<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 [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<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 24, 1999
The 1999 Annual Meeting of Stockholders of Sunshine Mining and Refining
Company (the "Company") will be held on May 24, 1999 at 1:00 p.m., local time,
at 877 W. Main Street, Suite 600, Boise, 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 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 26, 1999,
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 31, 1999
<PAGE> 3
PROXY STATEMENT
GENERAL INFORMATION, VOTING SECURITIES AND RECORD DATE
This Proxy Statement and the form of proxies are first being mailed to
stockholders on or about March 31, 1999, in connection with the solicitation of
proxies by Sunshine Mining and Refining Company, a Delaware corporation (the
"Company") for use at the 1999 Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 1:00 p.m., local time, on Monday, May 24, 1999, at 877
W. Main Street, Suite 600, Boise, Idaho, and at any adjournment or adjournments
thereof. The Company held its last annual meeting on May 20, 1998.
The close of business on Friday, March 26, 1999, has been fixed as the
record date (the "Record Date"), at which 272,305,578 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 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. 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:
<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. 11,300,916(1) 4.2%
712 5th Ave., 36th Fl.
New York, New York 10019
Westgate International, L.P. 23,681,201(1) 8.7%
c/o Midland Bank Trust Corporation
(Cayman) Limited
P.O. Box 1109, Mary Street
Grand Cayman
Cayman Islands, British West Indies
-------------
29,422,204(1) 9.9%
</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
$1,705,000 principal amount of 8% debentures (which convert into 1,705,000
shares of Common Stock, $2,942,406 principal amount of 5% convertible notes
which convert into an estimated 5,162,116 shares of Common Stock) and 4,433,800
shares of Common Stock, totaling 11,300,916 shares of Common Stock. Westgate and
Martley beneficially own 1,729,085 warrants exercisable into Common Stock,
$16,690,000 principal amount of 8% Debentures (which convert into 16,690,000
shares of Common Stock), $2,942,406 principal amount of 5%
1
<PAGE> 4
convertible notes (which convert into an estimated 5,162,116 shares of Common
Stock) and 100,000 shares of Common Stock, totaling 23,681,201 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. Pursuant to terms of
the 5% convertible notes, Elliott, Westgate and Martley may not have beneficial
ownership of Common Stock exceeding 9.9% of all outstanding shares of 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 199,928 (1) --(3)
V. Dale Babbitt Common Stock 150,801(1) --(3)
Harry F. Cougher Common Stock 309,179(1) --(3)
William W. Davis Common Stock 733,300(1) --(3)
George M. Elvin Common Stock 155,800(1)(2) --(3)
Daniel D. Jackson Common Stock 192,000(1) --(3)
Oren G. Shaffer Common Stock 141,750(1) --(3)
John S. Simko Common Stock 925,969(1) --(3)
Robert B. Smith. Jr. Common Stock 165,000(1) --(3)
All officers and directors as a group Common Stock 2,973,727(4) 1%
</TABLE>
- - ----------------
(1) Includes the following shares subject to purchase pursuant to stock
options exercisable within sixty days: Mr. Andersen, 130,000 shares;
Mr. Babbitt, 135,000 shares; Mr. Cougher, 300,000 shares; Mr. Davis,
600,000 shares; Mr. Elvin 120,000 shares; Mr. Jackson, 180,000 shares;
Mr. Shaffer, 130,000 shares; Mr. Simko, 865,000 shares; and Mr. Smith,
130,000 shares.
(2) Includes 17,800 shares owned by Mr. Elvin's wife.
(3) Less than 1%.
(4) Includes 2,590,000 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, 1998 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.
2
<PAGE> 5
PROPOSAL 1
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................ 60 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.................. 62 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.................. 56 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................ 70 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.................. 56 Director since June 1993. Since October 1994,
Executive Vice-President and Chief Financial
Officer of Ameritech Corporation; previously was
President of Vigrocap, 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.................... 60 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.............. 61 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 All Star Systems, Inc., Terex Corp.
and Headway Corporate Resources, Inc.; Mr. Jackson is an advisory director of
CCC Information Services Group, Inc. and a director of ABRA, Inc.; Mr. Shaffer
is a director of Taiwan Equity Fund, Inc. and Singapore Fund, Inc.; 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.
3
<PAGE> 6
MEETINGS AND COMMITTEES
The Board of Directors of the Company held five (5) meetings during
1998, and all members attended at least seventy-five percent (75%) of the
meetings.
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 1998.
The Compensation and Transaction Committee, consisting of Messrs.
Jackson, Babbitt, and Shaffer, 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 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 1998.
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 1998.
