AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 6, 2002
REGISTRATION NO. 333-100850
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
AMENDMENT NO. 1
TO
FORM F-10
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
----------------------
AGNICO-EAGLE MINES LIMITED
(Exact name of Registrant as specified in its charter)
ONTARIO, CANADA 1041 NOT APPLICABLE
(Province or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.,
incorporation or organization) Classification Code Number) if applicable)
145 KING STREET EAST, SUITE 500, TORONTO, ONTARIO, CANADA M5C 2Y7,
(416) 947-1212
(Address and telephone number of Registrant's principal executive offices)
DAVID J. LEVENSON
TROUTMAN SANDERS LLP
1660 INTERNATIONAL DRIVE, SUITE 600
MCLEAN, VIRGINIA 22102
(703) 734-4328
(703) 734-4340 (FAX)
(Name, address and telephone number of agent for service in the United States)
-------------------------
COPIES TO:
SEAN BOYD BRICE T. VORAN PHILIPPE TARDIF PATRICIA OLASKER
Agnico-Eagle Mines Limited Shearman & Sterling Lang Michener Davies Ward Phillips &
145 King Street East Commerce Court West BCE Place, Suite 2500 Vineberg LLP
Suite 500 199 Bay Street, Suite 4405 181 Bay Street 1 First Canadian Place
Toronto, Ontario M5C 2Y7 Toronto, Ontario M5L 1E8 Toronto, Ontario M5J 2T7 Suite 4400
(416) 947-1212 (416) 360-8484 (416) 360-8600 Toronto, Ontario M5X 1B1
(416) 367-4681 (fax) (416) 360-2958 (fax) (416) 304-3761 (fax) (416) 863-0900
(416) 863-0871 (fax)
------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
PROVINCE OF ONTARIO, CANADA
(Principal jurisdiction regulating this offering)
It is proposed that this filing shall become effective (check appropriate box):
A. /X/ Upon filing with the Commission, pursuant to Rule 467(a) (if in
connection with an offering being made contemporaneously in the
United States and Canada).
B. / / At some future date (check appropriate box below).
1. / / Pursuant to Rule 467(b) on ( ) at ( ) (designate a
time not sooner than seven calendar days after filing).
2. / / Pursuant to Rule 467(b) on ( ) at ( ) (designate a
time seven calendar days or sooner after filing) because the
securities regulatory authority in the review jurisdiction
has issued a receipt or notification of clearance on ( ).
3. / / Pursuant to Rule 467(b) as soon as practicable after
notification of the Commission by the Registrant or the
Canadian securities regulatory authority of the review
jurisdiction that a receipt or notification of clearance has
been issued with respect hereto.
4. / / After the filing of the next amendment to this form (if
preliminary material is being filed).
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to the home jurisdiction's shelf prospectus
offering procedures, check the following box. / /
----------------------
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED SECURITY PRICE REGISTRATION FEE(3)
Units(1)(2)....................... 13,800,000 US$13.90 US$191,820,000 US$17,647.44
Common Shares(2).................. 13,800,000 -- -- --
Warrants to Purchase Common
Shares(2)........................ 6,900,000 -- -- --
Common Shares Underlying
Warrants(2)...................... 6,900,000 US$19.00 US$131,100,000 US$12,061.20
(1) Each Unit consists of one common share and one-half of a common share
purchase warrant. Each whole warrant entitles the holder to purchase one
common share.
(2) Includes shares which the underwriters have the option to purchase from the
company to cover over-allotments, if any.
(3) $28,513.10 of such fee was previously paid upon the initial filing of this
registration statement. The additional registration fee is $1,195.54.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PART I
INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS
I-1
PROSPECTUS
12,000,000 COMMON SHARES AND
6,000,000 SHARE PURCHASE WARRANTS
[LOGO]
AGNICO-EAGLE MINES LIMITED
UNITS
------------------
Agnico-Eagle Mines Limited (the "Company") is offering in Canada and the
United States a total of 12,000,000 units of the Company (the "Units"), each
Unit consisting of one common share of the Company (a "Common Share") and
one-half of one share purchase warrant of the Company (a "Warrant"), at a price
of $13.90 per Unit.
Each whole Warrant will entitle the holder to purchase one Common Share for
a price of $19.00 at any time on or prior to five years from the date of the
closing of this offering. The Warrants will be issued in registered form. The
Common Shares and the Warrants comprising the Units will separate immediately
upon the closing of this offering. See "Details of the Offering".
The outstanding Common Shares of the Company are listed on The Toronto Stock
Exchange (the "TSX") under the symbol "AGE" and the New York Stock Exchange (the
"NYSE") under the symbol "AEM". The TSX has conditionally approved the listing
of the Common Shares and Warrants comprising the Units and the Common Shares
issuable on exercise of the Warrants. Listing is subject to the Company
fulfilling all of the requirements of the TSX on or before January 28, 2003,
including, in the case of the Warrants, distribution of the Warrants to a
minimum number of public security holders. The NYSE has conditionally approved
the listing of the Common Shares comprising part of the Units and the Common
Shares issuable on exercise of the Warrants, subject to official notice of
issuance. The Company's application to include the Warrants for quotation on the
Nasdaq National Market ("Nasdaq") has been conditionally approved. Quotation is
subject to fulfilling all of the requirements of Nasdaq, including distribution
of Warrants to a minimum number of public security holders. It is anticipated
that Warrants will be listed on the TSX under the symbol "AGE.WT.U" and quoted
on Nasdaq under the symbol "AEMLW". The closing price of the Common Shares on
November 5, 2002 on the TSX was C$19.12 per share and on the NYSE was
$12.28 per share.
INVESTING IN THE COMMON SHARES AND WARRANTS COMPRISING THE UNITS INVOLVES
RISKS THAT ARE DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE 4 OF
THIS PROSPECTUS.
WE ARE PERMITTED TO PREPARE THIS PROSPECTUS IN ACCORDANCE WITH CANADIAN
DISCLOSURE REQUIREMENTS, WHICH ARE DIFFERENT FROM THOSE OF THE UNITED STATES.
ALTHOUGH WE CURRENTLY PREPARE OUR FINANCIAL STATEMENTS IN ACCORDANCE WITH UNITED
STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, SOME FINANCIAL STATEMENTS
INCORPORATED BY REFERENCE HEREIN HAVE, AS INDICATED, BEEN PREPARED IN ACCORDANCE
WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND ARE SUBJECT TO
CANADIAN AUDITING AND AUDITOR INDEPENDENCE STANDARDS. AS A RESULT, THESE
FINANCIAL STATEMENTS MAY NOT BE COMPARABLE TO FINANCIAL STATEMENTS OF UNITED
STATES COMPANIES.
OWNING THE COMMON SHARES AND THE WARRANTS MAY SUBJECT YOU TO TAX
CONSEQUENCES BOTH IN THE UNITED STATES AND CANADA. THIS PROSPECTUS MAY NOT
DESCRIBE THESE TAX CONSEQUENCES FULLY. YOU SHOULD READ THE TAX DISCUSSION UNDER
"CANADIAN FEDERAL INCOME TAX CONSIDERATIONS" AND "UNITED STATES FEDERAL INCOME
TAX CONSIDERATIONS".
YOUR ABILITY TO ENFORCE CIVIL LIABILITIES UNDER THE UNITED STATES FEDERAL
SECURITIES LAWS MAY BE AFFECTED ADVERSELY BECAUSE WE ARE INCORPORATED IN
ONTARIO, SOME OF OUR OFFICERS AND DIRECTORS AND SOME OF THE EXPERTS NAMED IN
THIS PROSPECTUS ARE CANADIAN RESIDENTS, AND SUBSTANTIALLY ALL OF OUR ASSETS AND
THE ASSETS OF THOSE OFFICERS, DIRECTORS AND EXPERTS ARE LOCATED OUTSIDE OF THE
UNITED STATES.
--------------------
PER UNIT TOTAL
-------- -----
Public offering price....................................... $13.90 $166,800,000
Underwriting commission..................................... $.556 $6,672,000
Proceeds, before expenses, to Agnico-Eagle Mines Limited.... $13.344 $160,128,000
The public offering price for Units offered in the United States is payable
in US dollars and the public offering price for Units offered in Canada is
payable in Canadian dollars. The US dollar amount is the equivalent of the
Canadian price of the Units being offered hereby.
The Underwriters may also purchase up to 1,800,000 Units from the Company at
the public offering price, less the underwriting commission, within 30 days
after the date of this prospectus solely to cover over-allotments, if any.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The Units will be ready for delivery on or about November 14, 2002.
--------------------
MERRILL LYNCH & CO. TD SECURITIES
SCOTIA CAPITAL (USA) INC.
YORKTON CAPITAL INC.
CIBC WORLD MARKETS
SALOMON SMITH BARNEY
DUNDEE SECURITIES
SPROTT SECURITIES
------------------
The date of this prospectus is November 6, 2002.
TABLE OF CONTENTS
PAGE
--------
THE OFFERING............................ 3
RISK FACTORS............................ 4
FORWARD-LOOKING STATEMENTS.............. 9
THE COMPANY............................. 9
RECENT DEVELOPMENTS..................... 11
USE OF PROCEEDS......................... 13
CAPITALIZATION.......................... 14
DESCRIPTION OF SHARE CAPITAL............ 15
DIVIDEND POLICY......................... 15
CANADIAN FEDERAL INCOME TAX
CONSIDERATIONS........................ 16
UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS........................ 19
DETAILS OF THE OFFERING................. 22
PAGE
--------
PLAN OF DISTRIBUTION.................... 25
RELATIONSHIP BETWEEN ISSUER AND CERTAIN
UNDERWRITERS.......................... 27
LEGAL MATTERS........................... 27
AUDITORS, TRANSFER AGENT AND
REGISTRAR............................. 27
DOCUMENTS INCORPORATED BY REFERENCE..... 27
AVAILABLE INFORMATION................... 28
ENFORCEABILITY OF CERTAIN CIVIL
LIABILITIES........................... 29
DOCUMENTS FILED AS PART OF THE
REGISTRATION STATEMENT................ 29
Only the information contained or incorporated by reference in this
prospectus should be relied upon. The Company has not authorized any other
person to provide different information. If anyone provides different or
inconsistent information, it should not be relied upon. The Units offered
hereunder may not be offered or sold in any jurisdiction where the offer or sale
is not permitted. Unless otherwise indicated, the statistical, operating and
financial information contained in this prospectus is presented as at
December 31, 2001. It should be assumed that the information appearing in this
prospectus and the documents incorporated by reference is accurate only as of
their respective dates. The Company's business, financial condition, results of
operations and prospects may have changed since those dates.
IN THIS PROSPECTUS, UNLESS STATED OTHERWISE, "AGNICO-EAGLE", THE "COMPANY",
"WE", "US", AND "OUR" REFER TO AGNICO-EAGLE MINES LIMITED AND ITS CONSOLIDATED
SUBSIDIARY.
The Company publishes its consolidated financial statements in United States
dollars ("US dollars"). Unless otherwise indicated, all references to "$", "US$"
or "dollar" in this prospectus refer to US dollars and "C$" refers to Canadian
dollars. For information purposes, the noon buying rate in The City of New York
for cable transfers in Canadian dollars as certified for customs purposes by the
Federal Reserve Bank of New York (the "Noon Buying Rate") on October 30, 2002
was US$1.00 = C$1.5677 and on November 5, 2002 was US$1.00 = C$1.5563.
To reflect the Company's substantial U.S. shareholder base and to maintain
comparability with other companies in the gold sector, the Company changed its
primary basis of reporting to United States generally accepted accounting
principles ("US GAAP") effective January 1, 2002. For statutory reporting
purposes in Canada, the Company continues to prepare and file consolidated
financial statements and related management discussion and analysis under
Canadian generally accepted accounting principles ("Canadian GAAP"). UNLESS
OTHERWISE STATED HEREIN ALL NUMBERS USED HEREIN WERE PREPARED IN ACCORDANCE WITH
CANADIAN GAAP.
The 2001 Ore Reserve Report dated February 25, 2001 relating to the
Company's LaRonde Division prepared by Marc Legault, the LaRonde Division's
Chief Geologist, contains information concerning drilling methods, sampling
methods and approach, sample preparation, analysis and security, quality control
procedures, data verification and laboratories used for analysis, which
procedures, techniques and laboratories were used by the Company in connection
with the scientific and technical information provided in this prospectus. Marc
Legault is a qualified person as defined under the Canadian Securities
Administrators' National Instrument 43-101 and has supervised the preparation of
and verified the information that forms the basis for the scientific and
technical data contained in this prospectus.
2
THE OFFERING
THE FOLLOWING IS A BRIEF SUMMARY OF SOME OF THE TERMS OF THIS OFFERING. FOR
A MORE COMPLETE DESCRIPTION OF THE TERMS OF THE UNITS, SEE "DETAILS OF THE
OFFERING".
ISSUER: The Company is an established Canadian gold producer with
mining operations located in northwestern Quebec and
exploration and development activities in Canada and the
southwestern United States (principally Nevada). The
Company's operating history includes almost three decades of
continuous gold production, primarily from underground
operations. Since its formation in 1972, the Company has
produced approximately three million ounces of gold. In
2001, the Company produced 234,860 ounces of gold at an
average cash cost of $155 per ounce, net of revenues
received from the sale of zinc, silver and copper
by-products. The Company's principal operating divisions are
the LaRonde Division and the Exploration Division. The
LaRonde Division consists of the LaRonde Mine, including the
El Coco Property, which is 100% owned and operated by the
Company. The LaRonde Mine, with its single operating
production shaft, currently accounts for all of the
Company's gold production. The Company, through its
Exploration Division and its 67.4% owned subsidiary, Sudbury
Contact Mines Limited ("Sudbury Contact"), focuses its
exploration activities primarily on the identification of
new gold reserves and development opportunities in proven
producing regions in Canada and the southwestern United
States. In addition, Sudbury Contact engages in exploration
for deposits of diamonds in northern Ontario.
