<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
AZCO MINING INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
<PAGE> 2
(5) Total fee paid:
- -------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 3
AZCO MINING INC.
999 West Hastings, Suite 1250
Vancouver, British Columbia
Canada V6C 2W2
(604) 682-7286
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 18, 1998
To Our Shareholders:
An Annual Meeting (the "Meeting") of Shareholders of Azco Mining Inc.
(the "Company"), a Delaware corporation, will be held at 10:00 a.m. (local
time) on Wednesday, February 18, 1998 at the Company's offices at 999 West
Hastings, Suite 1250, Vancouver, British Columbia, Canada, for the following
purposes:
1. To elect five directors of the Company.
2. To ratify the appointment of Coopers & Lybrand as the
Company's independent public accountants for the fiscal year
ending June 30, 1998, and to authorize the directors of the
Company to fix and approve their remuneration.
3. To consider and vote upon such other matters as may properly
come before the Meeting or any adjournment thereof.
Shareholders of record at the close of business on January 13, 1998 are
entitled to notice of and to vote at the Meeting.
The Board of Directors of the Company extends a cordial invitation to
all shareholders to attend the Meeting in person. Whether or not you plan to
attend the Meeting, please fill in, date, sign, and mail the enclosed proxy in
the return envelope as promptly as possible. Your proxy may be revoked at any
time prior to the Meeting. The prompt return of your completed proxy will
assist the Company in obtaining a quorum of shareholders for the Meeting, but
will not affect your ability to change your vote by subsequent proxy or by
attending the Meeting and voting in person. If you are unable to attend, your
written proxy will assure that your vote is counted.
By Order of the Board of Directors
Alan P. Lindsay
Chairman of the Board
Vancouver, British Columbia
January 16, 1998
<PAGE> 4
AZCO MINING INC.
999 West Hastings, Suite 1250
Vancouver, British Columbia
Canada V6C 2W2
(604) 682-7286
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 18, 1998
This Proxy Statement is furnished to the shareholders of Azco Mining
Inc. (the "Company"), a Delaware corporation, in connection with the
solicitation by and on behalf of the Company's Board of Directors
(collectively, the "Board") of proxies to be voted at the Annual Meeting (the
"Meeting") of shareholders (each a "Shareholder") of the Company. The Meeting
will be held on February 18, 1998 at 10:00 a.m. (local time) at the Company's
offices at 999 West Hastings, Suite 1250, Vancouver, British Columbia, Canada,
for the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders.
Solicitation expenses will be paid by the Company. In addition to
solicitation by mail, directors, officers and other employees of the Company
may, without additional compensation, solicit proxies by mail, in person or by
telecommunication.
The Company has retained Morrow & Co., professional proxy solicitors,
at an estimated fee of $5,500 plus reasonable out-of-pocket expenses, to assist
in the solicitation process. Approximately 35 persons will be utilized by such
firm in its solicitation efforts. The Company will reimburse brokerage houses,
banks, custodians and other nominees and fiduciaries for out-of-pocket expenses
incurred in forwarding the Company's proxy materials to, and obtaining
instructions relating to such materials from, beneficial owners of shares of
the Company's common stock.
All proxies that are properly executed and received prior to the
Meeting will be voted at the Meeting. If a Shareholder specifies how the proxy
is to be voted on any business to come before the Meeting, it will be voted in
accordance with such specification. IF A SHAREHOLDER DOES NOT SPECIFY HOW TO
VOTE THE PROXY, IT WILL BE VOTED FOR EACH MATTER SCHEDULED TO COME BEFORE THE
MEETING AND IN THE PROXY HOLDERS' DISCRETION ON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING. Any proxy may be revoked by a Shareholder at
any time before it is actually voted at the Meeting by delivering written
notification to the Secretary of the Company, by delivering another valid proxy
bearing a later date or by attending the Meeting and voting in person.
This Proxy Statement and the accompanying proxy are first being sent
to Shareholders on or about January 19, 1998. The Company will bear the cost
of preparing, assembling and mailing the notice, Proxy Statement and form of
proxy for the Meeting.
Unless otherwise indicated, all monetary amounts set forth herein are
in United States dollars.
