U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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 THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
MINERA ANDES 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 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:
(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,
of the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration No.
(3) Filing Party:
(4) Date Filed:
MINERA ANDES INC.
3303 North Sullivan Road
Spokane, Washington, 99216 USA
NOTICE
------
OF THE ANNUAL GENERAL MEETING OF COMMON SHAREHOLDERS
TO THE SHAREHOLDERS:
TAKE NOTICE that an Annual General Meeting of the Shareholders of Minera Andes
Inc. (the Corporation") will be held in the Main Boardroom at the offices of
Minera Andes Inc. at 3303 North Sullivan Road at the hour of 10:00 a.m (Spokane
time), on Friday, June 7, 2002, for the following purposes:
1. to receive and consider the annual report of the board of directors to the
shareholders and the audited financial statements of the Corporation, for
the fiscal year ended December 31, 2001, and the report of the Auditors
thereon;
2. to fix the number of directors to be elected for the ensuing year;
3. to elect a Board of Directors for the ensuing year;
4. to appoint BDO Dunwoody LLP as Auditors for the ensuing year at
remuneration to be fixed by the directors; and
5. to transact any such other business as may properly be brought before the
Meeting or any adjournment thereof.
Shareholders who are unable to attend the Meeting in person are requested to
date and sign the enclosed form of Instrument of Proxy and return it in the
envelope provided for that purpose.
DATED at the City of Spokane, in the State of Washington, this 15th day of
April, 2002.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Allen V. Ambrose
-----------------------------------------------
Allen V. Ambrose, President
IMPORTANT
It is desirable that as many shares as possible be represented at the meeting.
If you do not expect to attend and would like your shares represented, please
complete the enclosed instrument of proxy and return it as soon as possible in
the envelope provided for that purpose. All proxies, to be valid, must be
deposited at the office of the Registrar and Transfer Agent of the Corporation,
Computershare Trust Company of Canada, 6th Floor, Western Gas Tower, 530 - 8th
Avenue S.W., Calgary, Alberta, T2P 3S8, at least forty eight (48) hours prior to
the meeting or any adjournment thereof.
[LOGO] MINERA ANDES
INCORPORATED
NOTICE OF
- and -
MANAGEMENT INFORMATION CIRCULAR
FOR THE ANNUAL GENERAL MEETING OF
COMMON SHAREHOLDERS OF
MINERA ANDES INC.
DATED JUNE 7, 2002
THIS NOTICE AND MANAGEMENT INFORMATION CIRCULAR IS FURNISHED IN CONNECTION WITH
THE SOLICITATION BY THE MANAGEMENT OF MINERA ANDES INC. OF PROXIES TO BE VOTED
AT THE ANNUAL GENERAL MEETING OF ALL COMMON SHAREHOLDERS
TO BE HELD AT:
MINERA ANDES INC.
3303 North Sullivan Road
Spokane, Washington 99216
In the Main Boardroom
Friday, June 7, 2002
Minera Andes Inc. Meeting: 10:00 a.m. (Spokane Time)
1
Table of Contents
SOLICITATION OF PROXIES ........................................................... 3
APPOINTMENT AND REVOCATION OF PROXIES ............................................. 3
ADVICE TO BENEFICIAL SHAREHOLDERS ................................................. 4
VOTING OF PROXIES ................................................................. 5
VOTING SHARES AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT .. 5
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS .................................. 8
A. Compensation of Directors ................................................... 8
B. Compensation of Officers .................................................... 8
C. Stock Option Plan ........................................................... 12
D. Other Compensation .......................................................... 16
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS .................................. 17
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS AND IN MATTERS TO BE ACTED UPON ..... 17
PARTICULARS OF MATTERS TO BE ACTED UPON ........................................... 17
(A) Report to Shareholders ..................................................... 17
(B) Number of Directors ........................................................ 17
(C) Election of Directors ...................................................... 18
(D) Appointment of Auditor ..................................................... 20
ATTENDANCE OF ACCOUNTANTS ......................................................... 21
GENERAL ........................................................................... 21
FINANCIAL STATEMENTS .............................................................. 21
OTHER BUSINESS .................................................................... 22
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE ........................... 22
SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING ..................................... 22
CERTIFICATE ....................................................................... 23
2
MINERA ANDES INC.
3303 North Sullivan Road
Spokane, Washington
USA 99216
MANAGEMENT INFORMATION CIRCULAR
FOR THE ANNUAL GENERAL MEETING OF COMMON SHAREHOLDERS
JUNE 7, 2002
ALL AMOUNTS OF MONEY WHICH ARE REFERRED TO IN THIS MANAGEMENT INFORMATION
CIRCULAR ARE EXPRESSED IN LAWFUL MONEY OF THE UNITED STATES UNLESS OTHERWISE
SPECIFIED.
NOTE: Shareholders who do not hold their common shares in their own name, as
registered shareholders, should read "Advice to Beneficial Shareholders" within
for an explanation of their rights.
SOLICITATION OF PROXIES
-----------------------
THIS MANAGEMENT INFORMATION CIRCULAR IS PROVIDED IN CONNECTION WITH THE
SOLICITATION OF PROXIES BY THE MANAGEMENT OF MINERA ANDES INC. (the
"Corporation") of proxies for the annual general meeting of the shareholders of
the Corporation (the "Meeting") to be held on Friday, June 7, 2002, at 10:00
a.m. (Spokane time) in the Main Boardroom, at the offices of the Corporation,
3303 North Sullivan Road, Spokane, Washington 99216 or at any adjournment
thereof for the purposes set forth in the accompanying Notice of Meeting. The
Management Information Circular will be mailed on or about April 30, 2002.
Although it is expected that the solicitation of proxies will be primarily by
mail, proxies may also be solicited personally or by telephone, telegraph or
personal interview by regular employees of the Corporation, at a nominal cost.
In accordance with National Policy No. 41, arrangements have been made with
brokerage houses and other intermediaries, clearing agencies, custodians,
nominees and fiduciaries to forward solicitation materials to the beneficial
owners of the common shares held of record by such persons and the Corporation
may reimburse such persons for reasonable fees and disbursements incurred by
them in doing so. The costs thereof will be borne by the Corporation.
APPOINTMENT AND REVOCATION OF PROXIES
-------------------------------------
The persons named in the enclosed Instrument of Proxy, Allen V. Ambrose,
President, of Spokane, Washington and Brian Gavin, Vice President, Exploration,
of Spokane, Washington, have been selected by the directors of the Corporation
and have indicated their willingness to represent as proxy the shareholder who
appoints them. A SHAREHOLDER HAS THE RIGHT TO DESIGNATE A PERSON (WHO NEED NOT
BE A SHAREHOLDER) OTHER THAN ALLEN V. AMBROSE OR BRIAN GAVIN, BEING THE
MANAGEMENT DESIGNEES, TO REPRESENT HIM OR HER AT THE MEETING. Such right may be
exercised by inserting in the space provided for that purpose on the Instrument
of Proxy the name of the person to be designated and deleting therefrom the
names of the management designees, or by completing another proper form of
proxy. Such shareholder should notify
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the nominee of the appointment, obtain a consent to act as proxy and should
provide instructions on how the shareholder's common shares are to be voted. In
any case, the form of proxy should be dated and executed by the shareholder or
an attorney authorized in writing, with proof of such authorization attached,
where an attorney executed the proxy form.
A form of proxy will not be valid for the Meeting or any adjournment thereof
unless it is completed and delivered to Computershare Trust Company of Canada,
6th Floor, Western Gas Tower, 530 - 8th Avenue S.W., Calgary, Alberta, T2P 3S8,
at least forty-eight (48) hours prior to the Meeting or any adjournment thereof.
Late proxies may be accepted or rejected at any time prior to the commencement
time of the Meeting by the Chairman of the Meeting in his discretion and the
Chairman is under no obligation to accept or reject any particular late proxy.
In addition to revocation in any other manner permitted by law, a shareholder
who has given a proxy may revoke it, any time before it is exercised, by
instrument in writing executed by the shareholder or by his attorney authorized
in writing and deposited either at the registered office of the Corporation at
any time up to and including the last business day preceding the day of the
Meeting, or any adjournment thereof, at which the proxy is to be used, or with
the chairman of the Meeting on the day of the Meeting or any adjournment
thereof. In addition, a proxy may be revoked by the shareholder personally
attending at the meeting and voting his common shares.
ADVICE TO BENEFICIAL SHAREHOLDERS
---------------------------------
The information set forth in this section is of significant importance to many
shareholders of the Corporation as a substantial number of shareholders do not
hold their common shares of the Corporation in their own names. Shareholders of
the Corporation who do not hold their common shares in their own names (referred
to herein as "Beneficial Shareholders") should note that only proxies deposited
by shareholders whose names appear on the records of the Corporation as the
registered holders of common shares can be recognized and acted upon at the
Meeting. If common shares are listed in an account statement provided to a
shareholder by a broker, then, in almost all cases, those shares will not be
registered in the shareholder's name on the records of the Corporation. Such
shares will more likely be registered under the name of the shareholder's broker
or an agent of that broker. In Canada, the vast majority of such shares are
registered under the name of CDS & Co. (the registration name for The Canadian
Depositary for Securities, which acts as nominee for many Canadian brokerage
firms). Common shares of the Corporation held by brokers or their agents or
nominees can only be voted (for or against resolutions) upon the instructions of
the Beneficial Shareholder. Without specific instructions, a broker and its
agents and nominees are prohibited from voting shares for the broker's clients.
