VISTA GOLD CORP.
NOTICE OF MEETING
AND
MANAGEMENT INFORMATION
AND PROXY CIRCULAR
for the
Annual and Special General Meeting
to be held on
Friday, April 26, 2002
[LETTERHEAD]
March 19, 2002
Dear Shareholder:
Throughout 2001, our focus has been on assuring that the Corporation will have
sufficient funds to continue operating. Our 2001 reports carried a consistent
theme -- the need for fresh capital if we were to remain viable. On January 22,
2002, we announced a U.S.$3.8 million private placement which, pending
shareholder approval, provides the capital that will allow us to continue
operating and to pursue a value-creating business plan.
It is therefore my pleasure to invite you to attend the Corporation's 2002
annual and special general meeting of shareholders. The meeting will be held on
Friday, April 26, 2002 at 10:00 a.m., Vancouver time, at Suite 1200, 200 Burrard
Street, Vancouver, British Columbia, Canada. If you are unable to attend the
meeting in person, please complete, date, sign and return the enclosed form of
proxy to ensure that your vote is counted.
The Notice of Meeting, Management Information and Proxy Circular, and forms of
proxy for the annual and special general meeting, are all enclosed. These
documents contain important information and I encourage you to read them
carefully. Specifically, I would like to draw your attention to the section in
the Management Information and Proxy Circular entitled "Particulars of Matters
to be Acted Upon". In this section, in addition to the election of directors and
the appointment of auditors, you will be asked to consider and approve three
important resolutions related to the private placement.
SHAREHOLDER APPROVAL IS REQUIRED BEFORE THE PRIVATE PLACEMENT IS FINALIZED, AND
MANAGEMENT AND THE BOARD OF DIRECTORS STRONGLY URGE YOU TO VOTE FOR THE
RESOLUTIONS.
Additional information regarding the private placement and management's decision
to proceed with the private placement is set out below.
Recent years have been difficult for gold miners and investors in gold mining
companies. Many gold companies have gone out of business. Those of us that have
survived have learned to be resourceful. Until now, Vista's management has
maintained the Corporation and its gold resources without issuing new equity or
debt, by selling off non-essential assets and minimizing overhead. However,
these are temporary measures, at best. As disclosed in the Corporation's 2001
Forms 10-Q, the company expected to run out of cash around the end of
March 2002. Without the addition of new capital, the Corporation cannot continue
operating.
In the past several years, the Corporation has aggressively pursued a variety of
potential funding sources. A significant deterrent for potential investors had
been the contingent liability associated with the Mineral Ridge Resources, Inc.
lawsuit as disclosed in Part II, Item 1 "Legal Proceedings" of the Corporation's
2001 Forms 10-Q. On August 25, 2000, United States Fidelity & Guarantee Company
("USF&G") filed an action in the United States District Court against the
Corporation, our subsidiary Vista Gold Holdings, Inc., Stockscape.com
Technologies, Inc. (formerly, Cornucopia Resources Inc.) and its
subsidiaries, Cornucopia Resources, Inc., Red Mountain Resources, Inc. and
Touchstone Resources Inc. This action involved a General Contract of Indemnity
in connection with the posting of a reclamation bond for mining activities by
Mineral Ridge Resources, Inc. at Silver Peak, Nevada. In the action, USF&G
sought to compel all of the defendants to post additional collateral for the
bond and reimburse USF&G for costs, in the total amount of U.S.$902,819.
The Corporation and Vista Gold Holdings, Inc. were not parties to the General
Contract of Indemnity and have denied any liability. However, because of the
expense in defending against this suit and the negative impact on the
Corporation's ability to attract financing, management determined that it was in
the best interest of the Corporation to settle this matter. As a result,
management negotiated a settlement with USF&G in the amount of U.S.$814,087, and
an agreement with Stockscape, whereby Stockscape would provide all of the cash
needed to settle the suit with USF&G plus additional working capital for the
Corporation in return for equity in the Corporation. This resulted in the first
part of the private placement, which closed on February 1, 2002.
The first part of the private placement raised U.S.$1.026 million (U.S.$814,087)
of which is being held in trust to settle the USF&G suit) through the issuance
of 21.6 million units priced at U.S.$0.0513 per unit -- each unit consisting of
one common share and one warrant to purchase one common share at an exercise
price of U.S.$0.075 per share for a period of five years from the date of issue.
Of these units, 1.6 million were issued to Global Resource Investments Ltd.
("Global") as consideration for its services as agent. If the warrants that were
issued as part of this stage of the private placement are exercised, an
additional U.S.$1.5 million will flow into the Corporation. SHAREHOLDER APPROVAL
IS REQUIRED BEFORE THESE WARRANTS MAY BE EXERCISED.
As a direct result of the negotiations with Stockscape, Global agreed to broker
the private placement of convertible debentures of the Corporation with a total
principal amount of U.S.$2.774 million -- the second step of the private
placement -- bringing the total private placement to U.S.$3.8 million. This
level of investment, together with the potential for additional investment
through the exercise of warrants, ensures the Corporation's viability and will
provide funding that will allow Vista to focus on increasing its gold resource
and reserve base.
This second part of the private placement was fully subscribed and closed on
March 19, 2002. The gross proceeds of this stage were placed in escrow and will
be available to the Corporation only if shareholders approve the private
placement and the USF&G lawsuit is settled. The debentures are convertible into
units at a price of U.S.$0.0513 per unit -- each unit consisting of one common
share and one warrant with the same terms as those issued in connection with the
first part of the private placement. If theses warrants are exercised, the
Corporation will receive an additional U.S.$4.1 million. SHAREHOLDER APPROVAL IS
REQUIRED BEFORE THESE DEBENTURES MAY BE CONVERTED.
A 1 for 20 share consolidation is contemplated in conjunction with the private
placement. After this consolidation is completed, the conversion price for the
debentures will be U.S.$1.026 per unit (i.e., U.S.$0.0513 times 20), and the
exercise price for the warrants issued as part of the first and second parts of
the private placement will be U.S.$1.50 (i.e., U.S.$0.075 times 20). The private
placement, combined with the share consolidation, will support the Corporation's
continued eligibility for listing on the American Stock Exchange, which provides
an important market for our shareholders. It will also introduce the potential
to attract large institutional investors and investment coverage by industry
analysts. SHAREHOLDER APPROVAL IS REQUIRED FOR THE SHARE CONSOLIDATION.
The total sum being raised as a result of the Private Placements is
U.S.$3.8 million initially, with a potential for an additional U.S.$5.6 million
if all of the associated warrants are exercised. This new funding will allow the
Corporation to eliminate a contingent liability; will provide the capital for
the Corporation to remain viable; and will allow the Corporation to pursue a
value-creating business plan. This plan involves selective acquisition of gold
exploration and development properties, and the improvement of these properties
through the application of appropriate technology.
At the time this financing was negotiated, it was priced at a small discount to
the then prevailing market prices for the Corporation's stock. Since that time,
the value of the Corporation's business plan and the
improved viability of the Corporation have been recognized in the market place
and at the date of this letter, reflected in increased prices for the
Corporation's stock.
Management and the Board of Directors believe that this private placement is the
best, and possibly the only, source of new capital available to the Corporation
in the near term. This new capital will help the Corporation improve its reserve
and resource base from which future cash flows, earnings and long-term growth
can be generated.
WE STRONGLY URGE YOU TO VOTE FOR THE PRIVATE PLACEMENT RESOLUTIONS.
Yours truly,
(Signed) RONALD J. MCGREGOR
President and
Chief Executive Officer
VISTA GOLD CORP.
NOTICE OF MEETING
NOTICE IS HEREBY GIVEN THAT an annual and special general meeting (the
"Meeting") of the shareholders of Vista Gold Corp. (the "Corporation") will be
held at Suite 1200, 200 Burrard Street, Vancouver, British Columbia on Friday,
April 26, 2002, at 10:00 a.m., Vancouver time, for the following purposes:
1. to receive the annual report to shareholders and the consolidated
financial statements of the Corporation, together with the auditor's
report thereon, for the fiscal year ended December 31, 2001;
2. to elect directors to hold office until the next annual general meeting;
3. to appoint PricewaterhouseCoopers LLP, Chartered Accountants, as auditor
to hold office until the next annual general meeting at a remuneration to
be fixed by the directors;
4. to consider and approve an ordinary resolution authorizing the directors
of the Corporation to issue common share purchase warrants which, subject
to certain conditions including the approval of shareholders at the
Meeting, are exercisable to acquire 21,600,000 common shares of the
Corporation, the full text of which resolution is set out as Resolution
No. 1 in Schedule "A" to the attached Management Information and Proxy
Circular and is incorporated herein by reference;
5. to consider and approve an ordinary resolution authorizing the directors
of the Corporation to issue convertible debentures in the principal
amount of U.S.$2,774,000, and special warrants which, subject to certain
conditions including the approval of shareholders at the Meeting, are
convertible into or exercisable to acquire a total of 58,399,999 common
shares of the Corporation and common share purchase warrants to acquire a
total of 58,399,999 common shares of the Corporation, the full text of
which resolution is set out as Resolution No. 2 in Schedule "A" to the
attached Management Information and Proxy Circular and is incorporated
herein by reference;
6. to consider and approve a special resolution authorizing the
consolidation of the issued and outstanding common shares of the
Corporation on the basis of 20 existing common shares into one common
share, and related amendments to the Corporation's Articles of
Continuance, the complete text of which resolution is set out as
Resolution No. 3 in Schedule "A" to the attached Management Information
and Proxy Circular, and the full text of such proposed Articles of
Amendment is set out in Schedule "B" to the attached Management
Information and Proxy Circular, and both of which are incorporated herein
by reference; and
7. to transact such other business as may properly come before the Meeting
or any adjournment or adjournments thereof.
Accompanying this Notice of Meeting are (i) a Management Information and Proxy
Circular, (ii) a form of proxy and notes thereto, and (iii) a reply card for use
by shareholders who wish to receive the Corporation's interim financial
statements.
If you are a REGISTERED SHAREHOLDER of the Corporation and are unable to attend
the Meeting in person, please date and execute the accompanying form of proxy
for the Meeting and deposit it with Computershare Trust Company of Canada at
Montreal Trust Centre, 510 Burrard Street, Vancouver, British Columbia,
V6C 3B9, Attention: Proxy Department, before 10:00 a.m., Vancouver time, on
Wednesday, April 24, 2002, or no later than 48 hours (excluding Saturdays,
Sundays and holidays) before any adjournment of the Meeting.
If you are a NON-REGISTERED SHAREHOLDER of the Corporation and receive these
materials through your broker or another intermediary, please complete and
return the materials in accordance with the instructions provided to you by your
broker or such other intermediary.
This Notice of Meeting, the Management Information and Proxy Circular, the form
of proxy and notes thereto for the Meeting, and the reply card are first being
sent to shareholders of the Corporation on or about March 25, 2001.
DATED at Littleton, Colorado, this 19th day of March, 2002.
