<PAGE> 1
As filed with the Securities and Exchange Commission on October 1, 1999
Registration Nos. 333-_____
333-86327
333-74437
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
-------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------
SUNSHINE MINING AND REFINING COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 75-2618333
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
877 W. MAIN STREET, SUITE 600
BOISE, IDAHO 83702
(208) 345-0660
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
JOHN S. SIMKO, CHIEF EXECUTIVE OFFICER
877 W. MAIN STREET, SUITE 600
BOISE, IDAHO 83702 (208) 345-0660
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
COPY TO:
JANICE V. SHARRY
HAYNES AND BOONE, LLP
901 MAIN STREET
SUITE 3100
DALLAS, TEXAS 75202-3789
(214) 651-5000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
<PAGE> 2
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS TO BE PRICE PER OFFERING REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED SHARE PRICE FEE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per share 338,812 shares(1),(2) $2.25(3) $762,327(3) $211.93
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Shares of common stock registered by the registrant under Registration
Statement No. 333-74437 and not previously issued upon conversion of
Sunshine Mining and Refining Company's 5% Convertible Notes due January
28, 2001 in the amount of 479,876 as of September 27, 1999 and shares of
common stock registered by the registrant under Registration Statement No.
333-86327 and not previously issued upon conversion of Sunshine Mining and
Refining Company's 5% Convertible Notes due January 28, 2001 in the amount
of 848,688 as of September 27, 1999 are consolidated in this registration
statement pursuant to Rule 429 under the Securities Act. Registration fees
with respect to Registration Statement No. 333-74437 in the amount of
$2,807.00 and with respect to Registration Statement No. 333-86327 in the
amount of $376.02 have previously been paid. The total amount registered
under this registration statement as so consolidated is 1,667,376.
(2) Represents the additional number of shares of common stock that may be
issued upon conversion of Sunshine Mining and Refining Company's 5%
Convertible Notes due January 28, 2001. The additional number of shares of
common stock are being registered pursuant to a side letter agreement
between the registrant and the holders of the 5% Convertible Notes
relating to the requirement in the Convertible Note Investment Agreement
that Sunshine Mining and Refining Company register such additional shares
due to the 1 for 8 reverse stock split that the Company effected on August
6, 1999. The number of shares of common stock to be registered shall be
deemed to include such greater number of shares of common stock as are
issuable as a result of any adjustment to the conversion price of the 5%
Convertible Notes due January 28, 2001 that is attributable to stock
splits, stock dividends, or similar transactions.
(3) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended, based on the
average of the high and low reported sales price of the common stock on
the New York Stock Exchange on September 29, 1999.
Pursuant to Rule 429 under the Securities Act, the prospectus filed as
part of this registration statement also relates to the common stock registered
by the registrant under Registration Statement No. 333-74437 that remain
unissued common stock as of September 27, 1999 in the amount of 479,876 shares
and the common stock registered by the registrant under Registration Statement
No. 333-86327 that remain unissued common stock as of September 27, 1999 in the
amount of 848,688 shares. This registration statement also constitutes
Post-Effective Amendment No. 2 with respect to the registrant's Registration
Statement No. 333-74437 and Post-Effective Amendment No. 1 with respect to the
registrant's Registration Statement No. 333-86327.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
ii
<PAGE> 3
===============================================================================
PROSPECTUS
------------------
SUNSHINE MINING AND REFINING COMPANY
877 W. Main Street, Suite 600,
Boise, Idaho 83702,
208.345.0660
UP TO 1,667,376 SHARES OF COMMON STOCK
------------------
This Prospectus relates to the resale by selling stockholders of our
common stock issuable upon conversion of our 5% convertible notes. The selling
stockholders may offer the shares of common stock through public or private
transactions, at prevailing market prices, or at privately negotiated prices.
New York Stock Exchange Symbol: SSC
Recent Price: $1.8125 at September 27, 1999.
------------------
Prospective Purchasers Should Consider Carefully The Risk Factors
Beginning On Page 3 Of This Prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
------------------
Prospectus dated October 1, 1999
1
<PAGE> 4
===============================================================================
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RISK FACTORS................................................. 3
WHERE YOU CAN FIND MORE INFORMATION.......................... 6
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE............ 6
THE COMPANY.................................................. 7
RECENT DEVELOPMENTS.......................................... 7
DESCRIPTION OF THE 5% CONVERTIBLE NOTES...................... 8
USE OF PROCEEDS.............................................. 10
DESCRIPTION OF CAPITAL STOCK................................. 10
PLAN OF DISTRIBUTION......................................... 13
SELLING STOCKHOLDERS......................................... 14
SHARES ELIGIBLE FOR FUTURE SALE.............................. 16
LEGAL MATTERS................................................ 16
EXPERTS...................................................... 16
</TABLE>
===============================================================================
2
<PAGE> 5
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS OR INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS
BELOW PRIOR TO YOUR PURCHASE OF COMMON STOCK. THIS PROSPECTUS AND THE OTHER
INFORMATION INCORPORATED BY REFERENCE INTO THIS PROSPECTUS CONTAINS
"FORWARD-LOOKING STATEMENTS," WHICH CAN BE IDENTIFIED BY TERMINOLOGY SUCH AS
"MAY," "WILL," "EXPECT," ANTICIPATE," ESTIMATE," OR "CONTINUE." THE RISK
FACTORS SET FORTH BELOW IDENTIFY SOME REPRESENTATIVE RISKS AND UNCERTAINTIES,
BUT NOT EVERY RISK AND UNCERTAINTY, THAT COULD CAUSE OUR ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS.
THE DOCUMENTS WE HAVE INCORPORATED BY REFERENCE INTO THIS PROSPECTUS,
INCLUDING THE FINANCIAL STATEMENTS AND THE NOTES TO FINANCIAL STATEMENTS
CONTAINED IN THOSE DOCUMENTS, CONTAIN MORE DETAILED DISCUSSIONS OF THE MATTERS
DISCUSSED BELOW.
WE HAVE EXPERIENCED OPERATING LOSSES FOR THE LAST TEN YEARS AND EXPECT OUR
LOSSES TO CONTINUE.
Our earnings are directly related to the price of silver because
approximately 80% of our revenues come from the sale of silver mined from our
Sunshine Mine in Kellogg, Idaho. Silver prices have been depressed since 1985.
As a result, our mining operations are not profitable. We have experienced net
losses for the past ten years. Our recent net losses are as follows:
o 1994 - $ 4.9 million
o 1995 - $15.5 million
o 1996 - $25.9 million
o 1997 - $19.3 million
o 1998 - $64.8 million
Our net losses for 1998 reflect a $50.4 million charge to write down our
investment in the Sunshine Mine. At December 31, 1998, we had a $17.5 million
stockholders' deficit, working capital of $9.7 million and cash, cash
investments and silver bullion of $6.6 million. For the six months ended June
30, 1999, we reported a net loss of $5.0 million. At June 30, 1999, we had a
$18.2 million stockholders' deficit, a working capital deficit of $15.75
million and cash, cash investments and silver bullion of $9.1 million.
Although at current silver prices and production rates, the Sunshine Mine
generates positive net income and cash flows, these cash flows do not generate
enough funds to cover all of our interest expense, general and administrative
costs, and exploration costs. Therefore at current silver prices, we expect our
operating losses and cash flow deficiencies to continue until we complete the
development of the Pirquitas Mine in Argentina which is expected to be at the
end of 2001.
FUTURE LOSSES WILL LIKELY RESULT IN LIQUIDITY DEFICIENCIES AND AN INABILITY TO
CONTINUE OPERATIONS.
Our operating losses are primarily a result of depressed silver prices
resulting in margins that are insufficient to cover our other expenses. If
silver prices do not improve, we expect to fund our losses for the 1999 fiscal
year from our cash and cash equivalents and the silver bullion we hold for
investment. On June 30, 1999, our cash, cash equivalents, and silver bullion
held for investment totaled approximately $9.1 million.
If our operating losses and cash flow deficiencies continue, we eventually
may be required to further curtail our operations or cease mining at the
Sunshine Mine altogether. In an attempt to ensure our ability to continue
operations at least through December 31, 1999, we have reduced our Argentina
operations primarily to the level required to complete the feasibility study
for the Pirquitas Mine and implemented cost reduction and cash conservation
plans and initiatives to reduce our work-in-process inventory. We cannot assure
you that we will be successful in implementing these actions. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business and Properties" and our financial statements, including the notes to
our financial statements, that appear in our Annual Report and Quarterly
Reports.
THE PRICE OF SILVER IS VOLATILE AND EFFECTS OUR STOCK PRICE.
Because our earnings are directly related to the price of silver, the value
of the common stock historically has moved in the same direction as the price
of silver. Numerous factors beyond our control, alone or in combination, may
cause the price of silver to rise or fall. These factors include, among others:
3
<PAGE> 6
o inflation expectations,
o speculative activities of market makers, arbitrageurs, traders and
other participants in the commodities markets,
o levels of silver production, and
o the demand for silver as a component of manufactured goods.
The following table contains the high, low and average closing spot prices
per ounce of silver on the Commodity Exchange, Inc. ("COMEX") for the indicated
periods.
