EXHIBIT 99.2
Notice of Annual and
Special Meeting of Shareholders
on June 24, 2003
Management Proxy Circular
Instrument of Proxy
Solicited by Management
CALEDONIA
Mining Corporation
NOTICE OF ANNUAL AND SPECIAL
MEETING OF SHAREHOLDERS
TAKE NOTICE that the Annual and Special Meeting of Shareholders of Caledonia
Mining Corporation (the "Corporation") will be held in the 42nd Floor Boardroom
#7 of the Corporation's Solicitors, Borden Ladner Gervais LLP, Scotia Plaza, 40
King Street West, Toronto, Ontario, on Tuesday, June 24, 2003 commencing at 9:30
a.m. in the forenoon (local time) for the purposes of:
1. receiving the annual report that includes the financial statements and
auditors' report thereon for the financial year ended December 31, 2002;
2. electing directors;
3. appointing auditors and authorizing the directors to fix their
remuneration;
4. considering and, if deemed appropriate, approve an ordinary resolution of
the shareholders of the Corporation that, subject to regulatory approval
and in compliance with the policies of The Toronto Stock Exchange, the
Corporation be authorized to enter into one or more private placement
transactions with subscribers substantially at arm's length to the
Corporation, during the ensuing 12 month period, providing for the
issuance of up to 75% of the number of common shares outstanding as of
the date of this resolution;
5. transacting such other business as may properly be brought before the
meeting.
A copy of the annual report, form of proxy and management proxy circular
accompany this notice. A copy of the Corporation's Form 20F filed with the
United States Securities and Exchange Commission and the applicable Canadian
regulatory authorities is available upon request.
Shareholders will be entitled to vote at the meeting in person or by proxy. If
it is not your intention to be present at the meeting, please exercise your
right to vote by promptly signing, dating and returning the proxy in the
envelope provided for that purpose.
DATED: May 09, 2003 BY ORDER OF THE BOARD
/s/ S. E. Hayden
Chairman of the Board, President and
Chief Executive Officer
1
MANAGEMENT PROXY CIRCULAR
SOLICITATION OF PROXIES
THIS MANAGEMENT PROXY CIRCULAR IS FURNISHED IN CONNECTION WITH THE SOLICITATION
BY AND ON BEHALF OF THE MANAGEMENT OF CALEDONIA MINING CORPORATION (THE
"CORPORATION") OF PROXIES TO BE USED AT THE ANNUAL AND SPECIAL MEETING (THE
"MEETING") OF SHAREHOLDERS OF THE CORPORATION TO BE HELD ON TUESDAY, JUNE 24,
2003 AT THE HOUR OF 09:30 O'CLOCK IN THE FORENOON, LOCAL TIME, IN THE 47TH FLOOR
BOARDROOM #7 OF THE CORPORATION'S SOLICITORS, BORDEN LADNER GERVAIS LLP, SCOTIA
PLAZA, 40 KING STREET WEST, TORONTO, ONTARIO, for the purposes set forth in the
accompanying notice of meeting. It is expected that the solicitation will be
primarily by mail but proxies may also be solicited personally or by telephone
by employees of the Corporation at nominal cost. The cost of any such
solicitation by management will be borne by the Corporation.
APPOINTMENT AND REVOCATION OF PROXIES
THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY ARE DIRECTORS AND/OR OFFICERS OF
THE CORPORATION. A SHAREHOLDER DESIRING TO APPOINT SOME OTHER PERSON TO
REPRESENT HIM AT THE MEETING MAY DO SO BY INSERTING SUCH PERSON'S NAME, WHICH
NEED NOT BE A SHAREHOLDER OF THE CORPORATION, IN THE BLANK SPACE PROVIDED IN THE
FORM OF PROXY AND STRIKING OUT THE NAMES OF THE PERSONS SPECIFIED OR BY
COMPLETING ANOTHER PROPER FORM OF PROXY. In all cases, the completed proxy is to
be deposited at the registered office of the Corporation or at the offices of
Equity Transfer Services Inc., Suite 420, 120 Adelaide Street West, Toronto,
Ontario, M5H 4C3 prior to the day of the Meeting or with the Chairman of the
Meeting on the day of the Meeting or any adjournment thereof.