DETAILS OF THE OFFERING: 12,000,000 Units (13,800,000 Units if the Underwriters'
over-allotment option is exercised in full), each consisting
of one Common Share and one-half of one Warrant.
COMMON SHARES
For a description of the attributes of the Common Shares,
see "Description of Share Capital -- Common Shares".
WARRANTS
Each whole Warrant will entitle the holder to purchase one
Common Share at a price of US$19.00, subject to adjustment
in specified events. Warrants will be exercisable at any
time prior to 5:00 p.m. (Toronto time) on the date which is
five years from the date of the closing of this offering,
after which the Warrants will expire. Holders of Warrants
may elect to pay the exercise price in the Canadian dollar
equivalent of the US dollar exercise price. See "Details of
the Offering -- Warrants".
PRICE: C$21.79 per Unit (US$13.90 per Unit).
USE OF PROCEEDS: The net proceeds of this offering are estimated to be
C$249.6 million (US$159.2 million based on the Noon Buying
Rate on October 30, 2002), determined after deducting the
underwriting commission and estimated expenses of this
offering payable by the Company and assuming no exercise of
the over-allotment option. The net proceeds of this offering
will be used to fund future potential acquisitions, capital
expenditures and for other general corporate purposes.
Pending such application, the net proceeds of the offering
will be temporarily added to cash and short-term deposits
and applied to temporarily reduce amounts outstanding under
the Company's revolving bank credit facility. Although the
Company is examining several acquisition opportunities, no
contract, arrangement or understanding currently exists
regarding any material acquisition.
3
RISK FACTORS
AN INVESTMENT IN THE COMMON SHARES AND THE WARRANTS COMPRISING THE UNITS
INVOLVES CERTAIN RISKS. BEFORE MAKING AN INVESTMENT DECISION, PROSPECTIVE
PURCHASERS SHOULD CAREFULLY CONSIDER ALL OF THE INFORMATION IN THIS PROSPECTUS
AND IN THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN AND, IN PARTICULAR, SHOULD
EVALUATE THE FOLLOWING RISK FACTORS. HOWEVER, THE RISKS DESCRIBED BELOW ARE NOT
THE ONLY ONES FACING THE COMPANY. ADDITIONAL RISKS NOT CURRENTLY KNOWN TO THE
COMPANY OR THAT THE COMPANY CURRENTLY DEEMS IMMATERIAL MAY ALSO IMPAIR THE
COMPANY'S BUSINESS OPERATIONS.
RECENT LOSSES
Although the Company reported net earnings for the nine months ended
September 30, 2002, it incurred net losses in the three months ended
September 30, 2002 and in each of the last five years. The Company's
profitability depends on the price of gold, gold production, cash operating
costs, the prices and production levels of by-product zinc, silver and copper
and other factors discussed in this section of the prospectus. Substantially all
of these factors are beyond the Company's control and there can be no assurance
that the Company will sustain profitability in the near future.
METAL PRICE VOLATILITY
The Company's earnings are directly related to the price of gold as revenues
are derived primarily from gold mining. The Company's general policy is not to
sell forward its future gold production. Gold prices fluctuate widely and are
affected by numerous factors beyond the Company's control, including central
bank sales, producer hedging activities, expectations of inflation, the relative
exchange rate of the US dollar with other major currencies, global and regional
demand and political and economic conditions and production costs in major gold
producing regions. The aggregate effect of these factors is impossible to
predict with accuracy. Gold prices are also affected by worldwide production
levels. In addition, the price of gold has on occasion been subject to very
rapid short-term changes because of speculative activities. Fluctuations in gold
prices may materially adversely affect the Company's financial performance or
results of operations. If the market price of gold falls below the Company's
production costs and remains at such a level for any sustained period, the
Company will experience losses and may curtail or suspend some or all of its
exploration, development and mining activities. The prices received for the
Company's by-products (zinc, silver and copper) affect the Company's ability to
meet its targets for cost per ounce of gold produced. By-product prices
fluctuate widely and are affected by numerous factors beyond the Company's
control.
The volatility of gold prices is illustrated in the following table which
sets forth, for the periods indicated, the high and low afternoon fixing prices
for gold on the London Bullion Market (the "London P.M. Fix") and the average
gold prices received by the Company.
2002
(TO NOVEMBER 5) 2001 2000 1999 1998 1997
---------------- -------- -------- -------- -------- --------
High price ($ per ounce)............................... 330 293 313 326 313 367
Low price ($ per ounce)................................ 277 256 264 253 273 283
Average price received ($ per ounce)................... 308 273 278 274 296 336
On November 5, 2002, the London P.M. Fix was $319 per ounce of gold.
Based on 2002 production estimates, the approximate sensitivities of the
Company's after-tax earnings and cash flows to a 10% change in metal prices from
2001 market average prices are as follows:
EARNINGS PER SHARE CASH FLOW PER SHARE
------------------ -------------------
Gold........................................................ $0.07 $0.12
Zinc........................................................ $0.02 $0.03
Silver...................................................... $0.01 $0.02
Sensitivities of the Company's after-tax earnings and cash flows to changes
in metal prices will increase with increased production.
4
DEPENDENCE ON THE LARONDE DIVISION
The Company's mining and milling operations at the LaRonde Division account
for all of the Company's gold production and will continue to account for all of
its gold production in the future unless additional properties are acquired or
brought into production. Any adverse condition affecting mining or milling
conditions at the LaRonde Division could be expected to have a material adverse
effect on the Company's financial performance and results of operations until
such time as the condition is remedied. In addition, the Company's principal
development program is the expansion of the LaRonde Division. This program
involves the exploration and extraction of ore from new zones and may present
new or different challenges for the Company. There can be no assurance that the
Company's current exploration and development programs at the LaRonde Division
will result in any new economically viable mining operations or yield new
mineral reserves to replace and expand current mineral reserves.
COST OF EXPLORATION AND DEVELOPMENT PROGRAMS
The Company's profitability is significantly affected by the costs and
results of its exploration and development programs. As mines have limited lives
based on proven and probable mineral reserves, the Company actively seeks to
replace and expand its reserves, primarily through exploration and development
and, from time to time, through strategic acquisitions. Exploration for minerals
is highly speculative in nature, involves many risks and frequently is
unsuccessful. Among the many uncertainties inherent in any gold exploration and
development program are the location of economic ore bodies, the development of
appropriate metallurgical processes, the receipt of necessary governmental
permits and the construction of mining and processing facilities. In addition,
substantial expenditures are required to pursue such exploration and development
activities. Assuming discovery of an economic ore body, depending on the type of
mining operation involved, several years may elapse from the initial phases of
drilling until commercial operations are commenced and during such time the
economic feasibility of production may change. Accordingly, there can be no
assurance that the Company's current exploration and development programs will
result in any new economically viable mining operations or yield new reserves to
replace and expand current reserves.
TOTAL CASH COSTS OF GOLD PRODUCTION AT THE LARONDE MINE
The Company's total cash operating costs to produce an ounce of gold are
dependent on a number of factors, including primarily the prices and production
levels of by-product zinc, silver and copper, the revenue from which is offset
against the cost of gold production, the US dollar/Canadian dollar exchange rate
and the net profit royalty on metal production from the adjacent El Coco
Property, which is affected by all of these factors and the gold price. As these
factors are beyond the Company's control, there can be no assurance that the
Company will continue to maintain its status as a low cash cost gold producer.
RESTRICTIONS IN THE BANK CREDIT FACILITY
The Company's $125 million revolving bank credit facility limits, among
other things, the Company's ability to incur additional indebtedness, pay
dividends or make payments in respect of the Common Shares, make investments or
loans, transfer the Company's assets and make expenditures relating to the
LaRonde Mine or the El Coco Property, except as set forth in a mine development
plan delivered pursuant to the credit facility and the ability of its
subsidiaries to make expenditures in excess of $5 million in any fiscal year in
excess of those set forth in the mine development plan. Further, the bank credit
facility requires the Company to maintain specified financial ratios and satisfy
financial condition tests. Events beyond the Company's control, including
changes in general economic and business conditions, may affect the Company's
ability to satisfy these covenants, which could result in a default under the
bank credit facility. If an event of default under the bank credit facility
occurs, the lenders could elect to declare all principal amounts outstanding
thereunder, together with accrued interest, to be immediately due and payable
and to enforce their security interest over substantially all property relating
to the LaRonde Mine and the El Coco Property. An event of default under the bank
credit facility may also give rise to an event of default under existing and
future debt agreements and, in such event, the Company may not have sufficient
funds to repay amounts owing under such agreements.
5
COMPETITION AND SCARCITY OF MINERAL LANDS
Many companies and individuals are engaged in the mining business, including
large, established mining companies with substantial capabilities and long
earnings records. There is a limited supply of desirable mineral lands available
for claim staking, lease or other acquisition in the areas where the Company
contemplates conducting exploration activities. The Company may be at a
competitive disadvantage in acquiring mining properties, as it must compete with
these individuals and companies, many of which have greater financial resources
and larger technical staffs than the Company. Accordingly, there can be no
assurance that the Company will be able to compete successfully for new mining
properties.
RISKS OF ACQUISITIONS
The Company has recently begun to focus on evaluating opportunities to
acquire shares or assets of other mining businesses. Such acquisitions may be
significant in size, may change the scale of the Company's business, and may
expose the Company to new geographic, political, operating, financial or
geological risks. The Company's success in its acquisition activities depends on
its ability to identify suitable acquisition candidates, acquire them on
acceptable terms and integrate their operations successfully with those of the
Company. Any acquisitions would be accompanied by risks, such as the difficulty
of assimilating the operations and personnel of any acquired businesses; the
potential disruption of the Company's ongoing business; the inability of
management to maximize the financial and strategic position of the Company
through the successful integration of acquired assets and businesses; the
maintenance of uniform standards, controls, procedures and policies; the
impairment of relationships with employees, customers and contractors as a
result of any integration of new management personnel; and the potential unknown
liabilities associated with acquired assets and businesses. In addition, the
Company may need additional capital to finance an acquisition. Debt financing
related to any acquisition may expose the Company to increased risk of leverage,
while equity financing may cause existing shareholders to suffer dilution. The
Company is not currently permitted under the terms of its revolving credit
facility to raise additional debt financing without the consent of a majority of
the lenders. There can be no assurance that the Company would be successful in
overcoming these risks or any other problems encountered in connection with such
acquisitions.
UNCERTAINTY OF MINERAL RESERVE AND MINERAL RESOURCE ESTIMATES
The figures for proven and probable mineral reserves and mineral resource
presented herein are estimates, and no assurance can be given that the
anticipated tonnages and grades will be achieved or that the indicated level of
recovery of gold will be realized. The ore grade actually recovered by the
Company may differ from the estimated grades of the mineral reserves and mineral
resource. Such figures have been determined based on assumed gold prices and
operating costs. The Company has estimated proven and probable mineral reserves
based on a $300 per ounce gold price. While gold prices have generally been
above $300 per ounce to date in 2002, for the previous four years the market
price of gold has been, on average, below $300 per ounce. Prolonged declines in
the market price of gold may render mineral reserves containing relatively lower
grades of gold mineralization uneconomic to exploit and could reduce materially
the Company's reserves. Should such reductions occur, the Company could be
required to take a material write-down of its investment in mining properties or
delay or discontinue production or the development of new projects, resulting in
increased net losses and reduced cash flow. If a gold price of $275 per ounce
were assumed, the mineral reserve and mineral resource position would decline by
less than 2%. Market price fluctuations of gold, as well as increased production
costs or reduced recovery rates, may render mineral reserves containing
relatively lower grades of mineralization uneconomical to recover and may
ultimately result in a restatement of mineral resources. Short-term factors
relating to the mineral reserve, such as the need for orderly development of ore
bodies or the processing of new or different grades may impair the profitability
of a mine in any particular accounting period.
Mineral resource estimates for properties that have not commenced production
are based, in most instances, on very limited and widely spaced drill hole
information, which is not necessarily indicative of conditions between and
around the drill holes. Accordingly, such mineral resource estimates may require
revision as more drilling information becomes available or as actual production
experience is gained.
6
MINING RISKS AND INSURANCE
The business of gold mining is generally subject to certain types of risks
and hazards, including environmental hazards, industrial accidents, unusual or
unexpected rock formations, changes in the regulatory environment, cave-ins and
flooding and gold bullion losses. Such occurrences could result in damage to, or
destruction of, mineral properties or production facilities, personal injury or
death, environmental damage, delays in mining, monetary losses and possible
legal liability. The Company carries insurance to protect itself against certain
risks of mining and processing in amounts that it considers to be adequate but
which may not provide adequate coverage in certain unforeseen circumstances. The
Company may also become subject to liability for pollution, cave-ins or other
hazards against which it cannot insure or against which it may elect not to
insure because of high premium costs or other reasons or the Company may become
subject to liabilities which exceed policy limits. In such case, the Company may
be required to incur significant costs that could have a material adverse effect
on its financial performance and results of operations.
LAWS AND REGULATIONS
The Company's mining operations and exploration activities are subject to
extensive Canadian federal and provincial, United States federal and state and
local laws and regulations governing prospecting, development, production,
exports, taxes, labour standards, occupational health and safety, water
disposal, toxic substances, environmental protection, mine safety and other
matters. Compliance with such laws and regulations increases the costs of
planning, designing, drilling, developing, constructing, operating and closing
mines and other facilities. Amendments to current laws and regulations governing
operations and activities of mining companies or more stringent implementation
or interpretation thereof could have a material adverse impact on the Company,
cause a reduction in levels of production and delay or prevent the development
of new mining properties.
In July 2002, the Company paid a C$5,046 fine in respect of a notice of
infraction issued by the Quebec Ministry of the Environment under the LOI SUR LA
QUALITE DE L'ENVIRONNEMENT with respect to a toxic effluent at the LaRonde
Division. The Company has taken measures to prevent the discharge of toxic
effluent, including the installation of on-site water treatment systems, the
last of which is expected to be completed in 2003. In the meantime, the Company
is storing the effluent on site for future treatment. Although the costs of
treatment have not yet been finally determined, the Company believes that such
costs will not have a material effect on the Company's results of operations.
