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Schedule 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
AZCO MINING INC.
______________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
_______________________________________________________________________________
(Name of Person(s) filing Proxy Statement if other than Registrant)
Payment of Filing Fee ((Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4)
and 0-11,
1) Title of each class of securities to which transaction applies:
_________________________________________________
2) Aggregate number of securities to which transaction applies:
_________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
_________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________
5) Total fee paid:
_________________________________________________________
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange act
Rule 0-11(a) (2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
_________________________________________________________
2) Form, Schedule or Registration Statement No.:
_________________________________________________________
3) Filing Party:
_________________________________________________________
4) Date Filed:
April 12, 2001
_______________________________________________________________
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AZCO MINING INC.
7239 N. El Mirage Road
Glendale, AZ 85307
(623) 935-0774
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 2001
To Our Stockholders:
The 2001 Annual Meeting of Stockholders of Azco Mining Inc.(the
"Company"), a Delaware corporation, will be held at the Company's corporate
office located at 7239 N. El Mirage Road, Glendale, Arizona on Wednesday, May
16, 2001, at 10:00 a.m. (Phoenix local time), for the following purposes:
1. To elect four directors to serve until the next annual meeting
and until their successors are duly elected;
2. To ratify the selection of PricewaterhouseCoopers LLP as
independent public accountants for the Company's fiscal year
ending June 30, 2001, and to authorize the Board of Directors
to fix and approve directors' remuneration;
3. To consider and vote upon such other matters as may properly
come before the meeting or any adjournment thereof.
The Company's stockholders of record on its books at the close of
business on April 6, 2001 are entitled to notice of and to vote at the meeting
or any adjournment of the meeting.
The Board of Directors of the Company extends a cordial invitation to
all stockholders to attend the meeting in person. The following pages provide
additional details about the meeting as well as other useful information.
By Order of the Board of Directors
Lawrence G. Olson
Chairman of the Board
Glendale, Arizona
April 12, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY IN THE RETURN ENVELOPE AS PROMPTLY AS POSSIBLE. THE
PROMPT RETURN OF YOUR COMPLETED PROXY WILL ASSIST THE COMPANY IN OBTAINING A
QUORUM OF STOCKHOLDERS FOR THE MEETING, BUT WILL NOT AFFECT YOUR ABILITY TO
CHANGE YOUR VOTE BY SUBSEQUENT PROXY OR BY ATTENDING THE MEETING AND VOTING IN
PERSON. IF YOU ARE UNABLE TO ATTEND THE MEETING, YOUR WRITTEN PROXY WILL ASSURE
THAT YOUR VOTE IS COUNTED. IF YOU LATER FIND OUT THAT YOU WILL BE PRESENT AT THE
MEETING OR FOR ANY OTHER REASON DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT
ANY TIME BEFORE IT IS VOTED.
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AZCO MINING INC.
7239 N. El Mirage Road
Glendale, AZ 85307
(623) 935-0774
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 16, 2001
This Proxy Statement is furnished to the stockholders of Azco Mining
Inc. (the "Company"), a Delaware corporation, in connection with the
solicitation by and on behalf of the Company's Board of Directors of proxies to
be voted at the Annual Meeting of Stockholders of the Company. The meeting will
be held at the Company's corporate office located at 7239 N. El Mirage Road,
Glendale, Arizona 85307, on Wednesday, May 16, 2001 at 10:00 a.m. (Phoenix local
time) for the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders.
The Company will pay the cost of this proxy solicitation. It will
reimburse brokers, banks, custodians and other nominees for their expenses
incurred in sending the Company's proxy materials to, and obtaining instructions
relating to such materials from, beneficial owners of shares of the Company's
common stock. In addition to solicitation by mail, directors, officers and other
employees of the Company may, without additional compensation, solicit proxies
by mail, in person or by telecommunication.
All proxies that are properly executed and received prior to the
meeting will be voted at the meeting. If a stockholder specifies how the proxy
is to be voted on any business to come before the meeting it will be voted in
accordance with such specification. IF A STOCKHOLDER DOES NOT SPECIFY HOW TO
VOTE THE PROXY IT WILL BE VOTED FOR EACH MATTER SCHEDULED TO COME BEFORE THE
MEETING AND IN THE PROXY HOLDERS' DISCRETION ON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING. Any proxy may be revoked by a stockholder at
any time before it is actually voted at the meeting by delivering written notice
to the secretary or acting secretary of the meeting, by delivering another valid
proxy bearing a later date or by attending the meeting and voting in person.
This Proxy Statement and the accompanying proxy are first being sent to
stockholders on or about April 12, 2001. The Company will bear the cost of
preparing, assembling and mailing the notice, Proxy Statement and form of proxy
for the meeting.
Unless otherwise indicated, all monetary amounts set forth herein are
in United States dollars.
VOTING SECURITIES
All voting rights are vested exclusively in the holders of the
Company's common stock, $.002 par value per share (the "Common Stock"), with
each share entitled to one vote. Only stockholders of record at the close of
business on April 6, 2001 are entitled to notice of and to vote on each matter
presented at the meeting or any adjournment thereof. At the close of business on
March 29, 2001 there were 30,050,621 shares of Common Stock issued and
outstanding. A minimum of one-third of the shares of Common Stock issued and
outstanding must be represented at the meeting, in person or by proxy, in order
to constitute a quorum. Cumulative voting is not allowed for any purpose. The
affirmative vote of the holders of a plurality of shares of the Common Stock
represented at the meeting in person or by proxy and entitled to vote on the
subject matter will be necessary to elect directors of the Company and the
affirmative vote of the holders of the majority of the shares of Common Stock
represented at the meeting in person or by proxy and entitled to vote on the
subject matter will be necessary to ratify the appointment of the auditors.
