WEALTH MINERALS LTD.
2006 | Notice of Annual General Meeting of Shareholders |
ANNUAL | Management Information Circular |
GENERAL | |
MEETING | |
Place: | Suite 1901, 1177 West Hastings Street
Vancouver, British Columbia
V6E 2K3 |
Time: | 10:00 a.m. |
Date: | Tuesday, December 5, 2006 |
WEALTH MINERALS LTD.
CORPORATE DATA | Head Office
Suite 1901, 1177 West Hastings Street
Vancouver, B.C. V6E 2K3
Directors and Officers
Hendrik Van Alphen, Director, President & Chief Executive Officer
Jerry Pogue, Director
Michael Bartlett, Director
Gary Freeman, Director
Michael W. Kinley, Chief Financial Officer
Lawrence W. Talbot, Vice-President & General Counsel
Marla K. Ritchie, Corporate Secretary
Registrar and Transfer Agent
Computershare Investor Services Inc.
510 Burrard Street, 3rd Floor,
Vancouver, B.C. V6C 3B9
Legal Counsel
Gowling Lafleur Henderson LLP
2300 – 1055 Dunsmuir Street
Vancouver, B.C. V7X 1J1 |
| |
Auditor
STS Partners LLP, C.A.
543 Granville Street, Suite 600
Vancouver, BC V6C 1X8 Stock Exchange Listings
TSX Venture
Symbol “WML” OTC Bulletin Board
Symbol “WMLLF” Frankfurt
Symbol “EJZ” |
WEALTH MINERALS LTD.
MANAGEMENT INFORMATION CIRCULAR
(Containing information as at October 31, 2006 unless indicated otherwise)
SOLICITATION OF PROXIES
This Information Circular is furnished in connection with the solicitation of proxies by the management ofWealth Minerals Ltd. (the “Company”) for use at the Annual General Meeting of Shareholders of the Company (and any adjournment thereof) to be held at 10:00 a.m. (Vancouver time) on Tuesday, December 5, 2006 at the place and for the purposes set forth in the accompanying Notice of Meeting (the “Meeting”). While it is expected that the solicitation will be primarily by mail, proxies may be solicited personally or by telephone by the regular employees of the Company at nominal cost. All costs of solicitation by management will be borne by the Company.
The contents and the sending of this Information Circular have been approved by the directors of the Company.
APPOINTMENT AND REVOCATION OF PROXIES
The individuals named in the accompanying form of proxy are Hendrik Van Alphen, the Presidentof the Company and Michael W. Kinley, the Chief Financial Officer. A SHAREHOLDER WISHING TO APPOINT SOME OTHER PERSON (WHO NEED NOT BE A SHAREHOLDER) TO REPRESENT HIM AT THE MEETING HAS THE RIGHT TO DO SO, EITHER BY STROKING OUT THE NAME OF THE PERSON NAMED IN THE ACCOMPANYING FORM OF PROXY AND INSERTING THE DESIRED PERSON’S NAME IN THE BLANK SPACE PROVIDED IN THE FORM OF PROXY OR BY COMPLETING ANOTHER FORM OF PROXY. A proxy will not be valid unless the completed form of proxy is received by Computershare Investor Services Inc., Proxy Department, 9th Floor, 100 University Avenue, Toronto, Ontario M5J 2Y1, not less than forty-eight (48) hours (excluding Saturdays, Sundays and holidays) before the time for holding the Meeting or, with respect to any matters occur ring after the reconvening of the Meeting following any adjournment of the Meeting, not less than forty-eight (48) hours prior to the time of recommencement of such adjourned Meeting.
A shareholder who has given a proxy may revoke it by an instrument in writing executed by the shareholder or by his attorney authorized in writing or, where the shareholder is a corporation, by a duly authorized officer or attorney of the corporation, and delivered to the registered office of the Company, Suite 2300, 1055 Dunsmuir Street, P.O. Box 49122, Vancouver, British Columbia, V7X 1J1 at any time up to and including the last business day preceding the day of the Meeting, or if adjourned, any reconvening thereof, or in any other manner provided by law. A revocation of a proxy does not affect any matter on which a vote has been taken prior to the revocation.
VOTING OF PROXIES
The shares represented by a properly executed proxy in favour of persons designated as proxyholders in the enclosed form of proxy will:
(a)
be voted or withheld from voting in accordance with the instructions of the person appointing the proxyholder on any ballot that may be called for; and
(b)
where a choice with respect to any matter to be acted upon has been specified in the form of proxy, be voted in accordance with the specification made in such proxy.
SUCH SHARES WILL BE VOTEDIN FAVOUR OF EACH MATTER FOR WHICH NO CHOICE HAS BEEN SPECIFIED OR WHERE BOTH CHOICES HAVE BEEN SPECIFIED BY THE SHAREHOLDER.
The enclosed form of proxy, when properly completed and delivered and not revoked, confers discretionary authority upon the person appointed proxy thereunder to vote with respect to amendments or variations of matters identified in the Notice of Meeting, and with respect to other matters which may properly come before the Meeting. If amendments or variations to matters identified in the Notice of Meeting are properly brought before the Meeting or any further or other business is properly brought before the Meeting, it is the intention of the persons designated in the enclosed form of proxy to vote in accordance with their best judgment on such matters or business. At the time of the printing of this Information Circular, the management of the Company knows of no such amendment, variation or other matter that may be presented to the Meeting.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
Authorized Capital:
An unlimited number of common shares without par value
Issued and Outstanding:
20,236,142 common shares without par value
Only shareholders of record at the close of business on October 31, 2006 (the “Record Date”), who either personally attend the Meeting or who have completed and delivered a form of proxy in the manner and subject to the provisions described above shall be entitled to vote or to have their shares voted at the Meeting.
On a show of hands, every individual who is present as a shareholder or as a duly appointed representative of one or more registered corporate shareholders will have one vote, and on a poll every shareholder present in person or represented by a valid proxy, and every person who is a duly appointed representative of one or more corporate shareholders, will have one vote for each common share registered in the name of the shareholder on the list of shareholders, which is available for inspection during normal business hours at Computershare Investor Services Inc. and will be available at the Meeting. Shareholders represented by proxyholders are not entitled to vote on a show of hands.
To the knowledge of the directors and senior officers of the Company, there are no persons or companies who beneficially own, directly or indirectly or exercise control or direction over shares carrying more than 10% of the voting rights attached to all outstanding shares of the Company.
ADVICE TO BENEFICIAL SHAREHOLDERS
Only registered shareholders or proxyholders duly appointed by registered shareholders are permitted to vote at the Meeting. Most shareholders of the Company are “non-registered” shareholders because the shares they own are not registered in their names but are instead registered in the names of a brokerage firm, bank or other intermediary or in the name of a clearing agency. Shareholders who do not hold their shares in their own name (referred to herein as “Beneficial Shareholders”) should note that only registered shareholders are entitled to vote at the Meeting. If common shares are listed in an account statement provided to a shareholder by a broker, then in almost all cases those common shares will not be registered in such shareholder’s name on the records of the Company. Such common shares will more likely be registered under the name of the shareholder’s broker or an agent of that broker. In Canada, the vast majority of such shares are registered under the name of CDS & Co. (the registration name for The Canadian Depository for Securities, which company acts as nominee for many Canadian brokerage firms). Common shares held by brokers (or their agents or nominees) on behalf of a broker’s client can only be voted (for or against resolutions) at the direction of the Beneficial Shareholder. Without specific instructions, brokers and their agents and nominees are prohibited from voting shares for the brokers’ clients. Therefore, each Beneficial Shareholder should ensure that voting instructions are communicated to the appropriate person well in advance of the Meeting.
