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EXHIBIT 10(b)
A copy of this Part A Statement was registered by the Australian Securities
Commission on 31 January 1996. Neither the Commission nor any of its officers
takes any responsibility as to the contents of this Part A Statement.
PART A STATEMENT
BY
COEUR D'ALENE MINES CORPORATION
(ARBN 072 498 125)
This Statement is given by COEUR D'ALENE MINES CORPORATION to GASGOYNE GOLD
MINES NL (ACN 009 212 382) under Part 6.3 of the Corporations Law.
Terms used in this Statement are defined in clause 8 of this Statement
1. OVERVIEW OF THE OFFER
1.1 OFFERS FOR ALL GASGOYNE SHARES
Coeur d'Alene proposes making takeover offers in respect of all Gasgoyne
Shares, together with all Rights attaching to them, whether on issue on
the date of the offers or issued during the term of the offers pursuant to
the exercise of any Gasgoyne Options.
The consideration to be offered for each 100 Gasgoyne Shares is $60 plus 7
Coeur d'Alene Shares. The holders of Gasgoyne Shares who, as a result of
accepting an offer or offers become entitled to an odd lot or fractional
entitlement of Coeur d'Alene Shares, will be treated in the manner set out
in clauses 12.2 and 2.4 respectively of the offer document accompanying
this Statement.
This offer may not be accepted for only a portion of the Gasgoyne Shares
held by a person. Acceptance must be made for all of such person's
Gasgoyne Shares, including Gasgoyne Shares issued on exercise of Gasgoyne
Options during the term of the offers.
A copy of one of the proposed offers accompanies this Statement.
1.2 OFFER PERIOD
The Offers are to remain open for the period commencing on the date of the
Offers and ending at 5.00 pm (Perth time) on the day which is one month
after that date unless the Offers are extended or withdrawn in accordance
with the Corporations Law.
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2 OVERVIEW OF COEUR D'ALENE
2.1 PRINCIPAL ACTIVITIES
The principal activity of Coeur d'Alene and of its subsidiaries ("GROUP")
is the production of precious metals (ie gold and silver).
Coeur d'Alene was founded in 1928 and is based in Coeur d'Alene, Idaho,
United States of America. The Group currently employs more than 1,000
people and has total assets exceeding A$590 million (US$440 million) at
current exchange rates.
The Group is a significant producer of silver and gold and operator of
mines in the United States, Chile and New Zealand.
Total Gold and Silver Production
SILVER GOLD
1995 7.2 million ounces 168,000 ounces
1996 (forecast)* 8.9 million ounces 224,000 ounces
* The directors of Coeur d'Alene can give no assurance that these
levels of production will be achieved. The forecast above does not
include production for Gasgoyne - refer to the full forecast in clause
4.4.4 which includes forecast production for Gasgoyne.
The Group has the following four operating mines:
- Rochester Mine, Nevada (USA)
- Golden Cross Mine (New Zealand)
- Fachinal Mine (Chile)
- El Bronce Mine (Chile)
The Group also has interests in a number of other projects:
- Kensington, Alaska (USA)
- Silver Valley Resources Corp, Idaho (USA)
- Faride (Chile)
Refer to the table in clause 2.4 for further details of the production,
costs, ore reserves and mineral deposits of each mine.
Rochester Mine
The Rochester Mine is a silver and gold surface mine located in Nevada,
USA. The mine has been in continuous operation since 1986 and is wholly
owned and operated by the Group.
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The mine is one of the largest and lowest cost primary silver mines in
North America. As at 31 December 1995:
- proven and probable reserves were 95.5 million ounces of silver and
813,000 ounces of gold; and
- cash operating costs for the year were US$275 per gold equivalent
ounce.
The currently identified mine life is approximately ten years at current
gold and silver prices.
Golden Cross
The Golden Cross mine is a gold and silver surface and underground mine
located near Waihi on the North Island of New Zealand.
The Group owns an 80% interest in the mine and has operatorship. The
balance of the interest in the mine is owned by The Todd Corporation of
New Zealand. Coeur d'Alene's interest was acquired in 1993 for
approximately US$54 million and is a fully operating property.
The mine had a low cost structure of US$232 per gold equivalent ounce for
the year ended 31 December 1995. Gold equivalent reserves increased by
76% in 1994 to approximately 510,000 ounces.
Fachinal Mine
The Fachinal mine is a gold and silver open pit and underground mine
located in southern Chile. The mine is wholly owned and operated by the
Group.
The mine commenced production in October 1995 on schedule and under
budget. The mine is expected to produce 44,000 ounces of gold and 2.8
million ounces of silver in its first full year of operation (1996), at a
forecast cash operating cost of US$225 per gold equivalent ounce.
The mine has significant reserve expansion potential as the property
contains 67 veins and at least five mineralized zones.
El Bronce Mine
The El Bronce mine is an underground gold and silver mine located in
central Chile.
In 1994 the Group acquired an interest in the mine entitling it to 51% of
net profits and giving it operatorship.
The Group will also be entitled to a 51% equity interest in the mine if it
invests a total of US$25.5 million towards, among other things,
exploratory and development activities over the 4 years to July 1997. As
at 30 September 1995 the Group had already invested US$16.7 million and is
thus only required to pay a further US$8.8 million over the next two
years.
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Since Coeur d'Alene assumed operatorship, cash operating costs have
decreased from US$400 to US$314 per gold equivalent ounce.
Proven and probable reserves at the mine are currently 69,000 ounces of
gold and are expected by Coeur d'Alene to significantly increase.
Kensington Property
The Group has a 100% ownership interest in a major Alaskan development
project known as the Kensington Property.
The Property has proven and probable reserves of approximately 1,946,000
ounces of gold. An updated feasibility study is currently being conducted
and development activities are being undertaken. The Company believes
that the remaining permits will be obtained and expects that a decision
will be made as to commencement of production in the third quarter of
1996.
Silver Valley Resources Corporation
The Group owns 50% of the shares in Silver Valley Resources Corporation
("SILVER VALLEY"). The other 50% is owned by Asarco Inc.
Silver Valley owns the Coeur and Galena silver mines in Idaho, USA.
Operations at these mines were suspended (in July 1992 and April 1991
respectively) due to the low price of silver.
A US$25 million program to develop additional reserves is on-going and the
first drilling results have encountered significant commercial grades of
silver ore. The mines are being maintained in a ready state and could be
in production within 90 days of a decision to recommence production.
Due to increased silver prices in 1995 and recent exploratory drilling
which resulted in several high grade intercepts, Silver Valley may decide
to commence production at one or both mines in the near future.
Faride Mine
The Group has a development property at a gold mine known as the Faride
mine in Chile.
The Group's Business Plan
The Group's business plan is to continue to:
- expand its gold and silver production through exploration,
development and acquisition of efficient mining properties; and
- acquire businesses with a favourable operating cost structure that
are operational or expected to become operational in the near future
so that they can reasonably
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be expected to contribute to the Group's near-term cash flow and net
income and expand the Group's gold and/or silver production.
However, there are no material acquisitions other than the Offers
currently being negotiated by the Group.
Listing of Coeur d'Alene Shares
Coeur d'Alene Shares are traded on the New York Stock Exchange under the
symbol "CDE" and also on the Pacific Stock Exchange based in San
Francisco, California. It is the intention of Coeur d'Alene that Coeur
d'Alene Shares will be listed on ASX. Coeur d'Alene will apply to ASX for
admission to the official list of ASX and for official quotation of Coeur
d'Alene Shares. Quotation is not guaranteed or automatic and the Offers
are not subject to listing on ASX.
As at 25 January 1996, Coeur d'Alene had a market capitalisation of
US$437.4 million (A$592.7 million), the closing price of Coeur d'Alene
Shares on New York Stock Exchange was US$21.375 (A$28.96) per share and
net assets were in excess of US$230 million (A$311.7 million). Coeur
d'Alene has the equivalent of a "B-" credit rating on its outstanding debt
from Standard & Poor's and "B2" from Moody's Investor Services.
2.2 DIRECTORS AND SENIOR MANAGEMENT OF COEUR D'ALENE
The names, US addresses and occupations of all the Directors of Coeur
d'Alene are:
NAME ADDRESS OCCUPATION
Dennis E Wheeler 505 Front Street Chairman, President and
Coeur d'Alene Idaho 83854 Chief Executive Officer
James A Sabala 505 Front Street Senior Vice President and
Coeur d'Alene Idaho 83854 Chief Financial Officer
Joseph C Bennett 2725 W Stonecrop Road Wilson Mining Consultant
Wyoming 83014
Duane B Hagadone 111 South First Street Chairman of the Board
Coeur d'Alene Idaho 83814 The Hagadone Corporation
James J Curran 1300 SW 5th Avenue Chairman of the Board and
Portland Oregon 97201 Chief Executive Officer -
First Interstate Bank
Northwest Region
James A McClure 201 Maryland Avenue NE Attorney, Pursley & Huntley
Washington DC 20002 President - McClure Gerard &
Neuenschwander
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Jeffery T Grade 13400 Bishops Lane Chairman of the Board and
Brookfield Wisconsin 53005 Chief Executive Officer -
Harnischfegar Industries,
Inc.
Cecil D Andrus 1910 University Drive Chairman-Andrus
Boise Idaho 83701 Center for Public Policy
of Counsel Gallatin Group
Background of Directors
The background of each of the Directors of Coeur d'Alene is as follows:
Dennis E Wheeler - Chairman of the Board of the company since May 1992;
President since December 1980; Chief Executive Officer since December
1986; Chief Administrative Officer from December 1980 to December 1986;
Secretary from January 1980 to December 1980; Senior Vice President and
General Counsel from 1978 to 1980. Director of Sierra Pacific Resources
(a public utility holding company listed on NYSE). Mr. Wheeler is aged 53
and has been a director since 1968.
James A Sabala - Senior Vice President and Chief Financial Officer of the
company since June 1989; Vice President - Finance from 1987 to June 1989;
Treasurer since 1982; and Secretary from 1986 to March 1990. Certified
Public Accountant. Mr. Sabala is aged 41 and has been a director since
1989.
Joseph C Bennett - Mining Consultant. Director of Conwest Exploration
Company, Limited. Mr. Bennett is aged 62 and has been a director since
1981.
Duane B Hagadone - Chairman of the Board of The Hagadone Corporation, a
company engaged in the newspaper and communications businesses, since
1966; Chairman of the Board of Hagadone Hospitality Co., which is engaged
in the hotel and restaurant businesses, since 1983. Director of
Washington Water Power Company, which is listed on NYSE. Mr. Hagadone is
aged 63 and has been a director since 1987.
James J Curran - Chairman of the Board and Chief Executive Officer, First
Interstate Bank, Northwest Region (Alaska, Idaho, Montana, Oregon and
Washington); Chairman of the Board and Chief Executive Officer, First
Interstate Bank of Oregon, N.A. from February 1991 to October 1991;
Chairman, President and Chief Executive Officer of First Interstate Bank
of Denver, N.A., from April 1990 to January 1991; Chairman, President and
Chief Executive Officer of First Interstate Bank of Idaho, N.A., from July
1984 to March 1990. Mr Curran is aged 56 and has been a director since
1989.
James A McClure - Attorney with the Boise, Idaho law firm of Givens,
Pursley & Huntley; President of the Washington, D.C. consulting firm of
McClure, Gerard & Neuenschwander, Inc.; United States Senator from Idaho
from 1972 to 1990; former Chairman of the Senate Energy and Natural
Resources Committee. Director of Boise Cascade Corporation (a natural
resources company listed on
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NYSE) and The Williams Companies (a petroleum and telecommunications
company). Mr McClure is aged 71 and has been a director since 1991.
Jeffery T Grade - Chairman of the Board and Chief Executive Officer of
Harnischfeger Industries, Inc. (listed on NYSE) since 1993, which is
engaged in the manufacture of mining and material handling equipment and
paper-making machinery and in computerised information systems and
engineering services; previously served as President and Chief Executive
Officer of that corporation from 1992 to 1993 and President and Chief
Operating Officer of that corporation from 1986 to 1992. Also a director
of Crucible Materials Corporation (a manufacturer of special materials),
Measurex Corporation (a manufacturer of central systems) and Case
Corporation (listed on NYSE). Mr Grade is aged 52 and has been a director
since 1993.
Cecil D Andrus - Governor of Idaho (1971-1977; 1987-1995); Secretary of
the Department of the Interior of the United States of America
(1977-1981). Director of Albertson's, Inc. (a nation-wide grocery retail
chain listed on NYSE); Chairman of the Andrus Center for Public Policy at
Boise State University; member "of counsel" of the Gallatin Group (a
policy consulting firm). Mr Andrus is aged 64 and was appointed a
director in 1995.
The senior management of Coeur d'Alene is as follows:
NAME OCCUPATION
Dennis E Wheeler Chairman, President and
Chief Executive Officer
Michael L Clark Senior Vice President and
Chief Operating Officer
James A Sabala Senior Vice President and
Chief Financial Officer
Michael C Tippett Senior Vice President
Exploration & New Business
Development
William F Boyd Vice President, Corporate
Counsel and Secretary
Alan L Wilder Vice President,
Engineering Operations
Management
Tom T Angelos Controller
2.3 SIGNIFICANT SHAREHOLDERS OF COEUR D'ALENE
The following table sets forth information concerning the beneficial
ownership of Coeur d'Alene Shares by the only shareholders known on 25
January 1996 by the Company to be a beneficial owner of a substantial
proportion (both as a percentage of current outstanding shares and on a
fully diluted basis) of Coeur d'Alene Shares outstanding or securities
convertible into Coeur d'Alene Shares:
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NUMBER OF
SECURITIES PERCENTAGE OF PERCENT OF
BENEFICIALLY OUTSTANDING FULLY
OWNED(3) SHARES DILUTED(4)
------------- -------------- -------------
Fidelity Management & 2,009,852 9.82% 7.64%
Research Corp.(1)
Franklin Resources, Inc. (2) 1,030,032 N/A 3.92%
(1) FMR Corp. is an investment advisory firm that serves as
investment advisor to several investment companies that beneficially
own the above-reported shares. Its address is 82 Devonshire Street,
Boston, Massachusetts 02109 USA.
(2) Franklin Resources, Inc., is an investment advisory firm that serves
as investment advisor to several investment companies that
beneficially own the above-reported securities. Its address is 777
Mariners Island Boulevarde, P.O. Box 7777, San Mateo, California
94403-7777 USA. Franklin Resources, Inc. did not actually hold any
Coeur d'Alene Shares at the date of its last filing (see note (3)).
Rather, 992,368 shares may be acquired upon the conversion of 6 3/8%
Debentures and 37,664 shares may be acquired upon the conversion of
6% Debentures.
(3) The above securities holdings are based on beneficial ownership of
securities filings with the SEC by Fidelity Management Research Corp
dated 30 September 1995 and Franklin Resources, Inc. dated 10
February 1995.
(4) Based on there being a total of 26,300,779 Coeur d'Alene Shares on a
fully diluted basis (ie 20,464,882 outstanding Coeur d'Alene Shares,
plus the issue of 5,835,897 shares on conversion of outstanding
convertible debentures).
2.4 ORE RESERVES AND MINERALIZED MATERIAL ESTIMATE
The accompanying table shows 1993 and 1994 information with respect to
Coeur d'Alene's ownership of mines, production, costs, ore reserves and
mineral deposits.
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COEUR D'ALENE STATISTICAL SUMMARY
--------------------------------------------------------------------------
Production Cost per Ounce
(US$)
---------------------------------------------------------------------------------------------------------
Interest Tonnes
Mined Grade Recovery Ounces
GOLD Mine % year Millions g/Tonne % Produced Cash Noncash
- --------------------------------------------------------------------------------------------------------------------------
United States Rochester 100.0 1994 7.119 0.24 104.73 56,886
100.0 1993 6.577 0.31 103.46 66,412
Kensington 50.0 1994
50.0 1993
Chile Fachinal 100.0 1994
100.0 1993
El Bronce 51.0 1994 0.022 6.51 90.05 4,953 174.67 20.40
Faride 51.0 1994
New Zealand Golden Cross 80.0 1994 0.643 3.57 89.48 67,400 277.00 111.00
80.0 1993 0.436 4.39 90.00 56,898 220.26 116.40
SILVER
United States Rochester 100.0 1994 7.119 49.33 53.18 5,938,000 3.57 0.59
100.0 1993 6.577 52.62 53.43 5,944,000 3.55 0.54
Galena 50.0 1994
62.5 1993
Coeur 50.0 1994
50.0 1993
Chile Fachinal 100.0 1994
100.0 1993
Faride 51.0 1994
El Bronce 51.0 1994 0.022 25.88 92.45 20,000
New Zealand Golden Cross 80.0 1994 0.643 18.96 55.28 222,000
80.0 1993 0.436 20.26 60.01 175,000
--------------------------------------------------------------------
Reserves Mineralized Material
-------------------------------------------------------------------
Interest Tonnes Grade Contained Tonnes Grade
GOLD Mine % year Millions g/Tonne Ounces(1) Millions g/tonne
- -----------------------------------------------------------------------------------------------------------------------------
United States Rochester 100.0 1994 73.230 0.37 872,000
100.0 1993 68.149 0.38 841,000
Kensington 50.0 1994 12.378 4.90 (2)1,946,000 2.893 5.04
50.0 1993 12.378 4.90 973,000
Chile Fachinal 100.0 1994 4.126 2.40 319,000 1.387 2.40
100.0 1993 4.083 2.40 318,000
El Bronce 51.0 1994 0.357 5.90 35,000 0.569 6.17
Faride 51.0 1994 1.074 2.67 47,000 0.513 1.37
New Zealand Golden Cross 80.0 1994 6.865 2.71 481,000 0.368 1.71
80.0 1993 4.356 3.12 345,600
Total Contained Gold Ounces
1994 3,700,000
Toal Contained Gold Ounces
1993 2,477,600
SILVER
United States Rochester 100.0 1994 73.230 43.16 101,601,000
100.0 1993 68.058 45.25 99,200,000
Galena 50.0 1994 0.863 516.63 7,163,000 0.777 303.05
62.5 1993 0.863 516.63 8,953,750
Coeur 50.0 1994 0.342 594.10 3,262,500 0.156 487.14
50.0 1993 0.463 668.50 4,968,500
Chile Fachinal 100.0 1994 4.126 110.35 14,634,000 1.387 110.73
100.0 1993 4.083 110.39 14,700,000
Faride 51.0 1994 1.074 130.96 2,307,000 0.513 154.27
El Bronce 51.0 1994
New Zealand Golden Cross 80.0 1994 6.865 11.66 2,058,000
80.0 1993 4.356 13.92 1,559,040
Total Contained Silver
Ounces 1994 131,025,500
Total Contained Silver
Ounces 1993 129,381,290
(1) Represents Coeur d'Alene's share of the
Contained Ounces (Au and Ag)
Rochester 100%
Kensington 50% in 1994, 100% in 1995 (7 July 1995)
Fachinal 100%
El Bronce 51% (net profits interest)
Coeur 50%
Faride 51% (option) Golden Cross 80%
Galena 50% in 1994, 62.5% in 1993
(2) Gives pro forma effect, as of 1 January 1994, to
the acquisition of the remaining
50% interest in the Kensington Mine on 7 July
1995.
