1
Schedule 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
AZCO MINING INC.
______________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
_______________________________________________________________________________
(Name of Person(s) filing Proxy Statement if other than Registrant)
Payment of Filing Fee ((Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4)
and 0-11,
1) Title of each class of securities to which transaction applies:
_________________________________________________
2) Aggregate number of securities to which transaction applies:
_________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
_________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________
5) Total fee paid:
_________________________________________________________
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange act
Rule 0-11(a) (2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
_________________________________________________________
2) Form, Schedule or Registration Statement No.:
_________________________________________________________
3) Filing Party:
_________________________________________________________
4) Date Filed:
April 12, 2001
_______________________________________________________________
2 AZCO MINING INC.
7239 N. El Mirage Road
Glendale, AZ 85307
(623) 935-0774
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 2001
To Our Stockholders:
The 2001AND PROXY STATEMENT FOR
Annual Meeting of Stockholders To Be Held April 26, 2002
To the Shareholders of AzcoAZCO Mining, Inc.(:
NOTICE IS HEREBY GIVEN that the "Company"2002 Annual Meeting of Shareholders (the
"Annual Meeting") of AZCO Mining, Inc., a Delaware corporation will be held at the Company's corporate
office located at 7239 N. El Mirage Road, Glendale, Arizona on Wednesday, May
16, 2001, at 10:00 a.m. (Phoenix local time), for the following purposes:
1. To elect four directors to serve until the next annual meeting
and until their successors are duly elected;
2. To ratify the selection of PricewaterhouseCoopers LLP as
independent public accountants for the Company's fiscal year
ending June 30, 2001, and to authorize the Board of Directors
to fix and approve directors' remuneration;
3. To consider and vote upon such other matters as may properly
come before the meeting or any adjournment thereof.
The Company's stockholders of record on its books at the close of
business on April 6, 2001 are entitled to notice of and to vote at the meeting
or any adjournment of the meeting.
The Board of Directors of the Company extends a cordial invitation to
all stockholders to attend the meeting in person. The following pages provide
additional details about the meeting as well as other useful information.
By Order of the Board of Directors
Lawrence G. Olson
Chairman of the Board
Glendale, Arizona
April 12, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY IN THE RETURN ENVELOPE AS PROMPTLY AS POSSIBLE. THE
PROMPT RETURN OF YOUR COMPLETED PROXY WILL ASSIST THE COMPANY IN OBTAINING A
QUORUM OF STOCKHOLDERS FOR THE MEETING, BUT WILL NOT AFFECT YOUR ABILITY TO
CHANGE YOUR VOTE BY SUBSEQUENT PROXY OR BY ATTENDING THE MEETING AND VOTING IN
PERSON. IF YOU ARE UNABLE TO ATTEND THE MEETING, YOUR WRITTEN PROXY WILL ASSURE
THAT YOUR VOTE IS COUNTED. IF YOU LATER FIND OUT THAT YOU WILL BE PRESENT AT THE
MEETING OR FOR ANY OTHER REASON DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT
ANY TIME BEFORE IT IS VOTED.
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AZCO MINING INC.
7239 N. El Mirage Road
Glendale, AZ 85307
(623) 935-0774
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 16, 2001
This Proxy Statement is furnished to the stockholders of Azco Mining
Inc. (the "Company"), a Delaware corporation, in connection with the
solicitation by and on behalf of the Company's Board of Directors of proxies to
be voted at the Annual Meeting of Stockholders of the Company. The meeting
will be held at the Company's corporate office located at 7239 N. El Mirage
Road, Glendale, Arizona 85307, on Wednesday, May 16, 2001Friday, April 26, 2002 at 10:11:00 a.m. (Phoenix
local time) for the purposes set forth infollowing purpose:
1. To elect four directors to the accompanying NoticeBoard of Annual Meeting of
Stockholders.
The Company will pay the cost of this proxy solicitation. It will
reimburse brokers, banks, custodians and other nomineesDirectors to serve for their expenses
incurred in sendinga one
year term;
2. To ratify the Company's proxy materialsindependent public accountants, Price
Waterhouse Coopers, LLP.
3. To transact any and all other business that may properly come before
the Meeting or any Adjournment(s) thereof.
The Board of Directors has fixed the close of business on March 11, 2002 as
the record date (the "Record Date") for the determination of shareholders
entitled to notice of and obtaining instructions
relating to vote at such materials from, beneficial owners of sharesmeeting or any adjournment(s) thereof.
Only shareholders of the Company's common stock. In additionCommon Stock of record at the close of
business on the Record Date are entitled to solicitationnotice of and to vote at the Annual
Meeting. Shares can be voted at the Annual Meeting only if the holder is present
or represented by mail, directors, officersproxy. The stock transfer books will not be closed. A copy of
the Company's 2001 Annual Report to Shareholders, in the form of the 10-K filed
with the Securities and other
employeesExchange Commission, which includes audited financial
statements, is enclosed. A list of shareholders entitled to vote at the Annual
Meeting will be available for examination at the offices of the Company may, without additional compensation, solicit proxies
by mail,for ten
(10) days prior to the Annual Meeting.
You are cordially invited to attend the Annual Meeting; whether or not you
expect to attend the meeting in person, or by telecommunication.however, you are urged to mark, sign,
date, and mail the enclosed form of proxy promptly so that your shares of stock
may be represented and voted in accordance with your wishes and in order that
the presence of a quorum may be assured at the meeting. Your proxy will be
returned to you if you should be present at the Annual Meeting and should
request its return in the manner provided for revocation of proxies on the
initial page of the enclosed proxy statement. All proxies that are properly
executed and received prior to the meeting will be voted at the meeting. If a
stockholder specifies how the proxy is to be voted on any business to come
before the meeting it will be voted in accordance with such specification. IF A STOCKHOLDER DOES NOT SPECIFY HOW TO
VOTE THE PROXY IT WILL BE VOTEDIf a
stockholder does not specify how to vote the proxy it will be voted FOR EACH MATTER SCHEDULED TO COME BEFORE THE
MEETING AND IN THE PROXY HOLDERS' DISCRETION ON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.each
matter scheduled to come before the meeting and in the proxy holders' discretion
on such other business as may properly come before the meeting. Any proxy may be
revoked by a stockholder at any time before it is actually voted at the meeting
by delivering written notice to the secretary or acting secretary of the
meeting, by delivering another valid proxy bearing a later date or by attending
the meeting and voting in person.
This Proxy StatementBY ORDER OF THE BOARD OF DIRECTORS
- ------------------------------------------------------
Lawrence G. Olson, Chairman of the Board of Directors
YOUR VOTE IS IMPORTANT
AZCO MINING INC.
7239 N. El Mirage Road
Glendale, AZ 85307
(623) 935-0774
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD April 26, 2002
SOLICITATION AND REVOCABILITY OF PROXIES
The accompanying proxy is solicited by the Board of Directors on behalf of
AZCO Mining, Inc., a Delaware corporation (the "Company"), to be voted at the
2002 Annual Meeting of Shareholders of the Company (the "Annual Meeting") to be
held on April 26, 2002 at the time and place and for the purposes set forth in
the accompanying Notice of Annual Shareholders (the "Notice") and at any
adjournment(s) thereof. When proxies in the accompanying form are properly
executed and received, the shares represented thereby will be voted at the
Annual Meeting in accordance with the directions noted thereon; if no direction
is indicated, such shares will be voted for the election of directors and in
favor of the other proposals set forth in the Notice.
The executive offices of the Company are located at, and the mailing
address of the Company is 7239 N. El Mirage Road, Glendale, AZ 85307.
Management does not intend to present any business at the Annual Meeting
for a vote other than the matters set forth in the Notice and has no information
that others will do so. If other matters requiring a vote of the shareholders
properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying form of proxy to vote the shares represented by the
proxies held by them in accordance with their judgment on such matters.
This proxy statement (the "Proxy Statement") and accompanying proxy are
first being sentmailed to stockholders on or about April 12, 2001.March 22, 2002. The Company's Annual
Report on Form 10-K (the "2001 Form 10-K"), which serves as the Annual Report to
Shareholders, covering the Company's fiscal year ended December 31, 2001, is
enclosed herewith, and certain parts thereof are incorporated herein by
reference. See "Incorporation by Reference."
Any shareholder of the Company giving a proxy has the unconditional right
to revoke his proxy at any time prior to the voting thereof either in person at
the Annual Meeting, by delivering a duly executed proxy bearing a later date or
by giving written notice of revocation to the Company addressed to Lawrence G.
Olson, Chairman of the Board of Directors, 7239 North E. Mirage Road, Glendale,
Arizona 85307; no such revocation shall be effective, however, until such notice
of revocation has been received by the Company at or prior to the Annual
Meeting.
