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A LITTLE HISTORY ON THE "RING OF FIRE"
What Ontario needs to unlock Ring of Fire’s mineral wealth is a Marshall Plan
Stan Sudol, Special to Financial Post | March 10, 2016 | Last Updated: Mar 10 3:36 PM ET
More from Special to Financial Post
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Aerial view of the Northern Ontario First Nation of Eabametoong accessible only by plane.
Postmedia NewsAerial view of the Northern Ontario First Nation of Eabametoong accessible only by plane. .
Ontario’s “Ring of Fire” mineral belt, located in the province’s remote James Bay Lowlands, is thought to hold more than $60 billion of geological riches. When the belt was discovered in 2007, it was supposed to usher in a new era of prosperity for Northern Ontario, especially for the impoverished First Nations communities in the region.
Almost a decade later, the ore remains in the ground and doesn’t appear to be coming out anytime soon. Thanks to the Ontario government’s ineptitude, dysfunctional mining policy, lack of promised infrastructure spending and (to a much lesser extent) a broader commodity slump, American miner Cliffs Natural Resources Inc. left the province in frustration in 2013, permanently halting its proposed US$3.3-billion chromite project.
The ultimate indignity for Ontario came last year, when Cliffs sold its US$550-million investment in the Ring of Fire to junior miner Noront Resources Ltd. — the only significant player left in the area — for a bargain-basement price of US$27.5 million.
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Many analysts say that Ontario missed an extraordinary opportunity to establish a chromite industry during the commodity boom, and that it will be at least five or more years before any possible development occurs.
While the provincial Liberals shoulder most of the blame for delaying Ontario’s best mineral discovery in over a century, they did have a legitimate complaint: the previous federal government under Stephen Harper was not at the economic table in a meaningful way.
With the election of the Trudeau Liberals, who have a strong mandate to alleviate living standards of Canada’s First Nations communities, hopes for the development of the Ring of Fire and the enormous mineral potential of the entire northwestern region of Ontario have been renewed.
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The mining companies in the Ring of Fire need infrastructure, and so do the isolated aboriginal communities. If the Trudeau government worked in conjunction with Ontario and adopted something akin to a “Marshall Plan” — the name of the American initiative to rebuild war-torn Europe after the Second World War — to develop and modernize infrastructure in the isolated northwest, it would kill two birds with one stone.
The standard of living for First Nations communities would dramatically improve, and a new round of mineral exploration and development would take place that would generate billions of dollars in tax revenue to pay back the government’s investment. And then some.
Postmedia News
Postmedia NewsThe village of Summer Beaver (Nibinamik First Nation)..
Let’s start with the potable water crisis in Northwest Ontario. Within its first 100 days in office, the Trudeau government hit a home run by announcing it would fix the water problems at Neskantaga First Nation, a community near the Ring of Fire that has been on a boil water alert for an astonishing 20 years.
However, three of the other four isolated communities in the region are also on a boil water alert. In fact, 35 of the 49 aboriginal communities in Northern Ontario had drinking water advisories in effect as of May 2015.
Peter Koven/Financial Post
Peter Koven/Financial PostDrill samples from the Ring of Fire sit in stacks in northern Ontario. .
A 2011 report found that it would cost about $1 billion to upgrade or replace the water and wastewater needs of all these communities. As Trudeau himself would say, “It’s 2016.” It is high time we gave these communities the potable water that most Canadians takes for granted.
Another need is roads. Ontario Regional Chief Isadore Day has called for the construction of permanent roads to the many isolated First Nations communities in Northern Ontario, which would replace winter roads that are being affected by global warming. There is an old saying in the mining business that the best way to find new mineral deposits is by building roads.
The first road that should be built is an east-west corridor between the Ring of Fire and Pickle Lake, which would link up with four isolated First Nations communities. This would not only provide a cheaper way of bringing food, building supplies and diesel fuel to the communities, but would also allow Noront to proceed with development of its Eagle’s Nest nickel-copper project in the Ring of Fire.
Developing this road shouldn’t be difficult. In the early 1880s, it took Canada less than five years to build the Canadian Pacific railway from Ontario to Vancouver – a distance of roughly 4,200 kilometers. The distance between the Ring of Fire and the provincial highway system is about 280 kilometres.
However, connecting the many other First Nations communities throughout the northwest could also be done economically through the construction of forestry roads. Hartley Multamaki, vice president of Green Forest Management, said a rough estimate for primary forestry road construction, which is solid enough for huge trucks, would be around $250,000 per kilometre. The ultimate cost could be higher because of obstacles like river crossings, swamps and access to aggregates.
So taking that estimate, the cost of building 1,100 kilometres of forestry road through standard Canadian Shield geography in Northwestern Ontario would be about $275 million. Add in an additional $60 million for the previously mentioned obstacles. So for $335 million, you could connect a large number of isolated communities, especially in the geologically rich greenstone belts to the west of the Ring of Fire. Not an earth-shattering sum!
The final hard infrastructure need that should be addressed is access to grid power. The vast majority of Northwestern Ontario’s isolated First Nations rely on costly diesel-generated power, which is heavily subsidized by governments. Electricity costs can run three to 10 times higher than grid power. It is also environmentally risky and limits expansion and business opportunities in these communities.
The Ontario Power Authority estimates that grid connection would save roughly $1 billion over the next 30 years compared to diesel generation. The capital cost for a current aboriginal-led project proposal is estimated at $1 billion. It basically pays for itself. The four communities closest to the Ring of Fire — Webequie, Nibinamik, Neskantaga and Eabametoong — could be easily connected to this initiative with an acceptable increase in cost.
The aboriginal communities in Northwestern Ontario are among the most impoverished in the country, and yet their territories contain billions and billions of dollars of untapped mineral wealth. Jim Franklin, the former chief geoscientist at the Geological Survey of Canada, predicted at least $140 billion worth of chromite and base metals will be discovered in the Ring of Fire, and an additional $140 to $190 billion of gold are lying in the many greenstone belts to the west of the camp.
By providing potable water, road access and grid power to these communities, the Trudeau government will also be benefiting the mining industry, which will discover, explore and build the next generation of mines, providing the jobs and tax revenue to pay back these strategic infrastructure investments in record time.
Stan Sudol is a Toronto-based communications consultant, mining policy analyst and publisher/editor of www.republicofmining.com.
Niobium junior heads towards production
THIS niobium-focused junior has outlined a robust production scenario and secured major investor support on the verge of entering a strategic commodities space in dire need of supplier diversification. By Justin Niessner – RESOURCESTOCKS*
MiningNews.Net
13 Jul 2015
15:18
Cradle Resources Panda Hill in SW Tanzania
TOPICS (select for more information):
RESOURCESTOCKS
Cradle Resources is targeting niobium production at its Panda Hill niobium project, Tanzania, in 2017 after a string of successes, including positive prefeasibility results, a huge mineral resource expansion, encouraging pilot plant testwork and the cementing of a 50:50 joint venture scheme with one of Africa’s leading mine developers.
This traction is moving the Perth-based developer ever closer to first production at Panda Hill, where an operation valued at $US470 million is expected to deliver 4600 tonnes of niobium annually over 30 years.
Investors who can’t remember the last time a niobium mine went into production have nothing wrong with their memories. It’s been an astonishing 39 years since any new sources of supplies have come on line even though the $2.2 billion-per-annum global niobium market represents an industry three times bigger than graphite.
As a result, many investors remain uninformed about the sector as hidden opportunities are quietly exploited by the minority in the know. This is particularly true in Australia, where steel mills and alloying industries are less common than in the UK or steelmaking centres like Germany, the US or China.
Niobium is a soft, lustrous transition metal used primarily in the production of high-strength, low-alloy steels for a number of industries such as construction, car making, piping, tooling and high-tech machining. The niobium market is expected to grow 25% over the next six years.
Cradle’s plan is to join the extremely exclusive world of niobium production, which includes only three existing miners worldwide.
The largest player by far is privately owned Brazilian giant CBMM, which accounts for about 85% of the global market. Anglo American contributes 7-8% of world supply from its own Brazilian operations and Toronto-based Magris Resources, which recently bought the Niobec underground niobium mine from Iamgold, delivers the remainder from properties in Quebec, Canada.
This situation puts a desperately unbalanced emphasis on Brazilian supply in a sector intimately tied to well-understood technology and urbanisation growth patterns.
“The big steelmaking parts of the world haven’t got any niobium production – China’s got no niobium, Europe’s got no niobium, nor does the US. This makes economic niobium resources strategic” Cradle managing director Grant Davey told RESOURCESTOCKS.
“There’s not a whole lot of supply coming onto the market and we’ll be the next producer.
“You’ve got a lot of steel mills around the world trying to get niobium, and geographically, more than 90% is locked up in one country. Consumers don’t like that. They want diversity of supply. They want to be able to get their hands on it without being reliant on a few suppliers.”
Cradle knows that the tightness of the niobium market requires any ‘would-be entrants’ to have a light touch. With plans to output about 5000 tonnes of ferroniobium per annum, Panda Hill is targeting about 5% of the world market at an industry-average cash cost around $17-18/kg.
“We’ve designed our capacity so that we enter the market responsibly with additional supply,” Davey said.
Recent development work on Panda Hill has revealed potential for a high-margin business with a low operating cost in a stable commodity price regime. Prefeasibility work has indicated the operation would generate life-of-mine earnings before interest, tax, depreciation and amortisation of $103 million per annum.
Mining is planned to proceed by conventional open pit drill, blast, load and haul techniques. Production scheduling work has contemplated the first five years of operation sourcing solely from indicated mineral resources, with any inferred material or low-grade material to be stockpiled. A run-of-mine grade of 0.7% niobium is targeted for the first 10 years of operation.
The plant is planned to be expanded after the first five years of production to achieve an increased production profile to meet a ferroniobium market growing at a rate of 3-5% a year.
Total capital expenditure is estimated at $194 million (including $71 million for a process plant), with a payback period of only 1.5 years and total working capital costs of $37 million.
The internal rate of return was figured at 38%. To put these metrics in perspective, the proposed Elk Creek niobium underground mining project in the US was scoped in April to require $919 million in total capital, including $517 for processing, metallurgical and infrastructure costs. Elk Creek IRR came out at 16%.
Davey said these disparities between Panda Hill and its closest competing development helped illustrate the advantages of Cradle’s asset.
“Panda Hill is an open pit with a low strip ratio, while Niocorp has an underground project. Panda Hill has low initial capex requirements because of developed infrastructure in the area and a simple processing operation because of relatively simple metallurgy. To add to this we’ve got a highly technical $7 billion fund as a joint venture partner who’s ticked the box on the Panda Hill niobium project.”
This vote of confidence for Cradle comes from Denham Capital’s African mining-focused platform Tremont, which in turn is backed by Rob Still, a successful mining entrepreneur in Africa.
Still is the head of Pangea Exploration, an adviser to Tremont, which has developed at least 16 projects in southern and eastern African over the last 25 years.
He has been variously credited as a director for companies listed in South Africa, Australia, Canada and the UK, as well being crdited with taking a large number of African projects from exploration to production.
As of press time, Tremont had taken a 37.5% stake in Panda Hill and was on track to acquire a 50% interest as de-risking work, metallurgical tests for a 75t bulk sample and extensional drilling progress ahead of definitive feasibility results to be published later this year.
Tremont has committed $20 million to development of the project and is assisting Cradle in negotiating debt and offtake arrangements. Environmental certifications are well underway and the mining license renewal for a further 10 years of mining is in process.
“We’ve been successful in making sure this project’s value has been unlocked. Panda Hill is the only undeveloped niobium mine that makes economic sense in current economics in our view.
“Niobium deposits typically don’t make economic sense because of difficult metallurgy, low grades, low recovery rates and poor infrastructure.” Davey said.
Geologic advantages at Panda Hill, however, seem set to break a 40-year drought in niobium mine development. The mineralisation is considered relatively clean, with low levels of impurities and well liberated at coarse grind. A single-stage flotation method for producing a concentrate at 50-55% niobium will be applied. This level of simplicity is considered exceptional in niobium deposits, and may allow for the upgrade of materials produced.
Despite only about a third of the site’s carbonatite footprint having been drilled, resources stand at 178 million tonnes grading 0.5% niobium, with 26Mt at 0.7% niobium. In gold terms, this endowment represents the equivalent of a 15-million-ounce inventory grading 2.6gpt recovered. The mineral resource is open at depth and along strike, and an exploration target of 400Mt at about the same grade has been established. Geological mapping by Cradle last year suggest the possibility of lateral extensions along outcrops of carbonatite and magnetite-carbonatite which are mineralised at surface.
Davey also flagged jurisdiction as an important factor in the Panda Hill strategy. The project’s location provides for access to a dry port located in the southwest Tanzanian city of Mbeya (26km away), the Tazara rail line (2km away), Tunduma Highway (5km away), an Songwe Airport (8km away) and a cement factory (6km away). Growing Mbeya was founded as a mining town and boasts a number of technical colleges, medical facilities and a major fuel depot.
Cradle says the Songwe River and a planned 400 kilovolt power line have promised simple access to water and power as Tanzania more broadly realises its emergence as a major resources investment destination. Big names setting up shop in the country have included Acacia Mining (formerly Africa Barrick Gold), Anglogold Ashanti and just about every oil supermajor.
“The legislation is world class, the government is supporting diversifying into things like niobium and English is the language of business,” Davey said as development updates continue to culminate toward a looming construction phase which will employ regional engineers.
“It’s easily accessible to Asia and Europe and quite an easy country to do business in. It’s certainly in my top four countries in Africa to do business in. This is a real business and a mine that is going to be built. The prefeasibility results demonstrated a highly economic, world-class project. It’s an African mineral resource project that’s going to produce a strategic product.”
*A version of this report, first published in the July-August 2015 edition of RESOURCESTOCKS magazine, was commissioned by Cradle Resources.
Expand Niobium Production Suggest Demand Heating Up
By Donald Levit -
January 6, 2017 - 21:08 GMT
Niobium is a metal that not many have heard of, but its status as a strategic metal means that it is a commodity that has the potential to outperform many investments.
Strategic metals are those that are essential to modern technology. Often they have niche applications, but their sources are limited, which makes them susceptible to supply side disruptions that can cause rapid swings in prices. Molybdenum is one of the more recognized strategic metals.
China controls most of the world’s molybdenum and the country has taken advantage of this, flooding the market with supplies when international producers became a threat and then charging exorbitant prices for exports once the country has resumed its control of the metal’s supply. This has caused some massive fluctuations in the commodity’s price, and investors who have capitalized on the upside have received returns hard to find elsewhere. Conversely, major losses have also been expected but the potential for such high returns continues to draw many to the market.
Niobium is used to produce stronger, lighter steel for industrial pipes and aircraft parts. It is mined in only three places on Earth. These characteristics make it a strategic metal.
The metal is starting to garner more interest, and countries and companies are moving to boost supplies due to the likelihood of increased demand and higher prices. At the end of December Russia announced that it would significantly increase the volume of domestic niobium production in the coming years by expanding existing production and processing capacities.
Currently, the majority of Russian niobium demand is met by the imports, but the country wants to reduce this reliance. When it comes to strategic metals, lower reliance on imports is important. Right now, Russia meets most of its demand from Brazil. Brazil controls about 85% of world niobium production.
INVEST IN NIOBIUM
Niobium is frequently alloyed with steel because of it strength. It is lightweight and strong at high temperatures, making it perfect for missiles and other aerospace applications. It also sees use in the nuclear and superconducting industries. The major marketable niobium materials are ferroniobium, nickel-niobium, and niobium metal, ore, and oxide. In the United States, niobium was consumed by the metallurgical industry. Niobium masteralloys—ferroniobium and niobium-nickel alloy—were consumed to produce steel and superalloys. About 75% of world niobium consumption was for the production of microalloyed steel. Brazil and Canada were the leading producers of niobium mineral concentrates in 2009. The leading niobium ore and concentrate producers were Companhia Brasileira de Metalurgia e Mineração (CBMM) in Brazil and IAMGOLD Corporation (Niobec Mine) in Canada.
As much as 97% of 2008 world niobium production resulted from the mining pyrochlore mineral [(Na,Ca)2Nb2O6(OH,F)] in Brazil and Canada. Steelmaking, primarily high-strength low-alloy and stainless steels, accounted for about 90% niobium use. The niobium-containing high-strength low-alloy steel was use in automobiles, construction, and gas pipelines; the stainless steel in automobiles
The principal use for niobium was as an additive in steelmaking, mostly in the manufacture of microalloyed steels. The production of high-strength low-alloy steel was the leading use for niobium, and the trend for niobium consumption, domestically and globally, was expected to continue to closely follow that of steel production, as the steel industry is estimated to account for as much as 90% of niobium consumption. Consumption of niobium, however, does not mirror trends in overall steel production, as only 10% of steel products contain niobium. The leading nonsteel use of niobium was in superalloys for, among other applications, aircraft engines.
The long-term growth of niobium use was interrupted by the economic downturn of 2008–09. Niobium is used in high strength low-alloy steels consumed by pipeline, automobile, and construction industries. Greater demand for natural gas was expected to result in increased demand for pipeline steel. The sharp decline in demand for automobiles and in construction that started in 2008 was part of the current economic cycle. Recovery of these markets was expected to revive demand for niobium. It was reported that globally the unit consumption of niobium per metric ton of steel produced was 55 to 60 g/t, while that of highly economically developed countries was 100 g/t and of China was 40 g/t, suggesting significant potential for niobium consumption growth as China’s economy develops.
Domestic Production and Use: Significant U.S. niobium mine production has not been reported since 1959. Domestic niobium resources are of low grade, some are mineralogically complex, and most are not commercially recoverable. Companies in the United States produced ferroniobium and niobium compounds, metal, and other alloys from imported niobium minerals, oxides, and ferroniobium. Niobium was consumed mostly in the form of ferroniobium by the steel industry and as niobium alloys and metal by the aerospace industry. Major end-use distribution of reported niobium consumption was as follows: steels, 74%; and superalloys, 26%. In 2009, the estimated value of niobium consumption was $162 million and was expected to be about $330 million in 2010, as measured by the value of imports.
Recycling: Niobium was recycled when niobium-bearing steels and superalloys were recycled; scrap recovery specifically for niobium content was negligible. The amount of niobium recycled is not available, but it may be as much as 20% of apparent consumption.
Import Sources (2006–09): Niobium contained in niobium and tantalum ore and concentrate; ferroniobium; and niobium metal and oxide: Brazil, 84%; Canada, 9%; Germany, 2%; Estonia, 2%; and other, 3%.
Events, Trends, and Issues: Niobium principally was imported in the form of ferroniobium and niobium unwrought metal, alloy, and powder. United States niobium import dependence was expected to be the same as that of 2009, when Brazil was the leading niobium supplier. By weight in 2009, Brazil supplied 75% of total U.S. niobium imports, 69% of ferroniobium, 91% of niobium metal, and 86% of niobium oxide. The leading suppliers of niobium in ore and concentrate were Mozambique (48%) and Canada (32%). Financial market problems in 2008 and the subsequent economic slowdown resulted in reduced niobium material consumption in 2009. Niobium apparent consumption is believed to have increased significantly in 2010 compared with that of 2009.
World Resources: World resources are more than adequate to supply projected needs. Most of the world’s identified resources of niobium occur mainly as pyrochlore in carbonatite [igneous rocks that contain more than 50% by volume carbonate (CO3) minerals] deposits and are outside the United States. The United States has approximately 150,000 tons of niobium resources in identified deposits, all of which were considered uneconomic at 2010 prices for niobium.
Substitutes: The following materials can be substituted for niobium, but a performance or cost penalty may ensue: molybdenum and vanadium, as alloying elements in high-strength low-alloy steels; tantalum and titanium, as alloying elements in stainless and high-strength steels; and ceramics, molybdenum, tantalum, and tungsten in high-temperature applications.
Niobium Producers
News Ontario - (old)
Ring of Fire: progressing or stalled?
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Alan S. Hale
By Alan S. Hale, The Daily Press
Tuesday, January 12, 2016 8:32:33 EST PM
Column: Province doesn't 'get it'
Despite criticism for many corners that the provincial government is not doing enough to launch the Ring of Fire chromite development, Northern Affairs and Mines Minister Michael Gravelle argues that the province is making significant headway.
In a letter sent to Premier Kathleen Wynne on Monday to update her on the work he has been doing since 2014 to fulfil his mandate to promote mining and economic development in Northern Ontario, Gravelle pointed to the ongoing negotiations with First Nations near the Ring of Fire as a sign of progress.
Talks with Matawa-member First Nations in the region around the Ring of Fire are continuing, said Gravelle, under the auspices of the Ring of Fire Regional Framework Agreement.
“The agreement outlines key priorities for negotiations including enhanced First Nation participation in the Environmental Assessment process (currently underway), regional long-term environmental monitoring, infrastructure planning and implementation, socio-economic supports and resource revenue sharing in the Ring of Fire,” reads the letter.
The terms of reference for the ongoing environmental assessment being conducted for Noront Resources – which has the biggest land claim in the Ring of Fire – were only approved this past June.
Since he was given the mandate to oversee the Ring of Fire in 2014, Gravelle said his ministry has distributed $8.7 million to communities and band councils to help them build the capacity to be ready when mining begins at the Ring of Fire. On top of that, in the past two years, 1,950 people from First Nations have made use of skills and training programs to help them take advantage of opportunities that are expected to come from the development.
The Ministry is also negotiating bilateral agreements with the aboriginal communities closest to the mine site. They have signed a memorandum of understanding signed with the Marten Falls First Nation and a cooperation agreement with Webequie First Nation and are working on getting similar agreements with the Neskantaga and Eabametoong First Nations.
One of the major stumbling blocks for the Ring of Fire has been the ability to get a transportation corridor to the mining site established. Gravelle said the province and the federal government has spent $785,000 for a study that will work with First Nations to look at the options of a corridor.
Going forward, Gravelle said his Ministry is committed to working with First Nations and the federal government to get the development off the ground.
“We remain steadfast in our work with industry and First Nations to align interests in the development of a road network that provides access to communities, as well as access for mineral development within the region,” Gravelle wrote. “We are committed to working collaboratively with the federal government to ensure that development moves forward in a way that maximizes the benefits for First Nations communities, as well as for Ontario and Canada.”
Although he has great respect for Gravelle as a Minister, Timmins – James Bay MPP Gilles Bisson said the entire letter is an attempt to put a positive spin on a track record that has seen progress on the mining development virtually grind to halt for seven years.
“This progress report is pretty well not much ado about anything,” said Bisson. “I really believe this government has been conflicted when it comes to this project. They are conflicted between doing what's right when it comes to getting a project like this off the ground . . . and them trying to figure out how to do that in the context of their electoral base in Southern Ontario (where some people consider mining to be environmentally unfriendly).”
As a result, said Bisson, the government has been paralysed and unable take actions that would have led to the Ring of Fire to have begun mining, or at least in the final stages of construction on two or three mines by now.
Those necessary steps, by Bisson's reckoning, were to put forward an infrastructure plan early instead of waiting on the federal government as they did; to create legislative framework for revenue sharing with First Nations to take the burden of negotiation of mining companies; and figure out what role First Nations would play when it came to land use planning.
“They couldn't bring themselves to make those decisions on the Ring of Fire. So where are we at today? We're nowhere. We aren't any further ahead on the Ring of Fire than we were seven years ago,” declared Bisson. “All-in-all this has been a complete failure. I have great respect for Michael Gravelle, but I don't respect the Liberal Party. At least, Gravelle has tried. But on this file, he has no support from the cabinet and no support from the premier.”
When it comes to promoting mining and economic development in Northern Ontario generally, the Minister told the premier they have a few irons in the fire.
These include seven investment missions to various countries this year to drum up interest in the Ontario mining sector. The province is co-sponsoring a new conference called Mines and Money Americas which will take place in Toronto during 2016. There is also a bill tabled in the Liberal-controlled legislature to implement a new online land claim registration and management system.
The province's plans for developing the North's economy outside mining are mostly limited to spending $120 million to subsidize electricity rates, promoting agriculture in the region, and direct investment in smaller projects from the Northern Ontario Heritage Fund Corporation.
The fact that the province needs to go abroad to convince companies to invest in the Ontario mining industry is a dramatic fall from grace for the province said Bisson.
“Ontario was once the number one mining jurisdiction in North America. We were number one, and we are not in Canada, last. So the very fact that the government needs to go outside of Canada to drum-up investors tells you how bad it is. It used to be that people were banging down the doors to invest in Ontario,” said the local MPP.
As for the province's proposed online land claim system, Bisson said that would be a big mistake because it would allow companies to make claims in Canada without doing any on-the-ground prospecting first, giving an undue advantage to large multi-national mining
Gino Donato/The Sudbury Star When it comes to the Ring of Fire, Noront Resources Ltd. is in it for the long haul, president and CEO Alan Coutts said Thursday.
Company sees modest start, big potential in mining area
When it comes to the Ring of Fire, Noront Resources Ltd. is in it for the long haul, president and CEO Alan Coutts said Thursday.
Speaking at Bryston's on the Park in Copper Cliff as part of the Greater Sudbury Chamber of Commerce President's Luncheon Series, Coutts talked about the wealth pulled from the ground in the Sudbury area and how he sees similar potential in the Ring, a crescent rich in chromite and other minerals such as nickel and copper, located in the James Bay Lowlands, about 500 kilometres north of Thunder Bay, and dotted with five small Oji-Cree First Nations communities.
"We all know in this room the last 150 years has generated an incredible amount of wealth and prosperity from the Sudbury Basin," Coutts said. "The Ring of Fire is almost identical in size, about 100 kilometres from tip to tail, and you can see there are already more than 20 deposits that have been discovered in that region, of various qualities and sizes."
Noront consolidated most of those discoveries during the last year, first buying out Cliffs Natural Resources after that company abandoned plans for chromite development in the Ring, then acquiring MacDonald Mines, the other large claim-holder in the region.
"We believe this is a mining camp," Coutts said. "We believe this will be, hopefully, the next Sudbury or the next Timmins or Red Lake, and we're trying to get a toe hold into this region and take advantage of these unique opportunities that presented themselves when the markets were down. We've all seen people pay too much for assets. We're hoping we paid not enough for these assets."
Noront is not a company that's in the business of flipping stock, he said.
"We have a pedigree - we've built and operated mines and smelters all over the world," Coutts said. "And if we have our way, that's what we're going to do here, as well. We're very excited about the ability to consolidate this. We see this as a company maker. We want to be that company that was, once upon a time, the Falconbridges and the Incos and the Norandas of Canada, and we see this as a great opportunity. All of those companies had a flagship operation that vaulted them on to greater things and we see this as having the same potential."
Rather than a chromite deposit, it's Eagle's Nest, a nickel-copper deposit expected to yield about one million tonnes per year, that could serve as Noront's starting point for development in the rest of the Ring.
The mine is not unique, except that Noront is planning no starter pit, because of water-treatment issues associated with the boggy, wet terrain, and in that the company has committed to returning all tailings back underground.
"People in this room who have operated or know anything about paste backfill plants would say well, that's kind of hard, to get all of those tailings back underground, after you've swollen them up from grounding," Coutts said. "You can usually put about two-thirds of you tailings back underground if you're doing it well, but what we didn't want to do in this boggy terrain and again, very sensitive environmental terrain, with our First Nations partners, was have a very big tailings dam that was built on boggy material."
When Noront talked with local First Nations about their concerns with the project, Coutts said, tailings and legacy issues associated with tailings dams were near the top of the list.
"A lot of people know what a tailings dam breach is and some of the devastation that can be caused by those, so that was a very sensitive part. The other thing they were very concerned about was water and water treatment."
Noront plans to create an underground quarry to provide room for extra tailings, as well as rock for roads and airstrips.
"In Year 3, when we don't need any more rock, we're going to turn our attention to the first chromite deposit," Coutts said. "We need to have addition void every year to live up to that commitment to put the tailings back underground, so the way we're going to do this is to mine about 500,000 tonnes per annum from the Blackbird deposit, a very massive chromite deposit up to 30 metres thick in various places. As a lot of mining people here will understand, a 500,000-tonne-per-annum mine is small, but we can mine a very high grade of chrome out of this mine, verging on 40 per cent Cr2O3, to provide that extra void, but importantly, we can also ship that volume out on a road to a ferrochrome processing facility and produce ferrochrome."
An alloy of chromium and iron, ferrochrome is chiefly used in the production of stainless steel.
"This is the modest start to the chromite world," Coutts said. "It is not a Cliffs-scale project by any means. It's a fraction of the size, but we think it's a very elegant way to get into that business, to learn it, to basically subsidize the mining process on the back of the infrastructure you build for the nickel mine, and also serve a purpose that we have from a permanent point of view."
They plan to build the processing plant, to be built somewhere in Northern Ontario, and produce ferrochrome for sale to the industrial northeastern United States. Even the modest 500,000 tonnes of ore produced by the mine will produce about 200,000 tonnes of ferrochrome, which Coutts said is equal to half of the American market.
"From there, let's see how that market goes," Coutts said. "Let's see if we can be a good supplier and live up to all of our obligations with our partners, whether they're industrial partners or First Nations partners."
The company has already begun talks with several communities interested in hosting the processing plant, including Sudbury, Timmins, Thunder Bay (through Fort William First Nation) and Sault Ste Marie. There is interest in Hamilton, Coutts said, but the company prefers a "made-in-the-North solution."
None of it will get started, however, without a road. Noront prefers a gravel road to a railway, at least initially, because the former option costs much less and can be shared with local First Nations, currently serviced only by air and winter roads.
"It kind of sounds easy, doesn't it?" Coutts said. "Our provincial government has allocated monies towards it, everybody up there wants the road network in there, yet we're struggling to get that final alignment on that gravel road that will enable those two mines."
Talks are ongoing through the Ring of Fire Regional Framework, which includes First Nations and representatives, including former premier Bob Rae, and the province, represented by former Supreme Court Justice Frank Iacobucci.
"The idea was get the First Nation players together, get government together, get to a table and try to regulate some of these issues so the playing field is established - how will the communities participate, what will their ownership be, how will they be involved in the environmental permitting?" Coutts said. "All of those are really good outcomes. However, in the last three years, a lot of the conversations with Canadians and First Nations have been taking on a vastly different aspect. It's not just about simple resource-development opportunities. The conversation that's going on is about reconciliation, about treaties, about jurisdiction.
"The conversation has to happen. Those conversations about consult and consent have to happen and Canadians need to address that, but the issue we have is we're not really part of that larger, Canada-wide issue. I question whether that discussion should be going on at this particular table, with a very remote, isolated group of First Nations.
"As a resource developer, I'm constantly trying to bring the dialogue back to, 'Lets get a road going, let's get some jobs created, let's get some training happening and let's try to make some of those communities sustainable and let's get some infrastructure built,' but it's a tough slog."
Many of the First Nations signed their last business agreement with the signing of Treaty 9, Coutts said, and understandably want a better deal for their communities.
"What our job as a resource developer is to do the right thing, show the right volente, get people saying, 'I know these people, these are good people and they do what they say they're doing and they're responsible,' to build that trust, because ultimately, I think the way to address this whole issue is for Noront, as an industrial proponent, and the few communities that are directly in the area and have the traditional land use to have a joint view of resource development and go marching over to the provincial government and say, 'Right, all of us want to do it this way. How does that sound?' I think that's the way to do it."
bleeson@postmedia.com
Twitter: @ben_leeson
HIGH INTREST IN "RING OF FIRE"
Noront still sold on the Ring of Fire
By Ben Leeson, Sudbury Star
Friday, January 27, 2017 12:45:18 EST AM
Gino Donato/The Sudbury Star When it comes to the Ring of Fire, Noront Resources Ltd. is in it for the long haul, president and CEO Alan Coutts said Thursday.
Gino Donato/The Sudbury Star When it comes to the Ring of Fire, Noront Resources Ltd. is in it for the long haul, president and CEO Alan Coutts said Thursday
Company sees modest start, big potentail
When it comes to the Ring of Fire, Noront Resources Ltd. is in it for the long haul, president and CEO Alan Coutts said Thursday.
Speaking at Bryston's on the Park in Copper Cliff as part of the Greater Sudbury Chamber of Commerce President's Luncheon Series, Coutts talked about the wealth pulled from the ground in the Sudbury area and how he sees similar potential in the Ring, a crescent rich in chromite and other minerals such as nickel and copper, located in the James Bay Lowlands, about 500 kilometres north of Thunder Bay, and dotted with five small Oji-Cree First Nations communities.
"We all know in this room the last 150 years has generated an incredible amount of wealth and prosperity from the Sudbury Basin," Coutts said. "The Ring of Fire is almost identical in size, about 100 kilometres from tip to tail, and you can see there are already more than 20 deposits that have been discovered in that region, of various qualities and sizes."
Noront consolidated most of those discoveries during the last year, first buying out Cliffs Natural Resources after that company abandoned plans for chromite development in the Ring, then acquiring MacDonald Mines, the other large claim-holder in the region.
"We believe this is a mining camp," Coutts said. "We believe this will be, hopefully, the next Sudbury or the next Timmins or Red Lake, and we're trying to get a toe hold into this region and take advantage of these unique opportunities that presented themselves when the markets were down. We've all seen people pay too much for assets. We're hoping we paid not enough for these assets."
Noront is not a company that's in the business of flipping stock, he said.
"We have a pedigree - we've built and operated mines and smelters all over the world," Coutts said. "And if we have our way, that's what we're going to do here, as well. We're very excited about the ability to consolidate this. We see this as a company maker. We want to be that company that was, once upon a time, the Falconbridges and the Incos and the Norandas of Canada, and we see this as a great opportunity. All of those companies had a flagship operation that vaulted them on to greater things and we see this as having the same potential."
Rather than a chromite deposit, it's Eagle's Nest, a nickel-copper deposit expected to yield about one million tonnes per year, that could serve as Noront's starting point for development in the rest of the Ring.
The mine is not unique, except that Noront is planning no starter pit, because of water-treatment issues associated with the boggy, wet terrain, and in that the company has committed to returning all tailings back underground.
"People in this room who have operated or know anything about paste backfill plants would say well, that's kind of hard, to get all of those tailings back underground, after you've swollen them up from grounding," Coutts said. "You can usually put about two-thirds of you tailings back underground if you're doing it well, but what we didn't want to do in this boggy terrain and again, very sensitive environmental terrain, with our First Nations partners, was have a very big tailings dam that was built on boggy material."
When Noront talked with local First Nations about their concerns with the project, Coutts said, tailings and legacy issues associated with tailings dams were near the top of the list.
"A lot of people know what a tailings dam breach is and some of the devastation that can be caused by those, so that was a very sensitive part. The other thing they were very concerned about was water and water treatment."
Noront plans to create an underground quarry to provide room for extra tailings, as well as rock for roads and airstrips.
"In Year 3, when we don't need any more rock, we're going to turn our attention to the first chromite deposit," Coutts said. "We need to have addition void every year to live up to that commitment to put the tailings back underground, so the way we're going to do this is to mine about 500,000 tonnes per annum from the Blackbird deposit, a very massive chromite deposit up to 30 metres thick in various places. As a lot of mining people here will understand, a 500,000-tonne-per-annum mine is small, but we can mine a very high grade of chrome out of this mine, verging on 40 per cent Cr2O3, to provide that extra void, but importantly, we can also ship that volume out on a road to a ferrochrome processing facility and produce ferrochrome."
An alloy of chromium and iron, ferrochrome is chiefly used in the production of stainless steel.
"This is the modest start to the chromite world," Coutts said. "It is not a Cliffs-scale project by any means. It's a fraction of the size, but we think it's a very elegant way to get into that business, to learn it, to basically subsidize the mining process on the back of the infrastructure you build for the nickel mine, and also serve a purpose that we have from a permanent point of view."
They plan to build the processing plant, to be built somewhere in Northern Ontario, and produce ferrochrome for sale to the industrial northeastern United States. Even the modest 500,000 tonnes of ore produced by the mine will produce about 200,000 tonnes of ferrochrome, which Coutts said is equal to half of the American market.
"From there, let's see how that market goes," Coutts said. "Let's see if we can be a good supplier and live up to all of our obligations with our partners, whether they're industrial partners or First Nations partners."
The company has already begun talks with several communities interested in hosting the processing plant, including Sudbury, Timmins, Thunder Bay (through Fort William First Nation) and Sault Ste Marie. There is interest in Hamilton, Coutts said, but the company prefers a "made-in-the-North solution."
None of it will get started, however, without a road. Noront prefers a gravel road to a railway, at least initially, because the former option costs much less and can be shared with local First Nations, currently serviced only by air and winter roads.
"It kind of sounds easy, doesn't it?" Coutts said. "Our provincial government has allocated monies towards it, everybody up there wants the road network in there, yet we're struggling to get that final alignment on that gravel road that will enable those two mines."
Talks are ongoing through the Ring of Fire Regional Framework, which includes First Nations and representatives, including former premier Bob Rae, and the province, represented by former Supreme Court Justice Frank Iacobucci.
"The idea was get the First Nation players together, get government together, get to a table and try to regulate some of these issues so the playing field is established - how will the communities participate, what will their ownership be, how will they be involved in the environmental permitting?" Coutts said. "All of those are really good outcomes. However, in the last three years, a lot of the conversations with Canadians and First Nations have been taking on a vastly different aspect. It's not just about simple resource-development opportunities. The conversation that's going on is about reconciliation, about treaties, about jurisdiction.
"The conversation has to happen. Those conversations about consult and consent have to happen and Canadians need to address that, but the issue we have is we're not really part of that larger, Canada-wide issue. I question whether that discussion should be going on at this particular table, with a very remote, isolated group of First Nations.
"As a resource developer, I'm constantly trying to bring the dialogue back to, 'Lets get a road going, let's get some jobs created, let's get some training happening and let's try to make some of those communities sustainable and let's get some infrastructure built,' but it's a tough slog."
Many of the First Nations signed their last business agreement with the signing of Treaty 9, Coutts said, and understandably want a better deal for their communities.
"What our job as a resource developer is to do the right thing, show the right volente, get people saying, 'I know these people, these are good people and they do what they say they're doing and they're responsible,' to build that trust, because ultimately, I think the way to address this whole issue is for Noront, as an industrial proponent, and the few communities that are directly in the area and have the traditional land use to have a joint view of resource development and go marching over to the provincial government and say, 'Right, all of us want to do it this way. How does that sound?' I think that's the way to do it."
bleeson@postmedia.com
Twitter: @ben_leeson
Gino Donato/The Sudbury Star When it comes to the Ring of Fire, Noront Resources Ltd. is in it for the long haul, president and CEO Alan Coutts said Thursday.