<TABLE>
<CAPTION>
NOMINAL DOLLARS
----------------------------------
YEAR HIGH LOW AVERAGE
---- -------- -------- --------
<S> <C> <C> <C> <C>
1983 $ 14.74 $ 8.38 $ 11.46
1984 10.17 6.25 8.15
1985 6.89 5.48 6.14
1986 6.32 4.85 5.49
1987 11.25 5.35 6.99
1988 8.06 6.01 6.53
1989 6.20 5.02 5.47
1990 5.35 3.94 4.82
1991 4.55 3.51 4.03
1992 4.32 3.63 3.94
1993 5.44 3.52 4.31
1994 5.78 4.61 5.28
1995 6.10 4.38 5.20
1996 5.84 4.71 5.21
1997 6.34 4.16 4.88
1998 7.26 4.62 5.51
</TABLE>
On September 29, 1999, the closing price of spot silver as reported on the
COMEX was $5.565 per ounce.
WE ARE DEPENDENT ON THE SUCCESS OF OUR EXPLORATION AT THE SUNSHINE MINE AND THE
DEVELOPMENT OF THE PIRQUITAS MINE.
Substantially all of our revenues are derived from the Sunshine Mine,
which does not generate sufficient cash at current silver prices to cover our
current cash requirements. Therefore, our future earnings are dependent on the
success of our exploration projects at the Sunshine Mine, and increases in
production as a result, and the successful development of the Pirquitas Mine.
Successful development of a new mine involves a high degree of risk. See
"Business and Properties -- Operations -- Exploration Activities at the
Sunshine Mine" included in the Annual Report.
BECAUSE OUR RESERVE ESTIMATES ARE IMPRECISE, WE DO NOT KNOW THE EXACT QUANTITY
OF MATERIALS WE WILL RECOVER.
Our ore reserve estimates discussed in the "Company" section below
represent the judgment of our geologic personnel and are not guarantees that
the indicated quantities will be recovered. 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 mineral on 1, 2, or 3
sides, sampling data and similar examinations.
Our reserve estimates may change as ore bodies are mined and we obtain
additional data. Our reserve estimates at the Pirquitas Mine come from an
independent study. Our reserve estimates at the Sunshine Mine were prepared
internally; however, the methodology used to prepare the reserve estimates has
been reviewed and provided by an independent consultant.
4
<PAGE> 7
NO ASSURANCE CAN BE MADE THAT FINANCING CAN BE OBTAINED TO DEVELOP THE
PIRQUITAS MINE.
It is estimated that it will require approximately $124 million to put the
Pirquitas Mine into production. In order to develop the Pirquitas Mine, we will
need to obtain equity financing as well as obtain third party financing, enter
into a joint venture, sell a royalty interest or take other similar action to
raise the capital required to develop the Pirquitas Mine. Such sources of
capital providers may not be available on terms acceptable to us. If such
sources are not available, we may not develop the Pirquitas Mine.
WE MAY NOT BE ABLE TO FULLY INSURE AGAINST RISKS ASSOCIATED WITH OPERATING
MINES, ESPECIALLY ENVIRONMENTAL RISKS.
Our operations may be affected by risks and hazards generally associated
with the mining industry. These risks and hazards include fires, cave-ins, rock
bursts, flooding, industrial accidents, mechanical or electrical failures,
unusual or unexpected rock formations and environmental pollution or other
hazards resulting from the disposal of waste products occurring from
production. 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. We maintain
insurance at levels consistent with our historical experience and industry
practice. We may not always be able to pay for this insurance, especially if
there is an increase in the cost of premiums. Insurance for environmental risks
is generally either not available or too costly for our industry.
THERE IS EXTENSIVE GOVERNMENT REGULATION OF OUR INDUSTRY, AND SUCH REGULATION
SOMETIMES RESULTS IN LAWSUITS.
Extensive federal, state and local laws and regulations control our mineral
mining and exploration activities. These laws and regulations also govern the
possible effects of these activities on the environment. We have been involved
in lawsuits and are involved in a lawsuit in which we have been accused of
violating environmental laws and may be subject to similar lawsuits in the
future. These lawsuits have resulted in substantial expenses and diversions of
our resources. Any future lawsuits can be expected to result in similar
expenses and unproductive diversion of our resources. In addition, new
legislation and regulations could be adopted at any time that may result in
additional operating expense, capital expenditures or restrictions and delays
in the mining, production or development of our properties. To the extent that
we devote money and employees' time responding to government regulations or
lawsuits, these resources will not be devoted to our income-producing
operations.
THE FINANCIAL CONDITION OF OUR ARGENTINA AND MEXICO OPERATIONS IS SUBJECT TO
SOCIAL, POLITICAL AND ECONOMIC RISKS, INCLUDING CHANGES IN FOREIGN INVESTMENT
AND TRADE POLICIES, AND OTHER RISKS ASSOCIATED WITH FOREIGN OPERATIONS.
We presently conduct operations in Argentina and Mexico and anticipate that
we will continue to conduct significant international operations in the future.
Because we conduct operations internationally, we are subject to the effects of
local political and economic developments, exchange controls, currency
fluctuations, royalty and tax increases, retroactive tax claims, expropriation,
import and export regulations, other foreign laws or policies governing
operations of foreign-based companies, United States laws and policies
affecting foreign trade, taxation and investment and civil unrest and union
activity different from the United States. Changes in these items could
restrict our ability to conduct operations, reduce the profitability of our
operations or reduce the value of our assets in Argentina and Mexico.
Because we do business with foreign governments, our contracts with those
governments are subject to renegotiation and our ability to enforce our rights
against those governments by bringing a lawsuit may be subject to the doctrine
of sovereign immunity, which prohibits or restricts lawsuits against government
agencies. In addition, if we are sued in a foreign country or are forced to
bring suit in a foreign country to enforce our rights against foreign parties,
then our ability to control the costs and manage the conduct of any foreign
litigation will be difficult because of our unfamiliarity with foreign court
systems and procedures, language barriers and the expense and inconvenience of
international travel and communications.
ISSUANCES AND RESALES OF OUR COMMON STOCK MAY LOWER THE PRICE OF THE COMMON
STOCK.
As of September 29, 1999, we had 36.9 million shares of common stock
outstanding, excluding 567,718 treasury shares. On August 6, 1999, we effected
a 1 for 8 reverse stock split of our common stock in order to increase our
stock price to over $1 to comply with the continued listing requirements of the
New York Stock Exchange. All references in this Prospectus to the number of
shares of common stock prior to August 6, 1999 have been adjusted to reflect
the 1 for 8 reverse stock split. We previously have registered with the
Securities and Exchange Commission and have unissued as of September 29, 1999 a
total of approximately 8.1 million shares of common stock for resale by some of
our stockholders. In addition, we have reserved a large number of shares of
common stock for future issuance upon the exercise of outstanding convertible
securities, stock warrants and options. We caution you that:
o the sale of shares of common stock previously registered or to be
registered for resale could have a material adverse effect on the
market price of the common stock,
5
<PAGE> 8
o the issuance of shares of common stock that have been reserved for
future issuance could also have a material adverse effect on the
market price of the common stock, and
o the issuance of shares of common stock could significantly dilute our
current stockholders' ownership interests.
WE MAY NOT BE ABLE TO MEET THE NEW YORK STOCK EXCHANGE'S CONTINUED LISTING
REQUIREMENTS.
On August 6, 1999, we effected a 1 for 8 reverse stock split to increase
our stock price to over $1 to comply with the New York Stock Exchange's
continued listing requirements. The New York Stock Exchange continued listing
requirements also include a requirement that a listed company have a market
capitalization of at least $50 million. As of September 29, 1999, our market
capitalization was $78.5 million. If the Company's market capitalization falls
beneath $50 million, the New York Stock Exchange could notify us that we may be
delisted. If the New York Stock Exchange were to issue such a notice, we could
require a hearing to be held with a committee of the board of directors of the
New York Stock Exchange. If the common stock is delisted from trading on the
New York Stock Exchange, there would be a significant reduction in the
liquidity of our common stock, which likely would have a material adverse
effect on us and our stockholders. The adverse impact of a delisting may be
mitigated if we are able to have our common stock listed on another exchange.
There can be no assurance, however, that we will meet the original or continued
listing obligations of another exchange.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the Securities and Exchange Commission's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on its public reference room. Our Securities and Exchange
Commission filings are also available to the public from our web site at
http://www.sunshinemining.com, or at the Securities and Exchange Commission's
web site at http://www.sec.gov or at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring you to those documents. You should
consider the information incorporated by reference to be part of this
prospectus, and information that we file later with the Securities and Exchange
Commission will automatically update and replace this information. We
incorporate by reference the documents listed below and any future filings we
make with the Securities and Exchange Commission under Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 until the selling security
holders sell all the shares of common stock.
o Annual Report on Form 10-K for the fiscal year ended December 31,
1998,
o Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 1999 and June 30, 1999,
o Reports on Form 8-K filed on February 4, 1999, June 4, 1999, June 14,
1999 and August 11, 1999,
o Proxy Statement for Annual Meeting of Stockholders held on May 24,
1999, and
o Description of our common stock contained in our Registration
Statement on Form 8-A, as amended, Registration Number 1-7966.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Corporate Secretary
Sunshine Mining and Refining Company
877 W. Main Street Suite 600
Boise, Idaho 83702
208.345.0660
You should rely only on the information incorporated by reference or
provided in this prospectus or the supplements to the prospectus. We have not
authorized anyone to provide you with different information. The selling
stockholders are not making an offer of these securities in
6
<PAGE> 9
any state where the offer is not permitted. You should not assume that the
information in this prospectus or any supplement to this prospectus is accurate
as of any date other than the date on the front of the document.