In addition to the solicitation of proxies by use of the mail, officers and
regular employees of the Company may solicit the return of proxies, either by
mail, telephone, telegraph or through personal contact. Such officers and
employees will bear the cost of
preparing, assemblingnot be additionally compensated but will be reimbursed for
out-of-pocket expenses. Brokerage houses and mailing the notice, Proxy Statementother custodians, nominees, and
form of proxy
for the meeting.
Unless otherwise indicated, all monetary amounts set forth herein arefiduciaries will, in United States dollars.
VOTING SECURITIES
All voting rights are vested exclusively in the holdersconnection with shares of the Company's common stock,
$.002$0.002 par value per share (the "Common Stock"), with
each share entitledregistered in their names, be
requested to one vote. Only stockholdersforward solicitation material to the beneficial owners of such
shares of Common Stock.
The cost of preparing, printing, assembling, and mailing the Annual Report,
the Notice, this Proxy Statement, and the enclosed form of proxy, as well as the
cost of forwarding solicitation materials to the beneficial owners of shares of
Common Stock and other costs of solicitation, are to be borne by the Company.
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QUORUM AND VOTING
The record atdate for the closedetermination of business on April 6, 2001 areshareholders entitled to notice of
and to vote on each matter
presented at the meeting or any adjournment thereof. AtAnnual Meeting was the close of business on March 29, 200111, 2002
(the "Record Date"). On the Record Date, there were 30,050,621 shares of Common
Stock issued and outstanding.
A minimum of one-third of the sharesEach shareholder of Common Stock issued and
outstanding mustis entitled to one vote on all matters to
be representedacted upon at the meeting,Annual Meeting and neither the Company's Articles of
Incorporation (the "Articles of Incorporation") nor its Bylaws (the "Bylaws")
allow for cumulative voting rights. The presence, in person or by proxy, in orderof the
holders of a majority of the issued and outstanding Common Stock entitled to
vote at the meeting is necessary to constitute a quorum. Cumulative votingquorum to transact business. If
a quorum is not allowed for any purpose. Thepresent or represented at the Annual Meeting, the shareholders
entitled to vote thereat, present in person or by proxy, may adjourn the Annual
Meeting from time to time without notice or other announcement until a quorum is
present or represented. Assuming the presence of a quorum, the affirmative vote
of the holders of a plurality of the shares of the Common Stock representedvoting at the
meeting in person or by proxy and entitled to vote onis required for the subject matter will be necessary to elect directorselection of each of the Companynominees for director, and
the affirmative vote of the holders of thea majority of the shares of Common Stock
representedvoting at the meeting is required for approval of the increase in person or by proxythe total
Common Stock.
Abstentions and entitled to vote on the
subject matterbroker non-votes will be necessary to ratify the appointment of the auditors.
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An abstention or withholding authority to vote will be counted as
present for determining whether the quorum requirement is satisfied. With
respect to the vote on any particular proposal, abstentions will be treated as
shares present and entitled to vote and, for purposes of
determining the outcome
of the vote on any such proposal, shall have the same effect as a vote against
the proposal. A broker "non-vote" occurs when a nominee holding shares for a
beneficial holder does not have discretionary voting power and does not receive
voting instructions from the beneficial owner. Broker "non-votes" on a
particular proposalquorum, but will not be treatedcounted as shares present and entitled to vote
onvoting for purposes of
determining whether a proposal has received the necessary number of votes for
approval of the proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTSUMMARY
The table below sets forthfollowing is a brief summary of certain information as of March 16, 2001, with
respectcontained elsewhere
in this Proxy Statement. This summary is not intended to beneficial ownershipbe complete and is
qualified in all respects by reference to the detailed information appearing
elsewhere in this proxy statement and the exhibits hereto.
The Meeting
Date, Time and Place of the Company's Common Stock by each person
known by the CompanyAnnual Meeting
The Annual Meeting of AZCO is scheduled to be the beneficial owner of more than 5% of its
outstanding Common Stock, by each director of the Company, by each Named
Executive Officer and by all officers and directors of the Company as a group.
Unless otherwise noted, each stockholder has sole investment and voting power
over the shares owned.
===================================================================================================
NAME AND ADDRESS NUMBER OF PERCENT
OF BENEFICIAL OWNER SHARES OF CLASS
- ---------------------------------------------------------------------------------------------------
Alan P. Lindsay 1,178,569(1) 3.86%
(Former Director, Chairman, President and
Chief Executive Officer)
- ---------------------------------------------------------------------------------------------------
Anthony R. Harvey 653,252(2) 2.14%
(Director)
- ---------------------------------------------------------------------------------------------------
Paul A. Hodges 113,000(3) *
(Director)
- ---------------------------------------------------------------------------------------------------
Lawrence G. Olson 1,778,700(4) 5.90%
(Director, Chairman, President and
Chief Executive Officer)
3045 S. 35th Avenue
Phoenix, AZ 85009
- ---------------------------------------------------------------------------------------------------
Stanley A. Ratzlaff 150,000(5) *
(Director)
- ---------------------------------------------------------------------------------------------------
M. William Lightner Jr. 105,000(6) *
(Director)
- ---------------------------------------------------------------------------------------------------
Gary L. Simmerman 315,000(7) 1.04%
(Vice-President Operations)
- ---------------------------------------------------------------------------------------------------
Ryan A. Modesto 175,000(8) *
(Vice-President Finance, Corporate Secretary)
- ---------------------------------------------------------------------------------------------------
All officers and directors as a group (7 persons) 3,244,952(9) 10.32%
===================================================================================================
* Less than 1%.
(Footnotesheld on next page)
(1) Includes (i) 605,308 shares owned by a corporation which is controlled
by Mr. Lindsay, (ii) options to acquire 300,000 sharesApril 26, 2002, at
an exercise
price of CDN $1.05 per share and (iii) options to acquire 200,000
shares at an exercise price of CDN $0.80 per share
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(2) Includes (i) 122,224 shares owned by Mr. Harvey's wife, (ii) options to
acquire 300,000 shares at an exercise price of CDN $1.05 per share and
(iii) options to acquire 200,000 shares at an exercise price of CDN
$0.80 per share.
(3) Includes options to acquire (i) 50,000 shares at an exercise price of
CDN $1.05 per share and (ii) 50,000 shares at an exercise price of CDN
$0.70 per share.
(4) Includes options to acquire 100,000 shares at an exercise price of CDN
$1.05 per share.
(5) Includes options to acquire 100,000 shares at an exercise price of US
$0.90 per share.
(6) Consists of options to acquire 100,000 shares at an exercise price of
US $0.69 per share
(7) Consists of options to acquire (i) 30,000 shares at an exercise price
of CDN $0.80 per share (ii) 210,000 shares at an exercise price of CDN
$1.05 per share (iii) 25,000 shares at an exercise price of CDN $0.70
per share and (iv) 50,000 shares at an exercise price of CDN $0.95 per
share.
(8) Consists of options to acquire (i) 30,000 shares at an exercise price
of CDN $0.80 per share (ii) 20,000 shares at an exercise price of CDN
$0.70 per share and (iii)120,000 shares at an exercise price of CDN
$1.05 per share.
(9) Includes options to acquire an aggregate of 1,385,000 shares.
ELECTION OF DIRECTORS
The Company's Bylaws provide that the number of members of the Board of
Directors shall not exceed seven members and currently the Board of Directors
consists of five members. The size of the board has been reduced to four,
effective upon the date of the annual meeting. Cumulative voting11:00 a.m. in the electionCompany's corporate offices at 7239 N. El Mirage Road,
Glendale, AZ 85307. See "Solicitation and Revocability of directors is not permitted. Directors are elected by a pluralityProxies."
Record Date
Only holders of record of shares of Common Stock represented at the meeting andclose of business
on March 11, 2002 are entitled to receive notice of and to vote onat the matter,
which means thatAnnual
Meeting.
Vote Required
Assuming the four nominees receiving the highest numberpresence of votes, a quorum being in attendance, will be elected as directors.
The persons who are nominated as directors and for whom proxies will be
voted are: Lawrence G. Olson, Paul A. Hodges, Stanley A. Ratzlaff, M. William
Lightner, Jr. Unless authority is withheld, it is intended thatat the Annual Meeting , the affirmative
vote of the holders of a plurality of the shares of Common Stock represented byand
voting at the proxies will be voted "FOR" these persons,Annual Meeting is required for (i) the election of each to serve asnominee
for director of the Company untiland (ii) ratification of the next annual meetingappointment of stockholders or until
his respective successor is elected or appointed and qualified. Each nominee has
consented to being a nominee and to serve if elected. In the
unlikely event that
any nominee becomes unable to serve for any reason,independent public accountants of the proxies will be voted
for a substitute nomineeCompany.