A shareholder giving a proxy has the right to revoke the proxy by instrument in
writing executed by the shareholder or by the shareholder's attorney authorized
in writing and deposited at the registered office of the Corporation at any time
up to and including the last business day preceding the date of the Meeting, or
any adjournment thereof, at which the proxy is to be used, or with the Chairman
of the Meeting on the date of the Meeting, or any adjournment thereof, or in any
other manner permitted by law.
EXERCISE OF DISCRETION BY PROXIES
THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY WILL VOTE THE SHARES IN RESPECT
OF WHICH THEY ARE APPOINTED IN ACCORDANCE WITH THE DIRECTION OF THE SHAREHOLDERS
APPOINTING THEM. IN THE ABSENCE OF SUCH DIRECTION, SUCH SHARES WILL BE VOTED FOR
THE ELECTION OF DIRECTORS, FOR THE APPOINTMENT OF AUDITORS AND FOR AUTHORIZING
THE DIRECTORS TO FIX THE REMUNERATION OF THE AUDITORS AND FOR THE APPROVAL OF
THE RESOLUTION AUTHORIZING PRIVATE PLACEMENT TRANSACTIONS WITH SUBSCRIBERS
SUBSTANTIALLY AT ARM'S LENGTH TO THE CORPORATION DURING THE ENSUING 12-MONTH
PERIOD.
The enclosed form of proxy confers discretionary authority upon the persons
named therein with respect to any amendments or variations to matters identified
in the notice of meeting and with respect to other matters which may properly
come before the Meeting. At the time of printing this management proxy circular,
management of the Corporation knows of no such amendments, variations or other
matters to come before the Meeting.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
On May 07, 2003, the Corporation had outstanding 223,694,412 common shares, each
carrying the right of one vote per share. To the best of the knowledge of the
directors and officers of the Corporation, no person beneficially owns, directly
or indirectly, or exercises control or direction over, shares carrying more than
10% of the votes attached to all shares of the Corporation.
The Board of Directors of the Corporation has fixed a record date of May 23,
2003 for the purpose of determining who is entitled to receive Notice of Meeting
and to determine who is entitled to vote at the Meeting and at any adjournment
thereof. The failure of any shareholder to receive notice of the Meeting shall
not deprive the shareholder of voting at the Meeting.
ELECTION OF DIRECTORS
The persons named in the enclosed form of proxy intend to vote for the election
of the nominees whose names are set forth below. All of the nominees are now
members of the Board of Directors and have been since the dates indicated.
Management does not contemplate that any of the nominees will be unable to serve
as a director but, if that should occur for any reason prior to the Meeting, the
persons named in the enclosed form of proxy reserve the right to vote for
another nominee in their discretion. Each director elected will hold office
until the next annual meeting or until he earlier ceases to be a director of the
Corporation.
Set out below are the names of the persons proposed to be nominated for election
as directors, the number of common shares of the Corporation beneficially owned,
or over which control or direction is exercised, by each of them as of April 29,
2003, their municipality of residence and their present principal occupations.
2
NAME, OFFICE HELD AND PRINCIPAL OCCUPATION DIRECTOR NUMBER OF SHARES
MUNICIPALITY OF RESIDENCE SINCE BENEFICIALLY OWNED,
CONTROLLED OR DIRECTED
- ------------------------------ --------------------------------------- -------- ----------------------
S. E. Hayden, (1)(2)(3)(4) Chairman, President and Chief Executive 1996 Nil
Chairman, President and Chief Officer of the Corporation and Director
Executive Officer & Director all of the various subsidiary
Johannesburg, South Africa companies. Chief Executive Officer of
Eersteling Gold Mining Company Limited,
Greenstone Management Services (Pty)
Ltd., and Barbrook Mines Limited.