THE COMPANY
We are one of the world's leading primary silver producers. We own the
Sunshine Mine in the Coeur d'Alene Mining District of northern 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.
Currently, estimated reserves for the Sunshine Mine are proven and probable
reserves of 37.4 million ounces of silver of which our share of the reserves is
36.6 million ounces of silver. Based on the most recent engineering data,
production in 1999 is expected to continue at approximately 5.5 million ounces,
and projected net cash production costs are projected to be less than $4.50 per
ounce of silver.
The bankable feasibility study performed for the Pirquitas Mine estimates
that there are proven and probable reserves of 116.0 million ounces of silver,
156.0 million pounds of tin and 272.0 million pounds of zinc. The feasibility
study was prepared to support our efforts to finance development of the
Pirquitas Mine.
Our company is a Delaware corporation. The mailing address and telephone
number for our principal executive offices are:
877 W. Main Street
Suite 600
Boise, Idaho 83702
208.345.0660
RECENT DEVELOPMENTS
On August 6, 1999, we effected a 1 for 8 reverse stock split of our common
stock in order to increase our stock price to over $1 to comply with the
continued listing requirements of the New York Stock Exchange.
EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share adjusted to reflect the reverse stock split. All amounts are
in U.S. dollars in thousands, except per share amounts.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR JUNE 30,
---------------------------------- ---------------------
1998 1997 1996 1999 1998
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Numerator:
Net Loss ...................................... $(64,845) $(19,308) $(25,902) $ (5,206) $ (6,540)
Gain on retirement and exchange of
preferred stock/debt ........................ -- -- 40,124 216 --
Preferred stock dividends ..................... -- -- (2,622) -- --
-------- -------- -------- -------- --------
Numerator for basic earnings per share -
income (loss) available to common
shareholders ................................ $(64,845) $(19,308) $ 11,600 $ (4,990) $ (6,540)
Denominator:
Denominator for basic and diluted earnings
per share - weighted - average shares ...... 32,109 31,892 27,823 33,525 32,029
Basic and diluted earnings (loss) per share ...... $ (2.02) $ (0.61) $ 0.42 $ (0.15) $ (0.20)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS
JUNE 30, ENDED MARCH 31,
--------------------- ---------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Numerator:
Net Loss ...................................... $ (2,341) $ (6,612) $ (2,866) $ 71
Gain on retirement and exchange of
preferred stock/debt ........................ 216 -- -- --
Preferred stock dividends ..................... -- -- -- --
-------- -------- -------- --------
Numerator for basic earnings per share -
income (loss) available to common
shareholders ................................ $ (2,125) $ (6,612) $ (2,866) $ 71
Denominator:
Denominator for basic and diluted earnings
per share - weighted - average shares ...... 34,524 32,095 32,514 31,961
Basic and diluted earnings (loss) per share ...... $ (0.06) $ (0.21) $ (0.09) $ 0.00
</TABLE>
LETTER AGREEMENT
Pursuant to a letter agreement dated September 22, 1999 by and between us
and the holders of the 5% convertible notes (filed as Exhibit 4.20 herewith),
we have agreed that by October 22, 1999, we will do the following:
o reserve for issuance 338,812 shares of our common stock to be
available upon conversion of the 5% convertible notes;
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<PAGE> 10
o obtain an effective registration statement covering the 338,812
shares of our common stock to be available upon conversion of the 5%
convertible notes; and
o obtain approval from the New York Stock Exchange for the listing of
the 338,812 shares of our common stock to be available upon
conversion of the 5% convertible notes.
If we are unable to reserve for issuance, obtain an effective registration
statement and obtain approval from the New York Stock Exchange for listing of
the 338,812 shares of our common stock by October 22, 1999, we must pay a
penalty to the holders of the 5% convertible notes of $5,000 for every thirty
days in which we are unable to meet the three conditions.
In addition to the requirements discussed above regarding the 338,812
shares, the letter agreement modifies portions of the documents underlying the
5% convertible notes by adding limitations and restrictions (i) regarding the
ability of the holders of the 5% convertible notes to sell shares of our common
stock and convert their 5% convertible notes into shares of our common stock
and (ii) regarding the ability of us to redeem the 5% convertible notes.
DESCRIPTION OF THE 5% CONVERTIBLE NOTES
On January 28, 1999, we sold $6 million in initial principal amount of 5%
convertible notes in a private placement. The 5% convertible notes rate senior
to all of our subordinated obligations. Interest on the 5% convertible notes
accrues at 5% and will be paid by adding the interest to the outstanding
principal amount of the 5% convertible notes. Interest on the 5% convertible
notes accrues and is payable quarterly.
The principal amount of the 5% convertible notes may be converted by the
noteholders in whole or in part at any time into common stock. The conversion
price will be determined at the time of conversion. The conversion prices have
been adjusted to reflect the 1 for 8 reverse stock split. Except as set forth
in the letter agreement dated September 22, 1999 by and between us and the
holders of the 5% convertible notes, to determine the conversion price:
o First, we will find the average of the highest and lowest trading
prices for the common stock on each day for the twenty consecutive
trading days prior to the conversion date;
o Second, we will find the average of the five lowest prices determined
in the first step;
o Third, we will deduct from the price determined in the second step
3%, plus an additional 1% for each full thirty day period that the 5%
convertible notes have been outstanding, up to an additional 5%; and
o Fourth, $3 million in initial principal amount of the 5% convertible
notes have a maximum conversion price of $5.50.
For example, if 5% convertible notes had been converted into common stock
on April 6, 1999, we would have calculated the conversion price as follows:
o First, we would find the average of the highest and lowest trading
prices for each of the twenty trading days from Monday, March 8, 1999
through Monday, April 5, 1999;
o Second, we would then take the five lowest of the average prices from
the first step and average them. The five lowest of the average
prices from step one are $3.625 on each of March 17, 18 and 19, 1999,
$3.75 on April 1 and 5, 1999. The average of those five prices is
$3.675.
o Third, we would deduct 5% from $3.675, which 5% is equal to 3% plus
1% for the thirty day period commencing on February 27, 1999 plus 1%
for the thirty day period commencing on March 30, 1999. After
deducting the 5%, the conversion price would be $3.49125 in principal
amount of 5% convertible notes per share of common stock.
The conversion price of the 5% convertible notes is subject to
anti-dilution adjustments. Regardless of the conversion price, we will not have
to issue more than 3,562,500 shares of common stock upon conversion of the 5%
convertible notes including shares that already have been issued, but such
maximum number is subject to anti-dilution adjustment if there is a
o stock split of the common stock,
8
<PAGE> 11
o reclassification of the common stock,
o dividend of the common stock, or
o distribution of debt securities, cash or rights to purchase any
security of Sunshine Mining or any of its subsidiaries that is made
to holders of common stock.
In addition,
o if the common stock as a class is not, or the shares of the common
stock or other securities issuable upon conversion of the 5%
convertible notes are not, listed for trading on the New York Stock
Exchange, the Nasdaq National Market System or the American Stock
Exchange at all times until the 5% convertible notes have been paid
in full or subject to mandatory conversion, as described below, the
maximum number of shares will increase by 75%.
Although the 5% convertible notes are due and payable in cash on January
28, 2001, we may have the option to require conversion of all outstanding 5%
convertible notes prior to their maturity. There are conditions that apply to
our option to require conversion. The material conditions are:
o we can not be in material default or breach of the agreement relating
to the sale of the 5% convertible notes, the terms of the 5%
convertible notes or the Registration Rights Agreement discussed
below.
o none of the events in the Registration Rights Agreement that are
described below and would result in an obligation by us to make
penalty payments can be ongoing, and
o Sunshine Mining and Refining and its subsidiaries on a consolidated
basis must have assets with a net realizable fair market value
exceeding its liabilities and be able to pay all its debts as they
become due, and may not be subject to any liquidation, dissolution or
winding up of its affairs.
At the option of the holders of the 5% convertible notes, we will have to
prepay the 5% convertible notes upon the occurrence of
o a change in control of Sunshine Mining and Refining,
o a going private transaction,
o a tender offer by Sunshine Mining and Refining,
o a default by Sunshine Argentina, Inc. or Sunshine Exploration, Inc.,
two subsidiaries of Sunshine Mining and Refining, under the terms of
the put option agreements that they have entered into with the
purchasers of the 5% convertible notes in the private placement. The
put option agreements relate to approximately $18.4 million of 8%
senior exchangeable notes due 2000 of Sunshine Precious Metals, Inc.,
a subsidiary of Sunshine Mining and Refining, which notes are
guaranteed by Sunshine Mining and Refining and are exchangeable into
common stock,
o a transfer by Sunshine Argentina of all or substantially all of the
Pirquitas Mine, or
o an issuance of securities that results in Sunshine Mining and
Refining losing control of Sunshine Argentina.