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An abstention or withholding authority to vote will be counted as
present for determining whether the quorum requirement is satisfied. With
respect to the vote on any particular proposal, abstentions will be treated as
shares present and entitled to vote and, for purposes of determining the outcome
of the vote on any such proposal, shall have the same effect as a vote against
the proposal. A broker "non-vote" occurs when a nominee holding shares for a
beneficial holder does not have discretionary voting power and does not receive
voting instructions from the beneficial owner. Broker "non-votes" on a
particular proposal will not be treated as shares present and entitled to vote
on the proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information, as of March 16, 2001, with
respect to beneficial ownership of the Company's Common Stock by each person
known by the Company to be the beneficial owner of more than 5% of its
outstanding Common Stock, by each director of the Company, by each Named
Executive Officer and by all officers and directors of the Company as a group.
Unless otherwise noted, each stockholder has sole investment and voting power
over the shares owned.
===================================================================================================
NAME AND ADDRESS NUMBER OF PERCENT
OF BENEFICIAL OWNER SHARES OF CLASS
- ---------------------------------------------------------------------------------------------------
Alan P. Lindsay 1,178,569(1) 3.86%
(Former Director, Chairman, President and
Chief Executive Officer)
- ---------------------------------------------------------------------------------------------------
Anthony R. Harvey 653,252(2) 2.14%
(Director)
- ---------------------------------------------------------------------------------------------------
Paul A. Hodges 113,000(3) *
(Director)
- ---------------------------------------------------------------------------------------------------
Lawrence G. Olson 1,778,700(4) 5.90%
(Director, Chairman, President and
Chief Executive Officer)
3045 S. 35th Avenue
Phoenix, AZ 85009
- ---------------------------------------------------------------------------------------------------
Stanley A. Ratzlaff 150,000(5) *
(Director)
- ---------------------------------------------------------------------------------------------------
M. William Lightner Jr. 105,000(6) *
(Director)
- ---------------------------------------------------------------------------------------------------
Gary L. Simmerman 315,000(7) 1.04%
(Vice-President Operations)
- ---------------------------------------------------------------------------------------------------
Ryan A. Modesto 175,000(8) *
(Vice-President Finance, Corporate Secretary)
- ---------------------------------------------------------------------------------------------------
All officers and directors as a group (7 persons) 3,244,952(9) 10.32%
===================================================================================================
* Less than 1%.
(Footnotes on next page)
(1) Includes (i) 605,308 shares owned by a corporation which is controlled
by Mr. Lindsay, (ii) options to acquire 300,000 shares at an exercise
price of CDN $1.05 per share and (iii) options to acquire 200,000
shares at an exercise price of CDN $0.80 per share
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(2) Includes (i) 122,224 shares owned by Mr. Harvey's wife, (ii) options to
acquire 300,000 shares at an exercise price of CDN $1.05 per share and
(iii) options to acquire 200,000 shares at an exercise price of CDN
$0.80 per share.
(3) Includes options to acquire (i) 50,000 shares at an exercise price of
CDN $1.05 per share and (ii) 50,000 shares at an exercise price of CDN
$0.70 per share.
(4) Includes options to acquire 100,000 shares at an exercise price of CDN
$1.05 per share.
(5) Includes options to acquire 100,000 shares at an exercise price of US
$0.90 per share.
(6) Consists of options to acquire 100,000 shares at an exercise price of
US $0.69 per share
(7) Consists of options to acquire (i) 30,000 shares at an exercise price
of CDN $0.80 per share (ii) 210,000 shares at an exercise price of CDN
$1.05 per share (iii) 25,000 shares at an exercise price of CDN $0.70
per share and (iv) 50,000 shares at an exercise price of CDN $0.95 per
share.
(8) Consists of options to acquire (i) 30,000 shares at an exercise price
of CDN $0.80 per share (ii) 20,000 shares at an exercise price of CDN
$0.70 per share and (iii)120,000 shares at an exercise price of CDN
$1.05 per share.
(9) Includes options to acquire an aggregate of 1,385,000 shares.
ELECTION OF DIRECTORS
The Company's Bylaws provide that the number of members of the Board of
Directors shall not exceed seven members and currently the Board of Directors
consists of five members. The size of the board has been reduced to four,
effective upon the date of the annual meeting. Cumulative voting in the election
of directors is not permitted. Directors are elected by a plurality of shares of
Common Stock represented at the meeting and entitled to vote on the matter,
which means that the four nominees receiving the highest number of votes, a
quorum being in attendance, will be elected as directors.
The persons who are nominated as directors and for whom proxies will be
voted are: Lawrence G. Olson, Paul A. Hodges, Stanley A. Ratzlaff, M. William
Lightner, Jr. Unless authority is withheld, it is intended that the shares
represented by the proxies will be voted "FOR" these persons, each to serve as
director of the Company until the next annual meeting of stockholders or until
his respective successor is elected or appointed and qualified. Each nominee has
consented to being a nominee and to serve if elected. In the unlikely event that
any nominee becomes unable to serve for any reason, the proxies will be voted
for a substitute nominee selected by the Board of Directors.
