SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
APOLLO GOLD CORPORATION
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
Total fee paid: N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
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NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS OF
APOLLO GOLD CORPORATION
AND MANAGEMENT INFORMATION AND PROXY CIRCULAR
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TABLE OF CONTENTS
INVITATION TO SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS . . . . . . . . . . . . . . . . . 2
GENERAL PROXY INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Solicitation of Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Voting Shares And Principal Holders Thereof. . . . . . . . . . . . . . . . . . . . . 3
Beneficial Ownership Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Q & A on Proxy Voting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
STATEMENT OF CORPORATE GOVERNANCE PRACTICES. . . . . . . . . . . . . . . . . . . . . . 7
Overview of Corporate Governance Practices . . . . . . . . . . . . . . . . . . . . . 7
Assumption of Responsibilities by the Board of Directors . . . . . . . . . . . . . 7
Corporate Governance Principles. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Composition of the Board of Directors. . . . . . . . . . . . . . . . . . . . . . . 8
Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Board Functioning and Independence . . . . . . . . . . . . . . . . . . . . . . . . 9
Shareholder Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Code of Business Conduct and Ethics. . . . . . . . . . . . . . . . . . . . . . . . 10
Whistleblower Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Board Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Audit and Finance Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Report of the Audit and Finance Committee. . . . . . . . . . . . . . . . . . . . . 11
Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Report of the Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . 12
Technical Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Nominating Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
How was the Board Compensated in 2003? . . . . . . . . . . . . . . . . . . . . . . 16
Shareholdings of Board Members . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Summary of Board and Committee Meetings Held . . . . . . . . . . . . . . . . . . . 16
Summary of Attendance of Directors . . . . . . . . . . . . . . . . . . . . . . . . 16
Executive Officers and Executive Compensation. . . . . . . . . . . . . . . . . . . . 17
Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Summary Compensation Table for Named Executive Officers. . . . . . . . . . . . . . 19
Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Incentive Stock Option Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Plan of Arrangement Stock Option Plan. . . . . . . . . . . . . . . . . . . . . . . 21
2003 Stock Option Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Aggregated Options Exercised During Most Recently Completed Financial Year And
Option Values At Financial Year-End. . . . . . . . . . . . . . . . . . . . . . . . 22
Management Agreements with Executive Officers. . . . . . . . . . . . . . . . . . . . 22
Indebtedness of Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . 24
Equity Compensation Plan Information . . . . . . . . . . . . . . . . . . . . . . . . 24
Performance Graph. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Directors' and Officers' Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 25
Interests of Insiders and Others in Material Transactions. . . . . . . . . . . . . . 26
Section 16(a) Beneficial Ownership Reporting Compliance. . . . . . . . . . . . . . . 26
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 26
Interest of Certain Persons in Matters to be Acted Upon. . . . . . . . . . . . . . . 26
PARTICULARS OF MATTERS TO BE ACTED UPON. . . . . . . . . . . . . . . . . . . . . . . . 27
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Proposal #1 - Election of Directors. . . . . . . . . . . . . . . . . . . . . . . . . 27
Proposal #2 - Appointment of Auditors. . . . . . . . . . . . . . . . . . . . . . . . 29
Proposal #3 - Advanced Shareholder Approval for the Issuance of Common Shares
by Private Placement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
APPROVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SHAREHOLDER PROPOSALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SCHEDULE "A" CORPORATE GOVERNANCE PROCEDURES . . . . . . . . . . . . . . . . . . . . . A-1
SCHEDULE "B" RESOLUTION APPROVING IN ADVANCE THE ISSUANCE OF COMMON SHARES BY
PRIVATE PLACEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
SCHEDULE "C" AUDIT COMMITTEE CHARTER. . . . . . . . . . . . . . . . . . . . . . . . . C-1
INVITATION TO SHAREHOLDERS
It is my great pleasure to invite you to join our board of directors and the
senior management of Apollo Gold Corporation at our next annual and special
meeting, which convenes at 11:00 a.m. (Denver time) on May 20, 2004, at the
Hyatt Regency Tech Center, 7800 East Tufts Avenue, Denver, Colorado 80237.
I urge you to attend if you can. This occasion is your opportunity to receive a
first-hand account of how Apollo Gold Corporation performed for the year ended
December 31, 2003, as well as to hear our plans for the future.
Should you have any questions for senior management, the annual meeting is an
excellent place to raise them.