VOTING SECURITIES
All voting rights are vested exclusively in the holders of the
Company's common stock, $.002 par value (collectively, the "Common Stock"),
with each share entitled to one vote. Only Shareholders of record at the close
of business on January 13, 1998 are entitled to notice of and to vote at the
Meeting or any adjournment. At the close of business on January 13, 1998,
there were 25,680,497 shares of Common Stock issued and outstanding. A minimum
of one-third of the shares of Common Stock issued and outstanding must be
represented at the Meeting, in person or by proxy, in order to constitute a
quorum. Cumulative voting is not allowed for any purpose. The affirmative
vote of the
<PAGE> 5
holders of the majority of the shares of Common Stock represented at the
Meeting in person or by proxy and entitled to vote on the subject matter will
be necessary to elect the slate of directors nominated by the Company and to
ratify the appointment of the auditors.
An abstention or withholding authority to vote will be counted as
present for determining whether the quorum requirement is satisfied. With
respect to the vote on any particular proposal, abstentions will be treated as
shares present and entitled to vote and, for purposes of determining the
outcome of the vote on any such proposal, shall have the same effect as a vote
against the proposal. A broker "non-vote" occurs when a nominee holding shares
for a beneficial holder does not have discretionary voting power and does not
receive voting instructions from the beneficial owner. Broker "non-votes" on a
particular proposal will not be treated as shares present and entitled to vote
on the proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information, as of December 31, 1997, with
respect to beneficial ownership of the Company's Common Stock by each person
known by the Company to be the beneficial owner of more than 5% of its
outstanding Common Stock, by each director of the Company, by each Named
Executive Officer (as defined below under "EXECUTIVE COMPENSATION") and by all
officers and directors of the Company as a group. Unless otherwise noted, each
Shareholder has sole investment and voting power over the shares owned.
<TABLE>
<CAPTION>
====================================================================================================================================
NAME AND ADDRESS TYPE OF NUMBER OF PERCENT
OF BENEFICIAL OWNER OWNERSHIP SHARES OF CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alan P. Lindsay Record and 978,569(1) 3.78%
(Director and Chief Executive Beneficial
Officer)
999 W. Hastings, Suite 1250
Vancouver, BC V6C 2W2
CANADA
- ------------------------------------------------------------------------------------------------------------------------------------
Anthony R. Harvey Record and 453,252(2) 1.75%
(Director, Executive Vice-President Beneficial
and Secretary)
999 W. Hastings, Suite 1250
Vancouver, BC V6C 2W2
CANADA
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew F. de P. Malim Record and 163,500(3) *
(Director) Beneficial
7-8 Kendrick Mews
London, England SW7 3HG
- ------------------------------------------------------------------------------------------------------------------------------------
Paul A. Hodges Record and 116,524(4) *
(Director) Beneficial
4536 N. Via Bellas Catali
Tucson, AZ 85718
- ------------------------------------------------------------------------------------------------------------------------------------
Ian M. Gray Record and 100,000(5) *
(Director) Beneficial
Copper Hill House
Buller Hill, Redruth
Cornwall, England TR166SR
- ------------------------------------------------------------------------------------------------------------------------------------
All Officers & Directors Record and 2,111,845(6) 7.86%
as a Group (8 persons) Beneficial
====================================================================================================================================
</TABLE>
* Less than 1%.
2
<PAGE> 6
(1) Includes (i) 605,308 shares owned by a corporation which is controlled
by Mr. Lindsay and (ii) options to acquire 300,000 shares at an
exercise price of CDN $1.80 per share.
(2) Includes (i) 122,224 shares owned by Mr. Harvey's wife and (ii)
options to acquire 300,000 shares at an exercise price of CDN $1.80
per share.
(3) Includes options to acquire 125,000 shares at an exercise price of CDN
$1.80 per share.
(4) Includes options to acquire (i) 50,000 shares at an exercise price of
$2.00 per share and (ii) 50,000 shares at an exercise price of CDN
$1.80 per share.
(5) Consists of options to acquire 100,000 shares at an exercise price of
CDN $1.90 per share.
(6) Includes options to acquire an aggregate of 1,225,000 shares.
Management anticipates that insiders and their affiliates owning an
aggregate of approximately 3.5% of the outstanding shares of Common Stock will
vote in favor of each of the proposals to be submitted at the Meeting,
including votes for all the nominees for directors.
ELECTION OF DIRECTORS
The Company's Bylaws provide that the number of members of the Board
shall not exceed seven members and currently consists of five members
Cumulative voting in the election of directors is not permitted. Directors are
elected by majority vote of the shares represented at the Meeting and entitled
to vote on the matter.
The directors listed below have been nominated for re-election at the
Meeting. Unless authority is withheld, it is intended that the shares
represented by the proxies will be voted "FOR" these directors, each to serve
until the Company's next Annual Meeting of Shareholders or until his respective
successor is elected and qualified.