If we have to prepay the 5% convertible notes, the prepayment price will
be equal to 115% of the outstanding principal amount.
At the time we sold the 5% convertible notes, we entered into a
Registration Rights Agreement with the purchasers of the 5% convertible notes
that, among other obligations, requires us to register the common stock
issuable upon conversion of the 5% convertible notes with the Securities and
Exchange Commission so that the common stock may be sold to the public. The
Registration Rights Agreement provides that we must make penalty payments to
the holders of the 5% convertible notes if:
9
<PAGE> 12
o the common stock issuable upon conversion of the 5% convertible notes
is not registered with the Securities and Exchange Commission by
April 28, 1999, plus any extensions that are due to delays by the
holders of the 5% convertible notes in providing us with information
needed to register the common stock,
o the registration of the common stock is suspended for more than five
consecutive days or more than twenty days in any calendar year,
o the common stock is not listed for trading on the New York Stock
Exchange, the Nasdaq National Market System or the American Stock
Exchange at all times until the 5% convertible notes have been paid
in full or subject to mandatory conversion, as described above, or
o except as set forth in the letter agreement dated September 22, 1999
by and between us and the holders of the 5% convertible notes, we do
not keep available for issuance enough shares of common stock,
subject to the maximum amount described above, to allow conversion of
all of the 5% convertible notes.
The amount of the penalty payment will be
o 1% of the outstanding principal amount of the 5% convertible notes
for the first 30 day period or portion of a 30 day period that the
condition giving rise to the penalty payment obligation exists,
o 2% of the outstanding principal of the 5% convertible notes for the
next 30 day period or portion of a 30 day period that the condition
giving rise to the penalty payment obligation exists, and
o 3% of the outstanding principal amount of the 5% convertible notes
for each subsequent 30 day period or portion of a 30 day period that
the condition giving rise to the penalty payment obligation exists.
To the extent that penalty payments become due, holders of the 5%
convertible notes have the option to add the amount of the penalty payment to
the outstanding principal amount of their 5% convertible notes.
If we do not have available a sufficient number of shares of common stock
reserved for issuance to satisfy our obligations to issue common stock upon
conversion of the 5% convertible notes, then, in addition to the penalty
payments described above, the holders of the 5% convertible notes have the
right to require us to redeem the 5% convertible notes. The holders of the 5%
convertible notes also have the right to require us to redeem the 5%
convertible notes if we fail to pay the penalty payments described above in a
timely manner. If we are required to redeem the 5% convertible notes the
redemption price will be the greater of:
o 120% of the principal amount of the 5% convertible notes being
redeemed; or
o the principal amount of the 5% convertible notes being redeemed plus
a formula that represents the spread between the conversion price of
the 5% convertible notes and the market price for the common stock
that is issuable upon conversion of the 5% convertible notes being
redeemed.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock by the
selling stockholders.
DESCRIPTION OF CAPITAL STOCK
We have summarized some of the material terms and provisions of our
outstanding capital stock in this section. The summary is not complete. We have
also filed our Certificate of Incorporation, the Amendments to our Certificate
of Incorporation and our Bylaws with the Securities and Exchange Commission.
You should read our Certificate of Incorporation, as amended, and our Bylaws
for additional information before you purchase any of the common stock.
As of September 29, 1999, our authorized capital stock was 95 million
shares. Those shares consist of 75 million shares of common stock, par value
$0.01 per share, and 20 million shares of preferred stock, par value $1.00 per
share.
10
<PAGE> 13
COMMON STOCK
As of September 29, 1999, 36.9 million shares of our common stock were
outstanding and 567,718 shares of common stock were held in our treasury. As of
September 29, 1999, there were approximately 30,000 holders of record of our
common stock.
Subject to the senior rights of preferred stock which may from time to
time be outstanding, holders of common stock are entitled to receive dividends
declared by the Board of Directors out of funds legally available for the
payment of dividends. Upon the dissolution and liquidation of our business,
holders of common stock are entitled to a ratable share of our net assets
remaining after payment to the holders of the preferred stock of the full
preferential amounts to which they are entitled. All outstanding shares of
common stock are fully paid and non-assessable.
The holders of common stock are entitled to one vote per share for the
election of directors and in all other matters submitted to a vote of
stockholders. Holders of common stock are not entitled to cumulate their votes
for the election of directors. Holders of common stock are not entitled to
preemptive rights.
In order to approve any business combination, including any merger or
consolidation or the sale, lease, exchange or other disposition of all or
substantially all of our assets, including a disposition in connection with a
dissolution or winding up or liquidation, Article Five of our Certificate of
Incorporation requires the affirmative vote or consent of the holders of:
o a majority of the shares entitled to vote on the business
combination, and
o a majority of any series or class of preferred stock entitled to vote
as a class on the business combination.
Article Five may not be amended or repealed without the prior affirmative vote
or consent of the holders of:
o 66 2/3% of all shares of stock entitled to vote on the amendment or
repeal, and
o 66 2/3% of any series or class of preferred stock, if the Board of
Directors gives such series or class of preferred stock such right to
vote as a class.
These provisions may have the effect of delaying, deterring or preventing a
change of control of our corporation.
We currently do not pay cash dividends on the common stock. We have not
paid cash dividends on the common stock since the third quarter of 1981. Our
Board of Directors, at its discretion, may declare dividends. The Board of
Directors will consider, among other factors, our current and projected
earnings and liquidity position. We do not expect to begin making dividend
payments in the foreseeable future.
Our payment of cash dividends is subject to restrictions. Some of our debt
securities impose restrictions on our ability to declare or pay cash dividends
and make distributions on our capital stock. Because of these restrictions, no
funds are available for us to make cash dividends.
The common stock is listed on the New York Stock Exchange. Our transfer
agent and registrar for the common stock is American Stock Transfer & Trust
Company.
PREFERRED STOCK
Subject to any limitations under Delaware law, our Board of Directors,
without any further vote or action by the stockholders, may:
o authorize the issuance of preferred stock in one or more series,
o establish from time to time the number of shares to be included in
each such series,
o fix the rights, preferences and privileges of the shares of each
wholly unissued series of preferred stock and any qualifications,
limitations or restrictions therein, and
o increase or decrease the number of shares of any such series, but not
below the number of shares of such series then outstanding.
11
<PAGE> 14
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. Our issuance of preferred stock,
if any, therefore, may have the effect of delaying, deferring or preventing a
change of control of our corporation.
As of September 29, 1999, no shares of preferred stock were outstanding.
We have no current plan to issue any shares of preferred stock. Our preferred
stock is not entitled to preemptive rights.
MEETINGS OF THE STOCKHOLDERS
Our Bylaws provide for annual meetings and special meetings of our
stockholders.
Calling and Notice of Meetings. The Board of Directors designates the date
and time of our annual stockholders meetings. The Chairman of the Board of
Directors, the President, the Board of Directors or the majority of the
directors by written order, can call a special stockholders meetings. When a
stockholders meeting is called, we must provide written notice of the
stockholders meeting to the stockholders. We must provide notice of any
stockholders meeting to each stockholder entitled to vote not less than ten nor
more than sixty days before the stockholders meeting. A notice of a special
stockholders meeting must describe the purpose or purposes of the stockholders
meeting. The Board of Directors may fix, in advance, a record date on which we
determine the stockholders that are entitled to notice of a stockholders
meeting or to vote at any stockholders meeting. The record date may not be more
than sixty nor less than ten days before the date of the stockholders meeting.
We must also prepare and make a complete list of the stockholders entitled to
vote at a stockholders meeting. We must prepare this list at least ten days
before the stockholders meeting. Any stockholder may examine this list for a
period of ten days prior to the stockholders meeting.
Quorum and Voting. Stockholders may represent themselves or designate a
proxy to represent their shares at any stockholders meeting. The representation
of a majority of the shares of capital stock entitled to vote at a stockholders
meeting constitutes a quorum for the conduct of business at the stockholders
meeting. Our Certificate of Incorporation, our By-Laws, or applicable law may
contain special provisions requiring a specific percentage of votes of our
capital stock to decide a specific question brought before a stockholders
meeting at which a quorum is present. If no special provisions exist, then the
vote of the holders of a majority of the shares of capital stock entitled to
vote decides any question brought before the stockholders meeting.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Limitation of Liability. Our Certificate of Incorporation limits the
personal liability of our directors to our corporation. It provides that no
director shall be personally liable to our corporation or its stockholders for
a breach of a fiduciary duty as a director, unless the limitation is not
permitted by the Delaware General Corporation Law. This includes liability for:
o any breach of the director's duty of loyalty to our corporation or
its stockholders,
o any act or omission not in good faith,
o any act or omission that involves gross negligence,
o any act or omission that involves intentional misconduct or a knowing
violation of law,
o any transaction from which the director derived any improper personal
benefit, or
o any act or omission where the liability of the director is expressly
provided by the Delaware General Corporation Law.
