-----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, D6Q7XP2pVttj+FIp2jjG0IM+9u0Gp8rh+m/ugfVNVIj0Fv7rc/sO/hYdyGoHhqOH nxZrqZSeQr3kg0an7kCCeA== 0000950134-95-002695.txt : 19951119 0000950134-95-002695.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950134-95-002695 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951106 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNSHINE MINING & REFINING CO CENTRAL INDEX KEY: 0000833376 STANDARD INDUSTRIAL CLASSIFICATION: 3330 IRS NUMBER: 752231378 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10012 FILM NUMBER: 95587504 BUSINESS ADDRESS: STREET 1: 877 WEST MAIN STREET STREET 2: SUITE 600 CITY: BOISES STATE: ID ZIP: 83702 BUSINESS PHONE: 2083450660 MAIL ADDRESS: STREET 1: 877 W MAIN STREET SUITE 600 CITY: BOISE STATE: ID ZIP: 83702 FORMER COMPANY: FORMER CONFORMED NAME: SUNSHINE MINING CO /DE DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SUNSHINE HOLDINGS INC DATE OF NAME CHANGE: 19880915 10-Q 1 FORM 10-Q PERIOD END 09/30/95 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarterly Period Ended September 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Transition Period From __________________to___________________ Commission File Number 1-10012 SUNSHINE MINING AND REFINING COMPANY - - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 75-2231378 - - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 877 W. Main, Suite 600, Boise, Idaho 83702 - - -------------------------------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number including area code (208) 345-0660 ---------------- - - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- ---
Number of Shares Outstanding Title of Each Class of Common Stock at October 30, 1995 - - ------------------------------------ ------------------------ Common Stock, $.01 par value 193,071,928
Page 1 of 16 2 SUNSHINE MINING AND REFINING COMPANY CONSOLIDATED BALANCE SHEETS (In Thousands) ASSETS
September 30,1995 December 31,1994 -------------------- -------------------- Current assets: Cash and cash investments $ 18,993 $ 26,581 Silver bullion 8,987 8,408 Accounts receivable 2,013 416 Inventories (Note 2) 1,698 3,151 Marketable securities 39 1,097 Other current assets 1,455 1,367 -------------------- -------------------- Total current assets 33,185 41,020 Property, plant and equipment, at cost 138,002 137,798 Less accumulated depreciation, depletion and amortization (69,113) (66,390) -------------------- -------------------- 68,889 71,408 Investments and other assets 3,415 4,229 -------------------- -------------------- Total assets $ 105,489 $ 116,657 ==================== ====================
See accompanying notes. - 2 - 3 SUNSHINE MINING AND REFINING COMPANY CONSOLIDATED BALANCE SHEETS (In Thousands, Except Per Share Amounts) LIABILITIES AND STOCKHOLDERS' EQUITY
September 30,1995 December 31,1994 ------------------------ -------------------- Current liabilities: Accounts payable 719 435 Accrued expenses $ 1,804 $ 2,048 ------------------------ -------------------- Total current liabilities 2,523 2,483 Long-term debt 1,519 1,519 Accrued pension and other postretirement benefits 6,561 6,811 Other long-term liabilities and deferred credits 5,440 5,436 Stockholders' equity: Cumulative redeemable preferred stock-- aggregate redemption value: September 30, 1995 - $126,071 December 31, 1994 - $119,675 81,928 80,707 Common stock--$.01 par value; 400,000 shares authorized; shares issued: September 30, 1995 - 196,726 December 31, 1994 - 196,659 1,967 1,967 Paid-in capital 623,325 623,181 Deficit (617,737) (605,410) ------------------------ -------------------- 89,483 100,445 ------------------------ -------------------- Less treasury stock, at cost: 3,664 shares 37 37 ------------------------ -------------------- 89,446 100,408 Total liabilities and stockholders' equity $ 105,489 $ 116,657 ======================== ====================
See accompanying notes. - 3 - 4 SUNSHINE MINING AND REFINING COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (In Thousands, Except Per Share Amounts) (Unaudited)
QUARTER NINE MONTHS ------------------------------- --------------------------------- 1995 1994 1995 1994 ----------- ------------- ------------ -------------- Operating revenues $ 5,149 $ 5,009 $ 13,178 $ 12,492 Costs and expenses: Cost of sales 4,233 4,977 14,203 12,035 Depreciation, depletion and amortization 1,047 970 2,724 3,232 Exploration 1,702 563 4,045 1,408 Selling, general and administrative expense 1,386 1,393 4,263 4,114 Curtailment gain on postretirement benefits other than pensions (Note 3) - - - (6,936) ----------- ------------- ------------ -------------- 8,368 7,903 25,235 13,853 ----------- ------------- ------------ -------------- Operating income (loss) (3,219) (2,894) (12,057) (1,361) Other income (expense): Interest income 291 363 1,024 792 Interest expense (232) (322) (575) (953) Other, net 260 25 502 830 ----------- ------------- ------------ -------------- 319 66 951 669 ----------- ------------- ------------ -------------- Net income (loss) (2,900) (2,828) (11,106) (692) Preferred dividend requirements (2,500) (2,591) (7,617) (7,902) ----------- ------------- ------------ -------------- Income (loss) applicable to common shares $ (5,400) $ (5,419) $ (18,723) $ (8,594) =========== ============= ============ ============== Income (loss) per common share $ ($0.03) $ ($0.03) $ ($0.10) $ ($0.05) =========== ============= ============ ============== Weighted average common shares outstanding 193,059 189,072 193,031 184,188 =========== ============= ============ ==============