If you cannot attend in person, I encourage you to exercise the power of your
proxy, by signing, dating and returning the enclosed proxy promptly in the
accompanying reply envelope. If you decide to attend the annual and special
meeting and wish to change your proxy vote, you may do so automatically by
voting in the annual and special meeting. For further information regarding the
power of your proxy please read the accompanying Management Information and
Proxy Circular.
I appreciate your participation, and I look forward to seeing you this May in
Denver.
Sincerely,
(Signed) R. DAVID RUSSELL
President and April 8, 2004
Chief Executive Officer
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN THAT an annual and special meeting (the "MEETING") of the
shareholders of Apollo Gold Corporation (the "CORPORATION") will be held at the
Hyatt Regency Tech Center, 7800 East Tufts Avenue, Denver, Colorado 80237 on
Thursday, May 20, 2004 at 11:00 a.m. (Denver time) for the following purposes:
(1) to receive the consolidated financial statements of the Corporation for the
fiscal year ended December 31, 2003, together with the report of the
auditors thereon;
(2) to elect directors of the Corporation;
(3) to appoint auditors and to authorize the directors to fix their
remuneration;
(4) to consider and, if thought appropriate, pass a resolution with or without
variation, (the "PRIVATE PLACEMENT RESOLUTION"), authorizing the board of
directors of the Corporation to enter into additional private placements of
securities of the Corporation during the 12 month period ending May 20,
2005, as further set out in SCHEDULE "B" to the accompanying Management
Information and Proxy Circular;
(5) to transact such other business as may properly come before the Meeting or
any adjournment thereof.
The accompanying Management Information and Proxy Circular provides additional
information relating to the matters to be dealt with at the Meeting and is
deemed to form part of this Notice of Meeting.
SHAREHOLDERS WHO ARE UNABLE TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY, AND TO RETURN IT IN THE ENVELOPE
PROVIDED FOR THAT PURPOSE.
If you are a REGISTERED SHAREHOLDER of the Corporation and are unable to attend
the Meeting in person, please date and execute the accompanying form of proxy.
Proxies to be used at the Meeting must be deposited with CIBC Mellon Trust
Company, Proxy Department, 200 Queens Quay East, Unit #6, Toronto, Ontario, M5A
4K9 Canada, before 5:00 p.m. (Toronto time) on May 18, 2004.
If you are a NON-REGISTERED SHAREHOLDER of the Corporation and receive these
materials through your broker or another intermediary, please complete and
return the materials in accordance with the instructions provided to you by your
broker or such other intermediary. In addition, please read the section entitled
Q&A ON PROXY VOTING "If my shares are not registered in my name but are held in
the name of a nominee (a bank, trust company, securities broker, trustee or
other), how do I vote my shares?"
By Order of the Board
(Signed) R. David Russell
President and
Chief Executive Officer
Denver, Colorado
April 8, 2004
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APOLLO GOLD CORPORATION
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MANAGEMENT INFORMATION AND PROXY CIRCULAR
GENERAL PROXY INFORMATION
SOLICITATION OF PROXIES
THIS MANAGEMENT INFORMATION AND PROXY CIRCULAR (THE "CIRCULAR") IS FURNISHED IN
CONNECTION WITH THE SOLICITATION OF PROXIES BY OR ON BEHALF OF THE MANAGEMENT OF
APOLLO GOLD CORPORATION (THE "CORPORATION" OR "APOLLO") FOR USE AT THE ANNUAL
AND SPECIAL MEETING (THE "MEETING") OF SHAREHOLDERS OF THE CORPORATION (THE
"SHAREHOLDERS") TO BE HELD ON THURSDAY, MAY 20, 2004, AT 11:00 A.M. (DENVER
TIME), OR ANY ADJOURNMENT THEREOF, AT THE HYATT REGENCY TECH CENTER, 7800 EAST
TUFTS AVENUE, DENVER, COLORADO 80237 FOR THE PURPOSES SET OUT IN THE
ACCOMPANYING NOTICE OF MEETING (THE "NOTICE OF MEETING").
The solicitations will be made primarily by mail, but proxies may also be
solicited personally or by telephone by directors, officers and regular
employees of the Corporation at nominal cost. Banks, brokers, custodians,
nominees and fiduciaries will be requested to forward the proxy soliciting
materials to beneficial owners, and the Corporation will reimburse such persons
for reasonable out-of-pocket expenses incurred by them in this connection. The
expenses of soliciting proxies, including the cost of preparing, assembling and
mailing this proxy material to shareholders, will be borne by the Corporation.
