Silver Elephant Mining Corp 6-K, filed Jun 1, 2020
Silver Elephant Mining Corp. (SILEF)
6-K
2020-06-01
For: 2020-06-01
View Original
Added on
April 06, 2026
About this 6-K
Silver Elephant Mining Corp filed this 6-K on June 1, 2020.
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 UNDER
THE
SECURITIES EXCHANGE ACT OF 1934
For the
month of June,
2020
Commission
File Number 000-55985
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SILVER ELEPHANT MINING CORP.
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(Translation
of registrant’s name into English)
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Suite 1610 – 409 Granville Street
Vancouver, British Columbia, Canada V6C 1T2
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(Address
of principal executive offices)
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Indicate
by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F
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Form
20-F
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☒
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Form
40-F
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☐
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Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1):
☐
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Note: Regulation S-T Rule 101(b)(1) only permits
the submission in paper of a Form 6-K if submitted solely to
provide an attached annual report to security holders.
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Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule
101(b)(7): ☐
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Note: Regulation S-T Rule 101(b)(7) only permits
the submission in paper of a Form 6-K if submitted to furnish
a report or other document that the registrant foreign private
issuer must furnish and make public under the laws of the
jurisdiction in which the registrant is incorporated, domiciled or
legally organized (the registrant’s “home
country”), or under the rules of the home country exchange on
which the registrant’s securities are traded, as long as the
report or other document is not a press release, is not required to
be and has not been distributed to the registrant’s security
holders, and, if discussing a material event, has already been the
subject of a Form 6-K submission or other Commission filing on
EDGAR.
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1
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.
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SILVER ELEPHANT MINING CORP. |
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Date: June 1,
2020
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By:
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/s/
Brigitte McArthur
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Brigitte
McArthur
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Corporate
Secretary
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INDEX TO EXHIBITS
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Notice and Management Information Circular of Annual General and
Special Meeting of Shareholders to be held on July 7,
2020.
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NOTICE OF MEETING AND
MANAGEMENT INFORMATION CIRCULAR FOR THE
ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS OF
SILVER ELEPHANT MINING CORP.
TO BE HELD ON
TUESDAY, JULY 7, 2020
May
25, 2020
1
NOTICE
OF ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS
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Date:
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Tuesday, July 7,
2020
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Time:
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10:00
a.m. (Pacific Daylight Time)
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Location:
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Virtual
Meeting via teleconferencing
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Participant
/ Guests (Toll Free):
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1-877-407-2991 (Canada and USA)
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Participant
/ Guest (Toll):
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1-201-389-0925 (for holders outside of Canada
and USA)
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NOTICE IS HEREBY GIVEN that the Annual
General and Special Meeting (the “Meeting”) of the shareholders (the
“Shareholders”)
of Silver Elephant Mining Corp. (the “Company”) will be held at the
above date, time and location, subject to any adjournment or
postponement thereof for the following purposes:
1.
to receive the
audited financial statements of Silver Elephant Mining Corp.
(formerly Prophecy Development Corp.) for the year ended December
31, 2019 and the auditor’s report thereon;
2.
to set the number
of directors at five (5);
3.
to elect directors
for the ensuing year;
4.
to appoint Davidson
& Company LLP, Chartered Professional Accountants, as the
Company’s auditor for the ensuing year and authorize the
directors to set the auditor’s remuneration;
5.
to consider and, if
deemed appropriate, pass an ordinary resolution approving the
repricing of certain common share purchase warrants of the Company,
all as more particularly set out in “Particulars of Additional Matters to be
Acted Upon – Amendment of Warrants”;
and
6.
to transact such
other business as may properly come before the Meeting or any
adjournment thereof.
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Out of
an abundance of caution, to proactively deal with potential issues
arising from the unprecedented public health impact of Coronavirus
Disease 2019 (“COVID-19”), and to limit and mitigate
risks to the health and safety of our communities, Shareholders,
employees, directors and other stakeholders, we will be holding the
Meeting in a virtual only format this year. Shareholders will not
need to physically attend the Meeting.
Shareholders
wishing to attend the Meeting may do so by calling 1-877-407-2991
(toll-free in Canada and USA) or 1-201-389-0925 (for holders
outside of Canada and USA) and instructions will be provided as to
how shareholders entitled to vote at the Meeting may participate
and vote at the Meeting.
Registered
Shareholders and duly appointed proxy holders will be able to
attend, ask questions and vote at the Meeting virtually by using
the telephonic dial-in provided above.
Beneficial
Shareholders who have not duly appointed themselves will be able to
attend the virtual Meeting as guests, but guests will not be able
to vote or ask questions at the Meeting.
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2
Meeting
Format
The
Company is holding the Meeting this year as a completely virtual
Meeting, which will be conducted via teleconference. Shareholders
will not be able to attend the Meeting in person.
Registered
Shareholders and duly appointed proxy holders will be able to
attend, participate and vote at the Meeting via
teleconference.
Beneficial
Shareholders (being Shareholders who hold their common shares of
the Company (“Common
Shares”) through a broker, investment dealer, bank,
trust company, custodian, nominee or other intermediary) will be
able to attend the Meeting, but will not be permitted to ask
questions or vote, unless they duly appoint themselves as their own
proxy holder and comply with all of the requirements set out in the
Circular relating to that appointment and registration and
applicable laws. Failing which, any Beneficial Shareholder will be
able to attend the Meeting as a guest but will not be able to vote
or ask questions at the Meeting.
The Company strongly encourages you to vote your shares by proxy
prior to the Meeting rather than at the Meeting.
Your
Vote is Important
Pursuant to
applicable securities laws, we have chosen to provide our Notice of
Meeting, the Circular, the proxy form/voting instruction form
(collectively, the “Meeting
Materials”), our financial statements and our
management’s discussion and analysis for the year ended
December 31, 2019 (collectively, the “Financial Information”) to
Shareholders using the notice-and-access provisions under National
Instrument 54-101 – Communications with Beneficial Owners of
Securities of a Reporting Issuer and under National
Instrument 51-102 – Continuous Disclosure
Obligations.
On or
about June 1, 2020, we will mail to Shareholders of record as of
the close of business on May 25, 2020, a notice containing
instructions on how to access our Meeting Materials, our Financial
Information and how to vote. Shareholders who have requested
printed copies of our Financial Information will continue to
receive them by mail.
Copies
of the Meeting Materials and our Financial Information are also
available on the Internet at www.sedar.com and
https://www.silverelef.com/investors/shareholder-meetings/.
You
may request a paper copy of the Meeting Materials and Financial
Information by contacting the Corporate Secretary at
604-569-3661.
DATED
at Vancouver, British Columbia, this 25th day of May,
2020.
BY
ORDER OF THE BOARD
/s/
“Michael
Doolin”
Michael
Doolin
Chief
Executive Officer
Silver
Elephant Mining Corp.
3
SILVER ELEPHANT MINING CORP.
MANAGEMENT INFORMATION CIRCULAR TABLE OF CONTENTS
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NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING OF
SHAREHOLDERS
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2
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GENERAL PROXY INFORMATION
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6
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SOLICITATION OF PROXIES
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6
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RECEIVING
DOCUMENTS
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6
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REGISTERED AND
BENEFICIAL SHAREHOLDERS
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7
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VOTING
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7
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WHO CAN
VOTE
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7
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HOW TO
VOTE
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7
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CHANGING YOUR
VOTE
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11
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VOTING
RESULTS
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11
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NOTICE
REGARDING NON-GAAP MEASURES
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11
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ADDITIONAL
INFORMATION
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11
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ABOUT THE MEETING
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12
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TIME,
DATE AND PLACE
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12
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ITEMS
OF BUSINESS
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12
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QUORUM
AND APPROVAL
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12
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INTEREST OF
INFORMED PERSONS IN MATERIAL TRANSACTIONS
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12
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VOTING
SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES
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12
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VOTES
NECESSARY TO PASS RESOLUTIONS
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13
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DIRECTORS
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13
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NUMBER
OF DIRECTORS
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13
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ELECTION OF
DIRECTORS
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13
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MAJORITY VOTING FOR
DIRECTORS
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13
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DIVERSITY
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13
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ADVANCE NOTICE POLICY
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TERM
LIMITS AND RETIREMENT POLICY
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14
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INFORMATION ABOUT
DIRECTOR NOMINEES
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14
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CEASE
TRADE ORDERS, BANKRUPTCIES, PENALTIES AND SANCTIONS
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19
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APPOINTMENT AND REMUNERATION OF THE AUDITOR
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19
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AUDIT COMMITTEE
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20
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BACKGROUND
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20
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COMPOSITION, NAME
OF AUDIT COMMITTEE MEMBER
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RELEVANT EXPERIENCE AND
QUALIFICATIONS
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20
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PRE-APPROVAL POLICIES FOR NON-ADUIT
SERVICES
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20
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EXTERNAL AUDITOR
FEES
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20
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STATEMENT OF EXECUTIVE COMPENSATION
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21
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COMPENSATION DISCUSSION AND ANALYSIS
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21
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INTRODUCTION
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21
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COMPENSATION
DISCUSSION AND ANALYSIS
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21
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NAMED
EXECUTIVE OFFICERS
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21
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REPORT OF EXECUTIVE
COMPENSATION
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21
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EQUITY
PARTICIPANTS – SHARE BASED AND OPTION-BASED
AWARDS
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23
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SHARE
BONUS PLAN
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25
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STOCK
APPRECIATION RIGHTS PLAN
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26
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SUMMARY
COMPENSATION TABLE
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27
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OUSTANDING
SHARE-BASED AWARDS AND OPTION-BASED AWARDS
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28
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INCENTIVE PLAN
AWARDS
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29
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TERMINATION AND
CHANGE OF CONTROL BENEFITS
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29
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STATEMENT OF DIRECTOR COMPENSATION
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30
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INCENTIVE PLAN AWARDS
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31
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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS
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31
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INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
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31
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OTHER DIRECTORSHIPS
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31
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ATTENDANCE OF DIRECTORS AT BOARD AND COMMITTEE METINGS
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32
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MANAGEMENT CONTRACTS
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32
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CORPORATE GOVERNANCE DISCLOSURE
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STATEMENT OF
CORPORATE GOVERNANCE PRACTICES
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32
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PARTICULARS OF ADDITIONAL MATTERS TO BE ACTED UPON
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36
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AMENDMENT OF
WARRANTS
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37
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REGISTRAR AND TRANSFER AGENT
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38
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ADDITIONAL INFORMATION
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38
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DIRECTORS’ APPROVAL
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39
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4
SILVER ELEPHANT MINING CORP.
MANAGEMENT INFORMATION CIRCULAR
This
management information circular (the “Circular”) has been prepared to
provide information to shareholders (“Shareholders”) of Silver Elephant
Mining Corp. (“Silver
Elephant” or the “Company”) as of the close of
business on May 25, 2020, (the “Record Date”) regarding the 2020
annual general and special meeting of Shareholders to be held on
Tuesday, July 7, 2020 (the “Meeting”).
The
Meeting will be held as a completely virtual Meeting, which will be
conducted via teleconference.
Shareholders
wishing to attend the Meeting may do so by calling 1-877-407-2991
(toll-free in Canada and USA) or 1-201-389-0925 (for holders
outside of Canada and USA) and instructions will be provided as to
how shareholders entitled to vote at the Meeting may participate
and vote at the Meeting.
A
summary of the information Shareholders will need to attend the
Meeting is provided below.
All
information in the Circular is as at May 25, 2020 unless otherwise
noted are expressed in Canadian dollars are referred to as
“C$”.
GENERAL
PROXY INFORMATION
Solicitation of Proxies
The
information contained in the Circular is furnished in connection
with the solicitation of proxies to be used at the Meeting to be
held on July 7, 2020 at 10:00 a.m. (Pacific Daylight Time) via live
teleconference which may be accessed by Shareholders via the
dial-in information provided above.
Solicitation of
proxies is done primarily by mail, supplemented by telephone or
other contact, by our employees or agents at a nominal cost, all of
which costs are paid by the Company. If you are eligible to vote
and your common shares of the Company (“Common Shares”) are registered in
your name, you can vote your Common Shares in person at the Meeting
or by completing your proxy form and returning the same in
accordance with the instructions set out herein and in the enclosed
documents. If your Common Shares are not registered in your name
but are held by a nominee, please see below.
Receiving Documents
Pursuant to
applicable securities laws, we have chosen to provide our Notice of
Meeting, the Circular, the proxy form/voting instruction form
(“VIF” and,
together with the Notice of Meeting and the Circular, collectively,
the “Meeting
Materials”), our financial statements and our
management’s discussion and analysis for the year ended
December 31, 2019 (the “Financial Information”) to
Shareholders using the notice-and-access provisions under National
Instrument 54-101 – Communications with Beneficial Owners of
Securities of a Reporting Issuer (“NI 54-101”) and under National Instrument
51-102 – Continuous
Disclosure Obligations (“NI 51-102”).
On or
about June 1, 2020, we will mail to Shareholders of record as of
the close of business on May 25, 2020 a notice (the
“N&A card”)
containing instructions on how to access our Meeting Materials, our
Financial Information and how to vote. Shareholders who have
requested printed copies of our Financial Information will continue
to receive them by mail.
5
If you
received the N&A card by mail, you will not receive a printed
copy of the Meeting Materials or our Financial Information in the
mail. Instead, the N&A card instructs you how to access and
review all of the important information contained in those
documents. The N&A card also instructs you on how you may
submit your proxy over the Internet or by telephone. If you
received the N&A card by mail and would like to receive a
printed copy of the Meeting Materials or our Financial Information,
you should follow the instructions for requesting such materials
included in the N&A card.
Copies
of the Meeting Materials are also available on the Internet at
www.sedar.com and
on the Company’s website at https://www.silverelef.com/investors/shareholder-meetings/.
Copies of the Financial Information are also available on the
Internet at www.sedar.com and the
Company’s website at https://www.silverelef.com/investors/financial-reports/.
You may
request a paper copy of the Meeting
Materials and the Financial Information by contacting the Corporate
Secretary at 604-569-3661.
Notice to Shareholders in the United States
The
solicitation of proxies and the transactions contemplated in this
Information Circular involve securities of an issuer located in
Canada and are being effected in accordance with the corporate laws
of the Province of British Columbia, Canada and securities laws of
the provinces of Canada. The Proxy solicitation rules under the
United States Securities Exchange
Act of 1934, as amended, are not applicable to the Company
or this solicitation, and this solicitation has been prepared in
accordance with the disclosure requirements of the securities laws
of the provinces of Canada. Shareholders should be aware that
disclosure requirements under the securities laws of the provinces
of Canada differ from the disclosure requirements under United
States securities laws.
The
enforcement by shareholders of civil liabilities under United
States federal securities laws may be affected adversely by the
fact that the Company is amalgamated under the Business Corporations Act (British
Columbia) (the “BCBCA”), as amended, certain of
its directors and its executive officers are residents of Canada or
elsewhere, and its assets and the assets of such persons are
located outside the United States. Shareholders may not be able to
sue a foreign company or its officers or directors in a foreign
court for violations of United States federal securities laws. It
may be difficult to compel a foreign company and its officers and
directors to subject themselves to a judgment made by a United
States court.
Registered and Beneficial Shareholders
The
N&A card and VIF are being sent to both registered and
Beneficial Shareholders.
As a
Shareholder, you may request printed copies of our annual and
interim financial statements and management’s discussion and
analysis by checking the appropriate box on the enclosed
VIF.
VOTING
Who
Can Vote
You are
entitled to receive notice of and vote at the Meeting if you held
our Common Shares as of the close of business on May 25, 2020, the
record date.
Each
Common Share that you own entitles you to one vote on each item of
business at the Meeting.
How
to Vote
We are
holding the Meeting in a virtual only format this year out of an
abundance of caution to proactively deal with the potential issues
arising from the unprecedented public health impact of COVID-19 and
to limit and mitigate risks to the health and safety of our
communities, Shareholders, employees, directors and other
stakeholders. All Shareholders will have an opportunity to listen
to the Meeting, and Registered Shareholders and duly appointed
proxy holders will be permitted to ask questions and vote at the
Meeting by calling into the Meeting using the dial-in information
provided above regardless of their geographic
location.
There
are different ways to submit your voting instructions, depending on
whether you are a registered or Beneficial Shareholder. You may
vote before the Meeting by completing your form of proxy or VIF in
accordance with the instructions provided therein. Beneficial
Shareholders should also carefully follow all instructions provided
by their intermediaries to ensure that their Common Shares are
voted at the Meeting.
If you attend the Meeting via teleconference, it is important that
you are connected to the teleconference call at all times during
the Meeting in order to vote when required. It is your
responsibility to ensure connectivity for the duration of the
Meeting. You should allow ample time to check into the Meeting and
complete any related procedures as directed.
6
REGISTERED
SHAREHOLDERS
Attending and Voting at the Meeting
You are
a registered Shareholder if you have your Common Shares registered
in your name.
You do
not have to complete the proxy form if you want to attend the
Meeting live via teleconference and vote directly at the
Meeting.
Registered
Shareholders and duly appointed proxy holders will be able to
attend, participate and vote at the Meeting by calling
1-877-407-2991 (toll-free in Canada and USA) or -201-389-0925 (for
holders outside of Canada and USA) and instructions will be
provided as to how shareholders entitled to vote at the Meeting may
participate and vote at the Meeting. You will be asked to provide
your proxy control
number (the “control
number”) for account validation when
requested.