Under mine closure plans originally submitted to the Minister of Natural
Resources in Quebec in 1996, the estimated current reclamation costs for the
LaRonde Division and Joutel are approximately $15 million and $0.5 million,
respectively. These reclamation plans are subject to approval by the Minister of
Natural Resources and there can be no assurance that the Minister of Natural
Resources will not impose additional reclamation obligations with attendant
higher costs. In addition, the Minister of Natural Resources may require that
the Company provide financial assurances to support such plans. At December 31,
2001, the Company had a total reclamation provision of $2.1 million, with
$0.9 million allocated for the LaRonde Division and $1.0 million allocated for
Joutel. Based on the current estimated reclamation costs for the LaRonde
Division, the Company records its annual reclamation provision for the LaRonde
Division at approximately $5 per ounce of gold produced.
CURRENCY FLUCTUATIONS
The Company's operating results and cash flow are significantly affected by
changes in the US dollar/Canadian dollar exchange rate. Exchange rate movements
can have a significant impact as all of the Company's revenues are earned in
US dollars but most of its operating and capital costs are in Canadian dollars.
The US dollar/Canadian dollar exchange rate has varied significantly over the
last several years. During the period from January 1, 1997 to September 30,
2002, the Noon Buying Rate fluctuated from a high of C$1.6128 to a low of
C$1.3357. Historical fluctuations in the US dollar/Canadian dollar exchange rate
are not necessarily indicative of future exchange rate fluctuations. Based on
the Company's anticipated 2002 after-tax operating results, a 10% change in the
average annual US dollar/Canadian dollar exchange rate would affect net income
and operating cash flow by approximately $0.06 per share and $0.10 per share,
respectively. To hedge its foreign
7
exchange risk and minimize the impact of exchange rate movements on operating
results and cash flow, the Company has periodically used foreign currency
options and forward foreign exchange contracts to purchase Canadian dollars.
However, there can be no assurance that the Company's foreign exchange hedging
strategies will be successful or that foreign exchange fluctuations will not
materially adversely affect the Company's financial performance and results of
operations.
INTEREST RATE FLUCTUATIONS
Fluctuations in interest rates can affect the Company's results of
operations and cash flows. The Company's convertible debentures due 2012 are at
a fixed rate of interest; however both its bank debt and cash balances are
subject to variable interest rates.
COMMON SHARE AND WARRANT PRICE VOLATILITY
The trading price of the Common Shares has been and may continue to be
subject to large fluctuations and, therefore, the trading price of the Warrants
may also fluctuate significantly, which may result in losses to investors. The
trading price of the Common Shares and Warrants may increase or decrease in
response to a number of events and factors, including:
- current events affecting the economic situation in Canada and the United
States;
- trends in the mining industry and the markets in which the Company
operates;
- changes in the market price of the commodities the Company sells;
- changes in financial estimates and recommendations by securities analysts;
- acquisitions and financings;
- quarterly variations in operating results;
- the operating and share price performance of other companies that
investors may deem comparable; and
- purchases or sales of blocks of the Common Shares or Warrants.
Part of this volatility, however, is attributable to the current state of
the stock market, in which wide price swings are common. This volatility may
adversely affect the prices of the Common Shares and the Warrants regardless of
the Company's operating performance.
NO PUBLIC MARKET FOR THE WARRANTS
Prior to this Offering, there was no public market for the Warrants. The TSX
has conditionally approved the listing of the Warrants and Nasdaq has
conditionally approved the Company's application to include the Warrants for
quotation. Listing on the TSX and quotation on Nasdaq, however, is subject to
the Company fulfilling all of the requirements of the TSX and Nasdaq,
respectively, including, with respect to both exchanges, distribution of the
Warrants to a minimum number of public holders. Moreover, there cannot be any
assurance as to the liquidity of the public market for the Warrants or that an
active public market for the Warrants will develop. If an active public market
does not develop, the market price and liquidity of the Warrants may be
adversely affected.
8
FORWARD-LOOKING STATEMENTS
Certain statements contained in this prospectus and in certain documents
incorporated by reference in this prospectus constitute "forward-looking
statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995. When used in such documents, the words
"anticipate", "believe", "estimate", and "expect" and similar expressions, as
they relate to the Company or the Company's management, are intended to identify
forward-looking statements. Such statements reflect the Company's current views
with respect to future events and are subject to certain risks, uncertainties
and assumptions. Many factors could cause the actual results, performance or
achievements of the Company to be materially different from any future results,
performances, or achievements that may be expressed or implied by such
forward-looking statements, including, among others, those which are discussed
under the heading "Risk Factors" in this prospectus. Should one or more of these
risks or uncertainties materialize, or should assumptions underlying the
forward-looking statements prove incorrect, actual results may vary materially
from those described herein as anticipated, believed, estimated or expected. The
Company does not intend, and does not assume any obligation, to update these
forward-looking statements.
THE COMPANY
HISTORY AND DEVELOPMENT OF THE COMPANY
The Company is an established Canadian gold producer with mining operations
located in northwestern Quebec and exploration and development activities in
Canada and the southwestern United States (principally Nevada). The Company's
operating history includes almost three decades of continuous gold production,
primarily from underground operations. Since its formation in 1972, the Company
has produced approximately three million ounces of gold. In 2001, the Company
produced 234,860 ounces of gold at an average cash cost of $155 per ounce, net
of revenues received from the sale of zinc, silver and copper by-products. The
Company believes that it is one of the low cash cost producers in the North
American gold mining industry. The Company has traditionally sold all of its
gold production at the spot price due to its general policy not to sell forward
its future gold production. However, the Company has purchased put options that
will allow it to set a floor price of $260 per ounce on approximately 45% of its
gold production over the period from 2004 to 2007 inclusive.
The Company's principal operating divisions are the LaRonde Division and the
Exploration Division. The LaRonde Division consists of the LaRonde Mine,
including the El Coco Property, which is 100% owned and operated by the Company.
The El Coco Property was acquired from Barrick Gold Corporation in 1999 and is
subject to a 50% net profits interest on production from current mineral
reserves on this property, which are expected to be depleted by the end of 2003.
The LaRonde Mine, with its single operating production shaft (the "Penna
Shaft"), currently accounts for all of the Company's gold production. Since the
commissioning of the mill in 1988, the LaRonde Division has produced over
1.9 million ounces of gold. The Penna Shaft at the LaRonde Mine extends to a
depth of 7,380 feet, which the Company believes makes it the deepest single-lift
shaft in the Western Hemisphere. Production was expanded at the LaRonde Mine to
5,000 tons of ore treated per day in October 2000 and to 7,000 tons of ore
treated per day in October 2002. Operating at 7,000 tons per day, the Company
contemplates an increase in gold production from 234,860 ounces of gold in 2001,
to approximately 285,000 ounces in 2002, 370,000 ounces in 2003 and 400,000
ounces in 2004.
An extensive surface and underground exploratory drilling program to
delineate additional reserves at the LaRonde Mine has been underway since 1990.
The program successfully outlined several ore zones and a large mineral resource
to the east of the site of what was, at the time, the main production shaft. As
of December 31, 2001, the LaRonde Division had established proven and probable
mineral reserves of approximately 3.3 million ounces of contained gold with a
total mineral reserve and mineral resource base of 8.5 million ounces of gold.
The Company's current strategy is to pursue opportunities for growth in gold
production and gold reserves through the acquisition of advanced exploration
properties, development properties, producing properties or other mining
businesses and through continued exploration, development and expansion of the
LaRonde Mine. Aggregate expenditures on the development and expansion of the
LaRonde Mine incurred in the last four fiscal years were $215 million, of which
$36.3 million was spent in 2001. Expenditures for the nine months ending
September 30, 2002 on this property were $45.1 million and planned expenditures
for the remaining three months of the year are estimated to be $9.8 million.
These expenditures will be financed out of funds from the
9
Company's $125 million revolving bank credit facility and operating cash flows.
Depending on the success of the exploration programs at this and other
properties, the Company may be required to make additional capital expenditures
for exploration, development and preproduction. In addition, the Company
continuously evaluates opportunities to make acquisitions, although it currently
has no contract, arrangement or understanding with respect to any material
acquisition.
The Company, through its Exploration Division and its subsidiary company,
Sudbury Contact, focuses its exploration activities primarily on the
identification of new gold reserves and development opportunities in proven
producing regions in Canada and the southwestern United States. In addition,
Sudbury Contact engages in exploration for deposits of diamonds in northern
Ontario. The Company currently manages exploration on 71 properties in central
and eastern Canada.
The Company's only significant subsidiary is Sudbury Contact, a public
company listed on the TSX. The Company has an approximate 67.4% interest in
Sudbury Contact. Sudbury Contact is a corporation incorporated under the laws of
the Province of Ontario.
The Company's executive and registered office is located at Suite 500, 145
King Street East, Toronto, Ontario, Canada M5C 2Y7; telephone number
(416) 947-1212; website: http://www.agnico-eagle.com. The information contained
on the website is not part of this prospectus.
KEY OPERATING STRENGTHS
The Company believes that it has a number of key operating strengths that
provide distinct competitive advantages.
FOCUSED BUSINESS STRATEGY. The Company and its predecessors have over three
decades of experience and expertise in metals mining, including nearly three
decades of continuous gold production. The Company's operations are located in
areas that are supportive of the mining industry in Canada and the southwestern
United States. These operations are concentrated in areas among North America's
principal gold-producing regions.
LOW-COST, EFFICIENT PRODUCER. The Company believes that it is one of the
low cash cost producers in the North American gold mining industry. The Company
has been able to improve this position through its dedication to cost-efficient
mining operations, the strength of its by-product revenue and the economies of
scale afforded by its large single shaft mine. In addition, the Company believes
its highly motivated work force contributes significantly to its low-cost
position and continued operational improvements.
SOUND OPERATING BASE. The Company's existing operations at the LaRonde
Division provide a sound economic base for additional reserve and production
development at the property. Since 1990, an extensive surface and underground
exploration program has identified several ore zones at depths ranging from 300
feet to approximately 10,000 feet below surface, at which point mineralization
remains open at depth and to the west. Production from these ore zones began in
1999 and the Penna Shaft was completed in March 2000. The Company successfully
expanded production at the LaRonde Mine to 5,000 tons of ore treated per day in
October 2000 and to 7,000 tons of ore treated per day in October 2002. See
"Recent Developments".
STRONG MANAGEMENT TEAM. The Company's senior management team has an average
of 20 years of operating and exploration experience in the mining industry.
Management's significant experience has been instrumental in the Company's
historical growth and provides a solid base on which to expand the Company's
operations. The geological knowledge that management has gained through its
years of experience in mining and developing the LaRonde Division is expected to
benefit the Company's current expansion program in the region.
GROWTH STRATEGY
OPTIMIZE AND FURTHER EXPAND OPERATIONS. The Company's strategy is to
increase annual gold production and gold reserves through the continued
exploration, development and expansion of the LaRonde Mine. The expansion of
production at the LaRonde Mine from 5,000 to 7,000 tons of ore treated per day
was completed in October 2002. Under the 7,000 tons-per-day mine plan, the
Company's objective is to increase gold production
10
at the LaRonde Division to approximately 400,000 ounces per year by 2004 and to
continue to lower its costs to produce an ounce of gold. Capital expenditures at
the LaRonde Division in 2001 were $36.3 million and are expected to be
approximately $55 million in 2002 and $17 million in 2003 to complete
development of the ore zones accessible from the Penna Shaft required to sustain
production at the rate of 7,000 tons of ore treated per day and to construct a
crushing plant and a load out plant at lower levels, scheduled to be completed
by July 2003.
GROWTH THROUGH ACQUISITIONS. The Company has traditionally sought to
achieve growth by acquiring advanced exploration properties, development
properties and producing properties and by investing in early-stage exploration
companies. More recently, the Company has begun to focus on achieving growth
through the acquisition of shares or assets of other mining businesses. The
Company is currently examining several such acquisition opportunities.
EXPAND GOLD RESERVES. The Company is conducting an aggressive drilling
program at the LaRonde Division to further increase its mineral reserve base and
transfer mineral resources to the mineral reserve category. In the three years
ended December 31, 2001, the Company has transferred over 17 million tons of
mineral resources to proven and probable mineral reserves, net of production
replacements. In that same period, the Company's exploration activities have
added 2.0 million ounces to proven and probable gold reserves net of production
replacement of 0.4 million ounces of gold mined. As a result, the LaRonde
Division's current global proven and probable mineral reserve and mineral
resource base is estimated to contain 8.5 million ounces of gold, 3.2 billion
pounds of zinc, 106 million ounces of silver and 612 million pounds of copper of
which 3.3 million ounces of gold, 2.9 billion pounds of zinc, 83 million ounces
of silver and 260 million pounds of copper are proven and probable mineral
reserve. The new underground workings at the Penna Shaft will provide a base
from which the Company can conduct its aggressive drilling program of 550,000
feet over the period from 2002 to 2005, inclusive.
EXPAND GEOGRAPHIC BASE. The Company's assets are primarily located in the
provinces of Quebec and Ontario. The Company's strategy is to seek to expand the
geographic base of its properties through acquisition of additional properties
or mining businesses within and outside Canada. The Company continuously
considers such acquisition opportunities.
LEVERAGE MINING EXPERTISE. The Company believes it can benefit not only
from the existing infrastructure at its mines, but also from geological
knowledge that it has gained in mining and developing its properties. The
Company's strategy is to capitalize on its operating and mine development
expertise to exploit fully the potential of its properties. The Company's goal
is to apply the proven operating principles of the LaRonde Division to each of
its existing and future properties.
