Exhibit 99.2
MOUNTAIN
PROVINCE DIAMONDS INC.
NOTICE
OF ANNUAL GENERAL & SPECIAL MEETING OF SHAREHOLDERS
NOTICE
IS HEREBY GIVEN that an annual & special general meeting (the “Meeting”) of the shareholders of Mountain
Province Diamonds Inc. (“Mountain Province”, the “Corporation”) will be held at Terminal
City Club, 837 Hastings Street West, Vancouver, British Columbia V6C 1B6, on Tuesday April 4, 2017 at 2:00 p.m. (Vancouver time)
for the following purposes:
| (a) | to
receive and consider the consolidated audited financial statements of Mountain Province
for the year ended December 31, 2016, together with the report of the auditors thereon; |
| (b) | to
consider and, if thought advisable, to set by special resolution the number of directors
of the Company for the ensuing year at seven (7); |
| (c) | to
elect directors for the ensuing year; and |
| (d) | to
re-appoint the auditors of Mountain Province and to authorize the directors of Mountain
Province to fix the auditors’ remuneration; |
| (e) | to
consider and, if thought advisable, to authorize by special resolution the directors
of Mountain Province to determine by resolution of the board the number of directors
of the Corporation, subject to the Articles of the Corporation; and |
| (f) | to
transact such other business as may properly be brought before the Meeting or any adjournment
thereof. |
This
notice of meeting is accompanied by a form of proxy, the management information circular, and a supplemental mailing list form.
The directors of Mountain Province have fixed the close of business on February 28, 2017 as the record date for the determination
of the shareholders of the Corporation entitled to receive notice of the Meeting.
Shareholders
who are unable to attend the Meeting in person are requested to complete, date, sign and send the enclosed form of proxy to Computershare
Investor Services Inc. so that as large a representation as possible may be had at the meeting.
DATED
at Toronto, Ontario this 28th day of February, 2017.
BY
ORDER OF THE BOARD OF DIRECTORS
“Patrick
Evans”
__________________________________________
Patrick
Evans
President
and Chief Executive Officer
MANAGEMENT
INFORMATION CIRCULAR
for
the
ANNUAL
GENERAL & SPECIAL MEETING OF SHAREHOLDERS
of
MOUNTAIN
PROVINCE DIAMONDS INC.
to
be held on
TUESDAY
April 4, 2017
February
28, 2017
MOUNTAIN
PROVINCE DIAMONDS INC.
161
Bay Street, Suite 1410, P.O. Box 216
Toronto, Ontario, Canada M5J 2S1
MANAGEMENT
INFORMATION CIRCULAR
SOLICITATION
OF PROXIES
This
management information circular is furnished in connection with the solicitation of proxies by management and the directors of
Mountain Province Diamonds Inc. (the “Company”) for use at the annual and special meeting of shareholders (the “Meeting”)
of the Company to be held at the time and place and for the purposes set forth in the accompanying Notice of Annual and Special
Meeting. References in this management information circular to the Meeting include any adjournment(s) thereof. It is expected
that the solicitation will be primarily by mail; however, proxies may also be solicited personally by the directors and by regular
employees of the Company. The cost of solicitation will be borne by the Company. The board of directors (the “Board”)
of the Company has fixed the close of business on February 28, 2017 as the record date, being the date for the determination of
the registered holders of securities entitled to receive notice of and to vote at the Meeting. Duly completed and executed proxies
must be received by the Company’s transfer agent, Computershare Investor Services Inc., at the address indicated on the
envelope accompanying the form of proxy no later than 5:00 p.m. (Toronto time) on March 31, 2017, or no later than 48 hours (excluding
Saturdays, Sundays and holidays) before the time of any adjourned Meeting. Late proxies may be accepted or rejected by the Chairman
of the Meeting in his discretion, and the Chairman is under no obligation to accept or reject any particular late proxy.
Unless
otherwise stated, the information contained in this management information circular is as of February 28, 2017. In this management
information circular, all dollar amounts referenced, unless otherwise indicated, are expressed in Canadian dollars.
Appointment
and Revocation of Proxies
The
persons named in the form of proxy are officers and/or directors of the Company. A shareholder desiring to appoint some other
person, who need not be a shareholder, to represent him or her at the Meeting, may do so by inserting such person’s name
in the blank space provided in the form of proxy or by completing another proper form of proxy and, in either case, depositing
the completed and executed proxy at the office of the Company’s transfer agent, Computershare Investor Services Inc., indicated
on the envelope accompanying the form of proxy no later than 5:00 p.m. (Toronto time) on March 31, 2017, or no later than 48 hours
(excluding Saturdays, Sundays and holidays) before the time of any adjourned Meeting.
A
shareholder forwarding the proxy may indicate the manner in which the appointee is to vote with respect to any specific item by
checking the appropriate space. If the shareholder giving the proxy wishes to confer discretionary authority with respect to any
item of business, then the space opposite the item is to be left blank. The common shares (the “Common Shares”) of
the Company represented by the proxy submitted by a shareholder will be voted in accordance with the directions, if any, given
in the proxy.
A
proxy given pursuant to this solicitation may be revoked by an instrument in writing executed by a shareholder or by a shareholder’s
attorney authorized in writing (or, if the shareholder is a corporation, by a duly authorized officer or attorney) and deposited
either at the head office of the Company (Mountain Province Diamonds Inc., 161 Bay Street, Suite 1410, P.O. Box 216 Toronto, Ontario,
Canada M5J 2S1, Attention: Perry Ing, Corporate Secretary) at any time up to and including the last business day preceding the
day of the Meeting or with the Chairman of the Meeting on the day of the Meeting or in any other manner permitted by law.
Voting
by Proxyholder
The
persons named in the Proxy will vote or withhold from voting the common shares represented thereby in accordance with your instructions
on any ballot that may be called for. If you specify a choice with respect to any matter to be acted upon, your common shares
will be voted accordingly. The Proxy confers discretionary authority on the persons named therein with respect to:
(a)
each matter or group of matters identified therein for which a choice is not specified, other than the appointment of an auditor
and the election of directors,
(b)
any amendment to or variation of any matter identified therein, and
(c)
any other matter that properly comes before the Meeting.
In
respect of a matter for which a choice is not specified or where both choices have been specified in the Proxy, the persons named
in the Proxy will vote the common shares represented by the Proxy for the approval of such matter.
Registered
Shareholders
Registered
Shareholders may wish to vote by Proxy whether or not they are able to attend the Meeting in person. Registered Shareholders electing
to submit a Proxy may do so by:
(a)
completing, dating and signing the enclosed form of Proxy and returning it to the Corporation’s transfer agent, Computershare
Investor Services Inc. (“Computershare”), by mail or by hand to the 9th Floor, 100 University Avenue, Toronto,
Ontario, M5J 2Y1;
(b)
using a touch-tone phone to transmit voting choices to the following toll-free number 1-866-732-8683. Registered Shareholders
must follow the instructions of the voice response system and refer to the enclosed Proxy form for the holder’s account
number and the Proxy control number; or
(c)
using the Internet through the website of the Corporation’s transfer agent at www.investorvote.com. Registered Shareholders
must follow the instructions that appear on the screen and refer to the enclosed Proxy form for the holder’s account number
and the Proxy control number.
In
all cases ensuring that the Proxy is received at least 48 hours (excluding Saturdays, Sundays and holidays) before the meeting
or the adjournment thereof at which the proxy is to be used.
Beneficial
Shareholders
The
following information is of significant importance to shareholders who do not hold 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 Corporation as the registered holders of common shares).
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 Corporation. 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 -
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
Corporation is taking advantage of the provisions of National Instrument 54-101 of the Canadian Securities Administrators, which
permit it to directly deliver Proxy-related materials to its NOBOs. As a result, NOBOs can expect to receive a scannable Voting
Instruction Form (a “VIF”) from Computershare. These VIFs are to be completed and returned to Computershare
in the envelope provided or by facsimile. 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 with respect to the shares represented by the VIFs they receive.
These
securityholder materials are being sent to both registered and non-registered owners of the securities of the Corporation. If
you are a non-registered owner, and the Corporation or its agent has sent these materials directly to you, your name and address
and information about your holdings of securities, have been obtained in accordance with applicable securities regulatory requirements
from the intermediary holding on your behalf.
By
choosing to send these materials to you directly, the Corporation (and not the intermediary holding on your behalf) has assumed
responsibility for (i) delivering these materials to you, and (ii) executing your proper voting instructions. Please return your
voting instructions as specified in your request for voting instructions.
The
form of Proxy supplied to you by your broker will be similar to the Proxy provided to Registered Shareholders by the Corporation.
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 similar voting information form (the “Broadridge VIF”) in lieu of
a Proxy provided by the Corporation. The Broadridge VIF will appoint the same persons as the Corporation’s Proxy to represent
you at the Meeting. You have the right to appoint a person (who need not be a Beneficial Shareholder of the Corporation), other
than the persons designated in the Broadridge VIF, to represent you at the Meeting. To exercise this right, you should insert
the name of the desired representative in the blank space provided in the Broadridge VIF. The completed Broadridge 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. If you receive a Broadridge VIF, you cannot use it to vote common
shares directly at the Meeting - the Broadridge VIF must be completed and returned to Broadridge, in accordance with its instructions,
well in advance of the Meeting in order to have the common shares voted.
Although
as a Beneficial Shareholder you may not be recognized directly at the Meeting for the purposes of voting common shares registered
in the name of your broker, you, or a person designated by you, may attend at the Meeting as proxyholder for your broker and vote
your common shares in that capacity. If you wish to attend at the Meeting and indirectly vote your common shares as proxyholder
for your broker, or have a person designated by you do so, you should enter your own name, or the name of the person you wish
to designate, in the blank space on the voting instruction form provided to you and return the same to your broker in accordance
with the instructions provided by such broker, well in advance of the Meeting.
REVOCATION
OF PROXIES
A
shareholder who has given a Proxy may revoke it by an instrument in writing executed by the shareholder or by the shareholder’s
attorney authorized in writing or, if the shareholder is a corporation, by a duly authorized officer or attorney of the corporation,
and delivered either to Computershare Investor Services Inc., Proxy Department, 100 University Avenue, 9th Floor, Toronto, Ontario,
Canada M5J 2Y1, or to the Corporation, at 161 Bay Street, Suite 1410, P.O. Box 216, Toronto, Ontario, Canada M5J 2S1 at any time
up to and including the last business day preceding the day of the Meeting or any adjournment of it, or to the chair of the Meeting
on the day of the Meeting or any adjournment of it. Only registered shareholders have the right to revoke a Proxy. Non-Registered
Holders who wish to change their vote must, at least seven days before the Meeting, arrange for their respective Intermediaries
to revoke the Proxy on their behalf.
A
revocation of a Proxy does not affect any matter on which a vote has been taken prior to the revocation.
RECORD
DATE
The
board of directors of the Corporation (the “Board”) has fixed February 28, 2017 as the record date (the “Record
Date”) for the purpose of determining shareholders entitled to receive the Notice of Meeting. Only shareholders of record
as at the close of business on the Record Date are entitled to receive the Notice of Meeting and to vote the common shares held
by them, either in person or by proxy, at the Meeting or any adjournment thereof.
EXERCISE
OF DISCRETION
If
the instructions in a Proxy are certain, the shares represented thereby will be voted or withheld from voting in accordance with
the specifications so made on any poll by the persons named in the Proxy, and, where a choice with respect to any matter to be
acted upon has been specified in the Proxy, the shares represented thereby will, on a poll, be voted or withheld from voting in
accordance with the specifications so made.
Where
no choice has been specified by the shareholder, such shares will, on a poll, be voted in accordance with the notes to Proxy.
The
enclosed Proxy, when properly completed and delivered and not revoked, confers discretionary authority upon the person(s) appointed
proxy holders thereunder to vote with respect to any amendments or variations of matters identified in the Notice of Meeting and
with respect to other matters which may properly come before the Meeting. At the time of the printing of this Information Circular,
management of the Corporation knows of no such amendment, variation or other matter which may be presented to the Meeting.
APPROVAL
OF MATTERS
Unless
otherwise noted, approval of matters to be placed before the Meeting is by an “ordinary resolution” which is a resolution
passed by a simple majority (50%+1) of the votes cast by shareholders of the Corporation present and entitled to vote in person
or by proxy.
INTEREST
OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Except
as disclosed in this Information Circular, no person who has been a director or executive officer of the Corporation at any time
since the beginning of the Corporation’s last financial year, no proposed nominee of the Corporation for election as a director
of the Corporation, and no associate or affiliate of the foregoing persons, has any material interest, direct or indirect, by
way of beneficial ownership or otherwise, in matters to be acted upon at the Meeting other than the election of directors or the
appointment of auditors.
INTEREST
OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
Except
as disclosed in this Information Circular, since the commencement of the Corporation’s most recently completed financial
year, no informed person of the Corporation, proposed nominee for director or any associate or affiliate of an informed person
or proposed nominee, had any material interest, direct or indirect, in any transaction or any proposed transaction which has materially
affected or would materially affect the Corporation or any of its subsidiaries. An “informed person” means: (a) a
director of executive officer of the Corporation; (b) a director or executive officer of a person or Corporation that is itself
an informed person or subsidiary of the Corporation; (c) any person or Corporation who beneficially owns, directly or indirectly,
voting securities of the Corporation or who exercises control or direction over voting securities of the Corporation or a combination
of both carrying more than 10% of the voting rights other than voting securities held by the person or Corporation as underwriter
in the course of a distribution; and (d) the Corporation itself, if and for so long as it has purchased, redeemed or otherwise
acquired any of its shares.