●
Registered
Shareholders: The control number is located on the form of
proxy or in the email notification that you received.
If, as
a registered Shareholder, you decide to vote your Common Shares at
the Meeting, you will be revoking any and all previously submitted
proxies for the Meeting. If you do not wish to revoke a previously
submitted proxy, you will not be able to vote at the
Meeting.
If, as a registered Shareholder, you are using
your control number to participate in the Meeting and you wish to
revoke any and all previously submitted proxies for the Meeting you
will be provided the opportunity to vote by ballot on the matters
put forth at the Meeting. If you do not wish to revoke a previously
submitted proxy, you will not be able to participate at the
Meeting.
Registered
Shareholders who wish to appoint a third-party proxy holder to
represent them at the Meeting
MUST submit their duly
completed proxy form or VIF AND register the proxy holder.
See “Voting by
Proxy” below.
Voting by Proxy
Mr.
Greg Hall, Director of the Company, or failing him, Ms. Brigitte
McArthur, Corporate Secretary of the Company, have agreed to act as
the Company’s proxy holder representatives. You can appoint
someone other than the Company’s representatives to attend
the Meeting and vote on your behalf. If you want to appoint someone else as your
proxy holder, print the name of the person you want in the space
provided in the form of proxy and follow the procedures as outline
below. This person does not need to be a
Shareholder.
On any ballot, your proxy holder must vote your
Common Shares or withhold your vote according to your instructions
and if you specify a choice on a matter, your Common Shares will be
voted accordingly. If there are other items of business that
come before the Meeting, or amendments or variations to the items
of business, your proxy holder will have the discretion to vote as
he or she see fit.
If
you appoint the Company’s representatives but do not tell
them how to vote your Common Shares, your Common Shares will be
voted:
●
For the fixing the
number of directors at five (5);
●
For the nominated
directors listed on the proxy form and in the
Circular;
●
For re-appointing
Davidson & Company LLP as the independent auditor and
authorizing the Board to fix the auditor’s remuneration;
and
●
For the repricing of
certain common share purchase warrants of the Company,
all as
more particularly set out herein.
This is
consistent with the voting recommendations by the Board and
management. If there are other
items of business that properly come before the Meeting, or
amendments or variations to the items of business, the
Company’s representatives will vote according to
management’s recommendation.
A proxy
will not be valid unless it is signed by the registered
Shareholder, or by the registered Shareholder’s attorney with
proof that they are authorized to sign. If you represent a
registered Shareholder that is a corporation or an association,
your proxy should have the seal of the corporation or association
and must be executed by an officer or an attorney who has written
authorization. If you execute a proxy as an attorney for an
individual registered Shareholder, or as an officer or attorney of
a registered Shareholder that is a corporation or association, you
must include the original or notarized copy of the written
authorization for the officer or attorney with your proxy
form.
7
If
you are voting by proxy, send your completed proxy by fax or mail
to our transfer agent, Computershare Investor Services Inc. at 8th
Floor, 100 University Avenue, Toronto, Ontario, Canada M5J 2Y1, or
by fax at 1-866-249-7775 in Canada and the United States, and
001-416-263-9524 outside of Canada and the United States. You may
also vote on the Internet or by telephone by following the
instructions set out in the form of proxy. Computershare must
receive your proxy by 10:00 a.m. (Pacific Daylight Time) on July 3,
2020, or 48 hours (excluding Saturdays, Sundays and holidays)
before the Meeting is reconvened if it is postponed or adjourned.
The Chair of the Meeting has the discretion to accept late
proxies.
If you
appoint someone other than the Company’s representatives to
be your proxy holder to attend, participate or vote at the Meeting,
you MUST submit
your proxy form or VIF (as applicable) appointing such third party
proxy holder AND register
the third party proxy holder, as described below. Registering your
proxy holder is an additional step to be completed AFTER you
have submitted your proxy form or VIF. Failure to register the proxy holder will
result in the proxy holder not receiving a Username to attend,
participate or vote at the Meeting.
●
Submit your proxy form or VIF: If you
are a registered Shareholder and wish to appoint a third party
proxy holder to attend, participate or vote at the Meeting as your
proxy and vote your Common Shares, you have to insert such
person’s name in the blank space provided in the form of
proxy or VIF (if permitted) and follow the instructions for
submitting such form of proxy or VIF. This must be completed prior
to registering such proxy holder, which is an additional step to be
completed once you have submitted your form of proxy or
VIF.
NON-REGISTERED SHAREHOLDERS
If your
Common Shares are registered in the name of:
●
your bank, trust
company, securities dealer or broker, trustee, administrator,
custodian or other intermediary, who holds your Common Shares in a
nominee account; or
●
a clearing agency
like the Canadian Depository for Securities Limited
(CDS).
The following information is of significant
importance to shareholders who do not hold their Common Shares in
their own name. Beneficial Shareholders should note that the
only proxies that can be recognized and acted upon at the Meeting
are those deposited by Registered Shareholders (those whose names
appear on the records of the Company as the registered holders of
Common Shares) or as set out in the following
disclosure.
If
Common Shares are listed in an account statement provided to a
shareholder by a broker, then in almost all cases those Common
Shares will not be registered in the shareholder’s name on
the records of the Company. Such Common Shares will more likely be
registered under the names of the shareholder’s broker or an
agent of that broker. In the United States, the vast majority of
such Common Shares are registered under the name of Cede & Co.
as nominee for The Depository Trust Company (which acts as
depositary for many U.S. brokerage firms and custodian banks), and
in Canada, under the name of CDS & Co. (the registration name
for The Canadian Depository for Securities Limited, which acts as
nominee for many Canadian brokerage firms).
Intermediaries are
required to seek voting instructions from Beneficial Shareholders
in advance of shareholders’ meetings. Every intermediary has
its own mailing procedures and provides its own return instructions
to clients.
There
are two kinds of beneficial owners (“Beneficial Shareholders”) –
those who object to their name being made known to the issuers of
securities which they own (called “OBOs” for objecting beneficial
owners), and those who do not object to the issuers of the
securities they own knowing who they are (called
“NOBOs” for
non-objecting beneficial owners).
The
Company is taking advantage of the provisions of NI 54-101 that
permit it to deliver proxy-related materials directly to its NOBOs.
As a result, NOBOs can expect to receive a scannable Voting
Information Form (“VIF”) from Computershare, our
transfer agent. The VIF is to be completed and returned to
Computershare in the envelope provided or by facsimile to the
number provided in the VIF. In addition, Computershare provides
both telephone voting and internet voting as described on the VIF
itself which contain complete instructions. Computershare will
tabulate the results of the VIFs received from NOBOs and will
provide appropriate instructions at the Meeting with respect to the
shares represented by the VIFs they receive.
The
Meeting Materials are being sent to Beneficial Shareholders who are
NOBOs. If you are a Beneficial Shareholder, and the Company or its
agent sent these materials directly to you, your name, address and
information about your holdings of securities were obtained in
accordance with applicable securities regulatory requirements from
the intermediary holding securities on your behalf. By choosing to
send the Meeting Materials to you directly, the Company (and not
the intermediary holding Common Shares on your behalf) has assumed
responsibility for (i) delivering these materials to you, and (ii)
executing your proper voting instructions. Please return your VIF
as specified in the request for voting instructions sent to
you.
8
The
Company is taking advantage of the provisions of NI 54-101 that
permit it to deliver proxy-related materials indirectly through
intermediaries to its OBOs. The Company will pay these
intermediaries expenses to deliver Meeting Materials to OBOs.
Intermediaries are responsible for delivering the Meeting Materials
to OBOs unless the OBO has waived the right to receive them.
Beneficial Shareholders, who are OBOs, should follow the
instructions of their intermediary carefully to ensure that their
Common Shares are voted at the Meeting.
The
proxy supplied to you by your broker will be similar to the Proxy
provided to Registered Shareholders by the Company. However, its
purpose is limited to instructing the intermediary on how to vote
on your behalf. Most brokers now delegate responsibility for
obtaining instructions from clients to Broadridge Financial
Solutions, Inc. (“Broadridge”) in the United States
and in Canada. Broadridge mails a VIF in lieu of a proxy provided
by the Company. The VIF will name the same persons as the
Company’s Proxy to represent your Common Shares at the
Meeting. You have the right to appoint a person (who need not be a
shareholder of the Company) different from the persons designated
in the VIF, to represent your Common Shares at the Meeting, and
that person may be you. To exercise this right, insert the name of
the desired representative (which may be you) in the blank space
provided in the VIF.
The
completed VIF must then be returned to Broadridge by mail or
facsimile or given to Broadridge by phone or over the internet, in
accordance with Broadridge’s instructions. Broadridge then
tabulates the results of all instructions received and provides
appropriate instructions respecting the voting of Common Shares to
be represented at the Meeting and the appointment of any
shareholder’s representative. If you receive a VIF from Broadridge, it must
be completed and returned to Broadridge in accordance with
Broadridge’s instructions, well in advance of the Meeting in
order to: (a) have your Common Shares voted as you instruct; or (b)
have any alternate representative you may choose duly appointed to
attend the Meeting and vote your Common Shares.
Alternatively, you
can request in writing that your broker send you a Proxy which
would enable you, or a person designated by you, to attend the
Meeting and vote your Common Shares.
Shareholders with
questions respecting the voting of shares held through a
stockbroker or other financial intermediary should contact that
stockbroker or other intermediary for assistance.
NOTICE
TO SHAREHOLDERS IN THE UNITED STATES
The
solicitation of proxies and the transactions contemplated in this
Information Circular involve securities of an issuer located in
Canada and are being affected in accordance with the corporate laws
of the Province of British Columbia, Canada and securities laws of
the provinces of Canada. The proxy solicitation rules under the
United States Securities Exchange
Act of 1934, as amended, are not applicable to the Company
or this solicitation, and this solicitation has been prepared in
accordance with the disclosure requirements of the securities laws
of the provinces of Canada. Shareholders should be aware that
disclosure requirements under the securities laws of the provinces
of Canada differ from the disclosure requirements under United
States securities laws.
The
enforcement by shareholders of civil liabilities under United
States federal securities laws may be affected adversely by the
fact that the Company is amalgamated under the Business Corporations Act (British
Columbia) (the “BCBCA”), as amended, certain of
its directors and its executive officers are residents of Canada
and its assets and the assets of such persons are located outside
the United States. Shareholders may not be able to sue a foreign
company or its officers or directors in a foreign court for
violations of United States federal securities laws. It may be
difficult to compel a foreign company and its officers and
directors to subject themselves to a judgment made by a United
States court.
Notice-and-Access
As
noted above, the Company is utilizing Notice-and-Access Provisions
under NI 54-101 and NI 51-102 for distribution of this Circular to
non-Registered Shareholders.
The
Notice-and-Access Provisions are a set of rules that allow
reporting issuers to post electronic versions of proxy-related
materials (such as proxy circulars and annual financial statements)
on-line, via the System for Electronic Document Analysis and
Retrieval (“SEDAR”) and at least one other
website, rather than mailing paper copies of such materials to
non-Registered Shareholders. Electronic copies of this Circular and
proxy related materials may be found under the Company’s
SEDAR profile at www.SEDAR.com and on the
Company’s website at
https://www.silverelef.com/investors/shareholder-meetings/.
The
Company will not use procedures known as
“stratification” in relation to the use of
Notice-and-Access Provisions. Stratification occurs when a
reporting issuer using the Notice-and-Access Provisions provides a
paper copy of this Circular to some shareholders with the notice
package.
9
In
relation to the Meeting, non-Registered Shareholders will receive
the required documentation under the Notice-and-Access Provisions,
which will not include a paper copy of this Circular. Shareholders
are reminded to review this Circular.
Changing
Your Vote
Registered Shareholders
Registered
Shareholders may revoke their proxy by sending a new completed
proxy form with a later date or a written note signed by you or by
your attorney if he or she has your written authorization. You can
also revoke your proxy in any manner permitted by law.
If you
represent a registered Shareholder that is a corporation or
association, your written note must have the seal of the
corporation or association and must be executed by an officer or an
attorney who has their written authorization. The written
authorization must accompany the revocation notice.
We must
receive the written notice of revocation any time up to and
including the last business day before the day of the Meeting or
the day the Meeting is reconvened if it was postponed or
adjourned.
Send
the written notice to:
●
Silver Elephant
Mining Corp., Suite 1610, 409 Granville Street, Vancouver, British
Columbia, Canada V6C 1T2 Attention: Corporate Secretary via email
at bmcarthur@silverelef.com; or
●
Our transfer agent:
Computershare Investor Services Inc., 8th Floor, 100 University
Avenue, Toronto, Ontario, Canada M5J 2Y1 or by fax at
1-866-249-7775 in Canada and the United States, and
001-416-263-9524 outside of Canada and the United
States.
If, as
a registered Shareholder, you are using your control number to
login to the Meeting and you accept the terms and conditions, you
will be revoking any and all previously submitted proxies and will
be provided the opportunity to vote by online ballot on the matters
put forth at the Meeting. If you do not wish to revoke a previously
submitted proxy, you will not be able to participate at the Meeting
online, however you will still be able to listen in and participate
in the Meeting by dialing in to the dial in information provided
above.
Beneficial Shareholders
Only
registered Shareholders have the right to revoke a proxy.
Beneficial Shareholders can change their vote by contacting their
intermediary right away, so they have enough time before the
Meeting to arrange to change the vote and, if necessary, revoke the
proxy.
Voting Results
Voting
results will be filed on the Company’s profile on SEDAR
(www.sedar.com) and in a news release issued following the Meeting,
which will be available on SEDAR and on the Company’s website
(https://www.silverelef.com/category/news/).
Notice
Regarding Non-GAAP Measures
This
Circular includes certain terms or performance measures commonly
used in the mining industry that are not defined under
International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board, including cash costs per
payable ounce of precious metals sold and basic attributable income
per share to manage and evaluate operating performance. Non-GAAP
financial measures do not have any standardized meaning prescribed
under IFRS and, therefore, they may not be comparable to similar
measures reported by other companies. We believe that, in addition
to conventional measure prepared in accordance with IFRS, certain
investors use this information to evaluate our performance. The
data presented is intended to provide additional information and
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. These
non-GAAP measures should be read in conjunction with our
consolidated financial statements. See “Non- GAAP Financial
Measures” in our management’s discussion and analysis
of the financial position and results of operations for the year
ended December 31, 2019 for a more detailed discussion of how we
calculate such measures and for a reconciliation of certain
measures to IFRS terms.
Additional
Information
Additional
information relating to the Company is available on the SEDAR
website at www.sedar.com.
You can
find financial information relating to the Company in our
consolidated financial statements, management’s discussion
& analysis and Annual Information Form (or Annual Report on
Form 20-F) for the most recently completed financial year. These
documents are available on our website (www.silverelef.com), on SEDAR
(www.sedar.com) and
on EDGAR (www.sec.gov/edgar.shtml).
10
You can also request copies of these documents by
contacting the Corporate Secretary at 604-569-3661 or via email to
bmcarthur@silverelef.com. If you have any questions about the
Meeting or the Meeting Materials, please call our Corporate
Secretary at 604-569-3661.
ABOUT
THE MEETING
Time,
Date and Place
The
Meeting will be held at 10:00 a.m. (Pacific Daylight Time) on July
7, 2020 via teleconference as set out in the Notice of
Meeting.
Items
of Business
The
items of business are set out in the Notice of
Meeting.
Quorum
and Approval
The Record Date for determining persons entitled
to receive notice of and vote at the Meeting is May 25, 2020. Only
persons who were Registered Shareholders as of the close of
business on May 25, 2020 are entitled to vote at the Meeting, or
any adjournment or postponement thereof, in the manner and subject
to the procedures described in this Circular. A quorum for the
Meeting shall be two persons present in person, each being a
shareholder entitled to vote or appointed by proxy and holding
together or representing by proxy not less than 5% of the
outstanding shares of the Company entitled to vote at a
meeting.
Interest
of Informed Persons in Material Transactions
To the
knowledge of the Company, no (i) director or executive officer of
the Company or any of its subsidiaries; (ii) Shareholder (or
director or executive officer of such Shareholder) who beneficially
owns, or controls or directs, directly or indirectly, more than 10%
of the Common Shares; and (iii) associates or affiliates of the
foregoing, had any material interest, direct or indirect, in any
transaction since the commencement of the Company’s most
recently completed financial year or in any proposed transaction
which has materially affected or would materially affect the
Company or any of its subsidiaries.
We are
not aware of any informed person or any nominee for director, or
any associate or affiliate of the foregoing, who has a direct or
indirect material interest in any transaction we entered into since
January 1, 2019 or any proposed transaction, either of which would
have a material effect on us or any of our
subsidiaries.
An
“informed person” means: (a) a director or executive
officer of the Company; (b) a director or executive officer of a
person or company that is itself an informed person or subsidiary
of the Company; (c) any person or company who beneficially owns,
directly or indirectly, voting securities of the Company or who
exercises control or direction, directly or indirectly, over voting
securities of the Company or a combination of both carrying more
than 10% of the voting rights other than voting securities held by
the person or company as underwriter in the course of a
distribution; and (d) the Company itself, if it has purchased,
redeemed or otherwise acquired any of its Common Shares and for so
long as it holds any of its Common Shares.