BY ORDER OF THE BOARD OF DIRECTORS
(Signed) RONALD J. MCGREGOR
President and
Chief Executive Officer
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS
NOTICE OF MEETING
MANAGEMENT INFORMATION AND PROXY CIRCULAR................... 1
Particulars of Matters to be Acted Upon................... 1
Election of Directors................................... 1
Appointment of Auditors................................. 3
Approval of Private Placements and Share
Consolidation.......................................... 3
Information About Proxies................................. 7
Solicitation of Proxies................................. 7
Appointment of Proxyholder.............................. 7
Revocation of Proxy..................................... 8
Voting of Proxies....................................... 8
Exercise of Discretion by Proxyholders.................. 8
Securities Entitled to Vote............................... 8
Principal Shareholders.................................... 9
Quorum and Percentage of Votes Necessary to Pass
Resolutions............................................. 9
Corporate Governance...................................... 9
Committees of the Board of Director and Meetings........ 10
Audit Committee Report.................................. 10
Executive Compensation.................................... 11
Summary Compensation Table.............................. 11
Long-Term Incentive Plan................................ 12
Stock Options........................................... 12
Pension and Retirement Savings Plans.................... 14
Termination of Employment, Change in Responsibilities
and Employment Contracts............................... 14
Report of the Compensation Committee.................... 15
Security Ownership of Directors and Executive
Officers............................................... 17
Performance Graph....................................... 18
Compensation of Directors and Officers.................. 18
Indebtedness of Directors and Senior Officers............. 18
Director and Officer Liability Insurance.................. 18
Interest of Management and Others in Material
Transactions............................................ 19
Management Contracts...................................... 19
Interest of Certain Persons in Matters to be Acted Upon... 19
Shareholder Proposals..................................... 19
Other Matters............................................. 20
Availability of Documents................................. 20
Documents Incorporated by Reference....................... 20
Board of Director Approval................................ 20
Schedule "A" -- Resolutions................................. A-1
Schedule "B" -- Articles of Amendment....................... B-1
Schedule "C" -- Alignment with TSE Corporate Governance
Guidelines................................................ C-1
i
MANAGEMENT INFORMATION AND PROXY CIRCULAR
THIS MANAGEMENT INFORMATION AND PROXY CIRCULAR ("INFORMATION CIRCULAR") IS
FURNISHED IN CONNECTION WITH THE SOLICITATION BY THE MANAGEMENT OF VISTA GOLD
CORP. (THE "CORPORATION") OF PROXIES TO BE VOTED AT THE ANNUAL AND SPECIAL
GENERAL MEETING (THE "MEETING") OF THE SHAREHOLDERS OF THE CORPORATION
("SHAREHOLDERS") TO BE HELD AT SUITE 1200, 200 BURRARD STREET, VANCOUVER,
BRITISH COLUMBIA ON FRIDAY, APRIL 26, 2002, AT 10:00 A.M., VANCOUVER TIME, FOR
THE PURPOSES SET FORTH IN THE ACCOMPANYING NOTICE OF MEETING.
It is anticipated that this Information Circular and the accompanying form of
proxy will be first mailed to shareholders on or about March 25, 2002. Unless
otherwise stated, the information contained in this Information Circular is
given as at March 19, 2002.
The executive office of the Corporation is located at 7961 Shaffer Parkway,
Suite 5, Littleton, Colorado 80127 and its telephone number is (720) 981-1185.
The registered and records office of the Corporation is located at 200 - 204
Lambert Street, Whitehorse, Yukon Territory, Canada, Y1A 3T2.
Advance notice of the Meeting was published in The Vancouver Sun and the
Whitehorse Star newspapers on March 12, 2002 and in The Toronto Star on
March 14, 2002.
INFORMATION REGARDING THE PROXIES SOLICITED BY MANAGEMENT IN CONNECTION WITH THE
MEETING IS SET OUT BELOW UNDER "INFORMATION ABOUT PROXIES".
PARTICULARS OF MATTERS TO BE ACTED UPON
ELECTION OF DIRECTORS
The directors of the Corporation are elected at each annual general meeting and
hold office until the close of the next annual general meeting or until their
successors are duly elected or appointed. Management proposes to nominate each
of the following five persons for election as a director of the Corporation.
Proxies cannot be voted for a greater number of persons than the number of
nominees named. IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, THE ENCLOSED
FORM OF PROXY WILL BE VOTED FOR THE NOMINEES LISTED BELOW. All of the proposed
nominees are presently or were in 2001 directors of the Corporation, except
Mr. Sinclair who was appointed as a director of the Corporation on
February 21, 2002.
Information concerning the five nominees, as furnished by them individually, is
set forth below.
NAME, RESIDENCE, NUMBER OF
POSITION AND AGE PRINCIPAL OCCUPATION, BUSINESS OR EMPLOYMENT(1) DIRECTOR SINCE SHARES HELD
---------------- ----------------------------------------------- -------------- -----------
JOHN CLARK(2)(3)(4)......... Chartered Accountant; President of Investment May 18, 2001 Nil
Toronto, Ontario and Technical Management Corp., a firm engaged
DIRECTOR in corporate finance and merchant banking, from
Age--46 February 1999 to present; Independent
consultant providing investment and management
advisory services from February 1998 to
January 1999; Executive Chairman of Laurasia
Resources Limited, an oil and gas company, from
1988 to February 1998.
RONALD J. MCGREGOR.......... President and Chief Executive Officer of the May 19, 1999 20,000
Littleton, Colorado Corporation from September 2000 to present;
DIRECTOR Vice President, Development and Operations of
Age--54 the Corporation from July 1996 to
September 2000.
1
NAME, RESIDENCE, NUMBER OF
POSITION AND AGE PRINCIPAL OCCUPATION, BUSINESS OR EMPLOYMENT(1) DIRECTOR SINCE SHARES HELD
---------------- ----------------------------------------------- -------------- -----------
C. THOMAS Businessman; President and Chief Executive March 8, 1996 Nil
OGRYZLO(2)(3)(4).......... Officer of Canatec Development Corporation, a
Toronto, Ontario resource management company, from January 2000
DIRECTOR to present; President and Chief Executive
Age--62 Officer of Black Hawk Mining Inc. and its
subsidiary Triton Mining Corporation, both gold
mining companies, from July 1997 to January
2000; prior thereto Chairman of Kilborn
SNC-Lavalin Inc., an engineering group.
MICHAEL B. RICHINGS......... Mining engineer; formerly, President and Chief May 1, 1995 79,967
Littleton, Colorado Executive Officer of the Corporation from
DIRECTOR June 1995 to September 2000.
Age--57
MURRAY SINCLAIR(2)(3)(4).... Businessman; Director of Quest Management February 21, Nil
Vancouver, British Columbia Corp., a firm that provides management services 2001
Director to the resource industry, from December 1996 to
Age--40 present; President and Director of Quest
Ventures Ltd., a firm that provides merchant
banking services to the resource industry, from
September 1997 to present.
------------------------
(1) Includes occupations for the five preceding years.
(2) Member of Compensation Committee.
(3) Member of Audit Committee.
(4) Member of Corporate Governance Committee.
The information as to the municipality of residence, principal occupation and
number of Common Shares owned by the nominees listed in the above table is not
within the knowledge of the management of the Corporation, and has been
furnished by the individual appointees as of March 19, 2002.
None of the above directors has entered into any arrangement or understanding
with any other person pursuant to which he was, or is to be, elected as a
director of the Corporation or a nominee of any other person, except that
Mr. Sinclair was appointed to the Board of Directors as a nominee of
Stockscape.com Technologies Inc. (defined below as "STOCKSCAPE") in connection
with the private placement transaction that was completed on February 1, 2002.
See "Particulars of Matters to be Acted Upon--Approval of Private Placements and
Share Consolidation--Private Placement of Units". Stockscape currently holds
approximately 17.8% of the outstanding common shares in the capital of the
Corporation ("COMMON SHARES"). See "Principal Shareholders".
Additional information regarding the various committees of the Board of
Directors, and the attendance of each director at meetings of the Board of
Directors and its committees held during 2001 is set out below under "Corporate
Governance--Committees of the Board of Directors".
2
APPOINTMENT OF AUDITORS
Unless otherwise instructed, the proxies given pursuant to this solicitation
will be voted for the re-appointment of PricewaterhouseCoopers LLP, Chartered
Accountants, of Vancouver, British Columbia, as the auditor of the Corporation
to hold office until the close of the next annual general meeting of the
Corporation or until a successor is appointed. It is proposed that the
remuneration to be paid to the auditor be fixed by the Board of Directors.
PricewaterhouseCoopers LLP (then Coopers & Lybrand) was first appointed the
auditor of the Corporation on June 28, 1985.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
Meeting and to be available to respond to appropriate questions from persons
present at the Meeting. If representatives of PricewaterhouseCoopers LLP are
present at the Meeting, the Chairman of the Meeting will provide such
representatives with the opportunity to make a statement if they so desire.
FEES PAID TO AUDITORS AND THEIR INDEPENDENCE FROM THE CORPORATION
The aggregate fees billed by PricewaterhouseCoopers LLP for their audit of the
Corporation's 2001 financial statements and for their reading and commenting on
the Corporation's financial statements included in the Corporation's quarterly
reports on Form 10-Q for 2001 were approximately U.S.$25,000. During 2001,
PricewaterhouseCoopers LLP did not bill the Corporation for any fees related to
financial information systems design and implementation services rendered in
fiscal 2001. During 2001, the aggregate fees billed by
PricewaterhouseCoopers LLP for all other services rendered in fiscal 2001 were
approximately U.S.$16,000.
In reviewing the independence of PricewaterhouseCoopers LLP, the Audit Committee
of the Board of Directors considered whether the provision of the services
described above, other than the services related to the audit of the
Corporation's annual financial statements and reading and commenting on
financial statements included in the Corporation's quarterly reports, is
compatible with maintaining the independence of PricewaterhouseCoopers LLP.
APPROVAL OF PRIVATE PLACEMENTS AND SHARE CONSOLIDATION
At the Meeting, shareholders will be asked to consider and approve three
separate resolutions which relate to a private placement transaction that was
completed by the Corporation in two steps on February 1, 2002 and March 19,
2002, respectively. The first resolution relates to certain common share
purchase warrants that were issued on February 1, 2002 in connection with the
first step of the private placement (defined below as the "UNIT OFFERING"), the
second resolution relates to certain convertible debentures and special warrants
that were issued on March 19, 2002 in connection with the second step of the
private placement (defined below as the "DEBENTURE OFFERING"), and the third
resolution relates to a consolidation of the outstanding Common Shares of the
Corporation (defined below as the "SHARE CONSOLIDATION") which is being
completed in connection with the private placements. These matters are discussed
in further detail below and the resolutions are set out in Schedule "A" to this
Information Circular.
MANAGEMENT AND THE BOARD OF DIRECTORS STRONGLY RECOMMEND THAT SHAREHOLDERS
VOTE IN FAVOUR OF THESE RESOLUTIONS. SEE "RECOMMENDATIONS OF MANAGEMENT AND
BOARD OF DIRECTORS" BELOW.
PRIVATE PLACEMENT OF UNITS
On February 1, 2002, the Corporation completed a private placement (the "UNIT
OFFERING") of 20,000,000 units (the "OFFERED UNITS") to Stockscape.com
Technologies Inc. ("STOCKSCAPE"), and 1,600,000 units (the "AGENT'S UNITS") to
Global Resource Investments Ltd. ("GLOBAL"), as consideration for its services
as agent in connection with the Unit Offering. Each Offered Unit and each
Agent's Unit consisted of one Common Share and one common share purchase warrant
(a "WARRANT"). Subject to
3
shareholder approval, each Warrant entitles the holder to purchase one Common
Share at a price of U.S.$0.075 per share on or before 4:30 p.m., Vancouver time,
on February 1, 2007. As a condition of the closing of the Unit Offering, Murray
Sinclair, a director of Stockscape, was appointed to the Board of Directors of
the Corporation. See "Particulars of Matters to be Acted Upon--Election of
Directors".
The closing of the Unit Offering provided the Corporation with net proceeds of
U.S.$1,026,000 and the potential for an additional U.S.$1,500,000, if the
Warrants issued as part of the Unit Offering are exercised. Of these proceeds,
U.S.$814,087 is being held in trust to settle a lawsuit initiated by United
States Fidelity & Guarantee Company (described in the Corporation's Form 10-K
for the year-ended 2000 and Form 10-Qs for 2001) and the balance will be used by
the Corporation as working capital. The potential liability associated with this
lawsuit had been a significant deterrent for potential investors and management
believes that its settlement will enhance the ability of the Corporation to
raise additional capital in the future. Management estimates that the additional
working capital provided by the Unit Offering will provide the Corporation with
sufficient cash resources to continue operations until the end of April 2002. IF
SHAREHOLDERS DO NOT APPROVE THE WARRANTS ISSUED AS PART OF THE UNIT OFFERING,
THE CORPORATION WILL LOSE THE POTENTIAL TO RECEIVE THE U.S.$1,500,000 THAT WILL
BE RECEIVED BY THE CORPORATION IF ALL WARRANTS ARE EXERCISED.