As a result of these limitations, we and our stockholders may be unable to
obtain monetary damages from a director for breach of the duty of care. We and
our stockholders may still seek injunctive or other equitable relief for a
director's alleged breach of such director's fiduciary duty. If these equitable
remedies are unavailable, however, we and our stockholders may not have an
effective remedy against the challenged conduct.
Indemnification. Our Certificate of Incorporation and Bylaws provide
rights of indemnification for all of our officers and directors.
12
<PAGE> 15
THE DELAWARE BUSINESS COMBINATION ACT
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. 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 the manner described by Section 203. A "business combination" includes
mergers, asset sales and other transactions that financially benefit the
interested stockholder. Subject to exceptions, an "interested stockholder" is a
person who, together with affiliates and associates, owns, or within three
years did own, 15% or more of the company's voting stock. The stockholders
holding a majority of the shares of the company's voting stock may amend the
company's Certificate of Incorporation or Bylaws to effectively avoid the
provisions of this statute. We do not intend to "elect out" of this statute by
amending our Certificate of Incorporation or Bylaws.
PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the common stock
offered hereby. The common stock 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 common stock 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 common
stock for whom they may act as agent. The selling stockholders and any such
brokers, dealers or agents who participate in the distribution of the common
stock may be deemed to be "underwriters", and any profits on the sale of the
common stock 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 of 1933. To the extent the
selling stockholders may be deemed to be underwriters, the selling stockholders
may be subject to statutory liabilities of the Securities Act, including, but
not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5
under the Securities Exchange Act of 1934.
The common stock offered hereby may be sold from time to time by the
selling stockholders, or, to the extent permitted, by their pledgees, donees,
transferees or other successors in interest. The common stock may be disposed
of from time to time in one or more transactions through any one or more of the
following:
o the purchasers directly,
o in ordinary brokerage transactions and transactions in which the
broker solicits purchasers,
o 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 common stock for whom they may act as agent,
o the writing of options on the common stock,
o the pledge of the common stock as security for any loan or
obligation, including pledges to brokers or dealers who may, from
time to time, themselves effect distributions of the common stock or
interests therein,
o purchases by a broker or dealer as principal and resale by such
broker or dealer for its own account,
o a block trade in which the broker or dealer so engaged will attempt
to sell the securities as agent but may position and resell a portion
of the block as principal to facilitate the transaction,
o an exchange distribution in accordance with the rules of such
exchange or transactions in the over the counter market,
o privately negotiated transactions,
o short sales, or
o a combination of any of the above transactions.
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. From time to time, the selling stockholders may engage in short
sales, short sales against the box, puts and calls and other transactions in
the common stock or other securities issued by us or derivatives of securities
issued by us, and may sell and deliver the common stock in connection with
their transactions or in settlement of securities loans.
13
<PAGE> 16
The selling stockholders or such successors in interest, and any
underwriters, brokers, dealers or agents that participate in the distribution
of the common stock, may be deemed to be "underwriters" within the meaning of
the Securities Act of 1933, and any profit on the sale of the common stock 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 of 1933.
At any time a particular offer of the common stock is made, a revised
prospectus or prospectus supplement, if required, will be distributed which
will set forth the aggregate amount and type of securities 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 Securities and Exchange
Commission to reflect the disclosure of additional information with respect to
the distribution of the common stock. In addition, the common stock covered by
this prospectus may be sold in private transactions or under Rule 144 rather
than pursuant to this prospectus.
To the best of our knowledge, there are currently no plans, arrangements
or understandings between any selling stockholders and any broker, dealer,
agent or underwriter regarding the sale of the common stock by the selling
stockholders. There is no assurance that any selling stockholder will sell any
or all of the common stock offered by it hereunder or that any such selling
stockholder will not transfer, devise or gift such common stock by other means
not described herein.
The selling stockholders and any other person participating in such
distribution will be subject to applicable provisions of the Securities
Exchange Act of 1934 and the rules and regulations thereunder, which may
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of any of the common stock by the selling stockholders and
any other such person. Furthermore, under Regulation M under the Securities
Exchange Act of 1934, any person engaged in the distribution of the common
stock may not simultaneously engage in market-making activities with respect to
the particular common stock being distributed for certain periods prior to the
commencement of such distribution. All of the foregoing may affect the
marketability of the common stock and the ability of any person or entity to
engage in market-making activities with respect to the common stock.
Pursuant to the Registration Rights Agreement entered into in connection
with the offer and sale of the 5% convertible notes, each of us and the selling
stockholders will be indemnified by the other against liabilities, including
liabilities under the Securities Act of 1933, or will be entitled to
contribution in connection therewith.
We have agreed to pay substantially all of the expenses incidental to the
registration, offering and sale of the common stock to the public other than
commissions, fees and discounts of underwriters, brokers, dealers and agents.
SELLING STOCKHOLDERS
The selling stockholders consist of Elliott Associates, L.P., a Delaware
limited partnership, and Westgate International, L.P., a Cayman Islands limited
partnership. The selling stockholders currently hold our 5% convertible notes
that are convertible into common stock. The shares of common stock that may be
sold by the selling stockholders under this prospectus are issuable upon
conversion of our 5% convertible notes. Permitted transferees, pledges, donees
and successors of Elliott Associates, L.P. and Westgate International, L.P.
that may in the future hold 5% convertible notes or common stock issued upon
conversion of 5% convertible notes may also be selling stockholders that use
this prospectus.
The following table sets forth:
o the name of each selling stockholder,
o the amount of common stock owned by each selling stockholder,
assuming no shares of common stock have been sold since the date on
which such selling stockholder provided such information to us, and
o a current estimate of the maximum amount of common stock that may be
offered for the account of each selling stockholder under this
prospectus.
14
<PAGE> 17
The following table is based upon information furnished to us by the
selling stockholders. We make no representation as to the accuracy of the
information provided regarding beneficial ownership of common stock by the
selling stockholders to the extent that such beneficial ownership is not
reflected in our records.
<TABLE>
<CAPTION>
COMMON STOCK
NAME OF OWNED PRIOR COMMON STOCK
SELLING STOCKHOLDER(1) TO OFFERING OFFERED HEREBY
---------------------------- --------------- ---------------
<S> <C> <C>
Elliott Associates, L.P. 1,691,698(2) 232,423(3)
------------ ---------
Westgate International, L.P. 2,296,077(4) 1,302,242(3)
------------ ---------
Total 3,987,775(5)
============
</TABLE>
- ----------
(1) The information set forth herein is as of September 27, 1999.
(2) Includes
o 1,424,375 shares of common stock issuable upon exchange of our 8%
senior exchangeable notes due 2000 currently owned by Elliott
Associates, L.P.,
o 34,900 shares of common stock currently owned by Elliott Associates,
L.P. and
o an estimated amount of 232,423 shares of common stock issuable
upon conversion of the 5% convertible notes currently owned by
Elliott Associates, L.P., subject to the limitation in footnote 5.
Mr. Paul Singer is the ultimate beneficial owner of Elliott
Associates, L.P.
(3) This number reflects an estimate of the number of shares of common stock
each selling stockholder may receive upon conversion of their 5%
convertible notes. As discussed in footnote 5 below, the aggregate amount
of common stock issuable to Elliott Associates, L.P. and Westgate
International, L.P. is subject to limitations.
(4) Includes
o 875,000 shares of common stock issuable upon exchange of our 8%
senior exchangeable notes due 2000 currently owned by Westgate
International, L.P.,
o 118,835 shares of common stock issuable upon exercise of warrants
to purchase common stock currently owned by Westgate International,
L.P., and
o the estimated amount of 1,302,242 shares of common stock issuable
upon conversion of the 5% convertible notes currently owned by
Westgate International, L.P., subject to the limitations described in
footnote 5 below.
Martley International, Inc., the investment manager for Westgate
International, L.P., shares dispositive and voting power over the shares
of common stock owned by Westgate International, L.P. Mr. Paul Singer is
the ultimate beneficial owner of Westgate International, L.P.
(5) The 5% convertible notes state that a holder and its affiliates may not
convert 5% convertible notes if, after such conversion, the holder and its
affiliates would in the aggregate be the beneficial owner of more than
9.9% of the total number of outstanding shares of common stock. The holder
has the ability to waive this limitation upon 61 days' notice or
immediately upon a change of control of Sunshine Mining and Refining. If
the limitation on the percentage of outstanding common stock that may be
issued to a selling stockholder is waived, then the number of shares of
common stock owned prior to the offering by Elliott Associates, L.P. and
Westgate International, L.P. collectively would be 4,120,486 based on the
current conversion price as of September 27, 1999 of the 5% convertible
notes. In addition to the limitation on the percentage of the total
outstanding shares of common stock that a holder of 5% convertible notes
may beneficially own, the maximum amount of shares of common stock that
may be issued upon conversion of the 5% convertible notes and sold under
this prospectus is 1,667,376 shares. However, this maximum number is
subject to certain anti-dilution adjustments. See "Description of the 5%
Convertible Notes." The actual number of shares issuable upon conversion
of the 5% convertible notes will vary depending on, among other things,
o the price of the common stock at the time of conversion,
15
<PAGE> 18
o the application of the limitations in the 5% convertible notes upon
the number of shares that may be issued to a selling stockholder and
possible waivers of such limitations,
o any sales of 5% convertible notes by each selling stockholder, and
o each selling stockholder's decision whether and to what extent to
convert any of its 5% convertible notes.