RECENT DEVELOPMENTS
RESULTS OF OPERATIONS FOR THE THIRD QUARTER AND OUTLOOK
As disclosed in the Company's management's discussion and analysis of
financial conditions and the results of operations for the nine months ended
September 30, 2002, gold production and revenue for the nine month period were
lower than anticipated due to the impact of delays in development in Zone 20
North at depth caused by delays in ventilation installation. As a result of
these delays, mining activity was concentrated in the zinc-silver rich zones in
the upper part of Zone 20 North. This re-sequencing of production is expected to
push into future years gold production initially scheduled for 2002. Production
was also affected by an electrical failure of the semi-autogenous (SAG) mill
drive which resulted in 11 days of lost production in July 2002. The mill drive
has since been replaced. Cash costs per ounce of gold for the nine months ended
September 30, 2002 were also higher than anticipated due to lower than projected
gold production, a higher El Coco royalty resulting from increased gold price
and a weaker than budget zinc price, partially offset by a weaker than
anticipated Canadian dollar. In 2003, further cost improvements are anticipated
as ore grades increase and production improves at the LaRonde Mine when mining
is expected to begin on the higher grade zones and the first full year of
production at 7,000 tons of ore treated per day is realized. Gold production for
the full year 2002 is now expected to be approximately 285,000 ounces at a cash
cost of approximately $130 per ounce and a total cash cost, including royalties
payable in respect of production from the El Coco Property, of approximately
$165
11
per ounce. The Company's ability to meet these production and cost targets is
subject to the uncertainties associated with mining and processing operations,
as well as the effects of gold prices, by-product credits (for zinc, silver and
copper), treatment and refining charges and the US dollar/Canadian dollar
exchange rate.
Capital expenditures for 2002 are estimated to be approximately
$55 million. These estimated capital expenditures for the year are approximately
$9 million in excess of the budget for the year. The increase was attributable
to a decline in labour productivity resulting from high underground temperatures
caused by the delays in ventilation installation.
SHELF PROSPECTUS
On October 31, 2002, the Company filed a preliminary short form base shelf
prospectus with the securities regulatory authorities in each of the provinces
of Canada and a registration statement on Form F-10 with the United States
Securities and Exchange Commission (the "SEC"), each relating to the offering by
the Company from time to time during the next 25 months of up to $500 million of
debt securities, Common Shares or warrants to purchase debt securities or Common
Shares. This registration statement is not currently effective. It is a
condition of closing of this offering that a shelf registration statement be
declared effective by the SEC and that the Company have filed with the SEC a
prospectus supplement registering the offering of Common Shares issuable from
time to time on the exercise of the Warrants.
LARONDE MINE EXPANSION
The expansion of the LaRonde Mine from 5,000 to 7,000 tons of ore per day
was completed in October 2002 and the construction of a crushing plant and a
load out plant at lower levels is scheduled to be completed by July 2003.
Underground, the first production stope on Level 194 was blasted during
June 2002. Extraction was delayed while an ore pass between Level 194 and 215
was completed which was slowed due to the delay in installing ventilation to
that depth.
The expansion of the mill is now substantially complete. The mill was shut
down for five days in early October 2002 to complete commissioning. Further work
remains to be done during the fourth quarter to upgrade the refinery heating and
ventilation systems. The mill is expected to average 7,000 tons of ore treated
per day during the fourth quarter.
DEEP DEVELOPMENT PROJECT
The Company has set up a team to study a deep development project at LaRonde
to access the Company's mineral resource base of 5.2 million ounces, located
outside of the Penna Shaft infrastructure. The initial phase is to study the
technical issues associated with deep mining, including ventilation and cooling
at depth, hoisting constraints and capacity at depth and excavation stability. A
detailed feasibility study has been initiated and the results of this study are
expected to be available in the first half of 2003.
PROPOSED ACCOUNTING CHANGE
Effective January 1, 2003, the Company will adopt Statement of Financial
Accounting Standards No. 143 relating to asset retirement obligations. The
Company is currently evaluating the impact of adopting this standard. Although
the change may negatively affect earnings in the first quarter of 2003, on an
annual basis its impact is expected to be immaterial.
12
USE OF PROCEEDS
The estimated net proceeds to the Company of this offering will be
approximately C$249.6 million ($159.2 million, based on the Noon Buying Rate on
October 30, 2002) (determined after deducting the underwriting commission and
the estimated expenses of this offering payable by the Company and assuming no
exercise of the underwriters over-allotment option). The net proceeds of this
offering will be used to fund future potential acquisitions, capital
expenditures and for other general corporate purposes. Pending such application,
the net proceeds of the offering will be temporarily added to cash and
short-term deposits and applied to temporarily reduce amounts outstanding under
the Company's revolving bank credit facility. Although the Company is examining
several acquisition opportunities, no contract, arrangement or understanding
currently exists regarding any material acquisition.
13
CAPITALIZATION
The following table sets forth the consolidated cash and short-term deposits
and capitalization of the Company as at September 30, 2002 both actual and as
adjusted to reflect the issuance of the Units offered hereby (based on the
US dollar offering price of $13.90 per Unit, net of estimated offering expenses
and assuming no exercise of the over-allotment option). This table should be
read in conjunction with the audited consolidated financial statements of the
Company for the period ended December 31, 2001 (the "Annual Financial
Statements"), the unaudited consolidated financial statements of the Company for
the nine months ended September 30, 2002 (the "Third Quarter Financial
Statements"), management's discussion and analysis of financial condition and
results of operation for the year ended December 31, 2001 and management's
discussion and analysis of financial condition and results of operations for the
nine months ended September 30, 2002 incorporated by reference into this
prospectus.
CANADIAN GAAP US GAAP
SEPTEMBER 30, 2002 SEPTEMBER 30, 2002
---------------------- -----------------------
ACTUAL AS ADJUSTED ACTUAL AS ADJUSTED
-------- ----------- --------- -----------
(unaudited, in thousands)
Cash and short-term deposits(1)....................... $ 17,699 $146,934 $ 17,699 $ 146,934
======== ======== ========= =========
Long-term debt:
Bank Credit Facility(1)(2).......................... $ 30,000 $ -- $ 30,000 $ --
Convertible debentures due 2012(3).................. -- -- 143,750 143,750
-------- -------- --------- ---------
Total debt(3)....................................... 30,000 -- 173,750 143,750
-------- -------- --------- ---------
Shareholders' equity:
Common shares: authorized -- unlimited; issued and
outstanding -- actual -- 69,722,269; as
adjusted -- 81,722,269(4)(5)...................... 263,871 416,991 423,639 569,194
Warrants(6)......................................... -- 13,680 -- 13,680
Convertible debentures due 2012(3).................. 90,590 90,590 -- --
Other paid-in capital(3)............................ 55,028 55,028 -- --
Contributed surplus................................. 5,566 5,566 7,181 7,181
Deficit(3)(5)....................................... (53,681) (61,246) (194,013) (194,013)
Accumulated other comprehensive loss................ -- -- (18,307) (18,307)
-------- -------- --------- ---------
Total shareholders' equity.......................... 361,374 520,609 218,500 377,735
-------- -------- --------- ---------
Total capitalization.................................. $409,073 $667,543 $ 409,949 $ 668,419
======== ======== ========= =========
------------
Notes:
(1) The estimated net proceeds from the sale of Units will be used to fund
future potential acquisitions, capital expenditures and for other general
corporate purposes. Pending such application, the net proceeds of the
offering will be temporarily added to cash and short-term deposits and
applied to temporarily reduce amounts outstanding under the Company's
revolving bank credit facility. See "Use of Proceeds".
(2) In 2001, the Company entered into a $125 million credit agreement with a
group of financial institutions. See Note 4(b) to the Annual Financial
Statements. As at November 5, 2002, the Company had drawn $30 million under
such credit facility.
(3) On February 15, 2002 the Company issued $143.75 million aggregate principal
amount of 4.50% convertible debentures due 2012 (the "Convertible
Debentures") for net proceeds of approximately $138.5 million. Under
Canadian GAAP, the fair value of the holder's conversion option of the
Convertible Debentures is included in Other paid-in capital. The remaining
portion of the Convertible Debentures is included in Shareholder's equity
and distributions under the Convertible Debentures are charged to Deficit.
Under US GAAP, the Convertible Debentures are classified as Long-term debt
and distributions are included as Interest expense.
(4) Does not include 2,862,200 Common Shares issuable at September 30, 2002
under stock options for directors, officers and employees of the Company and
under options granted for services at September 30, 2002, 6,000,000 Common
Shares issuable on the exercise of the Warrants or approximately 10,267,900
Common Shares issuable on the conversion of the Convertible Debentures. See
"Description of Share Capital -- Convertible Debentures".
(5) The Deficit under Canadian GAAP as at September 30, 2002 is increased by
$7.565 million under the "As Adjusted" column which amount represents the
estimated costs of issuing the Common Shares, including the underwriting
commission. Under US GAAP the estimated costs of issuing the Common Shares
are recorded as a reduction of proceeds received from the issuance of the
Common Shares.
(6) The Corporation will issue 6,000,000 Warrants pursuant to this offering
(6,900,000 if the over-allotment option is exercised in full).
14
DESCRIPTION OF SHARE CAPITAL
COMMON SHARES
The authorized capital of the Company consists of an unlimited number of
common shares, of which 69,746,169 were issued and outstanding as of
November 5, 2002. All outstanding common shares of the Company are fully paid
and non-assessable. The holders of the common shares are entitled to one vote
per share at meetings of shareholders and to receive dividends if, as and when
declared by the directors of the Company. In the event of voluntary or
involuntary liquidation, dissolution or winding-up of the Company, after payment
of all outstanding debts, the remaining assets of the Company available for
distribution would be distributed rateably to the holders of the common shares.
Holders of the common shares of the Company have no pre-emptive, redemption,
exchange or conversion rights.
CONVERTIBLE DEBENTURES
On February 15, 2002, the Company issued $143.75 million principal amount of
convertible debentures due February 15, 2012 (the "Convertible Debentures") for
net proceeds of approximately $138.5 million. The Convertible Debentures are
convertible into common shares of the Company at an initial conversion rate of
71.429 common shares per $1,000 principal amount of Convertible Debentures,
subject to adjustment in certain circumstances, and bear interest at the rate of
4.50% per annum. The Convertible Debentures are redeemable by the Company, in
whole or in part, at any time on or after February 15, 2006. Based on the
initial conversion rate, if all of the holders of the Convertible Debentures
exercise their respective conversion rights, the Company would be required to
issue approximately 10,267,900 common shares.
SHAREHOLDER RIGHTS PLAN
On April 22, 1999, the Board of Directors of the Company adopted a
shareholder rights plan (the "Plan") to replace the original shareholder rights
plan dated May 10, 1989, to take effect at the close of business on May 10, 1999
(the "Record Date"), subject to shareholder approval, confirmation and
ratification, which was received on June 25, 1999. The rights issued under the
Plan will expire (the "Expiration Time") at the close of the Company's annual
meeting in 2009, unless earlier redeemed or exchanged by the Company and subject
to shareholder re-ratification of the Plan by the shareholders at the Company's
annual meeting to be held in 2005.
Pursuant to the Plan, the Board declared a distribution of one right (a
"Right") for each outstanding common share of the Company to shareholders of
record at the close of business on the Record Date and authorized the issuance
of one Right for each common share (including the Common Shares offered hereby)
issued after the Record Date and prior to the Separation Time (described below)
and the Expiration Time. The Rights will separate from the common shares at the
time (the "Separation Time") which is the close of business on the eighth
trading day (or such later day as determined by the Board of Directors) after
the earlier of the first public announcement of the acquisition of, or intention
to acquire, beneficial ownership of 20% of the common shares of the Company by
any person other than in accordance with the terms of the Plan, or when a
Permitted Bid (described below) or competing Permitted Bid ceases to qualify as
such.
In order to constitute a "Permitted Bid", an offer must be made in
compliance with the Plan and must be made to all shareholders (other than the
offeror), must be open for at least 75 days and be accepted by shareholders
holding more than 50% of the outstanding voting shares and, if so accepted, must
be extended for a further 10 business day period.
DIVIDEND POLICY
The Company continued its policy of annual dividends with the declaration of
a $0.02 per share dividend in 2001, unchanged from 2000 and 1999 levels. This
represents 22 years of uninterrupted cash dividend payments by the Company.
Although the Company expects to continue paying an annual cash dividend, future
dividends will be at the discretion of the Company's Board of Directors and will
be subject to such factors as the Company's earnings, financial condition and
capital requirements. The Company's bank credit facility contains covenants
which restrict the Company's ability to pay or declare dividends.
15
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal tax considerations under the
INCOME TAX ACT (Canada) (the "Canadian Tax Act") generally applicable to a
purchaser of Units comprised of Common Shares and Warrants acquired pursuant to
this prospectus.
This summary is based on the current provisions of the Canadian Tax Act and
its regulations, all specific proposals to amend the Canadian Tax Act and the
regulations publicly announced by or on behalf of the Minister of Finance
(Canada) before the date of this prospectus (the "Tax Proposals"), and on the
published administrative practices of the Canada Customs and Revenue Agency
("CCRA"). This summary does not address all of the tax considerations that may
be relevant to any particular holder and, except for the Tax Proposals, does not
take into account or anticipate any changes in law, whether by legislative,
governmental or judicial decision or action, or any changes in the
administrative practices of the CCRA. This summary does not take into account
tax legislation of any province, territory or foreign jurisdiction. Provisions
of provincial or territorial income tax legislation vary among provinces and
territories in Canada and may differ from federal income tax legislation.
THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE LEGAL OR
TAX ADVICE TO ANY PARTICULAR PURCHASER OF UNITS. ACCORDINGLY, PROSPECTIVE
PURCHASERS OF UNITS SHOULD CONSULT THEIR OWN TAX ADVISORS ABOUT THE SPECIFIC TAX
CONSEQUENCES TO SUCH HOLDERS OF PURCHASING, HOLDING OR DISPOSING OF COMMON
SHARES AND WARRANTS.
Purchasers of Units and the Company must allocate the purchase price of each
Unit on a reasonable basis between the Common Shares and the one-half of a
Warrant to determine the cost of each for the purposes of the Canadian Tax Act.