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Company sees modest start, big potential in mining area
When it comes to the Ring of Fire, Noront Resources Ltd. is in it for the long haul, president and CEO Alan Coutts said Thursday.
Speaking at Bryston's on the Park in Copper Cliff as part of the Greater Sudbury Chamber of Commerce President's Luncheon Series, Coutts talked about the wealth pulled from the ground in the Sudbury area and how he screscent rich in chromite and other minerals such as nickel and copper, located in the James Bay Lowlands, about 500 kilometres north of Thunder Bay, and dotted with five small Oji-Cree First Nations communities.
"We all know in this room the last 150 years has generated an incredible amount of wealth and prosperity from the Sudbury Basin," Coutts said. "The Ring of Fire is almost identical in size, about 100 kilometres from tip to tail, and you can see there are already more than 20 deposits that have been discovered in that region, of various qualities and sizes."
Noront consolidated most of those discoveries during the last year, first buying out Cliffs Natural Resources after that company abandoned plans for chromite development in the Ring, then acquiring MacDonald Mines, the other large claim-holder in the region.
"We believe this is a mining camp," Coutts said. "We believe this will be, hopefully, the next Sudbury or the next Timmins or Red Lake, and we're trying to get a toe hold into this region and take advantage of these unique opportunities that presented themselves when the markets were down. We've all seen people pay too much for assets. We're hoping we paid not enough for these assets."
Noront is not a company that's in the business of flipping stock, he said.
"We have a pedigree - we've built and operated mines and smelters all over the world," Coutts said. "And if we have our way, that's what we're going to do here, as well. We're very excited about the ability to consolidate this. We see this as a company maker. We want to be that company that was, once upon a time, the Falconbridges and the Incos and the Norandas of Canada, and we see this as a great opportunity. All of those companies had a flagship operation that vaulted them on to greater things and we see this as having the same potential."
Rather than a chromite deposit, it's Eagle's Nest, a nickel-copper deposit expected to yield about one million tonnes per year, that could serve as Noront's starting point for development in the rest of the Ring.
The mine is not unique, except that Noront is planning no starter pit, because of water-treatment issues associated with the boggy, wet terrain, and in that the company has committed to returning all tailings back underground.
"People in this room who have operated or know anything about paste backfill plants would say well, that's kind of hard, to get all of those tailings back underground, after you've swollen them up from grounding," Coutts said. "You can usually put about two-thirds of you tailings back underground if you're doing it well, but what we didn't want to do in this boggy terrain and again, very sensitive environmental terrain, with our First Nations partners, was have a very big tailings dam that was built on boggy material."
When Noront talked with local First Nations about their concerns with the project, Coutts said, tailings and legacy issues associated with tailings dams were near the top of the list.
"A lot of people know what a tailings dam breach is and some of the devastation that can be caused by those, so that was a very sensitive part. The other thing they were very concerned about was water and water treatment."
Noront plans to create an underground quarry to provide room for extra tailings, as well as rock for roads and airstrips.
"In Year 3, when we don't need any more rock, we're going to turn our attention to the first chromite deposit," Coutts said. "We need to have addition void every year to live up to that commitment to put the tailings back underground, so the way we're going to do this is to mine about 500,000 tonnes per annum from the Blackbird deposit, a very massive chromite deposit up to 30 metres thick in various places. As a lot of mining people here will understand, a 500,000-tonne-per-annum mine is small, but we can mine a very high grade of chrome out of this mine, verging on 40 per cent Cr2O3, to provide that extra void, but importantly, we can also ship that volume out on a road to a ferrochrome processing facility and produce ferrochrome."
An alloy of chromium and iron, ferrochrome is chiefly used in the production of stainless steel.
"This is the modest start to the chromite world," Coutts said. "It is not a Cliffs-scale project by any means. It's a fraction of the size, but we think it's a very elegant way to get into that business, to learn it, to basically subsidize the mining process on the back of the infrastructure you build for the nickel mine, and also serve a purpose that we have from a permanent point of view."
They plan to build the processing plant, to be built somewhere in Northern Ontario, and produce ferrochrome for sale to the industrial northeastern United States. Even the modest 500,000 tonnes of ore produced by the mine will produce about 200,000 tonnes of ferrochrome, which Coutts said is equal to half of the American market.
"From there, let's see how that market goes," Coutts said. "Let's see if we can be a good supplier and live up to all of our obligations with our partners, whether they're industrial partners or First Nations partners."
The company has already begun talks with several communities interested in hosting the processing plant, including Sudbury, Timmins, Thunder Bay (through Fort William First Nation) and Sault Ste Marie. There is interest in Hamilton, Coutts said, but the company prefers a "made-in-the-North solution."
None of it will get started, however, without a road. Noront prefers a gravel road to a railway, at least initially, because the former option costs much less and can be shared with local First Nations, currently serviced only by air and winter roads.
"It kind of sounds easy, doesn't it?" Coutts said. "Our provincial government has allocated monies towards it, everybody up there wants the road network in there, yet we're struggling to get that final alignment on that gravel road that will enable those two mines."
Talks are ongoing through the Ring of Fire Regional Framework, which includes First Nations and representatives, including former premier Bob Rae, and the province, represented by former Supreme Court Justice Frank Iacobucci.
"The idea was get the First Nation players together, get government together, get to a table and try to regulate some of these issues so the playing field is established - how will the communities participate, what will their ownership be, how will they be involved in the environmental permitting?" Coutts said. "All of those are really good outcomes. However, in the last three years, a lot of the conversations with Canadians and First Nations have been taking on a vastly different aspect. It's not just about simple resource-development opportunities. The conversation that's going on is about reconciliation, about treaties, about jurisdiction.
"The conversation has to happen. Those conversations about consult and consent have to happen and Canadians need to address that, but the issue we have is we're not really part of that larger, Canada-wide issue. I question whether that discussion should be going on at this particular table, with a very remote, isolated group of First Nations.
"As a resource developer, I'm constantly trying to bring the dialogue back to, 'Lets get a road going, let's get some jobs created, let's get some training happening and let's try to make some of those communities sustainable and let's get some infrastructure built,' but it's a tough slog."
Many of the First Nations signed their last business agreement with the signing of Treaty 9, Coutts said, and understandably want a better deal for their communities.
"What our job as a resource developer is to do the right thing, show the right volente, get people saying, 'I know these people, these are good people and they do what they say they're doing and they're responsible,' to build that trust, because ultimately, I think the way to address this whole issue is for Noront, as an industrial proponent, and the few communities that are directly in the area and have the traditional land use to have a joint view of resource development and go marching over to the provincial government and say, 'Right, all of us want to do it this way. How does that sound?' I think that's the way to do it."
bleeson@postmedia.com
Twitter: @ben_leeson
ROAD TO NIOBIUM, FEB 2017
It is one of the most remote mining camps in Ontario, and it was heralded as the next economic engine for the province, and possibly Canada.
The Ring of Fire, about 575 kilometres north of Thunder Bay, holds massive amounts of chromite, nickle and copper, among other metals.
The area at one point had 35 exploration companies searching for minerals and a dozen mining camps housing workers. Now, just the Noront Resources Esker camp remains. A skeleton crew keeps the camp running, as well as doing geophysical work, looking for more mineral deposits.
"We're committed to it. We're continuing to consolidate in the Ring of Fire, where as other companies haven't had the ability to stick around," said Ryan Weston, Noront's Vice-President of Exploration.
Ryan Weston
Ryan Weston is the VP of Exploration for Noront Resources. (Jeff Walters/CBC)
Noront is the largest company that remains in the Ring of Fire. It holds the most mining claims, and still has workers in the area year-round.
The Esker camp is next door to the now-empty camp that was used by mining giant Cliffs Natural Resources. The buildings at the Cliffs camp are made of plywood — expensive, when a sheet of that material costs $20.
A large Quonset hut-style bunkhouse at the site cost half a million dollars to ship and install. It now sits empty. Noront's Esker camp is a little smaller, with the Quonset-style tent. They each sleep four people, and are very warm.
What holds this development from booming is the absence of a road to the site. The provincial and federal governments say the road is a priority, but so far, no shovels have started to create the long road to the mine site.
"It can be done. The beautiful thing about infrastructure development in the Ring of Fire is that is has many many positive spinoffs for a lot of these remote First Nation communities," said Weston.
Permanent jobs
Camp workers, like cook and medic Barb Wilson, hope the mining camp will one day return to what it was a couple of years ago, when helicopters were constantly flying in, setting up drilling rigs, bringing in supplies, and doing geophysical work.
"I hope people out there realize that we do need this," she said. "Hopefully, I hope to stay here until I'm at least 70. If I can swing it, I'll be here."
Logistics are the major challenge at the site. The camp is situated on an esker, but it is still within the James Bay lowlands. The trees are quite small, and water is everywhere.
"Mostly the terrain is the only hardship here," said Veikko Wennstom, the camp foreman. "The mud in the summertime. Every time you take a step you get an inch taller."
Veikko Wennstrom
Veikko Wennstrom is the camp foreman at Noront's Esker camp. (Jeff Walters/CBC)
Wennstrom has worked in mining for many years, and has called the Ring of Fire home for a handful of those. He likes the ability to work relatively close to his family in Thunder Bay, and also likes the importance the company places on safety and the environment.
Wennstrom said he hopes the development takes off soon. After all, he wants to see his hard work of maintaining and operating the camp develop into an area where those who would work in the mine would live.
He said he would like to see hundreds of people work in the area, and provide the economic opportunity to northern Ontario that was promised just a few years ago.
RING OF FIRE, FEB 2017
The Ring of Fire is the name given to a massive planned chromite mining and smelting development project in the mineral-rich James Bay Lowlands of Northern Ontario.[notes 1] The Ring of Fire development would impact nine First Nations, and potential developers are required to negotiate an Impact Benefit Agreement with these communities prior to development.[1] The region is centred on McFaulds Lake, near the Attawapiskat River in Kenora District, approximately 400 kilometres (250 mi) northeast of Thunder Bay, about 70 kilometres (43 mi) east of Webequie, and due north of Marten Falls and Ogoki Post, which is near/on the (Albany River) west of James Bay.
The Ring of Fire was named when the first significant mineral finds were made in the region, by Richard Nemis,[notes 2] after Johnny Cash's famous country and western ballad. Nemis, the founder and president of Noront Resources, was a lifelong fan of the singer.[2] By the fall of 2011, the Ring of Fire was considered "one of the largest potential mineral reserves in Ontario" with "more than 35 junior and intermediate mining and exploration companies covering an area of approximately "1.5 million hectares."[3] Although the Ring of Fire crescent covers 5,000 square kilometres (approximately 1,930 square miles), most discoveries made by 2012 were within a small, 20 kilometres (12 mi) long strip.[2] Ontario's Minister of Northern Development, Mines and Forestry Michael Gravelle called the region "home to one of the most promising mineral development opportunities in Ontario in more than a century."[1] Tony Clement, Canada's Treasury Board President and the FedNor minister responsible for the Ring of Fire, claimed it will be the economic equivalent of the Athabasca oil sands, with a potential of generating $120 billion.[4] Clement says the Ring of Fire represents a "once-in-a-life opportunity to create jobs and generate growth and long-term prosperity for northern Ontario and the nation."[1] Challenges facing the development of the Ring of Fire mineral include lack of access to the remote region, infrastructure deficits such as roads, railway, electricity and broadband, First Nations land rights, and environmental issues[5] in the James Bay Lowlands, the "third largest wetland in the world".[6]" Clement was looking to business, not the federal government, to invest "in power and transportation infrastructure to develop the deposit."[5]
Global Niobium Market Segmented by Application, Occurrence, End-User Industry and Geography Trends and Forecasts (2016-2021)
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The global niobium market was valued at 90,149.6 metric tons in 2015, and is likely to reach XX metric tons by 2021, at an estimated CAGR of 6.89%, during the forecast period 2016-2021. The forecast from IMF is that the growth rate of the global economy is going to be 3.8% for the year 2015. Although, the Chinese economy has shown signs of slowdown, the combined demand, along with that of Europe and US, is substantial for niobium. Moreover, further demand for niobium is expected to come from emerging countries.
Increasing demand for steel in emerging nations is expected to drive the niobium market. Niobium is primarily used in alloys, with special steel being the largest segment (used in large constructions and gas pipelines). Brazil produces most of the world’s total niobium (almost 90%), followed by Canada and Australia. CBMM, the biggest player in the market, increased the output capacity to150, 000 tons per annum (TPA) in 2015. The Anglo American group is another producer of this precious metal.
Niobium metal is found in volcanic rocks in multiple places around the world. It is obtained from pyrochlore and tantalite mineral ores, and sometimes as an associated metal from mining of other metals.
Worldwide, niobium is used in the form of ferroniobium, mostly as an alloying element in steels and in super alloys. Large amounts of niobium in the form of high-purity ferroniobium and nickel niobium are used in nickel-, cobalt-, and iron-base super alloys for applications such as rocket subassemblies, jet engine components, and heat-resistant and combustion equipment.
Currently, the niobium industry is consolidated both in terms of mineral source and the number of industry players. Almost all of the global niobium supply is derived from the mineral pyrochlore with the main producers being CBMM, Catalão (Anglo American) and others.
The non-pyrochlore producers are spread across different geographies and are fairly small in size; their operations are basic and uneven. The production of niobium from non-pyrochlore sources is mostly obtained as a byproduct of tantalum operations.
The biggest demand for niobium comes from China, North America and Europe. China is home to the world’s fastest-growing market for niobium, accounting for 25% of total consumption in 2010. This is reflected in the size of its steel industry and the rapid rate of expansion in output in the recent years.
FEB 2017...NEWS
www.engineeringnews.co.za/article/by-andrew-cheatle-executive-director-of-the-prospectors-developers-association-of-canada-2017-02-02
By Andrew Cheatle, Executive Director of the Prospectors & Developers Association of Canada
2nd February 2017
If you are in any way involved in exploration and mining, then chances are the acronym “PDAC” is one you have heard of before. It might even summon images of thousands of geologists, mining executives, government officials, students and financiers gathering in Toronto every year for the world’s largest annual industry event. But there is so much more to the letters P. D. A. and C. than you might realize.
The Prospectors & Developers Association of Canada (PDAC) is the leading voice of Canada’s mineral exploration and mining industry, working on behalf of more than 8,000 corporate and individual members, and effectively mining worldwide.
PDAC’s mission is to promote a globally responsible, vibrant and sustainable minerals industry. As the trusted representative of the sector, PDAC encourages best practices in technical, operational, environmental, safety and social performance. The work is carried out by a Board of Directors, 16 committees, and a team of permanent staff.
The association was formed by a group in 1932 to fight a Bill being proposed by the Government of Ontario that would have negatively impacted the industry. They won, and continued fighting for the betterment of their livelihoods through the new association, which grew in size and stature as the years progressed. These humble beginnings ultimately set the foundation for the PDAC as it’s known today.
The strength of Canada’s exploration and mining industry
The mineral exploration and mining industry makes modern life possible, while also contributing to the economic and social prosperity of communities across the country. More than 550,000 Canadians work in the industry, contributing an estimated $57 billion to Canada’s GDP annually. Operating in some of the most remote parts of the country, it is proudly the largest private sector employer of Aboriginal peoples.
Canada is recognized as being the global leader when it comes to mineral exploration. According to SNL Metals & Mining, 45% of the 1,800 companies with exploration budgets in 2015 were headquartered in Canada, accounting for 32% of global exploration spending in that year. Not surprisingly, Canada also leads the world in mine equity financing, accounting for more than 60%. Additionally, Canada is also home to hundreds of mine service and supply companies that operate around the world, and continues to attract the largest share of global non-ferrous mineral exploration budgets.
Canada’s globally recognized expertise has emerged over the course of more than a century. The root of success is its rich mineral endowment and natural capital. However, resource wealth alone is not enough. The transformation of natural capital into improved quality of life for Canadians has arisen through the application of intellectual capital and resourcefulness to all aspects and all stages of the industry. Geoscience investments, regulatory innovation, fiscal policy, infrastructure – in each of these areas, and more, Canadians have found ways to manage their mineral wealth responsibly. The combination of industry expertise, good governance and innovation has helped make Canada an exploration and mining superpower.
World-class discoveries continue to be made and turned into new mines in Canada. Proof of this is in the rankings. Canada ranks in the top five globally with respect to the production of 14 major minerals and metals (calculated by value of production).
Canada is:
• First in potash
• Second in uranium and niobium
• Third in cobalt, aluminum, tungsten and platinum group metals
• Fourth in nickel, salt, sulphur and titanium
• Fifth in diamonds, cadmium and gold
The production of these minerals and metals has generated significant economic benefits for Canadians, including over $10 billion paid to various levels of government in the form of taxes and royalties, and additional billions spent on local businesses during exploration, mine construction and mine operation. Many of these expenditures have involved training for, employment of, and procurement from, Aboriginal or northern people, businesses and communities.
working to bring known mineral deposits into production, many know The ability of the industry to sustain these economic benefits is not guaranteed however, as most mines eventually close. Additional mineral deposits must be brought into production to sustain the economic opportunities created by the industry. While there are a number of companies wn deposits are not economically viable to mine. New discoveries must constantly be made to replace the pipeline of projects moving into production. Sustaining mineral exploration in Canada must be a critical part of any strategy to sustain the economic benefits generated by the industry.
Challenges
The industry, which only recently has started to show signs of improvement, is still in the midst of a prolonged downturn in exploration financing that has had a significant impact on the junior exploration sector. Juniors have accounted for the vast majority of new discoveries in Canada over the last decade, so ensuring they have access to capital is crucial for sustaining exploration.
One of the fiscal policy innovations that have helped juniors raise money for high-risk exploration in Canada is the flow-through shares mechanism, which allows juniors to pass on certain exploration expenses to high net-worth individuals. These individuals help to finance exploration in exchange for a reduction of their personal income taxes. This system, which really took off in 1986, catalyzed an explosion in the number of juniors operating in Canada, and exploration expenditures in the country. In addition to helping make Canada a hub for mine equity financing, it also attracted the largest share of global non-ferrous exploration budgets, particularly after the introduction of the federal Mineral Exploration Tax Credit (METC) in 2000.
Canada has since lost its status as the top exploration destination, slipping behind Australia, which has adopted a financing scheme for juniors that is modeled on the flow-through shares system. While there are many factors affecting Canada’s attractiveness as an exploration destination some of the key ones include:
• The rising costs of making a discovery in Canada, as companies search for mineral deposits in more remote parts of the country and also at depth. Remote exploration project costs are up to 2.27 times more than non-remote projects, while very remote projects face costs up to six times more, hindering exploration and economic development in these regions. The average depth of discovery in Canada has also risen.
• Increasingly large tracts of prospective land are being withdrawn, reducing the ability of companies to access Canada’s vast resource endowment. In Ontario, for example, the provincial government committed to withdrawing 50% of northern Ontario from exploration activity.
• The regulatory system is characterized by increasing levels of uncertainty, including with respect to implementation of the Crown’s duty to consult and accommodate Aboriginal people, creating delays in project approvals and increased costs for companies and communities.
Overcoming obstacles
Sustaining exploration in Canada is critical to sustaining the economic benefits generated by the industry, as without exploration there can be no discoveries, and without discoveries there can be no producing mines.
To enhance the competitiveness and responsibility of Canada’s mineral exploration sector, PDAC has focused its attentions on two top priorities:
• Enhance Access to Capital: Renewing the federal Mineral Exploration Tax Credit (METC) and maintaining the flow-through share system.
• Facilitate Access to Land: Developing strategic investments in infrastructure to unlock the resource potential of remote and northern Canada.
These priorities were given to the Government of Canada in PDAC’s recommendations for Federal Budget 2017.
PDAC continues to advocate for improvements to Canadian capital markets that allow companies to cost-effectively raise money from a wider range of investors. This includes support for the range of new prospectus exemptions brought forth by various securities regulators over the last few years. These exemptions help to ‘democratize’ Canada’s capital markets by allowing a more diverse array of individuals to invest in grassroots exploration.
PDAC is also working in partnership with regional industry associations across Canada to ensure that mineral potential is factored into land withdrawal decisions, and to support effective implementation of the Crown’s duty to consult Aboriginal people.
PDAC Convention
The work of PDAC culminates at its annual convention in Toronto every March. It has brought the world's minerals industry together for more than 84 years. The International Convention, Trade Show & Investors Exchange draws thousands of investors, analysts, mining executives, geologists, prospectors, students and government officials from over 100 countries. In 2016, more than 22,000 professionals were in attendance, despite the economic challenges being faced by the industry across the world—a testament to the caliber of the event.
The cutting-edge learning and collaborative opportunities are unmatched by any other event. The Convention offers a Capital Markets Program, Aboriginal Program, a variety of Short Courses and Workshops, Mineral Outlook Luncheon, and Keynote Session.
PDAC also hosts the thought-leading Corporate Social Responsibility (CSR) Event Series, addressing issues such as diversity, gender, water, artisanal mining and climate change. Bringing government, key influencers and decision-makers together means that the latest trends, technologies and challenges affecting our sector are brought to light to ultimately help Canada remain a global leader.
PDAC and the World Economic Forum (WEF) co-hosted the inaugural International Mines Ministers Summit (IMMS) that brought together 16 Mines Ministers from around the world at the PDAC 2016 Convention. Led by Canada’s Minister of Natural Resources, the Honourable Jim Carr, the IMMS provided an important setting for the international mining community to discuss and work on resolving issues affecting the industry.
In addition, 25 Federal Parliamentarians, six Provincial and Territorial Ministers and two Premiers also attended.
The PDAC 2017 Convention will be held at the Metro Toronto Convention Centre (MTCC) from March 5 to 8. More information is available on the PDAC website: www.pdac.ca
1 CORPORATE PRESENTATION JANUARY 2017 Developing one of the most critical metal TSX-V: NBY 1
2 Forward Looking Statements This presentation contains certain forward-looking statements under the provisions of Canadian securities laws, as well as historical information. Forward-looking statements include, but is not limited to, statements relating to the Company's strategy, goals and objectives for its James Bay Project, targets and timetable for the exploration and development of the James Bay Niobium project, resource estimates, costs estimates, the potential demand and supply of niobium, and the price of niobium. Forward looking statements express, as of the date of this presentation, the Company s plans, estimates, forecasts, projections, expectations or beliefs as to future events and results. Forward-looking statements involve a number of risks, uncertainties and other factors beyond the Company s ability to control or predict, and there can be no assurance that such statements will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements. Risks, uncertainties and other factors that could cause results or future events to differ materially from current expectations expressed or implied by the forward-looking statements include, but are not limited to, factors associated with fluctuations in the market price of metals, changes or delays in mining development and exploration plans, the timing of receipt of necessary permits or regulatory approvals for the Company s exploration projects and other operations, uncertainty related to historical estimate of resources, uncertainty involved in interpreting geological data and future exploration results, environmental risks and hazards, uncertainty as to calculation of mineral resources, requirement of additional financing or additional permits, authorizations or licenses, risks of delays in construction and production and other risks referred to in the Company s Annual Information Form. The Company does not assume any obligation, to update these forward-looking statements and information, except as required by law. Claude Dufresne, P. Eng, acted as the qualified person as defined in National Instrument He reviewed and approved the technical and scientific content of this presentation. Mr. Dufresne is the President and CEO of the Company. 2
3 Company Profile Listed on the TSX-V: NBY Developing one of the most critical metal: Niobium Owns 100% of the James Bay Niobium Project located in Ontario STOCK INFORMATION DIRECTORS & MANAGEMENT Symbol NBY Serge Savard Chairman of the board Exchange TSX-V Claude Dufresne President & CEO Market Cap $29 M Alain Krushnisky CFO Shares outstanding 32.7 M Jean-Sébastien David Director 52-week high $ week low $0.05 Raymond Legault Jacques Bonneau Director Director Cash (Dec 31, 2016) $2.3 M Jean Rainville Director Carole Plante Corporate Secretary Updated January 25,
4 Billions of people Population is on the Rise For the first time in history, half of the world s population is living in cities Population to reach 9 billions by Urban Rural Source: UN World Urbanization Prospects 4
5 Urbanization is Changing the World By 2050, two-thirds of the global population will live in urban areas Source: UN World Urbanization Prospects 5
6 Steel is at the Core of Urbanization Steel is the material of choice for modern development Strong Ductile Durable 100% Recyclable Cost Effective Safe 6
7 Niobium an Undeniable Ally for Steel By adding it in steelmaking process Niobium improves steel properties Stronger Tougher Lighter More flexible Easier to weld Reduces GHG emissions 7
8 Niobium is Everywhere Automotive (structure, body) Bridges (beams, rods) High-rise buildings O&G Pipelines Aerospace (jet engine, rivets) Stainless steel (Exhaust) Tools Medical (MR, implants) Electronics (semiconductors) Jewelry 8
9 Niobium a green metal $10 of Niobium Mid-size vehicule 5% liters/km economy 0.02% of Niobium 15,000 tons $25M & 15,000 tons savings Øresun bridge 9
10 Niobium Demand by Region North America Europe & CIS India China South Korea Japan Africa & Middle East South America 2021 projected world consumtion t FeNb Note: About 3,000 t are not included in the picture (other Asia & Australia) Source: Camet Metallurgy Inc 10
11 g FeNb / t Steel Demand is Growing The amount of Niobium used per ton of steel is rising Niobium demand could double if China catches-up Crude Steel Production vs Niobium Intensity of Use, 2016 Americas South Korea Japan Europe & CIS India China Crude Steel Output (Mt) Note: Size is relative to total Niobium consumption Source: Camet Metallurgy Inc 11
12 Global Supply Only 3 producers sharing global demand for over 40 years Key end-users rely 100% on imports Niobec 8% Resources (M tonnes) Grade (%Nb 2 O 5 ) Recoverable Unit (kg Nb 2 O 5 /t milled) Araxa 80% Catalao 11% Source: Camet Metallurgy Inc 12
13 High Value Niobium Assets Recent M&A transactions reflect the appetite from Asian entities : $US 3.9B 30% Araxa mine 2014 : $US 500M 100% Niobec mine (5.6 x EBITDA) 2016 : $US 1.7B 100% Catalao + Phosphate mine (10.3 x EBITDA) Source: Bloomberg 13
14 USD/kg Nb Niobium Prices are Stable Niobium is one of the only commodity which price remained fairly stable in recent years $50 $45 World average FeNb price (converted in USD) $40 $35 $30 $25 $20 Between 2006 and 2008, the price of ferroniobium increased to address what appeared to be a structural under-valuing of niobium. Up to that point, the strong growth in demand for ferroniobium had not been reflected in its price. US dollar strength towards the Yen, Euro and Renminbi caused the reported price in USD to decline. Real prices in local currencies remained stable. $15 $10 Source: Camet Metallurgy Inc 14
15 Niobium Prices are Stable FeNb prices remained stable in local currencies EU/CIS Japan 15
16 James Bay Niobium Project Moose River, Moose Factory
17 Project Location James Bay Lowlands, Northeast Ontario, Canada Moosonee James Bay Niobium Detour Gold 40 km southeast of the town of Moosonee 110 km northwest of the Detour Gold mine 17
18 Infrastructures Moosonee James Bay Rail (ONR) Renison station < 40 km James Bay Niobium Crown Mining Lease Wetum road 18
19 James Bay Niobium History Discovered in 1966 Historical estimate of 0.52% Nb 2 O 5 established by Bechtel Canada Ltd. in Open at depth Major exploration work carried from 1967 to ,000 meters of drilling at an average depth of 170 meters in 85 holes, in sections of 61 meters intervals along a strike of 730 meters 1 Exploration shaft (~130' ) & a 250' cross-cut 225Mt extracted for metallurgical testing (pilot plant) Lakefield Research carried out metallurgical tests Overall recovery of 78%, very low impurities, and high grade concentrate 1 Feasibility study completed by Bechtel Canada Ltd. in : NioBay Metals has not yet undertaken the work necessary to verify or classify the historical estimates, the historical drilling and the metallurgical tests. Economic studies completed in the 1960s does not mean the James Bay Niobium deposit would be found to be economic today. NioBay Metals is not treating the historical results as a current mineral resource nor as having been verified by a qualified person. 19
20 SECTION 00 SECTION 8N Surface Plan % Nb 2 O % Nb 2 O 5 Inside red dash line: 62 M 0.52% Nb 2 O 1 5 Unit 6 (red): High-grade zone % Nb 2 O 1 5 Unit 5 (orange): Medium-grade zone % Nb 2 O 1 5 1: NioBay Metals has not yet undertaken the work necessary to verify or classify the historical estimates, the historical drilling and the metallurgical tests. Economic studies completed *Historical resources estimate are not compliant and are based on data obtained by previous operators in the 60's. MDN is not treating the historical in the 1960s does not mean the James Bay Niobium deposit would be found to be economic today. NioBay Metals is not treating the historical results as a current mineral resource nor resources as having as been NI verified compliant by a qualified nor as having person. been verified by a qualified person, and they should not be relied upon. 20
21 Section % Nb 2 O % Nb 2 O 5 1: NioBay Metals has not yet undertaken the work necessary to verify or classify the historical estimates, the historical drilling and the metallurgical tests. Economic studies completed in the 1960s does not mean the James Bay Niobium deposit would be found to be economic today. NioBay Metals is not treating the historical results as a current mineral resource nor as having been verified by a qualified person. 21
22 Strategy and Timeline NioBay s objective is to penetrate the market with around 5% of the market share Acquisition Resource Re-log and analyse Drilling PEA release PFS release DFS release Start construction 2016 Acquisition Production $8 million ~C$20 million 22
23 Summary Niobium is an essential strategic and critical metal in modern urbanisation Reduce emissions of greenhouse gases Highly sought after assets Growing demand and stable prices Well located project near key infrastructures Aims to become the second producer in North America and the fourth in the world 23
24 Developing one of the most critical metal Claude Dufresne President & CEO 1693 St-Patrick Street, Suite 106, Montreal (Quebec), Canada, H3K 3G9 Tel: (514
PROJECTS: 2017
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The Panda Hill Niobium Project is located approximately 26km from the city of Mbeya, covering an area of approximately 22.1km². Image courtesy of Cradle Resources.
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1
2
YEAR END HAPPENINGS 2016
tem 1 – Name and Address of Company
Niobay Metals Inc. (the “Company” or “Niobay”) 1693, Saint-Patrick Street Suite 106 Montréal, Québec H3K 3G9
Item 2 - Date of Material Change
December 19, 2016.
Item 3 - News Release
A news release pertaining to the material change being the subject of the present report was issued through Marketwired on December 20, 2016. A copy of the news release is attached hereto as Schedule “A”.
Item 4 – Summary of Material Change
On December 20, 2016, Niobay announced that it has closed a non-brokered private placement of flow-through shares raising $1,170,982.
Item 5 - Full Description of Material Change
5.1 Full Description of Material Change
The Company has completed a non-brokered private placement of flow-through shares (the “Private Placement”) by issuing an aggregate of 1,377,626 flow-through common shares (“FT Shares”) at a price of $0.85 per FT Share for gross proceeds of $1,170,982.
The proceeds of the Private Placement will be used to incur Canadian exploration expenses and flow-through mining expenditures, as defined under the Income Tax Act (Canada), that will be renounced in favour of the subscribers with an effective date of no later than December 31, 2016.
The Company paid $38,500 in cash and issued 45,294 warrants to a finder in connection with the closing of the Private Placement.
The FT Shares and finder’s warrants will be subject to resale restrictions for a period of four months and one day from the closing date of the Private Placement under applicable securities legislation.
Four related parties of the Company participated in the Private Placement, purchasing a total of 144,474 FT Shares. Under Multilateral Instrument 61-101 - Protection of Minority
Security Holders in Special Transactions (“MI 61-101”), the issuance of shares to these related parties qualifies as a "related party transaction". Accordingly, this material change report addresses the disclosure items contemplated by Part 5 of MI 61-101.
Description of the Transaction and its Material Terms
The material terms of the Private Placement are summarized above.
Purpose and Business Reasons for the Transaction and Anticipated Effect on the Company’s Business and Affairs
The purpose and business reason for the Private Placement is to provide funding for exploration of the Company's mineral projects in Canada. Following completion of the Private Placement, the Company has 32,535,127 common shares issued and outstanding.
Interest in the Transaction of Related Parties and Anticipated Effect on the Percentage of Securities Held
Of the 1,377,626 FT Shares issued under the Private Placement, the following related parties (the “Related Parties”) subscribed for an aggregate of 144,474 FT Shares, or 10.5%, as set out below:
Name Relationship to Company
# and % of FT Shares purchased in Private Placement
Total Shares held * / % of Issued and Outstanding after Private Placement (undiluted) Serge Savard Director 58,824 / 4.3% 717,005 / 2.2% Claude Dufresne Officer and Director 58,000 / 4.2% 511,730 / 1.6% Alain Krushnisky Officer 17,650 / 1.3% 65,650 / 0.2% Jean Rainville Director 10,000 / 0.7% 20,000 / 0.06% * directly and indirectly
Approval Procedures
The Private Placement was approved by all directors of the Company including all independent directors. The Private Placement was priced in accordance with the policies of the TSX Venture Exchange and the Related Parties subscribed along and on identical terms with arm’s length investors, who purchased the majority of the FT shares issued under the Private Placement.
Formal Valuation and Prior Valuations
Not applicable.
General Nature and Material Terms of Agreements with Interested Parties.
Not applicable.
Exemptions from Formal Valuation and Minority Approval Relied Upon.
The fair market value of the consideration paid by the Related Parties for the FT Shares being less than 25% of the Company's market capitalization, the Company is relying on the exemption from the formal valuation requirement set out in 5.5(a) of MI 61-101 and the exemption from the minority shareholder approval requirement set out in 5.7(1)(a). The filing of a material change report less than 21 days before the closing date of the first tranche of the Offering is reasonable in the circumstances, as the overall participants in the Private Placement, including the participation of Related Parties, could not be known until closing.
5.2 Disclosure for Restructuring Transactions
Not applicable.
Item 6 – Reliance on Section 7.1(2) of Regulation 51-102
Not applicable.
Item 7 - Omitted Information
Not applicable.
Item 8 - Executive Officer
For further information, please contact Claude Dufresne, President and Chief Executive Officer, at 514-866-6500, ext. 221.
Item 9 - Date of Report
December 29, 2016.
SCHEDULE “A”
Press release TSX-V: NBY
Niobay Metals announces Closing of Flow Through Financing
Montreal, December 20, 2016 – Niobay Metals Inc. (the “Company”) (TSX-V: NBY) is pleased to announce that it has closed the previously announced non-brokered private placement of flow-through shares. The Company issued 1,377,626 flow-through common shares (the “FT Shares”) at a price of $0.85 per FT Share, raising aggregate gross proceeds of $1,170,982 (the "Offering").
The proceeds of the Offering will be used to incur Canadian exploration expenses and flowthrough mining expenditures, as defined under the Income Tax Act (Canada), that will be renounced in favour of the purchasers with an effective date of no later than December 31, 2016. The funds are intended to be used to explore the Company's Canadian properties.
The Company paid $38,500 in cash and issued 45,294 warrants to a qualified finder in connection with the closing of the Offering. Each warrant will entitle the holder to purchase one common share at a price of $1.25 for a period of 24 months following closing date.
The FT Shares and finder’s warrants will be subject to resale restrictions for a period of four months and one day from the closing date of the Offering under applicable securities legislation. Following completion of the Offering, the Company has 32,535,127 common shares issued and outstanding.
Insiders of the Company subscribed for a total of 144,474 FT Shares and their participation in the Private Placement constitutes a "related party transaction" within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The fair market value of the consideration paid by insiders for the FT Shares being less than 25% of the Company's market capitalization, the Company intends to avail itself of the exemption from the formal valuation and the exemption from minority shareholder approval under sections 5.5 (a) and 5.7 (1) (a) of MI 61-101.
The Private Placement was made under the prospectus exemptions of applicable securities legislation and is subject to the final consent of the TSX Venture Exchange.
5
Exemptions from Formal Valuation and Minority Approval Relied Upon.
The fair market value of the consideration paid by the Related Parties for the FT Shares being less than 25% of the Company's market capitalization, the Company is relying on the exemption from the formal valuation requirement set out in 5.5(a) of MI 61-101 and the exemption from the minority shareholder approval requirement set out in 5.7(1)(a). The filing of a material change report less than 21 days before the closing date of the first tranche of the Offering is reasonable in the circumstances, as the overall participants in the Private Placement, including the participation of Related Parties, could not be known until closing.
5.2 Disclosure for Restructuring Transactions
Not applicable.
Item 6 – Reliance on Section 7.1(2) of Regulation 51-102
Not applicable.
Item 7 - Omitted Information
Not applicable.
Item 8 - Executive Officer
For further information, please contact Claude Dufresne, President and Chief Executive Officer, at 514-866-6500, ext. 221.
Item 9 - Date of Report
December 29, 2016.
SCHEDULE “A”
Press release TSX-V: NBY
Niobay Metals announces Closing of Flow Through Financing
Montreal, December 20, 2016 – Niobay Metals Inc. (the “Company”) (TSX-V: NBY) is pleased to announce that it has closed the previously announced non-brokered private placement of flow-through shares. The Company issued 1,377,626 flow-through common shares (the “FT Shares”) at a price of $0.85 per FT Share, raising aggregate gross proceeds of $1,170,982 (the "Offering").
The proceeds of the Offering will be used to incur Canadian exploration expenses and flowthrough mining expenditures, as defined under the Income Tax Act (Canada), that will be renounced in favour of the purchasers with an effective date of no later than December 31, 2016. The funds are intended to be used to explore the Company's Canadian properties.
The Company paid $38,500 in cash and issued 45,294 warrants to a qualified finder in connection with the closing of the Offering. Each warrant will entitle the holder to purchase one common share at a price of $1.25 for a period of 24 months following closing date.
The FT Shares and finder’s warrants will be subject to resale restrictions for a period of four months and one day from the closing date of the Offering under applicable securities legislation. Following completion of the Offering, the Company has 32,535,127 common shares issued and outstanding.