We cannot assure you that the selling stockholders will sell any or all of
the common stock offered by this prospectus. Because the selling stockholders
may sell using this prospectus none, some or all of the common stock issuable
upon conversion of the 5% convertible notes they presently hold, no estimate
can be given as to the amount of the common stock that will be held by the
selling stockholders upon termination of any such sales. In addition, the
selling stockholders identified above may have sold, transferred or otherwise
disposed of all or a portion of their 5% convertible notes or common stock
since the date on which they provided us the information regarding their
ownership of 5% convertible notes and common stock in transactions exempt from
the registration requirements of the Securities Act of 1993. See "Plan of
Distribution."
Only selling stockholders identified above who beneficially own the common
stock set forth opposite each such selling stockholder's name on the effective
date of the registration statement of which this prospectus forms a part may
sell common stock pursuant to this prospectus. We may from time to time include
additional selling stockholders in supplements to this prospectus.
Other than as a result of the ownership of the 5% convertible notes and a
combined aggregate principal amount of approximately $18.4 million of our 8%
senior exchangeable notes due 2000, to the best of our knowledge, none of the
selling stockholders had any material relationship with us within the three
year period ending on the date of this prospectus.
SHARES ELIGIBLE FOR FUTURE SALE
Except for our "affiliates", holders of the shares of common stock offered
and sold in this offering will be able to freely trade these shares without
restrictions or further registration under the Securities Act of 1933. 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. An "affiliate"
of ours that owns our common stock may only resell the common stock if the
shares are registered under the Securities Act of 1933, unless an exemption
from registration is available, including the exemption 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," is entitled to sell his or her shares
subject to volume limitations. A person may sell his or her shares if the
number of shares sold 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 sales are aggregated who is not deemed our "affiliate", and who has
beneficially owned shares for at least two years, may sell such shares under
Rule 144 without regard to these volume limitations.
LEGAL MATTERS
Our outside attorneys from the Dallas office of Haynes and Boone, LLP,
have issued an opinion for us about the legality of the offered shares of
common stock offered in this prospectus.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended December 31, 1998, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
16
<PAGE> 19
===============================================================================
UP TO 1,667,376 SHARES OF
COMMON STOCK
SUNSHINE MINING AND
REFINING COMPANY
---------------
PROSPECTUS
---------------
October 1, 1999
===============================================================================
17
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee .... $ 212
NYSE Listing Fee ....................................... 3,500
Printing and Photocopying Expenses ..................... 2,500
Accounting Fees and Expenses ........................... 5,000
Legal Fees and Expenses ................................ 20,000
Miscellaneous Expenses ................................. 1,000
--------
Total ............................................... $ 32,212
========
</TABLE>
All of the above expenses except the Securities and Exchange Commission
registration fee and the NYSE listing fee are estimated. All of such expenses
will be borne by the Registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The information set forth pursuant to Item 20 of the Registrant's
Registration Statement on Form S-4 (Registration No. 33-98876) is incorporated
herein by reference.
ITEM 16. EXHIBITS
EXHIBIT NO. EXHIBIT
----------- -------
*4.1 Certificate of Incorporation, filed as Exhibit 3.1 to the
Registrant's Registration Statement on Form S-4 (Registration
No. 33-98876), which exhibit is incorporated herein by
reference.
*4.2 Amendment to Certificate of Incorporation, filed as Exhibit
4.1 to the Registrant's Current Report on Form 8-K dated May
22, 1996 (File No. 001-100121), which exhibit is incorporated
herein by reference.
*4.3 Amendment to Certificate of Incorporation, filed as Exhibit
4.3 to the Registrant's Registration Statement on Form S-3
(Registration No. 333-86327), which exhibit is incorporated
herein by reference.
*4.4 Bylaws, filed as Exhibit 3.3 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31,
1998, which exhibit is incorporated herein by reference.
*4.5 Specimen Common Stock Certificate, filed as Exhibit 4.2 to
the Registrant's Registration Statement on Form S-1
(Registration No. 33-63446), which exhibit is incorporated
herein by reference.
*4.6 Warrant Agreement, dated as of February 1, 1996, between
Sunshine Merger Company and American Stock Transfer & Trust
Company, as Warrant Agent, filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-4 (Registration
No. 33-98876), which exhibit is incorporated herein by
reference.
*4.7 Warrant Agreement, dated as of February 3, 1994, between the
Registrant and American Stock Transfer & Trust Company, as
Warrant Agent, filed as Exhibit 4.3 to the Registrant's
Registration Statement on Form S-1 (Registration No.
33-73608), which exhibit is incorporated herein by reference.
*4.8 Form of Supplemental Warrant Agreement, dated as of February
1, 1996, between
II - 1
<PAGE> 21
Sunshine Merger Company and American Stock Transfer & Trust
Company, as Warrant Agent, filed as Exhibit 4.10 to the
Registrant's Registration Statement on Form S-4 (Registration
No. 33-98876), which exhibit is incorporated herein by
reference.
*4.9 Warrant Certificate, filed as Exhibit 4.3 to the Registrant's
Registration Statement on Form S-4 (Registration No.
33-98876), which exhibit is incorporated herein by reference.
*4.10 Form of Warrant Certificate, filed as Exhibit 4.4 to the
Registrant's Registration Statement on Form S-1 (Registration
No. 33-73608), which exhibit is incorporated herein by
reference.
*4.11 Form of Indenture, dated as of July 15, 1988, between the
Registrant and MTrust Corp., National Association, with
respect to the Registrant's Convertible Subordinated
Debentures due July 15, 2008, filed as Exhibit 4.25 to the
Registrant's Registration Statement on Form S-3 (Registration
No. 33-21159), which exhibit is incorporated herein by
reference.
*4.12 First Supplemental Indenture, dated as of August 8, 1988,
Second Supplemental Indenture, dated as of November 10, 1988,
and Third Supplemental Indenture, dated as of April 10, 1991,
by and between the Registrant and Ameritrust Texas, National
Association, the successor to MTrust Corp., National
Association, relating to the issuance of the Registrant's
Convertible Subordinated Debentures due July 15, 2008, filed
as Exhibit 4.3 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1990, which exhibit is
incorporated herein by reference.
*4.13 Form of Fourth Supplemental Indenture, by and between the
Registrant and Texas Commerce Bank, National Association, as
successor to Ameritrust Texas, National Association, formerly
known as MTrust Corp., National Association, filed as Exhibit
4.10 to the Registrant's Registration Statement on Form S-4
(Registration No. 33-98876), which exhibit is incorporated
herein by reference.
*4.14 Trust Deed, dated March 21, 1996, between the Registrant,
Sunshine Precious Metals, Inc. and Marine Midland Bank and
Form of Note, filed as Exhibits 4.5 and 4.6 to the
Registrant's Registration Statement on Form S-3 (Registration
No. 333-06537), which exhibits are incorporated herein by
reference.
*4.15 Warrant Agreement, dated as of June 21, 1996, between the
Registrant, Rauscher, Pierce & Clark and HSBC Investment
Banking Limited and Form of Warrant Certificate, filed as
Exhibits 4.7 and 4.8 to the Registrant's Registration
Statement on Form S-3 (Registration No. 333-06537), which
exhibits are incorporated herein by reference.
*4.16 Specimen form of Warrant to Purchase Common Stock issued on
November 24, 1997, filed as Exhibit 10.12 to the Registrant's
Registration Statement on Form S-3 (Registration No.
333-41641), which exhibit is incorporated herein by
reference.
*4.17 Specimen form of Senior Convertible Promissory Note, filed as
Exhibit 10.13 to the Registrant's Registration Statement on
Form S-3 (Registration No. 333-41641), which exhibit is
incorporated herein by reference.
*4.18 Amendment, dated December 11, 1998, to Warrants to Purchase
Common Stock issued on November 24, 1997, filed as Exhibit
4.16 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, which exhibit is
incorporated herein by reference.
II - 2
<PAGE> 22
*4.19 Specimen form of 5% Convertible Promissory Note due January
28, 2001 filed as Exhibit 4.2 to the Registrant's Current
Report on Form 8-K dated January 28, 1999, which exhibit is
incorporated herein by reference.
**4.20 Letter Agreement dated September 22, 1999 by and between
Sunshine Mining and Refining Company, on the one hand, and
Westgate International, L.P. and Elliott Associates, L.P., on
the other hand, filed herewith.
**5.1 Opinion of Haynes and Boone, LLP.
**23.1 Consent of Haynes and Boone, LLP (included in the opinion
filed as Exhibit 5.1).
**23.2 Consent of Ernst & Young LLP.
**24.1 Power of Attorney (set forth on signature page hereof).
- ----------
* Previously filed.