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US Definitions of Ore Reserves and Mineralized Materials
Information in this Statement and the material accompanying it with
respect to ore reserves and mineral deposits of the Group has been
prepared and defined in accordance with SEC definitions, as follows.
"Mineral Deposit" or "Mineralized Material" is a mineralized
underground body which has been intersected by sufficient closely
spaced drill holes and/or underground sampling to support sufficient
tonnage and average grade of metal(s) to warrant further
exploration-development work. This deposit does not qualify as a
commercially mineable ore body ("Reserves"), as prescribed under SEC
standards, until a final and comprehensive economic, technical, and
legal feasibility study based upon the test results is concluded.
"Ore Reserves" are that part of a mineral deposit which can be
economically and legally extracted or produced at the time of the
reserve determination.
For SEC purposes, ore reserves may be proven or probable:
"Proven (Measured) Reserves" are those reserves for which (a)
quantity is computed from dimensions revealed in outcrops, trenches,
workings, or drill holes; grade and/or quality are computed from
results of detailed sampling and (b) the sites for inspection,
sampling, and measurement are so closely spaced and the geologic
character is so well defined that size, shape, depth, and mineral
content of reserves are well-established.
"Probable (Indicated) Reserves" are those reserves for which quantity
and grade and/or quality are computed from information similar to
that for proven (measured) reserves, but the sites for inspection,
sampling, and measurement are farther apart or are otherwise less
adequately spaced. The degree of assurance, although lower then that
for proven (measured) reserves, is high enough to assume continuity
between points of observation.
Australian Definitions of Mineral Resources
The JORC Code applicable in Australia provides that Australian companies
reporting on mineralization are to prepare information on the following
bases.
"Mineral Resource" is defined as an identified in-situ mineral
occurrence from which valuable or useful minerals may be recovered.
Mineral resources are subdivided into:
- Measured Mineral Resources;
- Indicated Mineral Resources; and
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- Inferred Mineral Resources.
The JORC Code provides that in defining a mineral resource, the competent
person will only take into consideration geoscientific data if there is a
clear implication that there are reasonable prospects for eventual
economic exploitation.
"Measured Mineral Resource" means a mineral resource intersected and
tested by drill holes, underground openings or other sampling
procedures at locations which are spaced closely enough to confirm
continuity and where geoscientific data are reliably known. A
measured mineral resource estimate will be based on a substantial
amount of reliable data, interpretation and evaluation of which
allows a clear determination to be made of shapes, sizes, densities
and grades.
"Indicated Mineral Resource" means a mineral resource sampled by
drill holes, underground opening or other sampling procedures at
locations too widely spaced to ensure continuity but close enough to
give a reasonable indication of continuity and where geoscientific
data are known with a reasonable level of reliability. An indicated
mineral resource estimate will be based on more data, and therefore
will be more reliable, than an inferred mineral resource estimate.
"Inferred Mineral Resource" means a mineral resource inferred from
geoscientific evidence, drill holes, underground openings or other
sampling procedures where the lack of data is such that continuity
cannot be predicted with confidence and where geoscientific data may
not be known with a reasonable level of reliability.
Under the JORC Code, "Ore Reserve" is defined as that part of a measured
or indicated mineral resource which could be mined, inclusive of dilution,
and from which valuable or useful minerals could be recovered economically
under conditions realistically assumed at the time of reporting. Ore
reserves are subdivided into proved ore reserves and probable ore
reserves.
"Proved Ore Reserve" means an ore reserve stated in terms of mineable
tonnes/volume and grade in which the corresponding identified mineral
resource has been defined in three dimensions by excavation or
drilling (including minor extensions beyond actual openings and drill
holes), and where the geological factors that limit the ore body are
known with sufficient confidence that the mineral resource is
categorised as "measured".
"Probable Ore Reserve" means an ore reserve stated in terms of
mineable tonnes/volume and grades where the corresponding identified
mineral resource has been defined by drilling, sampling or excavation
(including extensions beyond actual openings and drill holes), and
where the
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geological factors that control the ore body are known with
sufficient confidence that the mineral resource is categorised as
"indicated".
The Group believes that its ore reserve estimates, based on SEC
definitions, are approximately the same as those that would result from
the application of the JORC Code for determining proved and probable ore
reserves. The Group also believes that its mineral deposit estimates,
based on SEC definitions, are approximately the same as would result from
the application of the JORC Code for mineral resources, after deduction
for proved and probable ore reserves.
Although the Group's ore reserve and mineral deposit estimates are
believed to have been prepared and evaluated reliably and professionally,
ore reserve and mineral deposit estimates involve interpretation of known
data and subjective judgments regarding grade, mineralization, continuity
and, in the case of ore reserves, economic factors.
The Group used US$375 and US$375-$400 per ounce as the gold price in
evaluating the Group's ore reserves at the end of 1993 and 1994,
respectively. Future market price fluctuations, production costs,
recovery rates and many other factors may result in an ore reserve
becoming uneconomic or a mineral deposit being upgraded into an ore
reserve.
Information with respect to the Group's mineral deposits is included in
this Statement and the material accompanying it to comply with Australian
disclosure requirements applicable to the Offers. SEC regulations do not
permit possible or inferred mineral resource disclosures and limit mineral
deposit disclosures in documents that are filed with the SEC under United
States securities laws unless required by applicable foreign securities
laws. Coeur d'Alene's future SEC filings will only disclose the proven
and probable ore reserve data and limited mineral deposit data permitted
under United States securities laws.
Gold Equivalent
References in this Statement to gold equivalent ounces in respect of
reserves or production means the number of ounces of gold plus one
seventieth of the number of ounces of silver. One seventieth
approximately reflects the current relative spot prices of gold and
silver.
2.5 ENVIRONMENTAL AND RECLAMATION POLICY
The Group and its employees continue to be recognised for their leadership
as environmental stewards. The Group has received 14 awards relating to
environmental care and compliance, including:
- Dennis E Wheeler, the Chairman, President and Chief Executive Officer
of Coeur d'Alene was awarded the 1994 Environmental Conservation
Distinguished Service Award by the American Institute of Mining,
Metallurgical and Petroleum Engineers, a 90,000 member US
organisation.
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- The Dupont/Conoco Environmental Leadership Award, which was awarded
to the Company on 1 October 1991 by a judging panel that included
representatives from environmental organisations and the US
government.
The receipt of such awards does not relieve the Company of its
obligations to comply with all applicable environmental laws.
In the 9 months ended 30 September 1995 the Group spent approximately
US$2.1 million on environmental compliance activities and spent nearly
US$3 million in the year ended 31 December 1994 at its operating
properties.
2.6 COEUR D'ALENE'S HISTORICAL FINANCIAL INFORMATION
Certain information on Coeur d'Alene's historical financial performance is
set out in paragraph 4.4.1. In addition Coeur d'Alene reported net income
of US$2.3 million for the nine months ended 30 September 1995. These
results included a US$3.2 million gain relating to the delivery of gold
and silver purchased in the open market to satisfy fixed price forward
delivery contracts and US$2.4 million of income from discontinued
operations (including the US$2.2 million after-tax gain from the sale of
related non-mining assets). The Group's accumulated deficit as of that
date declined to approximately US$14.8 million.
Coeur d'Alene's financial results over recent years have been
significantly affected by a number of factors including interest expenses
and certain non-recurring write-offs relating to mine closures. In 1994
the Company reported interest expense of US$11.4 million. On 15 December
1995, US$7.4 million of 7% Debentures were converted into Coeur d'Alene
Shares. As a result, in 1996, the Company's interest expense will decline
by US$5.2 million or 46%.
The following is an explanation of some of the reasons for Coeur d'Alene's
losses in the 1990 through 1994 financial years.
Coeur d'Alene acquired Callahan Mining Corporation ("CALLAHAN") by a
merger transaction effective retroactively on 31 December 1991. This
acquisition was accounted for on a pooling of interests basis, and
therefore the Group recorded losses of approximately US$4.2 million in
1990, US$14.4 million in 1991 and US$759,000 in 1992. Those losses
largely reflect significant non-recurring write-offs relating to the
closure of Callahan's Ropes Mine and Coeur d'Alene's Thunder Mountain Mine
and expenses incurred in connection with the acquisition of Callahan, as
well as interest expenses and the low silver and gold prices prevailing
during these periods. The mine closure write-offs amounted to
approximately US$5.6 million in 1990 and US$5.7 million in 1991, and the
expenses incurred in connection with the acquisition approximated US$5.2
million. Furthermore, a loss of approximately US$13.3 million before the
cumulative effect of a change in accounting policy was recorded in the
year ended 31 December 1993, which primarily resulted from approximately
US$9.4 million of non-recurring write-offs relating to the settlement of
litigation, resolution of an environmental matter and the
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write-off of uncollectable notes receivable. A loss of approximately
US$3.9 million was recorded in the year ended 31 December 1994 on which
date the Group's accumulated deficit amounted to approximately US$17
million.
THE ATTAINMENT OF NET INCOME FROM CONTINUING OPERATIONS IN THE FUTURE WILL
PRIMARILY DEPEND UPON FUTURE SILVER AND GOLD PRICES AND OPERATING RESULTS
AT THE GROUP'S OPERATING PROPERTIES.
2.7 DIVIDEND HISTORY
On a per share basis dividends or cash distributions (out of capital
surplus) paid in respect of the last five years by Coeur d'Alene are as
follows:
1991 1992 1993 1994 1995
US12 cents US15 cents US15 cents US15 cents US15 cents
Past dividends or cash distributions have been paid in April. See
page 28 of annexure B for additional information on net loss per share
and dividends or cash distributions paid. Further dividends or cash
distributions, if any, will be determined by the Board of Directors of
Coeur d'Alene and will depend primarily upon the Company's results of
operations, financial condition and capital requirements. No dividend or
cash distribution has been included in the forecast for the periods ended
31 December 1995 and 31 December 1996 - see note 9 under "Summary of
Significant Forecast Assumptions" in clause 4.4.4.
It is the policy of Coeur d'Alene's Board of Directors to discuss and
consider the declaration of an annual dividend or cash distribution at its
board meeting in March each year.
Dividends payable by Coeur d'Alene will not be franked under Australian
tax law. The entire amount of the dividend will constitute assessable
income for Australian income tax purposes, without any rebate for
franking.
Dividends payable by Coeur d'Alene will also be subject to a 15%
withholding tax in the United States, before being remitted to Australian
resident shareholders. That withholding tax generally may be claimed as a
credit against Australian income taxes but is limited to the lesser of the
actual dividend withholding tax paid and the Australian tax applicable to
the dividend.
The Australian taxation consequences of owning and disposing of Coeur
d'Alene Shares are considered generally in clause 4.9.
2.8 ADDITIONAL INFORMATION
Further details on the Group's business and properties are contained in
various public filings and reports in annexures B, C, D, E and F. In
particular, the section
15
15
titled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" appearing in each of those annexures (other than F)
provides additional background.
3 OVERVIEW OF GASGOYNE
3.1 INFORMATION ON GASGOYNE
Gasgoyne is an Australian based gold producer with exploration projects
located in Western Australia and Indonesia. Gasgoyne's major assets are a
50% interest in the Yilgarn Star joint venture at Marvel Loch, located
south of Southern Cross, approximately 370 kilometres east of Perth, and a
45% interest in the Awak Mas gold project, located in the South Sulawesi
province of Indonesia. Gasgoyne's other Western Australian interests
include gold exploration projects at Laverton and Norseman.
On the basis of Gasgoyne's most recent announcements to ASX, Gasgoyne's
combined equity gold resource base was 834,842 contained ounces at Yilgarn
Star and 811,800 contained ounces at Awak Mas, totalling 1,646,642
contained ounces, of which 357,605 ounces are in the reserves category.
On 6 September 1995, Gasgoyne made a full takeover offer for shares and
options in Pilbara Mines NL, its subsidiary. That offer was successful
and Gasgoyne proceeded to compulsory acquisition of all outstanding shares
in Pilbara Mines NL. As a result, the financial position of Gasgoyne
differs from its position as at 30 June 1995, the date of the last balance
sheet laid before Gasgoyne shareholders in general meeting. As part of
the material sent to Pilbara Mines NL shareholders, Gasgoyne prepared an
information memorandum, a copy of which is set out in annexure G. That
information memorandum contains pro forma and other information on
Gasgoyne following the acquisition of Pilbara Mines NL.
3.2 CHANGE IN GASGOYNE'S FINANCIAL POSITION
Other than as set out in annexures G and I, the financial position of
Gasgoyne has not, so far as is known by Coeur d'Alene, materially changed
since the date of the last balance sheet laid before Gasgoyne shareholders
in general meeting except that:
(a) On 27 October 1995, Gasgoyne filed its quarterly report for the
period ending 30 September 1995 with ASX. A copy of that report is
included as annexure I. The following is an extract from the
highlights identified by Gasgoyne in its release to ASX:
"- Gold production from the Yilgarn Star Gold Mine for the quarter
was 27,901 fine ounces of gold, from 190,030 tonnes of ore at a
recovered grade of 4.57 g/t gold.
- Cash operating costs were below forecast at $297.00 per ounce of
gold produced and $43.50 per tonne of ore milled. The higher
cash
16
16
operating costs [than in previous years] reflect a higher
proportion of underground ore coming into the system.
- An additional 160,000 ounces of gold has been added to the
resource base by the Southern Star discovery. Total resources
to a depth of about 100 metres are 1,164,000 tonnes at
4.3 g/t gold. Drilling is continuing between depths of
100 to 200 metres.
- An agreement has been finalised with CIM Gold NL to explore the
Northern Star Prospect, E77/486 located from 2.5 to 10.5
kilometres north of the Yilgarn Star Gold Mine. Gasgoyne Gold
Mines N.L. ("Gasgoyne Gold") and Orion Resources N.L. ("Orion")
may earn a 74% interest in the 50.4 square kilometre area by
expenditure of $1.5 million over 4 1/2 years.
- An additional 15,037 metres of RC and diamond holes were
completed in the quarter at Awak Mas in Indonesia. Significant
new zones of gold mineralization have been discovered in the
Lematik Domain, with the best results of 24 metres at 2.38 g/t
gold in AMD140 from surface."
(b) On 6 September 1995, Gasgoyne made the following announcement to ASX
in relation to a cash/gold facility provided by Citibank Limited:
"The Directors of Gasgoyne Gold Mines NL ("GGM") are pleased to
announce that on 1 September 1995 GGM entered into a Facility
Agreement with Citibank Limited to provide a line of credit to a
maximum of $10,500,000, which may be drawn by GGM in cash or the
gold equivalent thereof. The facility is for a period of three
years, with the maximum principal amount that may be
outstanding, over that three year period, reducing on a
quarterly basis.
The Citibank facility will be used by GGM for the ongoing
funding of its commitments on the Awak Mas Gold Project in South
Sulawesi, Indonesia and for other working capital requirements.
However, due to the substantial cash surplus being generated by
GGM's interest in the Yilgarn Star Project, the Citibank
facility is not anticipated to be required to its full extent
and has only initially been drawn to the sum of $5,250,000.
Prior to this recent drawing under the Citibank Facility, GGM
was debt free.
Security for the Citibank Facility is by way of a Fixed and
Floating Charge over all the assets and undertaking of GGM."
The facility documents contain a change in control provision, common
to facilities of this nature. It provides that if without the prior
written consent of Citibank, effective control of Gasgoyne is altered
from that subsisting on 1 September 1995, then the outstanding
amounts under the facility may
17
17
become due and payable. For the purposes of the facility, a change
in effective control occurs where control of the composition of the
board of directors of Gasgoyne changes, control of more than one half
of the voting power of Gasgoyne changes or control of more than one
half of the Gasgoyne Shares changes.
Coeur d'Alene believes that it is unlikely that Citibank would
require the outstanding amounts under the facility to be repaid as a
result of any change in effective control arising from the Takeover
Scheme. However, if Citibank required the amounts to be repaid,
Coeur d'Alene believes that the borrowing could be refinanced without
difficulty.
(c) Coeur d'Alene's forecast results for the periods ending 31 December
1995 and 31 December 1996 incorporate forecast results of Gasgoyne
for those periods - see note 16 under "Summary of Significant
Forecast Assumptions" in clause 4.4.4.
4 DETAILS OF TRANSACTION
4.1 INVESTMENT CONSIDERATIONS
The Offers are designed to enable Gasgoyne shareholders who accept the
Offers, to realise a part of their investment in cash and also
participate, via the holding of Coeur d'Alene Shares, in a larger
corporation which will hold a significant, and possibly 100%, interest in
Gasgoyne. For existing Gasgoyne shareholders, potential advantages
include:
- Participation in a group that:
- Has gold production which is approximately four times that of
Gasgoyne.
- Has four currently producing gold and silver mines and a number
of development stage projects.
- Is consistently expanding its gold production, while remaining
one of the leading North American silver producers.
- Had a estimated reserve base of 5.57 million ounces of gold
equivalent (3.7 million ounces of gold and 131 million ounces of
silver) at 1 January 1995 (restated to include 100% of the
Kensington Property).
- Has a considerably larger market capitalisation than Gasgoyne
and a strong balance sheet.
- Access to a wider range of mine operating and project development
experience and financial strength, which will place Gasgoyne in a
position to become part of a larger precious metals group capable of
developing Awak Mas and the Yilgarn Star tenements.
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18
- Listing in both Australia and the USA. Coeur d'Alene will apply to
be listed on ASX (listing is not guaranteed or automatic) and is
already listed on the New York Stock Exchange and Pacific Stock
Exchange (San Francisco).
- Affiliation with a Group that has an established outstanding record
of environmental protection and responsibility.
4.2 COEUR D'ALENE'S INTENTIONS ABOUT BUSINESS, ASSETS AND EMPLOYEES OF
GASGOYNE
It is the current intention of Coeur d'Alene, on the basis of the facts
and information concerning Gasgoyne which presently are known to it and
the existing circumstances affecting the business of Gasgoyne:
(a) to continue the business of Gasgoyne;
(b) not to make any major changes to the business of Gasgoyne nor to make
any redeployment of the fixed assets of Gasgoyne; and
(c) to continue the future employment of the present employees of
Gasgoyne.
If Coeur d'Alene becomes entitled compulsorily to acquire Gasgoyne Shares,
Coeur d'Alene presently intends to exercise those rights and to delist
Gasgoyne from the official list of ASX. As mentioned in clause 2.1, Coeur
d'Alene intends to seek listing of Coeur d'Alene Shares on ASX regardless
of whether compulsory acquisition is achieved.
Coeur d'Alene views the Takeover Scheme as a major step in creating a
competitive presence for the Group in Australia. The Group has already
established a significant base in the Australasian region through its 80%
interest in the Golden Cross gold mine (see clause 2.1) and has
considerable international experience in developing and operating mines
both in North America and in Chile. Coeur d'Alene intends to use its
experience in assisting Gasgoyne to expand Gasgoyne's gold production.
Following successful conclusion of its takeover offer Coeur d'Alene
intends to work with the Gasgoyne management team and with the board of
Orion Resources NL ("ORION") with a view to optimising the Yilgarn Star
project. Orion is a joint venture partner in the Yilgarn Star joint
venture with a 45% interest and is also the operator of that project.