VOTING
SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES
Currently,
the Corporation has issued and outstanding 160,173,833 fully paid and non-assessable common shares without par value, each share
carrying the right to one (1) vote. The common shares of the Corporation (the “Common Shares”) are listed on
the Toronto Stock Exchange (the “TSX”) under the symbol ‘MPVD’ and on the NASDAQ (the “NASDAQ”)
under the symbol ‘MPVD’. The Corporation has no other classes of voting securities and does not have any classes
of restricted securities.
Any
shareholder of record at the close of business on February 28, 2017 who either personally attends the Meeting or who has completed
and delivered a Proxy in the manner specified, subject to the provisions described above, shall be entitled to vote or to have
such shareholder’s shares voted at the Meeting.
To
the best of the knowledge of the directors and executive officers of the Corporation, the only person who, or corporation which,
beneficially owns, or controls or directs, directly or indirectly, shares carrying more than 10% of the voting rights attached
to all outstanding shares of the Corporation, is:
| Name
of Shareholder |
Number
of MPV Common Shares
Held |
Percentage
of issued and outstanding share capital of 160,173,833 shares
(as
at February 28, 2017) |
Bottin
(International) Investments Ltd.
(Controlled
by Mr. Dermot Desmond)
and
Mr. Dermot Desmond |
36,645,087 |
22.9% |
ELECTION
OF DIRECTORS
Management
is seeking shareholder approval of special resolution to set the number of directors of the Corporation at seven (7) for the ensuing
year. A special resolution of shareholders is required to change the number of directors, subject to any minimum and maximum set
out in the Articles of the Corporation. A special resolution is a resolution passed by a majority of at least two-thirds (2/3)
of the votes cast at the Meeting in favour of the resolution.
The
Corporation is also seeking shareholder approval of a special resolution to authorize the directors to set the number of directors
by board resolution. See “Particulars of Other Matters to be Acted Upon - Authority of the Board of Directors to Determine
the Number of Directors” on page 41 of this information circular.
The
term of office of each of the present directors expires at the Meeting. The persons named below will be presented for election
at the Meeting as management’s nominees. Management does not contemplate that any of these nominees will be unable to
serve as a director. Each director elected will hold office until the next annual meeting of the Corporation or until his or her
successor is elected or appointed, unless his or her office is earlier vacated in accordance with the Articles of the Corporation
or the provisions of the Business Corporations Act (Ontario) (“Business Corporations Act”). In the absence
of instructions to the contrary, the enclosed Proxy will be voted for the nominees listed herein.
The
following table sets out the names of the nominees for election as directors, the province or state and country in which each
is ordinarily resident, the period or periods during which each has served as a director, the first and last positions held in
the Corporation and their present principal occupations as at the date hereof, and the number of common shares of the Corporation
or any of its subsidiaries beneficially owned or controlled or directed by each, directly or indirectly, as at the end of the
Corporation’s most recent fiscal year.
Jonathan Comerford
|
Mr. Comerford, the Chairman of the Board
and a director of the Corporation, is an investment manager at International Investment and Underwriting Ltd. He obtained his Masters
in Business from the Michael Smurfit Business School in 1993 and his Bachelor of Economics from University College, Dublin in 1992. |
Chairman of the Board
(Independent)
|
Key Areas of Expertise/Experience |
| |
|
|
Investment Manager
|
|
|
Director since:
September 21,
2001
|
2016 Board/Committee Membership |
2016 Attendance |
Public Board Membership |
| |
Board of Directors |
12 of 12 |
100% |
Kennady Diamonds Inc. |
Age: 45
|
Compensation Committee |
9 of 9 |
100% |
|
County Dublin,
Ireland |
Audit Committee |
4 of 4 |
100% |
|
| |
Fiscal
Year(3)
|
Common
Shares Held
(#) |
Value
of Common Shares Held ($)(4) |
Share
ownership guidelines |
RSUs
held
(#) |
| |
2016 |
145,204 |
975,771 |
|
|
25,000 |
| |
2015 |
145,204 |
575,008 |
|
|
Nil |
| |
Change |
Nil |
|
|
|
|
| |
Date
of Grant |
Exercise
Price |
Options
Held (#) |
Options
Vested (#) |
Expiration
Date |
Value
of unexercised
In-the-money
options ($) |
Value
of options vested during the year ($)(5) |
| |
11-Dec-2015 |
3.57 |
75,000 |
75,000 |
10-Dec-2020 |
236,250 |
Nil |
| |
14-Apr-2015 |
4.66 |
150,000 |
150,000 |
13-Apr-2020 |
309,000 |
Nil |
| |
3-July-2013 |
5.28 |
150,000 |
150,000 |
2-July-2018 |
216,000 |
Nil |
| |
Total |
|
375,000 |
375,000 |
|
761,250 |
Nil |
| |
Mr. Comerford did not exercise any stock options during the year ended
December 31, 2016 |
| Patrick Evans
President and Chief Executive Officer
of the Company
(Non-Independent)
Director since:
November 16, 2005 to November 3, 2016
Age: 61
Arizona,
United States
of America
|
Mr.
Evans has served as the President and Chief Executive Officer of the Company since November
2005. Mr. Evans is a graduate of the University of Cape Town where he received his Bachelor
of Arts degree in 1977 and Bachelor of Science degree in 1978. In 1999 he was appointed
a Vice President of Placer Dome Inc. (a major gold mining company) and a non-executive
director of SouthernEra Resources Ltd. (a diamond and platinum exploration, development
and mining company). In 2001, he was appointed President and CEO of SouthernEra Resources
Ltd. and Messina Limited (a platinum mining company). In 2004, he was appointed President,
CEO and a director of Southern Platinum Corp. (a platinum mining company), which was
acquired by Lonmin Plc in June 2005. In September 2005, he was appointed President, CEO
and a director of Weda Bay Minerals Inc. (a nickel exploration and development company),
which was acquired by Eramet S.A. in May 2006. Mr. Evans was appointed the CEO and a
director of Norsemont Mining Inc. (a copper exploration and development company) in June
2007 which was taken over by Hudbay in the March 2011. He also served as a non-executive
director of Anvil Mining Limited (a copper mining company) from March 2009 to February
2012 when Anvil Mining was acquired by Minmetals. Mr. Evans has also served as the President
and CEO and a director of Kennady Diamonds Inc. from February 2012 to April 2016.
Key
Areas of Expertise/Experience |
| |
Executive
Management |
Corporate
Responsibility |
| |
Mining/Operations |
Capital
Markets/Corporate Finance |
| |
2016
Board/Committee Membership |
2016
Attendance |
Public
Board Membership |
| |
Board
of Directors |
6
of 6 |
100% |
Archon
Minerals Limited; Mirasol Resources Ltd. |
| |
Securities Held: |
|
|
|
| |
Fiscal
Year(3)
|
Common
Shares Held
(#) |
Value
of Common Shares Held ($)(4) |
Share
ownership guidelines |
RSUs
held
(#) |
| |
2016 |
1,390,229 |
9,342,339 |
|
|
50,000 |
| |
2015 |
1,390,229 |
5,505,307 |
Nil |
| |
Change |
Nil |
|
|
| |
Date
of Grant |
Exercise
Price |
Options
Held (#) |
Options
Vested (#) |
Expiration
Date |
Value
of unexercised
In-the-money
options ($) |
Value
of options vested during the year ($)(5) |
| |
11-Dec-2015 |
3.57 |
250,000 |
250,000 |
10-Dec-2020 |
787,500 |
Nil |
| |
14-Apr-2015 |
4.66 |
200,000 |
200,000 |
13-Apr-2020 |
412,000 |
Nil |
| |
14-Feb-2014 |
5.29 |
100,000 |
100,000 |
13-Feb-2019 |
143,000 |
Nil |
| |
14-May-2013 |
5.00 |
100,000 |
100,000 |
13-May-2018 |
172,000 |
Nil |
| |
8-Mar-2012 |
4.84 |
100,000 |
100,000 |
7-Mar-2017 |
188,000 |
Nil |
| |
Total |
|
750,000 |
750,000 |
|
1,702,500 |
Nil |
| |
Mr. Evans
did not exercise any stock options during the year ended December 31, 2016. |
Peeyush Varshney
Director
(Independent)
Independent Businessman
|
Mr. Varshney has been actively involved
in the capital markets since 1996 and has been a principal of Varshney Capital Corp., a private merchant banking, venture capital
and corporate advisory firm since 1996. Since September 2005, he has also been the Chief Executive Officer and a director of Canada
Zinc Metals Corp., a resource exploration company listed on the TSX Venture Exchange. Mr. Varshney obtained a Bachelor of Commerce
degree (Finance) in 1989 and a Bachelor of Laws in 1993, both from the University of British Columbia. He then articled at Farris,
Vaughan, Wills & Murphy, a law firm in Vancouver, British Columbia, from 1993 to 1994, and has been a member of the Law Society
of British Columbia since September 1994. Mr. Varshney is also a director of Margaret Lake Diamonds Inc.
Key Areas of Expertise/Experience |
| Director since: |
Corporate Responsibility |
Executive Management |
| April 13, 2007 |
Managing/Leading Growth |
Capital Markets/Corporate Finance |
Age: 50
British Columbia,
Canada |
2016
Board/Committee Membership |
2016 Attendance |
Public Board Membership |
| |
Board of Directors |
12 of 12 |
100% |
Canada Zinc Metals Corp.; Margaret Lake Diamonds Inc. |
| |
Corporate Governance and Nominating Committee |
5 of 5 |
100% |
|
| |
Audit Committee |
4 of 4 |
100% |
|
| |
Fiscal Year(3)
|
Common Shares Held
(#) |
Value of Common Shares Held ($)(4) |
Share ownership guidelines |
RSUs held
(#) |
| |
2016 |
122,422 |
822,676 |
|
|
25,000 |
| |
2015 |
122,422 |
484,791 |
|
|
Nil |
| |
Change |
Nil |
|
|
|
|
| |
Date of Grant |
Exercise Price |
Options Held (#) |
Options Vested (#) |
Expiration Date |
Value of unexercised
In-the-money options ($) |
Value of options vested during the year ($)(5) |
| |
11-Dec-2015 |
3.57 |
50,000 |
50,000 |
10-Dec-2020 |
157,500 |
Nil |
| |
14-Apr-2015 |
4.66 |
100,000 |
100,000 |
13-Apr-2020 |
206,000 |
Nil |
| |
3-July-2013 |
5.28 |
100,000 |
100,000 |
2-July-2018 |
144,000 |
Nil |
| |
Total |
|
250,000 |
250,000 |
|
507,500 |
Nil |
| |
Mr. Varshney did not exercise any stock
options during the year ended December 31, 2016. |
David Whittle
Director
(Independent)
Independent Businessman
Director since:
November 1, 1997
Age: 52
British Columbia,
Canada
|
Mr. Whittle obtained a Bachelor of Commerce degree
(Finance) in 1987 from the University of British Columbia. He then articled at Coopers & Lybrand, a Chartered Accountancy
firm, in Vancouver, British Columbia, becoming a Chartered Accountant in 1991. From 1993 to June 2000, on completion of the
Amalgamation, he was President/CEO and Chief Financial Officer of Glenmore. From 1994 to 1998, he was also Chief Financial
Officer of Lytton Minerals Limited, a diamond mining exploration company with which Glenmore was affiliated. Additionally,
from 1993 to 2004, Mr. Whittle was variously principal and partner of a Chartered Accountancy practice in the Vancouver area,
providing services to both private and public companies in a variety of industries including mining, real estate, telecommunications,
computer consulting, high tech and general merchandising. From 2004 to August 2007, Mr. Whittle was Chief Financial Officer
of Hillsborough Resources Limited, a public company in the mining business. From October 2007 to December 2014, Mr. Whittle
was Chief Financial Officer of Alexco Resource Corp., a public company both in the mining business and in the business of
providing consulting services to third parties in respect of environmental remediation and permitting. He also served as director
of Kennady Diamonds Inc., from February 2012 until June 2016 and currently sits as a member of the audit committee of the
Canadian Institute of Mining, Metallurgy and Petroleum. |
| |
Key Areas of Expertise/Experience |
| |
Mining/Operations |
Executive Management |
| |
Corporate Responsibility |
Managing/Leading Growth |
| |
|
|
| |
2016 Board/Committee Membership |
2016 Attendance |
Public Board Membership |
| |
Board of Directors |
12 of 12 |
100% |
Nil |
| |
Compensation Committee |
9 of 9 |
100% |
|
| |
Audit Committee |
4 of 4 |
100% |
|
| |
Fiscal Year(3)
|
Common Shares Held
(#) |
Value of Common Shares Held ($)(4) |
Share ownership guidelines |
RSUs held
(#) |
| |
2016 |
160,606 |
1,079,272 |
|
|
25,000 |
| |
2015 |
160,606 |
635,999 |
|
|
Nil |
| |
Change |
Nil |
|
|
|
|
| |
Date of Grant |
Exercise Price |
Options Held (#) |
Options Vested (#) |
Expiration Date |
Value of unexercised
In-the-money options ($) |
Value of options vested during the year ($)(5) |
|
| |
11-Dec-2015 |
3.57 |
50,000 |
50,000 |
10-Dec-2020 |
157,500 |
Nil |
|
| |
14-Apr-2015 |
4.66 |
100,000 |
100,000 |
13-Apr-2020 |
206,000 |
Nil |
|
| |
3-July-2013 |
5.28 |
100,000 |
100,000 |
2-July-2018 |
144,000 |
Nil |
|
| |
Total |
|
250,000 |
250,000 |
|
507,500 |
Nil |
|
| |
Mr.