- ------------------------------ --------------------------------------- -------- ----------------------
J. Johnstone, Chief Operating Officer of the 1997 Nil
Vice President Operations and Corporation and Director of various
Chief Operating Officer subsidiary companies.
& Director
Oakville, Ontario, Canada
- ------------------------------ --------------------------------------- -------- ----------------------
F. C. Harvey, Technical Technical Director of the Corporation 1993 4,300
Director & Director Oakville, and Director of various subsidiary
Ontario, Canada companies.
- ------------------------------ --------------------------------------- -------- ----------------------
C.R. Jonsson, Principal of Tupper, Jonsson & Yeadon, 1992 9,469
Director (1)(2)(3) Vancouver, Barristers & Solicitors.
British Columbia, Canada
- ------------------------------ --------------------------------------- -------- ----------------------
W. I. L. Forrest, Business Executive. 1992 17,000
Director (1)(2)(4)
Gingins, Switzerland
Notes:
(1) Member of Audit Committee, (2) Member of Compensation Committee, (3) Member
of Corporate Governance Committee, (4) Member of Nominating Committee.
The information as to shares beneficially owned or controlled or directed, not
being within the knowledge of the Corporation, has been furnished by the
respective nominees individually.
APPOINTMENT OF AUDITORS
Management is proposing the re-appointment of BDO Dunwoody LLP as auditors of
the Corporation to hold office until the next annual meeting of shareholders and
to authorize the Directors to fix their remuneration.
3
REPORT ON EXECUTIVE COMPENSATION
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following table, presented in accordance with the regulation (the
"Regulation") made under the Securities Act (Ontario) sets forth all annual and
long term compensation for services in all capacities to the Corporation and its
subsidiaries for the fiscal year ended December 31, 2002 in respect of the named
executive officers:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------------- -----------------------------------
AWARDS PAYOUTS
------------------------ -------
SECURITIES RESTRICTED
UNDER SHARES OR
NAME AND OTHER ANNUAL OPTIONS/ RESTRICTED LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION SARS SHARE UNITS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) (1) GRANTED (#) (#) ($) ($)
- ------------------ ---- ------- ----- ------------ ----------- ----------- ------- -------------
S. E. Hayden(2)(4) 2002 180,000 -- -- 4,000,000 Nil Nil Nil
Chairman of the 2001 180,000 -- -- Nil Nil Nil Nil
Board, President 2000 180,000 -- -- Nil Nil Nil Nil
& Chief Executive
Officer
- -----------------------------------------------------------------------------------------------------------------
J. Johnstone (4) 2002 207,200 -- -- 2,000,000 Nil Nil Nil
Vice President 2001 207,200 -- -- Nil Nil Nil Nil
Operations and 2000 207,200 -- -- Nil Nil Nil Nil
Chief Operating
Officer
- -----------------------------------------------------------------------------------------------------------------
F.C. Harvey (4) 2002 150,000 -- -- 2,000,000 Nil Nil Nil
Technical Director 2001 150,000 -- -- Nil Nil Nil Nil
2000 150,000 -- -- Nil Nil Nil Nil
- -----------------------------------------------------------------------------------------------------------------
J. Smith (3)(4) 2002 Nil -- -- 75,000 Nil Nil Nil
Vice-President 2001 Nil -- -- Nil Nil Nil Nil
Exploration 2000 7,508 -- -- Nil Nil Nil Nil
- -----------------------------------------------------------------------------------------------------------------
Notes:
(1) Perquisites and other personal benefits for each of the named executive
officers did not exceed the lesser of $50,000 and 10% of total annual
salary and bonus in 2000, 2001 and 2002.
(2) Mr. S. E. Hayden is employed indirectly by the Corporation through a
management and administrative agreement with Epicure Overseas SA.
(3) Since December 1999, Mr. J. Smith has provided consulting services to the
Corporation and its subsidiaries through a consulting agreement.