DIRECTORS AND EXECUTIVE OFFICERS
The following table lists the names, ages and positions of the
directors and executive officers of the Company as of January 1, 1998. Board
Directors are elected to serve until the next Annual Meeting of Shareholders.
All officers have been appointed to serve until their successors are elected
and qualified. Additional information regarding the business experience,
length of time served in each capacity and other matters relevant to each
individual is set forth below the table.
3
<PAGE> 7
<TABLE>
<CAPTION>
====================================================================================================================================
NAME POSITION HELD WITH THE COMPANY PRINCIPAL OCCUPATION
---- ------------------------------ --------------------
<S> <C> <C>
ALAN PETER LINDSAY . . . . . . . . . . . Chairman of the Board, Chief Chief Executive Officer
Executive Officer, President and of the Company
a Director of the Company
- ------------------------------------------------------------------------------------------------------------------------------------
ANTHONY RICHARD HARVEY . . . . . . . . . Vice-Chairman of the Board, Executive Vice-
Executive Vice-President, President of the
Secretary and a Director of the Company
Company
- ------------------------------------------------------------------------------------------------------------------------------------
ANDREW FREDERIC DE PAULA MALIM . . . . . Director of the Company Mining financier
- ------------------------------------------------------------------------------------------------------------------------------------
PAUL ARTHUR HODGES . . . . . . . . . . . Director of the Company Mining consultant
- ------------------------------------------------------------------------------------------------------------------------------------
IAN MCFARLANE GRAY . . . . . . . . . . . Director of the Company Mining consultant
- ------------------------------------------------------------------------------------------------------------------------------------
RYAN ANDREW MODESTO . . . . . . . . . . . Corporate Controller and Controller and
Principal Accounting Officer Principal Accounting
Officer of the Company
- ------------------------------------------------------------------------------------------------------------------------------------
DOUGLAS W. RAMSHAW . . . . . . . . . . . Vice President--Corporate Vice President--
Development Corporate Development
of the Company
- ------------------------------------------------------------------------------------------------------------------------------------
JON PATRICK NICHOLAS BADHAM Chief Geologist Geologist for the
Company
====================================================================================================================================
</TABLE>
The following is a brief biography of each of the directors and
executive officers of the Company.
Alan Peter Lindsay -- Chairman of the Board, Chief Executive Officer,
President and a Director
Mr. Lindsay, aged 46, one of the Company's founders, has been
responsible for arranging the financing, the corporate development and the
building of the organization of the Company. Mr. Lindsay has an extensive
background in business management and marketing. Mr. Lindsay has been involved
in the mining business for the past eight years and since 1989 has been engaged
full time on the Company's business. From 1982 to 1989 Mr. Lindsay was the
Manager of the Financial Services Division of the North American Life Assurance
Company in Vancouver.
Anthony Richard Harvey -- Vice-Chairman of the Board, Executive
Vice-President, Secretary and a Director
Mr. Harvey, aged 62, one of the Company's founders, has been
associated with the Company since July 13, 1988. He has been a full-time
employee since May 18, 1989, prior to which he spent 30 years with Wright
Engineers Limited, where he gained extensive experience in the mining industry
in various management positions, including mine construction and ore
extraction, bulk handling and processing, project management and corporate
marketing development, in many countries including the U.S. As a senior
project manager, he was responsible for the overall management and direction of
many mining projects worldwide, including, among others, the Copper Flat
Project, a 15,000 ton per day copper- molybdenum open pit mining and processing
plant located in New Mexico, for Quintana Minerals Corporation, and a 3,000 ton
per day underground copper mine rehabilitation expansion located in Ireland,
for Avoca Mines Limited.
4
<PAGE> 8
Andrew Frederic de Paula Malim -- Director
Mr. Malim, aged 53, became a director of the Company on July 16, 1991.
Mr. Malim has been associated with Lion Mining Group since 1981 and currently
is the managing director of that company. Mr. Malim also has majority
ownership of the Lion Mining Group. The Lion Mining Group has been associated
with the Company since March 1989 and has been responsible for the Company's
European representation and for raising a significant portion of the Company's
financing to date. Mr. Malim was one of the original members of the James
Capel & Company mining team, and for ten years was a member of the
International Stock Exchange, London.
Paul Arthur Hodges -- Director
Mr. Hodges, aged 69, became a director of the Company on October 1,
1993. He has a degree in Mining Engineering from the Colorado School of Mines
and is a registered professional engineer in Arizona. Mr. Hodges has over 40
years experience in the mining industry, covering exploration, operations,
project startups, management and financing, and has worked for Anaconda,
Asarco, RTZ and St. Joe. Mr. Hodges was the chief engineer worldwide for open
pit mining for RTZ and the President of Anamax Mining Company at Twin Buttes.