Record Date and Outstanding Shares
The
Record Date for determining persons entitled to receive notice of
and vote at the Meeting is May 25, 2020. Only persons who were
Registered Shareholders as of the close of business on July 3, 2020
are entitled to vote at the Meeting, or any adjournment or
postponement thereof, in the manner and subject to the procedures
described in this Information Circular. A quorum for the Meeting
shall be two persons present in person, each being a shareholder
entitled to vote or appointed by proxy, and holding, together or
representing by proxy, not less than 5% of the outstanding shares
of the Company entitled to vote at a meeting.
Voting
Securities and Principal Holders of Voting Securities
The
Company’s authorized
capital consists of an unlimited number of common shares without
par value. As at the date hereof, the Company has issued and outstanding
138,272,408 fully paid and non-assessable Common
Shares. Each Common Share carries the right to one vote. No group
of Shareholders has the right to elect a specified number of
directors, nor are there cumulative or similar voting rights
attached to the Common Shares. The Company has no other classes of voting
securities and does not have any classes of restricted securities.
The outstanding Common Shares are listed on the Toronto Stock
Exchange (the “TSX”) under the symbol
“ELEF”.
To the knowledge of the directors and
executive officers of the
Company, no person or
corporation beneficially owns, controls or directs, directly or
indirectly, shares carrying 10% or more of the voting rights
attached to all outstanding shares of the Company.
11
Votes
Necessary to Pass Resolutions
Ordinary
resolutions require a simple majority of 50% plus 1 of the votes
cast at the Meeting by Shareholders to be approved.
A
simple majority of affirmative votes cast at the Meeting is
required to pass all of the ordinary resolutions described herein,
other than the resolution approving the repricing of certain Common
Share purchase warrants of the Company which requires a simple
majority of votes cast by Shareholders other than holders of
Warrants who are Insiders (as such term in defined in the TSX
Company Manual) to pass. If there are more nominees for election as
directors or appointment of the Company’s auditor than there
are vacancies to fill, those nominees receiving the greatest number
of votes will be elected or appointed until all such vacancies have
been filled. If the number of nominees for election or appointment
is equal to the number of vacancies to be filled all such nominees
will be declared elected or appointed by acclamation.
Special
resolutions require a two-thirds majority of votes cast at the
Meeting by Shareholders to be approved.
DIRECTORS
Number
of Directors
The
board of directors of the Company (the “Board”) is a variable board
consisting of not fewer than one and not more than fifteen
directors. The term of office of each of the current directors will
end immediately before the election of directors at the Meeting.
Management does not contemplate that any of the nominees will be
unable to serve as a director. However, if a nominee should be
unable to so serve for any reason prior to the Meeting, the persons
named in the enclosed form of proxy shall have the right to vote
for another nominee in their discretion. Unless the
director’s office is earlier vacated in accordance with the
Business Corporations Act
(British Columbia) and the constating documents of the Company,
each director elected will hold office until the next annual
meeting or until his successor is appointed.
At the
Meeting, the Shareholders will be asked to pass an ordinary
resolution to set the number of directors of the Company for the
ensuing year at five (5). Such resolution will be approved if the
majority of Common Shares present or represented by proxy at the
Meeting and entitled to vote are voted in favour thereof. At the
Meeting, the Company will ask Shareholders to vote for the election
of the five (5) nominees proposed by the Company as directors. Each
holder of Common Shares will be entitled to cast their votes for,
or withhold their votes from, the election of each director. The
management proxyholders named in the accompanying form of proxy as
proxyholders intend to vote for the election of all nominees whose
names are set forth in this Information Circular, unless instructed
otherwise.
Management of the Company recommends that you vote IN FAVOUR of fixing the number
of directors at five and authorizing the Board to appoint new
directors to fill any vacancies on the Board. In the absence of
instructions to the contrary, the Company’s proxyholders will
vote the Common Shares represented by each form of proxy, properly
executed, IN FAVOUR
of fixing the number of directors at five, and authorizing the
Board to appoint new directors as necessary to fill any vacancies
on the Board.
Majority
Voting for Directors
The
Board adopted a majority voting policy on March 25, 2014. The
policy stipulates that if the votes in favour of the election of an
individual director nominee at a meeting of shareholders represent
less than the number that voted “withheld” in respect
of such election, the nominee will submit his or her resignation
promptly after the Meeting for the consideration of the Corporate
Governance and Compensation Committee (the “CGCC”). The CGCC will make a
recommendation to the Board after reviewing the matter, and the
Board will then decide whether to accept or reject the resignation.
The Board’s decision to accept or reject the resignation
offer will be disclosed to the public. The nominee will not
participate in any CGCC deliberations on the resignation offer. The
policy does not apply in circumstances involving contested director
elections.
Diversity
The
Company is committed to supporting a culture of inclusiveness and
diversity although it has not adopted any written policy
specifically relating to the identification and nomination of women
directors, nor does the Board currently consider the level of
representation of women when making executive officer appointments
or set arbitrary targets regarding women on the Board or in
executive positions. Although the Board acknowledges that
diversity, including diversity of experience, perspective,
education, race, gender and national origin is of value to the
Company, in considering potential directors and executive officers,
the CGCC will continue to seek the most qualified candidates,
regardless of their gender. While the CGCC is not specifically
focused on achieving any particular level of representation of
women on the Board, it will continue to consider that as one of the
various factors it reviews as part of its nomination and Board
assessment process. The Company does not believe that having a
written policy which sets specific quotas or targets is an
appropriate method for the Company to achieve diversity
objectives.
12
The
Company has been successful in recruiting two women to its key
leadership positions and does not believe that any gender bias has
existed or exists in its hiring or promotion decisions. For that
reason, no affirmative action is required to ensure women have an
equal opportunity within the Company. As of the date of this
Circular, there are no female members of the Board. Of the seven
executive officers of the Company, two are women, Ms. Irina
Plavutska, Chief Financial Officer, who joined the Company on
August 23, 2010 and has been an executive officer of the Company
since September 11, 2013, and Ms. Brigitte McArthur, Corporate
Secretary, who joined the Company on November 15, 2019. Together,
Ms. Plavutska and Ms. McArthur, represent 29% of the overall
executive officer positions within the Company. The Company will
continue to monitor its gender diversity and disclose the results
to its shareholders on an annual basis.
Advance Notice Policy
The
Board adopted an advance notice policy (the “Advance Notice Policy”) on March
25, 2014. The Advance Notice Policy provides for advance notice to
the Company in circumstances where nominations of persons for
election to the Board are made by shareholders of the Company other
than pursuant to (i) a requisition of a meeting made pursuant to
the provisions of the BCBCA or (ii) a shareholder proposal made
pursuant to the provisions of the BCBCA.
The
purpose of the Advance Notice Policy is to foster a variety of
interests of the shareholders and the Company by ensuring that all
shareholders - including those participating in a meeting by proxy
rather than in person - receive adequate notice of the nominations
to be considered at a meeting and can thereby exercise their voting
rights in an informed manner. Among other things, the Advance
Notice Policy fixes a deadline by which holders of Common Shares
must submit director nominations to the Company prior to any annual
or special meeting of shareholders and sets forth the minimum
information that a shareholder must include in the notice to the
Company for the notice to be in proper written form.
As of
the date of this Information Circular, the Company has not received notice of a
nomination in compliance with the Advance Notice
Policy.
Term
Limits and Retirement Policy
The
Company has not adopted term limits for directors or other specific
mechanisms for Board renewal, as it is satisfied that the terms of
management’s current nominees for election as directors are
not high, compared to other similar public companies and prevailing
governance standards. None of the nominees have served as a
director of the Company for more than 10 years, with one having
served the shortest period at five years. The CGCC (as defined
herein) believes that the Board composition being proposed is
adequately balanced between more experienced members with
historical knowledge of the Company and the mining industry, and
newer members who bring with them fresher perspectives. The Board
recognizes the value of consistency of tenure and therefore, seeks
to retain this unique skillset among its members unless
circumstances require otherwise. As well, the Board believes
prescribed term limits or other prescriptive mechanisms are
unnecessary where boards follow good corporate governance practices
and properly govern themselves. The CGCC continually reviews and
assesses the contributions of existing directors and the needs of
the Company with respect to Board renewal as part of its nomination
process. The Board will periodically consider whether term limits
or other mechanisms for Board renewal should be adopted and will
implement changes if, and when appropriate.
The
Company does not have a retirement policy for its
directors.
Information
about Nominee Directors
The
following table sets forth for each of the persons proposed to be
nominated for election as directors their name, province/state and
country of residence; their principal occupations or employment; a
brief biographical description; the date on which they became
directors of the Company; their independence; their memberships
with the applicable committees of the Company; each nominee’s
attendance to Board meetings and applicable committee meetings. The
two committees of the Company are: (i) the Audit Committee (the
“AC”),
and (ii) the Corporate Governance
& Compensation Nominating Committee (the
“CGCC”).
In
addition, the table shows the nominees’ current equity
ownership consisting of Common Shares beneficially owned, directly
or indirectly, or controlled or directed, and options credited to,
each nominee as of the date of this Information
Circular.
For
additional information regarding compensation, options, equity
ownership, and current directorships, please refer to the Statement
of Executive Compensation, Director Compensation, Statement of
Corporate Governance Practices and Other Directorships. The chart
below includes the attendance of each director for the Board of
Directors meetings and various committee meetings held between
January 1, 2019 to December 31, 2019.
13
|
Name
of Director/Officer
|
Common Shares Beneficially Owned, Directly or
Indirectly, or Controlled or Directed(1)
|
Number of
Options Held(1)
|
||
|
John
Lee
|
||||
 |
7,633,211(i)
|
4,580,000
|
||
|
Taipei,
Taiwan
Director
since: June 2011
Pre-amalgamated
October 2009(iii)
Non-independent
Member
of the
Board
|
Present: Director of the Company from October 21, 2009 to
present; President of Mau Capital Management LLC (private investor
relations firm) from July 2004 to present; and Executive Chairman
of the Company from January 2013 to present.
Former: Interim
President of the Company from June 2011 to October 2018; Interim
CEO of the Company from November 2012 to October 2018; Head of
Internal Affairs of the Company from October 2018 to February 2019;
and Interim President and Interim Chief Executive Officer of the
Company from February 2019 to April 2019.
|
|||
|
|
Board/Committee Membership
|
Attendance
|
%
|
|
|
|
Board
|
4 of 4
|
100%
|
|
|
|
Audit Committee
|
0 of 4(iv)
|
0%
|
|
|
|
|
|
|
|
|
|
Number of Stock Options Granted
|
Exercise Price ($)
|
Expiry
|
|
|
|
500,000
|
0.20
|
June 2, 2021
|
|
|
|
300,000
|
0.49
|
Jan. 12, 2022
|
|
|
|
550,000
|
0.33
|
Jan. 12, 2022
|
|
|
|
680,000
|
0.35
|
Sept. 1, 2022
|
|
|
|
400,000
|
0.28
|
Apr. 6, 2023
|
|
|
|
350,000
|
0.33
|
Oct. 17, 2023
|
|
|
|
700,000
|
0.20
|
Jul. 29, 2024
|
|
|
|
300,000
|
0.44
|
Nov. 1, 2024
|
|
|
|
800,000
|
0.22
|
May 4, 2025
|
|
|
|
|
|
|
|
|
|
Notes:
(i) Of
the 7,633,211 common shares, 284,310 common shares are held by
Merit Holdings Ltd., a private company wholly owned and controlled
by John Lee.
(ii) John Lee is not considered independent as he is currently the
Company’s Executive Chairman.
(iii) Northern Platinum Ltd., Prophecy Holdings Inc. and
Prophecy Resource Corp. were amalgamated on June 13, 2011 as one
company under the name “Prophecy Resource Corp.”
Prophecy Resource Corp. changed its name to “Prophecy Coal
Corp.” on June 14, 2011. Prophecy Coal Corp. changed its name
to “Prophecy Development Corp.” on January 5, 2015.
Prophecy Development Corp. changed its name to “Silver
Elephant Mining Corp.” on March 16, 2020.
(iv)
Mr. Lee was appointed as a member of the Audit Committee on
February 28, 2019, filling a vacancy upon Mr. Louise Dionne’s
resignation until a suitable candidate was appointed. Mr. Lee was
replaced as a member of the Audit Committee on December 10, 2019 by
Mr. Marc Leduc.
|
|||
|
Greg
Hall
|
||||
 |
238,092
|
660,000
|
||
|
British
Columbia, Canada
Director
since: June 2011
Pre-amalgamated
October 2009(i)
independent
Member
of the
Board
Chairman & Member of AC
Chairman &
Member of CGCC
|
Present: independent
Director of the Company from October 21, 2009 to present; President
of Water Street Assets Inc. from September 2013 to
present.
Former: Director of
Fidelity Minerals Corp. from September 23, 2016 to December 4,
2018; and Director of Intertainment Media Inc. from January 19,
2011 to May 29, 2015.
|
|||
|
|
Board/Committee Membership
|
Attendance
|
%
|
|
|
|
Board
|
4 of 4
|
100%
|
|
|
|
Audit Committee
|
4 of 4
|
100%
|
|
|
|
Corporate Governance & Compensation Committee
|
Nil(ii)
|
N/A
|
|
|
|
|
|
|
|
|
|
Number of Stock Options Granted
|
Exercise Price ($)
|
Expiry
|
|
|
|
120,000
|
0.20
|
Jun. 2, 2021
|
|
|
|
50,000
|
0.49
|
Jan. 12, 2022
|
|
|
|
50,000
|
0.33
|
Jan. 12, 2022
|
|
|
|
50,000
|
0.35
|
Sept. 1, 2022
|
|
|
|
40,000
|
0.28
|
Apr. 6, 2023
|
|
|
|
50,000
|
0.33
|
Oct. 17, 2023
|
|
|
|
120,000
|
0.20
|
July 29, 2024
|
|
|
|
80,000
|
0.44
|
Nov. 1, 2024
|
|
|
|
100,000
|
0.22
|
May 4, 2025
|
|
|
|
|
|
|
|
|
|
Notes:
(i)
Northern Platinum Ltd., Prophecy Holdings Inc. and Prophecy
Resource Corp. were amalgamated on June 13, 2011 as one company
under the name “Prophecy Resource Corp.” Prophecy
Resource Corp. changed its name to “Prophecy Coal
Corp.” on June 14, 2011. Prophecy Coal Corp. changed its name
to “Prophecy Development Corp.” on January 5, 2015.
Prophecy Development Corp. changed its name to “Silver
Elephant Mining Corp.” on March 16, 2020.
(ii)
The Corporate Governance &
Compensation Committee did not meet during the year ended December
31, 2020.
|
|||
14
|
Name of Director/Officer
|
Common Shares Beneficially Owned, Directly or Indirectly, or
Controlled or Directed(1)
|
Number of
Options Held(1)
|
||
|
Masateru
Igata
|
||||
 |
1,138,928(i)
|
660,000(i)
|
||
|
Ulaanbaatar,
Mongolia
Director
since: April 2014
independent
Member
of the
Board
Member of AC
Member
of CGCC
|
Present: independent
Director of the Company from April 23, 2014 to present; Founder and
Chief Executive Officer of Frontier Japan from January 2015 to
present.
|
|||
|
|
Board/Committee Membership
|
Attendance
|
%
|
|
|
|
Board
|
3 of 4
|
75%
|
|
|
|
Audit Committee
|
4 of 4
|
100%
|
|
|
|
Corporate Governance & Compensation Committee
|
Nil(ii)
|
N/A
|
|
|
|
|
|
|
|
|
|
Number of Stock Options Granted
|
Exercise Price ($)
|
Expiry
|
|
|
|
120,000
|
0.20
|
Jan. 2, 2021
|
|
|
|
70,000
|
0.49
|
Jan. 12, 2022
|
|
|
|
50,000
|
0.33
|
Jan. 12, 2022
|
|
|
|
50,000
|
0.35
|
Sept. 1, 2022
|
|
|
|
40,000
|
0.28
|
Apr. 6, 2023
|
|
|
|
50,000
|
0.33
|
Oct. 17, 2023
|
|
|
|
100,000
|
0.20
|
Jul. 29, 2024
|
|
|
|
80,000
|
0.44
|
Nov. 1, 2024
|
|
|
|
100,000
|
0.22
|
May 4, 2025
|
|
|
|
|
|
|
|
|
|
Notes:
(i) The
Common Shares and Stock Option grants are held by Sophir Asia
Limited, a private company wholly owned and controlled by Mr.
Igata.
(ii)
The Corporate Governance &
Compensation Committee did not meet during the year ended December
31, 2020.
|
|||
|
Marc
Leduc
|
||||
 |
23,585
|
330,000
|
||
|
Colorado,
United States
Director
since: July 2019
independent
Member
of the
Board
Member of AC
Member
of CGCC
|
Present: independent Director of the Company from July 22,
2019 to present; Chief Operating Officer of KORE Mining Ltd. from
October 29, 2019 to present; Director of South Star Mining Corp.
from March 25, 2019 to present.
Former: COO and Interim CEO (October 24, 2017 to December
31, 2017) of NewCastle Gold Ltd. (formerly Castle Mountain Mining
Company Limited) from October 12, 2016 to December 31, 2017.