The Toronto Stock Exchange (the "TSE") has approved the Unit Offering, subject
to shareholders approving the issuance of the Warrants at the Meeting. The
issuance of the Common Shares that were issued as part of the Unit Offering is
not subject to shareholder approval.
Accordingly, at the Meeting, the shareholders will be asked to consider and
approve an ordinary resolution (the "UNIT OFFERING RESOLUTION") authorizing the
directors of the Corporation to issue the Warrants to acquire 21,600,000 Common
Shares that were issued in connection with the Unit Offering. The full text of
the Unit Offering Resolution is set out as Resolution No. 1 of Schedule "A" to
this Information Circular.
PRIVATE PLACEMENT OF CONVERTIBLE DEBENTURES
On March 19, 2002, the Corporation completed a private placement (the "DEBENTURE
OFFERING") of convertible debentures ("DEBENTURES") in the principal amount of
U.S.$2,774,000 to various investors, and 4,325,925 special warrants (the
"AGENT'S SPECIAL WARRANTS") to Global, as consideration for its services as
agent in connection with the Debenture Offering. Subject to shareholder
approval, the Debentures are convertible into units (the "DEBENTURE UNITS") at a
price of U.S.$0.0513 per Debenture Unit, with each Debenture Unit consisting of
one Common Share and one Warrant. Subject to shareholder approval, each warrant
entitles the holder to purchase one Common Share at a price of U.S.$0.075 per
share on or before 4:30 p.m., Vancouver time, on March 18, 2007. The Debentures
bear interest at a rate of 1% per annum and will mature on September 20, 2003
(the "MATURITY DATE"), unless they are converted or otherwise become due and
payable prior to that date. Subject to shareholder approval (prior to March 18,
2007), the Agent's Special Warrants are convertible into 4,325,925 Agent's
Units, with each Agent's Unit consisting of one Common Share and one Warrant
with the same terms as the Offered Units (described above under "Private
Placement of Units").
Subject to shareholder approval of the Debenture Offering at the Meeting, and
the release to the Corporation from escrow of the gross proceeds raised by the
issuance of the Debentures (as described below), the Debentures may, at the
option of the holder, be converted into Debenture Units at any time prior to the
Maturity Date. In addition, if shareholder approval is obtained at the Meeting
the Debentures will automatically be converted into Debenture Units on the later
of (i) the date a registration statement filed under the United States
SECURITIES ACT OF 1933 (a "REGISTRATION STATEMENT") relating to the Debentures,
the Debenture Units and the Common Shares and Warrants underlying the Debenture
Units is declared effective by the United States Securities and Exchange
Commission (the "SEC") and (ii) the date the gross proceeds raised by the
issuance of the Debentures are released to the Corporation from escrow. THE
DEBENTURES WILL AUTOMATICALLY BECOME DUE AND PAYABLE, IN CASH, ON THE DATE OF
THE MEETING, IF
4
SHAREHOLDERS DO NOT APPROVE THE DEBENTURE OFFERING AT THE MEETING. In addition,
if shareholder approval is obtained at the Meeting the Debentures will become
due and payable, in cash, at the option of the holder at any time after
September 20, 2002, if by such date either (i) the SEC has not declared
effective a Registration Statement relating to the Debentures, the Debenture
Units and the Common Shares and Warrants underlying the Debenture Units, or
(ii) the gross proceeds raised by the issuance of the Debentures have not been
released to the Corporation from escrow (as described below).
The gross proceeds raised by the issuance of the Debentures have been placed in
escrow pending shareholder approval of the Debenture Offering at the Meeting and
the dismissal of the USF&G lawsuit (referred to above under "Private Placement
Units"). If shareholders approve the Debenture Offering at the Meeting, these
proceeds will be released to the Corporation within three business days of the
later of the date of the Meeting or the date the USF&G lawsuit is dismissed. IF
SHAREHOLDERS DO NOT APPROVE THE DEBENTURE OFFERING AT THE MEETING, THE PROCEEDS
FROM THE ISSUANCE OF THE DEBENTURES AND ALL ACCRUED INTEREST WILL BE RETURNED TO
INVESTORS. THE AGENT'S SPECIAL WARRANTS WILL NOT BE CONVERTED INTO AGENT'S UNITS
UNLESS SHAREHOLDER APPROVAL IS OBTAINED AT THE MEETING, OR AT A SUBSEQUENT
MEETING HELD PRIOR TO MARCH 18, 2007.
If shareholders approve the Debenture Offering at the Meeting, management
expects that the Debentureholders will nominate a person to be appointed as a
director of the Corporation.
The TSE has approved the Debenture Offering, subject to, among other things,
shareholders approving the issuance of the Debentures and the Agent's Special
Warrants at the Meeting. Accordingly, at the Meeting, the shareholders will be
asked to consider and approve an ordinary resolution (the "DEBENTURE OFFERING
RESOLUTION") authorizing the directors of the Corporation to issue the
Debentures and the Agent's Special Warrants that were issued in connection with
the Debenture Offering. The full text of the Debenture Offering Resolution is
set out as Resolution No. 2 of Schedule "A" to this Information Circular.
SHARE CONSOLIDATION
The Corporation is currently authorized to issue an unlimited number of Common
Shares, of which 112,315,040 were outstanding on March 19, 2002. In connection
with the Debenture Offering, the Board of Directors has approved (i) the
consolidation (the "SHARE CONSOLIDATION") of the issued and outstanding Common
Shares on the basis of 20 existing Common Shares into one Common Share, and
(ii) amendments to the Corporation's Articles of Continuance to reflect the
Share Consolidation. Management and the Board of Directors of the Corporation
believe that the Share Consolidation is necessary in order to facilitate future
equity financing that will be required by the Corporation to fund on-going
exploration and development of its properties, future property acquisitions and
working capital requirements
No fractional Common Shares will be issued in connection with the Share
Consolidation and in the event that the resultant number of Common Shares held
by any shareholder following the Share Consolidation is not a whole number, then
the number of Common Shares to be received by the shareholder shall be rounded
down to the nearest whole number of Common Shares. The maximum number of Common
Shares that the Corporation is authorized to issue will not be amended in
connection with the Share Consolidation and will remain as an unlimited number
of Common Shares.
Under the terms of the Warrants and the Debentures that were issued in
connection with the Unit Offering and the Debenture Offering (see "Private
Placement of Units" and "Private Placement of Convertible Debentures" above), if
the Share Consolidation is effected the price at which each Warrant is
exercisable to acquire one Common Share and each Debenture is convertible into
one Common Share will be adjusted so that it is 20 times the exercise price and
conversion price, respectively, prior to the Share Consolidation being made
effective. In other words, the Share Consolidation would have the effect of
re-pricing the exercise price of the Warrants from U.S.$0.075 to U.S.$1.50 and
the price of the Debenture Units issued on conversion of the Debentures from
U.S.$0.0513 to U.S.$1.026. A similar adjustment will be
5
made to the exercise price of stock options to acquire Common Shares which are
held by directors, officers and employees of the Corporation under the terms of
the Corporation's stock option plan. In addition, the number of Common Shares
issuable under the Corporation's stock option plan, will be reduced on a 20 to
one basis, from 4,500,000 Common Shares to 225,000 Common Shares.
If shareholders approve the Share Consolidation and management of the
Corporation elect to proceed with the Share Consolidation management will
determine the timing for the necessary actions to effect the Share
Consolidation. At present, management of the Corporation intends to file the
necessary corporate documents to effect the Share Consolidation with the Yukon
Registrar of Corporations as soon as possible following the approval of the
Share Consolidation Resolution at the Meeting. Upon receipt of confirmation that
the Corporation's Articles have been amended to reflect the Share Consolidation,
management intends to file the necessary documents to effect the Share
Consolidation with The Toronto Stock Exchange and the American Stock Exchange.
Following these filings with the stock exchanges, management of the Corporation
intends to mail letters of transmittal to each shareholder of record of the
Corporation that will set out the procedures for shareholders to surrender their
existing Common Share certificates and receive new Common Share certificates
representing the number of Common Shares to which they are entitled on a
post-Share Consolidation basis. Upon receipt by the Corporation's registrar and
transfer agent, Computershare Trust Company of Canada, of a shareholder's
properly completed letter of transmittal, together with his or her existing
Common Share certificates, Computershare will forward to such shareholder as
soon as practicable, the new Common Share certificates of the Corporation
reflecting the number of Common Shares to which each such shareholder is
entitled on a post-Share Consolidation basis. The Common Shares of the
Corporation are expected by management to commence trading on The Toronto Stock
Exchange and the American Stock Exchange on a post-Share Consolidation basis two
to three trading days after the later of (i) mailing of letters of transmittal
to shareholders of the Corporation and (ii) the Corporation meeting all
requirements established by The Toronto Stock Exchange and the American Stock
Exchange in respect of the Share Consolidation.
The Toronto Stock Exchange has approved the Share Consolidation, subject to,
among other things, shareholders approving the Share Consolidation at the
Meeting. Accordingly, at the Meeting, shareholders will be asked to consider and
approve a special resolution (the "SHARE CONSOLIDATION RESOLUTION") authorizing
the Share Consolidation and amendments to the Corporation's Articles of
Continuance to reflect the Share Consolidation. The full text of the Share
Consolidation Resolution is set out as Resolution No. 3 of Schedule "A" to this
Information Circular and the full text of the proposed Articles of Amendment of
the Corporation is set out in Schedule "B" to this Information Circular.
IF THE DEBENTURE OFFERING RESOLUTION IS NOT APPROVED BY SHAREHOLDERS, MANAGEMENT
OF THE CORPORATION MAY NOT PROCEED WITH THE SHARE CONSOLIDATION (I.E., EVEN IF
THE SHARE CONSOLIDATION RESOLUTION IS APPROVED). In addition, notwithstanding
the approval of the Share Consolidation Resolution by shareholders, the Board of
Directors may without further approval of the shareholders elect not to act on
or carry out the Share Consolidation. Finally, the Share Consolidation will not
be effected without the approval of The Toronto Stock Exchange and the American
Stock Exchange.
RECOMMENDATION OF MANAGEMENT AND THE BOARD OF DIRECTORS
MANAGEMENT AND THE BOARD OF DIRECTORS STRONGLY RECOMMEND THAT SHAREHOLDERS
VOTE IN FAVOUR OF THE UNIT OFFERING RESOLUTION, THE DEBENTURE OFFERING
RESOLUTION AND THE SHARE CONSOLIDATION RESOLUTION.
The Corporation's recent financial statements and other disclosure documents
have highlighted that the ability of the Corporation to continue as a going
concern (i.e., remain in business) is dependent on the Corporation obtaining
additional capital. In particular, the Corporation's financial statements and
Form 10-K for the year-ended 2000 and quarterly financial statements and
Form 10-Qs for 2001 disclosed
6
management's estimate that the Corporation had sufficient cash resources to
continue operations until March 2002, and made it clear that there was
substantial doubt about the ability of the Corporation to remain in business
after March 2002 unless the Corporation obtained additional capital. Management
now estimates that the additional working capital obtained by the Corporation at
the Unit Offering will provide the Corporation with sufficient cash resources to
continue operations only until the end of April 2002.
If approved by shareholders, the Warrants issued as part of the Unit Offering
will provide the potential for an additional U.S.$1,500,000 of capital to the
Corporation, if all Warrants are exercised; and the Debenture Offering will
provide a total of U.S.$2,800,000 immediately, (provided the USF&G lawsuit has
been dismissed), with the potential to provide an additional U.S.$4,100,000 of
capital if all Warrants issued in connection with this transaction are exercised
by investors. HOWEVER, THE CORPORATION WILL NOT RECEIVE ANY OF THIS FUNDING
UNLESS THE APPROVAL OF SHAREHOLDERS IS OBTAINED AT THE MEETING. IF THIS FUNDING
IS NOT OBTAINED, MANAGEMENT AND THE BOARD OF DIRECTORS HAVE SIGNIFICANT CONCERNS
REGARDING THE ABILITY OF THE CORPORATION TO CONTINUE TO REMAIN IN BUSINESS.