Also, Coeur d'Alene intends to work with the Gasgoyne management team with
a view to optimising the Awak Mas project in which Gasgoyne has a
significant interest, together with other assets of Gasgoyne, in
particular, exploration tenements adjacent to the Yilgarn Star project
which are currently under the management of Gasgoyne.
19
19
Orion is also a Western Australian based gold mining company, capitalised
at approximately $127 million on 25 January 1996. The Group increased its
shareholding in Orion to approximately 13.1% of Orion's issued share
capital on 23 January 1996 and at the same time purchased options which,
if exercised, would increase the Group's shareholding in Orion to
approximately 19.2%.
It is also Coeur d'Alene's current intention to continue to evaluate its
position in relation to Orion, in particular, as to whether it should seek
to increase its shareholding. In doing so, Coeur d'Alene would have
regard to the relevant provisions of the Yilgarn Star Joint Venture
Agreement which give Gasgoyne rights to become the operator of the Yilgarn
Star joint venture in certain "change of control" situations including
where a party becomes entitled to more than 20% of Orion's issued capital
or on certain changes to the composition of the Board of Directors of
Orion.
Following successful conclusion of the Takeover Scheme it is the present
intention of Coeur d'Alene to seek the appointment of its nominees as
directors of Gasgoyne and any company in respect of which Gasgoyne has
nominee directors so that persons nominated by Coeur d'Alene will
constitute at least a majority of those boards. However, it is Coeur
d'Alene's present intention to invite Mr Brian Hurley, the Chairman of the
Board of Directors of Gasgoyne to remain as Chairman. The present
Managing Director of Gasgoyne, Mr Philip Crabb has indicated that he may
step down from that position but remain active with Gasgoyne. Mr Crabb
has indicated that in any event he would remain as Chief Executive until
such time as a suitable replacement was appointed. If Mr Crabb steps
down, Coeur d'Alene intends to appoint an appropriately experienced
Australian executive as Mr Crabb's successor. Coeur d'Alene also intends
to request Mr Crabb to remain as a director of Gasgoyne following
completion of the Takeover Scheme.
4.3 RISK FACTORS
Ownership of Coeur d'Alene Shares involves the following risks, which are
both general and specific to Coeur d'Alene:
DEPENDENCE ON GOLD AND SILVER PRICES
The results of the Group's operations and the market price of Coeur
d'Alene Shares are significantly affected by the market prices of gold and
silver. Those prices may fluctuate widely and are affected by factors
beyond the Group's control, including interest rates, expectations
regarding inflation, currency values, global and regional political and
economic conditions, demand for jewellery, sales by central banks and
other factors.
Coeur d'Alene sells most of its gold and silver production at spot prices
prevailing at the time of sale. Coeur d'Alene has from time to time
entered into forward contracts for the sale of a small portion of its gold
and silver production. As at
20
20
23 January 1996, Coeur d'Alene had entered into forward contracts to
deliver a total of 46,772 ounces of gold in calender 1996 at an average
price of US$416 representing 21% of its total 1996 forecast gold
production, and less than 2% of its total gold reserves.
EXPLORATION AND DEVELOPMENT ACTIVITIES
Mineral exploration, particularly for gold and silver, involves many risks
and frequently is non-productive. Once mineralization is discovered, it
may take a number of years from the initial phases until production is
possible, during which time the economic feasibility of production may
change. Substantial developmental expenditures are required to establish
ore reserves, to determine metallurgical processes to extract the metals
from the ore and, in the case of new properties, to construct mining and
processing facilities.
The Group expended approximately US$23.0 million and US$49.7 million
(excluding capitalised interest) in the year ended 31 December 1994 and
the nine-month period ended 30 September 1995, respectively, in connection
with the exploration and development of its mining properties. Coeur
d'Alene currently estimates that the Group's exploration and development
expenditures on existing mining properties during the last quarter of 1995
and the year ended 31 December 1996 will approximate US$4.5 million and
US$8.8 million (excluding capitalised interest), respectively.
MINING ACTIVITIES
Following the commencement of production, the mining business continues to
be subject to risks and hazards, including quantity of production,
environmental hazards, industrial accidents, encountering unusual or
unexpected formations, cave-ins, flooding and periodic interruptions due
to inclement or hazardous weather conditions. Risks of this type could
result in damage to, or destruction of, mineral properties or producing
facilities, personal injury, environmental damage, reduced production and
delays in mining, monetary losses and possible legal liability. Insurance
fully covering certain environmental risks (including potential liability
for pollution or other hazards as a result of disposal of waste products
occurring from exploration and production) is not generally available to
the Group or to other companies within the industry. The Group has been
recognised for its commitment to environmental responsibility and knows of
no material environmental liabilities to which it currently is subject.
Refer to the section below under the sub-heading "Government Regulation".
CURRENCY FLUCTUATIONS
Gold is sold throughout the world principally based on the US dollar
price, but operating expenses for gold mining companies are incurred
principally in local currencies. The Group's operations are principally
based in the United States, Chile and New Zealand. As Coeur d'Alene is a
United States-based corporation, it has conducted currency hedging
programs for New Zealand dollars and Chilean pesos
21
21
to protect against significant currency fluctuations relative to the US
dollar and expects to continue to conduct those programs (including in
Australian dollars) if Coeur d'Alene achieves control of Gasgoyne.
As mentioned in clause 2.1 Coeur d'Alene will apply for official quotation
of Coeur d'Alene Shares on ASX and hopes to be granted official quotation
by ASX before the end of the offer period. In addition, Coeur d'Alene
Shares are traded principally in US dollars on the New York Stock Exchange
and Pacific Stock Exchange. For this reason, Australian residents who
plan to hold Coeur d'Alene Shares can expect, through their shareholding,
to be subject to the benefits and detriments of fluctuations in the US
dollar-Australian dollar exchange rate and, to a lesser extent, the
US-Chile and US-New Zealand dollar exchange rates. In general, a
weakening of the Australian dollar against the United States dollar would
result in an increase in the value of Coeur d'Alene Shares in Australian
dollars, while a strengthening of the Australian dollar against the United
States dollar would result in a decrease in the value of Coeur d'Alene
Shares in Australian dollars. The Australian dollar value of any Coeur
d'Alene dividends, would be declared in US dollars (but if declared will
be paid to Australian resident shareholders in Australian dollars) are
similarly affected by the relative value of the US dollar and the
Australian dollar.
Some of the more specific risks in relation to Coeur d'Alene are as
follows:
TRADING IN COEUR D'ALENE SHARES
As mentioned above, Coeur d'Alene will apply to ASX for official quotation
of Coeur d'Alene Shares. If granted, this will enable Gasgoyne
shareholders who accept an Offer to dispose of their Coeur d'Alene Shares
in Australia through ASX at any time. However, there can be no assurance
that quotation will be granted by ASX.
US securities law restrictions have the effect that the Coeur d'Alene
Shares issued as part of the consideration under the Offers may not be
offered or sold in the United States of America or to US persons until 40
days after the end of the offer period (see clause 5.3). However, they
may be offered or sold through ASX as described above.
THE SILVER MARKET AND PRICES
In recent years world silver prices have risen from previous lows. Over
the last four years the silver price has risen from an average of US$3.98
per ounce in 1992 to an average of US$5.18 (New York Comex close) in 1995.
In order to conserve the ore reserves until silver prices improve, the
Group suspended mining activity at the Group's Galena Mine (in July 1992,
during which month the average price of silver was US$3.95 per ounce) and
at the Group's Coeur Mine (in April 1991, during which month the average
price of silver was US$3.97 per ounce). Since then the Group has
consolidated its holdings in the
22
22
Coeur d'Alene mining district by the formation of Silver Valley Resources
Corporation, a 50/50 venture with Asarco Inc.
Coeur d'Alene anticipates that as the market price of silver approaches
US$6.00 per ounce, it will propose to Asarco Inc that Silver Valley
Resources Corporation resume operations at the mines, which have been kept
in good condition in anticipation of re-starting production. As of 25
January 1996 the quoted market price for silver (New York Comex close) was
US$5.55 per ounce.
GOLDEN CROSS
As mentioned above, the mining business continues to be subject to risks
and hazards. Coeur d'Alene recently became aware that the tailings
impoundment at the Golden Cross Mine in New Zealand is situated upon a
block of land that is apparently moving downslope at the rate of
approximately 3.5cm (11/2 inches) per annum because of deep seated natural
earth movements Remedial measures are being implemented to ensure the
stability of the tailings dam at a cost which, at the date of this
Statement, is not known (see page 17 of annexure B for details regarding
the Golden Cross Mine).
FOREIGN ACTIVITIES
The Group's producing projects are located in the United States, New
Zealand and Chile. Coeur d'Alene does not believe the Group's property
interests in New Zealand or Chile currently expose it to any significant
political risks.
Gasgoyne's joint venture interests at Awak Mas are located in Indonesia,
which has a system of government and law different to that in Australia.
In the contract of works between the Indonesian Government and the joint
venture parties at Awak Mas, there are provisions requiring the joint
venture parties to progressively sell down a portion of their interests by
offering interests first to the Indonesian Government and thereafter to
Indonesian nationals. The object of the sell down provision is that the
Indonesian Government or nationals will hold 51% of the interests in the
venture by no later than the 10th year of operations. In order to do so
they must pay fair market value for the interests. However, it is
believed that the Indonesian Government has relaxed its foreign investment
policy on mining projects and that it would not commonly exercise its
right to participate under these provisions. In addition the Indonesian
joint venture party currently participating in the project has waived its
rights under these provisions.
GOVERNMENT REGULATION
General
The Group's mining activities are subject to extensive federal, state and
local laws governing the protection of the environment, prospecting,
development, production, taxes, labour standards, occupational health,
mine safety, toxic substances and other matters. The costs associated
with compliance with these regulatory requirements
23
23
are substantial and possible future legislation and regulations could
cause additional expense, capital expenditures, restrictions and delays in
the development of the Group's properties, the extent of which cannot be
predicted.
Environmental Regulations
The Group is subject to environmental regulation and natural resource laws
in each of the places in which it operates. Under certain environmental
laws, any owner or operator of land that is contaminated may be held
liable and forced to undertake or pay for remediation, even if it was not
the owner or operator of that land at the time of contamination.
Coeur d'Alene is not aware of any material environmental liability arising
out of its present or former operations.
Proposed Mining Legislation
Legislation is presently being considered in the US Congress to change the
United States Mining Law of 1872 (the "Mining Act") under which the Group
holds mining claims on public lands. It is considered possible that the
Mining Act will be amended or be replaced by stricter legislation in the
next few years. The legislation under consideration contains new
environmental standards and conditions, additional reclamation
requirements and extensive new procedural steps which would be likely to
result in delays in permitting. Among the bills under consideration are
bills calling for an 8% gross royalty; a 2.5% net smelter return royalty;
or a 3.5% or 5% net proceeds royalty on the value of minerals mined on
public lands, payable to the US Government. Coeur d'Alene believes that
if and when any royalty is imposed, it will not be a gross royalty. A
significant portion of the Group's US mining properties are on public
lands. Whether or when changes will be enacted or the extent of any
changes is not presently known and the potential impact on the Group's
United States activities is difficult to predict.
Tax
During August 1995, the Internal Revenue Service ("IRS") completed an
audit of the Group for the years 1992 and 1993. Coeur d'Alene believes
that all material issues arising from the IRS audit have been resolved.
The Group's results may in the future be benefitted by income tax
deductions in the form of loss carryforwards. Refer to page 53 of
annexure B for a brief explanation of the types of loss carryforwards
available to Coeur d'Alene as at 31 December 1994. No assurance can be
given that these types of future income tax benefits will be able to be
utilised in whole or in part.
Due to the current and anticipated loss position of the Company,
utilisation of foreign tax credits passed through from foreign
subsidiaries will be likely to be subject to limitations.
24
24
UNCERTAINTIES REGARDING YILGARN STAR MINE UNDERGROUND OPERATION
If the Offers are successful, Gasgoyne will become a subsidiary of Coeur
d'Alene. The Yilgarn Star Mine's production (through October 1995) was
entirely attributable to surface mining operations. The results of that
performance are not necessarily indicative of the future production from
the underground mining operations, the initial stages of which have
recently commenced.
4.4 HISTORICAL, PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION AND
FORECAST
The following is a summary of the historical, pro forma condensed
consolidated, and forecast financial information in relation to Coeur
d'Alene and Gasgoyne.
An Independent Accountant's Report by Ernst & Young on the historical and
forecast financial information is attached as annexure A. In addition, a
report by the US firm of Ernst & Young LLP on the pro forma condensed
consolidated financial information is contained in clause 4.4.3.
4.4.1 COEUR D'ALENE HISTORICAL SELECTED FINANCIAL INFORMATION
The following table sets forth certain financial information of Coeur
d'Alene. This information should be read in conjunction with (i) the
historical financial statements of Coeur d'Alene, including the notes
thereto, which are included in annexures B, C, D and E, (ii) annexure K --
Differences Between US and Australian Generally Accepted Accounting
Principles, and (iii) the Pro Forma Condensed Consolidated Financial
Statements, which are included in clause 4.4.3.
25
25
COEUR D'ALENE HISTORICAL SELECTED FINANCIAL INFORMATION
(Tabular dollar amounts are in thousands of US dollars, except per share
amounts. Prepared in accordance with US GAAP)
Year Ended 31 December
--------------------------------------------------------------
INCOME STATEMENT DATA: 1990 1991 1992 1993 1994
--------------------------------------------------------------
Income:
Sale of concentrates and dore $ 53,125 $ 49,035 $ 41,414 $ 67,990 $ 79,606
Less cost of mine operations 45,375 44,072 37,829 59,804 67,802
--------- --------- --------- --------- ---------
Gross profits 7,750 4,963 3,585 8,186 11,804
Other income (1) 8,939 7,714 4,812 5,388 12,689
--------- --------- --------- --------- ---------
Total income 16,689 12,677 8,397 13,574 24,493
Expenses 23,118 29,178 14,118 31,548 29,493
--------- --------- --------- --------- ---------
Income (loss) from continuing
operations before income taxes(2) (6,429) (16,501) (5,721) (17,974) (5,000)
Provision (benefit) for income taxes (1,528) (1,198) (4,233) (3,932) (264)
--------- --------- --------- --------- ---------
Loss from continuing operations (4,901) (15,303) (1,488) (14,042) (4,736)
Income from discontinued operations
(net of taxes)(3) 711 904 729 752 793
--------- --------- --------- --------- ---------
Income (loss) before cumulative effect of change
in accounting method (4,190) (14,399) (759) (13,290) (3,943)
Cumulative effect of change in accounting method(4) 5,181
--------- --------- --------- --------- ---------
Net income (loss) $ (4,190) $(14,399) $ (759) $ (8,109) $ (3,943)
========= ========= ========= ========= =========
Per share data:(5)
Earnings per share data:
Loss from continuing operations $ (0.35) $ (1.00) $ (0.10) $ (0.92) $ (0.31)
Income from discontinued operations
(net of taxes) 0.05 0.06 0.05 0.05 0.05
--------- --------- --------- --------- ---------
Income (loss) before cumulative change in
accounting method (0.30) (0.94) (0.05) (0.87) (0.26)
Cumulative effect of change in accounting method .34
--------- --------- --------- --------- ----------
Net income (loss) $ (0.30) $ (0.94) $ (0.05) $ (0.53) $ (0.26)
========= ========= ========= ========= ==========
Cash dividends per share $ 0.11 $ 0.12 $ 0.15 $ 0.15 $ 0.15
========= ========= ========= ========= ==========
Weighted average number of shares of Common
Stock and equivalents used in calculation 13,792 15,308 15,317 15,328 15,388
========= ========= ========= ========= ==========
BALANCE SHEET DATA:
Total assets $275,806 $ 261,034 $324,878 $ 325,249 $ 412,361
Working capital 151,385 129,883 179,370 104,883 166,607
Long-term debt 59,548 57,902 131,134 129,234 227,193
Shareholders' equity 200,040 183,938 180,991 170,849 160,292
Six Months
Ended 30 June
-----------------------
INCOME STATEMENT DATA: 1994 1995
-----------------------
Income:
Sale of concentrates and dore $ 39,673 $41,512
Less cost of mine operations 33,825 33,972
------- -------
Gross profits 5,848 7,540
Other income (1) 4,039 4,447
------- -------
Total income 9,887 11,987
Expenses 14,363 14,757
------- -------
Income (loss) from continuing
operations before income taxes(2) (4,476) (2,770)
Provision (benefit) for income taxes (196) (642)
------- -------
Loss from continuing operations (4,280) (2,128)
Income from discontinued operations
(net of taxes)(3) 348 2,360
------- -------
Income (loss) before cumulative effect of change
in accounting method (3,932) 232
Cumulative effect of change in accounting method(4)
-------- -------
Net income (loss) $(3,932) $ 232
======== =======
Per share data:(5)
Earnings per share data:
Loss from continuing operations $ (0.28) $(0.14)
Income from discontinued operations
(net of taxes) 0.02 .15
-------- -------
Income (loss) before cumulative change in
accounting method (0.26) 0.01
Cumulative effect of change in accounting method
-------- -------
Net income (loss) $ (0.26) $ 0.01
======== =======
Cash dividends per share $ 0.15 $ 0.15
======== =======
Weighted average number of shares of Common
Stock and equivalents used in calculation 15,347 15,597
======== =======
BALANCE SHEET DATA:
Total assets $415,067 $432,963
Working capital 185,496 147,673
Long-term debt 228,232 237,194
Shareholders' equity 158,952 165,538
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26
(1) Other income for 31 December 1994 includes a gain on the sale
of securities of US$2.7m, and an increase in investment income
arising from the issuance of US$100 million of subordinated,
convertible debentures in January 1994 which increased the Company's
liquidity.
(2) The income (loss) from continuing operations before income taxes
include certain non-recurring items of expense and past property
losses. These items are discussed in clause 2.6.
(3) On 2 May 1995, the Company sold the assets of its flexible hose
and tubing division, The Flexaust Company, and shares of a related
subsidiary for approximately US$10.0 million payable in cash, of
which approximately US$4 million was paid at the time of closing and
the balance is payable over the next five years. The results of
operations and the gain on sale of Flexaust manufacturing segment are
presented as "Discontinued Operations". The Company recorded a
pre-tax gain on the sale of approximately US$3.9 million (US$2.2
million net of income taxes) during the second quarter of 1995.
(4) Effective 1 January 1993, the Company changed its method of
accounting for income taxes by adopting US Statement of Financial
Accounting Standards (FAS) 109, "Accounting for Income Taxes". FAS
109 requires an asset and liability approach to accounting for income
taxes and establishes criteria for recognising deferred tax assets.
Accordingly, the Company adjusted its existing deferred income tax
assets and liabilities to reflect current statutory income tax rates
and previously unrecognised tax benefits related to US federal and
certain state net operating loss carryforwards. FAS 109 also
contains requirements regarding balance sheet classification and
prior business combinations. Hence, the Company adjusted the
carrying values of an incremental interest in the Rochester Property
acquired in 1988 and CDE Chilean Mining Corp. acquired in 1990 to
reflect the gross purchase value previously reported net-of-tax. The
cumulative effect of the accounting change in prior years at 1
January 1993 is a non-recurring gain of US$5.181 million, or US$.34
per share, and is included in the Consolidated Statement of
Operations for the year ended 31 December 1993. Other than the
cumulative effect, the accounting change had no material effect on
the results of operations for the year ended 31 December 1993.