Existing regulatory policy requires brokers and other intermediaries to seek voting instructions from Beneficial Shareholders in advance of shareholders’ meetings. The various brokers and other intermediaries have their own mailing procedures and provide their own return instructions to clients, which should be carefully followed by Beneficial Shareholders in order to ensure that their common shares are voted at the Meeting. Often the form of proxy supplied to a Beneficial Shareholder by its broker is identical to the form of proxy provided by the Company to the registered shareholders. However, its purpose is limited to instructing the registered shareholder (i.e. the broker or agent of the broker) how to vote on behalf of the Beneficial Shareholder. The majority of brokers now delegate responsibility for obtaining instructions from clients to ADP Investor Communications Services (“ADP”). ADP typically prepares a machine-readable voting instruction form, mails those forms to the Beneficial Shareholders and asks Beneficial Shareholders to return the forms to ADP, or otherwise communicate voting instructions to ADP (by way of the internet or telephone, for example). ADP then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of common shares to be represented at the Meeting. A Beneficial Shareholder who receives an ADP voting instruction form cannot use that form to vote common shares directly at the Meeting. The voting instruction form must be returned to ADP (or instructions respecting the voting of common shares must be communicated to ADP) well in advance of the Meeting in order to have the common shares voted.
This Information Circular and accompanying materials are being sent to both registered shareholders and Beneficial Shareholders. Beneficial Shareholders fall into two categories – those who object to their identity being known to the issuers of securities which they own (“Objecting Beneficial Owners”, or “OBO’s”) and those who do not object to their identity being made known to the issuers of the securities they own (“Non-Objecting Beneficial Owners”, or “NOBO’s”). Subject to the provision of National Instrument 54-101 – Communication with Beneficial Owners of Securities of Reporting Issuers (“NI 54-101”) issuers may request and obtain a list of their NOBO’s from intermediaries via their transfer agents. If you are a Beneficial Shareholder, and the Company or its agent has sent these materials directly to you , your name, address and information about your holdings of common shares have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding the common shares on your behalf.
The Company’s OBO’s can expect to be contacted by ADP or their brokers or their broker’s agents as set out above.
Although Beneficial Shareholders may not be recognized directly at the Meeting for the purposes of voting common shares registered in the name of his broker, a Beneficial Shareholder may attend the Meeting as proxyholder for the registered shareholder and vote the common shares in that capacity. Beneficial shareholders who wish to attend the Meeting and indirectly vote their common shares as proxyholder for the registered shareholder should enter their own names in the blank space on the proxy or voting instruction card provided to them and return the same to their broker (or the broker’s agent) in accordance with the instructions provided by such broker.
All references to shareholders in this Information Circular and the accompanying form of Proxy and Notice of Meeting are to registered shareholders unless specifically stated otherwise.
ELECTION OF DIRECTORS
The Board of Directors presently consists of four directors and the directors have, by resolution, fixed the number of directors of the Company for the time being at four. Accordingly, there are four directors to be elected for the ensuing year.
The term of office of each of the present directors expires at the Meeting. The persons named below will be presented for election at the Meeting as management’s nominees and the persons named in the accompanying form of proxy intend to vote for the election of these nominees. Management does not contemplate that any of these nominees will be unable to serve as a director. Each director elected will hold office until the next annual general meeting of the Company or until his successor is elected or appointed, unless his office is earlier vacated in accordance with the Articles of the Company, or with the provisions of theBusiness Corporations Act(British Columbia).
In the following table and notes thereto is stated the name of each person proposed to be nominated by management for election as a director, the country in which he is ordinarily resident, all offices of the Company now held by him, his principal occupation, the period of time for which he has been a director of the Company, and the number of common shares of the Company beneficially owned by him, directly or indirectly, or over which he exercises control or direction, as at the date hereof.
Name, Position and Country of Residence(1) | Principal Occupation(1) | Date Elected or Appointed | Number of Shares Held(2) |
Hendrik Van Alphen(3)
President and Chief Executive Officer
Canada | Businessman; President and CEO of Cardero Resource Corp. (public mineral exploration company) 1999 to present; Director of Athlone Energy Ltd. (public oil & gas exploration company) June 2002 to present; Chairman and director of International Tower Hill Mines Ltd. (public mineral exploration company) September 2006 to present | September 27, 2004 | 734,000 |
Jerry Pogue(3)
Director
United States of America | Self-employed business consultant since 1994. | September 11, 1996 | 768,705(4) |
Michael Bartlett(3)
Director
United States of America | Businessman, President and owner of Leisure Capital Management Inc. (private investment company) from 1989 to present | January 31, 2000 | nil |
Jeffrey A. Pontius
Nominee
United States of America | Geologist; President & CEO of International Tower Hill Mines Ltd. (public mineral exploration company) since September 2006; previously, North American Exploration Manager, AngloGold Ashanti (USA) Exploration Inc. (an indirect subsidiary of AngloGold Ashanti Limited) since 1999. | nominee | Nil |
NOTES:
(1)
The information as to the municipality of residence and principal occupation, not being within the knowledge of the Company, has been furnished by the respective directors individually.
(2)
The information as to shares beneficially owned or over which a director exercises control or direction, not being within the knowledge of the Company, has been furnished by the respective directors individually.
(3)
Denotes member of Audit Committee.
(4)
Of these shares, 244,800 are held by Amergold Investments Inc., a company controlled by Mr. Pogue.
AUDIT COMMITTEE
Under Multilateral Instrument 52-110 – Audit Committees (“MI 52-110”), companies are required to provide certain disclosure with respect to their audit committee, including the text of the audit committee’s charter, the composition of the audit committee and the fees paid to the external auditor. This information with respect to the Company is provided in Schedule “A”.
STATEMENT OF EXECUTIVE COMPENSATION
The Company is required to disclose the compensation of each of its Named Executive Officers for each of the Company’s three most recently completed financial years. “Named Executive Officers” means the individuals who served as Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) of the Company (or acted in a similar capacity) during the most recently completed financial year, regardless of the amount of compensation of such individuals, and each of the Company’s three most highly compensated executive officers, other than the CEO and CFO, who were serving as executive officers at the end of the most recent financial year and whose total salary and bonus amounted to $150,000 or more. In addition, disclosure is also required for any individuals whose total salary and bonus during the most recent financial year was $150,000 whether or not they are an executive officer at the end of the financial year.