Whittle did not exercise any stock options during the year ended December 31, 2016.
|
Carl
Verley
Director
(Independent)
Self-Employed
Geological
Consultant
Director
since:
November
1, 1997
Age:
66
|
Mr. Verley has been a self-employed
Geological Consultant since 1982. Mr. Verley has served as President of Amerlin Exploration Services Ltd. (private company)
since 1983. Mr. Verley is a graduate of the University of British Columbia where he received his Bachelor of Science Degree
in May of 1974. He worked for Cordilleran Engineering Ltd. from 1975 to 1982. He has been a self-employed geologist since
1982. From August of 1990 to January 2002, he served on the Board of Directors of Gee-Ten Ventures Inc., from May 2002 to
July 2003 he was a director of Rome Resources Ltd., from July 2003 to December 2011, he was a director of Alphamin Resources
Corp., and from October 2007 to May 2012 he was a director of African Metals Corp. He was vice president of exploration for
Windstorm Resources Inc. from July 2011 to October 2012. Currently and since 1986 he has been a director of Mountain Province
Diamonds Inc. and since February 2012, he has been a director of Kennady Diamonds Inc. He is a registered Professional Geoscientist
with the British Columbia Association of Professional Engineers and Geoscientists and Northwest Territories and Nunavut Association
of Professional Engineers and Geoscientists. |
| British Columbia,Canada |
Key Areas of Expertise/Experience |
| |
Corporate governance |
Mineral Exploration |
| |
Executive compensation |
|
| |
2016 Board/Committee Membership |
2016 Attendance |
Public Board Membership |
| |
Board of Directors |
12 of 12 |
100% |
Nil |
| |
Compensation Committee |
9 of 9 |
100% |
|
| |
Corporate Governance and Nominating Committee |
5 of 5 |
100% |
|
| |
Fiscal Year(3)
|
Common Shares Held
(#) |
Value of Common Shares Held ($)(4) |
Share ownership guidelines |
RSUs held
(#) |
| |
2016 |
287,000 |
1,928,640 |
|
|
25,000 |
| |
2015 |
286,640 |
1,135,094 |
|
|
Nil |
| |
Change |
Nil |
|
|
|
|
| |
Date of Grant |
Exercise Price |
Options Held (#) |
Options Vested (#) |
Expiration Date |
Value of unexercised
In-the-money options ($) |
Value of options vested during the year ($)(5) |
| |
11-Dec-2015 |
3.57 |
50,000 |
50,000 |
10-Dec-2020 |
157,500 |
Nil |
| |
14-Apr-2015 |
4.66 |
100,000 |
100,000 |
13-Apr-2020 |
206,000 |
Nil |
| |
3-July-2013 |
5.28 |
100,000 |
100,000 |
2-July-2018 |
144,000 |
Nil |
| |
Total |
|
250,000 |
250,000 |
|
507,500 |
Nil |
| |
Mr. Verley did not exercise any stock
options during the year ended December 31, 2016
|
Bruce Dresner
Director
(Independent)
Retired
Investment
Professional
Director since:
March 11, 2013
|
Mr. Dresner is a Retired Investment Professional.
Mr. Dresner has had a distinguished career as an investment professional, including Director of Investments and Chief Investment
Officer at Dartmouth College (1985-1990), Vice President for Investments and Chief Investment Officer at Columbia University (1990-2002),
Principal of Quellos Group LLC (2002-2007) and Managing Director, BlackRock Inc. (2007-2008). Since his retirement from BlackRock,
Mr. Dresner has held a number of board and advisory positions, including serving on the advisory board of Capstone Investment Advisors
(2008-2010), as a member of the strategic advisory board of Wilshire Private Markets at Wilshire Associates Inc. (2010-2014), and
a trustee of the Gottex Multi-Asset Endowment and Alternative Asset Funds (2011-2016) and as Senior Advisor to BlueLine Advisors
LLC (2014 - present). Mr. Dresner is a graduate of Dartmouth College Tuck School of Business (MBA, 1971) and the University of
Miami (BA Economics, 1969). Mr. Dresner also received his CFA (Chartered Financial Analyst) designation in 1980. He is also a director
of the Sherman Fairchild Foundation (non-profit). |
Age: 69
|
Key Areas of Expertise/Experience |
| Florida, |
|
|
United States
of America
|
|
|
| |
2016 Board/Committee Membership |
2016 Attendance |
Public Board Membership |
| |
Board of Directors |
12 of 12 |
100% |
Sherman Fairchild
Foundation (non-profit) |
| |
Corporate Governance and Nominating Committee |
5 of 5 |
100% |
|
| |
Fiscal Year(3)
|
Common Shares Held
(#) |
Value of Common Shares Held ($)(4) |
Share ownership guidelines |
RSUs held
(#) |
| |
2016 |
381,111 |
2,561,066 |
|
|
25,000 |
| |
2015 |
381,111 |
1,509,200 |
|
|
Nil |
| |
Change |
Nil |
|
|
|
|
| |
Date of Grant |
Exercise Price |
Options Held (#) |
Options Vested (#) |
Expiration Date |
Value of unexercised
In-the-money options ($) |
Value of options vested during the year ($)(5) |
| |
11-Dec-2015 |
3.57 |
50,000 |
50,000 |
10-Dec-2020 |
157,500 |
Nil |
| |
14-Apr-2015 |
4.66 |
100,000 |
100,000 |
13-Apr-2020 |
206,000 |
Nil |
| |
3-July-2013 |
5.28 |
50,000 |
50,000 |
2-July-2018 |
72,000 |
Nil |
| |
11-Mar-2013 |
4.06 |
100,000 |
100,000 |
10-Mar-2018 |
266,000 |
Nil |
| |
Total |
|
300,000 |
300,000 |
|
701,500 |
Nil |
| |
Mr. Dresner did not exercise any stock
options during the year ended December 31, 2016. |
Karen Goracke
Director
(Independent)
President and CEO.
Director since:
November 3, 2016
Age: 50
|
Ms. Goracke serves as the President and
CEO of Borsheims Fine Jewellery and Gifts, A Berksire Hathway Company. Ms. Goracke began her career at Borsheims in 1988 as a Sales
Associate, but soon was promoted. In her time at Borsheims she has worked as inventory supervisor, watch buyer, ladies jewelry
buyer, director of merchandising, and, in 2013, was named President and CEO by Berkshire Hathaway Chairman Warren Buffett. Ms.
Goracke graduated from the University of Nebraska-Kearney with Bachelors of Science degrees in Business Administration and Organizational
Communication. She serves as a Director with the Jewelers Vigilance Committee, the leading compliance organization in the jewelry
and gem industry. She also serves as a Director with Jewelers of America and as well as on a number of other boards and committees
within the gem and jewelry industry. |
Omaha,
|
Key Areas of Expertise/Experience |
United States
|
US Retail Diamond Market |
Executive Management |
of America
|
Corporate Responsibility |
Corporate Ethics |
| |
2016 Board/Committee Membership |
2016 Attendance |
Public Board Membership |
| |
Board of Directors |
4 of 4 |
100% |
Nil |
| |
Fiscal Year(3)
|
Common Shares Held
(#) |
Value of Common Shares Held ($)(4) |
Share ownership guidelines |
RSUs held
(#) |
| |
2016 |
Nil |
Nil |
|
|
25,000 |
| |
2015 |
Nil |
Nil |
|
|
Nil |
| |
Change |
Nil |
|
|
|
|
| |
Date of Grant |
Exercise Price |
Options Held (#) |
Options Vested (#) |
Expiration Date |
Value of unexercised
In-the-money options ($) |
Value of options vested during the year ($)(5) |
| |
3-Nov-2016 |
6.96 |
100,000 |
100,000 |
3-Nov-2021 |
Nil |
Nil |
| |
Total |
|
100,000 |
100,000 |
|
Nil |
Nil |
| |
Ms. Goracke did not exercise any options
during the year ended December 31, 2016. |
| (1) | For
additional compensation information, see “Statement of Executive Compensation”,
below. |
| (2) | “Independent”
refers to the standards of independence under National Instrument 52-110 - Audit Committees. |
| (3) | “Securities
held” refers to the number of Common Shares and RSUs beneficially owned, controlled
or directed (directly or indirectly) by the director as at December 31, 2016 and December
31, 2015, as applicable, and options beneficially owned by the director as at December
31, 2016. |
| (4) | “Value
of Common Shares held” is calculated by multiplying the total number of Common
Shares held by the closing price of the Common Shares on the TSX on the last trading
day of the fiscal year (December 31, 2016-$6.72, December 31, 2015-$3.96). |
| (5) | “Value
of options vested during the year” is calculated by multiplying the total number
of options vested during the year by the difference between the market price of the Common
Shares on the TSX on the date of besting and the exercise price of such options. |
In
April 2013, the Board adopted a majority voting policy. Under this policy, if a nominee for director receives a greater number
of votes “withheld” from his or her election than votes “for” his or her election (a “Majority
Withhold Vote”), such director shall promptly tender to the Board his or her resignation as a Corporation director following
certification of the shareholder vote by the scrutineer at the Meeting (the “Scrutineer”) for such uncontested
election. The Corporate Governance Committee of the Board will duly consider and recommend to the Board whether to accept or reject
the resignation received from each director who received a Majority Withhold Vote. Following the recommendation of the Corporate
Governance Committee, the independent members of the Board will make a determination of the action to take with respect to the
offer or resignation, not later than 90 days after written certification of the shareholder vote by the Scrutineer. The Board
shall accept the resignation absent exceptional circumstances.
According
to the policy, the affected director cannot participate in the deliberations of the Corporate Governance Committee or the Board
as to whether to request his or her resignation. The majority voting policy applies only in circumstances involving an uncontested
election of directors, meaning an election in which the number of nominees is equal to the number of directors to be elected.
To
the best of management’s knowledge, and except as set out in the proceeding paragraphs below, no proposed director is, or
has been within the last ten years before the date of this Information Circular, a director, chief executive officer or chief
financial officer of any Corporation that:
| (a) | was
the subject to an order that was issued while the proposed director was acting in the
capacity as director, chief executive officer or chief financial officer; |
| (b) | was
subject to an order that was issued after the proposed director ceased to be a director,
chief executive office 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; or |
| (c) | 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. |
On
April 3, 2007, Patrick Evans, a director of Eurasia Gold Inc. (“Eurasia”) up until March 26, 2007, along with
the remaining directors, officers and insiders of Eurasia (collectively, the “Management”) were subject to
a cease trade order issued by the Ontario Securities Commission (“OSC”), which required all trading in and
all acquisitions of securities of Eurasia by Management to cease for a period of 15 days. The cease trade order was made because
Eurasia failed to file its audited financial statements for the year ended December 31, 2006, management’s discussion and
analysis relating to the audited annual financial statements for the year ended December 31, 2006, and annual information form
for the year ended December 31, 2006 (collectively, the “Year-End Financial Documents”). At a hearing held
before the OSC on April 16, 2007, it was further ordered that all trading in and acquisitions of securities of Eurasia by any
of the Management cease until Year-End Financial Documents were filed with the OSC. The cease trade order expired on April 25,
2007 when the Year-End Financial Documents were filed in accordance with the Ontario securities legislation. Prior to the issuance
of the cease trade order, Patrick Evans had resigned as a director of Eurasia and he has not been involved with Eurasia in any
capacity since March 26, 2007.
David
Whittle was a director of Image Innovations Holdings Inc. (“Image”), a company incorporated in the United States.
Image and its subsidiaries filed voluntary petitions for relief under Chapter 11, Title 11 of the United States Code on July 6,
2006. Image’s Joint Chapter 11 Liquidating Plan was confirmed by the Bankruptcy Court on August 21, 2007, and the Final
Decree closing the Chapter 11 cases was entered August 28, 2008.
Jonathan
Comerford was a director of Newfoundland and Labrador Refining Corporation (“NLRC”), incorporated under Newfoundland
law November 28, 2005. NLRC sought bankruptcy protection under the Canadian Bankruptcy and Insolvency Act on June 19, 2008, and
subsequently obtained Court approval for a proposal to creditors to sell or finance NLRC’s projects’ interests.
To
the best of management’s knowledge, no proposed director has, within the ten years before the date of this Information 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 proposed director.