See accompanying notes. - 4 - 5 SUNSHINE MINING AND REFINING COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (In Thousands) (Unaudited)
1995 1994 ------------------- ---------------------- Cash used by operating activities: Net loss $ (11,106) $ (692) Adjustments to reconcile loss from operations to net cash used by operations: Depreciation, depletion and amortization 2,724 3,232 Exploration Expenditures 4,045 1,408 Curtailment gain on postretirement benefits - (6,936) Realized and unrealized (gains) losses on marketable equity securities (134) - Issuances of common stock for interest on Silver Indexed Bonds and other 143 379 Net (increase) decrease in: Silver bullion (579) 102 Accounts receivable (1,597) (751) Inventories 1,453 (2,252) Other assets and deferred charges 148 (63) Net increase (decrease) in: Accounts payable and accrued expenses 40 (1,331) Accrued pension and other postretirement benefits (250) 79 Other liabilities and deferred credits 4 (415) ------------------- ---------------------- Net cash used by operations (5,109) (7,240) ------------------- ---------------------- Cash provided (used) by investing activities: Additions to property, plant and equipment and exploration expenditures (4,249) (1,512) Proceeds from investments 1,770 52 ------------------- ---------------------- Net cash provided by investing activities (2,479) (1,460) ------------------- ---------------------- Cash provided by financing activities: Issuance of common stock (Note 4) - 29,735 Decrease in restricted cash - 236 Principal repayments and retirements of long-term debt - (305) ------------------- ---------------------- Net cash provided by financing activities - 29,666 ------------------- ---------------------- Increase (decrease) in cash and cash investments (7,588) 20,966 Cash and cash investments, January 1 26,581 4,304 ------------------- ---------------------- Cash and cash investments, September 30 $ 18,993 $ 25,270 =================== ===================== Supplemental cash flow information - Interest paid in cash $ 146 $ 329 =================== =====================
See accompanying notes. - 5 - 6 SUNSHINE MINING AND REFINING COMPANY NOTES TO CONDENSED FINANCIAL STATEMENTS September 30, 1995 1. BASIS OF PRESENTATION The accompanying unaudited consolidated condensed financial statements of Sunshine Mining and Refining Company ("Sunshine" or the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain previously reported amounts have been reclassified to conform to the September 1995 presentation. Operating results for the nine month period ended September 30, 1995 are not necessarily indicative of the results that may be expected for the year ended December 31, 1995. For further information, refer to the consolidated financial statements and footnotes thereto included in Sunshine's report on Form 10-K for the year ended December 31, 1994. 2. INVENTORIES The components of inventory consist of the following:
September 30 December 31 1995 1994 ------------ ----------- Precious Metals Inventories: Work in process $ 723 $ 2,241 Finished goods 256 173 Materials and supplies inventories 719 737 --------- --------- $ 1,698 $ 3,151 ========= =========
- 6 - 7 3. CURTAILMENT GAIN During the first nine months of 1994, the Company recognized a curtailment gain of $6.9 million due to the termination of certain employee postretirement medical benefits. See "Management's Discussion and Analysis of Financial Condition." 