For its purposes, the Company intends to allocate C$20.00 to each Common Share
and C$1.79 to each one-half of a Warrant. Although the Company believes this
allocation to be reasonable, it will not be binding on the CCRA.
All amounts relevant in computing a holder's liability under the Canadian
Tax Act must be computed in Canadian dollars.
RESIDENTS OF CANADA
The following is a summary of the principal considerations under the
Canadian Tax Act generally applicable to a purchaser of Units comprised of
Common Shares and Warrants acquired pursuant to this prospectus who:
- is a resident of Canada for purposes of the Canadian Tax Act and any
applicable tax treaty or convention;
- holds Common Shares and Warrants as capital property; and
- deals at arm's length and is not affiliated with the Company or a
subsequent purchaser of such Common Shares and Warrants.
For purposes of this discussion, such a person is referred to as a "Canadian
Holder". Canadian Holders whose Common Shares do not otherwise qualify as
capital property may in certain circumstances make an irrevocable election under
subsection 39(4) of the Canadian Tax Act to have their Common Shares and every
"Canadian security" (as defined in the Canadian Tax Act) owned by such Canadian
Holder in the taxation year of the election and in all subsequent taxation years
deemed to be capital property.
The Canadian Tax Act contains provisions relating to securities held by
certain financial institutions, commonly referred to as the mark-to-market
rules. This summary does not take into account these mark-to-market rules.
Canadian Holders that are financial institutions for purposes of these rules
should consult their own tax advisors.
EXERCISE OF WARRANTS
No gain or loss will be realized by a Canadian Holder on the exercise of a
Warrant (except if cash is received in lieu of the issuance of fractional Common
Shares).
The cost to the Canadian Holder of each Common Share acquired on the
exercise of a Warrant will be the aggregate of the Canadian Holder's adjusted
cost base of the Warrant immediately before the exercise thereof
16
and the amount paid to acquire the Common Share on the exercise of the Warrant.
The cost to the Canadian Holder of each Common Share acquired on the exercise of
a Warrant must then be averaged with the adjusted cost base of all other Common
Shares then held by the Canadian Holder as capital property for purposes of
subsequently computing the adjusted cost base of each Common Share of the
Canadian Holder.
DISPOSITION OF WARRANTS
A Canadian Holder who disposes of or is deemed to dispose of a Warrant,
including on redemption or expiry of a Warrant (but otherwise than by exercise
of the Warrant), generally will realize a capital gain (or a capital loss) equal
to the amount by which the proceeds of disposition, net of any reasonable costs
of disposition, exceed (or are less than) the adjusted cost base of the Warrant
to the Canadian Holder. A Canadian Holder whose unexercised Warrant expires
generally will realize a capital loss equal to the adjusted cost base to the
Canadian Holder of the Warrant at the time of expiry.
DIVIDENDS ON COMMON SHARES
Dividends received or deemed to be received by a Canadian Holder on Common
Shares will be included in computing the Canadian Holder's income for purposes
of the Canadian Tax Act. The gross-up and dividend tax credit rules normally
applicable to taxable dividends paid by taxable Canadian corporations will apply
to dividends received by an individual. Such dividends received by a corporation
will normally be deductible in computing its taxable income.
A corporation which is a private corporation or a subject corporation for
purposes of the Canadian Tax Act may be liable to pay a refundable tax of
33 1/3% on dividends received or deemed to be received to the extent that such
dividends are deductible in computing the corporation's income. Canadian Holders
to whom these rules may be relevant should consult their own tax advisors.
DISPOSITION OF COMMON SHARES
On a disposition or a deemed disposition (other than to the Company) of a
Common Share, a Canadian Holder generally will realize a capital gain (or a
capital loss) equal to the amount by which the proceeds of disposition of the
Common Share, net of any reasonable costs of disposition, exceed (or are less
than) the adjusted cost base of the Common Share to the Canadian Holder. The
cost to a Canadian Holder of a Common Share acquired pursuant to this prospectus
will be averaged with the adjusted cost base of any other of the Company's
common shares owned as capital property by the Canadian Holder for purposes of
determining the adjusted cost base of each such share to the Canadian Holder.
TREATMENT OF CAPITAL GAINS AND CAPITAL LOSSES
A Canadian Holder will be required to include one-half of the amount of any
capital gain (a "taxable capital gain") in income, and will be required to
deduct one-half of the amount of any capital loss (an "allowable capital loss")
against taxable capital gains realized by the Canadian Holder in the year of
disposition. Allowable capital losses not deducted in the taxation year in which
they are realized may be carried back and deducted in any of the three preceding
taxation years or carried forward and deducted in any subsequent taxation year
against taxable capital gains realized in such years, to the extent and under
the circumstances specified in the Canadian Tax Act. A capital gain realized by
a Canadian Holder who is an individual may give rise to alternative minimum tax.
The amount of any capital loss realized on the disposition or deemed
disposition of a Common Share by a Canadian Holder that is a corporation may be
reduced by the amount of dividends received or deemed to have been received by
it on the Common Share to the extent and in the circumstances prescribed by the
Canadian Tax Act. Similar rules may apply where a Canadian Holder that is a
corporation is a member of a partnership or a beneficiary of a trust that owns
Common Shares and where a trust is a member of a partnership or a partnership or
trust is a beneficiary of a trust. Canadian Holders to whom these rules may be
relevant should consult their own tax advisors.
17
If a Canadian Holder is a Canadian-controlled private corporation for
purposes of the Canadian Tax Act, the Canadian Holder may be liable to pay an
additional refundable tax of 6 2/3% on certain investment income, including
taxable capital gains.
NON-RESIDENTS OF CANADA
The following is a summary of the principal considerations under the
Canadian Tax Act generally applicable to a purchaser of Units comprised of
Common Shares and Warrants acquired pursuant to this prospectus who:
- is not a resident of Canada for purposes of the Canadian Tax Act and any
applicable tax treaty or convention;
- holds Common Shares and Warrants as capital property;
- deals at arm's length and is not affiliated with the Company;
- does not use or hold Common Shares or Warrants in carrying on a business
in Canada; and
- is not a non-resident insurer for purposes of the Canadian Tax Act.
For purposes of this discussion such a person is referred to as a
"Non-Canadian Holder".
EXERCISE OF WARRANTS
No gain or loss will be realized by a Non-Canadian Holder on the exercise of
a Warrant (except if cash is received in lieu of the issuance of fractional
Common Shares).
DIVIDENDS ON COMMON SHARES
Dividends paid or credited or deemed to be paid or credited to a
Non-Canadian Holder on Common Shares will be subject to withholding tax under
the Canadian Tax Act at a rate of 25%, subject to reduction under the provisions
of an applicable income tax treaty or convention. Under the CANADA-UNITED STATES
INCOME TAX CONVENTION (1980), the applicable rate of dividend withholding tax is
generally reduced to 15%.
DISPOSITION OF COMMON SHARES OR WARRANTS
A Non-Canadian Holder of Common Shares or Warrants which are not taxable
Canadian property will not be subject to tax under the Canadian Tax Act on the
disposition of such Common Shares or Warrants. Generally, Common Shares and
Warrants will not be taxable Canadian property to a Non-Canadian Holder at a
particular time if:
- the Common Shares are listed on a prescribed stock exchange, including the
TSX and the NYSE, at that time; and
- during the 60-month period immediately preceding the disposition of the
Common Shares or Warrants, as the case may be, the Non-Canadian Holder,
persons with whom the Non-Canadian Holder did not deal at arm's length, or
the Non-Canadian Holder together with such persons, did not own or have an
interest in or an option in respect of 25% or more of the Company's issued
shares of any class or series. For the purpose of the foregoing
determination, the CCRA will treat Warrants held by the Non-Canadian
Holder and non-arm's length persons as having been exercised.
If Common Shares or Warrants are taxable Canadian property to a Non-Canadian
Holder, a capital gain realized on a disposition thereof by the Non-Canadian
Holder will be subject to tax under the Canadian Tax Act in the manner described
above under the heading "-- Residents of Canada -- Treatment of Capital Gains
and Capital Losses", unless the capital gain is exempt from tax under the
Canadian Tax Act pursuant to the provisions of an applicable income tax treaty
or convention. Non-Canadian Holders whose Common Shares or Warrants are taxable
Canadian property should consult their own tax advisors.
18
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material U.S. federal income tax
considerations to a U.S. Holder (as defined below) regarding the acquisition,
ownership and disposition of Common Shares, Warrants and any Common Shares
received in connection with the exercise of the Warrants. This summary applies
only to U.S. Holders who acquire Common Shares or Warrants in the initial
offering, hold such Common Shares (including Common Shares received in
connection with the exercise of the Warrants) or Warrants as capital assets
(that is, for investment purposes) and are eligible for benefits under the
income tax convention between the U.S. and Canada signed on September 26, 1980,
as amended, currently in force, which is referred to in this prospectus as the
"Treaty". This summary is based upon current U.S. federal income tax law and the
Treaty, as in effect on the date of this prospectus. Changes in the laws may
alter the tax treatment of Common Shares and Warrants, possibly with retroactive
effect.
This summary is general in nature and does not address the effects of any
state, local, foreign or other tax laws. In addition, it does not address all
tax considerations that may be relevant to a U.S. Holder in light of the
U.S. Holder's particular circumstances, nor does it apply to U.S. Holders having
a special status, such as:
- a person that owns, or is treated as owning, 10% or more of the Company's
voting shares;
- a dealer in securities or currencies;
- a trader in securities that elects to use a mark-to-market method of
accounting for securities holdings;
- a bank, mutual fund, life insurance company or other financial
institution;
- a tax-exempt organization;
- a person that holds Common Shares or Warrants as part of a straddle,
hedge, constructive sale or other integrated transaction for tax purposes;
- an S corporation or small business investment company;
- a person whose functional currency for tax purposes is not the
U.S. dollar; or
- a person liable for alternative minimum tax.
U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE TAX
CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF COMMON SHARES AND
WARRANTS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES.
For purposes of this discussion, a "U.S. Holder" means a beneficial owner of
a Common Share or Warrant that is, for U.S. federal income tax purposes:
- an individual citizen or resident of the United States;
- a corporation, or other entity treated as a corporation for U.S. federal
income tax purposes, created or organized in or under the laws of the U.S.
or any political subdivision thereof;
- an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
- a trust (a) the administration over which a U.S. court can exercise
primary supervision and (b) all of the substantial decisions of which one
or more U.S. persons have the authority to control.
If a partnership holds Common Shares or Warrants, the tax treatment of a
partner will generally depend on the status of the partner and on the activities
of the partnership. Partners of partnerships holding Common Shares or Warrants
should consult their tax advisors.
ALLOCATION OF PURCHASE PRICE BETWEEN THE COMMON SHARES AND THE WARRANTS
For U.S. federal income tax purposes, an acquisition of a Unit will be
treated as an acquisition of two components -- a Common Share and a Warrant to
purchase Common Shares. The purchase price for each Unit will be allocated
between those components in proportion to their respective fair market values at
the time of purchase, and such allocation will establish a U.S. Holder's initial
tax basis in the Common Share and the Warrant that comprise each Unit. The
Company will report the fair market value of each Common Share as $12.76 and
each one-half of a Warrant as $1.14. The Internal Revenue Service ("IRS"),
however, is not bound by this allocation and, therefore, there can be no
assurance that the IRS or a court will respect such allocation.
19
DISTRIBUTIONS
Any dividends on Common Shares are expected to be declared and paid in
US dollars. Subject to the discussion found under "-- Passive Foreign Investment
Company" below, the gross amount of any distribution (other than in liquidation)
generally will be treated as a foreign source dividend taxable as ordinary
income to the extent paid out of the Company's current or accumulated earnings
and profits, as determined for U.S. federal income tax purposes, and generally
will be "passive income" for U.S. foreign tax credit purposes. A distribution on
the Common Shares made by the Company in excess of the Company's current or
accumulated earnings and profits will be treated as a tax-free return of capital
to the extent of a U.S. Holder's adjusted tax basis in such Common Shares and,
to the extent in excess of adjusted basis, as capital gain. See "-- Sale or
Other Disposition of Shares". Because the Company is not a U.S. corporation, no
dividends-received deduction will be allowed with respect to dividends paid by
the Company.
As described above under "Canadian Federal Income Tax
Considerations -- Non-Residents of Canada -- Dividends on Common Shares", under
the Treaty, Canada currently imposes withholding tax on distributions at a rate
of 15%. U.S. Holders generally will have the option of claiming the amount of
any Canadian income taxes withheld either as a deduction from gross income or as
a dollar-for-dollar credit against their U.S. federal income tax liability,
subject to numerous complex limitations and restrictions which must be
determined and applied on an individual basis by each shareholder. Accordingly,
U.S. Holders should consult their own tax advisors concerning these rules in
light of their particular circumstances.
SALE OR OTHER DISPOSITION OF COMMON SHARES
Subject to the discussion found under "Passive Foreign Investment Company"
below, in general, if a U.S. Holder sells or otherwise disposes of Common Shares
in a taxable disposition:
- such U.S. Holder will recognize gain or loss equal to the difference (if
any) between:
- the U.S. dollar value of the amount realized on such sale or other
taxable disposition; and
- such U.S. Holder's adjusted tax basis in such Common Shares;
- any gain or loss will be capital gain or loss and will be long-term
capital gain or loss if such U.S. Holder's holding period for the Common
Shares is more than one year at the time of such sale or other taxable
disposition;
- any gain or loss will generally be treated as U.S. source income for
U.S. foreign tax credit purposes;
- additional preferential tax treatment may be available if such
U.S. Holder disposes of Common Shares held for more than five years; and
- such U.S. Holder's ability to deduct capital losses (if any) is subject to
limitations.
If a U.S. Holder is a cash basis taxpayer who receives foreign currency,
such as Canadian dollars, in connection with a sale or other taxable disposition
of Common Shares, the amount realized will be based on the U.S. dollar value of
the foreign currency received with respect to such Common Shares, as determined
on the settlement date of such sale or other taxable disposition.
