<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 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):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) 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 MAY 20, 1998
The 1998 Annual Meeting of Stockholders of Sunshine Mining and
Refining Company (the "Company"), will be held on May 20, 1998 at 1:00 p.m.,
local time, at the Grove Hotel, 245 S. Capitol Blvd., Boise, Idaho 83702 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 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 March 23,
1998, 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
March 24, 1998
<PAGE> 3
PROXY STATEMENT
VOTING SECURITIES AND RECORD DATE
This Proxy Statement and the form of proxies are first being mailed to
stockholders on or about March 24 , 1998, in connection with the solicitation
of proxies by Sunshine Mining and Refining Company, a Delaware corporation (the
"Company") for use at the 1998 Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 1:00 p.m., local time, on May 20, 1998, at the Grove
Hotel, Boise Idaho, and at any adjournment or adjournments thereof. The
Company held its last annual meeting on June 10, 1997.
The close of business on March 23, 1998, has been fixed as the record
date (the "Record Date"), at which 256,487,633 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. Stockholders will have
appraisal or similar rights with respect to 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. 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. A broker non-vote 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, the following persons own five
percent (5%) or more of the Company's Common Stock. This information was
obtained by the Company from Schedule 13D filings, amended as of November 24,
1997, by the identified Beneficial Owners.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Title of Name and Address of Amount and Nature Percent
Class Beneficial Owner of Beneficial Owner of Class
--------- ----------------------- ------------------- --------
<S> <C> <C> <C>
Common Stock Elliott Associates, L.P. 9,544,922(1) 3.43%
712 5th Ave., 36th Fl.
New York, New York 10019
Common Stock Westgate International, L.P. 12,565,900(1) 4.51%
c/o Midland Bank Trust Corporation
(Cayman) Limited
P.O. Box 1109, Mary Street
Grand Cayman
Cayman Islands, British West Indies ____
7.94%
</TABLE>
(1) Paul E. Singer and Braxton Associates, L.P., a New Jersey limited
partnership which is controlled by Singer, are the general partners of Elliott
Associates, L.P. Hambledon, Inc., a Cayman Islands corporation, is the sole
general partner of Westgate International, L.P. Martley International, Inc., a
Delaware corporation, is the investment manager for Westgate. The reporting
persons constitute a "group" as defined in Rule 13d-5(b)(1) with respect to
their beneficial ownership of the Common Stock. Elliott beneficially owns
$7,195,000 principal amount of 8% debentures (which convert into 7,195,000
shares of Common Stock) and 2,349,922 shares of Common Stock, totaling
9,544,992 shares of Common Stock. Westgate and Martley beneficially own
2,060,600 warrants exercisable into Common Stock, $8,340,000 principal amount
of 8% Debentures (which convert into 8,340,000
1
<PAGE> 4
shares of Common Stock) and 2,165,390 shares of Common Stock, totaling
12,565,990 shares of Common Stock. Elliott has the power to vote or direct the
vote of, and to dispose of or direct the disposition of, the Common Stock owned
by it. Westgate has shared power with Martley to vote or direct the vote of,
and to dispose or direct the disposition of, the Common Stock owned by it.
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 175,517 (1) --(3)
V. Dale Babbitt Common Stock 125,889 (1) --(3)
Harry F. Cougher Common Stock 309,479 (1) --(3)
William W. Davis Common Stock 704,418 (1) --(3)
George M. Elvin Common Stock 250,800 (1)(2) --(3)
Daniel D. Jackson Common Stock 167,059 (1) --(3)
Oren G. Shaffer Common Stock 117,625 (1) --(3)
John S. Simko Common Stock 927,843 (1) --(3)
Robert B. Smith. Jr. Common Stock 290,000 (1) --(3)
All officers and directors as a group Common Stock 3,068,630 (4) 1.20
</TABLE>
- - --------------------
(1) Includes the following shares subject to purchase pursuant to stock
options and warrants exercisable within sixty days: Mr. Andersen, 105,589
shares; Mr. Babbitt, 110,088 shares; Mr. Cougher, 300,300 shares; Mr.
Davis, 601,218 shares; Mr. Elvin 95,000 shares; Mr. Jackson, 155,059
shares; Mr. Simko, 866,873 shares; Mr. Shaffer, 105,875 shares; and Mr.
Smith, 105,000 shares.