Insiders of the Company subscribed for a total of 144,474 FT Shares and their participation in the Private Placement constitutes a "related party transaction" within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The fair market value of the consideration paid by insiders for the FT Shares being less than 25% of the Company's market capitalization, the Company intends to avail itself of the exemption from the formal valuation and the exemption from minority shareholder approval under sections 5.5 (a) and 5.7 (1) (a) of MI 61-101.
The Private Placement was made under the prospectus exemptions of applicable securities legislation and is subject to the final consent of the TSX Venture Exchange.
5
About Niobay Metals Inc. Niobay Metals Inc. is a mineral exploration company holding a 100% interest in the James Bay Niobium property in Ontario, Canada and a 72.5% interest in the Crevier niobium / tantalum project in Quebec, Canada. Niobay also holds interest in the Ikungu and Ikungu East gold properties in Tanzania.
Cautionary Statement Certain statements contained in this news release constitute forward looking information under the provisions of Canadian securities laws. All statements that address future plans, activities or events that the Company believes, expects or anticipates will or may occur are forward-looking information. Specifically, this news release contains forward looking information about the Company’s plans and intended use of proceeds. Forward looking information is based upon assumptions by management that are subject to known and unknown risks and uncertainties beyond the Company’s control, including risks related to obtaining all necessary permits to carry out exploration work. There can be no assurance that outcomes anticipated in the forward looking information will occur, and actual results may differ materially for a variety of reasons. Accordingly, readers should not place undue reliance on forward looking information. The Company undertakes no obligation to update publicly or otherwise revise any forward looking information, except as may be required by law. The FT Shares have not been, and will not be, registered under the U.S. Securities Act or any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For more information, contact: Claude Dufresne, P.Eng. President & CEO Niobay Metals Inc. Tel.: 514 866-6500, Ext. 221
Email: cdufresne@niobaymetals.com Website: www.niobaymetals.com
file:///C:/Users/robert%20tatge/Downloads/CheckCode%2[color=red][/color]0(13).pdf
WINTER ROAD OPEN TO LIGHT TRAFFIC AS OF JAN 31 2017
Effective January 31, 2017 at 6:00 pm, the James Bay Winter Road was opened to light vehicle traffic to a maximum gross vehicle weight of 7500 kilograms from Moosonee to Attawapiskat.
Due to ongoing flooding at the Albany River North crossing, vehicles will have to use the bypass road at the crossing until the main crossing is open. We estimate that this will take place in a few days.
Please drive with caution, as there is still heavy equipment working on the road, including water trucks and graders. There are also flooding activities ongoing at the various water crossings. Please be aware and use caution when approaching heavy equipment and flooding crews.
For additional information please call 705 336 6971 or 877 336 6960
ABOUT US
The western James Bay Winter Road connects the communities of Attawapiskat, Fort Albany, and Kashechewan to Moosonee through the annual construction and maintenance of an ice road. From Moosonee there is a rail link to the main Ontario provincial highway system at Cochrane.
The 312 km. long James Bay Winter Road is operated and managed by First Logistics, a division of Kimesskanemenow LP, a limited partnership between the four communities it connects, Attawapiskat, Fort Albany, Kashechewan and Moose Cree First Nations. The word kimesskanemenow is a Cree word which means 'our road'.
This website provides road users with up to date road status and conditions, and provides access to the past newsletters, employment opportunities with Kimesskanemenow, and contact information.
Board of Directors
President: Nancy Wood
Vice President: Guy Ginter
Secretary/Treasurer: Randy Chase
Directors from Attawapiskat: Richard Iahtail and Mike Okimaw
Directors from Fort Albany: Alex Solomon and Agatha Nakogee
Director from Kashechewan: Willie Friday Jr.
Directors from Moose Cree: Guy Ginter and Chief Patricia Faries
View our Photo Gallery
Three big 'whoppers' told about the Ring of Fire
'Ridiculous' to compare northern Ontario mineral find to the Alberta oil sands, expert says
By Jody Porter, CBC News Posted: Oct 15, 2014 7:00 AM ET| Last Updated: Oct 15, 2014 7:00 AM ET
A mining expert says the promise of the Ring of Fire mineral development area has been overstated.
A mining expert says the promise of the Ring of Fire mineral development area has been overstated. (The Canadian Press)
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Once called Canada's 'next oil sands', the Ring of Fire mining development area in northern Ontario has yet to live up to its promise.
hi-tony-clement-852
Treasury Board Chair Tony Clement said the Ring of Fire has a potential similar to the oil sands.
Federal Treasury Board Chair Tony Clement called the Ring of Fire "a game-changer for Canada" with "potential impact...akin to what the oil sands did for Alberta and Canada" just last year.
But that was before Cliffs Natural Resources halted its plans for a chromite mine in November 2013. Now the future of the Ring of Fire is far less certain, and even less likely to live up to what some say were always overinflated claims of its potential.
Here are three big 'whoppers' told about the Ring of Fire.
¦1. Chromium is a rare and valuable mineral.
From the Ontario Chamber of Commerce 2014 report 'Uncovering the economic potenital of Ontario's Ring of Fire : "The most promising discovery [in the Ring of Fire] is the first commercial quantities of chromite in North America. Based on current projections, the deposit is significant enough to sustain activity for a century."
This statement may be true if, and when, the price for chromite (or chromium) is high. Right now it is not.
"There's really an oversupply of chromium," Northern Miner newspaper editor John Cumming told CBC. "You can mine chromium by going to a waste dump in South Africa, so there's not a great need for a new source."
Cumming said dropping chromium prices have far more to do with stalling the project than the oft-cited relations with First Nations.
¦2. An agreement between Ontario and First Nations would smooth the path to development.
Ring of Fire Framework Agreement signing
A photo from the signing of a framework agreement for negotiations in the Ring of Fire between Ontario and Matawa First Nations' chiefs, last spring. (Government of Ontario)
?
Ontario called the March 2014 Regional Framework Agreement "an historic agreement to move [the] Ring of Fire development forward."
But since then, First Nations and Ontario haven't agreed on much, including the process for permits required for companies to continue working in the area.
"Once again it appears that we will be forced into another agenda that is not First Nations-centred," Long Lake 58 Chief Allen Towegishig wrote to Mines Minister Michael Gravelle in September. His was one of several letters critical of the province's actions since the agreement was signed.
Despite the presence of two high-profile negotiators, Bob Rae for Matawa First Nations and former Supreme Court Justice Frank Iacobucci for the province, the parties are a long way from seeing eye-to-eye.
¦3. Noront Resources and KWG Resources could fill the void left by Cliffs' departure.
Dalton McGuinty
Former Ontario premier Dalton McGuinty was among the first to call the Ring of Fire "the most promising mineral development opportunity in a century." THE CANADIAN PRESS (Canadian Press)
?
When Cliffs was interested in the project it was a healthy, multinational corporation with a lot of financial fire power. Its stocks have dropped, but still trade at more than $7 US on the Toronto Stock Exchange.
By comparison, Noront and KWG are smaller mining companies. In the last year, Noront's stocks peaked at 70 cents (CDN) and KWG's hasn't broken the 10 cent mark (CDN) in the past year.
Noront's plan for a nickel mine north of Pickle Lake may be the most viable project currently in the Ring of Fire, but it still has to get over some regulatory hurdles.
Cumming said he never bought the province's claim that the area is the "most promising mineral development opportunity in a century."
"It was never true and it was very irresponsible of [former] Premier Dalton McGuinty to say that. Likening it to the oil sands is just ridiculous," Cumming said. "It could never be that big. It's as big as any other mine in the north, which people never talk about."
By Jody Porter, CBC News Posted: Jan 30, 2017 7:00 AM ET| Last Updated: Jan 30, 2017 8:48 AM ET
Ring of Fire mining development still years away from delivering on a decade of hype
Noront Resources, Neskantaga First Nation disagree even on whether they're talking to each other
By Jody Porter, CBC News Posted: Jan 30, 2017 7:00 AM ET| Last Updated: Jan 30, 2017 8:48 AM ET
Neskantaga is one of three First Nations closest to the Noront Resources claims as shown on this map from the company's website.
Neskantaga is one of three First Nations closest to the Noront Resources claims as shown on this map from the company's website. (norontresources.com)
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¦ 'Cease and desist': First Nation tells mining company in Ontario's Ring of Fire
¦ Should there be a road to remote Ontario First Nations? Maybe, $785,000 government study concludes
¦ Ring of Fire could still provide jobs, but road needed, says Noront Resources
¦ Mining company to hire half of its workforce from Indigenous population
Ten years after a large chromite deposit in Ontario's James Bay lowlands was first discovered and declared a "game-changer" for the Canadian economy, the Ring of Fire mining development is flaming out in a dispute over who is talking to whom.
Noront Resources is now the main proponent in the project after Cliffs Natural Resources pulled out of the development in 2013, but its relationship with one of the First Nations in the area continues to deteriorate.
"Beginning this month Noront will enter into a series of meetings with Neskantaga First Nation," the company said in a news release dated January 17, 2017. "These meetings will be facilitated by an experienced and respected mediator with the goal of identifying a mutually agreeable path forward for the company's current and proposed exploration and development activities."
¦'Cease and desist,' Neskantaga First Nation tells Ring of Fire mining company
¦
Cliffs suspends Ring of Fire project in northern Ontario
But that's not true, according to the First Nation, which is seeking a retraction, an apology and an explanation for how the mistake was made before it will even consider talks with the company.
Esker Camp prospector tents
Noront Resources Esker Camp in Ontario's James Bay lowlands. (Jeff Walters/CBC)
Noront president Alan Coutts reiterated the claim that talks were scheduled in an interview with CBC News on January 25.
"We're starting talks, probably the beginning of February with Neskantaga," he said.
Still not true, according to senior staff working on the file for Neskantaga First Nation.
"At this time there is no mediation between Noront and Neskantaga," Chris Moonias told CBC News on Jan. 26.
Ontario's Minister of Northern Development and Mines, that funds the negotiations with First Nations on the Ring of Fire could not say for certain if the parties were talking.
"But the fact is there are discussions going on, or, I mean, are about to go on, between Neskantaga and Noront Resources," Michael Gravelle said.
'Cease and desist'
Last summer, Neskantaga sent Noront a letter telling the company to "cease and desist" its drilling program on the community's traditional lands. The First Nation said Noront failed to follow the community's development protocol. The matter has never been resolved.
Relationships with First Nations are key to progress in the Ring of Fire, Gravelle said.
"I think if there's one thing that Noront and I agree 100 per cent is that in order for this project to move forward we have to do it in partnership with First Nations," he said.
But it's not clear if Gravelle and Coutts vision of those partnerships is identical.
"We're saying, 'let's try to get this resource development issue separated from these larger broader issues" such as the United Nations Declaration on the Rights of Indigenous Peoples and reconciliation, Coutts said.
No route picked for road
Beyond the troubled relationships, infrastructure remains a huge hurdle in the Ring of Fire. Hundreds of kilometres of roads must be built over the muskeg to the proposed mine site. Without it there is no cost-effective way to get the minerals to market.
Little work has been done to prepare for a road. There is no route selected, no agreements in place for who would fund it; who would own or maintain it; not even a decision on whether the road would be built to accommodate both industrial vehicles from the mine and cars and trucks from nearby First Nations.
¦Ring of Fire road study produces inconclusive results about transportation in Ontario's remote north
¦Noront Resources waits for road to the Ring of Fire
All of that work is likely to take more time than is left in the provincial government's mandate, but Gravelle is undaunted.
"We've made our one billion dollar funding commitment to transportation infrastructure and we're keen to see the federal government join us in that funding agreement," Gravelle said.
¦Three big 'whoppers' told about the Ring of Fire
CONVERSATION ON "RING OF FIRE",FEB 2017
Northern Ontario’s Ring of Fire needs a road, not rail, Noront CEO asserts
Bill Curry
OTTAWA — The Globe and Mail
Published Thursday, Apr. 21, 2016 5:48PM EDT
Last updated Thursday, Apr. 21, 2016 5:59PM EDT
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The biggest player in Northern Ontario’s Ring of Fire says government infrastructure cash should focus on an east-west road rather than grand plans for a $2-billion north-south rail line.
Alan Coutts, president and CEO of Noront Resources Ltd., responded to a proposal recently promoted to the federal and Ontario governments for a 340-kilometre-long rail line that would be built and financed by Chinese investors.
“What we’re saying is let’s not blow our brains out building the biggest, costliest infrastructure known to mankind without the economic justification,” Mr. Coutts told The Globe and Mail.
Both Ottawa and Ontario are looking to make major investments in infrastructure to spur the economy and help struggling First Nations communities. Recent attention on youth suicides in Ontario’s fly-in reserves has heightened the political focus on social and economic challenges faced by isolated First Nations.
The Ring of Fire contains mineral deposits in a massive area located about 500 kilometres northeast of Thunder Bay.
Ontario has already pledged $1-billion toward Ring of Fire infrastructure and has asked Ottawa to match that amount. The federal budget included $8.4-billion for indigenous issues, including social and green infrastructure.
But the focus on developing the North comes at a time of weak commodity prices, meaning mining projects such as the Ring of Fire that once generated grandiose claims of development on par with Alberta’s oil sands are now viewed with strong skepticism.
Just last year, Cliffs Natural Resources Inc. sold its leading stake in the Ring of Fire to Noront for $20-million (U.S.) after spending $550-million to acquire its rights in the region. Cliffs’ CEO dismissed the Ring of Fire’s potential, predicting that nothing would be developed over the next 50 years.
Ontario’s Minister of Northern Development and Mines, Michael Gravelle, said that, in spite of current conditions, a flurry of activity is taking place behind the scenes to map out roads that will serve some First Nations and open the door for future mining as the market improves.
“We have made it quite clear [to Ottawa] that this is obviously a huge priority project for us,” he said Thursday in an interview.
Ottawa and Ontario are paying for a study of a possible east-west road route conducted by four area First Nations. The proposed road would connect the Ring of Fire and the First Nations of Eabametoong, Neskantaga, Nibinamik and Webequie, to Pickle Lake, Ont.
That work is scheduled to be finished in June, and Noront is hoping the Ontario government could announce a plan as soon as July on how the road plan would move ahead.
Mr. Gravelle said he could not confirm a timeline but that the route selected by the First Nations would then form the basis of Ontario’s talks with the federal government about new funding for Northern Ontario’s indigenous communities.
Much of the region’s potential has centred on its deposits of chromite, which is needed to produce stainless steel. This week, officials with KWG Resources Inc. – which has claims on some of the region’s chromite deposits – brought a team of Chinese engineers to Parliament Hill to promote a proposed rail line.
Mr. Coutts of Noront, who also met with Liberal MPs this month, said the current market for chromite doesn’t support such a rail line and that the focus should be on road access to mine nickel, copper, platinum and palladium.
“Let’s start modestly. Let’s get this shared infrastructure in place where there’s a social benefit and an industrial benefit, and we support the one mine right now that is economically viable. Will there be economically viable chromite operations in the future? I think there will be. But the market certainly isn’t there right now. It’s going to take some time to get the confidence back that will justify those kinds of huge investments,” he said.
Moe Lavigne, a vice-president at KWG, said he supports an east-west road that would ultimately help make the case for a rail line. He also insists that the potential for major financing from China is serious and could come soon.
“Having an east-west road built helps us a lot because it helps us to build the construction of the railroad,” he said. “If the timing works out well, there’s going to be synergies between our chromite mining and their nickel mining that we’re going to be able to exploit and save a lot of money.”
! Report Typo/Error
Follow Bill Curry on Twitter: @curryb
TICKERS mentioned in this story
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Noront Resources Ltd
Latest Price
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KWG-CN
KWG Resources Inc
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0.00
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Updated February 1 9:30 AM -5GMT. Delayed by at least 15 minutes.
More Related to this Story
• Chinese engineers endorse plans for $2-billion rail line to Ring of Fire
• China shows renewed interest in developing resource-rich Ring of Fire
• Ontario PCs say Cliffs quit Ring of Fire over Liberals’ planned tax
Topics
Ontario
CONVERSATION ON "RING OF FIRE",FEB 2017
Northern Ontario’s Ring of Fire needs a road, not rail, Noront CEO asserts
Bill Curry
OTTAWA — The Globe and Mail
Published Thursday, Apr. 21, 2016 5:48PM EDT
Last updated Thursday, Apr. 21, 2016 5:59PM EDT
0 Comments
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f
t
i
A A
? PrintLicense article
The biggest player in Northern Ontario’s Ring of Fire says government infrastructure cash should focus on an east-west road rather than grand plans for a $2-billion north-south rail line.
Alan Coutts, president and CEO of Noront Resources Ltd., responded to a proposal recently promoted to the federal and Ontario governments for a 340-kilometre-long rail line that would be built and financed by Chinese investors.
“What we’re saying is let’s not blow our brains out building the biggest, costliest infrastructure known to mankind without the economic justification,” Mr. Coutts told The Globe and Mail.
Both Ottawa and Ontario are looking to make major investments in infrastructure to spur the economy and help struggling First Nations communities. Recent attention on youth suicides in Ontario’s fly-in reserves has heightened the political focus on social and economic challenges faced by isolated First Nations.
The Ring of Fire contains mineral deposits in a massive area located about 500 kilometres northeast of Thunder Bay.
Ontario has already pledged $1-billion toward Ring of Fire infrastructure and has asked Ottawa to match that amount. The federal budget included $8.4-billion for indigenous issues, including social and green infrastructure.
But the focus on developing the North comes at a time of weak commodity prices, meaning mining projects such as the Ring of Fire that once generated grandiose claims of development on par with Alberta’s oil sands are now viewed with strong skepticism.
Just last year, Cliffs Natural Resources Inc. sold its leading stake in the Ring of Fire to Noront for $20-million (U.S.) after spending $550-million to acquire its rights in the region. Cliffs’ CEO dismissed the Ring of Fire’s potential, predicting that nothing would be developed over the next 50 years.
Ontario’s Minister of Northern Development and Mines, Michael Gravelle, said that, in spite of current conditions, a flurry of activity is taking place behind the scenes to map out roads that will serve some First Nations and open the door for future mining as the market improves.
“We have made it quite clear [to Ottawa] that this is obviously a huge priority project for us,” he said Thursday in an interview.
Ottawa and Ontario are paying for a study of a possible east-west road route conducted by four area First Nations. The proposed road would connect the Ring of Fire and the First Nations of Eabametoong, Neskantaga, Nibinamik and Webequie, to Pickle Lake, Ont.
That work is scheduled to be finished in June, and Noront is hoping the Ontario government could announce a plan as soon as July on how the road plan would move ahead.
Mr. Gravelle said he could not confirm a timeline but that the route selected by the First Nations would then form the basis of Ontario’s talks with the federal government about new funding for Northern Ontario’s indigenous communities.
Much of the region’s potential has centred on its deposits of chromite, which is needed to produce stainless steel. This week, officials with KWG Resources Inc. – which has claims on some of the region’s chromite deposits – brought a team of Chinese engineers to Parliament Hill to promote a proposed rail line.
Mr. Coutts of Noront, who also met with Liberal MPs this month, said the current market for chromite doesn’t support such a rail line and that the focus should be on road access to mine nickel, copper, platinum and palladium.
“Let’s start modestly. Let’s get this shared infrastructure in place where there’s a social benefit and an industrial benefit, and we support the one mine right now that is economically viable. Will there be economically viable chromite operations in the future? I think there will be. But the market certainly isn’t there right now. It’s going to take some time to get the confidence back that will justify those kinds of huge investments,” he said.
Moe Lavigne, a vice-president at KWG, said he supports an east-west road that would ultimately help make the case for a rail line. He also insists that the potential for major financing from China is serious and could come soon.
“Having an east-west road built helps us a lot because it helps us to build the construction of the railroad,” he said. “If the timing works out well, there’s going to be synergies between our chromite mining and their nickel mining that we’re going to be able to exploit and save a lot of money.”
! Report Typo/Error
Follow Bill Curry on Twitter: @curryb
TICKERS mentioned in this story
NOT-X
Noront Resources Ltd
Latest Price
$0.25
0.00
(0.00%)
KWG-CN
KWG Resources Inc
Latest Price
$0.02
0.00
(0.00%)
Updated February 1 9:30 AM -5GMT. Delayed by at least 15 minutes.
More Related to this Story
• Chinese engineers endorse plans for $2-billion rail line to Ring of Fire
• China shows renewed interest in developing resource-rich Ring of Fire
• Ontario PCs say Cliffs quit Ring of Fire over Liberals’ planned tax
Topics
Ontario
DELAY ACTION ON "RING OF FIRE PROGRESS:
Ring of Fire mining development still years away from delivering on a decade of hype – by Jody Porter (CBC News Thunder Bay – January 30, 2017)
January 30, 2017 in Aboriginal and Inuit Mining, Canadian Media Resource Articles, Ontario Mining, Ontario’s Ring of Fire Mineral Discovery
www.cbc.ca/news/canada/thunder-bay/
Noront Resources, Neskantaga First Nation disagree even on whether they’re talking to each other
Ten years after a large chromite deposit in Ontario’s James Bay lowlands was first discovered and declared a “game-changer” for the Canadian economy, the Ring of Fire mining development is flaming out in a dispute over who is talking to whom.
Noront Resources is now the main proponent in the project after Cliffs Natural Resources pulled out of the development in 2013, but it’s relationship with one of the First Nations in the area continues to deteriorate.
“Beginning this month Noront will enter into a series of meetings with Neskantaga First Nation,” the company said in a news release dated January 17, 2017. “These meetings will be facilitated by an experienced and respected mediator with the goal of identifying a mutually agreeable path forward for the company’s current and proposed exploration and development activities.”
But that’s not true, according to the First Nation, which is seeking a retraction, an apology and an explanation for how the mistake was made before it will even consider talks with the company.
Noront president Alan Coutts reiterated the claim that talks were scheduled in an interview with CBC News on January 25.
“We’re starting talks, probably the beginning of February with Neskantaga,” he said.
Still not true, according to senior staff working on the file for Neskantaga First Nation.
“At this time there is no mediation between Noront and Neskantaga,” Chris Moonias told CBC News on Jan. 26.
Ontario’s Minister of Northern Development and Mines, that funds the negotiations with First Nations on the Ring of Fire could not say for certain if the parties were talking.
“But the fact is there are discussions going on, or, I mean, are about to go on, between Neskantaga and Noront Resources,” Michael Gravelle said.
‘Cease and desist’
Last summer, Neskantaga sent Noront a letter telling the company to “cease and desist” its drilling program on the community’s traditional lands. The First Nation said Noront failed to follow the community’s development protocol. The matter has never been resolved.
Relationships with First Nations are key to progress in the Ring of Fire, Gravelle said.
“I think if there’s one thing that Noront and I agree 100 per cent is that in order for this project to move forward we have to do it in partnership with First Nations,” he said.
But it’s not clear if Gravelle and Coutts vision of those partnerships is identical.
“We’re saying, ‘let’s try to get this resource development issue separated from these larger broader issues” such as the United Nations Declaration on the Rights of Indigenous Peoples and reconciliation, Coutts said.
No route picked for road
Beyond the troubled relationships, infrastructure remains a huge hurdle in the Ring of Fire. Hundreds of kilometres roads must be built over the muskeg to the proposed mine site. Without it there is no cost-effective way to get the minerals to market.
Little work has been done to prepare for a road. There is no route selected, no agreements in place for who would fund it; who would own or maintain it; not even a decision on whether the road would be built to accommodate both industrial vehicles from the mine and cars and trucks from nearby First Nations.
All of that work is likely to take more time than is left in the provincial government’s mandate, but Gravelle is undaunted.
“We’ve made our one billion dollar funding commitment to transportation infrastructure and we’re keen to see the federal government join us in that funding agreement,” Gravelle said.
For the original source of this article, click here: http://www.cbc.ca/news/canada/thunder-bay/ring-of-fire-talks-1.3955236
WEB PAGE:
http://www.oilandgas360.com/canadian-international-minerals-inc-highlights-niobium-potential-of-wicheeda-alkaline-carbonatite-complex-british-columbia/
Canadian International Minerals Inc. Highlights Niobium Potential of Wicheeda Alkaline-Carbonatite Complex, British Columbia
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January 26, 2017 - 9:04 AM EST
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Canadian International Minerals Inc. Highlights Niobium Potential of Wicheeda Alkaline-Carbonatite Complex, British Columbia
(via TheNewswire)
January 26, 2017 / TheNewswire / Vancouver, British Columbia - Canadian International Minerals Inc. (the "Company") (TSX-V: CIN; FRANKFURT: 25C1) is pleased to provide an update on the Company's 100% owned Wicheeda Alkaline-Carbonatite project (the "Project"), located approximately 80 kilometers northeast of Prince George, B.C., in the heart of the Rocky Mountain Rare Metal Belt.
In 2011, the Company completed an 11 hole helicopter-supported diamond drill program on the Project. This program was designed to follow up on the 2010 drill program, which intercepted significant rare earth mineralization in all 9 holes, the most notable intercept being 37.3 meters of 1.43% TREO (Total Rare Earth Oxides) encountered in hole CA-10-006.
While the 2010 drill program was focused on the northwest portion of the claim block, in the vicinity of the Wicheeda Rare Earth deposit owned by Spectrum Mining Corp. (a private company), the 2011 drill program targeted a number of geophysical and geochemical targets approximately 1.8 km to 4.3 km to the southeast of the 2010 drilling.
The 2011 drilling campaign encountered rare earth mineralization in the majority of holes with most falling in the range of 0.2% - 0.5% TREO. The drill program confirmed that the alkaline intrusive body is mineralized in rare earths and rare metals over a 4.7 km strike length.
A preliminary reevaluation has affirmed that the project has significant Niobium potential which was not considered material at the time. The Company wishes to report the following Niobium assays from the 2011 drill program:
2011 Wicheeda Drilling
Hole
From (m)
To (m)
Interval (m)
Nb2O5 (%)
CA-11-010
Including
And
171.80
171.80
171.80
187.86
178.53
172.78
16.06
6.73
0.98
0.188
0.270
0.731
CA-11-010
182.93
187.86
4.93
0.214
CA-11-011
133.75
136.85
3.1
0.179
CA-11-011
Including
184.80
188.89
190.5
190.5
5.70
1.61
0.215
0.507
CA-11-013
57.31
61.33
4.02
0.143
CA-11-013
175
183
8
0.134
CA-11-013
314.85
315.66
0.81
0.616
CA-11-013
354.17
357.55
3.38
0.199
CA-11-014
Including
And
173.23
173.23
173.23
197.66
182.80
177.13
24.43
9.57
3.90
0.156
0.217
0.337
CA-11-014
Including
And
And**
232.98
241.65
251.44
256.57
270.58
259.92
259.92
258.77
37.6
18.27
8.48
2.2
0.226
0.297
0.321
0.632
** Intercept also returned 2.2 meters of 158 ppm Ta2O5
The Company continues to reevaluate the exploration targets for the Wicheeda Project and will be investigating a number of partnership avenues in the coming weeks.
About the Rocky Mountain Rare Metal Belt
The Rocky Mountain Rare Metal Belt is a 2,500 kilometer trend with geological conditions suitable for the emplacement of both rare earth elements and rare metals. The Belt is host to 3 main rare earth/metal deposits:
? -Blue River/Upper Fir Tatalum-Niobium Deposit
Commerce Resource Corp. (TSX-V: CCE)
Approximately 330km southeast of Wicheeda
Indicated Resource: 48.41 mt of 0.161% Nb2O5, and 197 g/t Ta2O5
? -Aley Carbonatite Niobium Deposit
Taseko Mines Ltd. (TSX: TKO)
Approximately 240km northwest of Wicheeda
Proven & Probable Resource: 83.8 mt of 0.5% Nb2O5
? -Wicheeda Rare Earth Elements Deposit
Spectrum Mining Corp. (private company)
Directly adjacent to Wicheeda to the northwest
Inferred Resource: 11.3 mt of 2.5% TREO (total rare earth element oxides)
About Niobium
Niobium is used in super-alloys, in particular the aerospace industry. Its primary production and pricing is dominated by private producers who operate in an opaque market environment. These primary producers are dominated by CBMM, privately owned by the Salles family in Brazil. It produces approximately 85% of the world's niobium. Other Brazilian producers include China Molybdenum.
In April 2016, Anglo American plc. announced it had reached an agreement with China Molybdenum Company Ltd. to sell its Niobium and Phosphate businesses for a total cash consideration of $1.5 billion. The Niobium business comprises one mine and three processing facilities, two non-operating mines, two further mineral deposits, and sales and marketing operations in the United Kingdom and Singapore. Together, the businesses generated EBITDA of $146 million in the year ended 31 December 2015. Niobec is another primary niobium producer, located in Quebec and formerly owned by Iamgold Corp.
Former Barrick Gold's chief executive Aaron Regent, through his private equity-backed Magris Resources Inc., bought the Niobec mine for US$530 million in 2015.
Qualified Person
The technical data in this news release has been reviewed by Thomas Hasek, P. Eng., a Qualified Person under the terms of N.I. 43-101.
For further information, please contact:
Canadian International Minerals Inc.
Michael E. Schuss
President and CEO
Phone: 604-241-2254
Website: www.cin-v.com
Forward-looking Information
This news release contains projections and forward-looking information that involve various risks and uncertainties regarding future events. Such forward-looking information can include without limitation statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance of the Company. The following are important factors that could cause the Company's actual results to differ materially from those expressed or implied by such forward looking statements; the uncertainty of future profitability; and the uncertainty of access to additional capital. These risks and uncertainties could cause actual results and the Company's plans and objectives to differ materially from those expressed in the forward-looking information. Actual results and future events could differ materially from anticipated in such information. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and expressed qualified in their entirety by this notice. The Company assumes no obligation to update forward-looking information should circumstances or management's estimates or opinions change.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Copyright (c) 2017 TheNewswire - All rights reserved.
Source: TheNewsWire (January 26, 2017 - 9:04 AM EST)
CEO SELLS PART OF HIS HOLDINGS
Niobay Metals Inc (NBY) Director Sells C$16,170.00 in Stock
Posted by Donnie Miller on Jan 20th, 2017 // No Comments
in Share.
Niobay Metals logoNiobay Metals Inc (TSE:NBY) Director Claude Dufresne sold 21,000 shares of the company’s stock in a transaction that occurred on Thursday, January 12th. The shares were sold at an average price of C$0.77, for a total value of C$16,170.00.
Niobay Metals Company Profile
NovaBay Pharmaceuticals, Inc, formerly NovaCal Pharmaceuticals, Inc, is a biopharmaceutical company, which develops products for the eye care market. The Company focuses on commercializing prescription Avenova for managing hygiene of the eyelids and lashes in the United States. Avenova is an eye care product formulated with a form of hypochlorous acid called Neutrox.
DRILLING PROGRAM, JAN 17, 2017
seekingalpha.com/instablog/2366771-rockstone/4950791-drill-program-find-one-trump-metals-niobium
Drill Program To Find One Of The Trump Metals: Niobium
Jan. 17, 2017 9:15 AM ET|Includes:Arctic Star Exploration Corp. (ASDZF), CMRZF, MDNND, NIOBF, TGB
Geologist inspecting niobium-rich outcrops on the CAP Property in British Columbia.
This week, Donald Trump will be moving into the White House. His presidency is expected to boost demand for commodities as the elect has pledged to enact growth fueling tax cuts and infrastructure spending after being sworn into office on Friday.
The US Department of Defence has declared niobium as one of its top "strategic" metals as it is not mined domestically, is a matter of national security and is important to the nation's economy. The US government maintains a stockpile of niobium at all times and according to the USGS, the DLA Strategic Materials plans to acquire more niobium to address the current shortfall. The US imports all of its niobium from Brazil (83%), Canada (12%) and others (5%).
Click to enlarge
Today, Arctic Star Exploration Corp. (TSX.V: ADD) reported to have started permitting for a drill program on its wholly owned CAP Property, located within the central parts of the Rocky Mountain Rare Metal Belt, 80 km northwest of Prince George in British Columbia, Canada.
In 2010, Arctic Star acquired this property for its potential to host niobium-tantalum and/or rare earth elements ("REEs"). Since then, these commodities have undergone a dramatic shift in demand owing in part to their usage in the green energy sector, which includes modern wind turbines, rechargeable batteries, catalytic convertors etc. Past exploration identified a large anomaly to be drill tested shortly, potentially discovering a niobium-rich deposit.
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Niobium focused companies performed well in 2016. One of them was MDN Inc., which changed its name to NioBay Metals Inc. following the announcement of their acquisition of the James Bay Niobium Project in Ontario which has a historic indicated resource with a grade of 0.52% Nb2O5. The company's stock appreciated by about 900% in 2016.
The year before, NioCorp Developments Ltd. (originally structured by Zimtu Capital Corp.) reported an indicated resource grade of 0.71% Nb2O5 assuming a 0.3% cut-off grade at its Elk Creek Niobium Deposit in Nebraska, USA. NioCorp's current market capitalization exceeds $130 million CAD.
Stretching for some 2,500 km from just above Idaho and Montana in the south to the Yukon in the north, Mother Nature has created the right geological environment along the Rocky Mountain Rare Metal Belt for the emplacement of both REEs and rare metals. Some explorers have been active along the belt for several years.
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The CAP Property was originally staked to cover an approximately 3-5 km diameter, circular, airborne magnetic geophysical anomaly which is believed to represent a carbonatite (or similar intrusion) at depth. The upcoming drill program may discover a significant deposit.
Arctic Star's CAP Property (2,825 hectares) is located within the central parts of this belt and about 50 km southwest of the Wicheeda REE Carbonatite from Spectrum Mining Corp., a private company. Wicheeda's Main Zone was drill tested with 15 holes at 3 sites in 2008/2009; highlights included:
• 3.55% REE over 49 m
• 2.92% REE over 72 m
• 2.2% REE over 144 m
This discovery prompted a staking rush in the region and over a dozen companies have been conducting exploration programs.
Commerce Resources Corp. owns the advanced-stage Blue River Tantalum-Niobium Project north of Kamloops in BC, where substantial resources have been defined. The company is currently focused on its other project, the Ashram REE Deposit in Québec.
Taseko Mines Ltd. (+155% in 2016; current market capitalization: $340 million CAD) acquired the Aley Niobium Project, 140 km north of Mackenzie in BC, in 2007 and now hosts an extensive body of niobium mineralization as indicated by drilling, with grades averaging 0.4% Nb2O5.
On the CAP Property, 2 narrowly outcropping syenite dikes have been identified and sampled near the crest of the ridge that trends from northwest to southeast across the property. The dikes contained highly anomalous geochemistry (potentially indicative of a large and higher grade deposit below surface), including:
• 0.48-0.98% Nb2O5 (481-981 ppm)
• 1.13-3.19% zirconium
• >0.1% lanthanum
• >0.1% cerium
• >0.05% neodymium
These high-level dikes indicate that the source of the magnetic geophysical anomaly may be associated with a carbonatite, or similar intrusion. Geologically, the Cap Property has similar potential to the known carbonatite complexes worldwide. Carbonatite-related deposits are a major host for rare metals, such as niobium and tantalum, and REEs. The world's largest niobium mine, Araxa in Brazil, and several of the world's largest REE deposits, including Lynas Corp.'s Mt. Weld Deposit in Australia and Molycorp's Mountain Pass Deposit in the US, are all hosted by carbonatites. Geologically similar exploration projects include Hudson Resources Inc.'s Sarfartoq Carbonatite Project in Greenland and Rare Element Resources Ltd.'s Bear Lodge Carbonatite Project in Wyoming, USA.
Niobium's Price Dominance
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For almost 50 years now, only 3 primary niobium mines are responsible for global supply:
Niobec (Québec, Canada)
• Deposit: Pegmatite
• Share in world supply: ~7%
• Average grade: 0.4-0.53% Nb2O5
• Owned by Magris Resources, a privately-held company (purchased from IAMGold for $500 million CAD in 2015)
Catalao (Brazil)
• Deposit: Carbonatite
• Share in world supply: ~7%
• Average grade: 0.9-1.3% Nb2O5
• Owned by China Molybdenum since April 2016 ($1.5 billion transaction with Anglo American)
Araxa (Brazil)
• Deposit: Carbonatite
• Share in world supply: ~85%
• Average grade: ~2.5% Nb2O5 (but with a 50% recovery)
• Owned by CBMM (Companhia Brasileira de Metalurgia e Mineração)
CBMM is a privately-held company, founded in 1955; since 1965 controlled by the Moreira Salles family, which became one of Brazil's wealthiest families primarily thanks to its bet on niobium.Between 2006-2008, CBMM doubled the price of ferroniobium to address the strong demand growth that was, according to CBMM, not priced in correctly. As niobium prices remained flat over the last 9 years, CBMM may increase prices again to better reflect heightened demand.
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Demand for niobium is expected to increase on the backs of national defense and the production of high-efficiency vehicles and super-alloys.Gobal steel production is expected to increase its usage of niobium (to make steel stronger and lighter) from currently about 10% to up to 20% over the next few years.
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In contrast to other strategic metals and REEs, niobium prices have only corrected marginally since the overall commodity slump started in 2011 and is rather explained with the USD strength. There are no official niobium prices as it is not traded on any metal exchange. Its price is determined solely by negotiation between buyer and seller.
In contrast to other strategic metals and REEs, niobium is not controlled by China; for instance: "China controls most of the world's molybdenum and the country has taken advantage of this, flooding the market with supplies when international producers became a threat and then charging exorbitant prices for exports once the country has resumed its control of the metal's supply. This has caused some massive fluctuations in the commodity's price..." (source)
Brazil has the world's largest niobium reserves (98.5%), followed by Canada (1%) and Australia (0.5%). Brazilian niobium reserves total about 840 million t of Nb2O5, with an average grade of 0.73%. The only 2 Brazilian niobium mines are Araxá and Catalão with reserve grades of about 1.2% Nb2O5 (resources at 0.93% Nb2O5).
Most of the current exploration, development, and operating mines for niobium have grades between 0.3% and 1.2% Nb2O5 (apart from Araxa averaging 2.5% Nb2O5).
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The Commodity That No One Knows About But Everybody Wants to Buy
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By Thomas Biesheuvel and Jesse Riseborough on May 18, 2016, for Bloomberg
Niobium is used in steel and 7 times more valuable than copper
China outbids 15 companies for rare chance to own Brazil mine
The world's mines and steel plants got so devalued during the commodity slump that some were just given away by owners struggling to cut losses or debt. But there's at least one metal that's been attracting a lot of attention.