Most recently Mr. Hodges was the President of Compania Minera El Indio. He was
a director of Lac Minerals Limited, a publicly traded company acquired by
American Barrick in late 1994.
Ian McFarlane Gray -- Director
Dr. Gray, aged 61, became a director of the Company on September 4,
1996. Most recently Dr. Gray has been involved in the assessment, acquisition
and development of gold and copper properties in Indonesia, Peru and Brazil.
For much of his career Dr. Gray held senior operations and management
positions with INCO Ltd. and BP Minerals International Ltd., and has been
involved in mineral exploration, project development, mine production,
formation and general management of public companies in North America,
Australia, Central Southern Africa, Southeast Asia and South America. Dr. Gray
currently serves as a director of each of the following Canadian public
companies: Atapa Minerals Ltd., Black Swan Gold Mines Ltd., El Misti Gold
Ltd., International Albany Resources Ltd., Jersey Goldfields Corporation, Indo
Metals Ltd., and International Panorama Resource Corporation.
Ryan Andrew Modesto -- Controller and Principal Accounting Officer
Mr. Modesto, aged 41, joined the Company in June 1994 as the
Controller of the Sanchez Project and became the Company's Corporate Controller
and Principal Accounting Officer on January 1, 1996. Mr. Modesto earned a B.S.
in Accounting from the University of Utah in 1977 and has 18 years of
accounting and administrative experience in the mining industry. For the six
years prior to joining the Company, Mr. Modesto was the Controller for Corona
Gold's Santa Fe project in Nevada.
Douglas W. Ramshaw -- Vice President--Corporate Development
Mr. Ramshaw, aged 26, joined the Company in May 1997 as the Company's
Vice President-Corporate Development. Mr. Ramshaw received a degree in Mining
Geology in 1993 from the Royal School of Mines, Imperial College, London,
England and obtained experience in various aspects of mining, including
underground and surface mapping, core logging, surveying, and field office
maintenance while working for ACA Howe International Ltd and St George Metals
Inc. in England, and Battle Mountain, Nevada. From February 1994 to December
1994, Mr. Ramshaw was first a research consultant and then an Assistant Editor
for Mining Journal, and from January 1996 to February 1997 he was a mining
analyst for C.M. Oliver and Company Limited, a British investment consulting
firm.
John Patrick Nicholas Badham -- Chief Geologist
Mr. Badham, aged 50, joined the Company in August 1997 as the
Company's chief geologist. From 1989 to 1996 Mr. Badham was the chief
geologist for Rio Tinto Mining and Exploration Ltd. which he was responsible
for target
5
<PAGE> 9
definition, exploration research and area selection. Mr. Badham received a
doctorate degree in economic geology from the University of Alberta in 1973.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons, the Company believes
that, during the fiscal year ended June 30, 1997, all filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with except that Mr. Modesto had one late filing
reporting one transaction and Mr. Ramshaw's Initial Report on Form 3 was not
timely filed.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Andrew F de P Malim, a non-officer director of the Company, is the
chairman, managing director and majority shareholder of Lion Mining Finance, a
United Kingdom registered company ("Lion"). On May 9, 1996, the Company
entered into a memorandum of agreement with Eagle River International Limited,
West African Gold and Exploration, Ltd. and Lion concerning the development of
mining concessions in Mali. Pursuant to this agreement, Lion was paid $15,692
in fiscal 1997. The Company and Lion are currently negotiating an agreement
whereby Lion will assign to the Company all of its interest in the Mali
agreement and Lion will agree to grant the Company first right on all mining
opportunities which are brought to it for a minimum three year term.
BOARD MEETINGS AND COMMITTEES
During the Company's fiscal year ended June 30, 1997, the Company's
Board met two times. Except for Dr. Gray who missed one meeting, all of the
directors were present for 75% or more of the meetings of the Board and any
committees upon which they served that were held during their individual
incumbencies. Messrs. Harvey and Lindsay spend virtually all of their business
time on the Company's business. Messrs. Hodges and Malim and Dr. Gray each
spend approximately ten percent of their business time on the Company's
business.
The Company's Audit Committee is comprised of Messrs. Harvey, Hodges
and Malim. The Audit Committee recommends the selection and re-appointment of
the Company's independent certified public accountants to the Board and reviews
the proposed scope, content and results of the audit performed by the
accountants, and any reports and recommendations made by them. The Audit
Committee held no formal meetings during the most recent fiscal year, but met
in the context of regular Board meetings.
