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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
Filed by the Registrant [_]
Filed by a Party of 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.
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(Name of Registrant as Specified in its Charter)
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(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) Filing Party:
(3) Date Filed:
Notes:
Reg. (S) 240.14a-101
SEC 191 (3-99)
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[LOGO OF MINERA ANDES INCORPORATED]
NOTICE OF
- and -
MANAGEMENT INFORMATION CIRCULAR
FOR THE ANNUAL GENERAL MEETING OF
COMMON SHAREHOLDERS OF
MINERA ANDES INC.
DATED June 8, 2001
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 8, 2001
Minera Andes Inc. Meeting: 10:00 a.m. (Spokane Time)
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 June 8, 2001, 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, 2000, 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 PricewaterhouseCoopers 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 2/nd/ day of
April, 2001.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Allen 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.
TABLE OF CONTENTS
SOLICITATION OF PROXIES.................................................... -1-
APPOINTMENT AND REVOCATION OF PROXIES...................................... -1-
ADVICE TO BENEFICIAL SHAREHOLDERS.......................................... -2-
VOTING OF PROXIES.......................................................... -2-
VOTING SHARES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT........................... -3-
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS........................... -5-
Compensation of Directors............................................. -5-
Compensation of Officers.............................................. -5-
Stock Option Plan..................................................... -9-
Other Compensation.................................................... -14-
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS........................... -14-
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
AND IN MATTERS TO BE ACTED UPON....................................... -14-
PARTICULARS OF MATTERS TO BE ACTED UPON.................................... -15-
Report to Shareholders................................................ -15-
Number of Directors................................................... -15-
Election of Directors................................................. -15-
Appointment of Auditor................................................ -18-
ATTENDANCE OF ACCOUNTANTS.................................................. -18-
GENERAL.................................................................... -19-
FINANCIAL STATEMENTS....................................................... -19-
OTHER BUSINESS............................................................. -19-
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.................... -19-
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING.............................. -19-
CERTIFICATE................................................................ -20-
-i-
MINERA ANDES INC.
3303 North Sullivan Road
Spokane, Washington
USA 99216
MANAGEMENT INFORMATION CIRCULAR
FOR THE ANNUAL GENERAL MEETING OF COMMON SHAREHOLDERS
June 8, 2001
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 June 8, 2001, 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 May 1, 2001.
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 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 share-
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holder 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
Shareholders who do not hold their common shares in their own name (referred to
herein as "Beneficial Shareholders") are advised that only proxies from
shareholders of record can be recognized and voted upon at the Meeting.
Beneficial Shareholders who complete and return a proxy must indicate thereon
the person (usually a brokerage house) who holds their common shares as a
registered shareholder. Every intermediary (broker) has its own mailing
procedure, and provides its own return instructions, which should be carefully
followed. The Instrument of Proxy supplied to Beneficial Shareholders is
identical to that provided to registered shareholders. However, its purpose is
limited to instructing the registered shareholder how to vote on behalf of the
Beneficial Shareholder.
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
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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 2, 2001
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 23, 2001 (the "Record Date"). A holder of common shares named
on that list will be entitled to vote such common 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 2, 2001 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.
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Common Shares Percentage of
Name and Place of Residence Beneficially Owned /(1)/ Common Shares /(1)/
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Officers & Directors
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Allen V. Ambrose 457,200/(2)/ 1.50%
3303 North Sullivan Road
Spokane, Washington 99216
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Armand Hansen 311,000/(3)/ 1.03%
3303 North Sullivan Road
Spokane, Washington 99216
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John Johnson Crabb 210,000/(3)/ 0.69%
4950 Gonzales Road
Madeira Park, British Columbia
V0H 2H0
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Brian Gavin 460,400/(2)/ 1.52%
3303 North Sullivan Road
Spokane, Washington 99216
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A.D. (Darryl) Drummond 180,000/(4)/ 0.60%
20, 5760 Hampton Place
Vancouver, British Columbia
V6T 2G1
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Common Shares Percentage of
Name and Place of Residence Beneficially Owned /(1)/ Common Shares /(1)/
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Bonnie L. Kuhn 131,000/(5)/ 0.43%
1600, 407 - 2nd Street S.W.