Executive Vice President of US Operations for Equinox Gold from
January 1, 2018 to March 31, 2019. President, Chief Executive, and
a Director of Luna Gold Corp. from January 30, 2015 to August 14,
2016; and Director of Rupert Resources Ltd. from April 10, 2013 to
December 7, 2016
|
|||
|
|
Board/Committee Membership
|
Attendance
|
%
|
|
|
|
Board
|
1 of 4(i)
|
25%
|
|
|
|
Audit Committee
|
0 of 4(ii)
|
0%
|
|
|
|
Corporate Governance & Compensation Committee
|
Nil(iii)
|
N/A
|
|
|
|
|
|
|
|
|
|
Number of Stock Options Granted
|
Exercise Price ($)
|
Expiry
|
|
|
|
150,000
|
0.20
|
Jul. 29, 2024
|
|
|
|
80,000
|
0.44
|
Nov. 1, 2024
|
|
|
|
100,000
|
0.22
|
May 4, 2025
|
|
|
|
Notes:
(i) Mr.
Leduc was appointed as a Director on July 22, 2019.
(ii)
Mr. Leduc was appointed as a member of the Audit Committee on
December 10, 2019 replacing John Lee.
(iii)
Mr. Leduc was appointed to the Corporate Governance &
Compensation Committee on December 10, 2019. The Corporate Governance & Compensation Committee
did not meet during the year ended December 31,
2020.
|
|||
15
|
Name of Director/Officer
|
Common Shares Beneficially Owned, Directly or Indirectly, or
Controlled or Directed(1)
|
Number of
Options Held(1)
|
||
|
Ronald
Clayton
|
||||
 |
15,000
|
500,000
|
||
|
Nevada,
United States
Director
since: November 2019
independent
Member
of the
Board
|
Present: independent
Director of the Company from November 4, 2019 to present;
President, Chief Executive Officer and a Director of 1911 Gold Corporation
(formerly Havilah Mining Corporation) from November 26, 2018 to
present; and a Director of Gold Standard Ventures Corp. from
January 30, 2018 to present.
Former: Chief
Operating Officer, President, Chief Executive Officer and a
Director of Tahoe Resources Inc. from May 25, 2010 to June 15,
2018.
|
|||
|
|
Board/Committee Membership
|
Attendance
|
%
|
|
|
|
Board
|
0 of 4(i)
|
N/A
|
|
|
|
|
|
|
|
|
|
Number of Stock Options Granted
|
Exercise Price ($)
|
Expiry
|
|
|
|
200,000
|
0.44
|
Nov. 1, 2024
|
|
|
|
300,000
|
0.22
|
May 4, 2025
|
|
|
|
|
|
|
|
|
|
Notes:
(i) Mr.
Clayton was appointed as a Director on November 4,
2019.
|
|||
Notes:
(1)
The number of
Common Shares beneficially owned, controlled or directed, directly
or indirectly, by the above directors and officers is based on
information furnished by the directors and officers themselves and
from the insider reports available at www.sedi.ca.
(2)
As of May 25, 2020,
the current directors of the Company, five (5) in the aggregate, beneficially owned,
controlled or directed, directly or indirectly, an aggregate of
9,010,231 Common Shares (excluding
stock options granted) or approximately 6.52% of the Common
Shares issued and outstanding. To the knowledge of the Company
there are no Common Shares owned directly or indirectly by the
Nominee Directors other than as disclosed above.
(3)
The AC shall meet four times
annually, or more frequently as circumstances dictate. The
Audit Committee is comprised of Greg Hall (Chairman),
Masateru Igata and Marc
Leduc.
(5)
The CGCC will
meet as often as the Chair shall determine to be necessary or
appropriate. The CGCC is comprised of
Greg Hall
(Chairman), Masateru Igata, and Marc
Leduc.
16
The
following information as to principal occupation, business or
employment is not within the knowledge of the management of the
Company and has been furnished by the respective nominees. Each
nominee has held the same or a similar principal occupation with
the organization indicated or a predecessor thereof for the last
five years unless otherwise indicated.
John Lee is the Executive Chairman has been
a Director of the Company since October 2009. Mr. Lee has been an
accredited investor in the resource industry since 2001. Under
John’s leadership, the Company raised over $110 million and
grew from having minimal assets to owning substantial assets in
USA, Bolivia and Mongolia. Mr. Lee is a CFA charter holder and has
degrees in economics and engineering from Rice University. Since
joining the Company, Mr. Lee has led the Company in making several
timely project acquisitions and has also identified, negotiated,
and financed the Pulacayo Project acquisition in 2015 and the
Gibellini Project acquisition in 2017.
Greg
Hall Director
& Co-Founder. Mr. Hall has 40 years of experience in venture
capital and a background in corporate finance. As a corporate
director of public companies since 2003, Mr. Hall has been involved
in strategic planning, mergers and acquisitions, and investment
decisions. He also spent 23 years as an investment banker. Prior to
his retirement from the investment business in 2003, Mr. Hall held
the following positions: Founding Partner & Director, PI
Financial; Partner & Director, Haywood Securities; VP,
Canaccord Genuity; Sr. VP, Leede Jones Gable. He is a former
Director & Audit Committee Chairman, Silvercorp Metals (NYSE).
Mr. Hall is a graduate of the SME Enterprise Board Program, Rotman
School of Management, University of Toronto, and a Member of the
Institute of Corporate Directors. Current positions include:
President & Director, Water Street Assets; Director, CanX CBD
Processing; Co-Founding Shareholder & Former Director, Numinus
Wellness (Salvation Labs); Director, Incubara Capital.
Masateru Igata has
been an independent Director of the Company since April 2014.
Mr. Igata, Founder & CEO of
Frontier LLC and Frontier Japan, has more than 30 years of
professional experience in Asian financial markets. Prior to
establishing Frontier Securities (Later renamed as Frontier LLC) in
2007, he had been a Managing Director at Salomon
Brothers/Citigroup/Nikko Citigroup in Tokyo leading the company to
be the most profitable foreign investment bank in Japan for more
than the decade. After leaving the firm in 2004, Mr. Igata became
interested in Mongolia’s fast-growing economy, and began to
develop close relationships with many Mongolian businesses since
then. Mr. Igata has since invested in Mining, Finance and real
estate sector in Japan, Mongolia, Canada and China through his own
companies in each region. In addition, with proven expertise on
cross-border capital raising, Mr. Igata has been actively promoting
Mongolian investment opportunities to foreign investors and
advocating capital market’s best practices in Mongolia to
ensure and enhance its access to foreign investors through a full
range of financial services, corporate access and research. In
addition, he has extensively advised the Government of Mongolia,
several government agencies and major corporate in Mongolia on fund
raising, corporate governance and value enhancement. In Japan, Mr.
Igata has served as an advisor to major mining companies on
corporate governance, investor relations and the outlook on the
global mining sector. Hosting Invest Mongolia Tokyo is one of the
services to facilitate himself and Japanese investors to access to
the Government and the Business in Mongolia. In addition, Mr. Igata
has been actively advising the Japanese Government and Government
related agencies on the various issues on the global mining
industry. Mr. Igata is a certified member of the Securities Analyst
Association of Japan and an Advisory Member of the Board at
Business Council of Mongolia (BCM). Mr. Igata was conferred
a decoration of Nairamdal
(Friendship) from President of Mongolia Tsakhiagiin Elbegdorj on
June 2017.
Marc Leduc has been
an independent Director of the Company since July 2019. Mr. Leduc
is a mining engineer and geologist
with more than 30 years’ experience involving all aspects of
the development, operations, planning and evaluation of mining
projects. Mr. Leduc holds a B.Sc. (Hons) degree in Mining
Engineering from Queen’s University in Kingston, Ontario, and
a B.Sc. degree in Geology from the University of Ottawa, and he is
a registered professional engineer in both Ontario and BC. Mr.
Leduc has led technical teams in the design and construction of
large mines, heap leach and tailings facilities. Mr. Leduc has held
top management positions with several mining companies including
most recently Chief Operating Officer and Interim CEO of NewCastle
Gold Ltd. before it was acquired in 2017 via merger with Trek
Mining Inc. and Anfield Gold Corp. (now named Equinox Gold Corp.).
Mr. Leduc, following the merger, remained with Equinox Gold for all
of 2018 and into 2019 holding the position of Senior Vice President
of US Operations. Mr. Leduc currently holds the position of COO
with Kore Mining and is an independent director of South Star
Mining. Mr. Leduc spent several years working in Peru as the
President and COO for Bear Creek Mining Corp, a silver exploration
and development company.
Ronald Clayton has
been an independent Director of the Company since November 4, 2019.
Mr. Clayton is a seasoned executive
with over 40 years of mine operating experience. He was COO and
later the CEO of Tahoe Resources and led the successful
construction and operation of Tahoe’s flagship Escobal silver
mine, which at its peak (2015 to 2017) produced over 20 million
ounces of silver annually. Tahoe was acquired by Pan American
Silver Corp. for US$1.07 billion in February 2019. Prior to his
8-year tenure at Tahoe, Mr. Clayton was senior vice president for
operations and general manager of several underground mines for
Hecla Mining Company. Mr. Clayton earned a Bachelor of Science
degree in mining engineering from the Colorado School of Mines and
is a graduate of the Tuck School of Business Executive Program at
Dartmouth College.
17
Management of the Company recommends that you vote IN FAVOUR of the election of
each of the above nominees to the Board. In the absence of
instructions to the contrary, the Company’s proxyholders will
vote the Common Shares represented by each Proxy, properly executed, IN FAVOUR
of the election of each of the above
nominees to the Board.
Cease
Trade Orders, Bankruptcies, Penalties and Sanctions
To the
best of our knowledge, none of the proposed directors of the
Company:
(a)
is, as at the date
of this Circular, or was within 10 years before the date of this
Circular, a director, chief executive officer or chief financial
officer of any company (including the Company), that:
(i)
was subject to an
order that was issued while the director or executive officer was
acting in the capacity as director, chief executive officer or
chief financial officer, or
(ii)
was subject to an
order that was issued after the director or executive officer
ceased to be a director, chief executive officer or chief financial
officer and which resulted from an event that occurred while that
person was acting in the capacity as director, chief executive
officer or chief financial officer.
For the
purposes of the above, “order” means:
(i) a
cease trade order;
(ii) an
order similar to a cease trade order; or
(iii)
an order that
denied the relevant company access to any exemption under
securities legislation,
that
was in effect for more than 30 consecutive days.
Except
as disclosed herein, to the knowledge of the Company, no director
or executive officer of the Company, or a shareholder holding a
sufficient number of securities of the Company to affect materially
the control of the Company:
(a)
is, as at the date
of this Circular, or has been within the 10 years before the date
of this Circular, a director or executive officer of any company
(including the Company) that, while that person was acting in the
that capacity, or within a year of that person ceasing to act in
that capacity, became bankrupt, made a proposal under any
legislation relating to bankruptcy or insolvency or was subject to
or instituted any proceedings, arrangement or compromise with
creditors or had a receiver, receiver manager or trustee appointed
to hold its assets; has, within the 10 years before the date of
this Circular, become bankrupt, made a proposal under any
legislation relating to bankruptcy or insolvency, or become subject
to or instituted any proceedings, arrangement or compromise with
creditors, or had a receiver, receiver manager or trustee appointed
to hold the assets of the director, executive officer or
shareholder;
(b)
has been subject to
any penalties or sanctions imposed by a court relating to
securities legislation or by a securities regulatory authority or
has entered into a settlement agreement with a securities
regulatory authority; or
(c)
has been subject to
any other penalties or sanctions imposed by a court or regulatory
body that would likely be considered important to a reasonable
investor in making an investment decision.
APPOINTMENT AND REMUNERATION OF THE AUDITOR
Davidson &
Company LLP, Chartered Accountants, (“Davidson & Company”) of 1200
– 609 Granville Street, Vancouver, British Columbia, V7Y 1G6,
will be proposed at the Meeting for appointment as auditor of the
Company until the close of business at the next annual meeting, at
remuneration to be fixed by the directors. The Audit Committee and
Board approved Davidson & Company, who have been auditors for
the Company since November 21, 2013.
Management of the Company recommends that you vote IN FAVOUR of the appointment of
Davidson & Company as auditors of the Company until the next
annual meeting. In the absence of instructions to the contrary, the
Company’s proxyholders will vote the Common Shares
represented by each Proxy, properly
executed, IN FAVOUR
of the appointment of Davidson &
Company as auditors of the Company.
AUDIT COMMITTEE
The
complete text of the Company’s audit committee charter can be
viewed on the Company’s website at https://www.silverelef.com/
under Corporate/Corporate Governance in the Company’s
Corporate Governance Policies and Procedures Manual. Please also
see the “Audit Committee” section of the
Company’s SEC Form 20-F Annual Report for the year ended
December 31, 2019, which can be found on the Company’s
website at https://www.silverelef.com/company/annual-reports/.
18
Background
Composition, Name of Audit Committee Member, Relevant Experience
and Qualifications
The Audit Committee is comprised of Greg Hall
(Chairman), Masateru Igata and
Marc Leduc, each of which are independent and financially
literate. As a result of Messrs. Hall, Igata and
Leduc’s education and experience, each member of the Audit
Committee has familiarity with, an understanding of, or experience
in:
●
the accounting
principles used by the Company to prepare its financial
statements;
●
the ability to
assess the general application of those principles in connection
with estimates, accruals and reserves;
●
reviewing or
evaluating financial statements that present a breadth and level of
complexity of accounting issues that are generally comparable to
the breadth and complexity of issues that can reasonably be
expected to be raised by the Company’s financial statements;
and
●
an understanding of
internal controls and procedures for financial
reporting.
Refer
to disclosure under Information of
Management’s Nominees for Director for relevant
education and experience of members of the Audit
Committee.
Pre-Approval Policies for Non-audit Services
The
Company’s auditor, Davidson & Company, has not provided
any material non-audit services during the most recently completed
fiscal year other than tax fees captioned below.
The
Company has procedures for the review and pre-approval of any
services performed by its auditor. The procedures require that all
proposed engagements of its auditor for audit and non-audit
services be submitted to the Audit Committee for approval prior to
the beginning of any such services. The Audit Committee considers
such requests and, if acceptable to a majority of the Audit
Committee members, pre-approves such audit and non-audit services
by a resolution authorizing management to engage the
Company’s auditor for such audit and non-audit services, with
set maximum dollar amounts for each itemized service. During such
deliberations, the Audit Committee assesses, among other factors,
whether the services requested, and the fees related to such
services could impair the independence of the
auditors.
External Auditor Service Fees
The
Audit Committee has reviewed the nature and amount of the audit and
non-audit services provided by Davidson & Company to the
Company to ensure auditor independence. Fees incurred with Davidson
& Company LLP
and its affiliates, Chartered
Accountants, for audit and non-audit services in the last two
fiscal years are outlined in the following table.
|
Nature of Fees
|
Year Ended
December 31, 2019(4)
|
|
Year Ended
December 31, 2018
|
|
Year Ended
December 31, 2017
|
|
Audit
Fees(1)
|
$100,000
|
|
$100,000
|
|
$100,000
|
|
Audit-Related
Fees(2)
|
Nil
|
|
52,340
|
|
52,340
|
|
Tax
Fees(3)
|
20,000
|
|
13,000
|
|
13,000
|
|
All
Other Fees
|
Nil
|
|
Nil
|
|
Nil
|
|
TOTAL
|
$120,000
|
|
$165,340
|
|
$165,340
|
Notes:
(1)
“Audit
Fees” represent fees for the audit of the annual consolidated
financial statements, and review in connection with the statutory
and regulatory filings.
(2)
“Audit
Related Fees” represent fees for assurance and related
services that are related to the performance of the
audit.
(3)
“Tax
Fees” represent fees for tax compliance, tax advice and
planning.
(4)
Fees for the year
ended December 31, 2019, are based, in part, upon estimates
received by the Company as final invoices are yet to be rendered as
of the date of this Information Circular.
19
STATEMENT OF EXECUTIVE COMPENSATION
Compensation
Discussion and Analysis
The
CGCC assists the Board in carrying out its responsibilities and
decision-making process relating to executive and director
compensation for the Company and its subsidiaries. The CGCC has the
following duties, responsibilities and authority:
(a)
to recommend to the
Board the form and amount of compensation to be paid by the Company
to directors for service on the Board and on its
committees;
(b)
review director
compensation at least annually;
(c)
to annually review
the Company’s base compensation structure and the
Company’s incentive compensation, stock option and other
share-based compensation plans and recommend changes in or
additions to such structure and plans to the Board as
needed;
(d)
to recommend to the
Board the annual base compensation of the Company’s executive
officers;
(e)
to recommend to the
Board annual corporate goals and objectives under any incentive
compensation plan adopted by the Company for officers and
non-officer personnel providing services to the Company and
recommend incentive compensation participation levels for officers
and non-officer personnel providing services to the Company under
any such incentive compensation plan. In determining the incentive
component of compensation, the CGCC will consider the
Company’s performance and relative shareholder return, the
values of similar incentives at comparable companies and the awards
given in past years;
(f)
to evaluate the
performance of officers generally and in light of annual corporate
goals and objectives under any incentive compensation
plan;
(g)
to provide
oversight of the performance evaluation and incentive compensation
of non-officer personnel providing services to the Company;
and
(h)
to administer the
Company’s stock option and other share-based compensation
plans and determine the grants of Options and other share-based
compensation.
Refer
to Information of
Management’s Nominees for Director for relevant
education and experience of members of the CGCC.
The
CGCC has not considered the implications of the risks associated
with the Company’s compensation program.
The CGCC is comprised of Greg Hall
(Chairman), Masateru Igata and
Marc Leduc, each of which are independent.