During the fiscal year ended June 30, 1997, the Company had no
nominating, compensation, stock option or executive committees.
6
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following tables show compensation during the fiscal years ended
June 30, 1995, 1996, and 1997, of those persons who were, at June 30, 1997 (i)
the Chief Executive Officer and (ii) other executive officers of the Company
whose total compensation was not less than $100,000 (collectively, the "Named
Executive Officers").
Summary Compensation Table
(As at year ended June 30)
<TABLE>
<CAPTION>
====================================================================================================================================
Long Term
Annual Compensation Compensation
------------------- ------------
Securities
Under
Options/
Other Annual SARs
Salary Bonus Compensation Granted
Name and Principal Position Year ($) ($) ($) (#)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alan Peter Lindsay, 1997 110,000(2) 5,500 6,000(3) -0-
President,(1) Chairman of the 1996 99,482(2) -0- 6,000(3) 300,000
Board and Chief Executive 1995 92,400(2) -0- 2,500(3) -0-
Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Anthony Richard Harvey 1997 110,000(4) 5,500 6,000(3) -0-
Vice-Chairman, Vice President, 1996 99,482(4) -0- 6,000(3) 300,000
and Secretary 1995 92,400(4) -0- 2,500(3) -0-
- ------------------------------------------------------------------------------------------------------------------------------------
David C. Beling, President and 1997 145,833 -0- 193,846(6) -0-
Chief Operating Officer (5) 1996 142,178 65,000 -0- 155,000
1995 135,000 7,000 6,490(7) -0-
====================================================================================================================================
</TABLE>
(1) Mr. Lindsay was appointed President of the Company upon the
resignation of Mr. Beling effective April 30, 1997.
(2) These amounts were actually paid to Alan Lindsay and Associates Ltd.,
a management company under the control of Mr. Lindsay pursuant to a
Management Agreement dated May 1, 1989 with the Company.
(3) These amounts were paid as reimbursement of medical insurance
premiums.
(4) These amounts were actually paid to ARH Management Ltd., a management
company under the control of Mr. Harvey pursuant to a management
agreement dated May 1, 1989 with the Company.
(5) Mr. Beling resigned as a director and officer of the Company effective
as of April 30, 1997.
(6) Mr. Beling's resignation triggered the provision of his employment
agreement where in the event of merger, consolidation, divestiture,
takeover, sale or other similar circumstances which result in
conditions or terms unacceptable to Mr. Beling within the first year
after such event, Mr. Beling would be paid 12 months base salary plus
any prorated bonuses and vacation accrued to the time of termination.
This amount includes $175,000 representing 12 months of base pay and
$18,846 of accrued vacation.
7
<PAGE> 11
(7) This amount was paid as a premium on a life insurance policy.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
====================================================================================================================================
Shares Value Number of Securities Value of Unexercised
Name Acquired Realized Underlying In-The-Money Options at FY-
on Unexercised End ($)(1)
Exercise Options at FY-End
-----------------------------------------------------------
Exer- Unexercisable Exercisable Unexercisable
cisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alan P. Lindsay -0- -0- 300,000 -0- -0- -0-
- ------------------------------------------------------------------------------------------------------------------------------------
David C. Beling 50,000 $73,750 -0- -0- -0- -0-
- ------------------------------------------------------------------------------------------------------------------------------------
Anthony R. Harvey -0- -0- 300,000 -0- -0- -0-
====================================================================================================================================
</TABLE>
(1) Based on the closing price of $1.31 of the Company's Common Stock as
quoted on The American Stock Exchange on June 30, 1997.
(2) Mr. Beling exercised 50,000 options prior to his resignation on April
30, 1997. The balance of Mr. Beling's unexercised options were
canceled on May 31, 1997.
COMPENSATION OF DIRECTORS
The Company pays a fee to its outside, non-officer directors of $1,500
per month. The Company also reimburses its directors for reasonable expenses
incurred by them in attending meetings of the Board. During fiscal 1997 Dr.
Gray, a non-officer director, was granted an option to acquire 100,000 shares
of the Company's Common Stock.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
Effective May 1, 1989, the Company entered into a management agreement
with Alan Lindsay and Associates Ltd. ("Associates"), a British Columbia
corporation owned and controlled by Mr. Lindsay, the Company's Chief Executive
Officer. This agreement requires all salary amounts otherwise payable by the
Company to Mr. Lindsay to be paid to Associates. This agreement is
automatically renewed for two year terms unless either party gives the other
party notice of non-renewal at least 30 days prior to the end of any term. The
agreement may be terminated by the Company without notice if Mr. Lindsay is no
longer a principal of Associates, or upon the occurrence of certain other
events such as Mr. Lindsay's bankruptcy or disability. The agreement may be
terminated by either party, without notice, upon breach of the material terms
of the agreement, commission of fraud or misconduct or declaration of
bankruptcy by either party.