Therefore, Beneficial Shareholders should ensure that instructions respecting
the voting of their common shares are communicated to the appropriate person.
Applicable regulatory rules require intermediaries/brokers to seek voting
instructions from Beneficial Shareholders in advance of shareholders' meetings.
Every intermediary/broker has its own mailing procedures and provides its own
return instructions to clients, which should be carefully followed by Beneficial
Shareholders in order to ensure that their common shares are voted at the
Meeting. Often, the form of proxy supplied to a Beneficial Shareholder by its
broker (or the agent of the broker) is identical to the form of proxy provided
to registered shareholders. However, its purpose is limited to instructing the
registered shareholder (the broker or agent of the broker) how to vote on behalf
of the Beneficial Shareholder. The majority of brokers now delegate
responsibility for obtaining instructions from clients to Independent Investor
Communications Corporation ("IICC"). IICC typically applies a special sticker to
the proxy forms, mails those forms to the Beneficial Shareholders and asks
Beneficial Shareholders to return the proxy forms to IICC. IICC then tabulates
the results of all instructions received and provides appropriate instructions
respecting the voting of shares to be represented at the meeting. A Beneficial
4
Shareholder receiving a proxy with an IICC sticker on it cannot use that proxy
to vote common shares directly at the Meeting - the proxy must be returned to
IICC well in advance of the Meeting in order to have their common shares voted.
Although a Beneficial Shareholder may not be recognized directly at the Meeting
for the purposes of voting common shares of the Corporation registered in the
name of his broker (or an agent of the broker), a Beneficial Shareholder may
attend at the Meeting as proxyholder for the registered shareholder and vote
such common shares in that capacity. Beneficial Shareholders who wish to attend
the Meeting and indirectly vote their common shares as proxyholder for the
registered shareholder, should enter their own names in the blank space on the
instrument of proxy provided to them and return the same to their broker (or the
broker's agent) in accordance with the instructions provided by such broker (or
agent), well in advance of the Meeting.
All references to shareholders in this Management Information Circular and the
accompanying Instrument of Proxy and Notice of Meeting are to shareholders of
record unless specifically stated otherwise. Where documents are stated to be
available for review or inspection, such items will be shown upon request to
registered shareholders who produce proof of their identity.
VOTING OF PROXIES
-----------------
The persons named in the enclosed Instrument of Proxy are directors and\or
officers of the Corporation who have indicated their willingness to represent as
proxy the shareholder who appoints them. Each shareholder may instruct his Proxy
how to vote his common shares by completing the blanks on the Instrument of
Proxy.
All common shares represented at the meeting by properly executed proxies will
be voted (including the voting on any ballot), and where a choice with respect
to any matter to be acted upon has been specified in the instrument of proxy,
the common shares represented by the proxy will be voted in accordance with such
specification. IN THE ABSENCE OF ANY SUCH SPECIFICATION, THE MANAGEMENT
DESIGNEES, IF NAMED AS PROXY, WILL VOTE IN FAVOUR OF THE MATTERS SET OUT
THEREIN.
The enclosed instrument of proxy confers discretionary authority upon the
management designees, or other persons named as proxy, with respect to
amendments to or variations of matters identified in the notice of meeting and
any other matters which may properly come before the Meeting. As of the date
hereof, the Corporation is not aware of any amendments to, variations of or
other matters which may come before the Meeting. In the event that other matters
come before the Meeting, then the management designees intend to vote in
accordance with the judgment of the management of the Corporation.
VOTING SHARES AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
-----------------------------------------------------------------
AND MANAGEMENT
--------------
The authorized share capital of the Corporation consists of an unlimited number
of common shares and an unlimited number of preferred shares (non-voting). As of
the effective date of this Management Information Circular, being April 1, 2002
unless otherwise indicated (the "Effective Date"), the issued and outstanding
share capital of the Corporation consists of 30,046,030 common shares. To date,
no preferred shares have been issued.
The Corporation will prepare a list of shareholders of record at the close of
business on April 18, 2002 (the "Record Date"). A holder of common shares named
on that list will be entitled to vote such common
5
shares at the Meeting on the basis of one vote for each common share held except
to the extent that, (i) the holder transfers his or her common shares after the
close of business on the Record Date, and (ii) such transferee produces properly
endorsed common share certificates to the Secretary or Transfer Agent of the
Corporation or otherwise establishes his or her ownership of the common shares,
at least ten (10) days prior to the Meeting, in which case the transferee may
vote those common shares at the Meeting.
The By-laws of the Corporation provide that holders present not being less than
two (2) in number and holding or representing not less than ten (10%) percent of
the issued common shares of the Corporation, shall constitute a quorum for the
meeting in respect of holders of common shares.
The following table sets forth certain information regarding the beneficial
ownership, as of April 12, 2002 of the common shares by (i) each person known by
the Corporation to own beneficially more than 5% of the common shares, (ii) each
director of the Corporation, (iii) each officer of the Corporation and (iv) all
directors and executive officers as a group. Except as otherwise noted, the
Corporation believes the persons listed below have sole investment and voting
power with respect to the common shares owned by them.
============================================================================================
COMMON SHARES PERCENTAGE OF
NAME AND PALCE OF BENEFICIALLY COMMON
RESIDENCE OWNED/(1)/ SHARES/(1)/
--------------------------------------------------------------------------------------------
Officers & Directors
--------------------------------------------------------------------------------------------
Allen V. Ambrose 457,200/(2)/ 1.50%
3303 North Sullivan Road
Spokane, Washington 99216
--------------------------------------------------------------------------------------------
Gary A. Craig /(8)/ 0 0%
3303 North Sullivan Road
Spokane, Washington 99216
--------------------------------------------------------------------------------------------
John Johnson Crabb 210,000/(3)/ 0.69%
4950 Gonzales Road
Madeira Park, British Columbia
V0H 2H0
--------------------------------------------------------------------------------------------
Brian Gavin 460,400/(2)/ 1.52%
3303 North Sullivan Road
Spokane, Washington 99216
--------------------------------------------------------------------------------------------
A.D. (Darryl) Drummond 180,000/(3)/ 0.60%
20, 5760 Hampton Place
Vancouver, British Columbia
V6T 2G1
--------------------------------------------------------------------------------------------
Bonnie L. Kuhn 131,000/(4)/ 0.43%
1900, 350 - 7th Avenue S.W.
Calgary, Alberta T2P 3N9
--------------------------------------------------------------------------------------------
Allan J. Marter 180,000/(3)/ 0.60%
7721-D.S. Curtice Way
Littleton, Colorado 80120
--------------------------------------------------------------------------------------------
5% or Greater Shareholders
--------------------------------------------------------------------------------------------
Neal A. and Joan L. Degerstrom 7,450,000/(5)(6)/ 23.0%
3303 North Sullivan Road
Spokane, Washington 99216
============================================================================================
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=========================================================================================
COMMON SHARES PERCENTAGE OF
NAME AND PLACE OF BENEFICIALLY COMMON
RESIDENCE OWNED/(1)/ SHARES/(1)/
-----------------------------------------------------------------------------------------
All directors and executive 1,618,600/(7)/ 5.16%
officers as a group (7 persons)
=========================================================================================
Notes:
(1) Common shares which the person or group has the right to acquire within
60 days after April 12, 2002 are deemed to be outstanding in
determining the beneficial ownership of the person or group and in
calculating percentage ownership of the person or group, but are not
deemed to be outstanding as to any other person or group.
(2) Includes:
(a) stock options entitling the holder to acquire 30,000 common
shares upon payment of Cdn $0.68 per common share granted
effective March 2, 1998 (these options originally had an
exercise price of Cdn $1.10 but were repriced on March 8,
1999);
(b) stock options entitling the holder to acquire 210,000 common
shares upon payment of Cdn $0.55 per common share granted
effective June 3, 1999. Effective April 7, 1999, the
Corporation canceled options to acquire 190,000 common shares
of which options to acquire 110,000 common shares were
exercisable upon payment of Cdn $1.15 per common share (these
options originally had an exercise price of Cdn $2.18 but were
repriced on February 20, 1998), and options to acquire 80,000
common shares were exercisable upon payment of Cdn $1.15 per
common share (these options originally had an exercise price
of Cdn $2.00 but were repriced on February 20, 1998); and
(c) stock options entitling the holder to acquire 100,000 common
shares upon payment of Cdn $0.16 per common share granted
effective September 5, 2000.