The Board of Directors recommends that you vote FOR director nominees
Lawrence G. Olson, Paul A. Hodges, Stanley A. Ratzlaff and M. William Lightner,
Jr.
The following is a brief biography regarding each nominee.
Lawrence G. Olson - Chairman of the Board, Chief Executive Officer, President
and a Director
Mr. Olson, age 63, became a director of the Company on March 15, 1999
in connection with the acquisition of Arizona Mica Properties Inc. On October
25, 2000 Mr. Olson was appointed Chairman, President and Chief Executive Officer
of the Company. Mr. Olson has owned and operated his own business, Olson Precast
of Arizona Inc., since 1973. Prior to starting Olson Precast, Mr. Olson was the
Sales Manager of a division of United Aircraft. Mr. Olson received a B.S. in
Civil Engineering from the University of Southern California in 1959. In 1998,
Olson Precast of New Mexico, Inc., a company controlled by Mr. Olson, was
liquidated under the United States bankruptcy laws in proceedings in the United
States Bankruptcy Court for the district of New Mexico. Mr. Olson is a member of
the Audit Committee and the Compensation Committee.
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Paul A. Hodges - Director
Mr. Hodges, age 74, has been a director of the Company since October 1,
1993. He has a degree in Mining Engineering from the Colorado School of Mines
and is a registered professional engineer in Arizona. Mr. Hodges has over 40
years experience in the mining industry, covering exploration, operations,
project startups, management and financing. Mr. Hodges was the Chief Engineer
worldwide for open pit mining for RTZ and the President of Anamax Mining Company
at Twin Buttes. Most recently Mr. Hodges was the President of Compania Minera El
Indio. He was a director of Lac Minerals Limited, a publicly traded company
acquired by American Barrick in late 1994. Mr. Hodges is the Chairman of the
Audit Committee and a member of the Compensation Committee.
Stanley A. Ratzlaff - Director
Mr. Ratzlaff, age 65, became a director of the Company on February 13,
2001. Mr. Ratzlaff a Financial Consultant and CPA has a B.A., cum laude, from
San Jose State University. He also completed the Advanced Management Program at
Harvard Business School. Mr. Ratzlaff worked from 1961 to 1969 for the public
accounting firm of Ernst & Young. Since that time Mr. Ratzlaff has held the
following positions: Assistant Controller of Atlantic Richfield Company,
Corporate Controller of Standard Oil Company, Vice President and Controller of
Occidental Petroleum Corporation and Vice President and Controller of Pacific
Enterprises. From 1994 to present, Mr. Ratzlaff has been a consulting CFO for
small companies. Mr. Ratzlaff is active as a board member on nonprofit entities.
M. William Lightner Jr. - Director
Mr. Lightner, age 66, became a director of the Company March 6, 2001.
Mr. Lightner a Financial Consultant and CPA has a B.S. in Commerce from Grove
City College and a MBA from the University of Pennsylvania, Wharton School of
Business. Mr. Lightner spent 31 years with the public account firm Arthur
Andersen & Co., retiring in 1989 as a Partner. Mr. Lightner became involved in
leveraged buy-outs and held the positions of Chairman of Mica Resources and
Financial Vice President of Merit Energy. Most recently Mr. Lightner held the
positions of CFO and Executive Vice President at Consumer Packaging, Inc. (1994
to 1999) and Anchor Glass Container Corp. (1997 to 2000). Mr. Lightner remains a
director of Anchor Glass Containers Corp.
EXECUTIVE OFFICERS
The following is a list of Executive Officers with brief individual
biographical information as of March 16, 2001. The listed Executive Officers
will continue to serve as officers of the Company until the next annual meeting
of the Board of Directors or until their respective successors are elected or
appointed and qualified.
Lawrence G. Olson - Chairman of the Board, Chief Executive Officer,
President and a Director
Mr. Olson's biographical information is provided above under "Election
of Directors."
Ryan A. Modesto -- Vice President of Finance, Corporate Secretary
Mr. Modesto, age 45, joined the Company in June 1994 as the Controller
of the Sanchez Project. On January 1, 1996 he was elected as the Company's
Corporate Controller and Principal Accounting Officer, in October 1998 he was
appointed Vice-President of Finance, and on October 25, 2001 he was elected as
Corporate Secretary of the Company. Mr. Modesto earned a B.S. in Accounting from
the University of Utah in 1977 and has 24 years of accounting and administrative
experience in the mining industry. For the six years prior to joining the
Company Mr. Modesto was the Controller of the Santa Fe Mine for Corona Gold Inc.
in Nevada.
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Gary L. Simmerman -- Vice President of Operations
Mr. Simmerman, age 50, joined the Company in September 1992 as Chief
Engineer of the Sanchez Project and in October 1998 was elected as
Vice-President of Operations. Mr. Simmerman, who has a B.S. in Mining
Engineering from the University of Arizona, has worked in the mining industry
since 1974, and has been involved in exploration, development and production
operations in gold, silver, copper, cobalt, coal and uranium. For the five years
prior to joining the Company Mr. Simmerman was Chief Engineer for Santa Fe
Pacific Gold's Rabbit Creek Mine and was involved in the original determination
of the ore reserves and the feasibility stage through startup, production and
expansion to a 200,000 ton per day operation.