Accountants
Price Waterhouse Cooper, LLP, have been selected by the Board of Directors.
The Board of Directors recommends that you vote FOR director nominees
Lawrence G. Olson, Paul A. Hodges, Stanley A. Ratzlaff and M. William Lightner,
Jr.
The following is a brief biography regarding each nominee.
Lawrence G. Olson - Chairman ofCompany to act as
the Board, Chief Executive Officer, President
and a Director
Mr. Olson, age 63, became a director ofprincipal accountant for 2002. Price Waterhouse Cooper, LLP have been the
Company on March 15, 1999
in connection with the acquisition of Arizona Mica Properties Inc. On October
25, 2000 Mr. Olson was appointed Chairman, President and Chief Executive Officer
of the Company. Mr. Olson has owned and operated his own business, Olson Precast
of Arizona Inc., since 1973. Prior to starting Olson Precast, Mr. Olson was the
Sales Manager of a division of United Aircraft. Mr. Olson received a B.S. in
Civil Engineering from the University of Southern California in 1959. In 1998,
Olson Precast of New Mexico, Inc., a company controlled by Mr. Olson, was
liquidated under the United States bankruptcy laws in proceedings in the United
States Bankruptcy Courtaccountants for the district of New Mexico. Mr. Olson is a member of
the Audit Committee and the Compensation Committee.
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Paul A. Hodges - Director
Mr. Hodges, age 74, has been a director of the Company since October 1,
1993. He1991 years and no change of accountants has
a degree in Mining Engineeringoccurred since that time and none is contemplated. It is not expected that the
representatives of
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Price Waterhouse Cooper will attend the annual shareholders' meeting and will
not be available to answer questions from the Colorado School of Mines
and is a registered professional engineer in Arizona. Mr. Hodges has over 40
years experience in the mining industry, covering exploration, operations,
project startups, management and financing. Mr. Hodges was the Chief Engineer
worldwide for open pit mining for RTZ and the President of Anamax Mining Company
at Twin Buttes. Most recently Mr. Hodges was the President of Compania Minera El
Indio. He was a director of Lac Minerals Limited, a publicly traded company
acquired by American Barrick in late 1994. Mr. Hodges is the Chairman of the
Audit Committee and a member of the Compensation Committee.
Stanley A. Ratzlaff - Director
Mr. Ratzlaff, age 65, became a director of the Company on February 13,
2001. Mr. Ratzlaff a Financial Consultant and CPA has a B.A., cum laude, from
San Jose State University. He also completed the Advanced Management Program at
Harvard Business School. Mr. Ratzlaff worked from 1961 to 1969 for the public
accounting firm of Ernst & Young. Since that time Mr. Ratzlaff has held the
following positions: Assistant Controller of Atlantic Richfield Company,
Corporate Controller of Standard Oil Company, Vice President and Controller of
Occidental Petroleum Corporation and Vice President and Controller of Pacific
Enterprises. From 1994 to present, Mr. Ratzlaff has been a consulting CFO for
small companies. Mr. Ratzlaff is active as a board member on nonprofit entities.
M. William Lightner Jr. - Director
Mr. Lightner, age 66, became a director of the Company March 6, 2001.
Mr. Lightner a Financial Consultant and CPA has a B.S. in Commerce from Grove
City College and a MBA from the University of Pennsylvania, Wharton School of
Business. Mr. Lightner spent 31 years with the public account firm Arthur
Andersen & Co., retiring in 1989 as a Partner. Mr. Lightner became involved in
leveraged buy-outs and held the positions of Chairman of Mica Resources and
Financial Vice President of Merit Energy. Most recently Mr. Lightner held the
positions of CFO and Executive Vice President at Consumer Packaging, Inc. (1994
to 1999) and Anchor Glass Container Corp. (1997 to 2000). Mr. Lightner remains a
director of Anchor Glass Containers Corp.
EXECUTIVE OFFICERS
The following is a list of Executive Officers with brief individual
biographical information as of March 16, 2001. The listed Executive Officers
will continue to serve as officers of the Company until the next annual meeting
of the Board of Directors or until their respective successors are elected or
appointed and qualified.
Lawrence G. Olson - Chairman of the Board, Chief Executive Officer,
President and a Director
Mr. Olson's biographical information is provided above under "Election
of Directors."
Ryan A. Modesto -- Vice President of Finance, Corporate Secretary
Mr. Modesto, age 45, joined the Company in June 1994 as the Controller
of the Sanchez Project. On January 1, 1996 he was elected as the Company's
Corporate Controller and Principal Accounting Officer, in October 1998 he was
appointed Vice-President of Finance, and on October 25, 2001 he was elected as
Corporate Secretary of the Company. Mr. Modesto earned a B.S. in Accounting from
the University of Utah in 1977 and has 24 years of accounting and administrative
experience in the mining industry. For the six years prior to joining the
Company Mr. Modesto was the Controller of the Santa Fe Mine for Corona Gold Inc.
in Nevada.
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Gary L. Simmerman -- Vice President of Operations
Mr. Simmerman, age 50, joined the Company in September 1992 as Chief
Engineer of the Sanchez Project and in October 1998 was elected as
Vice-President of Operations. Mr. Simmerman, who has a B.S. in Mining
Engineering from the University of Arizona, has worked in the mining industry
since 1974, and has been involved in exploration, development and production
operations in gold, silver, copper, cobalt, coal and uranium. For the five years
prior to joining the Company Mr. Simmerman was Chief Engineer for Santa Fe
Pacific Gold's Rabbit Creek Mine and was involved in the original determination
of the ore reserves and the feasibility stage through startup, production and
expansion to a 200,000 ton per day operation.
LEGAL PROCEEDINGS
On January 22, 1999, the Trustee in a bankruptcy proceeding against
Eagle River served a petition, in the Quebec Superior Court, District of Hull,
upon the Company to recuperate assets from the Company. It is the understanding
of the Company that the Trustee alleges that, through the Company's involvement
with Eagle River in its Mali Project, the Company is guilty of contractual
breaches in excess of $3.400,000. It is the Company's opinion that this claim is
unfounded. The outcome of the case is not yet determined.
On December 8, 2000, the Company filed a declaratory judgment action in
the United States District Court for the District of Arizona, Docket No. CIV
00-2334 PHX SRB, against each of Anthony R. Harvey, ARH Management, Ltd., Alan
Lindsay and Alan Lindsay & Associates, Ltd. The action seeks a declaratory
judgment regarding the Company's obligations to pay termination fees under the
management agreements between the Company and each of ARH Management, Ltd. and
Alan Lindsay & Associates, Ltd., as a result of the non-renewal by the Company
of such agreements. The Company employed Mr. Lindsay as Chief Executive Officer
and President of the Company pursuant to the management agreement between the
Company and Alan Lindsay & Associates, Ltd. The Company employed Mr. Harvey as
Executive Vice President and Secretary pursuant to the management agreement
between the Company and ARH Management, Ltd. Upon the non-renewal, Messrs.
Lindsay and Harvey each demanded payment of a termination fee equal to $297,675
pursuant to the terms of the management agreements. The Company asserted in the
complaint that these termination fee provisions are unfair and unbalanced, if
not unconscionable, and should not have been included in the agreements, and
would not have been so included had Messrs. Lindsay and Harvey caused the
Company to obtain independent legal counsel to advise the Company with regard to
the provisions of the management agreements. The Company further asserted that
the inclusion of the termination fee provisions was a breach by Messrs. Lindsay
and Harvey of their fiduciary duties to the Company as directors and executive
officers and constituted misconduct. On January 8, 2001, the named defendants
filed an answer and counterclaim seeking damages for breach of contract,
violation of Arizona Revised Statutes Section 23-353 for failing to pay wages
and compensation due and unjust enrichment. The litigation is pending.
CERTAIN TRANSACTIONS
In March 2001, Lawrence G. Olson jointly with his wife made an
unsecured loan to the Company in the amount of $800,000 at an interest rate
equal to the prime rate of interest as reported by Imperial Bank plus one
percentage point. Interest on the loan is payable in monthly installments and
all principal and accrued interest is due in full on March 14, 2002. In
connection with this loan, the Company issued to Mr. Olson a warrant to purchase
300,000 shares of the Company's common stock at $.70 per share, the closing
market price on the American Stock Exchange on the business day preceding the
date of issuance.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"shareholders.
Recommendations
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT THE
COMPANY'S SHAREHOLDERS VOTE FOR EACH OF THE NOMINEES FOR DIRECTOR ("PROPOSAL 1")
AND FOR RATIFICATION OF THE INDEPENDENT PUBLIC ACCOUNTANTS ("PROPOSAL 2").