As of 1 January 1993, after giving effect to the implementation of
FAS 109, the significant components of the Company's net deferred
tax liability were as follows:
Deferred Income Taxes
---------------------------------------------------------------
Assets Liabilities
---------------------------------------------------------------
Property, plant and equipment alternative
minimum tax credit carryforwards US$ 938,672 US$ $16,756,918
Business credit carryforwards 628,933
Net operating loss carryforwards 17,721,115
---------------------- -------------------
Total 19,288,720 16,756,918
-----------
Less - valuation allowance (7,927,904)
---------------------- -------------------
Net US$ 11,360,816 US$ 16,756,918
========================== =======================
As permitted by FAS 109, prior year financial statements have
not been restated to reflect the change in accounting method.
(5) Earnings per share are calculated based on the weighted average
number of Coeur d'Alene Shares outstanding and those equivalents that
are deemed to be dilutive. The 6% Debentures are considered to be
equivalents. Accordingly, such debentures are assumed to be
converted, and interest expense on such debentures, net of tax
expense, has been considered in the computation of earnings per
share, except in those instances where the effects of conversion
would be antidilutive.
27
27
4.4.2 GASGOYNE HISTORICAL SELECTED FINANCIAL INFORMATION
The following table sets forth certain financial information of
Gasgoyne which has been extracted from the audited accounts of
Gasgoyne for each of the 5 years ended 30 June 1995. This
information should be read in conjunction with (i) the audited
financial statements of Gasgoyne, including the notes thereto, which
are included in annexure H and (ii) annexure K -- Differences Between
US and Australian Generally Accepted Accounting Principles.
PROFIT AND LOSS ACCOUNT DATA:
(Tabular dollar amounts are in thousands of Australian dollars. Prepared in
accordance with Australian GAAP)
Year Ended 30 June
-------------------------------------------------------------------
1991 1992 1993 1994 1995
-------------------------------------------------------------------
Revenue:
Gold sales - $ 8,834 $ 18,640 $ 20,832 $ 31,404
Other $ 40 623 826 3,087 1,994
---------- ---------- --------- --------- ---------
Total Revenue 40 9,457 19,466 23,919 33,398
Expenses 533 7,189 11,818 15,852 19,993
---------- ---------- --------- --------- ---------
Operating profit before income tax(1) (493) 2,268 7,648 8,067 13,405
Income Tax(2) - - 2,706 2,759 4,734
---------- ---------- --------- --------- ---------
Operating profit after tax (493) 2,268 4,942 5,308 8,671
Extraordinary item(3) - - - 2,681 -
---------- ---------- --------- --------- ---------
Operating profit after extraordinary item (493) 2,268 4,942 7,989 8,671
Outside equity interest in profit and
extraordinary items(4) - - - 47 207
---------- ---------- --------- --------- ---------
Operating profit and extraordinary items
attributable to members of holding company $ (493) $ 2,268 $ 4,942 $ 8,036 $ 8,878
========== ========== ========= ========= =========
(1) Operating profit before income tax includes an abnormal item in
1994 comprising a gold call option fee of $1,000,000.
(2) No income tax is applicable in the year to 30 June 1992 due to the
benefit of prior year tax losses reducing the income tax expense by
$945,000.
(3) The extraordinary item relates to a gain in reduction in ownership
interest in controlled entity (Pilbara Mines NL). No income tax is
applicable.
(4) The minority interest relates to the share of loss attributable to
the outside equity interest in Pilbara Mines NL.
28
28
4.4.3 PRO FORMA INFORMATION
The following Pro Forma Condensed Consolidated Balance Sheet has been
prepared as of 30 June 1995, by Coeur d'Alene to illustrate the
estimated effects of the proposed acquisition under the Offers (the
"Acquisition") of the Gasgoyne Shares on issue (without regard to the
Gasgoyne Shares that might be issued pursuant to the exercise of
Gasgoyne Options but including shares issued during the Pilbara
takeover - see clause 3.1) assuming the Acquisition occurred as of
that date.
The Pro Forma Condensed Consolidated Balance Sheet is presented
utilising the purchase method of accounting whereby the cost of
acquiring the Gasgoyne Shares is determined by the market value of
the Coeur d'Alene Shares and the cash which Coeur d'Alene will pay,
plus the direct costs associated with the Acquisition, which are
estimated at approximately US$2 million. All amounts in the Pro Forma
Condensed Consolidated Balance Sheet are stated in US dollars. The
Pro Forma Condensed Consolidated Balance Sheet does not purport to
represent what the financial position actually would have been if the
Acquisition had occurred at 30 June 1995 or to project the financial
position for any future date or period.
The Pro Forma Condensed Consolidated Balance Sheet should be read in
conjunction with the historical consolidated financial statements,
including the notes thereto, of Coeur d'Alene, prepared in accordance
with US GAAP, which are included as annexures B, C, D, and E. The Pro
Forma Condensed Consolidated Balance Sheet also includes pro forma
adjustments which are based on available information and certain
assumptions that management of Coeur d'Alene believes are reasonable
in the circumstances. Such pro forma adjustments reflect the effects
of the acquisition of all of the Gasgoyne Shares on issue without
regard to the Gasgoyne Shares that may be issued on exercise of
Gasgoyne Options.
In December 1995, the Company completed the conversion of US $74.9
million of 7% Debentures into Coeur d'Alene Shares. The pro forma
balance sheet reflects this conversion of the debentures as though it
had occurred at 30 June 1995. The conversion, net of offering costs,
results in a significant decrease in long term debt and a
corresponding increase in shareholders' equity.
Subsequent to 30 June 1995, Gasgoyne successfully completed its
takeover of Pilbara Mines NL and acquired all of the shares in that
company (see clause 3.1). The Pro Forma Condensed Consolidated
Balance Sheet has been adjusted to reflect the impact of this
acquisition as if it had occurred at 30 June 1995.
29
29
COEUR D'ALENE
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
30 JUNE 1995 (UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS OF US DOLLARS)
COEUR D'ALENE PRO FORMA
HISTORICAL ADJUSTMENTS (A) PRO FORMA
------------- --------------- ---------
ASSETS
Current Assets
Cash and equivalents $47,135 $8,234 $55,369
Short-term investments 75,595 - 75,595
Receivables 12,218 360 12,578
Inventories 33,390 3,887 37,277
Other 2,701 144 2,845
-------- -------- --------
Total current assets 171,039 12,625 183,664
-------- -------- --------
Property, Plant and Equipment - net 244,723 106,530 351,253
-------- -------- --------
Investments and Other Assets
Net assets of discontinued 160 - 160
operations
Other assets 17,041 6,078 23,119
-------- -------- --------
Total investments and other
assets 17,201 6,078 23,279
-------- -------- --------
$432,963 $125,233 $558,196
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $23,366 $8,782 $32,148
Long-term Liabilities
Long-term debt 237,194 (50,922) 186,272
Other long-term obligations 5,691 2,461 8,152
-------- -------- --------
Total long-term liabilities 242,885 (48,461) 194,424
Deferred Income and
Mining Taxes 1,174 26,202 27,376
Shareholders' Equity 165,538 138,710 304,248
-------- -------- --------
$432,963 $125,233 $558,196
======== ======== ========
30
30
(A) To reflect the acquisition of 52,060,700 Gasgoyne Shares outstanding at 30
June 1995 and including shares issued subsequent to 30 June 1995 as part of
the takeover of Pilbara Mines NL (see clause 3.1) but excludes Gasgoyne
Shares that may be issued on exercise of Gasgoyne Options. This assumes the
issue of 3,644,255 Coeur d'Alene Shares valued at US$67.4 million and the
payment of US$23,114,991 in cash in connection with the Takeover Scheme.
Accordingly the total pro forma acquisition cost is US$90.5 million compared
to the book value for Gasgoyne of US$20.1 million. The actual acquisition
cost will be determined based upon the value of the Coeur d'Alene Shares
issued and cash paid for the purchase of Gasgoyne Shares. As discussed
below, it is Coeur d'Alene's opinion that substantially all of the purchase
price in excess of the net book value of Gasgoyne is attributable to the
mineral property interests held by Gasgoyne. The excess acquisition cost
paid over the net book value of assets acquired and related deferred taxes
is allocated as follows:
Total Acquisition Cost US$90,534
Net Book Value of Gasgoyne, 30 June 1995 20,149
---------
Excess of Purchase Price Paid over Net Book Value
of Assets Acquired Attributable to Mineral
Properties 70,385
Increase in Mineral Properties resulting from
adjustment to conform to Coeur d'Alene
accounting policies 5,447
Transaction costs 2,000
Increase in Mineral Properties due to the
Recognition of the Deferred Tax Consequences
of Differences Between the Assigned Values and
Tax Bases of the Net Assets Acquired 26,202
---------
Total Increase in Property, Plant and Equipment 104,034
Increase in Deferred Taxes 26,202
---------
Excess of Acquisition Cost Paid over Net Book
Value of Assets Acquired US$77,832
=========
With the exception of property, plant and equipment, the assets and
liabilities of Gasgoyne included in Coeur d'Alene's consolidated financial
statements consist primarily of working capital items, the carrying values
of which are substantially at fair market value. Based on the history of the
Yilgarn Star and Awak Mas properties and the identification and development
of mineral deposits and their conversion to ore reserves, the financial
analysis undertaken by Coeur d'Alene in connection with its decision to
acquire Gasgoyne, and Coeur d'Alene's experience in ownership and operation
of precious metals mines, it is Coeur d'Alene's opinion that all of the
acquisition cost in excess of the net book value of assets acquired is
attributable to mineral properties.
The final allocation of the acquisition cost will be made when the
acquisition is completed and when Coeur d'Alene completes its detailed
analysis of Gasgoyne's assets. However, management does not expect the final
actual allocation of the purchase price to be materially different from the
pro forma balance sheet.
In December 1995, the Company completed the balance sheet reflects this
conversion of the debentures as though it had occurred at 30 June 1995. The
conversion, net of offering costs, results in a substantial decrease in long
term debt and a corresponding increase in shareholders' equity.
The Pro Forma Condensed Consolidated Balance Sheet as at 30 June 1995 is
prepared on the basis that Coeur d'Alene acquires 100% of the Gasgoyne
Shares on issue. The effect on the Pro Forma Condensed Consolidated Balance
Sheet of an acquisition of less than 100% would be to reduce the
shareholders' equity with an equal and off-setting increase in the amounts
due to minority shareholders.
31
[ERNST & YOUNG LLP LETTERHEAD]
Review Report of Independent Accountants on
Pro Forma Financial Information
We have reviewed the pro forma adjustments reflecting the acquisition described
in Note A and the application of those adjustments to the historical amounts in
the accompanying pro forma condensed consolidated balance sheet of Coeur
d'Alene Mines Corporation as of June 30, 1995. The historical condensed
consolidated balance sheet is derived from the historical unaudited financial
statements of Coeur d'Alene Mines Corporation which were reviewed by us, and of
Gasgoyne Gold Mines N.L., which were audited by other auditors, appearing
elsewhere herein. Such pro forma adjustments are based on management's
assumptions described in Note A. Our review was conducted in accordance with
standards established by the American Institute of Certified Public
Accountants.
A review is substantially less in scope than an examination, the objective of
which is the expression of an opinion on management's assumptions, the pro
forma adjustments, and the application of those adjustments to historical
financial information. Accordingly, we do not express such an opinion.
The objective of this pro forma financial information is to show what the
significant effects on the historical financial information might have been had
the acquisition occurred at an earlier date. However, the pro forma condensed
consolidated balance sheet is not necessarily indicative of the effects on
financial position that would have occurred had the above-mentioned acquisition
actually occurred earlier.
Based on our review, nothing came to our attention that caused us to believe
that management's assumptions do not provide a reasonable basis for presenting
the significant effects directly attributable to the above-mentioned
acquisition described in Note A, that the related pro forma adjustments do not
give appropriate effect to those assumptions, or that the pro forma column does
not reflect the proper application of those adjusments to the historical
financial statement amounts in the pro forma condensed consolidated balance
sheet as of June 30, 1995.
/s/ ERNST & YOUNG LLP
---------------------
January 29, 1996
32
31
4.4.4 FINANCIAL FORECASTS
Set out below is the Forecasted Condensed Statements of Consolidated
Operations and Cashflows of Coeur d'Alene (including Gasgoyne) for the six
months ended 31 December 1995 and the year ending 31 December 1996. A
summary of significant forecast assumptions is also set out below.
COEUR D'ALENE
FORECASTED CONDENSED STATEMENTS OF
CONSOLIDATED OPERATIONS
FOR THE SIX MONTHS ENDED 31 DECEMBER 1995
AND THE YEAR ENDING 31 DECEMBER 1996
(thousands of US dollars, except per share amounts)
SIX MONTHS ENDED YEAR ENDING
31 DEC 1995 31 DEC 1996
-------------------------------------------
Sales of concentrates and dore $ 58,605 $ 149,885
Cost of mine operations 46,924 118,794
Gross profits 11,681 31,091
Other income 6,585 6,690
------------ ------------
Total income 18,266 37,781
Expenses
Corporate expenses 6,643 13,483
Mining exploration 3,262 5,882
Idle facilities expense 889 1,428
Interest expense 2,695 9,181
------------ ------------
Total expenses 13,489 29,974
Income before income taxes 4,777 7,807
Income taxes 2,324 1,222
------------ ------------
Net Income $ 2,453 $ 6,585
------------ ------------
Net Income Per Share $ 0.10 $ 0.27
============ ============
Average shares Used in the Computation 24,109,137 24,109,137
------------ ------------
See "Summary of Significant Forecast Assumptions" below.
33
32
COEUR D'ALENE
FORECASTED CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(thousands of US dollars)
SIX MONTHS ENDED YEAR ENDING
31 DEC 1995 31 DEC 1996
---------------- -----------------
Net Income $ 2,453 $ 6,585
Depreciation, depletion and amortization 12,289 28,646
Changes in working capital 7,122 (852)
---------- --------------
Net cash provided by operations 21,864 34,379
---------- --------------
Investment and Financing Activities
Additions to property plant and equipment (6,873) (13,732)
Additions to development projects (53,303) (20,228)
Increase in long-term debt 9,093 (5,601)
Dividends (1,003) -
Other investing & financing activities 9,858 -
---------- --------------
Net cash used in Investment and Financing (42,228) (39,561)
Activities
---------- --------------
Net Decrease in Cash and Equivalents $ (20,364) $ (5,182)
========== ==============
See "Summary of Significant Forecast Assumptions" below.
The financial forecast has been prepared to comply with Australian legal
requirements which require a description of the prospects of Coeur d'Alene
where the consideration offered includes shares of Coeur d'Alene . Coeur
d'Alene will not update this forecast in future regulatory filings. The
financial forecast has been prepared by Coeur d'Alene's management to provide
the reader with an indication of Coeur d'Alene's future production, earnings,
cash flow and dividends following the acquisition of Gasgoyne.
This financial forecast presents, to the best of management's knowledge and
belief, Coeur d'Alene's expected consolidated results of operations and
consolidated cash flows for the forecast periods. Accordingly, the forecast
reflects management's judgment as of 25 January 1996, the date of this
forecast, of the expected conditions and its expected course of action. The
assumptions disclosed herein are those that management believes are significant
to the forecast. There will usually be differences between forecasted and
actual results, because events and circumstances frequently do not occur as
expected, and those differences may be material. Coeur d'Alene's Consolidated
Financial Statements for the Year Ended 31 December 1994, which are included in
annexure B, should be read for additional information.
COEUR D'ALENE CAUTIONS READERS THAT A FORECAST IS SUBJECT TO MANY
UNCERTAINTIES AND NEEDS TO BE TREATED WITH CAUTION.
Unless specifically stated otherwise, all comments and production statistics
relate to the Group.
The forecast has been prepared in accordance with accounting principles
generally accepted in the United States and the accounting policies adopted by
Coeur d'Alene. (See note B to Coeur d'Alene's 31 December 1994 Consolidated
Financial Statements in annexure B and annexure K - Differences Between US and
Australian Generally Accepted Accounting Principles.)
34
33
SUMMARY OF SIGNIFICANT FORECAST ASSUMPTIONS
The following is a summary of the significant assumptions used in the
preparation of the forecast. These assumptions were based on Coeur d'Alene
management's judgment at 25 January 1996, the date the forecast was completed.
These assumptions should not be considered an all inclusive list of the
assumptions used in the preparation of the forecast.
1 That effective 1 July 1995, Coeur d'Alene acquired 100% of the Gasgoyne
Shares and that approximately 75% of the Gasgoyne Shares acquired are
exchanged for Coeur d'Alene Shares and approximately 25% are acquired for
cash. Therefore, the acquisition cost has been assumed to consist of
approximately 3.6 million Coeur d'Alene Shares and cash payments totalling
US$23.1 million. Transaction costs associated with the acquisition of the
Gasgoyne Shares are estimated to be US$2.0 million.
Management has assumed that all cash payments made in the acquisition of
the Gasgoyne Shares are funded from a revolving line of credit which bears
interest at LIBOR + 1.5%. LIBOR is assumed to be 5.625%.
2 Management assumes that Coeur d'Alene will produce 100,200 and 278,057
ounces of gold in the six months ending 31 December 1995 and the year
ending 31 December 1996, respectively. In addition, it is assumed that
Coeur d'Alene will produce 3,966,764 and 8,945,762 ounces of silver in the
six months ending 31 December 1995 and in the year ending 31 December
1996, respectively
3 (a) The average spot market price of gold is assumed to be US$393.38 and
US$400 per ounce in the 1995 and 1996 periods, respectively. The
price of gold was US$387.90 per ounce on 21 December 1995, the day
that the offer to acquire the Gasgoyne Shares was announced. The gold
price has varied between US$374.80 and US$406.60 per ounce over the
last twelve months preceding the date of preparation of this forecast
(New York Comex close). In determining the gold price to be used in
the forecast, Coeur d'Alene took into consideration many factors,
including the price of gold available in the forward markets and
consultations with gold market analysts and trading institutions. A
sensitivity analysis is included in note 14 below to show the impact
of 5% movements in the US dollar gold price.
(b) The average spot market price of silver is assumed to be US$5.44 and
US$6.00 per ounce in the 1995 and 1996 periods, respectively. The
price of silver was US$5.12 per ounce on 21 December 1995, the day
that the offer to acquire the Gasgoyne Shares was announced. The
silver price has varied between US$4.38 and US$6.11 per ounce over
the last twelve months preceding the date of preparation of this
forecast (New York Comex close). In determining the silver price to
be used in the forecast, Coeur d'Alene took into consideration many
factors, including the price of silver available in the forward
markets and consultations with silver market analysts and trading
institutions. A sensitivity analysis is included in note 14 below to
show the impact of 5% movements in the US dollar silver price.
35
34
4 Average exchange rates used throughout the forecast period were US$0.74
for the Australian dollars, US$0.67 for the New Zealand dollar and
US$0.002679 for the Chilean peso.
