-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nh+fKdNmyL4YZ3JkKTHe8hYTwyMd85+Gus2uTF5hHARRrJSY+PMHDZH9e28q8osw jcMMmpWFCBxnidqKa8iDNg== 0000950133-96-000073.txt : 19960201 0000950133-96-000073.hdr.sgml : 19960201 ACCESSION NUMBER: 0000950133-96-000073 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951221 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960131 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COEUR D ALENE MINES CORP CENTRAL INDEX KEY: 0000215466 STANDARD INDUSTRIAL CLASSIFICATION: SILVER ORES [1044] IRS NUMBER: 820109423 STATE OF INCORPORATION: ID FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08641 FILM NUMBER: 96509630 BUSINESS ADDRESS: STREET 1: 400 COEUR D ALENE MINES BLDG STREET 2: 505 FRONT AVE CITY: COEUR D ALENE STATE: ID ZIP: 83814 BUSINESS PHONE: 2086673511 MAIL ADDRESS: STREET 1: 400 COEUR D ALENE MINES BLDG STREET 2: 505 FRONT AVE CITY: COEUR D'ALENE STATE: ID ZIP: 83814 8-K 1 COEUR D'ALENE MINES CORPORATION 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities and Exchange Act of 1934 Date of Report (Date of earliest event reported): December 21, 1995 COEUR D'ALENE MINES CORPORATION - ------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Idaho 1-8641 82-0109423 - ---------------------------- ------------ ------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification Number) 400 Coeur d'Alene Mines Bldg. 505 Front Avenue Coeur d'Alene, Idaho 83814 - ----------------------------------------- ---------- (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (208) 667-3511 -------------- Not Applicable - ------------------------------------------------------------------------------- (Former name or former address, if changed since last report) 2 Item 2. Acquisition or Disposition of Assets. On January 24, 1996, Coeur d'Alene Mines Corporation ("Coeur") announced that it acquired from Homestake Mining Company ("Homestake") the shares of and options to acquire shares of Orion Resources NL, an Australian gold mining company ("Orion"), held by Homestake. As a result of that purchase, Coeur presently holds approximately 13.1% of Orion's outstanding shares and, upon exercise of such options, would own approximately 19.2% of Orion's outstanding shares. Coeur acquired from Homestake, for a total consideration of approximately $US10.7 million, 5.5 million Orion shares and options to purchase an additional 5.0 million shares of Orion. Coeur utilized its own cash resources to fund the acquisition. Earlier in January 1995 and during the last quarter of 1994, Coeur had acquired a total of 3.33 million shares of Orion primarily in transactions on the ASX for a total cost of approximately US$3.8 million. Orion is the operator of and has a 45% interest in the Yilgarn Star Gold Mine. Coeur will be required to obtain the approval of Australia's Foreign Investment Review Board prior to exercising options that would result in Coeur's owning more than 15% of Orion's outstanding shares. Orion's shares are listed on the Australian Stock Exchange. It is headquartered in Mt. Pleasant Western Australia and, in addition to owning its 45% operating interest in the Yilgarn Star Mine, also has a 49% non-operating interest in the Salsigne Mine in France as well as exploration interests in Australia and New Zealand. Item 5. Other Events. General On December 21, 1995, Coeur d'Alene Mines Corporation ("Coeur" or "the Company") announced that it (i) had entered into an agreement with the principal shareholder of Gasgoyne Gold Mines NL, an Australian Gold Mine Company ("Gasgoyne") pursuant to which Coeur acquired an option (the "Option") to acquire a portion of the Gasgoyne ordinary shares owned by such shareholder (constituting 19.9% of Gasgoyne's outstanding shares), and (ii) intended to extend an offer (the "Offer") to Gasgoyne shareholders to acquire all of the outstanding shares of Gasgoyne. In late January, 1996, Coeur made the filings required under the Australian securities laws with the Australian Securities Commission ("ASC") and the Australian Securities Exchange ("ASX"), upon which Gasgoyne's shares are listed. Coeur plans to deliver the Offer to Gasgoyne shareholders in mid-February 1996. The Option and Offer, as well as the purchase of Orion shares reported under Item 2 above, represent Coeur's entry into the Australian gold sector and are intended to position Coeur for 2 3 further expansion in the Australasian Pacific Rim region. Additional information regarding the Option and Offer is set forth below. The Option Coeur entered into the above-referred option agreement with Ioma Pty Ltd. ("Ioma"), which is the principal shareholder of Gasgoyne and is a private investment company controlled by Mr. Phil Crabb, Chief Executive Officer of Gasgoyne, Mr. Rick Crabb, a director of Gasgoyne, and other members of the Crabb family. Pursuant to that agreement, a copy of which is filed as an exhibit to this Form 8-K, Coeur has the Option to purchase from Ioma approximately 10.6 million Gasgoyne shares, representing approximately 19.9% of Gasgoyne's outstanding shares, on the basis of 7 Coeur shares of common stock plus A$60 cash (or $US44.50 based on the currency exchange rate in effect on January 30, 1996) in exchange for each 100 Gasgoyne shares. Exercise of the Option would require Coeur to issue 742,791 Coeur shares and pay approximately A$6.4 million (or approximately $US4.7 million based on the currency exchange rate in effect on January 30, 1996) to Ioma. The right of Coeur to exercise the Option is subject to (i) approval by the Treasurer of Australia under the Foreign Acquisitions and Takeovers Act of 1975 of Coeur's proposed purchase of shares under the Option and (ii) Coeur's conducting the Offer on terms no less favorable to Gasgoyne shareholders than on the basis of 7 Coeur shares plus A$60 (or $US44.50 based on the currency exchange rate in effect on January 30, 1996) for each 100 shares of Gasgoyne. The Option automatically will terminate if Ioma accepts the Offer prior to receipt by Ioma of Coeur's notice to exercise the Option (which notice cannot be given until five business days after dispatch of the statutory recommendation filing of the directors of Gasgoyne in relation to the Offer). The Offer On January 29, 1996, Coeur delivered the Offer and the related Part A Statement (which are the disclosure documents required under Australian law) to the ASC. Those documents were then registered by the ASC on January 30, 1996, and on January 31, 1996, Coeur delivered them to the Board of Directors of Gasgoyne and the ASX in accordance with Australian law. Copies of the Offer and the Part A Statement are filed as exhibits to this Form 8-K. In accordance with Australian law, Coeur plans to deliver the Offer and Part A Statement to Gasgoyne shareholders on or about February 15, 1996. Gasgoyne shareholders will then be able to accept the Offer during the following month, unless the term of the Offer is extended by Coeur. 3 4 The Offer is subject to Coeur's becoming entitled to at least 50.1% of Gasgoyne's outstanding Shares. In addition, the Offer also is subject to (i) there being no takeover offer by another party for Gasgoyne shares which becomes or is declared unconditional before the end of the Offer, (ii) there being no material adverse change in Gasgoyne's business, financial or trading position or condition, (iii) the consent of the Treasurer of Australia under the Foreign Acquisitions and Takeovers Act of 1975 to Coeur's acquisition of Gasgoyne shares under the Offer and (iv) there being no prescribed occurrence (as defined under the Australian law) occurring or being threatened with respect to Gasgoyne. Non-Australian shareholders of Gasgoyne accepting the Offer and Gasgoyne's shareholders accepting the Offer that are entitled to less than 50 Coeur shares will be entitled to receive only cash from Coeur in exchange for their Gasgoyne shares by means of a nominee sale. Holders of Gasgoyne options granted prior to December 21, 1995, may participate in the Offer by exercising their options. The Coeur shares being offered in the Offer have not been registered under the Securities Act of 1933 (the "Act") in reliance upon Regulation S thereunder and, consequently, the shares may not be offered or sold by former Gasgoyne shareholders to "U.S. persons" (as defined in Rule 902(o) of Regulation S under the Act) unless the shares are registered thereunder or an exemption from such registration requirement is available. Pursuant to Rule 903(c)(2) of Regulation S, the Coeur shares issued to Gasgoyne shareholders may not be offered or sold to any U.S. person prior to the expiration of a 40-day restricted period commencing on the date of the closing of the Offer. Coeur may borrow the funds required for the cash portion of the Offer from Rothschild Australia Limited ("Rothschild") pursuant to a loan facility providing for a maximum of US$50 million of borrowings at an annual interest rate equal to LIBOR plus 1.5%. Based on there being 53,891,993 Gasgoyne shares outstanding on January 25, 1996, and assuming the exercise of outstanding options to purchase an additional 3,689,000 Gasgoyne shares, the maximum number of Coeur shares Coeur could be required to issue in connection with the Offer, assuming that all Gasgoyne shareholders (including Ioma) accept the Offer, would be 4,030,669 shares, which constitutes approximately 19.7% of Coeur's presently outstanding shares. Furthermore, the maximum amount of cash that Coeur would be required to pay to all Gasgoyne shareholders (including Ioma) in the Offer would be approximately $A34.5 million (or approximately US$25.6 million based on the currency exchange rate in effect on January 30, 1996). Coeur plans to apply to list its shares on the Australian Stock Exchange in connection with the Offer. 4 5 On January 17, 1996, Sons of Gwalia Limited ("Sons of Gwalia") and Burmine Limited ("Burmine"), both of which are Australian mining companies, jointly announced that they intend to merge and that Sons of Gwalia, as the survivor of the merger, will make a takeover offer for Gasgoyne's outstanding shares on the basis of offering one Sons of Gwalia share for every three Gasgoyne shares. Gasgoyne is principally engaged in the exploration, development and ownership of gold properties located in western Australia and Indonesia. Headquartered in Perth, Australia, Gasgoyne's principal asset is its 50% non-operating interest in the Yilgarn Star Gold Mine in Marvel Loch, located approximately 70km east of Perth, which started production in 1991. Gasgoyne's other major asset is its 45% interest in the Awak Mas Gold Project, located in the Province of South Sulawesi of Indonesia. Gasgoyne's partners in the Yilgarn Star Gold Mine are Orion (the operator) with a 45% interest, and Gemini Mining Pty Ltd., a private Australian company owned by the Crabb family with a 5% interest. The Yilgarn Star Gold Mine operated as an open pit surface mine from 1991 until September 1995 and an underground mine commenced operations on a limited basis there in October 1995. Gasgoyne also has interests in exploration projects surrounding the Yilgarn Star Mine. Gasgoyne's joint venture partners in the Awak Mas Gold Project in Indonesia are Lone Star Exploration NL, an Australian gold company which is the project manager and holds a 45% interest in the project, and a private Indonesian company that has a 10% interest. The Part A Statement includes pro forma financial information (in Clause 4.4.3) and financial forecasts (in Clause 4.4.4) that assume the acquisition by Coeur of 100% of Gasgoyne's outstanding shares. Australian law required the inclusion of that information in the Part A Statement. For additional information relating to Gasgoyne, reference is made to Clauses 3.1, 3.2, 4.4.2 and 7.1 of the Part A Statement filed as an exhibit hereto. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements of Businesses Acquired. The financial statements of Orion, Coeur's acquisition of shares of which is reported under Item 2 of this Form 8-K, required to be filed for the periods specified in Rule 3-05(b) of Regulation SX will be filed by an amendment to this Form 8-K filed on or before April 8, 1996 (i.e., within 60 days after the February 8, 1996 date on which the Form 8-K is required to be filed). 5 6 (b) Pro Forma Financial Information. The pro forma financial information relating to the transaction reported under Item 2 of this Form 8-K that would be required pursuant to Item 11 of Regulation S-X will be filed by an amendment to this Form 8-K filed on or before April 8, 1996 (i.e., within 60 days after the February 8, 1996 date on which the Form 8-K is required to be filed). (c) Exhibits. The following exhibits are filed herewith: 10(a) Form of Offer, dated January 29, 1996, by Coeur d'Alene Mines Corporation to Acquire all the Ordinary Shares in Gasgoyne Gold Mines NL 10(b) Part A Statement by Coeur d'Alene Mines Corporation, dated January 29, 1996 10(c) Call Option Agreement Over Shares, dated December 20, 1995, between Coeur d'Alene Mines Corporation and Ioma Pty Ltd 6 7 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. COEUR D'ALENE MINES CORPORATION (Registrant) Dated: January 30, 1996 By: DENNIS E. WHEELER ---------------------------- Dennis E. Wheeler Chairman, President and Chief Executive Officer 7 EX-10.A 2 CASH AND SHARE OFFER 1 EXHIBIT 10(a) CASH AND SHARE OFFER THIS IS AN OFFER TO ACQUIRE ALL OF YOUR ORDINARY SHARES IN GASGOYNE GOLD MINES NL FOR A COMBINATION OF CASH AND COEUR D'ALENE SHARES TO BE ALLOTTED TO YOU Certain expressions used in this Offer are defined in clause 14. 1 OFFER 1.1 Coeur d'Alene offers to acquire all of your Gasgoyne Shares, including any Gasgoyne Shares issued during the term of this Offer pursuant to the exercise of any Gasgoyne Options, together with all Rights attaching to them on the terms and conditions set out in this Offer. 1.2 This Offer may only be accepted in respect of all (and not a part only) of your Gasgoyne Shares. 1.3 To accept this Offer, please follow the instructions set out in clause 4. 2 CONSIDERATION 2.1 The consideration offered by Coeur d'Alene is $60 cash plus 7 Coeur d'Alene Shares for each 100 Gasgoyne Shares. 2.2 To the extent that you hold Gasgoyne Shares that are not in multiples of 100, the cash and share portions of the consideration will be pro rated. 2.3 Subject to clause 12 (relating to foreign shareholders and odd lots), the Coeur d'Alene Shares to be allotted if the Offer is accepted will: (a) be issued credited as fully paid; and (b) rank equally in all respects with, and confer identical rights to, existing Coeur d'Alene Shares from the date you are registered as a holder of those shares (except that you may not offer or sell the Coeur d'Alene Shares in the USA or to a US Person prior to the expiration of a 40 day period commencing at the end of the offer period). 2.4 If the number of Gasgoyne Shares which you hold is such that your entitlement to Coeur D'Alene Shares is not a whole number, then Coeur d'Alene will: (a) allot the whole number of shares; and (b) in addition to any cash payable to you in relation to the cash component of the consideration set out in clauses 2.1 and 2.2, pay the value of the fractional entitlement by cheque in Australian dollars, using the last trading price of Coeur d'Alene Shares on the NYSE and the Exchange Rate on the last day before your acceptance is received. 2 - 2 - 2.5 Before the date of allotment of the Coeur d'Alene Shares pursuant to this Offer, Coeur d'Alene will apply to be admitted to the official list of ASX and for official quotation of the Coeur d'Alene Shares. Quotation is not guaranteed or automatic, nor is it a condition of this Offer. 3 DURATION OF OFFER This Offer will remain open for acceptance during the period commencing on the date of this Offer and ending at 5.00 pm Perth time on the day which is one month after that date. That period may be extended or the Offer withdrawn in accordance with the Corporations Law. 4 HOW TO ACCEPT THIS OFFER 4.1 IF YOU WERE NOT ISSUED SHARE CERTIFICATES (CHESS HOLDINGS) If you were not issued with share certificates for your Gasgoyne shares (ie because your Gasgoyne Shares are in a CHESS Holding), you can accept this offer by: (a) instructing your Broker or Non-Broker Participant to initiate acceptance of this Offer; or (b) if you are a Broker and Non-Broker Participant, initiating acceptance of this Offer in accordance with Rule 16.3 of the SCH business rules before the end of the offer period. 4.2 SHARE CERTIFICATES If you hold share certificates for your Gasgoyne shares then to accept this Offer you should COMPLETE, SIGN AND RETURN the accompanying Acceptance Form in accordance with the instructions on it and deliver or send it by post together with your Gasgoyne share certificate(s) and all other documents required by those instructions so that they are received before the expiry of the offer period. A reply pre-paid envelope is enclosed for your convenience. 4.3 It is recommended that holders of share certificates hand deliver the Acceptance Form and their certificates to Deloitte Share Registry Services, a division of the firm Deloitte Touche Tohmatsu (whose address appears on the Acceptance Form) and a receipt be obtained. Otherwise the use of registered mail with return receipt requested is recommended. Beneficial owners whose Gasgoyne Shares are registered in the name of a broker, trust company or other nominee should contact that nominee for assistance in accepting the Offer. 4.4 TIME OF ACCEPTANCE You will be deemed to have accepted this Offer at the time the relevant documentation is received by Coeur d'Alene or when you (or your Broker or Non-Broker Participant on your behalf) have initiated acceptance of this Offer through CHESS. 4.5 GASGOYNE OPTIONS Holders of Gasgoyne Options may accept Offers for the Gasgoyne Shares issuable to them on exercise of their Gasgoyne Options without the need first to send a notice of exercise to Gasgoyne. Those Offers may be accepted by: 3 - 3 - (a) duly completing and signing the relevant notice of exercise in respect of the Gasgoyne Options; (b) drawing a cheque in favour of Gasgoyne for the whole of the subscription price due on exercise of the Gasgoyne Options; (c) duly completing and signing the Acceptance Form in respect of the Gasgoyne Shares which will be issued on exercise of the Gasgoyne Options; and (d) sending the notice of exercise, cheque and Acceptance Form in accordance with this clause 4, together with the certificate(s) for the relevant Gasgoyne Options. 5 PAYMENT OF CONSIDERATION 5.1 DATE FOR PAYMENT OF CONSIDERATION Coeur d'Alene will provide the consideration for your Acceptance Shares on or before the thirtieth day after this Offer is validly accepted by you or this Offer or the contract resulting from your acceptance of this Offer becomes unconditional (whichever happens later) and in any event not later than the twenty-first day after the end of the offer period. 5.2 CASH PORTION OF THE CONSIDERATION The cash portion of the consideration will be paid by cheque (drawn in Australian currency) payable to you and will be delivered to you or lodged for posting to you at your address shown on the Acceptance Form or in the CHESS subregister (or such other address as you may notify in writing to Coeur d'Alene prior to despatch of the cheque) and at your risk. Where your address is in Australia, Coeur d'Alene will send your cheque to you by pre-paid ordinary post. Where your address is outside Australia, Coeur d'Alene will send your cheque to you by pre-paid airmail post. 5.3 SHARE PORTION OF THE CONSIDERATION Subject to clause 12, Coeur d'Alene will allot to you the Coeur d'Alene Shares forming the share portion of the consideration and forward to you the share certificates in respect of Coeur d'Alene Shares (if applicable) at the same address as referred to in clause 5.2. 6 CONDITIONS OF THE OFFER 6.1 This Offer and the contract resulting from acceptance of this Offer are subject to fulfilment of the following conditions: (a) that during the offer period Coeur d'Alene becomes entitled to at least 50.1% of Gasgoyne Shares on issue at the end of the offer period; (b) that during the period commencing on the date of service of the Part A Statement on Gasgoyne and ending at the end of the offer period none of the following events happen: (i) any one or more of the provisions of the constitution of Gasgoyne or of a subsidiary of Gasgoyne is altered in any of the ways mentioned in section 193(1) of the Corporations Law; 4 - 4 - (ii) Gasgoyne or a subsidiary of Gasgoyne resolves to reduce its share capital in any way; (iii) a subsidiary of Gasgoyne makes an allotment of, or grants an option to subscribe for, any of its shares or agrees to make such an allotment or grant such an option; (iv) Gasgoyne grants or agrees to grant an option to subscribe for any of its shares or allots or agrees to make an allotment of any of its shares where the allotted shares would not be subject to the Takeover Scheme; (v) Gasgoyne or a subsidiary of Gasgoyne issues, or agrees to issue, convertible notes; (vi) Gasgoyne or a subsidiary of Gasgoyne disposes, or agrees to dispose, of the whole, or a substantial part, of its business or property; (vii) Gasgoyne or a subsidiary of Gasgoyne charges, or agrees to charge, the whole, or a substantial part, of its business or property; (viii) Gasgoyne or a subsidiary of Gasgoyne resolves that it be wound up; (ix) the appointment of a provisional liquidator of Gasgoyne or of a subsidiary of Gasgoyne; (x) the making of an order by a court for the winding up of Gasgoyne or of a subsidiary of Gasgoyne; (xi) an administrator of Gasgoyne, or of a subsidiary of Gasgoyne, being appointed under section 436A, 436B or 436C of the Corporations Law; (xii) Gasgoyne or a subsidiary of Gasgoyne executing a deed of company arrangement; or (xiii) the appointment of a receiver, or a receiver and manager, in relation to the whole, or a substantial part, of the property of Gasgoyne or of a subsidiary of Gasgoyne. (c) no takeover offer by another party being made for shares in Gasgoyne which becomes or is declared unconditional (other than conditions that a prescribed occurrence does not occur) before the end of the offer period; (d) no material adverse change occurring to or being threatened or announced in the structure, business, financial or trading position or condition, assets or liabilities or profitability of Gasgoyne and its subsidiaries taken as a whole (including without limitation any material downgrading of the prospects of any of the major projects of Gasgoyne or one of its subsidiaries). 6.2 Each of the conditions set out in each paragraph and subparagraph of clause 6.1: 5 - 5 - (a) constitutes and shall be construed as a separate, several and distinct condition; (b) is a condition subsequent; and (c) until the expiration of the offer period will be for the benefit of Coeur d'Alene alone and may be relied on only by Coeur d'Alene. 6.3 Any contract resulting from acceptance of this Offer will not become binding unless and until the condition in clause 6.4 is fulfilled. Coeur d'Alene will not be entitled to waive that condition. 6.4 This Offer is conditional on the Treasurer of the Commonwealth of Australia ("TREASURER") unconditionally consenting to or stating prior to the end of the offer period that he has no objection to the purchases contemplated by the Offers under the Commonwealth Government's foreign investment policy or to similar effect or the Treasurer ceases to be entitled to make an order under Part II of the Foreign Acquisitions and Takeovers Act 1975 in respect of those purchases. 6.5 The breach or non-fulfillment of any of the conditions set out in clause 6.1 does not, until the end of the offer period, prevent a contract arising to acquire your Gasgoyne Shares resulting from your acceptance of this Offer but, if at the end of the offer period, in respect of any condition in clauses 6.1 or 6.4: (a) Coeur d'Alene has not declared the Offers to be free from that condition; (b) the Offers have not become free from that condition by virtue of the operation of section 664(2) of the Corporations Law; or (c) that condition has not been fulfilled, all contracts resulting from the acceptance of Offers and all acceptances that have not resulted in binding contracts are void. 6.6 Coeur d'Alene may at any time at its sole discretion but in compliance with section 663(2) of the Corporations Law by notice in writing to Gasgoyne declare the Offers free from all or any of the conditions set out in each paragraph and sub-paragraph of clause 6.1 on any date but not less than seven days before the last day of the offer period. 6.7 The date specified for the publication of the notice referred to in section 663(4) of the Corporations Law is [ ], subject to variation in accordance with section 663(5) of the Corporations Law in the event that the offer period is extended. 7 EFFECT OF ACCEPTANCE 7.1 By signing and returning the Acceptance Form, or initiating acceptance of this Offer through CHESS, in accordance with the provisions of this Offer you will: (a) have irrevocably accepted this Offer in respect of the Acceptance Shares; 6 - 6 - (b) be deemed to have represented and warranted to Coeur d'Alene that the Acceptance Shares will at each of the Relevant Times be free from all mortgages, charges, liens and other encumbrances (whether legal or equitable) whatsoever and, without limiting the generality of the foregoing, all restrictions on transfer of any kind, and that you have full power and authority to sell the Acceptance Shares to Coeur d'Alene; (c) have agreed to transfer the Acceptance Shares to Coeur d'Alene; (d) have represented and warranted to Coeur d'Alene that at each of the Relevant Times the Acceptance Shares are fully paid up; (e) be deemed to have represented and warranted to, and agreed with Coeur d'Alene, that the Acceptance Shares will be purchased by Coeur d'Alene with all Rights and that you will execute all such instruments as Coeur d'Alene may require for the purpose of vesting in it any such Rights; (f) notwithstanding the instructions in clause 4.1, if you signed the Acceptance Form in respect of any of your Gasgoyne Shares in a CHESS Holding, have irrevocably authorised Coeur d'Alene: (i) to instruct your Controlling Participant to initiate acceptance of this Offer in respect of all those Gasgoyne Shares in accordance with the SCH business rules; and (ii) to give any other instructions in relation to those Gasgoyne Shares to your Controlling Participant on your behalf under the sponsorship agreement between you and the Controlling Participant; (g) have authorised Coeur d'Alene (by its directors, servants and agents) to correct any errors or omissions contained in the Acceptance Form or made in the completion of the Acceptance Form and generally to complete in accordance with this Offer and the instructions on the Acceptance Form any blanks in the Acceptance Form as may be necessary to make the Acceptance Form an effective acceptance of this Offer and to enable registration of the Acceptance Shares to Coeur d'Alene; (h) have authorised Coeur d'Alene (by its directors, servants or agents) to alter the number of Gasgoyne Shares set out on the Acceptance Form as held by you if the number you actually hold is less than as set out; (i) have applied for the Coeur d'Alene Shares constituting the relevant portion of the share consideration to which you are entitled pursuant to this Offer, authorised Coeur d'Alene to issue and allot those shares to you and agreed to be bound by the constituent documents of Coeur d'Alene; (j) on this Offer or any contract resulting from your acceptance of this Offer becoming unconditional, have irrevocably appointed each of Coeur d'Alene and each of the directors of Coeur d'Alene from time to time jointly and each of them severally as your attorney to: 7 - 7 - (i) attend and vote (and otherwise participate) in respect of the Acceptance Shares at any and all general meetings of Gasgoyne, to receive notices of all such meetings and to requisition or join with other holders of Gasgoyne Shares in requisitioning or to convene or to join with other holders of Gasgoyne Shares in convening a general meeting or general meetings of Gasgoyne; (ii) complete and execute all forms, notices, instruments (including instruments appointing Coeur d'Alene or a director of Coeur d'Alene as a proxy or representative in respect of any of those Acceptance Shares), transfers (including further transfers of any of those Acceptance Shares to any person) and resolutions relating to those Acceptance Shares and generally to exercise all powers and rights which you may have as the registered holder or beneficial owner thereof; (iii) to request Gasgoyne to register in the name of Coeur d'Alene or its nominee any of the Acceptance Shares which you hold on any register of Gasgoyne; and (iv) generally to exercise all your powers and rights in relation to the Acceptance Shares, and have agreed that in exercising the powers conferred by that power of attorney Coeur d'Alene and any such director shall be entitled to act in the interests of Coeur d'Alene as the beneficial owner and intended registered holder of the Acceptance Shares. 7.2 If, for any reason, Coeur d'Alene does not receive any Rights referred to in paragraph 7.1(e), Coeur d'Alene will be entitled to reduce the amount of consideration payable in accordance with this Offer by the amount of value (as reasonably assessed by Coeur d'Alene) of such Rights. 7.3 If you comply with some, but not all of the requirements for acceptance, Coeur d'Alene may in its absolute discretion treat the Acceptance Form as valid notwithstanding your failure to comply with all requirements. 