Summary Compensation Table
The following table sets forth the compensation awarded, paid to or earned by the Company’s Named Executive Officers during the financial years ended November 30, 2005, 2004, and 2003.
| | | Annual Compensation | Long Term Compensation | |
| | | | | | Awards | Payouts | |
Name and Principal Position | Fiscal Year(1) | Salary
($) | Bonus
($) | Other Annual Compensation
($) | Securities
Under Options/
SARs
Granted
(#) | Restricted Shares or Restricted Share
Units
($) | LTIP
Payouts
($) | All
Other
Compensation |
Jerry Pogue,
Acting President and Chief Executive
Officer – March 30, 2005 to June 20, 2006 | 2005
2004
2003 | 16,000
N/A
N/A | Nil
N/A
N/A | Nil
N/A
N/A | 25,000/0
N/A
N/A | Nil
N/A
N/A | Nil
N/A
N/A | Nil
N/A
N/A |
Michael W. Kinley
Chief Financial Officer since Aug 1, 2005 | 2005
2004
2003 | 12,000
N/A
N/A | Nil
N/A
N/A | Nil
N/A
N/A | Nil
N/A
N/A | Nil
N/A
N/A | Nil
N/A
N/A | Nil
N/A
N/A |
Jon Lever
Former Chief Financial
Officer from
September 27, 2004
until July 31, 2005 | 2005
2004
2003 | 16,000
4,000
N/A | Nil
Nil
N/A | Nil
Nil
N/A | Nil
50,000/0
N/A | Nil
N/A
N/A | Nil
N/A
N/A | Nil
N/A
N/A |
Rosie Moore(2)
Former President from
September 27, 2004
until March 30, 2005 | 2005
2004
2003 | 13,500
22,500
N/A | Nil
Nil
N/A | 144,000
N/A
N/A | N/A
200,000/0
N/A | Nil
N/A
N/A | Nil
N/A
N/A | Nil
N/A
N/A |
Gary Freeman
Former President until
September 27, 2004 | 2005
2004
2003 | 72,500
65,000
60,000 | Nil
Nil
Nil | Nil
60,000
Nil | Nil
235,000/0
250,000/0 | Nil
Nil
Nil | Nil
Nil
Nil | Nil
Nil
Nil |
(1)
Fiscal years ended November 30.
(2)
The $144,000 represents wages and severance paid to Ms. Moore. Also, the 200,000 options granted to Ms. Moore were cancelled by mutual consent on May 2, 2005.
Long Term Incentive Plans
Long term incentive plan (“LTIP”) means “a plan providing compensation intended to motivate performance over a period greater than one financial year, LTIPs do not include option or stock appreciation rights plans or plans for compensation through shares or units that are subject to restrictions on resale”. The Company has not granted any LTIPs during the past financial year.
Stock Appreciation Rights
Stock appreciation right (“SAR”) means a right, granted by an issuer or any of its subsidiaries as compensation for employment services or office to receive cash or an issue or transfer of securities based wholly or in part on changes in the trading price of the Company’s shares. No SARs were granted to or exercised by the Named Executive Officer or directors of the Company during the past financial year.
Option Grants in Last Financial Year
During the fiscal year ended November 30, 2005, incentive stock options were granted to Named Executive Officers as set forth below.
Name | Securities
Under
Options/SARs
Granted | Percentage of Total
Options/SARs
Granted to
Employees in
Financial Year(1) | Exercise or
Base Price
($/Security) | Market Value of
Securities
Underlying
Options/SARs
on the Date of
Grant
($/Security) | Expiration Date |
Jerry Pogue | 25,000 | 2.82% | $1.05/share | $1.23/share | August 29, 2007 |
Michael W. Kinley | nil | n/a | n/a | n/a | n/a |
Jon Lever | n/a | n/a | n/a | n/a | n/a |
Rosie Moore | n/a | n/a | n/a | n/a | n/a |
Gary Freeman | n/a | n/a | n/a | n/a | n/a |
Aggregated Option Exercises during the Most Recently Completed Financial Year and Financial Year-End Option Values
The following table sets forth details of all exercises of stock options during the last financial year ended November 30, 2005, by the Named Executive Officers and the financial year-end value of unexercised options on an aggregated basis:
Name | Securities
Acquired on
Exercise
(#) | Aggregate
Value
Realized
($)(1) | Unexercised Option
at Financial Year-End
(#)
Exercisable/
Unexercisable | Value of Unexercised
In-the-Money
Options at Financial
Year-End
($)(2)
Exercisable/
Unexercisable |
Jerry Pogue | Nil | Nil | 175,000/0 | 141,750/0 |
Michael W. Kinley | Nil | Nil | Nil/Nil | N/A |
Jon Lever | 50,000 | 43,000 | Nil/Nil | N/A |
Rosie Moore | Nil | Nil | Nil/Nil | N/A |
Gary Freeman | Nil | Nil | 100,000(3)/0 | 86,000/0 |
(1)
Value using the closing price of common shares of the Company on the Exchange on the date of exercise, less the exercise price per share.
(2)
Value using the closing price of common shares of the Company on the Exchange on November 30, 2005, being the last trading day of the Company’s shares for the financial year, of $1.56 per share, less the exercise price per share.
(3)
In addition, 100,000 options previously granted to Mr. Freeman were cancelled May 2/06 by mutual consent.
Option Repricings
No incentive stock options held by the Named Executive Officers were repriced during the last fiscal year.
Termination of Employment, Change in Responsibilities and Employment Contracts
The Company has no plans or arrangements in respect of remuneration received or that may be received by the Named Executive Officer in the Company’s most recently completed financial year or current financial year in respect of compensating such officer in the event of termination of employment (as a result of resignation, retirement, change of control, etc.) or a change in responsibilities following a change of control.
Compensation of Directors
Except as noted below, the Company has no arrangements, standard or otherwise, pursuant to which Directors are compensated by the Company for their services in their capacity as Directors, or for committee participation, involvement in special assignments or for services as a consultant or expert during the most recently completed fiscal year or subsequently, up to and including the date of this Information Circular.
Except as noted below, none of the Company’s current Directors who are not Named Executive Officers have received any manner of compensation for services provided in their capacity as Directors, consultants or experts during the Company’s most recently completed fiscal year.
The following options were granted to the directors of the Company who were not Named Executive Officers, as a group during the fiscal year ended November 30, 2005:
Option Grants in Last Fiscal year to Directors Who are Not Named Executive Officers
(as a group)
Name | Securities
Under
Options/SARs
Granted | % of Total
Options/SARs
Granted to
Employees in
Fiscal Year(1) | Exercise or
Base Price
($/Security) | Market Value of
Securities
Underlying
Options/SARs
on the Date of
Grant
($/Security)(2) | Expiration Date |
Directors who are not Named Executive Officers (3) | 50,000 | 5.65% | $1.05/share | $1.23/share | August 29/07 |
(1)
Percentage of all of the Company’s options granted during the fiscal year ended November 30, 2005.
(2)
Closing price of the Company’s common shares on the TSX Venture Exchange on August 29, 2005.
Aggregated Option Exercises in Last Fiscal year and Fiscal year-End Option Values
of Directors Who are Not Named Executive Officers (as a group)
The following table sets forth details of all exercises of stock options during the last financial year ended November 30, 2005, by the Directors who are not Named Executive Officers and the financial year-end value of unexercised options held by Directors who are not Named Executive Officers on an aggregated basis:
Name | Securities
Acquired on Exercise (#) | Aggregate
Value Realized ($)(1) | Unexercised Option
at Financial Year-End (#) Exercisable/ Unexercisable | Value of Unexercised
In-the-Money Options at Financial Year-End ($)(2)Exercisable/ Unexercisable |
Directors who are not Named Executive Officers (3) | 20,000 | $26,200 | 225,000/0 | 176,000/0 |
(1)
Value using the closing price of common shares of the Company on the Exchange on November 30, 2005, less the exercise price per share.
(2)
Value using the closing price of common shares of the Company on the Exchange on November 30, 2005, being the last trading day of the Company’s shares for the financial year, of $1.56 per share, less the exercise price per share.
Compensation Table
Name of Director | Year(1) | Annual
Compensation -
Directors fees | No. Securities under
option) | All other
compensation -
Consulting fees |
Henk Van Alphen | 2005 | Nil | 175,000(2) | $17,100(3) |
Michael Bartlett | 2005 | Nil | 50,000 | Nil(2) |
(3)
Year ended November 30, 2005.
(4)
25,000 options cancelled May 2, 2005 by mutual consent.
(5)
Consulting fees paid to Henk Van Alphen for management services.