Named
Executive Officers
In this
section “Named Executive Officer” (or
“NEO”) means
each of the following individuals:
(a)
the Chief Executive Officer (the
“CEO”);
(b)
the Chief Financial Officer (the
“CFO”);
(c)
each
of the three most highly compensated executive officers, or the
three most highly compensated individuals acting in a similar
capacity, other than the CEO and CFO, at the end of the most
recently completed financial year whose total compensation was,
individually, more than $150,000 for that financial year;
and
(d)
each individual who would be a NEO under paragraph
(c) but for the fact that the individual was neither an executive
officer of the company, nor
acting in a similar capacity, at December 31,
2019.
The
following disclosure sets out the compensation that the Board
intended to pay, make payable, award, grant, give or otherwise
provide to each NEO and director of the Company or its subsidiaries
for the financial year ended December 31, 2019.
Although an NEO or
director may purchase financial instruments that are designed to
hedge or offset a decrease in market value of Common Shares granted
as compensation or held, directly or indirectly, by the NEO or
director, no such persons currently hold or plan to purchase such
financial instruments.
Report
on Executive Compensation
This
report on executive compensation has been approved by the CGCC. The
Board assumes responsibility for reviewing and monitoring the
long-range compensation strategy for the Company’s senior
management, although the CGCC guides it in this role. As part of
its mandate, the Board determines the type and amount of
compensation for the Company’s NEOs. In addition, the Board
reviews the methodology utilized by the Company for setting
salaries of employees throughout the organization.
The
CGCC receives competitive market information on compensation levels
for executives. The Company’s compensation policies and
programs are designed to be competitive with similar mining
exploration and development companies and to recognize and reward
executive performance consistent with the success of the
Company’s business.
20
Philosophy and Objectives
The
Company’s senior management compensation program is designed
to ensure that the level and form of compensation achieves certain
objectives, including:
(a)
attracting and
retaining talented, qualified and effective
executives;
(b)
motivating the
short and long-term performance of these executives;
and
(c)
aligning their
interests with those of the Company’s
shareholders.
In
compensating its senior management, the Company employs a
combination of base salary, bonus compensation and equity
participation through its share-based compensation
plan.
Base Salary/Compensation
In the
Board’s view, paying compensation that is competitive in the
markets in which the Company operates is a first step to attracting
and retaining talented, qualified and effective executives. The
NEOs are remunerated in order to ensure that the compensation
package offered by the Company is in line with that offered by
other companies in our industry, and as an immediate means of
rewarding the NEO for efforts expended on behalf of the
Company.
The
compensation to be paid to a particular NEO is determined by
gathering competitive information on comparable companies within
the industry from a variety of sources, including surveys conducted
by independent consultants and national and international list
publications. The Company does not engage in formal benchmarking.
Payment of cash compensation fits within the objective of the
compensation program since it rewards each NEO for performance of
his duties and responsibilities.
Compensation for
the CEO is approved by the Board. Base compensation and bonus
levels are determined taking into account independent market survey
data.
Bonus Compensation
There
are currently no specific performance goals set by the Company for
executive bonus compensation. Bonus compensation is awarded at the
discretion of the Board and the Board considers performance of the
individual and the Company, competitive factors and other matters
in awarding bonuses. The Company’s objective is to achieve
certain strategic objectives and milestones. The Board will
consider executive cash and share bonus compensation dependent upon
the Company meeting the Company’s strategic objectives and
milestones and sufficient cash resources being
available.
Performance Graph
The
Board of Directors recognizes that the mining industry is volatile
in share prices. The Company’s focus is on long-term
shareholder value growth. The Company’s common shares were
valued at $0.39 on the TSX at December 31, 2019. The following
chart compares the total cumulative shareholder return for $100
invested in the Company’s common shares since December 31,
2014 to December 31, 2019, with the cumulative total return of the
S&P/TSX Composite Index for the five most recently completed
fiscal years of the Company.
Note:
The Company does not, nor is it
contemplating in the near term, paying a dividend on its Common
Shares.
21
Compensation levels
for NEOs over the period indicated reflect their accomplishment of
performance goals that are targeted at building a foundation for
the long-term success of the Company. In particular, NEOs were
instrumental in identifying, negotiating and closing key project
acquisitions for the Company. Given the early stage of the
Company’s development, these achievements may not yet be
recognized in the market price of the Company’s Common
Shares, particularly in light of difficult market conditions for
mining stocks in recent years. A significant proportion of
compensation for the Company’s NEOs continues to be “at
risk” compensation in the form of Common Shares and Option
grants, with the value of such Common Shares and Options being
directly affected by changes in share price. However, base salaries
are not determined on benchmarks, performance goals or specific
formula but are set to be competitive with industry levels.
Discretionary cash bonuses may also be paid based upon a review of
various operational and other objectives of the Company, the
results of which may not have necessarily been reflected in the
Company’s share price in a particular year. In addition, the
trading price of the Common Shares may be affected by various
factors not related to the results of the Company such as changes
in commodity prices and general economic conditions. Accordingly,
it is difficult to specifically correlate total compensation to the
trends shown in totality in the above performance graph. Over the
period December 31, 2014 through December 31, 2019, total
compensation received by the NEOs fluctuated significantly (Refer
to Incentive Plan Awards
– Value Vested
or Earned During the
Year for
NEOs).
Equity
Participation – Share-Based and Option-Based
Awards
The
Company has a 15% fixed share-based compensation plan in place, as
approved by the Company’s shareholders on June 2, 2016, as
amended on June 13, 2017 and September 12, 2019 (the
“2016 Plan”),
under which the Company may grant Options, Bonus Shares (as defined
herein) or Stock Appreciation Rights (each, an “Award” as defined herein) to
acquire the equivalent of a maximum of 14,372,419 of the
Company’s Common Shares. As at the date of this Information
Circular, there are the equivalent of 12,282,500 Options outstanding under the
2016 Plan, which constitutes 8.88% of the total issued and
outstanding Common Shares.
The
2016 Plan was established to provide incentive to qualified parties
being directors, officers, employees and consultants, to increase
their proprietary interest in the Company through equity
participation and foster their continued association with the
Company. The Company believes that encouraging its directors,
officers and employees to become shareholders is the best way of
aligning their interests with those of its shareholders. Awards are
granted to staff taking into account a number of factors, including
the amount and term of Options or Awards previously granted, base
salary and bonuses and competitive compensation factors. Award
Options vest according to terms established by the 2016 Plan. At
least annually, the CGCC reviews grants of Awards to directors,
officers, employees and consultants.
The
Company’s long term incentives are designed to foster and
promote the long-term financial success of the Company by
strengthening the ability of the Company to attract and retain
directors, officers and qualified employees, motivate performance
through incentive compensation, promote greater alignment of
interests between employees and shareholders in creating long-term
shareholder value, and enable employees to participate in the
long-term growth and financial success of the Company. The
Black-Scholes method is used to value Options. Awards provide
employees with the opportunity to participate in the growth of the
Company’s share price as well as benefit from the favourable
tax treatment applicable to this form of compensation.
The
CGCC approves Awards to facilitate consideration of targeted direct
compensation to officers. Award Options are generally granted to
directors and officers annually as part of the annual compensation
review. Award Options are granted at other times of the year to
individuals commencing employment with the Company. The exercise
price (the “Exercise
Price”) for Award Options is set in accordance with
TSX policies and is based on the five-day volume weighted average
trading price prior to the date of grant.
The
CGCC may make additional amendments to the 2016 Plan subject to any
necessary shareholder and regulatory approvals. Amendments to the
2016 Plan, which would require such approvals include any amendment
to the 2016 Plan, which increases the number of Common Shares
issuable pursuant to Awards under the 2016 Plan.
The
following is a summary of certain provisions of the 2016 Plan and
is qualified in its entirety by the full text of the 2016 Plan,
subject to any revisions or amendments (including the proposed
amendments to the 2016 Plan) deemed necessary by the CGCC and
Board.
Purpose
The
purpose of the 2016 Plan is to promote the interests and long-term
success of the Company by: (i) providing certain employees,
directors, officers and consultants with greater incentive to
further develop and promote the Company’s business and
financial success; (ii) furthering the alignment of interests of
persons to whom Awards (as defined herein) may be granted with
those of the shareholders generally through a proprietary ownership
interest in the Company; and (iii) assisting the Company in
attracting, retaining and motivating its employees, directors,
officers and consultants.
22
Eligible Persons
Awards
may be granted to an employee, director, officer or consultant of
the Company or any of its subsidiaries (an “Eligible Person”). A participant
(“Participant”) is an Eligible Person to whom an Award
has been granted. An “Award” means any Option, Bonus
Share or Stock Appreciation Right (each as defined herein) granted
under the 2016 Plan.
Number of Common Shares Available for Awards
Subject
to the adjustment provisions provided for in the 2016 Plan and the
applicable rules and regulations of all regulatory authorities to
which the Company is subject (including the Toronto Stock Exchange
(the “Stock Exchange”), defined in the 2016 Plan to
mean: “such stock exchange or other organized market on which
the Common Shares are principally listed or posted for trading from
time to time, and which, for greater certainty, is the TSX”
as at the date of this Information Circular), the aggregate number
of Common Shares issuable pursuant to Awards granted under the 2016
Plan plus the aggregate number of Common Shares issuable pursuant
to outstanding Options granted under the 2016 Plan (as such term is
defined in the 2016 Plan), must not exceed the equivalent of
14,372,419. As of the date of this Information Circular there are a
total of 12,282,500 Common Shares issued and outstanding under the
2016 Plan, representing 8.88% of the total issued and outstanding
Common Shares.
If an
outstanding Award for any reason expires or is terminated or
cancelled without having been exercised or settled in full, or if
Common Shares acquired pursuant to an Award are forfeited, the
Common Shares will again be available for issuance under the 2016
Plan. Common Shares will not be deemed to have been issued pursuant
to the 2016 Plan with respect to any portion of an Award that is
settled in cash.
Number of Common Shares under Award Grant
Subject
to complying with all requirements of the Stock Exchange and the
provisions of the 2016 Plan, the number of Common Shares that may
be purchased under any Award will be determined and fixed by the
CGCC at the date of grant.
Maximum Award Grant
The
following restrictions will apply to grants of Awards made to
Non-Employee Directors (as defined in the Amended and Restated
Plan):
(i)
the annual grant of
Awards to any one Non-Employee Director shall not exceed $150,000
in value (based on a Black-Scholes calculation or such other
similar and acceptable methodology, applied consistently and
appropriately as determined by the Board), of which no more than
$100,000 may comprise Options; and
(ii)
the maximum number
of Common Shares that may be made issuable pursuant to Awards made
to all Non-Employee Directors within any one-year period shall not
exceed 1% of the number of Common Shares that are outstanding as at
a specified time, on a non-diluted basis (as of the commencement of
such one-year period).
Exercise Price of Options
The
Exercise Price per Common Share under each Option will be the
volume weighted average trading price of the Common Shares as
reported on the Stock Exchange for the five (5) trading days
immediately preceding the day on which the Option is granted, or
such greater amount as the CGCC may determine; provided, however,
that the Exercise Price of an Option shall not be less than the
Current Market Price (the “Current Market Price” as such term
is defined in the 2016 Plan) calculated on the Award
date.
Vesting and Restrictions
Options
vest according to the terms of the Option Agreement (as such term
is defined in the 2016 Plan) under which they are
granted.
Except
as determined from time to time by the CGCC and Board, all Options
will cease to vest as at the date upon which the Participant ceases
to be an Eligible Person (which, in the case of an employee or
consultant of the Company or its subsidiaries, will be the date on
which active employment or engagement, as applicable, with the
Company or its subsidiaries terminates, specifically without regard
to any period of reasonable notice or any salary
continuance).
Notwithstanding the
above, in the event of the death of a Participant prior to the
Participant ceasing to be an Eligible Person, all Options of such
Participant will become immediately vested.
23
Term of Options and Causes of Cessation
Subject
to s. 8.3 of the 2016 Plan that deals with extensions for blackout
periods and the requirements of the Stock Exchange, each Option
with expire (the “Expiry
Date”) on the earlier of:
(a)
the date determined
by the CGCC and specified in the Option Agreement pursuant to which
such Option is granted, provided that such date may not be later
than the earlier of: (i) the date which is the tenth anniversary of
the date on which such Option is granted, and (ii) the latest date
permitted under the applicable rules and regulations of all
regulatory authorities to which the Company is subject, including
the Stock Exchange;
(b)
in the event the
Participant ceases to be an Eligible Person for any reason, other
than the death of the Participant or the termination of the
Participant for cause, such period of time after the date on which
the Participant ceases to be an Eligible Person as may be specified
by the CGCC, which date must not exceed 90 days following the
termination of the Participant’s employment with the Company,
or in the case of Options granted to a director, officer or
consultant, 90 days following the Participant ceasing to be a
director, officer or a consultant, unless the CGCC otherwise
determines, and which period will be specified in the Option
Agreement with the Participant with respect to such
Option;
(c)
in the event of the
termination of the Participant as an officer, employee or
consultant of the Company or a subsidiary for cause, the date of
such termination;
(d)
in the event that a
director is subject to any order, penalty or sanction by an
applicable securities regulatory authority which relates to such
director’s activities in relation to the Company, and the
CGCC determines that such director’s Options should be
cancelled, the date of such determination;
(e)
in the event of the
death of a Participant prior to: (i) the Participant ceasing to be
an Eligible Person; or (ii) the date which is the number of days
specified by the CGCC pursuant to subparagraph (b) above from the
date on which the Participant ceased to be an Eligible Person; the
date which is one year after the date of death of such Participant
or such earlier date as may be specified by the CGCC and which
period will be specified in the Option Agreement with the
Participant with respect to such Option; and
(f)
notwithstanding the
foregoing provisions of subparagraphs (b), (c), (d) and (e) above,
the CGCC may, subject to the 2016 Plan, and to regulatory approval,
at any time prior to expiry of an Option, extend the period of time
within which an Option may be exercised by a Participant who has
ceased to be an Eligible Person, but such an extension must not be
granted beyond the original Expiry Date of the Option as provided
for in subparagraph (a) above.
Blackout Extension
Where
the Expiry Date for an Option occurs during a blackout period, the
Expiry Date for such Option shall be extended to the date which is
ten business days following the end of such blackout period,
provided that, the Expiry Date for an Option will not be extended
if the Eligible Person or the Company is subject to a cease trade
order (or similar order under securities laws) in respect of the
Company’s securities.
Share
Bonus Plan
The
CGCC will have the right to issue, or reserve for issuance, for no
cash consideration, to any Eligible Person, as compensation or a
discretionary bonus, any number of Common Shares (the
“Bonus Shares”)
as the CGCC may determine. The price at which such Bonus Shares are
issued will be equal to the Current Market Price.
“Current Market Price” means: (a)
in respect of Options, the volume weighted average trading price of
the Common Shares as reported on the Stock Exchange for the five
(5) Trading Days immediately preceding the day on which the Option
is granted, or such greater amount as the CGCC may determine;
provided, however, that the Exercise Price of an Option shall not
be less than the minimum Exercise Price required by the applicable
rules of the Stock Exchange; (b) in respect of Bonus Shares, means
the most recent closing price of the Common Shares on the Stock
Exchange immediately prior to the grant of the Bonus Shares; and
(c) in respect of Stock Appreciation Rights (as defined herein)
which are exercised: (i) the closing price of the Common Shares on
the Stock Exchange on the date the notice of exercise in respect
thereof is received by the Company, if such day is a Trading Day
(the “Trading
Day”) and the notice of exercise is received by the
Company after regular trading hours; or (ii) the closing price of
the Common Shares on the Stock Exchange on the Trading Day
immediately prior to the date the notice of exercise in respect
thereof is received by the Company, if the notice of exercise is
received by the Company during regular trading hours, or on a
non-Trading Day.
24
Stock
Appreciation Rights Plan
The
CGCC has the right, subject to the paragraphs below, to grant to
any Eligible Person stock appreciation rights (“Stock Appreciation Rights”), with
the specific terms and conditions thereof to be as provided in the
2016 Plan and in the award agreement (the “Award Agreement”) entered into in
respect of such grant.
A Stock
Appreciation Right will entitle the Participant to receive from the
Company the number of Common Shares, disregarding fractions, as
determined on the following basis:
|
Number of Common Shares
|
=
|
Number of Stock Appreciation Rights x (Current
Market Price – SAR Exercise Price) / Current Market
Price, less any amount withheld on account of income
taxes
|
The
Exercise Price per Common Share under each Stock Appreciation Right
(“SAR Exercise
Price”) will be the fair market value of the Common
Shares, expressed in terms of money, as determined by the CGCC, in
its sole discretion, provided that such price may not be less than
the SAR Fair Market Value (as defined herein) or such other minimum
price as may be permitted under the applicable rules and
regulations of all regulatory authorities to which the Company is
subject, including the Stock Exchange. Subject to the foregoing,
the fair market value (the “SAR Fair Market Value”) of any
Common Share for the purpose of determining the SAR Exercise Price
for any Stock Appreciation Right will be, unless otherwise
determined by the CGCC in their discretion, the trading price at
which the Common Shares traded on the Stock Exchange as of close of
market on the day immediately prior to the date such Stock
Appreciation Right is granted.
The
obligation of the Company to issue and deliver any Stock
Appreciation Rights pursuant to an Award or to deliver any Common
Shares pursuant to the exercise thereof will be subject to receipt
of all necessary approvals of any applicable securities regulatory
authority and the Stock Exchange. The Company may grant Stock
Appreciation Rights with the grant of Options.