7.4 Where the requirements for acceptance have been complied with in respect of some but not all of the Acceptance Shares, Coeur d'Alene may in its sole discretion deem your acceptance of this Offer complete in respect of those of the Acceptance Shares for which the requirements have been complied with (in this clause 7.4 referred to as "RELEVANT SHARES") but not in respect of the remainder notwithstanding any other terms of this Offer. In that event, Coeur d'Alene must provide the consideration in respect of the Relevant Shares but not any other Acceptance Shares you may hold, notwithstanding any other terms of this Offer. 8 WITHDRAWAL Coeur d'Alene may withdraw this Offer at any time with the written consent of the Commission and subject to the conditions (if any) specified in that consent. 8 - 8 - 9 VARIATION Coeur d'Alene may vary this Offer in accordance with the Corporations Law. 10 TO WHOM OFFERS ARE MADE 10.1 An offer in the form of this Offer is being made to each holder of Gasgoyne Shares registered in the register of members of Gasgoyne on the date of this Offer. Offers will also be made in respect of Gasgoyne Shares issued during the offer period pursuant to the exercise of any Gasgoyne Options (refer to clause 4.5 for instructions as to how to accept this Offer if you hold Gasgoyne Options). 10.2 If at any time during the offer period and before this Offer is accepted, another person is the holder of, or entitled to be registered as the holder of, some or all of your Gasgoyne Shares (in this clause called the "TRANSFERRED SHARES") then: (a) an offer corresponding to this Offer will be deemed to have been made to that person in respect of all of the Transferred Shares; (b) an offer corresponding to this Offer will be deemed to have been made to you in respect of all of your Gasgoyne Shares to which this Offer relates other than the Transferred Shares; and (c) this Offer will be deemed to have been withdrawn. 10.3 If at any time during the offer period and before this Offer is accepted, you are a trustee or nominee of a distinct portion of your Gasgoyne Shares or otherwise hold a distinct portion of your Gasgoyne Shares on account of another person within the meaning of section 650: (a) an offer corresponding to this Offer will be deemed to have been made to you relating to each distinct portion of your Gasgoyne Shares; (b) to accept this Offer you must give to Coeur d'Alene a notice which: (i) if it relates to Gasgoyne Shares in a CHESS Holding, must be in an electronic form approved by the SCH business rules; or (ii) if it relates to certificated Gasgoyne Shares, must be in writing, stating that the relevant shares consist of distinct portions and specify the number of your Gasgoyne Shares in respect of which you wish to accept this Offer for each distinct portion of shares which you hold; and (c) on giving the notice you will be deemed to have accepted that corresponding offer. 11 ENTITLEMENT OF COEUR D'ALENE 11.1 On the date of this Offer the total number of Gasgoyne Shares on issue is [ ]. 9 - 9 - There are no other classes of share on issue in the capital of Gasgoyne. 11.2 On the date of this Offer, immediately before this Offer was despatched, Coeur d'Alene was: (a) entitled to [ ] Gasgoyne Shares; (b) not entitled to any other marketable securities of Gasgoyne. 11.3 On 25 January 1996, being not earlier than five business days before the date on which the Part A Statement was signed, the number of Gasgoyne Shares on issue if all Gasgoyne Options on issue at that date had been converted into Gasgoyne Shares would be [ ]. The number of Gasgoyne Shares to which Coeur d'Alene would be entitled if all Gasgoyne Options on issue had been converted into Gasgoyne Shares on that date would be [ ]. 12 OBLIGATIONS OF COEUR D'ALENE TO PAY CONSIDERATION 12.1 FOREIGN SHAREHOLDERS If your address as shown in the register of members of Gasgoyne is a place outside Australia and its external territories then you will not be entitled to receive Coeur d'Alene Shares for your Gasgoyne Shares by reason of your acceptance of this offer and you will be a "foreign shareholder" for the purposes of this clause 12. If you are a foreign shareholder and you accept this Offer, Coeur d'Alene will arrange for a nominee sale in accordance with clause 12.3. 12.2 ODD LOTS If the total number of Coeur d'Alene Shares you are entitled to receive as consideration under this Offer constitute an odd lot then you may elect on the Acceptance Form not to receive Coeur d'Alene Shares for your Gasgoyne Shares by reason of your acceptance of this Offer and then you will be an "odd lot shareholder" for the purposes of this clause 12. If you are an odd lot shareholder and you accept this Offer, Coeur d'Alene will arrange for a nominee sale in accordance with clause 12.3. Coeur d'Alene understands that an "odd lot" of Coeur d'Alene Shares under the ASX business rules is 50 Coeur d'Alene Shares (and 100 under the NYSE business rules). If no election is made on the Acceptance Form and the total number of Coeur d'Alene Shares you are entitled to receive as consideration under this Offer constitute an odd lot, you will not be regarded as an "odd lot shareholder" for the purposes of this clause 12. 12.3 NOMINEE SALE If you are a foreign shareholder or an odd lot shareholder and you accept this Offer, Coeur d'Alene will: (a) arrange for allotment to a nominee approved by the Commission or ASX, as appropriate ("NOMINEE"), of the number of Coeur d'Alene Shares issued in accordance with clauses 2.1 and 2.3 to which you and all other odd lot and foreign shareholders would have been entitled but for this clause 12; 10 - 10 - (b) cause the Coeur d'Alene Shares so allotted to be offered for sale in such manner, at such price and on such other terms and conditions as are approved by the Nominee; (c) pay to you (in addition to any cash payable to you as a result of acceptance of the consideration set out in clause 2.1 of this Offer) the amount ascertained in accordance with the formula Net Proceeds x NAS of Sale TAS Where: (i) "NET PROCEEDS OF SALE" is the amount (if any) remaining after deducting from the proceeds of sale the expenses of the sale; and (ii) "NAS" is the number of Coeur d'Alene Shares which would but for this clause 12 otherwise have been allotted and issued to you; and (iii) "TAS" is the total number of Coeur d'Alene Shares allotted to the Nominee under this clause 12 in respect of the Gasgoyne Shares held by all foreign and odd lot shareholders; (d) payment will be made in Australian dollars, or if this is unlawful, the currency of the country of residence of the foreign shareholder (as shown in the register of members of Gasgoyne). 12.4 If you are resident in any place specified by the Reserve Bank of Australia as being a place for which a resident is not entitled to receive the consideration specified in clause 2.1, in the absence of any necessary authority of the Reserve Bank of Australia and the Australian Taxation Office, acceptance of this Offer will not create or transfer to you any right (contractual or contingent) to receive the consideration specified in this Offer unless and until any necessary authority of the Reserve Bank of Australia and the Australian Taxation Office has been obtained by you. 13 OTHER MATTERS 13.1 All costs and expenses of the preparation, despatch and circulation of the Offers and all stamp duty payable in respect of a transfer of Gasgoyne Shares in respect of which Offers are accepted, will be paid by Coeur d'Alene. 13.2 Subject to the Corporations Law, a notice or other communication given by Coeur d'Alene to you in connection with the Takeover Scheme will be deemed to be duly given if it is in writing and: (a) is delivered at your address as recorded in the register of members of Gasgoyne or the address shown in the Acceptance Form; or (b) is sent by pre-paid ordinary mail, or in the case of an address outside Australia by pre-paid airmail, to you at either of those addresses. 11 - 11 - 13.3 If: (a) this Offer is withdrawn after your Acceptance Form has been sent to Coeur d'Alene, but before it has been received; or (b) for any other reason Coeur d'Alene does not acquire the Gasgoyne Shares to which your Acceptance Form relates, Coeur d'Alene will despatch at your risk your Acceptance Form together with all other documents forwarded by you to your address as shown on the Acceptance Form or such other address as you may notify in writing to Coeur d'Alene by, where such address is inside Australia, pre-paid ordinary post, or, where such address is outside Australia, pre-paid airmail post. 14 INTERPRETATION 14.1 In this Offer and in the Acceptance Form, unless the contrary intention appears: "ACCEPTANCE FORM" means the form of acceptance and transfer enclosed with this Offer. "ACCEPTANCE SHARES" means the Gasgoyne Shares in respect of which this Offer is accepted or which are deemed under this Offer to have been accepted. "ASX" means Australian Stock Exchange Limited. "BROKER" means a person who is a share broker and a participant in CHESS. "CHESS" means Clearing House Electronic Subregister System, which provides for electronic share transfers in Australia. "CHESS HOLDING" means a holding of Gasgoyne Shares on the CHESS Subregister of Gasgoyne. "COEUR D'ALENE" means Coeur d'Alene Mines Corporation, a company incorporated in Idaho, USA having its registered office at 505 Front Avenue, Coeur d'Alene, Idaho 83814, USA and whose ARBN is 072 498 125. "COEUR D'ALENE SHARES" means fully paid shares of common stock in the capital of Coeur d'Alene. "COMMISSION" means the Australian Securities Commission. "CONTROLLING PARTICIPANT" means the Broker or Non-Broker Participant in CHESS who is designated as the controlling participant for shares in a CHESS Holding in accordance with the SCH business rules. "EXCHANGE RATE" means the noon mid-rate for Australian dollars into US dollars as displayed on Reuters or the inverse of that rate (as appropriate). "GASGOYNE" means Gasgoyne Gold Mines NL, a company having its registered office at Level 33, QV1 Building, 250 St George's Terrace, Perth, Western Australia and whose ACN is 009 212 382. 12 - 12 - "GASGOYNE OPTIONS" means non-renounceable options to subscribe for one Gasgoyne Share, issued by Gasgoyne to directors or employees prior to 21 December 1995. "GASGOYNE SHARES" means fully paid ordinary shares of 20c. each in the capital of Gasgoyne. "NON-BROKER PARTICIPANT" means a non-broker participant under the SCH business rules. "NYSE" means New York Stock Exchange. "OFFER" means the offer contained in this document or if the context so requires this document itself. "OFFERS" means the offers by Coeur d'Alene to acquire Gasgoyne Shares referred to in paragraph 1 of the Part A Statement. "ODD LOT" means the number of Coeur d'Alene Shares designated as less than a marketable parcel, determined under ASX business rules, or if Coeur d'Alene is not approved for inclusion in the official list of ASX at the date Coeur d'Alene Shares are to be allotted to the Nominee under clause 12.3(a), under NYSE business rules. "PART A STATEMENT" means the statement of Coeur d'Alene under Part A of section 750 relating to the Takeover Scheme. "RELEVANT TIMES" means: (i) the time of your acceptance; (ii) the time of the contract resulting from your acceptance being or becoming unconditional; (iii) the time immediately before registration of the transfer to Coeur d'Alene; and (iv) the time of registration of the transfer to Coeur d'Alene. "RIGHTS" means all accretions, rights or benefits of whatever kind attaching to or arising from Gasgoyne Shares directly or indirectly after 21 December 1995, including, without limitation all dividends or other distributions and all rights to receive any dividends or other distributions, or to receive or subscribe for shares, stock units, notes, bonds, options or other securities, declared or paid by Gasgoyne or any of its subsidiaries. "SCH" means Securities Clearing House, the body which administers the CHESS system in Australia. "SCH BUSINESS RULES" means the business rules of the SCH. "TAKEOVER SCHEME" means the takeover scheme under the Corporations Law constituted by the Offers. "US PERSON" has the meaning given for the purposes of regulation S made under the US Securities Act of 1933. References to $, A$ and to cents are to Australian dollars and cents respectively. 13 - 13 - A word or phrase to which a meaning is given by the Corporations Law has that meaning. A reference to a section or a provision is a reference to a section or provision of the Corporations Law. A reference to a clause and or paragraph is a reference to a clause or paragraph of this Offer. The Acceptance Form is included in and is part of the Offer. The singular includes the plural and vice versa. Headings are for convenience only and are not to affect the interpretation of this document or the Acceptance Form. This Offer is dated [ ]. For and on behalf of Coeur d'Alene. .................................. [ ] Director 14 THIS IS AN IMPORTANT DOCUMENT. IT IS RECOMMENDED THAT YOU CONSULT YOUR STOCKBROKER OR FINANCIAL ADVISER IMMEDIATELY. FORM OF ACCEPTANCE AND TRANSFER IN RESPECT OF THE OFFER BY COEUR D'ALENE MINES CORPORATION (ARBN 072 498 125) ("COEUR D'ALENE") TO ACQUIRE ALL OF YOUR FULLY PAID ORDINARY SHARES IN GASGOYNE GOLD MINES NL ("GASGOYNE") (please see instructions overleaf before completing this form) SHAREHOLDER NAME & CONSIDERATION ADDRESS CASH NUMBER OF COEUR D'ALENE NUMBER OF GASGOYNE SHARES SHARES HELD HOLDER NUMBER/FORM NUMBER If your name, address or shareholding is incorrect please amend and initial the alteration. IF YOU WERE NOT ISSUED WITH SHARE CERTIFICATES (CHESS HOLDINGS) If you were not issued with share certificates for your Gasgoyne Shares (ie because your shares are in a CHESS Holding) you cannot use this form to accept the Offer. To accept the Offer contact your Broker or Non-Broker Participant and instruct them to initiate the acceptance on the CHESS system. This acceptance must be initiated before 5.00 pm Perth time on the closing date. Please refer to clause 4.1 of the Offer document for further details. IF YOU HOLD SHARE CERTIFICATES I/We, the person(s) named above being the holder(s) of the Gasgoyne Shares shown above: 1. accept the Offer in respect of the Gasgoyne Shares referred to above and transfer to Coeur d'Alene all of those Gasgoyne Shares for the consideration specified in the Offer; 15 - 2 - 2. apply for the Coeur d'Alene Shares constituting the relevant portion of the share consideration to which I am entitled pursuant to the Offer; 3. authorise Coeur d'Alene to issue and allot those shares to me; 4. agree to be bound by the constituent documents of Coeur d'Alene; 5. agree to be bound by the terms of the Offer; 6. attach my share certificate(s); 7. acknowledge that all documents and remittances sent by post by or to you at the above address will be sent at my/our risk; IF YOU HOLD GASGOYNE OPTIONS If you hold Gasgoyne Options and you wish to accept the Offer, you may do so in the manner contemplated in clause 4.5 of the Offer document. Alternatively, you may exercise the Gasgoyne Options and then accept the Offer in respect of the Gasgoyne Shares issued on exercise to you. ODD LOTS If the total number of Coeur d'Alene Shares you are entitled to receive as consideration under the Offer constitutes an odd lot, then you may elect to receive cash via a nominee sale as contemplated in clauses 12.2 and 12.3 of the Offer document. Indicate in the box below whether this is desired. It applies only to possible odd lot shareholder. / / Odd lot shareholder election (clause 12.2) of Offer If this Form is signed under power of attorney, the donee of the power declares that he has no notice of the revocation thereof. __________________________ Date: __________________________ Date: Signature of Transferor(s) (In the case of joint holders all must sign. A corporation must affix its common seal.) 16 - 3 - TO ACCEPT THIS OFFER SEND OR DELIVER THIS FORM, TOGETHER WITH YOUR SHARE CERTIFICATES TO ANY OF: Deloitte Share Registry Services Level 1, Grosvenor Place Central Park, Level 16 225 George Street 152-158 St Georges Terrace Sydney NSW 2000 Perth WA 6000 To be received no later than 5.00pm Perth time on the closing date of the Offer. IF YOU HAVE ANY ENQUIRIES CONCERNING COMPLETION OF YOUR ACCEPTANCE, PLEASE TELEPHONE: Deloitte Share Registry Services Sydney: Perth: Tel (02) 322 7010 Tel (09) 365 7000 Fax (02) 322 7011 Fax (09) 365 7001 SOLICITING BROKERS ONLY The brokers whose stamp appears below states that the Gasgoyne Shares the subject of this acceptance are not Gasgoyne Shares in which the Broker or any associate holds a relevant interest. / / Check here if the shares above have been tendered in accordance with the SCH business rules. Broker Stamp Broker address 17 HOW TO FILL IN THE ACCEPTANCE FORM 1. The present number of Gasgoyne Share which you hold is shown on the Acceptance Form overleaf. If you have recently bought or sold any Gasgoyne Shares or exercised Gasgoyne Options, your holding may differ from that shown and you may alter the number of shares and the amount payable. Note that if you fail to do so, Coeur d'Alene will on your behalf. 2. To accept the Offer to purchase your Gasgoyne Shares, please sign and date the Acceptance Form where indicated. In addition, the following should be noted: (a) if the Gasgoyne Shares are registered in the names of joint holders, all joint holders must sign the Acceptance Form; (b) a corporation must execute the Acceptance Form under its seal or by attorney; and (c) if the Acceptance Form is signed under power of attorney, the relevant power of attorney must be submitted to Coeur d'Alene for noting unless it has already been noted by Gasgoyne. 3. If Gasgoyne Shares stand in the books of Gasgoyne in the name of a person deceased, this Offer may be accepted by executors or administrators. Probate (or Letters of Administration, if applicable) must be produced to Coeur d'Alene for noting unless it has already been noted by Gasgoyne. Any other requirements of Gasgoyne as to transfer or registration of these Gasgoyne Shares must be satisfied. 4. (a) If you have sold all your Gasgoyne Shares, please send this Acceptance Form to the stockbroker who acted on your behalf. (b) If you have sold part of your Gasgoyne Shares or purchased additional Gasgoyne Shares please alter the number of Gasgoyne Shares shown beside your name on the front of the Acceptance Form to show the number of Gasgoyne Shares now held by you and write below the name and address of the stockbroker who acted for you. 18 - 2 - Name and address of stockbroker if Gasgoyne Shares have been sold or purchased: Stockbroker: Address: 5. Place the completed Acceptance Form AND YOUR RELEVANT GASGOYNE SHARE CERTIFICATE(S) in the enclosed reply paid envelope and post them to International Registries Pty Limited on an address shown overleaf. Holders resident overseas are urged to forward their acceptances by AIRMAIL. The enclosed reply paid envelope is not available for use by holders resident overseas. 6. Should your share certificate(s) not be readily available, please complete and post the Acceptance Form immediately and forward the certificate(s) as soon as possible. If any certificate has been lost or destroyed, please include with your Acceptance Form a covering letter to this effect and advise Gasgoyne's registry, Share Register Services, Suite 1, Block F, 661 Newcastle Street, Leederville, WA 6007 (Tel: (09) 227 1770). - -------------------------------------------------------------------------------- THIS IS AN IMPORTANT DOCUMENT. If you are in doubt as to how to deal with it, consult your Stockbroker or Financial Adviser without delay. EX-10.B 3 PART A STATEMENT 1 EXHIBIT 10(b) A copy of this Part A Statement was registered by the Australian Securities Commission on 31 January 1996. Neither the Commission nor any of its officers takes any responsibility as to the contents of this Part A Statement. PART A STATEMENT BY COEUR D'ALENE MINES CORPORATION (ARBN 072 498 125) This Statement is given by COEUR D'ALENE MINES CORPORATION to GASGOYNE GOLD MINES NL (ACN 009 212 382) under Part 6.3 of the Corporations Law. Terms used in this Statement are defined in clause 8 of this Statement 1. OVERVIEW OF THE OFFER 1.1 OFFERS FOR ALL GASGOYNE SHARES Coeur d'Alene proposes making takeover offers in respect of all Gasgoyne Shares, together with all Rights attaching to them, whether on issue on the date of the offers or issued during the term of the offers pursuant to the exercise of any Gasgoyne Options. The consideration to be offered for each 100 Gasgoyne Shares is $60 plus 7 Coeur d'Alene Shares. The holders of Gasgoyne Shares who, as a result of accepting an offer or offers become entitled to an odd lot or fractional entitlement of Coeur d'Alene Shares, will be treated in the manner set out in clauses 12.2 and 2.4 respectively of the offer document accompanying this Statement. This offer may not be accepted for only a portion of the Gasgoyne Shares held by a person. Acceptance must be made for all of such person's Gasgoyne Shares, including Gasgoyne Shares issued on exercise of Gasgoyne Options during the term of the offers. A copy of one of the proposed offers accompanies this Statement. 1.2 OFFER PERIOD The Offers are to remain open for the period commencing on the date of the Offers and ending at 5.00 pm (Perth time) on the day which is one month after that date unless the Offers are extended or withdrawn in accordance with the Corporations Law. 2 2 2 OVERVIEW OF COEUR D'ALENE 2.1 PRINCIPAL ACTIVITIES The principal activity of Coeur d'Alene and of its subsidiaries ("GROUP") is the production of precious metals (ie gold and silver). Coeur d'Alene was founded in 1928 and is based in Coeur d'Alene, Idaho, United States of America. The Group currently employs more than 1,000 people and has total assets exceeding A$590 million (US$440 million) at current exchange rates. The Group is a significant producer of silver and gold and operator of mines in the United States, Chile and New Zealand. Total Gold and Silver Production
SILVER GOLD 1995 7.2 million ounces 168,000 ounces 1996 (forecast)* 8.9 million ounces 224,000 ounces
* The directors of Coeur d'Alene can give no assurance that these levels of production will be achieved. The forecast above does not include production for Gasgoyne - refer to the full forecast in clause 4.4.4 which includes forecast production for Gasgoyne. The Group has the following four operating mines: - Rochester Mine, Nevada (USA) - Golden Cross Mine (New Zealand) - Fachinal Mine (Chile) - El Bronce Mine (Chile) The Group also has interests in a number of other projects: - Kensington, Alaska (USA) - Silver Valley Resources Corp, Idaho (USA) - Faride (Chile) Refer to the table in clause 2.4 for further details of the production, costs, ore reserves and mineral deposits of each mine. Rochester Mine The Rochester Mine is a silver and gold surface mine located in Nevada, USA. The mine has been in continuous operation since 1986 and is wholly owned and operated by the Group. 3 3 The mine is one of the largest and lowest cost primary silver mines in North America. As at 31 December 1995: - proven and probable reserves were 95.5 million ounces of silver and 813,000 ounces of gold; and - cash operating costs for the year were US$275 per gold equivalent ounce. The currently identified mine life is approximately ten years at current gold and silver prices. Golden Cross The Golden Cross mine is a gold and silver surface and underground mine located near Waihi on the North Island of New Zealand. The Group owns an 80% interest in the mine and has operatorship. The balance of the interest in the mine is owned by The Todd Corporation of New Zealand. Coeur d'Alene's interest was acquired in 1993 for approximately US$54 million and is a fully operating property. The mine had a low cost structure of US$232 per gold equivalent ounce for the year ended 31 December 1995. Gold equivalent reserves increased by 76% in 1994 to approximately 510,000 ounces. Fachinal Mine The Fachinal mine is a gold and silver open pit and underground mine located in southern Chile. The mine is wholly owned and operated by the Group. The mine commenced production in October 1995 on schedule and under budget. The mine is expected to produce 44,000 ounces of gold and 2.8 million ounces of silver in its first full year of operation (1996), at a forecast cash operating cost of US$225 per gold equivalent ounce. The mine has significant reserve expansion potential as the property contains 67 veins and at least five mineralized zones. El Bronce Mine The El Bronce mine is an underground gold and silver mine located in central Chile. In 1994 the Group acquired an interest in the mine entitling it to 51% of net profits and giving it operatorship. The Group will also be entitled to a 51% equity interest in the mine if it invests a total of US$25.5 million towards, among other things, exploratory and development activities over the 4 years to July 1997. As at 30 September 1995 the Group had already invested US$16.7 million and is thus only required to pay a further US$8.8 million over the next two years. 4 4 Since Coeur d'Alene assumed operatorship, cash operating costs have decreased from US$400 to US$314 per gold equivalent ounce. Proven and probable reserves at the mine are currently 69,000 ounces of gold and are expected by Coeur d'Alene to significantly increase. Kensington Property The Group has a 100% ownership interest in a major Alaskan development project known as the Kensington Property. The Property has proven and probable reserves of approximately 1,946,000 ounces of gold. An updated feasibility study is currently being conducted and development activities are being undertaken. The Company believes that the remaining permits will be obtained and expects that a decision will be made as to commencement of production in the third quarter of 1996. Silver Valley Resources Corporation The Group owns 50% of the shares in Silver Valley Resources Corporation ("SILVER VALLEY"). The other 50% is owned by Asarco Inc. Silver Valley owns the Coeur and Galena silver mines in Idaho, USA. Operations at these mines were suspended (in July 1992 and April 1991 respectively) due to the low price of silver. A US$25 million program to develop additional reserves is on-going and the first drilling results have encountered significant commercial grades of silver ore. The mines are being maintained in a ready state and could be in production within 90 days of a decision to recommence production. Due to increased silver prices in 1995 and recent exploratory drilling which resulted in several high grade intercepts, Silver Valley may decide to commence production at one or both mines in the near future. Faride Mine The Group has a development property at a gold mine known as the Faride mine in Chile. The Group's Business Plan The Group's business plan is to continue to: - expand its gold and silver production through exploration, development and acquisition of efficient mining properties; and - acquire businesses with a favourable operating cost structure that are operational or expected to become operational in the near future so that they can reasonably 5 5 be expected to contribute to the Group's near-term cash flow and net income and expand the Group's gold and/or silver production. However, there are no material acquisitions other than the Offers currently being negotiated by the Group. Listing of Coeur d'Alene Shares Coeur d'Alene Shares are traded on the New York Stock Exchange under the symbol "CDE" and also on the Pacific Stock Exchange based in San Francisco, California. It is the intention of Coeur d'Alene that Coeur d'Alene Shares will be listed on ASX. Coeur d'Alene will apply to ASX for admission to the official list of ASX and for official quotation of Coeur d'Alene Shares. Quotation is not guaranteed or automatic and the Offers are not subject to listing on ASX. As at 25 January 1996, Coeur d'Alene had a market capitalisation of US$437.4 million (A$592.7 million), the closing price of Coeur d'Alene Shares on New York Stock Exchange was US$21.375 (A$28.96) per share and net assets were in excess of US$230 million (A$311.7 million). Coeur d'Alene has the equivalent of a "B-" credit rating on its outstanding debt from Standard & Poor's and "B2" from Moody's Investor Services. 2.2 DIRECTORS AND SENIOR MANAGEMENT OF COEUR D'ALENE The names, US addresses and occupations of all the Directors of Coeur d'Alene are:
NAME ADDRESS OCCUPATION Dennis E Wheeler 505 Front Street Chairman, President and Coeur d'Alene Idaho 83854 Chief Executive Officer James A Sabala 505 Front Street Senior Vice President and Coeur d'Alene Idaho 83854 Chief Financial Officer Joseph C Bennett 2725 W Stonecrop Road Wilson Mining Consultant Wyoming 83014 Duane B Hagadone 111 South First Street Chairman of the Board Coeur d'Alene Idaho 83814 The Hagadone Corporation James J Curran 1300 SW 5th Avenue Chairman of the Board and Portland Oregon 97201 Chief Executive Officer - First Interstate Bank Northwest Region James A McClure 201 Maryland Avenue NE Attorney, Pursley & Huntley Washington DC 20002 President - McClure Gerard & Neuenschwander
6 6 Jeffery T Grade 13400 Bishops Lane Chairman of the Board and Brookfield Wisconsin 53005 Chief Executive Officer - Harnischfegar Industries, Inc. Cecil D Andrus 1910 University Drive Chairman-Andrus Boise Idaho 83701 Center for Public Policy of Counsel Gallatin Group