To
the best of management’s knowledge, no proposed director has been subject to:
| (a) | 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 |
| (b) | any
other penalties or sanctions imposed by a court or regulatory body that would likely
be considered important to a reasonable securityholder in deciding whether to vote for
a proposed nominee director. |
EXECUTIVE
COMPENSATION
For
the purposes of this Information Circular:
| (a) | “Chief
Executive Officer” or “CEO” of the Corporation means the
individual who served as chief executive officer of the Corporation during the most recently
completed financial year; |
| (b) | “Chief
Financial Officer” or “CFO” of the Corporation means the
individual who served as chief financial officer of the Corporation during the most recently
completed financial year; |
| (c) | “executive
officer” of the Corporation means an individual who is a Chairman or Vice-Chairman
of the Board, the President, a Vice-President in charge of a principal business unit,
division or function including sales, finance or production, an officer of the Corporation
or any of its subsidiaries who performed a policy-making function in respect of the Corporation,
or any other individual who performed a policy-making function in respect of the Corporation; |
| (d) | “Named
Executive Officers” or “NEO” means; |
| (iii) | each
of the Corporation’s three most highly compensated officers (including any of its
subsidiaries), other than the CEO and CFO, who were serving as executive officers at
the end of the most recently completed financial year and whose total compensation, individually,
exceeded $150,000; and |
| (iv) | any
additional individuals for whom disclosure would have been provided under (iii) except
that the individual was not serving as an officer of the Corporation or its subsidiaries,
nor acting in a similar capacity, at the end of the most recently completed financial
year; |
| (e) | “Option-Based
Award” means an award under an equity incentive plan of options, including,
for greater certainty, share options, share appreciation rights, and similar instruments
that have option-like features; |
| (f) | “Share-Based
Award” means an award under an equity incentive plan or equity-based instruments
that do not have option-like features, including, for greater certainty, Common Shares,
restricted share units, deferred share units, phantom shares, phantom share units, common
share equivalent units, and stock. |
Compensation
Discussion and Analysis
Role
of the Compensation Committee
The
Compensation Committee is responsible for reviewing the Corporation’s compensation arrangements with its executive officers
as determined to be needed.
When
reviewing the compensation of the executive officers, as needed, the Compensation Committee considers the following objectives:
(i) recruiting and retaining the executives critical to the success of the Corporation and the enhancement of shareholder value;
(ii) providing fair and competitive compensation based upon a detailed comparison with the compensation levels paid for similar
positions by similar companies; (iii) balancing the interests of management and shareholders of the Corporation; and (iv) rewarding
performance, both on an individual basis and with respect to the business in general. The Compensation Committee has the responsibility
of reviewing the executive officers’ total compensation package in consultation with the CEO and making proposals to the
Board, reviewing and advising on stock option guidelines, including recommendations on specific option grants, and reviewing and
communicating to the Board the compensation policies and principles that will be applied to other executives and employees of
the Corporation.
Compensation
Philosophy
The
Corporation’s compensation philosophy provides that any and all employees, including those consulting in management roles,
receive compensation based on the market value for the type of role they perform. Compensation currently includes three elements:
(a) salary or consulting fees (pursuant to the consulting agreements with the NEOs), (b) cash bonuses and (c) long-term incentives
by way of the grant of stock options or restricted stock units in accordance with the policies of the TSX, the NASDAQ, and the
Corporation’s Long Term Equity Incentive Plan (the “Incentive Plan”).
The
Corporation does not provide sponsored or defined pension or retirement plans, nor does it provide any other benefit plans. Employees
and/or consultants to the Corporation are expected to provide for their own benefits and retirement.
Composition
of the Compensation Committee
The
Corporation’s Compensation Committee consists of Jonathan Comerford, Carl Verley (Chair), and David Whittle, three (3) non-management
directors (each of whom is also an “independent” director, as defined in the National Instrument 52-110 - Audit Committees,
United States securities laws and NASDAQ rules). However, compensation matters may also be reviewed and approved by the Board.
Mr.
Comerford, Mr. Verley and Mr. Whittle are directors and/or officers of other companies and have experience in compensation matters.
The Board believes that the members of the Compensation Committee collectively have the knowledge, experience and background required
to fulfill their mandate. Such knowledge, experience and background enables them to make decisions regarding the sustainability
of the Corporation’s compensation policies and practices. Mr. Verley has been the Chair of the Compensation Committee since
2003.
For
a discussion of the policies and practices adopted by the board to determine the compensation for the Company’s directors
and executive officers, see above under “Compensation Discussion and Analysis”.
Report
on Executive Compensation
The
Compensation Committee has no formal compensation policy. However, executive officers are compensated in a manner consistent with
their respective contributions to the overall benefit of the Corporation. The Corporation’s NEO’s during the fiscal
year ended December 31, 2016 were Patrick Evans, CEO, Bruce Ramsden, CFO and Reid Mackie, VP Diamond Marketing.
Executive
compensation is generally based on discussion by the Compensation Committee or by the Board. The Corporation entered into consulting
agreements with the CEO, Patrick Evans, in November 2005 (amended in August 2009 and May 2013). The Corporation entered into a
consulting agreement with the CFO, Bruce Ramsden, in January, 2013 and amended on January 1, 2014 and January 1, 2016. The Corporation
entered into a consulting agreement with the VP Diamond Marketing, Reid Mackie, in July, 2015. The compensation granted to the
CEO, CFO and the VP Diamond Marketing is primarily cash-based however, Patrick Evans, Bruce Ramsden and Reid Mackie were granted
options upon the execution of their respective consulting agreements (and the amended consulting agreements) in order to align
the interests of management and shareholders. For an overview of these consulting agreements, please refer to the discussion below
under the heading “Executive Compensation - Employment/Consulting Agreements of NEOs”.
As
part of the Compensation Committee’s “Terms of Reference”, the Compensation Committee is tasked with the responsibility
of reviewing and recommending any changes to compensation for the Corporation’s senior management, or to defer such discussions
to the Board, and to make any recommendations for the granting of options. The Compensation Committee finalized its recommendations
to the Board for changes to compensation for management, including the grant of restricted share units to Mr. Evans, Mr. Ramsden
and Mr. Mackie in December 2016, which vest over three years commencing on December 31, 2017. Directors were granted restricted
share units vesting over three years commencing December 31, 2017, and their Directors’ fees were increased effective January
1, 2017.
Elements
of Compensation
Consulting
Fees
Pursuant
to the consulting agreements noted above, the CEO, CFO and VP Diamond Marketing provide consulting services to the Corporation
in connection with their respective roles with the Corporation. There are no other NEOs with employment or other agreements with
the Corporation.
The
Corporation has not retained a compensation consultant or advisor to assist the Board of Compensation Committee in determining
compensation for any of the Corporation’s directors or executive officers.
Long-Term
Incentives
The
Corporation provides long-term incentives by granting stock options or restricted share units to executive officers in accordance
with the policies of the TSX and the Corporation’s Incentive Plan. Any options granted permit executive officers to acquire
Common Shares at an exercise price equal to the closing market price of such shares at the time of grant of the option. The objective
of granting options and/or restricted share units is to encourage executive officers to acquire an ownership interest in the Corporation
over a period of time, which acts as financial incentive for such executive officers to consider the long-term interests of the
Corporation and its shareholders.
When
determining the number of stock options or restricted share units to be granted to an executive officer, the Compensation Committee
takes into account the number and terms of stock options or restricted share units previously granted to the executive officer,
if any, and option compensation granted by similar companies to executives with similar responsibilities.
On
May 17, 2016, the Board approved the adoption of the Incentive Plan, which is designed to replace the Corporation’s Stock
Option Plan. Shareholders approved the plan at the special meeting of shareholders held on June 21, 2016.
Other
Compensation
The
Corporation provides no compensation to its NEOs other than the amounts under their respective consulting arrangements and Long-Term
Incentives as described above. For greater certainty, the Corporation makes no commitments for Option-Based Awards or Share-Based
Awards other than the stock options granted pursuant to the Corporation’s Incentive Plan.
Compensation
Risk
In
the upcoming year, the Compensation Committee will undertake a review of the risks associated with the Corporation's compensation
of its NEOs, other executives (if any), and directors and, based on the review, the Board will determine whether any steps should
be taken to mitigate and/or manage any identified risks.
NEOs
and directors are discouraged from purchasing financial instruments designed to hedge or offset a decrease in market value of
equity securities granted as compensation or held, directly or indirectly, by the NEO or director, and to the knowledge of the
Corporation, no NEO or director has undertaken such hedging transactions. The Corporation does not, however, have a policy expressly
prohibiting such purchases.
Employment/Consulting
Agreements of NEOs
The
Corporation and its subsidiaries have no employment contracts with any Named Executive Officer, but have Consulting Agreements
with the CEO and CFO, the Corporation’s only Named Executive Officers.
CEO
Compensation
The
Corporation has a Consulting Agreement with Patrick Evans for his services as President and CEO which was effective November 1,
2005 and amended in August 2009 and May 2013 (the “Evans Agreement”). The amended agreement allows for the
provision of future performance-based bonus payments. The monthly consulting fee under the Evans Agreement is $33,333, and in
the year ended December 31, 2016, the Corporation paid or accrued a total of $1,000,000 in monthly consulting fees and bonuses
to Mr. Evans. Effective January 1, 2017 Mr. Evans’ consulting fee was increased to $41,667 per month. Under the Evans Agreement,
Patrick Evans is entitled to receive a severance payment equal to six months of his annual compensation in the event that the
Evans Agreement is terminated, without cause by the Corporation (as defined in the Evans Agreement). In the event of termination
as a result of change in control of the Corporation (as defined in the Evans Agreement), Patrick Evans will receive a severance
payment equal to 24 months of his total annual compensation, benefits and full incentive compensation for the same period, all
payable within 30 days of termination. In addition, the Corporation will fully fund Mr. Evans RBC life insurance policy to maturity
through a lump sum payment, estimated at approximately $400,000 based on term of the policy and prevailing interest rates. All
stock options or restricted shares held by Mr. Evans will vest upon the Change of Control.
CFO
Compensation
The
Corporation entered into a Consulting Agreement with a corporation controlled by Bruce Ramsden, to provide the services of Mr.
Ramsden as VP Finance, effective February 1, 2013 and as VP Finance, Chief Financial Officer and Corporate Secretary, effective
May 1, 2013 (the “Ramsden Agreement”). The Ramsden Agreement provides for a monthly consulting fee of $17,500,
and in the year ended December 31, 2016, the Corporation paid or accrued a total of $315,000 in monthly consulting fees and bonuses
under the Ramsden Agreement. Mr. Ramsden advised in December 2016 of his intention to resign as VP Finance, Chief Financial Officer
and Corporate Secretary, effective January 31, 2017.
The
Corporation entered into an Employment Agreement with Perry Ing, to serve as VP Finance, Chief Financial Officer and Corporate
Secretary, effective February 6, 2017 (the “Ing Agreement”). The Ing Agreement provides for a monthly salary
of $25,000. Under the Ing Agreement, Perry Ing is entitled to receive a severance payment equal to six months of his annual compensation
in the event that the Ing Agreement is terminated, without cause by the Corporation (as defined in the Ing Agreement). In the
event of termination as a result of change in control of the Corporation (as defined in the Ing Agreement), Perry Ing will receive
a severance payment equal to 18 months of his total annual compensation, benefits and full incentive compensation for the same
period, all payable within 30 days of termination.
VP
Diamond Marketing Compensation
The
Corporation entered into a Consulting Agreement with a corporation controlled by Reid Mackie, to provide the services of Mr. Mackie
as VP Diamond Marketing, effective October 1, 2015 (the “Mackie Agreement”). The Mackie Agreement provides
for a monthly consulting fee of $17,500, and in the year ended December 31, 2016, the Corporation paid or accrued a total of $315,000
in monthly consulting fees and bonuses under the Mackie Agreement. The consulting fee was adjusted on January 1, 2017 to $20,833
per month.
Performance
Graph
The
following chart compares the total cumulative shareholder return for $100 invested in Common Shares, beginning on March 31, 2011,
with the cumulative total return of the S&P/TSX Composite Index (“S&P/TSX Index”) for the five most
recently completed financial years of the Corporation.
Mountain
Province Diamonds Inc. (“MPV”)
Cumulative Value of $100 Investment January 1, 2011
| |
Dec
2011 |
Dec
2012 |
Dec
2013 |
Dec
2014 |
Dec
2015 |
Dec
2016 |
| MPV |
$3.90 |
$3.89 |
$5.29 |
$4.85 |
$3.96 |
$6.72 |
| S
& P/TSX Composite Index |
11,955.09 |
12,433.50 |
13,621.55 |
14,632.44 |
13,009.95 |
15,287.59 |
Over
this period of time, the trend in the level of compensation paid to executive officers has been broadly similar to the trend of
the Corporation's cumulative total shareholder return relative to the cumulative total return of the S&P/TSX Index, allowing
for the increase over this period of the Corporation's management responsibilities and financing requirements as its
primary mining project has advanced toward the development phase.
Share-Based
and Option-based awards
The
Corporation’s Incentive Plan has been used to provide share purchase options which are granted in consideration of the level
of responsibility of the executive as well as his or her impact or contribution to the longer-term operating performance of the
Corporation. In determining the number of options to be granted to the executive officers, the Board takes into account the number
of options, if any, previously granted to each executive officer, and the exercise price of any outstanding options to ensure
that such grants are in accordance with the policies of the TSX, and closely align the interests of the executive officers with
the interests of shareholders.
The
Compensation Committee has the primary responsibility of administering the compensation policies related to the executive management
of the Corporation, including option-based awards.
On
May 17, 2016, the Board approved the adoption of the Incentive Plan, which is designed to replace the Corporation’s Stock
Option Plan. The Incentive Plan provides for the issuance of stock appreciation rights, deferred share units and other share-based
awards. A copy of the Incentive Plan is attached hereto as Schedule “B”. At the Meeting of Shareholders held on June
21, 2016, the Shareholders approved the Incentive Plan.