(2) Includes 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 2,445,002 shares subject to purchase pursuant to stock options and
warrants exercisable within 60 days.
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, 1997 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 AND BUSINESS HISTORIES
---- --- ----------------------------------------------
<S> <C> <C>
G. Chris Andersen . . . . 59 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 . . . . . 61 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.
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C> <C>
George M. Elvin . . . . . 55 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 . . . . 69 Director since May 1983; Principal, Jackson Capital LLC since 1996;
Managing Director of Hambrecht & Quist, Inc., a San Francisco, California
based investment banking firm (1990-1996).
Oren G. Shaffer . . . . . 55 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 . . . . . . 59 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. and a director of ABRA, Inc.; Mr. Shaffer is a director
Taiwan Equity Fund, Inc. and Singapore Fund; and Mr. Smith is a director of
Stratesec Corp. 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 four (4) meetings during
1997. Except for Messrs. Andersen and Shaffer, all Directors attended at least
seventy-five percent (75%) of the meetings of the aggregate of (i) the total
number of meetings of the Board of Directors and (ii) the total number of
meetings held by all committees of the board on which he 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
1997.
The Compensation and Transaction Committee, consisting of Messrs.
Jackson, Shaffer and Babbitt, with Mr. Jackson as Chairman, has the authority
to establish all compensation, including salaries, bonuses and the terms and
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
3
<PAGE> 6
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. Two (2) meetings of this Committee were held
during 1997.
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. One (1) meeting of
the Finance Committee was held during 1997.
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 59 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 44 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.
Harry F. Cougher 55 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 1997, 1996, and 1995. There were no other executive
officers whose salary and bonus for the year ended December 31, 1997, exceeded
$100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------------------------- ------------ -------
(A) (B) (C) (D) (G) (H) (I)
SECURITIES
UNDERLYING LTIP ALL OTHER
SALARY BONUS OPTIONS/SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($) ($)(1)
--------------------------- ---- ------ ----- ------------ ------- -------------
<S> <C> <C> <C> <C> <C> <C>
John S. Simko, 1997 360,031 43,100 0 0 12,894
Chairman & Chief Executive 1996 297,534 0 650,000 0 13,500
Officer 1995 297,832 0 100,000 0 15,525
William W. Davis, 1997 221,888 24,000 0 0 12,894
Exec. Vice Pres. & Chief 1996 201,890 0 400,000 0 13,500
Financial Officer 1995 177,650 0 100,000 0 15,525
Harry F. Cougher 1997 132,598 13,400 0 0 11,811
Sr. Vice Pres. & 1996 114,348 0 100,000 0 10,291
Chief Operating Officer-Mining 1995 114,354 0 100,000 0 11,765
</TABLE>
- - ----------------
(1) 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
4
<PAGE> 7
Sunshine Defined Contribution Plan (the "DC Plan"). Payments to Mr. Simko
under the Savings Plan were $4,750, $4,500, and $4,500 in 1997, 1996, and
1995, respectively; and under the DC Plan were $8,144, $9,000 and $11,025 in
1997, 1996, and 1995. Payments to Mr. Davis under the Savings Plan were
$4,750, $4,500, and $4,500 in 1997, 1996, and 1995, respectively; and under
the DC Plan were $8,144 ,$9,000 and $11,025 in 1997, 1996, and 1995,
respectively. Payments to Mr. Cougher under the Savings Plan were $4,380,
$3,430 and $3,360 for 1997, 1996, and 1995, respectively; and under the DC
Plan were $7,431, $6,861 and $5,980 for 1997, 1996, and 1995, respectively.
The Savings Plan is an individual account plan which provides for deferred
compensation as described in Section 401(k) of the Internal Revenue Code and
is subject to and complies with all of the principal protective provisions
of Titles I and II of the Employee Retirement Income Security Act of 1974
("ERISA"). The DC Plan replaced the Company's Defined Benefit Pension Plan
as of January 1, 1994, and is subject to and complies with ERISA.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in fiscal
1997 by the Named Executive Officers and the value of such officers'
unexercised options at December 31, 1997.
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
- - ---------------------------------------------------------------------------------------------------------------------
SHARES VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON REALIZED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
EXERCISE (#) ($) 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
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>
The years of credited service at December 31, 1993, for Mr. Simko was
nine years; for Mr. Davis was ten 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".