Background of Directors The background of each of the Directors of Coeur d'Alene is as follows: Dennis E Wheeler - Chairman of the Board of the company since May 1992; President since December 1980; Chief Executive Officer since December 1986; Chief Administrative Officer from December 1980 to December 1986; Secretary from January 1980 to December 1980; Senior Vice President and General Counsel from 1978 to 1980. Director of Sierra Pacific Resources (a public utility holding company listed on NYSE). Mr. Wheeler is aged 53 and has been a director since 1968. James A Sabala - Senior Vice President and Chief Financial Officer of the company since June 1989; Vice President - Finance from 1987 to June 1989; Treasurer since 1982; and Secretary from 1986 to March 1990. Certified Public Accountant. Mr. Sabala is aged 41 and has been a director since 1989. Joseph C Bennett - Mining Consultant. Director of Conwest Exploration Company, Limited. Mr. Bennett is aged 62 and has been a director since 1981. Duane B Hagadone - Chairman of the Board of The Hagadone Corporation, a company engaged in the newspaper and communications businesses, since 1966; Chairman of the Board of Hagadone Hospitality Co., which is engaged in the hotel and restaurant businesses, since 1983. Director of Washington Water Power Company, which is listed on NYSE. Mr. Hagadone is aged 63 and has been a director since 1987. James J Curran - Chairman of the Board and Chief Executive Officer, First Interstate Bank, Northwest Region (Alaska, Idaho, Montana, Oregon and Washington); Chairman of the Board and Chief Executive Officer, First Interstate Bank of Oregon, N.A. from February 1991 to October 1991; Chairman, President and Chief Executive Officer of First Interstate Bank of Denver, N.A., from April 1990 to January 1991; Chairman, President and Chief Executive Officer of First Interstate Bank of Idaho, N.A., from July 1984 to March 1990. Mr Curran is aged 56 and has been a director since 1989. James A McClure - Attorney with the Boise, Idaho law firm of Givens, Pursley & Huntley; President of the Washington, D.C. consulting firm of McClure, Gerard & Neuenschwander, Inc.; United States Senator from Idaho from 1972 to 1990; former Chairman of the Senate Energy and Natural Resources Committee. Director of Boise Cascade Corporation (a natural resources company listed on 7 7 NYSE) and The Williams Companies (a petroleum and telecommunications company). Mr McClure is aged 71 and has been a director since 1991. Jeffery T Grade - Chairman of the Board and Chief Executive Officer of Harnischfeger Industries, Inc. (listed on NYSE) since 1993, which is engaged in the manufacture of mining and material handling equipment and paper-making machinery and in computerised information systems and engineering services; previously served as President and Chief Executive Officer of that corporation from 1992 to 1993 and President and Chief Operating Officer of that corporation from 1986 to 1992. Also a director of Crucible Materials Corporation (a manufacturer of special materials), Measurex Corporation (a manufacturer of central systems) and Case Corporation (listed on NYSE). Mr Grade is aged 52 and has been a director since 1993. Cecil D Andrus - Governor of Idaho (1971-1977; 1987-1995); Secretary of the Department of the Interior of the United States of America (1977-1981). Director of Albertson's, Inc. (a nation-wide grocery retail chain listed on NYSE); Chairman of the Andrus Center for Public Policy at Boise State University; member "of counsel" of the Gallatin Group (a policy consulting firm). Mr Andrus is aged 64 and was appointed a director in 1995. The senior management of Coeur d'Alene is as follows:
NAME OCCUPATION Dennis E Wheeler Chairman, President and Chief Executive Officer Michael L Clark Senior Vice President and Chief Operating Officer James A Sabala Senior Vice President and Chief Financial Officer Michael C Tippett Senior Vice President Exploration & New Business Development William F Boyd Vice President, Corporate Counsel and Secretary Alan L Wilder Vice President, Engineering Operations Management Tom T Angelos Controller
2.3 SIGNIFICANT SHAREHOLDERS OF COEUR D'ALENE The following table sets forth information concerning the beneficial ownership of Coeur d'Alene Shares by the only shareholders known on 25 January 1996 by the Company to be a beneficial owner of a substantial proportion (both as a percentage of current outstanding shares and on a fully diluted basis) of Coeur d'Alene Shares outstanding or securities convertible into Coeur d'Alene Shares: 8 8
NUMBER OF SECURITIES PERCENTAGE OF PERCENT OF BENEFICIALLY OUTSTANDING FULLY OWNED(3) SHARES DILUTED(4) ------------- -------------- ------------- Fidelity Management & 2,009,852 9.82% 7.64% Research Corp.(1) Franklin Resources, Inc. (2) 1,030,032 N/A 3.92%
(1) FMR Corp. is an investment advisory firm that serves as investment advisor to several investment companies that beneficially own the above-reported shares. Its address is 82 Devonshire Street, Boston, Massachusetts 02109 USA. (2) Franklin Resources, Inc., is an investment advisory firm that serves as investment advisor to several investment companies that beneficially own the above-reported securities. Its address is 777 Mariners Island Boulevarde, P.O. Box 7777, San Mateo, California 94403-7777 USA. Franklin Resources, Inc. did not actually hold any Coeur d'Alene Shares at the date of its last filing (see note (3)). Rather, 992,368 shares may be acquired upon the conversion of 6 3/8% Debentures and 37,664 shares may be acquired upon the conversion of 6% Debentures. (3) The above securities holdings are based on beneficial ownership of securities filings with the SEC by Fidelity Management Research Corp dated 30 September 1995 and Franklin Resources, Inc. dated 10 February 1995. (4) Based on there being a total of 26,300,779 Coeur d'Alene Shares on a fully diluted basis (ie 20,464,882 outstanding Coeur d'Alene Shares, plus the issue of 5,835,897 shares on conversion of outstanding convertible debentures). 2.4 ORE RESERVES AND MINERALIZED MATERIAL ESTIMATE The accompanying table shows 1993 and 1994 information with respect to Coeur d'Alene's ownership of mines, production, costs, ore reserves and mineral deposits. 9 COEUR D'ALENE STATISTICAL SUMMARY
-------------------------------------------------------------------------- Production Cost per Ounce (US$) --------------------------------------------------------------------------------------------------------- Interest Tonnes Mined Grade Recovery Ounces GOLD Mine % year Millions g/Tonne % Produced Cash Noncash - -------------------------------------------------------------------------------------------------------------------------- United States Rochester 100.0 1994 7.119 0.24 104.73 56,886 100.0 1993 6.577 0.31 103.46 66,412 Kensington 50.0 1994 50.0 1993 Chile Fachinal 100.0 1994 100.0 1993 El Bronce 51.0 1994 0.022 6.51 90.05 4,953 174.67 20.40 Faride 51.0 1994 New Zealand Golden Cross 80.0 1994 0.643 3.57 89.48 67,400 277.00 111.00 80.0 1993 0.436 4.39 90.00 56,898 220.26 116.40 SILVER United States Rochester 100.0 1994 7.119 49.33 53.18 5,938,000 3.57 0.59 100.0 1993 6.577 52.62 53.43 5,944,000 3.55 0.54 Galena 50.0 1994 62.5 1993 Coeur 50.0 1994 50.0 1993 Chile Fachinal 100.0 1994 100.0 1993 Faride 51.0 1994 El Bronce 51.0 1994 0.022 25.88 92.45 20,000 New Zealand Golden Cross 80.0 1994 0.643 18.96 55.28 222,000 80.0 1993 0.436 20.26 60.01 175,000
-------------------------------------------------------------------- Reserves Mineralized Material ------------------------------------------------------------------- Interest Tonnes Grade Contained Tonnes Grade GOLD Mine % year Millions g/Tonne Ounces(1) Millions g/tonne - ----------------------------------------------------------------------------------------------------------------------------- United States Rochester 100.0 1994 73.230 0.37 872,000 100.0 1993 68.149 0.38 841,000 Kensington 50.0 1994 12.378 4.90 (2)1,946,000 2.893 5.04 50.0 1993 12.378 4.90 973,000 Chile Fachinal 100.0 1994 4.126 2.40 319,000 1.387 2.40 100.0 1993 4.083 2.40 318,000 El Bronce 51.0 1994 0.357 5.90 35,000 0.569 6.17 Faride 51.0 1994 1.074 2.67 47,000 0.513 1.37 New Zealand Golden Cross 80.0 1994 6.865 2.71 481,000 0.368 1.71 80.0 1993 4.356 3.12 345,600 Total Contained Gold Ounces 1994 3,700,000 Toal Contained Gold Ounces 1993 2,477,600 SILVER United States Rochester 100.0 1994 73.230 43.16 101,601,000 100.0 1993 68.058 45.25 99,200,000 Galena 50.0 1994 0.863 516.63 7,163,000 0.777 303.05 62.5 1993 0.863 516.63 8,953,750 Coeur 50.0 1994 0.342 594.10 3,262,500 0.156 487.14 50.0 1993 0.463 668.50 4,968,500 Chile Fachinal 100.0 1994 4.126 110.35 14,634,000 1.387 110.73 100.0 1993 4.083 110.39 14,700,000 Faride 51.0 1994 1.074 130.96 2,307,000 0.513 154.27 El Bronce 51.0 1994 New Zealand Golden Cross 80.0 1994 6.865 11.66 2,058,000 80.0 1993 4.356 13.92 1,559,040 Total Contained Silver Ounces 1994 131,025,500 Total Contained Silver Ounces 1993 129,381,290
(1) Represents Coeur d'Alene's share of the Contained Ounces (Au and Ag) Rochester 100% Kensington 50% in 1994, 100% in 1995 (7 July 1995) Fachinal 100% El Bronce 51% (net profits interest) Coeur 50% Faride 51% (option) Golden Cross 80% Galena 50% in 1994, 62.5% in 1993 (2) Gives pro forma effect, as of 1 January 1994, to the acquisition of the remaining 50% interest in the Kensington Mine on 7 July 1995. 10 10 US Definitions of Ore Reserves and Mineralized Materials Information in this Statement and the material accompanying it with respect to ore reserves and mineral deposits of the Group has been prepared and defined in accordance with SEC definitions, as follows. "Mineral Deposit" or "Mineralized Material" is a mineralized underground body which has been intersected by sufficient closely spaced drill holes and/or underground sampling to support sufficient tonnage and average grade of metal(s) to warrant further exploration-development work. This deposit does not qualify as a commercially mineable ore body ("Reserves"), as prescribed under SEC standards, until a final and comprehensive economic, technical, and legal feasibility study based upon the test results is concluded. "Ore Reserves" are that part of a mineral deposit which can be economically and legally extracted or produced at the time of the reserve determination. For SEC purposes, ore reserves may be proven or probable: "Proven (Measured) Reserves" are those reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings, or drill holes; grade and/or quality are computed from results of detailed sampling and (b) the sites for inspection, sampling, and measurement are so closely spaced and the geologic character is so well defined that size, shape, depth, and mineral content of reserves are well-established. "Probable (Indicated) Reserves" are those reserves for which quantity and grade and/or quality are computed from information similar to that for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower then that for proven (measured) reserves, is high enough to assume continuity between points of observation. Australian Definitions of Mineral Resources The JORC Code applicable in Australia provides that Australian companies reporting on mineralization are to prepare information on the following bases. "Mineral Resource" is defined as an identified in-situ mineral occurrence from which valuable or useful minerals may be recovered. Mineral resources are subdivided into: - Measured Mineral Resources; - Indicated Mineral Resources; and 11 11 - Inferred Mineral Resources. The JORC Code provides that in defining a mineral resource, the competent person will only take into consideration geoscientific data if there is a clear implication that there are reasonable prospects for eventual economic exploitation. "Measured Mineral Resource" means a mineral resource intersected and tested by drill holes, underground openings or other sampling procedures at locations which are spaced closely enough to confirm continuity and where geoscientific data are reliably known. A measured mineral resource estimate will be based on a substantial amount of reliable data, interpretation and evaluation of which allows a clear determination to be made of shapes, sizes, densities and grades. "Indicated Mineral Resource" means a mineral resource sampled by drill holes, underground opening or other sampling procedures at locations too widely spaced to ensure continuity but close enough to give a reasonable indication of continuity and where geoscientific data are known with a reasonable level of reliability. An indicated mineral resource estimate will be based on more data, and therefore will be more reliable, than an inferred mineral resource estimate. "Inferred Mineral Resource" means a mineral resource inferred from geoscientific evidence, drill holes, underground openings or other sampling procedures where the lack of data is such that continuity cannot be predicted with confidence and where geoscientific data may not be known with a reasonable level of reliability. Under the JORC Code, "Ore Reserve" is defined as that part of a measured or indicated mineral resource which could be mined, inclusive of dilution, and from which valuable or useful minerals could be recovered economically under conditions realistically assumed at the time of reporting. Ore reserves are subdivided into proved ore reserves and probable ore reserves. "Proved Ore Reserve" means an ore reserve stated in terms of mineable tonnes/volume and grade in which the corresponding identified mineral resource has been defined in three dimensions by excavation or drilling (including minor extensions beyond actual openings and drill holes), and where the geological factors that limit the ore body are known with sufficient confidence that the mineral resource is categorised as "measured". "Probable Ore Reserve" means an ore reserve stated in terms of mineable tonnes/volume and grades where the corresponding identified mineral resource has been defined by drilling, sampling or excavation (including extensions beyond actual openings and drill holes), and where the 12 12 geological factors that control the ore body are known with sufficient confidence that the mineral resource is categorised as "indicated". The Group believes that its ore reserve estimates, based on SEC definitions, are approximately the same as those that would result from the application of the JORC Code for determining proved and probable ore reserves. The Group also believes that its mineral deposit estimates, based on SEC definitions, are approximately the same as would result from the application of the JORC Code for mineral resources, after deduction for proved and probable ore reserves. Although the Group's ore reserve and mineral deposit estimates are believed to have been prepared and evaluated reliably and professionally, ore reserve and mineral deposit estimates involve interpretation of known data and subjective judgments regarding grade, mineralization, continuity and, in the case of ore reserves, economic factors. The Group used US$375 and US$375-$400 per ounce as the gold price in evaluating the Group's ore reserves at the end of 1993 and 1994, respectively. Future market price fluctuations, production costs, recovery rates and many other factors may result in an ore reserve becoming uneconomic or a mineral deposit being upgraded into an ore reserve. Information with respect to the Group's mineral deposits is included in this Statement and the material accompanying it to comply with Australian disclosure requirements applicable to the Offers. SEC regulations do not permit possible or inferred mineral resource disclosures and limit mineral deposit disclosures in documents that are filed with the SEC under United States securities laws unless required by applicable foreign securities laws. Coeur d'Alene's future SEC filings will only disclose the proven and probable ore reserve data and limited mineral deposit data permitted under United States securities laws. Gold Equivalent References in this Statement to gold equivalent ounces in respect of reserves or production means the number of ounces of gold plus one seventieth of the number of ounces of silver. One seventieth approximately reflects the current relative spot prices of gold and silver. 2.5 ENVIRONMENTAL AND RECLAMATION POLICY The Group and its employees continue to be recognised for their leadership as environmental stewards. The Group has received 14 awards relating to environmental care and compliance, including: - Dennis E Wheeler, the Chairman, President and Chief Executive Officer of Coeur d'Alene was awarded the 1994 Environmental Conservation Distinguished Service Award by the American Institute of Mining, Metallurgical and Petroleum Engineers, a 90,000 member US organisation. 13 13 - The Dupont/Conoco Environmental Leadership Award, which was awarded to the Company on 1 October 1991 by a judging panel that included representatives from environmental organisations and the US government. The receipt of such awards does not relieve the Company of its obligations to comply with all applicable environmental laws. In the 9 months ended 30 September 1995 the Group spent approximately US$2.1 million on environmental compliance activities and spent nearly US$3 million in the year ended 31 December 1994 at its operating properties. 2.6 COEUR D'ALENE'S HISTORICAL FINANCIAL INFORMATION Certain information on Coeur d'Alene's historical financial performance is set out in paragraph 4.4.1. In addition Coeur d'Alene reported net income of US$2.3 million for the nine months ended 30 September 1995. These results included a US$3.2 million gain relating to the delivery of gold and silver purchased in the open market to satisfy fixed price forward delivery contracts and US$2.4 million of income from discontinued operations (including the US$2.2 million after-tax gain from the sale of related non-mining assets). The Group's accumulated deficit as of that date declined to approximately US$14.8 million. Coeur d'Alene's financial results over recent years have been significantly affected by a number of factors including interest expenses and certain non-recurring write-offs relating to mine closures. In 1994 the Company reported interest expense of US$11.4 million. On 15 December 1995, US$7.4 million of 7% Debentures were converted into Coeur d'Alene Shares. As a result, in 1996, the Company's interest expense will decline by US$5.2 million or 46%. The following is an explanation of some of the reasons for Coeur d'Alene's losses in the 1990 through 1994 financial years. Coeur d'Alene acquired Callahan Mining Corporation ("CALLAHAN") by a merger transaction effective retroactively on 31 December 1991. This acquisition was accounted for on a pooling of interests basis, and therefore the Group recorded losses of approximately US$4.2 million in 1990, US$14.4 million in 1991 and US$759,000 in 1992. Those losses largely reflect significant non-recurring write-offs relating to the closure of Callahan's Ropes Mine and Coeur d'Alene's Thunder Mountain Mine and expenses incurred in connection with the acquisition of Callahan, as well as interest expenses and the low silver and gold prices prevailing during these periods. The mine closure write-offs amounted to approximately US$5.6 million in 1990 and US$5.7 million in 1991, and the expenses incurred in connection with the acquisition approximated US$5.2 million. Furthermore, a loss of approximately US$13.3 million before the cumulative effect of a change in accounting policy was recorded in the year ended 31 December 1993, which primarily resulted from approximately US$9.4 million of non-recurring write-offs relating to the settlement of litigation, resolution of an environmental matter and the 14 14 write-off of uncollectable notes receivable. A loss of approximately US$3.9 million was recorded in the year ended 31 December 1994 on which date the Group's accumulated deficit amounted to approximately US$17 million. THE ATTAINMENT OF NET INCOME FROM CONTINUING OPERATIONS IN THE FUTURE WILL PRIMARILY DEPEND UPON FUTURE SILVER AND GOLD PRICES AND OPERATING RESULTS AT THE GROUP'S OPERATING PROPERTIES. 2.7 DIVIDEND HISTORY On a per share basis dividends or cash distributions (out of capital surplus) paid in respect of the last five years by Coeur d'Alene are as follows:
1991 1992 1993 1994 1995 US12 cents US15 cents US15 cents US15 cents US15 cents
Past dividends or cash distributions have been paid in April. See page 28 of annexure B for additional information on net loss per share and dividends or cash distributions paid. Further dividends or cash distributions, if any, will be determined by the Board of Directors of Coeur d'Alene and will depend primarily upon the Company's results of operations, financial condition and capital requirements. No dividend or cash distribution has been included in the forecast for the periods ended 31 December 1995 and 31 December 1996 - see note 9 under "Summary of Significant Forecast Assumptions" in clause 4.4.4. It is the policy of Coeur d'Alene's Board of Directors to discuss and consider the declaration of an annual dividend or cash distribution at its board meeting in March each year. Dividends payable by Coeur d'Alene will not be franked under Australian tax law. The entire amount of the dividend will constitute assessable income for Australian income tax purposes, without any rebate for franking. Dividends payable by Coeur d'Alene will also be subject to a 15% withholding tax in the United States, before being remitted to Australian resident shareholders. That withholding tax generally may be claimed as a credit against Australian income taxes but is limited to the lesser of the actual dividend withholding tax paid and the Australian tax applicable to the dividend. The Australian taxation consequences of owning and disposing of Coeur d'Alene Shares are considered generally in clause 4.9. 2.8 ADDITIONAL INFORMATION Further details on the Group's business and properties are contained in various public filings and reports in annexures B, C, D, E and F. In particular, the section 15 15 titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing in each of those annexures (other than F) provides additional background. 3 OVERVIEW OF GASGOYNE 3.1 INFORMATION ON GASGOYNE Gasgoyne is an Australian based gold producer with exploration projects located in Western Australia and Indonesia. Gasgoyne's major assets are a 50% interest in the Yilgarn Star joint venture at Marvel Loch, located south of Southern Cross, approximately 370 kilometres east of Perth, and a 45% interest in the Awak Mas gold project, located in the South Sulawesi province of Indonesia. Gasgoyne's other Western Australian interests include gold exploration projects at Laverton and Norseman. On the basis of Gasgoyne's most recent announcements to ASX, Gasgoyne's combined equity gold resource base was 834,842 contained ounces at Yilgarn Star and 811,800 contained ounces at Awak Mas, totalling 1,646,642 contained ounces, of which 357,605 ounces are in the reserves category. On 6 September 1995, Gasgoyne made a full takeover offer for shares and options in Pilbara Mines NL, its subsidiary. That offer was successful and Gasgoyne proceeded to compulsory acquisition of all outstanding shares in Pilbara Mines NL. As a result, the financial position of Gasgoyne differs from its position as at 30 June 1995, the date of the last balance sheet laid before Gasgoyne shareholders in general meeting. As part of the material sent to Pilbara Mines NL shareholders, Gasgoyne prepared an information memorandum, a copy of which is set out in annexure G. That information memorandum contains pro forma and other information on Gasgoyne following the acquisition of Pilbara Mines NL. 3.2 CHANGE IN GASGOYNE'S FINANCIAL POSITION Other than as set out in annexures G and I, the financial position of Gasgoyne has not, so far as is known by Coeur d'Alene, materially changed since the date of the last balance sheet laid before Gasgoyne shareholders in general meeting except that: (a) On 27 October 1995, Gasgoyne filed its quarterly report for the period ending 30 September 1995 with ASX. A copy of that report is included as annexure I. The following is an extract from the highlights identified by Gasgoyne in its release to ASX: "- Gold production from the Yilgarn Star Gold Mine for the quarter was 27,901 fine ounces of gold, from 190,030 tonnes of ore at a recovered grade of 4.57 g/t gold. - Cash operating costs were below forecast at $297.00 per ounce of gold produced and $43.50 per tonne of ore milled. The higher cash 16 16 operating costs [than in previous years] reflect a higher proportion of underground ore coming into the system. - An additional 160,000 ounces of gold has been added to the resource base by the Southern Star discovery. Total resources to a depth of about 100 metres are 1,164,000 tonnes at 4.3 g/t gold. Drilling is continuing between depths of 100 to 200 metres. - An agreement has been finalised with CIM Gold NL to explore the Northern Star Prospect, E77/486 located from 2.5 to 10.5 kilometres north of the Yilgarn Star Gold Mine. Gasgoyne Gold Mines N.L. ("Gasgoyne Gold") and Orion Resources N.L. ("Orion") may earn a 74% interest in the 50.4 square kilometre area by expenditure of $1.5 million over 4 1/2 years. - An additional 15,037 metres of RC and diamond holes were completed in the quarter at Awak Mas in Indonesia. Significant new zones of gold mineralization have been discovered in the Lematik Domain, with the best results of 24 metres at 2.38 g/t gold in AMD140 from surface." (b) On 6 September 1995, Gasgoyne made the following announcement to ASX in relation to a cash/gold facility provided by Citibank Limited: "The Directors of Gasgoyne Gold Mines NL ("GGM") are pleased to announce that on 1 September 1995 GGM entered into a Facility Agreement with Citibank Limited to provide a line of credit to a maximum of $10,500,000, which may be drawn by GGM in cash or the gold equivalent thereof. The facility is for a period of three years, with the maximum principal amount that may be outstanding, over that three year period, reducing on a quarterly basis. The Citibank facility will be used by GGM for the ongoing funding of its commitments on the Awak Mas Gold Project in South Sulawesi, Indonesia and for other working capital requirements. However, due to the substantial cash surplus being generated by GGM's interest in the Yilgarn Star Project, the Citibank facility is not anticipated to be required to its full extent and has only initially been drawn to the sum of $5,250,000. Prior to this recent drawing under the Citibank Facility, GGM was debt free. Security for the Citibank Facility is by way of a Fixed and Floating Charge over all the assets and undertaking of GGM." The facility documents contain a change in control provision, common to facilities of this nature. It provides that if without the prior written consent of Citibank, effective control of Gasgoyne is altered from that subsisting on 1 September 1995, then the outstanding amounts under the facility may 17 17 become due and payable. For the purposes of the facility, a change in effective control occurs where control of the composition of the board of directors of Gasgoyne changes, control of more than one half of the voting power of Gasgoyne changes or control of more than one half of the Gasgoyne Shares changes. Coeur d'Alene believes that it is unlikely that Citibank would require the outstanding amounts under the facility to be repaid as a result of any change in effective control arising from the Takeover Scheme. However, if Citibank required the amounts to be repaid, Coeur d'Alene believes that the borrowing could be refinanced without difficulty. (c) Coeur d'Alene's forecast results for the periods ending 31 December 1995 and 31 December 1996 incorporate forecast results of Gasgoyne for those periods - see note 16 under "Summary of Significant Forecast Assumptions" in clause 4.4.4. 4 DETAILS OF TRANSACTION 4.1 INVESTMENT CONSIDERATIONS The Offers are designed to enable Gasgoyne shareholders who accept the Offers, to realise a part of their investment in cash and also participate, via the holding of Coeur d'Alene Shares, in a larger corporation which will hold a significant, and possibly 100%, interest in Gasgoyne. For existing Gasgoyne shareholders, potential advantages include: - Participation in a group that: - Has gold production which is approximately four times that of Gasgoyne. - Has four currently producing gold and silver mines and a number of development stage projects. - Is consistently expanding its gold production, while remaining one of the leading North American silver producers. - Had a estimated reserve base of 5.57 million ounces of gold equivalent (3.7 million ounces of gold and 131 million ounces of silver) at 1 January 1995 (restated to include 100% of the Kensington Property). - Has a considerably larger market capitalisation than Gasgoyne and a strong balance sheet. - Access to a wider range of mine operating and project development experience and financial strength, which will place Gasgoyne in a position to become part of a larger precious metals group capable of developing Awak Mas and the Yilgarn Star tenements. 18 18 - Listing in both Australia and the USA. Coeur d'Alene will apply to be listed on ASX (listing is not guaranteed or automatic) and is already listed on the New York Stock Exchange and Pacific Stock Exchange (San Francisco). - Affiliation with a Group that has an established outstanding record of environmental protection and responsibility. 