This Circular, the Notice of Meeting and accompanying Proxy are being mailed on
or about April 16, 2004.
QUORUM
A quorum is required in order for the Meeting to be properly constituted. The
holders of at least one-third of the shares entitled to vote at a meeting of
shareholders, personally present or represented by proxy, shall constitute a
quorum.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The authorized capital of the Corporation consists of an unlimited number of
common shares ("COMMON SHARES"). As of the close of business on April 8, 2004,
_______ Common Shares were outstanding and entitled to vote. Each Common Share
is entitled to one (1) vote. The outstanding Common Shares are listed on the
Toronto Stock Exchange (the "TSX") under the symbol APG, and on the American
Stock Exchange ("AMEX") under the symbol AGT.
BENEFICIAL OWNERSHIP TABLE
The following table sets forth certain information known to us with respect to
the beneficial ownership of our Common Shares as of March 26, 2004 by (i) all
persons who are known to us to be beneficial owners of five percent (5%) or more
of the Common Shares, (ii) each of our directors, (iii) the chief executive
officer and the other four most highly compensated executive officers (the
"NAMED EXECUTIVE OFFICERS") and (iv) all current directors and executive
officers as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power with
respect to the securities. Common Shares subject to options or warrants that
are currently exercisable or exercisable within 60 days of March 26, 2004 are
deemed to be outstanding and to be beneficially owned by the person or group
holding such options or warrants for the purpose of computing the percentage
ownership of such person or group but are not treated as outstanding for the
purpose of computing the percentage ownership of any other person or group.
Unless otherwise indicated, the address for each of the
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individuals listed in the table is care of Apollo Gold Corporation, 4601 DTC
Boulevard, Suite 750, Denver, Colorado 80237-2571. Unless otherwise indicated
by footnote, the persons named in the table have sole voting and sole investment
power with respect to all Common Shares shown as beneficially owned by them,
subject to applicable community property laws. Percentage of beneficial
ownership is based on 79,017,575 of our Common Shares outstanding as of March
26, 2004.
BENEFICIAL OWNER SHARES BENEFICIALLY OWNED PERCENT OF CLASS
G.W. (Bill) Thompson 125,071(1) *
W.S. (Steve) Vaughan 68,365(1) *
R. David Russell 1,574,928(1)(2) 1.98%
G. Michael Hobart 111,071(1) *
Charles E. Stott 112,071(1) *
R. Llee Chapman 354,929(1) *
Richard F. Nanna 1,321,166(1) 1.66%
Donald W. Vagstad 192,009(1) *
David K.Young 218,659(1) *
Gerald J. Schissler 35,000(1) *
Robert A. Watts Nil *
All officers and directors as a group (14 persons) 4,167,269(3) 5.12%
Goodman & Company, Investment Counsel Ltd. 5,375,000(4) 5.17%
* Represents less than 1% of our outstanding Common Shares.
(1) Amounts shown include Common Shares subject to options exercisable within
60 days: 125,071 Common Shares for Mr. Thompson; 68,365 Common Shares for
Mr. Vaughan; 550,403 Common Shares for Mr. Russell; 110,071 Common Shares
for Mr. Hobart; 110,071 Common Shares for Mr. Stott; 340,829 Common Shares
for Mr. Chapman; 544,866 Common Shares for Mr. Nanna; 192,009 Common Shares
for Mr. Vagstad; 217,659 Common Shares for Mr. Young; and 35,000 Common
Shares for Mr. Schissler.
(2) Shares beneficially owned by Mr. Russell also include 100 Common Shares
owned by a member of Mr. Russell's immediate family.
(3) Shares beneficially owned by all officers and directors as a group include
options and/or warrants to purchase up to 2,348,344 of our Common Shares
which may be exercised in whole or in part within 60 days.
(4) The address for Goodman & Company, Investment Counsel Ltd. (f/k/a Dynamic
Mutual Funds) is 55th Floor, Scotia Plaza, 40 King Street West, Toronto,
Ontario, Canada M5H4A9. The number of shares indicated is based on a
statement on Schedule 13G that was filed jointly by Goodman & Company,
Investment Counsel Ltd. on March 5, 2004 and includes 1,625,000 warrants to
purchase Common Shares of which 1,000,000 are exercisable at US$3.25 and
expire on December 23, 2006 and 625,000 are exercisable at US$1.60 and
expire on March 21, 2004.
Q & A ON PROXY VOTING
Q: WHAT AM I VOTING ON?