Niobium -- named for a Greek goddess who became a symbol of the tragic mourning mother -- is used to produce stronger, lighter steel for industrial pipes and aircraft parts. It is mined in only three places on Earth, and the price of every kilogram is seven times higher than copper.
China Molybdenum Co. outmaneuvered at least 15 companies last month to purchase Anglo American Plc's niobium and phosphate unit in Brazil, agreeing to pay $1.5 billion, or 50 percent more than the valuation by some analysts. The buying frenzy that included Vale SA, Apollo Global Management LLC and X2 Resources showcased the growing appeal of a market that may be worth $4 billion for a soft, silvery metal many experts don't know much about.
"I didn't know what niobium was, and I had been in the minerals industry for 20 years before this opportunity came across my desk," said Craig Burton, the chairman of Cradle Resources Ltd., which is seeking to develop the $200 million Panda Hill niobium project in Tanzania. "I had to actually open up the periodic table just to double-check that it was an element. It definitely is a boutique space."
Niobium is hard to find and hard to value. More than 80 percent of global supply comes from one company -- Cia. Brasileira de Metalurgia & Mineracao in Brazil. Metal Bulletin Ltd., which publishes prices for metals as obscure as bismuth and germanium, says there's not enough liquidity to report one for niobium.
The metal averaged about $40 a kilogram last year, according to Cradle Resources, which is based in Perth, Australia. An equivalent amount of copper on the London Metal Exchange fetched about $5.49. Global demand for niobium is about 90,000 to 100,000 metric tons annually.
Three Mines
Still, prices fell last year because of the weak demand for steel, as slumping oil and gas markets led to fewer metal pipe purchases, according to Anglo American, which wants to raise cash to cut debt after a collapse in commodity prices. Almost all the metal comes from just three mines in Brazil and Canada, allowing dominant producer CBMM to match supply to demand and influence prices.
Among the companies outbid by China Molybdenum were Mosaic Co., the world's largest producer of phosphate fertilizer, South32 Ltd. and Eurochem Group AG, people familiar with the process said. The sale was highly competitive, said two people involved, who asked not to be identified because the matter was private. The winning offer exceeded the estimates of analysts at Bank of America Corp. and Investec Plc. RBC Capital Markets said the assets were among the best that London-based Anglo has offered.
Very Unique
What makes the business so attractive is that there are only a few operating mines. Anglo and Niobec account for about 9 percent of production, and Brazil's CBMM supplies the rest, according to Argonaut Securities Pty. Both the U.S. and Europe list niobium as a strategically important mineral.
"Niobium is a very unique business," said Kalidas Madhavpeddi, who heads the CMOC International unit of Luoyang, China-based China Molybdenum. "We typically want to buy from people who regret selling it. We've been very carefully assembling a war chest in anticipation of a downturn in the industry."
CBMM, controlled by the billionaire Moreira Salles family, has mostly dominated supply since starting operations five decades ago. It sold a 30 percent stake to a group of Asian steelmakers in two transactions valued at $3.9 billion in 2011.
In another deal, Magris Resources Inc., founded by former Barrick Gold Corp. Chief Executive Officer Aaron Regent, agreed to pay $530 million for the Niobec mine in Canada in 2014.
Unsuccessful bidders in Anglo's sale may turn their interest to Cradle's Panda Hill project in Tanzania, Argonaut said in a research report. Pending financing, it's expected to start producing in mid-2018.
Cradle shares jumped 8.6 percent in Australian trading, reaching the highest since 2011. The sales "have brought a lot of participants in," Cradle's Burton said. "There was only one winner. That leaves lots of parties that might be interested in talking to us because we do need to raise some capital to bring this project on."
Click on above image (or here) to watch interview with Bloomberg reporter Thomas Biesheuvel.
Company Details
Arctic Star Exploration Corp.
1111 West Georgia Street
Vancouver, B.C. V6E 4M3, Canada
Phone: +1 604 689 1799
Email: info@arcticstar.ca
www.arcticstar.ca
Shares Issued & Outstanding: 49,529,106
Canadian Symbol (TSX.V): ADD
Current Price: $0.12 CAD (01/16/2017)
Market Capitalization: $6 million CAD
German Symbol / WKN (Frankfurt): 82A1 / A2DFY5
Current Price: €0.076 EUR (01/17/2017)
Market Capitalization: €4 million EUR
Stay Tuned!
For smartphones and tablets, an APP from Rockstone Research is available in the AppStore and in the GooglePlayStore.
Disclaimer: Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist.
Disclosure: I am/we are long ASDZF.
Stocks: ASDZF, MDNND, NIOBF, TGB, CMRZF
refresher
rockstone-research.com/index.php/en/research-reports/1628-Commerce-Resources-records-highest-niobium-mineralized-sample-to-date-at-Miranna
Last week, Commerce Resources Corp. reported sampling assays from the Miranna Area, located only 1 km east of its Ashram REE Deposit in Québec. The best results include 5.9% and 4.2% niobium pentoxide (Nb2O5). The 9 selected samples reported by Commerce averaged 2.3% Nb2O5. Of all 64 samples, 40 assayed >0.5% Nb2O5, with 16 surpassing 1%. Sampling also found significant grades of tantalum, phosphate and rare earth oxides (2 samples each graded >1,000 ppm Ta2O5 and 1% Nb2O5, while several samples revealed >10% P2O5).
When comparing these niobium grades with the range of global average mining grades of about 0.5 to 1.5% Nb2O5, and the average grades of niobium exploration projects, Commerce Resources indeed has every reason for being enthusiastic.
Niobium focused juniors seem to be enjoying a recent lift in share prices and market valuations potentially due to positive demand growth for niobium for structural steel for infrastructure projects, as well as for the current lighter and stronger chassis for cars. MDN Inc. has recently seen its’ share price appreciate by almost 400% following the announcement of their acquisition of the James Bay Niobium Project, called the Argor Project, which has an historic indicated resource with a grade of 0.52% Nb2O5.
Last year, NioCorp Developments Ltd. (originally structured by Zimtu Capital Corp.) reported an average indicated resource grade of 0.71% Nb2O5 assuming a 0.3% cut-off grade at its Elk Creek Niobium Deposit in Nebraska, USA. Today, NioCorp enjoys a market valuation exceeding $150 million CAD.
With a market share of about 90%, Brazil is the world’s largest producer of niobium, followed by Canada. Brazil has the world‘s largest niobium reserves (98.5%), followed by Canada (1%) and Australia (0.5%). Brazilian niobium reserves total about 840 million t of Nb2O5, with an average grade of 0.73%. The 2 Brazilian niobium mines are Araxá (owned by private company CBMM) producing about 85% of the world’s niobium with resource grades of about 2.5% Nb2O5 and Catalão (owned by China Molybdenum) producing about 7% of the world’s niobium with reserve grades of about 1.2% Nb2O5 (resources at 0.93% Nb2O5).
The third largest producer is the Niobec Mine in Québec (owned by private company Magris Resources) accounting for about 7% of global niobium mine output, with resource grades at 0.53% Nb2O5. Magris purchased Niobec from IamGold for $500 million CAD in January 2015. Market insiders believed this was a signal that infrastructure building was back on the horizon and that niobium demand would be positively affected.
Most of the current exploration, development, and operating mines for niobium have grades between 0.3% and 1.2% Nb2O5, apart from the world‘s largest and highest grade niobium mine, Araxá in Brazil, with resource grades of 2.5% Nb2O5. With an average of 2.3% Nb2O5 in the 9 samples reported from the Miranna Area, Commerce Resources may be close to the discovery of a high grade niobium deposit comparable to the leading global producer. Miranna has the right host rock and ore mineral for standard, highly efficient metallurgical processing, that being carbonatite rock and pyrochlore mineralogy hosting the niobium.
As Miranna is located only 1 km east of the Ashram Rare Earth Deposit, there could be significant potential for development synergies in the event a deposit of merit is defined at Miranna.
Having 2 strategic metals deposits right at surface would greatly facilitate the infrastructure development on the Eldor Property, as well as the entire region.
Developing 2 separate deposits on the Eldor Property would allow for significant synergies in CAPEX and OPEX, thereby bringing the overall costs down considerably in the event both assets were developed. The Plan Nord initiative, which has a focus on fostering the development of Quebec’s northern mineral resources, could soon have another good reason to consider Commerce Resources in its infrastructure development plans.
HOW DOES A 10% STOCK OPTION PLAN WORK?
How Employee Stock Options Work in Startup Companies
By Richard Harroch | In: Compensation & Benefits, Legal, Starting a Business
stock options
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Stock Option Plans are an extremely popular method of attracting, motivating, and retaining employees, especially when the company is unable to pay high salaries. A Stock Option Plan gives the company the flexibility to award stock options to employees, officers, directors, advisors, and consultants, allowing these people to buy stock in the company when they exercise the option.
Stock Option Plans permit employees to share in the company’s success without requiring a startup business to spend precious cash. In fact, Stock Option Plans can actually contribute capital to a company as employees pay the exercise price for their options.
The primary disadvantage of Stock Option Plans for the company is the possible dilution of other shareholders’ equity when the employees exercise the stock options. For employees, the main disadvantage of stock options in a private company—compared to cash bonuses or greater compensation—is the lack of liquidity. Until the company creates a public market for its stock or is acquired, the options will not be the equivalent of cash benefits. And, if the company does not grow bigger and its stock does not become more valuable, the options may ultimately prove worthless.
Thousands of people have become millionaires through stock options, making these options very appealing to employees. (Indeed, Facebook has made many employees into millionaires from stock options.) The spectacular success of Silicon Valley companies and the resulting economic riches of employees who held stock options have made Stock Option Plans a powerful motivational tool for employees to work for the company’s long-term success.
How Does a Stock Option Work?
The following shows how stock options are granted and exercised:
•ABC, Inc., hires employee John Smith.
•As part of his employment package, ABC grants John options to acquire 40,000 shares of ABC’s common stock at 25 cents per share (the fair market value of a share of ABC common stock at the time of grant).
•The options are subject to a four-year vesting with one year cliff vesting, which means that John has to stay employed with ABC for one year before he gets the right to exercise 10,000 of the options and then he vests the remaining 30,000 options at the rate of 1/36 a month over the next 36 months of employment.
•If John leaves ABC or is fired before the end of his first year, he doesn’t get any of the options.
•After his options are “vested” (become exercisable), he has the option to buy the stock at 25 cents per share, even if the share value has gone up dramatically.
•After four years, all 40,000 of his option shares are vested if he has continued to work for ABC.
•ABC becomes successful and goes public. Its stock trades at $20 per share.
•John exercises his options and buys 40,000 shares for $10,000 (40,000 x 25 cents).
•John turns around and sells all 40,000 shares for $800,000 (40,000 x the $20 per share publicly traded price), making a nice profit of $790,000.
Why Do Companies Issue Stock Options?
Companies issue options typically for one or more of the following reasons:
•Options can be used to attract and retain talented employees.
•Options can help motivate more dedication from employees.
•Options can be a cost-effective employee benefit plan, in lieu of additional cash compensation.
•Options can help smaller companies compete with larger companies in attracting great employees.
Key Issues in Stock Options
A company needs to address a number of key issues before adopting a Stock Option Plan and issuing options. Generally, the company wants to adopt a plan that gives it maximum flexibility. Here are some of the important considerations:
•Total number of shares: The stock option plan must reserve a maximum number of shares to be issued under the plan. This total number is generally based on what the board of directors believes is appropriate, but typically ranges from 5% to 20% of the company’s outstanding stock. Of course, not all options reserved for issuances have to be granted. Also, the investors in the company may have some contractual restrictions on the size of the option pool to prevent too much dilution.
•Number of options granted to an employee: There is no formula as to how many options a company will grant to a prospective employee. It’s all negotiable, although the company can set internal guidelines by job position within the company. And what is important is not the number of options, but what the number represents as a percentage of the fully diluted number of shares outstanding. For example, if you are awarded 100,000 options, but there are 100 million shares outstanding, that only represents 1/10 of 1% of the company. But if you are awarded 100,000 options and there are only 1 million shares outstanding, then that represents 10% of the company.
•Plan administration: Although most plans appoint the board of directors as administrator, the plan should also allow the board to delegate responsibilities to a committee. The board or the committee should have broad discretion as to the optionees, the types of options granted, and other terms.
•Consideration: The plan should give the board of directors maximum flexibility in determining how the exercise price can be paid, subject to compliance with applicable corporate law. So, for example, the consideration can include cash, deferred payment, promissory note, or stock. A “cashless” feature can be particularly attractive, where the optionee can use the buildup in the value of his or her option (the difference between the exercise price and the stock’s fair market value) as the currency to exercise the option.
•Shareholder approval: The company should generally have shareholders approve the plan, both for securities law reasons and to cement the ability to offer tax-advantaged incentive stock options.
•Right to terminate employment: To prevent giving employees an implied promise of employment, the plan should clearly state that the grant of stock options does not guarantee any employee a continued relationship with the company.
•Right of first refusal: The plan (and related Stock Option Agreement) can also provide that in the event the option is exercised, the shareholder grants the company a right of first refusal on transfers of the underlying shares. Doing so allows the company to keep share ownership in the company to a limited group of shareholders.
•Financial reports: For securities law reasons, the plan may require that periodic financial information and reports are delivered to option holders.
•Vesting: How do options vest? Most companies provide a vesting schedule, where the employee or advisor has to continue to work for the company for some period of time before the optionee’s rights vest. For example, an employee may be awarded options to acquire 10,000 shares with 25% vested after the first full year of employment, and then monthly vesting for the remaining shares over a 36-month vesting period.
•Exercise price: How much does the optionee have to pay for the stock when he or she exercises their option? Typically, the price is set at the stock’s fair market value at the time the option is granted. If the stock’s value goes up, the option becomes valuable because the optionee has the right to buy the stock at the cheaper price.
•Time to exercise: How long does the optionee have the right to exercise the option? The Stock Option Agreement typically sets a date when the option must be exercised (the date is usually shortened on termination of employment or death). Most employees only have 30-90 days to exercise an option after their employment with the company has terminated. This can be burdensome, particularly since the optionee may not have been able to sell any of the underlying shares to help pay the tax resulting from the exercise of the option.
•Transferability restrictions: What restrictions apply to the transfer of the option and underlying stock? Most Stock Option Agreements provide that the option is nontransferable. The agreements also state that the stock purchased by exercising the option may be subject to rights of purchase or rights of first refusal on any potential transfers. Increasingly, companies desire to implement more robust restrictions on both the options and the shares received upon exercise of the options to limit trades in the secondary market that may cause practical concerns in managing holders of the company’s stock.
•Securities law compliance: The issuance of options and underlying shares requires compliance with federal and state securities laws. Experienced corporate counsel should be involved here.
•409A valuation: The company needs to make a determination of the fair market value of its common stock in order to set the exercise price of the option, pursuant to Section 409A of the Internal Revenue Code. This is often done by hiring a third-party valuation expert.
•Cash usually needed: To exercise an option, the option holder typically has to pay cash out of pocket for the exercise (very few companies allow “cashless exercise”).
•ISOs: An employee holding tax advantaged Incentive Stock Options (ISOs) does not have a tax (or tax withholding) event upon exercise. You report taxable income when you sell the stock, but will need to include the difference between the exercise price and the current fair market value at the time of exercise (the “spread”) in income for purposes of calculating any additional tax obligation under the alternative minimum tax rules. If certain holding periods are met before selling the stock, all of the gain (back to the exercise price) may be taxed at the more favorable long-term capital gain rates.
•NSOs: If the options are not tax advantaged ISOs, they are “non-qualified stock options” (NSOs), and the spread upon exercise will be taxed at the more unfavorable ordinary income rates (as opposed to the capital gains rates). Additionally, as the exercise date is a taxable event, the company will have to report the spread as taxable income on the employee’s Form W-2 in the year of exercise and withhold applicable taxes on the amount of the spread, which generally means that the employee will have to write a check to the company to cover the tax withholding liability.
•Illiquidity: Stock in privately held companies is typically not liquid and is difficult to sell.
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search extensively ON THE 10% STOCK OPTION PLAN ... SEEMS TO HAVE LIMITATIONS...
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IBC Advanced Alloys Corp. Management’s Discussion and Analysis Nine Months Ended March 31, 2016
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The following is management’s discussion and analysis (“MD&A”) of IBC Advanced Alloys Corp., and its subsidiaries, prepared as of May 26, 2016. This MD&A should be read together with the unaudited interim condensed consolidated financial statements for the nine months ended March 31, 2016 and the audited consolidated financial statements and related notes for the year ended June 30, 2015. Financial amounts, other than amounts per share or per pound, are presented in thousands of United States dollars (“$”) unless indicated otherwise. Canadian dollar amounts are denoted by “C$”. The terms “IBC”, “we”, “us” and “our” refer to IBC Advanced Alloys Corp. and its subsidiaries, unless the context otherwise requires. Certain information included in this MD&A may constitute forward-looking statements. Statements in this report that are not historical facts are forward-looking statements involving known and unknown risks and uncertainties, which could cause actual results to vary considerably from these statements. Readers are cautioned not to put undue reliance on forward-looking statements. Our unaudited condensed consolidated interim financial statements for the nine months ended March 31, 2016 have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) using accounting policies consistent with IFRS as issued by the IASB and interpretations of the International Financial Reporting Interpretations Committee. Additional information relating to us is available for view on SEDAR at www.sedar.com. Our Business We are primarily engaged in developing and manufacturing advanced alloys, in particular beryllium-aluminum alloys and specialty copper alloys. Our head office is located in Vancouver, Canada. We operate four plants in the United States (“US”) that manufacture, heat-treat, machine or market copper-beryllium, beryllium-aluminum, copper-based master alloys and similar specialty alloy products including beryllium-aluminum castings. Our manufacturing operations currently employ 70 people. Our manufacturing operations comprise two divisions: Copper Alloys and Engineered Materials. • Copper Alloys manufactures and distributes a wide variety of copper alloys as castings and forgings: beryllium copper, chrome copper and aluminum bronze in plate, block, bar, rings and specialty copper alloy forgings for plastic mold tooling and resistance welding parts. • Engineered Materials supplies high-performance beryllium-aluminum components to the aerospace and high-tech manufacturing sectors. In the past we have undertaken research initiatives with the goal of increasing demand for beryllium-related products. At present, we do not have any active research programs but intend to resume research in the future. Other than our VP nuclear fuels, who is employed part-time, we do not have any employees directly engaged in research. We were formed by an amalgamation under the laws of British Columbia on November 23, 2007 and our common shares are listed on the TSX Venture Exchange (the “TSX-V”) under the symbol “IB” and on the OTCQB market under the symbol “IAALD”, having changed from “IAALF” after the May 2016 one-for-ten consolidation of our share capital.
IBC Advanced Alloys Corp. Management’s Discussion and Analysis Nine Months Ended March 31, 2016
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Corporate Developments • In May 2016, we closed a private placement raising gross proceeds of C$7.46 million ($5.7 million) and undertook a one-share-for-ten consolidation of our share capital. See Corporate Reorganization and Private Placement below. • In May 2016, Mark Smith and Geoff Hampson joined our board of directors. Further details on their experience and skills are provided under Board of Director Changes below. Dal Brynelsen and Alastair Neill, who had served on our board since 2007 and 2011 respectively, stepped down. • In May 2016, we appointed Major General David Heinz as president and chief executive officer and Anthony Dutton, our former president and CEO, as vice-president of corporate relations and special projects. Major General Heinz’ appointment follows his January 2016 appointment as chief operating officer. General Heinz has been a director of IBC since May 2011 and remains on the board. Private Placement and Corporate Reorganization CORPORATE REORGANIZATION In May 2016, we consolidated our share capital on the basis of one post-consolidation common share for every ten pre-consolidation common shares. We previously had 98,085,813 common shares issued and outstanding and, following the consolidation, had 9,808,492 common shares issued and outstanding, after adjusting for rounding. We did not issue and fractional shares. We believe the consolidation will provide us with increased flexibility when negotiating financings and better access to equity markets in which to raise the capital we require to further develop our manufacturing operations and strengthen business operations.
PRIVATE PLACEMENT In conjunction with the consolidation, we completed a non-brokered private placement issuing 19,893,670 post-consolidation units at an issue price of C$0.375 per unit for gross proceeds of C$7.46 million, which reflected receipts exceeding the original 25% oversubscription option. Included in this amount is $0.39 million of subscriptions by directors, officers, employees and consultants. The planned use of proceeds is for equipment upgrades to our Engineered Materials and Copper Alloys operations and for general working capital purposes. Each unit consists of one post-consolidation common share of IBC and one transferable share purchase warrant. Each warrant is exercisable to acquire an additional post-consolidation common share of IBC at a price of C$0.50 until May 24, 2021. The warrants have an acceleration provision, so that in the event IBC trades at C$2.50 or greater for 21 consecutive trading days at any time until May 24, 2018, warrant holders will have 60 days to exercise their warrants, failing which the warrants will expire. The securities issued are subject to a hold period expiring September 25, 2016. In connection with the private placement, we paid finders’ fees and issued finders’ warrants and units. Full particulars are provided in Shareholders’ Equity – Private Placement below. We entered into a consulting agreement with Rory Godinho as part of the reorganization, under which he provided corporate finance advice to us and managed the private placement. In addition, Mark A. Smith, acting through his company KMSMITH LLC, advised the Company on restructuring our business and operations.
IBC Advanced Alloys Corp. Management’s Discussion and Analysis Nine Months Ended March 31, 2016
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Board of Directors Changes In conjunction with the reorganization and private placement, Dal Brynelsen and Alastair Neill stepped down from the board. Out board and management have joined in thanking Messrs Brynelsen and Neill for their service to the Company. Two new directors joined our board:
MARK SMITH Mark Smith is the president, CEO and executive chairman of Niocorp a company developing a superalloy materials project near Elk Creek, Nebraska that will produce niobium, scandium and titanium products. He is well recognized in the mining community, having recently served as president, CEO and director of Molycorp, Inc., where he was instrumentally involved in taking the company public. Previously, Mr. Smith was the president and CEO of Chevron Mining Inc. from 2005 through 2008. He was also vice president for Unocal Corporation where he managed its real estate, remediation, mining and carbon divisions for over 22 years. From 2000 to 2007, Mr. Smith also served as a director and shareholder representative of Companhia Brasileira de Metalurgia e Mineração, a private company that currently produces approximately 85% of the world supply of niobium. He is also president, CEO and director of Largo Resources (TSXV: LGO). Mr. Smith has a bachelor of science in engineering from Colorado State University and a juris doctor cum laude from Western State University, College of Law.
GEOFF HAMPSON Geoff Hampson has a 30-year career as a senior executive and entrepreneur in a variety of businesses with experience in technology, start-ups, mining, turnaround situations. He has engaged in industry consolidations where he has been able to build strong teams to lead businesses into sector-leading positions. Mr. Hampson has been involved in over 20 M&A transactions on both the buy and sell sides. Having negotiated over ten international joint ventures, in countries such as Brazil, India, Ukraine, Russia, South Africa and China, he has cultivated his international experience and built countless relationships around the world. Mr. Hampson is the chairman and CEO of Fibrox Technology Ltd., a North American leader in the production of mineral fiber. He is also chairman and CEO of Para Resources Inc., a publicly- listed company focusing on South and Central American gold properties. Mr. Hampson was the founder and chairman of Techvibes Media Inc., the founder and CEO of Corelink Data Centers LLC, the CEO of Live Current Media, Inc., and the president and CEO of Novocon International Inc. Mr. Hampson has served on the boards of directors of several other companies including: Eagle Mountain Gold Corp., a junior mining company;; International Samuel Exploration Inc., a junior exploration company;; American Asset Investment Corp, a Panamanian real estate investment fund focused on US commercial real estate;; Peer 1 Network Enterprises Inc., as CEO and director;; and Pacific Rodera Energy Inc. as chairman. He served as a member of the University of British Columbia’s International Advisory Board and is active in local and international associations and charities. Mr. Hampson has lived and worked in both Canada and the United States.
BOARD COMMITTEES With the revised board in place, the Company has reconstituted its board committees. The audit committee now comprises Mike Jarvis (chair), Mark Smith and Geoff Hampson all of whom are
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independent. The compensation committee now comprises Mark Smith (chair), Mike Jarvis and Anthony Dutton, two of whom are independent. Manufacturing Operations We currently have four manufacturing operations in the United States that employ 70 people.
Location Building Area Leased/Owned Employs 2 m sq ft Copper Alloys Franklin, IN 4,800 48,000 Owned 37 Royersford, PA 1,500 16,000 Leased 8 New Madrid, MO 2,500 26,500 Owned 6 51 Engineered Materials Wilmington, MA 5,800 63,000 Leased 19 70 Most of the Company’s management and administration are based at the Franklin, IN facility.
COPPER ALLOYS We manufacture and distribute a wide variety of copper alloys as castings and forgings: beryllium copper, chrome copper and aluminum bronze in plate, block, bar, rings and specialty copper alloy forgings for plastic mold tooling and resistance welding parts. We sell directly to end users and serve some markets through a network of established dealers and distributors. Our Copper Alloys operations are based in Franklin, Indiana, where we maintain a forging (hammer, press and ring rolling), heat-treating and machining operation. We cast billets at plants in Royersford, Pennsylvania and New Madrid, Missouri. Our Franklin plant sits on 4.8 hectares (12.0 acres) of land that has considerable room for expansion. We source copper alloys in cast billet, slab or ingot from mills in North America, Europe and Asia and convert these into usable industrial products serving the industrial welding, oil and gas, plastic mold, metal melting, marine defense, electronic and industrial equipment markets. We also provide tooling components for the North American automotive industry, the European and North American consumer plastic tooling producers, the global oil and gas service industry, the prime North American submarine and aircraft carrier producers and repair facilities including the US Navy, electronics industries and general equipment manufacturers. We produce material at two IBC-owned mills and buy other billet from independent third-party mills. We have expertise in melting and casting beryllium copper and other beryllium containing alloys. Our casting operations are a primary producer-supplier of beryllium copper casting and master alloy ingot products in North America and markets around the world. Our copper alloys operations also manufacture beryllium nickel and low-beryllium-content beryllium-aluminum alloys. We offer our customers a full range of manufacturing and support services including casting and master alloy products, cast and forged billet products, semi-continuous cast input billets and wrought products. We manufacture our beryllium alloys utilizing either pure metallic beryllium or certified beryllium copper master alloy.
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Our Royersford facility has three furnaces that have been adapted to meet the specialized requirements of beryllium alloy manufacturing. We have strong technical and manufacturing engineering resources in the highly specialized beryllium and beryllium containing alloy industry, which have allowed us to develop and integrate proprietary direct chill VLT (very low turbulence) semi-continuous casting technology into a highly autonomous billet manufacturing cell. This effort has resulted in the capability to manufacture large 21-inch diameter beryllium copper input billets weighing up to two tonnes. These large-scale as-cast billets exhibit consistently fine- grained, uniform micro-structures coupled with high purity, low carbide chemical compositions. Our New Madrid plant is located on a 2.4-hectare (6.0 acres) site 265 kilometres (165 miles) south of St. Louis, Missouri. It has two furnaces and is capable of producing billets in a range of sizes and compositions. We are planning to upgrade this facility to make it suitable for beryllium alloy production when production volumes justify the investment. This facility is underutilized and as a result there is room for significant expansion of plant operations at this location.
ENGINEERED MATERIALS Engineered Materials supplies high-performance beryllium-aluminum components to the aerospace and high-tech manufacturing sectors. We currently manufacture the Beralcast® and ABX™ families of metal matrices that can be used in commercial and military applications requiring complex, lightweight or high-stiffness parts. We have additional, higher-performance products in development and plan to launch at least one new major product line in the next six months. Using our proprietary manufacturing techniques, we plan to make beryllium-aluminum components more accessible and cost-effective. In general, Beralcast® and ABX™ alloys serve as a higher-performance or lower-cost replacement materials for cast aluminum, magnesium, titanium, metal matrix composites, non- metallic composites, and pure beryllium or powder metallurgy beryllium-aluminum. Some of the varied applications include automotive braking and structural components and aerospace and satellite system components. The principal Beralcast® metal matrix is more than three times stiffer than aluminum with 22% less weight and can be precision-cast to simple and complex configurations. This material is very lightweight with a high modulus of elasticity and can be precision cast for three-dimensional stability. Beralcast® is ideally suited for certain demanding semiconductor manufacturing equipment, computer components and other commercial and aerospace applications and allows for a near-net shape to be cast for maximum manufacturing efficiencies. Binary beryllium-aluminum composites were developed by a US corporation, which was originally a metallurgical laboratory affiliated with MIT, in cooperation with Lockheed Martin. We own the intellectual property relating to the more advanced development of this technology, which is a proprietary and patented castable metal matrix composite beryllium aluminum alloy now manufactured as Beralcast®. We believe that a competitor has launched an alternative cast beryllium-aluminum product, which if commercially viable would be a direct competitor to Beralcast® and ABX™. We have trade name rights to Beralcast® and ABX™;; proprietary know-how;; manufacturing equipment;; marketing and supply agreements;; and US beryllium stockpile bidding requirements and bona fides. Since the manufacturing process is different from that employed for Copper Alloys, we operate a separate manufacturing facility optimized for Beralcast® and ABX™ alloys. We are developing Engineered Materials’ business by undertaking product-focused development initiatives with a heavy emphasis on defence applications. Generally, the process is as follows:
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1. Memorandum of understanding – The first step is to assess the feasibility of using Beralcast® in the customer’s application. 2. Non-recurring engineering – At various stages between the initial feasibility assessment and production, we and our customer engage in engineering work to tailor the part design to the material and assess its performance. 3. Hard tooling – Once production is likely, the customer asks us to design, manufacture and implement hard tooling to be included as part of final qualification process. Although not a guarantee that a production order will follow, a hard tooling contract is a very strong indication that the customer expects to enter volume production of the component. 4. LRIP (low-rate initial production) – New programs typically work though a start-up phase to iron out problems before production reaches long-term levels. As part of the first production run, we work with our customer on various quality assurance steps culminating in the first article inspection. 5. Volume production. We are currently working on various initiatives at stages from memorandum of understanding to low-rate initial production (“LRIP”). Recent Business Initiatives In September 2014, Lockheed Martin Missiles and Fire Control selected Engineered Materials to provide critical cast components for the EOTS system on the F-35 Lightning II. The first component covered by this contract is an EOTS azimuth gimbal housing being manufactured using Beralcast®, Engineered Material’s proprietary beryllium-aluminum casting alloy. Lockheed Martin has awarded us two contracts for production azimuth gimbal housings for OEM aircraft and spares. These contracts are for the ramp-up production period, or LRIP. The first contract, awarded in September 2013 was for LRIP lots 7 and 8 and the second contract awarded in August 2014 was for LRIP lots 9 and 10. We have completed production for LRIP lots 7 and 8 and have completed much of the production for LRIP lots 9 and 10. The value of the initial contract was just over $2.0 million including machining, non-recurring engineering and hard tooling deliverables;; the value of the second contract, which is for castings only, is for a similar amount. These contracts, with subsequent LRIP contract awards, have the potential to increase significantly over the life of the F-35 program. The EOTS assembly being produced by Lockheed Martin for all the F-35 variants. Although our production contracts are typically about one year, planned F-35 production is expected to run through 2035 with completion of over 3,000 aircraft. We are currently pursuing other sales opportunities with several defence companies. While we are currently operating at much less than capacity and refurbished part of our vacuum furnace in 2014, we believe that increased production at our Wilmington, MA facility will require replacement of key parts of our furnace at an expected cost of less than $1 million. We plan to undertake these upgrades, which will potentially double our melt capacity, in the summer of 2016.
BUSINESS RISKS Some of the risks that our business faces, which are specific to our operations, are: Dependence on Ulba Metallurgical Plant We are dependent on Ulba Metallurgical Plant (“Ulba”) for our supply of vacuum-cast beryllium and beryllium copper master alloy. Ulba operates a beryllium processing and manufacturing facility and is owned by Kazatomprom, the national atomic company of Kazakhstan. As we have
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done in the past, we may also be able to source beryllium from the US National Defense Stockpile and a third-party business from time to time. We have entered into long-term beryllium and beryllium copper master alloy supply agreements with Ulba. Ulba’s ability to honour its supply obligations will depend on its ability to source raw materials. We are unable to obtain reliable information as to the extent and availability of Ulba’s raw material supply, although we understand that production uses long-term stockpiles. Any disruptions in Ulba’s ability to manufacture beryllium or CTMA to our specifications would have a materially adverse effect on our business. Our contract with Ulba will expire in 2016 and if we are unable to renew the contract on commercially reasonable terms, it will have a material adverse effect on our business. Disruptions of our Manufacturing Operations From time to time, our operations are adversely affected by disruptions caused by such things as water line failures, power outages, equipment failures and anomalous weather. These issues normally only cause short-term interruptions, but can affect our ability to meet our quarterly revenue and profitability objectives. Need to Meet Product Specifications All of the products that we manufacture are required to conform to a specification. Some of these specifications are very exacting and small variations in process can cause our products to fall short of the required standard. In addition, customers’ requirements can change from time to time. If we are unable to address these specification issues in a timely manner, we are at risk of losing short-term revenue and even long-term production contracts.
OPERATING PERFORMANCE AND OUTLOOK Copper Alloys Our first and fourth fiscal quarters are usually stronger than our second and third fiscal quarters. This is due to seasonal factors such as the holiday season and our customers’ production schedules. Our second fiscal quarter was exceptionally weak with very poor Copper Alloys sales but our sales improved in the third fiscal quarter, although not yet returning to historical levels. The continued softness in sales is partly due, we believe, to a general sector weakness resulting from lower resource activity, particularly oil and gas. Our order backlog has returned to normal levels and we expect to see Copper Alloys near-term performance to be consistent with the third quarter performance. Looking further out, the recently completed private placement will fund the purchase of equipment which we expect will improve both our revenues and our margins. Copper Alloys sales are also affected by changes in the underlying price of commodities, primarily copper. Indicative copper prices per pound are:
2015 2014 June 30 $2.64 $3.15 September 30 $2.29 $3.03 December 31 $2.10 $2.85 2016 2015 March 31 $2.16 $2.75
We aim to pass the cost of copper through to our customers and do not hold large inventories of copper. Accordingly, our profitability should not, in the long term, affected by the price of copper except to the extent that high copper prices discourage consumption or competitors lower their
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margins to obtain business. In the short term, price fluctuations can have a bearing on our profitability as we realize gains or losses on our inventories. Since copper is a significant component of products we sell, the price of copper does materially affect our revenues. Engineered Materials Engineered Materials sales in fiscal 2016 have grown as a result of ongoing Lockheed Martin business. Our third fiscal quarter sales were the best for the Engineered Materials Business since we acquired the business in 2010. The excellent results in the year to date are a result of recognizing a significant proportion of revenues from both LRIP lots 7 and 8 (contract value approximately $2 million) LRIP lots 9 and 10 (contract value approximately $2 million). While manufacturing activity on these contracts has been fairly evenly spread over the period from September 2014 to date, revenue recognition rules have resulted in some revenues from earlier production not being recognized until the current period. We expect that Engineered Materials shipments in our fourth fiscal quarter will decline due to the timing of shipments. In previous fiscal years, our Engineered Materials division has typically generated 10% to 15% of our revenues but we expect Engineered Materials’ proportion of total revenue to increase over the next few years as that segment grows. In the first nine months of fiscal 2016, Engineered Materials generated 30% of our sales. Research Initiatives From time to time, we sponsor and assist in research initiatives with a view to increasing long- term demand and new market opportunities for beryllium and beryllium oxide. Our primary focus has been on enhanced nuclear fuels, but we are not actively engaged in research at present. We presented a paper on our beryllium oxide (“BeO”) nuclear fuels initiative at the Characterization and Quality Control of Nuclear Fuels (“CQCNF 2015”) Conference in Hyderabad, India in December 2015. The conference was sponsored by the Indian Nuclear Fuel Complex, a central industrial unit of India's Department of Atomic Energy which manages 21 nuclear power reactors in India. Since 2008, we have sponsored collaborative research agreements with Purdue University and Texas A&M to develop a new type of BeO nuclear. Work to date has confirmed that UO2 – BeO fuel is longer lasting, more efficient and provides a larger safety margin than current nuclear fuels. Under the terms of the collaborative research agreements, IBC has an option to enter into an exclusive royalty-bearing license for commercial application to the intellectual property relating to the development of an advanced BeO nuclear fuel with both Purdue and Texas A&M. Purdue has filed provisional patents covering the IBC-funded nuclear fuel research. The next step in this research initiative will be to have an industrial assembly of the BeO- enhanced fuel approved for irradiation in a test reactor. We have not allocated funds to this initiative but are seeking a partner to jointly fund the next development step. Financial Except as noted, all financial amounts are determined in accordance with IFRS and expressed in thousands of US dollars, except per-share amount.
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SELECTED QUARTERLY INFORMATION During our most recent eight quarters, we have not incurred any loss from discontinued operations or extraordinary items. Quarter Ended Revenue Loss for the period Basic and diluted loss per share1 $000 $000 $ June 30, 2014 4,323 (792) (0.10) September 30, 2014 4,646 (519) (0.07) December 31, 2014 5,087 (706) (0.09) March 31, 2015 4,479 (582) (0.07) June 30, 2015 3,572 (996) (0.12) September 30, 2015 4,232 (721) (0.08) December 31, 2015 3,324 (1,774) (0.19) March 31, 2016 4,741 (296) (0.03) 1 The sum of quarterly loss per share may not add to year-to-date totals due to rounding Factors affecting quarterly losses include: • June 30, 2014 – our Copper Alloys operations had a weak quarter, although this was partly offset by improved Engineered Materials sales. The Copper Alloys weakness was not due to any single factor but had a variety of causes that were not attributable to a long-term trend. • June 30, 2015 – while Engineered Materials enjoyed a strong quarter, Copper Alloys operations experienced a weak quarter that reflected a trend towards lower order intake. • December 31, 2015 – Copper Alloys sales decreased markedly due in part to general sector problems (weak demand, lower price of copper) but also other factors such as ongoing customer equipment-related issues that resulted in lower orders. • March 31, 2016 – We enjoyed record sales in our Engineered Materials divisions, and our loss decreased as a result.