Calgary, Alberta T2P 2Y3
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Allan J. Marter 180,000/(4)/ 0.60%
7721-D.S. Curtice Way
Littleton, Colorado 80120
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5% or Greater Shareholders
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Neal A. and Joan L. Degerstrom 7,450,000/(6)(7)/ 23.00%
3303 North Sullivan Road
Spokane, Washington 99216
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All directors and executive 1,929,600/(8)/ 6.42%
officers as a group (7 persons)
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Notes:
(1) Common shares which the person or group has the right to acquire within 60
days after April 2, 2001 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 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 options to acquire 40,000
were exercisable common shares 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.
(5) 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.
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(6) 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").
(7) Does not include 1,213,409 common shares reserved for issuance to
Degerstrom upon the satisfaction of certain performance criteria.
(8) The directors and officers collectively hold options entitling the holders
to acquire 150,000 common shares at an exercise price of Cdn$0.68, options
entitling the holders to acquire 980,000 common shares at an exercise price
of Cdn$0.55, and options entitling the holders to acquire 400,000 common
shares at an exercise price of $0.16.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
A. Compensation of Directors
The Corporation has six directors. During the fiscal period ended December 31,
2000, 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, 2000, 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, 2000, a total of 300,000 stock options
were granted to directors of the Corporation. These stock options were granted
effective September 5, 2000.
B. Compensation of Officers
1. Cash
During the fiscal period ended December 31, 2000, the Corporation employed three
(3) executive officers, Allen V. Ambrose, President, Brian Gavin, Vice
President, Exploration and Allan J. Marter, Chief Financial Officer all of whom
except for Allan J. Marter continue to be employed. Allan J. Marter resigned as
Chief Financial Officer on March 29, 2000. Bonnie L. Kuhn was appointed Chief
Financial Officer on May 15, 2000. 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, 2000, was $197,546. 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$100,000 or more (the
"Named Executive Officers"); in this case Allen V. Ambrose, President and Brian
Gavin, Vice President, Exploration.
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Statement of Executive Compensation
-----------------------------------
Long-Term
Annual Compensation Compensation
------------------------------------------------------------------------------------------------------------------------------------
Awards Payouts
--------------------------------------
Securities
Granted Restricted
Performance Other Annual Under Shares or All other
Name and Right Compen- Option Restricted LTIP/(2)/ Compen-
Principal ($) sation /SARS/(1)/ Share- Payouts sation
Position Year Salary ($) (Bonus) ($) Granted # Units ($) ($)
------------------------------------------------------------------------------------------------------------------------------------
Allen V. January 1, 1998 - 96,200 Nil 9,660/(3)(5)/ 220,000/(9)/ Nil Nil Nil
Ambrose December 31, 1998
President and
Director
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January 1, 1999 - 92,302 Nil 8,960/(6)(8)/ 290,000/(10)/ Nil Nil Nil
December 31, 1999
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January 1, 2000 - 87,404 Nil 9,164/(8)(11)/ 100,000/(13)/ Nil Nil Nil
December 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
January 1, 1998 - 122,600 Nil 11,112/(4)(5)/ 220,000/(9)/ Nil Nil Nil
Brian Gavin December 31, 1998
Vice -------------------------------------------------------------------------------------------------------------------
President, January 1, 1999 - 105,502 Nil 9,620/(7)(8)/ 290,000/(10)/ Nil Nil Nil
Exploration December 31, 1999
-------------------------------------------------------------------------------------------------------------------
January 1, 2000 - 87,404 Nil 9,164/(8)(12)/ 100,000/(13)/ Nil Nil Nil
December 31, 2000
===================================================================================================================================
Notes:
(1) "SARS" or "Stock appreciation right" means a right of cash or an issue or
transfer of securities granted by the Corporation, as compensation for
based wholly or in part on changes in the trading services rendered, to
receive a payment price of publicly traded securities of the Corporation.
(2) "LTIP " or "long term incentive plan" means any over a period longer than
one financial year, but plan which provides compensation intended to does
not include option or stock appreciation serve as incentive for performance
to occur right plans or plans for compensation through restricted shares or
restricted share units.