(4) The figures shown are the agreed salaries. The Officers noted have, in
recognition of the Corporation's cash position in the respective years
agreed to defer an aggregate total of $302,201 of the salaries due them
for the period ending December 31, 2001 and further amounts totaling
$173,067 and $383,810 for the periods ending December 31, 2000 and
December 31, 1999 respectively.
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The following table (presented in accordance with the Regulation) sets forth
stock options granted by the Board of Directors of the Corporation during the
fiscal year ended December 31, 2002 to the named executive officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
MARKET VALUE OF
SECURITIES
% OF TOTAL UNDERLYING
SECURITIES UNDER OPTIONS/SARS GRANTED OPTIONS/SARS ON
OPTIONS/SARS TO EMPLOYEES IN EXERCISE OR BASE DATE OF GRANT EXPIRATION
NAME GRANTED # FISCAL YEAR PRICE ($/SECURITY) ($/SECURITY) DATE
- -------------- ---------------- -------------------- ------------------ --------------- ----------
S. E. Hayden 4,000,000 49% $0.235 $0.235 April 12,
2012
J. Johnstone 2,000,000 24% $0.235 $0.235 April 12,
2012
F. C. Harvey 2,000,000 24% $0.235 $0.235 April 12,
2012
J. Smith 75,000 1% $0.35 $0.35 June 02,
2012
The following table (presented in accordance with the Regulation) sets forth
stock options exercised by the named executive officers during the fiscal year
ended December 31, 2002:
OPTION/SAR EXERCISES IN LAST FISCAL YEAR
VALUE OF UNEXERCISED IN-
UNEXERCISED THE-MONEY (1)
SECURITIES OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED DECEMBER 31, 2002 DECEMBER 31, 2002
ON AGGREGATE VALUE (#) ($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ------------- ---------- --------------- ----------------- ------------------------
S. E. Hayden Nil Nil 4,675,000/Nil $714,000/Nil
J. Johnstone Nil Nil 2,285,000/Nil $360,800/Nil
F. C. Harvey Nil Nil 2,510,000/Nil $360,800/Nil
J. Smith Nil Nil 225,000/Nil $4,785/Nil
Notes:
(1) "In-the-money " means the excess of the market value of the common shares
of the Corporation outstanding on December 31 2002 over the exercise
price of the options.
The Corporation does not have a long-term incentive plan, a pension plan or
other form of defined benefit plan. In January 1997, the Corporation implemented
a Key Executive Severance Protection Plan applicable to certain executives. The
Plan calls for severance payment to these executives if employment is terminated
as a result of a change of control of the Corporation.
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COMPOSITION OF THE COMPENSATION COMMITTEE
The Corporation has a compensation committee comprised of three members. All
issues as to compensation are considered by the compensation committee of the
Corporation the members of which, during the fiscal year ended December 31,
2002, were C. R. Jonsson, W. I. L. Forrest and S. E. Hayden. Mr. S. E. Hayden is
an officer and an employee of the Corporation and therefore an inside director.
Mr. C. R. Jonsson and Mr. W. I. L. Forrest are outside and unrelated directors
within the meaning of The Toronto Stock Exchange Report on Corporate Governance
Practices.
COMPENSATION POLICIES
While the Compensation Committee of the Board of Directors of the Corporation
has not adopted a written policy concerning the compensation of executive
officers, it has developed a consistent approach and philosophy relating to
executive compensation. The overriding principles in the determination of
executive compensation are the need to provide total compensation packages that
will attract and retain qualified and experienced executives, to reward the
executives for their contribution to the overall success of the Corporation and
to integrate the longer-term interest of the executives with the investment
objectives of the Corporation's shareholders.
Executive compensation at the Corporation has two principal components: salary
and stock options. The Compensation Committee is mindful that the Corporation
competes within the framework of the international mining industry. The
Compensation Committee is of the view that a competitive salary level is
appropriate for the executive officers, as their total compensation package
should emphasize salaries and the stock options granted by the Corporation.