LEGAL PROCEEDINGS
On January 22, 1999, the Trustee in a bankruptcy proceeding against
Eagle River served a petition, in the Quebec Superior Court, District of Hull,
upon the Company to recuperate assets from the Company. It is the understanding
of the Company that the Trustee alleges that, through the Company's involvement
with Eagle River in its Mali Project, the Company is guilty of contractual
breaches in excess of $3.400,000. It is the Company's opinion that this claim is
unfounded. The outcome of the case is not yet determined.
On December 8, 2000, the Company filed a declaratory judgment action in
the United States District Court for the District of Arizona, Docket No. CIV
00-2334 PHX SRB, against each of Anthony R. Harvey, ARH Management, Ltd., Alan
Lindsay and Alan Lindsay & Associates, Ltd. The action seeks a declaratory
judgment regarding the Company's obligations to pay termination fees under the
management agreements between the Company and each of ARH Management, Ltd. and
Alan Lindsay & Associates, Ltd., as a result of the non-renewal by the Company
of such agreements. The Company employed Mr. Lindsay as Chief Executive Officer
and President of the Company pursuant to the management agreement between the
Company and Alan Lindsay & Associates, Ltd. The Company employed Mr. Harvey as
Executive Vice President and Secretary pursuant to the management agreement
between the Company and ARH Management, Ltd. Upon the non-renewal, Messrs.
Lindsay and Harvey each demanded payment of a termination fee equal to $297,675
pursuant to the terms of the management agreements. The Company asserted in the
complaint that these termination fee provisions are unfair and unbalanced, if
not unconscionable, and should not have been included in the agreements, and
would not have been so included had Messrs. Lindsay and Harvey caused the
Company to obtain independent legal counsel to advise the Company with regard to
the provisions of the management agreements. The Company further asserted that
the inclusion of the termination fee provisions was a breach by Messrs. Lindsay
and Harvey of their fiduciary duties to the Company as directors and executive
officers and constituted misconduct. On January 8, 2001, the named defendants
filed an answer and counterclaim seeking damages for breach of contract,
violation of Arizona Revised Statutes Section 23-353 for failing to pay wages
and compensation due and unjust enrichment. The litigation is pending.
CERTAIN TRANSACTIONS
In March 2001, Lawrence G. Olson jointly with his wife made an
unsecured loan to the Company in the amount of $800,000 at an interest rate
equal to the prime rate of interest as reported by Imperial Bank plus one
percentage point. Interest on the loan is payable in monthly installments and
all principal and accrued interest is due in full on March 14, 2002. In
connection with this loan, the Company issued to Mr. Olson a warrant to purchase
300,000 shares of the Company's common stock at $.70 per share, the closing
market price on the American Stock Exchange on the business day preceding the
date of issuance.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than 10% stockholders are required
by SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain
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reporting persons, the Company believes that, during the fiscal year ended June
30, 2000, all filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with.
BOARD MEETINGS
During the Company's fiscal year ended June 30, 2000 the Company's
Board of Directors ("the Board") met 9 times. All of the directors were present
at 75% or more of the aggregate of all meetings of the Board and committee
meetings in which they serve. The Board has Audit and Compensation Committees
and does not have a nominating or any other committees.
AUDIT COMMITTEE REPORT
The Company's Audit Committee is presently composed of three directors
who are not officers of the Company. The Company adopted its Audit Committee
Charter in June 2000 and in accordance with the Audit Committee Charter's
definition of "independent" directors, Anthony R. Harvey, an officer of the
Company, resigned as a member of the Audit Committee and was replaced by
Lawrence G. Olson. Mr. Olson was not an officer of the Company at the time of
his appointment to the Audit Committee. The Board of Directors has determined
that all members of the Audit Committee who attended the Audit Committee meeting
held in September 1999 and those persons presently acting as directors of the
Audit Committee are "independent" as defined in the American Stock Exchange
listing standards regarding audit committees. The Audit Committee is responsible
for monitoring and reviewing the Company's financial reporting process on behalf
of the Board of Directors. Management is responsible for the Company's internal
controls and the financial reporting process while the independent accountants
are responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with generally accepted auditing
standards and to issue a report thereon. The Board of Directors has adopted a
written charter for the Audit Committee, which is included as Appendix A to this
proxy statement.
The Audit Committee held one meeting during fiscal year 2000. The
meeting was designed to facilitate and encourage open communication between the
Audit Committee and the internal auditors and the Company's independent public
accountant, PricewaterhouseCoopers LLP. During the meeting, the Audit Committee
reviewed and discussed the Company's quarterly and annual financial statements
with management and PricewaterhouseCoopers LLP. The Audit Committee believes
that management maintains an effective system of internal controls that results
in fairly presented financial statements. The Audit Committee discussed with
PricewaterhouseCoopers LLP matters relating to communications with audit
committees as required by Statement on Auditing Standards No. 61.
PricewaterhouseCoopers LLP also provided to the Audit Committee the written
disclosures and the letter relative to auditor independence as required by
Independence Standards Board Standard No. 1 and the Committee has discussed with
PricewaterhouseCoopers its independence. PricewaterhouseCoopers LLP did not
perform any non-audit services during fiscal year 2000.
Based on these reviews and discussions, the Audit Committee recommended
to the Board of Directors that the audited financial statements be included in
the Company's Annual Report on Form 10-K for the year ended June 30, 2000.
AUDIT FEES
Fees from PricewaterhouseCoopers LLP for the fiscal year 2000 audit and
the review of quarterly reports on Form 10-Q were $40,739.