(3) Includes:
(a) stock options entitling the holder to acquire 20,000 common
shares upon payment of Cdn $0.68 per common share granted
effective March 2, 1998 (these options originally had an
exercise price of Cdn $1.10 but were repriced on March 8,
1999);
(b) stock options entitling the holder to acquire 120,000 common
shares upon payment of Cdn $0.55 per common share granted
effective June 3, 1999. Effective April 7, 1999, the
Corporation canceled options to acquire 100,000 common shares
of which options to acquire 60,000 common shares were
exercisable upon payment of Cdn $1.15 per common share (these
options originally had an exercise price of Cdn $2.18 but were
repriced on February 20, 1998), and option to acquire 40,000
common shares were exercisable upon payment of Cdn $1.15 per
common share (these options originally had an exercise price
of Cdn $2.00 but were repriced on February 20, 1998); and
(c) stock options entitling the holder to acquire 40,000 common
shares upon payment of Cdn $0.16 per common share granted
effective September 5, 2000.
(4) Includes:
(a) stock options entitling the holder to acquire 10,000 common
shares upon payment of Cdn $0.68 per common share granted
effective March 2, 1998 (these options originally had an
exercise price of Cdn $1.10 but were repriced on March 8,
1999);
(b) stock options entitling the holder to acquire 80,000 common
shares upon payment of Cdn $0.55 per common share granted
effective June 3, 1999. Effective April 7, 1999, the
Corporation canceled options to acquire 60,000 common shares
which were exercisable upon payment of Cdn $1.27 per common
share (these options originally had an exercise price of Cdn
$1.73 but were repriced on February 20, 1998); and
(c) stock options entitling the holder to acquire 40,000 common
shares upon payment of Cdn $0.16 per common share granted
effective September 5, 2000.
(5) The common shares are owned beneficially by Mr. and Mrs. Degerstrom by
virtue of their combined majority control of the record owner, N.A.
Degerstrom, Inc. ("Degerstrom").
(6) Does not include 1,213,409 common shares reserved for issuance to
Degerstrom upon the satisfaction of certain performance criteria.
(7) The directors and officers collectively hold options entitling the
holders to acquire 130,000 common shares at an exercise price of
Cdn$0.68, options entitling the holders to acquire 860,000 common
shares at an exercise price of Cdn$0.55, and options entitling the
holders to acquire 360,000 common shares at an exercise price of $0.16.
(8) Gary Craig became a director of the Corporation on April 12, 2002.
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COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
------------------------------------------------
A. Compensation of Directors
The Corporation has six directors. During the fiscal period ended December 31,
2001, the Corporation paid no cash compensation (including salaries, director's
fees, commissions, bonuses paid for services rendered, bonuses paid for services
rendered in a previous year, and any compensation other than bonuses earned by
the directors for services rendered) to the directors for services rendered as
such. The directors are reimbursed for expenses incurred in attending any
directors meetings.
Three (3) of the directors were, at December 31, 2001, executive officers of the
Corporation. Executive officers of the Corporation who also act as directors do
not receive any additional compensation for services rendered in their capacity
as directors other than as paid by the Corporation to such executive officers in
their capacity as executive officers. See "Compensation of Officers". The
Corporation does carry liability insurance for its directors.
During the fiscal year ended December 31, 2001, no stock options were granted to
directors of the Corporation.
B. Compensation of Officers
1. Cash
During the fiscal period ended December 31, 2001, the Corporation employed three
(3) executive officers, Allen V. Ambrose, President, Brian Gavin, Vice
President, Exploration and Bonnie L. Kuhn, Chief Financial Officer all of whom
continue to be employed. The aggregate cash compensation (including salaries,
directors' fees, commissions, bonuses paid for services rendered, bonuses paid
for services rendered in a previous year, and any compensation other than
bonuses earned) paid to such executive officers and corporations controlled by
them, by the Corporation and its subsidiaries for services rendered during the
fiscal period ended December 31, 2001, was $193,136. Other than as herein set
forth, the Corporation did not pay any additional compensation to its executive
officers (including personal benefits and securities or properties paid or
distributed which compensation was not offered on the same terms to all
full-time employees).
The following table sets forth total compensation paid by the Corporation and
its subsidiaries, as the case may be, for that portion of the last three fiscal
years in which the above were in existence in respect of the President and those
officers whose compensation in the last fiscal year was Cdn$100,000 or more (the
"Named Executive Officers"); in this case Allen V. Ambrose, President and Brian
Gavin, Vice President, Exploration.
8
=================================================================================================================================
STATEMENT OF EXECUTIVE COMPENSATION
---------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------------------------------------------------------------------------------------------------------
AWARDS PAYOUTS
---------------------------------------------------------------------------------------------------------------------------------
SECURITIES
PERFORMANCE OTHER GRANTED RESTRICTED ALL
NAME AND RIGHT ANNUAL UNDER OPTION SHARES OR LTIP /(2)/ OTHER
PRINCIPAL SALARY ($) COMPENSATION /SARS /(1)/ RESTRICTED PAYOUTS COMPENSATION
POSITION YEAR ($) (BONUS) ($) GRANTED # SHARE-UNITS ($) ($)
--------------------------------------------------------------------------------------------------------------------------------
Allen V. January 1, 92,302 Nil 8,960/(3)(4)/ 290,000/(6)/ Nil Nil Nil
Ambrose 1999 -
President December 31,
and Director 1999
------------------------------------------------------------------------------------------------------------------
January 1, 87,404 Nil 9,164/(3)(7)/ 100,000/(9)/ Nil Nil Nil
2000 -
December 31,
2000
------------------------------------------------------------------------------------------------------------------
January 1, 87,444 Nil 9,767/(3)(10)/ Nil Nil Nil Nil
2001
-December
31, 2001
--------------------------------------------------------------------------------------------------------------------------------
Brian Gavin January 1, 105,502 Nil 9,620/(3)(5)/ 290,000/(6)/ Nil Nil Nil
Vice 1999 -
President, December 31,
Exploration 1999
------------------------------------------------------------------------------------------------------------------
January 1, 87,404 Nil 9,164/(3)(8)/ 100,000/(9)/ Nil Nil Nil
2000 -
December 31,
2000
------------------------------------------------------------------------------------------------------------------
January 1, 87,444 Nil 9,767/(3)(11)/ Nil Nil Nil Nil
2001 -
December 31,
2001
=================================================================================================================================
Notes:
(1) "SARS" or "Stock appreciation right" means a right granted by the
Corporation, as compensation for services rendered, to receive a
payment of cash or an issue or transfer of securities based wholly or
in part on changes in the trading price of publicly traded securities
of the Corporation.
(2) LTIP " or "long term incentive plan" means any plan which provides
compensation intended to serve as incentive for performance to occur
over a period longer than one financial year, but does not include
option or stock appreciation right plans or plans for compensation
through restricted shares or restricted share units.
(3) Allen V. Ambrose and Brian Gavin, as employees of Degerstrom provided
services under the Operating Agreement, which services were invoiced
to the Corporation under the said agreement. The compensation
Degerstrom paid to Mr. Ambrose was invoiced 100% to the Corporation
and Mr. Gavin's compensation was invoiced 100% to the Corporation,
including the employer portion of FICA Social Security, Washington
Unemployment Insurance, Washington Workers Compensation, FICA Medicare
and FUTA.
(4) From January 1999 to December 1999 the following benefits were
provided to Allen V. Ambrose and billed by Degerstrom to the
Corporation:
401 K Base $2,748
401 K Match $1,832
Medical Insurance $4,380
(5) From January 1999 to December 1999 the following benefits were
provided to Brian Gavin and billed by Degerstrom to the Corporation:
401 K Base $3,144
401 K Match $2,096
Medical Insurance $4,380
(6) Includes stock options granted on June 3, 1999 entitling the holder to
acquire 210,000 common shares of the Corporation at an exercise price
of Cdn $0.55. In addition, includes the following stock options which
were repriced during 1999:
9
(a) stock options entitling the holder to acquire 50,000 common shares of
the Corporation at an exercise price of Cdn $0.68 (these options
originally had an exercise price of Cdn $1.44 but were repriced on
March 8, 1999); and
(b) stock options entitling the holder to acquire 30,000 common shares of
the Corporation at an exercise price of Cdn $0.68 (these options
originally had an exercise price of Cdn $1.10 but were repriced on
March 8, 1999).
(7) From January 2000 to December 2000 the following benefits were provided to
Allen V. Ambrose and billed by Degerstrom to the Corporation:
401 K Base $2,616
401 K Match $1,744
Medical Insurance $4,804
(8) From January 2000 to December 2000 the following benefits were provided to
Brian Gavin and billed by Degerstrom to the Corporation:
401 K Base $2,616
401 K Match $1,744
Medical Insurance $4,804
(9) Includes stock options granted on September 5, 2000 entitling the holder to
acquire 100,000 common shares at an exercise price of Cdn$0.16.