The approximate percentage of Coeur d'Alene's forecast 1995 and 1996
operating costs denominated in Australian, New Zealand and Chilean
currencies are as follows:
--------------------------------------------
AUSTRALIA NEW ZEALAND CHILE
--------------------------------------------
1995 25 39 0
--------------------------------------------
1996 20 35 24
--------------------------------------------
To help minimise the effects of fluctuation of the various currencies in
relation to the US dollar, Coeur d'Alene has implemented a foreign
currency protection program by entering into a series of foreign currency
purchase contracts which establish fixed exchange rates under which US$
may be exchanged for these currencies. See Note B to Coeur d'Alene's 31
December 1994 Consolidated Financial Statements in annexure B for details
of this program.
A sensitivity analysis is included in note 14 below to show the impact of
5% movements in the Australian, New Zealand and Chilean currencies in
relation to the US dollar. This sensitivity analysis incorporates the
effects of the foreign currency protection program described above.
5 Coeur d'Alene has engaged in some limited forward selling of gold to be
produced in 1996. See note B to Coeur d'Alene's 31 December 1994
Consolidated Financial Statements in annexure B for a description of Coeur
d'Alene's policy on forward sales.
6 In determining operating cost levels used in the forecast, management took
into consideration many factors, including historical operating
performance, inflation and continuing cost improvements, at each of Coeur
d'Alene's operating locations. A sensitivity analysis is included in note
14 below to show the impact of 3% movements in production costs.
7 Income and mining taxes for the forecast period are based on forecast
earnings and the statutory tax rates as presently enacted in the
geographical and tax jurisdictions that Coeur d'Alene operates. Coeur
d'Alene's actual consolidated income and mining tax rate can vary
significantly as a result of numerous factors, including, but not limited
to, changes in the geographical mix of pretax income or loss,
nondeductible expenses, and changes in the tax rules, rates and
regulations of the various taxing regulatory authorities. The applicable
statutory income and mining tax rates (as reduced by applicable statutory
mining incentives) utilised in the forecast are as follows:
36
35
United States . . . . . . . . . . . . 35%
Chile . . . . . . . . . . . . . . . . 49%
New Zealand . . . . . . . . . . . . . 36%
Australia . . . . . . . . . . . . . . 36%
Currently, Coeur d'Alene has sufficient net operating loss carryforwards
and other tax credits to offset applicable income taxes in the US, New
Zealand and Chile.
The lower effective tax rate reflected in the forecast for the year ending
31 December 1996 is caused principally by the utilisation of certain US
net operating loss carryforwards and the tax effect of accounting for the
proposed acquisition under the Takeover Scheme.
8 Management assumes that Coeur d'Alene's current levels of exploration
spending will continue throughout the forecast period. No benefits from
this exploration have been included in the forecast.
9 Management has assumed that no dividends or cash dividends will be paid by
Coeur d'Alene during the forecast period As mentioned in clause 2.7, it
is the policy of Coeur d'Alene's Board of Directors to discuss and
consider the declaration of an annual dividend or cash distribution at its
board meeting in March in each year. Therefore a dividend has not been
included in the forecasts at this time.
10 Assumptions as to short-term interest rates used for determining
incremental interest income are as follows:
Six Months Ended Year Ending
31 December 1995 31 December 1996
---------------- ----------------
Short-term interest rates (US) 5.0% 5.0%
11 The excess of purchase price over the underlying book value of the
Gasgoyne Shares to be acquired in the amount of US$104 million has been
allocated to property, plant and equipment and deferred taxes in the
amounts of US$77.8 million and US$26.2 million, respectively. Coeur
d'Alene expects to allocate excess purchase price to property, plant and
equipment and to the reserves portion of mineral properties. Coeur d'Alene
will amortise the excess purchase price allocated to reserves on a
units-of-production basis. Coeur d'Alene will amortise the excess purchase
price of the properties on a units-of-production basis to the extent
mineral deposits are upgraded to reserves or will expense the excess
purchase price if and when and to the extent the carrying value of the
other mineral deposits and mineral properties are determined to be
impaired.
12 Coeur d'Alene currently is involved in several late stage
exploration/development projects. Ongoing exploration, prefeasibility and
feasibility study costs related to these projects are included in the
forecast.
Coeur d'Alene is actively developing the Kensington project located in the
state of Alaska in the US. If Coeur d'Alene proceeds with construction of
the project, approximately US$200 million will be required over a 2-year
period. No provisions for construction have been made in the forecast. It
is anticipated that a final production decision will be made in
37
36
the third quarter of 1996 and that construction could commence in early
1997, depending on whether the Company decides to proceed.
13 Coeur d'Alene currently has outstanding long-term debt obligations of
US$174.0 million. No payments of principal are due under these obligations
until the year 2002. (See note H to Coeur d'Alene's 31 December 1994
Consolidated Financial Statements in annexure B for details of Coeur
d'Alene's long-term debt.) Management assumes no debt repayments or
additional borrowings (other than the indebtedness incurred in connection
with the acquisition of the Gasgoyne Shares - see note 1 above) during the
forecast period.
14 Sensitivity Analysis
The following sensitivity analysis projects the estimated effects on
results of operations and cash flows of changes in certain assumptions
from those used in the preparation of the forecast. Except for the
acquisition of Gasgoyne Shares, the sensitivities should not be
interpreted as establishing lower and upper limits of possible outcomes.
(Thousands of US dollars, except per share amounts)
PRO FORMA NET INCOME
NET INCOME, EARNINGS PER SHARE (EPS) AND CASH FLOW
Six Months Ended Year Ending
31 December 1995 31 December 1996
---------------------------------- ---------------------------------
Net Income EPS Cash Flow Net Income EPS Cash Flow
---------------------------------- ---------------------------------
5% increase in gold price $3,895 $0.16 ($18,924) $9,961 $0.41 ($2,264)
5% decrease in gold price $1,013 $0.04 ($21,806) $3,212 $0.13 ($8,098)
5% increase in silver price $3,427 $0.14 ($19,392) $9,277 $0.38 ($2,490)
5% decrease in silver price $1,481 $0.06 ($21,338) $3,894 $0.16 ($7,873)
A$ weakens against US$ by 5% $2,342 $0.10 ($21,964) $6,271 $0.26 ($5,233)
A$ strengthens against US$ by 5% $2,566 $0.11 ($21,867) $6,899 $0.29 ($5,131)
NZ$ weakens against US$ by 5% (a) $2,523 $0.10 ($21,847) $7,085 $0.29 ($4,682)
NZ$ strengthens against US$ by 5% (a) $2,385 $0.10 ($21,985) $6,086 $0.25 ($5,681)
Chilean pesos weakens against US$ by 5% (a) $2,454 $0.10 ($21,916) $6,783 $0.28 ($4,984)
Chilean pesos strengthens against US$ by 5% (a) $2,454 $0.10 ($21,916) $6,387 $0.26 ($5,380)
Production costs increase by 3% $1,189 $0.05 ($23,180) $4,427 $0.18 ($7,341)
Production costs decrease by 3% $3,718 $0.15 ($20,651) $8,743 $0.36 ($3,024)
------------------------------------------------------------------------
(a) The sensitivity analysis incorporates the effect of the foreign
currency protection program
15 While management has not prepared a financial forecast for the year ending
31 December 1997, management is not aware of any non-recurring items. No
material change in gold or silver production is expected in that period
which may have a significant effect on Coeur d'Alene's results from
operations.
16 The following financial information for Gasgoyne and its subsidiaries is
incorporated into the forecasts (in A$ thousands):
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TWELVE
SIX MONTHS MONTHS
ENDED ENDING
31 DECEMBER 31 DECEMBER
1995 1996
----------- -----------
Gold Sales $14,699 $32,987
Cost of Sales $9,324 $18,813
Other income $1,483 $650
Total other expenses $2,128 $1,550
Working capital
changes $2,255 $4,112
Capital expenditure $6,175 $8,704
Other
Financing/Investing
activities $2,736 ($3,500)
Dividends paid $1,356 -
Income tax rate 36% 36%
This financial information has been derived following discussions with
management of Gasgoyne and is generally in line with historic results.
Nothing has come to the attention of Coeur d'Alene which causes it to
believe that Gasgoyne's results over the periods referred to above will be
materially different to those experienced in the immediately preceding
corresponding periods.
No dividend to be paid by Gasgoyne has been provided for the year ending
31 December 1996 (see note 9 above). In respect of the year ended 30 June
1995, Gasgoyne paid fully franked dividends of 11 cents per Gasgoyne Share.
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4.5 HOW CASH CONSIDERATION TO BE PROVIDED
The cash consideration for the acquisition of Gasgoyne Shares to which the
Offers relate (including any Gasgoyne Shares issued on exercise of
Gasgoyne Options) will, if all of the Offers are accepted, be not more
than A$34,750,000.
Coeur d'Alene has sufficient uncommitted liquid funds to pay the cash
consideration specified above. However, it has not earmarked those funds
for any particular purpose, including in connection with the Takeover
Scheme.
In addition, Coeur d'Alene has negotiated a standby loan facility with
Rothschild Australia Limited ("ROTHSCHILD") as set out in a letter of
offer dated 19 January 1996 ("FACILITY"). The letter of offer was
accepted by Coeur d'Alene on 22 January 1996. The specific purpose of the
Facility is to fund the cash consideration specified above.
The amount available to be drawn under the Facility is sufficient to meet
the cash consideration specified above. The Facility may be drawn in US$
or A$.
The Facility is subject to the following conditions precedent:
(a) Rothschild conducting a review, to its satisfaction, of the structure
and documentation for the Takeover Scheme, including the bid
timetable;
(b) finalisation and execution of security and loan documentation to the
satisfaction of Rothschild;
(c) Rothschild being satisfied that Coeur d'Alene has complied with and
will maintain all relevant governmental and statutory requirements in
connection with the Facility and acquisition of Gasgoyne Shares; and
(d) legal opinions satisfactory to Rothschild from Rothschild's and Coeur
d'Alene's counsel regarding the validity and enforceability of all
the relevant loan documentation.
There is no reason currently known to Coeur d'Alene why the above
conditions will not be able to be satisfied.
The Facility contains the following covenants and special conditions:
(a) net tangible worth of Coeur d'Alene to remain at or above US$160
million;
(b) Coeur d'Alene's interest coverage ratio (operating profit plus
interest receivable divided by interest payable) to be at or above
1.5;
(c) current ratio (current assets divided by current liabilities) to be
at or above 2.0;
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(d) funded indebtedness (excluding subordinated debentures) divided by
net tangible worth not to exceed 0.5;
(e) no material change in the nature of Coeur d'Alene's business or
constituent documents, other than changes to the constituent
documents necessary to obtain ASX listing;
(f) if Coeur d'Alene acquires less than 100% of the Gasgoyne Shares, the
aggregate market value of the Gasgoyne Shares owned by Coeur d'Alene
and its subsidiaries must at all times exceed two times the
outstanding Facility balance;
(g) there must be no significant change in the ownership or control of
Coeur d'Alene during the term of the Facility, without the approval
of Rothschild;
(h) Rothschild has indicated that the security and loan documentation for
the Facility will contain standard events of default for a facility
of this nature, including breach of the share value ratio specified
in (f) above and if in the sole discretion of Rothschild there is a
material adverse change in the financial condition of Coeur d'Alene.
There is no reason currently known to Coeur d'Alene why the above
covenants and special conditions will not be able to be satisfied, other
than (g) which may be outside its control.
The Facility also provides that if Coeur d'Alene acquires control of
Gasgoyne, Coeur d'Alene will use its best endeavours to ensure that
Gasgoyne does not do anything other than in the ordinary course of
business and does not increase its net indebtedness (in a manner to be
defined by Rothschild).
Coeur d'Alene expects that a breach of any of the covenants and special
conditions referred to above would permit Rothschild to require the
Facility to be repaid either immediately or following a specified period
to remedy the breach.
At present Coeur d'Alene intends to pay the cash consideration from its
own funds, but may draw down the Facility in whole or in part.
4.6 INFORMATION ABOUT COEUR D'ALENE SHARES
Clauses 4.6, 4.7 and 4.8 set out a summary of the rights attaching to
Coeur d'Alene Shares, the rights attaching to Gasgoyne Shares and Gasgoyne
Options and a comparison of the rights attaching to Coeur d'Alene Shares
and Gasgoyne Shares.
Coeur d'Alene Shares
The share consideration for the acquisition of Gasgoyne Shares to which
the Offers relate (including Gasgoyne Shares issued on exercise of
Gasgoyne Options) will, if all of the Offers are accepted, require the
issue of not more than 4,031,000 Coeur d'Alene Shares. Coeur d'Alene
Shares are shares of common stock in the capital of Coeur d'Alene. The
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term "common stock" is equivalent to the term "ordinary shares" as used
generally in Australia.
Coeur d'Alene is authorised to issue up to 60,000,000 Coeur d'Alene
Shares, of which, at 25 January 1996, 20,464,882 shares were outstanding
and 1,059,211 shares were held as treasury stock (ie, held by the Company
itself), 3,880,481 shares were authorised for issuance on the conversion
of Coeur d'Alene's US$100 million principal amount of outstanding 6 3/8%
Debentures, 1,955,416 shares were reserved for issuance on conversion of
Coeur d'Alene's US$50 million principal amount of outstanding 6%
Debentures, 751,136 shares were authorised for issuance under Coeur
d'Alene's Executive Compensation Program and 200,000 shares were
authorised for issuance under Coeur d'Alene's Non-Employee Directors Stock
Option Plan (see clause 7.4).
The holders of Coeur d'Alene Shares are entitled to one vote for each
share held on each matter submitted to a vote of shareholders, and on
giving notice required by law, may cumulate their votes in elections of
directors (ie, may spread votes among some candidates only - see clause
4.8). Subject to preference that may be applicable to any shares of
preferred stock of Coeur d'Alene outstanding at the time, holders of Coeur
d'Alene Shares are entitled to receive ratably such dividends as may be
declared by the Board of Directors out of funds legally available
therefore and, in the event of the liquidation, dissolution or winding up
of Coeur d'Alene, are entitled to share ratably in all assets remaining
after payment of liabilities. Holders of Coeur d'Alene Shares have no
pre-emptive rights (ie, rights to purchase additional shares prior to the
offering of such shares to other persons) and have no rights to convert
their Coeur d'Alene Shares into any other securities.
The Coeur d'Alene Shares to be issued are not permitted under US law to be
sold in the US or to US persons for a period of 40 days commencing on the
date of closing of the Offers. Refer to clause 5.3 for further
information on this restriction.
Coeur d'Alene's articles of incorporation include a "fair price" provision
applicable to certain business combination transactions in which Coeur
d'Alene may be involved. The provision requires that a holder of 10% or
more of the outstanding Coeur d'Alene Shares ("INTERESTED STOCKHOLDER")
not engage in certain specified transactions with respect to the Company
(eg mergers, takeover offers, sales of assets, dissolution and
liquidation) unless one of three conditions is met:
(i) a majority of the directors who are unaffiliated with the Interested
Stockholder and were directors before the Interested Stockholder
became an Interested Stockholder approve the transaction;
(ii) holders of 80% or more of the outstanding Coeur d'Alene Shares
approve the transaction; or
(iii) the shareholders are all paid a "fair price", ie generally the
higher of the fair market value of the shares or the same price as
the price paid to shareholders in the transaction in which the
Interested Stockholder acquired its block.
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By discouraging certain types of hostile takeover bids, the fair price
provision may tend to insulate current management against the possibility
of removal. Coeur d'Alene is not aware of any person or entity proposing
or contemplating such a transaction.
The transfer agent and registrar for Coeur d'Alene's Shares is First
Interstate Bank of Oregon, NA, Portland, Oregon. Deloitte Share Registry
Services (a division of the firm of Deloitte Touche Tohmatsu) will serve
as co-transfer agent with respect to Coeur d'Alene Shares issued in
Australia.
Preferred Stock
Coeur d'Alene is authorised to issue up to 10,000,000 shares of preferred
stock, none of which have been issued. The Board of Directors has the
authority to determine the dividend rights, dividend rates, conversion
rights, voting rights, rights and terms of redemption and liquidation
preferences, redemption prices, sinking fund terms on any series of
preferred stock, the number of shares constituting any such series and the
designation thereof. Holders of preferred stock have no pre-emptive
rights and have no rights to convert their preferred stock into any other
securities. While a series may be designated and preferred stock may be
issued from time to time in the future, except upon exercise of the Rights
(as described below), Coeur d'Alene has no present plans to issue any such
shares.
On 24 May 1989 the Board of Directors of Coeur d'Alene declared a dividend
distribution of one Right for each issued Coeur d'Alene Share to
shareholders registered at the close of business on 16 June 1989. Each
Right entitles the registered holder to purchase from Coeur d'Alene one
one-hundredth of a share of Series A Preferred Stock at a purchase price
of US$100 in cash ("Purchase Price"), subject to adjustment. The Rights
are not exercisable or detachable from the Coeur d'Alene Shares until ten
days after any person or group acquires 20% or more (or commences a
takeover offer for 30% or more) of Coeur d'Alene Shares. If any person or
group acquires 30% or more of the Coeur d'Alene Shares on issue or
acquires Coeur d'Alene in a merger or other business combination, each
Right (other than those held by the acquiring person) will entitle the
holder to purchase preferred stock of Coeur d'Alene or common stock of the
acquiring company having a market value of approximately two times the
US$100 exercise price. The Rights expire on 24 May 1999, and can be
redeemed by Coeur d'Alene at any time prior to their becoming exercisable.
4.7 INFORMATION ABOUT GASGOYNE SHARES
Holders of Gasgoyne Shares who accept an Offer will, if the Offers become
unconditional, be entitled to be issued Coeur d'Alene Shares (although
foreign shareholders or odd-lots may be treated in accordance with clause
12 of the Offers). Details of the rights attaching to Gasgoyne Shares and
Gasgoyne Options are taken in part from the Part A Statement dated 30
August 1995 given by Gasgoyne to Pilbara Mines NL. On the basis of
filings with ASX and the Commission as at the day immediately preceding
the date of this Statement, there have been no changes to the rights
attaching to Gasgoyne Shares or Gasgoyne Options since that date.
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RIGHTS ATTACHING TO GASGOYNE SHARES
The following is a broad summary (though not an exhaustive or definitive
statement) of the rights, privileges and restrictions which attach to
existing Gasgoyne Shares.
Voting Rights
Subject to any rights or restrictions for the time being attached to any
class or classes of shares (at present there are none), at a general
meeting of Gasgoyne every member present in person or by attorney,
representative or proxy has one vote on a show of hands and on a poll one
vote for each fully paid share held in the capital of Gasgoyne. A member
who holds an ordinary share which is not fully paid shall on a poll have
such number of votes as bears the same proportion to the total of such
shares registered in the member's name as the amount of the issue price
thereof paid up bears to the total issue price.
However, in the event of a breach of any escrow agreement entered into by
Gasgoyne under the ASX Listing Rules in relation to any shares which are
classified under the Listing Rules or by ASX as restricted securities, the
member holding the shares in question shall cease to be entitled to any
voting rights in respect of those shares for so long as the breach
subsists.