4.2 COEUR D'ALENE'S INTENTIONS ABOUT BUSINESS, ASSETS AND EMPLOYEES OF GASGOYNE It is the current intention of Coeur d'Alene, on the basis of the facts and information concerning Gasgoyne which presently are known to it and the existing circumstances affecting the business of Gasgoyne: (a) to continue the business of Gasgoyne; (b) not to make any major changes to the business of Gasgoyne nor to make any redeployment of the fixed assets of Gasgoyne; and (c) to continue the future employment of the present employees of Gasgoyne. If Coeur d'Alene becomes entitled compulsorily to acquire Gasgoyne Shares, Coeur d'Alene presently intends to exercise those rights and to delist Gasgoyne from the official list of ASX. As mentioned in clause 2.1, Coeur d'Alene intends to seek listing of Coeur d'Alene Shares on ASX regardless of whether compulsory acquisition is achieved. Coeur d'Alene views the Takeover Scheme as a major step in creating a competitive presence for the Group in Australia. The Group has already established a significant base in the Australasian region through its 80% interest in the Golden Cross gold mine (see clause 2.1) and has considerable international experience in developing and operating mines both in North America and in Chile. Coeur d'Alene intends to use its experience in assisting Gasgoyne to expand Gasgoyne's gold production. Following successful conclusion of its takeover offer Coeur d'Alene intends to work with the Gasgoyne management team and with the board of Orion Resources NL ("ORION") with a view to optimising the Yilgarn Star project. Orion is a joint venture partner in the Yilgarn Star joint venture with a 45% interest and is also the operator of that project. Also, Coeur d'Alene intends to work with the Gasgoyne management team with a view to optimising the Awak Mas project in which Gasgoyne has a significant interest, together with other assets of Gasgoyne, in particular, exploration tenements adjacent to the Yilgarn Star project which are currently under the management of Gasgoyne. 19 19 Orion is also a Western Australian based gold mining company, capitalised at approximately $127 million on 25 January 1996. The Group increased its shareholding in Orion to approximately 13.1% of Orion's issued share capital on 23 January 1996 and at the same time purchased options which, if exercised, would increase the Group's shareholding in Orion to approximately 19.2%. It is also Coeur d'Alene's current intention to continue to evaluate its position in relation to Orion, in particular, as to whether it should seek to increase its shareholding. In doing so, Coeur d'Alene would have regard to the relevant provisions of the Yilgarn Star Joint Venture Agreement which give Gasgoyne rights to become the operator of the Yilgarn Star joint venture in certain "change of control" situations including where a party becomes entitled to more than 20% of Orion's issued capital or on certain changes to the composition of the Board of Directors of Orion. Following successful conclusion of the Takeover Scheme it is the present intention of Coeur d'Alene to seek the appointment of its nominees as directors of Gasgoyne and any company in respect of which Gasgoyne has nominee directors so that persons nominated by Coeur d'Alene will constitute at least a majority of those boards. However, it is Coeur d'Alene's present intention to invite Mr Brian Hurley, the Chairman of the Board of Directors of Gasgoyne to remain as Chairman. The present Managing Director of Gasgoyne, Mr Philip Crabb has indicated that he may step down from that position but remain active with Gasgoyne. Mr Crabb has indicated that in any event he would remain as Chief Executive until such time as a suitable replacement was appointed. If Mr Crabb steps down, Coeur d'Alene intends to appoint an appropriately experienced Australian executive as Mr Crabb's successor. Coeur d'Alene also intends to request Mr Crabb to remain as a director of Gasgoyne following completion of the Takeover Scheme. 4.3 RISK FACTORS Ownership of Coeur d'Alene Shares involves the following risks, which are both general and specific to Coeur d'Alene: DEPENDENCE ON GOLD AND SILVER PRICES The results of the Group's operations and the market price of Coeur d'Alene Shares are significantly affected by the market prices of gold and silver. Those prices may fluctuate widely and are affected by factors beyond the Group's control, including interest rates, expectations regarding inflation, currency values, global and regional political and economic conditions, demand for jewellery, sales by central banks and other factors. Coeur d'Alene sells most of its gold and silver production at spot prices prevailing at the time of sale. Coeur d'Alene has from time to time entered into forward contracts for the sale of a small portion of its gold and silver production. As at 20 20 23 January 1996, Coeur d'Alene had entered into forward contracts to deliver a total of 46,772 ounces of gold in calender 1996 at an average price of US$416 representing 21% of its total 1996 forecast gold production, and less than 2% of its total gold reserves. EXPLORATION AND DEVELOPMENT ACTIVITIES Mineral exploration, particularly for gold and silver, involves many risks and frequently is non-productive. Once mineralization is discovered, it may take a number of years from the initial phases until production is possible, during which time the economic feasibility of production may change. Substantial developmental expenditures are required to establish ore reserves, to determine metallurgical processes to extract the metals from the ore and, in the case of new properties, to construct mining and processing facilities. The Group expended approximately US$23.0 million and US$49.7 million (excluding capitalised interest) in the year ended 31 December 1994 and the nine-month period ended 30 September 1995, respectively, in connection with the exploration and development of its mining properties. Coeur d'Alene currently estimates that the Group's exploration and development expenditures on existing mining properties during the last quarter of 1995 and the year ended 31 December 1996 will approximate US$4.5 million and US$8.8 million (excluding capitalised interest), respectively. MINING ACTIVITIES Following the commencement of production, the mining business continues to be subject to risks and hazards, including quantity of production, environmental hazards, industrial accidents, encountering unusual or unexpected formations, cave-ins, flooding and periodic interruptions due to inclement or hazardous weather conditions. Risks of this type could result in damage to, or destruction of, mineral properties or producing facilities, personal injury, environmental damage, reduced production and delays in mining, monetary losses and possible legal liability. Insurance fully covering certain environmental risks (including potential liability for pollution or other hazards as a result of disposal of waste products occurring from exploration and production) is not generally available to the Group or to other companies within the industry. The Group has been recognised for its commitment to environmental responsibility and knows of no material environmental liabilities to which it currently is subject. Refer to the section below under the sub-heading "Government Regulation". CURRENCY FLUCTUATIONS Gold is sold throughout the world principally based on the US dollar price, but operating expenses for gold mining companies are incurred principally in local currencies. The Group's operations are principally based in the United States, Chile and New Zealand. As Coeur d'Alene is a United States-based corporation, it has conducted currency hedging programs for New Zealand dollars and Chilean pesos 21 21 to protect against significant currency fluctuations relative to the US dollar and expects to continue to conduct those programs (including in Australian dollars) if Coeur d'Alene achieves control of Gasgoyne. As mentioned in clause 2.1 Coeur d'Alene will apply for official quotation of Coeur d'Alene Shares on ASX and hopes to be granted official quotation by ASX before the end of the offer period. In addition, Coeur d'Alene Shares are traded principally in US dollars on the New York Stock Exchange and Pacific Stock Exchange. For this reason, Australian residents who plan to hold Coeur d'Alene Shares can expect, through their shareholding, to be subject to the benefits and detriments of fluctuations in the US dollar-Australian dollar exchange rate and, to a lesser extent, the US-Chile and US-New Zealand dollar exchange rates. In general, a weakening of the Australian dollar against the United States dollar would result in an increase in the value of Coeur d'Alene Shares in Australian dollars, while a strengthening of the Australian dollar against the United States dollar would result in a decrease in the value of Coeur d'Alene Shares in Australian dollars. The Australian dollar value of any Coeur d'Alene dividends, would be declared in US dollars (but if declared will be paid to Australian resident shareholders in Australian dollars) are similarly affected by the relative value of the US dollar and the Australian dollar. Some of the more specific risks in relation to Coeur d'Alene are as follows: TRADING IN COEUR D'ALENE SHARES As mentioned above, Coeur d'Alene will apply to ASX for official quotation of Coeur d'Alene Shares. If granted, this will enable Gasgoyne shareholders who accept an Offer to dispose of their Coeur d'Alene Shares in Australia through ASX at any time. However, there can be no assurance that quotation will be granted by ASX. US securities law restrictions have the effect that the Coeur d'Alene Shares issued as part of the consideration under the Offers may not be offered or sold in the United States of America or to US persons until 40 days after the end of the offer period (see clause 5.3). However, they may be offered or sold through ASX as described above. THE SILVER MARKET AND PRICES In recent years world silver prices have risen from previous lows. Over the last four years the silver price has risen from an average of US$3.98 per ounce in 1992 to an average of US$5.18 (New York Comex close) in 1995. In order to conserve the ore reserves until silver prices improve, the Group suspended mining activity at the Group's Galena Mine (in July 1992, during which month the average price of silver was US$3.95 per ounce) and at the Group's Coeur Mine (in April 1991, during which month the average price of silver was US$3.97 per ounce). Since then the Group has consolidated its holdings in the 22 22 Coeur d'Alene mining district by the formation of Silver Valley Resources Corporation, a 50/50 venture with Asarco Inc. Coeur d'Alene anticipates that as the market price of silver approaches US$6.00 per ounce, it will propose to Asarco Inc that Silver Valley Resources Corporation resume operations at the mines, which have been kept in good condition in anticipation of re-starting production. As of 25 January 1996 the quoted market price for silver (New York Comex close) was US$5.55 per ounce. GOLDEN CROSS As mentioned above, the mining business continues to be subject to risks and hazards. Coeur d'Alene recently became aware that the tailings impoundment at the Golden Cross Mine in New Zealand is situated upon a block of land that is apparently moving downslope at the rate of approximately 3.5cm (11/2 inches) per annum because of deep seated natural earth movements Remedial measures are being implemented to ensure the stability of the tailings dam at a cost which, at the date of this Statement, is not known (see page 17 of annexure B for details regarding the Golden Cross Mine). FOREIGN ACTIVITIES The Group's producing projects are located in the United States, New Zealand and Chile. Coeur d'Alene does not believe the Group's property interests in New Zealand or Chile currently expose it to any significant political risks. Gasgoyne's joint venture interests at Awak Mas are located in Indonesia, which has a system of government and law different to that in Australia. In the contract of works between the Indonesian Government and the joint venture parties at Awak Mas, there are provisions requiring the joint venture parties to progressively sell down a portion of their interests by offering interests first to the Indonesian Government and thereafter to Indonesian nationals. The object of the sell down provision is that the Indonesian Government or nationals will hold 51% of the interests in the venture by no later than the 10th year of operations. In order to do so they must pay fair market value for the interests. However, it is believed that the Indonesian Government has relaxed its foreign investment policy on mining projects and that it would not commonly exercise its right to participate under these provisions. In addition the Indonesian joint venture party currently participating in the project has waived its rights under these provisions. GOVERNMENT REGULATION General The Group's mining activities are subject to extensive federal, state and local laws governing the protection of the environment, prospecting, development, production, taxes, labour standards, occupational health, mine safety, toxic substances and other matters. The costs associated with compliance with these regulatory requirements 23 23 are substantial and possible future legislation and regulations could cause additional expense, capital expenditures, restrictions and delays in the development of the Group's properties, the extent of which cannot be predicted. Environmental Regulations The Group is subject to environmental regulation and natural resource laws in each of the places in which it operates. Under certain environmental laws, any owner or operator of land that is contaminated may be held liable and forced to undertake or pay for remediation, even if it was not the owner or operator of that land at the time of contamination. Coeur d'Alene is not aware of any material environmental liability arising out of its present or former operations. Proposed Mining Legislation Legislation is presently being considered in the US Congress to change the United States Mining Law of 1872 (the "Mining Act") under which the Group holds mining claims on public lands. It is considered possible that the Mining Act will be amended or be replaced by stricter legislation in the next few years. The legislation under consideration contains new environmental standards and conditions, additional reclamation requirements and extensive new procedural steps which would be likely to result in delays in permitting. Among the bills under consideration are bills calling for an 8% gross royalty; a 2.5% net smelter return royalty; or a 3.5% or 5% net proceeds royalty on the value of minerals mined on public lands, payable to the US Government. Coeur d'Alene believes that if and when any royalty is imposed, it will not be a gross royalty. A significant portion of the Group's US mining properties are on public lands. Whether or when changes will be enacted or the extent of any changes is not presently known and the potential impact on the Group's United States activities is difficult to predict. Tax During August 1995, the Internal Revenue Service ("IRS") completed an audit of the Group for the years 1992 and 1993. Coeur d'Alene believes that all material issues arising from the IRS audit have been resolved. The Group's results may in the future be benefitted by income tax deductions in the form of loss carryforwards. Refer to page 53 of annexure B for a brief explanation of the types of loss carryforwards available to Coeur d'Alene as at 31 December 1994. No assurance can be given that these types of future income tax benefits will be able to be utilised in whole or in part. Due to the current and anticipated loss position of the Company, utilisation of foreign tax credits passed through from foreign subsidiaries will be likely to be subject to limitations. 24 24 UNCERTAINTIES REGARDING YILGARN STAR MINE UNDERGROUND OPERATION If the Offers are successful, Gasgoyne will become a subsidiary of Coeur d'Alene. The Yilgarn Star Mine's production (through October 1995) was entirely attributable to surface mining operations. The results of that performance are not necessarily indicative of the future production from the underground mining operations, the initial stages of which have recently commenced. 4.4 HISTORICAL, PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION AND FORECAST The following is a summary of the historical, pro forma condensed consolidated, and forecast financial information in relation to Coeur d'Alene and Gasgoyne. An Independent Accountant's Report by Ernst & Young on the historical and forecast financial information is attached as annexure A. In addition, a report by the US firm of Ernst & Young LLP on the pro forma condensed consolidated financial information is contained in clause 4.4.3. 4.4.1 COEUR D'ALENE HISTORICAL SELECTED FINANCIAL INFORMATION The following table sets forth certain financial information of Coeur d'Alene. This information should be read in conjunction with (i) the historical financial statements of Coeur d'Alene, including the notes thereto, which are included in annexures B, C, D and E, (ii) annexure K -- Differences Between US and Australian Generally Accepted Accounting Principles, and (iii) the Pro Forma Condensed Consolidated Financial Statements, which are included in clause 4.4.3. 25 25 COEUR D'ALENE HISTORICAL SELECTED FINANCIAL INFORMATION (Tabular dollar amounts are in thousands of US dollars, except per share amounts. Prepared in accordance with US GAAP)
Year Ended 31 December -------------------------------------------------------------- INCOME STATEMENT DATA: 1990 1991 1992 1993 1994 -------------------------------------------------------------- Income: Sale of concentrates and dore $ 53,125 $ 49,035 $ 41,414 $ 67,990 $ 79,606 Less cost of mine operations 45,375 44,072 37,829 59,804 67,802 --------- --------- --------- --------- --------- Gross profits 7,750 4,963 3,585 8,186 11,804 Other income (1) 8,939 7,714 4,812 5,388 12,689 --------- --------- --------- --------- --------- Total income 16,689 12,677 8,397 13,574 24,493 Expenses 23,118 29,178 14,118 31,548 29,493 --------- --------- --------- --------- --------- Income (loss) from continuing operations before income taxes(2) (6,429) (16,501) (5,721) (17,974) (5,000) Provision (benefit) for income taxes (1,528) (1,198) (4,233) (3,932) (264) --------- --------- --------- --------- --------- Loss from continuing operations (4,901) (15,303) (1,488) (14,042) (4,736) Income from discontinued operations (net of taxes)(3) 711 904 729 752 793 --------- --------- --------- --------- --------- Income (loss) before cumulative effect of change in accounting method (4,190) (14,399) (759) (13,290) (3,943) Cumulative effect of change in accounting method(4) 5,181 --------- --------- --------- --------- --------- Net income (loss) $ (4,190) $(14,399) $ (759) $ (8,109) $ (3,943) ========= ========= ========= ========= ========= Per share data:(5) Earnings per share data: Loss from continuing operations $ (0.35) $ (1.00) $ (0.10) $ (0.92) $ (0.31) Income from discontinued operations (net of taxes) 0.05 0.06 0.05 0.05 0.05 --------- --------- --------- --------- --------- Income (loss) before cumulative change in accounting method (0.30) (0.94) (0.05) (0.87) (0.26) Cumulative effect of change in accounting method .34 --------- --------- --------- --------- ---------- Net income (loss) $ (0.30) $ (0.94) $ (0.05) $ (0.53) $ (0.26) ========= ========= ========= ========= ========== Cash dividends per share $ 0.11 $ 0.12 $ 0.15 $ 0.15 $ 0.15 ========= ========= ========= ========= ========== Weighted average number of shares of Common Stock and equivalents used in calculation 13,792 15,308 15,317 15,328 15,388 ========= ========= ========= ========= ========== BALANCE SHEET DATA: Total assets $275,806 $ 261,034 $324,878 $ 325,249 $ 412,361 Working capital 151,385 129,883 179,370 104,883 166,607 Long-term debt 59,548 57,902 131,134 129,234 227,193 Shareholders' equity 200,040 183,938 180,991 170,849 160,292
Six Months Ended 30 June ----------------------- INCOME STATEMENT DATA: 1994 1995 ----------------------- Income: Sale of concentrates and dore $ 39,673 $41,512 Less cost of mine operations 33,825 33,972 ------- ------- Gross profits 5,848 7,540 Other income (1) 4,039 4,447 ------- ------- Total income 9,887 11,987 Expenses 14,363 14,757 ------- ------- Income (loss) from continuing operations before income taxes(2) (4,476) (2,770) Provision (benefit) for income taxes (196) (642) ------- ------- Loss from continuing operations (4,280) (2,128) Income from discontinued operations (net of taxes)(3) 348 2,360 ------- ------- Income (loss) before cumulative effect of change in accounting method (3,932) 232 Cumulative effect of change in accounting method(4) -------- ------- Net income (loss) $(3,932) $ 232 ======== ======= Per share data:(5) Earnings per share data: Loss from continuing operations $ (0.28) $(0.14) Income from discontinued operations (net of taxes) 0.02 .15 -------- ------- Income (loss) before cumulative change in accounting method (0.26) 0.01 Cumulative effect of change in accounting method -------- ------- Net income (loss) $ (0.26) $ 0.01 ======== ======= Cash dividends per share $ 0.15 $ 0.15 ======== ======= Weighted average number of shares of Common Stock and equivalents used in calculation 15,347 15,597 ======== ======= BALANCE SHEET DATA: Total assets $415,067 $432,963 Working capital 185,496 147,673 Long-term debt 228,232 237,194 Shareholders' equity 158,952 165,538
26 26 (1) Other income for 31 December 1994 includes a gain on the sale of securities of US$2.7m, and an increase in investment income arising from the issuance of US$100 million of subordinated, convertible debentures in January 1994 which increased the Company's liquidity. (2) The income (loss) from continuing operations before income taxes include certain non-recurring items of expense and past property losses. These items are discussed in clause 2.6. (3) On 2 May 1995, the Company sold the assets of its flexible hose and tubing division, The Flexaust Company, and shares of a related subsidiary for approximately US$10.0 million payable in cash, of which approximately US$4 million was paid at the time of closing and the balance is payable over the next five years. The results of operations and the gain on sale of Flexaust manufacturing segment are presented as "Discontinued Operations". The Company recorded a pre-tax gain on the sale of approximately US$3.9 million (US$2.2 million net of income taxes) during the second quarter of 1995. (4) Effective 1 January 1993, the Company changed its method of accounting for income taxes by adopting US Statement of Financial Accounting Standards (FAS) 109, "Accounting for Income Taxes". FAS 109 requires an asset and liability approach to accounting for income taxes and establishes criteria for recognising deferred tax assets. Accordingly, the Company adjusted its existing deferred income tax assets and liabilities to reflect current statutory income tax rates and previously unrecognised tax benefits related to US federal and certain state net operating loss carryforwards. FAS 109 also contains requirements regarding balance sheet classification and prior business combinations. Hence, the Company adjusted the carrying values of an incremental interest in the Rochester Property acquired in 1988 and CDE Chilean Mining Corp. acquired in 1990 to reflect the gross purchase value previously reported net-of-tax. The cumulative effect of the accounting change in prior years at 1 January 1993 is a non-recurring gain of US$5.181 million, or US$.34 per share, and is included in the Consolidated Statement of Operations for the year ended 31 December 1993. Other than the cumulative effect, the accounting change had no material effect on the results of operations for the year ended 31 December 1993. As of 1 January 1993, after giving effect to the implementation of FAS 109, the significant components of the Company's net deferred tax liability were as follows:
Deferred Income Taxes --------------------------------------------------------------- Assets Liabilities --------------------------------------------------------------- Property, plant and equipment alternative minimum tax credit carryforwards US$ 938,672 US$ $16,756,918 Business credit carryforwards 628,933 Net operating loss carryforwards 17,721,115 ---------------------- ------------------- Total 19,288,720 16,756,918 ----------- Less - valuation allowance (7,927,904) ---------------------- ------------------- Net US$ 11,360,816 US$ 16,756,918 ========================== =======================
As permitted by FAS 109, prior year financial statements have not been restated to reflect the change in accounting method. (5) Earnings per share are calculated based on the weighted average number of Coeur d'Alene Shares outstanding and those equivalents that are deemed to be dilutive. The 6% Debentures are considered to be equivalents. Accordingly, such debentures are assumed to be converted, and interest expense on such debentures, net of tax expense, has been considered in the computation of earnings per share, except in those instances where the effects of conversion would be antidilutive. 27 27 4.4.2 GASGOYNE HISTORICAL SELECTED FINANCIAL INFORMATION The following table sets forth certain financial information of Gasgoyne which has been extracted from the audited accounts of Gasgoyne for each of the 5 years ended 30 June 1995. This information should be read in conjunction with (i) the audited financial statements of Gasgoyne, including the notes thereto, which are included in annexure H and (ii) annexure K -- Differences Between US and Australian Generally Accepted Accounting Principles. PROFIT AND LOSS ACCOUNT DATA: (Tabular dollar amounts are in thousands of Australian dollars. Prepared in accordance with Australian GAAP)
Year Ended 30 June ------------------------------------------------------------------- 1991 1992 1993 1994 1995 ------------------------------------------------------------------- Revenue: Gold sales - $ 8,834 $ 18,640 $ 20,832 $ 31,404 Other $ 40 623 826 3,087 1,994 ---------- ---------- --------- --------- --------- Total Revenue 40 9,457 19,466 23,919 33,398 Expenses 533 7,189 11,818 15,852 19,993 ---------- ---------- --------- --------- --------- Operating profit before income tax(1) (493) 2,268 7,648 8,067 13,405 Income Tax(2) - - 2,706 2,759 4,734 ---------- ---------- --------- --------- --------- Operating profit after tax (493) 2,268 4,942 5,308 8,671 Extraordinary item(3) - - - 2,681 - ---------- ---------- --------- --------- --------- Operating profit after extraordinary item (493) 2,268 4,942 7,989 8,671 Outside equity interest in profit and extraordinary items(4) - - - 47 207 ---------- ---------- --------- --------- --------- Operating profit and extraordinary items attributable to members of holding company $ (493) $ 2,268 $ 4,942 $ 8,036 $ 8,878 ========== ========== ========= ========= =========
(1) Operating profit before income tax includes an abnormal item in 1994 comprising a gold call option fee of $1,000,000. (2) No income tax is applicable in the year to 30 June 1992 due to the benefit of prior year tax losses reducing the income tax expense by $945,000. (3) The extraordinary item relates to a gain in reduction in ownership interest in controlled entity (Pilbara Mines NL). No income tax is applicable. (4) The minority interest relates to the share of loss attributable to the outside equity interest in Pilbara Mines NL. 28 28 4.4.3 PRO FORMA INFORMATION The following Pro Forma Condensed Consolidated Balance Sheet has been prepared as of 30 June 1995, by Coeur d'Alene to illustrate the estimated effects of the proposed acquisition under the Offers (the "Acquisition") of the Gasgoyne Shares on issue (without regard to the Gasgoyne Shares that might be issued pursuant to the exercise of Gasgoyne Options but including shares issued during the Pilbara takeover - see clause 3.1) assuming the Acquisition occurred as of that date. The Pro Forma Condensed Consolidated Balance Sheet is presented utilising the purchase method of accounting whereby the cost of acquiring the Gasgoyne Shares is determined by the market value of the Coeur d'Alene Shares and the cash which Coeur d'Alene will pay, plus the direct costs associated with the Acquisition, which are estimated at approximately US$2 million. All amounts in the Pro Forma Condensed Consolidated Balance Sheet are stated in US dollars. The Pro Forma Condensed Consolidated Balance Sheet does not purport to represent what the financial position actually would have been if the Acquisition had occurred at 30 June 1995 or to project the financial position for any future date or period. The Pro Forma Condensed Consolidated Balance Sheet should be read in conjunction with the historical consolidated financial statements, including the notes thereto, of Coeur d'Alene, prepared in accordance with US GAAP, which are included as annexures B, C, D, and E. The Pro Forma Condensed Consolidated Balance Sheet also includes pro forma adjustments which are based on available information and certain assumptions that management of Coeur d'Alene believes are reasonable in the circumstances. Such pro forma adjustments reflect the effects of the acquisition of all of the Gasgoyne Shares on issue without regard to the Gasgoyne Shares that may be issued on exercise of Gasgoyne Options. In December 1995, the Company completed the conversion of US $74.9 million of 7% Debentures into Coeur d'Alene Shares. The pro forma balance sheet reflects this conversion of the debentures as though it had occurred at 30 June 1995. The conversion, net of offering costs, results in a significant decrease in long term debt and a corresponding increase in shareholders' equity. Subsequent to 30 June 1995, Gasgoyne successfully completed its takeover of Pilbara Mines NL and acquired all of the shares in that company (see clause 3.1). The Pro Forma Condensed Consolidated Balance Sheet has been adjusted to reflect the impact of this acquisition as if it had occurred at 30 June 1995. 29 29 COEUR D'ALENE PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET 30 JUNE 1995 (UNAUDITED) (DOLLAR AMOUNTS IN THOUSANDS OF US DOLLARS)