The closings of the Unit Offering and the Debenture Offering in February and
March 2002 represent the culmination of several years of extensive efforts by
management to identify and secure the funding necessary for the Corporation to
continue to operate its business. Management and the Board of Directors believe
that these transactions represent the best, and possibly the only, source of new
capital available to the Corporation in the near term. In addition, these
transactions have provided the Corporation with the capital necessary to
eliminate the contingent liability associated with a lawsuit against the
Corporation, to remain viable, and to develop and pursue a value-creating
business plan.
FOR THESE REASONS, MANAGEMENT AND THE BOARD OF DIRECTORS STRONGLY RECOMMEND THAT
SHAREHOLDERS VOTE IN FAVOUR OF THE UNIT OFFERING RESOLUTION, THE DEBENTURE
OFFERING RESOLUTION AND THE SHARE CONSOLIDATION RESOLUTION.
INFORMATION ABOUT PROXIES
SOLICITATION OF PROXIES
The solicitation for proxies will be conducted by mail and may be supplemented
by telephone or other personal contact to be made, without special compensation,
by officers and employees of the Corporation. THE CORPORATION MAY RETAIN OTHER
PERSONS OR COMPANIES TO SOLICIT PROXIES ON BEHALF OF MANAGEMENT, IN WHICH EVENT
THE CUSTOMARY FEES FOR SUCH SERVICES WILL BE PAID. THE COST OF THE SOLICITATION
WILL BE BORNE BY THE CORPORATION.
APPOINTMENT OF PROXYHOLDER
THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY FOR THE MEETING ARE DIRECTORS OR
OFFICERS OF THE CORPORATION AND ARE NOMINEES OF MANAGEMENT. A SHAREHOLDER HAS
THE RIGHT TO APPOINT SOME OTHER PERSON, WHO NEED NOT BE A SHAREHOLDER, TO
REPRESENT SUCH SHAREHOLDER AT THE MEETING BY STRIKING OUT THE NAMES OF THE
PERSONS DESIGNATED IN THE ACCOMPANYING FORM OF PROXY AND BY INSERTING THAT OTHER
PERSON'S NAME IN THE BLANK SPACE PROVIDED. IF A SHAREHOLDER APPOINTS ONE OF THE
PERSONS DESIGNATED IN THE ACCOMPANYING FORM OF PROXY AS A NOMINEE AND DOES NOT
DIRECT THE SAID NOMINEE TO VOTE EITHER FOR OR AGAINST OR WITHHOLD FROM VOTING ON
A MATTER OR MATTERS WITH RESPECT TO WHICH AN OPPORTUNITY TO SPECIFY HOW THE
COMMON SHARES REGISTERED IN THE NAME OF SUCH SHAREHOLDER SHALL BE VOTED, THE
PROXY SHALL BE VOTED IN FAVOUR OF SUCH MATTER OR MATTERS.
The instrument appointing a proxyholder must be in writing and signed by the
shareholder, or such shareholder's attorney authorized in writing, or if the
shareholder is a corporation, by a duly authorized officer, or attorney, of the
corporation. An instrument of proxy will only be valid if it is duly completed,
signed, dated and received at the office of the Corporation's registrar and
transfer agent, Computershare Trust Company of Canada at Montreal Trust Centre,
510 Burrard Street, Vancouver, British Columbia,
7
V6C 3B9, Attention: Proxy Department before 10:00 a.m., Vancouver time, on
Wednesday, April 24, 2002, or no later than 48 hours (excluding Saturdays,
Sundays and holidays) before any adjournment of the Meeting, unless the Chairman
of the Meeting elects to exercise his discretion to accept proxies
received subsequently.
REVOCATION OF PROXY
A shareholder may revoke a proxy by delivering an instrument in writing executed
by such shareholder or by the shareholder's attorney authorized in writing or,
where the shareholder is a corporation, by a duly authorized officer or attorney
of the corporation, either to 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, with the Chairman of the Meeting on the day of the
Meeting or any adjournment thereof, before any vote in respect of which the
proxy is to be used shall have been taken or in any other manner permitted
by law.
VOTING OF PROXIES
A shareholder may direct the matter in which his or her Common Shares are to be
voted or withheld from voting in accordance with the instructions of the
shareholder by marking the form of proxy accordingly. If the instructions in a
proxy given to management are certain, the Common Shares represented by that
proxy will be voted on any poll and where a choice has been specified in the
proxy, the Common Shares will be voted on any poll in accordance with the
specifications so made. WHERE NO CHOICE IS SO SPECIFIED WITH RESPECT TO ANY
RESOLUTION OR IN THE ABSENCE OF CERTAIN INSTRUCTIONS, THE COMMON SHARES
REPRESENTED BY A PROXY GIVEN TO MANAGEMENT WILL BE VOTED IN FAVOUR OF THE
RESOLUTION. IF MORE THAN ONE DIRECTION IS MADE WITH RESPECT TO ANY RESOLUTION,
SUCH COMMON SHARES WILL SIMILARLY BE VOTED IN FAVOUR OF THE RESOLUTION.
EXERCISE OF DISCRETION BY PROXYHOLDERS
The enclosed form of proxy when properly completed and delivered and not revoked
confers discretionary authority upon the proxyholders named therein with respect
to amendments or variations of matters identified in the accompanying Notice of
Meeting, and other matters not so identified which may properly be brought
before the Meeting. At the date of this Information Circular, management of the
Corporation knows of no such amendments, variations or other matters to come
before the Meeting. If any other matter comes before the Meeting, the persons
named in the proxy will vote in accordance with their judgement on such matter.
SECURITIES ENTITLED TO VOTE
As of March 19, 2002, the authorized share capital of the Corporation is divided
into an unlimited number of Common Shares, of which 112,315,040 Common Shares
are issued and outstanding, and an unlimited number of preferred shares, none of
which are issued. Every shareholder who is present in person and entitled to
vote at the Meeting shall have one vote on a show of hands and on a poll shall
have one vote for each Common Share of which the shareholder is the registered
holder and such shareholder may exercise such vote either in person or by
proxyholder, except that shareholders who acquired their Common Shares as part
of the Unit Offering are not entitled to vote at the Meeting with respect to the
Unit Offering Resolution or the Debenture Offering Resolution. See "Particulars
of Matters to be Acted Upon--Approval of Private Placements and Share
Consolidation".
8
The Board of Directors of the Corporation has fixed the close of business on
March 22, 2002 as the record date for the purpose of determining the
shareholders entitled to receive notice of the Meeting, but the failure of any
shareholder to receive notice of the Meeting does not deprive such shareholder
of the entitlement to vote at the Meeting. Every shareholder of record at the
close of business on March 22, 2002 who personally attends the Meeting will be
entitled to vote at the Meeting or any adjournment thereof, except to the extent
that:
(a) such shareholder has transferred the ownership of any of his or her
Common Shares after March 22, 2002; and
(b) the transferee of those Common Shares produces properly endorsed share
certificates, or otherwise establishes that he or she owns the Common
Shares, and demands, not later than 10 days before the Meeting, that his
or her name be included in the list of shareholders entitled to vote at
the Meeting, in which case the transferee is entitled to vote those
Common Shares at the Meeting.
PRINCIPAL SHAREHOLDERS
To the knowledge of the directors and officers of the Corporation, as of
March 19, 2002, the only person or company that beneficially owns, directly or
indirectly, or exercises control or direction over, more than 5% of the issued
and outstanding Common Shares is Stockscape.com Technologies Inc., (defined
below as "STOCKSCAPE"), which beneficially owns 20,000,000 Common Shares, which
represent 17.8% of the outstanding Common Shares. The Corporation understands
that more than 10% of the issued and outstanding shares of Stockscape are
beneficially owned by Mr. Arthur Richard Rule. See "Particulars of Matters to be
Acted Upon -- Approval of Private Placements and Share Consolidation" and
"Interests of Management and Others in Material Transactions".
QUORUM AND PERCENTAGE OF VOTES NECESSARY TO PASS RESOLUTIONS
Under By-Law No. 1 of the Corporation, the quorum for the transaction of
business at the Meeting is two shareholders present in person or by proxy.
The ordinary resolutions authorizing the directors of the Corporation (i) to
issue certain common share purchase warrants in connection with the private
placement transaction that was completed by the Corporation on February 1, 2002
(defined above as the "UNIT OFFERING"), and (ii) to issue certain convertible
debentures and special warrants in connection with the private placement
transaction that was completed by the Corporation on March 19, 2002 (defined
above as the "DEBENTURE OFFERING"), must be approved by a majority of more than
50% of the votes cast by shareholders who vote in person or by proxy at the
Meeting with respect to these resolutions, excluding shareholders who acquired
their Common Shares as part of the Unit Offering. See "Particulars of Matters to
be Acted Upon--Approval of Private Placements and Share Consolidation".
The special resolution to approve the consolidation of the issued and
outstanding Common Shares of the Corporation on the basis of 20 existing Common
Shares into one Common Share, must be approved by a majority of not less than
66 2/3% of the votes cast by the shareholders of the Corporation who vote in
person or by proxy in respect of that resolution. See "Particulars of Matters to
be Acted Upon--Approval of Private Placements and Share Consolidation--Share
Consolidation".
CORPORATE GOVERNANCE
The Corporation's Board of Directors and executive officers consider good
corporate governance to be an important factor in the efficient and effective
operation of the Corporation. The Toronto Stock Exchange has established
guidelines for effective corporate governance. The Board of Directors is of the
view that the Corporation's system of corporate governance meets or exceeds
these guidelines. A detailed
9
description of how the Corporation's system of corporate governance compares to
the corporate governance guidelines established by The Toronto Stock Exchange is
attached as Schedule "C" to this Information Circular.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
During fiscal 2001, there were three standing committees of the Board of
Directors: the Audit Committee; the Corporate Governance Committee; and the
Compensation Committee, each described below. Between meetings of the Board of
Directors, certain of its powers may be exercised by these standing committees,
and these committees, as well as the Board of Directors, sometimes act by
unanimous written consent. A majority of the directors on each committee are
unrelated directors.
The Audit Committee is chaired by John M. Clark-. Its other members are C.
Thomas Ogryzlo and A. Murray Sinclair (a member since February 21, 2002). Its
primary function is to assist the Board of Directors in fulfilling its oversight
responsibilities by reviewing (i) the financial statements, reports and other
information provided to shareholders, regulators and others, (ii) the internal
controls that management and the Board have established, and (iii) the audit,
accounting and financial reporting processes generally. The Audit Committee met
four times during the fiscal year ended December 31, 2001. Additional
information about the Audit Committee is contained in the Audit Committee Report
below "Audit Committee Report".
The Corporate Governance Committee is chaired by C. Thomas Ogryzlo. Its other
members are John Clark and A. Murray Sinclair (a member since February 21,
2002). The Corporate Governance Committee's functions are to review the
Corporation's governance activities and policies in light of the corporate
governance guidelines published by The Toronto Stock Exchange and also to review
proposed nominees for the Board. The Corporate Governance Committee met once
during the fiscal year ended December 31, 2001. Additional information about the
Corporate Governance Committee is contained above under "Corporate Governance"
and in Schedule "C" to this Information Circular.
The Compensation Committee is chaired by John M. Clark. Its other members are C.
Thomas Ogryzlo and A. Murray Sinclair (a member since February 21, 2002). The
Compensation Committee's functions are to review and recommend compensation
policies and programs to the Corporation as well as salary and benefit levels
for its executives. The Compensation Committee met two times during the fiscal
year ended December 31, 2001. Additional information about the Compensation
Committee is contained under the heading "Executive Compensation--Report of the
Compensation Committee".