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RESULTS OF OPERATIONS Overview Three Months Ended March 31, 2016 We incurred a loss of $296 for the three months ended March 31, 2016 compared to a loss of $582 in the comparative 2015 period. Our sales improved 6% compared to the comparative year, but were up 43% compared to our second quarter, which was unusually weak. Our Engineered Materials operations reflected the highest sales quarter since we acquired the business in 2010. Thanks to ongoing cost-cutting inactivates, our financial operating performance improved significantly. A summary of our results of operations to income before other income (loss) (“operating income (loss)”) follows: Three Months Ended Three Months Ended March 31, 2016 March 31, 2015 Copper Eng. Corp. Consol- Copper Eng. Corp. Consol- Alloys Mat. idated Alloys Mat. idated $ $ $ $ $ $ $ $
Sales 2,890 1,851 - 4,741 3,683 796 - 4,479
Cost of sales Materials 1,019 329 - 1,348 2,056 415 - 2,471 Labour 777 293 - 1,070 504 223 - 727 Subcontract 323 153 - 476 - - - - Overhead 458 344 - 802 306 400 - 706 Depreciation 128 86 - 214 121 69 - 190 Change in finished goods (52) 207 - 155 (25) 2 - (23) 2,653 1,412 - 4,065 2,962 1,109 - 4,071 Gross profit (loss) 237 439 - 676 721 (313) - 408 SG&A expenses 442 177 296 915 569 346 276 1,191 Operating income (loss) (205) 262 (296) (239) 152 (659) (276) (783)
Gross margin 8% 24% - 14% 20% (39%) - 9%
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Overview Nine Months Ended March 31, 2016 Our loss for the nine months ended March 31, 2016 was $2,791 compared to a loss of $1,807 in the comparative period. The increase in our loss for the primarily attributable to a very weak second quarter, particularly in Copper Alloys. A summary of our results of operations to income before other income (loss) (“operating income”) follows: Nine Months Ended Nine Months Ended March 31, 2016 March 31, 2015 Copper Eng. Corp. Consol- Copper Eng. Corp. Consol- Alloys Mat. idated Alloys Mat. idated $ $ $ $ $ $ $ $
Sales 8,616 3,681 - 12,297 12,082 2,130 - 14,212
Cost of sales Materials 4,499 746 - 5,245 7,548 817 - 8,365 Labour 1,718 832 - 2,550 1,419 947 - 2,366 Subcontract 719 610 - 1,329 - - - - Overhead 1,227 1,054 - 2,281 1,009 1,099 - 2,108 Depreciation 386 260 - 646 297 244 - 541 Change in finished goods (154) 186 - 32 (278) 2 - (276) 8,395 3,688 - 12,083 9,995 3,109 - 13,104 Gross profit (loss) 221 (7) - 214 2,087 (979) - 1,108 SG&A expenses 1,373 598 905 2,876 1,198 944 959 3,101 Operating income (loss) (1,152) (605) (905) (2,662) 889 (1,923) (959) (1,993)
Gross margin 3% 0% - 2% 17% (46%) - 8% Segment Analysis A discussion about the significant components of the segment operating loss and net loss follows. Copper Alloys • In the current fiscal year, Copper Alloys gross profit has been adversely affected by a combination of declining sales and significant fixed operating costs. • A decline in the price of copper reduced our sales by $1,502 and a decline in production volume decreased sales by $1,144 in the nine months ended March 31, 2016 compared to the same period in 2015. Changes in by-product sales ($274 decline) and sales mix ($546 decrease) accounted for the remainder of the difference. We try to pass price changes (favourable or unfavourable) through to our customers but sharp declines in price adversely affect our profitability due to holding losses on inventory. • The increase in Copper Alloys expenses is primarily due to a bad debt recovery booked in the prior year and reduced salary allocations to Engineered Materials.
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• Interest expense, shown below the operating income line, relates to line of credit and term loan facilities for our Copper Alloys operations. Engineered Materials • Engineered Materials gross profit margin is adversely affected by fixed costs being spread over a small sales volume. In the short term, material and supplies costs are the only significant variable expense. As noted above, we enjoyed the strongest sales quarter ever in Engineered Materials and recorded much improved profitability measures as a result. We expect that if Engineered Materials sales increase, gross margin will improve as the fixed costs will be spread over a larger sales volume. • Our manufacturing overhead decreased in the current fiscal period primarily as a result of staffing changes. • Depreciation charges are a significant proportion of operating costs, so while we report an operating loss, the cash flow performance of Engineered Materials is better. We expect that most of Engineered Materials’ current plant and equipment will be substantially depreciated by the end of fiscal 2016. We expect to undertake a capital expansion plan in the next few months, so we will continue to record depreciation expense in future periods. Corporate • Corporate expenses relate to expenses incurred to manage the overall group, including senior management, fundraising initiatives, business development activities, public company costs and any expenses not directly related to manufacturing. We have taken steps to reduce corporate overhead, which are reflected in lower second quarter expenses, and expect that expenses will further decrease in the third fiscal quarter. • Investor relations expense largely comprises consulting fees paid to communicate information about us to current and prospective investors. As a result of new initiatives, particularly regarding our Engineered Materials operations, we increased our investor relations activities and expect they will remain at the current level for the foreseeable future. We have curtailed new investor relations programs but will continue to recognize expense for previously purchased programs. • We include corporate-related personnel costs in salaries, wages, and management fees expense. Our CEO and CFO have at various times deferred payment of some or all of their compensation or taken payment in shares. Accordingly, our cash operating costs were less than the accrued costs reflected in our financial statements. See Liquidity and Capital Resources below for further particulars in this regard. • Professional fees comprise corporate audit and legal and related fees, other than legal fees incurred for financings, which are capitalized. • Other income primarily represents receipts from the sublease of our premises. This income will not be significant in future periods as we downsize our premises.
CHANGES IN FINANCIAL POSITION SINCE JUNE 30, 2015 Changes in our financial position since June 30, 2015 relate to operations in the ordinary course.
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LIQUIDITY AND CAPITAL RESOURCES At March 31, 2016, we had working capital of $775 including cash and equivalents of $156, as compared to working capital of $2,904 at June 30, 2015. Factors affecting our liquidity include: • As discussed elsewhere in this MD&A, in May 2016, we closed a financing which generated gross proceeds of C$7,460 (approximately $5,700). • We have raised $300 through the issuance of promissory notes which are due in the third quarter of fiscal 2017. We believe that our operating cash flow will be sufficient to repay these notes as planned. • Copper Alloys generally generates enough cash independently to support its operations (although it did not do so in the second or third quarters). Engineered Materials has a history of losses, but generated income in the third quarter. We expect that we will continue to support Engineered Materials’ operations, at least in the short term, primarily to acquire beryllium inventory. • The main limitation on our cash position is the cost of maintaining our corporate office and corporate development initiatives. Related to this are restrictions imposed by our banks that currently prevent us from transferring funds from Copper Alloys to our other segments. Consequently, at present, our corporate office, research and corporate development activities are entirely dependent on our ability to raise equity funds. We have taken steps to reduce corporate costs. While we have seen the benefit of these initiatives, the full impact of the savings will be realized in the second quarter of fiscal 2017. • To support our cash position, directors and officers deferred $584 of compensation to March 31, 2016. This obligation was largely settled following closing of the offering, with insiders subscribing for units valued at C$353 ($268) with their after-tax compensation. Following the financing, a balance of $89 remains which is payable at the discretion of the board of directors following the Company reaching profitability. • We have purchase commitments that may exceed our operational needs with the result that we may over-invest in inventory. • Resource prices, particularly for copper, have a bearing on our manufacturing costs and selling prices, as copper is a large component of most of our products. • We may be obliged to incur material expenditures on purchases of property, plant and equipment to maintain our productive capacity or service customers. In particular, based on sales initiatives under way, we are contemplating the purchase of equipment to expand our capacity to produce Beralcast® products. We expect that the proceeds from our May 2016 offering will be sufficient to meet our short-term needs. We may be able to generate additional cash by expanding our bank facilities but we will need to raise additional funds to complete our business plan. There can be no assurance that we will be successful in obtaining such funds.
COMMITMENTS At March 31, 2016, we had commitments to lease premises over the next five years with an aggregate payment obligation of $2,265. We were also committed to raw materials purchases over the next two years aggregating $4,143.
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RELATED PARTY TRANSACTIONS Except as described below, we do not have any contractual relationships with directors or officers other than employment contracts in the ordinary course of business. The employment contracts are not financially material to our business except that our vice-president corporate relations and special projects (formerly our CEO), CFO and executive vice-president of business and technical development are eligible to receive payments of up to C$450, C$96 and $405 respectively in the event of a change of control of IBC, if certain conditions are met. The amounts payable to our vice-president corporate relations and special projects were reduced in conjunction with our May 2016 reorganization. Our directors were paid $36 per year, but agreed in October 2012 to reduce annual director compensation to $18 temporarily as part of a broader initiative to reduce overhead expenses. In the period ended March 31, 2016, we borrowed $150 from our CEO (formerly our COO) under two promissory notes. The loans are secured by the accounts receivable and inventory of our Engineered Materials division and bear interest at an annual rate of 10%. Our CEO has agreed to be partially compensated in our common shares, subject to conditional acceptance by the TSX Venture Exchange. For the period January 2016 to July 2016, we will pay our CEO cash compensation to cover necessary payroll withholdings with the balance to be paid in our common shares. From July 2016 to January 2017 we will pay a combination of cash and shares. The share price used will be the closing price of IBC’s common shares on the TSX- V on the last trading day of the month. Any extension of the arrangement beyond one year would be also subject to obtaining disinterested shareholder approval. As noted above, we entered into an advisory agreement with KMSMITH LLC, Mark Smith’s consulting company. We will pay the $17 per month from April 1, 2016 until December 31, 2016. We have also granted KMSMITH LLC options to purchase up to 907,000 common shares in accordance with our stock option plan at an exercise price of C$0.375 until May 22, 2021.
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS Our activities expose us to a variety of financial risks, including foreign exchange risk, interest rate risk, commodity price risk and credit risk. We do not have a practice of trading derivatives. We attempt to employ a natural hedge for foreign currency by holding funds in the currency in which we expect to spend the monies. Foreign Exchange Risk While most of our activities are in the United States, we maintain a corporate office in Canada and raise money in Canadian dollars. We manage exchange risk on equity capital by converting expected United States expenditures to United States dollars at the time the money is raised. Interest Rate Risk Our interest rate risk mainly arises from the interest rate impact on cash and cash equivalents and interest expense on the BMO Harris Bank line of credit. Our term loan has a fixed interest rate and is not exposed to short-term interest rate risk. Commodity Price Risk Our profitability and long-term viability depend, in large part, on the market prices of copper, aluminum and beryllium. The market prices for metals can be volatile and are affected by factors beyond our control, including: global or regional consumption patterns;; the supply of, and demand for, these metals;; speculative activities;; the availability and costs of metal substitutes;; expectations for inflation;; and political and economic conditions, including interest rates and
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currency values. We cannot predict the effect of these factors on metal prices. We do not engage in hedging but, where possible, structures selling arrangements in a way that passes commodity price risk through to the customer. Credit Risk We manage credit risk by trading with recognized creditworthy third parties and insuring trade receivables. In addition, we monitor receivable balances with the result that the Company’s exposure to bad debt is generally not significant. We also manage our credit risk by investing surplus cash in low-risk, liquid securities, typically short-term deposits with large financial institutions. Environmental and Occupational Safety Issues We melt and machine materials that have the potential, if not controlled and handled appropriately, to have a negative effect on health and the environment. In addition, our operations use materials such as cutting and hydraulic fluids, which have the capacity to cause environmental contamination if left uncontained. To mitigate these potential risks we: • employ manufacturing practices to minimize and eliminate dispersal of fumes and dust;; • use trap basins and fluid reservoirs to capture and retrieve possible overages;; • use of active exhaust vents/hoods located in equipment areas to capture and filter air;; • regularly scheduled assessment and maintenance of in-house ventilation systems;; • require our employees to use appropriate personal protective equipment (respirators, outer garments, gloves, etc.) selected to limit and protect them from any potential exposures;; • conduct beryllium lymphocyte proliferation tests (BeLPT) to determine employees’ potential for sensitivity to beryllium prior to possible exposure;; • undertake ongoing air quality monitoring and perform periodic employee health exams as per occupational health guidelines;; and • limit access to areas that may have a potential exposure to beryllium dust particles. In spite of these procedures, we remain subject to risk in this regard. As with all industry, we are subject to periodic inspection by state and local safety, health and environmental authorities. If during an inspection a failing was noted in our system, the potential for the temporary or permanent closure of the facilities could exist. If during the periodic employee health screening, an employee displays elevated exposure to metals, it could require us to place the employee on sick leave, which would have the potential to impact both our direct and indirect costs and cause a disruption of production. There is also the potential that an inherent safety or environmental exposure, if uncontrolled, could initialize a suit by employees or neighbours. To minimize the risks arising from pre-acquisition activities, we commissioned phase one environmental reviews prior to acquiring our copper alloys businesses. It may be possible that environmental problems remain at our facilities that these phase one assessments did not uncover.
IBC Advanced Alloys Corp. Management’s Discussion and Analysis Nine Months Ended March 31, 2016
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Shareholders’ Equity POTENTIAL SHARE ISSUANCE Our board and the TSX-V have approved the issuance of 3,333 shares to settle a contingent liability of $30 with a supplier but we have not yet issued the shares.
SHARE CONSOLIDATION As described above, we consolidated our share capital on the basis of one post-consolidation common share for every ten pre-consolidation common shares. We previously had 98,085,813 common shares issued and outstanding and had 9,808,492 common shares issued and outstanding on completion of the consolidation, after adjusting for rounding. All share and per- share amounts have been restated to reflect the effect of the consolidation.
PRIVATE PLACEMENT In conjunction with the consolidation, we completed a non-brokered private placement of 19,893,670 post-consolidation units at C$0.375 per unit for gross proceeds of C$7,460, which reflected receipts exceeding the original 25% oversubscription option. Each unit consists of one post-consolidation common share of IBC and one transferable share purchase warrant. Each warrant is exercisable to acquire an additional post-consolidation common share of IBC at a price of C$0.50 until May 24, 2021. The warrants have an acceleration provision, so that in the event IBC trades at C$2.50 or greater for 21 consecutive trading days at any time until May 24, 2018, warrant holders will have 60 days to exercise their warrants, failing which the warrants will expire. The securities issued are subject to a hold period expiring September 25, 2016. We conducted the private placement in reliance upon certain prospectus and registration exemptions. Funds raised under the private placement will be used for planned capital expenditures at our Copper Alloys and Engineered Materials divisions to increase capacity and production efficiencies, and to provide general business working capital. While we intend to spend the available funds as indicated above, there may be circumstances where, for sound business reasons, a reallocation of the available funds may be necessary. We paid finders' fees on the private placement $291 (of which $87 was paid through the issuance of 233,000 units with the same terms as the private placement) and issued warrants to purchase up to 907,000 common shares at C$0.50 until May 24, 2021.
SHARE OPTIONS We have a rolling 10% share option plan that allows for the issuance of options equal to 10% of the number of issued shares. Shareholders approved our 2015 share option plan at our annual general meeting held in December 2015. In August 2015, we granted incentive stock options to directors, officers, management and certain key employees and consultants, to purchase up to 120,000 common shares. The options have an exercise price of C$1.20, are exercisable until August 25, 2020 and vest in stages over a three-year period. In August 2015, an option holder forfeited 6,500 options and, in November 2015, another option holder forfeited 50,000 options. In March 2016, 2,666 options expired unexercised and in May 2016, 3,333 options expired unexercised. In May 2016, as noted in Related Party Transactions, we issued options to purchase up to 907,000 common shares at a price of C$0.375 until May 2021.
IBC Advanced Alloys Corp. Management’s Discussion and Analysis Nine Months Ended March 31, 2016
- 17 -
WARRANTS In February 2016, 1,516,700 warrants exercisable at C$1.80 expired unexercised and in March 2016, 852,729 warrants exercisable at C$2.40 expired unexercised. In May 2016, we issued warrants to purchase up to 907,000 common shares at C$0.375 and 20,126,670 common shares at C$0.50 as part of a private placement, as described under Private Placement above.
OUTSTANDING SHARE DATA As at the date of this MD&A, we have issued: • A total of 29,935,162 common shares. In addition, we plan to issue 3,333 common shares to settle a contingent liability to a supplier. • Warrants to purchase 22,015,070 common shares. • Share options to purchase 1,746,000 common shares. The maximum number of shares potentially issuable is therefore 53,699,565.
searching for a positive point on 10% stock plan
Medallion Provides Corporate Update
Posted by Medallion - December 8, 2016 - 2016 News Releases, All News Releases
Medallion Provides Corporate Update
Vancouver, BC – Medallion Resources Ltd. (TSX-V: MDL; OTCPK: MLLOF – “Medallion” or the “Company”), today provided a corporate update.
In September the Company closed a $300,000 private placement, principally to pursue a pilot-scale metallurgical test program to further develop its monazite-based rare-earth extraction process, as well as to advance customer development work and perform jurisdictional research for the Company’s proposed rare-earth extraction plant. Medallion is pursuing production of rare-earth elements by sourcing and processing the by-product mineral monazite and marketing the resulting rare-earth chemical concentrates. Monazite, a well-understood rare-earth phosphate mineral, is mined and concentrated in significant quantities as a by-product in the heavy mineral sands mining industry.
Recently, some delays were experienced in arranging cross-border transportation of good-quality monazite sand samples from a potential feedstock supplier for the metallurgical test-work, but the process in now moving forward. It is expected that the feedstock material will be shipped shortly from the potential supplier to Medallion’s testing facility. This test-work is important for technical confirmation prior to building a continuous-flow integrated pilot plant. Data gathered from the pilot plant will in turn form the basis of an engineering study confirming the commercial viability of the process and proposed processing facility. With these delays behind the Company, Medallion is now in a position to provide updates on shipments, processing test-work and customer engagement.
Medallion’s annual meeting of the Company’s shareholders (the “Shareholders”) was held on September 28, 2016. Shareholders voted in favour of all items and matters of business submitted at the Meeting, including: (i) the re-appointment of Davidson & Company LLP, Chartered Accountants as auditors of the Company; (ii) the election of each director nominee, being Donald Lay, David Haber, Rod McKeen, Andrew Morden and David Shaw; (iii) the annual ratification and approval of the Company’s existing 10% “rolling” stock option plan as mandated by the policies of the TSX Venture Exchange and; (iv) an amendment to the Company’s articles giving the Board of Directors the authority to make changes to the capitalization of the Company without Shareholder approval.
Further to the stock option grant announced in the Company’s news release of September 15, 2016, the grant did not proceed. Medallion has now, pursuant to its stock option plan, granted stock options covering 3,790,000 shares at an exercise price of $.05 per share for a period of five years to directors, officers, consultants and advisors of the Company. Currently Medallion has 84,091,933 shares outstanding and a fully diluted capitalization, including all options and warrants of 111,527,640 shares.
About Medallion Resources
Medallion Resources is focused on the opportunity for low-cost, near-term, rare-earth production by exploiting the mineral monazite. Monazite is a rare-earth phosphate that is available as a by-product from existing mining and mineral-sands sources, principally in the Indian Ocean basin. Rare earths are used in critical components for virtually all computing and mobile electronic products, as well as wind turbines, electric and hybrid vehicles, and strategic defense systems. Medallion is committed to following best practices and accepted international standards in all aspects of mineral processing and the safe management of waste materials. More about Medallion (TSX-V: MDL; OTCPK: MLLOF; Frankfurt: MRD) can be found at medallionresources.com.
Donald Lay, President & CEO at +1.604.681.9558 or info@medallionresources.com
-K 1 form6kinformationcircular.htm INFORMATION CIRCULAR
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the period ended: May 12, 2004
COMMISSION FILE NUMBER: 0-22216
CANADIAN ZINC CORPORATION
(Exact name of Registrant as specified in its charter)
Suite 1202 – 700 West Pender Street
Vancouver, British Columbia
Canada V6C 1G8
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F
Form 20-F
[ X ]
Form 40-F
[ ]
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 13g3-2(b) under the Securities Exchange Act of 1934.
Yes
[ ]
No
[ X ]
If ‘Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):
CANADIAN ZINC CORPORATION
Suite 1202 – 700 West Pender Street
Vancouver, British Columbia V6C 1G8
NOTICE OF MEETING
TO:
The Shareholders of Canadian Zinc Corporation
NOTICE IS HEREBY GIVEN THAT an annual and special general meeting (the "Meeting") of the shareholders of Canadian Zinc Corporation (the "Company") will be held at 10th Floor, 595 Howe Street, Vancouver, British Columbia on Wednesday, June 16, 2004, at the hour of 10:00 a.m., Vancouver time, for the following purposes:
1.
To receive and consider the report of the directors and the financial statements of the Company together with the auditor's report thereon for the financial year ended December 31, 2003;
2.
To determine the number of directors at seven (7);
3.
To elect directors for the ensuing year;
4.
To appoint the auditor for the ensuing year;
5.
To authorize the directors to fix the remuneration to be paid to the auditor;
6.
To consider and, if though fit, to pass an ordinary resolution adopting a new 2004 stock option plan pursuant to which the maximum number of common shares of the Company which may be issued pursuant to options granted to directors, officers, employees and consultants of the Company and its subsidiaries, unless otherwise approved by shareholders, is 6,350,000 common shares (i.e., a fixed 10% stock option plan);
7.
To consider and, if though fit, to pass an ordinary resolution adopting an amended 2004 stock option plan as a replacement to the new fixed 10% stock option plan, pursuant to which the aggregate number of common shares of the Company which may be issued to directors, officers, employees and consultants of the Company and its subsidiaries may not exceed 10% of the issued and outstanding common shares at the time of the grant (i.e., a rolling 10% stock option plan) and otherwise having the same terms and conditions as the Company's 2004 Stock Option Plan, subject to the implementation of the Toronto Stock Exchange of policies permitting such plans;
8.
To consider and, if thought fit, to pass an ordinary resolution approving the issuance by the Company in one or more private placements during the 12 month period commencing June 16, 2004, of such number of securities as would result in the Company issuing or making issuable up to 68,496,427 common shares;
9.
To consider and, if thought fit, to pass a special resolution approving an amendment to the Company’s Notice of Articles (formerly "Memorandum") to delete certain "Pre-Existing Company Provisions" and bring the Company's charter documents into conformity with the new Business Corporations Act (British Columbia), the effect of which will be, among other things, to provide for two-thirds majority votes on special resolutions;
10.
To consider and, if thought fit, to pass a special resolution approving an amendment to the Company’s Notice of Articles to change the authorized capital to an unlimited number of common shares without par value;
11.
To consider and, if thought fit, to pass a special resolution adopting new Articles which contain updated provisions based on the new Business Corporations Act (British Columbia); and
12.
To transact such further or other business as may properly come before the Meeting and any adjournments thereof.
The accompanying information circular provides additional information relating to the matters to be dealt with at the Meeting and is deemed to form part of this notice. Also accompanying this notice is a form of proxy and a supplemental mailing return card. Any adjournment of the Meeting will be held at a time and place to be specified at the Meeting.
Only holders of common shares of record at the close of business on May 12, 2004 will be entitled to receive notice of and vote at the Meeting. If you are unable to attend the Meeting in person, please complete, sign and date the enclosed form of proxy and return the same in the enclosed return envelope provided for that purpose within the time and to the location set out in the form of proxy accompanying this notice.
DATED this 14th day of May, 2004.
BY ORDER OF THE BOARD OF DIRECTORS
(Signed)
John F. Kearney
Chairman, President and Chief Executive Officer
If you are a non-registered shareholder of the Company and receive these materials through your broker or through another intermediary, please complete and return the materials in accordance with the instructions provided to you by your broker or by the other intermediary. Failure to do so may result in your shares not being eligible to be voted by proxy at the Meeting.
CANADIAN ZINC CORPORATION
Suite 1202 – 700 West Pender Street
Vancouver, British Columbia V6C 1G8
INFORMATION CIRCULAR
(As at May 12, 2004, except as otherwise indicated)
This information circular is furnished in connection with the solicitation of proxies by the management of Canadian Zinc Corporation (the "Company") for use at the annual and special general meeting of the Company to be held on June 16, 2004 and at any adjournments thereof (the "Meeting"). The solicitation will be conducted by mail and may be supplemented by telephone or other personal contact to be made without special compensation by officers and employees of the Company. The cost of solicitation will be borne by the Company.
APPOINTMENT OF PROXYHOLDER
A duly completed form of proxy will constitute the person(s) named in the enclosed form of proxy as the shareholder's proxyholder. The persons whose names are printed in the enclosed form of proxy for the Meeting are officers or Directors of the Company (the "Management Proxyholders").
A shareholder has the right to appoint a person other than a Management Proxyholder, to represent the shareholder at the Meeting by striking out the names of the Management Proxyholders and by inserting the desired person's name in the blank space provided or by executing a proxy in a form similar to the enclosed form. A proxyholder need not be a shareholder.
REVOCABILITY OF PROXY
Any registered shareholder who has returned a proxy may revoke it at any time before it has been exercised. In addition to revocation in any other manner permitted by law, a proxy may be revoked by instrument in writing, including a proxy bearing a later date, executed by the registered shareholder or by his attorney authorized in writing or, if the registered shareholder is a corporation, under its corporate seal or by an officer or attorney thereof duly authorized. The instrument revoking the proxy must be deposited at the registered office of the Company, at any time up to and including the last business day preceding the date of the Meeting, or any adjournment thereof, or with the chairman of the Meeting on the day of the Meeting. Only registered shareholders have the right to revoke a proxy. Non-Registered Holders who wish to change their vote must, at least seven (7) days before the Meeting, arrange for their respective Intermediaries to revoke the proxy on their behalf.
VOTING BY PROXY
Common shares of the Company represented by properly executed proxies in the accompanying form will be voted or withheld from voting on each respective matter in accordance with the instructions of the shareholder on any ballot that may be called for.
If no choice is specified and one of the Management Proxyholders is appointed by a shareholder as proxyholder, such person will vote in favour of the matters proposed at the Meeting and for all other matters proposed by management at the Meeting.
The enclosed form of proxy also confers discretionary authority upon the person named therein as proxyholder with respect to amendments or variations to matters identified in the Notice of the Meeting and with respect to other matters which may properly come before the Meeting. At the date of this information circular, management of the Company knows of no such amendments, variations or other matters to come before the Meeting.
COMPLETION AND RETURN OF PROXY
Completed forms of proxy must be deposited at the office of the Company's registrar and transfer agent, Computershare Investor Services Inc., Proxy Department, 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1, not later than forty-eight (48) hours, excluding Saturdays, Sundays and holidays, prior to the time of the Meeting, unless the chairman of the Meeting elects to exercise his discretion to accept proxies received subsequently.
NON-REGISTERED HOLDERS
Only registered shareholders or duly appointed proxyholders are permitted to vote at the Meeting. Most shareholders of the Company are "non-registered" shareholders because the common shares they own are not registered in their names but are instead registered in the name of the brokerage firm, bank or trust company through which they purchased the common shares. More particularly, a person is not a registered shareholder in respect of common shares which are held on behalf of that person (the "Non-Registered Holder") but which are registered either: (a) in the name of an intermediary (an "Intermediary") that the Non-Registered Holder deals with in respect of the common shares (Intermediaries include, among others, banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered RRSP's, RRIFs, RESPs and similar plans); or (b) in the name of a clearing agency (such as The Canadian Depository for Securities Limited ("CDS")) of which the Intermediary is a participant. In accordance with the requirements of National Instrument 54-101 of the Canadian Securities Administrators, the Company has distributed copies of the notice of meeting, this information circular and the proxy (collectively, the "Meeting Materials") to the clearing agencies and Intermediaries for onward distribution to Non-Registered Holders.
Intermediaries are required to forward the Meeting Materials to Non-Registered Holders unless a Non-Registered Holder has waived the right to receive them. Very often, Intermediaries will use service companies to forward the Meeting Materials to Non-Registered Holders. Generally, Non-Registered Holders who have not waived the right to receive Meeting Materials will either:
(a)
be given a form of proxy which has already been signed by the Intermediary (typically by a facsimile, stamped signature), which is restricted as to the number of shares beneficially owned by the Non-Registered Holder but which is otherwise not completed. Because the Intermediary has already signed the form of proxy, this form of proxy is not required to be signed by the Non-Registered Holder when submitting the proxy. In this case, the Non-Registered Holder who wishes to submit a proxy should otherwise properly complete the form of proxy and deliver it to Computershare Trust Company of Canada as provided above; or
(b)
more typically, be given a voting instruction form which is not signed by the Intermediary, and which, when properly completed and signed by the Non-Registered Holder and returned to the Intermediary or its service company, will constitute voting instructions (often called a "proxy authorization form") which the Intermediary must follow. Typically, the proxy authorization form will consist of a one page pre-printed form. Sometimes, instead of the one page pre-printed form, the proxy authorization form will consist of a regular printed proxy form accompanied by a page of instructions which contains a removable label containing a bar-code and other information. In order for the form of proxy to validly constitute a proxy authorization form, the Non-Registered Holder must remove the label from the instructions and affix it to the form of proxy, properly complete and sign the form of proxy and return it to the Intermediary or its service company in accordance with the instructions of the Intermediary or its service company.
In either case, the purpose of this procedure is to permit Non-Registered Holders to direct the voting of the common shares which they beneficially own. Should a Non-Registered Holder who receives one of the above forms wish to vote at the Meeting in person, the Non-Registered Holder should strike out the names of the Management Proxyholders and insert the Non-Registered Holder's name in the blank space provided. In either case, Non-Registered Holders should carefully follow the instructions of their Intermediary, including those regarding when and where the proxy or proxy authorization form is to be delivered.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Except as set out herein, to the knowledge of the management of the Company, no director or executive officer of the Company since the beginning of the Company's last financial year, nor any associate or affiliate of the foregoing persons, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matters to be acted upon at the Meeting other than the election of directors and the approval of stock option plans.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company is authorized to issue 200,000,000 common shares without par value, of which as at May 12, 2004, the record date for the Meeting, 68,496,427 common shares were issued and outstanding. The holders of common shares are entitled to one vote for each common share held. Holders of common shares of record at the close of business on May 12, 2004 will be entitled to receive notice of and vote at the meeting. The Company has only one class of shares.
To the knowledge of management of the Company, no person beneficially owns, directly or indirectly, or exercises control or direction over shares carrying more than 10% of the voting rights attached to the common shares of the Company.
ELECTION OF DIRECTORS
At the meeting, shareholders will be asked to elect seven (7) directors (the "Nominees"). The following table provides the names of the Nominees and information concerning them. The specified persons in the enclosed form of proxy intend to vote for the election of the Nominees. Management does not contemplate that any of the Nominees will be unable to serve as a director. Each director of the Company holds office until his successor is elected or appointed.
Name, Province or State and Country of Ordinary Residence and Position Held with the Company
Principal Occupation During Preceding
Five Years
Date First Became Director of the Company
Common Shares beneficially owned, directly or indirectly, or over which control or direction is exercised (1)
Robert Gayton
British Columbia, Canada
Chief Financial Officer and Director
Financial consultant to and Vice-President Finance of Western Silver Holdings Ltd., Quaterra Resources Inc., Eaglecrest Explorations Ltd., Pacific Cascade Resources Corp., Rio Fortuna Exploration Corp., Intl Bravo Resources Corp., Lightyear Technologies Inc., Director of seven public companies and three private companies
May 2000
30,000 common shares
20,000 share purchase warrants
John F. Kearney(2)
Ontario, Canada
Chairman, President, Chief Executive Officer and Director
Chairman, President and Chief Executive Officer of Canadian Zinc Corporation since 2003; Chairman of Conquest Resources Limited since 2001; Chairman of Anglesey Mining plc since 1994
November 2001
140,000 common shares
450,000 stock options
John MacPherson
British Columbia, Canada
Director
Chairman of Mineworks Inc. since 2003; Chairman of Canadian Zinc Corporation from 2000 to June 2003
May 1999
60,000 common shares
David Nickerson
Northwest Territories, Canada
Director
Professional Engineer, Mining consultant, Director, Tyhee Development Corp.; previously Chairman of Northwest Territories Water Board; Member of Parliament, Member of NWT Legislative Assembly; Government Minister
March 2004
Nil
Alan C. Savage(3)
British Columbia, Canada
Director
Chief Executive Officer of Doublestar Resources Ltd., Director of two public companies and one private company
June 2003
2,000 common shares
David Shaw
British Columbia, Canada
Director
Self employed as an independent consulting geologist
May 2000
50,000 common shares
Alan Taylor
British Columbia, Canada
Vice President, Exploration, Chief Operating Officer and Director
Vice President, Exploration of Canadian Zinc Corporation since 1999 and Chief Operating Officer of Canadian Zinc Corporation since March 2004
March 2004
Nil
(1)
The information as to common shares beneficially owned or over which the above-named directors exercise control or directors, not being within the knowledge of the Company, has been furnished by the respective directors individually.
(2)
Mr. Kearney served as a non-executive director of Q-Entertainment Inc. (TSX: QZR), a technology and entertainment company, from October 1996 to October 31, 1997. On November 6, 1997, Q-Entertainment Inc. and its U.S. subsidiaries filed for Chapter 11 protection in the United States and subsequently filed for Chapter 7 bankruptcy in the United States Bankruptcy Court (Texas), following which a trustee in bankruptcy was appointed. Mr. Kearney also served as a non-executive director of McCarthy Corporation plc, the largest shareholder in Q-Entertainment Inc., from July 2000 to March 2003. In June 2003, McCarthy Corporation plc proposed a voluntary arrangement with its creditors pursuant to the legislation of the United Kingdom.
(3)
Mr. Savage served as a director of Consolidated Van Anda Gold Ltd., which became the subject of a cease trade order of the Alberta Securities Commission in February 2002. Mr. Savage resigned as a director of Consolidated Van Anda Gold Ltd. in August 2003.
IF ANY OF THE ABOVE NOMINEES IS FOR ANY REASON UNAVAILABLE TO SERVE AS A DIRECTOR, PROXIES IN FAVOUR OF MANAGEMENT WILL BE VOTED FOR ANOTHER NOMINEE IN THEIR DISCRETION UNLESS THE SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT HIS SHARES ARE TO BE WITHHELD FROM VOTING IN THE ELECTION OF DIRECTORS.
The board of directors of the Company does not have an executive committee. The board of directors of the Company has established an Audit Committee to oversee the retention performance and compensation of the Company’s independent auditors, and to oversee and establish procedures concerning systems of internal accounting and control. The Audit Committee currently comprises of Robert Gayton, Alan C. Savage and David Shaw.
EXECUTIVE COMPENSATION
The following table (presented in accordance with the rules (the "Rules") made under the Securities Act (British Columbia)) sets forth all annual and long-term compensation for services in all capacities to the Company and its subsidiaries for the three most recently completed financial years (to the extent required by the Rules) in respect of John F. Kearney, the current Chief Executive Officer of the Company, Malcolm J.A. Swallow, the Chief Executive Officer of the Company until July 2003, and Robert Gayton, the Chief Financial Officer of the Company (the "Named Executive Officers"). No other executive officers of the Company were in receipt of salaries or bonuses in excess of $150,000 during the financial year ended December 31, 2003.
SUMMARY COMPENSATION TABLE
Annual Compensation
Long-Term Compensation
Awards
Payouts
Name
And
Principal
Position
Year
Salary
($)
Bonus
($)
Other
Annual
Compen-sation
($)
Securities Under Options/
SARs Granted
(#)
Shares or Units Subject to Resale Restrictions
($)
LTIP Payouts
($)
All Other Compen-sation
($)
John F. Kearney
Chairman, President and Chief Executive Officer (1)
2003
105,000
Nil
Nil
600,000
Nil
Nil
Nil
Robert Gayton
Chief Financial Officer
2003
2002
2001
5,625
8,483
10,870
Nil
Nil
Nil
Nil
Nil
Nil
Nil
200,000
200,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Malcolm J.A. Swallow
Former President and Chief Executive Officer(2)
2003
2002
2001
Nil
Nil
150,000
Nil
Nil
Nil
50,631(3)
94,180(3)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
(1)
Mr. Kearney was appointed Chairman, President and Chief Executive Officer of the Company in July 2003.
(2)
Mr. Swallow was appointed President and Chief Executive Officer of the Company in June 2000. Mr. Swallow resigned as the President and Chief Executive Officer of the Company in July 2003.
(3)
Paid to Swallow Services Ltd., a company controlled by Mr. Swallow.
Long-Term Incentive Plan (LTIP) Awards
The Company does not have a LTIP pursuant to which cash or non-cash compensation intended to serve as an incentive for performance (whereby performance is measured by reference to financial performance or the price of the Company's securities) is paid.
Option/SAR Grants During the Most Recently Completed Financial Year
The following table provides details on stock options granted to the Named Executive Officers during the year ended December 31, 2003.
Name
Securities Under Options/SARs Granted
(#)
% of Total Options/SARs Granted to Employees in Financial Year
Exercise or Base Price
($/Security)
Market Value of Securities Underlying Options/SARs on the Date of Grant
($/Security)
Expiration Date
John F. Kearney
600,000
66%
$0.23
$0.23
March 18, 2007
Robert Gayton
Nil
N/A
N/A
N/A
N/A
Malcolm J.A. Swallow
Nil
N/A
N/A
N/A
N/A
Aggregate Option/SAR Exercises During the Most Recently Completed Financial Year and
Financial Year-End Option/SAR Values
The following table (presented in accordance with the Rules) sets forth details of all exercises of stock options during the most recently completed financial year by the Named Executive Officers, the number of unexercised options held by the Named Executive Officers at the financial year-end and the value of unexercised in-the-money options on an aggregated basis at the financial year-end.
Name
Securities Acquired
on Exercise
(#)
Aggregate
Value
Realized
($)
Unexercised Options/SARs
at Financial
Year-End
(#)
Exercisable/
Unexercisable
Value of Unexercised
In-the-Money
Options/SARs
at Financial Year-End(1)
($)
Exercisable/
Unexercisable
John F. Kearney(2)
200,000
$100,000
600,000 / Nil
$654,000 / Nil
Robert Gayton
200,000
$48,000
Nil / Nil
Nil / Nil
Malcolm J.A. Swallow(3)
500,000
$250,000
Nil / Nil
Nil / Nil
(1)
The closing price of the common shares of the Company on The Toronto Stock Exchange (the "TSX") on December 31, 2003 was $1.32.