4. COMMON STOCK OFFERING During the first nine months of 1994, the Company realized net proceeds of $30.1 million from a Rights Offering of Units to its stockholders. See "Management's Discussion and Analysis of Financial Condition." - 7 - 8 SUNSHINE MINING AND REFINING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations for the Nine Months Ended September 30, 1995 and 1994 LIQUIDITY AND CAPITAL RESOURCES As the price of silver since 1985 has been only slightly in excess of, or less than, the Company's cash cost to produce an ounce of silver, the Company's operations have not been able to generate cash flow sufficient to cover its costs of exploration, research, general and administrative expenses, and interest, as well as non-cash charges such as depreciation, depletion, and amortization. Until such time as the price of silver increases significantly or higher production is achieved at a lower cost, the Company will continue to generate a negative cash flow from operations. However, the Company had approximately $30.7 million of working capital, including approximately $28.0 million of cash and silver bullion held for investment at September 30, 1995. These balances are deemed adequate to fund the Company's expected cash requirements for several years. The Company anticipates capital expenditures in its existing operations over the next twelve months to be approximately $1 million. If the Company successfully develops new reserves in the West Chance Area of the Sunshine Mine, as presently anticipated, capital expenditures would increase by approximately $4 million. Exploration expenditures for the first nine months of 1995 totaled approximately $4.0 million, and are anticipated to continue at a comparable rate for the next twelve months. - 8 - 9 Preferred Stock The dividend on Sunshine's $11.94 (Stated Value) Cumulative Redeemable Preferred Stock (the "Preferred Stock") has neither been declared nor paid since December 31, 1990. Given current silver prices, the Company does not expect any resumption of dividends in the foreseeable future. Dividends are cumulative. The amount of aggregate redemption value disclosed on the balance sheet includes $40 million in dividends in arrears. The Certificate of Designation of Rights and Preferences (the "Certificate") governing the Preferred Stock prohibits partial redemptions while dividends are in arrears. Therefore, the Company has not made annual redemptions of approximately 808 thousand shares of the Preferred Stock since 1991. Pursuant to the Certificate, the Company may make dividend payments and redemptions of the Preferred Stock using cash or by issuing shares of its common stock valued in accordance with a specified formula. There are no penalties for the Company failing to make dividend payments or partial redemptions. The Company recently announced that it had reached agreements with each of the three largest holders of Preferred Stock on the terms of a transaction which would result in the conversion of the entire outstanding issue (approximately 7,166,000 shares) of Preferred Stock into common stock of the Company. If completed pursuant to the terms of the agreements, the transaction would eliminate the Preferred Stock and extinguish all dividend arrearages, redemption requirements, and other rights of the Preferred Stock. The terms of the transaction provide for Sunshine to be merged with and into its wholly-owned subsidiary, Sunshine Merger Company, after the approval by the holders of a majority of the outstanding shares of the Preferred Stock voting as a class and the holders of a majority of the outstanding shares of common stock voting as a class. The three holders who have agreed to support the transaction hold approximately 25% of the Preferred Stock outstanding. - 9 - 10 After the merger, the subsidiary would immediately change its name to Sunshine Mining and Refining Company. Pursuant to the terms of the merger, each common share of Sunshine would automatically become a common share of the new company, and each Preferred share would be converted to (a) newly-issued shares of common stock, the quantity to be determined by a formula, and (b) either .9 shares of common stock for each Preferred share, or, at the option of the Preferred holder, two warrants to purchase common stock. The Company has filed Proxy Prospectus materials with the Securities and Exchange Commission (the "SEC") and expects to mail the Prospectus to shareholders after the SEC review process is completed. Operating, Investing, and Financing Activities Cash used in operating activities in the first nine months of 1995 was $5.1 million compared to $7.2 million in the first nine months of 1994. Cash operating losses increased in the first nine months of 1995 by $1.7 million. This is offset by changes in working capital components, principally inventories. Approximately $2.5 million of cash was used by investing activities in the first nine months of 1995 compared to $1.5 million in the 1994 period. The $1.0 million increase was primarily due to increased exploration expenditures of $2.6 million partially offset by the sale of certain marketable securities. Cash provided by financing activities was $30 million in the first quarter of 1994 as a result of the Company's Rights Offering. There was no cash provided by financing activities in the first nine months of 1995. Other Beginning in 1996 the Company will be subject to the provisions of Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS No. 121"). The Company's current method of accounting for