During the fiscal year ended December 31, 2001, the Board of Directors met seven
times. Each director attended at least 75% of the total number of each of the
meetings of the Board of Directors and the meetings of the committees on which
he served.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is responsible for providing
independent, objective oversight of the Corporation's accounting functions and
internal controls. The Audit Committee acts under a written charter adopted and
approved by the Board of Directors in 2001. Each of the members of the Audit
Committee is independent, as defined by the American Stock Exchange listing
standards.
The responsibilities of the Audit Committee include recommending to the Board of
Directors an accounting firm to be engaged as the Corporation's independent
accountants. The Audit Committee is responsible for recommending to the Board of
Directors that Corporation's financial statements be included in its annual
report. The Audit Committee took a number of steps in making this recommendation
for fiscal year 2001.
First, the Audit Committee discussed with PricewaterhouseCoopers LLP those
matters required to be discussed by Statement on Auditing Standards. No. 61,
including information regarding the scope and
10
results of the audit. These communications and discussions are intended to
assist the Audit Committee in overseeing the financial reporting and disclosure
process. Second, the Audit Committee discussed with PricewaterhouseCoopers LLP
the independence of PricewaterhouseCoopers LLP and received from
PricewaterhouseCoopers LLP a letter concerning their independence as required
under applicable independence standards for auditors of public companies. This
discussion and disclosure assisted the Audit Committee in evaluating such
independence. Finally, the Audit Committee reviewed and discussed, with the
Corporation's management and PricewaterhouseCoopers LLP, the Corporation's
audited consolidated balance sheets at December 31, 2001, and consolidated
statements of income, cash flows and shareholders' equity for the fiscal year
ended December 31, 2001. Based on the discussions with
PricewaterhouseCoopers LLP concerning the audit, the independence discussions,
and the financial statement review, and such other matters deemed relevant and
appropriate by the Audit Committee, the Audit Committee recommended to the Board
of Directors that the Corporation's financial statements be included in its 2001
Annual Report on Form 10-KSB.
Submitted on behalf of the Audit
Committee
John M. Clark (Chairman)
C. Thomas Ogryzlo
A. Murray Sinclair
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below contains a summary of the compensation paid to, or earned by,
the Corporation's President and Chief Executive Officer, and the Corporation's
four most highly compensated executive officers (other than the President and
Chief Executive Officer) who were serving as executive officers at the end of
the Corporation's most recently completed financial year and during such year
received, in their capacity as officers of the Corporation and any of its
subsidiaries, in excess of Cdn.$100,000 (collectively, the "Named Executive
Officers"), for each of the Corporation's three most recently completed
financial years ended December 31, 2001, 2000 and 1999. All currency figures
under the heading "Summary Compensation Table" are in United States dollars.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
NUMBER OF
ANNUAL COMPENSATION COMMON
------------------------------------- SHARES UNDER
OTHER ANNUAL OPTIONS ALL OTHER
SALARY BONUS COMPENSATION(1) GRANTED(2) COMPENSATION(3)
NAME AND PRINCIPAL POSITION YEAR (U.S.$) (U.S.$) (U.S.$) (#) (U.S.$)
--------------------------- -------- -------- -------- --------------- ------------ ---------------
Ronald J. McGregor........... 2001 160,000 nil nil 650,000 5,250
President and Chief Executive 2000 160,000 nil nil 500,000 5,250
Officer 1999 141,000 nil nil 300,000 5,000
John F. Engele(4)............ 2001 69,950 nil nil 175,000 2,869
Vice President, Finance and 2000 -- -- -- -- --
Chief Financial Officer 1999 -- -- -- -- --
------------------------
(1) Perquisites and other personal benefits for the most recently completed
financial year do not exceed the lesser of $50,000 or 10% of the total
annual salary and bonus for any of the Named Executive Officers unless
otherwise noted.
11
(2) All securities under option are for Common Shares of the Corporation. No
stock appreciation rights ("SARs") are outstanding.
(3) Represents the Corporation's contribution under the Corporation's Retirement
Savings Plan, except where otherwise indicated. The executive officers of
the Corporation participate in this plan on the same basis as all other
employees of the Corporation. See "Pensions and Retirement Savings Plans".
(4) Mr. Engele was appointed Vice President, Finance on May 1, 2001 and Chief
Financial Officer on October 30, 2001.
LONG-TERM INCENTIVE PLAN
The Corporation does not presently have a long-term incentive plan for its Named
Executive Officers.
STOCK OPTIONS
The Corporation has established the Stock Option Plan which provides for grants
to directors, officers, employees and consultants of the Corporation, or its
subsidiaries, of options to purchase up to a maximum of 4,500,000 of the issued
and outstanding Common Shares from time to time, provided that no more than 5%
of the issued and outstanding Common Shares may from time to time be reserved
for issuance pursuant to the exercise of stock options granted to any one
individual. Effective upon the amalgamation of Granges Inc. and Da Capo
Resources Ltd. on November 1, 1996, the Corporation, as the amalgamated entity,
adopted the Stock Option Plan of Granges Inc. Under the Stock Option Plan,
options may be exercised by the payment in cash of the option exercise price to
the Corporation. All options are subject to the terms and conditions of an
option agreement entered into by the Corporation and each participant at the
time an option is granted.
The Stock Option Plan is administered by the Board of Directors which has full
and final discretion to determine (i) the total number of optioned shares to be
made available under the Stock Option Plan, (ii) the directors, officers,
employees and consultants of the Corporation who are eligible to receive stock
options under the Stock Option Plan ("Optionees"), (iii) the time when and the
price at which stock options will be granted, (iv) the time when and the price
at which stock options may be exercised, and (v) the conditions and restrictions
on the exercise of options. Pursuant to the terms of the Stock Option Plan, the
exercise price must not be less than the closing price of the Common Shares on
The Toronto Stock Exchange on the day preceding the date of grant. Options
become exercisable only after they vest in accordance with the respective stock
option agreement and must expire no later than ten years from the date of grant.
If an Optionee ceases to be an officer or employee of the Corporation, or its
subsidiaries, as a result of termination for cause, all unexercised options will
immediately terminate. If an Optionee ceases to be a director, officer or
employee of the Corporation, or its subsidiaries, or ceases to be a consultant
to the Corporation, for any reason other than termination for cause, the
Optionee shall have the right to exercise his or her options at any time up to
but not after the earlier of 30 days from the date of ceasing to be a director,
officer, employee or consultant, or the expiry date. In the event of death of an
Optionee, the legal representatives of such Optionee have the right to exercise
the options at any time up to but not after the earlier of 90 days from the date
of death, or the expiry date.
Options granted under the Stock Option Plan are non-transferable and
non-assignable other than on the death of a Participant. An Optionee has no
rights whatsoever as a shareholder in respect of unexercised options.
STOCK OPTION GRANTS
A summary of stock options granted to the Named Executive Officers under the
Stock Option Plan during the financial year ended December 31, 2001 is set out
in the table below. All stock options are for
12
Common Shares of the Corporation. No stock appreciation rights ("SARs") are
outstanding, and it is currently intended that none be issued. All currency
figures under the heading "Stock Option Grants" are in Canadian dollars.
OPTION GRANTS DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR
% OF TOTAL POTENTIAL
OPTIONS REALIZABLE VALUE
NUMBER GRANTED TO MARKET VALUE OF AT ASSUMED
OF EMPLOYEES SECURITIES ANNUAL RATES OF
SECURITIES IN UNDERLYING STOCK PRICE
UNDER FINANCIAL EXERCISE OR OPTIONS ON THE APPRECIATION FOR
OPTION YEAR BASE PRICE DATE OF GRANT EXPIRY DATE OPTION TERM
NAME (#) (%) (CDN.$/SECURITY) (CDN.$/SECURITY)(1) (M/D/Y) 5%/10% (CDN.$)
---- ---------- ---------- ---------------- ------------------- ----------- ----------------
Ronald J. McGregor.... 150,000 46% 0.12 0.12 10/30/11 29,320/46,687
100,000 31% 0.12 0.12 04/30/11 19,547/31,124
John F. Engele........ 75,000 23% 0.12 0.12 10/30/11 14,660/23,343
------------------------
(1) The market value of the Common Shares on the date of grant of the options is
the closing price per share at which the Common Shares were traded on The
Toronto Stock Exchange on the day preceding the date of grant.
The reported high and low trading prices of the Corporation's Common Shares on
The Toronto Stock Exchange and the American Stock Exchange for the 30 days prior
to the date of the grants of the options referred to above are set out in the
table below.
THE TORONTO STOCK EXCHANGE AMERICAN STOCK EXCHANGE
--------------------------- ------------------------
HIGH LOW HIGH LOW
---------- ----------- --------- ---------
March 31 to April 29, 2001.................. Cdn.$0.15 Cdn.$0.105 U.S.$0.09 U.S.$0.07
September 30 to October 29, 2001............ Cdn.$0.15 Cdn.$ 0.12 U.S.$0.10 U.S.$0.08
13
AGGREGATED OPTION EXERCISES AND VALUE OF UNEXERCISED OPTIONS
A summary of the exercise of options by the Named Executive Officers during the
financial year ended December 31, 2001 and the value at December 31, 2001 of
unexercised in-the-money options held by the Named Executive Officers issued is
set out in the table below. No SARs are outstanding. All currency figures under
the heading "Aggregated Option Exercises and Value of Unexercised Options" are
in Canadian dollars.
AGGREGATED OPTION EXERCISES DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR
AND FINANCIAL YEAR-END OPTION VALUES
VALUE OF
UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SECURITIES AGGREGATE FINANCIAL YEAR-END FINANCIAL YEAR-END
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE(1)
NAME (#) (CDN.$) (#) (CDN.$)
---- ----------- --------- ------------------ ------------------
Ronald J. McGregor...................... nil nil 650,000/0 6,000/nil
John F. Engele.......................... nil nil 175,000/0 nil/nil
------------------------
(1) Based on the closing trading price of the Common Shares on The Toronto Stock
Exchange on the last trading day of the financial year, being Cdn.$0.10.
PENSION AND RETIREMENT SAVINGS PLANS
The Corporation sponsors a quantified tax-deferred savings plan in accordance
with the provisions of section 401(K) of the U.S. Internal Revenue Service Code,
which is available to permanent U.S.-based employees. Under the terms of this
plan, the Corporation makes contributions of up to 4% of eligible employees'
salaries.
TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS
On April 30, 2001, Robert L. Folen resigned as Vice President, Finance and was
replaced by John F. Engele. Mr. Engele was previously employed by Echo Bay
Mines Ltd. in various senior financial positions. Mr. Engele was appointed Chief
Financial Officer on October 30, 2001. Mr. Folen continues to serve the company
as Controller of Vista's subsidiary, Hycroft Resources & Development Inc. The
Named Executive Officers of the Corporation, Ronald J. McGregor, the President
and Chief Executive Officer, and John F. Engele, Vice President, Finance and
Chief Financial Officer, have been engaged under employment contracts. Each of
these contracts provides for base salary, annual discretionary incentive bonus,
four weeks vacation time and various minor perquisites.
The contract between the Corporation and Mr. McGregor is for an unlimited term,
provides for an annual bonus at the sole discretion of the Board of Directors
and provides for the severance benefit described below. Under the terms of this
contract, the employment of Mr. McGregor may be terminated by the Corporation
without cause, provided that it continues to pay his base salary for a period of
12 months (or makes a lump sum payment equal to 12 months of his base salary),
and by Mr. McGregor upon 30 days notice to the Corporation. In addition, in the
event that Mr. McGregor suffers an injury or illness that renders him
permanently incapable of substantially performing his duties under this
contract, the Corporation may terminate Mr. McGregor's employment, provided that
it continues to pay his base salary and other employee benefits for a period of
12 months following notice of such termination.
The contract between the Corporation and Mr. Engele is for an unlimited term,
provides for a performance bonus in accordance with the Corporation's incentive
policy, may be terminated by the
14
Corporation or the employee upon 30 days written notice, and provides for the
severance benefits described below. Under the terms of this contract, the
employment of Mr. Engele may be terminated by the Corporation without cause,
provided that it continues to pay his base salary for a period of 6 months (or
makes a lump sum payment equal to 6 months of his base salary), and by
Mr. Engele upon 30 days notice to the Corporation. In addition, in the event
that Mr. Engele suffers an injury or illness that renders him permanently
incapable of substantially performing his duties under this contract, the
Corporation may terminate Mr. McGregor's employment, provided that it continues
to pay his base salary and other employee benefits for a period of 6 months
following notice of such termination.