Dividend Rights
Subject to the rights of holders of shares issued with any special or
preferential rights (at present there are none), the profits of Gasgoyne
which the directors of Gasgoyne may from time to time determine to
distribute by way of dividend are divisible among the shareholders in
proportion to the numbers of shares held by them respectively and are paid
irrespective of the amount paid or credited as paid on those shares.
Rights on Winding Up
Subject to the rights of holders of shares issued on special terms and
conditions (at present there are none), if Gasgoyne is wound up, the
liquidator may, with the authority of a special resolution, divide among
the members in kind the whole or any part of the property of Gasgoyne, and
may for that purpose set such value as he or she considers fair on any
property to be so divided, and may determine how the division is to be
carried out as between the members or different classes of members.
The liquidator may, with the authority of a special resolution, vest the
whole or any part of any such property in trustees on such trusts for the
benefit of the contributories as the liquidator thinks fit, but so that no
member is compelled to accept any shares or other securities in respect of
which there is no liability.
Subject to the rights of members (if any) entitled to shares with special
rights in a winding-up, all moneys and property that are to be distributed
among shareholders on a winding-up, shall be so distributed in proportion
to the shares held by them respectively, irrespective of the amount paid
up or credited as paid up on the shares.
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Transfer of Shares
Subject to the articles of association of Gasgoyne, the Corporations Law,
or any other laws and the Listing Rules, Gasgoyne Shares are freely
transferable.
Issue of Further Shares
The allotment and issue of any new shares is under the control of the
directors from time to time of Gasgoyne. Subject to restrictions on the
allotment of shares to directors or their associates contained in the
Listing Rules, the articles of association of Gasgoyne and the
Corporations Law, the directors may allot or otherwise dispose of shares
on such terms and conditions as they see fit.
Classes of Shares
If at any time the share capital of Gasgoyne is divided into different
classes of shares, the rights attached to any class (unless otherwise
provided by the terms of issue of the shares of that class) may be varied,
whether or not Gasgoyne is being wound up, with the consent in writing of
the holders of three quarters of the issued shares of that class, or if
authorised by a special resolution passed at a separate meeting of the
holders of the shares of the class. Any variation of rights of that type
is subject to section 197 of the Corporations Law. The provisions of
Gasgoyne's articles of association relating to general meetings apply so
far as they are capable of application and with necessary alterations to
every separate meeting of that type except that a quorum is constituted by
two persons who together hold or represent by proxy one-third of the
issued shares of the class.
RIGHTS ATTACHING TO GASGOYNE UNLISTED OPTIONS
As at 25 January 1996, Coeur d'Alene understands that Gasgoyne had on
issue the following Gasgoyne Options to subscribe for Gasgoyne Shares:
NUMBER EXERCISE PRICE EXPIRY DATE
A$
735,000 0.47 30 June 1997
1,990,000 1.30 22 December 1997
100,000 1.47 28 April 1998
30,000 1.45 29 June 1997
84,000 2.24 28 June 1997
100,000 1.56 10 August 1998
125,000 1.81 14 September 1998
525,000 2.08 15 December 1998
--------
Total 3,689,000
The above Gasgoyne Options were issued pursuant to Gasgoyne's Employee
Option Plan. Refer to page 10 of annexure L for details of the rules of
the Employee Option Plan.
Each Option entitles the holder to apply for and be allotted one Gasgoyne
Share at the relevant exercise price on the following terms and
conditions:
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- The Options may be exercised by notice in writing to Gasgoyne
received at any time from the date of issue to the relevant expiry
date ("exercise period").
- There are no participating rights or entitlements inherent to the
option to participate in any new issue of capital which may be
offered to shareholders of Gasgoyne from time to time prior to expiry
date. Gasgoyne has indicated that it will ensure that during the
exercise period for the purpose of determining entitlements to any
such new issue, the book's closing date will be at least 12 business
days after such new issue is announced. This will afford the
optionholder an opportunity to exercise the option prior to the
book's closing date of any such new issue.
- The optionholder may not except with the approval of the board of
directors (in its absolute discretion) sell, transfer, assign, give
or otherwise dispose in equity or in law the benefit of the option.
- A certificate will be issued for each option. On the reverse side of
the certificate there will be enclosed a notice that is to be
completed when exercising the option. If there is more than one
option on a certificate and prior to the expiry date the option is
exercised in part, Gasgoyne has indicated that it will issue another
certificate for the balance of the options held and not yet
exercised.
- The options are not listed on the official list of ASX.
- It is a condition of each option that in the event of a
reconstruction (including consolidation, subdivision, reduction or
return) of the issued capital of Gasgoyne, the number of options and
the exercise price of options will be reconstructed in the same
proportion as the issued capital of Gasgoyne is reconstructed and in
the manner which will not result in any additional benefits being
conferred on optionholders which are not conferred on shareholders,
(subject to the provisions with respect to the rounding of
entitlements as sanctioned by the meeting of shareholders approving
the reconstruction of capital) but in all other respects the terms
for the exercise of options shall remain unchanged.
4.8 COMPARISON OF RIGHTS ATTACHING TO SHARES
Gasgoyne shareholders who accept the Offer will become shareholders of an
Idaho corporation and will have rights and privileges as set out in the
Idaho constitution, Idaho Code and Idaho Business Corporation Act ("IDAHO
CODE") and the Coeur d'Alene articles of incorporation and by-laws.
The rights and privileges of shareholders of an Idaho corporation are
comparable to those of shareholders of an Australian corporation,
however, there are some material differences, some of which are
summarised below.
Quorum
Under Gasgoyne's articles of association three shareholders present in
person or by proxy, attorney or representative constitutes a quorum for a
meeting.
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Under Coeur d'Alene's by-laws, holders of a majority of the outstanding
shares in person or by proxy, constitutes a quorum for the transaction of
business at a meeting of shareholders.
Vote Required for Ordinary Transactions
Under the Idaho Code and Coeur d'Alene's articles of incorporation, most
matters requiring shareholder approval must be approved by the vote of
holders of a majority of the outstanding shares represented in person or
by proxy at the meeting and entitled to vote.
Under Australian law, matters which are decided by a general meeting of
shareholders generally require the approval of the shareholders by
ordinary resolution, which is a resolution passed by the majority of
shares present in person or by proxy. Some matters (such as amendments
to the articles of association) require approval by special resolution,
which is a resolution passed by the holders of at least 75% of the shares
represented in person or by proxy, where at least 21 days of notice of
the resolution has been given.
VOTE REQUIRED FOR EXTRAORDINARY TRANSACTIONS
As mentioned in clause 4.6 Coeur d'Alene's articles of incorporation
include a "fair price" provision applicable to certain business
combination transactions. Where those provisions are applicable, holders
of at least 80% of the outstanding Coeur d'Alene Shares need to approve
the relevant transaction. Generally, a merger or consolidation to which
Coeur d'Alene is a party requires the approval of the holders of a
majority of the outstanding shares of each of the corporations involved
under the Idaho Code.
Under Australian law, a merger or consolidation of Gasgoyne with another
company cannot be implemented in the same way as under the Idaho Code,
however, corporate combinations can be effected by a scheme of
arrangement under the Corporations Law. A scheme of arrangement requires
approval by majorities of 50% in number and 75% in value of all
shareholders and each class of shareholders, together with court
approval.
A dissolution or a sale of substantially all of a corporation's assets
requires the approval of the holders of a majority of the outstanding
shares under the Idaho Code and in Australia the ASX Listing Rules
require approval by ordinary resolution.
APPOINTMENT OF DIRECTORS
Under Gasgoyne's articles of association, directors of Gasgoyne may be
appointed by ordinary resolution and must be voted on individually. In
addition, the directors have the power to fill a casual vacancy or
appoint additional directors up to the maximum number specified in the
articles of association (currently 10).
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Under Coeur d'Alene's by-laws, at any election of Directors, every
shareholder entitled to vote has the right to vote, in person or by
proxy, in respect of the number of shares held for as many persons as
there are Directors to be elected, or to cumulate votes by giving either
one candidate the number of votes multiplied by the number of candidates,
or by distributing those votes on the same principle among any number of
candidates. This is common to US corporations and is referred to as
"cumulative voting".
TRANSACTIONS INVOLVING RELATED PARTIES
The Corporations Law also prohibits a public company or an entity
controlled by it from giving any type of financial benefit to a "related
party" (including parent companies, controlling entities, directors and
their families, and entities which they control) unless the financial
benefit:
(i) constitutes reasonable remuneration to an officer;
(ii) is an advance of less than $2,000;
(iii) is given between wholly owned entities;
(iv) is given on arm's length terms or pursuant to a court order;
(v) constitutes a benefit given to shareholders in their capacity as
shareholders and does not discriminate unfairly between
shareholders (eg a dividend); or
(vi) is approved by a general meeting of shareholders.
The Idaho Code has no equivalent provisions. The Code however provides
that certain contracts or transactions between a corporation and one or
more of its directors or related entities will not be void or voidable
because of a financial interest where, amongst other things, it is
approved by shareholders. The Idaho Code does require that the issuance
of stock options to, or adoption of a stock option plan providing for the
issuance of options to, directors or officers must be approved by the
holders of at least two-thirds of the outstanding shares. Furthermore,
the NYSE listing rules require shareholder approval for certain
transactions in which directors or officers, or their affiliates, have an
interest. In addition, the ASX Listing Rules contain restrictions on
certain transactions involving certain related parties, substantial
shareholders and associates which currently apply to Gasgoyne and may
apply to Coeur d'Alene, if ASX approves it for listing and those
provisions are not waived.
As noted in clause 4.6, the Coeur d'Alene articles of incorporation
contain a "fair price" provision which will apply to business
combinations between Coeur d'Alene and "Interested Stockholders" as
referred to in that clause.
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DISSENTERS' APPRAISAL RIGHTS
The Idaho Code generally entitles a shareholder voting against the
following corporate actions to exercise dissenters' appraisal rights if
the shareholder complies with certain procedural requirements:
(i) a plan of merger or consolidation to which the corporation is a
party;
(ii) a sale, lease, exchange or other disposition of all or
substantially all of the property and assets of the corporation not
made in the usual or regular course of its business, including a
sale of dissolution;
(iii) any plan of exchange to which the corporation is a party
which provides for the acquisition of the corporation's shares; and
(iv) an amendment to the articles of incorporation which materially and
adversely affects the rights of the shares as to certain specified
matters.
Limitation of Director Liability
The Corporations Law provides that a company or related body corporate
must not indemnify a person who is or has been an officer (including a
director) or auditor against a liability incurred in that capacity, or
exempt such a person from such a liability. However, a person may be
indemnified:
(i) against a liability (other than to the company) unless the
liability arises out of conduct involving a lack of good faith; or
(ii) against a liability for costs and expenses incurred in defending
civil or criminal proceedings where judgment is given in favour of
the person, the person is acquitted or the court grants relief to
the person under the Corporations Law.
Gasgoyne's articles of association provide broad rights of
indemnification to the extent permitted under the Corporations Law, for
officers (including directors), employees and auditors.
The Coeur d'Alene articles of incorporation contain a provision,
permitted by the Idaho Code, limiting the personal liability of Directors
for breach of fiduciary duties provided the breach does not involve:
(a) any breach of the Director's duty of loyalty to Coeur d'Alene or
its shareholders;
(b) acts of omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
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(c) any transaction from which the director derived an improper
personal benefit; or
(d) certain declarations of dividends, distributions of assets or
repurchases of the corporation's shares in violation of the Idaho
Code.
Under Coeur d'Alene's by-laws, Coeur d'Alene must indemnify Directors and
officers to the fullest extent permitted by law. This is not exclusive
of any right which may exist under any by-law, agreement, vote of
shareholders or disinterested Directors, or otherwise.
Distributions and Dividends
Under the Corporations Law, a corporation may only pay dividends out of
profits, as determined under Australian law, or, in certain instances,
out of the share premium account.
Under the Idaho Code, a corporation may pay dividends in cash or its own
shares except when the corporation is insolvent or when the payment would
render the corporation insolvent. Generally, cash dividends may be paid
only out of the unreserved and unrestricted earned surplus of the
corporation. In addition, a corporation generally may make cash
distributions to its shareholders out of capital surplus of the
corporation; provided, however, that no such distribution may be made
when the corporation is insolvent or when the distribution would render
the corporation insolvent.
Buy-Backs
Under Coeur d'Alene's articles of incorporation the Directors have a wide
power to repurchase shares.
In general terms the Corporations Law permits buy-backs in more limited
circumstances. In particular, buy-backs can be made without shareholders
approval if:
(a) all ordinary shareholders have a reasonable opportunity to accept
the offer ("equal access buy-back"); and
(b) less than 10% of voting shares are bought back during a 12 month
period.
Equal access buy-backs of more than 10% of voting shares in a 12 month
period require approval by an ordinary resolution of shareholders.
Buy-backs which favour some shareholders over others ("selective
buy-backs") require approval by a special resolution of shareholders.
The Corporations Law also permits, in certain circumstances, odd-lot,
employee and on market buy-backs without shareholder approval.
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4.9 GENERAL AUSTRALIAN TAXATION CONSIDERATIONS
The following opinions are not exhaustive of all possible Australian
income tax considerations that could apply to particular shareholders. In
particular, the summary does not address all tax considerations applicable
to shareholders that may be subject to special tax rules, such as banks,
insurance companies, tax exempt organisations, superannuation funds or
dealers in securities.
EACH GASGOYNE SHAREHOLDER IS ADVISED TO CONSULT WITH THE SHAREHOLDER'S OWN
TAX ADVISER REGARDING THE CONSEQUENCES OF ACQUIRING, HOLDING OR DISPOSING
OF GASGOYNE SHARES OR COEUR D'ALENE SHARES IN LIGHT OF CURRENT TAX LAWS
AND THE SHAREHOLDER'S PARTICULAR INVESTMENT CIRCUMSTANCES.
The following is the opinion of Mallesons Stephen Jaques of Sydney,
Australia, Australian solicitors to Coeur d'Alene, as to the principal
Australian income tax consequences generally applicable to a Gasgoyne
shareholder who disposes of Gasgoyne Shares under the Offer. The opinion
reflects Mallesons Stephen Jaques' interpretation of the current
provisions of the Australian Income Tax Assessment Act 1936 (the "Act")
and the regulations made under it, the convention between the Government
of Australia and the Government of the United States for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes
and Income (the "Australia/United States Tax Treaty"), taking into account
currently proposed amendments and Mallesons Stephen Jaques' understanding
of the current administrative practices of the Australian Taxation Office.
The opinion does not otherwise take into account or anticipate changes in
the law, whether by way of judicial decision or legislative action, nor
does it take into account tax legislation of other countries.
Australian Resident Shareholders
The Australian tax consequences for holders of Gasgoyne Shares, who are
residents of Australia for tax purposes, are as follows:
(i) Disposal of Gasgoyne Shares
The sale of Gasgoyne Shares pursuant to acceptance of the Offer will
generally result in a disposal of Gasgoyne Shares for capital gains
tax purposes. A taxable capital gain would arise if the Gasgoyne
Shares are disposed of at a price in excess of their indexed cost
base. In this regard, the price received for the Gasgoyne Shares
disposed of is the sum of the market value of the Coeur d'Alene
Shares received under the Offer, calculated at the time the Offer is
accepted, plus the cash received under the Offer. If the Gasgoyne
Shares have been held for more than 12 months, the indexed cost base
will include an adjustment for inflation over the period for which
the Gasgoyne Shares have been held and hence any taxable capital gain
would be reduced by that amount as well as the cost base.
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Shareholders in Gasgoyne who dispose of their Gasgoyne Shares should
incur a capital loss if the cost of the Gasgoyne Shares disposed of
was greater than the sum of the market value of the Coeur d'Alene
Shares received and the cash received under the Offer. A capital
loss may be offset against taxable capital gains arising in the
current or future years of income. A capital loss cannot be offset
against ordinary income or carried back to offset taxable capital
gains arising in earlier years.
Profits realised by certain categories of shareholders, such as
sharetraders, banks and insurance companies, may be taxed as ordinary
income without any adjustment for inflation.
(ii) Coeur d'Alene Shares held by Australian Residents
Dividends paid on Coeur d'Alene Shares would generally be subject to
US withholding tax at the rate of 15%. This tax would be deducted by
Coeur d'Alene when the dividend is paid.
Generally, such dividends would also be subject to Australian income
tax. The entire amount of the dividend would be taxable including
the amount representing US withholding tax. The Australian tax
payable on such dividends would generally be reduced by the lesser of
the amount of any US tax withheld and the Australian tax attributable
to the dividends received.
Dividends paid by Coeur d'Alene cannot be franked for Australian
purposes and a shareholder will not be entitled to franking credit
rebates.
Dividends paid by Coeur d'Alene will not qualify for the
inter-corporate dividend rebate.
Dividends may be exempt from Australian tax if paid to an Australian
resident company on Coeur d'Alene Shares which confer a voting
interest of greater than 10%.
Because Coeur d'Alene Shares are listed on New York Stock Exchange
and Pacific Stock Exchange, the rules relating to the taxation of
foreign investment funds do not currently apply to investors who hold
Coeur d'Alene Shares in respect of those shares.
(iii) Subsequent Sale of Coeur d'Alene Shares
Gain or loss from the sale or other disposal of Coeur d'Alene Shares
will generally be subject to the same tax rules as those referred to
at item (i) above.
If Coeur d'Alene Shares are granted official quotation on ASX, the
sale of Coeur d'Alene Shares on ASX will generally be subject to
share transfer duty at the rate of 0.3% (half of which is borne by
both buyer and seller). The transfer of Coeur d'Alene Shares on a
branch register of Coeur d'Alene in Australia (other than
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pursuant to a sale on ASX) generally will be subject to share
transfer duty at the rate of 0.3% if Coeur d'Alene Shares are granted
official quotation on ASX and 0.6% if not (in each case borne wholly
by the buyer generally).
Non-Australian Resident Shareholders
The Australian tax consequences for holders of Gasgoyne Shares, who are
not Australian residents for tax purposes, are as follows:
(i) Disposal of Gasgoyne Shares
Generally, if the Gasgoyne Shares held by a shareholder (plus any
Gasgoyne Shares held by an "associate" for the purposes of the Act)
during the five years preceding the sale of such shares pursuant to
the Offer represent less than 10% of the issued shares in Gasgoyne,
their sale pursuant to the Offer will not give rise to any liability
under the Australian capital gains tax provisions in the Act.
Profits realised by certain categories of shareholders, such as
sharetraders, banks and insurance companies, may be taxed in
Australia as ordinary income depending on whether or not those
profits have an Australian source. Determining the source of income
is a factual matter which depends on all the surrounding
circumstances. However, if the shareholder is resident in a country
with which Australia has a double tax treaty, it is possible that the
terms of the particular treaty could deem any profit arising on the
acceptance of the Offer to have an Australian source. For example
that may be likely under the Australia/United States Tax Treaty
because the assets of Gasgoyne consist wholly or principally of real
property (including leaseholder interests in land and rights to
exploit or explore for natural resources) situated in Australia.
(ii) Dividends
Any dividend paid by Coeur d'Alene to a non-Australian resident
shareholder will generally not be taxable in Australia.