(10) From January 2001 to December 2001 the following benefits were provided to
Allen V. Ambrose and billed by Degerstrom to the Corporation:
401 K Base $2,616
401 K Match $1,744
Medical Insurance $5,407
(11) From January 2001 to December 2001 the following benefits were provided to
Brian Gavin and billed by Degerstrom to the Corporation:
401 K Base $2,616
401 K Match $1,744
Medical Insurance $5,407
2. Stock Options
The Named Executive Officers of the Corporation were not granted any stock
options during the fiscal period ended December 31, 2001.
The following table sets forth details of the fiscal year-end value of
unexercised options on an aggregated basis held by the Named Executive Officers
for the fiscal year ended December 31, 2001:
AGGREGATED OPTION VALUES FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
=====================================================================================================================
UNEXERCISED OPTIONS AT VALUE OF UNEXERCISED
SECURITIES MOST RECENT YEAR END IN-THE-MONEY OPTIONS AT MOST
ACQUIRED ON AGGREGATE VALUE (#) RECENT YEAR END/(1)(2)/
EXERCISE REALIZED EXERCISABLE EXERCISABLE
NAME (#) ($) /UNEXERCISABLE /UNEXERCISABLE
---------------------------------------------------------------------------------------------------------------------
Allen V. Ambrose, 0 0 340,000/Nil 0/0
President
---------------------------------------------------------------------------------------------------------------------
Brian Gavin, 0 0 340,000/Nil 0/0
Vice President,
Exploration
=====================================================================================================================
Notes:
(1) Value of unexercised in-the-money options calculated using the closing
price of common shares on the Canadian Venture Exchange Inc. on December
31, 2001, less the exercise price of in-the-money stock options.
(2) On December 31, 2001 the last day the common shares traded in 2001, the
closing price of the common shares on the Canadian Venture Exchange Inc.
was Cdn $0.12. The exercise price of these options was greater than the
closing price on December 31, 2001.
(3) The amounts are in Canadian dollars.
10
3. Long-term Incentive Plans
The Corporation has not had and does not currently have any long term incentive
plans, other than stock options to be granted from time to time by the Board of
Directors under the provisions of the Corporation's stock option plan. See
"Stock Option Plan".
4. Stock Appreciation Rights and Restricted Shares
No stock appreciation rights or restricted shares were granted by the
Corporation to the Named Executive Officers of the Corporation during the fiscal
periods ended December 31, 1999, December 31, 2000 or December 31, 2001.
Furthermore, no stock appreciation rights were exercised.
5. Stock Option and SAR Repricing
During the fiscal year ended December 31, 1998 the Corporation repriced options
to acquire 190,000 common shares of the Corporation held by each of the Named
Executive Officers. During the fiscal year ended December 31, 1999 the
Corporation repriced options to acquire 80,000 common shares of the Corporation
held by each of the Named Executive Officers effective March 8, 1999. The 80,000
options held by each of the Named Executive Officers were repriced to $0.68,
from $1.44 as to 50,000 options, and from $1.10 as to 30,000 options. The
Corporation did not make any downward repricing of stock options or stock
appreciation rights during the fiscal period ended December 31, 2001. See "Stock
Options".
6. Pension and Retirement Plans and Payments made upon Termination of
Employment
The Corporation does not have in place any pension or retirement plan. The
Corporation has not provided compensation, monetary or otherwise, during the
preceding fiscal year, to any person who now acts or has previously acted as a
Named Executive Officer of the Corporation, in connection with or related to the
retirement, termination or resignation of such person and the Corporation has
provided no compensation to such persons as a result of a change of control of
the Corporation, its subsidiaries or affiliates. The Corporation is not party to
any compensation plan or arrangement with a Named Executive Officer resulting
from the resignation, retirement or the termination of employment of such
person.
7. Employment and Management Contracts
(a) N.A. Degerstrom, Inc. ("Degerstrom") provides management services to the
Corporation and acts as operator of the Corporation's properties and
projects pursuant to an operating agreement entered into on March 15, 1995
("Operating Agreement"). Under the Operating Agreement, Degerstrom operates
and manages the exploration program on all properties and provides related
offsite administrative assistance as required. This agreement allows the
Corporation to minimize its overhead by providing for reimbursement to
Degerstrom of direct out of pocket and certain allocated indirect costs and
expenses and the payment of a management fee of 15%. During the year ended
December 31, 2001 administrative fees were paid to Degerstrom of $40,918 on
total costs incurred by the Corporation of $305,298.
(b) The Corporation had entered into an agreement dated April 30, 1996, as
amended on October 31, 1997 with Waiata Resources located in Littleton,
Colorado. The agreement provided that Allan J. Marter, who is the principal
of Waiata Resources ("Waiata") and a director and officer of the
Corporation, would provide financial advisory services to the Corporation
including the oversight of the accounting function and reporting, joint
venture negotiations and documentation, business and financial planning and
the review and evaluation of investment opportunities. Waiata received a
retainer of $2,800 per month which entitled the Corporation of up to five
days
11
of advisory services from Allan J. Marter per month. Additional advisory
services were paid at the pro rata rate based on $560 per day. The
agreement provided for termination by the Corporation upon thirty days
written notice. This agreement has since been terminated upon the
resignation of Allan J. Marter as Chief Financial Officer, effective March
29, 2000. Mr. Marter has continued to provide corporate finance services on
an as needed basis, without a contract from March 29, 2000; he was paid
$2,100 from January to December, 2001.
C. Stock Option Plan
The Board of Directors of the Corporation has adopted a stock option plan (the
"Plan") which was approved with amendments by the shareholders of the
Corporation at the Annual and Special Meeting of Shareholders held on June 26,
1996. Subsequently at the Corporation's Annual and Special Meeting of
Shareholders held on June 26, 1998, the shareholders of the Corporation approved
a further amendment increasing the total number of common shares reserved for
issuance under the Plan from 2,000,000 to 3,000,000 common shares. Further at
the Corporation's Annual General and Special Meeting of Shareholders held on
June 23, 2000, the shareholders of the Corporation approved a further amendment
increasing the total number of common shares reserved for issuance under the
Plan from 3,000,000 to 6,000,000 common shares. The Corporation maintains the
Plan for the benefit of its employees and others who provide services to the
Corporation. The Board of Directors believes the availability of stock
incentives is an important factor in the Corporation's ability to attract and
retain experienced and competent employees and to provide an incentive for them
to exert their best efforts on behalf of the Corporation. Certain provisions of
the Plan are described below.
As of April 1, 2002, out of the total 6,000,000 shares provided for issuance
under the Plan 3,764,000 shares remain available for grant. Certain provisions
of the Plan are described below.
(a) Description of the Plan
-----------------------
(i) General
-------
The Plan is not subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA") or to the qualification requirements of Section
401(a) of the Internal Revenue Code of 1986, as amended, (the "Code"). Certain
stock options granted under the Plan may be treated as incentive stock options
as defined in Section 422 of the Code ("Incentive Stock Options"). Other stock
options, including all options granted under the Plan to individuals who are not
employees of the Corporation or any of its subsidiaries are not Incentive Stock
Options and are referred to in this Management Information Circular as
"Nonstatutory Stock Options".
The purpose of the Plan is to advance the interests of the Corporation and its
subsidiaries and affiliates by encouraging the directors, officers, employees
and consultants of the Corporation and its subsidiaries to acquire common shares
in the Corporation, thereby increasing their proprietary interest in the
Corporation, encouraging them to remain associated with the Corporation and its
subsidiaries and furnishing them with additional incentive in their efforts on
behalf of the Corporation and its subsidiaries in the conduct of their affairs.
(ii) Common Shares Reserved for Issuance Under the Plan
--------------------------------------------------
The common shares to be offered under the Plan consist of common shares of the
Corporation's authorized but unissued common shares. The aggregate number of
common shares to be delivered upon the exercise of all options granted under the
Plan shall not exceed 10% of the Corporation's issued and outstanding common
shares from time to time, up to a maximum of 6,000,000 common shares. The
12
number and kind of common shares available for grants under the Plan is subject
to adjustment by the Board of Directors if the outstanding common shares of the
Corporation are increased, decreased, changed into or exchanged for a different
number or kind of securities of the Corporation through re-organization, merger,
re-capitalization, re-classification, stock dividend, subdivision or
consolidation.
If any option granted under the Plan expires or terminates for any reason
without having been exercised in full, the unpurchased common shares subject
thereto will again become available for the purpose of the Plan. No fractional
common shares are issued under the Plan on any such adjustment.
To the Effective Date an aggregate of 2,010,000 stock options have been granted
to the directors, officers, employees and consultants of the Corporation or its
subsidiaries pursuant to the Corporation's Plan of which 226,000 stock options
have been exercised. To the Effective Date, 3,764,000 stock options were
available for grant under the Plan.