COEUR D'ALENE PRO FORMA HISTORICAL ADJUSTMENTS (A) PRO FORMA ------------- --------------- --------- ASSETS Current Assets Cash and equivalents $47,135 $8,234 $55,369 Short-term investments 75,595 - 75,595 Receivables 12,218 360 12,578 Inventories 33,390 3,887 37,277 Other 2,701 144 2,845 -------- -------- -------- Total current assets 171,039 12,625 183,664 -------- -------- -------- Property, Plant and Equipment - net 244,723 106,530 351,253 -------- -------- -------- Investments and Other Assets Net assets of discontinued 160 - 160 operations Other assets 17,041 6,078 23,119 -------- -------- -------- Total investments and other assets 17,201 6,078 23,279 -------- -------- -------- $432,963 $125,233 $558,196 ======== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities $23,366 $8,782 $32,148 Long-term Liabilities Long-term debt 237,194 (50,922) 186,272 Other long-term obligations 5,691 2,461 8,152 -------- -------- -------- Total long-term liabilities 242,885 (48,461) 194,424 Deferred Income and Mining Taxes 1,174 26,202 27,376 Shareholders' Equity 165,538 138,710 304,248 -------- -------- -------- $432,963 $125,233 $558,196 ======== ======== ========
30 30 (A) To reflect the acquisition of 52,060,700 Gasgoyne Shares outstanding at 30 June 1995 and including shares issued subsequent to 30 June 1995 as part of the takeover of Pilbara Mines NL (see clause 3.1) but excludes Gasgoyne Shares that may be issued on exercise of Gasgoyne Options. This assumes the issue of 3,644,255 Coeur d'Alene Shares valued at US$67.4 million and the payment of US$23,114,991 in cash in connection with the Takeover Scheme. Accordingly the total pro forma acquisition cost is US$90.5 million compared to the book value for Gasgoyne of US$20.1 million. The actual acquisition cost will be determined based upon the value of the Coeur d'Alene Shares issued and cash paid for the purchase of Gasgoyne Shares. As discussed below, it is Coeur d'Alene's opinion that substantially all of the purchase price in excess of the net book value of Gasgoyne is attributable to the mineral property interests held by Gasgoyne. The excess acquisition cost paid over the net book value of assets acquired and related deferred taxes is allocated as follows: Total Acquisition Cost US$90,534 Net Book Value of Gasgoyne, 30 June 1995 20,149 --------- Excess of Purchase Price Paid over Net Book Value of Assets Acquired Attributable to Mineral Properties 70,385 Increase in Mineral Properties resulting from adjustment to conform to Coeur d'Alene accounting policies 5,447 Transaction costs 2,000 Increase in Mineral Properties due to the Recognition of the Deferred Tax Consequences of Differences Between the Assigned Values and Tax Bases of the Net Assets Acquired 26,202 --------- Total Increase in Property, Plant and Equipment 104,034 Increase in Deferred Taxes 26,202 --------- Excess of Acquisition Cost Paid over Net Book Value of Assets Acquired US$77,832 =========
With the exception of property, plant and equipment, the assets and liabilities of Gasgoyne included in Coeur d'Alene's consolidated financial statements consist primarily of working capital items, the carrying values of which are substantially at fair market value. Based on the history of the Yilgarn Star and Awak Mas properties and the identification and development of mineral deposits and their conversion to ore reserves, the financial analysis undertaken by Coeur d'Alene in connection with its decision to acquire Gasgoyne, and Coeur d'Alene's experience in ownership and operation of precious metals mines, it is Coeur d'Alene's opinion that all of the acquisition cost in excess of the net book value of assets acquired is attributable to mineral properties. The final allocation of the acquisition cost will be made when the acquisition is completed and when Coeur d'Alene completes its detailed analysis of Gasgoyne's assets. However, management does not expect the final actual allocation of the purchase price to be materially different from the pro forma balance sheet. In December 1995, the Company completed the balance sheet reflects this conversion of the debentures as though it had occurred at 30 June 1995. The conversion, net of offering costs, results in a substantial decrease in long term debt and a corresponding increase in shareholders' equity. The Pro Forma Condensed Consolidated Balance Sheet as at 30 June 1995 is prepared on the basis that Coeur d'Alene acquires 100% of the Gasgoyne Shares on issue. The effect on the Pro Forma Condensed Consolidated Balance Sheet of an acquisition of less than 100% would be to reduce the shareholders' equity with an equal and off-setting increase in the amounts due to minority shareholders. 31 [ERNST & YOUNG LLP LETTERHEAD] Review Report of Independent Accountants on Pro Forma Financial Information We have reviewed the pro forma adjustments reflecting the acquisition described in Note A and the application of those adjustments to the historical amounts in the accompanying pro forma condensed consolidated balance sheet of Coeur d'Alene Mines Corporation as of June 30, 1995. The historical condensed consolidated balance sheet is derived from the historical unaudited financial statements of Coeur d'Alene Mines Corporation which were reviewed by us, and of Gasgoyne Gold Mines N.L., which were audited by other auditors, appearing elsewhere herein. Such pro forma adjustments are based on management's assumptions described in Note A. Our review was conducted in accordance with standards established by the American Institute of Certified Public Accountants. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's assumptions, the pro forma adjustments, and the application of those adjustments to historical financial information. Accordingly, we do not express such an opinion. The objective of this pro forma financial information is to show what the significant effects on the historical financial information might have been had the acquisition occurred at an earlier date. However, the pro forma condensed consolidated balance sheet is not necessarily indicative of the effects on financial position that would have occurred had the above-mentioned acquisition actually occurred earlier. Based on our review, nothing came to our attention that caused us to believe that management's assumptions do not provide a reasonable basis for presenting the significant effects directly attributable to the above-mentioned acquisition described in Note A, that the related pro forma adjustments do not give appropriate effect to those assumptions, or that the pro forma column does not reflect the proper application of those adjusments to the historical financial statement amounts in the pro forma condensed consolidated balance sheet as of June 30, 1995. /s/ ERNST & YOUNG LLP --------------------- January 29, 1996 32 31 4.4.4 FINANCIAL FORECASTS Set out below is the Forecasted Condensed Statements of Consolidated Operations and Cashflows of Coeur d'Alene (including Gasgoyne) for the six months ended 31 December 1995 and the year ending 31 December 1996. A summary of significant forecast assumptions is also set out below. COEUR D'ALENE FORECASTED CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS FOR THE SIX MONTHS ENDED 31 DECEMBER 1995 AND THE YEAR ENDING 31 DECEMBER 1996 (thousands of US dollars, except per share amounts)
SIX MONTHS ENDED YEAR ENDING 31 DEC 1995 31 DEC 1996 ------------------------------------------- Sales of concentrates and dore $ 58,605 $ 149,885 Cost of mine operations 46,924 118,794 Gross profits 11,681 31,091 Other income 6,585 6,690 ------------ ------------ Total income 18,266 37,781 Expenses Corporate expenses 6,643 13,483 Mining exploration 3,262 5,882 Idle facilities expense 889 1,428 Interest expense 2,695 9,181 ------------ ------------ Total expenses 13,489 29,974 Income before income taxes 4,777 7,807 Income taxes 2,324 1,222 ------------ ------------ Net Income $ 2,453 $ 6,585 ------------ ------------ Net Income Per Share $ 0.10 $ 0.27 ============ ============ Average shares Used in the Computation 24,109,137 24,109,137 ------------ ------------
See "Summary of Significant Forecast Assumptions" below. 33 32 COEUR D'ALENE FORECASTED CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (thousands of US dollars)
SIX MONTHS ENDED YEAR ENDING 31 DEC 1995 31 DEC 1996 ---------------- ----------------- Net Income $ 2,453 $ 6,585 Depreciation, depletion and amortization 12,289 28,646 Changes in working capital 7,122 (852) ---------- -------------- Net cash provided by operations 21,864 34,379 ---------- -------------- Investment and Financing Activities Additions to property plant and equipment (6,873) (13,732) Additions to development projects (53,303) (20,228) Increase in long-term debt 9,093 (5,601) Dividends (1,003) - Other investing & financing activities 9,858 - ---------- -------------- Net cash used in Investment and Financing (42,228) (39,561) Activities ---------- -------------- Net Decrease in Cash and Equivalents $ (20,364) $ (5,182) ========== ==============
See "Summary of Significant Forecast Assumptions" below. The financial forecast has been prepared to comply with Australian legal requirements which require a description of the prospects of Coeur d'Alene where the consideration offered includes shares of Coeur d'Alene . Coeur d'Alene will not update this forecast in future regulatory filings. The financial forecast has been prepared by Coeur d'Alene's management to provide the reader with an indication of Coeur d'Alene's future production, earnings, cash flow and dividends following the acquisition of Gasgoyne. This financial forecast presents, to the best of management's knowledge and belief, Coeur d'Alene's expected consolidated results of operations and consolidated cash flows for the forecast periods. Accordingly, the forecast reflects management's judgment as of 25 January 1996, the date of this forecast, of the expected conditions and its expected course of action. The assumptions disclosed herein are those that management believes are significant to the forecast. There will usually be differences between forecasted and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. Coeur d'Alene's Consolidated Financial Statements for the Year Ended 31 December 1994, which are included in annexure B, should be read for additional information. COEUR D'ALENE CAUTIONS READERS THAT A FORECAST IS SUBJECT TO MANY UNCERTAINTIES AND NEEDS TO BE TREATED WITH CAUTION. Unless specifically stated otherwise, all comments and production statistics relate to the Group. The forecast has been prepared in accordance with accounting principles generally accepted in the United States and the accounting policies adopted by Coeur d'Alene. (See note B to Coeur d'Alene's 31 December 1994 Consolidated Financial Statements in annexure B and annexure K - Differences Between US and Australian Generally Accepted Accounting Principles.) 34 33 SUMMARY OF SIGNIFICANT FORECAST ASSUMPTIONS The following is a summary of the significant assumptions used in the preparation of the forecast. These assumptions were based on Coeur d'Alene management's judgment at 25 January 1996, the date the forecast was completed. These assumptions should not be considered an all inclusive list of the assumptions used in the preparation of the forecast. 1 That effective 1 July 1995, Coeur d'Alene acquired 100% of the Gasgoyne Shares and that approximately 75% of the Gasgoyne Shares acquired are exchanged for Coeur d'Alene Shares and approximately 25% are acquired for cash. Therefore, the acquisition cost has been assumed to consist of approximately 3.6 million Coeur d'Alene Shares and cash payments totalling US$23.1 million. Transaction costs associated with the acquisition of the Gasgoyne Shares are estimated to be US$2.0 million. Management has assumed that all cash payments made in the acquisition of the Gasgoyne Shares are funded from a revolving line of credit which bears interest at LIBOR + 1.5%. LIBOR is assumed to be 5.625%. 2 Management assumes that Coeur d'Alene will produce 100,200 and 278,057 ounces of gold in the six months ending 31 December 1995 and the year ending 31 December 1996, respectively. In addition, it is assumed that Coeur d'Alene will produce 3,966,764 and 8,945,762 ounces of silver in the six months ending 31 December 1995 and in the year ending 31 December 1996, respectively 3 (a) The average spot market price of gold is assumed to be US$393.38 and US$400 per ounce in the 1995 and 1996 periods, respectively. The price of gold was US$387.90 per ounce on 21 December 1995, the day that the offer to acquire the Gasgoyne Shares was announced. The gold price has varied between US$374.80 and US$406.60 per ounce over the last twelve months preceding the date of preparation of this forecast (New York Comex close). In determining the gold price to be used in the forecast, Coeur d'Alene took into consideration many factors, including the price of gold available in the forward markets and consultations with gold market analysts and trading institutions. A sensitivity analysis is included in note 14 below to show the impact of 5% movements in the US dollar gold price. (b) The average spot market price of silver is assumed to be US$5.44 and US$6.00 per ounce in the 1995 and 1996 periods, respectively. The price of silver was US$5.12 per ounce on 21 December 1995, the day that the offer to acquire the Gasgoyne Shares was announced. The silver price has varied between US$4.38 and US$6.11 per ounce over the last twelve months preceding the date of preparation of this forecast (New York Comex close). In determining the silver price to be used in the forecast, Coeur d'Alene took into consideration many factors, including the price of silver available in the forward markets and consultations with silver market analysts and trading institutions. A sensitivity analysis is included in note 14 below to show the impact of 5% movements in the US dollar silver price. 35 34 4 Average exchange rates used throughout the forecast period were US$0.74 for the Australian dollars, US$0.67 for the New Zealand dollar and US$0.002679 for the Chilean peso. The approximate percentage of Coeur d'Alene's forecast 1995 and 1996 operating costs denominated in Australian, New Zealand and Chilean currencies are as follows:
-------------------------------------------- AUSTRALIA NEW ZEALAND CHILE -------------------------------------------- 1995 25 39 0 -------------------------------------------- 1996 20 35 24 --------------------------------------------
To help minimise the effects of fluctuation of the various currencies in relation to the US dollar, Coeur d'Alene has implemented a foreign currency protection program by entering into a series of foreign currency purchase contracts which establish fixed exchange rates under which US$ may be exchanged for these currencies. See Note B to Coeur d'Alene's 31 December 1994 Consolidated Financial Statements in annexure B for details of this program. A sensitivity analysis is included in note 14 below to show the impact of 5% movements in the Australian, New Zealand and Chilean currencies in relation to the US dollar. This sensitivity analysis incorporates the effects of the foreign currency protection program described above. 5 Coeur d'Alene has engaged in some limited forward selling of gold to be produced in 1996. See note B to Coeur d'Alene's 31 December 1994 Consolidated Financial Statements in annexure B for a description of Coeur d'Alene's policy on forward sales. 6 In determining operating cost levels used in the forecast, management took into consideration many factors, including historical operating performance, inflation and continuing cost improvements, at each of Coeur d'Alene's operating locations. A sensitivity analysis is included in note 14 below to show the impact of 3% movements in production costs. 7 Income and mining taxes for the forecast period are based on forecast earnings and the statutory tax rates as presently enacted in the geographical and tax jurisdictions that Coeur d'Alene operates. Coeur d'Alene's actual consolidated income and mining tax rate can vary significantly as a result of numerous factors, including, but not limited to, changes in the geographical mix of pretax income or loss, nondeductible expenses, and changes in the tax rules, rates and regulations of the various taxing regulatory authorities. The applicable statutory income and mining tax rates (as reduced by applicable statutory mining incentives) utilised in the forecast are as follows: 36 35 United States . . . . . . . . . . . . 35% Chile . . . . . . . . . . . . . . . . 49% New Zealand . . . . . . . . . . . . . 36% Australia . . . . . . . . . . . . . . 36%
Currently, Coeur d'Alene has sufficient net operating loss carryforwards and other tax credits to offset applicable income taxes in the US, New Zealand and Chile. The lower effective tax rate reflected in the forecast for the year ending 31 December 1996 is caused principally by the utilisation of certain US net operating loss carryforwards and the tax effect of accounting for the proposed acquisition under the Takeover Scheme. 8 Management assumes that Coeur d'Alene's current levels of exploration spending will continue throughout the forecast period. No benefits from this exploration have been included in the forecast. 9 Management has assumed that no dividends or cash dividends will be paid by Coeur d'Alene during the forecast period As mentioned in clause 2.7, it is the policy of Coeur d'Alene's Board of Directors to discuss and consider the declaration of an annual dividend or cash distribution at its board meeting in March in each year. Therefore a dividend has not been included in the forecasts at this time. 10 Assumptions as to short-term interest rates used for determining incremental interest income are as follows:
Six Months Ended Year Ending 31 December 1995 31 December 1996 ---------------- ---------------- Short-term interest rates (US) 5.0% 5.0%
11 The excess of purchase price over the underlying book value of the Gasgoyne Shares to be acquired in the amount of US$104 million has been allocated to property, plant and equipment and deferred taxes in the amounts of US$77.8 million and US$26.2 million, respectively. Coeur d'Alene expects to allocate excess purchase price to property, plant and equipment and to the reserves portion of mineral properties. Coeur d'Alene will amortise the excess purchase price allocated to reserves on a units-of-production basis. Coeur d'Alene will amortise the excess purchase price of the properties on a units-of-production basis to the extent mineral deposits are upgraded to reserves or will expense the excess purchase price if and when and to the extent the carrying value of the other mineral deposits and mineral properties are determined to be impaired. 12 Coeur d'Alene currently is involved in several late stage exploration/development projects. Ongoing exploration, prefeasibility and feasibility study costs related to these projects are included in the forecast. Coeur d'Alene is actively developing the Kensington project located in the state of Alaska in the US. If Coeur d'Alene proceeds with construction of the project, approximately US$200 million will be required over a 2-year period. No provisions for construction have been made in the forecast. It is anticipated that a final production decision will be made in 37 36 the third quarter of 1996 and that construction could commence in early 1997, depending on whether the Company decides to proceed. 13 Coeur d'Alene currently has outstanding long-term debt obligations of US$174.0 million. No payments of principal are due under these obligations until the year 2002. (See note H to Coeur d'Alene's 31 December 1994 Consolidated Financial Statements in annexure B for details of Coeur d'Alene's long-term debt.) Management assumes no debt repayments or additional borrowings (other than the indebtedness incurred in connection with the acquisition of the Gasgoyne Shares - see note 1 above) during the forecast period. 14 Sensitivity Analysis The following sensitivity analysis projects the estimated effects on results of operations and cash flows of changes in certain assumptions from those used in the preparation of the forecast. Except for the acquisition of Gasgoyne Shares, the sensitivities should not be interpreted as establishing lower and upper limits of possible outcomes. (Thousands of US dollars, except per share amounts) PRO FORMA NET INCOME NET INCOME, EARNINGS PER SHARE (EPS) AND CASH FLOW
Six Months Ended Year Ending 31 December 1995 31 December 1996 ---------------------------------- --------------------------------- Net Income EPS Cash Flow Net Income EPS Cash Flow ---------------------------------- --------------------------------- 5% increase in gold price $3,895 $0.16 ($18,924) $9,961 $0.41 ($2,264) 5% decrease in gold price $1,013 $0.04 ($21,806) $3,212 $0.13 ($8,098) 5% increase in silver price $3,427 $0.14 ($19,392) $9,277 $0.38 ($2,490) 5% decrease in silver price $1,481 $0.06 ($21,338) $3,894 $0.16 ($7,873) A$ weakens against US$ by 5% $2,342 $0.10 ($21,964) $6,271 $0.26 ($5,233) A$ strengthens against US$ by 5% $2,566 $0.11 ($21,867) $6,899 $0.29 ($5,131) NZ$ weakens against US$ by 5% (a) $2,523 $0.10 ($21,847) $7,085 $0.29 ($4,682) NZ$ strengthens against US$ by 5% (a) $2,385 $0.10 ($21,985) $6,086 $0.25 ($5,681) Chilean pesos weakens against US$ by 5% (a) $2,454 $0.10 ($21,916) $6,783 $0.28 ($4,984) Chilean pesos strengthens against US$ by 5% (a) $2,454 $0.10 ($21,916) $6,387 $0.26 ($5,380) Production costs increase by 3% $1,189 $0.05 ($23,180) $4,427 $0.18 ($7,341) Production costs decrease by 3% $3,718 $0.15 ($20,651) $8,743 $0.36 ($3,024) ------------------------------------------------------------------------
(a) The sensitivity analysis incorporates the effect of the foreign currency protection program 15 While management has not prepared a financial forecast for the year ending 31 December 1997, management is not aware of any non-recurring items. No material change in gold or silver production is expected in that period which may have a significant effect on Coeur d'Alene's results from operations. 16 The following financial information for Gasgoyne and its subsidiaries is incorporated into the forecasts (in A$ thousands): 38 37
TWELVE SIX MONTHS MONTHS ENDED ENDING 31 DECEMBER 31 DECEMBER 1995 1996 ----------- ----------- Gold Sales $14,699 $32,987 Cost of Sales $9,324 $18,813 Other income $1,483 $650 Total other expenses $2,128 $1,550 Working capital changes $2,255 $4,112 Capital expenditure $6,175 $8,704 Other Financing/Investing activities $2,736 ($3,500) Dividends paid $1,356 - Income tax rate 36% 36%
This financial information has been derived following discussions with management of Gasgoyne and is generally in line with historic results. Nothing has come to the attention of Coeur d'Alene which causes it to believe that Gasgoyne's results over the periods referred to above will be materially different to those experienced in the immediately preceding corresponding periods. No dividend to be paid by Gasgoyne has been provided for the year ending 31 December 1996 (see note 9 above). In respect of the year ended 30 June 1995, Gasgoyne paid fully franked dividends of 11 cents per Gasgoyne Share. 39 38 4.5 HOW CASH CONSIDERATION TO BE PROVIDED The cash consideration for the acquisition of Gasgoyne Shares to which the Offers relate (including any Gasgoyne Shares issued on exercise of Gasgoyne Options) will, if all of the Offers are accepted, be not more than A$34,750,000. Coeur d'Alene has sufficient uncommitted liquid funds to pay the cash consideration specified above. However, it has not earmarked those funds for any particular purpose, including in connection with the Takeover Scheme. In addition, Coeur d'Alene has negotiated a standby loan facility with Rothschild Australia Limited ("ROTHSCHILD") as set out in a letter of offer dated 19 January 1996 ("FACILITY"). The letter of offer was accepted by Coeur d'Alene on 22 January 1996. The specific purpose of the Facility is to fund the cash consideration specified above. The amount available to be drawn under the Facility is sufficient to meet the cash consideration specified above. The Facility may be drawn in US$ or A$. The Facility is subject to the following conditions precedent: (a) Rothschild conducting a review, to its satisfaction, of the structure and documentation for the Takeover Scheme, including the bid timetable; (b) finalisation and execution of security and loan documentation to the satisfaction of Rothschild; (c) Rothschild being satisfied that Coeur d'Alene has complied with and will maintain all relevant governmental and statutory requirements in connection with the Facility and acquisition of Gasgoyne Shares; and (d) legal opinions satisfactory to Rothschild from Rothschild's and Coeur d'Alene's counsel regarding the validity and enforceability of all the relevant loan documentation. There is no reason currently known to Coeur d'Alene why the above conditions will not be able to be satisfied. The Facility contains the following covenants and special conditions: (a) net tangible worth of Coeur d'Alene to remain at or above US$160 million; (b) Coeur d'Alene's interest coverage ratio (operating profit plus interest receivable divided by interest payable) to be at or above 1.5; (c) current ratio (current assets divided by current liabilities) to be at or above 2.0; 40 39 (d) funded indebtedness (excluding subordinated debentures) divided by net tangible worth not to exceed 0.5; (e) no material change in the nature of Coeur d'Alene's business or constituent documents, other than changes to the constituent documents necessary to obtain ASX listing; (f) if Coeur d'Alene acquires less than 100% of the Gasgoyne Shares, the aggregate market value of the Gasgoyne Shares owned by Coeur d'Alene and its subsidiaries must at all times exceed two times the outstanding Facility balance; (g) there must be no significant change in the ownership or control of Coeur d'Alene during the term of the Facility, without the approval of Rothschild; (h) Rothschild has indicated that the security and loan documentation for the Facility will contain standard events of default for a facility of this nature, including breach of the share value ratio specified in (f) above and if in the sole discretion of Rothschild there is a material adverse change in the financial condition of Coeur d'Alene. There is no reason currently known to Coeur d'Alene why the above covenants and special conditions will not be able to be satisfied, other than (g) which may be outside its control. The Facility also provides that if Coeur d'Alene acquires control of Gasgoyne, Coeur d'Alene will use its best endeavours to ensure that Gasgoyne does not do anything other than in the ordinary course of business and does not increase its net indebtedness (in a manner to be defined by Rothschild). Coeur d'Alene expects that a breach of any of the covenants and special conditions referred to above would permit Rothschild to require the Facility to be repaid either immediately or following a specified period to remedy the breach. At present Coeur d'Alene intends to pay the cash consideration from its own funds, but may draw down the Facility in whole or in part. 4.6 INFORMATION ABOUT COEUR D'ALENE SHARES Clauses 4.6, 4.7 and 4.8 set out a summary of the rights attaching to Coeur d'Alene Shares, the rights attaching to Gasgoyne Shares and Gasgoyne Options and a comparison of the rights attaching to Coeur d'Alene Shares and Gasgoyne Shares. Coeur d'Alene Shares The share consideration for the acquisition of Gasgoyne Shares to which the Offers relate (including Gasgoyne Shares issued on exercise of Gasgoyne Options) will, if all of the Offers are accepted, require the issue of not more than 4,031,000 Coeur d'Alene Shares. Coeur d'Alene Shares are shares of common stock in the capital of Coeur d'Alene. The 41 40 term "common stock" is equivalent to the term "ordinary shares" as used generally in Australia. Coeur d'Alene is authorised to issue up to 60,000,000 Coeur d'Alene Shares, of which, at 25 January 1996, 20,464,882 shares were outstanding and 1,059,211 shares were held as treasury stock (ie, held by the Company itself), 3,880,481 shares were authorised for issuance on the conversion of Coeur d'Alene's US$100 million principal amount of outstanding 6 3/8% Debentures, 1,955,416 shares were reserved for issuance on conversion of Coeur d'Alene's US$50 million principal amount of outstanding 6% Debentures, 751,136 shares were authorised for issuance under Coeur d'Alene's Executive Compensation Program and 200,000 shares were authorised for issuance under Coeur d'Alene's Non-Employee Directors Stock Option Plan (see clause 7.4). The holders of Coeur d'Alene Shares are entitled to one vote for each share held on each matter submitted to a vote of shareholders, and on giving notice required by law, may cumulate their votes in elections of directors (ie, may spread votes among some candidates only - see clause 4.8). Subject to preference that may be applicable to any shares of preferred stock of Coeur d'Alene outstanding at the time, holders of Coeur d'Alene Shares are entitled to receive ratably such dividends as may be declared by the Board of Directors out of funds legally available therefore and, in the event of the liquidation, dissolution or winding up of Coeur d'Alene, are entitled to share ratably in all assets remaining after payment of liabilities. Holders of Coeur d'Alene Shares have no pre-emptive rights (ie, rights to purchase additional shares prior to the offering of such shares to other persons) and have no rights to convert their Coeur d'Alene Shares into any other securities. The Coeur d'Alene Shares to be issued are not permitted under US law to be sold in the US or to US persons for a period of 40 days commencing on the date of closing of the Offers. Refer to clause 5.3 for further information on this restriction. Coeur d'Alene's articles of incorporation include a "fair price" provision applicable to certain business combination transactions in which Coeur d'Alene may be involved. The provision requires that a holder of 10% or more of the outstanding Coeur d'Alene Shares ("INTERESTED STOCKHOLDER") not engage in certain specified transactions with respect to the Company (eg mergers, takeover offers, sales of assets, dissolution and liquidation) unless one of three conditions is met: (i) a majority of the directors who are unaffiliated with the Interested Stockholder and were directors before the Interested Stockholder became an Interested Stockholder approve the transaction; (ii) holders of 80% or more of the outstanding Coeur d'Alene Shares approve the transaction; or (iii) the shareholders are all paid a "fair price", ie generally the higher of the fair market value of the shares or the same price as the price paid to shareholders in the transaction in which the Interested Stockholder acquired its block. 