ALL OTHER FEES
All other billings from PricewaterhouseCoopers LLP for the calendar
year 2000 totaled $10,673. During fiscal year 2000, PricewaterhouseCoopers LLP
provided the Company with only audit and tax preparation services.
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Respectively submitted to the Azco Mining Inc. stockholders by the
Audit Committee of the Board of Directors.
Paul A. Hodges, Audit Committee Chair
Lawrence G. Olson
Ian M. Gray (1)
(1) Mr. Gray resigned on December 9, 2000 and did not participate in the
preparation of this Audit Committee Report.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following tables show compensation during the fiscal years ended
June 30, 1997, 1998 and 1999, respectively, of those persons who served as Chief
Executive Officer at any time during fiscal 2000 and each other executive
officer of the Company whose total cash compensation during fiscal 2000 exceeded
$100,000 (collectively, the "Named Executive Officers").
Summary Compensation Table
(For the fiscal year ended June 30, 2000)
===============================================================================================================
Annual Compensation Long Term
Compensation
- ----------------------------------------------------------------------------------------------------------------
Securities
Underlying
Options/
Other Annual SARs
Salary Bonus Compensation Granted
Name and Principal Position Year ($) ($) ($) (#)
- ----------------------------------------------------------------------------------------------------------------
Alan P. Lindsay, President, 2000 192,938(1) 9,413 9,000(3) -0-
Chairman of the Board and 1999 183,750(1) 9,000 9,000(3) 200,000
Chief Executive Officer 1998 139,169(1) 5,500 7,250(3) -0-
- ----------------------------------------------------------------------------------------------------------------
Anthony R. Harvey, 2000 192,938(2) 9,413 9,000(3) -0-
Vice Chairman, Executive Vice 1999 183,750(2) 9,000 9,000(3) 200,000
President and Secretary 1998 139,169(2) 5,500 7,250(3) -0-
- ----------------------------------------------------------------------------------------------------------------
Ryan A. Modesto 2000 116,664 5,583 -0- -0-
Vice President Finance 1999 109,084 5,550 -0- 70,000
1998 97,200 4,800 30,000(4) 13,000
- ----------------------------------------------------------------------------------------------------------------
Gary L. Simmerman 2000 158,824 7,750 -0- 50,000
Vice President Operations 1999 115,793 7,500 30,000(5) 155,000
1998 96,000 4,800 -0- 30,000
================================================================================================================
(1) These amounts were actually paid to Alan Lindsay and Associates Ltd., a
management company under the control of Mr. Lindsay pursuant to a
Management Agreement dated May 1, 1989 and a successor Management
Agreement dated February 1, 1998 with the Company.
(2) These amounts were actually paid to ARH Management Ltd., a management
company under the control of Mr. Harvey pursuant to a Management
Agreement dated May 1, 1989 and a successor Management Agreement dated
February 1, 1998 with the Company.
(3) These amounts were paid as reimbursement of medical insurance premiums.
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(4) Mr. Modesto was granted a $30,000 relocation allowance in conjunction
with the move of the Company's corporate office from Solomon, Arizona,
to Ferndale, Washington.
(5) Mr. Simmerman was granted a $30,000 relocation allowance in conjunction
with the move of the Company's establishment of its Glendale office to
oversee the Black Canyon Mica Project.
OPTION GRANTS IN LAST FISCAL YEAR
=================================================================================================================================
Name Number of % of total Exercise or Expiration Date Potential Realized Value
Securities Options Base Price (Cdn $) at Assumed Annual
Underling granted to (Cdn $/Sh) Rates of Stock Price
Options Employees Appreciation for Option Term
Granted (#) in Fiscal 5% 10%
Year
- ---------------------------------------------------------------------------------------------------------------------------------
Gary L. Simmerman 50,000(*) 56% 0.95 December 13, 2004 13,123 28,999
=================================================================================================================================
(*) These options are exercisable from the date of grant (December 13, 1999).
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTIONS VALUES
=================================================================================================================
Number of Securities Underling Value of Unexercised In-The-money
Unexercised Options at FY-End Options at FY-End ($)(*)
- -----------------------------------------------------------------------------------------------------------------
Name Unexercisable Exercisable Unexercisable
Exercisable
- -----------------------------------------------------------------------------------------------------------------
Alan P. Lindsay 500,000 -0- 273,363 -0-
- -----------------------------------------------------------------------------------------------------------------
Anthony R. Harvey 500,000 -0- 273,363 -0-
- -----------------------------------------------------------------------------------------------------------------
Gary L. Simmerman 315,000 -0- 165,305 -0-
- -----------------------------------------------------------------------------------------------------------------
Ryan A. Modesto 170,000 -0- 93,955 -0-
=================================================================================================================
(*) Based on the closing price of $1.1875 of the Company's Common Stock as
quoted on the American Stock Exchange on June 30, 2000.
COMPENSATION OF DIRECTORS
The Company pays to each of its outside, non-officer directors a fee of
$1,500 per month. The Company also reimburses its directors for reasonable
expenses incurred by them in attending meetings of the Board of Directors.
During fiscal year 2000, non-officer directors received a total of $1,750 in
consulting fees separate and distinct from directors fees as a result of actual
services rendered above and beyond those typical of a non-officer director. It
is the Company's policy to grant immediately exercisable options to directors
upon their initial election to purchase 100,000 shares of the Company's common
stock at an exercise price equal to the fair market value of the stock.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS.