Other than the named executive officers, the Corporation has one other executive
officer as defined in the Regulation. The chief executive officer of the
Corporation is one of the named executive officers and therefore his
compensation is determined in the same manner as for the other executive
officers of the Corporation.
Presented by the members of the Compensation Committee:
C. R. Jonsson W. I. L. Forrest S. E. Hayden
COMPENSATION OF DIRECTORS
Each of the five directors, including directors who are officers of the
Corporation, is entitled to an annual director's fee of $5,000 Canadian and out
of pocket expenses relating to attendance at a board or committee meeting. In
recognition of the Corporation=s cash position, no director fees were paid in
1999, 2000, 2001 or 2002 for duties performed in 1998, 1999, 2000 and 2001.
These fees have been accrued in the accounts of the Corporation. The Corporation
obtained in June, 2002 liability insurance for directors and officers of the
Corporation and its affiliates with coverage of $2,000,000 Canadian per
occurrence and in the aggregate.
PERFORMANCE GRAPH
The following graph and table compares the year-end value of the common shares
of the Corporation with the TSE 300 Stock Index for the last seven years on the
basis of cumulative total return.
6
(PERFORMANCE GRAPH)
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1997 1998 1999 2000 2001 2002
--------- -------- -------- -------- -------- --------
Caledonia Mining
Corporation $100.00 $26.80 $12.20 $17.10 $13.40 $100.00
S&P/TSX Composite $100 $98 $130 $139 $122 $107
CORPORATE GOVERNANCE PRACTICES
The Toronto Stock Exchange Committee on Corporate Governance in Canada issued a
report (the "TSE Report") in December 1994 containing guidelines for effective
corporate governance of corporations. The by-laws of The Toronto Stock Exchange
(the "TSE") were subsequently amended to require each listed corporation
incorporated in Canada to make annual disclosure of its corporate governance
practices with reference to those guidelines. The Board believes that sound
corporate governance practices are essential to the effective operation of the
Corporation and that these practices should be reviewed regularly to ensure that
they are appropriate. The Corporation's Statement of Corporate Governance
Practices follows.
MANDATE OF THE BOARD
The Board of Directors of the Corporation is responsible for the overall
stewardship of the Corporation, and has full power and authority to manage and
control the affairs and business of the Corporation. Among other things, the
Board is responsible for:
I. supervising the officers of the Corporation in their management of the
business and affairs of the Corporation;
II. managing the Corporation's strategic planning process;
III. identifying and managing risks to the Corporation's business;
IV. succession planning including the appointment and appraisal of senior
officers of the Corporation;
V. overseeing the administration of a policy for communications by the
Corporation with shareholders, the investment community, the media,
governments and the general public;
VI. seeing to the integrity of the Corporation's internal control and
management information systems; and
VII. developing position descriptions and terms of reference for the Board,
the President and Chief Executive Officer and the committees of the
Board.
The Board holds regular meetings at least four times per year. Additional
meetings are normally held to address special items of business and the
frequency of meetings as well as the nature of agenda items change depending
upon the state of the Corporation's affairs and in light of opportunities or
risks which the Corporation faces. On average the Board has met between nine and
ten times per year during the past five years.
BOARD COMPOSITION
The TSE Report recommends that a majority of the Board be unrelated to the
Corporation. The TSE Report uses the term unrelated director to mean a director
who is free from any interest and any business or other relationship which
could, or could reasonably be perceived to, materially interfere with the
director's ability to act with a view to the best interests of the Corporation,
other than interests and relationships arising from shareholding.
The Board of Directors currently has five members. The Board has concluded that
two of these directors, Messrs. Forrest and Jonsson, are unrelated directors
within the meaning of the TSE Report. In reaching that conclusion, the Board has
examined the factual circumstances of each director and has considered any
interests and business or other relationship that any director may have with the
Corporation. Mr. S. E. Hayden is a related director by virtue of his position as
the President and Chief Executive Officer of the Corporation and Messrs. J.