(iii) Administration
--------------
The Plan is interpreted and administered by the Board of Directors. A majority
of the Board of Directors constitutes a quorum, and the acts of a majority of
the directors present at any meeting at which a quorum is present, or acts
unanimously approved in writing, shall be the acts of the directors.
Subject to the provisions of the Plan, the Board of Directors has authority to
construe and interpret the Plan and all option agreements entered into
thereunder, to define the terms used in the Plan and in all option agreements
entered into thereunder, to prescribe, amend and rescind rules and regulations
relating to the Plan and to make all other determinations necessary or advisable
for the administration of the Plan. All determinations and interpretations made
by the Board of Directors are binding and conclusive on all participants in the
Plan and on their legal personal representatives and beneficiaries.
Each option granted under the Plan is to be evidenced by an agreement, signed on
behalf of the Corporation and by the optionee, in a form approved by the Board
of Directors.
(iv) Participation and Types of Grants
---------------------------------
Directors, officers, management, consultants and employees of the Corporation
are eligible for selection to participate in the Plan (such persons hereinafter
collectively referred to as "Participants"). The Board of Directors determines
to whom options shall be granted, the terms and provisions of the respective
option agreements, the time or times at which such options shall be granted, and
the number of common shares to be subject to each option. An individual who has
been granted an option may, if the Participant is otherwise eligible, and if
permitted under the policies of the stock exchange or stock exchanges on which
the common shares of the Corporation are listed, be granted an additional option
or options if the directors so determine. The rules of any stock exchange upon
which the Corporation's common shares are listed are applicable relative to
options granted to Participants.
(v) Exercise Price
--------------
The Board of Directors determines the exercise price of the common shares
covered by each option granted under the Plan. The exercise price of options
granted under the Plan may not be less than the closing price of the
Corporation's common shares on the stock exchange or stock exchanges on which
the common shares of the Corporation are listed on the last trading day
immediately preceding the day on which the stock exchange is notified of the
proposed issuance of the option, less any discounts permitted by the policy or
policies of such stock exchange or stock exchanges.
13
However, if an option is granted within six months of a public distribution of
the Corporation's common shares by way of prospectus, then the minimum exercise
price of such option may, if the policy of such stock exchange or stock
exchanges requires, be the greater of the closing price of the Corporation's
common shares on the last trading day immediately preceding the day on which the
stock exchange is notified of the proposed issuance of the option, as provided
above, and the price per common share paid by the investing public for common
shares of the Corporation acquired by the public during such public
distribution, determined in accordance with the policy or policies of such stock
exchange or stock exchanges.
(vi) Duration and Exercise of Options
--------------------------------
The option period is a period of time fixed by the Board of Directors, not to
exceed the maximum period permitted by any stock exchange on which the
Corporation's common shares are then listed or other regulatory body having
jurisdiction, provided that the option period may be reduced with respect to any
option as provided in "Termination of Employment or Service, Death and
Assignment" below.
Except as set forth in "Termination of Employment or Service, Death and
Assignment" below, no option may be exercised unless the Participant is at the
time of such exercise a director, officer, employee or consultant of the
Corporation or any of its subsidiaries or affiliates. Provided, however, that
any other provision to the contrary, an option granted to a consultant in
connection with specific services provided or to be provided by that consultant
may be exercised only after the date of completion of such service and prior to
30 days following the date of completion of such service.
Options may be exercised in amounts and at times determined by the Board of
Directors. The exercise of any option will be contingent upon receipt by the
Corporation at its head office of a written notice of exercise, specifying the
number of common shares with respect to which the option is being exercised,
accompanied by cash payment, certified check or bank draft for the full purchase
price of such common shares with respect to which the option is exercised. No
Participant or his legal representatives, legatees or distributees will be, or
will be deemed to be, a holder of any common shares subject to an option under
this Plan, unless and until the certificates for such common shares are issued
to such persons under the terms of the Plan.
No person entitled to exercise an option has any of the rights or privileges of
a shareholder of the Corporation in respect of any common shares issuable upon
exercise of such option until certificates representing such common shares are
issued and delivered.
(vii) Termination of Employment or Service, Death and Assignment
----------------------------------------------------------
If a Participant ceases to be a director, officer, employee or consultant of the
Corporation or any of its subsidiaries or affiliates for any reason (other than
death), the Participant may exercise any option then held within 90 days
following the Participant's ceasing to be a director, officer, employee or
consultant, but only if and to the extent that the Participant was entitled to
exercise the option at the date of such cessation.
In the event of the death of a Participant, any option then held by the
Participant will be exercisable within the twelve (12) months following the
Participant's death, but only: (a) by the person or persons to whom the
Participant's rights under the option pass by the Participant's will or the laws
of descent and distribution; and (b) if and to the extent that the Participant
was entitled to exercise the option at the date of the Participant's death.
14
(viii) Amendment and Termination of the Plan
-------------------------------------
The Board of Directors may, at any time, suspend or terminate the Plan. The
Board of Directors may also at any time amend or revise the terms of the Plan,
provided that no such amendment or revision may alter the terms of any options
theretofore granted under the Plan.
(b) Summary of United States Federal Income Tax Consequences
--------------------------------------------------------
(i) Non-statutory Stock Options
---------------------------
A. General. Under United States federal income tax law now in effect, no
-------
income is realized by the grantee of a Non-statutory Stock Option until the
option is exercised. When a Non-statutory Stock Option is exercised, the
optionee realizes ordinary compensation income, and the Corporation generally
becomes entitled to a deduction, in the amount by which the market value of the
common shares subject to the Non-statutory Stock Option at the time of exercise
exceeds the exercise price. With respect to options exercised by certain
executive officers, the Corporation's deduction can in certain circumstances be
limited by the $1,000,000 cap on deductibility set forth in Section 162(m) of
the Code. The Corporation is required to withhold on all amounts treated as
ordinary income to optionees. Upon the sale of common shares acquired by
exercise of a Non-statutory Stock Option, the amount by which the sale proceeds
exceed the market value of the common shares on the date of exercise will
constitute capital gain which will be taxable at varying rates depending on the
holding period.
B. Exercise by "Insiders". The tax consequences described above also apply
----------------------
to an optionee who is an "insider" for purposes of Section 16(b) of the
Securities Exchange Act of 1934, as amended, (the `Exchange Act") unless both
(a) the grant of the option was not approved by either the Board of Directors or
a committee composed solely of two or more non-employee directors and (b) the
insider exercises the option within six months of the date of grant.
(ii) Incentive Stock Options
-----------------------
A. General. Under federal income tax law now in effect, no income will be
-------
recognized by an optionee upon either grant or exercise of an Incentive Stock
Option. The amount by which the market value of common shares issued upon
exercise of an Incentive Stock Option exceeds the exercise price, however, is
included in the optionee's alternative minimum taxable income and may, under
certain conditions, be taxed under the alternative minimum tax. If the optionee
holds common shares acquired upon exercise of an Incentive Stock Option for two
years after the date of grant and one year after the date of exercise (the
"holding periods"), and if the optionee has been an employee of the Corporation
(or of any parent or subsidiary of the Corporation) at all times from the date
of grant to the date three months before exercise, then any gain realized by the
optionee upon sale or exchange of the common shares will be treated as long-term
capital gain and any loss will be long-term capital loss.
Generally, if an optionee disposes of common shares acquired upon exercise of an
Incentive Stock Option within the holding periods and all requirements other
than the holding period rules are met (an "early disposition"), the optionee
will recognize ordinary compensation income for the year of disposition equal to
the excess of the market value of the common shares on the date of exercise over
the option's exercise price. The remainder of the gain realized upon the early
disposition, if any, will be capital gain and will be taxed at varying rates
depending on the holding period. A special rule limits the amount of ordinary
compensation income that must be recognized to the amount of gain realized by
the optionee upon the early disposition. As a result, the optionee will not be
required to recognize the entire spread between the exercise price and the
market value on the date of exercise as ordinary compensation income if the
early disposition results in either a loss or a gain smaller than the spread at
exercise. If common shares acquired upon exercise of an Incentive Stock Option
are disposed of in an early disposition, the
15
Corporation ordinarily will be entitled to a deduction in the year of
disposition equal to the amount of ordinary compensation income recognized by
the optionee.
B. Exercise by "Insiders". The tax consequences described above also apply to
----------------------
an optionee who is an "insider" for purposes of Section 16(b) of the Exchange
Act, unless both (a) the grant of the Incentive Stock Option was not approved by
either the Board of Directors or a committee composed solely of two or more
non-employee directors and (b) the insider exercises the Incentive Stock Option
within six months of the date of grant. Optionees who are insiders should
consult their individual tax advisers before exercising an Incentive Stock
Option in either of those cases.
THE FOREGOING SUMMARY IS NOT A COMPLETE DESCRIPTION OF THE FEDERAL INCOME TAX
ASPECTS OF THE PLAN. MOREOVER, THE FOREGOING SUMMARY RELATES ONLY TO FEDERAL
INCOME TAX; THERE MAY ALSO BE FEDERAL ESTATE AND GIFT TAX CONSEQUENCES
ASSOCIATED WITH THE PLAN, AS WELL AS FOREIGN, STATE AND LOCAL TAX CONSEQUENCES.