Effective May 1, 1989 the Company entered into a management agreement
with ARH Management Ltd. ("Management"), a British Columbia corporation owned
and controlled by Mr. Harvey, the Company's Vice-Chairman. This agreement
requires all salary amounts otherwise payable by the Company to Mr. Harvey to
be paid to Management. This agreement is automatically renewed for two year
terms unless either party gives the other party notice of non-renewal at least
30 days prior to the end of any term. The agreement may be terminated by the
Company without notice if Mr. Harvey is no longer a principal of Management, or
upon the occurrence of certain other events such as Mr. Harvey's bankruptcy or
disability. The agreement may be terminated by either party, without notice,
upon breach of the material terms of the agreement, commission of fraud or
misconduct or declaration of bankruptcy by either party.
Effective August 15, 1994 management agreements (collectively, the
"Management Agreements") were provided to both Messrs. Harvey and Lindsay that
are effective in the event of a change in control of the Company. The
Management Agreements provide for a lump sum distribution in an amount (taking
into account all other applicable change in control payments by the Company)
not to exceed 299% of the base amount as defined in IRC Section 280G(b). Such
8
<PAGE> 12
"base amount" is generally equivalent to the applicable person's average annual
compensation from the Company includable in his gross income over the preceding
five years. Change of control is defined as any of the following:
(i) the acquisition of (whether direct or indirect) shares in
excess of 20 percent of the outstanding shares of Common Stock
of the Company by a person or group of persons, other than
through a public equity offering by the Company; or
(ii) the occurrence of any transaction relating to the Company
required to be described pursuant to the requirements of item
6(e) of Schedule 14A of Regulation 14A of the Securities and
Exchange Commission under the Exchange Act; or
(iii) any change in the composition of the Board of the Company
resulting in a majority of the present directors not
constituting a majority, provided that in making such
determination, directors who were elected by, or on the
recommendation of, such present majority, shall be excluded.
Effective August 15, 1994 directors' agreements (collectively, the
"Directors' Agreements") were provided to each of Messrs. Malim and Hodges that
are effective in the event of a change in control of the Company. On November
19, 1996 a Directors' Agreement was provided to Dr. Gray. These Directors'
Agreements provide for a lump sum distribution in the amount of $100,000.
Change in control has the same definition as set forth above in connection with
the Management Agreements.
If all change in control payments to all officers and directors were
triggered, the aggregate amount payable by the company would be approximately
$1,938,000, provided, that such amount could vary depending upon the value of
outstanding stock options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended June 30, 1997, the Company had no
compensation committee. Each of the Company's officers and directors
participated in deliberations of the Company's Board concerning officer
compensation.
REPORT OF THE BOARD ON EXECUTIVE COMPENSATION
OVERALL POLICY
Salary compensation of the Company's executive officers is determined
by the Board. The directors' consideration of and decisions regarding
executive compensation are guided by a number of factors described below. The
objectives of the Company's total executive compensation package are to attract
and retain the best possible executive talent, to provide an economic framework
to motivate the Company's executives to achieve goals consistent with the
Company's business strategy, to provide an identity between executive and
shareholder interests through stock option plans and to provide a compensation
package that recognizes an executive's individual results and contributions in
addition to the Company's overall business results.
In making recommendations concerning executive compensation, the
directors review individual executive compensation, corporate performance,
stock price appreciation and total return to Shareholders for the Company.
SALARIES
The key elements of the Company's executive compensation consist of
salary and stock options. The Board determines salary levels of officers and
employee stock option awards.
Salaries for executive officers are determined by evaluating the
responsibilities of the position held and the experience of the individual, and
by reference to the competitive marketplace for executive talent, including a
comparison of salaries for comparable positions at other mining companies.
9
<PAGE> 13
The salary levels of the officers of the Company for the following
fiscal year are generally established by the Board at its year-end meetings.
Specific individual performance and overall corporate or business segment
performance are reviewed in determining the compensation level of each
individual officer. The Board, where appropriate, also considers other
performance measures, such as safety, environmental awareness and improvements
in relations with Shareholders, employees, the public and government
regulators.
Mr. Lindsay's salary as Chief Executive Officer was increased to
$110,000 by the Company's Board on February 6, 1996. The Board's basis for
this increase was that Mr. Lindsay had not received a salary increase since May
22, 1992 when his salary was set at $92,400.