Johnstone and F. C. Harvey are related directors by virtue of their positions as
employees of the Corporation. The Board believes that the extensive knowledge of
Messrs. Hayden, Johnstone and Harvey of the Corporation's business is beneficial
to the other directors and their participation as directors contributes to the
effectiveness of the Board.
The Corporation does not have a significant shareholder, defined in the TSE
Report as a shareholder with the ability to exercise a majority of votes for the
election of directors.
7
The Board determines each year the number of directors to be elected at the
annual general meeting. Under the articles of the Corporation, the number of
directors of the Corporation must be at least three.
BOARD COMMITTEES
The Board of Directors has four standing committees: the Audit Committee, the
Compensation Committee, the Corporate Governance Committee and the Nominating
Committee. The Board has established a policy to strive to implement the
recommendations of the TSE Report wherever possible and practical.
AUDIT COMMITTEE
The Audit Committee is currently composed of a majority of outside directors and
unrelated directors. The members of the Audit Committee, the internal accounting
staff and the external auditors have unrestricted direct access to, and
communication with, each other to assist them in carrying out their respective
duties. The Committee is responsible for reviewing and making recommendations to
the Board on:
I. financial statements and the related reports of management and external
auditors;
II. accounting and financial reporting procedures and methods; and
III. internal audit procedures and reports, and matters relating to external
auditors, including the appointment and terms of engagement of external
auditors and their reports relating to accounting, financial and internal
audit matters.
COMPENSATION COMMITTEE
The Compensation Committee is currently composed of one related and two
unrelated directors. The Committee is responsible for making recommendations to
the Board on:
I. compensation of officers and senior employees of the Corporation,
including stock option incentives;
II. succession planning for officers of the Corporation;
III. labour relations, employee morale and compliance with statutory
requirements respecting employees; and
IV. pension matters.
CORPORATE GOVERNANCE COMMITTEE
The Corporate Governance Committee is currently composed of one unrelated and
one related director. The Committee has general responsibility for developing
the approach of the Corporation to matters of corporate governance, which
includes the responsibility for:
I. assessing, at least annually, the effectiveness of the Board as a whole
and the committees of the Board;
II. reviewing annually the mandates of the Board and its committees and
making recommendations for change;
III. recommending procedures to permit the Board to function independently
from management;
IV. reviewing and, if appropriate, approving requests from directors for the
engagement of outside advisors;
V. seeing to the adequacy of the orientation and education programs for new
members of the Board;
VI. making recommendations to the Board on the compensation of the directors;
VII. determining annually which directors should be considered to be unrelated
directors, and recommending such determination to the Board; and
VIII. preparing annually and recommending to the Board a Statement of Corporate
Governance Practices.
NOMINATING COMMITTEE
The Nominating Committee is composed of one unrelated and one related director.
The Committee is responsible for:
I. identifying prospective nominees for the Board and recommending them to
the Board; and
II. establishing criteria for Board membership and retirement therefrom.
DECISIONS REQUIRING BOARD APPROVAL
As part of the Board's responsibility for the strategic planning process of the
Corporation, the Board considers and, where appropriate, adopts the goals of the
business that are proposed by management and the strategies and policies within
which the Corporation is managed. Management is required to seek the approval of
the Board for material deviations, financial or otherwise, from the approved
business goals, strategies and policies of the Corporation.
8
SHAREHOLDER FEEDBACK
The Corporate Governance Committee is responsible for overseeing the
Corporation's policy for communications with shareholders, the investment
community, the media, governments and the general public. In accordance with
that policy, communications with such parties are handled through the head
office located in Mississauga, Canada.
EXPECTATIONS OF MANAGEMENT
The Board requires management to keep the Board informed in a timely and candid
manner of the progress of the Corporation towards the achievement of its
established goals, and of any material deviations from such goals and from
corporate strategies and policies approved by the Board.
This Statement of Corporate Governance Practices has been prepared by the
Corporate Governance Committee.