permanent - 10 - 11 impairment of its mining properties is consistent with the provisions of SFAS No. 121. RESULTS OF OPERATIONS THE THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1994 Consolidated operating revenues increased approximately $140 thousand for the third quarter of 1995 compared to the third quarter of 1994 due to mark to market increases on work in process inventories and investment bullion during the quarter ($730 thousand increase in the third quarter of 1995 compared to $669 thousand increase in the same period in 1994), and an increase in by-product revenues. Cost of sales decreased $744 thousand (15%) (from $5.0 million in the third quarter of 1994 to $4.2 million in the third quarter of 1995) due to lower unit production costs. Unit production costs decreased primarily due to increases in silver production from 1994 to 1995 (571 thousand ounces produced from 29,056 tons at 20.27 ounces per ton in 1995 versus 469 thousand ounces from 25,599 tons at 18.92 ounces per ton in 1994). Production in the third quarter more nearly approximates production objectives during this exploration period. Exploration expense increased $1.1 million (202%) for the third quarter of 1995 compared to the same period in 1994 in keeping with the Company's plan to increase exploration spending at the Sunshine mine and as well as other sites in Arizona, Colorado, Argentina, and Peru. Depreciation, depletion and amortization increased approximately $77 thousand. Higher depletion expense is a result of higher production figures in the quarter. - 11 - 12 THE NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 1994 Consolidated operating revenues increased approximately $686 thousand (5.5%) for the first nine months of 1995 compared to the first nine months of 1994 due to higher sales volume (2.0 million ounces in the first nine months of 1995 compared to 1.9 million ounces in the same period of 1994) due to the inventory drawdown discussed below. During the first quarter of 1995 the Company suspended operation of its silver refinery. As a result, the Company began selling silver and copper concentrate to a third-party smelter instead of refining silver bullion and copper metal for sale to commercial and industrial customers. This resulted in a shorter processing time before sales recognition, causing a drawdown of work-in-process inventories versus an inventory buildup in the first nine months of 1994. Cost of sales increased $2.2 million from the first nine months of 1995 compared to 1994, due to this drawdown in inventories and an increase in unit production costs. Unit production costs increased primarily due to declines in silver production from 1994 to 1995 (1.3 million ounces produced from 79,025 tons at 17.46 ounces per ton in 1995 versus 1.6 million ounces from 78,655 tons at 21.44 ounces per ton in 1994). Mine production declined due to a reduction in mill head grades as a result of extensive underground development activities. Additionally, the operation experienced earlier than expected mineout and adverse mining conditions in many of the mine's productive stopes. Production levels have been improving gradually since April, and the third quarter production more nearly approximates production objectives during this exploration period. Exploration expense increased $2.6 million (187%) for the first nine months of 1995 compared to the same period in 1994 in keeping with the Company's plan to - 12 - 13 increase exploration spending at the Sunshine mine and as well as other sites in Arizona, Colorado, Argentina, and Peru. Depreciation, depletion and amortization declined by approximately $508 thousand. Lower depletion expense is a result of lower production figures in the nine month period. Interest income increased by $232 thousand (29.3%) due to higher cash balances after the Company's rights offering in March 1994. Interest expense was reduced $378 thousand (39.7%) due to the reduction of approximately $8 million (84%) in the aggregate principal amount of debt outstanding in the first quarter of 1994. Sunshine's net income in 1994 included a $6.9 million gain on the curtailment of certain postretirement medical benefits for certain of its employees and retirees. - 13 - 14 SUNSHINE MINING AND REFINING COMPANY PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS By letter dated July 17, 1995, Sunshine and Sunshine Precious Metals, Inc. ("SPMI"), its wholly owned subsidiary, were notified that they have been identified by the United States Department of the Interior, Fish and Wildlife Service, as PRPs for alleged natural resource damage in the Coeur d'Alene Basin. The letter further served as notice that the Department of the Interior intends to bring suit against Sunshine, SPMI and other identified PRPs to recover natural resource damages under CERCLA. The Department of Interior has not set forth any amount of damages. The Company believes that the settlement by SPMI of all natural resource claims with the State of Idaho in May, 1986, bars these claims. ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 99.1 Agreement between Sunshine and Elliott Associates, L.P. dated October 19, 1995 ("ELLIOTT") whereby ELLIOTT agrees to vote all of its shares of Preferred Stock for the proposed merger of Sunshine and its wholly owned subsidiary. 99.2 Agreement between Sunshine and Grace Holdings, L.P. dated October 23, 1995 ("GRACE") whereby GRACE agrees to vote all of its shares of Preferred Stock for the proposed merger of Sunshine and its wholly owned subsidiary. 99.3 Agreement between Sunshine and Lloyd I. Miller, III dated October 20, 1995 ("MILLER") whereby Miller agrees to vote all of his shares of Preferred Stock for the proposed merger of Sunshine and its wholly owned subsidiary. 27 Financial Data Schedule. - 14 - 15 (b) Reports on Form 8-K None - 15 - 16 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 hereto duly authorized. SUNSHINE MINING AND REFINING COMPANY Dated: November 6, 1995 By: /s/ William W. Davis -------------------------------- William W. Davis Senior Vice President, Chief Financial Officer and Chief Accounting Officer - 16 - 17 INDEX TO EXHIBITS
Exhibits Description - - -------- ----------- 99.1 Agreement between Sunshine and Elliott Associates, L.P. dated October 19, 1995 ("ELLIOTT") whereby ELLIOTT agrees to vote all of its shares of Preferred Stock for the proposed merger of Sunshine and its wholly owned subsidiary. 99.2 Agreement between Sunshine and Grace Holdings, L.P. dated October 23, 1995 ("GRACE") whereby GRACE agrees to vote all of its shares of Preferred Stock for the proposed merger of Sunshine and its wholly owned subsidiary. 99.3 Agreement between Sunshine and Lloyd I. Miller, III dated October 20, 1995 ("MILLER") whereby Miller agrees to vote all of his shares of Preferred Stock for the proposed merger of Sunshine and its wholly owned subsidiary. 27 Financial Data Schedule.
EX-99.1 2 AGREEMENT BETWEEN SUNSHINE AND ELLIOTT ASSOCIATES 1 Exhibit 99.1 AGREEMENT THIS AGREEMENT is entered into as of October 19, 1995, by and between SUNSHINE MINING AND REFINING COMPANY (the "Company"), whose address is 877 W. Main St., Suite 600, Boise, Idaho 83702; and ELLIOTT ASSOCIATES, L.P., whose address is 712 Fifth Avenue, 36th Floor, New York, New York 10019 ("Elliott"), who is the beneficial owner of 535,800 shares of $11.94 (Stated Value) Preferred Stock of the Company (the "Preferred Stock"). For good and valuable consideration, the parties hereto, intending to be legally bound, agree as follows: 1. Elliott hereby covenants and agrees to vote all of the shares of Preferred Stock beneficially held by it FOR the merger proposal (the "Merger Proposal") as outlined in the term sheet attached herewith and incorporated herein by reference, at a special meeting of shareholders of the Company, and any adjournment thereof, at which the Merger Proposal may be presented for the approval of shareholders. 2. Elliott agrees that it will not join nor participate as a party in that certain litigation commenced against the Company by Harbor Finance Partners, a Colorado partnership, and currently pending in Delaware Chancery Court, New Castle County, identified as Case No. CA 14159, nor in any similar litigation. 3. This Agreement, and all obligations hereunder, including without limitation paragraph 2, shall expire upon the earlier of (i) the 120th day after the date hereof, provided that the merger ("Merger") described in the Merger Proposal has not occurred, or (ii) the date, if any, upon which the Merger Proposal is either withdrawn or materially modified by the Company. 4. This Agreement shall be binding upon the parties' successors and assigns. This Agreement shall be interpreted pursuant to the laws of the state of Delaware. 5. By executing this Agreement, the undersigned each represent and warrant that it has been duly authorized to execute this Agreement and to be bound thereby. ELLIOTT ASSOCIATES, L.P. DATED: October 19, 1995 By: PAUL E. SINGER ---------------- ----------------------------- Paul E. Singer, General Partner SUNSHINE MINING AND REFINING COMPANY By: WILLIAM W. DAVIS ----------------------------- William W. Davis, Senior Vice-President and Chief Financial Officer 2 PREFERRED STOCK PROPOSED TRANSACTION Merge SSC into special purpose sub, with each Preferred share replaced by (a) Sunshine Common Stock issuable pursuant to the formula described below, and (b) .9 share of common stock or, at the option of the holder, 2 Warrants as described below: SUNSHINE COMMON STOCK The number of shares of Common stock will be that number of shares determined by dividing the closing price on Sunshine Common stock on the latest date practical prior to mailing the prospectus into $10.50 (at a 1 7/8 Common stock price, 5.6 shares). If the average closing price of the Common stock on the NYSE for the first 120 trading days after the Effective Date of the Merger is less than the initial price used to determine the number of shares issuable, additional Common shares will be issued as soon as practical after the end of the 120-trading day period. The additional number of shares issuable will be determined by the following formula, where: X = Average Common stock closing price on the NYSE for first 120 trading days after issuance, and Y = Average Common shares initially issuable per Preferred share $10.50 - Y. In no event will the total of ------ initial shares X issuable, plus additional shares issuable, exceed 8.4. WARRANTS Shares purchasable 1 Exercise Price 110% of the Common stock closing price on the latest date practical prior to mailing the prospectus; resettable to 110% of average closing price of the Common stock on the NYSE for the first 120 trading days after the Effective Date of the Merger, if such price is less than the initial price. Expiration 5 years from issuance EX-99.2 3 AGREEMENT BETWEEN SUNSHINE AND GRACE HOLDINGS, L.P 1 EXHIBIT 99.2 AGREEMENT THIS AGREEMENT is entered into as of October 23, 1995, by and between SUNSHINE MINING AND REFINING COMPANY (the "Company"), whose address is 877 W. Main St., Suite 600, Boise, Idaho 83702, and GRACE HOLDINGS, L.P., whose address is 1000 West Diversy Parkway, Suite 233, Chicago, Illinois 60614 ("Grace"), who is the beneficial owner of 844,200 shares of $11.94 (Stated Value) Preferred Stock of the Company (the "Preferred Stock"). For good and valuable consideration, the parties hereto, intending to be legally bound, agree as follows: 1. Grace hereby covenants and agrees to vote all of the shares of Preferred Stock beneficially held by it FOR the merger proposal (the "Merger Proposal") in accordance with the term sheet attached herewith and incorporated herein by reference, at a special meeting of shareholders of the Company, and any adjournment thereof, at which the Merger Proposal may be presented for the approval of shareholders. 2. Grace hereby agrees that, upon consummation of the merger (the "Merger") as contemplated in the Merger Proposal, it will dismiss with prejudice its litigation currently pending against the Company in The United States District Court for the District of Delaware, identified as Case No. CA 95-38, each party bearing its own costs and attorney fees. 3. Grace agrees that it will not join nor participate as a party in that certain litigation commenced against the Company by Harbor Finance Partners, a Colorado partnership, and currently pending in Delaware Chancery Court, New Castle County, identified as Case No. CA 14159, nor in any similar litigation. 4. This Agreement, and all obligations hereunder, including without limitation paragraph 3, shall expire upon the earlier of (i) the 120th day after the date hereof, provided that the Merger has not occurred, or (ii) the date, if any, upon which the Merger Proposal is either withdrawn or materially modified by the Company. 5. This Agreement, shall be binding upon the parties' successors and assigns. This Agreement shall be interpreted pursuant to the laws of the State of Delaware. 6. By executing this Agreement the undersigned each represent and warrant that it has been duly authorized to execute this Agreement and to be bound thereby. 2 GRACE HOLDINGS, L.P. DATED: October 23, 1995 By: BRADFORD T. WHITMORE ---------------- ---------------------------- Bradford T. Whitmore SUNSHINE MINING AND REFINING COMPANY By: WILLIAM W. DAVIS --------------------------- William W. Davis, Senior Vice-President and Chief Financial Officer 3 PREFERRED STOCK PROPOSED TRANSACTION Merge SSC into special purpose sub, with each Preferred share replaced by (a) Sunshine Common Stock issuable pursuant to the formula described below, and (b) .9 share of common stock or, at the option of the holder, 2 Warrants as described below: SUNSHINE COMMON STOCK The number of shares of Common stock will be that number of shares determined by dividing the closing price on Sunshine Common stock on the latest date practical prior to mailing the prospectus into $10.50 (at a 1 7/8 Common stock price, 5.6 shares). If the average closing price of the Common stock on the NYSE for the first 120 trading days after the Effective Date of the Merger is less than the initial price used to determine the number of shares issuable, additional Common shares will be issued as soon as practical after the end of the 120-trading day period. The additional number of shares issuable will be determined by the following formula, where: X = Average Common stock closing price on the NYSE for first 120 trading days after issuance, and Y = Average Common shares initially issuable per Preferred share $10.50 - Y. In