42 41 By discouraging certain types of hostile takeover bids, the fair price provision may tend to insulate current management against the possibility of removal. Coeur d'Alene is not aware of any person or entity proposing or contemplating such a transaction. The transfer agent and registrar for Coeur d'Alene's Shares is First Interstate Bank of Oregon, NA, Portland, Oregon. Deloitte Share Registry Services (a division of the firm of Deloitte Touche Tohmatsu) will serve as co-transfer agent with respect to Coeur d'Alene Shares issued in Australia. Preferred Stock Coeur d'Alene is authorised to issue up to 10,000,000 shares of preferred stock, none of which have been issued. The Board of Directors has the authority to determine the dividend rights, dividend rates, conversion rights, voting rights, rights and terms of redemption and liquidation preferences, redemption prices, sinking fund terms on any series of preferred stock, the number of shares constituting any such series and the designation thereof. Holders of preferred stock have no pre-emptive rights and have no rights to convert their preferred stock into any other securities. While a series may be designated and preferred stock may be issued from time to time in the future, except upon exercise of the Rights (as described below), Coeur d'Alene has no present plans to issue any such shares. On 24 May 1989 the Board of Directors of Coeur d'Alene declared a dividend distribution of one Right for each issued Coeur d'Alene Share to shareholders registered at the close of business on 16 June 1989. Each Right entitles the registered holder to purchase from Coeur d'Alene one one-hundredth of a share of Series A Preferred Stock at a purchase price of US$100 in cash ("Purchase Price"), subject to adjustment. The Rights are not exercisable or detachable from the Coeur d'Alene Shares until ten days after any person or group acquires 20% or more (or commences a takeover offer for 30% or more) of Coeur d'Alene Shares. If any person or group acquires 30% or more of the Coeur d'Alene Shares on issue or acquires Coeur d'Alene in a merger or other business combination, each Right (other than those held by the acquiring person) will entitle the holder to purchase preferred stock of Coeur d'Alene or common stock of the acquiring company having a market value of approximately two times the US$100 exercise price. The Rights expire on 24 May 1999, and can be redeemed by Coeur d'Alene at any time prior to their becoming exercisable. 4.7 INFORMATION ABOUT GASGOYNE SHARES Holders of Gasgoyne Shares who accept an Offer will, if the Offers become unconditional, be entitled to be issued Coeur d'Alene Shares (although foreign shareholders or odd-lots may be treated in accordance with clause 12 of the Offers). Details of the rights attaching to Gasgoyne Shares and Gasgoyne Options are taken in part from the Part A Statement dated 30 August 1995 given by Gasgoyne to Pilbara Mines NL. On the basis of filings with ASX and the Commission as at the day immediately preceding the date of this Statement, there have been no changes to the rights attaching to Gasgoyne Shares or Gasgoyne Options since that date. 43 42 RIGHTS ATTACHING TO GASGOYNE SHARES The following is a broad summary (though not an exhaustive or definitive statement) of the rights, privileges and restrictions which attach to existing Gasgoyne Shares. Voting Rights Subject to any rights or restrictions for the time being attached to any class or classes of shares (at present there are none), at a general meeting of Gasgoyne every member present in person or by attorney, representative or proxy has one vote on a show of hands and on a poll one vote for each fully paid share held in the capital of Gasgoyne. A member who holds an ordinary share which is not fully paid shall on a poll have such number of votes as bears the same proportion to the total of such shares registered in the member's name as the amount of the issue price thereof paid up bears to the total issue price. However, in the event of a breach of any escrow agreement entered into by Gasgoyne under the ASX Listing Rules in relation to any shares which are classified under the Listing Rules or by ASX as restricted securities, the member holding the shares in question shall cease to be entitled to any voting rights in respect of those shares for so long as the breach subsists. Dividend Rights Subject to the rights of holders of shares issued with any special or preferential rights (at present there are none), the profits of Gasgoyne which the directors of Gasgoyne may from time to time determine to distribute by way of dividend are divisible among the shareholders in proportion to the numbers of shares held by them respectively and are paid irrespective of the amount paid or credited as paid on those shares. Rights on Winding Up Subject to the rights of holders of shares issued on special terms and conditions (at present there are none), if Gasgoyne is wound up, the liquidator may, with the authority of a special resolution, divide among the members in kind the whole or any part of the property of Gasgoyne, and may for that purpose set such value as he or she considers fair on any property to be so divided, and may determine how the division is to be carried out as between the members or different classes of members. The liquidator may, with the authority of a special resolution, vest the whole or any part of any such property in trustees on such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no member is compelled to accept any shares or other securities in respect of which there is no liability. Subject to the rights of members (if any) entitled to shares with special rights in a winding-up, all moneys and property that are to be distributed among shareholders on a winding-up, shall be so distributed in proportion to the shares held by them respectively, irrespective of the amount paid up or credited as paid up on the shares. 44 43 Transfer of Shares Subject to the articles of association of Gasgoyne, the Corporations Law, or any other laws and the Listing Rules, Gasgoyne Shares are freely transferable. Issue of Further Shares The allotment and issue of any new shares is under the control of the directors from time to time of Gasgoyne. Subject to restrictions on the allotment of shares to directors or their associates contained in the Listing Rules, the articles of association of Gasgoyne and the Corporations Law, the directors may allot or otherwise dispose of shares on such terms and conditions as they see fit. Classes of Shares If at any time the share capital of Gasgoyne is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may be varied, whether or not Gasgoyne is being wound up, with the consent in writing of the holders of three quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of the class. Any variation of rights of that type is subject to section 197 of the Corporations Law. The provisions of Gasgoyne's articles of association relating to general meetings apply so far as they are capable of application and with necessary alterations to every separate meeting of that type except that a quorum is constituted by two persons who together hold or represent by proxy one-third of the issued shares of the class. RIGHTS ATTACHING TO GASGOYNE UNLISTED OPTIONS As at 25 January 1996, Coeur d'Alene understands that Gasgoyne had on issue the following Gasgoyne Options to subscribe for Gasgoyne Shares:
NUMBER EXERCISE PRICE EXPIRY DATE A$ 735,000 0.47 30 June 1997 1,990,000 1.30 22 December 1997 100,000 1.47 28 April 1998 30,000 1.45 29 June 1997 84,000 2.24 28 June 1997 100,000 1.56 10 August 1998 125,000 1.81 14 September 1998 525,000 2.08 15 December 1998 -------- Total 3,689,000
The above Gasgoyne Options were issued pursuant to Gasgoyne's Employee Option Plan. Refer to page 10 of annexure L for details of the rules of the Employee Option Plan. Each Option entitles the holder to apply for and be allotted one Gasgoyne Share at the relevant exercise price on the following terms and conditions: 45 44 - The Options may be exercised by notice in writing to Gasgoyne received at any time from the date of issue to the relevant expiry date ("exercise period"). - There are no participating rights or entitlements inherent to the option to participate in any new issue of capital which may be offered to shareholders of Gasgoyne from time to time prior to expiry date. Gasgoyne has indicated that it will ensure that during the exercise period for the purpose of determining entitlements to any such new issue, the book's closing date will be at least 12 business days after such new issue is announced. This will afford the optionholder an opportunity to exercise the option prior to the book's closing date of any such new issue. - The optionholder may not except with the approval of the board of directors (in its absolute discretion) sell, transfer, assign, give or otherwise dispose in equity or in law the benefit of the option. - A certificate will be issued for each option. On the reverse side of the certificate there will be enclosed a notice that is to be completed when exercising the option. If there is more than one option on a certificate and prior to the expiry date the option is exercised in part, Gasgoyne has indicated that it will issue another certificate for the balance of the options held and not yet exercised. - The options are not listed on the official list of ASX. - It is a condition of each option that in the event of a reconstruction (including consolidation, subdivision, reduction or return) of the issued capital of Gasgoyne, the number of options and the exercise price of options will be reconstructed in the same proportion as the issued capital of Gasgoyne is reconstructed and in the manner which will not result in any additional benefits being conferred on optionholders which are not conferred on shareholders, (subject to the provisions with respect to the rounding of entitlements as sanctioned by the meeting of shareholders approving the reconstruction of capital) but in all other respects the terms for the exercise of options shall remain unchanged. 4.8 COMPARISON OF RIGHTS ATTACHING TO SHARES Gasgoyne shareholders who accept the Offer will become shareholders of an Idaho corporation and will have rights and privileges as set out in the Idaho constitution, Idaho Code and Idaho Business Corporation Act ("IDAHO CODE") and the Coeur d'Alene articles of incorporation and by-laws. The rights and privileges of shareholders of an Idaho corporation are comparable to those of shareholders of an Australian corporation, however, there are some material differences, some of which are summarised below. Quorum Under Gasgoyne's articles of association three shareholders present in person or by proxy, attorney or representative constitutes a quorum for a meeting. 46 45 Under Coeur d'Alene's by-laws, holders of a majority of the outstanding shares in person or by proxy, constitutes a quorum for the transaction of business at a meeting of shareholders. Vote Required for Ordinary Transactions Under the Idaho Code and Coeur d'Alene's articles of incorporation, most matters requiring shareholder approval must be approved by the vote of holders of a majority of the outstanding shares represented in person or by proxy at the meeting and entitled to vote. Under Australian law, matters which are decided by a general meeting of shareholders generally require the approval of the shareholders by ordinary resolution, which is a resolution passed by the majority of shares present in person or by proxy. Some matters (such as amendments to the articles of association) require approval by special resolution, which is a resolution passed by the holders of at least 75% of the shares represented in person or by proxy, where at least 21 days of notice of the resolution has been given. VOTE REQUIRED FOR EXTRAORDINARY TRANSACTIONS As mentioned in clause 4.6 Coeur d'Alene's articles of incorporation include a "fair price" provision applicable to certain business combination transactions. Where those provisions are applicable, holders of at least 80% of the outstanding Coeur d'Alene Shares need to approve the relevant transaction. Generally, a merger or consolidation to which Coeur d'Alene is a party requires the approval of the holders of a majority of the outstanding shares of each of the corporations involved under the Idaho Code. Under Australian law, a merger or consolidation of Gasgoyne with another company cannot be implemented in the same way as under the Idaho Code, however, corporate combinations can be effected by a scheme of arrangement under the Corporations Law. A scheme of arrangement requires approval by majorities of 50% in number and 75% in value of all shareholders and each class of shareholders, together with court approval. A dissolution or a sale of substantially all of a corporation's assets requires the approval of the holders of a majority of the outstanding shares under the Idaho Code and in Australia the ASX Listing Rules require approval by ordinary resolution. APPOINTMENT OF DIRECTORS Under Gasgoyne's articles of association, directors of Gasgoyne may be appointed by ordinary resolution and must be voted on individually. In addition, the directors have the power to fill a casual vacancy or appoint additional directors up to the maximum number specified in the articles of association (currently 10). 47 46 Under Coeur d'Alene's by-laws, at any election of Directors, every shareholder entitled to vote has the right to vote, in person or by proxy, in respect of the number of shares held for as many persons as there are Directors to be elected, or to cumulate votes by giving either one candidate the number of votes multiplied by the number of candidates, or by distributing those votes on the same principle among any number of candidates. This is common to US corporations and is referred to as "cumulative voting". TRANSACTIONS INVOLVING RELATED PARTIES The Corporations Law also prohibits a public company or an entity controlled by it from giving any type of financial benefit to a "related party" (including parent companies, controlling entities, directors and their families, and entities which they control) unless the financial benefit: (i) constitutes reasonable remuneration to an officer; (ii) is an advance of less than $2,000; (iii) is given between wholly owned entities; (iv) is given on arm's length terms or pursuant to a court order; (v) constitutes a benefit given to shareholders in their capacity as shareholders and does not discriminate unfairly between shareholders (eg a dividend); or (vi) is approved by a general meeting of shareholders. The Idaho Code has no equivalent provisions. The Code however provides that certain contracts or transactions between a corporation and one or more of its directors or related entities will not be void or voidable because of a financial interest where, amongst other things, it is approved by shareholders. The Idaho Code does require that the issuance of stock options to, or adoption of a stock option plan providing for the issuance of options to, directors or officers must be approved by the holders of at least two-thirds of the outstanding shares. Furthermore, the NYSE listing rules require shareholder approval for certain transactions in which directors or officers, or their affiliates, have an interest. In addition, the ASX Listing Rules contain restrictions on certain transactions involving certain related parties, substantial shareholders and associates which currently apply to Gasgoyne and may apply to Coeur d'Alene, if ASX approves it for listing and those provisions are not waived. As noted in clause 4.6, the Coeur d'Alene articles of incorporation contain a "fair price" provision which will apply to business combinations between Coeur d'Alene and "Interested Stockholders" as referred to in that clause. 48 47 DISSENTERS' APPRAISAL RIGHTS The Idaho Code generally entitles a shareholder voting against the following corporate actions to exercise dissenters' appraisal rights if the shareholder complies with certain procedural requirements: (i) a plan of merger or consolidation to which the corporation is a party; (ii) a sale, lease, exchange or other disposition of all or substantially all of the property and assets of the corporation not made in the usual or regular course of its business, including a sale of dissolution; (iii) any plan of exchange to which the corporation is a party which provides for the acquisition of the corporation's shares; and (iv) an amendment to the articles of incorporation which materially and adversely affects the rights of the shares as to certain specified matters. Limitation of Director Liability The Corporations Law provides that a company or related body corporate must not indemnify a person who is or has been an officer (including a director) or auditor against a liability incurred in that capacity, or exempt such a person from such a liability. However, a person may be indemnified: (i) against a liability (other than to the company) unless the liability arises out of conduct involving a lack of good faith; or (ii) against a liability for costs and expenses incurred in defending civil or criminal proceedings where judgment is given in favour of the person, the person is acquitted or the court grants relief to the person under the Corporations Law. Gasgoyne's articles of association provide broad rights of indemnification to the extent permitted under the Corporations Law, for officers (including directors), employees and auditors. The Coeur d'Alene articles of incorporation contain a provision, permitted by the Idaho Code, limiting the personal liability of Directors for breach of fiduciary duties provided the breach does not involve: (a) any breach of the Director's duty of loyalty to Coeur d'Alene or its shareholders; (b) acts of omissions not in good faith or which involve intentional misconduct or a knowing violation of law; 49 48 (c) any transaction from which the director derived an improper personal benefit; or (d) certain declarations of dividends, distributions of assets or repurchases of the corporation's shares in violation of the Idaho Code. Under Coeur d'Alene's by-laws, Coeur d'Alene must indemnify Directors and officers to the fullest extent permitted by law. This is not exclusive of any right which may exist under any by-law, agreement, vote of shareholders or disinterested Directors, or otherwise. Distributions and Dividends Under the Corporations Law, a corporation may only pay dividends out of profits, as determined under Australian law, or, in certain instances, out of the share premium account. Under the Idaho Code, a corporation may pay dividends in cash or its own shares except when the corporation is insolvent or when the payment would render the corporation insolvent. Generally, cash dividends may be paid only out of the unreserved and unrestricted earned surplus of the corporation. In addition, a corporation generally may make cash distributions to its shareholders out of capital surplus of the corporation; provided, however, that no such distribution may be made when the corporation is insolvent or when the distribution would render the corporation insolvent. Buy-Backs Under Coeur d'Alene's articles of incorporation the Directors have a wide power to repurchase shares. In general terms the Corporations Law permits buy-backs in more limited circumstances. In particular, buy-backs can be made without shareholders approval if: (a) all ordinary shareholders have a reasonable opportunity to accept the offer ("equal access buy-back"); and (b) less than 10% of voting shares are bought back during a 12 month period. Equal access buy-backs of more than 10% of voting shares in a 12 month period require approval by an ordinary resolution of shareholders. Buy-backs which favour some shareholders over others ("selective buy-backs") require approval by a special resolution of shareholders. The Corporations Law also permits, in certain circumstances, odd-lot, employee and on market buy-backs without shareholder approval. 50 49 4.9 GENERAL AUSTRALIAN TAXATION CONSIDERATIONS The following opinions are not exhaustive of all possible Australian income tax considerations that could apply to particular shareholders. In particular, the summary does not address all tax considerations applicable to shareholders that may be subject to special tax rules, such as banks, insurance companies, tax exempt organisations, superannuation funds or dealers in securities. EACH GASGOYNE SHAREHOLDER IS ADVISED TO CONSULT WITH THE SHAREHOLDER'S OWN TAX ADVISER REGARDING THE CONSEQUENCES OF ACQUIRING, HOLDING OR DISPOSING OF GASGOYNE SHARES OR COEUR D'ALENE SHARES IN LIGHT OF CURRENT TAX LAWS AND THE SHAREHOLDER'S PARTICULAR INVESTMENT CIRCUMSTANCES. The following is the opinion of Mallesons Stephen Jaques of Sydney, Australia, Australian solicitors to Coeur d'Alene, as to the principal Australian income tax consequences generally applicable to a Gasgoyne shareholder who disposes of Gasgoyne Shares under the Offer. The opinion reflects Mallesons Stephen Jaques' interpretation of the current provisions of the Australian Income Tax Assessment Act 1936 (the "Act") and the regulations made under it, the convention between the Government of Australia and the Government of the United States for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes and Income (the "Australia/United States Tax Treaty"), taking into account currently proposed amendments and Mallesons Stephen Jaques' understanding of the current administrative practices of the Australian Taxation Office. The opinion does not otherwise take into account or anticipate changes in the law, whether by way of judicial decision or legislative action, nor does it take into account tax legislation of other countries. Australian Resident Shareholders The Australian tax consequences for holders of Gasgoyne Shares, who are residents of Australia for tax purposes, are as follows: (i) Disposal of Gasgoyne Shares The sale of Gasgoyne Shares pursuant to acceptance of the Offer will generally result in a disposal of Gasgoyne Shares for capital gains tax purposes. A taxable capital gain would arise if the Gasgoyne Shares are disposed of at a price in excess of their indexed cost base. In this regard, the price received for the Gasgoyne Shares disposed of is the sum of the market value of the Coeur d'Alene Shares received under the Offer, calculated at the time the Offer is accepted, plus the cash received under the Offer. If the Gasgoyne Shares have been held for more than 12 months, the indexed cost base will include an adjustment for inflation over the period for which the Gasgoyne Shares have been held and hence any taxable capital gain would be reduced by that amount as well as the cost base. 51 50 Shareholders in Gasgoyne who dispose of their Gasgoyne Shares should incur a capital loss if the cost of the Gasgoyne Shares disposed of was greater than the sum of the market value of the Coeur d'Alene Shares received and the cash received under the Offer. A capital loss may be offset against taxable capital gains arising in the current or future years of income. A capital loss cannot be offset against ordinary income or carried back to offset taxable capital gains arising in earlier years. Profits realised by certain categories of shareholders, such as sharetraders, banks and insurance companies, may be taxed as ordinary income without any adjustment for inflation. (ii) Coeur d'Alene Shares held by Australian Residents Dividends paid on Coeur d'Alene Shares would generally be subject to US withholding tax at the rate of 15%. This tax would be deducted by Coeur d'Alene when the dividend is paid. Generally, such dividends would also be subject to Australian income tax. The entire amount of the dividend would be taxable including the amount representing US withholding tax. The Australian tax payable on such dividends would generally be reduced by the lesser of the amount of any US tax withheld and the Australian tax attributable to the dividends received. Dividends paid by Coeur d'Alene cannot be franked for Australian purposes and a shareholder will not be entitled to franking credit rebates. Dividends paid by Coeur d'Alene will not qualify for the inter-corporate dividend rebate. Dividends may be exempt from Australian tax if paid to an Australian resident company on Coeur d'Alene Shares which confer a voting interest of greater than 10%. Because Coeur d'Alene Shares are listed on New York Stock Exchange and Pacific Stock Exchange, the rules relating to the taxation of foreign investment funds do not currently apply to investors who hold Coeur d'Alene Shares in respect of those shares. (iii) Subsequent Sale of Coeur d'Alene Shares Gain or loss from the sale or other disposal of Coeur d'Alene Shares will generally be subject to the same tax rules as those referred to at item (i) above. If Coeur d'Alene Shares are granted official quotation on ASX, the sale of Coeur d'Alene Shares on ASX will generally be subject to share transfer duty at the rate of 0.3% (half of which is borne by both buyer and seller). The transfer of Coeur d'Alene Shares on a branch register of Coeur d'Alene in Australia (other than 52 51 pursuant to a sale on ASX) generally will be subject to share transfer duty at the rate of 0.3% if Coeur d'Alene Shares are granted official quotation on ASX and 0.6% if not (in each case borne wholly by the buyer generally). Non-Australian Resident Shareholders The Australian tax consequences for holders of Gasgoyne Shares, who are not Australian residents for tax purposes, are as follows: (i) Disposal of Gasgoyne Shares Generally, if the Gasgoyne Shares held by a shareholder (plus any Gasgoyne Shares held by an "associate" for the purposes of the Act) during the five years preceding the sale of such shares pursuant to the Offer represent less than 10% of the issued shares in Gasgoyne, their sale pursuant to the Offer will not give rise to any liability under the Australian capital gains tax provisions in the Act. Profits realised by certain categories of shareholders, such as sharetraders, banks and insurance companies, may be taxed in Australia as ordinary income depending on whether or not those profits have an Australian source. Determining the source of income is a factual matter which depends on all the surrounding circumstances. However, if the shareholder is resident in a country with which Australia has a double tax treaty, it is possible that the terms of the particular treaty could deem any profit arising on the acceptance of the Offer to have an Australian source. For example that may be likely under the Australia/United States Tax Treaty because the assets of Gasgoyne consist wholly or principally of real property (including leaseholder interests in land and rights to exploit or explore for natural resources) situated in Australia. (ii) Dividends Any dividend paid by Coeur d'Alene to a non-Australian resident shareholder will generally not be taxable in Australia. (iii) Subsequent Sale of Coeur d'Alene Shares Gain or loss from the sale or other disposal of Coeur d'Alene Shares by a non-Australian resident shareholder will generally not be subject to Australian tax. If Coeur d'Alene Shares are granted official quotation on ASX, the sale of Coeur d'Alene Shares on ASX in Australia will generally be subject to share transfer duty at the rate of 0.3% (half of which is borne by both buyer and seller). The transfer of Coeur d'Alene Shares on a branch register of Coeur d'Alene in Australia (other than pursuant to a sale on ASX) generally will be subject to share transfer duty at the rate of 0.3% if Coeur d'Alene Shares are granted official quotation on ASX and 0.6% if not (in each case borne wholly by the buyer generally). 53 52 General In all cases, regard should be given to the foreign consequences (if any) of disposal of Gasgoyne Shares and the acquisition of and possible subsequent disposal of Coeur d'Alene Shares. Gasgoyne shareholders and optionholders are advised to contact a suitably qualified taxation expert if in doubt as to the tax consequences of accepting the Offer. 5 INTERESTS IN COEUR D'ALENE AND GASGOYNE SHARES 5.1 SHARES TO WHICH COEUR D'ALENE IS ENTITLED IN GASGOYNE Coeur d'Alene is at the date of this Statement entitled to 10,621,300 Gasgoyne Shares. This entitlement arises as follows: - On 31 August 1995, Callahan Mining Corporation, a wholly owned US subsidiary of Coeur d'Alene, acquired 10,000 Gasgoyne Shares on-market at $1.90 per share. Coeur d'Alene and Callahan Mining Corporation are related bodies corporate and therefore Coeur d'Alene is entitled to the shares held by Callahan. - On 20 December 1995, Coeur d'Alene entered into a call option agreement with Ioma Pty Limited under which Ioma Pty Limited granted to Coeur d'Alene an option to purchase 10,611,300 Gasgoyne Shares for $60 plus 7 Coeur d'Alene Shares for each 100 Gasgoyne Shares (ie the same consideration as under the Offers). Ioma Pty Limited was, and is at the date of this Statement, the largest shareholder of Gasgoyne and is a company controlled by two directors of Gasgoyne, PG and RW Crabb. The call option agreement automatically terminates if Ioma Pty Limited accepts, in respect of all of the Gasgoyne Shares covered by the agreement, a takeover offer made by Coeur d'Alene prior to the option being exercised. The option can only be exercised if a takeover offer is made by Coeur d'Alene under which the consideration offered is not substantially less favourable than under the call option agreement and foreign investment approval is obtained. Except for the Gasgoyne Shares described in clause 5.1, Coeur d'Alene is not at the date of this Statement entitled to any other marketable securities of Gasgoyne, including Gasgoyne Options. There have been no acquisitions or disposals of Gasgoyne Shares or Gasgoyne Options by Coeur d'Alene, or any of its associates, in the 4 months ending on the day immediately before the day on which this Statement was lodged with the Commission for registration except as set out in clause 5.1. 5.2 ACQUISITIONS/DISPOSALS IN SHARES OF COEUR D'ALENE There have been no acquisitions or disposals of shares in Coeur d'Alene by any person included in, or any associate of it, in the 4 months ending on the day immediately before the 54 53 day on which this Statement was lodged with the Commission for registration except as follows: The following officers of Coeur d'Alene or its subsidiaries were granted stock options on 5 December, 1995 pursuant to the Coeur d'Alene Executive Compensation Program (see clause 7.4):