Summary
Compensation Table
The
following table (presented in accordance with National Instrument Form 51-102F6) sets forth all direct and indirect compensation
provided to the Corporation’s Named Executive Officers for the financial years ended December 31, 2016, 2015 and 2014.
| NEO
Name and Principal Position |
Year |
Fee
($) |
Share-Based
Awards
($)(5) |
Option-Based
Awards
($)(4) |
Non-Equity
Incentive Plan Compensation ($) |
Pension
Value
($) |
All
Other Compensation
($) |
Total
Compensation
($) |
Annual
Incentive Plans
($) |
Long-term
Incentive Plans
($) |
Patrick
Evans(1)
(President
and CEO) |
2016
2015
2014
|
$400,000
$300,000
$270,000
|
$324,500
Nil
Nil |
Nil
$598,175
$137,000
|
$600,000
$520,500
$229,500
|
Nil
Nil
Nil |
Nil
Nil
Nil |
Nil
Nil
Nil
|
$1,324,500
$1,418,675
$
636,500
|
Bruce
Ramsden(2)
(CFO) |
2016
2015
2014
|
$210,000
$200,000
$165,000
|
$162,250
Nil
Nil |
Nil
$270,910
$68,650
|
$105,000
$215,500
$82,500
|
Nil
Nil
Nil |
Nil
Nil
Nil |
Nil
Nil
Nil |
$477,250
$686,410
$316,000
|
Reid
Mackie(3)
(VP
Diamond Marketing) |
2016 |
$210,000 |
$285,650 |
Nil |
$105,000 |
Nil |
Nil |
Nil |
$600,650 |
| (1) | Mr. Evans was paid $400,000 for the year ended December 31, 2016 and $300,000 for the year ended December
31, 2015 and $270,000 for the year ended December 31, 2014, pursuant to the terms of the Evans Agreement for his services as President
and CEO as well as the amounts indicated under “Annual Incentive Plans” for the year ended December 31, 2016, December
31, 2015, and the year ended December 31, 2014, also pursuant to the Evans Agreement in August 2009 and May 2013. Mr. Evans was
also a director of the Corporation and received a fee of $Nil for acting in this capacity for the year ended December 31, 2016,
$Nil for the year ended December 31, 2015, and $Nil for the year ended December 31, 2014. Mr. Evans’ payment under the annual
incentive plan for December 31, 2016 was accrued and paid to him in November 2016. His payment under the annual incentive plan
for December 31, 2015 was earned by him and paid by the Corporation in December 2015. |
| (2) | Mr. Ramsden joined the Corporation on February 1, 2013 as VP Finance and on May 1, 2013 as VP Finance,
CFO and Corporate Secretary. Mr. Ramsden resigned on January 31, 2017. |
| (3) | Mr. Mackie joined the Corporation on October 1, 2015 as VP Diamond Marketing. |
| (4) | In the fiscal year ended December 31, 2016, no stock options were granted, 200,000 stock options were
granted on April 14, 2015 and 250,000 stock options were granted on December 11, 2015 to Mr. Evans in his capacity as President
and CEO, and 100,000 stock options were granted on April 14, 2015 and 100,000 stock options were granted on December 11, 2015 to
Mr. Ramsden in his capacity as CFO. These options vested immediately and expire on April 12, 2020 and December 10, 2020 respectively.
They have an exercise price of $4.66 and $3.57 per share respectively.
They were valued using the Black-Scholes model (a common methodology) as the methodology to calculate the grant date fair value
and the Corporation relied on the following key assumptions and estimates for the calculation of these Option-based Awards:
April 14, 2015 Stock Options
Dividend yield - nil; Expected volatility - 37.76%; Risk-free rate of return - 0.73%; Expected life of options - 5 years. The fair
value at the time of grant was calculated to be $476,400 for the options granted to Mr. Evans and Mr. Ramsden.
December 11, 2015 Stock Options
Dividend yield - nil; Expected volatility - 34.8%; Risk-free rate of return - 0.74%; Expected life of options - 5 years. The fair
value at the time of grant was calculated to be $394,485 for the options granted to Mr. Evans and Mr. Ramsden.
|
| (5) | In the fiscal year ended December 31, 2016, 20,000 restricted stock options were granted on June 21, 2016 to Mr. Mackie in
his capacity as VP Diamond Marketing at a deemed price of $6.17 per restricted share unit. These restricted shares vest 50% on
December 31, 2016 and 50% on June 30, 2017. On December 21, 2017, 50,000, 25,000 and 25,000 restricted share units were granted
at a deemed price of $6.49 to Mr. Evans, Mr. Ramsden and Mr. Mackie respectively vesting equally over three years commencing December
31, 2017. |
Incentive
Plan Awards
The
Corporation does not have any incentive plans for NEOs except for Mr. Evans, Mr. Ramsden and Mr. Mackie, pursuant to the Evans,
Ramsden and Mackie Agreements, as previously discussed.
Outstanding
Share-Based Awards and Option-Based Awards
The
following table sets forth information concerning all awards outstanding under incentive plans of the Corporation at the end of
the most recently completed financial year, including awards granted before the more recently completed financial year, to each
of the Named Executive Officers:
| |
Option-Based
Awards |
Share-Based
Awards |
| Name |
Number
of Securities Underlying Unexercised Options (#) |
Option
Exercise Price ($) |
Option
Expiration Date |
Value
of Unexercised In-the-Money Options(1)
($) |
Number
of Shares or Units of Shares That Have Not Vested
(#) |
Market
or Payout Value of Share-Based Awards That Have Not Vested ($) |
Market
or Payout Value of Vested Share-Based Awards Not Paid Out or Distributed ($) |
| Patrick
Evans |
250,000
200,000
100,000
100,000
100,000
|
$3.57
$4.66
$5.29
$5.00
$4.84 |
December
10, 2020
April
13, 2020
February
13, 2019
May
13, 2018
March
7, 2017 |
$787,500
$412,000
$143,000
$172,000
$188,000 |
50,000
Nil
Nil
Nil
Nil |
$324,500
Nil
Nil
Nil
Nil |
Nil
Nil
Nil
Nil
Nil |
| Bruce
Ramsden |
100,000
50,000
100,000 |
$4.66
$5.29
$4.08 |
April
13, 2020
February
13, 2019
January
31, 2018 |
$206,000
$71,500
$264,000 |
25,000
Nil
Nil
|
$162,250
Nil
Nil
|
Nil
Nil
Nil
|
| Reid
Mackie |
100,000 |
$4.21 |
October
15, 2020 |
$167,334 |
68,333 |
$307,616 |
Nil |
| (1) | This
amount is calculated based on the difference between the market value of the securities
underlying the options at the end of the most recently completed financial year, which
is $6.72, and the exercise or base price of the vested options. |
Incentive
Plan Awards - Value Vested or Earned During The Year
The
following table sets out the value of the option-based awards that vested during the financial year ended December 31, 2016 for
each Named Executive Officer. There were no share-based awards or non-equity incentive plan compensation amounts:
NEO Name |
Option-Based
Awards -
Value
Vested during the Year(1) ($) |
Restricted
Share Unit Awards -
Value
Vested during the Year(1) ($) |
| Patrick
Evans |
$Nil |
$Nil |
| Bruce
Ramsden(2) |
$Nil |
$Nil |
| Reid
Mackie(3) |
$83,666 |
$61,700 |
| (1) | The
value of unexercised in-the-money options on date vested is based on the number of options
that became vested on the applicable date and is calculated based on the difference between
the market value of the Common Shares on the TSX as at the date of vesting and the exercise
price of the option. Options granted during the year vested immediately and the exercise
price represented market value at the time of the grant (and vesting). |
| (2) | Mr.
Ramsden commenced as CFO on May 1, 2013 and resigned on January 31, 2017. |
| (3) | Mr.
Mackie commenced as VP Diamond Marketing on October 1, 2015. |
Long
Term Incentive Plan
The
Stock Option Plan was established on November 26, 1998 and later amended on September 27, 2002 and September 10, 2009. It was
approved by the shareholders of the Corporation at the annual and special meeting of shareholders of the Corporation on September
10, 2009 and re-approved at the annual meeting of shareholders on June 14, 2012. On June 21, 2016, the shareholders of the Corporation
approved The Long Term Incentive Plan, which allows the Board, from time to time and in its sole discretion, to determine the
eligibility of those directors, employees and other persons who provide ongoing services to the Corporation, who are eligible
to participate under the Incentive Plan. The Board believes that stock options and restricted share units provide an effective
tool for the Corporation to enable it to attract and retain key personnel in the face of competition from larger companies.
The
Incentive Plan provides that the maximum number of shares that may be reserved for issuance will be 10% of the Corporation’s
issued and outstanding shares at the time of the grant. As of February 28, 2017, there are 2,765,000 stock options and 320,000
restricted share units outstanding representing 1.93% of the issued and outstanding common shares of the Corporation.
The
material terms of the Long Term Incentive Plan are as follows:
| 1. | In
no case, may the issuance of shares under the Incentive Plan and any other share compensation
arrangement of the Corporation result in: |
| (a) | the
number of shares reserved for issuance: |
| (i) | to
insiders exceeding 10% of the Corporation’s issued and outstanding share capital;
or |
| (ii) | to
any one person exceeding 5% of the Corporation’s issued and outstanding share capital; |
| (b) | the
number of shares issued within a one year period: |
| (i) | to
insiders exceeding 10% of the Corporation’s issued and outstanding share capital;
or |
| (ii) | to
any one insider and its associates exceeding 5% of the Corporation’s issued and
outstanding share capital. |
| 2. | The
exercise price of any option issued under the Stock Option Plan shall not be less than
the market value of the Common Shares as of the date of the grant. The market value of
the Common Shares shall be determined in accordance with the Incentive Plan, but in any
event, shall not be less than the closing price of the Common Shares on the TSX on the
business day immediately prior to the date of the grant. If the Corporation’s Common
Shares are not listed on an organized trading facility, then the market value will be,
subject to the necessary approvals of the applicable regulatory authorities, that value
as is determined by resolution of the Board. |
| 3. | Subject
to all applicable securities laws and regulations and the rules and policies of all applicable
regulatory authorities, the Board may attach terms and conditions to a grant of option
under the Incentive Plan. These terms and conditions may include, but are not necessarily
limited to, the following: |
| (a) | providing
that an option expires on a specified date after the option holder ceases to be a director
or employee of the Corporation or ceases to provide services to the Corporation; |
| (b) | providing
that a portion or portions of an option vest after certain periods of time or expire
after certain periods of time; and |
| (c) | providing
that an option be exercisable immediately, in full, notwithstanding that it has vesting
provisions, upon the occurrence of certain events, such as a friendly or hostile takeover
bid for the Corporation. |
| 4. | The
expiry date of an option under the Incentive Plan shall be the date so fixed by the Board
on the date of the grant, provided such expiry date shall be no later than the tenth
anniversary of the date of the grant. |
| 5. | Options
issued under the Incentive Plan may not be assigned or transferred except to the legal
personal representatives of a deceased optionee. |
| 6. | The
Incentive Plan provides for the cashless exercise of options in the event of a bona fide
offer (an “Offer”) for common shares of the Corporation made to holders
of options, or to shareholders of the Corporation generally, or to a class of shareholders
which includes the option holders, which Offer, if accepted in whole or in part, would
result in the offeror becoming a control person of the Corporation, within the meaning
given to “control person” in the Securities Act (Ontario), and all
stock options will become vested and any optionee may surrender his or her options to
the Corporation and receive a payment equal to: |
| (a) | if
the Offer is a cash offer, the difference between the option price and the offer price
under the Offer; and |
| (b) | if
the Offer is in securities of the offeror, a number of securities of the offeror based
on the difference between the Offer consideration and the option exercise price, multiplied
by the number of Common Shares held under option. |
If
the Offer is not completed in the time and manner specified in the Offer, or if the Offeror does not take up all Common Shares
tendered by the Option Holder, any Common Shares issued upon exercise of stock options may be returned to the Corporation and
the stock options reinstated.
| 7. | The
Board may from time to time amend the Incentive Plan and the terms and conditions of
any option granted under the Incentive Plan without obtaining shareholder approval and,
without limitation, may make amendments for the purpose of meeting any changes in any
relevant law, rule or regulation applicable to the Incentive Plan, or for any other purpose
which may be permitted by all relevant laws, regulations, rules and policies provided
that any such amendment shall not alter the terms or conditions of any option issued
under the Incentive Plan or impair any right of any option holder pursuant to any option
awarded prior to such amendment. The Board’s discretion includes, without limitation,
the authority to make amendments respecting administration of the plan, to change the
class of eligible persons under the plan, to substitute any option with another award
of the same or a different type, to adjust for any share consolidation or reclassification,
to clarify any ambiguity, inconsistency or omission in the Incentive Plan and other amendments
of a clerical or housekeeping nature, to alter the vesting or termination provisions,
and to modify the mechanics of exercise. |
| 8. | The
exercise price of any outstanding stock option granted to any non-insiders of the Corporation
may not be reduced unless shareholder approval is obtained. The exercise price of any
outstanding stock option may not be reduced and the original exercise period may not
be extended to the benefit of insiders of the Corporation unless disinterested shareholder
approval is obtained. |
On
May 17, 2016, the Board approved the adoption of the Incentive Plan, which is designed to replace the Corporation’s Stock
Option Plan. The Incentive Plan provides for the issuance of stock appreciation rights, deferred share units and other share-based
awards. The Incentive Plan was approved by the shareholders at the 2016 Annual General and Special Meeting on June 21, 2016.