As at March 19, 2002, the Corporation has arrangements with Mr. McGregor and
Mr. Engele under which each is entitled to receive severance benefits based upon
his monthly salary in the event of termination of his employment other than for
cause. The aggregate compensation payable to Mr. McGregor and Mr. Engele under
this arrangement is U.S.$210,000 and the amount payable to each Mr. McGregor and
Mr. Engele is as follows:
COMPENSATION
NAME PAYABLE
---- ------------
Ronald J. McGregor.......................................... U.S.$160,000
John F. Engele.............................................. U.S.$ 50,000
Other than as described above, the Corporation has no plan or arrangement in
respect of compensation received or that may be received by Named Executive
Officers to compensate such officers in the event of the termination of
employment, resignation, retirement, change of control of the Corporation or in
the event of a change in responsibilities following a change of control.
REPORT OF THE COMPENSATION COMMITTEE
COMPOSITION OF THE COMPENSATION COMMITTEE
The Corporation has a Compensation Committee comprised of the following
directors: John M. Clark (Chairman), C. Thomas Ogryzlo and A. Murray Sinclair.
None of the members of the Compensation Committee is or has been an executive
officer or employee of the Corporation or any of its subsidiaries or affiliates.
No executive officer of the Corporation is or has been a director or a member of
the Compensation Committee of another entity having an executive officer who is
or has been a director or a member of the Compensation Committee of the
Corporation.
REPORT ON EXECUTIVE COMPENSATION
It is the responsibility of the Compensation Committee to review and recommend
compensation policies and programs to the Corporation as well as salary and
benefit levels for its executives. The committee makes recommendations to the
Board of Directors which gives final approval on compensation matters.
The Corporation's compensation policies and programs are designed to be
competitive with similar mining companies and to recognize and reward executive
performance consistent with the success of the Corporation's business. These
policies and programs are intended to attract and retain capable and experienced
people.
In addition to industry comparables, the Compensation Committee considers a
variety of factors when determining both compensation policies and programs and
individual compensation levels. These factors include the long-range interests
of the Corporation and its shareholders, overall financial and operating
performance of the Corporation and the committee's assessment of each
executive's individual performance and contribution toward meeting corporate
objectives. Superior performance is recognized through the Corporation's
incentive policy.
15
The total compensation plan for executive officers is comprised of three
components: base salary, an incentive payment and stock options. As a general
rule for establishing base salaries, the Compensation Committee reviews
competitive market data for each of the executive positions and determines
placement at an appropriate level in a range. Compensation levels are typically
negotiated with the candidate for the position prior to his or her final
selection as an executive officer. The compensation range for executives
normally moves annually to reflect external factors such as inflation.
The Corporation's incentive policy generally allows executive officers and
management personnel to earn an incentive payment to a maximum of 15% of his or
her base salary, two-thirds of which is based upon individual performance and
one-third of which is based upon the performance of the Corporation. All
executive officers and management personnel participate in this policy, except
the President and Chief Executive Officer. By contract, he is entitled to earn a
bonus the amount of which is at the sole discretion of the Board of Directors.
Following the end of each fiscal year, the Compensation Committee makes a
recommendation to the Board of Directors as to the appropriate incentive payment
for the executive officers and management personnel. No specific performance
criteria or objectives are utilized by the Compensation Committee or the Board
of Directors in making their determinations. In 2001, no incentive payments were
paid to any executive officers or employees of the Corporation.
The third element in the total compensation plan is the Stock Option Plan. This
plan is intended to emphasize management's commitment to growth of the
Corporation and enhancement of shareholders' wealth through, for example,
improvements in net earnings, resource base, and share price increments.
The compensation of Ronald J. McGregor, the President and Chief Executive
Officer of the Corporation, is determined in the same manner as for other
executive officers (as described above). Under the employment contract between
the Corporation and Mr. McGregor, Mr. McGregor is entitled to receive a base
salary, an annual discretionary incentive bonus, four weeks vacation time and
various minor perquisites. In addition, Mr. McGregor is entitled to receive
incentive stock options under the Stock Option. During 2001, Mr. McGregor did
not receive an incentive bonus. Further details regarding the compensation
received by Mr. McGregor during 2001 are outlined above under "Executive
Compensation--Summary Compensation Table".
Submitted on behalf of the Compensation
Committee
John M. Clark (Chairman)
C. Thomas Ogryzlo
A. Murray Sinclair
16
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of Common Shares beneficially owned,
as of March 15, 2002, by each director of the Corporation, each of the executive
officers named in the Summary Compensation Table, and all directors and
executive officers of the Corporation as a group:
NUMBER OF COMMON NUMBER OF COMMON SHARES
NAME OF BENEFICIAL OWNER(1) SHARES OWNED(2) CONTROLLED BY OPTIONS
--------------------------- ---------------- -----------------------
John M. Clark........................ nil 100,000
Director
Ronald J. McGregor................... 20,000 650,000
President, Chief Executive Officer
and Director
C. Thomas Ogryzlo.................... nil 100,000
Director
Michael B. Richings.................. 79,967 300,000
Director
A. Murray Sinclair................... nil 100,000
Director
John F. Engele....................... nil 175,000
Vice President, Finance and
Chief Financial Officer
All directors and officers as a 99,967 1,425,000
group..............................
------------------------
(1) For the purposes of this table, a person is considered to "beneficially own"
any Common Shares (i) over which such person exercises sole or shared voting
or investment power, or (ii) of which such person has the right to acquire
beneficial ownership at any time within 60 days (e.g., through the exercise
of stock options). Unless otherwise indicated, each person has sole voting
and investment power with respect to the Common Shares set opposite his
name.
(2) Unless otherwise indicated, all amounts shown are less than 1% of the
outstanding Common Shares.
17
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the Corporation's
cumulative total shareholder return on its Common Shares with the cumulative
total return of the TSE 300 Stock Index and the TSE Gold and Precious Metals
Index, assuming the reinvestment of dividends, for the last five financial
years:
1996 1997 1998 1999 2000 2001
-------- -------- -------- -------- -------- --------
VGZ Toronto................................. 100.00 17.84 12.43 7.57 4.86 5.41
TSE Gold.................................... 100.00 56.44 52.39 43.13 38.40 45.12
TSE 300..................................... 100.00 113.03 109.43 141.96 150.73 129.66
COMPENSATION OF DIRECTORS AND OFFICERS
On December 30, 1997, the Board of Directors resolved to waive annual fees for
directors of the Corporation effective January 1, 1998 until such time as the
directors determine otherwise. During the financial year ended December 31,
2001, directors of the Corporation received a fee of Cdn.$1,000 per meeting of
the Board of Directors. The Corporation also reimbursed directors for
out-of-pocket expenses related to their attendance at meetings. No additional
amounts were paid or are payable to directors of the Corporation for committee
participation or special assignments.
The total aggregate cash remuneration paid or payable by the Corporation and its
subsidiaries during the financial year ended December 31, 2001 (i) to the
directors of the Corporation in their capacity as directors of the Corporation
and any of its subsidiaries was U.S.$18,219, and (ii) to the officers of the
Corporation and any of its subsidiaries who received in their capacity as
officers or employees of the Corporation aggregate remuneration in excess of
Cdn.$40,000 was U.S.$281,251. This sum includes compensation paid to executive
officers pursuant to the cash incentive plan and retirement savings plan and
compensation paid to Mr. Folen in his capacity as Vice President, Finance prior
to his resignation.
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
The President and Chief Executive Officer of the Corporation maintains a
U.S.$1,000 travel advance loan from the Corporation. None of the directors, nor
any individual who was at any time during the most recently completed financial
year a director, or any associates or affiliates of the foregoing persons is
indebted to the Corporation.
DIRECTOR AND OFFICER LIABILITY INSURANCE
The Corporation has purchased and maintains insurance in the amount of
Cdn.$10 million for the benefit of the directors and officers of the Corporation
against liabilities incurred by such persons as directors and officers of the
Corporation and its subsidiaries, except where the liability relates to such
persons failure to act honestly and in good faith with a view to the best
interests of the Corporation. The annual premium paid by the Corporation for
this insurance in respect of the directors and officers as a group is
Cdn.$75,375. No premium for this insurance is paid by the individual directors
and officers. The insurance contract underlying this insurance does not expose
the Corporation to any liability in addition to the payment of the required
premiums.
18
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
Except as described below, no proposed nominee for election as director, no
director or senior officer of the Corporation who has served in such capacity
since the beginning of the last financial year, no person that has direct or
indirect beneficial ownership of more than 10% of the issued Common Shares of
the Corporation, and no associate or affiliate of any such person, had any
material interest, directly or indirectly, in any transaction within the past
three years, or in any proposed transaction, which has affected or would
materially affect the Corporation or any of its subsidiaries.
As part of the Unit Offering (as defined above), the Corporation issued
20,000,000 Common Shares and subject to shareholder approval, Warrants to
acquire an additional 20,000,000 Common Shares to Stockscape.com
Technologies Inc. (defined above as "STOCKSCAPE"), and 1,600,000 Common Shares
and subject to shareholder approval, Warrants to acquire an additional 1,600,000
Common Shares to Global Resource Investments Ltd. (defined above as "GLOBAL"),
as consideration for its services as agent in connection with the Unit Offering.
In addition, as part of the Debenture Offering (as defined above), the
Corporation issued 4,325,925 Agent's Special Warrants to Global as consideration
for its services as agent in connection with the Debenture Offering. Subject to
shareholder approval, the Agent's Special Warrants are convertible into
4,325,925 Common Shares and Warrants to acquire an additional 4,325,925 Common
Shares. These transactions are described in further detail above under
"Particulars of Matters to be Acted Upon-- Approval of Private Placements and
Share Consolidation".
As at March 19, 2002, the Common Shares acquired by Stockscape as part of the
Unit Offering represented approximately 17.8% of the issued and outstanding
Common Shares. See "Principal Shareholders". The Corporation understands that
more than 10% of the issued and outstanding shares of Stockscape, and that all
of the issued and outstanding shares of Global are beneficially owned by
Mr. Arthur Richard Rule. At the Meeting, shareholders will be asked to approve
the Unit Offering Resolution and the Debenture Offering Resolution which
include, among other things, approval of the issuance of Warrants to Stockscape
and Global, and the Agent's Special Warrants to Global. Neither Stockscape nor
Global will be permitted to vote its Common Shares at the Meeting with respect
to these matters. See "Quorum and Percentage of Votes Necessary to Pass
Resolutions".
MANAGEMENT CONTRACTS
There are no management functions of the Corporation which are to any
substantial degree performed by persons other than the directors or senior
officers of the Corporation.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Other than as disclosed herein, no person who has been a director or officer of
the Corporation at any time since the beginning of the last financial year or
any proposed nominee for election as director, nor any associate or affiliate of
such person, has an interest in the matters to be acted upon at the Meeting.
SHAREHOLDER PROPOSALS
Under the United States SECURITIES ACT OF 1933, the deadline for submitting
shareholder proposals for inclusion in the management information and proxy
circular for an annual meeting of the Corporation is calculated in accordance
with Rule 14a-8(e) of Regulation 14A to that Act. If the proposal is submitted
for a regularly scheduled annual meeting, the proposal must be received at the
Corporation's principal executive offices not less than 120 calendar days before
the date of the Corporation's management information and proxy circular released
to the Corporation's shareholders in connection with the previous year's annual
meeting. However, if the Corporation did not hold an annual meeting the previous
year, or if the date of the current year's annual meeting has been changed by
more than 30 days from the date of the previous year's meeting, then the
deadline is a reasonable time before the Corporation begins to print and mail
its proxy materials. Accordingly, unless the date of the next annual meeting is
changed by more than
19
30 days from the date of this year's meeting the deadline for submitting
shareholder proposals for inclusion in the management information and proxy
circular for the next annual meeting of the Corporation will be November 25,
2002.