(3) From January 1998 to December 1998 the following benefits were provided to
Allen V. Ambrose and billed by Degerstrom to the Corporation:
401 K Base $3,360.00
401 K Match $1,920.00
Medical Insurance $4,380.00
(4) From January 1998 to December 1998 the following benefits were provided to
Brian Gavin and billed by Degerstrom to the Corporation:
401 K Base $4,284.00
401 K Match $2,448.00
Medical Insurance $4,380.00
(5) 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.
(6) 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
(7) 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
(8) 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.
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(9) Includes stock options granted on March 2, 1998 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). In addition, includes the following stock
options which were repriced during 1998:
(a) stock options entitling the holder to acquire 110,000 common shares of
the Corporation at an exercise price of Cdn $1.15 (these options
originally had an exercise price of Cdn $2.18 but were repriced on
February 20, 1998). These options were subsequently canceled in April,
1999; and
(b) stock options entitling the holder to acquire 80,000 common shares of
the Corporation at an exercise price of Cdn $1.15 (these options
originally had an exercise price of Cdn $2.00 but were repriced on
February 20, 1998). These options were subsequently canceled in April,
1999.
(10) 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:
(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).
(11) 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
(12) From January 1999 to December 1999 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
(13) 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.
2. Stock Options
The Named Executive Officers of the Corporation were granted 100,000 stock
options each during the fiscal period ended December 31, 2000. The following
table sets forth stock options granted during the fiscal year ended December 31,
2000, to the Named Executive Officers:
OPTIONS GRANTED DURING THE FISCAL YEAR ENDED DECEMBER 31, 2000
=====================================================================================================================
Number Potential Realizable
of % of Total Value at Assumed
Common Options Market Exercise Annual Rates of
Shares Granted to Price Price Per Stock Price
Reserved Employees as at Date Common Appreciation for
Name of Under in Fiscal of Grant Share Option Term /(6)/
Optionee Option Year Cdn $ /(5)/ Cdn $ Expiry Date 5% 10%
---------------------------------------------------------------------------------------------------------------------
Allen V. 100,000 11.5% $0.19 $0.16 August 28, 2005 $8,250 $14,600
Ambrose/(3)/
President
---------------------------------------------------------------------------------------------------------------------
Brian Gavin/(4)/ 100,000 11.5% $0.19 $0.16 August 28, 2005 $8,250 $14,600
Vice President,
Exploration
=====================================================================================================================
Notes:
(1) On March 30, 2001, the last date the common shares of the Corporation
traded before the Effective Date, the closing price of the common shares on
the Canadian Venture Exchange Inc. was Cdn$0.09
(2) All amounts in this table are in Canadian dollars.
(3) Executive Officer who is also a director.
(4) Executive Officer of the Corporation and Director of MASA.
(5) The Corporation's common shares did not trade on September 5, 2000. The
last trade was on September 1, 2000.
(6) In accordance with rules of the Securities and Exchange Commission, these
amounts are the hypothetical gains or "option spreads" that would exist for
the respective options based on assumed rates of annual compound stock
price appreciation of 5% and 10% from the date the options were granted
over the full option term.
The following table sets forth details of the fiscal year-end value of
unexercised options on an aggregated basis held by the Named Executive Officers
for the fiscal year ended December 31, 2000:
-7-
AGGREGATED OPTION VALUES FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
====================================================================================================
Unexercised Options Value of Unexercised
Securities Aggregate at Most Recent Year In-the-Money Options at Most
Acquired on Value End (#) Recent Year End/(1)(2)/
Exercise Realized Exercisable Exercisable
Name (#) ($) /Unexercisable /Unexercisable
----------------------------------------------------------------------------------------------------
Allen V. Ambrose, 0 0 390,000/Nil 0/0
President
----------------------------------------------------------------------------------------------------
Brian Gavin, 0 0 390,000/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
29, 2000, less the exercise price of in-the-money stock options.
(2) On December 29, 2000 the last day the common shares traded in 2000, the
closing price of the common shares on the Canadian Venture Exchange Inc.
was Cdn $0.11. The exercise price of these options was greater than the
closing price on December 29, 2000.