Pension
Plan Benefits
The
Corporation does not have any form of pension plan that provides for payments or benefits to the Named Executive Officers at,
following, or in connection with retirement. The Corporation does not have any form of deferred compensation plan.
Termination
and Change of Control Benefits
Except
as disclosed above under the heading “Executive Compensation - Employment/Consulting Agreements of NEOs”, the Corporation
and its subsidiaries do not have any contracts, agreements, plans or arrangements that provide for payments to a Named Executive
Officer at, following, or in connection with any termination (whether voluntary, involuntary or constructive), resignation, retirement,
change in control of the Corporation, or change in a Named Executive Officer’s responsibilities.
Director
Compensation
Director
Compensation Table
The
following table sets forth all amounts of compensation provided to the directors, who are each not also a Named Executive Officer,
for the Corporation’s most recently completed financial year ended December 31, 2016:
| Director
Name |
Fees
Earned
($)(1) |
Other
fees earned |
Share-Based
Awards ($)(3) |
Option-Based
Awards ($)(2) |
Long
Term Incentive Awards
($) |
Non-Equity
Incentive Plan Compensation ($) |
Pension
Value
($) |
All
Other Compensation ($) |
Total
($) |
| Jonathan
Comerford |
$40,000 |
Nil |
$162,250 |
Nil |
Nil |
Nil |
Nil |
Nil |
$202,250 |
| Peeyush
Varshney |
$35,000 |
Nil |
$162,250 |
Nil |
Nil |
Nil |
Nil |
Nil |
$197,250 |
| Carl
Verley |
$35,000 |
Nil |
$162,250 |
Nil |
Nil |
Nil |
Nil |
Nil |
$197,250 |
| David
Whittle |
$35,000 |
Nil |
$162,250 |
Nil |
Nil |
Nil |
Nil |
Nil |
$197,250 |
| Bruce
Dresner |
$30,000 |
Nil |
$162,250 |
Nil |
Nil |
Nil |
Nil |
Nil |
$192,250 |
| Karen
Goracke |
$5,000 |
Nil |
$162,250 |
$213,910 |
Nil |
Nil |
Nil |
Nil |
$381,160 |
| (1) | Effective
January 1, 2015, compensation for the directors has been approved at the following levels:
the Chairman of the Board is entitled to receive $40,000 per annum, the Chairman of the
Audit Committee is entitled to receive $35,000 per annum, the director serving as the
Corporation’s Qualified Person is entitled to receive $35,000 per annum, the Director
serving as the Corporate Governance Chairman is entitled to receive $35,000 per annum
and all other directors are entitled to receive $30,000 per annum. These amounts continue
to be paid monthly. Effective January 1, 2017, compensation for the directors has been
approved at the following levels: the Chairman of the Board is entitled to receive $50,000
per annum, the Chairman of the Audit Committee is entitled to receive $45,000 per annum,
the director serving as the Corporation’s Qualified Person is entitled to receive
$45,000 per annum, the Director serving as the Corporate Governance Chairman is entitled
to receive $45,000 per annum and all other directors are entitled to receive $35,000
per annum. These amounts continue to be paid monthly. |
| (2) | As
stated previously in this Information Circular, the Corporation has an Incentive Plan
for the granting of incentive stock options and restricted share units to the officers,
employees, and directors. The purpose of granting such options and restricted share units
is to assist the Corporation in compensating, attracting, retaining and motivating the
directors of the Corporation and to closely align the personal interests of such persons
to those of the shareholders. For further details about the Incentive Plan, please refer
to the discussion above under the heading “Executive Compensation - Incentive Plan”. |
| (3) | On
December 21, 2016, the directors were granted Restricted Share Units, vesting equally
over three years, commencing on December 21, 2017. |
Incentive
Plan Awards - Outstanding Share-Based Awards and Option-Based Awards
The
following table sets forth information concerning all awards outstanding under incentive plans of the Corporation at the end of
the most recently completed financial year, including awards granted before the most recently completed financial year, to each
of the directors who are not Named Executive Officers:
| |
Option-Based
Awards |
Share-Based
Awards |
| Name |
Number
of Securities Underlying Unexercised Options (#) |
Option
Exercise Price ($) |
Option
Expiration Date |
Value
of Unexercised In-the-Money Options(1)
($) |
Number
of Shares or Units of Shares That Have Not Vested
(#) |
Market
or Payout Value of Share-Based Awards That Have Not Vested ($) |
Market
or Payout Value of Vested Share-Based Awards Not Paid Out or Distributed ($) |
| Jonathan
Comerford |
75,000
150,000
150,000 |
$3.57
$4.66
$5.28 |
December
10, 2020
April
13, 2020
July
2, 2018 |
$236,250
$309,000
$216,000 |
25,000
Nil
Nil |
$162,250
Nil
Nil |
Nil
Nil
Nil |
| Peeyush
Varshney |
50,000
100,000
100,000 |
$3.57
$4.66
$5.28 |
December
10, 2020
April
13,2020
July
2, 2018 |
$157,500
$206,000
$144,000 |
25,000
Nil
Nil |
$162,250
Nil
Nil |
Nil
Nil
Nil |
| David
Whittle |
50,000
100,000
100,000 |
$3.57
$4.66
$5.28 |
December
10, 2020
April
13,2020
July
2, 2018 |
$157,500
$206,000
$144,000 |
25,000
Nil
Nil |
$162,250
Nil
Nil |
Nil
Nil
Nil |
Carl
Verley |
50,000
100,000
100,000 |
$3.57
$4.66
$5.28 |
December
10, 2020
April
13,2020
July
2, 2018 |
$157,500
$206,000
$144,000 |
25,000
Nil
Nil |
$162,250
Nil
Nil |
Nil
Nil
Nil |
Bruce
Dresner |
50,000
100,000
100,000
50,000 |
$3.57
$4.66
$4.06
$5.28 |
December
10, 2020
April
13, 2020
March
10, 2018
July
2, 2018 |
$157,500
$206,000
$266,000
$144,000 |
25,000
Nil
Nil
Nil |
$162,250
Nil
Nil
Nil |
Nil
Nil
Nil
Nil |
Karen
Goracke |
100,000 |
$6.96 |
November
3, 2021 |
$Nil |
25,000 |
$162,250 |
Nil |
| (1) | This
amount is calculated based on the difference between the market value of the securities
underlying the options at the end of the most recently completed financial year, which
is $6.72, and the exercise or base price of the option. |
Incentive
Plan Awards - Value Vested or Earned During the Year
The
following table sets out the value of the option-based awards that vested during the financial year ended December 31, 2016 for
each non-executive director. There were no share-based awards or non-equity incentive plan compensation amounts:
| Director
Name |
Option-Based
Awards -
Value
Vested during the Year (1) ($) |
| Jonathan
Comerford |
Nil |
| Bruce
Dresner |
Nil |
| Peeyush
Varshney |
Nil |
| Carl
Verley |
Nil |
| David
Whittle |
Nil |
| Karen
Goracke |
Nil |
| (1) | The
value of unexercised in-the-money options on the date vested is based on the number of
options that became vested on the applicable date and is calculated based on the difference
between the market value of the Common Shares on the TSX as at the date of vesting and
the exercise price of the option. |
INDEBTEDNESS
OF DIRECTORS AND EXECUTIVE OFFICERS
As
at the date of this Information Circular, no executive officer, director, employee or former executive officer, director or employee
of the Corporation or any of its subsidiaries is, or at any time since the beginning of the most recently completed financial
year, has any of them been, indebted to the Corporation, or any of its subsidiaries, nor is any of these individuals, or at any
time since the beginning of the most recently completed financial year, has any of them been, indebted to another entity which
indebtedness is the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding
provided by the Corporation or any of its subsidiaries.
APPOINTMENT
AND REMUNERATION OF AUDITOR
Shareholders
will be asked to approve the reappointment of KPMG LLP, Chartered Accountants (“KPMG”), as the auditor of the
Corporation to hold office until the next annual general meeting of the shareholders at remuneration to be fixed by the directors.
The auditor was first appointed on August 6, 1998.
MANAGEMENT
CONTRACTS
No
management functions of the Corporation or its subsidiaries are performed to any substantial degree by a person other than the
directors or executive officers of the Corporation or its subsidiaries.
DISCLOSURE
OF CORPORATE GOVERNANCE PRACTICES
Corporate
Governance relates to the activities of the Board of Directors. National Policy 58-201 - Corporate Governance Disclosure (“NI
58-201”) and the Sarbanes-Oxley Act of 2002 (the “Act”), the rules adopted by the United States Securities
and Exchange Commission (the “SEC”) pursuant to the Act, and the NASDAQ corporate governance rules (the “NASDAQ
Rules”) as they apply to foreign private issuers, together establish corporate governance guidelines which apply to
the Corporation. Corporate governance relates to activities of the Board, the members of which are elected by and are accountable
to the shareholders, and takes into account the role of the individual members of management who are appointed by the Board and
who are charged with the day to day management of the Corporation. The Board is committed to sound corporate governance practices
which are both in the interests of its shareholders and contribute to effective and efficient decision making. NI 58-101 - Disclosure
of Corporate Governance Practices requires that each reporting company disclose its corporate governance practices on an annual
basis.
The
Corporation’s general approach to corporate governance is summarized below.
Board
of Directors
The
Board is currently composed of six directors. Management proposes to set the number of directors at seven and to elect seven
nominees for the ensuing year. All seven proposed nominees with the exception of Patrick Evans are current directors. Mr.
Evans stepped down as a Director on November 3, 2016 to allow for the appointment of Ms. Karen Goracke.
Independence
Section
1.4 of National Instrument 52-110 (“NI 52-110”) sets out the standard for director independence. Under NI 52-110,
a director is independent if he has no direct or indirect material relationship with the Corporation. A material relationship
is a relationship which could, in the view of the Board, be reasonably expected to interfere with the exercise of a director’s
independent judgment. NI 52-110 also sets out certain situations where a director will automatically be considered to have a material
relationship with the Corporation.
Applying
the definition set out in section 1.4 of NI 52-110, six of the six current members of the Board are independent. The
members who are independent are: Jonathan Comerford, Carl Verley, David Whittle, Bruce Dresner, Peeyush Varshney and Karen Goracke.
Patrick
Evans, a director nominee, is not independent by virtue of the fact that he is an executive officer of the Corporation (Mr.
Evans has been the President and CEO since November 2005 and served as a director until November 3, 2016).
In
order to facilitate its exercise of independent judgment in carrying out the responsibilities of the Board, the Board ensures
that a majority of independent directors sit on all Board committees.
Other
Directorships
In
addition to their positions on the Board, the following directors also serve as directors of the following reporting issuers or
reporting issuer equivalents as of the date of this Information Circular:
| Name
of Director |
Reporting
Issuer(s) or Equivalent(s) |
| Patrick
Evans |
Archon
Minerals Limited; Mirasol Resources Ltd. |
| Jonathan
Comerford |
Kennady
Diamonds Inc. |
| Bruce
Dresner |
Sherman
Fairchild Foundation (nonprofit) |
| Peeyush
Varshney |
Canada
Zinc Metals Corp.; Margaret Lake Diamonds Inc. |
| Carl
Verley |
None |
| David
Whittle |
None |
| Karen
Goracke |
None |
Meetings
of Directors
The
Board meets as necessary in the absence of management to ensure the Board’s functional independence from management. The
Corporation recognizes the desirability of directors being able to consult outside professional advice, as appropriate, in the
discharge of their duties.
Since
the beginning of the Corporation’s most recently completed financial year, the independent directors have not held a meeting
at which non-independent directors were not in attendance. The independent directors do not hold regularly scheduled meetings
without non-independent directors and the Corporate Secretary (who is also a member of senior management; however, the Board has
adopted a practice whereby the independent directors routinely hold an in-camera session following most Board meetings. Open and
candid discussion among independent directors is encouraged, and the independent directors are free to communicate with each other
independent of the non-independent director and management as they feel is appropriate, and by the means they consider appropriate.
Independence
of Chair
The
Corporation’s corporate governance structure recognizes the value of separating the offices of the Chair and the CEO. Patrick
Evans is the Corporation’s President and Chief Executive Officer and the Board is chaired by Jonathan Comerford, an independent
director.
Attendance
The
Board meets on a regularly scheduled basis and more frequently if required. Since January 1, 2016, the beginning of the most recently
completed financial year, the Board met 12 times. Jonathan Comerford, David Whittle, Carl Verley, Bruce Dresner and Peeyush Varshney
attended all 12 meetings. Patrick Evans attended 6 of 6 meetings until he resigned as a director on November 3, 2016 and Karen
Goracke attended 4 of 4 meetings since her appointment as a director on November 3, 2016.