Officers, directors and greater than 10% stockholders are required
by SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain
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8
reporting persons, the Company believes that, during the fiscal year ended June
30, 2000, all filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with.
BOARD MEETINGSTHE COMPANY
1. Background
Board Meetings
During the Company's fiscal year ended June 30, 20002001 the Company's Board of
Directors ("the Board") met 95 times. All of the directors were present at 75% or
more of the aggregate of all meetings of the Board and committee meetings in
which they serve. The Board has Audit and Compensation Committees and does not
have a nominating or any other committees.
AUDIT COMMITTEE REPORTAudit Committee Report
The Company's Audit Committee is presently composed of three directors who
are not officers of the Company. The Company adopted its Audit Committee Charter
in June 2000 and in accordance with the Audit Committee Charter's definition of
"independent" directors, Anthony R. Harvey, an officer of the Company, resigned
as a member of the Audit Committee and was replaced by Lawrence G. Olson. Mr.
Olson was not an officer of the Company at the time of his appointment to the
Audit Committee. The Board of Directors has determined that all members of the
Audit Committee who attended the Audit Committee meeting held in September 19992000
and those persons presently acting as directors of the Audit Committee are
"independent" as defined in the American Stock Exchange listing standards
regarding audit committees. The Audit Committee is responsible for monitoring
and reviewing the Company's financial reporting process on behalf of the Board
of Directors. Management is responsible for the Company's internal controls and
the financial reporting process while the independent accountants are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with generally accepted auditing standards
and to issue a report thereon.
The Board of Directors has adopted a
written charter for the Audit Committee, which is included as Appendix A to this
proxy statement.
The Audit Committee held one meeting during fiscal year 2000.2001. The meeting
was designed to facilitate and encourage open communication between the Audit
Committee and the internal auditors and the Company's independent public accountant,
PricewaterhouseCoopers LLP. During the meeting, the Audit Committee reviewed and
discussed the Company's quarterly and annual financial statements with
management and with PricewaterhouseCoopers LLP. The Audit Committee believes
that management maintains an effective system of internal controls that results
in fairly presented financial statements. The Audit Committee discussed with
PricewaterhouseCoopers LLP matters relating to communications with audit
committees as required by Statement on Auditing Standards No. 61.
PricewaterhouseCoopers LLP also provided to the Audit Committee the written
disclosures and the letter relative to auditor independence as required by
Independence Standards Board Standard No. 1 and the Committee has discussed with
PricewaterhouseCoopers its independence. PricewaterhouseCoopers LLP did not
perform any non-audit services other than tax services during fiscal year 2000.2001.
Based on these reviews and discussions, the Audit Committee recommended to
the Board of Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the year ended June 30, 2000.
AUDIT FEES2001.
3
Audit Fees
Fees from PricewaterhouseCoopers LLP for the fiscal year 20002001 audit and the
review of quarterly reports on Form 10-Q were $40,739.
ALL OTHER FEES$50,500.
All Other Fees
All other billings from PricewaterhouseCoopers LLP for the calendar year
20002001 totaled $10,673.$4,411. During fiscal year 2000,2001, PricewaterhouseCoopers LLP
provided the Company with only audit and tax preparation services.
6
9
Respectively submitted to the Azco Mining Inc. stockholders by the Audit
Committee of the Board of Directors.
Stanley A. Ratzlaff, Audit Committee Chair
Paul A. Hodges
Audit Committee Chair
Lawrence G. Olson
Ian M. Gray (1)
(1) Mr. Gray resigned on December 9, 2000 and did not participate in the
preparation of this Audit Committee Report.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLEWilliam Lightner
Stockholder Return Performance Graph
The following tables show compensation duringgraph shows the fiscal years endedcumulative total stockholder return on
the Company's Common Stock compared to the cumulative total return of two other
stock market indices: (i) The American Stock Exchange Market Index (U.S.) (the
"Amex Market Index (U.S.)"), and (ii) the Peer Group Index of similar
line-of-business companies as described below. The time period graphed is the
period from July 1, 1996 through June 30, 1997, 19982001.
The AMEX Market Index (U.S.) is an index comprising all domestic common
shares traded on The American Stock Exchange. The Peer Group Index includes data
from the following five companies: Benguet Corporation , Freeport McMoran Copper
& Gold, Rio Tinto PLC (formerly RTZ Corp. PLC), Canyon Resources Corp. and 1999, respectively,Hecla
Mining Co. all of those persons who served as Chief
Executive Officer at any time during fiscal 2000 and each other executive
officer ofwhich are listed on AMEX or the Company whose total cash compensation during fiscal 2000 exceeded
$100,000 (collectively, the "Named Executive Officers").
Summary Compensation Table
(For the fiscal year ended June 30, 2000)NYSE.
4
===============================================================================================================
Annual Compensation Long Term
Compensation
- ----------------------------------------------------------------------------------------------------------------
Securities
Underlying
Options/
Other Annual SARs
Salary Bonus Compensation Granted
Name and Principal Position Year ($) ($) ($) (#)
- ----------------------------------------------------------------------------------------------------------------1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
Azco Mining Inc. 100 84.00 44.00 60.00 76.00 32.00
Peer Group Index 100 99.82 53.25 59.81 34.23 40.34
AMEX Market Index 100 106.35 122.96 120.96 139.08 136.22
(1) Assumes $100 invested on July 1, 1996 in the Company's Common Stock, the
AMEX Market Index, and the Peer Group Index of alike line-of-business
companies.
(2) Total stockholder return assumes reinvestment of dividends.
(3) Where applicable, Canadian currency has been translated to U.S. Dollars.
2. Security Ownership of Management and Principal Shareholders
The following table sets forth information regarding the beneficial
ownership of Common Stock as of the Record Date by each person or group who
owned, to the Company's knowledge, more than five percent of the Common Stock,
each of the Company's directors, the Company's Chief Executive Officer, and all
of the Company's directors and executive officers as a group.
Name of Beneficial Owner Amount of Ownership (1) Percent of Class
- ------------------------ ----------------------- ----------------
Christian Mustad 1,950,000 6.49%
Rue de l'Industrie 6
CH - 1630 BULLE, Switzerland
Lawrence G. Olson
Director, Chairman, President & CEO 1,878,700(1) 6.21%
Paul A. Hodges 133,000(2) -
Director
Stanley A. Ratzlaff 180,000(3) -
Director
M. William Lightner Jr. 125,000(4) -
Director
Gary L. Simmerman 315,000(5) 1.04%
Vice-President Operations
Ryan A. Modesto 205,000(6) -
Vice-President Finance, Secretary
All of the officer and directors 2,836,700(7) 9.11%
as a group - 6 persons
- - = less than 1%
5
(1) Includes options to acquire (i) 100,000 shares at an exercise price of CDN
$1.05 per share and (ii) 100,000 shares at an exercise price of US $0.67
per share.
(2) Includes option to acquire (i) 50,000 shares at an exercise price of CDN
$1.05 per share (ii) 50,000 shares at an exercise price of CDN $0.70 per
share and (iii) 20,000 shares at an exercise price of US $0.67 per share.
(3) Includes options to acquire (i) 100,000 shares at an exercise price of US
$0.90 per share and (ii) 20,000 shares at an exercise price of US $0.67 per
share.
(4) Includes of options to acquire (i) 100,000 shares at an exercise price of
US $0.69 per share and (ii) 20,000 shares at an exercise price of US $0.67
per share.
(5) Consists of options to acquire (i) 30,000 shares at an exercise price of
CDN $0.80 per share (ii) 210,000 shares at an exercise price of CDN $1.05
per share (iii) 25,000 shares at an exercise price of CDN $0.70 per share
and (iv) 50,000 shares at an exercise price of CDN $0.95 per share.
(6) Includes options to acquire (i) 30,000 shares at an exercise price of CDN
$0.80 per share (ii) 20,000 shares at an exercise price of CDN $0.70 per
share (iii) 120,000 shares at an exercise price of CDN $1.05 per share and
(iv) 30,000 shares at an exercise price of US $0.67 per share.
(7) Includes options to acquire an aggregate of 1,075,000 shares.
3. Voting Intentions of Certain Beneficial Owners and Management.
To be ratified by the Shareholders, Proposal No. 1, Proposal No. 2, and
Proposal No. 3, each require the affirmative vote of a majority of the Company's
outstanding voting securities present after quorum. The Company's directors and
officers have advised the Company that they will vote the 2,836,700 shares owned
or controlled by them FOR each of the Proposals in this Proxy Statement. These
shares represent 9.11% of the outstanding common stock of the Company.
4. Additional Information.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed with the Commission can be inspected and copied at
the public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of this material can also be obtained at
prescribed rates from the Public Reference Section of the Commission at its
principal office at 450 Fifth Street, N.W. Washington, D.C. 20549. The Company's
Common Stock is traded through AMEX and the Toronto Stock Exchange under the
symbol AZC.