(iii) Subsequent Sale of Coeur d'Alene Shares
Gain or loss from the sale or other disposal of Coeur d'Alene Shares
by a non-Australian resident shareholder will generally not be
subject to Australian tax.
If Coeur d'Alene Shares are granted official quotation on ASX, the
sale of Coeur d'Alene Shares on ASX in Australia will generally be
subject to share transfer duty at the rate of 0.3% (half of which is
borne by both buyer and seller). The transfer of Coeur d'Alene
Shares on a branch register of Coeur d'Alene in Australia (other than
pursuant to a sale on ASX) generally will be subject to share
transfer duty at the rate of 0.3% if Coeur d'Alene Shares are granted
official quotation on ASX and 0.6% if not (in each case borne wholly
by the buyer generally).
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General
In all cases, regard should be given to the foreign consequences (if any)
of disposal of Gasgoyne Shares and the acquisition of and possible
subsequent disposal of Coeur d'Alene Shares.
Gasgoyne shareholders and optionholders are advised to contact a suitably
qualified taxation expert if in doubt as to the tax consequences of
accepting the Offer.
5 INTERESTS IN COEUR D'ALENE AND GASGOYNE SHARES
5.1 SHARES TO WHICH COEUR D'ALENE IS ENTITLED IN GASGOYNE
Coeur d'Alene is at the date of this Statement entitled to 10,621,300
Gasgoyne Shares. This entitlement arises as follows:
- On 31 August 1995, Callahan Mining Corporation, a wholly owned US
subsidiary of Coeur d'Alene, acquired 10,000 Gasgoyne Shares
on-market at $1.90 per share. Coeur d'Alene and Callahan Mining
Corporation are related bodies corporate and therefore Coeur d'Alene
is entitled to the shares held by Callahan.
- On 20 December 1995, Coeur d'Alene entered into a call option
agreement with Ioma Pty Limited under which Ioma Pty Limited granted
to Coeur d'Alene an option to purchase 10,611,300 Gasgoyne Shares for
$60 plus 7 Coeur d'Alene Shares for each 100 Gasgoyne Shares (ie the
same consideration as under the Offers). Ioma Pty Limited was, and is
at the date of this Statement, the largest shareholder of Gasgoyne
and is a company controlled by two directors of Gasgoyne, PG and RW
Crabb. The call option agreement automatically terminates if Ioma
Pty Limited accepts, in respect of all of the Gasgoyne Shares covered
by the agreement, a takeover offer made by Coeur d'Alene prior to the
option being exercised. The option can only be exercised if a
takeover offer is made by Coeur d'Alene under which the consideration
offered is not substantially less favourable than under the call
option agreement and foreign investment approval is obtained.
Except for the Gasgoyne Shares described in clause 5.1, Coeur d'Alene is
not at the date of this Statement entitled to any other marketable
securities of Gasgoyne, including Gasgoyne Options.
There have been no acquisitions or disposals of Gasgoyne Shares or
Gasgoyne Options by Coeur d'Alene, or any of its associates, in the 4
months ending on the day immediately before the day on which this
Statement was lodged with the Commission for registration except as set
out in clause 5.1.
5.2 ACQUISITIONS/DISPOSALS IN SHARES OF COEUR D'ALENE
There have been no acquisitions or disposals of shares in Coeur d'Alene by
any person included in, or any associate of it, in the 4 months ending on
the day immediately before the
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day on which this Statement was lodged with the Commission for
registration except as follows:
The following officers of Coeur d'Alene or its subsidiaries were granted
stock options on 5 December, 1995 pursuant to the Coeur d'Alene Executive
Compensation Program (see clause 7.4):
US$
NUMBER EXERCISE
OF PRICE PER
NAME POSITION(1) SHARES SHARE (2)
---------------- -------------- -------- ----------
Dennis E Wheeler Chairman, 37,114 18.00
President and
Chief Executive
Officer
Michael L Clark Senior Vice 17,280 18.00
President and
Chief Operating
Officer
Michael C Tippett Senior Vice 13,953 18.00
President
Exploration
and New
Business
Development
James A Sabala Senior Vice 10,844 18.00
President and
Chief Financial
Officer
William F Boyd Corporate 8,989 18.00
Counsel and
Secretary
Robert Martinez Vice President 3,402 18.00
and General
Manager of
Coeur Rochester,
Inc.
Tom T Angelos Controller 1,841 18.00
(1) All of the positions listed above are positions with Coeur d'Alene
unless otherwise indicated.
(2) The exercise price of the above options is equal to the average of
the high and low sale prices of the Coeur d'Alene Shares on the date
of grant on the New York Stock Exchange. The options become
exercisable cumulatively to the extent of 25% after the first,
second, third and fourth anniversaries of the date of grant and
expire ten years after the date of the grant.
5.3 TRADING IN COEUR D'ALENE SHARES
Coeur d'Alene has not registered the Coeur d'Alene Shares being offered in
the Offer under the US Securities Act 1933 ("SECURITIES ACT") and,
consequently, the Shares may not be offered or sold by former Gasgoyne
shareholders to "US persons" (as defined in Regulation S under the
Securities Act) or in the USA unless the securities are registered under
the Securities Act or an exemption from such registration requirement is
available.
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Pursuant to Rule 903(c)(2) of Regulation S made under the Securities Act,
the Coeur d'Alene Shares issued to Gasgoyne shareholders may not be
offered or sold to a US person prior to the expiration of a 40-day
restricted period commencing on the date of closing of the Offers.
Following the expiration of the 40-day restricted period, former Gasgoyne
shareholders will be able to sell their Coeur d'Alene Shares to US persons
in reliance upon the exemption from registration provided by section 4(1)
of the Securities Act for a person that is neither an issuer, underwriter
or dealer. That 40-day restricted period requirement also applies to
former Gasgoyne shareholders that became "affiliates" of Coeur d'Alene (ie
an officer, director or 10% shareholder of Coeur d'Alene). Such a person
will be required to conform his or her US resales of Coeur d'Alene Shares
to Rule 144 under the Securities Act. Under that rule, an affiliate may
not sell during any three-month period more than the greater of (i) 1% of
the Coeur d'Alene Shares on issue or (ii) the average weekly volume of
trading in the shares during the preceding four calendar weeks on the New
York and Pacific Stock Exchanges.
5.4 PROPOSED ACQUISITION BY COEUR D'ALENE OF OTHER SHARES, OPTIONS OR NOTES
Coeur d'Alene has not sent, nor does it propose to send, while the Offers
remain open, offers or invitations relating to the acquisition of shares
in Gasgoyne (whether voting shares or not) of a different class from the
Gasgoyne Shares or relating to the acquisition of renounceable options or
convertible notes granted or issued by Gasgoyne.
To the best of the knowledge of Coeur d'Alene, Gasgoyne had on issue on 25
January 1996 3,689,000 options to subscribe for Gasgoyne Shares. Those
options have been issued to directors and employees of Gasgoyne and are
non-renounceable. As mentioned in clause 6.6(b), the Commission has
granted an exemption to enable Coeur d'Alene to acquire Gasgoyne Shares
issued on exercise of any of those options.
6 LEGAL MATTERS
6.1 NO PRE-EMPTION CLAUSES IN GASGOYNE'S CONSTITUTION
There is no restriction on the right to transfer Gasgoyne Shares to which
the Offers relate contained in the constitution of Gasgoyne that has the
effect of requiring the holders of Gasgoyne Shares, before transferring
them, to offer them for purchase to members of Gasgoyne or to any other
person.
6.2 NO BENEFITS TO OFFICERS OF GASGOYNE
Coeur d'Alene does not propose in connection with the Offers that:
(a) a prescribed benefit (other than an excluded benefit) will or may be
given to a person in connection with the retirement of a person from
a prescribed office in relation to Gasgoyne; or
(b) a prescribed benefit will or may be given to a prescribed person in
relation to Gasgoyne in connection with the transfer of the whole or
any part of the undertaking or property of Gasgoyne.
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6.3 NO AGREEMENTS WITH DIRECTORS OF GASGOYNE
There is no agreement made between Coeur d'Alene and any of the directors
of Gasgoyne in connection with or conditional upon the outcome of the
Offers.
However, as mentioned in clause 5.1, Coeur d'Alene has entered into a call
option agreement with Ioma Pty Limited, a company associated with two
directors of Gasgoyne, PG and RW Crabb, under which 10,611,300 Gasgoyne
Shares held by Ioma Pty Limited may be acquired by Coeur d'Alene for $60
plus 7 Coeur d'Alene Shares per 100 Gasgoyne Shares (the same
consideration as under the Takeover Scheme).
Also, Coeur d'Alene's present intention is to invite Mr Brian Hurley to
remain as Chairman of the board of directors, and Mr Philip Crabb to
remain as a director of Gasgoyne following successful conclusion of the
Takeover Scheme (see clause 4.2).
6.4 NO AGREEMENT AS TO TRANSFER OF SHARES BY COEUR D'ALENE
There is no agreement whereby any Gasgoyne Shares acquired by Coeur
d'Alene pursuant to the Offers by Coeur d'Alene will or may be transferred
to any other person, except that, in accordance with ordinary banking
practice in connection with any security granted under a facility,
Rothschild as mortgagee may be entitled to take a transfer of Gasgoyne
Shares under the facility referred to in clause 4.5. Coeur d'Alene
understands that Rothschild does not hold any Gasgoyne Shares nor are any
Gasgoyne Shares held on Rothschild's behalf.
6.5 ESCALATION CLAUSES
There is no agreement for the acquisition of Gasgoyne Shares by Coeur
d'Alene or by an associate, being an agreement under which the person, or
either or any of the persons, from whom the Gasgoyne Shares have been or
are to be acquired or an associate of that person or of either or any of
those persons may, at any time after an Offer is sent, become entitled to
any benefit, whether by way of receiving an increased price for those
Gasgoyne Shares or by payment of cash or otherwise, that is related to,
dependent on, or calculated in any way by reference to, the consideration
payable for Gasgoyne Shares acquired after the agreement was entered into.
6.6 RELIEF UNDER THE CORPORATIONS LAW
The Commission on 24 January 1996 made the following declarations under
section 728 and 730 of the Corporations Law, that the Corporations Law in
its application to the Takeover Scheme be varied:
(a) to permit the payment of cash only to foreign shareholders of
Gasgoyne Shares and holders of Gasgoyne Shares who would, as a result
of acceptance of the Offers, hold less than a marketable parcel of
shares;
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(b) to permit offers to be made in respect of Gasgoyne Shares issued as a
result of the exercise of any Gasgoyne Options during the offer
period which were capable of being exercised on or before the date of
despatch of the Offers;
(c) to permit the execution of documents in relation to the Takeover
Scheme by agents of directors of Coeur d'Alene.
See annexure J for copies of the relevant instruments from the Commission.
7 OTHER MATTERS
7.1 OTHER MATERIAL INFORMATION
There is no other information material to the making of a decision by an
offeree whether or not to accept an Offer, being information that is
within the knowledge of Coeur d'Alene and has not previously been
disclosed to the holders of Gasgoyne Shares except as follows:
Announcements to ASX
- On 4 July 1995, Gasgoyne announced to ASX that:
"The Participants in the Yilgarn Star Production Joint Venture, being
Gasgoyne Gold Mines NL ("GGM"), Orion Resources NL ("ORR") and Gemini
Mining Pty Ltd ("GEMINI") were recently served with a writ issued by
Boral out of the Supreme Court of Western Australia claiming damages
for alleged breach of contract in the sum of $4,991,832.03, together
with interest and costs.
GGM, ORR and Gemini ("Yilgarn Star Participants") intend to
vigorously defend the action by Boral. Based upon advice received by
the solicitors and Counsel engaged to review Boral's claims, it is
the view of the Yilgarn Star Participants that Boral's claims have no
foundation and that the Yilgarn Star Participants have no liability
whatsoever to Boral."
No provision is made in Gasgoyne's accounts for this litigation.
- On 10 August 1995, Gasgoyne declared a fully franked dividend of 6
cents per Gasgoyne Share. The dividend was payable on 1 November
1995 with books closing to determine entitlements to the dividend on
25 October 1995.
- On 13 September 1995 Gasgoyne lodged its Proforma Preliminary Final
Statement for the financial year ended 30 June 1995.
- On 13 September 1995, Gasgoyne announced that:
"In accordance with the terms of the Masmindo Option Agreement,
Gasgoyne and its joint venture partner, Lone Star Exploration NL
("LONE STAR") have now given notice of exercise of the Option and the
first payment of US$1 million has been paid.
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As a result of the above and other transactions as approved by the
shareholders of Lone Star on 25 August 1995, the beneficial holding
in the Awak Mas Gold Project is as follows:
Gasgoyne Gold Mines NL 45
Lone Star Exploration NL 45
PT Asminco Bara Utama 10
----
TOTAL 100%
=====
The balance of the consideration for the Masmindo Option Agreement
(US$3 million) will be paid in accordance with the terms of the
Option Agreement, being US$1 million on 15 September 1996 and US$2
million on 15 September 1997. These payments will be accelerated
should the project proceed to production prior to that date".
- On 13 November 1995, Gasgoyne announced to ASX a proposal to upgrade
the Star Mill. JR Engineering was commissioned to undertake a
preliminary plant upgrade investigation of the Star Mill to 1.0
million tonnes per annum from the current 760,000 tonnes per annum
capacity. The total cost of the upgrade is estimated at $5 million.
- On 18 December 1995, Gasgoyne lodged with ASX a prospectus offering
525,000 free options to directors and offering shares in Gasgoyne to
vendors of mining tenements. In consideration of this issue of
shares, Gasgoyne acquired:
(i) a 100% legal and beneficial interest in the Blackstone Licences;
(ii) the 10% legal and beneficial interest of William Robert Richmond
in Wilga Well (West) Exploration Licence; and
(iii) the 10% joint legal and beneficial interest of Brian Dudley
Richardson, John Sautul and Andrew Huxtable in the Wilga Well
(West) Exploration Licence and the Wilga Well Exploration
Licence.
- On 11 January 1996 Gasgoyne announced to ASX that:
"The Directors of Gasgoyne Gold Mines NL are pleased to advise
that following a 23,473 metre drilling programme conducted at
Awak Mas by Joint Venture Partners Gasgoyne Gold Mines NL (45%),
Lone Star Exploration NL (45%) and PT Asminco Bara Utama (10%)
throughout 1995 it has been possible to update the total
estimated resource for the Awak Mas Gold Project.
Total In-Situ Resources (in all categories) at a 0.7 g/tonne
gold cut off have increased by 147% from 829,000 ounces as
reported in December 1994 to 2,048,000 ounces as at 31 December
1995.
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RESOURCE STATEMENT: AWAK MAS PROJECT - DECEMBER
1995*
cut off 1.0 g/tonne Gold 0.7 g/tonne Gold
-------- -------------------------------- ---------------------------------
CATEGORY TONNES GRADE OUNCES TONNES GRADE OUNCES
(Mt) (g/t gold) (oz) (Mt) (g/t gold) (oz)
----------------------------------------------------------------------------------------
INDICATED 15.1 2.07 1,005,000 21.0 1.65 1,113,000
----------------------------------------------------------------------------------------
INFERRED 12.7 1.95 799,000 19.4 1.50 935,000
----------------------------------------------------------------------------------------
TOTAL 27.8 2.02 1,804,000 40.4 1.58 2,048,000
----------------------------------------------------------------------------------------
* This resource was calculated by Resource Service Group Pty Ltd
using the Geostatistical Technique of Indicator Kriging. The
stated Resource is the estimate based on complete selectivity using
a 2.5 metre bench composite sample support and represents the
in-situ, undiluted resource.
* Tonnes rounded to the nearest 100,000
* Ounces rounded to the nearest 1,000
At a 1.0 g/tonne gold cut off, the resources has increased
from 660,000 ounces to 1,804,000 ounces. An increase of 173%.
The increase in Mineral Resources has occurred by in-fill
drilling within the Rante and Lematik Domains previously
identified and expanding the boundaries of the mineralisation in
all areas and all directions.
As at 31 December 1995, the mineralisation is open generally in
all directions. The partners intend to continue drilling
throughout the first half of 1996 and have planned a further
drilling programme of greater than 20,000 metres with a view to
extending the mineralisation boundaries to the west and south of
Lematik and further drilling in Ongan to the north, and Mapacing
to the west. Centrally, the Tanjung Domain that lies between
Rante and Lematik will be in-filled to better define the
resource in that area. To date only fifty percent of the
identified gold in soil anomaly has been systematically drilled
and has been included in the resource statement. Potential for
further resource upgrade exists in the western half of the
anomaly."
- On 17 January 1996 Sons of Gwalia Ltd ("SOG") and Burmine Limited
("BURMINE") made a joint announcement to ASX that:
* SOG and Burmine would merge by way of a scheme of arrangement,
with SOG to issue one share for every two Burmine shares;
* SOG agreed to take a placement of 10% of Burmine's issued
capital, at a price of $3.50 per Burmine share; and
* SOG, in agreement with Burmine, would bid for Gasgoyne, with SOG
issuing one share for every three Gasgoyne shares.
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Substantial Shareholders
- As set out in the 1995 annual report of Gasgoyne, the substantial
shareholders of Gasgoyne as at 18 September 1995 were as follows:
NUMBER OF
SHARES % HELD
------------ --------
Ioma Pty Limited and 13,839,682 29.53
Associates*
ANZ Nominees Limited 3,822,173 8.15
Pendal Nominees Pty Ltd 2,762,546 5.89
* Associates represent R J Dunn, S A Dunn, P G Crabb, R W Crabb,
Gemini Mining Pty Limited and Barcfin Pty Limited.
- Since this date, substantial shareholder notices have been lodged
reflecting the following changes:
* On 12 December 1995, Bankers Trust Australia Limited ("BANKERS
TRUST") lodged a Notice of Change of Interest of Substantial
Shareholder. The notice stated that Bankers Trust held relevant
interests in 3,299,566 fully paid ordinary Gasgoyne Shares,
which represents 6.22% of the total number of Gasgoyne Shares.
On 11 January 1996, Bankers Trust lodged a Notice of Person
Ceasing to be a Substantial Shareholder.
* On 20 December 1995, Ioma Pty Limited ("IOMA") lodged a Notice
of Change of Interest of Substantial Shareholders. The notice
stated that Ioma and its associates held relevant interests in
14,543,792 Gasgoyne Shares, which represents 27.27% of the total
number of Gasgoyne Shares.
* On 5 January 1996, Mercury Asset Management plc ("MERCURY")
lodged a Notice of Change of Interest of Substantial
Shareholder. The notice stated that Mercury held relevant
interests in 7,784,577 Gasgoyne Shares, which represents 14.60%
of the total number of Gasgoyne Shares.
* On 9 January 1996, Burmine Limited ("BURMINE") lodged a Notice
of Interest of Substantial Shareholder. The notice stated that
Burmine held relevant interests in 4,923,709 Gasgoyne shares,
which represents 9.23% of the total number of Gasgoyne shares.
Redemption of Debentures by Coeur d'Alene
- On 19 December 1995, Coeur d'Alene made the following press release
in relation to completion of an underwritten call for redemption of
its 7% Debentures (which were converted into Coeur d'Alene Shares):
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"Coeur d'Alene Mines Corporation (NYSE:CDE) announced that it
has completed the underwritten call for redemption of its $75
million principal amount of 7% convertible subordinated
debentures due 2002, with the entire debenture indebtedness
converted into equity.