Board
Mandate
The
Board is required to supervise the management of the business and affairs of the Corporation and to act with a view to the best
interests of the Corporation and its shareholders. The Board actively oversees the development, adoption and implementation of
the Corporation’s strategies and plans. The Board’s responsibilities include:
| (a) | representing
the interests of the shareholders in all significant decisions affecting the Corporation
and ensuring that shareholders are kept informed of developments affecting the Corporation; |
| (b) | the
Corporation’s strategic planning process, |
| (c) | the
identification of the principal risks of the Corporation’s business and ensuring
the implementation of appropriate systems to manage risk, |
| (d) | reviewing
significant operational and financial issues as they arise and providing direction to
management of these matters, |
| (e) | acting
diligently to ensure that the Corporation fulfils its legal and regulatory requirements, |
| (f) | evaluating
the effectiveness of senior management and establishing their compensation, |
| (g) | evaluating
whether or not directors receive the information they require to perform their duties
as directors, |
| (h) | the
Corporation’s succession planning, including appointing, training and monitoring
senior management, |
| (i) | the
Corporation’s major business development initiatives, |
| (j) | the
integrity of the Corporation’s internal control and management information systems, |
| (k) | the
Corporation’s policies for communicating with shareholders and others, and |
| (l) | the
general review of the Corporation’s results of operations. |
The
Board considers certain decisions to be of sufficient importance to the Corporation and as such, requires management to seek the
prior approval of the Board with respect to these decisions. Such decisions include:
| (a) | approval
of the annual capital budget and any material changes to the operating budget, |
| (b) | approval
of the Corporation’s business plan and monitoring performance, |
| (c) | acquisition
of, or investments in, new business, |
| (d) | changes
in the nature of the Corporation’s business, |
| (e) | changes
in senior management, and |
| (f) | all
matters as required under the Business Corporations Act (Ontario). |
Position
Descriptions
There
are no written position descriptions for the Chair of the Board and the chairs of each Board committee. The roles and responsibilities
of each Board committee are included in the “Terms of Reference” for each Board committee. It is understood by the
Board committee chairs that they are responsible for the overall management, guidance, and functioning of their respective committee.
As well, there exists a Corporation Mandate for the Board, and the Chair of the Board understands that it is his role to ensure
the overall management, guidance, and functioning of the Board.
The
duties and responsibilities of the President and CEO are included in the Evans Agreement including the power and authority to
manage, supervise and direct the Corporation’s business and affairs, and to undertake such other duties as may, from time
to time, be assigned to the President and CEO by the Board. Such duties and responsibilities are indicated to be subject always
to the control and direction of the Board.
Orientation
and Continuing Education
Board
turnover is relatively rare and, accordingly, the Corporation has not adopted a formalized process of orientation for new Board
members. Orientation of new directors is conducted on an as-needed basis.
With
respect to current directors, they are kept informed as to matters impacting, or which may impact, the Corporation’s operations
through reports and presentations at Board meetings. Directors are also provided with the opportunity to meet with senior management
and other employees, advisors and directors, who can answer any questions that may arise.
Business
Conduct Policy
The
Corporation has adopted a Business Conduct Policy (May 2006, amended in September 2010) posted on its website at www.mountainprovince.com
and available on SEDAR at www.sedar.com and on the SEC’s website at https://www.sec.gov/edgar.shtml as an exhibit to the
Corporation’s annual report on Form 20-F for the year ended March 31, 2006. The amended Business Conduct Policy was included
in an exhibit to the Corporation’s annual report on Form 20-F for the year ended December 31, 2010.
Shareholders
may request copies of the Corporation’s Business Conduct Policy by contacting the Corporation at 161 Bay Street, Suite 1410,
P.O. Box 216, Toronto, Ontario, Canada M5J 2S1, by mail, or by telephone at 416-361-3562.
Annually,
the Corporation’s officers and key consultants provide their recognition of the current policy and understanding of its
importance. The Business Conduct Policy provides guidance to the directors and officers individually, and to the Board as a whole,
to ensure the exercise of independent judgment in considering transactions and agreements where a director or officer might have
a material interest. Having an independent director, Jonathan Comerford, as the chair of the Board, also helps to ensure independent
judgment and to encourage and promote a culture of ethical business conduct.
The
Board considers that the fiduciary duties placed on individual directors by the Corporation’s governing corporate legislation
and the common law and the restrictions placed by applicable corporate legislation on an individual director’s participation
in decisions of the Board in which the director has an interest are sufficient to ensure that the Board operates independently
of management and in the best interests of the Corporation.
Gender
Diversity
The
Board has not adopted a written policy relating to the identification and nomination of women directors. The directors of the
Corporation have a fiduciary duty to act in the best interests of the Corporation. As part of that duty, the Board believes that
it should be able to select and nominate for election or appointment as directors those individuals who will best serve the interests
of the Corporation, regardless of gender. The Board believes that implementing such a policy will potentially restrict the Board’s
ability to select those individuals that will best serve the interests of the Corporation.
The
Board considers the level of representation of women on the board in identifying and nominating candidates for the appointment
or election to the Board. In identifying and nominating candidates for election or appointment to the Board, the Board considers
various factors, including, but not limited to: (i) the individual merits of each potential candidate, including their skills,
education, background, experience and any previous contributions to the Corporation; (ii) the number and qualities of potential
candidates and whether any such candidates are women; (iii) the current composition of the Board; and (iv) the needs of the Corporation.
The ultimate selection will be based on serving the best interests of the Corporation.
The
Corporation considers the level of representation of women in executive officer positions when making executive officer appointments.
In making executive officer appointments, the Corporation considers various factors, including, but not limited to: (i) the merits
of each potential candidate, including their skills, education, background, experience and any previous contributions to the Corporation;
(ii) the number and qualities of potential candidates and whether any such candidates are women; (iii) the composition of the
executive officers; and (iv) the needs of the Corporation. The ultimate selection will be based on serving the best interests
of the Corporation.
The
Corporation has not adopted specific targets for gender or other dimensions of diversity at the Board or executive officer level
due to the relatively small size of these groups. In addition, the Corporation believes that it is important that each appointment
to the Board and at the executive officer level be made, and be perceived as being made, based on the merits of the individual
and the needs of the Corporation at the relevant time. If specific targets were adopted based on specific criteria, including
gender, this could limit the Corporation’s ability to ensure that the overall composition of the Board and its team of executive
officers meets the needs of the Corporation.
As
at the date hereof, the number of women on the Board is one and the number of women in executive officer positions is zero. As
at the date hereof, the number of women in management positions within the Corporation is one.
Nomination
of Directors
The
Board does not have a separate nominating committee. The Corporate Governance Committee will assess the performance and qualification
of directors and assesses and recommend potential nominees to the Board, as needed.
Assessments
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 Committees.
Board
Committees
Committees
of the Board are an integral part of the Corporation’s governance structure. There are three standing committees: the Audit
Committee, the Compensation Committee, and the Corporate Governance Committee - established to devote the necessary expertise
and resources to particular areas, and to enhance the quality of discussion at Board meetings. The Committees facilitate effective
Board decision-making by providing recommendations to the Board on matters within their respective responsibilities. The Board
believes that the Committees assist in the effective functioning of the Board and that the composition of the Committees should
ensure that the views of unrelated and independent directors are effectively represented.
Each
of these committees is comprised solely of non-management directors, each of whom is also independent. The committees, their mandates
and memberships are outlined below.
Compensation
Committee
The
Compensation Committee, in consultation with the President of the Corporation, reviews and recommends to the Board for approval
all matters relating to the compensation of executives of the Corporation. The Compensation Committee has no formal compensation
policy. The Compensation Committee monitors the performance of senior management generally. Executive officers are compensated
in a manner consistent with their respective contributions to the overall benefit of the Corporation.
However,
compensation matters may also be reviewed and approved by the Corporation’s entire board of directors.
Executive
compensation is based on a combination of factors, including a comparative review of information provided to the Compensation
Committee by compensation consultants, recruitment agencies and auditors as well as historical precedent.
Since
January 1, 2016, the beginning of the most recently completed financial year, the Compensation Committee has held nine meetings
in consideration of the Committee’s recommendation to the Board of compensation matters. These compensation matters included
the annual incentive award to Mr. Evans, Mr. Ramsden and Mr. Mackie, the granting of options to Mr. Evans, Mr. Ramsden, Mr. Mackie
and other employees and consultants, and the compensation for directors.
The
Committee is composed of Jonathan Comerford, Carl Verley (Chair) and David Whittle, all of whom are independent directors.
Corporate
Governance and Nominating Committee
The
Corporate Governance and Nominating Committee is responsible for developing the approach of the Corporation to the matters of
corporate governance including the mandate, size and composition of the Board and its committees, and assessing the effectiveness
of the Board, its members and the committees of the Board. Since January 1, 2016, the beginning of the most recently completed
financial year, the Corporate Governance and Nominating Committee met five times. The Corporate Governance Committee is composed
of Bruce Dresner, Carl Verley and Peeyush Varshney (Chair), all of whom are independent directors.
Audit
Committee
Audit
Committee Charter
The
text of the Corporation’s Audit Committee Charter is attached as Schedule “A” to this Information Circular.
The
Audit Committee meets with the independent auditors to review and inquire into matters affecting financial reporting matters,
the system of internal accounting and financial controls and procedures, and the audit procedures and audit plans. The Audit Committee
also recommends to the Board the auditors to be appointed. In addition, the Audit Committee reviews and recommends to the Board
for approval the annual financial statements, the annual report and certain other documents required by regulatory authorities.
During the most recently completed financial year, the Audit Committee met four times.
Composition
of the Audit Committee
As
of the date hereof, the Audit Committee is composed of David Whittle (Chair), Jonathan Comerford, and Peeyush Varshney, all of
whom are independent directors. All of the members of the Audit Committee are financially literate within the meaning of Section
1.6 of NI 52-110.
Relevant
Education and Experience
David
Whittle, Chair of the Audit Committee, is a Canadian-qualified Chartered Professional Accountant (CPA, CA) in good standing with
twenty-four years’ experience as a director and senior executive and financial officer of various public companies listed
in both Canada and the United States. Jonathan Comerford has a Masters in Business from the Michael Smurfit Business School and
a Bachelor of Economics from University College, Dublin, and serves as Investment Manager at International Investment and Underwriting.
Peeyush Varshney has a Bachelor of Commerce and extensive executive experience with several public companies.
Pre-Approval
Policies and Procedures
The
Audit Committee pre-approves all audit services to be provided to the Corporation by its independent auditors. The Audit Committee’s
policy regarding the pre-approval of non-audit services to be provided to the Corporation by its independent auditors is that
all such services shall be pre-approved by the Audit Committee. Non-audit services that are prohibited to be provided to the Corporation
by its independent auditors may not be pre-approved. In addition, prior to the granting of any pre-approval, the Audit Committee
must be satisfied that the performance of the services in question will not compromise the independence of the independent auditors.
Since the enactment of the Sarbanes-Oxley Act of 2002, all non-audit services, performed by the Corporation’s auditor, for
the fiscal year ended December 31, 2016, have been pre-approved by the Audit Committee of the Corporation. No non-audit services
were approved pursuant to the de minimis exemption to the pre-approval requirement.
Audit
Fees
For
the fiscal years ended December 31, 2016 and December 31, 2015, KPMG LLP and its affiliates were paid the following fees by Mountain
Province:
| Auditor’s
Fees |
2016
CAD$ |
%
of Total Fees |
2015
CAD$ |
%
of Total Fees |
| Audit
Fees: |
|
|
|
|
| General
Audit |
270,000 |
78.8 |
275,000 |
78.0 |
| |
|
|
|
|
| Total
Audit Fees |
270,000 |
78.8 |
275,000 |
78.0 |
| Tax
Fees: |
|
|
|
|
| Planning
and advice |
52,267 |
15.3 |
45,101 |
12.8 |
| Compliance |
20,072 |
5.9 |
32,566 |
9.2 |
| Total
Tax Fees |
72,339 |
21.2 |
77,667 |
22.0 |
Total
Fees |
342,339 |
100.0 |
352,667 |
100.0 |
RESPONSE
TO SHAREHOLDERS
The
Corporation communicates regularly with its shareholders and maintains a website at www.mountainprovince.com. Management is available
to shareholders to respond to questions and concerns. The Board believes that management’s communications with shareholders,
and the avenues available to shareholders and others interested in the Corporation to have their inquiries about the Corporation
answered, are responsive and effective.
If
you have issues, questions or comments which you would like to have considered by your directors at the Annual Meeting of Shareholders,
please advise us at: Corporate Secretary, Mountain Province Diamonds Inc., 161 Bay Street, Suite 1410, PO Box 216, Toronto, Ontario
M5J 2S1; through info@mountainprovince.com; or by fax to 416-603-8565.
EXPECTATIONS
AND ACCOUNTABILITY OF MANAGEMENT
The
Board’s access to information relating to the operations of the Corporation, through direct communication with the CEO and/or
VP Finance, CFO and Corporate Secretary, through the membership on the Board of a key member of management, and the attendance
of the VP Finance, CFO and Corporate Secretary at Board meetings, are considered key elements to the effective and informed functioning
of the Board of the Corporation.
The
Board is directly involved in setting and approving goals and plans and monitoring performance. This process establishes clear
expectations of management and accountability for results. The Board expects the Corporation’s management to take the initiative
in identifying opportunities and risks affecting the Corporation’s business and finding ways to deal with these opportunities
and risks for the benefit of the Corporation. The Board is confident that the Corporation’s management responds ably to
this expectation.