As of November 30, 2005, a total of $40,084 was owed by the Company to related parties as follows: $30,153 to directors for reimbursement of expenses; $5,000 to directors and officers for consulting fees and $4,931 to Cardero Resource Corp. (a company with a common director) for rent and administration fees.
Equity Compensation Plans
The following table provides information regarding the Company’s equity compensation plans which were in effect during the past financial year:
Plan Category | # of Securities to be Issued
Upon Exercise of
Outstanding Options,
Warrants and Rights | Weighted-Average Exercise
Price of Outstanding
Options, Warrants and
Rights | # of Securities Remaining
Available for Future
Issuance Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column (a)) |
Equity Compensation Plans Approved By Shareholders(1) | 1,260,000 | $0.78 | 107,864 |
Equity Compensation Plans Not Approved By Shareholders(1) | None | N/A | N/A |
Total(1): | 1,260,000 | N/A | 107,864 |
(1)
As at November 30, 2005, being the last day of the Company’s most recently completed fiscal year, options had been granted and were outstanding to purchase a total of 1,260,000 common shares, and options to purchase up to an additional 107,864 common shares were available for future grants, under the provisions of the Company’s 2004 Incentive Stock Option Plan. As of October 27, 2006, options have been granted and are outstanding to purchase a total of 1,460,000 common shares, and options to purchase up to an additional 563,614 common shares are available for future grants under the provisions of the Company’s Incentive Stock Option Plan. See “Particulars of Other Matters to be Acted Upon – Annual Re-Approval of Incentive Stock Option Plan” for details on the Company’s 2004 Incentive Stock Option Plan.
STATEMENT OF CORPORATE GOVERNANCE PRACTICE
The British Columbia Securities Commission has issued guidelines on corporate governance disclosure for venture issuers as set out in Form 58-101F2 and requires full and complete annual disclosure of listed companies systems of corporate governance with reference to each of such guidelines (the “Guidelines”). Where a company’s corporate governance system differs from the Guidelines, each difference and the reason for the difference is required to be disclosed. The Company’s approach to corporate governance is provided in Schedule “B”.
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
At no time during the Company’s last completed financial year was any director, executive officer, employee, proposed management nominee for election as a director of the Company nor any associate of any such director, executive officer, or proposed management nominee of the Company or any former director, executive officer or employee of the Company or any of its subsidiaries, indebted to the Company or any of its subsidiaries or indebted to another entity where such indebtedness is or has been the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Company or any of its subsidiaries, other than routine indebtedness.
CORPORATE CEASE TRADE ORDERS OR BANKRUPTCIES
None of the directors or any proposed management nominee for election as a director of the Company is, or during the ten years preceding the date of this Information Circular has been, a director or officer of any company that, while the person was acting in that capacity:
(a)
was the subject of a cease trade order or similar order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days;
(b)
was subject to an event that resulted, after the director or proposed management nominee ceased to be a director or officer of the relevant company, in the relevant company being the subject of a cease trade order or similar order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days; or
(c)
within a year of the director or proposed management nominee ceasing to be a director or officer of the relevant company, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement, or compromise with creditors, or had a receiver, receiver manager, or trustee appointed to hold its assets, except as follows:
1.
Jerry Pogue was a director of Lyon Lake Mines Ltd. (“Lyon”). On September 21, 2000 temporary cease trade orders were issued against Lyon for failure to file the required financial statements, and were subsequently revoked on November 9, 2000 upon the filing of the required records. On May 29, 2001, cease trade orders were again issued as a result of the failure of Lyon to file its annual financial statements for the year ended December 31, 2000, and such cease trade order remains in effect. Mr. Pogue resigned as a director on or about May 8, 2001.
2.
Jerry Pogue is the past President and CEO and a current Director of Indico Technologies Limited (“Indico”). On October 5, 2004, the B.C. Securities Commission issued a cease trade order against all directors of Indico as a consequence of Indico not being able to disclose certain information in its MD & A relating to an investment in a private company which it was constrained from disclosing due to the refusal of the private company to consent to such disclosure. The private company subsequently became public, and the disclosure required by Indico could then be made. As a consequence, the cease trade order was revoked on September 6, 2005.
3.
Michael Bartlett was President and a director of Creative Entertainment Technologies Inc. (“Creative”). On May 29, 2002 a cease trade order was issued against Creative for failure by Creative to file its financial statements for the year ended December 31, 2001, and such cease trade order remains in effect. Mr. Bartlett resigned as a director and officer in 2002.
PERSONAL BANKRUPTCIES
During the ten years preceding the date of this Information Circular, no director or proposed management nominee for election as a director of the Company has been declared bankrupt or made a voluntary assignment in bankruptcy, made a proposal under any legislation relating to bankruptcy or insolvency, or been subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of that individual.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
Other than as set forth below or in this or previous Information Circulars and other than transactions carried out in the ordinary course of business of the Company or any of its subsidiaries, none of the directors or executive officers of the Company, a director or executive officer of a person or company that is itself an informed person of the Company, nor any shareholder beneficially owning shares carrying more than 10% of the voting rights attached to the shares of the Company nor an associate or affiliate of any of the foregoing persons has, since December 1, 2004 (being the commencement of the Company’s last completed financial year), had any material interest, direct or indirect, in any transactions which materially affected or would materially affect the Company or any of its subsidiaries.
As defined in National Instrument 51-102, “informed person” means:
(a)
a director or executive officer of a reporting issuer;
(b)
a director or executive officer of a person or company that is itself an informed person or subsidiary of a reporting issuer;
(c)
any person or company who beneficially owns, directly or indirectly, voting securities of a reporting issuer or who exercises control or direction over voting securities of a reporting issuer or a combination of both carrying more than 10% of the voting rights attached to all outstanding voting securities of the reporting issuer other than voting securities held by the person or company as underwriter in the course of a distribution; and
(d)
a reporting issuer that has purchased, redeemed or otherwise acquired any of its securities, for so long as it holds any of its securities.
1.
On July 5, 2005, the Company completed a non-brokered private placement of 1,000,000 units at a price of $0.56 per unit (“Unit”). Each Unit consisted of one common share and one-half of a non-transferable common share purchase warrant (“Warrant”), with each whole warrant entitling the holder to purchase one additional common share (“Warrant Share”) for a period of 18 months at a price of $0.80. A director, Jerry Pogue, acquired 30,000 Units on the same terms as the other arm’s length participants in the placement.
APPOINTMENT OF AUDITOR
Unless such authority is withheld, the persons named in the accompanying proxy intend to vote for the reappointment of STS Partners LLP, C.A. (formerly: Sadovnick Telford & Skov) as auditors of the Company and to authorize the directors to fix their remuneration. STS Partners LLP was first appointed auditors of the Company on July 9, 2001.
MANAGEMENT CONTRACTS
The management functions of the Company are substantially performed by the directors and officers of the Company, and not to any substantial degree by any other person with whom the Company has contracted.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Other than as set forth in this Information Circular, no person who has been a director or executive officer of the Company at any time since the beginning of the last financial year, nor any proposed nominee for election as a director of the Company, nor any associate or affiliate of any of the foregoing, has any material interest, directly or indirectly, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon other than the election of directors or the appointment of auditors. Directors and executive officers may, however, be interested in the annual re-approval of the Company’s Incentive Stock Option Plan as detailed below.
PARTICULARS OF MATTERS TO BE ACTED UPON
A.