Non-Transferability of Awards
Each
Award Agreement will provide that the Award granted thereunder is
not transferable or assignable to anyone other than by will or by
the laws governing the devolution of property, to the
Participant’s executor, administrator or other personal
representative in the event of death of the
Participant.
Procedure for Suspending, Amending or Terminating the 2016
Plan
The
CGCC has the right at any time to suspend, amend or terminate the
2016 Plan or any Award Agreement, including, but not limited to,
the right without approval of the shareholders, to: (a) make
amendments of a clerical nature, including, but not limited to, the
correction of grammatical or typographical errors or clarification
of terms; (b) make amendments to reflect any requirements of any
regulatory authorities to which the Company is subject, including
the Stock Exchange; (c) make amendments to vesting provisions of
Awards; (d) extend the term of any Award held by non-insiders of
the Company, as long as the extended term remains within the
original expiry of the Award; and (e) prior to the expiry of an
Option, extend the period of time within which an Option may be
exercised by a Participant who has ceased to be an Eligible Person,
but such an extension shall not be granted beyond the original
Expiry Date of the Option.
Other Material Information
Subject
to the provisions of the 2016 Plan, appropriate adjustments to the
2016 Plan and to Awards will be made, and will be conclusively
determined, by the CGCC, to give effect to adjustments in the
number of Common Shares resulting from subdivisions,
consolidations, substitutions, or reclassifications of the Common
Shares, the payment of share dividends by the Company (other than
dividends in the ordinary course) or other changes in the capital
of the Company or from a Merger and Acquisition Transaction
(“Merger and Acquisition
Transaction” as defined in the 2016 Plan). In the
event of a Merger and Acquisition Transaction, or a proposed Merger
and Acquisition Transaction, the CGCC will: (a) in an appropriate
and equitable manner, determine any adjustment to the number and
type of Common Shares (or other securities or other property) that
thereafter will be made the subject of Awards; (b) in an
appropriate and equitable manner, determine the number and type of
Common Shares (or other securities or other property) subject to
outstanding Awards; (c) in an appropriate and equitable manner,
determine the Exercise Price with respect to any Award, provided,
however, that the number of securities covered by any Award or to
which such Award relates will always be a whole number; (d) in an
appropriate and equitable manner, determine the manner in which all
unexercised rights granted under the 2016 Plan will be treated
including, without limitation, requiring the acceleration of the
time for the exercise of such rights by the Participants, the time
for the fulfilment of any conditions or restrictions on such
exercise, and the time for the expiry of such rights; (e) offer any
Participant the opportunity to obtain a new or replacement Award
over any securities into which the Common Shares are changed or are
convertible or exchangeable, on a basis proportionate to the number
of Common Shares under the Award and the Exercise Price (and
otherwise substantially upon the terms of the Award being replaced,
or upon terms no less favourable to the
25
Participant); and
(f) commute for or into any other security or any other property or
cash, any Award that is still capable of being exercised, upon
giving to the Participant to whom such Award has been granted at
least 30 days’ written notice of its intention to commute
such Award, and during such period of notice, the Award, to the
extent it has not been exercised, may be exercised by the
Participant without regard to any vesting conditions attached
thereto, and on the expiry of such period of notice, the
unexercised portion of the Award will lapse and be
cancelled.
The
following table sets out the annual burn rate of the 2016 Plan for
each of the Corporation’s three most recently completed
fiscal years. The annual burn rate represents the total number of
securities granted under the 2016 Plan during the applicable fiscal
year, divided by the weighted average number of securities
outstanding for the applicable fiscal year.
|
Fiscal Year
|
Annual Burn Rate (%)
|
|
2019
|
3.9%
|
|
2018
|
5.2%
|
|
2017
|
7.3%
|
Summary Compensation Table
The
following table is a summary of compensation paid in the
Company’s previous three financial years to the
Company’s NEOs. All compensation noted below are in Canadian
Dollars unless otherwise noted.
|
|
|
|
|
|
Non-equity incentive
plan compensation
($)
|
|
|
|
|
|
Name and
Position
|
Year
|
Salary
($)
|
Share
based
awards
($)
|
Option-based awards (1)
($)
|
Annual
incentive
plans
|
Long-term
incentive
plans
|
Pension
value
($)
|
All other
compensation
($)
|
Total
compensation
($)
|
|
John Lee (1) (2)
|
2019
|
Nil
|
320,000
|
21,908
(6)
|
Nil
|
Nil
|
Nil
|
377,370
|
719,278
|
|
Executive
Chairman
|
2018
|
Nil
|
Nil
|
80,064
|
Nil
|
Nil
|
Nil
|
406,468
|
486,532
|
|
&
Director
|
2017
|
Nil
|
316,719
(11)
|
451,140
|
Nil
|
Nil
|
Nil
|
283,781
|
1,051,640
|
|
Michael Doolin (1) (2)
(4)
|
2019
|
298,469
|
265,000
|
74,387
(7)
|
Nil
|
Nil
|
Nil
|
10,672
|
648,528
|
|
CEO
& COO
|
2018
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
|
|
2017
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
|
Irina Plavutska (2)
|
2019
|
143,152
|
40,000
|
7,303
(8)
|
Nil
|
Nil
|
Nil
|
6,370
|
196,825
|
|
CFO
|
2018
|
118,500
|
Nil
|
17,617
|
Nil
|
Nil
|
Nil
|
5,424
|
141,541
|
|
|
2017
|
74,000
|
29,098
(12)
|
86,861
|
Nil
|
Nil
|
Nil
|
1,386
|
191,298
|
|
Ronald Espell (2)
|
2019
|
331,674
|
60,000
|
7,303
(9)
|
Nil
|
Nil
|
Nil
|
29,548
|
428.525
|
|
VP,
Environment and
|
2018
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
|
Sustainability
|
2017
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Ni1
|
|
Michael Drozd (5)
|
2019
|
322,942
|
Nil
|
3,188
(10)
|
Nil
|
Nil
|
Nil
|
41,038
|
367,168
|
|
Former
VP, Operations
|
2018
|
218,687
|
Nil
|
33,347
|
Nil
|
Nil
|
Nil
|
24,735
|
276,860
|
|
|
2017
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Notes:
(1)
John Lee does not
receive compensation for acting as a Director of the
Company.
(2)
After the year end,
the Company issued bonus common shares with a fair value of $0.40
per Share to executive officers under the Share- Based Compensation
Plan.
(3)
The stock options
issued, included and described under these Option-based awards were
granted to executive officers under the Share- Based Compensation
Plan. Stock options granted on July 29, 2019 to John Lee, Irina
Plavutska and Ronald Espell were not valued at December 31, 2019
due to the following: further to the voluntary forfeiture of share
options with expire dates on April 7, 202, June 22, 2020, and
November 14, 2023, at exercise prices ranging from $0.50 to $0.65,
the Company granted 794, 000 new stock options with an expire date
of July 29, 2024 at an exercise price of $0.20 per share. As at
December 31, 2019, the re-issuing of these options had been
approved by the TSX, but they had not been approved by the
shareholders; consequently, these options were no
valued.
(4)
Mr. Doolin was
appointed Chief Executive Officer and Chief Operating Officer on
April 1, 2019. The Company issued 500,000
sign-on Bonus Shares with a fair value of $0.23 per share to Mr.
Doolin.
(5)
Michael Drozd was
appointed Vice-President, Operations on August 16, 2018, and ceased
to be Vice–President, Operations effective November 7,
2019.
(6)
300,000 stock
options exercisable at $0.44 and expiring on November 1,
2024.
(7)
The equivalent of
500,000 and 300,000 stock options, exercisable at the equivalent of
$0.21 and $0.44, respectively, and expiring on April 1, 2024 and
November 1, 2024, respectively.
(8)
100,000 stock
options exercisable at $0.44 and expiring on November 1,
2024.
(9)
100,000 stock
options exercisable at $0.44 and expiring on November 1,
2024.
(10)
100,000 stock
options exercisable at $0.20 and expiring on July 29,
2024.
26
During
the years ended December 31, 2019, 2018 and 2017, the share option
values were calculated using the following weighted average
assumptions:
|
|
Year
ended December 31,
|
||
|
|
2019
|
2018
|
2017
|
|
Risk-free interest
rate
|
1.54%
|
1.77%
|
1.25%
|
|
Expected life of
options in years
|
4.45
|
4.40
|
4.4
|
|
Expected
volatility
|
132.75%
|
135.71%
|
133.55%
|
|
Expected dividend
yield
|
Nil
|
Nil
|
Nil
|
|
Expected forfeiture
rate
|
12%
|
12%
|
12%
|
|
Weighted average
fair value of options granted during the period
|
$0.31
|
$0.32
|
$0.32
|
The
expected volatility used in the Black-Scholes option pricing model
is based on the historical volatility of the Company’s
shares. The expected forfeiture rate is based on the historical
forfeitures of options issued.
On July
29, 2019, further to the voluntary forfeiture of share options held
by certain directors, officers, and employees with expiry dates on
April 7, 2020, June 22, 2020, and November 14, 2023, at exercise
prices ranging from $0.50 to $0.65, the Company regranted 1,275,000
new stock options to such individuals with an expiry date of July
29, 2024 at an exercise price of $0.20 per Share subject to a
two-year vesting schedule whereby 12.5% per quarter following the
date of grant. As at December 31, 2019, these modified re-granted
options had not been approved by the shareholders; consequently,
these options were not valued. On March 16, 2020 the Company held a
Special Meeting of Shareholders whereby the re-granted options were
approved by the Shareholders.
Incentive Plan Awards
Outstanding Share-Based Awards and Option-Based Awards
The
Company currently has a Share-Based Awards Plan (the
“Plan”).
Although it also contains provisions for the awarding of Stock
Appreciation Rights, as at December 31, 2019. The following table
sets out the Option-Based Awards and Share-Based Awards outstanding
as at December 31, 2019, for each NEO.
Option-Based Awards
and Share-Based Awards outstanding as at December 31, 2019, for
each NEO.
|
|
OPTIONS-BASED AWARDS
|
SHARE-BASED AWARDS
|
|||||
|
Name
|
Number of
securities
underlying
unexercised
options
(#)
|
Option
exercise
price
(CDN$)
|
Option
expiration
date
|
Value of
Unexercised
in-the-money
options
(CDN$) (1)
|
Number of
shares or units
of shares
that have
not vested
(#)
|
Market
or payout
value of share-based awards
that have not vested
(CDN$) (2)
|
Market
or payout
value of vested share-based awards not paid out or
distributed
(CDN$) (2)
|
|
John Lee
Executive
Chairman
&
Director
|
500,000
300,000
550,000
680,000
400,000
350,000
700,000
300,000
|
0.20
0.49
0.33
0.35
0.28
0.33
0.20
0.44
|
2-Jun-21
12-Jan-22
12-Jun-22
1-Sep-22
6-Apr-23
17-Oct-23
29-Jul-24
1-Nov-24
|
95,000
Nil
33,000
27,200
44,000
21,000
133,000
Nil
|
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
|
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
|
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
|
|
Michael Doolin
CEO
& COO
|
500,000
300,000
|
0.21
0.44
|
1-Apr-24
1-Nov-24
|
90,000
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
|
Irina Plavutska
CFO
|
70,000
100,000
37,500
50,000
100,000
100,000
|
0.49
0.35
0.28
0.33
0.20
0.44
|
12-Jan-22
1-Sep-22
6-Apr-23
17-Oct-23
29-Jul-24
1-Nov-24
|
Nil
4,000
4,125
3,000
19,000
Nil
|
Nil
Nil
Nil
Nil
Nil
Nil
|
Nil
Nil
Nil
Nil
Nil
Nil
|
Nil
Nil
Nil
Nil
Nil
Nil
|
|
Ronald Espell
VP,
Environment and Sustainability
|
200,000
100,000
|
0.44
0.20
|
1-Nov-24
29-Jul-24
|
Nil
38,000
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
|
Michael Drozd (3)
Former
VP, Operations
|
150,000
25,000
25,000
|
0.31
0.33
0.20
|
1-May-23
17-Oct-23
29-Jul-24
|
12,000
1,500
4,750
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Notes:
1.
The value at
December 31, 2019 is calculated by determining the difference
between the closing price on the TSX of the Common Shares at
December 31, 2019 ($0.39 per Common Share/Market Value) and the
Exercise Price of the Options.
2.
Michael Drozd was
appointed Vice-President, Operations on August 16, 2018, and ceased
to be Vice–President, Operations effective November 7,
2019.
27
Incentive Plan Awards -Value Vested or Earned During the Year ended
December 31, 2019
The
following table sets out the value vested or earned as at the year
ended December 31, 2019, for incentive plan awards outstanding for
each NEO:
|
Name
|
Option-based awards
Value vested during the year ($)(1)(4)
|
Share-based awards – Value vested during the year
($)(2)(3)
|
Non-equity incentive plan compensation – Value earned during
the year ($)
|
|
John Lee
Executive
Chairman & Director
|
198,700
|
Nil
|
Nil
|
|
Michael Doolin
CEO
& COO
|
33,750
|
115,000
|
Nil
|
|
Irina Plavutska
CFO
|
8,594
|
Nil
|
Nil
|
|
Ronald Espell
VP,
Environment and Sustainability
|
Nil
|
Nil
|
Nil
|
|
Michael Drozd
Former VP, Operations
|
9,750
|
Nil
|
Nil
|
Notes:
(1)
The value of the
vested in-the-money options at December 31, 2019 is calculated by
determining the difference between the closing price on the TSX of
the Common Shares at December 31, 2019 ($0.39 per Common Share) and
the Exercise Price of the Options.
(2)
After the year end,
the Company issued bonus common shares with a fair value of $0.40
per Share to executive officers under the Share- Based Compensation
Plan, therefore at December 31, 2019 they had no
value.
(3)
The value of the
sign-in Bonus Shares at December 31, 2019 is calculated by
multiplying the number of Bonus Shares awarded, by their fair
market value as at the date they were granted on May 1, 2019 (being
$0.23).
(4)
The modified
options were regranted on July 29, 2019 had not been approved by
the shareholders of the Company, therefore these options were had
not vested as at December 31, 2019.
Pension Plan Benefits
The
Company does not currently offer pension plan, defined contribution
plan, deferred compensation plan or similar benefits to its
NEOs.
Termination
and Change of Control Benefits
Other
than as set out below, there are no contracts, agreements, plans or
arrangements that provide for payments to a NEO following or in
connection with any termination (whether voluntary, involuntary or
constructive), resignation, retirement, change of control of the
Company or change in responsibilities of the NEO as of the date of
this Information Circular.
John Lee, Executive Chairman
On
January 1, 2010, the Company entered into a consulting agreement
with a holding company solely owned by Mr. Lee, at an annual fee of
$16,000 (as amended). On November 6, 2012 this agreement was
terminated and on November 7, 2012 a new consulting agreement was
entered into (which we refer to as the “Mau Agreement”). On April 7, 2015,
the Mau Agreement was terminated, and the Company entered into an
agreement with Linx that subsequently, on October 9, 2018, was
replaced with another agreement between the Company and Linx
Partners Ltd. (“Linx”) (which we refer to as the
“New Linx
Agreement”) for an indefinite term, a corporate entity
with an address for service at 26th Floor, Beautiful
Group Tower, 77 Connaught Road, Central, Hong Kong. The New Linx
Agreement provides for: (1) consulting fees, with up to $36,600 per
year annual increases during fiscal years 2020 to 2022, at the
discretion of the Board of Directors; (2) bonus, based on
pre-determined criteria; (3) up to 3,000,000 common shares upon
meeting certain milestone targets described in the New Linx
Agreement; (4) stock options; (5) health and dental benefits; and
(6) vacation pay. The New Linx Agreement may be terminated by the
Company for any reason other than for cause upon 90 days’
written notice with the Company having the option of paying the
consulting fees due under the New Linx Agreement for that 90-day
period in lieu thereof. In such case, provided the Company
successfully raises through one or more equity financing(s)
undertaken after the commencement of the New Linx Agreement: (a)
total gross aggregate proceeds of less than $25,000,000, the
Company will pay a termination payment of $1,000,000; or (b) total
gross aggregate proceeds of more than $25,000,000, the Company will
pay a termination payment of $1,600,000. The New Linx Agreement
with the Company also provides that in the event the New Linx
Agreement is terminated as a result of, or within six months
following, a significant change in the affairs of the Company such
as a take-over bid, change of control of the Board, the sale,
exchange or other disposition of a majority of the outstanding
common shares, the merger or amalgamation or other corporate
restructuring of the Company in a
transaction or series of transactions in which the Company’s
shareholders receive less than 51% of outstanding common shares of
the new or continuing company (we refer to such significant change
as a “Change of Control”), Mr. Lee shall receive from
the Company within 30 days, a payment equivalent to two
years’ worth of his regular annual consulting fees (currently
$336,000). In the event Mr. Lee’s consulting agreement is
terminated as a result of a Change in Control, all of his rights to
any stock options he holds shall be governed by the provisions of
his stock option agreements with the Company.
28
Michael Doolin, Chief Executive Office and Chief Operating
Officer
Mr.
Doolin entered into an employment agreement with the Company on
March 5, 2019 and a Change of Control agreement dated March 5,
2019. The employment agreement had an effective date of April 1,
2019 and is for an indefinite term and provides for: (1) salary;
(2) bonus, at the discretion of the Company; (3) stock options; (4)
employee benefits; and (5) vacation pay. In the event Mr.