If a U.S. Holder is an accrual basis taxpayer, such U.S. Holder may elect
the same treatment required of cash basis taxpayers with respect to a sale or
other taxable disposition of Common Shares, provided the election is applied
consistently from year to year. The election may not be changed without the
consent of the IRS. If a U.S. Holder is an accrual basis taxpayer and does not
elect to be treated as a cash basis taxpayer (pursuant to the U.S. Treasury
Regulations applicable to foreign currency transactions) for this purpose, such
U.S. Holder might have a foreign currency gain or loss for U.S. federal income
tax purposes because of differences between the U.S. dollar value of the foreign
currency received prevailing on the date of the sale or other taxable
disposition of Common Shares and the date of payment. Any such currency gain or
loss generally will be treated as U.S. source ordinary income or loss and would
be in addition to gain or loss, if any, that such U.S. Holder recognizes on the
sale or other taxable disposition of Common Shares.
PASSIVE FOREIGN INVESTMENT COMPANY
U.S. Holders (who are not tax-exempt) would be subject to a special, adverse
tax regime (that would differ in certain respects from that described above) if
the Company is or were to become a passive foreign investment
20
company for U.S. federal income tax purposes. Although the determination of
whether a corporation is a passive foreign investment company is made annually,
and thus may be subject to change, the Company does not believe that it is, nor
does it expect to become, a passive foreign investment company. Notwithstanding
the foregoing, the Company urges U.S. Holders to consult their U.S. tax advisors
regarding the adverse U.S. federal income tax consequences of owning the stock
(or an option to acquire stock) of a passive foreign investment company and of
making certain elections designed to lessen those adverse consequences.
TAX TREATMENT OF THE WARRANTS
EXERCISE OF WARRANTS
No gain or loss will be recognized for U.S. federal income tax purposes by
U.S. Holders of the Warrants on the exercise thereof in exchange for Common
Shares (except if cash is received in lieu of the issuance of fractional Common
Shares). A U.S. Holder's tax basis in the Common Shares received on exercise of
Warrants will equal the sum of its tax basis in the Warrants (which in the case
of an initial U.S. Holder, will equal the portion of the purchase price of the
Unit allocated to the Warrant, as described above) plus the exercise price paid
on the exercise thereof. The holding period of the Common Shares received on the
exercise of the Warrants generally will not include the holding period of the
Warrants.
SALE OR EXCHANGE
Subject to the discussion found under "Passive Foreign Investment Company"
above and except as otherwise provided herein, the sale or exchange of a Warrant
(including an exchange made pursuant to a U.S. Holder's right to have the
Company redeem such Warrants) generally will result in the recognition of
capital gain or loss to the U.S. Holder in an amount equal to the difference
between the amount realized on such sale or exchange and the U.S. Holder's
adjusted tax basis in the Warrant. The adjusted tax basis in the Warrant
generally will equal the portion of the issue price for the Unit properly
allocable to the Warrant.
EXPIRATION
On the expiration of a Warrant, a U.S. Holder will recognize a loss equal to
its adjusted tax basis in the Warrant. The loss generally will be a capital loss
provided that the Common Shares issuable on exercise of the Warrants would have
been capital assets if acquired by the U.S. Holder of Common Shares.
ADJUSTMENT
Adjustments to the number of Common Shares issuable on exercise of the
Warrants or to the exercise price of the Warrants pursuant to the anti-dilution
provisions for the Warrants, as more fully described under "Details of the
Offering -- Warrants", may result in a taxable deemed distribution to the
holders of Warrants pursuant to Section 305 of the Internal Revenue Code of
1986, as amended, if such change has the effect of increasing the holder's
proportionate interest in the Company's earnings and profits or assets. In
general, anti-dilution adjustments are not treated as resulting in deemed
distributions. However, if, for example, the adjustment were considered an
adjustment to compensate for taxable cash or property distribution to other
shareholders, a taxable deemed distribution could result.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Dividends on Common Shares and payments of the proceeds from a sale or other
disposition of Common Shares or Warrants, paid within the U.S. or through
certain U.S.-related financial intermediaries, are subject to information
reporting and may be subject to backup withholding unless a holder:
- is a corporation or other exempt recipient; or
- provides a taxpayer identification number and certify that no loss of
exemption from backup withholding has occurred.
Amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against a holder's U.S. federal income tax liability,
provided the required information is furnished to the IRS.
21
DETAILS OF THE OFFERING
The offering consists of 12,000,000 Units, each Unit consisting of one
Common Share and one-half of a Warrant. Each whole Warrant will entitle the
holder to purchase one Common Share. The Common Shares and the Warrants
comprising the Units will separate immediately on the closing of the offering.
COMMON SHARES
For a description of the attributes of the Common Shares, see "Description
of Share Capital -- Common Shares".
WARRANTS
The following statements are subject to the detailed provisions of the
Warrant Indenture referred to below.
Each whole Warrant will entitle the holder to purchase one Common Share at a
price of US$19.00, subject to adjustment as summarized below. Warrants will be
exercisable at any time prior to 5:00 p.m. (Toronto time) on the date which is
five years from the date of the closing of this offering, after which the
Warrants will expire and be of no value. Under the Warrant Indenture, the
Company will be entitled to purchase in the market, by invitation to tender, by
private contract or otherwise, all or any of the Warrants then outstanding, and
any Warrants so purchased will be cancelled.
The exercise price for the Warrants is payable in US dollars. However,
holders of Warrants may elect to pay the exercise price in Canadian dollars. In
such an event, the Warrant exercise price payable shall be the Canadian dollar
equivalent of the Warrant exercise price payable in US dollars as calculated
using the Noon Buying Rate, or if such exchange rate is not quoted or published,
such other exchange rate as may be reasonably determined by the Company, on the
business day immediately preceding the relevant exercise date, rounded to the
nearest tenth of a cent, and subject to confirmation by the Company within two
business days.
The Warrants will be issued in registered form under, and be governed by, an
indenture to be dated as of the date of closing of this offering (the "Warrant
Indenture") between the Company and Computershare Trust Company of Canada, as
trustee (the "Trustee"). The principal office of the Trustee in Toronto and the
principal office of an affiliate of the Trustee in the Borough of Manhattan,
New York will be the locations at which Warrants may be surrendered for exercise
or transfer. No service charge will be made for registration of transfer or
exchange on surrender of any Warrant certificate. The Company may require
payment of a sum sufficient to cover any taxes or governmental or other charges
that may be imposed in connection with any registration or transfer or exchange
of Warrant certificates.
The Warrant Indenture will provide for adjustment in the number of Common
Shares issuable on the exercise of the Warrants and/or the exercise price per
Common Share on the occurrence of certain events, including:
(a) the declaration of a dividend or making of a distribution on the Common
Shares payable in Common Shares or securities exchangeable for or
convertible into Common Shares to all or substantially all the holders of
the Common Shares;
(b) the subdivision or change of the outstanding Common Shares into a
greater number of Common Shares;
(c) the reduction, combination or consolidation of the Common Shares into a
lesser number of Common Shares;
(d) the fixing of a record date for the issuance of rights, options or
warrants to all or substantially all of the holders of the Common Shares
under which such holders are entitled, during a period expiring not more
than 45 days after such record date, to subscribe for or purchase Common
Shares, or securities exchangeable for or convertible into Common Shares,
at a price per share to the holder (or at a conversion or exchange price
per share) of less than 95% of the Current Market Price per Common Share
on such record date;
22
(e) the fixing of a record date for the payment, issue or distribution to
all or substantially all of the holders of the Common Shares of a
dividend, cash or assets (including evidences of the Company's
indebtedness) or rights, options, warrants or other securities (including
securities convertible into or exchangeable for Common Shares) and such
payment, issue or distribution does not constitute a Dividend Paid in
Ordinary Course or an event listed in (a) to (d) above; and
(f) the purchase of Common Shares pursuant to an issuer bid or a tender
offer or exchange offer made by the Company or any subsidiary thereof at
a price greater than the Current Market Price per Common Share at the
time such tender or exchange offer expires.
The term "Current Market Price per Common Share" will be defined in the
Warrant Indenture to mean, at any date, the US dollar average trading price per
Common Share (calculated in accordance with the Warrant Indenture) for the
20 consecutive trading days commencing on the trading day immediately before
such date on the NYSE or, if the Common Shares are not then listed on the NYSE
then on such other U.S. stock exchange or Nasdaq on which the Common Shares are
then listed or quoted as may be selected by the directors of the Company or, if
the Common Shares are not then listed or quoted on any U.S. stock exchange or
Nasdaq then on such other stock exchange on which the Common Shares are then
listed as may be selected by the directors of the Company or, if the Common
Shares are not then listed on a stock exchange, on the over-the-counter market;
provided that, if there is no market for the Common Shares during all or part of
the period during which the Current Market Price per Common Share thereof would
otherwise be determined, the Current Market Price per Common Share shall in
respect of all or such part of the period be determined by a
nationally-recognized firm of chartered accountants appointed by the Company
(who may be the Company's auditors), in each case appropriately adjusted to take
into account the occurence during such 20 trading day period of certain events
that would result in an adjustment of the Warrant exercise price.
The term "Dividends Paid in Ordinary Course" will be defined in the Warrant
Indenture to mean dividends on the Common Shares payable in cash in any fiscal
year of the Company to the extent that such dividends in the aggregate do not
exceed the greater of (i) 110% of the aggregate amount of dividends paid by the
Company on its Common Shares in the 12 consecutive months ended immediately
prior to the first day of the fiscal year, (ii) 25% of the consolidated net
earnings of the Company under US GAAP before extraordinary items and after
dividends paid on any and all preferred shares of the Company for the most
recent year, and (iii) 10% of the shareholders' equity of the Company under
US GAAP.
The Warrant Indenture will also provide for adjustment in the class and/or
number of securities issuable on the exercise of the Warrants and/or exercise
price per security in the event of the following additional events:
(i) reorganization, reclassification or other change of the Common Shares into
other securities; (ii) consolidation, amalgamation, arrangement or merger of the
Company with or into another entity (other than consolidations, amalgamations,
arrangements or mergers which do not result in any reclassification of the
Common Shares or a change of the Common Shares into other shares); or
(iii) sale, conveyance or transfer of the Company's undertakings or assets as an
entirety or substantially as an entirety to another corporation or other entity
in which the holders of Common Shares are entitled to receive shares, other
securities or property, including cash.
No adjustment in the exercise price or the number of Common Shares
purchasable on the exercise of the Warrants will be required to be made unless
the cumulative effect of such adjustment or adjustments would change the
exercise price by at least one percent or the number of Common Shares
purchasable on exercise by at least one one-hundredth of a share, provided
however, that any such adjustment that is not made will be carried forward and
taken into account in any subsequent adjustment.
The Company will also covenant in the Warrant Indenture that, during the
period in which the Warrants are exercisable, it will give notice to holders of
Warrants of any event that requires or may require an adjustment in any of the
exercise rights pursuant to any of the Warrants at least ten days prior to the
record date or effective date, as the case may be, of such event.
No fractional Common Shares will be issuable on the exercise of any
Warrants. To the extent that the holder of a Warrant would otherwise be entitled
to purchase a fraction of a Common Share, the holder will receive a cash payment
in lieu thereof based on the then Current Market Price per Common Share. Holders
of Warrants
23
will not have any voting rights or any other rights which a holder of Common
Shares would have (including, without limitation, the right to receive notice of
or to attend meetings of shareholders or any right to receive dividends or other
distributions). Holders of Warrants will have no pre-emptive rights to acquire
securities of the Company.
From time to time, the Company and the Trustee, without the consent of the
holders of Warrants, may amend or supplement the Warrant Indenture for certain
purposes, including curing defects or inconsistencies or making any change that,
in the opinion of the Trustee, does not prejudice the rights of the Trustee or
the holders of the Warrants. Any amendment or supplement to the Warrant
Indenture that so prejudices the interests of the holders of the Warrants may
only be made by "extraordinary resolution", which will be defined in the Warrant
Indenture as a resolution either (i) passed at a meeting of the holders of
Warrants at which there are holders of Warrants present in person or represented
by proxy representing at least 25% of the then outstanding Warrants (at least
50% for any amendment that would increase the exercise price per security,
decrease the number of securities issuable upon the exercise of Warrants or
shorten the term of the Warrants), or such lesser percentage constituting a
quorum for this purpose under the Warrant Indenture, and passed by the
affirmative vote of holders of Warrants representing not less than 66 2/3% of
the then outstanding Warrants represented at the meeting and voted on the poll
on such resolution; or (ii) adopted by an instrument in writing signed by the
holders of Warrants representing not less than 66 2/3% of the then outstanding
Warrants.
The Company has filed a preliminary short form base shelf prospectus with
the securities regulatory authorities in each of the provinces of Canada and a
registration statement on Form F-10 (the "Registration Statement") with the SEC,
each relating to the offering by the Company from time to time during the next
25 months of up to $500 million of debt securities, Common Shares or warrants to
purchase debt securities or Common Shares. The Registration Statement is not
currently effective. It is a condition of the closing of this offering that a
shelf registration statement be declared effective by the SEC and that the
Company have filed with the SEC a prospectus supplement registering the offering
of Common Shares issuable from time to time on the exercise of the Warrants. The
Company has agreed to use its reasonable efforts to maintain the Registration
Statement or another registration statement relating to these Common Shares
effective until the earlier of the expiration date of the Warrants and the date
on which no Warrants remain outstanding. The Company will covenant in the
Warrant Indenture to use its best efforts to maintain the listing of the
Warrants on the TSX, reasonable efforts to effect and maintain the quotation of
the Warrants on Nasdaq and reasonable efforts to maintain the listing of the
Common Shares issuable on the exercise of the Warrants on the TSX and the NYSE.