The following stock options are outstanding to officers, directors, employees
and consultants of the Corporation as of December 31, 2001.
=========================================================================================================
NUMBER OF EXERCISE
GROUP COMMON PRICE PER
(NUMBER OF SHARES UNDER COMMON
PERSONS IN GROUP) OPTION DATE OF GRANT EXPIRY DATE SHARE $CDN
---------------------------------------------------------------------------------------------------------
2 Named Executive Officers 60,000 March 2, 1998/(4)/ March 2, 2003 0.68
420,000 June 3, 1999 June 3, 2004 0.55
200,000 September 5, 2000 August 28, 2005 0.16
---------------------------------------------------------------------------------------------------------
5 Directors /(1)(5)/ 90,000 March 2, 1998/(4)/ March 2, 2003 0.68
560,000 June 3, 1999 June 3, 2004 0.55
200,000 September 5, 2000 August 28, 2005 0.16
---------------------------------------------------------------------------------------------------------
14 Others /(2)/ 65,000 March 2, 1998/(4)/ March 2, 2003 0.68
166,000 June 3, 1999 June 3, 2004 0.55
29,000 June 3, 1999 June 3, 2004 0.59
220,000 September 5, 2000 August 28, 2005 0.16
---------------------------------------------------------------------------------------------------------
Total 2,010,000
=========================================================================================================
Notes:
(1) Directors who are not Named Executive Officers.
(2) Includes employees, consultants of the Corporation and its subsidiaries as
well as directors and officers of subsidiaries whose holdings are not
previously disclosed.
(3) These options originally had an exercise price of Cdn $1.44 but were
subsequently repriced to Cdn $0.68 on March 8, 1999.
(4) These options originally had an exercise price of Cdn $1.10 but were
repriced to Cdn $0.68 on March 8, 1999.
(5) Armand Hansen resigned as a director on April 12, 2002.
D. Other Compensation
During the Corporation's fiscal period ended December 31, 2001, the Corporation
accrued and/or paid fees to a law firm for the provision of ongoing legal
services to the Corporation amounting to approximately $11,624. Bonnie L. Kuhn,
the Secretary, Chief Financial Officer and Director of the Corporation, is an
associate of such firm.
Other than as set forth herein, the Corporation did not pay any additional
compensation to the executive officers or directors (including personal benefits
and securities or properties paid or distributed which
16
compensation was not offered on the same terms to all full time employees)
during the last completed fiscal year.
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
------------------------------------------------
No director, executive officer, senior officer or any of their respective
associates or affiliates or any proposed nominee director is or has been at any
time since the beginning of the last completed fiscal year, indebted to the
Corporation or any of its subsidiaries nor has any such person been indebted to
any other entity where such indebtedness is the subject of a guarantee, support
agreement, letter of credit or similar arrangement or understanding, provided by
the Corporation or any of its subsidiaries.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS AND IN MATTERS TO BE
------------------------------------------------------------------
ACTED UPON
----------
There are no material interests, direct or indirect, of the current directors,
senior officers, and shareholders who beneficially own, directly or indirectly,
more than ten (10%) percent of the outstanding common shares or any known
associate or affiliates of such persons, in any matter to be acted upon nor in
any transaction which has materially affected the Corporation since the
commencement of the Corporation's last financial year, other than as set forth
herein or as previously disclosed, and for the following transaction:
1. On September 20, 2001, Degerstrom, who is a principal shareholder of the
Corporation, acquired from the Corporation certain unused assets and all of
the issued and outstanding shares of NAD S.A. for an acquisition cost of
$45,800. These assets include certain pieces of idle equipment that were no
longer used, including half-an interest in a travel trailer, furniture,
household items and a 1995 Land Rover.
PARTICULARS OF MATTERS TO BE ACTED UPON
---------------------------------------
To the knowledge of the Board of Directors of the Corporation, the only matters
to be brought before the Meeting are those matters set forth in the accompanying
Notice of Meeting relating to the receipt of financial statements and the
Auditors' Report thereon, the election of directors, and the appointment of
auditors.
(a) Report to Shareholders
----------------------
The Board of Directors of the Corporation have approved all of the information
in the Report to Shareholders that accompanies this present Management
Information Circular, including the audited consolidated financial statements
delivered therewith for the fiscal year ended December 31, 2001.
(b) Number of Directors
-------------------
For this forthcoming year, it is proposed that the Board of Directors shall
consist of six (6) members. At the Meeting, shareholders will be asked to
consider and, if thought fit, approve an ordinary resolution fixing the number
of directors to six (6).
17
In order to be effective, an ordinary resolution requires the approval of a
majority of the votes cast by shareholders who vote in respect of the
resolution.
Unless otherwise indicated in the Proxy, it is management's intention to vote
the proxies in favour of the resolution fixing the number of directors to six
(6).
(c) Election of Directors
---------------------
At the Meeting, it will be proposed that six (6) directors be elected to hold
office until the next Annual General Meeting of Shareholders or until their
successors are elected or appointed. There are presently six (6) directors of
the Corporation, each of whose terms of office will expire at the Meeting. It is
the intention of the management designees, if named as proxy, to vote for the
election of the following persons to the Board of Directors. Management does not
contemplate that any of such nominees will be unable to serve as directors;
however, if for any reason any of the proposed nominees do not stand for
election or are unable to serve as such, proxies in favour of management
designees will be voted for another nominee in their discretion unless the
shareholder has specified in his proxy that his common shares are to be withheld
from voting in the election of directors. Each director elected will hold office
until the next Annual General Meeting of Shareholders or until his successor is
duly elected, unless his office is earlier vacated in accordance with the Bylaws
of the Corporation.
In order to be effective, an ordinary resolution requires the approval of a
majority of the votes cast by shareholders who vote in respect of the
resolution.
The following sets forth the name of each of the persons proposed to be
nominated for election as a director, all positions and offices in the
Corporation, presently held by him or her, his or her municipality of residence,
his or her principal occupation at the present and during the preceding five
years, the period during which he or she has served as a director, and the
number of voting common shares of the Corporation that he or she has advised are
beneficially owned by him or her, directly or indirectly, or over which control
or direction is exercised, as of April 12, 2002 hereof (except as otherwise
noted, the Corporation believes the persons listed below have sole investment
and voting power with respect to the common shares owned by them).
====================================================================================================================
COMMON
SHARES PERCENTAGE
NAME, AGE AND MUNICIPALITY POSITION BENEFICIALLY OF COMMON
OF RESIDENCE HELD PRINCIPAL OCCUPATION DURING PAST FIVE YEARS OWNED/(5)/ SHARES/(5)/
--------------------------------------------------------------------------------------------------------------------
Allen V. Ambrose, 45 President Director and President of the Corporation 457,200/(2)/ 1.50%
Spokane, Washington and Director since November 6, 1995. Mr. Ambrose is an
Exploration Manager/Geologist with N.A.
Degerstrom, Inc.
--------------------------------------------------------------------------------------------------------------------
Gary A. Craig, 53/(1)/ Director A director of the Corporation since April 12, 0 0%
Spokane, Washington 2002. Mr. Craig is Vice President of
Operations for Mining Contracting with N.A.
Degerstrom, Inc., a position he held since
August 2000. Previously Gary Craig was
Project Manager for Dravo Corporation, a
mining company.
====================================================================================================================
18
====================================================================================================================================
COMMON
SHARES PERCENTAGE
NAME, AGE AND MUNICIPALITY POSITION BENEFICIALLY OF COMMON
OF RESIDENCE HELD PRINCIPAL OCCUPATION DURING PAST FIVE YEARS OWNED/(5)/ SHARES/(5)/
------------------------------------------------------------------------------------------------------------------------------------
Bonnie L. Kuhn, 36 Chief A director and officer of the Corporation since June 19, 131,000/(4)/ 0.43%
Calgary, Alberta Financial 1997 and Chief Financial Officer since May 15, 2000.
Officer, Associate with Ogilvie and Company, Barristers and
Secretary Solicitors, from 1994 to December 31, 1998. From January 1,
and Director 1999 to present, a partner with Armstrong Perkins Hudson
LLP, Barristers & Solicitors. Director of Talon Petroleums
Ltd., an oil and gas exploration company, from September
1997 to September 1999. Director of Tajzha Ventures Ltd. an
oil and gas exploration company from October 25, 2000 to
present.
------------------------------------------------------------------------------------------------------------------------------------
John Johnson Crabb, 76/(1)/ Director A director of the Corporation since November 6, 1995. Mr. 210,000/(3)/ 0.69%
Madeira Park, B.C. Crabb was a Mining Executive/ Geologist and Director with
Inland Resources, Inc., a mining company from 1985 to
November 1995; Director of Cadre Resources Ltd. from April
1995 to March 1996.