** Filed herewith.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement (notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar of securities would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if in
the aggregate, the changes in volume and price represents no more
than 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
Registration Statement); and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II - 3
<PAGE> 23
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II - 4
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in London, England, as of the 1st day of October, 1999.
SUNSHINE MINING AND REFINING COMPANY
By: /s/ JOHN S. SIMKO
---------------------------------
John S. Simko
Chief Executive Officer and
Chairman of the Board
II - 5
<PAGE> 25
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of Sunshine Mining and Refining Company (the "Company") hereby
constitutes and appoints John S. Simko and William W. Davis, or either of them
(with full power to each of them to act alone), his true and lawful
attorneys-in-fact and agents, with full power of substitution, for him and on
his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and file any of the documents referred to below relating to the
proposed issuance and registration of shares of Common Stock and the
Registration Statement on Form S-3 under the Securities Act of 1933, as
amended, pertaining thereto, including any amendments increasing the amount of
securities for which registration is being sought, with all exhibits and any
and all documents required to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as he himself might or could do if
personally present, thereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities indicated as of the 1st day of October, 1999:
SIGNATURE TITLE
--------- -----
/s/ JOHN S. SIMKO
- -------------------------------------
John S. Simko Director, Chief Executive Officer and
Chairman of the Board
/s/ G. CHRIS ANDERSEN
- -------------------------------------
G. Chris Andersen Director
/s/ DANIEL D. JACKSON
- -------------------------------------
Daniel D. Jackson Director
/s/ V. DALE BABBITT
- -------------------------------------
V. Dale Babbitt Director
/s/ WILLIAM W. DAVIS
- -------------------------------------
William W. Davis Executive Vice President,
Chief Financial and
Accounting Officer
/s/ ROBERT B. SMITH, JR.
- -------------------------------------
Robert B. Smith, Jr. Director
/s/ OREN G. SHAFFER
- -------------------------------------
Oren G. Shaffer Director
/s/ GEORGE M. ELVIN
- -------------------------------------
George M. Elvin Director
II - 6
<PAGE> 26
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
*4.1 Certificate of Incorporation, filed as Exhibit 3.1 to the
Registrant's Registration Statement on Form S-4 (Registration
No. 33-98876), which exhibit is incorporated herein by
reference.
*4.2 Amendment to Certificate of Incorporation, filed as Exhibit
4.1 to the Registrant's Current Report on Form 8-K dated May
22, 1996 (File No. 001-100121), which exhibit is incorporated
herein by reference.
*4.3 Amendment to Certificate of Incorporation, filed as Exhibit
4.3 to the Registrant's Registration Statement on Form S-3
(Registration No. 333-86327), which exhibit is incorporated
herein by reference.
*4.4 Bylaws, filed as Exhibit 3.3 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31,
1998, which exhibit is incorporated herein by reference.
*4.5 Specimen Common Stock Certificate, filed as Exhibit 4.2 to
the Registrant's Registration Statement on Form S-1
(Registration No. 33-63446), which exhibit is incorporated
herein by reference.
*4.6 Warrant Agreement, dated as of February 1, 1996, between
Sunshine Merger Company and American Stock Transfer & Trust
Company, as Warrant Agent, filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-4 (Registration
No. 33-98876), which exhibit is incorporated herein by
reference.
*4.7 Warrant Agreement, dated as of February 3, 1994, between the
Registrant and American Stock Transfer & Trust Company, as
Warrant Agent, filed as Exhibit 4.3 to the Registrant's
Registration Statement on Form S-1 (Registration No.
33-73608), which exhibit is incorporated herein by reference.
*4.8 Form of Supplemental Warrant Agreement, dated as of February
1, 1996, between Sunshine Merger Company and American Stock
Transfer & Trust Company, as Warrant Agent, filed as Exhibit
4.10 to the Registrant's Registration Statement on Form S-4
(Registration No. 33-98876), which exhibit is incorporated
herein by reference.
*4.9 Warrant Certificate, filed as Exhibit 4.3 to the Registrant's
Registration Statement on Form S-4 (Registration No.
33-98876), which exhibit is incorporated herein by reference.
*4.10 Form of Warrant Certificate, filed as Exhibit 4.4 to the
Registrant's Registration Statement on Form S-1 (Registration
No. 33-73608), which exhibit is incorporated herein by
reference.
*4.11 Form of Indenture, dated as of July 15, 1988, between the
Registrant and MTrust Corp., National Association, with
respect to the Registrant's Convertible Subordinated
Debentures due July 15, 2008, filed as Exhibit 4.25 to the
Registrant's Registration Statement on Form S-3 (Registration
No. 33-21159), which exhibit is incorporated herein by
reference.
*4.12 First Supplemental Indenture, dated as of August 8, 1988,
Second Supplemental Indenture, dated as of November 10, 1988,
and Third Supplemental Indenture, dated as of April 10, 1991,
by and between the Registrant and Ameritrust Texas, National
Association, the successor to MTrust Corp., National
Association, relating to the issuance of the Registrant's
Convertible Subordinated Debentures due
</TABLE>
<PAGE> 27
<TABLE>
<S> <C>
July 15, 2008, filed as Exhibit 4.3 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December
31, 1990, which exhibit is incorporated herein by reference.
*4.13 Form of Fourth Supplemental Indenture, by and between the
Registrant and Texas Commerce Bank, National Association, as
successor to Ameritrust Texas, National Association, formerly
known as MTrust Corp., National Association, filed as Exhibit
4.10 to the Registrant's Registration Statement on Form S-4
(Registration No. 33-98876), which exhibit is incorporated
herein by reference.
*4.14 Trust Deed, dated March 21, 1996, between the Registrant,
Sunshine Precious Metals, Inc. and Marine Midland Bank and
Form of Note, filed as Exhibits 4.5 and 4.6 to the
Registrant's Registration Statement on Form S-3 (Registration
No. 333-06537), which exhibits are incorporated herein by
reference.
*4.15 Warrant Agreement, dated as of June 21, 1996, between the
Registrant, Rauscher, Pierce & Clark and HSBC Investment
Banking Limited and Form of Warrant Certificate, filed as
Exhibits 4.7 and 4.8 to the Registrant's Registration
Statement on Form S-3 (Registration No. 333-06537), which
exhibits are incorporated herein by reference.
*4.16 Specimen form of Warrant to Purchase Common Stock issued on
November 24, 1997, filed as Exhibit 10.12 to the Registrant's
Registration Statement on Form S-3 (Registration No.
333-41641), which exhibit is incorporated herein by
reference.
*4.17 Specimen form of Senior Convertible Promissory Note, filed as
Exhibit 10.13 to the Registrant's Registration Statement on
Form S-3 (Registration No. 333-41641), which exhibit is
incorporated herein by reference.
*4.18 Amendment, dated December 11, 1998, to Warrants to Purchase
Common Stock issued on November 24, 1997, filed as Exhibit
4.16 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, which exhibit is
incorporated herein by reference.
*4.19 Specimen form of 5% Convertible Promissory Note due January
28, 2001 filed as Exhibit 4.2 to the Registrant's Current
Report on Form 8-K dated January 28, 1999, which exhibit is
incorporated herein by reference.
**4.20 Letter Agreement dated September 22, 1999 by and between
Sunshine Mining and Refining Company, on the one hand, and
Westgate International, L.P. and Elliott Associates, L.P., on
the other hand, filed herewith.
**5.1 Opinion of Haynes and Boone, LLP.
**23.1 Consent of Haynes and Boone, LLP (included in the opinion
filed as Exhibit 5.1).
**23.2 Consent of Ernst & Young LLP.
**24.1 Power of Attorney (set forth on signature page hereof).
</TABLE>
- ----------
* Previously filed.
** Filed herewith.
<PAGE> 1
EXHIBIT 4.20
[SUNSHINE MINING AND REFINING LETTERHEAD]
September 22, 1999
Mr. Paul E. Singer
Stonington Management Corporation
712 Fifth Avenue
New York, New York 10019
Re: Letter Agreement
Dear Paul:
As we discussed today, this Letter Agreement (the "Letter Agreement")
sets forth the terms of the agreement between Sunshine Mining and Refining
Company and any affiliates thereof ("Sunshine"), on the one hand, and Westgate
International, L.P., Elliott Associates, L.P. and any affiliates thereof
(collectively, "Elliott"), on the other hand, regarding (i) the waiver of
Section 3.11(A) of the Convertible Note Investment Agreement dated as of January
27, 1999 by and between Sunshine and Elliott (the "Investment Agreement"), (ii)
the sale of shares of common stock of Sunshine ("Shares") by Elliott, (iii) the
purchase by Sunshine of Elliott's 8 percent Senior Exchangeable Notes due 2000
("Eurobonds") which are issued by Sunshine, (iv) the conversion of Elliott's 5%
Convertible Notes due January 28, 2001 issued by Sunshine (the "Notes"), (v) the
coverage of Elliott's short position on its Shares, (vi) the redemption by
Sunshine of Notes owned by Elliott and (vii) the reservation, registration and
listing by Sunshine of Shares due to the reverse stock split effected by
Sunshine on August 6, 1999 (the "Reverse Stock Split").