No U.S. person or person holding Warrants for the account of a U.S. person will
be permitted to exercise Warrants during any period prior to the expiration time
of the Warrants when no such registration statement is effective. In lieu of the
exercise right, during any such period U.S. persons will have the right to
require the Company to redeem Warrants held by them for a redemption price equal
to the difference between the Current Market Price per Common Share and the
exercise price, multiplied by the number of Common Shares otherwise issuable on
the exercise of the Warrants. If no such registration statement is effective,
the Company will notify the holders of Warrants in the United States in
accordance with the provisions of the Warrant Indenture. In such event, the
Warrants would cease to be quoted on Nasdaq but would continue to be listed and
traded on the TSX.
24
PLAN OF DISTRIBUTION
Pursuant to an agreement dated October 31, 2002 (the "Underwriting
Agreement") between the Company and each of the Underwriters named below, the
Company has agreed to sell and the Underwriters severally have agreed to
purchase from the Company, the number of Units listed opposite their names
below:
NUMBER
OF UNITS
UNDERWRITER --------
Merrill Lynch Canada Inc.................................... 3,300,000
TD Securities Inc........................................... 3,300,000
Scotia Capital Inc.......................................... 1,500,000
Yorkton Securities Inc...................................... 1,500,000
CIBC World Markets Inc...................................... 720,000
Salomon Smith Barney Canada Inc............................. 720,000
Dundee Securities Corporation............................... 480,000
Sprott Securities Inc....................................... 480,000
----------
Total................................................. 12,000,000
==========
The offering price of the Units was determined by negotiation between the
Company and the Underwriters. The public offering price for Units offered in the
United States is payable in US dollars, and the public offering price for Units
offered in Canada is payable in Canadian dollars. The US dollar amount is the
equivalent of the Canadian price of the Units being offered hereby based on the
Noon Buying Rate on October 30, 2002. The expenses of the offering, not
including the underwriting commission, are estimated to be C$1.4 million
($0.9 million, based on the Noon Buying Rate on October 30, 2002) and are
payable by the Company. In consideration of their services in connection with
the offering, the Company has agreed to pay the Underwriters a commission of 4%
of the gross proceeds of the offering. In the Underwriting Agreement, each of
the Underwriters has severally agreed, subject to the terms and conditions set
forth therein, to purchase all of the Units offered hereby if any of such Units
are purchased. The obligations of the Underwriters under the Underwriting
Agreement may be terminated at their discretion on the occurrence of certain
stated events, including the occurrence of a material adverse change in the
state of the financial markets. Under certain circumstances, the commitments of
non-defaulting Underwriters may be increased.
The Underwriters may also purchase up to 1,800,000 Units from the Company at
the public offering price at any time up to 30 days after the date of the
prospectus. The Underwriters may exercise this option solely to cover
over-allotments, if any. This prospectus also qualifies the grant of the
over-allotment option and the issuance of the Common Shares and Warrants
comprising the Units issuable on exercise of the over-allotment option. If the
Underwriters exercise the option in full, the total underwriting commission will
be C$12,028,080 ($7,672,800, based on the US dollar offering price of $13.90 per
Unit), and the net proceeds to the Company, before expenses, will be
C$288,673,920 ($184,147,200, based on the US dollar offering price of
$13.90 per Unit).
This offering is being made concurrently in all provinces of Canada and in
the United States pursuant to the multijurisdictional disclosure system
implemented by securities regulatory authorities in Canada and the United
States. The Units will be offered in the United States and Canada through the
Underwriters either directly or through their respective U.S. or Canadian
broker-dealer affiliates or agents. Subject to applicable law, the Underwriters
may offer the Units outside Canada and the United States.
It is a condition of closing that a shelf registration statement be declared
effective by the SEC and that the Company have filed with the SEC a prospectus
supplement registering the offering of Common Shares issuable from time to time
on the exercise of the Warrants. See "Details of the Offering -- Warrants".
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the United States Securities Act of
1933, as amended, and applicable Canadian securities legislation, and to
contribute to payments that the Underwriters may be required to make in respect
thereof.
The Underwriters, as principals, conditionally offer the Units, subject to
prior sale, if, as and when issued by the Company and accepted by the
Underwriters in accordance with the conditions contained in the Underwriting
Agreement and subject to the approval of certain legal matters on behalf of the
Company by
25
Davies Ward Phillips & Vineberg LLP, Toronto, Ontario and by Troutman
Sanders LLP, McLean, Virginia and on behalf of the Underwriters by Lang
Michener, Toronto, Ontario and Shearman & Sterling, Toronto, Ontario and
New York, New York.
Subscriptions will be received subject to rejection or allotment in whole or
in part and the right is reserved to close the subscription books at any time
without notice. It is expected that the closing will be held on November 14,
2002, or such other date as may be agreed on by the Company and the
Underwriters, but, in any event, not later than November 27, 2002. Certificates
representing the Common Shares and the Warrants comprising the Units in
definitive form will be available for delivery at closing.
Pursuant to policy statements of the Ontario Securities Commission and the
Commission des valeurs mobilieres du Quebec, the Underwriters may not,
throughout the period of distribution under this short form prospectus, bid for
or purchase Common Shares or Warrants. The foregoing restriction is subject to
certain exceptions, as long as the bid or purchase is not engaged in for the
purpose of creating actual or apparent active trading in or raising the price of
such securities. These exceptions include a bid or purchase permitted under the
by-laws and rules of the TSX relating to market stabilization and passive market
making activities and a bid or purchase made to and on behalf of a customer
where the order was not solicited during the period of distribution. Pursuant to
the first-mentioned exception, in connection with this offering, the
Underwriters may over-allot or effect transactions which stabilize or maintain
the market price of the Common Shares or Warrants at levels other than those
which might otherwise prevail on the open market. Such transactions, if
commenced, may be discontinued at any time.
Subject to the foregoing, in order to facilitate this offering, the
Underwriters may purchase and sell Common Shares and Warrants in the open
market. These transactions may include short sales, stabilizing transactions and
purchases to cover positions created by short sales. Short sales involve the
sale by the Underwriters of a greater number of securities than they are
required to purchase in this offering. Stabilizing transactions consist of
certain bids or purchases made for the purpose of preventing or retarding a
decline in the market price of such securities while this offering is in
progress. The Underwriters also may impose penalty bids, under which selling
concessions allowed to syndicate members or other broker-dealers participating
in this offering are reclaimed if Units previously distributed in this offering
are repurchased in connection with stabilization transactions or otherwise.
These activities by the Underwriters may stabilize, maintain or otherwise affect
the market price of the Common Shares or the Warrants. As a result, the price of
the Common Shares or the Warrants may be higher than the price that might
otherwise exist in the open market. If these activities are commenced, they may
be discontinued by the Underwriters at any time. These transactions may be
effected on the NYSE, the TSX, Nasdaq or otherwise. On October 31, 2002 and
November 1, 2002, the Underwriters purchased an aggregate of 363,000 Common
Shares at prices that ranged from $12.00 to $12.25 per Common Share.
Because more than 10% of the proceeds of this offering, not including
underwriting compensation, may be received by entities who are affiliated with
National Association of Securities Dealers, Inc. members who are participating
in this offering, this offering is being conducted in compliance with the NASD
Conduct Rule 2710(c)(8), which requires that the public offering price of an
equity security be no higher than the price recommended by a qualified
independent underwriter which has participated in the offering and performed its
usual standard of due diligence with respect thereto. Merrill Lynch, Pierce,
Fenner & Smith Incorporated has agreed to act as, and assume the responsibility
for acting as, qualified independent underwriter with respect to the offering,
and the public offering price of the Units is no higher than that recommended by
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
The Company and its officers and directors have agreed not to issue, sell or
otherwise dispose of any Common Shares (other than in this offering) or
securities convertible into or exchangeable or exercisable for such common
shares, or publicly announce an intention to do so, without the prior written
consent of the Underwriters, for a period of 90 days after the date of the
prospectus. The restrictions in the foregoing sentence shall not apply to
(i) any Common Shares issuable on exercise of the Warrants, (ii) any Common
Shares issued or options to purchase Common Shares granted pursuant to existing
employee plans of the Company referred to herein, (iii) any Common Shares issued
in connection with the rights described under "Description of Share
Capital -- Shareholder Rights Plan", (iv) any Common Shares issued pursuant to
any non-employee director stock plan or dividend reinvestment plan, (v) any
Common Shares issuable on the conversion of any of the
26
Convertible Debentures, (vi) any Common Shares issued in connection with "flow
through financing" by the Company in an amount up to C$4 million, or (vii) any
securities issuable after 30 days after the date of this prospectus pursuant to
an acquisition, merger, consolidation or amalgamation transaction involving the
Company.
RELATIONSHIP BETWEEN ISSUER AND CERTAIN UNDERWRITERS
Each of TD Securities, Scotia Capital Inc. and CIBC World Markets Inc. is a
wholly-owned subsidiary of a bank that is a lender under the Company's revolving
bank credit facility in the maximum aggregate amount of $125 million. As of
November 5, 2002, the Company had approximately $30 million outstanding under
such credit facility. Consequently the Company may be considered a connected
issuer of each of TD Securities Inc., Scotia Capital Inc. and CIBC World
Markets Inc. for the purpose of securities legislation in certain Canadian
provinces. See "Use of Proceeds" and "Plan of Distribution". The Company is in
compliance with the terms of this credit facility. Indebtedness under the
Company's revolving bank credit facility is secured by a charge on substantially
all of the property relating to the LaRonde Mine and the El Coco Property. The
decision to distribute the Units, including the determination of the terms of
this offering will be made through negotiations between the Company and the
Underwriters. The lenders have not had any involvement in such decision or
determination. As a consequence of this offering, TD Securities Inc., Scotia
Capital Inc. and CIBC World Markets Inc. will each receive their share of the
Underwriters' fee. The Company's annual mine plan is subject to the approval of
the lenders. The proceeds of this offering will be applied to temporarily reduce
the Company's indebtedness under the Company's revolving bank credit facility.
See "Use of Proceeds".
LEGAL MATTERS
Certain legal matters relating to this offering will be passed upon on
behalf of the Company by Davies Ward Phillips & Vineberg LLP, Toronto, Ontario
and by Troutman Sanders LLP, McLean, Virginia and on behalf of the Underwriters
by Lang Michener, Toronto, Ontario and Shearman & Sterling, Toronto, Ontario and
New York, New York. At the date hereof, partners and associates of each of
Davies Ward Phillips & Vineberg LLP, Troutman Sanders LLP and Lang Michener own
beneficially, directly or indirectly, less than 1% of the Common Shares.
AUDITORS, TRANSFER AGENT AND REGISTRAR
The auditors of the Company are Ernst & Young LLP, Chartered Accountants,
Ernst & Young Tower, 222 Bay Street, P.O. Box 251, Toronto, Ontario M5K 1J7. The
audited consolidated financial statements of the Company as at December 31, 2001
and 2000 and for each of the three-year period ended December 31, 2001 have been
audited by Ernst Young and are incorporated by reference herein in reliance on
the authority of said firm as experts in auditing and accounting.
The registrar and transfer agent for the Common Shares and Warrants is
Computershare Trust Company of Canada through its offices at 100 University
Avenue, Toronto, Ontario M5J 2Y1.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the securities commissions or similar
authorities in each of the provinces of Canada are specifically incorporated by
reference in and form an integral part of this prospectus:
(a) the Company's Annual Information Form dated April 24, 2002 consisting of
the Company's Annual Report on Form 20-F under the United States
Securities Exchange Act of 1934 for the fiscal year ended December 31,
2001;
(b) the audited consolidated financial statements of the Company, including
the notes thereto, as at December 31, 2001 and 2000 and for each of the
years in the three-year period ended December 31, 2001 together with the
auditors' report thereon;
(c) management's discussion and analysis of financial condition and results
of operations of the Company for the year ended December 31, 2001;
27
(d) the Management Information Circular dated April 24, 2002, prepared in
connection with the Company's annual meeting of shareholders on June 21,
2002 (excluding the sections entitled "Composition of Compensation
Committee", "Report on Executive Compensation", "Performance Graph" and
"Statement of Corporate Governance Practices");
(e) the information set forth under the caption "Summarized Quarterly Data"
on pages 40 and 41 of the Company's annual report for the year ended
December 31, 2001;
(f) management's discussion and analysis of results of operations and
liquidity and capital resources of the Company for the nine months ended
September 30, 2002 and unaudited consolidated financial statements of the
Company as at and for the nine months ended September 30, 2002;
(g) the material change report dated February 22, 2002 filed by the Company
in respect of the redemption of the convertible notes due 2004; and
(h) the material change report dated May 22, 2002 filed by the Company in
respect of the forgiveness of certain intercompany debt owed to the
Company by Sudbury Contact.
All documents of the type referred to above, and any material change reports
(excluding confidential material change reports), filed by the Company with any
securities commission or similar regulatory authority in Canada, subsequent to
the date of this prospectus and prior to the termination of the distribution
under this prospectus shall be deemed to be incorporated by reference in this
prospectus.
ANY STATEMENT CONTAINED HEREIN OR IN A DOCUMENT INCORPORATED OR DEEMED TO BE
INCORPORATED BY REFERENCE HEREIN SHALL BE DEEMED TO BE MODIFIED OR SUPERSEDED
FOR THE PURPOSES OF THIS PROSPECTUS TO THE EXTENT THAT A STATEMENT CONTAINED
HEREIN, OR IN ANY OTHER SUBSEQUENTLY FILED DOCUMENT WHICH ALSO IS INCORPORATED
OR IS DEEMED TO BE INCORPORATED BY REFERENCE HEREIN, MODIFIES OR SUPERSEDES SUCH
STATEMENT. THE MODIFYING OR SUPERSEDING STATEMENT NEED NOT STATE THAT IT HAS
MODIFIED OR SUPERSEDED A PRIOR STATEMENT OR INCLUDE ANY OTHER INFORMATION SET
FORTH IN THE DOCUMENT WHICH IT MODIFIES OR SUPERSEDES. THE MAKING OF A MODIFYING
OR SUPERSEDING STATEMENT WILL NOT BE DEEMED AN ADMISSION FOR ANY PURPOSES THAT
THE MODIFIED OR SUPERSEDED STATEMENT, WHEN MADE, CONSTITUTED A
MISREPRESENTATION, AN UNTRUE STATEMENT OF A MATERIAL FACT OR AN OMISSION TO
STATE A MATERIAL FACT THAT IS REQUIRED TO BE STATED OR THAT IS NECESSARY TO MAKE
A STATEMENT NOT MISLEADING IN LIGHT OF THE CIRCUMSTANCES IN WHICH IT WAS MADE.