All reports and documents filed by the Company pursuant to Section 13, 14
or 15(d) of the Exchange Act, after the date of this Proxy Statement, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
respective date of filing such documents. The Company is not current in its
filings. Any statement incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Proxy Statement to the extent that a
statement contained herein or in any other subsequently filed document, which
also is or is deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute part of this Proxy
Statement.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Proxy Statement has been
delivered, on the written request of any such person, a copy of any or all of
the documents referred to above which have been or may be incorporated by
reference in this Proxy Statement, other than exhibits to such documents.
Written requests for such copies should be directed to the Company at 7239 N. El
Mirage Road, Glendale, Arizona 85307.
5. Director Compensation
Compensation awarded to Directors of the Company is listed below in
response to question 7, "Remuneration and Executive Compensation."
6. Compliance with Section 16(a)
6
Section 16(a) of the Securities Exchange Act of 1934 as amended (the
"Exchange Act") requires the Company's directors, officers and persons who own
more than 10 percent of a registered class of the Company's equity securities,
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("the Commission"). Directors, officers and greater than 10
percent beneficial owners are required by applicable regulations to furnish the
Company with copies of all forms they file with the Commission pursuant to
Section 16(a). The Company is not aware of any beneficial owner of more than 10
percent of its registered Common Stock for purposes of Section 16(a).
Based solely upon a review of the copies of the forms furnished to the
Company, the Company has not met all filing requirements applicable to its
directors and executive officers were satisfied.
7. Remuneration and Executive Compensation
The following table sets forth for fiscal 2001 compensation awarded or paid
to the Company's officers and directors (collectively, the "named Executive
Officers"). Other than as indicated in the table below, no executive officer of
the Company received any annual compensation in the year ended June 30, 2001.
Summary Compensation Table
Annual Compensation Table
Annual Compensation Long Term Compensation
Other Restricted
Annual Stock Options/ LTIP All Other
Name and Title Year Salary Bonus Compensation Awarded SARs (#) payouts ($) Compensation
- -------------- ---- --------- ----- ------------ ------- -------- ----------- ------------
Lawrence G. Olson 2001 0 0 0 0 0
President, CEO, 2000 0 18,000(1) 0 0 0
Chairman 1999 0 4,500(1) 0 100,000 0 0
Alan P. Lindsay 2001 66,150(2) 0 3,000(3) 0 0 0
Former President, CEO, 2000 192,938(1) 192,938(2)9,413 9,000(3) -0-0 0 0
Chairman of the Board and 1999 183,750(1) 183,750(2)9,000 9,000(3) 0 200,000 Chief Executive Officer 1998 139,169(1) 5,500 7,250(3) -0-
- ----------------------------------------------------------------------------------------------------------------
Anthony R. Harvey, 2000 192,938(2) 9,413 9,000(3) -0-
Vice Chairman, Executive Vice 1999 183,750(2) 9,000 9,000(3) 200,000
President and Secretary 1998 139,169(2) 5,500 7,250(3) -0-
- ----------------------------------------------------------------------------------------------------------------0 0
Ryan A. Modesto 2001 110,000 31,044(4) 0 0 0
V.P. of Finance, 2000 116,664 5,583 -0- -0-
Vice President Finance0 0 0 0
Secretary 1999 109,084 5,550 -0-0 0 70,000 1998 97,200 4,800 30,000(4) 13,000
- ----------------------------------------------------------------------------------------------------------------0 0
Gary L. Simmerman 2001 160,416 0 0 0 0 0
V.P. of Operations 2000 158,824 7,750 -0-0 0 50,000 Vice President Operations0 0
1999 115,793 7,500 30,000(5) 0 155,000 1998 96,000 4,800 -0- 30,000
================================================================================================================0 0
(1) These amounts represent directors fees paid to Mr. Olson prior to October
2000. Mr. Olson has received no salary or fees since he became Chairman of
the Board, President and CEO of the Company in October 2000.
(2) These amounts were actually paid to Alan Lindsay and Associates Ltd., a
management company under the control of Mr. Lindsay pursuant to a
Management Agreement dated May 1, 1989 and a successor Management Agreement
dated February 1, 1998 with the Company.
(2) These amounts were actually paid to ARH Management Ltd., a management
company under the control of Mr. Harvey pursuant to a Management
Agreement dated May 1, 1989 and a successor Management Agreement dated
February 1, 1998 with the Company.
(3) These amounts were paid as reimbursement of medical insurance premiums.
7
10
(4) Mr. Modesto was granted a $30,000reimbursed $31,044 in relocation allowancecosts in conjunction with
the move of the Company's corporate office from Solomon, Arizona,Ferndale, Washington to
Ferndale, Washington.Glendale, Arizona.
(5) Mr. Simmerman was granted a $30,000 relocation allowance in conjunction
with the move of the Company's establishment of its Glendale office to
oversee the Black Canyon Mica Project.
OPTION GRANTS IN LAST FISCAL YEARAll of the foregoing amounts are estimates based upon the Company's
internal forecast and budget. There can be no assurance that the amounts of
compensation actually paid, or the persons to whom it is paid, will not differ
materially from the above estimates.
7
Option Grants in Last Fiscal Year
=================================================================================================================================
Name Number of % of total Exercise or Expiration Date Potential Realized Value
Securities Options Base Price (Cdn $)(US$) at Assumed Annual
Underling granted to (Cdn $/Sh)(US$ per Rates of Stock Price
Options Employees Share) Appreciation for Option Termterm
Granted (#) in Fiscal Year 5% 10%
Year
- ---------------------------------------------------------------------------------------------------------------------------------
Gary L. Simmerman 50,000(*) 56% 0.95 DecemberStanley A. Ratzlaff 100,000(1) 40% 0.90 February 13, 2004 13,123 28,999
=================================================================================================================================2006 24,865 54,946
M. William Lightner 100,000(2) 40% 0.69 March 6, 2006 19,063 42,125
(*)(1) These options are exercisable from the date of grant (December(February 13, 1999)2001).
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTIONS VALUES(2) These options are exercisable from the date of grant (March 6, 2001).
Aggregated Option Exercises in Last Fiscal Year and FY-End Options Values
=================================================================================================================
Number of Securities Underling Value of Unexercised In-The-money
Unexercised Options at FY-End Options at FY-End ($)(*)
- -----------------------------------------------------------------------------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
Exercisable
- --------------------------------------------------------------------------------------------------------------------- ----------- ------------- ----------- -------------
Alan P. Lindsay 500,000Lawrence G. Olson 100,000 -0- 273,363 -0- - -----------------------------------------------------------------------------------------------------------------
Anthony R. Harvey 500,000 -0- 273,363 -0-
- -----------------------------------------------------------------------------------------------------------------
Gary L. Simmerman 315,000 -0- 165,3051,000 -0-
- -----------------------------------------------------------------------------------------------------------------
Ryan A. Modesto 170,000 -0- 93,955800 -0-
=================================================================================================================
(*) Based on the closing price of $1.1875$0.50 of the Company's Common Stock as quoted
on the American Stock Exchange on June 30, 2000.
COMPENSATION OF DIRECTORS2001.
Compensation of Directors
The Company pays to each of its outside, non-officer directors a fee of
$1,500 per month. The Company also reimburses its directors for reasonable
expenses incurred by them in attending meetings of the Board of Directors.
During fiscal year 2000, non-officer directors received a total of $1,750$-0- in
consulting fees separate and distinct from directors fees as a result of actual
services rendered above and beyond those typical of a non-officer director. It
is the Company's policy to grant immediately exercisable options to directors
upon their initial election to purchase 100,000 shares of the Company's common
stock at an exercise price equal to the fair market value of the stock.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS.Employment Contracts and Change-in-Control Arrangements.
On February 1, 1998 the Company entered into separate management agreements
with Alan Lindsay and Associates Ltd., and with ARH Management Ltd. Associates
Ltd. is a British Columbia corporation owned and controlled by Mr. Lindsay, the
Company's Chief Executive Officer. ARH Management Ltd. is a British Columbia
corporation owned and controlled by Mr. Harvey, the Company's Vice-Chairman.