Annual Re-Approval of Incentive Stock Option Plan
Pursuant to Policy 4.4 of the TSX Venture Exchange (“TSXV”), all TSXV listed companies are required to adopt a stock option plan prior to granting incentive stock options. In 2004, the Board of Directors of the Company established such a plan (the “2004 Plan”). The purpose of the 2004 Plan is to attract and motivate directors, senior officers, employees, consultants and others providing services to the Company and its subsidiaries, and thereby advance the Company’s interests, by affording such persons with an opportunity to acquire an equity interest in the Company through the issuance of stock options. The Company is currently listed on Tier 2 of the TSXV and has adopted a “rolling” stock option plan reserving a maximum of 10% of the issued shares of the Company at the time of the stock option grant. The Shareholders have approved the 2004 Plan on January 28, 2004, January 14, 2005 and December 21, 2005. As a “rolling” stock option plan, the 2004 Plan is required to be re-approved by the Shareholders each year at the Company’s Annual General Meeting.
The TSXV’s Policy 4.4 and the terms of the 2004 Plan authorize the Board of Directors to grant stock options to optionees on the following terms:
1.
The aggregate number of shares that may be issued pursuant to options granted under the 2004 Plan, unless otherwise approved by shareholders, may not exceed that number which is equal to 10% of the shares of the Company issued and outstanding at the time of the grant.
2.
The number of shares subject to each option will be determined by the Board of Directors, provided that the aggregate number of shares reserved for issuance pursuant to options granted to:
(a)
insiders may not exceed 10% of the issued shares of the Company;
(b)
any one individual may not exceed 5% of the issued shares of the Company (unless the Company is a Tier 1 Issuer and disinterested shareholder approval has been obtained);
(c)
any one consultant during any 12 month period may not exceed 2% of the issued shares of the Company; and
(d)
all persons employed to provide investor relations activities (as a group) may not exceed 2% of the issued shares of the Company during any 12 month period;
in each case calculated as at the date of grant of the option, including all other shares under option to such person at that time.
3.
The exercise price of an option may not be set at less than the minimum price permitted by the TSXV.
4.
Options may be exercisable for a period of up to five years from the date of grant while the Company is listed on Tier 2 of the TSXV. Options may be granted with an exercise period of up to 10 years if the Company becomes listed on Tier 1 of the TSXV.
5.
The options are non-assignable and non-transferable. The options can only be exercised by the optionee as long as the optionee remains an eligible optionee pursuant to the 2004 Plan or within a period of not more than 90 days after ceasing to be an eligible optionee (30 days in the case of a person engaged in investor relations activities) or, if the optionee dies, within one year from the date of the optionee’s death.
6.
Options granted to consultants engaged to perform investor relations activities must be subject to a vesting requirement, whereby such options will vest over a period of not less than 12 months, with a maximum of 25% vesting in any 3 month period.
7.
On the occurrence of a takeover bid, issuer bid or going private transaction, the Board of Directors will have the right to accelerate the date on which any option becomes exercisable.
A copy of the 2004 Plan may be inspected at the registered office of the Company, Suite 2300, 1055 Dunsmuir Street, Vancouver, B.C. V7X 1J1 during normal business hours at any time up to the Meeting and at the Meeting. In addition, a copy of the plan will be mailed, free of charge, to any holder of common shares who requests a copy, in writing, from the Vice-President of the Company at Suite 1901, 1177 West Hastings Street, Vancouver, BC V6E 2K3.
Notice of options granted under the 2004 Plan must be given to the TSXV on a monthly basis. Any amendments to the 2004 Plan must also be approved by the TSXV and, if necessary, by the shareholders of the Company prior to becoming effective.
Accordingly, Shareholders will be asked to pass an ordinary resolution, in substantially the following form, to re-approve the 2004 Plan:
“RESOLVED, as an ordinary resolution, that the Company’s 2004 Incentive Stock Option Plan, as described in the Company’s Information Circular dated October 31, 2006, and the grant of options thereunder in accordance therewith, be approved.”
ANY OTHER MATTERS
Management of the Company knows of no matters to come before the Meeting other than those referred to in the Notice of Meeting accompanying this Information Circular. However, if any other matters properly come before the Meeting, it is the intention of the persons named in the form of proxy accompanying this Information Circular to vote the same in accordance with their best judgment of such matters.
ADDITIONAL INFORMATION
Additional information regarding the Company and its business activities is available on the SEDAR website located atwww.sedar.com under “Company Profiles – Wealth Minerals Ltd.”. The Company’s financial information is provided in the Company’s comparative financial statements and related management discussion and analysis for its most recently completed financial year and may be viewed on the SEDAR website at the location noted above. Shareholders of the Company may request copies of the Company’s financial statements and related management discussion and analysis by contacting the Vice-President of the Company at Suite 1901 – 1177 West Hastings Street, Vancouver, B.C., V6E 2K3.
Schedule “A”
Audit Committee
Composition of the Audit Committee
Following the election of the directors nominate for election as directors at the Meeting, it is intended that the following will be the members of the Audit Committee:
Henk Van Alphen | Not independent(1) | Financially literate(2) |
Jeffrey Pontius | Independent(1) | Financially literate(2) |
Michael Bartlett | Independent(1) | Financially literate(2) |
(1)
A member of an audit committee is independent if the member has no direct or indirect material relationship with the Company that could, in the view of the Board of Directors, reasonably interfere with the exercise of a member’s independent judgment.
(2)
An individual is financially literate if he has the ability to read and understand a set of financial statements that present a breadth of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements.
The Audit Committee’s Charter
The text of the current charter for the Audit Committee is attached as Exhibit 1 to this Schedule “A”.
Audit Committee Oversight
At no time since the commencement of the Company’s most recently completed financial year was a recommendation of the Audit Committee to nominate or compensate an external auditor not adopted by the Board.
Reliance on Certain Exemptions
At no time since the commencement of the Company’s most recently completed financial year has the Company relied on the exemption in Section 2.4 of MI 52-110 (De Minimis Non-audit Services), or an exemption from MI 52-110, in whole or in part, granted under Part 8 of MI 52-110.
Pre-Approval Policies and Procedures
The Audit Committee is authorized by the Board to review the performance of the Company’s external auditors and approve in advance provision of services other than auditing and to consider the independence of the external auditors, including reviewing the range of services provided in the context of all consulting services bought by the Company. The Chairman of the Audit Committee is authorized to approve any non-audit services or additional work which the Chairman deems as necessary and is required to notify the other members of the Audit Committee of such non-audit or additional work.
External Auditor Service Fees (By Category)
The aggregate fees billed by the Company’s external auditors in each of the last two fiscal yearsfor audit fees are as follows:
Financial Year Ending | Audit Fees(1) | Audit Related Fees(2) | Tax Fees(3) | All Other Fees(4) |
2004 | $34,000 | $Nil | $1,000 | $Nil |
2005 | $45,000 | $Nil | $Nil | $Nil |
(1)
The aggregate audit fees billed.
(2)
The aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements that are not included under the heading “Audit Fees”.
(3)
The aggregate fees billed for professional services rendered for tax compliance, tax advice and tax planning.
(4)
The aggregate fees billed for products and services other than as set out under the headings “Audit Fees”, “Audit Related Fees” and “Tax Fees”.
Exemption
The Company is relying upon the exemption in section 6.1 of the Multilateral Instrument 52-110 –Audit Committees.
Exhibit 1
WEALTH MINERALS LTD.
AUDIT COMMITTEE CHARTER
(Adopted by the Board of Directors on November 24, 2005)
1.