Doolin’s employment agreement is terminated as a result of a
Change in Control, all of his rights to any stock options he holds
shall be governed by the provisions of his stock option agreements
with the Company. Mr. Doolin’s Change of Control agreement
provides that in the event his employment is terminated as a result
of, or within six months following, a Change in Control, Mr. Doolin
shall receive from the Company within 30 days, a payment equal to
two years of his regular annual salary.
Irina Plavutska, Chief Financial Officer
Ms.
Plavutska entered into her latest employment agreement with the
Company effective February 1, 2018, as amended January 31, 2019.
The employment agreement is for an indefinite term and provides
for: (1) salary; (2) bonus, at the discretion of the Company; (3)
stock options; (4) employee benefits; and (5) vacation pay. Her
employment agreement with the Company also provides that in the
event her employment is terminated as a result of, or within six
months following, a Change in Control, Ms. Plavutska shall receive
from the Company within 30 days, a payment equal to two years of
her regular annual salary (currently $132,000). In the event Ms.
Plavutska’s employment agreement is terminated as a result of
a Change in Control, all of her rights to any stock options she
holds shall be governed by the provisions of her stock option
agreements with the Company.
The
criteria used to determine the amounts payable to the NEOs is based
on industry standards and the Company’s financial
circumstances. The agreements with the NEOs and subsequent changes
were accepted by the Board based on recommendations of the
CGCC.
STATEMENT
OF DIRECTOR COMPENSATION
Compensation of Directors
independent
directors are paid varying amounts depending on the degree to which
they are active on behalf of the Company. See the table below for
amounts paid or accrued in fiscal year 2019.
The
following table sets forth all compensation the Company paid or
granted to the Company’s directors, other than NEOs, for the
most recently completed financial year ended December 31,
2019.
|
Name
|
Fees Earned ($)
|
Share-Based
Awards
($)(4)
(10)
|
Option-Based
Awards
($)(5)
(10)
|
Non-equity Incentive
Plan Compensation
($)(10)
|
Pension
Value
($)(10)
|
All other
Compensation
($)(10)
|
Total ($)(10)
|
|
Greg
Hall
|
21,400
|
6,000
|
5,842(6)
|
Nil
|
Nil
|
Nil
|
33,242
|
|
Masateru Igata
|
19,600
|
6,000
|
5,842(7)
|
Nil
|
Nil
|
Nil
|
31,442
|
|
Marc
Leduc(1)
|
4,962
|
6,000
|
13,401(8)
|
Nil
|
Nil
|
20,443
|
38,806
|
|
Ronald
Clayton(2)
|
2,600
|
6,000
|
14,606(9)
|
Nil
|
Nil
|
Nil
|
23,206
|
|
Louis
Dionne(3)
|
3,600
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
3,600
|
Notes:
(1)
Marc Leduc was
appointed as a Director of the Company on July 22,
2019.
(2)
Ronald Clayton was
appointed as a Director of the Company on November 4,
2019.
(3)
Louis Dionne ceased
to be a Director on February 28, 2019.
(4)
After the year end,
the Company issued Bonus Shares with a fair value of $0.40 per
Share to directors under the Share-Based Compensation
Plan.
(5)
The stock options
issued, included and described under these Option-based awards were
granted to executive officers under the Share-Based Compensation
Plan. Stock options granted on July 29, 2019 to Messrs. Hall and
Igata were not valued at December 31, 2019, due to the following:
further to the voluntary forfeiture of share options with expire
dates on April 7, 2020, June 22, 2020, and November 14, 2023, at
exercise prices ranging from $0.50 to $0.65, the Company granted
794, 000 new stock options with an expire date of July 29, 2024, at
an exercise price of $0.20 per share. As at December 31, 2019, the
re-issuing of these options had been approved by the TSX, but they
had not been approved by the shareholders; consequently, these
options were not valued.
(6)
80,000 stock
options exercisable at $0.44 and expiring on November 1,
2024.
(7)
80,000 stock
options exercisable at $0.20 and expiring on November 1,
2024.
(8)
The equivalent of
150,000 and 80,000 stock options, exercisable at the equivalent of
$0.20 and $0.44, respectively, and expiring on July 29, 2024 and
November 1, 2024, respectively.
(9)
200,000 stock
options exercisable at $0.44 and expiring on November 1,
2024.
(10)
Fair value at the
time of grant calculated using the Black-Scholes option pricing
model using the assumption described in the table “Share
Option Values and Assumptions” above.
29
Incentive Plan Awards -Value Vested or Earned During the Year ended
December 31, 2019
The
following table sets out the value vested or earned as at the year
ended December 31, 2019, for incentive plan awards outstanding for
non-NEO directors:
|
Name
|
Option-based awards Value vested during the year ($)(1), (5)
|
Share-based awards – Value vested during the year
($)
|
Non-equity incentive plan compensation – Value earned during
the year ($)
|
|
Greg
Hall
|
32,600
|
Nil
|
Nil
|
|
Masa
Igata
|
32,600
|
Nil
|
Nil
|
|
Marc
Leduc(2)
|
Nil
|
Nil
|
Nil
|
|
Ronald
Clayton(3)
|
Nil
|
Nil
|
Nil
|
|
Louis
Dionne(4)
|
Nil
|
Nil
|
Nil
|
Notes:
(1)
The value of the
vested in-the-money options at December 31, 2019 is calculated by
determining the difference between the closing price on the TSX of
the Common Shares at December 31, 2019 ($0.39 per Common Share) and
the Exercise Price of the Options.
(2)
Marc Leduc was
appointed as a Director of the Company on July 22,
2019.
(3)
Ronald Clayton was
appointed as a Director of the Company on November 4,
2019.
(4)
Louis Dionne ceased
to be a Director on February 28, 2019.
(5)
The modified
options were regranted on July 29, 2019 had not been approved by
the shareholders of the Company and therefore these options had not
vested as at December 31, 2019.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS
The
following table sets out equity compensation plan information as at
the end of the financial year ended December 31, 2019.
|
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
2)
|
|
Equity
compensation plans approved by securityholders
|
9,577,500
|
$0.31
|
2,988,968
|
|
Equity
compensation plans not approved by securityholders
|
Nil
|
Nil
|
Nil
|
|
Total
|
9,577,500
|
$0.31
|
2,988,968
|
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
As of
May 25, 2020, none of the directors, proposed nominees for election
as directors, executive officers or their respective associates or
affiliates, or other management of the Company are indebted to the
Company or another entity where the indebtedness is the subject of
a guarantee, support agreement, letter of credit or other similar
arrangement or understanding provided by the Company or its
subsidiaries.
OTHER
DIRECTORSHIPS
Certain
directors of the Company are also presently directors of other
issuers that are reporting issuers (or the equivalent) in Canada or
elsewhere. With respect to these interlocking board memberships, it
is the Board’s view that the mining community at the highest
levels is closely connected and that in order for the
Company’s directors to maintain these connections, which are
in the best interests of the Company, directors of the Company
should be permitted to serve on other boards of directors,
including in some cases, the same board of directors. The Current
Board is satisfied that it has a system for dealing with conflicts
of interest if any were to arise. In
addition to their positions, the following current directors also
served as directors of the following reporting issuers or reporting
issuer equivalent(s):
|
Name of Director
|
Reporting Issuer(s) or Equivalent(s)
|
|
Marc
Leduc
|
KORE
Mining Ltd. - Chief Operating Officer
South
Star Mining Corp. - Director
|
|
Ronald
Clayton
|
1911 Gold Corporation (formerly
“Havilah Mining Corporation”) - President,
CEO & Director
Gold Standard Ventures Corp. - Director
|
30
ATTENDANCE OF DIRECTORS AT BOARD AND COMMITTEE
MEETINGS
The
Company has previously disclosed all attendance at Board of
Directors meetings and committee meeting attendance. Please refer
to “Election of Directors” as to Board of Directors
meetings and committee meeting attendance.
MANAGEMENT CONSULTING AGREEMENTS
On January 1, 2010, the Company entered into a
consulting agreement with a holding company solely owned by Mr. Lee, at an annual fee
of $16,000 (as amended). On November 6, 2012 this agreement was
terminated and on November 7, 2012 a new consulting agreement was
entered into (aggregately, referred to as previously disclosed, as
the Mau Agreement). On April 7, 2015 the Mau Agreement was
terminated, and the Company entered into the Old Linx Agreement. On
October 9, 2018 the Old Linx Agreement was replaced with the New
Linx Agreement for an indefinite term, and provides for: (1)
consulting fees, with up to $36,600 per year with annual increases
during fiscal years 2020 to 2022, at the discretion of the Board;
(2) bonus, based on the criteria disclosed above under
Bonus
Compensation; (3) up to
3,000,000 Common Shares upon meeting certain milestone targets described in the
New Linx Agreement; (4) Options; (5) health and dental benefits;
and (6) vacation pay. For further information regarding Mr.
Lee’s consulting agreements with the Company, refer to the
disclosure under Summary Compensation
Table. Linx is a corporate entity with an address for
service at 26th Floor, Beautiful
Group Tower, 77 Connaught Road, Central, Hong Kong.
The New
Linx Agreement is for an indefinite term and may be terminated by
the Company for any reason other than for cause upon 90 days’
written notice. The Company has the option of paying the consulting
fees due under the New Linx Agreement for that 90-day period in
lieu thereof. In such case, provided the Company successfully
raises through one or more equity financing(s) undertaken after the
commencement of the New Linx Agreement: (a) total gross aggregate
proceeds of less than $25,000,000, the Company will pay a
termination payment to him of $1,000,000; or (b) total gross
aggregate proceeds of more than $25,000,000, the Company will pay a
termination payment to him of $1,600,000. Mr. Lee’s
consulting agreement with the Company also provides that in the
event the New Linx Agreement is terminated as a result of, or
within six months following, a significant change in the affairs of
the Company such as a take-over bid, Change of Control of the
Board, the sale, exchange or other disposition of a majority of the
outstanding Common Shares, the merger or amalgamation or other
corporate restructuring of the Company in a transaction or series
of transactions in which the Company’s shareholders receive
less than 51% of outstanding Common Shares of the new or continuing
company (a “Change of Control”), Mr. Lee shall receive
from the Company within 30 days, a payment equivalent to two
years’ worth of his regular annual consulting fees (currently
$336,000). In the event Mr. Lee’s consulting agreement is
terminated as a result of a Change of Control all rights to any
Options he holds shall be governed by the provisions of his stock
option agreements with the Company.
Other
than disclosed herein, the Company does not have any agreement or
arrangement under which compensation was provided during the most
recently completed financial year or is payable in respect of
services provided to the Company or any of its subsidiaries that
were performed by a director or a NEO, or performed by any other
party but are services typically provided to a director or a NEO.
The management functions of the Company are not to any substantial
degree performed by any person other than the executive officers
and directors of the Company.
CORPORATE GOVERNANCE DISCLOSURE
Statement of Corporate Governance Practices
The Board of Directors of the Company, as a whole,
is responsible for reviewing the overall governance principles of
the Company and is responsible for any governance issues that may
arise. National Instrument 58-101 - Disclosure of Corporate
Governance Practices requires
each reporting issuer to disclose its corporate governance
practices on an annual basis. The following describes the
Company’s corporate governance practices.
|
Corporate Governance Disclosure Requirement
|
Comments
|
|||
|
1. Board of Directors
|
|
|||
|
(a)
Disclose
the identity of directors who are independent.
|
As of
the date of this Information Circular, the independent directors of
the Company are Messrs. Hall, Igata, Leduc and
Clayton.
|
|||
|
(b)
Disclose
the identity of directors who are not independent and describe the
basis for that determination.
|
John
Lee is not independent as he is currently the Company’s
Executive Chairman.
All of
the above have a material relationship with the Company. A material
relationship is defined in National Instrument 52-110 to mean any
relationship, which could in the view of the board, or reasonably
expected to interfere with the exercise of his independent
judgment.
|
|||
31
|
Corporate Governance Disclosure Requirement
|
Comments
|
||||
|
1. Board of Directors
(Continued)
|
|
||||
|
(c)
Disclose whether or not a majority of directors
are independent. If a majority of directors are not independent,
describe what the board of directors (the
“board”)
does to facilitate its exercise of independent judgment in carrying
out its responsibilities.
|
As of the date of this Information Circular there is a majority of
independent Directors. Four out of five current directors are
independent. The Company’s independent Directors meet
on an ad-hoc basis in order to facilitate and carry out independent
decision making for the Company.
|
||||
|
(d)
If
a director is presently a director of any other issuer that is a
reporting issuer (or the equivalent) in a jurisdiction or a foreign
jurisdiction, identify both the director and the other
issuer.
|
Directorships of the directors of the Company are set out in this
Information Circular in the table under the heading
Other
Directorships.
|
||||
|
(e)
Disclose
whether or not the independent directors hold regularly scheduled
meetings at which non-independent directors and members of
management are not in attendance. If the independent directors hold
such meetings, disclose the number of meetings held since
the
beginning of the issuer’s most recently completed financial
year. If the independent directors do not hold such meetings,
describe what the board does to facilitate open and candid
discussion among its independent directors.
|
The current independent Directors do not hold such meetings. To
facilitate open and candid discussions among its independent
Directors, the independent members meet via ad-hoc meetings as
required.
|
||||
|
(f)
Disclose
whether or not the chair of the board is an independent director.
If the board has a chair or lead director who is an independent
director, disclose the identity of the independent chair or lead
director, and describe his or her role and responsibilities. If the
board has
neither a chair that is independent nor a lead director that is
independent, describe what the board does to provide leadership for
its independent directors.
|
The Executive Chairman, John Lee is not an independent
Director. The Board provides leadership to its independent
Directors by formal Board Meetings. The Company currently does have
a “lead director”.
|
||||
|
(g)
Disclose
the attendance record of each director for all board meetings held
since the beginning of the issuer’s most recently completed
financial year.
|
The attendance of each director for all board and committee
meetings between January 1, 2019 to December 31, 2019 is set out in
the table under the heading “Attendance of Directors at
Board and Committee Meetings”
|
||||
|
2. Board Mandate
|
|
||||
|
Disclose
the text of the board’s written mandate. If the board does
not have a written mandate, describe how the board delineates its
role and responsibilities.
|
The
Board has a written mandate. The Board has the duties to: (i)
oversee management of the Company, (ii) exercise business judgment,
(iii) understand the Company and its business, (iv) establish
effective systems, (v) protect confidentiality and proprietary
information, and (vi) prepare for and attend Board, committee and
shareholder meetings. The text of the Board’s Mandate can be
found on the Company’s website at www.silverelef.com and is
located in the Corporate Governance Policies and Procedures
Manual, as amended.
|
||||
|
3. Position Descriptions
|
|
||||
|
(a)
Disclose
whether or not the board has developed written position
descriptions for the chair and the chair of each board committee.
If the board has not developed written position descriptions for
the chair and/or the chair of each board committee, briefly
describe how the board delineates the role and responsibilities of
each such position.
|
The
Company does not maintain separate written descriptions of the
roles of the Chairman or Chairs of each of the committees of the
Board. Instead, it has developed written charters for each of the
committees which are attached as appendices to the Manual and
available for review on the Company’s website at
www.silverelef.com under “Corporate – Corporate
Governance” or upon request by contacting the Company. The
Chair of each committee is responsible for ensuring that the
applicable committee fulfils its responsibilities and duties under
its governing charter.
|
||||
32
|
Corporate Governance Disclosure Requirement
|
Comments
|
|||||
|
3. Position Descriptions
(Continued)
|
|
|||||
|
(b)
Disclose
whether or not the board and CEO have developed a written position
description for the CEO. If the board and CEO have not developed
such a position description, briefly describe how the board
delineates the role and responsibilities of the CEO.
|
The Board has developed a written position description for the
CEO. The position description for the CEO delegates to him
the responsibility for, among other things, executing the strategy
agreed by the Board and developing the Company’s objectives
through leadership of the senior executive team
including:
● Participation
in the development of the Company’s vision, strategic agenda,
and business plan to facilitate communication and understanding
between management and the Board
● Ensuring
operations conform with the Board’s view on company
policy
● Ensuring,
in consultation with the committees and the full Board, that
succession plans are in place at senior executive
levels
● Participation
in external relationships which fulfil the Company’s
obligations as a member of industry and the community
● Providing
the key link between the Board and management, and as a result, has
a significant communication, coaching and team-building
responsibility
● Ensuring
that the Company’s risks are adequately addressed, and
appropriate internal controls are in place
● Representing
the shareholders and Board to management and management to the
shareholders and Board
● Carrying
out special assignments in collaboration with management or the
Board
|
|||||
|
4. Orientation and Continuing Education
|
|
|||||
|
(a)
Briefly
describe what measures the board takes to orient new directors
regarding (i) the role of the board, its committees and its
directors, and (ii) the nature and operation of the issuer’s
business.
|
New
directors are provided with details of the Company’s
organizational structure, the structure of the Board, compliance
requirements for directors, corporate policies and by-laws and
technical reports. They also meet with the directors and senior
management of the Company to learn of the functions and activities
of the Company. On an ongoing basis, presentations are made to the
Board on various aspects of the Company’s operations.