(3) The amounts are in Canadian dollars.
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, 1998, December 31, 1999 or December 31, 2000.
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, 2000. 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.
-8-
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, 2000 administrative fees were paid to Degerstrom of $42,770 on
total costs incurred by the Corporation of $460,043. Equipment rentals of
$3,206 were included in the total costs for 2000.
(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 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
$3,745 from April to December, 2000.
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 2, 2001, out of the total 6,000,000 shares provided for issuance
under the Plan 3,560,000 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,
-9-
(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 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 2,440,000 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, 3,560,000 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.
-10-
(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.
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.
-11-
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.
(vi) 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.
(vi) 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) Nonstatutory Stock Options
A. General. Under United States federal income tax law now in effect, no
income is realized by the grantee of a Nonstatutory Stock Option until the
option is exercised. When a Nonstatutory 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 Nonstatutory 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 Nonstatutory
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
-12-
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 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, 2000:
=========================================================================================================
Group Number of Exercise Price
(number of persons in Common Shares Per Common
group) Under Option Date of Grant Expiry Date Share $Cdn
---------------------------------------------------------------------------------------------------------
2 Named Executive 100,000 January 10, 1996/(3)/ January 10, 2001 0.68
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)/ 40,000 January 10, 1996/(3)/ January 10, 2001 0.68
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
---------------------------------------------------------------------------------------------------------
-13-
=========================================================================================================
Group Number of Exercise Price
(number of persons in Common Shares Per Common
group) Under Option Date of Grant Expiry Date Share $Cdn
---------------------------------------------------------------------------------------------------------
14 Others /(2)/ 45,000 January 10, 1996/(3)/ January 10, 2001 0.68
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
250,000 January 10, 2000 January 10, 2002 0.25
220,000 September 5, 2000 August 28, 2005 0.16
---------------------------------------------------------------------------------------------------------
Total 2,445,000
=========================================================================================================
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.
D. Other Compensation
During the Corporation's fiscal period ended December 31, 2000, the Corporation
accrued and/or paid fees to a law firm for the provision of ongoing legal
services to the Corporation amounting to approximately $44,675. Bonnie L. Kuhn,
the Secretary, Chief Financial Officer and Director of the Corporation, is a
partner 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 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 November 30, 2000, Degerstrom, who is a principal shareholder of the
Corporation, acquired 1,175,000 special warrants of the Corporation at a
price of Cdn$0.20 per special warrant for gross proceeds of Cdn$235,000
(US$162,242). Each special warrant entitles the holder to acquire one unit
comprised of one common share of the Corporation and one non-transferrable
common share purchase warrant at no additional cost during the period
commencing on the closing date, and ending at 4:30 p.m. (Calgary time) on
the earlier of: (i) five (5) business days after the day upon receipt of a
notice from the Corporation requesting the exercise of the special
warrants; and (ii) November 30,
-14-
2002. Each warrant is exercisable into one common share at the price of
Cdn$0.20 if exercised on or before 4:30 p.m. (Calgary time) on the first
year anniversary of the issuance date or at a price of Cdn$0.25 if
exercised on or before 4:30 (Calgary time) on the second year anniversary
of the issuance date. The funds received from Degerstrom pursuant to this
private placement were used to pay Degerstrom for drilling and exploration
costs incurred on the Huevos Verdes property.
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, 2000.
(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).
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
-15-
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 the Effective Date 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 /(6)/ Shares /(6)/
------------------------------------------------------------------------------------------------------------------------------------
Allen V. Ambrose, 44 President Director and President of the Corporation since 457,200/(2)/ 1.50%
Spokane, Washington and Director November 6, 1995. Mr. Ambrose is an
Exploration Manager/Geologist with N.A.
Degerstrom, Inc. and Director of Cadre Resources
Ltd. - which is a mining company.
------------------------------------------------------------------------------------------------------------------------------------
Armand Hansen, 65 /(1)/ Director A director of the Corporation since November 6, 311,000/(3)/ 1.03%
Spokane, Washington 1995. Mr. Hansen has retired as Vice President of
Operations for Mining Contracting with N.A.