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 60 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 45 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 56 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>
- - --------
4
<PAGE> 7
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 1998, 1997, and 1996. There were no other executive officers
whose salary and bonus for the year ended December 31, 1998, exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
- - ----------------------------------------------------------------- ------ -------
(A) (B) (C) (D) (G) (H) (I)
SECURITIES
UNDERLYING LTIP ALL OTHER
SALARY BONUS OPTIONS/SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($) ($)(1)
--------------------------- ---- ------ ----- ------------ ------- --------------
<S> <C> <C> <C> <C> <C> <C>
John S. Simko, 1998 360,031 55,000 0 0 10,798
Chairman & Chief Executive 1997 360,031 43,100 0 0 12,894
Officer 1996 297,534 0 650,000 0 13,500
William W. Davis, 1998 242,547 26,400 0 0 10,798
Exec. Vice Pres. & Chief 1997 221,888 24,000 0 0 12,894
Financial Officer 1996 201,890 0 400,000 0 13,500
Harry F. Cougher 1998 145,025 10,200 0 0 10,476
Sr. Vice Pres. & 1997 132,598 13,400 0 0 11,811
Chief Operating Officer-Mining 1996 114,348 0 100,000 0 10,291
</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
Sunshine Defined Contribution Plan (the "DC Plan"). Payments to Mr. Simko under
the Savings Plan were $4,800, $4,750, and $4,500 in 1998, 1997, and 1996,
respectively; and under the DC Plan were $5,998, $8,144 and $9,000 in 1998,
1997, and 1996. Payments to Mr. Davis under the Savings Plan were $4,800,
$4,750, and $4,500 in 1998, 1997, and 1996, respectively; and under the DC Plan
were $5,998, $8,144 and $9,000 in 1998, 1997, and 1996, respectively. Payments
to Mr. Cougher under the Savings Plan were $4,657, $4,380 and $3,430 for 1998,
1997, and 1996, respectively; and under the DC Plan were $5,819, $7,431 and
$6,861 for 1998, 1997, and 1996, respectively. The Savings Plan is an individual
account plan which provides for deferred compensation as described in Section
401(k) of the Internal Revenue Code and is subject to and complies with all of
the principal protective provisions of Titles I and II of the Employee
Retirement Income Security Act of 1974 ("ERISA"). The DC Plan replaced the
Company's Defined Benefit Pension Plan as of January 1, 1994, and is subject to
and complies with ERISA.
OPTIONS GRANTS IN LAST FISCAL YEAR
No stock options were granted to the Named Executive Officers in the
year ended December 31, 1998.
5
<PAGE> 8
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in fiscal
1998 by the Named Executive Officers and the value of such officers'
unexercised options at December 31, 1998.
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
- - ------------------------------------------------------------------------------------------------------------------
SHARES VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON REALIZED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
EXERCISE (#) ($) 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".
COMPENSATION OF DIRECTORS
Directors who are not employees receive an annual retainer of $25,000
and $1,250 per day for each board and committee meeting attended. Directors who
so elect are covered by the Sunshine Mining Health Insurance Plan. During 1998,
directors received compensation as follows in gold, cash and/or health
benefits: Messrs. Andersen $28,750, Babbitt $37,337, Elvin $31,250, Jackson
$35,140, Shaffer $28,750 and Smith $36,087.
6
<PAGE> 9
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 and again in September 1998 to extend the term to December
31, 2002.
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. The Board 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.
Several key objectives were established for executive officers in 1998.
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 increase shareholder worth,
each objective was given relatively equal consideration by the Committee.
The key objectives were as follows:
(1) Increase silver production from the Sunshine Mine to approximately six
million ounces of silver at a reduced cash cost per ounce of silver in
1998;
7
<PAGE> 10
(2) Strengthen the Company's financial condition and balance sheet to
enable the Company to continue exploration and development of Pirquitas
and to be in position to explore and develop other appropriate
properties;
(3) Continue work required to establish additional reserves and complete
the bankable feasibility study of Pirquitas in 1998;
(4) Identify and acquire new exploration projects;
(5) Increase investor awareness of the Company;
(6) Establish a plan to return the Company to profitability by 2000.
The decline in silver prices continued in the last half of 1998, which
hampered efforts to return to profitability and negatively impacted the Common
Stock price. Cash operating costs per ounce of silver declined $0.57 in 1998
primarily due to an increase in silver production of 1.6 million ounces (36.5%)
over 1997 to 5.8 million ounces; however, these reduced costs were partially
offset by a $0.50 per ounce reduction in by-product credits due to lower lead,
copper and antimony prices.
Progress was made in other categories. The Company increased reserves at
Pirquitas to over 100 million ounces of silver; completed a preliminary
feasibility study for Pirquitas; and caused a bankable feasibility study to be
completed by the second quarter of 1999; and increased investor awareness about
the Company through direct mailings, meetings with analysts and participation at
investment conferences.
The Committee recommended no increases in salary to Messrs. Davis and
Cougher. A 21% bonus payable to Mr. Davis in 1999 was approved by the Committee.
The Committee recommended no change in Mr. Simko's compensation and his
overall compensation remains below counterparts in the Peer Companies.
Daniel D. Jackson
V. Dale Babbitt
Oren G. Shaffer
8
<PAGE> 11
PERFORMANCE GRAPH
The accompanying chart compares the returns on investments since
December 31, 1993, 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 Coeur d'Alene Mines Corporation.
[GRAPH]
<TABLE>
<CAPTION>
COMPANY NAME/INDEX 1993 1994 1995 1996 1997 1998
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUNSHINE MINING & REFINING 100 64.98 49.98 37.47 39.99 19.99
S&P 500 INDEX 100 101.32 139.40 171.40 228.59 293.91
PEER GROUP 100 75.83 60.39 49.97 40.97 24.29
</TABLE>
9
<PAGE> 12
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders must be received by the Company at its principal
executive offices by December 2, 1999, for inclusion in the proxy statement and
proxy relating to that meeting. Stockholders who intend to present a proposal at
the 2000 Annual Meeting of Stockholders without inclusion of such proposal in
the Company's proxy materials are required to provide notice of such proposal to
the Company no later than February 15, 2000.
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 ON 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, 1998, 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 31, 1999
10
<PAGE> 13
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 March 26, 1999, at
the Annual Meeting of Stockholders to be held on May 24, 1999, or any
adjournment(s) thereof.
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<S> <C>
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees 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 shares are held by joint tenants, both
should sign. 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 , 1999
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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.
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