(2)
Mr. Kearney became Chairman, President and Chief Executive Officer of the Company in July 2003.
(3)
Mr. Swallow resigned as the President and Chief Executive Officer of the Company in July 2003 and as a director of the Company in September 2003.
Options and SAR Re-Pricings
There was no re-pricing of stock options under the Company's stock option plan or otherwise during the most recently completed financial year.
Defined Benefit or Actuarial Plan
The Company does not have a defined benefit or actuarial plan.
Termination of Employment, Change in Responsibilities and Employment Contracts
Except as otherwise disclosed herein, the Company and its subsidiaries have no compensatory plan or arrangement in respect of compensation received or that may be received by an executive officer of the Company in the Company's most recently completed or current financial year to compensate such executive officer in the event of the termination of employment (resignation, retirement, change of control) or in the event of a change in responsibilities following a change in control, where in respect of the executive officer the value of such compensation exceeds $100,000.
Composition of Compensation Committee
During 2003, the Compensation Committee consisted of Robert Gayton, David Shaw and Alan C. Savage and was responsible for determining the compensation of executive officers of the Company.
Report on Executive Compensation
Historically, the compensation of executive officers of the Company has been comprised primarily of cash compensation and the allocation of incentive stock options. In establishing levels of remuneration and in granting stock options, an executive's performance, level of expertise, responsibilities, length of service to the Company and comparable levels of remuneration paid to executives of other companies of comparable size and development within the industry are taken into consideration. Interested executives do not participate in reviews, discussions or decisions of the Compensation Committee or the board of directors regarding this remuneration.
The general compensation philosophy of the Company for executive officers, including for the Chief Executive Officer, is to provide a level of compensation that is competitive within the North American marketplace and that will attract and retain individuals with the experience and qualifications necessary for the Company to be successful, and to provide long-term incentive compensation which aligns the interest of executives with those of shareholders and provides long-term incentives to members of senior management whose actions have a direct and identifiable impact on the performance of the Company and who have material responsibility for long-range strategy development and implementation.
The Company's stock option plans are administered by the board of directors of the Company. The stock option plans are designed to give each option holder an interest in preserving and maximizing shareholder value in the longer term, to enable the Company to attract and retain individuals with experience and ability, and to reward individuals for current performance and expected future performance. Stock option grants are considered when reviewing executive officer compensation packages as a whole.
This report on executive compensation was submitted by the Compensation Committee of the Company, comprising of Robert Gayton, Alan C. Savage and David Shaw.
Compensation of Directors
Historically, the Company did not pay cash compensation to directors of the Company for services rendered in their capacity as directors or for their services rendered as members of committees during 2003. For the financial year 2004 and future years, the Company has agreed to pay directors an annual fee of $8,000 plus $400 for each meeting or committee meeting attended.
From time to time, directors may be retained to provide specific services to the Company and will be compensated on a basis to be negotiated.
The Company has no plans other than the Company's stock option plans previously referred to herein pursuant to which cash or non-cash compensation was paid or distributed to directors during the most recently completed financial year or is proposed to be paid or distributed in a subsequent year. Directors are eligible to participate in the stock option plans. During the financial year ended December 31, 2003, 800,000 stock options were granted to directors of the Company.
Insurance
The Company does not currently have any directors’ and officers’ liability insurance or key man insurance.
Performance Graph
The following graph compares the yearly percentage change in the cumulative total shareholder return over the last five financial years of the common shares of the Company, assuming a $100 investment in the common shares of the Company on December 31, 1998, with the TSE 300 Index during such period, assuming dividend reinvestment. The TSE 300 Index was replaced by the S&P/TSX Composite Index on May 1, 2002. The historical values of the TSE 300 Index and the S&P/TSX Composite Index are identical for the period in question (December 31, 1998 to December 31, 2003).
CUMULATIVE VALUE OF A $100 INVESTMENT AS OF DECEMBER 31
DATA
1998
1999
2000
2001
2002
2003
CZN
100
192
304
135
161
1015
S&P/TSX
100
132
141
124
108
137
Indebtedness of Directors and Executive Officers
No director or executive officer, or associate or affiliate of any such director or executive officer, is, or at any time, since the beginning of the most recently completed financial year of the Company, was indebted to the Company.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
Other than as described herein, no informed person or proposed director of the Company, or any associate or affiliate of any informed person or proposed director, has had a material interest, direct or indirect, in any transaction of the Company since the commencement of the Company's last fiscal year or in any proposed transaction which has materially affected or would materially affect the Company.
MANAGEMENT CONTRACTS
Except as otherwise disclosed herein, no management functions of the Company are performed to any substantial degree by a person other than the directors or executive officers of the Company.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The board of directors and senior management consider good corporate governance to be central to the effective and efficient operation of the Company. The board has confirmed the strategic objective of the Company of exploring and developing the Prairie Creek Property with the intention of developing and mining the deposit.
The TSX has set out a series of guidelines for effective corporate governance (the "TSX Guidelines"). The TSX Guidelines address matters such as the constitution and independence of corporate boards, the functions to be performed by boards and their committees and the effectiveness and education of board members. The TSX requires the disclosure by each listed corporation of its approach to corporate governance with reference to the TSX Guidelines as it is recognized that the unique characteristics of individual corporations will result in varying degrees of compliance. The Ontario Securities Commission released corporate governance guidelines for comment on January 16, 2004 (the "OSC Guidelines"). The OSC Guidelines have been proposed in order to improve corporate governance practices in light of recent corporate governance related developments in Canada and in the United States. While the proposed OSC Guidelines are not yet in force, the Company has undertaken to re-examine its corporate governance practices in the context of the proposed OSC Guidelines in order to improve its corporate governance practices and will implement any applicable changes to its practices where appropriate.
Set out below is a description of the Company's approach to corporate governance in relation to the TSX Guidelines.
Guideline 1
The board of directors should explicitly assume responsibility for stewardship of the Company.
Comment:
The mandate of the board of directors is to supervise the management of the business and affairs of the Company and, as part of its overall stewardship responsibility, the board of directors assumes responsibility for the following matters:
(a)
Adoption of a Strategic Planning Process
Comment:
The board of directors is charged with taking an early, active and direct role in the strategic planning process, including considering such matters as acquisitions of properties, divestitures of properties, financing and public relations. Management is responsible for the day-to-day operations of the Company, however, the board of directors takes an active role in reviewing projects and corporate direction on a regular basis. In addition, the board of directors monitors the success of management in implementing and adhering to approved objectives, budgets and strategies.
(b)
Identification of the Principal Risks associated with the Company's Business and Ensuring the Implementation of Appropriate Systems to Manage These Risks
Comment:
Mineral exploration is inherently unpredictable. Future metal prices, the success of exploration and development programs and permitting activity can have a significant impact on capital requirements and on the company’s business
The board of directors has identified the principal risks of the Company to be, among other things: obtaining of operating permits for the Prairie Creek Project; delays in obtaining such permits; the price of various metals in the international markets; and the affect of metal prices on the ability of the Company to raise the financing required to carry out its exploration, development and permitting activities; and the success of the Company's exploration, development and permitting activities.
The board of directors has assigned the responsibility for monitoring these risks to the President of the Company. The board reviews all activities of the President regularly at meetings of the board.
(c)
Succession Planning Including Appointing, Training and Monitoring Senior Management
Comment:
The board of directors makes all senior officer appointments. The board of directors monitors their performance and is responsible for succession planning and management development.
(d)
A Communications Policy for the Company
Comment:
The board of directors has adopted a communications policy which requires the Company to disseminate the material results of its ongoing business and exploration activities and financial operations on a regular and timely basis. Most of the Company's communications with its shareholders are reviewed by the board of directors including annual financial statements, annual reports, management's discussion and analysis of operating results, quarterly results and management's comments thereon, proxy solicitation materials and press releases relating to material changes, except for periodic press releases whether material or not which are reviewed by management only.
(e)
The Integrity of the Company's Internal Control and Management Information Systems
Comment:
Board approval is required for any management decisions which may have a significant impact on the Company, including material acquisitions and dispositions, capital budgets, debt and equity financings, changes to compensation programs and property acquisitions and divestitures. The directors have determined that it would be appropriate for most of these issues to be considered by the board as a whole rather than by committee unless directors have a conflict of interest. The only permanent committees of the board are the Audit Committee, which has been formed to review the Company's financial reporting and to monitor the Company's internal controls and financial information systems, and the Compensation Committee.
Generally, the board of directors is expected to meet a minimum of six times each year. In addition, the board of directors meets at other times when matters requiring its approval are raised and the timing is such that it is not prudent or possible to wait for a regularly scheduled or quarterly meeting.
Guidelines 2 and 3
A majority of the directors should be “unrelated” directors.
Comment:
The board is currently comprised of seven directors. The board believes that there are currently four "unrelated" directors and three "related" directors within the meaning of the TSX Guidelines.
Pursuant to the TSX Guidelines, an "unrelated" director is a director who is independent of management and is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director's ability to act with a view to the best interests of the Company, other than interests and relationships arising from shareholdings. Based on this definition, four of the directors of the Company are "unrelated" directors and three directors, John F. Kearney, Robert Gayton and Alan Taylor are considered to be "related" directors being the Chairman, President and Chief Executive Officer of the Company, the Chief Financial Officer of the Company and the Vice-President and Chief Operating Officer of the Company, respectively. Prior to July 2003, John MacPherson was considered to have been a related director as he was the Chairman and an employee of the Company.
The TSX Guidelines make an informal distinction between inside and outside directors. The TSX Guidelines consider an inside director to be a director who is an officer or employee of the Company or any of its affiliates. Each of the "unrelated" directors of the Company is also considered to be an "outside" director of the Company by virtue of the fact he is not an officer or employee of the Company.
Guideline 4
The board of directors should appoint a nominating committee composed exclusively of outside directors with responsibility for proposing new nominees to the board and assessing directors on an ongoing basis.
Comment:
The board of directors determines nominations to the Board. Nominations are generally the result of recruitment efforts by the members of the board and informal and formal discussions with members of the board of directors. At the present time, the board is made up of four outside and unrelated directors, two inside and related directors and one inside and unrelated director. Assessment of the performance of the directors is carried out by the board of directors as a whole on a periodic basis.
Guideline 5
The board of directors should implement a process for assessing the effectiveness of the board as a whole, its committees and the contribution of individual directors.
Comment:
The board of directors reviews, on an ongoing basis, the effectiveness of the board as a whole, and the contribution and effectiveness of individual directors. The board of directors has determined that the Audit Committee would operate more appropriately if it were to consist entirely of outside and unrelated directors. The board of directors intends to reconstitute the Audit Committee.
Guideline 6
The Company should provide an education and orientation program for new members of the board of directors.
Comment:
The Company has an informal orientation and education program for new members of the board of directors that has been prepared by management of the Company in order to ensure that new directors are familiarized with the Company's business and the procedures of the board of directors. In addition, new directors receive copies of board material and other material regarding the business and operations of the Company (including recent annual reports, annual information forms, proxy solicitation materials and various other operating, property and budget reports) and are encouraged to visit and meet with management on a regular basis.
Guideline 7
The board of directors should examine its size to ensure that it facilitates effective decision making.
Comment:
The board of directors will consider its size each year when it passes a resolution determining the number of directors to be elected at each annual meeting of shareholders. In determining its appropriate size, the board of directors considers such matters as what is the appropriate size to properly administer the affairs of the Company while maintaining a diversity of views and experience. The board of directors has considered its present size and has determined that at this time seven members is appropriate to effectively carry out the duties of the board of directors given the Company's current status. Seven nominees are proposed for election to the board at the annual general meeting.
Guideline 8
The board should review the adequacy and form of compensation of directors to ensure that it reflects the responsibilities and risks involved.
Comment:
Historically, the directors did not receive any fees for acting as directors of the Company. Directors are entitled to participate in the Company's stock option plans and to reimbursement for expenses incurred in attending directors' and shareholders' meetings. The Compensation Committee has reviewed the compensation paid to directors based on such factors as time commitment, comparative fees paid by other companies in the industry in North America, level of responsibility and the Company's current cash position and has recommended that, for the year 2004 and future years, directors of the Company be paid an annual fee of $8,000 paid quarterly plus a fee of $400 for each board or committee meeting attended.
Guideline 9
Committees of the board of directors should be composed of outside directors, a majority of whom are unrelated.
Comment:
The board of directors currently has two subcommittees: an Audit Committee and a Compensation Committee. The Audit Committee is currently comprised of two outside and unrelated directors, and one inside and related director. The board of directors has determined that the Audit Committee would operate more appropriately if it were to consist entirely of outside and unrelated directors. The board of directors intends to reconstitute the Audit Committee. The Compensation Committee is also currently comprised of two outside and unrelated directors, and one inside and related director. From time to time, the board of directors will form ad hoc committees to consider specific transactions comprised of persons unrelated to the transaction.
Guideline 10
The board of directors should assume responsibility for, or assign to a committee the general responsibility for, the approach to corporate governance issues.
Comment:
The board of directors assumes responsibility for the Company's approach to corporate governance issues. The board of directors conducts periodic reviews of the Company's corporate governance practices to ensure continued compliance with applicable stock exchange rules and applicable laws including the OSC Guidelines.
Guideline 11
The board of directors and the Chief Executive Officer together should develop position descriptions for the board of directors and the Chief Executive Officer, involving the definition of the limits to management's responsibilities. In addition, the board of directors should approve or develop corporate objectives which the Chief Executive Officer is responsible for meeting.
Comment:
The board of directors responds to and, if it considers appropriate, approves, with such revisions as it may require, corporate objectives and recommended courses of action which have been brought forward by the Chief Executive Officer and management. In addition to those matters which must be approved by the board of directors by law, significant business activities and actions proposed to be taken by the Company are subject to approval by the board of directors.
Annual capital and operating budgets and significant changes thereto, long range plans, major changes in the organizational structure of the Company, annual financial statements, major acquisitions and dispositions, major financing transactions involving the issuance of shares, acquisitions of properties, long term contracts with significant cumulative financial commitments, appointments of senior executive officers, benefit plans, amendments to stock option plans, issuance of stock options and succession plans, are all subject to approval of the board of directors or, where appropriate, a duly authorized committee of the board of directors.
In addition, the board of directors is responsible for overseeing the strategic direction of the Company, monitoring the performance of the Company's assets and assessing opportunities for and risks affecting the Company's business and assessing means to effectively deal with the same.
Guideline 12
The board of directors should have appropriate structures and procedures to ensure that it can function independently of management.
Comment:
In order to ensure that the board of directors can function independently of management, the unrelated directors will, in appropriate circumstances, meet separately from the related directors as an ad hoc subcommittee of the board of directors. The board of directors reviews its procedures on an ongoing basis to ensure that it can function independently of management.
Guideline 13
The Audit Committee of the board of directors should be comprised only of outside directors. The Audit Committee should have direct communication channels with external auditors.
Comment:
The Audit Committee currently consists of three directors, two of whom are outside and unrelated directors, and one is an inside and related director. The board of directors has determined that the Audit Committee would operate more appropriately if it were to consist entirely of outside and unrelated directors. The board of directors intends to reconstitute the Audit Committee. The Audit Committee reviews the Company's audited financial statements and meets with the Company's management and auditors for purposes of reviewing the Company's audited financial statements. The quarterly financial statements of the Company are reviewed by the Audit Committee before presentation to, and review by, the board. In addition, the Audit Committee is charged with the responsibility of monitoring the integrity of the Company’s internal controls and management information systems. For the purposes of performing these duties, the members of the Audit Committee have the right, at all times, to inspect all of the books and financial records of the Company and to discuss with management and the auditors of the Company any accounts, records and matters relating to the financial statements of the Company.
Guideline 14
The board of directors should implement a system which enables individual directors to engage outside advisors at the Company's expense, in appropriate circumstances.
Comment:
Individual directors may engage outside advisors at the Company's expense and with the authorization of the board in order to provide advice to the director for the purpose of assisting the director in performing his duties as a director of the Company.
EQUITY COMPENSATION PLAN INFORMATION
Plan Category
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(December 31, 2003)
(a)
Weighted-average exercise price of outstanding options, warrants and rights
(December 31, 2003)
(b)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(December 31, 2003)
Equity compensation plans approved by securityholders
600,000
$0.23
1,292,500
Equity compensation plans not approved by securityholders
Nil
Nil
Nil
Total
600,000
1,292,500
APPOINTMENT OF AUDITORS
Unless such authority is withheld, the persons named in the accompanying proxy intend to vote for the appointment of Ellis Foster, as auditors of the Company for the 2004 fiscal year, and to authorize the directors to fix their remuneration. Ellis Foster were first appointed as auditors of the Company in 1991.
PARTICULARS OF OTHER MATTERS TO BE ACTED UPON
Approval of New 2004 Stock Option Plan
The Company currently has (i) a 1995 stock option plan (the "1995 Plan"), which had 1,600,000 common shares of the Company reserved for issuance pursuant to the granting of stock options of which 80,000 remain available for issuance and no stock options are outstanding; (ii) a 1996 stock option plan (the "1996 Plan"), which had 1,000,000 common shares of the Company reserved for issuance pursuant to the granting of stock options of which 22,500 remain available for issuance and no stock options are outstanding; and (iii) a 1997 stock option plan (the "1997 Plan"), which had 2,500,000 common shares of the Company reserved for issuance pursuant to the granting of stock options of which 590,000 remain available for issuance and 450,000 stock options are outstanding.
The board of directors of the Company has approved a new 2004 stock option plan (the "2004 Plan") for the Company, subject to shareholder and regulatory approval, to replace the above plans and has approved the cancellation of the 1995 Plan and the 1996 Plan (as no stock options are outstanding under either stock option plan) and the discontinuance of the granting of options under the 1997 Plan, subject the approval of the 2004 Plan.
The purpose of the 2004 Plan is to attract and motivate directors, officers, employees of and service providers to the Company and its subsidiaries (collectively the "Optionees") and thereby advance the Company's interests by affording such persons with an opportunity to acquire an equity interest in the Company through the stock options. The 2004 Plan authorizes the board of directors to grant stock options to the Optionees on the following terms:
1.
The number of shares subject to each stock option is determined by the board of directors provided that the 2004 Plan, together with all other previously established or proposed share compensation arrangements, may not result in:
(a)
the number of common shares of the Company reserved for issuance pursuant to stock options granted to insiders exceeding 10% of the outstanding issue; or
(b)
the issuance, within a one year period, to insiders of the Company of a number of common shares of the Company exceeding 10% of the outstanding issue or to any one insider of a number exceeding 5% of the outstanding issue.
The outstanding issue is determined on the basis of the number of common shares of the Company outstanding immediately prior to any share issuance, excluding shares issued pursuant to share compensation arrangements over the preceding one-year period.
2.
The maximum number of common shares of the Company which may be issued pursuant to stock options granted under the 2004 Plan, unless otherwise approved by shareholders, is 6,350,000 common shares.
3.
The exercise price of an option may not be set at less than the closing price of the common shares of the Company on the TSX on the trading day immediately preceding the date of grant of the option.
4.
The options may be exercisable for a period of up to ten years, such period and any vesting schedule to be determined by the board of directors of the Company, and are non-assignable, except in certain circumstances.
5.
The options can be exercised by the Optionee as long as the Optionee is a director, officer, employee or consultant to the Company or its subsidiaries or within a period of not more than 90 days after ceasing to be a director, officer, employee or consultant (or such longer period as may be approved by the board of directors of the Company and, if required, the TSX) or, if the Optionee dies, within one year from the date of the Optionee's death.
6.
On the occurrence of a takeover bid, issuer bid or going private transaction, the board of directors will have the right to accelerate the date on which any option becomes exercisable.
A copy of the 2004 Plan is available for viewing up to the date of the Meeting at the Company's offices at Suite 1202, 700 West Pender Street, Vancouver, British Columbia, and at the Meeting.
The affirmative vote of the holders of a majority of the issued and outstanding common shares of the Company entitled to vote and represented in person or by proxy at the Meeting is required for the approval of the 2004 Plan.
Shareholders will be asked at the Meeting to consider, and if thought fit, approve, with or without variation, the ordinary resolution in the form set forth below:
"RESOLVED as an ordinary resolution, that the Company be and is hereby authorized to adopt the 2004 Stock Option Plan pursuant to which the maximum number of common shares of the Company which may be issued pursuant to options granted to directors, officers, employees and consultants of the Company and its subsidiaries, unless otherwise approved by shareholders, is 6,350,000 common shares."
It is expected that, if the resolution is approved, the board of directors of the Company will in due course grant options under the 2004 Plan as the board of directors deems fit in light of the overall compensation program and the relative efforts and contributions of the eligible participants under the 2004 Plan.
The directors of the Company believe the passing of the foregoing ordinary resolution is in the best interests of the Company and recommend that shareholders of the Company vote in favour of the resolution.
The persons named as proxies in the enclosed form of proxy intend to cast the votes represented by proxy in favour of the foregoing resolution unless the holder of common shares who has given such proxy has directed that the votes be otherwise cast.
Approval and Ratification of Rolling 10% Stock Option Plan
Current policies of the TSX require that every stock option plan must have a specified maximum number of shares, authorized by shareholders, issuable pursuant to the plan. The TSX is currently reviewing its policies in respect of stock option plans and may in future permit the adoption of stock option plans providing that number of common shares which may be issued pursuant to options previously granted and those granted under the plan is a maximum of 10% of the issued and outstanding common shares at the time of the grant. The board of directors of the Company has approved the adoption of an amended stock option plan (the "Amended 10% Rolling Stock Option Plan") to replace the Company's 2004 Plan (if the 2004 Plan is approved by shareholders at the Meeting), if and when there is a change in TSX policies that permit the adoption of such stock option plans. There is no assurance that the TSX policies in respect of stock option plans will change in the near term or at all. It is anticipated that, if permitted, such plans will require that the number of shares which may be reserved for issuance to any one individual may not exceed 5% of the issued shares on a yearly basis and may require that a rolling stock option plan which sets the number of common shares issuable under the plan at a maximum of 10% of the issued and outstanding common shares be approved and ratified by shareholders every three years. Any increase in the issued and outstanding common shares will result in an increase in the available number of common shares issuable under the Amended 10% Rolling Stock Option Plan, and any exercises of stock options will make new grants available under the plan. The Amended 10% Rolling Stock Option Plan will in all other respects have the same terms and conditions as the 2004 Plan.
The approval of the Amended 10% Rolling Stock Option Plan requires the affirmative vote of the holders of a majority of the issued and outstanding common shares of the Company entitled to vote and represented in person or by proxy at the Meeting other than the votes attaching to common shares beneficially owned by insiders to whom stock options may be issued pursuant to the Amended 10% Rolling Stock Option Plan and their associates. Such persons currently hold, directly or indirectly, or exercise control or direction over approximately 282,000 common shares (less than one percent of the currently issued and outstanding common shares).
Shareholders will be asked at the Meeting to consider, and if thought fit, approve with or without variation, the ordinary resolution in the form set forth below:
"RESOLVED, as an ordinary resolution, that the Company be and is hereby authorized to adopt an amended 2004 Stock Option Plan pursuant to which the aggregate number of common shares of the Company which may be issued to directors, officers, employees and consultants of the Company and its subsidiaries may not exceed 10% of the issued and outstanding common shares at the time of the grant and otherwise having the same terms and conditions as the Company's 2004 Stock Option Plan."
If approved by shareholders of the Company, the Amended 10% Rolling Stock Option Plan will take effect upon approval by the TSX and the board of directors of the Company. If the resolution is passed, the Company will issue a press release announcing the implementation of the Amendment 10% Rolling Stock Option Plan once the changes to TSX policies permitting the adoption of such stock option plans are adopted.
The directors of the Company believe the passing of the foregoing ordinary resolution is in the best interests of the Company and recommend that shareholders of the Company vote in favour of the resolution.
The persons named as proxies in the enclosed form of proxy intend to cast the votes represented by proxy in favour of the foregoing resolution unless the holder of common shares who has given such proxy has directed that the votes be otherwise cast.
Authorization to Issue Additional Shares
The Company from time to time investigates opportunities to raise financing on advantageous terms. The Company may undertake additional financings over the next year and expects one or more of these to be structured as private placements. Under the rules of the TSX, the aggregate number of shares of a listed company which are issued or made subject to issuance (i.e., issuable under a share purchase warrant or option or other convertible security) by way of one or more private placement transactions during any particular six-month period may not exceed 25% of the number of shares outstanding (on a non-diluted basis) prior to giving effect to such transactions (the "TSX 25% Rule"), unless there has been shareholder approval of such transactions.
The application of the TSX 25% Rule may restrict the ability of the Company to raise funds by private placement of its securities.
Management of the Company considers it to be in the best interests of the Company to retain flexibility for the Company to solicit private placement funds for working capital, exploration and development and Company operations. The TSX has a working practice that it will accept advance approval by shareholders in anticipation of private placements that may exceed the TSX 25% Rule, provided such transactions are completed within 12 months of the date such advance approval is given.
The Company's issued and outstanding share capital on the record date for the Meeting is 68,496,427 common shares. The Company proposes that the maximum number of common shares which either would be issued or made subject to issuance under one or more private placements in the 12 month period commencing June 16, 2004 would not exceed 68,496,427 common shares in the aggregate.
Any private placement proceeded with by the Company under the advance approval being sought at the Meeting will be subject to approval by the directors of the Company and to the following additional restrictions:
(i)
it must be substantially with parties at arms-length to the Company;
(ii)
it cannot materially affect control of the Company;
(iii)
it must be completed within a 12 month period following the date the advance shareholder approval is given; and
(iv)
it must comply with the private placement pricing rules of the TSX which currently require that the issue price per common share must not be lower than the closing market price of the common shares on the TSX on the trading day prior to the date notice of the private placement is given to the TSX (the "Market Price") less the applicable discount, as follows:
Market Price
Maximum Discount
$0.50 or less
25%
$0.51 to $2.00
20%
Above $2.00
15%
(For these purposes, a private placement of unlisted convertible securities is deemed to be a private placement of the underlying listed securities at an issue price equal to the lowest possible price at which the securities are convertible by the holders thereof).
In all cases, the TSX retains the discretion to decide whether or not a particular placement is "substantially" at arms-length or will materially affect control, in which case specific shareholder approval may be required.
In anticipation that the Company may wish to enter into one or more private placements in the next 12 months that will result in it issuing and/or making issuable such number of its common shares, taking into account any shares that may be issued upon exercise of any warrants, options or other rights granted in connection with the private placements, that will exceed the TSX 25% Rule, the Company requests shareholders pass an ordinary resolution in the following terms to approve such private placements.
The affirmative vote of the holders of a majority of the issued and outstanding common shares of the Company entitled to vote and represented in person or by proxy at the Meeting is required for the approval of the ordinary resolution.
The ordinary resolution that will be proposed at the Meeting is as follows:
"RESOLVED as an ordinary resolution that the issuance by the Company in one or more private placements during the 12 month period commencing June 16, 2004, of such number of securities as would result in the Company issuing or making issuable up to [68,496,427] common shares, as more particularly described in and subject to the restrictions described in the Company's Information Circular dated May 14, 2004, be, and is hereby, approved."
The directors of the Company believe the passing of the foregoing ordinary resolution is in the best interests of the Company and recommend that shareholders of the Company vote in favour of the resolution.
The persons named as proxies in the enclosed form of proxy intend to cast the votes represented by proxy in favour of the foregoing resolution unless the holder of common shares who has given such proxy has directed that the votes be otherwise cast.
Approval of Amended Notice of Articles and Approval of New Articles
The Business Corporations Act (British Columbia) (the "New Act") has been adopted in British Columbia and is now in effect. The New Act replaces the Company Act (British Columbia) (the "Former Act") and adopts many provisions similar to those contained in corporate legislation elsewhere in Canada. The New Act also uses new forms and terminology; most particularly a Memorandum is now called a "Notice of Articles". The Company wishes to take steps to bring its charter documents into conformity with the New Act and to that end is filing a Notice of Articles, which replaces the Company's "Memorandum", with the Registrar of Companies (British Columbia).
The Company is seeking shareholder approval of certain amendments to its Notice of Articles (the "Amended Notice of Articles") and approval of a new form of Articles (the "New Articles") with a view to updating its charter documents to bring them into line with the New Act and incorporating some of the new provisions of the New Act. The directors believe that amending the Company's Notice of Articles and adopting the New Articles will bring the Company's charter documents into line with charter documents of companies in other jurisdictions and will enable the Company to be more efficient, flexible and cost-effective.
Copies of the Altered Notice of Articles and the New Articles are available for viewing up to the date of the Meeting at the Company's offices at Suite 1202, 700 West Pender Street, Vancouver, British Columbia, and at the Meeting.
Proposed Amendments to Notice of Articles
1.
Pre-Existing Company Provisions and Majority of Votes Required for Special Resolutions
The regulations under the New Act effectively added certain provisions, called "Pre-Existing Company Provisions" or "PCPs", to every company's Notice of Articles. The PCPs provide, among other things, that the number of votes required to pass a special resolution (formerly also referred to as a special resolution under the Former Act) or a special separate resolution is at least three-quarters of the votes cast by shareholders present in person or by proxy at the meeting. This is the majority that was required under the Former Act. The New Act provides that a special resolution may be passed by at least two-thirds of the votes cast by shareholders present in person or by proxy at the meeting. The Company proposes to amend its Notice of Articles to delete the PCPs so that, among other things, the provisions of the New Act permitting a two-thirds majority will apply to the Company.
If shareholders approve this resolution, special resolutions will require a two-thirds majority vote, instead of a three-quarters majority vote. Management believes that this will provide the Company with greater flexibility for future corporate activities and is consistent with companies in other jurisdictions.
Shareholders will be asked at the Meeting to consider, and if thought fit, approve with or without variation, the special resolution in the form set forth below. The affirmative vote of the holders of at least three-quarters of the issued and outstanding common shares of the Company entitled to vote and represented in person or by proxy at the Meeting is required for the approval of the special resolution.
"RESOLVED, as a special resolution, that:
(a)
the Pre-Existing Company Provisions in the Notice of Articles of the Company are hereby deleted;
(b)
the Company's Notice of Articles is altered accordingly;
(c)
any director or officer of the Company is authorized to execute and file a Notice of Alteration of the Notice of Articles with the Registrar of Companies (British Columbia) along with all other documents and takes such further actions that may be necessary to effect the amendment; and
(d)
the board of directors of the Company is hereby authorized, at any time in its sole discretion, to determine whether or not to proceed with this resolution without further approval, ratification or confirmation by the shareholders."
This amendment to the Notice of Articles shall take effect immediately on the date and time the Notice of Alteration of the Articles is filed with the Registrar of Companies (British Columbia).
The directors of the Company believe the passing of the foregoing special resolution is in the best interests of the Company and recommend that shareholders of the Company vote in favour of the resolution.
The persons named as proxies in the enclosed form of proxy intend to cast the votes represented by proxy in favour of the foregoing resolution unless the holder of common shares who has given such proxy has directed that the votes be otherwise cast.
2.
Proposed Alterations of Authorized Capital
The Company's current authorized capital is 200,000,000 common shares without par value.
The New Act does not require a company's Notice of Articles to contain a fixed authorized capital with respect to each class of shares. Accordingly, the Company proposes to alter the Notice of Articles of the Company to alter the authorized capital of the Company to an unlimited number of common shares without par value. The Company believes that having unlimited authorized capital provides the Company with greater flexibility for future corporate activities.
Shareholders will be asked at the Meeting to consider, and if thought fit, approve with or without variation, the special resolution in the form set forth below. The affirmative vote of the holders of at least three-quarters of the issued and outstanding common shares of the Company entitled to vote and represented in person or by proxy at the Meeting is required for the approval of the special resolution.
"RESOLVED, as a special resolution, that:
(a)
the number of shares of the Company authorized to be issued be increased to an unlimited number of common shares without par value;
(b)
the Company's Notice of Articles be altered accordingly;
(c)
any director or officer of the Company is authorized to execute and file a Notice of Alteration of the Notice of Articles with the Registrar of Companies (British Columbia) along with all other documents and to take such further actions that may be necessary to effect the amendment; and
(d)
the board of directors of the Company is hereby authorized, at any time in its absolute discretion, to determine whether or not to proceed with the above resolutions without further approval, ratification or confirmation by the shareholders."
This amendment to the Notice of Articles shall take effect immediately on the date and time the Notice of Alteration of the Articles is filed with the Registrar of Companies (British Columbia).
The directors of the Company believe the passing of the foregoing special resolution is in the best interests of the Company and recommend that shareholders of the Company vote in favour of the resolution.
The persons named as proxies in the enclosed form of proxy intend to cast the votes represented by proxy in favour of the foregoing resolution unless the holder of common shares who has given such proxy has directed that the votes be otherwise cast.
Adoption of New Articles
Management believes that the New Articles will update and bring its Articles into line with those in other jurisdictions, will provide the Company with greater flexibility for future corporate activities and will result in efficiencies and greater cost-effectiveness.
The resolution approving the New Articles must be passed by not less than three-quarters of the votes cast by the shareholders present in person or by proxy at the Meeting. The major changes from the existing Articles are:
1.
Certain changes to the Notice of Articles, New Articles and share structure may be made by directors' resolution or by ordinary resolution. A description of these changes is provided below;
2.
The directors, by directors' resolution, may approve a change of name of the Company without the necessity for Shareholder approval;
3.
Shareholders' meetings may be held by electronic means;
4.
The quorum for shareholders' meetings is changed from two shareholders to one Shareholder present in person or represented by proxy; and
5.
Shareholder meetings may, if authorized by directors' resolution, be held in jurisdictions outside British Columbia.
If the New Articles are adopted by shareholders, the Company may alter its Notice of Articles, New Articles and share structure in the following manner:
1.
by directors' resolution or ordinary resolution, as determined in each case by the directors, to:
(a)
create one or more classes or series of shares and, if none of the shares of a class or series of shares are allotted or issued, eliminate that class or series of shares and alter the identifying name of any of its shares;
(b)
establish, increase, reduce or eliminate the maximum number of shares that the Company is authorized to issue out of any class or series of shares;
(c)
change unissued shares with par value into shares without par value or vice versa or change all or any of its fully paid issued shares with par value into shares without par value;
(d)
create, attach, vary or delete special rights or restrictions for the shares of any class or series of shares, if none of those shares have been issued;
(e)
subdivide all or any of its unissued, or fully paid issued, shares; and
(f)
authorize alterations to the New Articles that are procedural or administrative in nature or are matters that pursuant to the New Articles are within the directors' powers, control or authority.
1.
if the New Act does not specify the type of resolution and the New Articles do not specify another type of resolution, by ordinary resolution otherwise alter its shares, authorized share structure or the New Articles.
Shareholders will be asked at the Meeting to consider, and if thought fit, approve with or without variation, the special resolution in the form set forth below. The affirmative vote of the holders of at least three-quarters of the issued and outstanding common shares of the Company entitled to vote and represented in person or by proxy at the Meeting is required for the approval of the special resolution.
"RESOLVED, as a special resolution, that:
(a)
the Company adopt the New Articles in substitution for the existing Articles of the Company;
(b)
any director or officer of the Company is authorized to execute and file such documents and take such further action, including any filings with the Registrar of Companies (British Columbia), that may be necessary to effect the amendment; and
(c)
the board of directors of the Company is hereby authorized, at any time in its sole discretion, to determine whether or not to proceed with this resolution without further approval, ratification or confirmation by the shareholders,
as more particularly described in and subject to the restrictions described in the Company's Information Circular dated May 14, 2004."
The directors of the Company believe the passing of the foregoing special resolution is in the best interests of the Company and recommend that shareholders of the Company vote in favour of the resolution.
The persons named as proxies in the enclosed form of proxy intend to cast the votes represented by proxy in favour of the foregoing resolution unless the holder of common shares who has given such proxy has directed that the votes be otherwise cast.
ADDITIONAL INFORMATION
Additional information relating to the Company is available under the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.canadianzinc.com. Financial information is provided in the Company’s Financial Statements and MD & A for the year ended December 31, 2003.
Shareholders may request copies of the Company’s Financial Statements, MD & A, and Annual Information Form by contacting the Company at:
Suite 1202 – 700 West Pender Street
Vancouver, British Columbia V6C 1G8
Tel: (604) 688-2001 Fax: (604) 688-2043
Email: invest@canadianzinc.com
* * * * * * * *
The contents and sending of this Information Circular have been approved by the directors of the Company. The foregoing contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made.
DATED at Vancouver, Canada as of the 14th day of May, 2004.
BY ORDER OF THE BOARD OF DIRECTORS
(Signed)
(Signed)
John F. Kearney
Chairman, President and Chief Executive Officer
Robert Gayton
Chief Financial Officer
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CANADIAN ZINC CORPORATION
(Signed) John Kearney___________________
President and Chairman
Date: June 29, 2005
-K 1 form6kinformationcircular.htm INFORMATION CIRCULAR
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the period ended: May 12, 2004
COMMISSION FILE NUMBER: 0-22216
CANADIAN ZINC CORPORATION
(Exact name of Registrant as specified in its charter)
Suite 1202 – 700 West Pender Street
Vancouver, British Columbia
Canada V6C 1G8
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F
Form 20-F
[ X ]
Form 40-F
[ ]
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 13g3-2(b) under the Securities Exchange Act of 1934.
Yes
[ ]
No
[ X ]
If ‘Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):
CANADIAN ZINC CORPORATION
Suite 1202 – 700 West Pender Street
Vancouver, British Columbia V6C 1G8
NOTICE OF MEETING
TO:
The Shareholders of Canadian Zinc Corporation
NOTICE IS HEREBY GIVEN THAT an annual and special general meeting (the "Meeting") of the shareholders of Canadian Zinc Corporation (the "Company") will be held at 10th Floor, 595 Howe Street, Vancouver, British Columbia on Wednesday, June 16, 2004, at the hour of 10:00 a.m., Vancouver time, for the following purposes:
1.
To receive and consider the report of the directors and the financial statements of the Company together with the auditor's report thereon for the financial year ended December 31, 2003;
2.