These management agreements
8
11 replaced the original management agreements with
Associates Ltd. and ARH Management Ltd. each dated May 1, 1989 in their
entirety. The management agreements provide that all salary amounts otherwise
payable by the Company to Messers. Lindsay and Harvey be paid to Associates
Ltd.. and ARH Management Ltd. , respectively. Under the agreements, each of
Messers. Lindsay and Harvey receive a base fee of $180,000 annually plus an
allowance for equivalent insurance benefits (approximately $750 per month). The
base fee may be renegotiated annually at the request
8
of either party to the management agreements. If the parties cannot agree on the
renegotiated base fee, then the base fee is increased by the greater of 5% or
the amount of the cost of living index as published by the Canadian federal
government. The management agreements are each for a period of 36 months
automatically renewing for subsequent one-year periods unless either party gives
the other party notice of non-renewal at least 90 days prior to the end of any
term. In October 2000, the Company elected to not renew these agreements, which
expired on February 2001. In connection with this non-renewal, each of
Associates Ltd. and ARH Management Ltd. demanded payment from the Company of a
termination fee equal to $297,675 based on the terms of the management
agreements. The Company disputes its obligations to pay the termination fees
based on a breach by Messrs. Lindsay and Harvey of their fiduciary duties to the
Company as directors and executive officers. This matter is currently in
litigation.
On August 15, 1994 the Company entered into management agreements with
Messrs. Lindsay and Harvey which are effective in the event of a change in
control of the Company. Similar managementManagement agreements were provided to Mr. Modesto on November 19, 1996 and
to Mr. Simmerman on October 23, 1998. The management agreements provide for a
lump sum distribution in an amount (taking into account all other applicable
change in control payments by the Company) not to exceed 299% of the base amount
as defined in IRC Section 280G (b) upon a change in control of the Company. Such
"base amount" is generally equivalent to the applicable person's average annual
compensation from the Company includable in his gross income over the preceding
five years. Change of control is therein defined to include only the following:
(i)the acquisition (whether direct or indirect) of shares in excess of 20% of
the outstanding shares of Common Stock of the Company by a person or group of
persons, other than through a public equity offering by the Company;
(ii)the occurrence of any transaction relating to the Company required to be
described pursuant to the requirements of item 6(e) of Schedule 14A of
Regulation 14A of the SEC under the Securities and Exchange Act of 1934; or
(iii)any change in the composition of the Board of Directors of the Company
resulting in a majority of the present directors not constituting a majority;
provided, that in making such determination directors who were elected by, or on
the recommendation of, such present majority, shall be excluded.
On August 15, 1994 and on December 8, 1999, the Company provided director's
agreements to Messrs. Hodges and Olson. The director's agreements are effective
in the event of a change in control of the Company. The director's agreements
provide for a lump sum distribution not to exceed $100,000 to each of Messrs.
Hodges and Olson upon a change in control of the Company. The terms "change in
control" has the same definition as set forth above in connection with the
management agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During8. Information and Background of Officers and Directors
The following table shows the fiscal year ended June 30, 2000 Messrs. Gray, Hodgespositions held by the Company's officers and
Olsondirectors. The directors were membersappointed and will serve until the next annual
meeting of the Company's Compensation Committee.stockholders, and until their successors have been
elected and have qualified. The Compensation
Committee held no formal meetings duringofficers were appointed to their positions, and
continue in such positions at the fiscal year ended June 30,discretion of the directors.
Name Age Position
- ---- --- --------
Lawrence G. Olson 64 Chairman of the Board, CEO, President and Director
Paul A. Hodges 75 Director
Stanley A. Ratzlaff 66 Director
M. William Lightner, Jr. 67 Director
Ryan A. Modesto 46 Vice President of Finance, Secretary
Gary L. Simmerman 51 Vice President of Operations
Lawrence G. Olson - age 64, Chairman of the Board, Chief Executive Officer,
President and a Director. Mr. Olson became a director of the Company on March
15, 1999 in connection with the acquisition of Arizona Mica Properties Inc. On
October 25, 2000 but metMr. Olson was appointed Chairman, President and Chief Executive
Officer of the Company. Mr. Olson has owned and operated his own business, Olson
Precast of Arizona Inc., since 1973. Mr. Olson received a B.S. in Civil
Engineering from the University of Southern California in 1959. In 1998, Olson
Precast of New Mexico, Inc., a company controlled by Mr. Olson, was liquidated
under the United States bankruptcy laws in proceedings in the
context of regular Board meetings.
9
12
REPORT OF THE BOARD ON EXECUTIVE COMPENSATION
OVERALL POLICY
Salary compensationUnited States Bankruptcy Court for the district of New Mexico. Mr. Olson is a
member of the Company's Executive Officers is determined
byAudit Committee and the Compensation Committee.
The directors' consideration of and decisions
regarding executive compensation are guided byPaul A. Hodges - age 75, Director. Mr. Hodges has been a number of factors described
below. The objectives of the Company's total executive compensation package are
to attract and retain the best possible executive talent, to provide an economic
framework to motivate the Company's executives to achieve goals consistent with
the Company's business strategy, to provide an identity between executive and
stockholder interests through stock option plans and to provide a compensation
package that recognizes an executive's individual results and contributions in
addition to the Company's overall business results.
In making recommendations concerning executive compensation the
Compensation Committee reviews individual executive compensation, corporate
performance, stock price appreciation and total return to the Company's
stockholders.
SALARIES
The Company's executive compensation consists of two key elements;
salary and stock options. The Compensation Committee determines salary levels of
officers and employee stock option awards.
Executive Officers' salaries are determined by evaluating the
responsibilities of the Executive Officers' position, individual experience, and
by reference to the competitive marketplace for executive talent, including a
comparison of salaries for comparable positions at other mining companies.
The Compensation Committee at its year-end meetings generally
establishes the salary levels of the Executive Officersdirector of the Company
since October 1, 1993. He has a degree in Mining Engineering from the Colorado
School of Mines and is a registered professional engineer in Arizona. Mr. Hodges
has over 40 years experience in the mining industry, covering exploration,
operations, project startups, management and financing. Mr. Hodges was the Chief
Engineer worldwide for open pit mining for RTZ and the following fiscal year. Specific individual performance and overall corporate and
business segment performance are reviewedPresident of Anamax
Mining Company at Twin Buttes. Most recently Mr. Hodges was the President of
Compania Minera El Indio. He was a director of Lac Minerals Limited, a publicly
traded company acquired by American Barrick in determininglate 1994. Mr. Hodges is the
compensation level
of each individual Executive Officer. The Board where appropriate, also
considers other performance measures, such as safety, environmental awareness
and improvements in relations with stockholders, employees, the public and
government regulators.
The Company's Compensation Committee increased Mr. Lindsay's salary as
Chief Executive Officer to $198,450 on February 1, 2000. This represented a 5%
increase in base fees over the annual base fees of $189,000 established on
February 1, 1999. The Compensation Committee's decision to increase Mr.
Lindsay's salary was based on its desire to adjust Mr. Lindsay's compensation to
bring it in line with industry standards.
The Company's Compensation Committee increased Mr. Harvey's salary as
Executive Vice-President and Secretary to $198,450 on February 1, 2000. This
represented a 5% increase in base fees over the annual base fees of $189,000
established on February 1, 1999. The Compensation Committee's decision to
increase Mr. Harvey's salary was based on its desire to adjust Mr. Harvey's
compensation to bring it in line with industry standards.
During fiscal year 2000, year-end bonuses for all employees and
officers were calculated at 5% of base salary or fees paid during calendar 1999.
STOCK OPTIONS
Under the Company's 1989 Stock Option Plan, as amended ("the Plan"),
which was approved by the Company's stockholders, stock options are granted to
the Company's officers, directors and key employees, including the individuals
whose compensation is detailed in this Proxy Statement. The Board determines the
sizeChairman of the stock option grants based on certain factors, including competitive
compensation data similar to those used to determine salaries.
Stock options are intended to align the interestsAudit Committee and a member of the executives
with those of the Company's stockholders. All stock options granted under the
Plan are granted with an exercise price equal to at least the market price of
the
10
13
Common Stock on the date of grant and are generally exercisable over a five-year
period. This approach is designed to provide executive incentive for the
creation of additional stockholder value over the long term since the benefit of
the option award cannot be realized unless the stock price appreciates.
CONCLUSION
The Company's executive compensation is linked to individual and
corporate performance. The Board intends to continue the policy of linking
executive compensation to corporate performance, recognizing that the ups and
downs of the business cycle, and in particular depressed mineral prices, from
time to time, may result in an imbalance in executive compensation and corporate
performance for a particular period.
This report has been provided by the Board of Directors.
Lawrence G. Olson Anthony R. Harvey
Paul A. HodgesCompensation Committee.
Stanley A. Ratzlaff - age 66, Director. Mr. Ratzlaff became a director of the
Company on February 13, 2001. Mr. Ratzlaff a Financial Consultant and CPA has a
B.A., cum laude, from San Jose State University. He also completed the Advanced
Management Program at Harvard Business School. Mr. Ratzlaff worked from 1961 to
1969 for the public accounting firm of Ernst & Young. Since that time Mr.