On February 1, 1998 the Company entered into separate management
agreements with Alan Lindsay and Associates Ltd., and with ARH Management Ltd.
Associates Ltd. is a British Columbia corporation owned and controlled by Mr.
Lindsay, the Company's Chief Executive Officer. ARH Management Ltd. is a British
Columbia corporation owned and controlled by Mr. Harvey, the Company's
Vice-Chairman. These management agreements
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replaced the original management agreements with Associates Ltd. and ARH
Management Ltd. each dated May 1, 1989 in their entirety. The management
agreements provide that all salary amounts otherwise payable by the Company to
Messers. Lindsay and Harvey be paid to Associates Ltd.. and ARH Management Ltd.
, respectively. Under the agreements, each of Messers. Lindsay and Harvey
receive a base fee of $180,000 annually plus an allowance for equivalent
insurance benefits (approximately $750 per month). The base fee may be
renegotiated annually at the request of either party to the management
agreements. If the parties cannot agree on the renegotiated base fee, then the
base fee is increased by the greater of 5% or the amount of the cost of living
index as published by the Canadian federal government. The management agreements
are each for a period of 36 months automatically renewing for subsequent
one-year periods unless either party gives the other party notice of non-renewal
at least 90 days prior to the end of any term. In October 2000, the Company
elected to not renew these agreements, which expired on February 2001. In
connection with this non-renewal, each of Associates Ltd. and ARH Management
Ltd. demanded payment from the Company of a termination fee equal to $297,675
based on the terms of the management agreements. The Company disputes its
obligations to pay the termination fees based on a breach by Messrs. Lindsay and
Harvey of their fiduciary duties to the Company as directors and executive
officers. This matter is currently in litigation.
On August 15, 1994 the Company entered into management agreements with
Messrs. Lindsay and Harvey which are effective in the event of a change in
control of the Company. Similar management agreements were provided to Mr.
Modesto on November 19, 1996 and to Mr. Simmerman on October 23, 1998. The
management agreements provide for a lump sum distribution in an amount (taking
into account all other applicable change in control payments by the Company) not
to exceed 299% of the base amount as defined in IRC Section 280G (b) upon a
change in control of the Company. Such "base amount" is generally equivalent to
the applicable person's average annual compensation from the Company includable
in his gross income over the preceding five years. Change of control is therein
defined to include only the following:
(i) the acquisition (whether direct or indirect) of shares in
excess of 20% of the outstanding shares of Common Stock of the
Company by a person or group of persons, other than through a
public equity offering by the Company;
(ii) the occurrence of any transaction relating to the Company
required to be described pursuant to the requirements of item
6(e) of Schedule 14A of Regulation 14A of the SEC under the
Securities and Exchange Act of 1934; or
(iii) any change in the composition of the Board of Directors of the
Company resulting in a majority of the present directors not
constituting a majority; provided, that in making such
determination directors who were elected by, or on the
recommendation of, such present majority, shall be excluded.
On August 15, 1994 and on December 8, 1999, the Company provided
director's agreements to Messrs. Hodges and Olson. The director's agreements are
effective in the event of a change in control of the Company. The director's
agreements provide for a lump sum distribution not to exceed $100,000 to each of
Messrs. Hodges and Olson upon a change in control of the Company. The terms
"change in control" has the same definition as set forth above in connection
with the management agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended June 30, 2000 Messrs. Gray, Hodges and
Olson were members of the Company's Compensation Committee. The Compensation
Committee held no formal meetings during the fiscal year ended June 30, 2000,
but met in the context of regular Board meetings.
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REPORT OF THE BOARD ON EXECUTIVE COMPENSATION
OVERALL POLICY
Salary compensation of the Company's Executive Officers is determined
by the Compensation Committee. The directors' consideration of and decisions
regarding executive compensation are guided by a number of factors described
below. The objectives of the Company's total executive compensation package are
to attract and retain the best possible executive talent, to provide an economic
framework to motivate the Company's executives to achieve goals consistent with
the Company's business strategy, to provide an identity between executive and
stockholder interests through stock option plans and to provide a compensation
package that recognizes an executive's individual results and contributions in
addition to the Company's overall business results.
In making recommendations concerning executive compensation the
Compensation Committee reviews individual executive compensation, corporate
performance, stock price appreciation and total return to the Company's
stockholders.
SALARIES
The Company's executive compensation consists of two key elements;
salary and stock options. The Compensation Committee determines salary levels of
officers and employee stock option awards.
Executive Officers' salaries are determined by evaluating the
responsibilities of the Executive Officers' position, individual experience, and
by reference to the competitive marketplace for executive talent, including a
comparison of salaries for comparable positions at other mining companies.
The Compensation Committee at its year-end meetings generally
establishes the salary levels of the Executive Officers of the Company for the
following fiscal year. Specific individual performance and overall corporate and
business segment performance are reviewed in determining the compensation level
of each individual Executive Officer. The Board where appropriate, also
considers other performance measures, such as safety, environmental awareness
and improvements in relations with stockholders, employees, the public and
government regulators.
The Company's Compensation Committee increased Mr. Lindsay's salary as
Chief Executive Officer to $198,450 on February 1, 2000. This represented a 5%
increase in base fees over the annual base fees of $189,000 established on
February 1, 1999. The Compensation Committee's decision to increase Mr.
Lindsay's salary was based on its desire to adjust Mr. Lindsay's compensation to
bring it in line with industry standards.
