dealers or agents, any
discounts, commissions and other items constituting compensation from the
Selling Stockholders and any discounts, commissions or concessions allowed or
reallowed or paid to dealers. Such Prospectus Supplement and, if necessary, a
post-effective amendment to the Registration Statement of which this Prospectus
is a part, will be filed with the Commission to reflect the disclosure of
additional information with respect to the distribution of the Shares. In
addition, the Shares covered by this Prospectus may be sold in private
transactions or under Rule 144 rather than pursuant to this Prospectus.
To the best knowledge of the Company, there are currently no plans,
arrangements or understandings between any Selling Stockholders and any broker,
dealer, agent or underwriter regarding the sale of the Shares by the Selling
Stockholders. There is no assurance that any Selling Stockholder will sell any
or all of the Shares offered by it hereunder or that any such Selling
Stockholder will not transfer, devise or gift such Shares by other means not
described herein.
The Selling Stockholders and other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M, which may limit the timing of purchases and sales of any of the Shares by the
Selling Stockholders and any other such person. Furthermore, under Regulation M
under the Exchange Act, any person engaged in the distribution of the Shares may
not simultaneously engage in market-making activities with respect to the
particular Shares being distributed for certain periods prior to the
commencement of such distribution. All of the foregoing may affect the
marketability of the Shares and the ability of any person or entity to engage in
market-making activities with respect to the Shares.
Pursuant to the Registration Rights Agreement entered into in connection
with the offer and sale of the Notes by the Company, each of the Company and the
Selling Stockholders will be indemnified by the other against certain
liabilities, including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith.
The Company has agreed to pay substantially all of the expenses incidental
to the registration, offering and sale of the Shares to the public other than
commissions, fees and discounts of underwriters, brokers, dealers and agents.
9
<PAGE> 10
SELLING STOCKHOLDERS
The Selling Stockholders consist of Stonehill Partners, L.P., Stonehill
Institutional Partners, L.P. and Stonehill Offshore Partners Limited. The
Selling Stockholders currently hold Notes and Warrants convertible into or
exercisable for the Shares. It is unknown if, when or in what amounts a Selling
Stockholder may offer Shares for sale and the names of the Selling Stockholders
who may sell the Shares.
There can be no assurance that the Selling Stockholders will sell any or
all of the Shares offered hereby. Because the Selling Stockholders may offer
all, some or none of the Shares pursuant to the Offering contemplated by this
Prospectus, no estimate can be given by the Selling Stockholders at this time.
Other than as a result of the ownership of the Notes, to the best of the
Company's knowledge, none of the Selling Stockholders had any material
relationship with the Company within the three year period ending on the date of
this Prospectus.
SHARES ELIGIBLE FOR FUTURE SALE
The up to 25,000,000 shares of Common Stock offered and sold in this
Offering will be freely tradeable without restrictions or further registration
under the Securities Act, except for any such securities owned by an "affiliate"
of the Company as such term is defined under Rule 144. Shares owned by an
"affiliate" of the Company may not be resold in the absence of registration
under the Securities Act unless an exemption from registration is available,
including the exemptions contained in Rule 144.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned his or her shares for at
least one year, including an "affiliate," as that term is defined below, is
entitled to sell, within any three-month period, that number of shares that does
not exceed the greater of 1% of the then outstanding shares or the average
weekly trading volume of the then outstanding shares during the four calendar
weeks preceding each such sale. A person (or persons whose shares are
aggregated) who is not deemed an "affiliate" of the Company, and who has
beneficially owned shares for at least two years, is entitled to sell such
shares under Rule 144 without regard to the volume limitations described above.
As defined in Rule 144, an "affiliate" of an issuer is a person that directly,
or indirectly through the use of one or more intermediaries, controls, or is
controlled by, or is under the common control with, such issuer.
The Company is unable to estimate the number of shares that may be sold in
the future by its existing and future stockholders or the effect, if any, that
sales of shares by such stockholders will have on the market price of the Common
Stock prevailing from time to time. Sales of substantial amounts of Common Stock
by existing stockholders could adversely affect the prevailing market price.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed on
for the Company by Haynes and Boone, LLP, Dallas, Texas.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report (Form 10-K) for the year ended December 31, 1996, as
amended by the amendment filed on Form 10-K/A on October 16, 1997, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
10
<PAGE> 11
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In accordance with the
Exchange Act, the Company files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). The reports,
proxy statements, and other information can be inspected and copied at the
public reference facilities that the Commission maintains at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at 7 World Trade Center, 13th Floor, New York, New York 10048,
and Northwestern Atrium Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661. Copies of these materials can be obtained at prescribed rates
from the Public Reference Section of the Commission at the principal offices of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants, including the Company, that file
electronically with the Commission. The address of the Commission's Web Site is
http://www.sec.gov. The Company's Common Stock is listed for trading on the New
York Stock Exchange under the symbol "SSC". Quarterly Reports and other
information concerning the Company can be inspected at the offices of such
Exchange, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission the Registration Statement on
Form S-3 under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus, which constitutes a part of the Registration Statement,
does not contain all the information set forth in the Registration Statement,
certain items of which are contained in schedules and exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. Statements made in the Prospectus concerning the contents of any
documents referred to herein are not necessarily complete. With respect to each
such document filed with the Commission as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description, and
each such statement shall be deemed qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference in
this Prospectus: (i) Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, as amended by the Amendment filed on Form 10K/A on October
16, 1997, (file No. 001-10012); (ii) Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1997 and June 30, 1997, each as amended by Amendments
to the identified Quarterly Reports filed on Form 10-Q/A on October 16, 1997,
and for the quarter ended September 30, 1997 (file No. 001-10012); (iii) the
Proxy Statement for the Annual Meeting of Stockholders of the Company held on
June 10, 1996 (File No. 001-10012); (iv) the description of Common Stock
contained in Sunshine's Registration Statement No. 1-7966, as amended, filed
pursuant to the Securities Exchange Act of 1934; and (v) all other reports filed
pursuant to Section 13(a) or 15(d) of the Exchange Act since the fiscal year
ended December 31, 1996.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the completion of the Offering shall be deemed to be incorporated by
reference herein. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed superseded or modified
for purposes of this Prospectus to the extent that a statement contained herein
(or in any other subsequently filed document which also is incorporated by
reference herein) modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the documents incorporated
by reference (other than exhibits to such documents which are not specifically
incorporated by reference in such documents). Written requests for such copies
should be directed to the Company, 877 W. Main Street, Suite 600, Boise, Idaho
83702, Attention: Rebecca L. Saunders, Secretary. Telephone requests may be
directed to Rebecca L. Saunders, Secretary, at (208) 345-0660.
11
<PAGE> 12
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IF GIVEN OR
MADE SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors............................... 2
The Company................................ 4
Recent Developments........................ 5
Use of Proceeds............................ 6
Description of Capital Stock............... 6
Plan of Distribution....................... 8
Selling Stockholders....................... 10
Shares Eligible for Future Sale............ 10
Legal Matters.............................. 10
Experts.................................... 10
Available Information...................... 11
Incorporation of Certain Documents by
Reference................................ 11
</TABLE>
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UP TO 25,000,000 SHARES OF
COMMON STOCK
SUNSHINE MINING AND
REFINING COMPANY
------------------------
PROSPECTUS
------------------------
January 20, 1998
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