Ratzlaff has held the following positions: Assistant Controller of Atlantic
Richfield Company, Corporate Controller of Standard Oil Company (OHIO), Vice
President and Controller of Occidental Petroleum Corporation and Vice President
and Controller of Pacific Enterprises. From 1994 to present, Mr. Ratzlaff has
been a consulting CFO for small companies. Mr. Ratzlaff is a director and past
chairman of a non- profit entity.
M. William Lightner Jr. 11
14
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph shows- age 67, Director. Mr. Lightner became a director of
the cumulative total stockholder return on
the Company's Common Stock compared to the cumulative total return of two other
stock market indices: (i) The American Stock Exchange Market Index (U.S.) (the
"Amex Market Index (U.S.)"),Company March 6, 2001. Mr. Lightner a Financial Consultant and (ii) the Peer Group Index of similar
line-of-business companies as described below. The time period graphed is the
periodCPA has a
B.S. in Commerce from July 1, 1995 through June 30, 2000.
The AMEX Market Index (U.S.) is an index comprising all domestic common
shares traded on The American Stock Exchange. The Peer Group Index includes dataGrove City College and a MBA from the following five companies: Benguet Corporation, Freeport McMoran Copper
& Gold, Rio Tinto PLC (formerly RTZ Corp. PLC), Canyon Resources Corp. and Hecla
Mining Co. allUniversity of
which are listed on AMEX or the NYSE.
CUMULATIVE TOTAL STOCKHOLDER RETURN(1)(2)(3)
[LINE GRAPH]
[PLOTPOINTS FOR LINE GRAPH]
- -------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
- -------------------------------------------------------------------------------------------
Azco Mining Inc. 100 104.17 87.50 45.83 62.50 79.17
- -------------------------------------------------------------------------------------------
Peer Group Index 100 83.80 83.12 44.43 49.56 28.23
- -------------------------------------------------------------------------------------------
AMEX Market Index 100 114.50 121.78 140.79 138.50 159.25
- -------------------------------------------------------------------------------------------
12
15
(1) Assumes $100 invested on July 1, 1995 in the Company's Common Stock,
the AMEX Market Index, and the Peer Group IndexPennsylvania, Wharton School of alike
line-of-business companies.
(2) Total stockholder return assumes reinvestment of dividends.
(3) Where applicable, Canadian currency has been translated to U.S.
dollars.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP to audit
the Company's financial statements prepared in connectionBusiness. Mr. Lightner spent 31 years with the
submittalpublic account firm Arthur Andersen & Co., retiring in 1989 as a Partner. Mr.
Lightner became involved in leveraged buy-outs and held the positions of
Chairman of Mica Resources and Financial Vice President of Merit Energy. Most
recently Mr. Lightner held the positions of CFO and Executive Vice President at
Consumer Packaging, Inc. (1994 to 1999) and Anchor Glass Container Corp. (1997
to 2001). Mr. Lightner remains a director of Anchor Glass Containers Corp.
Ryan A. Modesto -- age 46, Vice President of Finance, Corporate Secretary. Mr.
Modesto joined the Company in June 1994 as the Controller of the Company's Report on Form 10-K for the fiscal year ended June 30, 2000. The
Board of Directors recommends that the stockholders ratify its selection of
PricewaterhouseCoopers LLPSanchez
Project. On January 1, 1996 he was elected as the Company's independent public accountantsCorporate Controller
and authorizePrincipal Accounting Officer, in October 1998 he was appointed
Vice-President of Finance, and on October 25, 2001 he was elected as Corporate
Secretary of the BoardCompany. Mr. Modesto earned a B.S. in Accounting from the
University of Directors to fixUtah in 1977 and approve directors' remuneration.
PricewaterhouseCoopers LLP has audited the Company's financial statements since
1991.
The shares25 years of Common Stock represented by the proxiescorporate management, accounting
and administrative experience in the accompanying form will be voted "FOR"mining industry. For the ratificationsix years prior to
joining the Company Mr. Modesto was the Controller of the appointmentSanta Fe Mine for
Corona Gold Inc. in Nevada.
Gary L. Simmerman -- age 51, Vice President of PricewaterhouseCoopersOperations. Mr. Simmerman joined
the Company in September 1992 as Chief Engineer of the Company's independent public accountants unlessSanchez Project and in
October 1998 was elected as Vice-President of Operations. Mr. Simmerman, who has
a contrary direction is indicated.
TheB.S. in Mining Engineering from the University of Arizona, has worked in the
mining industry since 1974, and has been involved in exploration, development
and production operations in gold, silver, copper, cobalt, coal and uranium. For
the five years prior to joining the Company has requested representativesMr. Simmerman was Chief Engineer for
Santa Fe Pacific Gold's Rabbit Creek Mine and was involved in the original
determination of PricewaterhouseCoopersthe ore reserves and the feasibility stage through startup,
production and expansion to be present at the Meeting, will make available to such representatives an
opportunity to make a statement if they so desire and expects them to be
available to respond to appropriate questions.
STOCKHOLDER PROPOSALS200,000 ton per day operation.
9. Stockholder Proposals
Proposals by stockholders of the Company to be presented at the next annual
meeting of stockholders must be received by the Company a reasonable amount of
time prior to such meeting to be included in the Company's proxy statement and
proxy for that meeting. If a stockholder intends to submit a proposal at the
Meeting that is not included in the Company's Proxy Statement, and the
stockholder fails to notify the Company of such proposal a reasonable amount of
time before the Company mails the proxy materials for the Meeting, then the
proxies appointed by the Company's management will be allowed to use their
discretionary voting authority when the proposal is raised at the Meeting
without any discussion on the matter in the Proxy Statement. The proponent must
be a stockholder of record or a beneficial owner entitled to vote on his or her
proposal at the next annual meeting and must continue to own such security
entitling him or her to vote through that date on which the meeting is held. The
proponent must own 1% or
10
more of the outstanding shares, or $2,000.00 in market value, of the Company's
Common Stock and must have owned such shares for one year in order to present a
stockholder proposal to the Company.
ANNUAL REPORT ON FORM 10-K11
PROPOSAL NO. 1:
ELECTION OF BOARD MEMBERS
The Annual Report on Form 10-K concerning the operationBylaws of the Company duringprovide that the number of directors that shall
constitute the whole board shall be not less than one (1). The number of
directors presently comprising the Board of Directors is four (4).
Nominees
Unless otherwise directed in the enclosed proxy, it is the intention of the
persons named in such proxy to nominate and to vote the shares represented by
such proxy for the election of the following named nominees for the office of
director of the Company, to hold office until next annual meeting of the
shareholders or until their respective successors shall have been duly elected
and shall have qualified. Each of the nominees is presently a director of the
Company.
1. Information Concerning Nominees
Name Age Position
- ---- --- --------
Lawrence G. Olson 64 Chairman of the Board, CEO, President and Director
Paul A. Hodges 75 Director
Stanley A. Ratzlaff 66 Director
M. William Lightner, Jr. 67 Director
Lawrence G. Olson - age 64, Chairman of the Board, Chief Executive Officer,
President and a Director. Mr. Olson became a director of the Company on March
15, 1999 in connection with the acquisition of Arizona Mica Properties Inc. On
October 25, 2000 Mr. Olson was appointed Chairman, President and Chief Executive
Officer of the Company. Mr. Olson has owned and operated his own business, Olson
Precast of Arizona Inc., since 1973. Mr. Olson received a B.S. in Civil
Engineering from the University of Southern California in 1959. In 1998, Olson
Precast of New Mexico, Inc., a company controlled by Mr. Olson, was liquidated
under the United States bankruptcy laws in proceedings in the United States
Bankruptcy Court for the district of New Mexico. Mr. Olson is a member of the
Audit Committee and the Compensation Committee.
Paul A. Hodges - age 75, Director. Mr. Hodges has been a director of the Company
since October 1, 1993. He has a degree in Mining Engineering from the Colorado
School of Mines and is a registered professional engineer in Arizona. Mr. Hodges
has over 40 years experience in the mining industry, covering exploration,
operations, project startups, management and financing. Mr. Hodges was the Chief
Engineer worldwide for open pit mining for RTZ and the President of Anamax
Mining Company at Twin Buttes. Most recently Mr. Hodges was the President of
Compania Minera El Indio. He was a director of Lac Minerals Limited, a publicly
traded company acquired by American Barrick in late 1994. Mr. Hodges is the
Chairman of the Audit Committee and a member of the Compensation Committee.
Stanley A. Ratzlaff - age 66, Director. Mr. Ratzlaff became a director of the
Company on February 13, 2001. Mr. Ratzlaff a Financial Consultant and CPA has a
B.A., cum laude, from San Jose State University. He also completed the Advanced
Management Program at Harvard Business School. Mr. Ratzlaff worked from 1961 to
1969 for the public accounting firm of Ernst & Young. Since that time Mr.