The Company's Compensation Committee increased Mr. Harvey's salary as
Executive Vice-President and Secretary to $198,450 on February 1, 2000. This
represented a 5% increase in base fees over the annual base fees of $189,000
established on February 1, 1999. The Compensation Committee's decision to
increase Mr. Harvey's salary was based on its desire to adjust Mr. Harvey's
compensation to bring it in line with industry standards.
During fiscal year 2000, year-end bonuses for all employees and
officers were calculated at 5% of base salary or fees paid during calendar 1999.
STOCK OPTIONS
Under the Company's 1989 Stock Option Plan, as amended ("the Plan"),
which was approved by the Company's stockholders, stock options are granted to
the Company's officers, directors and key employees, including the individuals
whose compensation is detailed in this Proxy Statement. The Board determines the
size of the stock option grants based on certain factors, including competitive
compensation data similar to those used to determine salaries.
Stock options are intended to align the interests of the executives
with those of the Company's stockholders. All stock options granted under the
Plan are granted with an exercise price equal to at least the market price of
the
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Common Stock on the date of grant and are generally exercisable over a five-year
period. This approach is designed to provide executive incentive for the
creation of additional stockholder value over the long term since the benefit of
the option award cannot be realized unless the stock price appreciates.
CONCLUSION
The Company's executive compensation is linked to individual and
corporate performance. The Board intends to continue the policy of linking
executive compensation to corporate performance, recognizing that the ups and
downs of the business cycle, and in particular depressed mineral prices, from
time to time, may result in an imbalance in executive compensation and corporate
performance for a particular period.
This report has been provided by the Board of Directors.
Lawrence G. Olson Anthony R. Harvey
Paul A. Hodges Stanley A. Ratzlaff
M. William Lightner Jr.
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STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph shows the cumulative total stockholder return on
the Company's Common Stock compared to the cumulative total return of two other
stock market indices: (i) The American Stock Exchange Market Index (U.S.) (the
"Amex Market Index (U.S.)"), and (ii) the Peer Group Index of similar
line-of-business companies as described below. The time period graphed is the
period from July 1, 1995 through June 30, 2000.
The AMEX Market Index (U.S.) is an index comprising all domestic common
shares traded on The American Stock Exchange. The Peer Group Index includes data
from the following five companies: Benguet Corporation, Freeport McMoran Copper
& Gold, Rio Tinto PLC (formerly RTZ Corp. PLC), Canyon Resources Corp. and Hecla
Mining Co. all of which are listed on AMEX or the NYSE.
CUMULATIVE TOTAL STOCKHOLDER RETURN(1)(2)(3)
[LINE GRAPH]
[PLOTPOINTS FOR LINE GRAPH]
- -------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
- -------------------------------------------------------------------------------------------
Azco Mining Inc. 100 104.17 87.50 45.83 62.50 79.17
- -------------------------------------------------------------------------------------------
Peer Group Index 100 83.80 83.12 44.43 49.56 28.23
- -------------------------------------------------------------------------------------------
AMEX Market Index 100 114.50 121.78 140.79 138.50 159.25
- -------------------------------------------------------------------------------------------
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(1) Assumes $100 invested on July 1, 1995 in the Company's Common Stock,
the AMEX Market Index, and the Peer Group Index of alike
line-of-business companies.
(2) Total stockholder return assumes reinvestment of dividends.
(3) Where applicable, Canadian currency has been translated to U.S.
dollars.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP to audit
the Company's financial statements prepared in connection with the submittal of
the Company's Report on Form 10-K for the fiscal year ended June 30, 2000. The
Board of Directors recommends that the stockholders ratify its selection of
PricewaterhouseCoopers LLP as the Company's independent public accountants and
authorize the Board of Directors to fix and approve directors' remuneration.
PricewaterhouseCoopers LLP has audited the Company's financial statements since
1991.
The shares of Common Stock represented by the proxies in the
accompanying form will be voted "FOR" the ratification of the appointment of
PricewaterhouseCoopers as the Company's independent public accountants unless a
contrary direction is indicated.
The Company has requested representatives of PricewaterhouseCoopers to
be present at the Meeting, will make available to such representatives an
opportunity to make a statement if they so desire and expects them to be
available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Proposals by stockholders of the Company to be presented at the next
annual meeting of stockholders must be received by the Company a reasonable
amount of time prior to such meeting to be included in the Company's proxy
statement and proxy for that meeting. If a stockholder intends to submit a
proposal at the Meeting that is not included in the Company's Proxy Statement,
and the stockholder fails to notify the Company of such proposal a reasonable
amount of time before the Company mails the proxy materials for the Meeting,
then the proxies appointed by the Company's management will be allowed to use
their discretionary voting authority when the proposal is raised at the Meeting
without any discussion on the matter in the Proxy Statement. The proponent must
be a stockholder of record or a beneficial owner entitled to vote on his or her
proposal at the next annual meeting and must continue to own such security
entitling him or her to vote through that date on which the meeting is held. The
proponent must own 1% or more of the outstanding shares, or $2,000.00 in market
value, of the Company's Common Stock and must have owned such shares for one
year in order to present a stockholder proposal to the Company.
ANNUAL REPORT ON FORM 10-K
The Annual Report on Form 10-K concerning the operation of the Company
during the fiscal year ended June 30, 2000, including certified financial
statements for the year then ended, is being mailed to each stockholder of the
Company with this Notice of Annual Meeting. Additional copies of the Annual
Report may be obtained without charge upon written request to the Secretary of
the Company, at the corporate office located at 7239 N. El Mirage Road,
Glendale, Arizona 85307.