------------------------------------------------------------------------------------------------------------------------------------
A.D. (Darryl) Drummond, 65 Director A director of the Corporation since June 26, 1996. Mr. 180,000/(3)/ 0.60%
Ph.D., P. Eng. Drummond is a Professional Engineer; President of D.D.H.
Vancouver, British Columbia Geomanagement from 1981 to present; Director of All North
Resources Ltd. from May 1995 to July 1996; Director of
International All-North Resources Ltd. from July 1996 to
December 1998; Director of Riverdance Res. Corp. from
January, 1998 to December 1998; Director of The Quinto
Mining Corporation from September 1996 to August 1977;
Director of Kaieteur Res. Corp. from December 1998 to
present; Director of Saxony Explorations Ltd. from February
2000 to present; Director of Valerie Gold Resources Ltd.
from November 1998 to present.
------------------------------------------------------------------------------------------------------------------------------------
Allan J. Marter, 54/(1)/ Director A director and officer of the Corporation since June 19, 180,000/(3)/ 0.60%
Littleton, Colorado 1997. On March 29, 2000, Mr. Marter resigned as Chief
Financial Officer. Mr. Marter was a financial advisor in the
mining industry and principal of Waiata Resources from
April, 1996 to present. From 1992 to April, 1996, employed
as a director with Endeavour Financial Inc. Director of
Addwest Minerals International, Ltd. formerly Alina
International Industries Ltd. from February 28, 1997 to
present. Director of Latitude Minerals Corp. from September
1999 to present. Director of Golden Phoenix Minerals Inc.
from October 1999 to present. Vice President and Chief
Financial Officer of Golden Star Resources Ltd. from
November 9, 1999 to present. Has provided financial advisory
services to the Corporation through Waiata Resources since
April 30, 1996.
====================================================================================================================================
Notes:
(1) Member of Audit Committee.
19
(2) Includes:
(a) stock options entitling the holder to acquire 30,000 common
shares upon payment of Cdn $0.68 per common share granted
effective March 2, 1998 (these options originally had an
exercise price of Cdn $1.10 but were repriced on March 8,
1999);
(b) stock options entitling the holder to acquire 210,000 common
shares upon payment of Cdn $0.55 per common share granted
effective June 3, 1999. Effective April 7, 1999, the
Corporation canceled options to acquire 190,000 common shares
of which options to acquire 110,000 common shares were
exercisable upon payment of Cdn $1.15 per common share (these
options originally had an exercise price of Cdn $2.18 but
were repriced on February 20, 1998), and options to acquire
80,000 common shares were exercisable upon payment of Cdn
$1.15 per common share (these options originally had an
exercise price of Cdn $2.00 but were repriced on February 20,
1998); and
(c) stock options entitling the holder to acquire 100,000
common shares upon payment of Cdn $0.16 per common share
granted effective September 5, 2000.
(3) Includes:
(a) stock options entitling the holder to acquire 20,000 common
shares upon payment of Cdn $0.68 per common share granted
effective March 2, 1998 (these options originally had an
exercise price of Cdn $1.10 but were repriced on March 8,
1999);
(b) stock options entitling the holder to acquire 120,000 common
shares upon payment of Cdn $0.55 per common share granted
effective June 3, 1999. Effective April 7, 1999, the
Corporation canceled options to acquire 100,000 common shares
of which options to acquire 60,000 common shares were
exercisable upon payment of Cdn $1.15 per common share (these
options originally had an exercise price of Cdn $2.18 but
were repriced on February 20, 1998), and option to acquire
40,000 common shares were exercisable upon payment of Cdn
$1.15 per common share (these options originally had an
exercise price of Cdn $2.00 but were repriced on February 20,
1998); and
(c) stock options entitling the holder to acquire 40,000 common
shares upon payment of Cdn $0.16 per common share granted
effective September 5, 2000.
(4) Includes:
(a) stock options entitling the holder to acquire 10,000 common
shares upon payment of Cdn $0.68 per common share granted
effective March 2, 1998 (these options originally had an
exercise price of Cdn $1.10 but were repriced on March 8,
1999);
(b) stock options entitling the holder to acquire 80,000 common
shares upon payment of Cdn $0.55 per common share granted
effective June 3, 1999. Effective April 7, 1999, the
Corporation canceled options to acquire 60,000 common shares
which were exercisable upon payment of Cdn $1.27 per common
share (these options originally had an exercise price of Cdn
$1.73 but were repriced on February 20, 1998); and
(c) stock options entitling the holder to acquire 40,000 common
shares upon payment of Cdn $0.16 per common share granted
effective September 5, 2000.
(5) Common shares which the person or group has the right to acquire within
60 days after April 1, 2002 are deemed to be outstanding in determining
the beneficial ownership of the person or group and in calculating
percentage ownership of the person or group, but are not deemed to be
outstanding as to any other person or group.
The audit committee of the Corporation currently consists of Gary A. Craig,
Allan J. Marter and John Johnson Crabb. The general function of the audit
committee is to review the overall audit plan and the Corporation's system of
internal controls, to review the results of the external audit, and to resolve
any potential dispute with the Corporation's auditors. The Board of Directors of
the Corporation met two times during 2001. The audit committee met one time
during 2001. (No director attended fewer than 50% of the aggregate of all
meetings of the Board of Directors and the audit committee of which the director
was a member during 2001.) The Corporation does not have an executive committee
at this time.
Unless otherwise indicated in the Proxy, it is management's intention to vote
the proxies in favour of the election of the above directors.
(d) Appointment of Auditor
----------------------
On July 24, 2001, the Corporation's auditors, PricewaterhouseCoopers LLP,
notified the Corporation that it had resigned as the Corporation's independent
accountants, following the closure of its Spokane office. The Corporation's
Board of Directors filled the vacancy for the auditors left by the resignation
of PricewaterhouseCoopers LLP with the appointment of BDO Dunwoody LLP as
auditors of the Corporation.
20
There have been no reportable events (ie. disagreements, unresolved issues or
consultations) during the period in which PricewaterhouseCoopers LLP, Chartered
Accountants have been in office. PricewaterhouseCoopers LLP, Chartered
Accountants were appointed auditors of the Corporation on June 19, 1997. In
accordance with National Policy 31, the "Reporting Package" which includes Form
8K dated July 24, 2001 and letter from the former auditor have been delivered to
the Alberta Securities Commission, the British Columbia Securities Commission,
the Saskatchewan Securities Commission, the Ontario Securities Commission and
the Nova Scotia Securities Commission and is attached hereto and forms Schedule
"A" to this Information Circular.
Unless otherwise directed, it is management's intention to vote the proxies in
favour of an ordinary resolution to appoint the firm of BDO Dunwoody LLP as
auditor of the Corporation to hold office until the close of the next annual
general meeting of shareholders or until BDO Dunwoody LLP is removed from office
or resigns as provided by law and by the Corporation's by-laws and to authorize
the directors of the Corporation to fix the remuneration of BDO Dunwoody LLP as
auditors of the Corporation. BDO Dunwoody LLP has been the auditor of the
Corporation since July 24, 2001.
In order to be effective, an ordinary resolution requires the approval of a
majority of the votes cast by shareholders who vote in respect of the
resolution.
ATTENDANCE OF ACCOUNTANTS
-------------------------
The Corporation has been advised by BDO Dunwoody LLP that neither that firm nor
any of its associates has any relationship with the Corporation or its
subsidiaries other than the usual relationship that exists between independent
public accountants and clients. Representatives of BDO Dunwoody LLP will not be
present at the Meeting.
GENERAL
-------
All matters to be brought before the Meeting require, for the passing of same, a
simple majority of the votes cast in person or by proxy at the Meeting by the
holders of common shares. If a majority of the common shares represented at the
Meeting should be withheld from voting for the appointment of BDO Dunwoody LLP
as auditors of the Corporation, the Board of Directors will appoint another firm
of chartered accountants based upon the recommendation of the audit committee,
which appointment for any period subsequent to the next annual meeting of
shareholders will be subject to approval by the shareholders at that meeting.
The contents and the sending of this Management Information Circular have been
approved by the Board of Directors of the Corporation.
FINANCIAL STATEMENTS
--------------------
Shareholders as of the record date of April 18, 2002, will receive with this
Management Information Circular a copy of the Corporation's 2001 Form 10-KSB,
including audited financial statements for the fiscal year ended December 31,
2001. The financial statements of the Corporation contained in Form 10-KSB are
incorporated herein by reference.
21
OTHER BUSINESS
--------------
While there is no other business other than that mentioned in the Notice of
Meeting to be presented for action by the shareholders at the Meeting, it is
intended that the proxies hereby solicited will be exercised upon any other
matters and proposals that may properly come before the Meeting, or any
adjournment or adjournments thereof, in accordance with the discretion of the
persons authorized to act thereunder.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
-------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation's
executive officers, directors and persons who own more than ten percent of the
common shares to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Executive officers, directors and
beneficial owners of more than ten percent of the common shares are required by
SEC regulation to furnish the Corporation with copies of all Section 16(a) forms
they file. Based solely on a review of the copies of such forms received by the
Corporation and on written representations from certain reporting persons that
they have complied with the relevant filing requirements, the Corporation
believes that all Section 16(a) filing requirements applicable to its executive
officers and directors have been complied with.
SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
---------------------------------------------
Shareholder proposals submitted for inclusion in the 2003 proxy materials and
consideration at the 2003 Annual Meeting of Shareholders must be received by the
Corporation by January 1, 2003. Any such proposal should comply with the rules
promulgated by the Securities and Exchange Commission governing shareholder
proposals submitted for inclusion in proxy materials.
22
CERTIFICATE
-----------
The foregoing contains no untrue statement of a material fact and does not omit
to state a material fact that is required to be stated or that is necessary to
make a statement not misleading in the light of the circumstances in which it
was made.
DATED this 15th day of April, 2002.
ON BEHALF OF THE MANAGEMENT OF MINERA ANDES INC.
/s/ Allen V. Ambrose /s/ Bonnie L. Kuhn
------------------------------------ -------------------------------------
ALLEN V. AMBROSE BONNIE L. KUHN
Signing as Chief Executive Officer Chief Financial Officer and Secretary
23
Schedule A to the
Notice of and Management
Information Circular
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: July 24, 2001
Minera Andes Inc.
-----------------
(Exact name of registrant as specified in its charter)
Alberta, Canada 000-22731 None
---------------------------------- --------------------- -------------------------------
(State or other jurisdiction of (Commission File (IRS Employer Identification
incorporation) Number) Number)
3303 N. Sullivan Road, Spokane, Washington 99216
------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (509) 921-7322
None
-------------------------------------------------------------------
(Former name or former address, if change since last report)
Item 4. Change in Registrant's Certifying Accountant.
(a) (i) On July 24, 2001, PricewaterhouseCoopers LLP, (the "Former
Accountants") as independent accountants, notified the Registrant
that it had resigned as the Registrant's independent accountants,
following the closure of its Spokane office. The Registrant has
engaged BDO Dunwoody LLP ("BDO") as its new principal independent
accountants effective July 24, 2001.
(ii) The reports of the Former Accountants on the financial statements
for the fiscal years ended December 31, 2000 and 1999 contained
no adverse opinion or disclaimer of opinion, and were not
qualified or modified as to audit scope uncertainty or accounting
principles, except that the report included an explanatory
paragraph expressing substantial doubt related to the Company's
ability to continue as a going concern.
(iii) The decision to engage BDO as the principal independent
accountant for the Registrant was approved by the Audit Committee
of the Board of Directors of the Registrant.
(iv) In connection with its audits for the fiscal years ended December
31, 2000 and 1999 and through July 24, 2001, there have been no
disagreements with the Former Accountants on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements,
if not resolved to the satisfaction of the Former Accountants,
would have caused them to make reference thereto in their report
on the financial statements for such years.
(v) During the fiscal years ended December 31, 2000 and 1999 and
through the interim period ended July 24, 2001, there were no
"reportable events" as defined by Item 304 (a)(1)(v) of
Regulation S-K.
(vi) The Registrant has requested that the Former Accountants furnish
it with a letter addressed to the U.S. Securities and Exchange
Commission stating whether or not it agrees with the above
statements. A copy of such letter, dated July 25, 2001, is filed
as Exhibit 16.01 to this Form 8-K.
(b) Neither the Registrant nor anyone on its behalf has consulted BDO
during the Registrant's two most recent fiscal years, or any subsequent
interim period, prior to its engagement of BDO.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
16.01 Letter dated July 25, 2001, from the Registrant's former
principal independent accountant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Minera Andes Inc.
Date: July 26, 2001 By: /s/ Allen Ambrose
------------------------------------
Allen Ambrose
President
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
Exhibit 16.01 Letter dated July 25, 2001, from the Registrant's former
principal independent accountant.
Exhibit 16.01
July 25, 2001
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Commissioners:
We have read the statements made by Minera Andes Inc. (copy attached), which we
understand will be filed with the Commission, pursuant to Item 4 of Form 8-K, as
part of the Company's Form 8-K report dated July 24, 2001. We agree with the
statements concerning our Firm in such Form 8-K.
Very truly yours,
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
MINERA ANDES INC.
INSTRUMENT OF PROXY
-------------------
FOR THE ANNUAL GENERAL MEETING OF COMMON SHAREHOLDERS
June 7, 2002
The undersigned shareholder of Minera Andes Inc. (the "Corporation") hereby
appoints Mr. Allen V.Ambrose, President and Director of the Corporation, or
failing him Mr. Brian Gavin, Vice President, Exploration, of the Corporation, or
instead of either of the foregoing _________________________, as proxyholder of
the undersigned at the Annual General Meeting of Shareholders (the "Meeting"),
to be held on Friday, June 7 2002 and at any adjournment or adjournments
thereof, and at any ballot that may take place in consequence thereof to the
same extent and with the same powers as if the undersigned were personally
present at the Meeting with authority to vote at the said proxyholders'
direction, except as otherwise specified below.
Without limiting the general powers hereby conferred, the undersigned hereby
directs the said proxyholder to vote the common shares represented by this
instrument of proxy in the following manner:
1. FOR [_] AGAINST [_]
Ordinary resolution setting the number of directors to be elected at six
(6).
2. FOR all nominees except as WITHHOLD AUTHORITY
marked to the contrary below. [_] to vote for all nominees listed below. [_]
Instructions: To withhold authority to vote for any individual, strike a
line through the nominee's name below.
Allen V. Ambrose, Gary A. Craig, Bonnie L. Kuhn, John Johnson Crabb, A.D.
Drummond, Allan J. Marter
The election of the directors for the ensuing year.
3. FOR [_] WITHHOLD [_]
Appointment of BDO Dunwoody LLP as Auditor for the ensuing year at a
remuneration to be fixed by the directors.
4. At the discretion of the said proxyholder, upon any amendment or variation
of the above matters or any other matter that may be properly brought before
the Meeting or any adjournment thereof, in such manner as such proxy, in
such proxyholder's sole judgment, may determine.
This Instrument of Proxy is solicited on behalf of the management of the
Corporation. If this Instrument of Proxy is received, the shares it represents
will be voted as the shareholder indicates above. If this Instrument of Proxy is
received but no direction is given above, the shares will be voted in favour of
the above matters.
1
Each shareholder has the right to appoint a proxyholder other than the persons
designated above, who need not be a shareholder, to attend and act for him and
on his behalf at the Meeting. To exercise such right, the names of the nominees
of management should be crossed out and the name of the shareholder's appointee
should be legibly printed in the blank space provided. Such shareholder should
notify the nominee of his appointment, obtain his consent to act as proxy and
should instruct him on how the shareholder's shares are to be voted.
This Instrument of Proxy must be dated and executed by the shareholder or dated
and executed by the shareholder's attorney on behalf of the shareholder if such
attorney is authorized, in writing, to do so. If executed by the shareholder's
attorney, proof of written authorization must be attached to this Instrument of
Proxy.
THE UNDERSIGNED HEREBY revokes any proxies previously given.
DATED this ______ day of ______________________, 2002.
________________________________________
(signature of shareholder)
________________________________________
(name of shareholder - Please Print)
________________________________________
Number of Common Shares Held
NOTES:
1. This Instrument of Proxy will not be
valid and will not be acted upon or
voted unless it is completed as out
lined herein and delivered to the
Corporation c/o the offices of the
Computershare Trust Company of
Canada, 6th Floor, Western Gas
Tower, 530 - 8th Avenue S.W.,
Calgary, Alberta, T2P 3S8, at least
forty eight (48) hours, excluding
Saturdays and holidays, before the
time set for the Meeting or any
adjournment thereof.
2. If the shareholder is an individual,
this Instrument of Proxy must be
executed by the shareholder or his
attorney authorized in writing.
3. If the shareholder is a corporation,
this Instrument of Proxy must be
executed under corporate seal or by
a duly authorized officer or
attorney of the Corporation.
4. Persons signing as executors,
administrators, trustees, etc.
should so indicate and give their
full title as such.
2
SUPPLEMENTARY MAIL LIST
RETURN CARD
NOTE: If you wish to be included in the Supplementary Mailing List of
Minera Andes Inc. in order to receive its interim financial
statements for the ensuing year, please complete and return this
card.
________________________________________________________________________________
TO: Minera Andes Inc.
3303 North Sullivan Road
Spokane, Washington 99216
U.S.A.
The undersigned certifies that the undersigned is the owner of securities of
Minera Andes Inc. and requests that the undersigned be placed on the
Supplementary Mailing List of Minera Andes Inc. for its interim financial
statements for the ensuing year.
DATED: _______________________, 2002. _____________________________________
Name (please print)
_____________________________________
Address
_____________________________________
_____________________________________
Signature
____________________________________
Name and title of person signing if
different from name above.