Directors can also access internal financial information,
management, technical experts and consultants.
|
|||||
|
(b)
Briefly
describe what measures, if any, the board takes to provide
continuing education for its directors. If the board does not
provide continuing education, describe how the board ensures that
its directors maintain the skill and knowledge necessary to meet
their obligations as directors.
|
As a
part of the continuing education of the directors, correspondence
with the Company’s legal counsel facilitates the directors to
remain up to date with developments in relevant corporate and
securities’ law matters. New directors are provided with key
documents including the Code of Business Conduct and Ethics, Board
and Committee Mandates and Charters, Insider Trading Policy and
Continuous disclosure policies. As well, the directors meet with
Management to discuss and better understand the business and from
time to time visit the Company’s properties. Board members
are encouraged to communicate with Management and auditors, to keep
themselves current with industry trends and development, and to
attend related industry seminars. Board members have full access to
the Company’s records. Directors attend conferences and
seminars relevant to their particular expertise.
|
|||||
|
5. Ethical Business Conduct
|
|
|||||
|
(a)
Disclose
whether or not the board has adopted a written code for the
directors, officers and employees. If the board has adopted a
written code:
|
The
Company has adopted a written Code of Business Conduct and Ethics
for its directors, officers and employees (the “Code”).
|
|||||
|
(i)
disclose
how a person or Company may
obtain a copy of the code;
|
A copy
of the Code of Business Conduct and Ethics may be obtained by
written request to the Company’s offices located at Suite
#1610, 409 Granville Street, Vancouver, B.C., V6C 1T2, Canada or
can be viewed on the Company’s website at www.silverelef.com
and is located in the Corporate Governance Policies and Procedures
Manual, as amended.
|
|||||
|
(ii)
describe
how the board monitors compliance with its code, or if the board
does not monitor compliance, explain whether and how the board
satisfies itself regarding compliance with its code;
and
|
The Board has instructed management to bring any breaches of the
Code to the attention of the Chair of the Audit Committee.
Management and employees may report breaches in the Code
confidentially and anonymously to the Chair of the Audit
Committee.
|
|||||
33
|
Corporate Governance Disclosure Requirement
|
Comments
|
|||||
|
5. Ethical Business Conduct
(Continued)
|
|
|||||
|
(iii)
provide
a cross-reference to any material change report filed since the
beginning of the issuer’s most recently completed financial
year that pertains to any conduct of a director or executive
officer that constitutes a departure from the code.
|
No material change report has been filed since January 1, 2019 (the
commencement of the year ended December 31, 2019), or ever, that
pertains to any conduct of a director or executive officer that
constitutes a departure from the Code.
|
|||||
|
(b)
Describe
any steps the board takes to ensure directors exercise independent
judgment in considering transactions and agreements in respect of
which a director or executive officer has a material
interest.
|
If a director or executive officer has an interest in any
transaction or agreement before the Board, the interested directors
or executive officers must abstain from voting on such issues or
topics. Each director must disclose all actual or potential
conflicts of interest to the Board or the Audit
Committee.
|
|||||
|
(c)
Describe
any other steps the board takes to encourage and promote a culture
of ethical business conduct.
|
The Company has adopted a Whistleblower Policy which allows its
directors, officers and employees who feel that a violation of the
Code has occurred, or who have concerns regarding financial
statements disclosure issues, accounting, or internal controls, to
report such violations or concerns on a confidential and anonymous
basis. Such reporting can be made by email or telephone to the
Chair of the Audit Committee. The Chair of the Audit Committee then
investigates each matter so reported and make corrective and
disciplinary action, if appropriate. Complaints may also be made
internally. The Board has also adopted the Company’s
disclosure policy that covers the accurate and timely communication
of all material information.
|
|||||
|
6. Nominations of Directors
|
|
|||||
|
(a)
Describe
the process by which the board identifies new candidates for board
nomination.
|
The
Board considers its size each year when it considers the number of
directors to recommend to the shareholders for election at the
Company’s annual meeting of shareholders, taking into account
the number required to carry out the Board’s duties
effectively and to maintain a diversity of views and experience.
The CGCC is composed entirely of independent directors and is
responsible for the identification of new director candidates for
Board nomination.
|
|||||
|
(b)
Disclose
whether or not the board has a nominating committee composed of
independent directors. If the board does not have a nominating
committee composed entirely of independent directors, describe what
steps the board takes to encourage an objective nomination
process.
|
The Company does have a nominating committee which is the CGCC. As
of the date of the Information Circular, the CGCC consists entirely
of independent Directors. The Chairman of the CGCC, Greg
Hall is the primary contact for
the CGCC, whereby all activities of the CGCC are first addressed to
the Chairman to address.
The
Board considers its size each year when it considers the number of
directors to recommend to the shareholders for election at the
Company’s annual meeting of shareholders, taking into account
the number required to carry out the Board’s duties
effectively and to maintain a diversity of views and
experience.
|
|||||
|
(c)
If
the board has a nominating committee, describe the
responsibilities, powers and operation of the nominating committee.
Also describe if the Company implements a majority voting policy
for its directors.
|
The CGCC has the responsibility of, among other things: (i)
recommending to the Board, on an annual basis, nominees for
election as directors for the next annual meeting of shareholders
and nominees for appointment to Committees of the Board; and (ii)
analyzing the needs of the Board when vacancies arise on the Board
and Committees and recommending nominees who meet such
needs. The Company has implemented majority voting for
its’ directors. Information on the majority voting for
directors is set out under the heading Majority Voting for
Directors.
|
|||||
|
7. Compensation
|
|
|||||
|
(a)
Describe
the process by which the board determines the compensation for the
issuer’s directors and officers.
|
The
CGCC assists the Board in carrying out its responsibilities and
decision-making process relating to executive and director
compensation for the Company and its subsidiaries.
|
|||||
|
(b)
Disclose
whether or not the board has a compensation committee composed
entirely of independent directors. If the board does not have a
compensation committee composed entirely of independent directors,
describe what steps the board takes to ensure an objective process
for determining such compensation.
|
The Company does have a compensation committee which is the CGCC.
The CGCC consists entirely of independent directors.
|
|||||
34
|
Corporate Governance Disclosure Requirement
|
Comments
|
||||
|
7. Compensation (Continued)
|
|
||||
|
(c)
If
the board has a compensation committee, describe the
responsibilities, powers and operation of the compensation
committee.
|
The
CGCC assists the Board in carrying out its responsibilities and
decision-making process relating to executive and director
compensation for the Company and its subsidiaries. The CGCC has the
following duties, responsibilities and authority:
(a) to recommend to the
Board the form and amount of compensation to be paid by the Company
to directors for service on the Board and on its committees. The
CGCC shall review director compensation at least
annually;
(b) to annually review
the Company’s base compensation structure and the
Company’s incentive compensation, stock option and other
share-based compensation plans and recommend changes in or
additions to such structure and plans to the Board as
needed;
(c) to recommend to the
Board the annual base compensation of the Company’s executive
officers;
(d) to recommend to the
Board annual corporate goals and objectives under any incentive
compensation plan adopted by the Company for officers and
non-officer personnel providing services to the Company and
recommend incentive compensation participation levels for officers
and non-officer personnel providing services to the Company under
any such incentive compensation plan. In determining the incentive
component of compensation, the CGCC will consider the
Company’s performance and relative shareholder return, the
values of similar incentives at comparable companies and the awards
given in past years;
(e) to evaluate the
performance of officers generally and in light of annual corporate
goals and objectives under any incentive compensation
plan;
(f) to provide
oversight of the performance evaluation and incentive compensation
of non-officer personnel providing services to the Company;
and
to
administer the Company’s stock option and other share-based
compensation plans and determine the grants of Options and other
share-based compensation.
|
||||
|
8. Other Board Committees
|
|
||||
|
If
the board has standing committees other than the audit,
compensation and nominating committees, identify the committees and
describe their function.
|
There
are no other committees.
|
||||
|
9. Assessments
|
|
||||
|
Disclose
whether or not the board, its committees and individual directors
are regularly assessed with respect to their effectiveness and
contribution. If assessments are regularly conducted, describe the
process used for the assessments. If assessments are not regularly
conducted, describe how the board satisfies itself that the board,
its committees, and its individual directors are performing
effectively.
|
The
Board monitors the adequacy of information given to directors,
communication between the Board and management and the strategic
direction and processes of the Board and its committees. The CGCC
oversees the performance of the Board and its Audit
Committee.
The Board or did/not review the Boards and Committee performances
during the year ended December 31, 2019.
|
||||
PARTICULARS
OF ADDITIONAL MATTERS TO BE ACTED UPON
The
current and outstanding warrants of the Company as of the date of
this Information Circular is 40,823,497. The Board and Management
for the Company proposes that the exercise price of certain
previously issued Common Share purchase warrants be amended from
between $0.40 and $0.70, which is significantly above current
trading prices for the Common Shares to $0.26.
The
Company believes it to be in its best interests to complete the
amendment for a number of reasons, including, but not limited to,
the ability to obtain additional capital upon exercise of such
warrants, the likelihood of such exercise being increased as a
result of the exercise price being adjusted, the cost associated
with future financings being greater than amending warrant exercise
prices as a method of gaining access to additional capital, and
increasing current securityholder buy-in into the
Company.
35
AMENDMENT
OF WARRANTS
The
Company proposes to amend the exercise price of an aggregate of
24,318,927 previously issued Common Share purchase warrants (the
“Warrants”) of
the Company to $0.26.
The
particulars of the Warrants impacted by the amended exercise price
are outlined in the tables below.
|
Warrants
Held by Non-Insiders
|
||||||||||
|
Number of
Warrants
|
Current Exercise
Price
of Warrants ($)
|
Date of Issuance
|
Expiry
Date
|
Reason
for Issuance
|
||||||
|
412,000
|
0.70
|
September
30, 2015
|
September
30, 2020
|
Private
Placement
|
||||||
|
375,000
|
0.70
|
November
13, 2015
|
November
13, 2020
|
Private
Placement
|
||||||
|
650,000
|
0.40
|
January
25, 2016
|
January
25, 2021
|
Private
Placement
|
||||||
|
713,670
|
0.44
|
August
29, 2016
|
August
29, 2021
|
Private
Placement
|
||||||
|
499,990
|
0.40
|
January
13, 2017
|
January
13, 2022
|
Private
Placement
|
||||||
|
732,500
|
0.50
|
April
12, 2017
|
April
12, 2022
|
Private
Placement
|
||||||
|
493,060
|
0.50
|
June
13, 2017
|
June
13, 2022
|
Securities
for debt
|
||||||
|
2,696,890
|
0.40
|
September
20, 2017
|
September
20, 2020
|
Private
Placement
|
||||||
|
582,880
|
0.40
|
October
16, 2017
|
October
16, 2020
|
Private
Placement
|
||||||
|
786,600
|
0.40
|
December
18, 2017
|
September
20, 2020
|
Private
Placement
|
||||||
|
1,950,140
|
0.40
|
December
18, 2017
|
October
16, 2020
|
Private
Placement
|
||||||
|
36,030
|
0.40
|
December
18, 2017
|
December
18, 2020
|
Securities for
Debt
|
||||||
|
500,000
|
0.50
|
February
15, 2018
|
February
15, 2021
|
Asset
Acquisition
|
||||||
|
3,674,990
|
0.40
|
July 6,
2018
|
July 6,
2021
|
Private
Placement
|
||||||
|
Warrants
Held by Insiders
|
||||||||||
|
Holder
|
Number of
Warrants
|
Current Exercise
Price
of Warrants ($)
|
Date of Issuance
|
Expiry
Date
|
Reason for Issuance
|
|||||
|
John
Lee
|
300,000
|
0.70
|
September
30, 2015
|
September
30, 2020
|
Private
Placement
|
|||||
|
195,000
|
0.70
|
November
13, 2015
|
November
13, 2020
|
Private
Placement
|
||||||
|
7,500,000
|
0.40
|
June 2,
2016
|
June 2,
2021
|
Securities
for Debt
|
||||||
|
300,000
|
0.44
|
August
29, 2016
|
August
29, 2021
|
Private
Placement
|
||||||
|
300,000
|
0.50
|
April
12, 2017
|
April
12, 2022
|
Private
Placement
|
||||||
|
500,000
|
0.40
|
December
18, 2017
|
September
20, 2020
|
Private
Placement
|
||||||
|
150,000
|
0.40
|
December
18, 2017
|
December
18, 2020
|
Securities
for Debt
|
||||||
|
306,280
|
0.50
|
June
13, 2017
|
June
13, 2022
|
Securities for Debt
|
||||||
|
198,237
|
0.40
|
July 6,
2018
|
August
13, 2021
|
Private
Placement
|
||||||
|
Sophir
Asia Limited(1)
|
400,000
|
0.70
|
September
30, 2015
|
September
30, 2020
|
Private
Placement
|
|||||
|
26,250
|
0.50
|
June
13, 2017
|
June
13, 2022
|
Securities
for Debt
|
||||||
|
11,420
|
0.40
|
December
18, 2017
|
December
18, 2020
|
Securities
for Debt
|
||||||
|
Greg
Hall
|
55,000
|
0.70
|
November
13, 2015
|
November
13, 2020
|
Private
Placement
|
|||||
|
33,600
|
0.50
|
June
13, 2017
|
June
13, 2022
|
Securities
for Debt
|
||||||
|
13,800
|
0.40
|
December
18, 2017
|
December
18, 2020
|
Securities
for Debt
|
||||||
|
Irina
Plavutska
|
43,680
|
0.50
|
June
13, 2017
|
June
13, 2022
|
Securities
for Debt
|
|||||
Note:
(1)
Sophir Asia Limited
is a private company wholly owned by Masateru Igata.
For the
purpose of obtaining shareholder approval in compliance with the
rules of the TSX, all shares held by Insiders (as such term is
defined in the TSX Company Manual) who also hold Warrants, and any
associates and affiliates of such parties (the “Excluded Insiders”) will be
excluded from voting in connection with the Warrant Resolution. As
a result, a total of 9,110,231 Common Shares held by Excluded
Insiders shall be excluded from voting on the Warrant
Resolution.
At the
Meeting, Shareholders other than Excluded Insiders will be asked to
consider and, if deemed appropriate, to pass, with or without
variation, an ordinary resolution, in the form set out below (the
“Warrant
Resolution”), subject to such amendments, variations
or additions as may be approved at the Meeting, approving the
amendment to the exercise price of the Warrants to
$0.26.
The
Company confirms that it does not have any valuations that relate
to the Company, the warrants or the Common Shares that have been
made in the last 24 months.
Furthermore, the
Company confirms that it has not received any bona fide offers that relate to the
Company, the warrants or the Common Shares during the 24 months
preceding the determination to reprice the warrants.
The
text of the Warrant Resolution to be submitted to Shareholders at
the Meeting is set forth below:
“BE
IT RESOLVED, as an ordinary resolution of the shareholders of the
Company, THAT:
1.
the Company is
hereby authorized to amend the exercise price of the Warrants to
$0.26 as disclosed in the management information circular
circulated to shareholders of the Company in connection with the
Annual General and Special Meeting of Shareholders to be held on
July 7, 2020, and in accordance with the policies of the Toronto
Stock Exchange; and
2.
any one director or
officer of the Company is authorized and directed, on behalf of the
Company, to take all necessary steps and proceedings and to
execute, deliver and file any and all declarations, agreements,
documents and other instruments and do all such other acts and
things (whether under corporate seal of the Company or otherwise)
that may be necessary or desirable to give effect to this ordinary
resolution of shareholders.”
Management of the Company
recommends that you vote
IN FAVOUR of the amendment to the
exercise price of the Warrants.
To be effective, the Warrant Resolution must be approved by not
less than a majority of the votes cast by the Shareholders other
than the Excluded Insiders present in person, or represented by
proxy, at the Meeting. In the absence of
instructions to the contrary, the Company’s proxyholders will
vote the Common Shares represented by each form of proxy, properly
executed,
IN FAVOUR the amendment to the
exercise price of the Warrants.
Other Matters
It is
not known if any other matters will come before the Meeting other
than set forth above and in the Notice of Meeting, but if such
should occur, the persons named in the accompanying Proxy intend to
vote on any poll, on such matters in accordance with their best
judgment, exercising discretionary authority with respect to
amendments or variations of matters identified in the Notice of
Meeting and other matters which may properly come before the
Meeting or any adjournment or postponement thereof.
RESTRICTED SECURITIES
The
Company has no other classes of voting securities and does not have
any classes of restricted securities.
REGISTRAR AND TRANSFER AGENT
The
registrar and transfer agent of the Corporation is Computershare
Investor Services Inc., 510 Burrard Street, 3rd Floor, Vancouver,
British Columbia V6C 3B9.
ADDITIONAL
INFORMATION
Additional
information relating to Silver Elephant is available on Silver
Elephant’s website at www.silverelef.com, on SEDAR
under Silver Elephant’s profile at www.sedar.com and on EDGAR at
www.sec.gov/edgar.shtml.
Financial and other information of Silver Elephant is provided in
its audited consolidated financial statements and
management’s discussion and analysis for the financial year
ended December 31, 2019 can be found under Silver Elephant’s
profile on SEDAR at www.sedar.com and will be sent
without charge to any security holder upon request by contacting
the Corporate Secretary of Silver Elephant at Suite 1610, 409
Granville Street, Vancouver, British Columbia, Canada V6C 1T2, by
telephone: (604) 569-3661.
DIRECTORS APPROVAL
The contents of this Information Circular and the
sending of it to each Shareholder entitled to receive notice of the
Meeting, to each director of the Company, to the auditor of the
Company, and to the appropriate regulatory agencies has been
authorized, by the Board dated at Vancouver, British Columbia, this
25th
day of May, 2020.
BY
ORDER OF THE BOARD
/s/ “Michael Doolin”
Michael
Doolin
Chief
Executive Officer
36