- PURPOSE
The overall purpose of the Audit Committee (the “Committee”) is to:
(a)
ensure that the management of Wealth Minerals Ltd. (the “Company”) has designed and implemented an effective system of internal financial controls for reviewing and reporting on the Company’s financial statements;
(b)
oversee, review and report on the integrity of the Company’s financial disclosure and reporting;
(c)
review the Company's compliance with regulatory and statutory requirements as they relate to financial statements, taxation matters and disclosure of material facts; and
(d)
be directly responsible for:
(i)
the selection of a firm of external auditors to be proposed for election as the external auditors of the Company,
(ii)
the oversight of the work of the Company’s external auditors, and
(iii)
subject to the grant by the shareholders of the authority to do so, if required, fixing the compensation of the external auditors of the Company.
2.
- COMPOSITION, PROCEDURES AND ORGANIZATION
2.1
The Committee will consist of at least three members of the Board of Directors (the “Board”), all of whom will be “independent
1 Whether a director is “independent” will be determined in accordance with all applicable laws and regulations, including the applicable securities laws of Canada and the United States and the regulations and policies of any stock exchange or quotation system on which the Company’s securities are listed or quoted.
2 “unrelated director” means a director who is: (a) not a member of management and is free from any interest and any business, family or other relationship which could reasonably be perceived to materially interfere with the director’s ability to act with a view to the best interests of the issuer, other than interests and relationships arising solely from holdings in the issuer, (b) not currently, or has not been within the last three years, an officer, employee of or material service provider to the issuer or any of its subsidiaries or affiliates; and (c) not a director (or similarly situated individual) officer, employee or significant shareholder of an entity that has a material business relationship with the issuer. A chair or vice chair of the board of directors who is not a member of management is not, for that reason alone, a related director.
2.2
All of the members of the Committee will be “financially literate
2.3
The Board, at its organizational meeting held in conjunction with each annual general meeting of the shareholders, will appoint the members of the Committee for the ensuing year. The Board may at any time remove or replace any member of the Committee and may fill any vacancy in the Committee.
2.4
Unless the Board has appointed a chair of the Committee, the members of the Committee will elect a chair from among their number.
2.5
The Committee will select an individual to act as secretary for the Committee, who will be either:
(a)
a member of the Committee other than the chair, or
(b)
another individual who is not a member of the management of the Company.
2.6
The quorum for meetings will be a majority of the members of the Committee, present in person or by telephone or other telecommunication device that permits all persons participating in the meeting to speak and to hear each other. Decisions by the Committee will be by the affirmative vote of a majority of the members of the Committee, or by consent resolutions in writing signed by each member of the Committee.
2.7
The Committee will have access to such officers and employees of the Company and to the Company's external auditors, and to such information respecting the Company, as it considers to be necessary or advisable in order to perform its duties and responsibilities.
2.8
Meetings of the Committee will be conducted as follows:
(a)
the Committee will meet:
(i)
at least four times annually, and
(ii)
may meet as many additional times:
A.
as deemed necessary or appropriate by the Committee,
B.
upon request by any member of the Committee, the Chief Executive Officer, the Chief Financial Officer or the external auditors,
in each case at such times and at such locations as may be determined by the Committee or the chair of the Committee. Except in respect of a regularly scheduled meeting of the Committee, notice of such meeting, together with a proposed agenda, will be delivered to each member of the Committee not less that forty-eight (48) hours prior to the proposed meeting time (which notice may be waived by all of the members of the Committee); and
(b)
the external auditors and management representatives will be invited to attend as necessary in the discretion of the Committee.
3 An individual is financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally compatible to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company's financial statements.
2.9
The internal accounting staff, any external accounting consultant(s) and the external auditors will have a direct line of communication to the Committee through its chair and may bypass management if deemed necessary. The Committee, through its chair, may contact directly any employee in, or consultant of, the Company as it deems necessary, and any employee of, or consultant to, the Company may bring before the Committee any matter involving questionable, illegal or improper financial practices or transactions.
2.10
The Committee may, in its sole discretion, retain, at the expense of the Company, such legal, financial or other advisors or consultants as it may deem necessary or advisable in order to properly and fully perform its duties and responsibilities hereunder.
3.
- DUTIES AND RESPONSIBILITIES
3.1
The overall duties and responsibilities of the Committee will be as follows:
(a)
be directly responsible for:
(i)
the selection of a firm of external auditors to be proposed for election as the external auditors of the Company,
(ii)
the oversight of the work of the Company’s external auditors, and
(iii)
subject to the grant by the shareholders of the authority to do so, if required, fixing the compensation of the external auditors of the Company;
(b)
to review with the management of the Company (and, in the case of the annual audited statements, with the external auditors) the annual audited consolidated and unaudited consolidated quarterly financial statements, including the notes thereto, to ensure that such statements present fairly the financial position of the Company and the results of its operations and, if appropriate, to recommend to the Board as to the approval of any such financial statements;
(c)
to assist the Board in the discharge of its responsibilities relating to the Company’s accounting principles, reporting practices and internal controls and its approval of the Company's annual and quarterly consolidated financial statements;
(d)
to establish and maintain a direct line of communication with the Company's internal accounting staff and any external accounting consultant(s) and assess their performance;
(e)
to ensure that the management of the Company has designed, implemented and is maintaining an effective and appropriate system of internal financial controls; and
(f)
to report regularly to the Board on the fulfilment of its duties and responsibilities.
3.2
The duties and responsibilities of the Committee as they relate to the external auditors will be as follows:
(a)
to select a firm of external auditors to be proposed by management of the Company to the shareholders for election by the shareholders as the external auditors for the Company, and to verify the independence of such proposed external auditors;
(b)
to review and approve the fee, scope and timing of the annual and any other audit performed by the external auditors;
(c)
to review and evaluate the qualifications, performance and independence of the lead partner of the external auditors of the Company;
(d)
to discuss with management of the Company the timing and process for implementing the rotation of the lead audit partner and the reviewing partners of the external auditors of the Company;
(e)
to obtain confirmation from the external auditors of the Company that they will report directly to the Committee;
(f)
to obtain confirmation from the external auditors of the company that they will report in a timely matter to the Committee all critical accounting policies and practices to be used, all alternative accounting policies and practices, the ramifications of each of such accounting policies and practices and the accounting policy and practice preferred by the external auditors of the Company, for the financial information of the Company within applicable generally accepted accounting principles (“GAAP”) which have been discussed with management of the Company and will provide a copy of all material written communications between the external auditors of the Company and management of the Company including, without limitation, any management letter or schedule of unadjusted differences;
(g)
obtain confirmation from the external auditors of the Company that they will ensure that all reports filed under the United States Securities Exchange Act of 1934, as amended, which contain financial statements required to be prepared in accordance with Canadian GAAP and/or are reconciled to, United States GAAP, reflect all material correcting adjustments identified by the external auditors of the Company;
(h)
to review and approve the Company’s hiring policies regarding partners, employees and former partners and employees of the present and any former external auditors of the Company;
(i)
to review and pre-approve all non-audit services to be provided to the Company (or any of its subsidiaries) by the external auditors, provided that such pre-approval authority may be delegated by the Committee to any member of the Committee who is “independent” and “unrelated” on the condition that any such pre-approval must be presented to the Committee at its first schedule meeting following any such approval;
(j)
review the audit plan of the external auditors prior to the commencement of the audit;
(k)
to review with the external auditors, upon completion of their annual audit:
(i)
the contents of their report,
(ii)
the scope and quality of the audit work performed,
(iii)
the adequacy of the Company's financial and accounting personnel,
(iv)
the co-operation received from the Company's personnel and any external consultants during the audit,
(v)
the scope and nature of the internal resources used,
(vi)
any significant transactions outside of the normal business of the Company,
(vii)
any significant proposed adjustments and recommendations for improving internal accounting controls, accounting principles or management systems, and
(viii)
the non-audit services provided by the external auditors during the year under audit;
(l)
to discuss with the external auditors not just the acceptability, but also the quality, of the Company’s accounting principles; and
(m)
to implement structures and procedures to ensure that the Committee meets the external auditors on a regular basis in the absence of management.