To determine the number of directors at seven (7);
3.
To elect directors for the ensuing year;
4.
To appoint the auditor for the ensuing year;
5.
To authorize the directors to fix the remuneration to be paid to the auditor;
6.
To consider and, if though fit, to pass an ordinary resolution adopting a new 2004 stock option plan pursuant to which the maximum number of common shares of the Company which may be issued pursuant to options granted to directors, officers, employees and consultants of the Company and its subsidiaries, unless otherwise approved by shareholders, is 6,350,000 common shares (i.e., a fixed 10% stock option plan);
7.
To consider and, if though fit, to pass an ordinary resolution adopting an amended 2004 stock option plan as a replacement to the new fixed 10% stock option plan, pursuant to which the aggregate number of common shares of the Company which may be issued to directors, officers, employees and consultants of the Company and its subsidiaries may not exceed 10% of the issued and outstanding common shares at the time of the grant (i.e., a rolling 10% stock option plan) and otherwise having the same terms and conditions as the Company's 2004 Stock Option Plan, subject to the implementation of the Toronto Stock Exchange of policies permitting such plans;
8.
To consider and, if thought fit, to pass an ordinary resolution approving the issuance by the Company in one or more private placements during the 12 month period commencing June 16, 2004, of such number of securities as would result in the Company issuing or making issuable up to 68,496,427 common shares;
9.
To consider and, if thought fit, to pass a special resolution approving an amendment to the Company’s Notice of Articles (formerly "Memorandum") to delete certain "Pre-Existing Company Provisions" and bring the Company's charter documents into conformity with the new Business Corporations Act (British Columbia), the effect of which will be, among other things, to provide for two-thirds majority votes on special resolutions;
10.
To consider and, if thought fit, to pass a special resolution approving an amendment to the Company’s Notice of Articles to change the authorized capital to an unlimited number of common shares without par value;
11.
To consider and, if thought fit, to pass a special resolution adopting new Articles which contain updated provisions based on the new Business Corporations Act (British Columbia); and
12.
To transact such further or other business as may properly come before the Meeting and any adjournments thereof.
The accompanying information circular provides additional information relating to the matters to be dealt with at the Meeting and is deemed to form part of this notice. Also accompanying this notice is a form of proxy and a supplemental mailing return card. Any adjournment of the Meeting will be held at a time and place to be specified at the Meeting.
Only holders of common shares of record at the close of business on May 12, 2004 will be entitled to receive notice of and vote at the Meeting. If you are unable to attend the Meeting in person, please complete, sign and date the enclosed form of proxy and return the same in the enclosed return envelope provided for that purpose within the time and to the location set out in the form of proxy accompanying this notice.
DATED this 14th day of May, 2004.
BY ORDER OF THE BOARD OF DIRECTORS
(Signed)
John F. Kearney
Chairman, President and Chief Executive Officer
If you are a non-registered shareholder of the Company and receive these materials through your broker or through another intermediary, please complete and return the materials in accordance with the instructions provided to you by your broker or by the other intermediary. Failure to do so may result in your shares not being eligible to be voted by proxy at the Meeting.
CANADIAN ZINC CORPORATION
Suite 1202 – 700 West Pender Street
Vancouver, British Columbia V6C 1G8
INFORMATION CIRCULAR
(As at May 12, 2004, except as otherwise indicated)
This information circular is furnished in connection with the solicitation of proxies by the management of Canadian Zinc Corporation (the "Company") for use at the annual and special general meeting of the Company to be held on June 16, 2004 and at any adjournments thereof (the "Meeting"). The solicitation will be conducted by mail and may be supplemented by telephone or other personal contact to be made without special compensation by officers and employees of the Company. The cost of solicitation will be borne by the Company.
APPOINTMENT OF PROXYHOLDER
A duly completed form of proxy will constitute the person(s) named in the enclosed form of proxy as the shareholder's proxyholder. The persons whose names are printed in the enclosed form of proxy for the Meeting are officers or Directors of the Company (the "Management Proxyholders").
A shareholder has the right to appoint a person other than a Management Proxyholder, to represent the shareholder at the Meeting by striking out the names of the Management Proxyholders and by inserting the desired person's name in the blank space provided or by executing a proxy in a form similar to the enclosed form. A proxyholder need not be a shareholder.
REVOCABILITY OF PROXY
Any registered shareholder who has returned a proxy may revoke it at any time before it has been exercised. In addition to revocation in any other manner permitted by law, a proxy may be revoked by instrument in writing, including a proxy bearing a later date, executed by the registered shareholder or by his attorney authorized in writing or, if the registered shareholder is a corporation, under its corporate seal or by an officer or attorney thereof duly authorized. The instrument revoking the proxy must be deposited at the registered office of the Company, at any time up to and including the last business day preceding the date of the Meeting, or any adjournment thereof, or with the chairman of the Meeting on the day of the Meeting. Only registered shareholders have the right to revoke a proxy. Non-Registered Holders who wish to change their vote must, at least seven (7) days before the Meeting, arrange for their respective Intermediaries to revoke the proxy on their behalf.
VOTING BY PROXY
Common shares of the Company represented by properly executed proxies in the accompanying form will be voted or withheld from voting on each respective matter in accordance with the instructions of the shareholder on any ballot that may be called for.
If no choice is specified and one of the Management Proxyholders is appointed by a shareholder as proxyholder, such person will vote in favour of the matters proposed at the Meeting and for all other matters proposed by management at the Meeting.
The enclosed form of proxy also confers discretionary authority upon the person named therein as proxyholder with respect to amendments or variations to matters identified in the Notice of the Meeting and with respect to other matters which may properly come before the Meeting. At the date of this information circular, management of the Company knows of no such amendments, variations or other matters to come before the Meeting.
COMPLETION AND RETURN OF PROXY
Completed forms of proxy must be deposited at the office of the Company's registrar and transfer agent, Computershare Investor Services Inc., Proxy Department, 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1, not later than forty-eight (48) hours, excluding Saturdays, Sundays and holidays, prior to the time of the Meeting, unless the chairman of the Meeting elects to exercise his discretion to accept proxies received subsequently.
NON-REGISTERED HOLDERS
Only registered shareholders or duly appointed proxyholders are permitted to vote at the Meeting. Most shareholders of the Company are "non-registered" shareholders because the common shares they own are not registered in their names but are instead registered in the name of the brokerage firm, bank or trust company through which they purchased the common shares. More particularly, a person is not a registered shareholder in respect of common shares which are held on behalf of that person (the "Non-Registered Holder") but which are registered either: (a) in the name of an intermediary (an "Intermediary") that the Non-Registered Holder deals with in respect of the common shares (Intermediaries include, among others, banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered RRSP's, RRIFs, RESPs and similar plans); or (b) in the name of a clearing agency (such as The Canadian Depository for Securities Limited ("CDS")) of which the Intermediary is a participant. In accordance with the requirements of National Instrument 54-101 of the Canadian Securities Administrators, the Company has distributed copies of the notice of meeting, this information circular and the proxy (collectively, the "Meeting Materials") to the clearing agencies and Intermediaries for onward distribution to Non-Registered Holders.
Intermediaries are required to forward the Meeting Materials to Non-Registered Holders unless a Non-Registered Holder has waived the right to receive them. Very often, Intermediaries will use service companies to forward the Meeting Materials to Non-Registered Holders. Generally, Non-Registered Holders who have not waived the right to receive Meeting Materials will either:
(a)
be given a form of proxy which has already been signed by the Intermediary (typically by a facsimile, stamped signature), which is restricted as to the number of shares beneficially owned by the Non-Registered Holder but which is otherwise not completed. Because the Intermediary has already signed the form of proxy, this form of proxy is not required to be signed by the Non-Registered Holder when submitting the proxy. In this case, the Non-Registered Holder who wishes to submit a proxy should otherwise properly complete the form of proxy and deliver it to Computershare Trust Company of Canada as provided above; or
(b)
more typically, be given a voting instruction form which is not signed by the Intermediary, and which, when properly completed and signed by the Non-Registered Holder and returned to the Intermediary or its service company, will constitute voting instructions (often called a "proxy authorization form") which the Intermediary must follow. Typically, the proxy authorization form will consist of a one page pre-printed form. Sometimes, instead of the one page pre-printed form, the proxy authorization form will consist of a regular printed proxy form accompanied by a page of instructions which contains a removable label containing a bar-code and other information. In order for the form of proxy to validly constitute a proxy authorization form, the Non-Registered Holder must remove the label from the instructions and affix it to the form of proxy, properly complete and sign the form of proxy and return it to the Intermediary or its service company in accordance with the instructions of the Intermediary or its service company.
In either case, the purpose of this procedure is to permit Non-Registered Holders to direct the voting of the common shares which they beneficially own. Should a Non-Registered Holder who receives one of the above forms wish to vote at the Meeting in person, the Non-Registered Holder should strike out the names of the Management Proxyholders and insert the Non-Registered Holder's name in the blank space provided. In either case, Non-Registered Holders should carefully follow the instructions of their Intermediary, including those regarding when and where the proxy or proxy authorization form is to be delivered.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Except as set out herein, to the knowledge of the management of the Company, no director or executive officer of the Company since the beginning of the Company's last financial year, nor any associate or affiliate of the foregoing persons, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matters to be acted upon at the Meeting other than the election of directors and the approval of stock option plans.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company is authorized to issue 200,000,000 common shares without par value, of which as at May 12, 2004, the record date for the Meeting, 68,496,427 common shares were issued and outstanding. The holders of common shares are entitled to one vote for each common share held. Holders of common shares of record at the close of business on May 12, 2004 will be entitled to receive notice of and vote at the meeting. The Company has only one class of shares.
To the knowledge of management of the Company, no person beneficially owns, directly or indirectly, or exercises control or direction over shares carrying more than 10% of the voting rights attached to the common shares of the Company.
ELECTION OF DIRECTORS
At the meeting, shareholders will be asked to elect seven (7) directors (the "Nominees"). The following table provides the names of the Nominees and information concerning them. The specified persons in the enclosed form of proxy intend to vote for the election of the Nominees. Management does not contemplate that any of the Nominees will be unable to serve as a director. Each director of the Company holds office until his successor is elected or appointed.
Name, Province or State and Country of Ordinary Residence and Position Held with the Company
Principal Occupation During Preceding
Five Years
Date First Became Director of the Company
Common Shares beneficially owned, directly or indirectly, or over which control or direction is exercised (1)
Robert Gayton
British Columbia, Canada
Chief Financial Officer and Director
Financial consultant to and Vice-President Finance of Western Silver Holdings Ltd., Quaterra Resources Inc., Eaglecrest Explorations Ltd., Pacific Cascade Resources Corp., Rio Fortuna Exploration Corp., Intl Bravo Resources Corp., Lightyear Technologies Inc., Director of seven public companies and three private companies
May 2000
30,000 common shares
20,000 share purchase warrants
John F. Kearney(2)
Ontario, Canada
Chairman, President, Chief Executive Officer and Director
Chairman, President and Chief Executive Officer of Canadian Zinc Corporation since 2003; Chairman of Conquest Resources Limited since 2001; Chairman of Anglesey Mining plc since 1994
November 2001
140,000 common shares
450,000 stock options
John MacPherson
British Columbia, Canada
Director
Chairman of Mineworks Inc. since 2003; Chairman of Canadian Zinc Corporation from 2000 to June 2003
May 1999
60,000 common shares
David Nickerson
Northwest Territories, Canada
Director
Professional Engineer, Mining consultant, Director, Tyhee Development Corp.; previously Chairman of Northwest Territories Water Board; Member of Parliament, Member of NWT Legislative Assembly; Government Minister
March 2004
Nil
Alan C. Savage(3)
British Columbia, Canada
Director
Chief Executive Officer of Doublestar Resources Ltd., Director of two public companies and one private company
June 2003
2,000 common shares
David Shaw
British Columbia, Canada
Director
Self employed as an independent consulting geologist
May 2000
50,000 common shares
Alan Taylor
British Columbia, Canada
Vice President, Exploration, Chief Operating Officer and Director
Vice President, Exploration of Canadian Zinc Corporation since 1999 and Chief Operating Officer of Canadian Zinc Corporation since March 2004
March 2004
Nil
(1)
The information as to common shares beneficially owned or over which the above-named directors exercise control or directors, not being within the knowledge of the Company, has been furnished by the respective directors individually.
(2)
Mr. Kearney served as a non-executive director of Q-Entertainment Inc. (TSX: QZR), a technology and entertainment company, from October 1996 to October 31, 1997. On November 6, 1997, Q-Entertainment Inc. and its U.S. subsidiaries filed for Chapter 11 protection in the United States and subsequently filed for Chapter 7 bankruptcy in the United States Bankruptcy Court (Texas), following which a trustee in bankruptcy was appointed. Mr. Kearney also served as a non-executive director of McCarthy Corporation plc, the largest shareholder in Q-Entertainment Inc., from July 2000 to March 2003. In June 2003, McCarthy Corporation plc proposed a voluntary arrangement with its creditors pursuant to the legislation of the United Kingdom.
(3)
Mr. Savage served as a director of Consolidated Van Anda Gold Ltd., which became the subject of a cease trade order of the Alberta Securities Commission in February 2002. Mr. Savage resigned as a director of Consolidated Van Anda Gold Ltd. in August 2003.
IF ANY OF THE ABOVE NOMINEES IS FOR ANY REASON UNAVAILABLE TO SERVE AS A DIRECTOR, PROXIES IN FAVOUR OF MANAGEMENT WILL BE VOTED FOR ANOTHER NOMINEE IN THEIR DISCRETION UNLESS THE SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT HIS SHARES ARE TO BE WITHHELD FROM VOTING IN THE ELECTION OF DIRECTORS.
The board of directors of the Company does not have an executive committee. The board of directors of the Company has established an Audit Committee to oversee the retention performance and compensation of the Company’s independent auditors, and to oversee and establish procedures concerning systems of internal accounting and control. The Audit Committee currently comprises of Robert Gayton, Alan C. Savage and David Shaw.
EXECUTIVE COMPENSATION
The following table (presented in accordance with the rules (the "Rules") made under the Securities Act (British Columbia)) sets forth all annual and long-term compensation for services in all capacities to the Company and its subsidiaries for the three most recently completed financial years (to the extent required by the Rules) in respect of John F. Kearney, the current Chief Executive Officer of the Company, Malcolm J.A. Swallow, the Chief Executive Officer of the Company until July 2003, and Robert Gayton, the Chief Financial Officer of the Company (the "Named Executive Officers"). No other executive officers of the Company were in receipt of salaries or bonuses in excess of $150,000 during the financial year ended December 31, 2003.
SUMMARY COMPENSATION TABLE
Annual Compensation
Long-Term Compensation
Awards
Payouts
Name
And
Principal
Position
Year
Salary
($)
Bonus
($)
Other
Annual
Compen-sation
($)
Securities Under Options/
SARs Granted
(#)
Shares or Units Subject to Resale Restrictions
($)
LTIP Payouts
($)
All Other Compen-sation
($)
John F. Kearney
Chairman, President and Chief Executive Officer (1)
2003
105,000
Nil
Nil
600,000
Nil
Nil
Nil
Robert Gayton
Chief Financial Officer
2003
2002
2001
5,625
8,483
10,870
Nil
Nil
Nil
Nil
Nil
Nil
Nil
200,000
200,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Malcolm J.A. Swallow
Former President and Chief Executive Officer(2)
2003
2002
2001
Nil
Nil
150,000
Nil
Nil
Nil
50,631(3)
94,180(3)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
(1)
Mr. Kearney was appointed Chairman, President and Chief Executive Officer of the Company in July 2003.
(2)
Mr. Swallow was appointed President and Chief Executive Officer of the Company in June 2000. Mr. Swallow resigned as the President and Chief Executive Officer of the Company in July 2003.
(3)
Paid to Swallow Services Ltd., a company controlled by Mr. Swallow.
Long-Term Incentive Plan (LTIP) Awards
The Company does not have a LTIP pursuant to which cash or non-cash compensation intended to serve as an incentive for performance (whereby performance is measured by reference to financial performance or the price of the Company's securities) is paid.
Option/SAR Grants During the Most Recently Completed Financial Year
The following table provides details on stock options granted to the Named Executive Officers during the year ended December 31, 2003.
Name
Securities Under Options/SARs Granted
(#)
% of Total Options/SARs Granted to Employees in Financial Year
Exercise or Base Price
($/Security)
Market Value of Securities Underlying Options/SARs on the Date of Grant
($/Security)
Expiration Date
John F. Kearney
600,000
66%
$0.23
$0.23
March 18, 2007
Robert Gayton
Nil
N/A
N/A
N/A
N/A
Malcolm J.A. Swallow
Nil
N/A
N/A
N/A
N/A
Aggregate Option/SAR Exercises During the Most Recently Completed Financial Year and
Financial Year-End Option/SAR Values
The following table (presented in accordance with the Rules) sets forth details of all exercises of stock options during the most recently completed financial year by the Named Executive Officers, the number of unexercised options held by the Named Executive Officers at the financial year-end and the value of unexercised in-the-money options on an aggregated basis at the financial year-end.
Name
Securities Acquired
on Exercise
(#)
Aggregate
Value
Realized
($)
Unexercised Options/SARs
at Financial
Year-End
(#)
Exercisable/
Unexercisable
Value of Unexercised
In-the-Money
Options/SARs
at Financial Year-End(1)
($)
Exercisable/
Unexercisable
John F. Kearney(2)
200,000
$100,000
600,000 / Nil
$654,000 / Nil
Robert Gayton
200,000
$48,000
Nil / Nil
Nil / Nil
Malcolm J.A. Swallow(3)
500,000
$250,000
Nil / Nil
Nil / Nil
(1)
The closing price of the common shares of the Company on The Toronto Stock Exchange (the "TSX") on December 31, 2003 was $1.32.
(2)
Mr. Kearney became Chairman, President and Chief Executive Officer of the Company in July 2003.
(3)
Mr. Swallow resigned as the President and Chief Executive Officer of the Company in July 2003 and as a director of the Company in September 2003.
Options and SAR Re-Pricings
There was no re-pricing of stock options under the Company's stock option plan or otherwise during the most recently completed financial year.
Defined Benefit or Actuarial Plan
The Company does not have a defined benefit or actuarial plan.
Termination of Employment, Change in Responsibilities and Employment Contracts
Except as otherwise disclosed herein, the Company and its subsidiaries have no compensatory plan or arrangement in respect of compensation received or that may be received by an executive officer of the Company in the Company's most recently completed or current financial year to compensate such executive officer in the event of the termination of employment (resignation, retirement, change of control) or in the event of a change in responsibilities following a change in control, where in respect of the executive officer the value of such compensation exceeds $100,000.
Composition of Compensation Committee
During 2003, the Compensation Committee consisted of Robert Gayton, David Shaw and Alan C. Savage and was responsible for determining the compensation of executive officers of the Company.
Report on Executive Compensation
Historically, the compensation of executive officers of the Company has been comprised primarily of cash compensation and the allocation of incentive stock options. In establishing levels of remuneration and in granting stock options, an executive's performance, level of expertise, responsibilities, length of service to the Company and comparable levels of remuneration paid to executives of other companies of comparable size and development within the industry are taken into consideration. Interested executives do not participate in reviews, discussions or decisions of the Compensation Committee or the board of directors regarding this remuneration.
The general compensation philosophy of the Company for executive officers, including for the Chief Executive Officer, is to provide a level of compensation that is competitive within the North American marketplace and that will attract and retain individuals with the experience and qualifications necessary for the Company to be successful, and to provide long-term incentive compensation which aligns the interest of executives with those of shareholders and provides long-term incentives to members of senior management whose actions have a direct and identifiable impact on the performance of the Company and who have material responsibility for long-range strategy development and implementation.
The Company's stock option plans are administered by the board of directors of the Company. The stock option plans are designed to give each option holder an interest in preserving and maximizing shareholder value in the longer term, to enable the Company to attract and retain individuals with experience and ability, and to reward individuals for current performance and expected future performance. Stock option grants are considered when reviewing executive officer compensation packages as a whole.
This report on executive compensation was submitted by the Compensation Committee of the Company, comprising of Robert Gayton, Alan C. Savage and David Shaw.
Compensation of Directors
Historically, the Company did not pay cash compensation to directors of the Company for services rendered in their capacity as directors or for their services rendered as members of committees during 2003. For the financial year 2004 and future years, the Company has agreed to pay directors an annual fee of $8,000 plus $400 for each meeting or committee meeting attended.
From time to time, directors may be retained to provide specific services to the Company and will be compensated on a basis to be negotiated.
The Company has no plans other than the Company's stock option plans previously referred to herein pursuant to which cash or non-cash compensation was paid or distributed to directors during the most recently completed financial year or is proposed to be paid or distributed in a subsequent year. Directors are eligible to participate in the stock option plans. During the financial year ended December 31, 2003, 800,000 stock options were granted to directors of the Company.
Insurance
The Company does not currently have any directors’ and officers’ liability insurance or key man insurance.
Performance Graph
The following graph compares the yearly percentage change in the cumulative total shareholder return over the last five financial years of the common shares of the Company, assuming a $100 investment in the common shares of the Company on December 31, 1998, with the TSE 300 Index during such period, assuming dividend reinvestment. The TSE 300 Index was replaced by the S&P/TSX Composite Index on May 1, 2002. The historical values of the TSE 300 Index and the S&P/TSX Composite Index are identical for the period in question (December 31, 1998 to December 31, 2003).
CUMULATIVE VALUE OF A $100 INVESTMENT AS OF DECEMBER 31
DATA
1998
1999
2000
2001
2002
2003
CZN
100
192
304
135
161
1015
S&P/TSX
100
132
141
124
108
137
Indebtedness of Directors and Executive Officers
No director or executive officer, or associate or affiliate of any such director or executive officer, is, or at any time, since the beginning of the most recently completed financial year of the Company, was indebted to the Company.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
Other than as described herein, no informed person or proposed director of the Company, or any associate or affiliate of any informed person or proposed director, has had a material interest, direct or indirect, in any transaction of the Company since the commencement of the Company's last fiscal year or in any proposed transaction which has materially affected or would materially affect the Company.
MANAGEMENT CONTRACTS
Except as otherwise disclosed herein, no management functions of the Company are performed to any substantial degree by a person other than the directors or executive officers of the Company.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The board of directors and senior management consider good corporate governance to be central to the effective and efficient operation of the Company. The board has confirmed the strategic objective of the Company of exploring and developing the Prairie Creek Property with the intention of developing and mining the deposit.
The TSX has set out a series of guidelines for effective corporate governance (the "TSX Guidelines"). The TSX Guidelines address matters such as the constitution and independence of corporate boards, the functions to be performed by boards and their committees and the effectiveness and education of board members. The TSX requires the disclosure by each listed corporation of its approach to corporate governance with reference to the TSX Guidelines as it is recognized that the unique characteristics of individual corporations will result in varying degrees of compliance. The Ontario Securities Commission released corporate governance guidelines for comment on January 16, 2004 (the "OSC Guidelines"). The OSC Guidelines have been proposed in order to improve corporate governance practices in light of recent corporate governance related developments in Canada and in the United States. While the proposed OSC Guidelines are not yet in force, the Company has undertaken to re-examine its corporate governance practices in the context of the proposed OSC Guidelines in order to improve its corporate governance practices and will implement any applicable changes to its practices where appropriate.
Set out below is a description of the Company's approach to corporate governance in relation to the TSX Guidelines.
Guideline 1
The board of directors should explicitly assume responsibility for stewardship of the Company.
Comment:
The mandate of the board of directors is to supervise the management of the business and affairs of the Company and, as part of its overall stewardship responsibility, the board of directors assumes responsibility for the following matters:
(a)
Adoption of a Strategic Planning Process
Comment:
The board of directors is charged with taking an early, active and direct role in the strategic planning process, including considering such matters as acquisitions of properties, divestitures of properties, financing and public relations. Management is responsible for the day-to-day operations of the Company, however, the board of directors takes an active role in reviewing projects and corporate direction on a regular basis. In addition, the board of directors monitors the success of management in implementing and adhering to approved objectives, budgets and strategies.
(b)
Identification of the Principal Risks associated with the Company's Business and Ensuring the Implementation of Appropriate Systems to Manage These Risks
Comment:
Mineral exploration is inherently unpredictable. Future metal prices, the success of exploration and development programs and permitting activity can have a significant impact on capital requirements and on the company’s business
The board of directors has identified the principal risks of the Company to be, among other things: obtaining of operating permits for the Prairie Creek Project; delays in obtaining such permits; the price of various metals in the international markets; and the affect of metal prices on the ability of the Company to raise the financing required to carry out its exploration, development and permitting activities; and the success of the Company's exploration, development and permitting activities.
The board of directors has assigned the responsibility for monitoring these risks to the President of the Company. The board reviews all activities of the President regularly at meetings of the board.
(c)
Succession Planning Including Appointing, Training and Monitoring Senior Management
Comment:
The board of directors makes all senior officer appointments. The board of directors monitors their performance and is responsible for succession planning and management development.
(d)
A Communications Policy for the Company
Comment:
The board of directors has adopted a communications policy which requires the Company to disseminate the material results of its ongoing business and exploration activities and financial operations on a regular and timely basis. Most of the Company's communications with its shareholders are reviewed by the board of directors including annual financial statements, annual reports, management's discussion and analysis of operating results, quarterly results and management's comments thereon, proxy solicitation materials and press releases relating to material changes, except for periodic press releases whether material or not which are reviewed by management only.
(e)
The Integrity of the Company's Internal Control and Management Information Systems
Comment:
Board approval is required for any management decisions which may have a significant impact on the Company, including material acquisitions and dispositions, capital budgets, debt and equity financings, changes to compensation programs and property acquisitions and divestitures. The directors have determined that it would be appropriate for most of these issues to be considered by the board as a whole rather than by committee unless directors have a conflict of interest. The only permanent committees of the board are the Audit Committee, which has been formed to review the Company's financial reporting and to monitor the Company's internal controls and financial information systems, and the Compensation Committee.
Generally, the board of directors is expected to meet a minimum of six times each year. In addition, the board of directors meets at other times when matters requiring its approval are raised and the timing is such that it is not prudent or possible to wait for a regularly scheduled or quarterly meeting.
Guidelines 2 and 3
A majority of the directors should be “unrelated” directors.
Comment:
The board is currently comprised of seven directors. The board believes that there are currently four "unrelated" directors and three "related" directors within the meaning of the TSX Guidelines.
Pursuant to the TSX Guidelines, an "unrelated" director is a director who is independent of management and is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director's ability to act with a view to the best interests of the Company, other than interests and relationships arising from shareholdings. Based on this definition, four of the directors of the Company are "unrelated" directors and three directors, John F. Kearney, Robert Gayton and Alan Taylor are considered to be "related" directors being the Chairman, President and Chief Executive Officer of the Company, the Chief Financial Officer of the Company and the Vice-President and Chief Operating Officer of the Company, respectively. Prior to July 2003, John MacPherson was considered to have been a related director as he was the Chairman and an employee of the Company.
The TSX Guidelines make an informal distinction between inside and outside directors. The TSX Guidelines consider an inside director to be a director who is an officer or employee of the Company or any of its affiliates. Each of the "unrelated" directors of the Company is also considered to be an "outside" director of the Company by virtue of the fact he is not an officer or employee of the Company.
Guideline 4
The board of directors should appoint a nominating committee composed exclusively of outside directors with responsibility for proposing new nominees to the board and assessing directors on an ongoing basis.
Comment:
The board of directors determines nominations to the Board. Nominations are generally the result of recruitment efforts by the members of the board and informal and formal discussions with members of the board of directors. At the present time, the board is made up of four outside and unrelated directors, two inside and related directors and one inside and unrelated director. Assessment of the performance of the directors is carried out by the board of directors as a whole on a periodic basis.
Guideline 5
The board of directors should implement a process for assessing the effectiveness of the board as a whole, its committees and the contribution of individual directors.
Comment:
The board of directors reviews, on an ongoing basis, the effectiveness of the board as a whole, and the contribution and effectiveness of individual directors. The board of directors has determined that the Audit Committee would operate more appropriately if it were to consist entirely of outside and unrelated directors. The board of directors intends to reconstitute the Audit Committee.
Guideline 6
The Company should provide an education and orientation program for new members of the board of directors.
Comment:
The Company has an informal orientation and education program for new members of the board of directors that has been prepared by management of the Company in order to ensure that new directors are familiarized with the Company's business and the procedures of the board of directors. In addition, new directors receive copies of board material and other material regarding the business and operations of the Company (including recent annual reports, annual information forms, proxy solicitation materials and various other operating, property and budget reports) and are encouraged to visit and meet with management on a regular basis.
Guideline 7
The board of directors should examine its size to ensure that it facilitates effective decision making.
Comment:
The board of directors will consider its size each year when it passes a resolution determining the number of directors to be elected at each annual meeting of shareholders. In determining its appropriate size, the board of directors considers such matters as what is the appropriate size to properly administer the affairs of the Company while maintaining a diversity of views and experience. The board of directors has considered its present size and has determined that at this time seven members is appropriate to effectively carry out the duties of the board of directors given the Company's current status. Seven nominees are proposed for election to the board at the annual general meeting.
Guideline 8
The board should review the adequacy and form of compensation of directors to ensure that it reflects the responsibilities and risks involved.
Comment:
Historically, the directors did not receive any fees for acting as directors of the Company. Directors are entitled to participate in the Company's stock option plans and to reimbursement for expenses incurred in attending directors' and shareholders' meetings. The Compensation Committee has reviewed the compensation paid to directors based on such factors as time commitment, comparative fees paid by other companies in the industry in North America, level of responsibility and the Company's current cash position and has recommended that, for the year 2004 and future years, directors of the Company be paid an annual fee of $8,000 paid quarterly plus a fee of $400 for each board or committee meeting attended.
Guideline 9
Committees of the board of directors should be composed of outside directors, a majority of whom are unrelated.
Comment:
The board of directors currently has two subcommittees: an Audit Committee and a Compensation Committee. The Audit Committee is currently comprised of two outside and unrelated directors, and one inside and related director. The board of directors has determined that the Audit Committee would operate more appropriately if it were to consist entirely of outside and unrelated directors. The board of directors intends to reconstitute the Audit Committee. The Compensation Committee is also currently comprised of two outside and unrelated directors, and one inside and related director. From time to time, the board of directors will form ad hoc committees to consider specific transactions comprised of persons unrelated to the transaction.
Guideline 10
The board of directors should assume responsibility for, or assign to a committee the general responsibility for, the approach to corporate governance issues.
Comment:
The board of directors assumes responsibility for the Company's approach to corporate governance issues. The board of directors conducts periodic reviews of the Company's corporate governance practices to ensure continued compliance with applicable stock exchange rules and applicable laws including the OSC Guidelines.
Guideline 11
The board of directors and the Chief Executive Officer together should develop position descriptions for the board of directors and the Chief Executive Officer, involving the definition of the limits to management's responsibilities. In addition, the board of directors should approve or develop corporate objectives which the Chief Executive Officer is responsible for meeting.
Comment:
The board of directors responds to and, if it considers appropriate, approves, with such revisions as it may require, corporate objectives and recommended courses of action which have been brought forward by the Chief Executive Officer and management. In addition to those matters which must be approved by the board of directors by law, significant business activities and actions proposed to be taken by the Company are subject to approval by the board of directors.
Annual capital and operating budgets and significant changes thereto, long range plans, major changes in the organizational structure of the Company, annual financial statements, major acquisitions and dispositions, major financing transactions involving the issuance of shares, acquisitions of properties, long term contracts with significant cumulative financial commitments, appointments of senior executive officers, benefit plans, amendments to stock option plans, issuance of stock options and succession plans, are all subject to approval of the board of directors or, where appropriate, a duly authorized committee of the board of directors.
In addition, the board of directors is responsible for overseeing the strategic direction of the Company, monitoring the performance of the Company's assets and assessing opportunities for and risks affecting the Company's business and assessing means to effectively deal with the same.
Guideline 12
The board of directors should have appropriate structures and procedures to ensure that it can function independently of management.
Comment:
In order to ensure that the board of directors can function independently of management, the unrelated directors will, in appropriate circumstances, meet separately from the related directors as an ad hoc subcommittee of the board of directors. The board of directors reviews its procedures on an ongoing basis to ensure that it can function independently of management.
Guideline 13
The Audit Committee of the board of directors should be comprised only of outside directors. The Audit Committee should have direct communication channels with external auditors.
Comment:
The Audit Committee currently consists of three directors, two of whom are outside and unrelated directors, and one is an inside and related director. The board of directors has determined that the Audit Committee would operate more appropriately if it were to consist entirely of outside and unrelated directors. The board of directors intends to reconstitute the Audit Committee. The Audit Committee reviews the Company's audited financial statements and meets with the Company's management and auditors for purposes of reviewing the Company's audited financial statements. The quarterly financial statements of the Company are reviewed by the Audit Committee before presentation to, and review by, the board. In addition, the Audit Committee is charged with the responsibility of monitoring the integrity of the Company’s internal controls and management information systems. For the purposes of performing these duties, the members of the Audit Committee have the right, at all times, to inspect all of the books and financial records of the Company and to discuss with management and the auditors of the Company any accounts, records and matters relating to the financial statements of the Company.
Guideline 14
The board of directors should implement a system which enables individual directors to engage outside advisors at the Company's expense, in appropriate circumstances.
Comment:
Individual directors may engage outside advisors at the Company's expense and with the authorization of the board in order to provide advice to the director for the purpose of assisting the director in performing his duties as a director of the Company.
EQUITY COMPENSATION PLAN INFORMATION
Plan Category
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(December 31, 2003)
(a)
Weighted-average exercise price of outstanding options, warrants and rights
(December 31, 2003)
(b)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(December 31, 2003)
Equity compensation plans approved by securityholders
600,000
$0.23
1,292,500
Equity compensation plans not approved by securityholders
Nil
Nil
Nil
Total
600,000
1,292,500
APPOINTMENT OF AUDITORS
Unless such authority is withheld, the persons named in the accompanying proxy intend to vote for the appointment of Ellis Foster, as auditors of the Company for the 2004 fiscal year, and to authorize the directors to fix their remuneration. Ellis Foster were first appointed as auditors of the Company in 1991.
PARTICULARS OF OTHER MATTERS TO BE ACTED UPON
Approval of New 2004 Stock Option Plan
The Company currently has (i) a 1995 stock option plan (the "1995 Plan"), which had 1,600,000 common shares of the Company reserved for issuance pursuant to the granting of stock options of which 80,000 remain available for issuance and no stock options are outstanding; (ii) a 1996 stock option plan (the "1996 Plan"), which had 1,000,000 common shares of the Company reserved for issuance pursuant to the granting of stock options of which 22,500 remain available for issuance and no stock options are outstanding; and (iii) a 1997 stock option plan (the "1997 Plan"), which had 2,500,000 common shares of the Company reserved for issuance pursuant to the granting of stock options of which 590,000 remain available for issuance and 450,000 stock options are outstanding.
The board of directors of the Company has approved a new 2004 stock option plan (the "2004 Plan") for the Company, subject to shareholder and regulatory approval, to replace the above plans and has approved the cancellation of the 1995 Plan and the 1996 Plan (as no stock options are outstanding under either stock option plan) and the discontinuance of the granting of options under the 1997 Plan, subject the approval of the 2004 Plan.
The purpose of the 2004 Plan is to attract and motivate directors, officers, employees of and service providers to the Company and its subsidiaries (collectively the "Optionees") and thereby advance the Company's interests by affording such persons with an opportunity to acquire an equity interest in the Company through the stock options. The 2004 Plan authorizes the board of directors to grant stock options to the Optionees on the following terms:
1.
The number of shares subject to each stock option is determined by the board of directors provided that the 2004 Plan, together with all other previously established or proposed share compensation arrangements, may not result in:
(a)
the number of common shares of the Company reserved for issuance pursuant to stock options granted to insiders exceeding 10% of the outstanding issue; or
(b)
the issuance, within a one year period, to insiders of the Company of a number of common shares of the Company exceeding 10% of the outstanding issue or to any one insider of a number exceeding 5% of the outstanding issue.
The outstanding issue is determined on the basis of the number of common shares of the Company outstanding immediately prior to any share issuance, excluding shares issued pursuant to share compensation arrangements over the preceding one-year period.
2.
The maximum number of common shares of the Company which may be issued pursuant to stock options granted under the 2004 Plan, unless otherwise approved by shareholders, is 6,350,000 common shares.
3.
The exercise price of an option may not be set at less than the closing price of the common shares of the Company on the TSX on the trading day immediately preceding the date of grant of the option.
4.
The options may be exercisable for a period of up to ten years, such period and any vesting schedule to be determined by the board of directors of the Company, and are non-assignable, except in certain circumstances.
5.
The options can be exercised by the Optionee as long as the Optionee is a director, officer, employee or consultant to the Company or its subsidiaries or within a period of not more than 90 days after ceasing to be a director, officer, employee or consultant (or such longer period as may be approved by the board of directors of the Company and, if required, the TSX) or, if the Optionee dies, within one year from the date of the Optionee's death.
6.
On the occurrence of a takeover bid, issuer bid or going private transaction, the board of directors will have the right to accelerate the date on which any option becomes exercisable.
A copy of the 2004 Plan is available for viewing up to the date of the Meeting at the Company's offices at Suite 1202, 700 West Pender Street, Vancouver, British Columbia, and at the Meeting.
The affirmative vote of the holders of a majority of the issued and outstanding common shares of the Company entitled to vote and represented in person or by proxy at the Meeting is required for the approval of the 2004 Plan.
Shareholders will be asked at the Meeting to consider, and if thought fit, approve, with or without variation, the ordinary resolution in the form set forth below:
"RESOLVED as an ordinary resolution, that the Company be and is hereby authorized to adopt the 2004 Stock Option Plan pursuant to which the maximum number of common shares of the Company which may be issued pursuant to options granted to directors, officers, employees and consultants of the Company and its subsidiaries, unless otherwise approved by shareholders, is 6,350,000 common shares."
It is expected that, if the resolution is approved, the board of directors of the Company will in due course grant options under the 2004 Plan as the board of directors deems fit in light of the overall compensation program and the relative efforts and contributions of the eligible participants under the 2004 Plan.
The directors of the Company believe the passing of the foregoing ordinary resolution is in the best interests of the Company and recommend that shareholders of the Company vote in favour of the resolution.