Mr. Harvey's salary as Executive Vice President and Secretary was
increased to $110,000 by the Company' Board on February 6, 1996. The Board's
basis for this increase was that Mr. Harvey had not received a salary increase
since May 22, 1992 when his salary was set at $92,400.
STOCK OPTIONS
Under the Company's 1989 Stock Option Plan as amended ("the Plan"),
which was approved by Shareholders, stock options are granted to the Company's
officers, directors and key employees, including the individuals whose
compensation is detailed in this Proxy Statement. The Board determines the
size of the stock option grants based on certain factors, including competitive
compensation data similar to those used to determine salaries.
Stock options are intended to align the interests of the executives
with those of the Shareholders. All stock options granted from the Plan are
granted with an exercise price equal to at least the market price of the Common
Stock on the date of grant and are generally exercisable over a five-year
period. This approach is designed to provide executive incentive for the
creation of additional shareholder value over the long term since the benefit
of the option awards cannot be realized unless stock price appreciation occurs.
CONCLUSION
The Company's executive compensation is linked to individual and
corporate performance. The Board intends to continue the policy of linking
executive compensation to corporate performance, recognizing that the ups and
downs of the business cycle, and in particular depressed mineral prices, from
time to time, may result in an imbalance for a particular period.
This Report has been provided by the Board.
<TABLE>
<S> <C>
Alan Peter Lindsay Andrew Frederic de Paula Malim
Anthony Richard Harvey Paul Arthur Hodges
Ian M. Gray
</TABLE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph shows the cumulative total Shareholder return on
the Company's Common Stock compared to the cumulative total return of two other
stock market indices: (i) The American Stock Exchange Index (U.S.) (the "Amex
Index (U.S.)"), and (ii) the Peer Group Index of similar line-of-business
companies as industry code defined in the Media General Financial Database.
The time period graphed is the period from July 2 1992 through June 30, 1997.
(The Company's Common Stock was registered under Section 12 of the Exchange Act
in July 1992.)
The AMEX Index (U.S.) is an index comprising all domestic common
shares traded on The American Stock Exchange. The Peer Group Index includes
data from the following five companies; Benguet Corporation, Freeport McMoran
Copper & Gold, Cyprus Amax Minerals, O'Okiep Copper Co. Ltd. and Rio Tinto PLC
(formerly RTZ Corp. PLC), all of which are listed on AMEX or NYSE. (The stock
of Atlas Corporation, a member of last year's peer group, is no longer traded
on a major exchange.)
10
<PAGE> 14
CUMULATIVE TOTAL SHAREHOLDER RETURN(1)(2)(3)
JULY 1, 1992 - JUNE 30 1997
FISCAL YEAR ENDING
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Azco Mining Inc. 100 78.63 100.81 60.48 62.90 52.82
Peer Group Index 100 91.02 111.71 109.35 94.23 96.87
AMEX Index 100 109.33 105.54 126.99 145.40 154.64
</TABLE>
(1) Assumes $100 invested on July 1, 1992 in the Company's Common Stock,
the AMEX Index, and the Peer Group Index of alike line-of-business companies by
industry code as defined in the Media General Financial Database.
(2) Total Shareholder return assumes reinvestment of dividends.
(3) Where applicable, Canadian currency has been translated to U.S.
dollars.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board has appointed Coopers & Lybrand to audit the Company's
financial statements prepared in connection with the submittal of the Company's
Report on Form 10-K for the fiscal year ended June 30, 1998. The Board
recommends that the Shareholders ratify that appointment and authorize the
directors of the Company to fix and approve their remuneration. Coopers &
Lybrand has audited the Company's financial statements since 1991.
The shares of Common Stock represented by the Proxies in the
accompanying form will be voted "FOR" the ratification of the appointment of
independent public accountants unless a contrary direction is indicated.
The Company has requested representatives of Coopers & Lybrand to be
present at the Meeting, will make available to such representatives an
opportunity to make a statement if they so desire, and expects them to be
available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Proposals by Shareholders of the Company to be presented at the next
Annual Meeting of Shareholders must be received by the Company a reasonable
amount of time prior to such meeting to be included in the Company's Proxy
Statement and proxy for that meeting. The proponent must be a record or
beneficial owner entitled to vote on his or her proposal at the next Annual
Meeting and must continue to own such security entitling him or her to vote
through that date on which the Meeting is held. The proponent must own 1% or
more of the outstanding shares, or $1,000.00 in market value, of the Company's
Common Stock and must have owned such shares for one year in order to present a
shareholder proposal to the Company.