1. Sunshine and Elliott agree that Elliott hereby waives Section 3.11(A)
of the Investment Agreement and such waiver shall remain effective
unless Sunshine does not close, by November 3, 1999 the offering of new
units (the "New Units") by Sunshine on substantially similar terms as
described in the summary of the terms attached as Exhibit A hereto for
at least $35,000,000. The foregoing waiver applies solely to the
offering of New Units as described in Exhibit A.
2. Elliott agrees not to sell any of its Shares until November 3, 1999
unless (i) the sales price is in excess of $1.75 per Share, (ii)
Sunshine is in bankruptcy, (iii) the Shares are delisted from the New
York Stock Exchange or (iv) Sunshine is in default with respect to any
of its obligations under the Notes, the Investment Agreement or the
Registration Rights Agreement (as defined in the Investment Agreement
(collectively, the "Note Documents").
<PAGE> 2
3. If upon a closing of the offering of the New Units for at least
$35,000,000, Sunshine determines that it has enough Shares authorized
to enable all holders of the notes or warrants comprising the New Units
to exercise their conversion or exercise rights, Sunshine will upon
such closing purchase all of Elliott's outstanding Eurobonds at par
plus accrued interest. If upon closing of the offering of the New Units
for at least $35,000,000, Sunshine determines that it does not have a
sufficient number of authorized Shares to enable all holders of the
notes or warrants comprising the New Units to exercise their conversion
or exercise rights, Sunshine will, within 120 days of the closing, hold
a special stockholders meeting to attempt to increase the authorized
number of Shares. If Sunshine obtains the necessary increase in the
authorized Shares to enable all holders of the notes or warrants
comprising the New Units to exercise their conversion or exercise
rights, Sunshine will, immediately upon effectiveness of such increase,
purchase all of Elliott's outstanding Eurobonds at par plus accrued
interest. If such approval is not obtained, then Sunshine shall apply
proceeds from the New Units that are released towards payment of
Elliott's Eurobonds at par plus accrued interest, to the extent not
returned to investors.
Notwithstanding the above, Elliott may purchase $18.395 million of the
New Units in accordance with the terms of the offering subject to
proration in the event the offering has subscriptions totaling more
than $80 million. Elliott may pay for the New Units by tendering its
Eurobonds. The Eurobonds may be valued at par for such payment and
Sunshine will pay the accrued interest in cash.
4. Elliott and Sunshine agree that until November 17, 1999, the conversion
price for any Notes which Elliott wishes to convert is $1.36275 per
Share (subject to adjustments as provided in the Notes) unless (i)
Sunshine is in bankruptcy, (ii) the Shares are delisted from the New
York Stock Exchange or (iii) Sunshine is in default under any
obligation under the Note Documents. Upon the occurrence of any event
described in clauses (i) through (iii) the conversion price shall be
determined pursuant to the Notes.
5. Elliott agrees that until November 3, 1999 it will not return borrowed
Sunshine Shares, except for affiliate transfers, unless such Shares are
called by the lending broker.
6. Sunshine agrees that until November 3, 1999 it will not exercise any
optional redemption on any of the Notes owned by Elliott.
7. Sunshine agrees that within 30 days hereof it will (i) reserve for
issuance, (ii) obtain an effective registration statement for and (iii)
have approved for listing on the New York Stock Exchange an additional
338,812 Shares in which Elliott may convert its Notes. Sunshine
acknowledges that such additional 338,812 shares are properly issuable
upon conversion of the Notes. If Sunshine is unable to accomplish steps
(i-iii) within 30 days hereof, Sunshine will pay Elliott $5,000 for
every 30 days in which steps (i-iii) are not accomplished and if such
payments are not made within 5 business days, Elliott
<PAGE> 3
shall be entitled to the remedies provided in Section 2(b) of the
Registration Rights Agreement.
8. Subject to compliance with paragraph 7 above, Elliott hereby waives and
releases any claim it may have against Sunshine for failures to
register the increase in the "Maximum Amount" provide by Section 3.15
of the Investment Agreement and Section 2(i) of the Registration Rights
Agreement and arising out of the Reverse Stock Split.
Except as modified by this Letter Agreement, the terms of the
Investment Agreement, the Notes and the Registration Rights Agreement dated as
of January 28, 1999 by and between Sunshine and Elliott remain in full force and
effect.
This Letter Agreement is effective as of the date hereof.
If this Letter Agreement is acceptable to you, please sign and date
this Letter Agreement as set forth below.
Yours truly,
SUNSHINE MINING AND REFINING COMPANY
/s/ WILLIAM W. DAVIS
- -------------------------------------
William W. Davis
Executive Vice President
Agreed to and accepted by on this 22nd day of September, 1999:
WESTGATE INTERNATIONAL, L.P.:
By: Martley International Inc.
Attorney-in-Fact
By: /s/ PAUL E. SINGER
-------------------------
Paul E. Singer
President
ELLIOTT ASSOCIATES, L.P.
By: /s/ PAUL E. SINGER
-------------------------------
Paul E. Singer
General Partner
<PAGE> 1
EXHIBIT 5.1
October 1, 1999
Sunshine Mining and Refining Company
877 W. Main Street, Suite 600
Boise, Idaho 83702
Re: Registration of 1,667,376 Shares of Common Stock
Gentlemen:
We have acted as counsel to Sunshine Mining and Refining Company, a Delaware
corporation (the "Company"), in connection with the preparation and filing by
the Company with the Securities and Exchange Commission of a Registration
Statement on Form S-3 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"). The Registration Statement registers
the proposed offer and sale by certain stockholders of the Company (the "Selling
Stockholders") of up to 1,667,376 shares (the "Shares") of the Company's common
stock, par value $0.01 per share ("Common Stock"), to be issued upon the
conversion of the Company's currently outstanding 5% Convertible Notes (the
"Notes"). Pursuant to Rule 429 of the Securities Act, this Registration
Statement is registering 338,812 additional shares of common stock and relates
to the remaining unissued shares of common stock as of September 27, 1999 of
479,876 under a registration statement on Form S-3 (SEC File No. 333-74437) and
of 848,688 under a registration statement on Form S-3 (SEC File No. 333-86327).
In connection therewith, we have examined and relied upon the originals, or
copies certified to our satisfaction, of (i) the Certificate of Incorporation of
the Company, as amended (the "Certificate of Incorporation"); (ii) the Bylaws of
the Company (the "Bylaws"); (iii) the minutes and records of the corporate
proceedings of the Company with respect to the issuance and sale of the Notes
and the issuance of the Shares; (iv) the Registration Statement and all exhibits
thereto; (v) the Registration Rights Agreement, dated as of January 28, 1999, by
and among the Company and the Selling Stockholders; (vi) the Notes; (vii) the
Investment Agreement, dated as of January 27, 1999, among the Company and the
Selling Stockholders; (viii) the specimen Common Stock certificate filed as
Exhibit 4.2 to the Company's Registration Statement on Form S-1 (Reg. No.
33-63446); and (ix) such other documents and instruments as we have deemed
necessary for the expression of the opinions contained herein.
In making the foregoing examinations, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies thereof and the authenticity of the originals of
such latter documents. As to various questions of fact material to this opinion,
where such facts have not been independently established, and as to the content
and form of the Certificate of Incorporation, the Bylaws, certain minutes,
<PAGE> 2
Sunshine Mining and Refining Company
October 1, 1999
Page 2
records, resolutions and other documents or writings of the Company, we have
relied, to the extent we have deemed reasonably appropriate, upon
representations or certificates of officers of the Company or governmental
officials and upon documents, records, and instruments furnished to us by the
Company, without independent check or verification of their accuracy. Finally,
we have assumed that all formalities required by the Certificate of
Incorporation, Bylaws and the General Corporation Law of the State of Delaware
will be complied with when the Shares are issued.
Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein and having due regard for such legal
considerations as we deem relevant, we are of the opinion that the Shares to be
issued by the Company upon the conversion of the Notes have been duly authorized
and, when issued in accordance with the terms of the Notes, will be validly
issued, fully paid and non-assessable.
The opinions expressed above are specifically limited to the General Corporation
Laws, as amended, of the State of Delaware, and the federal laws of the United
States of America.
This opinion (i) is rendered as of the date hereof, and we undertake no, and
hereby disclaim any kind of, obligation to advise you of any change or any new
developments that might affect any matters or opinions set forth herein, and
(ii) is limited to the matters stated herein and no opinions may be inferred or
implied beyond the matters expressly stated herein.
We hereby consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement and to the reference to
this firm under "Legal Matters" in the Prospectus forming a part of such
Registration Statement.
Very truly yours,
/s/ HAYNES AND BOONE, LLP
Haynes and Boone, LLP
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Sunshine Mining and
Refining Company for the registration of 1,667,376 shares of its common stock
and to the incorporation by reference therein of our report dated February 26,
1999, with respect to the consolidated financial statements of Sunshine Mining
and Refining Company included in its Annual Report Form 10-K for the year
ended December 31, 1998, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
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ERNST & YOUNG LLP
Dallas, Texas
September 29, 1999