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OTHER MATTERS
The Board of Directors knows of no other business to be presented at
the Annual Meeting of Stockholders. If other matters properly come before the
Annual Meeting of the Stockholders, the persons named in the accompanying form
of proxy intend to vote on such other matters in accordance with their best
judgment.
By Order of the Board
April 12, 2001 Lawrence G. Olson,
Chairman of the Board
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APPENDIX A
AZCO MINING INC.
AUDIT COMMITTEE CHARTER
MISSION STATEMENT
The audit committee will assist the board of directors in its financial
oversight responsibilities. The audit committee will review the financial
reporting process, the system of internal control, the audit process, and the
Company's process for monitoring compliance with laws and regulations and the
code of conduct.
ORGANIZATION
The Board of Directors of Azco Mining Inc. shall appoint, on an annual basis, no
less than three of the Company's independent directors to serve on the Company's
Audit Committee. A chairperson shall be appointed and the independence of all
committee members shall be in compliance with the American Stock Exchange's
independent director and Audit Committee listing standards.
The Audit Committee shall meet, either telephonic or in person, a minimum of
four times a year to review and recommend to the board for approval the
Company's quarterly filings on Form 10-Q and its annual report on Form 10-K.
RESPONSIBILITIES
Review the performance of the external auditors and report to the board of
directors the appointment or discharge of the external auditors.
Review the annual financial statements and determine whether they are complete
and consistent with the information known to committee members and assess
whether the financial statements reflect appropriate accounting principles. Meet
with management and the external auditors, either telephonically or in person,
to review the financial statements and the result of the audit.
Ensure that significant findings and recommendations made by the external
auditors are received and discussed on a timely basis.
Review quarterly reports on a pre-issuance basis and obtain explanations from
management and the external auditors as to whether:
- Actual financial results for the quarter varied significantly from
projected results.
- There are changes in accounting or financial reporting practices.
- There are any significant or unusual events or transactions.
- The company has complied with the terms of all loan agreements or
security indentures.
- The interim financial statements contain adequate and appropriate
disclosures.
Review the findings of any examinations by regulatory agencies such as the SEC
and the AMEX.
Review adequacies and effectiveness of the company's internal controls.
Review and update the charter and receive approval of changes from the board.
Accepted by the Audit Committee of Azco Mining Inc. on June 8, 2000.
Lawrence G. Olson
Dr. Ian M. Gray
Paul A. Hodges
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned shareholder of Azco Mining Inc. (the "Company") hereby appoints
Lawrence G Olson and Ryan A. Modesto, or either of them, as proxy, of the
undersigned to attend, vote and act for and in the name of the undersigned at
the Annual Meeting of the Shareholders of the Company (the "Meeting") to be held
in the board room of the Company's Corporate office at 7239 N. El Mirage Road,
Glendale, Arizona, on, May 16, 2001, at the hour of 10:00 a.m. (local time), and
at every adjournment thereof, and the undersigned hereby revokes any former
proxy given to attend and vote at the meeting.
EACH IS HEREBY INSTRUCTED TO VOTE AS FOLLOWS WITH RESPECT TO THE FOLLOWING
MATTERS:
1. FOR [ ] The following nominees for Director - Lawrence G. Olson,
Paul A. Hodges, Stanley A. Ratzlaff and M. William
Lightner, Jr., except the following nominees
_____________________________________________________.
WITHHOLD [ ] From All Nominees.
ABSTAIN [ ]
2. FOR [ ] AGAINST [ ] ABSTAIN [ ] To appoint PricewaterhouseCoopers
as auditors and to authorize the
directors to fix the auditors'
remuneration.
THIS PROXY WILL BE VOTED FOR OR AGAINST OR WITHHELD OR ABSTAINED IN RESPECT OF
THE MATTERS LISTED IN ACCORDANCE WITH THE CHOICE, IF ANY, INDICATED IN THE SPACE
PROVIDED. IF NO CHOICE IS INDICATED, THE PROXY WILL BE VOTED "FOR" SUCH MATTER.
IF ANY AMENDMENTS OR VARIATIONS ARE TO BE VOTED ON, OR ANY FURTHER MATTERS COME
BEFORE THE MEETING, THIS PROXY WILL BE VOTED ACCORDING TO THE BEST JUDGMENT OF
THE PERSON VOTING THE PROXY AT THE MEETING. THIS FORM SHOULD BE READ IN
CONJUNCTION WITH THE ACCOMPANYING NOTICE OF MEETING AND PROXY STATEMENT.
DATED this ________day of __________, 2001.
___________________________________
Signature of Shareholder
___________________________________
(Please print name of Shareholder)
NOTES:
1. Please date and sign (exactly as the shares represented by this Proxy are
registered) and return promptly. Where the instrument is signed by a
corporation, its corporate seal must be affixed and execution must be made by
an officer or attorney thereof duly authorized. If no date is stated by the
shareholders, the Proxy is deemed to bear the date upon which it was mailed
by management to the shareholder.
2. To be valid, this Proxy form, duly signed and dated, must arrive at the
office of the Company's transfer agent, Computershare Trust Company of
Canada, 510 Burrard Street, Vancouver, British Columbia, V6C 3B9 not less
than forty-eight (48) hours (excluding Saturdays, Sundays and holidays)
before the day of the Meeting or any adjournment thereof.