ANNUAL REPORT ON FORM 10-K
The Annual Report on Form 10-K concerning the operation of the Company
during the fiscal year ended June 30, 1997, including certified financial
statements for the year then ended, is being mailed to each Shareholder of the
Company with this Notice of Annual Meeting. Additional copies of the Annual
Report may be obtained upon written request to the Secretary of the Company, at
999 West Hastings, Suite 1250, Vancouver, British Columbia, Canada, V6C 2W2.
11
<PAGE> 15
OTHER MATTERS
The Board knows of no other business to be presented at the Meeting of
Shareholders. If other matters properly come before the Meeting the persons
named in the accompanying form of Proxy intend to vote on such other matters in
accordance with their best judgment.
By Order of the Board
January 16, 1998 Alan P. Lindsay,
Chairman of the Board
12
<PAGE> 16
PROXY SOLICITED BY MANAGEMENT OF THE COMPANY
The undersigned shareholder of Azco Mining Inc. (the "Company") hereby appoints
Alan P. Lindsay, or Anthony R. Harvey as nominee of the undersigned to attend,
vote and act for and in the name of the undersigned at the Annual Meeting of
the Shareholders of the Company (the "Meeting") to be held at the Company's
offices at 999 West Hastings, Suite 1250, Vancouver, British Columbia, Canada,
on Wednesday, the 18th day of February, 1998, at the hour of 10:00 a.m. (local
time), and at every adjournment thereof, and the undersigned hereby revokes any
former proxy given to attend and vote at the meeting.
THE NOMINEE IS HEREBY INSTRUCTED TO VOTE AS FOLLOWS WITH RESPECT TO THE
FOLLOWING MATTERS:
<TABLE>
<S> <C> <C>
1. FOR [ ] All Nominees as Directors - Alan P. Lindsay, Anthony R. Harvey, Ian M. Gray,
Andrew F. de P. Malim and Paul A. Hodges.
WITHHELD [ ] From All Nominees.
FOR [ ] All Nominees Except the Following: _________________________________.
2. FOR [ ] AGAINST [ ] ABSTAIN [ ] To appoint Coopers & Lybrand as auditors and to authorize the
directors to fix the auditors' remuneration.
</TABLE>
THIS PROXY WILL BE VOTED FOR OR AGAINST OR WITHHELD OR ABSTAINED IN RESPECT OF
THE MATTERS LISTED IN ACCORDANCE WITH THE CHOICE, IF ANY, INDICATED IN THE
SPACE PROVIDED. IF NO CHOICE IS INDICATED, THE PROXY WILL BE VOTED FOR SUCH
MATTER. IF ANY AMENDMENTS OR VARIATIONS ARE TO BE VOTED ON, OR ANY FURTHER
MATTERS COME BEFORE THE MEETING, THIS PROXY WILL BE VOTED ACCORDING TO THE BEST
JUDGMENT OF THE PERSON VOTING THE PROXY AT THE MEETING. THIS FORM SHOULD BE
READ IN CONJUNCTION WITH THE ACCOMPANYING NOTICE OF MEETING AND PROXY
STATEMENT.
DATED this day of , 1998.
--------- ---------------------
- -------------------------------------------------
Signature of Shareholder
- -------------------------------------------------
(Please print name of Shareholder)
NOTES:
1. YOU HAVE THE RIGHT TO APPOINT A PERSON TO REPRESENT YOU AT THE MEETING
OTHER THAN THE PERSONS DESIGNATED IN THE FORM OF PROXY. IF YOU WISH
TO EXERCISE THIS RIGHT, INSERT THE NAME OF YOUR NOMINEE IN THE BLANK
SPACE PROVIDED FOR THAT PURPOSE IN THE FORM OF PROXY AND STRIKE OUT
THE TWO PRINTED NAMES.
2. Please date and sign (exactly as the shares represented by this Proxy
are registered) and return promptly. Where the instrument is signed
by a corporation, its corporate seal must be affixed and execution
must be made by an officer or attorney thereof duly authorized. If no
date is stated by the Shareholders, the Proxy is deemed to bear the
date upon which it was mailed by management to the Shareholder.
3. To be valid, this Proxy form, duly signed and dated, must arrive at
the office of the Company's transfer agent, Montreal Trust Company of
Canada, 510 Burrard Street, Vancouver, British Columbia, V6C 3B9 not
less than forty-eight (48) hours (excluding Saturdays, Sundays and
holidays) before the day of the Meeting or any adjournment thereof.