3.3
The duties and responsibilities of the Committee as they relate to the internal control procedures of the Company are to:
(a)
review the appropriateness and effectiveness of the Company's policies and business practices which impact on the financial integrity of the Company, including those relating to internal accounting, the use of and services provided by any external accounting consultant(s), insurance, information services and systems and financial controls, management reporting and risk management, and to ensure that the Company maintains:
(i)
the necessary books, records and accounts in reasonable detail to accurately and fairly reflect the Company’s financial transactions,
(ii)
effective internal control systems, and
(iii)
adequate processes for assessing the risk of material misstatement of the financial statements and for detecting control weaknesses or fraud;
(b)
establish procedures for:
(i)
the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and
(ii)
the confidential, anonymous submission by employees or any external consultants of the Company of concerns regarding questionable accounting or auditing matters;
(c)
to periodically review this policy and recommend to the Board any changes which the Committee may deem appropriate;
(d)
review any unresolved issues between management and the external auditors that could affect the financial reporting or internal controls of the Company;
(e)
periodically review the Company's financial and auditing procedures and the extent to which recommendations made by the internal accounting staff, by any external accounting consultant(s) or by the external auditors have been implemented;
(f)
assist in the preparation of any internal control report by management, which provides that management of the Company is responsible for establishing and maintaining an adequate control structure and procedures for financial reporting by the Company, assessing the effectiveness of such control structure and procedures, and ensuring that the external auditors of the Company attest to, and report on, the assessment of such control structure and procedures by management of the Company;
(g)
assist the Chief Executive Officer and the Chief Financial Officer of the Company in their assessment of the effectiveness of the Company’s internal control over financial reporting and in determining whether there has been any material change in the Company’s internal control over financial reporting which has materially affected or could materially affect such internal control subsequent to the date of the evaluation; and
(h)
assist the Chief Executive Officer and the Chief Financial Officer of the Company in identifying and addressing any significant deficiencies or material weaknesses in the design or operation of the Company’s internal control over financial information and any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
3.4
The Committee is also charged with the responsibility to:
(a)
review the Company's quarterly statements of earnings, including the impact of unusual items and changes in accounting principles and estimates and report to the Board with respect thereto;
(b)
review and approve the financial sections of:
(i)
the annual report to shareholders;
(ii)
the annual information form (if any);
(iii)
any quarterly or annual management discussion and analysis;
(iv)
prospectuses; and
(v)
other public reports requiring approval by the Board,
(vi)
and report to the Board with respect thereto including, without limitation, as to the approval (or otherwise) thereof by the Board;
(c)
review regulatory filings and decisions as they relate to the Company's consolidated annual and interim financial statements, including any press releases with respect thereto;
(d)
ensure that the Company discloses in the periodic reports of the Company, as appropriate, whether at least one member of the Committee is a “financial expert” within the meaning of the rules and forms adopted by the Securities and Exchange Commission;
(e)
ensure that all non-audit services approved by or on behalf of the Committee are disclosed in the periodic reports of the Company;
(f)
ensure that each annual report and, to the extent required by any applicable legal or regulatory requirement, any quarterly report of the Company includes disclosure with respect to all material off-balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships of the Company with unconsolidated entities which may have a current or future effect on the Company in accordance with all applicable legal and regulatory requirements;
(g)
ensure that all financial statements and other financial information, including pro forma financial information, included in any report filed by the Company with any regulatory authority or contained in any public disclosure or press release of the Company is presented in a manner which does not contain a material misstatement or omission and reconciles the pro forma information contained therein to Canadian GAAP, and if appropriate, reconciles such pro forma information contained therein to United States GAAP, and which otherwise complies with all applicable legal and regulatory requirements;
(h)
review the appropriateness of the policies and procedures used in the preparation of the Company's consolidated financial statements and other required disclosure documents, and consider recommendations for any material change to such policies;
(i)
review and report on the integrity of the Company’s consolidated financial statements;
(j)
review the minutes of any audit committee meeting of any subsidiaries of the Company;
(k)
review with management, the external auditors and, if necessary, with legal counsel, any litigation, claim or other contingency, including tax assessments that could have a material effect upon the financial position or operating results of the Company and the manner in which such matters have been disclosed in the consolidated financial statements;
(l)
review the Company’s compliance with regulatory and statutory requirements as they relate to financial statements, tax matters and disclosure of material facts; and
(m)
develop a calendar of activities to be undertaken by the Committee for each ensuing year and to submit the calendar in the appropriate format to the Board within a reasonable time following each annual general meeting of shareholders.
3.5
The Committee shall have the authority to determine:
(a)
subject to the grant by the shareholders of the authority to do so, if required, the compensation to be received by the external auditors of the Company in connection with all audit services, and non-audit services, to be performed by the auditors;
(b)
the compensation to be received by any legal, financial or other advisors or consultants engaged by the Committee to assist it in performing its duties and responsibilities hereunder; and
(c)
the appropriate funding for the ordinary administrative expenses of the Committee.
4.
– General
4.1
The Committee will:
(a)
prepare any report or other disclosure, including any recommendation of the Committee, required by any applicable legal or regulatory requirement to be included in the annual proxy or information circular of the Company;
(b)
review this Charter at least annually and recommend any changes herein to the Board;
(c)
report the activities of the Committee to the Board on a regular basis and make such recommendations thereto as the Committee may deem necessary or appropriate; and
(d)
prepare and review with the Board an annual performance evaluation of the Committee, which performance evaluation must compare the performance of the Committee with the requirements of this Charter and be conducted in such manner as the Committee deems appropriate. Such report to the Board may be in such form as the Committee determines, which may include being in the form of an oral report by the chair of the Committee or by another member of the Committee designated by the Committee to make such report.
4.2
No member of the Committee will receive any compensation from the Company, other than fees for being a director of the Company, or a member of a committee of the Board.
4.3
In addition to the foregoing, the Committee will perform such other duties as may be assigned to it by the Board from time to time or as may be required by any applicable stock exchanges, regulatory authorities or legislation.
SCHEDULE “B”
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
Corporate governance relates to the activities of the board of directors of the Company (the “Board”), the members of which are elected by and are accountable to the shareholders, and takes into account the role of the individual members of management who are appointed by the Board and who are charged with the day-to-day management of the Company. The Board is committed to sound corporate governance practices that are both in the interest of its shareholders and contribute to effective and efficient decision making. National Policy 58-201Corporate Governance Guidelines establishes corporate governance guidelines that apply to all public companies. The Company has reviewed its own corporate governance practices in light of these guidelines. In certain cases, the Company’s practices comply with the guidelines, however, the Board considers that some of the guidelines are not suitable for the Company at its current stage of development and therefore these guidelines have not been adopted. National Instrument 58-101Disclosure of Corporate Governance Practices mandates disclosure of corporate governance practices for Venture Issuers in Form 58-101F2, which disclosure is set out below.