no event will the total of ------ initial shares X issuable, plus additional shares issuable, exceed 8.4. WARRANTS Shares purchasable 1 Exercise Price 110% of the Common stock closing price on the latest date practical prior to mailing the prospectus; resettable to 110% of average closing price of the Common stock on the NYSE for the first 120 trading days after the Effective Date of the Merger, if such price is less than the initial price. Expiration 5 years from issuance EX-99.3 4 AGREEMENT BETWEEN SUNSHINE AND LLOYD I. MILLER III 1 EXHIBIT 99.3 AGREEMENT THIS AGREEMENT is entered into as of October 20, 1995, by and between SUNSHINE MINING AND REFINING COMPANY (the "Company"), whose address is 877 W. Main St., Suite 600, Boise, Idaho 83702; and LLOYD I. MILLER, III, whose address is 4550 Gordon Dr., Naples, Florida 33940 ("Miller") who is the beneficial owner of 430,100 shares of $11.94 (Stated Value) Preferred Stock of the Company (the "Preferred Stock"). For good and valuable consideration, the parties hereto, intending to be legally bound, agree as follows: 1. Miller hereby covenants and agrees to vote all of the shares of Preferred Stock beneficially held by it FOR the merger proposal (the "Merger Proposal") as outlined in the term sheet attached herewith and incorporated herein by reference, at a special meeting of shareholders of the Company, and any adjournment thereof, at which the Merger Proposal may be presented for the approval of shareholders. 2. Miller agrees that it will not join nor participate as a party in that certain litigation commenced against the Company by Harbor Finance Partners, a Colorado partnership, and currently pending in Delaware Chancery Court, New Castle County, identified as Case No. CA 14159, nor in any similar litigation. 3. This Agreement, and all obligations hereunder, including without limitation paragraph 2, shall expire upon the earlier of (i) the 120th day after the date hereof, provided that the merger ("Merger") described in the Merger Proposal has not occurred, or (ii) the date, if any, upon which the Merger Proposal is either withdrawn or materially modified by the Company. 4. This Agreement shall be binding upon the parties' successors and assigns. This Agreement shall be interpreted pursuant to the internal laws of the state of Delaware. 5. By executing this Agreement, the undersigned each represent and warrant that it has been duly authorized to execute this Agreement and to be bound thereby. DATED: October 20, 1995 LLOYD I. MILLER, III ---------------- ------------------------------------ Lloyd I. Miller, III SUNSHINE MINING AND REFINING COMPANY By: WILLIAM W. DAVIS ----------------------------- William W. Davis, Senior Vice-President and Chief Financial Officer 2 PREFERRED STOCK PROPOSED TRANSACTION Merge SSC into special purpose sub, with each Preferred share replaced by (a) Sunshine Common Stock issuable pursuant to the formula described below, and (b) .9 share of common stock or, at the option of the holder, 2 Warrants as described below: SUNSHINE COMMON STOCK The number of shares of Common stock will be that number of shares determined by dividing the closing price on Sunshine Common stock on the latest date practical prior to mailing the prospectus into $10.50 (at a 1 7/8 Common stock price, 5.6 shares). If the average closing price of the Common stock on the NYSE for the first 120 trading days after the Effective Date of the Merger is less than the initial price used to determine the number of shares issuable, additional Common shares will be issued as soon as practical after the end of the 120-trading day period. The additional number of shares issuable will be determined by the following formula, where: X = Average Common stock closing price on the NYSE for first 120 trading days after issuance, and Y = Average Common shares initially issuable per Preferred share $10.50 - Y. In no event will the total of ------ initial shares X issuable, plus additional shares issuable, exceed 8.4. WARRANTS Shares purchasable 1 Exercise Price 110% of the Common stock closing price on the latest date practical prior to mailing the prospectus; resettable to 110% of average closing price of the Common stock on the NYSE for the first 120 trading days after the Effective Date of the Merger, if such price is less than the initial price. Expiration 5 years from issuance EX-27 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COLIDATED BALANCE SHEET AT SEPTEMBER 30, 1995 (UNAUDITED) AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000833376 SUNSHINE MINING AND REFINING COMPANY 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 18,993 39 2,013 0 1,698 33,185 138,002 69,113 105,489 2,523 1,519 1,967 81,928 0 5,551 105,489 13,178 13,178 14,203 25,235 0 0 575 (11,106) 0 (11,106) 0 0 0 (18,723) (.10) (.10)
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