OTHER MATTERS
Management of the Corporation knows of no other matters, which will be brought
before the Meeting other than those set forth in the Notice of Meeting. Should
any other matters properly come before the Meeting, the Common Shares
represented by the proxies solicited hereby will be voted on those matters in
accordance with the best judgement of the persons voting such proxies.
AVAILABILITY OF DOCUMENTS
THE CORPORATION WILL PROVIDE TO ANY PERSON OR CORPORATION, UPON REQUEST, ONE
COPY OF ANY OF THE FOLLOWING DOCUMENTS:
(a) THE CORPORATION'S LATEST FORM 10-K OR ANNUAL INFORMATION FORM, TOGETHER
WITH ANY DOCUMENT, OR THE PERTINENT PAGES OF ANY DOCUMENT, INCORPORATED
THEREIN BY REFERENCE;
(b) THE COMPARATIVE FINANCIAL STATEMENTS OF THE CORPORATION FOR THE
CORPORATION'S MOST RECENTLY COMPLETED FINANCIAL YEAR IN RESPECT OF WHICH
SUCH FINANCIAL STATEMENTS HAVE BEEN ISSUED, TOGETHER WITH THE REPORT OF
THE AUDITORS THEREON, AND ANY INTERIM FINANCIAL STATEMENTS OF THE
CORPORATION SUBSEQUENT TO THE FINANCIAL STATEMENTS FOR THE CORPORATION'S
MOST RECENTLY COMPLETED FINANCIAL YEAR; AND
(c) THE INFORMATION CIRCULAR OF THE CORPORATION IN RESPECT OF THE MOST
RECENT ANNUAL MEETING OF SHAREHOLDERS OF THE CORPORATION WHICH INVOLVED
THE ELECTION OF DIRECTORS.
COPIES OF THE ABOVE DOCUMENTS WILL BE PROVIDED, UPON REQUEST, BY THE SECRETARY
OF THE CORPORATION AT 1200 WATERFRONT CENTRE, 200 BURRARD STREET, VANCOUVER,
BRITISH COLUMBIA, CANADA, V7X 1T2, FREE OF CHARGE TO SHAREHOLDERS OF THE
CORPORATION. THE CORPORATION MAY REQUIRE THE PAYMENT OF A REASONABLE CHARGE FROM
ANY PERSON OR CORPORATION WHO IS NOT A SHAREHOLDER OF THE CORPORATION AND WHO
REQUESTS A COPY OF ANY SUCH DOCUMENT.
DOCUMENTS INCORPORATED BY REFERENCE
The information contained in Part II of the Corporation's Form 10-KSB for the
year ended December 31, 2001 is incorporated by reference into this Information
Circular.
BOARD OF DIRECTOR APPROVAL
The undersigned hereby certifies that the contents and sending of this
Information Circular to the shareholders of the Corporation have been approved
by the Board of Directors.
DATED at Littleton, Colorado, this 19th day of March, 2002.
BY ORDER OF THE BOARD OF DIRECTORS
(Signed) RONALD J. MCGREGOR
President and
Chief Executive Officer
20
SCHEDULE "A"
RESOLUTIONS
RESOLUTION NO. 1--UNIT OFFERING RESOLUTION
"BE IT RESOLVED as an ordinary resolution that:
1. the directors of the Corporation are hereby authorized to issue to
Stockscape Technologies Inc. and Global Resource Investments Ltd. a total of
21,600,000 common share purchase warrants, as more particularly described in
the Management Information and Proxy Circular dated March 19, 2002; and
2. any officer of the Corporation is authorized to do all acts and things, to
execute under the common seal of the Corporation or otherwise and to deliver
all agreements, documents and instruments, to give all notices and to
deliver, file and distribute all documents and information which such
officer determines to be necessary or desirable in connection with or to
give effect to and carry out the foregoing resolution."
RESOLUTION NO. 2--DEBENTURE OFFERING RESOLUTION
"BE IT RESOLVED as an ordinary resolution that:
1. the directors of the Corporation are hereby authorized to issue convertible
debentures in a principal amount of U.S.$2,774,000 to various investors and
4,325,925 special warrants to Global Resource Investments Ltd., all as more
particularly described in the Management Information and Proxy Circular
dated March 19, 2002; and
2. any officer of the Corporation is authorized to do all acts and things, to
execute under the common seal of the Corporation or otherwise and to deliver
all agreements, documents and instructions, to give all notices and to
deliver, file and distribute all documents and information which such
officer determines to be necessary or desirable in connection with or to
give effect to and carry out the foregoing resolution."
RESOLUTION NO. 3--SHARE CONSOLIDATION RESOLUTION
"BE IT RESOLVED, as a special resolution, that:
1. the Corporation consolidate all of its issued and outstanding common shares
on the basis of every 20 issued and outstanding common shares without par
value being consolidated into one common share without par value, and amend
the Corporation's Articles of Continuance accordingly;
2. no fractional common shares of the Corporation shall be issued in connection
with the consolidation and in the event that the resultant number of common
shares held by any shareholder is not a whole number, then the number of
common shares to be received by a shareholder shall be rounded down to the
nearest whole number of common shares;
3. the maximum number of common shares that the Corporation is authorized to
issue is not amended, and shall remain as an unlimited number of common
shares without par value authorized for issuance by the Corporation;
4. the amended Articles of Continuance of the Corporation (the "Amended
Articles") in substantially the form attached as Schedule "B" to the
Management Information and Proxy Circular dated March 19, 2002 are hereby
approved in all respects, with such amendments thereto as the director or
officer executing the same may approve, such approval to be conclusively
evidenced by his or her signature thereto;
5. notwithstanding that this special resolution has been duly passed by the
shareholders of the Corporation, the Board of Directors of the Corporation
may, in their sole discretion and without
A-1
further approval of the shareholders of the Corporation, revoke this special
resolution at any time prior to effecting the share consolidation and elect
not to act on or carry out this special resolution; and
6. any director or officer of the Corporation is hereby authorized, for and on
behalf of the Corporation, to execute and deliver the Amended Articles and
to execute and, if appropriate, deliver all of the documents and do all
other things as in the opinion of such director or officer may be necessary
or desirable to implement this special resolution and the matters authorized
hereby, such determination to be conclusively evidenced by the execution and
delivery of such document or instrument and the taking of any such action."
A-2
SCHEDULE "B"
ARTICLES OF AMENDMENT
BUSINESS CORPORATIONS ACT (YUKON)
(Section 30 or 179)
Form 5-01
ARTICLES OF AMENDMENT
1. Name of Corporation: Vista Gold Corp.
2. Corporate Access Number: 26273
3. The Articles of the above named corporation are amended pursuant to a court
order:
Yes No X
4. The Articles of Continuance of Vista Gold Corp. (the "Corporation") are
amended as follows by special resolution of the shareholders of the
Corporation:
(a) the Corporation consolidate all of its issued and outstanding common
shares without par value on the basis of every 20 issued and outstanding
common shares without par value being consolidated into one common share
without par value:
(i) no fractional common shares of the Corporation shall be issued in
connection with the consolidation and in the event that the
resultant number of common shares held by any shareholder is not a
whole number, then the number of common shares to be received by a
shareholder shall be rounded down to the nearest whole number of
common shares; and
(ii) the maximum number of common shares that the Corporation is
authorized to issue is not amended, and shall remain as an
unlimited number of common shares without par value authorized for
issuance by the Corporation.
5. Date Signature Title
B-1
SCHEDULE "C"
ALIGNMENT WITH TSE CORPORATE GOVERNANCE GUIDELINES
DOES THE
TSE CORPORATE CORPORATION
GOVERNANCE GUIDELINE ALIGN? COMMENTS
-------------------- ----------- ------------------------------------------------------
1. Board should Yes Pursuant to the BUSINESS CORPORATIONS ACT of the Yukon
explicitly assume Territory, the Board of Directors is required to
responsibility for manage or supervise the management of the affairs and
stewardship of the business of the Corporation. The Board of Directors
corporation, and has adopted a written mandate, which defines its
specifically for: stewardship responsibilities in light of this
statutory obligation. The Directors' principal
responsibilities are to supervise and evaluate
management, to oversee the conduct of the business, to
set policies appropriate for the business and to
approve corporate strategies and goals. In carrying
out these responsibilities, the Board of Directors is
entitled to place reasonable reliance on management.
The mandate and responsibilities of the Board of
Directors are to be carried out in a manner consistent
with the fundamental objective of protecting and
enhancing the value of the Corporation and providing
ongoing benefit to the shareholders.
(a) adoption of a Yes The Board of Directors specifically assumes
strategic planning responsibility for the adoption of a strategic
process planning process.
(b) identification of Yes The Board of Directors specifically assumes
principal risks, responsibility for identification of principal risks,
and implementing and implementing risk management systems.
risk management
systems
(c) succession Yes The Board of Directors specifically assumes
planning and responsibility for succession planning and monitoring
monitoring senior senior management.
management
(d) communications Yes The Board of Directors specifically assumes
policy responsibility for the Corporation's communications
policy.
(e) integrity of Yes The Board of Directors specifically assumes
internal control and responsibility for the integrity of internal control
management and management information systems.
information
systems
2. Majority of directors Yes The present Board of Directors consists of five
should be "unrelated" directors, three of whom qualify as unrelated
(independent of directors who are independent of management and free
management and free from any interest or business relationship which
from conflicting could, or could be perceived to, materially interfere
interest) with their ability to act in the best interest of the
Corporation.
C-1
DOES THE
TSE CORPORATE CORPORATION
GOVERNANCE GUIDELINE ALIGN? COMMENTS
-------------------- ----------- ------------------------------------------------------
3. Disclosure for each Yes Ronald J. McGregor is a related director because of
director whether he or his management position with the Corporation. Michael
she is related, and B. Richings was President and Chief Executive Officer
how that conclusion of the Corporation until September 8, 2000 and since
was reached then has continued to provide services to management
of the Corporation on an informal consulting basis.
The Corporate Governance Committee of the Board of
Directors has determined that the above factors may
impair the ability of the directors to act with a view
to the best interest of the Corporation and,
accordingly, Mr. Richings has been determined to be a
related director. The remaining three directors are
all independent of management and have no interest,
business or other relationship other than
shareholdings, which could, or could reasonably be
perceived to materially interfere with the directors
ability to act with a view to the best interests of
the Corporation.
The Corporation does not have a significant
shareholder with the ability to exercise a majority of
the votes for the election of the Board of Directors.
4. (a) Appoint a Yes The Corporate Governance Committee, which is required
committee to meet at least once each year, is required to
responsible for identify, review the qualifications of and recommend
appointment/ to the Board of Directors possible nominees for the
assessment of Board of Directors to be proposed in management's
directors Information Circular for election or re-election at
each annual meeting of the Corporation and to
identify, review the qualifications of and recommend
to the Board of Directors possible candidates to fill
vacancies on the Board of Directors between annual
meetings.
(b) Composed Yes The Corporate Governance Committee is entirely
exclusively of composed of non-management directors who are unrelated
non-management to the Corporation.
directors, the
majority of whom
are unrelated
5. Implement a process Yes The Corporate Governance Committee reviews the
for assessing the Corporations governance activities and reviews the
effectiveness of the qualifications of and recommends to the Board of
Board, its committees Directors nominees for re-election at each annual
and individual meeting of the Corporation.
directors
6. Provide orientation Yes New Board members receive a director's orientation. As
and education programs well, presentations are from time to time given to the
for new directors Board on legal and other matters applicable to the
Corporation and directors' duties.
C-2
DOES THE
TSE CORPORATE CORPORATION
GOVERNANCE GUIDELINE ALIGN? COMMENTS
-------------------- ----------- ------------------------------------------------------
7. Consider reducing size Yes A board must have enough directors to carry out its
of Board, with a view duties efficiently, while presenting a diversity of
to improving views and experience. The Board of Directors believes
effectiveness that its present size effectively fulfils this goal.