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER
EQUITY COMPENSATION PLANS
The
following table sets out information for the Corporation’s most recently completed financial year ended December 31, 2016
with respect to compensation plans under which equity securities of the Corporation are authorized for issuance.
| Plan
Category |
Number
of securities to be issued upon exercise of outstanding options, restricted share units, warrants and rights
(a) |
Weighted-average
exercise price of outstanding options, restricted share units value, warrants and rights
(b) |
Number
of securities remaining available for future issuances under equity compensation (excluding securities reflected in column
(a))
(c) |
Equity
compensation plans approved by securityholders
Restricted
Share Units |
3,020,000
320,000
|
$4.68
$6.48 |
12,641,883 |
| Equity
compensation plans not approved by securityholders |
N/A |
N/A |
N/A |
| Total |
3,340,000 |
$4.85 |
12,641,883 |
PARTICULARS
OF OTHER MATTERS TO BE ACTED UPON
Financial
Statements and Auditors’ Report Thereon
At
the Meeting, shareholders will have placed before them the financial statements for the most recently completed financial year
and the auditor’s report thereon.
Authority
of the Board to Determine the Number of Directors
The
Articles of Continuance of the Corporation dated May 8, 2006, by which the Corporation continued to the jurisdiction of the Business
Corporations Act (Ontario) (the “OBCA”), provide for a minimum of one (1) and a maximum of ten (10) directors. By-Law
No. 1 of the Corporation provides in section 3.01:
3.01
Number of Directors and Quorum
The
number of directors of the Corporation shall be the number of directors as specified in the articles or, where a minimum and maximum
number of directors is provided for in the articles, the number of directors of the Corporation shall be the number of directors
determined from time to time by special resolution or, if a special resolution empowers the directors to determine the number,
the number of directors determined by resolution of the board. Subject to paragraph 3.08, the quorum for the transaction of business
at any meeting of the board shall be a majority of the number of directors then in office and or such greater number of directors
as the board may from time to time by resolution determine.”
Shareholders
will be asked to consider, and if deemed advisable, approve a special resolution passed by at least two-thirds (2/3) of the votes
cast at the Meeting, authorizing the board of the Corporation to determine from time to time the number of directors of the Corporation,
subject always to the Articles of the Corporation and the provisions of the OBCA.
The
purpose of the proposed resolution is to give the board flexibility to increase the size of the board to add one or more additional
directors between shareholder meetings. This will allow the board to add expertise and fill perceived gaps in the knowledge and
skills of the directors, without having to call a meeting of shareholders.
A
special resolution is a resolution passed by a majority of at least two-thirds (2/3) of the votes cast at the Meeting in favour
of the resolution.
The
text of the proposed special resolution is:
“BE
IT RESOLVED AS A SPECIAL RESOLUTION THAT the board of the Corporation be and is hereby authorized and empowered, subject to the
Articles and applicable law, to determine from time to time the number of directors.”
In
the absence of contrary instructions, the Management nominees named as proxyholders in the enclosed Proxy Instrument intend to
vote FOR this special resolution.
OTHER
MATTERS
Management
is not aware of any matters to come before the Meeting other than those set forth in the Notice of Meeting. If any other matter
properly comes before the Meeting, it is the intention of the persons named in the Proxy to vote the shares represented thereby
in accordance with their best judgment on such matter.
ADDITIONAL
INFORMATION
Additional
information relating to the Corporation is available on the SEDAR website at www.sedar.com. Financial information is provided
in the Corporation’s comparative financial statements and management discussion and analysis for its most recently completed
financial year which is filed on SEDAR. The Corporation also files with the United States Securities and Exchange Commission and
the NASDAQ and its Annual Report on Form 40-F is available at www.sec.gov/edgar.shtml.
Shareholders
may request copies of the Corporation’s financial statements and management discussion and analysis by contacting the Corporation
at 161 Bay Street, Suite 1410, P.O. Box 216, Toronto, Ontario, Canada M5J 2S1, by mail, by fax to 416-603-8565, or by telephone
at 416-361-3562.
APPROVALS
AND SIGNATURE
The
contents and distribution of this Information Circular to each shareholder entitled to receive notice of the Meeting, to each
director of the Corporation, to the auditor of the Corporation, and to the appropriate governmental agencies, has been approved
by the Board.
DIRECTOR’S
APPROVAL
The
contents and distribution of this Information Circular to the shareholders of the Corporation has been approved by the Board.
Unless otherwise specified, information contained in this Information Circular is given as of February 28, 2017.
ON BEHALF OF THE BOARD
“Patrick
Evans”
__________________________________________
Patrick
Evans
President
and Chief Executive Officer
SCHEDULE
“A”
Mountain
Province Diamonds Inc.
Charter
of the
Audit
Committee of the Board of Directors
Mandate
The
Audit Committee (the “Committee”) is a committee of the Board of Directors (the “Board”)
of Mountain Province Diamonds Inc. (“MPV” or the “Company”) established for the purpose
of overseeing the accounting and financial reporting process of MPV and external audits of the consolidated financial statements
of MPV. In connection, therewith, the Committee assists the Board in fulfilling its oversight responsibilities in relation to
MPV’s internal accounting standards and practices, financial information, accounting systems and procedures, financial reporting
and statements and the nature and scope of the annual external audit. The Committee also recommends for Board approval MPV’s
audited annual consolidated financial statements and other mandatory financial disclosure.
MPV’s
external auditor is accountable to the Board and the Committee as representatives of shareholders of MPV. The Committee shall
be directly responsible for overseeing the relationship of the external auditor. The Committee shall have such access to the external
auditor as it considers necessary or desirable in order to perform its duties and responsibilities. The external auditor shall
report directly to the Committee.
The
objectives of the Committee are as follows:
| 1. | to
be satisfied with the credibility and integrity of financial reports; |
| 2. | to
support the Board in meeting its oversight responsibilities in respect of the preparation
and disclosure of financial reporting, including the consolidated financial statements
of MPV; |
| 3. | to
facilitate communication between the Board and the external auditor and to receive all
reports of the external auditor directly from the external auditor; |
| 4. | to
be satisfied with the external auditor’s independence and objectivity; and |
| 5. | to
strengthen the role of independent directors by facilitating in-depth discussions between
members of the Committee, management and MPV’s external auditor. |
| 1. | The
Committee shall comprise at least three directors, none of whom shall be an officer or
employee of MPV or any of its subsidiaries or any affiliate thereof. Each Committee member
shall satisfy the independence, financial literacy and experience requirements of applicable
securities laws, rules or guidelines, any applicable stock exchange requirements or guidelines
and any other applicable regulatory rules. In particular, each member of the Committee
shall have no direct or indirect material relationship with MPV or any affiliate thereof
which could reasonably interfere with the exercise of the member’s independent
judgment. Determinations as to whether a particular director satisfies the requirements
for membership on the Committee shall be made by the full Board. |
| 2. | Members
of the Committee shall be appointed by the Board. Each member shall serve until his successor
is appointed, unless he shall resign or be removed by the Board or he shall otherwise
cease to be a director of MPV. |
| 3. | The
Chair of the Committee may be designated by the Board or, if it does not do so, the members
of the Committee may elect a Chair by vote of a majority of the full Committee membership.
The Committee Chair shall satisfy the independence, financial literacy and experience
requirements as described above. |
| 4. | The
Committee shall have access to such officers and employees of MPV and to such information
respecting MPV as it considers necessary or advisable in order to perform its duties
and responsibilities. |
| 1. | At
all meetings of the Committee, every question shall be decided by a majority of the votes
cast. In case of an equality of votes, the matter will be referred to the Board for decision. |
| 2. | A
quorum for meetings of the Committee shall be a majority of its members. |
| 3. | Meetings
of the Committee shall be scheduled at least quarterly and at such other times during
each year as it deems appropriate. Minutes of all meetings of the Committee shall be
taken. The CFO shall attend meetings of the Committee, unless otherwise excused from
all or part of any such meeting by the Committee Chair. The Chair of the Committee shall
hold in camera sessions of the Committee, without management present, at each meeting,
as determined necessary. |
| 4. | The
Committee shall report the results of meetings and reviews undertaken and any associated
recommendations to the Board. |
| 5. | The
Committee shall meet periodically with MPV’s external auditor in connection with
the preparation of the annual consolidated financial statements and otherwise as the
Committee may determine, part or all of each such meeting to be in the absence of management. |
As
discussed above, the Committee is established to assist the Board in fulfilling its oversight responsibilities with respect to
the accounting and financial reporting processes of MPV and external audits of MPV’s consolidated financial statements.
In that regard, the Committee shall:
| 1. | satisfy
itself on behalf of the Board with respect to MPV’s internal control systems including
identifying, monitoring and mitigating business risks as well as compliance with legal,
ethical and regulatory requirements. The Committee shall also review with management,
the external auditor and, if necessary, legal counsel, any litigation, claim or other
contingency (including tax assessments) that could have a material effect on the financial
position or operating results of MPV (on a consolidated basis), and the manner in which
these matters may be, or have been, disclosed in the financial statements; |
| 2. | review
with management and the external auditor the annual consolidated financial statements
of MPV, the reports of the external auditor thereon and related financial reporting,
including Management’s Discussion and Analysis and any earnings press releases,
(collectively, “Annual Financial Disclosures”) prior to their submission
to the Board for approval. This process should include, but not be limited to: |
| (a) | reviewing
changes in accounting principles, or in their application, which may have a material
impact on the current or future year’s financial statements; |
| (b) | reviewing
significant accruals, reserves or other estimates; |
| (c) | reviewing
accounting treatment of unusual or non-recurring transactions; |
| (d) | reviewing
the adequacy of any reclamation fund; |
| (e) | reviewing
disclosure requirements for commitments and contingencies; |
| (f) | reviewing
financial statements and all items raised by the external auditor, whether or not included
in the financial statements; and |
| (g) | reviewing
unresolved differences between MPV and the external auditor. |
Following
such review, the Committee shall recommend to the Board for approval all Annual Financial Disclosures;
| • | review
with management all interim consolidated financial statements of MPV and related financial
reporting, including Management’s Discussion and Analysis and any earnings press
releases, (collectively “Quarterly Financial Disclosures”) and, if
thought fit, approve all Quarterly Financial Disclosures; |
| • | be
satisfied that adequate procedures are in place for the review of MPV’s public
disclosure of financial information extracted or derived from MPV’s financial statements,
other than Annual Financial Disclosures or Quarterly Financial Disclosures, and shall
periodically assess the adequacy of those procedures; |
| • | review
with management and recommend to the Board for approval, any financial statements of
MPV which have not previously been approved by the Board and which are to be included
in a prospectus of MPV; |
| • | review
with management and recommend to the Board for approval, MPV’s Annual Information
Form; |
| • | with
respect to the external auditor: |
| (a) | receive
all reports of the external auditor directly from the external auditor; |
| (b) | discuss
with the external auditor: |
| (i) | critical
accounting policies; |
| (ii) | alternative
treatments of financial information within GAAP discussed with management (including
the ramifications thereof and the treatment preferred by the external auditor); and |
| (iii) | other
material, written communication between management and the external auditor; |
| (c) | consider
and make a recommendation to the Board as to the appointment or re-appointment of the
external auditor, being satisfied that such auditor is a participant in good standing
pursuant to applicable securities laws; |
| (d) | review
the terms of engagement of the external auditor, including the appropriateness and reasonableness
of the auditor’s fees, and make a recommendation to the Board as to the compensation
of the external auditor; |
| (e) | when
there is to be a replacement of the external auditor, review with management the reasons
for such replacement and the information to be included in any required notice to securities
regulators and recommend to the Board for approval the replacement of the external auditor
along with the content of any such notice; |
| (f) | oversee
the work of the external auditor in performing its audit or review services and oversee
the resolution of any disagreements between management and the external auditor; |
| (g) | review
and discuss with the external auditor all significant relationships that the external
auditor and its affiliates have with MPV and its affiliates in order to determine the
external auditor’s independence, including, without limitation: |
| (i) | requesting,
receiving and reviewing, on a periodic basis, written or oral information from the external
auditor delineating all relationships that may reasonably be thought to bear on the independence
of the external auditor with respect to MPV; |
| (ii) | discussing
with the external auditor any disclosed relationships or services that the external auditor
believes may affect the objectivity and independence of the external auditor; and |
| (iii) | recommending
that the Board take appropriate action in response to the external auditor’s information
to satisfy itself of the external auditor’s independence; |
| (h) | as
may be required by applicable securities laws, rules and guidelines, either: |
| (i) | pre-approve
all non-audit services to be provided by the external auditor to MPV (and its subsidiaries,
if any), or, in the case of de minimus non-audit services, approve such non-audit
services prior to the completion of the audit; or |
| (ii) | adopt
specific policies and procedures for the engagement of the external auditor for the purposes
of the provision of non-audit services; |
| (i) | review
and approve the hiring policies of MPV regarding partners, employees and former partners
and employees of the present and former external auditor of MPV; |
| 3. | (a) establish
procedures for: |
| (i) | the
receipt, retention and treatment of complaints received by MPV regarding accounting,
internal accounting controls or auditing matters; and |
| (ii) | the
confidential, anonymous submission by employees of MPV of concerns regarding questionable
accounting or auditing matters; and |
| (b) | review
with the external auditor its assessment of the internal controls of MPV, its written
reports containing recommendations for improvement, and MPV’s response and follow-up
to any identified weaknesses; |
| 4. | with
respect to risk management, be satisfied that MPV has implemented appropriate systems
of internal control over financial reporting (and review management’s assessment
thereof) to ensure compliance with any applicable legal and regulatory requirements; |
| 5. | review
annually with management and the external auditor and report to the Board on insurable
risks and insurance coverage; and |
| 6. | engage
independent counsel and other advisors as it determines necessary to carry out its duties
and set and pay the compensation for any such advisors. |