US$ NUMBER EXERCISE OF PRICE PER NAME POSITION(1) SHARES SHARE (2) ---------------- -------------- -------- ---------- Dennis E Wheeler Chairman, 37,114 18.00 President and Chief Executive Officer Michael L Clark Senior Vice 17,280 18.00 President and Chief Operating Officer Michael C Tippett Senior Vice 13,953 18.00 President Exploration and New Business Development James A Sabala Senior Vice 10,844 18.00 President and Chief Financial Officer William F Boyd Corporate 8,989 18.00 Counsel and Secretary Robert Martinez Vice President 3,402 18.00 and General Manager of Coeur Rochester, Inc. Tom T Angelos Controller 1,841 18.00
(1) All of the positions listed above are positions with Coeur d'Alene unless otherwise indicated. (2) The exercise price of the above options is equal to the average of the high and low sale prices of the Coeur d'Alene Shares on the date of grant on the New York Stock Exchange. The options become exercisable cumulatively to the extent of 25% after the first, second, third and fourth anniversaries of the date of grant and expire ten years after the date of the grant. 5.3 TRADING IN COEUR D'ALENE SHARES Coeur d'Alene has not registered the Coeur d'Alene Shares being offered in the Offer under the US Securities Act 1933 ("SECURITIES ACT") and, consequently, the Shares may not be offered or sold by former Gasgoyne shareholders to "US persons" (as defined in Regulation S under the Securities Act) or in the USA unless the securities are registered under the Securities Act or an exemption from such registration requirement is available. 55 54 Pursuant to Rule 903(c)(2) of Regulation S made under the Securities Act, the Coeur d'Alene Shares issued to Gasgoyne shareholders may not be offered or sold to a US person prior to the expiration of a 40-day restricted period commencing on the date of closing of the Offers. Following the expiration of the 40-day restricted period, former Gasgoyne shareholders will be able to sell their Coeur d'Alene Shares to US persons in reliance upon the exemption from registration provided by section 4(1) of the Securities Act for a person that is neither an issuer, underwriter or dealer. That 40-day restricted period requirement also applies to former Gasgoyne shareholders that became "affiliates" of Coeur d'Alene (ie an officer, director or 10% shareholder of Coeur d'Alene). Such a person will be required to conform his or her US resales of Coeur d'Alene Shares to Rule 144 under the Securities Act. Under that rule, an affiliate may not sell during any three-month period more than the greater of (i) 1% of the Coeur d'Alene Shares on issue or (ii) the average weekly volume of trading in the shares during the preceding four calendar weeks on the New York and Pacific Stock Exchanges. 5.4 PROPOSED ACQUISITION BY COEUR D'ALENE OF OTHER SHARES, OPTIONS OR NOTES Coeur d'Alene has not sent, nor does it propose to send, while the Offers remain open, offers or invitations relating to the acquisition of shares in Gasgoyne (whether voting shares or not) of a different class from the Gasgoyne Shares or relating to the acquisition of renounceable options or convertible notes granted or issued by Gasgoyne. To the best of the knowledge of Coeur d'Alene, Gasgoyne had on issue on 25 January 1996 3,689,000 options to subscribe for Gasgoyne Shares. Those options have been issued to directors and employees of Gasgoyne and are non-renounceable. As mentioned in clause 6.6(b), the Commission has granted an exemption to enable Coeur d'Alene to acquire Gasgoyne Shares issued on exercise of any of those options. 6 LEGAL MATTERS 6.1 NO PRE-EMPTION CLAUSES IN GASGOYNE'S CONSTITUTION There is no restriction on the right to transfer Gasgoyne Shares to which the Offers relate contained in the constitution of Gasgoyne that has the effect of requiring the holders of Gasgoyne Shares, before transferring them, to offer them for purchase to members of Gasgoyne or to any other person. 6.2 NO BENEFITS TO OFFICERS OF GASGOYNE Coeur d'Alene does not propose in connection with the Offers that: (a) a prescribed benefit (other than an excluded benefit) will or may be given to a person in connection with the retirement of a person from a prescribed office in relation to Gasgoyne; or (b) a prescribed benefit will or may be given to a prescribed person in relation to Gasgoyne in connection with the transfer of the whole or any part of the undertaking or property of Gasgoyne. 56 55 6.3 NO AGREEMENTS WITH DIRECTORS OF GASGOYNE There is no agreement made between Coeur d'Alene and any of the directors of Gasgoyne in connection with or conditional upon the outcome of the Offers. However, as mentioned in clause 5.1, Coeur d'Alene has entered into a call option agreement with Ioma Pty Limited, a company associated with two directors of Gasgoyne, PG and RW Crabb, under which 10,611,300 Gasgoyne Shares held by Ioma Pty Limited may be acquired by Coeur d'Alene for $60 plus 7 Coeur d'Alene Shares per 100 Gasgoyne Shares (the same consideration as under the Takeover Scheme). Also, Coeur d'Alene's present intention is to invite Mr Brian Hurley to remain as Chairman of the board of directors, and Mr Philip Crabb to remain as a director of Gasgoyne following successful conclusion of the Takeover Scheme (see clause 4.2). 6.4 NO AGREEMENT AS TO TRANSFER OF SHARES BY COEUR D'ALENE There is no agreement whereby any Gasgoyne Shares acquired by Coeur d'Alene pursuant to the Offers by Coeur d'Alene will or may be transferred to any other person, except that, in accordance with ordinary banking practice in connection with any security granted under a facility, Rothschild as mortgagee may be entitled to take a transfer of Gasgoyne Shares under the facility referred to in clause 4.5. Coeur d'Alene understands that Rothschild does not hold any Gasgoyne Shares nor are any Gasgoyne Shares held on Rothschild's behalf. 6.5 ESCALATION CLAUSES There is no agreement for the acquisition of Gasgoyne Shares by Coeur d'Alene or by an associate, being an agreement under which the person, or either or any of the persons, from whom the Gasgoyne Shares have been or are to be acquired or an associate of that person or of either or any of those persons may, at any time after an Offer is sent, become entitled to any benefit, whether by way of receiving an increased price for those Gasgoyne Shares or by payment of cash or otherwise, that is related to, dependent on, or calculated in any way by reference to, the consideration payable for Gasgoyne Shares acquired after the agreement was entered into. 6.6 RELIEF UNDER THE CORPORATIONS LAW The Commission on 24 January 1996 made the following declarations under section 728 and 730 of the Corporations Law, that the Corporations Law in its application to the Takeover Scheme be varied: (a) to permit the payment of cash only to foreign shareholders of Gasgoyne Shares and holders of Gasgoyne Shares who would, as a result of acceptance of the Offers, hold less than a marketable parcel of shares; 57 56 (b) to permit offers to be made in respect of Gasgoyne Shares issued as a result of the exercise of any Gasgoyne Options during the offer period which were capable of being exercised on or before the date of despatch of the Offers; (c) to permit the execution of documents in relation to the Takeover Scheme by agents of directors of Coeur d'Alene. See annexure J for copies of the relevant instruments from the Commission. 7 OTHER MATTERS 7.1 OTHER MATERIAL INFORMATION There is no other information material to the making of a decision by an offeree whether or not to accept an Offer, being information that is within the knowledge of Coeur d'Alene and has not previously been disclosed to the holders of Gasgoyne Shares except as follows: Announcements to ASX - On 4 July 1995, Gasgoyne announced to ASX that: "The Participants in the Yilgarn Star Production Joint Venture, being Gasgoyne Gold Mines NL ("GGM"), Orion Resources NL ("ORR") and Gemini Mining Pty Ltd ("GEMINI") were recently served with a writ issued by Boral out of the Supreme Court of Western Australia claiming damages for alleged breach of contract in the sum of $4,991,832.03, together with interest and costs. GGM, ORR and Gemini ("Yilgarn Star Participants") intend to vigorously defend the action by Boral. Based upon advice received by the solicitors and Counsel engaged to review Boral's claims, it is the view of the Yilgarn Star Participants that Boral's claims have no foundation and that the Yilgarn Star Participants have no liability whatsoever to Boral." No provision is made in Gasgoyne's accounts for this litigation. - On 10 August 1995, Gasgoyne declared a fully franked dividend of 6 cents per Gasgoyne Share. The dividend was payable on 1 November 1995 with books closing to determine entitlements to the dividend on 25 October 1995. - On 13 September 1995 Gasgoyne lodged its Proforma Preliminary Final Statement for the financial year ended 30 June 1995. - On 13 September 1995, Gasgoyne announced that: "In accordance with the terms of the Masmindo Option Agreement, Gasgoyne and its joint venture partner, Lone Star Exploration NL ("LONE STAR") have now given notice of exercise of the Option and the first payment of US$1 million has been paid. 58 57 As a result of the above and other transactions as approved by the shareholders of Lone Star on 25 August 1995, the beneficial holding in the Awak Mas Gold Project is as follows: Gasgoyne Gold Mines NL 45 Lone Star Exploration NL 45 PT Asminco Bara Utama 10 ---- TOTAL 100% =====
The balance of the consideration for the Masmindo Option Agreement (US$3 million) will be paid in accordance with the terms of the Option Agreement, being US$1 million on 15 September 1996 and US$2 million on 15 September 1997. These payments will be accelerated should the project proceed to production prior to that date". - On 13 November 1995, Gasgoyne announced to ASX a proposal to upgrade the Star Mill. JR Engineering was commissioned to undertake a preliminary plant upgrade investigation of the Star Mill to 1.0 million tonnes per annum from the current 760,000 tonnes per annum capacity. The total cost of the upgrade is estimated at $5 million. - On 18 December 1995, Gasgoyne lodged with ASX a prospectus offering 525,000 free options to directors and offering shares in Gasgoyne to vendors of mining tenements. In consideration of this issue of shares, Gasgoyne acquired: (i) a 100% legal and beneficial interest in the Blackstone Licences; (ii) the 10% legal and beneficial interest of William Robert Richmond in Wilga Well (West) Exploration Licence; and (iii) the 10% joint legal and beneficial interest of Brian Dudley Richardson, John Sautul and Andrew Huxtable in the Wilga Well (West) Exploration Licence and the Wilga Well Exploration Licence. - On 11 January 1996 Gasgoyne announced to ASX that: "The Directors of Gasgoyne Gold Mines NL are pleased to advise that following a 23,473 metre drilling programme conducted at Awak Mas by Joint Venture Partners Gasgoyne Gold Mines NL (45%), Lone Star Exploration NL (45%) and PT Asminco Bara Utama (10%) throughout 1995 it has been possible to update the total estimated resource for the Awak Mas Gold Project. Total In-Situ Resources (in all categories) at a 0.7 g/tonne gold cut off have increased by 147% from 829,000 ounces as reported in December 1994 to 2,048,000 ounces as at 31 December 1995. 59 58 RESOURCE STATEMENT: AWAK MAS PROJECT - DECEMBER 1995*
cut off 1.0 g/tonne Gold 0.7 g/tonne Gold -------- -------------------------------- --------------------------------- CATEGORY TONNES GRADE OUNCES TONNES GRADE OUNCES (Mt) (g/t gold) (oz) (Mt) (g/t gold) (oz) ---------------------------------------------------------------------------------------- INDICATED 15.1 2.07 1,005,000 21.0 1.65 1,113,000 ---------------------------------------------------------------------------------------- INFERRED 12.7 1.95 799,000 19.4 1.50 935,000 ---------------------------------------------------------------------------------------- TOTAL 27.8 2.02 1,804,000 40.4 1.58 2,048,000 ----------------------------------------------------------------------------------------
* This resource was calculated by Resource Service Group Pty Ltd using the Geostatistical Technique of Indicator Kriging. The stated Resource is the estimate based on complete selectivity using a 2.5 metre bench composite sample support and represents the in-situ, undiluted resource. * Tonnes rounded to the nearest 100,000 * Ounces rounded to the nearest 1,000 At a 1.0 g/tonne gold cut off, the resources has increased from 660,000 ounces to 1,804,000 ounces. An increase of 173%. The increase in Mineral Resources has occurred by in-fill drilling within the Rante and Lematik Domains previously identified and expanding the boundaries of the mineralisation in all areas and all directions. As at 31 December 1995, the mineralisation is open generally in all directions. The partners intend to continue drilling throughout the first half of 1996 and have planned a further drilling programme of greater than 20,000 metres with a view to extending the mineralisation boundaries to the west and south of Lematik and further drilling in Ongan to the north, and Mapacing to the west. Centrally, the Tanjung Domain that lies between Rante and Lematik will be in-filled to better define the resource in that area. To date only fifty percent of the identified gold in soil anomaly has been systematically drilled and has been included in the resource statement. Potential for further resource upgrade exists in the western half of the anomaly." - On 17 January 1996 Sons of Gwalia Ltd ("SOG") and Burmine Limited ("BURMINE") made a joint announcement to ASX that: * SOG and Burmine would merge by way of a scheme of arrangement, with SOG to issue one share for every two Burmine shares; * SOG agreed to take a placement of 10% of Burmine's issued capital, at a price of $3.50 per Burmine share; and * SOG, in agreement with Burmine, would bid for Gasgoyne, with SOG issuing one share for every three Gasgoyne shares. 60 59 Substantial Shareholders - As set out in the 1995 annual report of Gasgoyne, the substantial shareholders of Gasgoyne as at 18 September 1995 were as follows:
NUMBER OF SHARES % HELD ------------ -------- Ioma Pty Limited and 13,839,682 29.53 Associates* ANZ Nominees Limited 3,822,173 8.15 Pendal Nominees Pty Ltd 2,762,546 5.89
* Associates represent R J Dunn, S A Dunn, P G Crabb, R W Crabb, Gemini Mining Pty Limited and Barcfin Pty Limited. - Since this date, substantial shareholder notices have been lodged reflecting the following changes: * On 12 December 1995, Bankers Trust Australia Limited ("BANKERS TRUST") lodged a Notice of Change of Interest of Substantial Shareholder. The notice stated that Bankers Trust held relevant interests in 3,299,566 fully paid ordinary Gasgoyne Shares, which represents 6.22% of the total number of Gasgoyne Shares. On 11 January 1996, Bankers Trust lodged a Notice of Person Ceasing to be a Substantial Shareholder. * On 20 December 1995, Ioma Pty Limited ("IOMA") lodged a Notice of Change of Interest of Substantial Shareholders. The notice stated that Ioma and its associates held relevant interests in 14,543,792 Gasgoyne Shares, which represents 27.27% of the total number of Gasgoyne Shares. * On 5 January 1996, Mercury Asset Management plc ("MERCURY") lodged a Notice of Change of Interest of Substantial Shareholder. The notice stated that Mercury held relevant interests in 7,784,577 Gasgoyne Shares, which represents 14.60% of the total number of Gasgoyne Shares. * On 9 January 1996, Burmine Limited ("BURMINE") lodged a Notice of Interest of Substantial Shareholder. The notice stated that Burmine held relevant interests in 4,923,709 Gasgoyne shares, which represents 9.23% of the total number of Gasgoyne shares. Redemption of Debentures by Coeur d'Alene - On 19 December 1995, Coeur d'Alene made the following press release in relation to completion of an underwritten call for redemption of its 7% Debentures (which were converted into Coeur d'Alene Shares): 61 60 "Coeur d'Alene Mines Corporation (NYSE:CDE) announced that it has completed the underwritten call for redemption of its $75 million principal amount of 7% convertible subordinated debentures due 2002, with the entire debenture indebtedness converted into equity. Prior to December 15, 1995, the holders of $74,649,000 principal amount of the debentures had converted the debentures into a total of approximately 4,844,000 shares of Coeur common stock. Converting Debentureholders received approximately 64.9 shares of Common Stock for each of $1,000 principal amount, with cash paid in lieu of any fractional shares. The balance of $351,000 principal amount of the Debentures was redeemed by Coeur on December 15, 1995 at a price of $1,070 for each of $1,000 principal amount of Debentures. Pursuant to a standby agreement with UBS Securities Inc., that firm purchased from Coeur on December 19, 1995 a total of approximately 20,000 shares of Common Stock of the Corporation, representing the number of shares of Common Stock that would have been issued upon conversion of those Debentures that were not surrendered for conversion. As a result of that standby arrangement, the entire principal amount of the outstanding debenture indebtedness was converted into equity. Coeur issued a total of approximately 4,864,000 new shares of Common Stock in connection with the Debenture conversions and standby arrangement, increasing its total shares of outstanding Common Stock to approximately 20.5 million shares. Coeur is an international gold and silver mining company with operating mines in Nevada, New Zealand and Chile." All amounts referred to above are in US dollars. Awak Mas Feasibility Study - Under the contract of works between the Indonesian Government and the joint venture parties involved in the Awak Mas joint venture project, a feasibility study was required to be completed by 24 October 1995. That feasibility study has not been completed. While under certain circumstances the Indonesian Government may have the right to terminate the contract of works, no such notice has been given. It is Coeur d'Alene's understanding that it is unlikely the Indonesian Government would take such steps while the joint venture parties are actively involved in exploration and other activities involving the expenditure of development funds. In any event, the Indonesian Government is required to give notice of any default, and a period of up to 180 days to remedy the default, before it is able to terminate the contract of works. In its 1995 annual report Gasgoyne advised that its preliminary estimate of the capital cost of the Awak Mas project was US$35 million. Coeur d'Alene 62 61 understands that this does not include the estimated costs of the mining fleet or power station. Until completion of the final feasibility study, a final estimated cost of the project will not be known. However, it is Coeur d'Alene's belief that the final capital cost may substantially exceed Gasgoyne's estimate. Because of the need to complete the feasibility study, related work and construction time, Coeur d'Alene believes that production at Awak Mas is unlikely to commence prior to 1998. Star Mill Environmental Reclamation - Milling operations for the Yilgarn Star joint venture, in which Gasgoyne has a 50% interest, are conducted at the Star Mill (formerly known as Great Victoria Gold Mines milling facility). Coeur d'Alene believes that environmental reclamation of the tailings storage facility stockpiles at that mill may cost between $1.78 million and $4.42 million. Gasgoyne has not made a provision for its share of any reclamation expenses in respect of that site other than the provision of bonds to the Minister of Mines, totalling $205,000 in respect of its share of such reclamation expenses. Foreign Investment Approval - Coeur d'Alene has despatched a notification to the Takeover Scheme, and the call option agreement referred to in clause 5.1, to the Treasurer in accordance with the requirements of the Foreign Acquisitions and Takeovers Act 1975 (Clth). 7.2 TRADING HISTORY AND ALTERATIONS TO CAPITAL STRUCTURE DURING PREVIOUS FIVE YEARS Coeur d'Alene Shares currently trade on the New York Stock Exchange ("NYSE") and Pacific Stock Exchange. On 25 January 1996, the latest available recorded sale price of Coeur d'Alene Shares on the NYSE on the date on which this Statement was lodged for registration was US$21.375. During the 3 months ending on the day immediately before the date on which this Statement was lodged with the Commission for registration: - the highest recorded sale price of Coeur d'Alene Shares on the NYSE was US$21.625 on 25 January 1996; and - the lowest recorded sale price of Coeur d'Alene Shares on the NYSE was US$16.625 on each of 27 October 1995, 30 October 1995, 1 November 1995 and 28 December 1995. The last recorded sale price of Coeur d'Alene Shares on the NYSE on 20 December 1995 (the last trading day before the public announcement of the Offers) was US$18.125. 63 62 Coeur d'Alene Shares are also listed on Pacific Stock Exchange (based in San Francisco, California). The number of recorded dealings in Coeur d'Alene Shares on that securities exchange in the 3 months ending on the day immediately before the day on which this Statement was served on Gasgoyne was significantly lower than on NYSE. As mentioned in clause 2.1, Coeur d'Alene intends to seek official quotation of Coeur d'Alene Shares on ASX. As at the date this Statement was lodged for registration, no sale of Coeur d'Alene Shares has taken place on ASX. The following table sets out the high and low closing sales prices of the Coeur d'Alene Shares for the periods indicated, as reported by the NYSE Composite Tape.
-------------------------------------------------------- High Low (US$) -------------------------------------------------------- 1995 First Quarter $18.500 $14.750 Second Quarter 21.500 17.500 Third Quarter 20.875 17.250 Fourth Quarter 20.875 16.625 -------------------------------------------------------- 1994 First Quarter $23.000 $18.375 Second Quarter 21.750 16.625 Third Quarter 22.125 17.500 Fourth Quarter 21.375 14.750 -------------------------------------------------------- 1993 First Quarter $16.000 $10.000 Second Quarter 21.000 15.375 Third Quarter 23.750 15.750 Fourth Quarter 22.000 17.500 -------------------------------------------------------- 1992 First Quarter $16.625 $14.000 Second Quarter 18.375 13.875 Third Quarter 17.625 14.875 Fourth Quarter 15.250 11.000 -------------------------------------------------------- 1991 First Quarter $19.375 $14.000 Second Quarter 22.250 17.500 Third Quarter 22.875 15.750 Fourth Quarter 16.625 13.375 --------------------------------------------------------
Coeur d'Alene paid per share cash distributions or dividends of US15c. on each Coeur d'Alene Share on each of 21 April 1995, 15 April 1994, 16 April 1993 and 15 April 1992; US12c. on 12 April 1991 and US11c. on each of 20 April 1990 and 21 April 1989. Future distributions or dividends on the Coeur d'Alene Shares, if any, will be determined by Coeur d'Alene's Board of Directors and will depend primarily on Coeur d'Alene's results of operations, financial condition and capital requirements. 64 63 At 23 January 1996, there were 8,359 registered holders of Coeur d'Alene Shares. ALTERATIONS TO CAPITAL STRUCTURE DURING PREVIOUS FIVE YEARS (a) Coeur d'Alene During the five years ending on the day immediately before the day on which this Part A statement was lodged with the Commission, the following changes in the capital structure of Coeur d'Alene have occurred. All shares or stock referred to are Coeur d'Alene Share unless otherwise stated.
DATE PARTICULARS 1991 25 February Coeur d'Alene issued 500 shares to executive officers and key employees exercising non-qualified stock options pursuant to the Executive Compensation Plan for a total consideration of US$8,250. 19 March Coeur d'Alene issued a total of 8,300 shares of restricted stock to executive officers and key employees pursuant to the Executive Compensation Plan. 19 March Coeur d'Alene granted a total of 31,100 stock options to executives officers and key employees pursuant to the Executive Compensation Plan. 31 December Coeur d'Alene issued 3,322,061 shares in consideration for the merger of all of the outstanding shares of Callahan Mining Company. 1992 12 May Coeur d'Alene issued a total of 12,000 shares of restricted stock to executive officers and key employees pursuant to the Executive Compensation Plan. 12 May Coeur d'Alene issued a total of 43,100 stock options to executive officers and key employees pursuant to the Executive Compensation Plan. 1993 12 May Coeur d'Alene issued a total of 10,374 shares of restricted stock to executive officers and key employees pursuant to the Executive Compensation Plan.
65 64 29 June Coeur d'Alene issued a total of 8,675 shares to employees exercising stock options for a total consideration of US$124,500. 30 July Coeur d'Alene issued a total of 2,675 shares to employees exercising stock options for a total consideration of US$63,531. 1994 18 March Coeur d'Alene issued a total of 18,778 shares to executive officers and key employees pursuant to the Executive Compensation Plan. 12 December Coeur d'Alene settled a class action shareholder lawsuit by issuing 220,083 shares (valued at US$4 million) to the class members in partial payment of the settlement amount. 1995 5 January Coeur d'Alene granted a total of 43,806 stock options to executive officers and key employees pursuant to the Executive Compensation Plan. 19 January Coeur d'Alene issued a total of 675 shares to employees exercising stock options for a total consideration of US$11,559. 16 March Coeur d'Alene issued a total of 21,656 shares to executive officers and key employees pursuant to the Executive Compensation Plan. 31 March Coeur d'Alene authorised to be issued an additional 500,000 shares under the Company's Executive Compensation Program. 31 March Coeur d'Alene authorised to be issued an additional 200,000 shares under the Non-Employee Directors' Stock Option Plan. 18 April Coeur d'Alene issued 2,750 shares to executive officers and key employees exercising stock options pursuant to the Executive Compensation Plan for a total consideration of US$55,344. 19 December Coeur d'Alene issued 4,866,929 shares to debenture holders in connection with the redemption of its 7% Debentures. 31 December Coeur d'Alene granted options to purchase a total of 53,484 shares to executive officers and key employees pursuant to the Executive Compensation Program.
SUBSIDIARIES OF COEUR D'ALENE Callahan Mining Company became a subsidiary on 31 December 1991. 66 65
DATE PARTICULARS 31 December Callahan Mining Company issued 1,000 shares to Coeur 1991 d'Alene for a total consideration of US$1,000.
Compania Minera CDE Fachinal Limitada became a subsidiary on 18 May, 1995. 8 May 1994 Compania Minera CDE Fachinal Limitada issued 99,990 shares to Coeur d'Alene for a total consideration of US$99,990 and 10 shares issued to CDE Chilean Mining Company (another subsidiary of Coeur d'Alene).
Silver Valley Resources Corporation became a subsidiary on 1 January 1995. 1 January 1995 Silver Valley Resources issued 315 shares to Coeur d'Alene for a total consideration of US$3.15.
SUBSIDIARIES OF CALLAHAN MINING COMPANY Coeur New Zealand, Inc. became a subsidiary of Callahan Mining Company on 22 March 1993.
DATE PARTICULARS 1993 22 March Coeur New Zealand, Inc. issued 100 shares to Callahan Mining Company for a total consideration of US$1.00 in connection with the acquisition of Coeur Gold New Zealand Ltd. 22 March Coeur Gold New Zealand, Ltd. issued 4,790,000 to Coeur New Zealand, Inc. for a total consideration of US$1.00 in connection with the acquisition of the Golden Cross Joint Venture.
Silver Valley Resources became a subsidiary on 1 January 1995.