The size of the Board, at five members, is smaller
than in previous years, reflecting a depressed gold
market and a reduced level of company activities, and
allowing the Board to react more quickly in changing
market conditions. The Corporate Governance Committee
reviews the Board size annually.
8. Review compensation of Yes The Compensation Committee is comprised of three
directors in light of directors, John M. Clark, C. Thomas Ogryzlo, and
risks and A. Murray Sinclair (since February 21, 2002) all of
responsibilities whom are unrelated directors who are independent of
management. The Compensation Committee reviews and
makes recommendations to the Board of Directors in
respect of the compensation levels for the directors
and executive officers of the Corporation.
9. (a) Committees should Yes The Board of Directors has established three
generally be committees: the Audit Committee; the Compensation
composed of Committee; and the Corporate Governance Committee. All
non-management three committees are entirely composed of
directors non-management directors.
(b) Majority of Yes All the members of the Audit Committee, the
committee members Compensation Committee and the Corporate Governance
should be Committee are unrelated directors.
unrelated
10. Appoint a committee Yes The Corporate Governance Committee consists of three
responsible for directors, John M. Clark, C. Thomas Ogryzlo, and
approach to corporate A. Murray Sinclair (since February 21, 2002) all of
governance issues whom were unrelated directors who were independent of
management of the Corporation. The Corporate
Governance Committee reviews the Corporation's
governance activities and policies and reviews
proposed nominees for the Board of Directors prior to
approval by the Board of Directors.
C-3
DOES THE
TSE CORPORATE CORPORATION
GOVERNANCE GUIDELINE ALIGN? COMMENTS
-------------------- ----------- ------------------------------------------------------
11. (a) Define limits to
management's
responsibilities
by developing
mandates for:
(i) the Board Yes The Board of Directors expects management of the
Corporation to conduct the business and affairs of the
Corporation in accordance with the Corporation's
ongoing strategic plan and to meet or surpass the
annual and long-term goals of the Corporation set by
the Board of Directors in consultation with
management. As a part of its annual strategic planning
process, the Board of Directors specifies its
expectations of management both over the next
financial year and in the context of the Corporation's
long-term goals. The Board of Directors will review
management's progress in meeting these expectations at
Board of Director's meetings held at least every
quarter.
(ii) the CEO Yes The Board of Directors has delegated the day to day
management of the business and affairs of the
Corporation to the President and Chief Executive
Officer, subject to compliance with the Corporation's
strategic plans.
(b) Board should Yes The Corporation's capital plans are approved from time
approve CEO's to time by the Board of Directors.
corporate
objectives
12. Establish structures Yes The Board of Directors believes that adequate
and procedures to structures and processes are in place to facilitate
enable the board to the functioning of the Board of Directors
function independently independently of the Corporation's management. The
of management Audit Committee, the Compensation Committee and the
Corporate Governance Committee are entirely composed
of directors who are unrelated to the Corporation's
management.
C-4
DOES THE
TSE CORPORATE CORPORATION
GOVERNANCE GUIDELINE ALIGN? COMMENTS
-------------------- ----------- ------------------------------------------------------
13. (a) Establish an audit Yes The Audit Committee is composed of three directors,
committee with a John M. Clark, C. Thomas Ogryzlo and A. Murray
specifically Sinclair (since February 21, 2002), all of whom are
defined mandate unrelated directors who are independent of management.
The Audit Committee, under the guidance of the Audit
Committee Charter approved by the Board of Directors,
reviews annual and quarterly financial statements and
oversees the annual audit process, internal accounting
controls and the resolution of issues identified by
the Corporation's external auditor.
(b) All members should Yes All members of the Audit Committee are non-management
be non-management directors.
directors
14. Implement a system to Yes Individual directors can engage outside advisers.
enable individual
directors to engage
outside advisers, at
corporation's expense
C-5
PROXY
SOLICITED BY MANAGEMENT OF VISTA GOLD CORP.
FOR THE 2002 ANNUAL GENERAL MEETING OF VISTA GOLD CORP.
The undersigned shareholder of Vista Gold Corp. (the "Corporation") hereby
appoints Ronald J. McGregor, or failing him John F. Engele, or failing either of
them as the proxyholder for and on
behalf of the undersigned to attend, act and vote for and on behalf of the
undersigned at the annual general meeting (the "Meeting") of the shareholders of
the Corporation to be held at 10:00 a.m. (Vancouver time) in Vancouver, British
Columbia, on Friday, April 26, 2002 and at any adjournments thereof, to the same
extent and with the same powers as if the undersigned were present at the said
meeting, or any adjournments thereof, and, without limiting the foregoing, the
persons named are specifically directed to vote as indicated below. For further
information regarding the Meeting and the matters that will be acted on at the
Meeting, reference is specifically made to the accompanying Notice of Meeting
and Management Information and Proxy Circular, both dated March 15, 2002
(the "Circular").
The undersigned directs the proxyholder appointed by this proxy to vote as
follows:
1. To elect the following persons as directors of the Corporation until the
next annual general meeting:
Ronald J. McGregor........................... FOR / / WITHHOLD / /
John M. Clark................................ FOR / / WITHHOLD / /
C. Thomas Ogryzlo............................ FOR / / WITHHOLD / /
Michael B. Richings.......................... FOR / / WITHHOLD / /
Murray Sinclair.............................. FOR / / WITHHOLD / /
2. To appoint PricewaterhouseCoopers LLP, Chartered Accountants, as auditor of
the Corporation until the next annual general meeting and authorize the
directors to fix the remuneration to be paid to the auditor.
FOR / / WITHHOLD / /
3. To approve an ordinary resolution authorizing the directors of the
Corporation to issue common share purchase warrants which, subject to
certain conditions including the approval of shareholders at the Meeting,
are exercisable to acquire common shares of the Corporation, the full text
of which resolution is set out as Resolution No. 1 in Schedule "A" to the
Circular.
FOR / / AGAINST / /
4. To approve an ordinary resolution authorizing the directors of the
Corporation to issue certain convertible debentures and special warrants
which, subject to certain conditions including the approval of shareholders
at the Meeting, are convertible into or exercisable to acquire common shares
of the Corporation and common share purchase warrants to acquire common
shares of the Corporation, the full text of which resolution is set out as
Resolution No. 2 in Schedule "A" to the Circular.
FOR / / AGAINST / /
5. To approve a special resolution authorizing the consolidation of the issued
and outstanding common shares of the Corporation on the basis of 20 issued
and outstanding common shares being consolidated into one common share, and
related amendments to the Corporation's Articles of Continuation, the
complete text of which resolution is set out as Resolution No. 3 in
Schedule "A" to the Circular, and the full text of such proposed Articles of
Amendment is set out in Schedule "B" to the Circular, and both of which are
incorporated herein by reference.
FOR / / AGAINST / /
EXECUTED on the ________ day of __________________ , 2002.
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Signature of Shareholder (or Authorized Number of Common Shares Held
Attorney or Signatory on behalf of Shareholder)
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Name of Shareholder (please print clearly)
--------------------------------------------------------------------------------
Address
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City/Province
INSTRUCTIONS:
1. The common shares represented by this proxy will, on any ballot, be voted as
you may have specified by marking an "X" in the spaces provided for that
purpose. IF NO CHOICE IS SPECIFIED AND EITHER OF RONALD J. MCGREGOR OR JOHN
F. ENGELE IS APPOINTED AS PROXYHOLDER, THE COMMON SHARES WILL BE VOTED AS IF
YOU HAD SPECIFIED AN AFFIRMATIVE VOTE.
2. YOU MAY APPOINT AS PROXYHOLDER SOMEONE OTHER THAN THE PERSONS NAMED IN THIS
PROXY BY STRIKING OUT THEIR NAMES AND INSERTING IN THE BLANK SPACE PROVIDED
THE NAME OF THE PERSON YOU WISH TO ATTEND AND ACT AS PROXYHOLDER, AND THAT
PERSON NEED NOT BE A SHAREHOLDER OF THE CORPORATION. IF THE INSTRUCTIONS ON
THIS PROXY ARE CERTAIN, THE COMMON SHARES REPRESENTED BY THE PROXY WILL BE
VOTED ON ANY POLL IN ACCORDANCE WITH SUCH INSTRUCTIONS, AND WHERE YOU
SPECIFY A CHOICE WITH RESPECT TO ANY MATTER TO BE ACTED ON, THE COMMON
SHARES WILL BE VOTED ON ANY POLL IN ACCORDANCE WITH THE SPECIFICATIONS SO
MADE.
3. THIS PROXY ALSO CONFERS A DISCRETIONARY AUTHORITY TO VOTE THE SHARES WITH
RESPECT TO: (A) AMENDMENTS TO OR VARIATIONS OF MATTERS IDENTIFIED IN THE
NOTICE OF MEETING; AND (B) OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE
MEETING, BUT ONLY IF MANAGMENT HAS NOT BEEN MADE AWARE, A REASONABLE TIME
PRIOR TO THIS SOLICITATION, THAT THE AMENDMENTS, VARIATIONS OR OTHER MATTERS
ARE TO BE PRESENTED FOR ACTION AT THE MEETING. NO MATTERS OTHER THAN THOSE
STATED IN THE ATTACHED NOTICE OF MEETING ARE, AT PRESENT, KNOWN TO BE
CONSIDERED AT THE MEETING BUT, IF SUCH MATTERS SHOULD ARISE, PROXIES WILL BE
VOTED IN ACCORDANCE WITH THE INSTRUCTIONS OF THE SHAREHOLDER VOTING BY
PROXY, OR, FAILING SUCH INSTRUCTIONS, IN ACCORDANCE WITH THE BEST JUDGMENT
OF THE PROXYHOLDER.
4. In order to be valid this proxy must be dated and signed by the shareholder
or by his or her attorney duly authorized in writing or, in the case of a
corporation, executed under its corporate seal or by an officer or officers
or attorney for the corporation duly authorized. If this proxy is executed
by an attorney for an individual shareholder or joint shareholder or by an
officer or officers or attorney of a corporate shareholder not under its
corporate seal, the instrument so empowering the officer or officers or the
attorney, as the case may be, or a notarial copy thereof, should accompany
the proxy. The signature and name must conform to the name of the
shareholder as registered. Executors, administrators and trustees signing on
behalf of the registered shareholder should so indicate. If shares are
jointly held, either of the registered owners may sign the proxy. If this
proxy is not dated in the blank space provided, it will be deemed to bear
the date on which it was mailed by management of the Corporation.
5. This proxy may not be used at the Meeting unless it is deposited at the
office of Computershare Trust Company of Canada at 510 Burrard Street,
Vancouver, British Columbia, V6C 3B9, Attention: Proxy Department before
10:00 a.m., Vancouver time, on Wednesday, April 24, 2002, or no later than
48 hours, excluding Saturdays, Sundays and holidays, before any adjournment
of the Meeting. The Chairman of the Meeting has the discretion to accept
proxies received subsequently.
In accordance with National Policy Statement No. 41/Shareholder Communication,
both registered shareholders and non-registered (beneficial) shareholders may
request annually that their names be added to a company's supplemental mailing
list in order to receive interim financial statements. If you wish to receive
such statements, please complete and return this form to the Corporation's
registrar and transfer agent:
COMPUTERSHARE TRUST COMPANY OF CANADA
510 BURRARD STREET
VANCOUVER, BRITISH COLUMBIA
V6C 3B9
SUPPLEMENTAL MAILING LIST
RETURN CARD
TO: Vista Gold Corp.
The undersigned certifies that the undersigned is the owner of securities of
Vista Gold Corp. (the "Corporation") and requests that the undersigned be placed
on the Corporation's Supplemental Mailing List in order to receive the
Corporation's interim financial statements.
DATED: ------------------------------ , 2002 --------------------------------------------
Signature
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Name -- Please Print
--------------------------------------------
Address
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Postal Code
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Name and title of person signing if different
from name above.