PRIVATE PLACEMENT TRANSACTIONS
The Corporation from time to time investigates opportunities to raise financing
on advantageous terms. While it is not the intention of management at this time
to enter into any private placement agreements other than as previously publicly
disclosed, it seeks the flexibility to enter into private placement agreements,
if required, which could result in the issue of up to 75% of the number of
shares issued and outstanding at this time.
Under the rules of The Toronto Stock Exchange the aggregate number of shares of
a listed company which are issued or made subject to issuance (i.e. issuable
under a share purchase warrant or option or other convertible security) by way
of one or more private placement transactions during any particular six-month
period must not exceed 25% of the number of shares outstanding (on a non-diluted
basis) prior to giving effect to such transactions (the "TSE 25% Rule"), unless
there has been shareholder approval of such transactions.
The application of the TSE 25% Rule may restrict the availability to the
Corporation of funds which it may wish to raise in the future by private
placement of its securities.
In particular, management of the Corporation considers it to be in the best
interests of the Corporation to seek private placement funds for working capital
and its operations. The Toronto Stock Exchange has a working practice that it
will accept advance approval by shareholders in anticipation of private
placements that may exceed the TSE 25% Rule, provided such private placements
are completed within 12 months of the date such advance shareholder approval is
given.
The Corporation's issued and outstanding share capital as of May 07, 2003 is
223,694,412 common shares and the Corporation proposes that the maximum number
of shares which either would be issued or made subject to issuance under one or
more private placements in the twelve month period commencing on June 24, 2003
would not exceed 167,770,809 common shares, or 75% of the Corporation's issued
and outstanding shares as at May 07, 2003.
Any private placement proceeded with by the Corporation under the advance
approval being sought at the Meeting will be subject to the following additional
restrictions:
(1) it must be substantially with parties at arm's length to the Corporation;
(2) it must not result in control of the Corporation being materially
affected;
(3) it must be completed within a twelve month period following the date the
shareholder approval is given; and
(4) it must comply with the private placement pricing rules of The Toronto
Stock Exchange which currently require that the issue price per common
share must not be lower than the closing market price of the common
shares on The Toronto Stock Exchange on the trading day prior to the date
notice of the private placement is given to The Toronto Stock Exchange
(the "Market Price"), less the applicable discount. For these purposes, a
private placement of unlisted convertible securities is deemed to be a
private placement of the underlying listed securities at an issue price
equal to the lowest possible price at which the securities are
convertible by the holders thereof.
In any event, The Toronto Stock Exchange retains the discretion to decide
whether or not a particular placement is "substantially" at arm's length or will
result in control of the Corporation being materially effected, in which case
specific shareholder approval may be required.
9
The directors of the Corporation believe the passing of a resolution authorizing
the Corporation to enter into private placement transactions for the issuance of
up to 75% of the number of common shares outstanding is in the best interests of
the Corporation and recommend that shareholders vote in favour of the
resolution. In the event the resolution is not passed, The Toronto Stock
Exchange will not approve any private placement that results in the issuance or
possible issuance of a number of shares which exceed the TSE 25% Rule in any
six-month period, without specific shareholder approval. Such restriction could
impede the Corporation's timely access to required funds on favourable terms.
The resolution will contain the following terms:
"RESOLVED, as an ordinary resolution, that the issuance by the Corporation in
one or more private placements during the twelve month period commencing on June
24, 2003 of such number of securities that would result in the Corporation
issuing or making issuable a number of common shares aggregating up to 75% of
the number of issued and outstanding common shares as at May 07, 2003, being the
date of the Management Proxy Circular describing the advance approval, as more
particularly described in and subject to the restriction described in the
Management Proxy Circular dated May 09, 2003, is hereby approved."
Approval of the above resolution will require the favourable vote of a majority
of the votes cast thereon at the Meeting.
GENERAL APPROVAL OF CIRCULAR
The contents and sending of this management information circular have been
approved by the Board of Directors of the Corporation.
DATED: May 09, 2003
BY ORDER OF THE BOARD
/S/ S. E. HAYDEN
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
10