The persons named as proxies in the enclosed form of proxy intend to cast the votes represented by proxy in favour of the foregoing resolution unless the holder of common shares who has given such proxy has directed that the votes be otherwise cast.
Approval and Ratification of Rolling 10% Stock Option Plan
Current policies of the TSX require that every stock option plan must have a specified maximum number of shares, authorized by shareholders, issuable pursuant to the plan. The TSX is currently reviewing its policies in respect of stock option plans and may in future permit the adoption of stock option plans providing that number of common shares which may be issued pursuant to options previously granted and those granted under the plan is a maximum of 10% of the issued and outstanding common shares at the time of the grant. The board of directors of the Company has approved the adoption of an amended stock option plan (the "Amended 10% Rolling Stock Option Plan") to replace the Company's 2004 Plan (if the 2004 Plan is approved by shareholders at the Meeting), if and when there is a change in TSX policies that permit the adoption of such stock option plans. There is no assurance that the TSX policies in respect of stock option plans will change in the near term or at all. It is anticipated that, if permitted, such plans will require that the number of shares which may be reserved for issuance to any one individual may not exceed 5% of the issued shares on a yearly basis and may require that a rolling stock option plan which sets the number of common shares issuable under the plan at a maximum of 10% of the issued and outstanding common shares be approved and ratified by shareholders every three years. Any increase in the issued and outstanding common shares will result in an increase in the available number of common shares issuable under the Amended 10% Rolling Stock Option Plan, and any exercises of stock options will make new grants available under the plan. The Amended 10% Rolling Stock Option Plan will in all other respects have the same terms and conditions as the 2004 Plan.
The approval of the Amended 10% Rolling Stock Option Plan requires the affirmative vote of the holders of a majority of the issued and outstanding common shares of the Company entitled to vote and represented in person or by proxy at the Meeting other than the votes attaching to common shares beneficially owned by insiders to whom stock options may be issued pursuant to the Amended 10% Rolling Stock Option Plan and their associates. Such persons currently hold, directly or indirectly, or exercise control or direction over approximately 282,000 common shares (less than one percent of the currently issued and outstanding common shares).
Shareholders will be asked at the Meeting to consider, and if thought fit, approve with or without variation, the ordinary resolution in the form set forth below:
"RESOLVED, as an ordinary resolution, that the Company be and is hereby authorized to adopt an amended 2004 Stock Option Plan pursuant to which the aggregate number of common shares of the Company which may be issued to directors, officers, employees and consultants of the Company and its subsidiaries may not exceed 10% of the issued and outstanding common shares at the time of the grant and otherwise having the same terms and conditions as the Company's 2004 Stock Option Plan."
If approved by shareholders of the Company, the Amended 10% Rolling Stock Option Plan will take effect upon approval by the TSX and the board of directors of the Company. If the resolution is passed, the Company will issue a press release announcing the implementation of the Amendment 10% Rolling Stock Option Plan once the changes to TSX policies permitting the adoption of such stock option plans are adopted.
The directors of the Company believe the passing of the foregoing ordinary resolution is in the best interests of the Company and recommend that shareholders of the Company vote in favour of the resolution.
The persons named as proxies in the enclosed form of proxy intend to cast the votes represented by proxy in favour of the foregoing resolution unless the holder of common shares who has given such proxy has directed that the votes be otherwise cast.
Authorization to Issue Additional Shares
The Company from time to time investigates opportunities to raise financing on advantageous terms. The Company may undertake additional financings over the next year and expects one or more of these to be structured as private placements. Under the rules of the TSX, the aggregate number of shares of a listed company which are issued or made subject to issuance (i.e., issuable under a share purchase warrant or option or other convertible security) by way of one or more private placement transactions during any particular six-month period may not exceed 25% of the number of shares outstanding (on a non-diluted basis) prior to giving effect to such transactions (the "TSX 25% Rule"), unless there has been shareholder approval of such transactions.
The application of the TSX 25% Rule may restrict the ability of the Company to raise funds by private placement of its securities.
Management of the Company considers it to be in the best interests of the Company to retain flexibility for the Company to solicit private placement funds for working capital, exploration and development and Company operations. The TSX has a working practice that it will accept advance approval by shareholders in anticipation of private placements that may exceed the TSX 25% Rule, provided such transactions are completed within 12 months of the date such advance approval is given.
The Company's issued and outstanding share capital on the record date for the Meeting is 68,496,427 common shares. The Company proposes that the maximum number of common shares which either would be issued or made subject to issuance under one or more private placements in the 12 month period commencing June 16, 2004 would not exceed 68,496,427 common shares in the aggregate.
Any private placement proceeded with by the Company under the advance approval being sought at the Meeting will be subject to approval by the directors of the Company and to the following additional restrictions:
(i)
it must be substantially with parties at arms-length to the Company;
(ii)
it cannot materially affect control of the Company;
(iii)
it must be completed within a 12 month period following the date the advance shareholder approval is given; and
(iv)
it must comply with the private placement pricing rules of the TSX which currently require that the issue price per common share must not be lower than the closing market price of the common shares on the TSX on the trading day prior to the date notice of the private placement is given to the TSX (the "Market Price") less the applicable discount, as follows:
Market Price
Maximum Discount
$0.50 or less
25%
$0.51 to $2.00
20%
Above $2.00
15%
(For these purposes, a private placement of unlisted convertible securities is deemed to be a private placement of the underlying listed securities at an issue price equal to the lowest possible price at which the securities are convertible by the holders thereof).
In all cases, the TSX retains the discretion to decide whether or not a particular placement is "substantially" at arms-length or will materially affect control, in which case specific shareholder approval may be required.
In anticipation that the Company may wish to enter into one or more private placements in the next 12 months that will result in it issuing and/or making issuable such number of its common shares, taking into account any shares that may be issued upon exercise of any warrants, options or other rights granted in connection with the private placements, that will exceed the TSX 25% Rule, the Company requests shareholders pass an ordinary resolution in the following terms to approve such private placements.
The affirmative vote of the holders of a majority of the issued and outstanding common shares of the Company entitled to vote and represented in person or by proxy at the Meeting is required for the approval of the ordinary resolution.
The ordinary resolution that will be proposed at the Meeting is as follows:
"RESOLVED as an ordinary resolution that the issuance by the Company in one or more private placements during the 12 month period commencing June 16, 2004, of such number of securities as would result in the Company issuing or making issuable up to [68,496,427] common shares, as more particularly described in and subject to the restrictions described in the Company's Information Circular dated May 14, 2004, be, and is hereby, approved."
The directors of the Company believe the passing of the foregoing ordinary resolution is in the best interests of the Company and recommend that shareholders of the Company vote in favour of the resolution.
The persons named as proxies in the enclosed form of proxy intend to cast the votes represented by proxy in favour of the foregoing resolution unless the holder of common shares who has given such proxy has directed that the votes be otherwise cast.
Approval of Amended Notice of Articles and Approval of New Articles
The Business Corporations Act (British Columbia) (the "New Act") has been adopted in British Columbia and is now in effect. The New Act replaces the Company Act (British Columbia) (the "Former Act") and adopts many provisions similar to those contained in corporate legislation elsewhere in Canada. The New Act also uses new forms and terminology; most particularly a Memorandum is now called a "Notice of Articles". The Company wishes to take steps to bring its charter documents into conformity with the New Act and to that end is filing a Notice of Articles, which replaces the Company's "Memorandum", with the Registrar of Companies (British Columbia).
The Company is seeking shareholder approval of certain amendments to its Notice of Articles (the "Amended Notice of Articles") and approval of a new form of Articles (the "New Articles") with a view to updating its charter documents to bring them into line with the New Act and incorporating some of the new provisions of the New Act. The directors believe that amending the Company's Notice of Articles and adopting the New Articles will bring the Company's charter documents into line with charter documents of companies in other jurisdictions and will enable the Company to be more efficient, flexible and cost-effective.
Copies of the Altered Notice of Articles and the New Articles are available for viewing up to the date of the Meeting at the Company's offices at Suite 1202, 700 West Pender Street, Vancouver, British Columbia, and at the Meeting.
Proposed Amendments to Notice of Articles
1.
Pre-Existing Company Provisions and Majority of Votes Required for Special Resolutions
The regulations under the New Act effectively added certain provisions, called "Pre-Existing Company Provisions" or "PCPs", to every company's Notice of Articles. The PCPs provide, among other things, that the number of votes required to pass a special resolution (formerly also referred to as a special resolution under the Former Act) or a special separate resolution is at least three-quarters of the votes cast by shareholders present in person or by proxy at the meeting. This is the majority that was required under the Former Act. The New Act provides that a special resolution may be passed by at least two-thirds of the votes cast by shareholders present in person or by proxy at the meeting. The Company proposes to amend its Notice of Articles to delete the PCPs so that, among other things, the provisions of the New Act permitting a two-thirds majority will apply to the Company.
If shareholders approve this resolution, special resolutions will require a two-thirds majority vote, instead of a three-quarters majority vote. Management believes that this will provide the Company with greater flexibility for future corporate activities and is consistent with companies in other jurisdictions.
Shareholders will be asked at the Meeting to consider, and if thought fit, approve with or without variation, the special resolution in the form set forth below. The affirmative vote of the holders of at least three-quarters of the issued and outstanding common shares of the Company entitled to vote and represented in person or by proxy at the Meeting is required for the approval of the special resolution.
"RESOLVED, as a special resolution, that:
(a)
the Pre-Existing Company Provisions in the Notice of Articles of the Company are hereby deleted;
(b)
the Company's Notice of Articles is altered accordingly;
(c)
any director or officer of the Company is authorized to execute and file a Notice of Alteration of the Notice of Articles with the Registrar of Companies (British Columbia) along with all other documents and takes such further actions that may be necessary to effect the amendment; and
(d)
the board of directors of the Company is hereby authorized, at any time in its sole discretion, to determine whether or not to proceed with this resolution without further approval, ratification or confirmation by the shareholders."
This amendment to the Notice of Articles shall take effect immediately on the date and time the Notice of Alteration of the Articles is filed with the Registrar of Companies (British Columbia).
The directors of the Company believe the passing of the foregoing special resolution is in the best interests of the Company and recommend that shareholders of the Company vote in favour of the resolution.
The persons named as proxies in the enclosed form of proxy intend to cast the votes represented by proxy in favour of the foregoing resolution unless the holder of common shares who has given such proxy has directed that the votes be otherwise cast.
2.
Proposed Alterations of Authorized Capital
The Company's current authorized capital is 200,000,000 common shares without par value.
The New Act does not require a company's Notice of Articles to contain a fixed authorized capital with respect to each class of shares. Accordingly, the Company proposes to alter the Notice of Articles of the Company to alter the authorized capital of the Company to an unlimited number of common shares without par value. The Company believes that having unlimited authorized capital provides the Company with greater flexibility for future corporate activities.
Shareholders will be asked at the Meeting to consider, and if thought fit, approve with or without variation, the special resolution in the form set forth below. The affirmative vote of the holders of at least three-quarters of the issued and outstanding common shares of the Company entitled to vote and represented in person or by proxy at the Meeting is required for the approval of the special resolution.
"RESOLVED, as a special resolution, that:
(a)
the number of shares of the Company authorized to be issued be increased to an unlimited number of common shares without par value;
(b)
the Company's Notice of Articles be altered accordingly;
(c)
any director or officer of the Company is authorized to execute and file a Notice of Alteration of the Notice of Articles with the Registrar of Companies (British Columbia) along with all other documents and to take such further actions that may be necessary to effect the amendment; and
(d)
the board of directors of the Company is hereby authorized, at any time in its absolute discretion, to determine whether or not to proceed with the above resolutions without further approval, ratification or confirmation by the shareholders."
This amendment to the Notice of Articles shall take effect immediately on the date and time the Notice of Alteration of the Articles is filed with the Registrar of Companies (British Columbia).
The directors of the Company believe the passing of the foregoing special resolution is in the best interests of the Company and recommend that shareholders of the Company vote in favour of the resolution.
The persons named as proxies in the enclosed form of proxy intend to cast the votes represented by proxy in favour of the foregoing resolution unless the holder of common shares who has given such proxy has directed that the votes be otherwise cast.
Adoption of New Articles
Management believes that the New Articles will update and bring its Articles into line with those in other jurisdictions, will provide the Company with greater flexibility for future corporate activities and will result in efficiencies and greater cost-effectiveness.
The resolution approving the New Articles must be passed by not less than three-quarters of the votes cast by the shareholders present in person or by proxy at the Meeting. The major changes from the existing Articles are:
1.
Certain changes to the Notice of Articles, New Articles and share structure may be made by directors' resolution or by ordinary resolution. A description of these changes is provided below;
2.
The directors, by directors' resolution, may approve a change of name of the Company without the necessity for Shareholder approval;
3.
Shareholders' meetings may be held by electronic means;
4.
The quorum for shareholders' meetings is changed from two shareholders to one Shareholder present in person or represented by proxy; and
5.
Shareholder meetings may, if authorized by directors' resolution, be held in jurisdictions outside British Columbia.
If the New Articles are adopted by shareholders, the Company may alter its Notice of Articles, New Articles and share structure in the following manner:
1.
by directors' resolution or ordinary resolution, as determined in each case by the directors, to:
(a)
create one or more classes or series of shares and, if none of the shares of a class or series of shares are allotted or issued, eliminate that class or series of shares and alter the identifying name of any of its shares;
(b)
establish, increase, reduce or eliminate the maximum number of shares that the Company is authorized to issue out of any class or series of shares;
(c)
change unissued shares with par value into shares without par value or vice versa or change all or any of its fully paid issued shares with par value into shares without par value;
(d)
create, attach, vary or delete special rights or restrictions for the shares of any class or series of shares, if none of those shares have been issued;
(e)
subdivide all or any of its unissued, or fully paid issued, shares; and
(f)
authorize alterations to the New Articles that are procedural or administrative in nature or are matters that pursuant to the New Articles are within the directors' powers, control or authority.
1.
if the New Act does not specify the type of resolution and the New Articles do not specify another type of resolution, by ordinary resolution otherwise alter its shares, authorized share structure or the New Articles.
Shareholders will be asked at the Meeting to consider, and if thought fit, approve with or without variation, the special resolution in the form set forth below. The affirmative vote of the holders of at least three-quarters of the issued and outstanding common shares of the Company entitled to vote and represented in person or by proxy at the Meeting is required for the approval of the special resolution.
"RESOLVED, as a special resolution, that:
(a)
the Company adopt the New Articles in substitution for the existing Articles of the Company;
(b)
any director or officer of the Company is authorized to execute and file such documents and take such further action, including any filings with the Registrar of Companies (British Columbia), that may be necessary to effect the amendment; and
(c)
the board of directors of the Company is hereby authorized, at any time in its sole discretion, to determine whether or not to proceed with this resolution without further approval, ratification or confirmation by the shareholders,
as more particularly described in and subject to the restrictions described in the Company's Information Circular dated May 14, 2004."
The directors of the Company believe the passing of the foregoing special resolution is in the best interests of the Company and recommend that shareholders of the Company vote in favour of the resolution.
The persons named as proxies in the enclosed form of proxy intend to cast the votes represented by proxy in favour of the foregoing resolution unless the holder of common shares who has given such proxy has directed that the votes be otherwise cast.
ADDITIONAL INFORMATION
Additional information relating to the Company is available under the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.canadianzinc.com. Financial information is provided in the Company’s Financial Statements and MD & A for the year ended December 31, 2003.
Shareholders may request copies of the Company’s Financial Statements, MD & A, and Annual Information Form by contacting the Company at:
Suite 1202 – 700 West Pender Street
Vancouver, British Columbia V6C 1G8
Tel: (604) 688-2001 Fax: (604) 688-2043
Email: invest@canadianzinc.com
* * * * * * * *
The contents and sending of this Information Circular have been approved by the directors of the Company. The foregoing contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made.
DATED at Vancouver, Canada as of the 14th day of May, 2004.
BY ORDER OF THE BOARD OF DIRECTORS
(Signed)
(Signed)
John F. Kearney
Chairman, President and Chief Executive Officer
Robert Gayton
Chief Financial Officer
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CANADIAN ZINC CORPORATION
(Signed) John Kearney___________________
President and Chairman
Date: June 29, 2005
SEARCH JAN 2017
Goldstar Minerals Announces New Stock Option Plan
MONTRÉAL, QUÉBEC–(Marketwired – Sept. 20, 2016) – Goldstar Minerals Inc. (TSX VENTURE:GDM) (the “Company” or “Goldstar”) is pleased to announce that it has approved and adopted a new “fixed” stock option plan, for the benefit of directors, officers, employees and service providers. This new plan (“Plan”) replaces and supersedes the Company’s previous “rolling 10%” plan. The purpose of the Plan is to advance the interests of the Company by providing optionees with additional performance incentive, and to allow the Company to attract and retain competent personnel.
The Plan is under the direction of the Board of Directors. The maximum number of stock options that can be issued under the Plan is 4,037,708, representing 9% of the outstanding shares. All options that expire without having been exercised shall be available for any subsequent grant.
About Goldstar Minerals Inc.
Goldstar Minerals is focused on developing high-value tungsten and related metals deposits in leading mining jurisdictions in Canada. Goldstar Minerals has the Julien property in Québec and the Lake George Property in New Brunswick, each with year-round access.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release may contain forward-looking information. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in these statements.
Benoit Moreau
President and Chief Executive Officer
514 591-8058
bmoreau@goldstarminerals.com
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Brixton Metals Provides Corporate and Project Update
brixtonmetals.com › News
Jul 27, 2016 - The Company's rolling 10% stock option plan was re-approved and KPMG ... has worked for many clients as an independent consultant and has ... This program is designed to confirm historic drill results and test new targets.
Brixton Metals Provides Corporate and Project Update
July 5, 2016 – Brixton Metals Corporation (TSX VENTURE: BBB) (the “Company” or “Brixton“) is pleased to announce results of its Annual General Meeting (“AGM“) and provide an update on its two gold-silver projects.
Corporate Update
Brixton would like to welcome Mr. Eric Sprott as a shareholder of the Company. As of closing of the previously announced $2.3M financing, the Company has 34,427,675 shares outstanding on a non-diluted basis, Mr. Sprott holds 5%, Mr. McEwen (Evanachan Limited) holds 10%, Hecla Mining holds 7%, CMP holds 7% and management as a group hold 13%.
The Company’s AGM was held on June 30, 2016 and the following people were elected to the Board of Directors for the ensuing year; Gary R. Thompson, Cale J. Moodie, Ian Ball and the newly elected Dr. Carl Hering. The Company wishes to thank Mr. Don Poirier for his contribution to the Company as a member of the Board and wish him all the best in his retirement years.
The shareholders of Brixton also approved at the AGM Mr. McEwen or Evanachan Limited becoming a “control person” of the Company (as defined by the TSX Venture Exchange), should Mr. McEwen or Evanachan Limited acquire additional securities of the Company in the future such that either or both of them hold more than 20% of the outstanding securities of the Company. The Company’s rolling 10% stock option plan was re-approved and KPMG LLP was appointed auditors for the ensuing year at the AGM.
Brixton welcomes Dr. Carl Hering to the Board of Directors of the Company. Dr. Carl Hering, brings extensive mining business acumen as a geologist with over 35 years of diversified technical and managerial experience in mineral exploration and corporate development worldwide. He was instrumental in two major gold discoveries in Latin America, each exceeding 3 million ounces and one in Ontario of over 10 million ounces where Osisko Mining acquired Brett Resources. Most recently, Dr. Hering has worked for many clients as an independent consultant and has been a director of numerous junior resource companies. Dr. Hering previously worked in senior exploration positions for both Noranda Exploration and Placer Dome Inc. He worked for Noranda Exploration from 1978 to 1988, primarily in the western U.S. From 1989 to 1997 he worked for Placer Dome in the U.S. (District Geologist, Western Great Basin), Latin America (Regional Geologist Mexico and Central America), Austral-Asia (Exploration Manager Asia-Pacific) and subsequently in Vancouver, coordinating technical evaluations for major acquisition opportunities worldwide for Placer Dome Inc.
Project Update
Brixton has commenced a phase one drill program consisting of 2,500 metres of NQ sized core drilling and surface rock geochemical program at its Langis project in Ontario. This program is designed to confirm historic drill results and test new targets. Based on results of this program, further drilling and IP geophysical surveys may be conducted later this year.
Brixton also completed a phase one soil-rock geochemical program at its Thorn project. A total of 981 soils and 159 rock samples were collected and submitted to ALS Minerals for analysis. The majority of samples were collected within in new area of the property which has not seen any previous exploration called the Chivas Zone. Secondary areas sampled were the Outlaw Zone, Aberlour Zone and Amarillo Creek, where follow-up sampling was conducted on encouraging gold results. Based on the results, further exploration may be conducted later this year.
About Brixton Metals Corporation
Brixton is an exploration Company focused on the advancement of its gold and silver projects toward feasibility.
The 100% owned Langis project and lands in the Cobalt Camp is 3,276 hectare in size. The project is located 500 km north of Toronto, Canada. The high-grade silver mineralization occurs as steeply-dipping veins within any of the three main rock types; Archean volcanics, Coleman Member sediments and Nipissing diabase. The unmined zone intersected by historic drilling: 1,550.34 g/t Ag over 9.45 metres and 19,229.13 g/t Ag over 0.49 metres. The Langis project does not currently contain any mineral resources or mineral reserves.
The 28,000 hectare, 100% owned Thorn Project is located in northwestern British Columbia, Canada, approximately 105 km ENE from Juneau, AK. The Thorn project hosts a district scale Triassic to Cretaceous volcano-plutonic complex with many styles of mineralization related to porphyry and epithermal environments. Targets include sediment hosted Au-Ag, Ag-Au-Pb-Zn diatreme-breccia, Au-Ag-Cu veins; and volcanic hosted structurally controlled Au-Ag. Brixton has established a maiden inferred resource of 21.5Moz AgEq from 7.4 Mt at 89.75 g/t AgEq based on limited drilling. Further information regarding the Thorn Project, including resource estimates, can be found in the Company’s technical report prepared by SRK Consulting dated December 12, 2014 and filed on SEDAR. Read more atbrixtonmetals.com/thorn-technical-reports/
Brixton Metals Corporation shares trade on the TSX-V under the ticker symbol BBB. For more information about Brixton please visit our website at www.brixtonmetals.com.
On Behalf of the Board of Directors
Mr. Gary R. Thompson, Chairman and CEO
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Information set forth in this news release may involve forward-looking statements under applicable securities laws. Forward-looking statements are statements that relate to future, not past, events. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as “anticipate”, “believe”, “plan”, “estimate”, “expect”, and “intend”, statements that an action or event “may”, “might”, “could”, “should”, or “will” be taken or occur, including statements that address potential quantity and/or grade of minerals, potential size and expansion of a mineralized zone, proposed timing of exploration and development plans, or other similar expressions. All statements, other than statements of historical fact included herein including, without limitation, statements regarding the drill program at Langis, the soil-rock geochemical program at Thorn and their results.
Mr. Gary R. Thompson
Chairman and CEO
Tel: 604-630-9707
email: info@brixtonmetals.com
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¦Home / Mining Company News Releases (Unreviewed) / Niobay Metals Announces Adoption of New Stock Option Plan
Niobay Metals Announces Adoption of New Stock Option Plan
?Posted by: Staff @ Geology for Investors ?in Mining Company News Releases (Unreviewed)
MONTREAL, QUEBEC–(Marketwired – Dec. 22, 2016) – Niobay Metals Inc. (the “Company”) (TSX VENTURE:NBY) announces that its board of directors has approved a new “rolling 10%” stock option plan (the “New Plan”) subject to approval of the Company’s shareholders and the TSX Venture Exchange (“TSX-V”).
The New Plan has been conditionally approved by the TSX VENTURE and will be submitted to the Company’s shareholders for approval at its 2017 annual meeting of shareholders. Any stock options granted pursuant to the New Plan after the date hereof and prior to shareholder approval will also be subject to, and will not be exercisable until, disinterested shareholder approval has been obtained. If such approval is not obtained, the stock options granted under the New Plan will terminate.
The New Plan will replace the Company’s “fixed number” stock option plan. Pursuant to the New Plan, the board of directors may grant stock options to directors, officers, employees, and consultants of the Company up to a maximum of 10% of the total the number of issued and outstanding shares of the Company from time to time, less any shares reserved for issuance under the “fixed number” option plan. More details about the New Plan will be provided in the management information circular for the 2017 annual meeting of shareholders.
Appointment of Corporate Secretary
The Company is also pleased to announce the appointment of Ms. Carole Plante as corporate secretary of the Company. Ms Plante received a law degree in 1983 from the University of Montréal and is a member of the Québec Bar. She has over 20 years of experience in the mining sector acting mainly as general counsel and corporate secretary for various publicly traded companies with mining activities in many international jurisdictions. Ms. Plante currently acts as general counsel and corporate secretary of a number of mineral exploration companies listed on the TSX-V.
About Niobay Metals Inc.
Niobay Metals Inc. is a mineral exploration company holding a 100% interest in the James Bay Niobium property in Ontario, Canada and a 72.5% interest in the Crevier niobium / tantalum project in Quebec, Canada. Niobay also holds interest in the Ikungu and Ikungu East gold properties in Tanzania.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Follow us on Twitter: https://mobile.twitter.com/NiobayMetals
LinkedIn: https://www.linkedin.com/company/niobay-metals-inc.?trk=biz-companies-cym
]]>Claude Dufresne, P.Eng.
President & CEO
Niobay Metals Inc.
514 866-6500, Ext. 221
cdufresne@niobaymetals.com
www.niobaymetals.com
]]>
WILL A 10% ROLLING STOCK OPTION WORK?
( WHAT HAPPEN TO STOCK PRICE)
https://www.sec.gov/Archives/edgar/data/1621906/000121390016018532/f1012ga3_westernuranium.htm
10-12G/A 1 f1012ga3_westernuranium.htm AMENDMENT NO. 3 TO FORM 10-12G
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10
(Amendment No. 3)
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
WESTERN URANIUM CORPORATION
(Exact name of registrant as specified in its charter)
Ontario, Canada 98-1271843
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer
Identification No.)
700-10 King Street East, Toronto, Ontario, Canada M5C 1C3
(Address of principal executive offices)
(416) 564-2870
(Registrant's telephone number, including area code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Shares
(Title of Class)
None
(Title of Class)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ? Accelerated Filer ?
Non-Accelerated Filer ? Smaller Reporting Company ?
(Do not check if a smaller reporting company)
Explanatory Note:
This Amendment No. 3 includes revisions to Item 6, “Executive Compensation” (revising disclosure under “Other Employee Compensation”); Item 9, “Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters” (revising disclosure under “Equity Compensation Plan Information”); and Item 15, “Financial Statements and Exhibits” (revising the list of exhibits under Item 15(b) to add new exhibit 10.11, “Incentive Stock Option Plan (Rolling 10%), as amended,” which has been incorporated as an exhibit by reference). In all other respects, this registration statement is unchanged from Amendment No. 2 filed on July 22, 2016.
Item 6. Executive Compensation
Summary Compensation Table
The following table sets forth information regarding compensation earned by our named executive officers:
Name and
Principal Position Year Salary
($) Bonus
($) Stock
Awards
($) Option
Awards
($) All Other
Compensation
($) TOTAL
($)
Mr. George Glasier, 2015 - - - - - -
President and Chief Executive Officer 2014 - - - - - -
Mr. Andrew Wilder, 2015 - - - - $ 119,500 $ 119,500
Chief Financial Officer (1) 2014 - - - - - -
(1) Mr. Wilder is the Founder and Chief Executive Officer of Cross River Advisors LLC (“Cross River”), a Connecticut company. Cross River provides accounting and management services to the Company. During the years ended December 31, 2015 and 2014, the Company incurred consulting fees of $119,500 and $0, respectively, to Cross River. Mr. Wilder received no compensation from the Company other than fees received through Cross River.
Employment Agreements
We have no employment agreements with our executive officers.
Other Employee Compensation
As of December 31, 2015, our named executive officers do not hold any unexercised options for the purchase of our common shares or any other incentive plan awards, and no such compensation was paid in the year ended December 31, 2015.
Director Compensation
The following tables set forth a summary of the compensation earned by each director who is not a named executive officer and who served on the Board during 2015 for the fiscal year ended December 31, 2015.
Name Fees Earned
or Paid in
Cash ($) Stock
Awards
($) Option
Awards
($) Total
($)
Michael Skutezky (1) $ 43,657 - - -
Russell Fryer - - - -
(1) Mr. Skutezky is the Chairman of Rhodes Capital Corporation (“Rhodes Capital”). Rhodes Capital provides consulting services to the Company. During the year ended December 31, 2015, the Company incurred $43,657 to Rhodes Capital, consisting of $37,332 in consulting fees and $6,325 in director fees for Mr. Skutezky’s services.
2
Item 9. Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters
From March 15, 2016 through May 22, 2016, our common shares traded on the OTC Pink Marketplace under the trading symbol, “WSTRF”. On May 23, 2016, our common shares began trading on the OTCQX Best Marketplace under the same symbol. To date the shares have been thinly traded, with the most recent closing bid price being $1.75 on July 20, 2016.
Beginning on November 20, 2014, our common shares have been listed on the CSE under the symbol "WUC".
The following table sets forth the range of high and low bid information for our common shares for the periods indicated, as quoted on the CSE.
This is in Canadian currency Price Range ($ CAN)
Low High
Year ended December 31, 2015
First Quarter (March 31, 2015) $ 3.50 $ 4.75
Second Quarter (June 30, 2015) $ 2.50 $ 4.50
Third Quarter (September 30, 2015) $ 4.00 $ 5.00
Fourth Quarter (December 31, 2015) $ 2.00 $ 3.50
Year ended December 31, 2016
First Quarter (March 31, 2016) $ 1.20 $ 2.40
Second Quarter (June 30, 2016) $ 1.50 $ 2.35
Third Quarter (from July 1 – July 22, 2016) $ 2.00 $ 2.50
Stockholders
According to our transfer agent, as of July 20, 2016 there were approximately 3,496 holders of record of our common shares.
Dividends
We have not declared or paid any dividends on our common shares and do not anticipate paying cash dividends in the foreseeable future. We plan to retain any future earnings for use in our business operations. Any decisions as to future payment of cash dividends will depend on our earnings and financial position and such other factors as the Board deems relevant.
Equity Compensation Plan Information
The Company maintains an Incentive Stock Option Plan (the “Plan”) that permits the granting of stock options as incentive compensation. Shareholders of the Company approved the Plan on June 30, 2008 and amendments to the Plan on June 20, 2013, and the Board of Directors approved additional changes to the Plan on September 12, 2015.
The purpose of the Plan is to attract, retain and motivate directors, management, staff and consultants by providing them with the opportunity, through stock options, to acquire a proprietary interest in the Company and benefit from its growth.
At December 31, 2015, a total of 271,996 stock options issued under the Plan were outstanding, and the same number of options was outstanding at July 22, 2016. All of those options were issued in connection with the Company’s acquisition of Black Range Minerals Limited (“Black Range”) to replace options previously issued by Black Range to its former offers and directors.
The Plan provides that the aggregate number of common shares for which stock options may be granted will not exceed 10% of the issued and outstanding common shares at the time stock options are granted. At December 31, 2015, a total of 16,230,733 common shares were outstanding, and at that date the maximum number of stock options eligible for issue under the Plan was 1,623,073 (10% of the issued and outstanding common shares). At July 22, 2016, a total of 16,797,089 common shares were outstanding, and at that date the maximum number of stock options eligible for issue under the Plan was 1,679,708.
3
A stock option exercise price shall not be less than the most recent share issuance price. The maximum term is five years. There are no specific vesting provisions under the Plan. Options are non-assignable and non-transferable except that stock options may be transferred to the spouse of an optionee or to the registered retirement savings plan or registered pension plan of an optionee.
The Plan provides if the optionee's employment is terminated for any reason, or if the service of a director, senior executive or consultant of the Company who is an optionee is terminated, any vested stock option of such optionee may be exercised during a period of ninety (90) days following the date of termination of such employment or service, as the case may be. In the case of an optionee's death, any vested stock option of such optionee at the time of death may be exercised by his or her heirs or legatees or their liquidator during a period of one year following such optionee's death.
The total number of common shares issuable to any one person during a 12-month period may not exceed ten percent (10%) of the total number of common shares issued and outstanding. Options granted to consultants providing investor relations activities must vest over 12 months in stages of no more than 25% in any three-month period. Also, in any 12-month period, no options exercisable for more than 2% of the Company’s issued and outstanding shares may be awarded to consultants or employees conducting investor relations activities. The Plan provides that where options are cancelled or lapse under the Plan, the associated common shares become available again and new options may be granted in respect thereof in accordance with the provisions of the Plan.
The Board may make any amendment to the Plan, without shareholder approval, except an increase in the number of common shares reserved for issue under the Plan or a reduction of an option exercise price. The terms of any existing option may not be altered, suspended or discontinued without the consent in writing of the Optionee.
Equity Compensation Plan Information
As of December 31, 2015
Plan Category
Number of
securities to
be issued
upon
exercise
of
outstanding
options,
warrants
and rights
Weighted-
average
exercise
price of
outstanding
options,
warrants
and rights
Number of
securities
remaining available for
future issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
(a) (b) (c)
Equity compensation plans approved by shareholders 271,996 Cdn$6.39 1,351,077
Equity compensation plans not approved by shareholders Nil Nil Nil
Total 271,996 Cdn$6.39 1,351,077
4
Item 15. Financial Statements and Exhibits
(a) The following financial statements are being filed as part of this Registration Statement.
Page No.
Western Uranium Corporation for the Three Months Ended March 31, 2016 and 2015
Condensed Consolidated Balance Sheets as of March 31, 2016 (Unaudited) and December 31, 2015 F-1
Condensed Consolidated Statements of Operations and other Comprehensive Loss for the three months ended March 31, 2016 and 2015 (Unaudited) F-2
Condensed Consolidated Statement of Shareholders' Equity for the three months ended March 31, 2016 (Unaudited) F-3
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 (Unaudited) F-4
Notes to the Condensed Consolidated Financial Statements F-5
Consolidated Financial Statements of Western Uranium Corporation and Subsidiaries
Report of Independent Registered Public Accounting Firm F-13
Consolidated Balance Sheets as of December 31, 2015 and 2014 F-14
Consolidated Statements of Operations and Other Comprehensive Loss for the years ended December 31, 2015 and for the period March 10, 2014 (Inception) through December 31, 2014 F-15
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2015 and for the period March 10, 2014 (Inception) through December 31, 2014 F-16
Consolidated Statements of Cash Flows for the years ended December 31, 2015 and for the period March 10, 2014 (Inception) through December 31, 2014 F-17
Notes to Consolidated Financial Statements F-19
(b) The following exhibits are being provided as required by Item 601 of Regulation S-K.
Exhibit No. Description
2.1(4) Share Exchange Agreement between Pinon Ridge Mining LLC, Homeland Uranium Inc., Homeland Uranium (Utah), et al., dated November 6, 2014.+
2.2(4) Merger Implementation Agreement between Black Range Minerals Limited and Western Uranium Corporation, dated March 20, 2015.
2.3(4) Credit Facility between Western Uranium Corporation and Black Range Minerals Limited, dated March 20, 2015.
2.4(2) Termination and Liquidation Agreement between Ablation Technologies LLC, Black Range Minerals Ablation Holdings Inc. and Mineral Ablation, LLC dated March 17, 2015
3.1(4) Certificate of Incorporation, as amended.
3.2(4) Amended and Restated By-laws.
10.1(4) Form of Note payable to The Siebels Hard Asset Fund Ltd., dated September 30, 2015, including Extension Agreement dated December 16, 2015.
10.2(4) Form of Note payable to The Siebels Hard Asset Fund Ltd, dated February 22, 2016.
10.3(4) Form of Note payable to Energy Fuel Holdings Corp., dated August 18, 2014.
10.4(4) Form of Note payable to Nuclear Energy Corporation LLC, dated October 13, 2011, including Extension Agreement dated January 5, 2016.
5
10.5(4) Form of WUC Warrant.
10.6(3) Call Option Agreement
10.7(3) Consulting Agreement between Cross River Advisors LLC and Western Uranium Corporation dated January 1, 2015
10.8(3) Consulting Agreement between Cross River Advisors LLC and Western Uranium Corporation dated October 16, 2015
10.9(3) Consulting Agreement between Bedford Bridge Fund LLC and Western Uranium Corporation dated January 1, 2016
10.10(3) Consulting Agreement between Rhodes Capital Corporation and Western Uranium Corporation dated January 1, 2015
10.11(2) Technology License Agreement between Ablation Technologies LLC and Black Range Mineral Ablation Holdings Inc. dated as of March 17, 2015
10.12(1) Incentive Stock Option Plan (Rolling 10%), as amended
21.1(4) List of Subsidiaries
+ Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of the omitted schedules and exhibits to the SEC upon request.
(1) Incorporated by reference to the Company’s Form 8-K filed on October 12, 2016
(2) Previously filed as an exhibit with Amendment No. 2 to the Form 10 on July 22, 2016
(3) Previously filed as an exhibit with Amendment No. 1 to the Form 10 on June 22, 2016
(4) Previously filed as an exhibit to the Form 10 on April 29, 2016
6
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
Western Uranium Corporation
Date: November 14, 2016 By: /s/ George Glasier
Mr. George Glasier
President and Chief Executive Officer
Date: November 14, 2016 By: /s/ Robert Klein
Mr. Robert Klein
Chief Financial Officer
7
HAPPY SUCCESSFUL NEW YEAR 2017
FOR A WORKING START: THIS GROUP OF SRSR SHAREHOLDERS CAN MAKE THE DIFFERENCE.
Emergcy Member Level
Saturday, December 19, 2015 9:54:40 PM
We are big group of major shareholder, currently around 180 Mio shares. We are not willing to wait anymore. Our action is imminent. You would like to join? This is my mail address (pichlero@gmail.com). I own currently 50 Mio and reprensent a group of my country with 70 Mio. the other 110 Mio coming various countries, major from Belgium and USA. You want to call me? +60 19 987 7095
We are fed up with complaining come and join us to act. I know our rights as I was phoning with a very competent lawyer for such matters in Houston; he knows Nevada cases like ours.
best regards
Otto