Ratzlaff has held the following positions: Assistant Controller of Atlantic
Richfield Company, Corporate Controller of Standard Oil Company (OHIO), Vice
President and Controller of Occidental Petroleum Corporation and Vice President
and Controller of Pacific Enterprises. From 1994 to present, Mr. Ratzlaff has
been a consulting CFO for small companies. Mr. Ratzlaff is a director and past
chairman of a non- profit entity.
M. William Lightner Jr. - age 67, Director. Mr. Lightner became a director of
the Company March 6, 2001. Mr. Lightner a Financial Consultant and CPA has a
B.S. in Commerce from Grove City College and a MBA from the University of
Pennsylvania, Wharton School of Business. Mr. Lightner spent 31 years with the
public account firm Arthur Andersen & Co., retiring in 1989 as a Partner. Mr.
Lightner became involved in leveraged buy-outs and held the positions of
Chairman of Mica Resources and Financial Vice President of Merit Energy. Most
recently Mr. Lightner
12
held the positions of CFO and Executive Vice President at Consumer Packaging,
Inc. (1994 to 1999) and Anchor Glass Container Corp. (1997 to 2001). Mr.
Lightner remains a director of Anchor Glass Containers Corp.
The Board of Directors does not contemplate that any of the above-named
nominees for director will refuse or be unable to accept election as a director
of the Company, or be unable to serve as a director of the Company. Should any
of them become unavailable for nomination or election or refuse to be nominated
or to accept election as a director of the Company, then the persons named in
the enclosed form of proxy intend to vote the shares represented in such proxy
for the election of such other person or persons as may be nominated or
designated by the Board of Directors. No nominee is related by blood, marriage,
or adoption to another nominee or to any executive officer of the Company or its
subsidiaries or affiliates.
Assuming the presence of a quorum, each of the nominees for director of the
Company requires for his election the approval of the holders of a plurality of
the shares of Common Stock represented and voting at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
INDIVIDUALS NOMINATED FOR ELECTION AS A DIRECTOR.
13
PROPOSAL NO. 2:
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers, LLP to audit
the Compnay's financial statements prepare in connection with the submittal of
the Company's report of Form 10-K for the fiscal year ended June 30, 2000, including certified financial
statements for the year then ended, is being mailed to each stockholder of the
Company with this Notice of Annual Meeting. Additional copies of the Annual
Report may be obtained without charge upon written request to the Secretary of
the Company, at the corporate office located at 7239 N. El Mirage Road,
Glendale, Arizona 85307.
13
16
OTHER MATTERS2002. The
Board of Ditrectos recommends that the stockholders ratify its selection of
PricewaterhouseCoopers, LLP as the Company's independent public accountants and
authorize the Board of Directors knowsto fix and approve directors' remuneration.
PricewaterhouseCoopers, LLP has audited the Company's financial statements since
1991.
The shares of no other business to be presented atCommon Stock represented by the Annual Meeting of Stockholders. If other matters properly come before the
Annual Meeting of the Stockholders, the persons namedproxies in the accompanying
form of proxy intend to vote on such other matters in accordance with their best
judgment.
By Orderwill be voted "FOR" the ratification of the Board
April 12, 2001 Lawrence G. Olson,
Chairmanappointment of
the Board
14
17
APPENDIX A
AZCO MINING INC.
AUDIT COMMITTEE CHARTER
MISSION STATEMENT
The audit committee will assist the board of directors in its financial
oversight responsibilities. The audit committee will review the financial
reporting process, the system of internal control, the audit process, and the
Company's process for monitoring compliance with laws and regulations and the
code of conduct.
ORGANIZATION
The Board of Directors of Azco Mining Inc. shall appoint, on an annual basis, no
less than three ofPricewaterhouseCooper as the Company's independent directorspublic accountants unless a
contrary direction is indicated.
The Company has requested representatives of PricewaterhouseCoopers to serve onbe
present at the Company's
Audit Committee. A chairperson shallMeeting, will make available to such representatives an
opportunity to make a statement if they so desire and expects them to be
appointed and the independence of all
committee members shall be in compliance with the American Stock Exchange's
independent director and Audit Committee listing standards.
The Audit Committee shall meet, either telephonic or in person, a minimum of
four times a yearavailable to review and recommendrespond to the board for approval the
Company's quarterly filings on Form 10-Q and its annual report on Form 10-K.
RESPONSIBILITIES
Review the performance of the external auditors and report to the board of
directors the appointment or discharge of the external auditors.
Review the annual financial statements and determine whether they are complete
and consistent with the information known to committee members and assess
whether the financial statements reflect appropriate accounting principles. Meet
with management and the external auditors, either telephonically or in person,
to review the financial statements and the result of the audit.
Ensure that significant findings and recommendations made by the external
auditors are received and discussed on a timely basis.
Review quarterly reports on a pre-issuance basis and obtain explanations from
management and the external auditors as to whether:
- Actual financial results for the quarter varied significantly from
projected results.
- There are changes in accounting or financial reporting practices.
- There are any significant or unusual events or transactions.
- The company has complied with the terms of all loan agreements or
security indentures.
- The interim financial statements contain adequate and appropriate
disclosures.
Review the findings of any examinations by regulatory agencies such as the SEC
and the AMEX.
Review adequacies and effectiveness of the company's internal controls.
Review and update the charter and receive approval of changes from the board.
Accepted by the Audit Committee of Azco Mining Inc. on June 8, 2000.
Lawrence G. Olson
Dr. Ian M. Gray
Paul A. Hodges
18
THIS PROXY IS SOLICITED BYquestions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE COMPANY
The undersigned shareholder of Azco Mining Inc. (the "Company") hereby appoints
Lawrence G Olson and Ryan A. Modesto, or either of them, as proxy, of the
undersigned to attend, vote and act for and in the name of the undersigned at
the Annual Meeting of the Shareholders of the Company (the "Meeting") to be held
in the board room of the Company's Corporate office at 7239 N. El Mirage Road,
Glendale, Arizona, on, May 16, 2001, at the hour of 10:00 a.m. (local time), and
at every adjournment thereof, and the undersigned hereby revokes any former
proxy given to attend and vote at the meeting.
EACH IS HEREBY INSTRUCTED TO VOTEAPPOINTMENT OF
PRICEWATERHOUSECOOPERS, LLP AS FOLLOWS WITH RESPECT TO THE FOLLOWING
MATTERS:
1. FOR [ ] The following nominees for Director - Lawrence G. Olson,
Paul A. Hodges, Stanley A. Ratzlaff and M. William
Lightner, Jr., except the following nominees
_____________________________________________________.
WITHHOLD [ ] From All Nominees.
ABSTAIN [ ]
2. FOR [ ] AGAINST [ ] ABSTAIN [ ] To appoint PricewaterhouseCoopers
as auditors and to authorize the
directors to fix the auditors'
remuneration.
THIS PROXY WILL BE VOTED FOR OR AGAINST OR WITHHELD OR ABSTAINED IN RESPECT OF
THE MATTERS LISTED IN ACCORDANCE WITH THE CHOICE, IF ANY, INDICATED IN THE SPACE
PROVIDED. IF NO CHOICE IS INDICATED, THE PROXY WILL BE VOTED "FOR" SUCH MATTER.
IF ANY AMENDMENTS OR VARIATIONS ARE TO BE VOTED ON, OR ANY FURTHER MATTERS COME
BEFORE THE MEETING, THIS PROXY WILL BE VOTED ACCORDING TO THE BEST JUDGMENT OF
THE PERSON VOTING THE PROXY AT THE MEETING. THIS FORM SHOULD BE READ IN
CONJUNCTION WITH THE ACCOMPANYING NOTICE OF MEETING AND PROXY STATEMENT.
DATED this ________day of __________, 2001.
___________________________________
Signature of Shareholder
___________________________________
(Please print name of Shareholder)
NOTES:
1. Please date and sign (exactly as the shares represented by this Proxy are
registered) and return promptly. Where the instrument is signed by a
corporation, its corporate seal must be affixed and execution must be made by
an officer or attorney thereof duly authorized. If no date is stated by the
shareholders, the Proxy is deemed to bear the date upon which it was mailed
by management to the shareholder.
2. To be valid, this Proxy form, duly signed and dated, must arrive at the
office of the Company's transfer agent, Computershare Trust Company of
Canada, 510 Burrard Street, Vancouver, British Columbia, V6C 3B9 not less
than forty-eight (48) hours (excluding Saturdays, Sundays and holidays)
before the day of the Meeting or any adjournment thereof.INDEPENDENT PUBLIC ACCOUNTANTS.
14