Degerstrom, Inc., a position he held for the past 19
years. He was a Director and Officer of Aresco
Inc., an equipment manufacturing company, from
1989 to January, 2001.
------------------------------------------------------------------------------------------------------------------------------------
Bonnie L. Kuhn, 35 Chief A director and officer of the Corporation since June 131,000/(5)/ 0.43%
Calgary, Alberta Financial 19, 1997 and Chief Financial Officer since May 15,
Officer, 2000. Associate with Ogilvie and Company,
Secretary Barristers and Solicitors, from 1994 to December
and Director 31, 1998. From January 1, 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, 75 /(1)/ Director A director of the Corporation since November 6, 210,000/(3)/ 0.69%
Madeira Park, B.C. 1995. Mr. 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.
------------------------------------------------------------------------------------------------------------------------------------
-16-
===================================================================================================================================
Common
Shares Percentage
Name, Age and Municipality Position Beneficially of Common
of Residence Held Principal Occupation During Past Five Years Owned /(6)/ Shares /(6)/
------------------------------------------------------------------------------------------------------------------------------------
A.D. (Darryl) Drummond, 64 Director A director of the Corporation since June 26, 1996. 180,000/(4)/ 0.60%
Ph.D., P. Eng. Mr. Drummond is a Professional Engineer;
Vancouver, British Columbia President of D.D.H. 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, 53/(1)/ Director A director and officer of the Corporation since June 180,000/(4)/ 0.60%
Littleton, Colorado 19, 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 from April 30, 1996
through March 29, 2000.
==================================================================================================================================
Notes:
(1) Member of Audit Committee.
(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.
-17-
(4) 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 options to acquire 40,000
were exercisable common shares 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.
(5) 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.
(6) Common shares which the person or group has the right to acquire within 60
days after April 2, 2001 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 Armand Hansen,
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 one time during 2000. The audit committee met two times
during 2000. (No director attended fewer than 75% of the aggregate of all
meetings of the Board of Directors and the audit committee of which the director
was a member during 2000.) 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
Unless otherwise directed, it is management's intention to vote the proxies in
favour of an ordinary resolution to appoint the firm of PricewaterhouseCoopers
LLP as auditor of the Corporation to hold office until the close of the next
annual general meeting of shareholders or until PricewaterhouseCoopers 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 PricewaterhouseCoopers LLP as auditors of the Corporation.
PricewaterhouseCoopers LLP has been the auditor of the Corporation since June
19, 1997.
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 PricewaterhouseCoopers 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 PricewaterhouseCoopers LLP
will not be present at the Meeting.
-18-
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
PricewaterhouseCoopers 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 23, 2001, will receive with this
Management Information Circular a copy of the Corporation's 2000 Form 10-KSB,
including audited financial statements for the fiscal year ended December 31,
2000. The financial statements of the Corporation contained in Form 10-KSB are
incorporated herein by reference.
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 2002 ANNUAL MEETING
Shareholder proposals submitted for inclusion in the 2002 proxy materials and
consideration at the 2002 Annual Meeting of Shareholders must be received by the
Corporation by January 1, 2002. Any such proposal should comply with the rules
promulgated by the Securities and Exchange Commission governing shareholder
proposals submitted for inclusion in proxy materials.
-19-
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 2/nd/ day of April, 2001.
ON BEHALF OF THE MANAGEMENT OF MINERA ANDES INC.
/s/ Allen V. Ambrose
---------------------------
ALLEN V. AMBROSE
President
MINERA ANDES INC.
INSTRUMENT OF PROXY
FOR THE ANNUAL GENERAL MEETING OF COMMON SHAREHOLDERS
June 8, 2001
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 June 8, 2001, 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, Armand Hansen, 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 PricewaterhouseCoopers 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.
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 ______________________, 2001.
--------------------------------------------
(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 outlined
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:
-------------------------------- -------------------------------------
Name (please print)
-------------------------------------
Address
-------------------------------------
-------------------------------------
Signature
-------------------------------------
Name and title of person signing if
different from name above.