A: Shareholders are voting on the election of directors to the board of
directors of the Corporation (the "BOARD") for 2004, the appointment of
auditors for the Corporation for 2004 and the approval of a resolution
authorizing the Board to enter into additional private placements of
securities of the Corporation during the 12-month period commencing May 20,
2004.
Q: WHO IS ENTITLED TO VOTE?
A: Shareholders as of the close of business on April 8, 2004 (the "RECORD
DATE"), are entitled to vote. Each Common Share is entitled to one vote on
those items of business identified in the Notice of Meeting.
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If you acquired your shares after the Record Date, please refer to the
answer to the question "What if ownership of shares has been transferred
after April 8, 2004?" to determine how you may vote such shares.
Q: HOW DO I VOTE?
A: There are two ways you can vote your shares if you are a registered
shareholder. You may vote in person at the Meeting or you may sign the
enclosed form of proxy appointing the named persons or some other person
you choose, who need not be a shareholder, to represent you as proxyholder
and vote your shares at the Meeting. If your shares are held in the name of
a nominee, please refer to the answer to the question "If my shares are not
registered in my name but are held in the name of a nominee (a bank, trust
company, securities broker, trustee or other), how do I vote my shares?" to
determine how you may vote your shares.
Q: WHAT IF I PLAN TO ATTEND THE MEETING AND VOTE IN PERSON?
A: If you are a registered shareholder and plan to attend the Meeting on May
20, 2004 and wish to vote your shares in person at the Meeting, do not
complete or return the form of proxy. Your vote will be taken and counted
at the Meeting. Please register with the transfer agent, CIBC Mellon Trust
Company, upon arrival at the Meeting. If your shares are held in the name
of a nominee, refer to the answer to the question "If my shares are not
registered in my name but are held in the name of a nominee (a bank, trust
company, securities broker, trustee or other), how do I vote my shares?"
for voting instructions.
Q: WHO IS SOLICITING MY PROXY?
A: THE ENCLOSED FORM OF PROXY IS BEING SOLICITED BY MANAGEMENT OF APOLLO GOLD
CORPORATION and the associated costs will be borne by the Corporation. The
solicitation will be made primarily by mail but may also be made by the
telephone, in writing or in person by the employees of the Corporation
and/or CIBC Mellon Trust Company.
Q: WHAT IF I SIGN THE FORM OF PROXY ENCLOSED WITH THIS CIRCULAR?
A: Signing the enclosed form of proxy gives authority to R. David Russell or
R. Llee Chapman, the President and the Chief Financial Officer of the
Corporation, respectively, or to another person you have appointed, to vote
your shares at the Meeting.
Q: CAN I APPOINT SOMEONE OTHER THAN THESE REPRESENTATIVES TO VOTE MY SHARES?
A: Yes. WRITE THE NAME OF THIS PERSON, WHO NEED NOT BE A SHAREHOLDER, IN THE
BLANK SPACE PROVIDED IN THE FORM OF PROXY. It is important to ensure that
any other person you appoint is attending the Meeting and is aware that he
or she has been appointed to vote your shares. Proxyholders should, upon
arrival at the Meeting, present themselves to a representative of CIBC
Mellon Trust Company.
Q: WHAT DO I DO WITH MY COMPLETED PROXY?
A: Return it to the Corporation's transfer agent, CIBC Mellon Trust Company,
in the envelope provided, at "CIBC Mellon Trust Company, Proxy Department,
200 Queens Quay East, Unit #6, Toronto, Ontario M5A 4K9 Canada", or by fax
to (416) 368-2502 so that it arrives no later than 5:00 p.m. (Toronto time)
on May 18, 2004. This will ensure that your vote is recorded.
Q: IF I CHANGE MY MIND, CAN I TAKE BACK MY PROXY ONCE I HAVE GIVEN IT?
A: Yes. If you change your mind and wish to revoke your proxy, prepare a
written statement to this effect or, if you are a registered shareholder,
you may attend the annual meeting and vote and this will automatically
revoke your proxy. If you prepare the written statement, the statement must
be signed by you or your attorney as authorized in writing or, if the
shareholder is a corporation, under its corporate seal or by an officer or
attorney of the corporation duly authorized. This statement must be
delivered either to the
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executive office of the Corporation at 4601 DTC Boulevard, Suite 750,
Denver, Colorado 80237-2571 no later than 5:00 p.m. (Toronto time) on May
19, 2004 or to the Chairman of the Meeting on the day of the Meeting, May
20, 2004, or any adjournment of the Meeting, prior to the time of voting.