ANY STATEMENT SO MODIFIED OR SUPERSEDED SHALL NOT BE DEEMED, EXCEPT AS SO
MODIFIED OR SUPERSEDED TO CONSTITUTE A PART OF THIS PROSPECTUS.
INFORMATION HAS BEEN INCORPORATED BY REFERENCE IN THIS SHORT FORM PROSPECTUS
FROM DOCUMENTS FILED WITH SECURITIES COMMISSIONS OR SIMILAR AUTHORITIES IN
CANADA. Copies of the documents incorporated herein by reference may be obtained
on request without charge from the Corporate Secretary, Agnico-Eagle Mines
Limited, Suite 500, 145 King Street East, Toronto, Ontario M5C 2Y7, (Telephone
(416) 947-1212). For the purpose of the Province of Quebec, this simplified
prospectus contains information to be completed by consulting the permanent
information record. A copy of the permanent information record may be obtained
from the Corporate Secretary of Agnico-Eagle Mines Limited at the
above-mentioned address and telephone number.
AVAILABLE INFORMATION
The Company has filed with the SEC a registration statement on Form F-10,
together with all amendments and supplements thereto, under the United States
Securities Act of 1933, as amended, with respect to the Common Shares and
Warrants offered hereby. This prospectus, which forms a part of the registration
statement, does not contain all the information set forth in the registration
statement, certain parts of which have been omitted in accordance with the rules
and regulations of the SEC. For further information with respect to the Company,
and the Common Shares and Warrants offered in this prospectus, reference is made
to the registration statement and to the schedules and exhibits filed therewith.
Statements contained in this prospectus as to the contents of certain documents
are not necessarily complete and, in each instance, reference is made to the
copy of the document filed as an exhibit to the registration statement. Each
such statement is qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports and other information with the SEC.
Under a multijurisdictional disclosure system
28
adopted by the United States, such reports and other information may be prepared
in accordance with the disclosure requirements of Canada, which requirements are
different from those of the United States. The Company is exempt from the rules
under Section 14 of the Exchange Act prescribing the furnishing and content of
proxy statements, and the Company's officers, directors and principal
shareholders are exempt from the reporting and short-swing profit recovery
provisions contained in Section 16 of the Exchange Act. Under the Exchange Act,
the Company is not required to publish financial statements as frequently or as
promptly as U.S. companies. Any information filed with the SEC can be read and
copied at prescribed rates at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Information on the operation of the Public
Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES
The Company is an Ontario corporation with its principal place of business
in Canada. All of its directors and officers and certain experts named in this
prospectus are residents of Canada and all or a substantial portion of its
assets and the assets of such persons are located outside the United States.
Consequently, it may be difficult for United States investors to effect service
of process within the United States on the Company or its directors or officers,
or to realize in the United States on judgments of courts of the United States
predicated on civil liabilities under the United States Securities Act of 1933,
as amended. Investors should not assume that Canadian courts would enforce
judgments of United States courts obtained in actions against the Company or
such persons predicated on the civil liability provisions of the United States
federal securities laws or the securities or "blue sky" laws of any state within
the United States or would enforce, in original actions, liabilities against the
Company or such persons predicated on the United States federal securities or
any such state securities or blue sky laws.
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
The following documents have been filed with the SEC as part of the
registration statement of which this prospectus forms a part: the documents
referred to under "Documents Incorporated by Reference"; consent of Ernst &
Young LLP; consent of Marc Legault; Underwriting Agreement; form of Warrant
Indenture and the powers of attorney.
29
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
12,000,000 COMMON SHARES AND
6,000,000 SHARE PURCHASE WARRANTS
[LOGO]
AGNICO-EAGLE MINES LIMITED
UNITS
---------------
P R O S P E C T U S
-------------------
MERRILL LYNCH & CO.
TD SECURITIES
SCOTIA CAPITAL (USA) INC.
YORKTON CAPITAL INC.
CIBC WORLD MARKETS
SALOMON SMITH BARNEY
DUNDEE SECURITIES
SPROTT SECURITIES
NOVEMBER 6, 2002
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED TO BE DELIVERED TO
OFFEREES OR PURCHASERS
Indemnification.
Under the BUSINESS CORPORATIONS ACT (Ontario), the Registrant may indemnify
a present or former director or officer or person who acts or acted at the
Registrant's request as a director or officer of another corporation of which
the Registrant is or was a shareholder or creditor, and his heirs and legal
representatives, against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, reasonably incurred by him in
respect of any civil, criminal or administrative action or proceeding to which
he is made a party by reason of his being or having been a director or officer
of the Registrant or body corporate and provided that the director or officer
acted honestly and in good faith with a view to the best interest of the
Registrant and, in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, had reasonable grounds for believing
that his conduct was lawful. Such indemnification may be made in connection with
a derivative action only with court approval. A director is entitled to
indemnification from the Registrant as a matter of right if he was substantially
successful on the merits in his defense and fulfilled the conditions set forth
above.
In accordance with the BUSINESS CORPORATIONS ACT (Ontario), the by-laws of
the Registrant indemnify a director or officer, a former director or officer, or
a person who acts or acted at a Registrant's request as a director or officer of
a corporation in which the Registrant is or was a shareholder or creditor
against any and all losses and expenses reasonably incurred by him in respect of
any civil, criminal, administrative action or proceeding to which he was made a
party by reason of being or having been a director or officer of the Registrant
or other corporation if he acted honestly and in good faith with a view to the
best interests of the Registrant, or, in the case of a criminal or
administrative action or proceeding that is enforced by monetary penalty, he had
reasonable grounds in believing that his conduct was lawful.
A policy of directors' and officers' liability insurance is maintained by
the Registrant which insures directors and officers for losses as a result of
claims against the directors and officers of the Registrant in their capacity as
directors and officers and also reimburses the Registrant for payments made
pursuant to the indemnity provisions under the By-Laws and the BUSINESS
CORPORATIONS ACT (Ontario).
Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been advised that in
the opinion of the Commission such indemnification is against public policy in
the United States as expressed in the Securities Act of 1933 and is therefore
unenforceable.
II-1
EXHIBITS
The following exhibits are filed as part of the registration statement:
EXHIBIT NO. DESCRIPTION
--------------------- -----------
3.1 Underwriting Agreement.
4.1 Annual Information Form dated April 24, 2002 consisting of
the Registrant's Annual Report on Form 20-F under the United
States Securities Exchange Act of 1934 for the fiscal year
ended December 31, 2001, incorporated by reference to the
Registrant's Annual Report on Form 20-F filed May 13, 2002.
4.2 Audited comparative consolidated financial statements of the
Registrant, including the notes thereto, as at December 31,
2001 and 2000 and for each of the years in the three year
period ended December 31, 2001, together with the auditors'
report thereon and management's discussion and analysis of
financial condition and results of operations of the
Registrant for such periods, incorporated by reference to
the Registrant's Annual Report on Form 20-F filed May 13,
2002.
4.3 Management Information Circular dated April 24, 2002
(excluding the sections entitled "Composition of
Compensation Committee", "Report on Executive Compensation",
"Performance Graph", and "Statement of Corporate Governance
Practices"), incorporated by reference to the Registrant's
Annual Report on Form 20-F filed May 13, 2002.
4.4 Management's discussion and analysis of results of
operations and liquidity and capital resources of the
Registrant for the nine months ended September 30, 2002 and
unaudited consolidated financial statements of the
Registrant as at September 30, 2002 and for the nine months
ended September 30, 2002, incorporated by reference to the
Registrant's Form 6-K filed October 24, 2002.
4.5 The information set forth under the caption "Summarized
Quarterly Data", at pages 40 and 41 of the Registrant's
2001 Annual Report, incorporated by reference to the
Registrant's Annual Report on Form 20-F filed May 13, 2002.
4.6 Material change report dated February 22, 2002 filed by the
Registrant in respect of the redemption by the Registrant of
the Registrant's convertible notes due 2004, incorporated by
reference to the Registrant's Registration Statement on
Form F-10/A (File No. 333-85192) filed on April 11, 2002.
4.7 Material change report dated May 22, 2002 filed by the
Registrant in respect of the forgiveness of certain
intercompany debt owed to the Registrant by Sudbury Contact
Mines Limited, incorporated by reference to the Registrant's
Form 6-K filed on November 5, 2002.
5.1 Consent of Ernst & Young LLP, Independent Chartered
Accountants.*
5.2 Consent of Marc Legault.*
6.1 Power of Attorney, included as part of Signatures.*
7.1 Form of Warrant Indenture.
------------
* Previously filed.
II-2
PART III
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
ITEM 1. UNDERTAKING
The Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to the securities registered pursuant to Form F-10 or to transactions
in said securities.
ITEM 2. CONSENT TO SERVICE OF PROCESS.
Concurrently with the filing of the initial Registration Statement on
Form F-10, the Registrant previously filed with the Commission a written
irrevocable consent and power of attorney on Form F-X.
III-1
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form F-10 and has duly caused this amendment to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Toronto, Province of Ontario, Country of Canada, on
November 6, 2002.
AGNICO-EAGLE MINES LIMITED
By */s/ SEAN BOYD
---------------------------------------------
Sean Boyd,
PRESIDENT
Pursuant to the requirements of the Securities Act, this amendment to the
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
President and Chief Executive
*/s/ SEAN BOYD Officer and a Director of the
------------------------------------------- Corporation (Principal Executive November 6, 2002
Sean Boyd Officer)
Vice President, Finance and
*/s/ DAVID GAROFALO Chief Financial Officer and a
------------------------------------------- Director of the Corporation November 6, 2002
David Garofalo (Principal Financing and
Accounting Officer)
*/s/ DOUGLAS R. BEAUMONT
------------------------------------------- Director November 6, 2002
Douglas R. Beaumont, P. Eng.
*/s/ JOHN T. CLEMENT
------------------------------------------- Director November 6, 2002
John T. Clement, Q.C.
*/s/ IRVING DOBBS
------------------------------------------- Director November 6, 2002
Irving Dobbs
*/s/ DR. ALAN GREEN
------------------------------------------- Director November 6, 2002
Dr. Alan Green
*/s/ WENCEL A. HUBACHECK
------------------------------------------- Director November 6, 2002
Wencel A. Hubacheck, P. Eng.
III-2
SIGNATURE TITLE DATE
--------- ----- ----
------------------------------------------- Director
Bernard Kraft, C.A.
*/s/ JAMES D. NASSO
------------------------------------------- Chairman November 6, 2002
James D. Nasso
------------------------------------------- Director
Ernest Sheriff
/s/ DAVID J. LEVENSON
------------------------------------------- Authorized United States November 6, 2002
David J. Levenson Representative
* Pursuant to powers of attorney executed by the persons named above whose
names are preceded by an asterisk, David J. Levenson, as attorney-in-fact, does
hereby sign this Amendment to the Registration Statement on behalf of each such
person, in each case in the capacity indicated, on the date indicated.
/s/ DAVID J. LEVENSON
-------------------------------------------
David J. Levenson,
ATTORNEY-IN-FACT
III-3
EXHIBIT INDEX
PAGE
EXHIBIT NO. DESCRIPTION NUMBER
--------------------- ----------- --------
3.1 Underwriting Agreement.
4.1 Annual Information Form dated April 24, 2002 consisting of
the Registrant's Annual Report on Form 20-F under the United
States Securities Exchange Act of 1934 for the fiscal year
ended December 31, 2001, incorporated by reference to the
Registrant's Annual Report on Form 20-F filed May 13, 2002.
4.2 Audited comparative consolidated financial statements of the
Registrant, including the notes thereto, as at December 31,
2001 and 2000 and for each of the years in the three year
period ended December 31, 2001, together with the auditors'
report thereon and management's discussion and analysis of
financial condition and results of operations of the
Registrant for such periods, incorporated by reference to
the Registrant's Annual Report on Form 20-F filed May 13,
2002.
4.3 Management Information Circular dated April 24, 2002
(excluding the sections entitled "Composition of
Compensation Committee", "Report on Executive Compensation",
"Performance Graph", and "Statement of Corporate Governance
Practices"), incorporated by reference to the Registrant's
Annual Report on Form 20-F filed May 13, 2002.
4.4 Management's discussion and analysis of results of
operations and liquidity and capital resources of the
Registrant for the nine months ended September 30, 2002 and
unaudited consolidated financial statements of the
Registrant as at September 30, 2002 and for the nine months
ended September 30, 2002, incorporated by reference to the
Registrant's Form 6-K filed October 24, 2002.
4.5 The information set forth under the caption "Summarized
Quarterly Data", at pages 40 and 41 of the Registrant's
2001 Annual Report, incorporated by reference to the
Registrant's Annual Report on Form 20-F filed May 13, 2002.
4.6 Material change report dated February 22, 2002 filed by the
Registrant in respect of the redemption by the Registrant of
the Registrant's convertible notes due 2004, incorporated by
reference to the Registrant's Registration Statement on
Form F-10/A (File No. 333-85192) filed on April 11, 2002.
4.7 Material change report dated May 22, 2002 filed by the
Registrant in respect of the forgiveness of certain
intercompany debt owed to the Registrant by Sudbury Contact
Mines Limited, incorporated by reference to the Registrant's
Form 6-K filed on November 5, 2002.
5.1 Consent of Ernst & Young LLP, Independent Chartered
Accountants.*
5.2 Consent of Marc Legault.*
6.1 Power of Attorney, included as part of Signatures.*
7.1 Form of Warrant Indenture.
------------
* Previously filed.