Board of Directors
Structure and Compensation
The Board is currently composed of four (4) directors. Three of the proposed nominees for election as directors at the 2006 Annual General Meeting are currently directors of the Company and one is a new nominee. Form 58-101F1 suggests that the board of directors of every listed company should be constituted with a majority of individuals who qualify as “independent” directors under Multilateral Instrument 52-110 (“MI 52-110”), which provides that a director is independent if he or she has no direct or indirect “material relationship” with the Company. “Material relationship” is defined as a relationship that could, in the view of the Company’s board of directors, be reasonably expected to interfere with the exercise of a director’s independent judgment. Of the proposed nominees, Jeffrey Pontius and Michael Bartlett are con sidered by the Board to be “independent”, within the meaning of MI 52-110. In assessing Form 58-101F2 and making the foregoing determinations, the circumstances of each director have been examined in relation to a number of factors. It is the objective of the Company to continue the search for additional qualified individuals who would be willing to serve as directors and who would be considered as “independent”, so as to achieve a majority of independent Board members and enhance the quality of the Company’s corporate governance.
The Company does not currently have a Chairman of the Board and, given the current size of the Board, does not consider that a Chairman is necessary. The independent directors will be able to exercise their responsibilities for independent oversight of management, and will provide leadership through their position on the Board and ability to meet independently of management whenever deemed necessary. The Board will give consideration to appointing an “independent” member as Chairman at such time as it believes that such a position is required but will not be able to do so until additional “independent” directors are recruited and appointed. This is because, even though a chairman who is not a member of management is not, for that reason alone, not an “independent” director, if one of the “independent” directors became the Chairman, the Audit Committee would no longer have a majority of “non-officer” directors (since the chairman is considered to be an officer under theBusiness Corporations Act(British Columbia)) as required by theBusiness Corporations Act(British Columbia).
The Company does not currently pay its directors any remuneration, as such, and the only compensation received by non-management directors is through payments for consulting services provided by them and the grant of incentive stock options. The quantity and quality of the Board compensation is reviewed on an annual basis. At present, the Board is satisfied that the current Board compensation arrangements adequately reflect the responsibilities and risks involved in being an effective director of the Company. At the present time, the President and Chief Executive Officer does not receive a salary for acting as such, and holds 175,000 stock options. The number of options to be granted to any director or officer is determined by the Board as a whole, thereby providing the independent director(s) with significant input into compensation decisions. Options to be grante d to “management” directors are required, as a matter of board practice, to be reviewed and approved by the “non-management” directors. Given the current size and limited scope of operations of the Company, the Board does not believe that a formal compensation committee is required. At such time as, in the opinion of the Board, the size and activities of the Company and the number of management employees warrants it, the Board will consider it necessary to appoint a formal compensation committee.
The current directors of the Company and the individual proposed as a nominee for director are directors of the following other reporting issuers:
Name of Director | Other Reporting Issuers | Exchange |
Henk Van Alphen | Cardero Resource Corp.
Athlone Energy Ltd.
International Tower Hill Mines Ltd. | TSX, AMEX
TSXV
TSXV, OTCBB |
Jerry Pogue | Indico Technologies Limited | TSXV |
Michael Bartlett | Indico Technologies Limited | TSXV |
Gary R. Freeman | Peterborough Capital Corp.
DiscFactories Corporation
Pediment Exploration Ltd. | TSXV
TSXV
TSXV |
Jeffrey A. Pontius | Nil | N/A |
Mandate of the Board
The mandate of the Board, as prescribed by theBusiness Corporations Act (British Columbia), is to manage or supervise the management of the business and affairs of the Company and to act with a view to the best interests of the Company. In doing so, the Board oversees the management of the Company’s affairs directly and through the Audit Committee. In fulfilling its mandate, the Board, among other matters, is responsible for reviewing and approving the Company’s overall business strategies and its annual business plan, reviewing and approving the annual corporate budget and forecast, reviewing and approving significant capital investments outside the approved budget; reviewing major strategic initiatives to ensure that the Company’s proposed actions accord with shareholder objectives; reviewing succession planning; assessing management’s performance against app roved business plans and industry standards; reviewing and approving the reports and other disclosure issued to shareholders; ensuring the effective operation of the Board; and safeguarding shareholders’ equity interests through the optimum utilization of the Company’s capital resources. The Board also takes responsibility for identifying the principal risks of the Company’s business and for ensuring these risks are effectively monitored and mitigated to the extent reasonably practicable. At this stage of the Company’s development, the Board does not believe it is necessary to adopt a written mandate, as sufficient guidance is found in the applicable corporate legislation and regulatory policies. However, as the Company grows, the Board may determine it is appropriate to develop a formal written mandate.
In keeping with its overall responsibility for the stewardship of the Company, the Board is responsible for the integrity of the Company’s internal control and management information systems and for the Company’s policies respecting corporate disclosure and communications.
Each member of the Board understands that he is entitled, at the cost of the Company, to seek the advice of an independent expert if he reasonably considers it warranted under the circumstances.
The positions of President and CEO are combined. The Board believes the Company is well serviced and the independence of the Board from management is not compromised by the combined role. The Board does not, and does not consider it necessary to, have any formal structures or procedures in place to ensure that the Board can function independently of management. The Board believes that its current composition, in which only one of four members is currently a member of management, is sufficient to ensure that the Board can function independently of management.
Nomination and Assessment
The Board as a whole determines new nominees to the Board, although a formal process has not been adopted. The nominees are generally the result of recruitment efforts by the individual Board members, including both formal and informal discussions among Board members and with the President and CEO. The current size of the Board is such that the entire Board takes responsibility for selecting new directors and assessing current directors. Proposed directors’ credentials are reviewed in advance of a Board meeting with one or more members of the Board prior to the proposed director’s nomination.
The Board monitors but does not formally assess the performance of individual Board members or committee members or their contributions. The Board does not, at present, have a formal process in place for assessing the effectiveness of the Board as a whole, its committees or individual directors, but will consider implementing one in the future should circumstances warrant. Based on the Company’s size, its stage of development and the limited number of individuals on the Board, the Board considers a formal assessment process to be inappropriate at this time. The Board plans to continue evaluating its own effectiveness on anad hoc basis.
New directors are briefed on strategic plans, short, medium and long term corporate objectives, business risks and mitigation strategies, corporate governance guidelines and existing company policies. There is no formal orientation for new members of the Board. This is considered to be appropriate, given the Company’s size and current level of operations. However, if the growth of the Company’s operations warrants it, it is likely that a formal orientation process would be implemented.
The skills and knowledge of the Board of Directors as a whole is such that no formal continuing education process is currently deemed required. The Board is comprised of individuals with varying backgrounds, who have, both collectively and individually, extensive experience in running and managing public companies in the natural resource sector. Board members are encouraged to communicate with management, auditors and technical consultants to keep themselves current with industry trends and developments and changes in legislation, with management’s assistance. Board members have full access to the Company’s records. Reference is made to the table under the heading “Election of Directors” for a description of the current principal occupations of the members of the Company’s Board.
Expectations of Management and Ethical Business Conduct
The Board expects management to operate the business of the Company in a manner that enhances shareholder value and is consistent with the highest level of integrity. Management is expected to execute the Company’s business plan and to meet performance goals and objectives.
Committee Responsibilities and Activities
Committees of the Board are an integral part of the Company’s governance structure. At the present time, the only standing committee is the Audit Committee. Disclosure with respect to the Audit Committee, as required by MI 52-110 – Audit Committee, is contained in Schedule “A” to this Information Circular. As the Company grows, and its operations and management structure became more complex, the Board will likely find it appropriate to constitute formal standing committees, such as a Corporate Governance Committee, Compensation Committee, Nominating Committee and Health, Safety and Environmental Committee, and to ensure that such committees are governed by written charters and are composed of at least a majority of “independent” directors.