Prior to December 15, 1995, the holders of $74,649,000 principal
amount of the debentures had converted the debentures into a
total of approximately 4,844,000 shares of Coeur common stock.
Converting Debentureholders received approximately 64.9 shares
of Common Stock for each of $1,000 principal amount, with cash
paid in lieu of any fractional shares. The balance of $351,000
principal amount of the Debentures was redeemed by Coeur on
December 15, 1995 at a price of $1,070 for each of $1,000
principal amount of Debentures.
Pursuant to a standby agreement with UBS Securities Inc., that
firm purchased from Coeur on December 19, 1995 a total of
approximately 20,000 shares of Common Stock of the Corporation,
representing the number of shares of Common Stock that would
have been issued upon conversion of those Debentures that were
not surrendered for conversion. As a result of that standby
arrangement, the entire principal amount of the outstanding
debenture indebtedness was converted into equity.
Coeur issued a total of approximately 4,864,000 new shares of
Common Stock in connection with the Debenture conversions and
standby arrangement, increasing its total shares of outstanding
Common Stock to approximately 20.5 million shares.
Coeur is an international gold and silver mining company with
operating mines in Nevada, New Zealand and Chile."
All amounts referred to above are in US dollars.
Awak Mas Feasibility Study
- Under the contract of works between the Indonesian Government and the
joint venture parties involved in the Awak Mas joint venture project,
a feasibility study was required to be completed by 24 October 1995.
That feasibility study has not been completed. While under certain
circumstances the Indonesian Government may have the right to
terminate the contract of works, no such notice has been given. It
is Coeur d'Alene's understanding that it is unlikely the Indonesian
Government would take such steps while the joint venture parties are
actively involved in exploration and other activities involving the
expenditure of development funds. In any event, the Indonesian
Government is required to give notice of any default, and a period of
up to 180 days to remedy the default, before it is able to terminate
the contract of works.
In its 1995 annual report Gasgoyne advised that its preliminary
estimate of the capital cost of the Awak Mas project was US$35
million. Coeur d'Alene
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understands that this does not include the estimated costs of the
mining fleet or power station. Until completion of the final
feasibility study, a final estimated cost of the project will not be
known. However, it is Coeur d'Alene's belief that the final capital
cost may substantially exceed Gasgoyne's estimate. Because of the
need to complete the feasibility study, related work and construction
time, Coeur d'Alene believes that production at Awak Mas is unlikely
to commence prior to 1998.
Star Mill Environmental Reclamation
- Milling operations for the Yilgarn Star joint venture, in which
Gasgoyne has a 50% interest, are conducted at the Star Mill
(formerly known as Great Victoria Gold Mines milling facility).
Coeur d'Alene believes that environmental reclamation of the
tailings storage facility stockpiles at that mill may cost between
$1.78 million and $4.42 million. Gasgoyne has not made a provision
for its share of any reclamation expenses in respect of that site
other than the provision of bonds to the Minister of Mines,
totalling $205,000 in respect of its share of such reclamation
expenses.
Foreign Investment Approval
- Coeur d'Alene has despatched a notification to the Takeover Scheme,
and the call option agreement referred to in clause 5.1, to the
Treasurer in accordance with the requirements of the Foreign
Acquisitions and Takeovers Act 1975 (Clth).
7.2 TRADING HISTORY AND ALTERATIONS TO CAPITAL STRUCTURE DURING PREVIOUS FIVE
YEARS
Coeur d'Alene Shares currently trade on the New York Stock Exchange
("NYSE") and Pacific Stock Exchange.
On 25 January 1996, the latest available recorded sale price of Coeur
d'Alene Shares on the NYSE on the date on which this Statement was lodged
for registration was US$21.375.
During the 3 months ending on the day immediately before the date on which
this Statement was lodged with the Commission for registration:
- the highest recorded sale price of Coeur d'Alene Shares on the NYSE
was US$21.625 on 25 January 1996; and
- the lowest recorded sale price of Coeur d'Alene Shares on the NYSE
was US$16.625 on each of 27 October 1995, 30 October 1995, 1 November
1995 and 28 December 1995.
The last recorded sale price of Coeur d'Alene Shares on the NYSE on 20
December 1995 (the last trading day before the public announcement of the
Offers) was US$18.125.
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Coeur d'Alene Shares are also listed on Pacific Stock Exchange (based in
San Francisco, California). The number of recorded dealings in Coeur
d'Alene Shares on that securities exchange in the 3 months ending on the
day immediately before the day on which this Statement was served on
Gasgoyne was significantly lower than on NYSE.
As mentioned in clause 2.1, Coeur d'Alene intends to seek official
quotation of Coeur d'Alene Shares on ASX. As at the date this Statement
was lodged for registration, no sale of Coeur d'Alene Shares has taken
place on ASX.
The following table sets out the high and low closing sales prices of the
Coeur d'Alene Shares for the periods indicated, as reported by the NYSE
Composite Tape.
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High Low
(US$)
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1995
First Quarter $18.500 $14.750
Second Quarter 21.500 17.500
Third Quarter 20.875 17.250
Fourth Quarter 20.875 16.625
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1994
First Quarter $23.000 $18.375
Second Quarter 21.750 16.625
Third Quarter 22.125 17.500
Fourth Quarter 21.375 14.750
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1993
First Quarter $16.000 $10.000
Second Quarter 21.000 15.375
Third Quarter 23.750 15.750
Fourth Quarter 22.000 17.500
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1992
First Quarter $16.625 $14.000
Second Quarter 18.375 13.875
Third Quarter 17.625 14.875
Fourth Quarter 15.250 11.000
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1991
First Quarter $19.375 $14.000
Second Quarter 22.250 17.500
Third Quarter 22.875 15.750
Fourth Quarter 16.625 13.375
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Coeur d'Alene paid per share cash distributions or dividends of US15c. on
each Coeur d'Alene Share on each of 21 April 1995, 15 April 1994, 16 April
1993 and 15 April 1992; US12c. on 12 April 1991 and US11c. on each of 20
April 1990 and 21 April 1989. Future distributions or dividends on the
Coeur d'Alene Shares, if any, will be determined by Coeur d'Alene's Board
of Directors and will depend primarily on Coeur d'Alene's results of
operations, financial condition and capital requirements.
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At 23 January 1996, there were 8,359 registered holders of Coeur d'Alene
Shares.
ALTERATIONS TO CAPITAL STRUCTURE DURING PREVIOUS FIVE YEARS
(a) Coeur d'Alene
During the five years ending on the day immediately before the day on
which this Part A statement was lodged with the Commission, the following
changes in the capital structure of Coeur d'Alene have occurred. All
shares or stock referred to are Coeur d'Alene Share unless otherwise
stated.
DATE PARTICULARS
1991
25 February Coeur d'Alene issued 500 shares to executive officers and
key employees exercising non-qualified stock options
pursuant to the Executive Compensation Plan for a total
consideration of US$8,250.
19 March Coeur d'Alene issued a total of 8,300 shares of restricted
stock to executive officers and key employees pursuant to
the Executive Compensation Plan.
19 March Coeur d'Alene granted a total of 31,100 stock options to
executives officers and key employees pursuant to the
Executive Compensation Plan.
31 December Coeur d'Alene issued 3,322,061 shares in consideration for
the merger of all of the outstanding shares of Callahan
Mining Company.
1992
12 May Coeur d'Alene issued a total of 12,000 shares of
restricted stock to executive officers and key employees
pursuant to the Executive Compensation Plan.
12 May Coeur d'Alene issued a total of 43,100 stock options to
executive officers and key employees pursuant to the
Executive Compensation Plan.
1993
12 May Coeur d'Alene issued a total of 10,374 shares of
restricted stock to executive officers and key employees
pursuant to the Executive Compensation Plan.
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29 June Coeur d'Alene issued a total of 8,675 shares to employees
exercising stock options for a total consideration of
US$124,500.
30 July Coeur d'Alene issued a total of 2,675 shares to employees
exercising stock options for a total consideration of
US$63,531.
1994
18 March Coeur d'Alene issued a total of 18,778 shares to executive
officers and key employees pursuant to the Executive
Compensation Plan.
12 December Coeur d'Alene settled a class action shareholder lawsuit
by issuing 220,083 shares (valued at US$4 million) to the
class members in partial payment of the settlement amount.
1995
5 January Coeur d'Alene granted a total of 43,806 stock options to
executive officers and key employees pursuant to the
Executive Compensation Plan.
19 January Coeur d'Alene issued a total of 675 shares to employees
exercising stock options for a total consideration of
US$11,559.
16 March Coeur d'Alene issued a total of 21,656 shares to executive
officers and key employees pursuant to the Executive
Compensation Plan.
31 March Coeur d'Alene authorised to be issued an additional
500,000 shares under the Company's Executive Compensation
Program.
31 March Coeur d'Alene authorised to be issued an additional
200,000 shares under the Non-Employee Directors' Stock
Option Plan.
18 April Coeur d'Alene issued 2,750 shares to executive officers
and key employees exercising stock options pursuant to the
Executive Compensation Plan for a total consideration of
US$55,344.
19 December Coeur d'Alene issued 4,866,929 shares to debenture holders
in connection with the redemption of its 7% Debentures.
31 December Coeur d'Alene granted options to purchase a total of
53,484 shares to executive officers and key employees
pursuant to the Executive Compensation Program.
SUBSIDIARIES OF COEUR D'ALENE
Callahan Mining Company became a subsidiary on 31 December 1991.
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DATE PARTICULARS
31 December Callahan Mining Company issued 1,000 shares to Coeur
1991 d'Alene for a total consideration of US$1,000.
Compania Minera CDE Fachinal Limitada became a subsidiary on 18 May, 1995.
8 May 1994 Compania Minera CDE Fachinal Limitada issued 99,990 shares
to Coeur d'Alene for a total consideration of US$99,990
and 10 shares issued to CDE Chilean Mining Company
(another subsidiary of Coeur d'Alene).
Silver Valley Resources Corporation became a subsidiary on 1 January 1995.
1 January 1995 Silver Valley Resources issued 315 shares to Coeur d'Alene
for a total consideration of US$3.15.
SUBSIDIARIES OF CALLAHAN MINING COMPANY
Coeur New Zealand, Inc. became a subsidiary of Callahan Mining Company on
22 March 1993.
DATE PARTICULARS
1993
22 March Coeur New Zealand, Inc. issued 100 shares to Callahan
Mining Company for a total consideration of US$1.00 in
connection with the acquisition of Coeur Gold New Zealand
Ltd.
22 March Coeur Gold New Zealand, Ltd. issued 4,790,000 to Coeur New
Zealand, Inc. for a total consideration of US$1.00 in
connection with the acquisition of the Golden Cross Joint
Venture.
Silver Valley Resources became a subsidiary on 1 January 1995.
1995
1 January Silver Valley Resources issued 155 shares to Callahan
Mining Company for a total consideration of US$1.85
7.3 SOLICITING BROKERS
Paterson Ord Minnett Limited and Poynton Corporate Limited have been
retained by Coeur d'Alene to assist with promotion of Coeur d'Alene and in
soliciting acceptances of the Offers, each of whom will be paid a monthly
retainer of $25,000 and additional fees of up to $150,000 to perform those
services.
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Paterson Ord Minnett Limited and Poynton Corporate Limited have been
involved only in the preparation of clause 7.3 of Statement and have
authorised or cause the issue of only this clause.
Coeur d'Alene will also pay to each broker whose name appears in the
appropriate space in each Form of Acceptance and Transfer with respect to
a valid acceptance of an Offer, 3 cents for each Gasgoyne Share
accepted, subject to a maximum fee of $500 with respect to any single
accepting shareholder. Where a Gasgoyne shareholder is a custodian,
trustee or nominee, and holds Gasgoyne Shares in two or more distinct
portions, Coeur d'Alene will pay a soliciting broker's fee with respect to
each distinct portion. The fee will not be payable in respect of Gasgoyne
Shares in which the broker or an associate holds a relevant interest, and
the fee cannot be shared with or passed on to Gasgoyne shareholders.
7.4 COEUR D'ALENE OFFICER STOCK OWNERSHIP PLANS
Coeur d'Alene has an Executive Compensation Program (the "PROGRAM"), under
which 571,136 Coeur d'Alene Shares presently are authorised for possible
issue. The Program is administered by the Compensation Committee of the
Company's Board of Directors and consists of three plans - the Annual
Incentive Plan ("AIP"), the Long-Term Incentive Plan ("LTIP") and the
Long-Term Performance Share Plan ("LTPSP"). Executive officers and key
employees of the Group designated by the Committee are eligible to
participate in the Program. The Company also has a Non-Employee
Directors' Stock Option Plan ("NED OPTION PLAN") administered by the Board
of Directors under which 200,000 Coeur d'Alene Shares presently are
authorised for possible issue. Non-executive Directors are eligible to
receive options under the NED Option Plan.
The Program
As stated above, the AIP, the LTIP and the LTPSP are the three plans that
constitute the Program. The AIP provides for annual incentive
compensation awards, one-half of which are based on the financial
performance of the Company and one-half on the individual officer's
performance. One-half of each AIP award is paid in cash and one-half in
Coeur d'Alene Shares. The LTIP provides for the grant of stock options
that are based on a percentage of base salary and vest cumulatively at a
rate of 25% per year. The exercise price of options granted under the
LTIP is equal to the average of the high and low prices of Coeur d'Alene
Shares on the New York Stock Exchange on the date of grant. Although the
LTIP also provides for the possible granting of stock appreciation rights,
none have been granted to date. The LTPSP provides for the issue of
performance share awards (60% of which are payable in Coeur d'Alene Shares
and 40% are payable in cash after a four-year performance period) and are
based on long-term shareholder value enhancement relative to industry
competitors over a four-year period.
Change in control provisions exist under the Program and also under
certain executive severance agreements entered into between Coeur d'Alene
and certain executive officers and key managerial employees of the Group.
A summary of those provisions appears on pages 14 and 15 of annexure F.
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NED Option Plan
The NED Option Plan provides for the granting of options to Non-Executive
Directors in lieu of directors' fees. Each Non-Executive Director
receives at least $5,000 of his directors' fees in the form of a stock
option, and is able to elect to receive a stock option in lieu of cash
fees for up to the $45,000 balance of his annual directors' fees.
Generally, options are automatically granted under the Plan on the third
business day of each year. The value of the options is determined by an
independent consultant or other expert applying the Black-Scholes option
valuation method designed to value a right to acquire Coeur d'Alene Shares
at an exercise price equal to fair market value on the date of grant,
which right is exercisable at any time beginning six months and ending ten
years from the date of grant. The option exercise price is equal to the
average of the high and low prices of Coeur d'Alene Shares as reported by
the New York Stock Exchange on the date of grant.
8 INTERPRETATION
In this Statement, the Offer and the Acceptance Form unless the contrary
intention appears:
"ASX" means Australian Stock Exchange Limited.
"COMMISSION" means the Australian Securities Commission.
"COEUR D'ALENE" or the "COMPANY" means Coeur d'Alene Mines Corporation, an
Idaho, United States of America corporation having its principal office at
505 Front Avenue, Coeur d'Alene, Idaho 83816-0316 United States of America
and whose ARBN is 072 498 125.
"COEUR D'ALENE SHARES" means fully paid shares of common stock in the
capital of Coeur d'Alene.
"6% DEBENTURES" means the Company's 6% convertible subordinated debentures
due 2002.
"6 3/8% DEBENTURES" means the Company's 6 3/8% convertible subordinated
debentures due 2004.
"7% DEBENTURES" means the Company's former 7% convertible subordinated
debentures due 2002 and converted into Coeur d'Alene Shares in December
1995.
"FINANCIAL FORECAST" means the Forecasted Condensed Statements of
Consolidated Operations and the Forecasted Condensed Statements of
Consolidated Cash Flows set out in clause 4.4.4.
"GAAP", "US GAAP" and "AUSTRALIAN GAAP" are used in this Statement in the
same way as they are used in annexure K.
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"GASGOYNE" means Gasgoyne Gold Mines NL, a company having its registered
office at Level 33, QVI Building, 250 St Georges Terrace, Perth WA 6000
and whose ACN is 009 212 382.
"GASGOYNE OPTIONS" mean non-renounceable options to subscribe for one
Gasgoyne Share issued by Gasgoyne prior to 21 December 1995.
"GASGOYNE SHARES" means fully paid ordinary shares of 20 cents each in the
capital of Gasgoyne.
"GROUP" means Coeur d'Alene and each of its subsidiaries.
"JORC CODE" means the Australasian Code for reporting of Identified
Mineral Resources and Ore Reserves, September 1992 prepared by the Joint
Committee of the Australasian Institute of Mining and Metallurgy,
Australian Institute of Geoscientists and Australian Mining Industry
Council.
"NYSE" means New York Stock Exchange.
"OFFERS" means the offers by Coeur d'Alene to acquire Gasgoyne Shares
referred to in clause 1.1 of this Statement.
"ODD LOT" means the number of Coeur d'Alene Shares designated as less than
a marketable parcel, determined under ASX business rules (understood by
Coeur d'Alene to be 50 Coeur d'Alene Shares), or if Coeur d'Alene is not
approved for inclusion in the official list of ASX at the date Coeur
d'Alene Shares are to be allotted to the Nominee under clause 12.3(a) of
the Offer, under NYSE business rules (understood by Coeur d'Alene to be
100 Coeur d'Alene Shares).
"OUTSTANDING", in relation to Coeur d'Alene Shares, means the Coeur
d'Alene Shares on issue less any held in treasury (ie held by Coeur
d'Alene itself).
"RIGHTS" means all accretions, rights or benefits of whatever kind
attaching to or arising from Gasgoyne Shares directly or indirectly after
the date of this Statement, including, without limitation, all dividends
or other distributions and all rights to receive any dividends or other
distributions, or to receive or subscribe for shares, stock units, notes,
bonds, options or other securities, declared, paid or made by Gasgoyne or
any of its subsidiaries.
"SEC" means the United States Securities and Exchange Commission.
"STATEMENT" means this Part A statement.
"TAKEOVER SCHEME" means the takeover scheme constituted by the Offers to
which this Statement relates.
A word or phrase to which a meaning is given by the Corporations Law has
that meaning. A reference to a section or provision is to a section or
provision of the Corporations Law.
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References to $, A$ and to cents are to Australian dollars and cents
respectively. Where A$ and US$ comparisons are made in this Statement,
current exchange rates have been used unless otherwise indicated.
The singular includes the plural and vice-versa.
Headings are for convenience only and do not affect the interpretation of
this Statement.
Unless the contrary intention appears, a reference to an annexure is a
reference to an annexure to this Statement and terms used in an annexure
have the same meaning as the meaning attributed to the term in this
Statement. The annexures form part of this Statement.
This Part A Statement is dated 29 January 1996 and is signed on behalf of Coeur
d'Alene by two Directors authorised so to sign under a resolution passed at a
meeting of the Directors of Coeur d'Alene on 26 January 1996.
/s/ DENNIS E WHEELER /s/ JAMES A SABALA
---------------------- --------------------
Dennis E Wheeler James A Sabala
Director Director