5
<PAGE> 8
COMPENSATION OF DIRECTORS
Prior to June 10, 1997, directors who are not employees received an
annual retainer of 50 troy ounces of gold and compensation for board and
committee meetings attended of 3.5 troy ounces of gold per day. Beginning June
10, 1997, directors who are not employees receive an annual retainer of $25,000
and $1,250 per day for each board and committee meeting attended. Also
beginning in 1997, directors who so elect are covered by the Sunshine Mining
Health Insurance Plan. During 1997, directors received compensation as follows
in gold, cash and/or health benefits: Messrs. Andersen $28,723.25, Babbitt
$36,537.05, Elvin $32,473.25, Jackson $33,421.60, Shaffer $29,973.25, Smith
$35,287.05.
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 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 REPORT
ON EXECUTIVE COMPENSATION
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, V. Dale Babbitt and Oren G. Shaffer.
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.
6
<PAGE> 9
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.
Several key objectives were established for executive officers in
1997. 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 to 4 million
ounces of silver at a reduced cash production cost per ounce of
silver in 1997 and return it to full production by 1997 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 establish proven and probable reserves and begin a
feasibility study in 1997;
(4) Continue exploration activities on existing projects and identify
and acquire control of new exploration projects;
(5) Increase investor awareness of Sunshine Mining & Refining Company
to enhance shareholder worth;
(6) Establish a plan to return the company to profitability by 2000.
The prolonged slump in silver prices continued in 1997 resulting in an
average silver price received of $5.02 per ounce sold. This hampered efforts
to return to profitability and negatively impacted the Common Stock price. To
strengthen the Company's financial condition, approximately $14.8 million in
net proceeds was raised through the placement of 10% Convertible Promissory
Notes. Cash production costs per ounce of silver declined 26% in 1997
primarily due to an increase in silver production of 1.7 million ounces (65%)
over 1996, as the production from the West Chance ore body increased.
Progress was made in other categories, including: The Company
established a reserve of over 70 million ounces of silver at Pirquitas through
its extensive drilling, underground sampling program, and metallurgical
testing; acquired the rights to La Joya del Sol which could contain sufficient
gold mineralization to warrant development; and increased investor awareness
through direct mailings, meetings with analysts, and participation at
investment conferences.
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
$12,000, respectively, together with a 12% bonus payable in 1998.
In December, 1997, 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 meeting its silver
production target for the year, establishing a reserve base at Pirquitas,
private placement of notes, increasing investor awareness of the Company, and
in his service as President of the Silver Institute, the Committee recommended
and the Board approved, a bonus of 15% be paid to Mr. Simko in 1998. His
overall compensation remains below similar positions in the Peer Companies.
Daniel D. Jackson
V. Dale Babbitt
Oren G. Shaffer
7
<PAGE> 10
PERFORMANCE GRAPH
The accompanying chart compares the returns on investments since
December 31, 1992, 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.
[GRAPH]
<TABLE>
<CAPTION>
COMPANY NAME/INDEX 1992 1993 1994 1995 1996 1997
- - ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUNSHINE MINING & REFINING 100 559.70 363.70 279.77 209.71 223.81
S&P 500 INDEX 100 110.08 111.53 153.45 188.68 251.63
PEER GROUP 100 220.54 167.25 133.19 110.21 90.35
</TABLE>
8
<PAGE> 11
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders must be received by the Company at its principal
executive offices by November 24, 1998, 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, 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.
GENERAL INFORMATION
No representative of Ernst & Young LLP, the Company's independent
public accountants, will be present at the Annual Meeting.
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, INCLUDING AUDITED
FINANCIAL STATEMENTS, FOR THE YEAR ENDED DECEMBER 31, 1997, 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, BY TELEPHONE REQUEST
TO (208) 345-0660, OR AT THE SECURITIES AND EXCHANGE COMMISSION WEB SITE
(HTTP:\\WWW.SEC.GOV).
SUNSHINE MINING AND REFINING COMPANY
March 24, 1998
9
<PAGE> 12
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 held of record by the undersigned on March 23, 1998, at the Annual
Meeting of Stockholders to be held on May 20, 1998, 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.)
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2. 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" 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 , 1998
--------------------------
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Signature
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Signature if held jointly
Please mark, sign, date and promptly return
this proxy card using the enclosed envelope.