1995 1 January Silver Valley Resources issued 155 shares to Callahan Mining Company for a total consideration of US$1.85
7.3 SOLICITING BROKERS Paterson Ord Minnett Limited and Poynton Corporate Limited have been retained by Coeur d'Alene to assist with promotion of Coeur d'Alene and in soliciting acceptances of the Offers, each of whom will be paid a monthly retainer of $25,000 and additional fees of up to $150,000 to perform those services. 67 66 Paterson Ord Minnett Limited and Poynton Corporate Limited have been involved only in the preparation of clause 7.3 of Statement and have authorised or cause the issue of only this clause. Coeur d'Alene will also pay to each broker whose name appears in the appropriate space in each Form of Acceptance and Transfer with respect to a valid acceptance of an Offer, 3 cents for each Gasgoyne Share accepted, subject to a maximum fee of $500 with respect to any single accepting shareholder. Where a Gasgoyne shareholder is a custodian, trustee or nominee, and holds Gasgoyne Shares in two or more distinct portions, Coeur d'Alene will pay a soliciting broker's fee with respect to each distinct portion. The fee will not be payable in respect of Gasgoyne Shares in which the broker or an associate holds a relevant interest, and the fee cannot be shared with or passed on to Gasgoyne shareholders. 7.4 COEUR D'ALENE OFFICER STOCK OWNERSHIP PLANS Coeur d'Alene has an Executive Compensation Program (the "PROGRAM"), under which 571,136 Coeur d'Alene Shares presently are authorised for possible issue. The Program is administered by the Compensation Committee of the Company's Board of Directors and consists of three plans - the Annual Incentive Plan ("AIP"), the Long-Term Incentive Plan ("LTIP") and the Long-Term Performance Share Plan ("LTPSP"). Executive officers and key employees of the Group designated by the Committee are eligible to participate in the Program. The Company also has a Non-Employee Directors' Stock Option Plan ("NED OPTION PLAN") administered by the Board of Directors under which 200,000 Coeur d'Alene Shares presently are authorised for possible issue. Non-executive Directors are eligible to receive options under the NED Option Plan. The Program As stated above, the AIP, the LTIP and the LTPSP are the three plans that constitute the Program. The AIP provides for annual incentive compensation awards, one-half of which are based on the financial performance of the Company and one-half on the individual officer's performance. One-half of each AIP award is paid in cash and one-half in Coeur d'Alene Shares. The LTIP provides for the grant of stock options that are based on a percentage of base salary and vest cumulatively at a rate of 25% per year. The exercise price of options granted under the LTIP is equal to the average of the high and low prices of Coeur d'Alene Shares on the New York Stock Exchange on the date of grant. Although the LTIP also provides for the possible granting of stock appreciation rights, none have been granted to date. The LTPSP provides for the issue of performance share awards (60% of which are payable in Coeur d'Alene Shares and 40% are payable in cash after a four-year performance period) and are based on long-term shareholder value enhancement relative to industry competitors over a four-year period. Change in control provisions exist under the Program and also under certain executive severance agreements entered into between Coeur d'Alene and certain executive officers and key managerial employees of the Group. A summary of those provisions appears on pages 14 and 15 of annexure F. 68 67 NED Option Plan The NED Option Plan provides for the granting of options to Non-Executive Directors in lieu of directors' fees. Each Non-Executive Director receives at least $5,000 of his directors' fees in the form of a stock option, and is able to elect to receive a stock option in lieu of cash fees for up to the $45,000 balance of his annual directors' fees. Generally, options are automatically granted under the Plan on the third business day of each year. The value of the options is determined by an independent consultant or other expert applying the Black-Scholes option valuation method designed to value a right to acquire Coeur d'Alene Shares at an exercise price equal to fair market value on the date of grant, which right is exercisable at any time beginning six months and ending ten years from the date of grant. The option exercise price is equal to the average of the high and low prices of Coeur d'Alene Shares as reported by the New York Stock Exchange on the date of grant. 8 INTERPRETATION In this Statement, the Offer and the Acceptance Form unless the contrary intention appears: "ASX" means Australian Stock Exchange Limited. "COMMISSION" means the Australian Securities Commission. "COEUR D'ALENE" or the "COMPANY" means Coeur d'Alene Mines Corporation, an Idaho, United States of America corporation having its principal office at 505 Front Avenue, Coeur d'Alene, Idaho 83816-0316 United States of America and whose ARBN is 072 498 125. "COEUR D'ALENE SHARES" means fully paid shares of common stock in the capital of Coeur d'Alene. "6% DEBENTURES" means the Company's 6% convertible subordinated debentures due 2002. "6 3/8% DEBENTURES" means the Company's 6 3/8% convertible subordinated debentures due 2004. "7% DEBENTURES" means the Company's former 7% convertible subordinated debentures due 2002 and converted into Coeur d'Alene Shares in December 1995. "FINANCIAL FORECAST" means the Forecasted Condensed Statements of Consolidated Operations and the Forecasted Condensed Statements of Consolidated Cash Flows set out in clause 4.4.4. "GAAP", "US GAAP" and "AUSTRALIAN GAAP" are used in this Statement in the same way as they are used in annexure K. 69 68 "GASGOYNE" means Gasgoyne Gold Mines NL, a company having its registered office at Level 33, QVI Building, 250 St Georges Terrace, Perth WA 6000 and whose ACN is 009 212 382. "GASGOYNE OPTIONS" mean non-renounceable options to subscribe for one Gasgoyne Share issued by Gasgoyne prior to 21 December 1995. "GASGOYNE SHARES" means fully paid ordinary shares of 20 cents each in the capital of Gasgoyne. "GROUP" means Coeur d'Alene and each of its subsidiaries. "JORC CODE" means the Australasian Code for reporting of Identified Mineral Resources and Ore Reserves, September 1992 prepared by the Joint Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Australian Mining Industry Council. "NYSE" means New York Stock Exchange. "OFFERS" means the offers by Coeur d'Alene to acquire Gasgoyne Shares referred to in clause 1.1 of this Statement. "ODD LOT" means the number of Coeur d'Alene Shares designated as less than a marketable parcel, determined under ASX business rules (understood by Coeur d'Alene to be 50 Coeur d'Alene Shares), or if Coeur d'Alene is not approved for inclusion in the official list of ASX at the date Coeur d'Alene Shares are to be allotted to the Nominee under clause 12.3(a) of the Offer, under NYSE business rules (understood by Coeur d'Alene to be 100 Coeur d'Alene Shares). "OUTSTANDING", in relation to Coeur d'Alene Shares, means the Coeur d'Alene Shares on issue less any held in treasury (ie held by Coeur d'Alene itself). "RIGHTS" means all accretions, rights or benefits of whatever kind attaching to or arising from Gasgoyne Shares directly or indirectly after the date of this Statement, including, without limitation, all dividends or other distributions and all rights to receive any dividends or other distributions, or to receive or subscribe for shares, stock units, notes, bonds, options or other securities, declared, paid or made by Gasgoyne or any of its subsidiaries. "SEC" means the United States Securities and Exchange Commission. "STATEMENT" means this Part A statement. "TAKEOVER SCHEME" means the takeover scheme constituted by the Offers to which this Statement relates. A word or phrase to which a meaning is given by the Corporations Law has that meaning. A reference to a section or provision is to a section or provision of the Corporations Law. 70 69 References to $, A$ and to cents are to Australian dollars and cents respectively. Where A$ and US$ comparisons are made in this Statement, current exchange rates have been used unless otherwise indicated. The singular includes the plural and vice-versa. Headings are for convenience only and do not affect the interpretation of this Statement. Unless the contrary intention appears, a reference to an annexure is a reference to an annexure to this Statement and terms used in an annexure have the same meaning as the meaning attributed to the term in this Statement. The annexures form part of this Statement. This Part A Statement is dated 29 January 1996 and is signed on behalf of Coeur d'Alene by two Directors authorised so to sign under a resolution passed at a meeting of the Directors of Coeur d'Alene on 26 January 1996. /s/ DENNIS E WHEELER /s/ JAMES A SABALA ---------------------- -------------------- Dennis E Wheeler James A Sabala Director Director EX-10.C 4 CALL OPTION AGREEMENT 1 EXHIBIT 10(c) Dated 20 December 1995 CALL OPTION AGREEMENT OVER SHARES IOMA PTY LTD ("VENDOR") COEUR D'ALENE MINES CORPORATION ("PURCHASER") MALLESONS STEPHEN JAQUES Solicitors Governor Phillip Tower 1 Farrer Place Sydney NSW 2000 Telephone (02) 250 3133 DX 113 Sydney Ref: NWH:DLF:AGB 2 CONTENTS AGREEMENT FOR PURCHASE OF SHARES 1 INTERPRETATION 2 CALL OPTION 3 EXERCISE PRICE 4 CONDITIONS PRECEDENT 5 EXERCISE OF OPTION 6 COMPLETION 7 WARRANTIES, REPRESENTATIONS AND INDEMNITIES 8 DEFAULT BY VENDOR 9 ACCEPTANCE OF TAKEOVER OFFER 10 COSTS AND STAMP DUTY 11 NOTICES 12 ASSIGNMENT 13 MISCELLANEOUS 14 GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS APPENDIX - WARRANTIES AND REPRESENTATIONS 3 1 CALL OPTION AGREEMENT OVER SHARES This agreement is made on 20 December 1995 Between: IOMA PTY LTD (A.C.N. 009 243 403) having its registered office at Gilbert Rodgers & Co, 33rd Floor, QV1 Building, 250 St Georges Terrace, Perth, Western Australia ("VENDOR") And: COEUR D'ALENE MINES CORPORATION an Idaho Corporation, having its registered office at 505 Front Avenue, Coeur d'Alene, Idaho 83814, USA ("PURCHASER") RECITALS: A. Gasgoyne Gold Mines N.L. (A.C.N. 009 212 382) is a company incorporated in Western Australia and has its registered office at Level 33, QV1 Building, 250 St Georges Terrace, Perth, Western Australia, 6000 ("COMPANY"). B. The Company has an authorised share capital of $20,000,000 divided into 100,000,000 ordinary shares of 20c. each, of which 53,322,943 have been issued, credited as fully paid. C. The Vendor is the beneficial owner of 11,508,353 issued shares in the capital of the Company. D. The Vendor has agreed to grant an option to the Purchaser to purchase 10,611,300 Shares held by the Vendor, comprising approximately 19.9% of the issued share capital of the Company on the following terms. OPERATIVE PROVISIONS: 1 INTERPRETATION 1.1 The following words have these meanings in this agreement unless the contrary intention appears. BUSINESS DAY means a day on which trading banks are open for general business in Sydney and Perth. CALL OPTION means the option granted to the Purchaser under clause 2. CALL OPTION PERIOD means the period commencing 5 Business Days after the despatch of the Company's Part B Statement in response to any takeover offer as contemplated in clause 4(b) and ending 2 months after that date. COMPLETION means settlement of the sale and purchase of the Option Shares in accordance with clause 6 and COMPLETE has a corresponding meaning. COMPLETION DATE means the date on which the consideration is payable under clause 3.2, or any other date agreed by the Vendor and the Purchaser. 4 2 EXERCISE PRICE means the aggregate consideration payable for the Option Shares calculated in accordance with clause 3. LAST ACCOUNTS means the financial statements for the period ending on the Last Balance Date included in the 1995 annual report of the Company. LAST BALANCE DATE means 30 June 1995. OPTION SHARES means 10,611,300 Shares held by the Vendor comprising approximately 19.9% of the total issued capital of the Company as at the date of this agreement. RELATED BODY CORPORATE of a body corporate means another body corporate which is related to the first within the meaning of section 50 of the Corporations Law. SHARES means the issued shares in the capital of the Company and SHARE means any one of those shares. SUBSIDIARY means a Related Body Corporate of the Company other than a holding company of the Company. WARRANTIES means the warranties, representations and indemnities in this agreement, including clause 7 and the appendix. 1.2 In this agreement unless the contrary intention appears: (a) a reference to a clause or appendix is a reference to a clause of or appendix to this agreement and references to this agreement include any recital or appendix; (b) a reference to this agreement or another instrument includes any variation or replacement of either of them; (c) a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them; (d) the singular includes the plural and vice versa; (e) the word person includes a firm, a body corporate, an unincorporated association or an authority; (f) a reference to a person includes a reference to the person's executors, administrators, successors, substitutes (including, but not limited to, persons taking by novation) and assigns; (g) if a period of time is specified and dates from a given day or the day of an act or event, it is to be calculated exclusive of that day; (h) a reference to a day is to be interpreted as the period of time commencing at midnight and ending 24 hours later; and 5 3 (i) a reference to "dollars" or "$" means Australian dollars. 1.3 Headings are inserted for convenience and do not affect the interpretation of this agreement. 2 CALL OPTION 2.1 In consideration of the payment by the Purchaser to the Vendor of $10 (receipt of which is acknowledged), the Vendor grants to the Purchaser an option to purchase the Option Shares on the terms and conditions set out in this agreement. 2.2 Nothing in this agreement shall be taken to restrict the Vendor's right to dispose of Shares in the Company, other than the Option Shares, to another party. 3 EXERCISE PRICE 3.1 The consideration payable to the Vendor by the Purchaser on exercise of the Call Option is: (a) $60; and (b) the issue to the Vendor by the Purchaser of 7 shares of common stock in the capital of the Purchaser of the same class as that currently quoted on New York Stock Exchange, for every 100 Option Shares. 3.2 The consideration payable under clause 3.1 must be paid to the Vendor by the Purchaser at the earlier of: (a) if the takeover contemplated in clause 4(b) proceeds, the same time as the consideration is paid to shareholders of the Company under that takeover; and (b) in any other case, 2 Business Days after that takeover fails to proceed, whether by reason of non-fulfilment of a condition precedent or otherwise. 4 CONDITIONS PRECEDENT The right of the Purchaser to exercise the Call Option is conditional on: (a) the Treasurer of the Commonwealth of Australia consenting, under the Foreign Acquisitions and Takeovers Act 1975, to the proposed acquisition by the Purchaser of the Option Shares and the Treasurer is to be deemed to have so consented: (i) if the Purchaser receives written advice from the Treasurer or on his behalf, without any term or condition which the Purchaser considers unacceptable, to the effect that the acquisition of the Option Shares is not objected to under the Foreign Acquisitions and Takeovers Act 1975; or 6 4 (ii) if ten days have elapsed from the day the Treasurer ceased to be empowered to make any order under Part II of the Foreign Acquisitions and Takeovers Act in relation to the proposed acquisition because of lapse of time, notice of the proposed acquisition of the Option Shares having been given to the Treasurer under the Foreign Acquisitions and Takeovers Act 1975; and (b) the Purchaser despatching offer documents under a full takeover offer for all of the Shares in the Company as contemplated under chapter 6 of the Corporations Law (provided that the relevant Part A Statement and offer is served on the Company prior to 31 March 1996) under which the consideration payable to shareholders of the Company is not less favourable than the consideration contemplated under clause 3.1 on a per share basis (making appropriate provision for holders of odd lots and allowing for any restrictions on the issue of shares of common stock by the Purchaser to non-Australian or non-US shareholders of the Company). 5 EXERCISE OF OPTION 5.1 Subject to clause 4, the Purchaser may exercise the Call Option by giving to the Vendor written notice of exercise at any time during the Call Option Period. 5.2 Exercise of the Call Option will only be valid if it relates to all the Option Shares. 5.3 Upon exercise of the Call Option, the Vendor must sell the Option Shares free and clear of any liens, claims, charges or other encumbrances or interests of any third party and with all rights attaching to them on and after the date of this agreement. 5.4 From the date of receipt by the Vendor of the notice of exercise contemplated under clause 5.1, the Vendor must exercise any voting rights attaching to the Option Shares in accordance with the directions of the Purchaser. 5.5 If this agreement is terminated for any reason, in addition to any other rights, powers or remedies provided by law: (a) each party is released from its obligations to further perform the agreement except those imposing on it obligations of confidentiality; and (b) each party retains the rights it has against any other party in respect of any past breach. 6 COMPLETION 6.1 Completion of the sale and purchase of the Option Shares will take place at 10:00 am on the Completion Date at Blakiston & Crabb, 1202 Hay Street, West Perth or such other time and place as the Vendor and the Purchaser may agree. 7 5 6.2 The Vendor agrees to do the following on Completion: (a) deliver to the Purchaser or its solicitors executed transfers in favour of the Purchaser of all the Option Shares together with the share certificates for the Option Shares and consents that the Purchaser reasonably requires; (b) use its best endeavours to cause the appointment to the board of directors of the Company of two of the Purchaser's nominees and the resignation from the board of two of the Vendor's nominees; and (c) apply in writing for the shares referred to in clause 3(b) and agree in writing to be bound by the constituent documents of the Purchaser. 6.3 The Purchaser agrees to do the following on Completion: (a) issue the shares referred to in clause 3(b) to the Vendor; and (b) make payment on Completion in accordance with clause 3, if the Vendor complies with clause 6.2. 7 WARRANTIES, REPRESENTATIONS AND INDEMNITIES 7.1 The Vendor represents and warrants to the Purchaser that each of the statements set out in the appendix is accurate. Each of the statements is to be treated as a separate representation and warranty and the interpretation of any statement made may not be restricted by reference to or inference from any other statement. 7.2 The Warranties are not extinguished or affected by any investigation made by or on behalf of the Purchaser into the affairs of the Company or any Subsidiary or by any other event or matter unless: (a) the Purchaser has given a specific written waiver or release; (b) the claim relates to a matter which is fairly disclosed in a formal disclosure letter given by or on behalf of the Vendor to the Purchaser before the date of this agreement; or (c) the claim relates to a thing done or not done after the date of this agreement at the request or with the approval of the Purchaser. 7.3 The Vendor acknowledges that it has made and given the Warranties with the intention of inducing the Purchaser to enter into this agreement and that the Purchaser has entered into this agreement in full reliance on the Warranties. 7.4 The Vendor represents, warrants and undertakes to the Purchaser that each of the Warranties is true and correct on the date of this agreement and will be at the Completion Date (or, 8 6 if applicable, the date on which the consideration is payable under a takeover offer if acceptance occurs as contemplated under clause 9.1) as if made on and as at each of those dates. 7.5 The Vendor indemnifies the Purchaser against all liability or loss arising directly or indirectly from, and any costs, charges and expenses incurred in connection with, any inaccuracy in or breach of any of the Warranties. 7.6 If a payment is made for a breach of any Warranty, the payment is to be treated as an equal reduction in the purchase price of each Option Share. 7.7 If any material breach or inaccuracy of any of the Warranties becomes apparent to the Purchaser on or before Completion the Purchaser may, by notice to the Vendor, terminate this agreement without prejudice to any other remedy available to it. If this agreement is so terminated then clause 5.5 applies with the necessary changes. 8 DEFAULT BY VENDOR If the Vendor does not Complete, other than as a result of default by the Purchaser, the Purchaser may give the Vendor notice requiring it to Complete within 5 Business Days of receipt of the notice. If the Vendor does not Complete within that period, the Purchaser may elect to proceed for specific performance or terminate this agreement. In either case the Purchaser may seek damages for the default. If this agreement is so terminated then clause 5.5 will apply with the necessary changes. This termination does not affect any other rights the Purchaser has against the Vendor at law or in equity. 9 ACCEPTANCE OF TAKEOVER OFFER 9.1 This agreement terminates automatically and forthwith if the Vendor accepts in respect of all of the Option Shares a takeover offer made by the Purchaser as contemplated in clause 4(b) prior to receipt by the Vendor of a valid exercise notice as contemplated in clause 5.1 (notwithstanding that the takeover later fails to proceed, whether by reason of non-fulfilment of a condition precedent or otherwise). 9.2 If this agreement terminates under clause 9.1, clause 5.5 applies with the necessary changes, except that all rights of the Purchaser under clause 7 are preserved. 10 COSTS AND STAMP DUTY 10.1 The Vendor and the Purchaser agree to bear their own legal and other costs and expenses in connection with, the preparation, execution and completion of this agreement and of other related documentation, except for stamp duty. 10.2 The Purchaser agrees to bear all stamp duty payable or assessed in connection with this agreement and the transfer of the Option Shares to the Purchaser. 9 7 11 NOTICES 11.1 A notice, approval, consent or other communication in connection with this agreement: (a) must be in writing; (b) must be marked for the attention of the Company Secretary; and (c) must be left at the address of the addressee, or sent by prepaid ordinary post (airmail if posted to or from a place outside Australia) to the address of the addressee or sent by facsimile to the facsimile number of the addressee which is specified in this clause or if the addressee notifies another address or facsimile number then to that address or facsimile number. The address, and facsimile number of each party is: Vendor Address: C/-Blakiston & Crabb 1202 Hay Street West Perth WA 6005 Facsimile: (09) 322 1506 Purchaser Address: 505 Front Avenue, Coeur d'Alene Idaho USA Facsimile: (208) 765 2943 11.2 A notice, approval, consent or other communication takes effect from the time it is received unless a later time is specified in it. 11.3 A letter or facsimile is taken to be received: (a) in the case of a posted letter, on the third (seventh, if posted to or from a place outside Australia) day after posting; and (b) in the case of facsimile, on production of a transmission report by the machine from which the facsimile was sent which indicates that the facsimile was sent in its entirety to the facsimile number of the recipient. 12 ASSIGNMENT A party may not assign its rights under this agreement without the consent of the other party. 13 MISCELLANEOUS EXERCISE OF RIGHTS 13.1 A party may exercise a right, power or remedy at its discretion, and separately or concurrently with another right, power or remedy. A single or partial exercise of a right, power or remedy by a party does not prevent a further exercise of that or of any other right, power or remedy. Failure by a party to exercise or delay in exercising a right, power or remedy does not prevent its exercise. 10 8 WAIVER AND VARIATION 13.2 A provision of or a right created under this agreement may not be: (a) waived except in writing signed by the party granting the waiver; or (b) varied except in writing signed by the parties. APPROVALS AND CONSENT 13.3 A party may give conditionally or unconditionally or withhold its approval or consent in its absolute discretion unless this agreement expressly provides otherwise. REMEDIES CUMULATIVE 13.4 The rights, powers and remedies provided in this agreement are cumulative with and not exclusive of the rights, powers or remedies provided by law independently of this agreement. NO MERGER 13.5 The Warranties in this agreement do not merge on Completion. SURVIVAL OF INDEMNITIES 13.6 Each indemnity in this agreement is a continuing obligation, separate and independent from the other obligations of the parties and survives termination of this agreement. ENFORCEMENT OF INDEMNITIES 13.7 It is not necessary for a party to incur expense or make payment before enforcing a right of indemnity conferred by this agreement. FURTHER ASSURANCES 13.8 Each party agrees, at its own expense, on the request of any other party, to do everything reasonably necessary to give effect to this agreement and the transactions contemplated by it (including the execution of documents) and to use all reasonable endeavours to cause relevant third parties to do likewise. PUBLICITY 13.9 A party may not make press or other announcements or releases relating to this agreement and the transactions the subject of this agreement without the approval of the other parties to the form and manner of the announcement or release unless that announcement or release is required to be made by law or by a stock exchange. 11 9 14 GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS 14.1 This agreement and the transactions contemplated by this agreement are governed by the law in force in New South Wales. 14.2 Each party irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of New South Wales and courts of appeal from them for determining any dispute concerning this agreement or the transactions contemplated by this agreement. Each party waives any right it has to object to an action being brought in those courts, to claim that the action has been brought in an inconvenient forum, or to claim that those courts do not have jurisdiction. 14.3 Without preventing any other mode of service, any document in an action (including, but not limited to, any writ of summons or other originating process or any third or other party notice) may be served on any party by being delivered to or left for that party at its address for service of notices under clause 11. EXECUTED as an agreement 12 10 APPENDIX WARRANTIES AND REPRESENTATIONS VENDOR'S QUALIFICATIONS 1 The Vendor is the registered holder and beneficial owner of the Option Shares. 2 At Completion, there will be no mortgages, charges, pledges, liens, encumbrances or other security interests over or affecting the Option Shares. 3 The Vendor has the power to enter into and perform this agreement and has obtained all necessary consents to enable it to do so. 4 The entry into and performance of this agreement by the Vendor does not constitute a breach of any obligation (including any statutory, contractual or fiduciary obligation), or default under any agreement or undertaking, by which the Vendor is bound. 5 No meeting has been convened, or resolution proposed, or petition presented, and no order has been made for the winding-up of the Vendor. No voluntary arrangement has been proposed or reached with any creditors of the Vendor. The Vendor is able to pay its debts as and when they fall due. THE COMPANY 6 To the best of the knowledge of the Vendor, having made due enquiry, the Company: (a) is accurately described in recitals A and B; (b) has full corporate power to own its properties, assets and business and to carry on its business as now conducted; and (c) has done everything necessary to do business lawfully in all jurisdictions in which its business is carried on. 7 No meeting has been convened or resolution proposed, or petition presented, and no order has been made, for the winding-up of the Company or any Subsidiary. No distress, execution or other similar order or process has been levied on any of the property or assets of the Company or any Subsidiary. No voluntary arrangement has been proposed or reached with any creditors of the Company or any Subsidiary. No receiver, receiver and manager, provisional liquidator, liquidator or other officer of the court has been appointed in relation to the Company or any Subsidiary. The Company is able to pay its debts as and when they fall due. 13 11 THE OPTION SHARES 8 The Option Shares comprise as at the date of the agreement approximately 19.9% of the total issued share capital of the Company, and are fully paid. All shares in the issued share capital of the Company are voting shares. 9 There are no commitments in place under which the Company or any Subsidiary is or may be obliged at any time to issue any shares or other securities of the Company, other than as disclosed in a prospectus issued by the Company dated 18 December 1995. 10 Other than as disclosed in writing by the Vendor to the Purchaser prior to execution of this agreement, there is no restriction on the sale or transfer of the Option Shares to the Purchaser. CHANGES 11 To the best of the knowledge of the Vendor, having made due enquiry, since the Last Balance Date: (a) the business of the Company and each Subsidiary has been carried on in the ordinary and usual course; (b) there has been no change in the assets, the liabilities, working capital or the financial position or profits of the Company from that set out in the Last Accounts which in the aggregate is materially adverse to the Company and each Subsidiary; and (c) the business or financial position of the Company and each Subsidiary has not been materially and adversely affected by any matter, either financial or otherwise, other than as disclosed by the Company to Australian Stock Exchange Limited prior to the date of this agreement. 12 The actual results of the underground Yilgarn Star mine are substantially in accordance with the final feasibility report prepared by James Askew & Associates on which the project is based, other than as disclosed by the Company to Australian Stock Exchange Limited prior to the date of this agreement. 14 12 EXECUTION SIGNED by RICK WAYNE CRABB as ) attorney for IOMA PTY LTD under ) power of attorney dated 19-12-95 ) in the presence of: ) ) ) ) ) /s/ JOHN LEA BLUE ) ................................. ) Signature of witness ) ) John Lea Blue ) ................................. ) Name of witness (block letters) ) ) [SIG] ................................. ) ............................. Address of witness ) By executing this agreement ) the attorney states that the Businessman ) attorney has received no ................................. ) notice of revocation of the Occupation of witness ) power of attorney COEUR D'ALENE MINES CORPORATION By: /s/ DENNIS E. WHEELER .............................. Dennis E. Wheeler Name: .............................. Title: Chairman, President and Chief Executive Officer .............................. -----END PRIVACY-ENHANCED MESSAGE-----