Q: HOW WILL MY SHARES BE VOTED IF I GIVE MY PROXY?
A: The persons named on the form of proxy must vote for or against or withhold
from voting your shares in accordance with your directions. IN THE ABSENCE
OF SUCH DIRECTIONS, HOWEVER, YOUR SHARES WILL BE VOTED IN FAVOUR OF THE
ELECTION OF DIRECTORS TO THE BOARD, THE APPOINTMENT OF AUDITORS AND
APPROVING THE PRIVATE PLACEMENTS OF SECURITIES OF THE CORPORATION.
Q: WHAT IF AMENDMENTS ARE MADE TO THESE MATTERS OR IF OTHER MATTERS ARE
BROUGHT BEFORE THE MEETING?
A: The persons named in the form of proxy will have discretionary authority
with respect to amendments or variations to matters identified in the
Notice of Meeting and with respect to other matters which may properly come
before the Meeting.
As of the date of this Circular, management of the Corporation knows of no
such amendment, variation or other matter expected to come before the
Meeting. If any other matters properly come before the Meeting, the persons
named in the form of proxy will vote on them in accordance with their best
judgement.
Q: HOW MANY SHARES ARE ENTITLED TO VOTE?
A: As of April 8, 2004, there were _______ Common Shares outstanding. Each
registered shareholder has one vote for each Common Share held at the close
of business on April 8, 2004.
Q: WHAT IF OWNERSHIP OF SHARES HAS BEEN TRANSFERRED AFTER APRIL 8, 2004?
A: The person who acquired such shares after April 8, 2004, must produce
properly endorsed share certificates or otherwise establish that he or she
owns the shares and must ask the Corporation no later than 5:00 p.m.
(Toronto time) on May 10, 2004, that his or her name be included in the
list of shareholders before the Meeting in order to be entitled to vote
these shares at the Meeting.
Q: WHO COUNTS THE VOTES?
A: The Corporation's transfer agent, CIBC Mellon Trust Company, counts and
tabulates the proxies. This is done independently of the Corporation to
preserve the confidentiality of individual shareholder votes. Proxies are
referred to the Corporation only in cases where a shareholder clearly
intends to communicate with management or when it is necessary to do so to
meet the requirements of applicable law.
Q: IF I NEED TO CONTACT THE TRANSFER AGENT, HOW DO I REACH THEM?
A: You can contact the transfer agent as follows:
By mail: or by telephone:
CIBC Mellon Trust Company Within Canada and the United States at 1 -416-643-5500
P.O. Box 7010 Adelaide Postal Station or 1-800-387-0825
Toronto, Ontario M5E 2W9
E-mail: enquiries@cibcmellon.com
www.cibcmellon.com
Page 6
Q: IF MY SHARES ARE NOT REGISTERED IN MY NAME BUT ARE HELD IN THE NAME OF A
NOMINEE (A BANK, TRUST COMPANY, SECURITIES BROKER, TRUSTEE OR OTHER), HOW
DO I VOTE MY SHARES?
A: There are two ways you can vote your shares held by your nominee. Unless
you have previously informed your nominee that you do not wish to receive
material relating to the Meeting, you will have received this Circular from
your nominee, together with a request for voting instructions for the
number of shares you hold.
For your shares to be voted for you, please follow the voting instructions
provided by your nominee. If you are a non-registered shareholder who has
voted and want to change your mind and vote in person, contact your nominee
to discuss whether this is possible and what procedure to follow.
Since the Corporation does not have access to the names of its
non-registered shareholders, if you attend the Meeting, the Corporation
will have no record of your shareholdings or of your entitlement to vote
unless your nominee has appointed you as proxyholder. Therefore, if you are
a non-registered shareholder and wish to vote in person at the Meeting,
insert your own name in the space provided on the voting instruction form
sent to you by your nominee. By doing so, you are instructing your nominee
to appoint yourself as proxyholder. Then sign and return the voting
instruction form by following the signing and returning instructions
provided by your nominee. Do not otherwise complete the voting instruction
form as your vote will be taken at the Meeting. Please register with the
transfer agent, CIBC Mellon Trust Company, upon arrival at the Meeting.
Q: WHAT RIGHTS OF APPRAISAL OR SIMILAR RIGHTS OF DISSENTERS DO I HAVE WITH
RESPECT TO ANY MATTER TO BE ACTED UPON AT THE MEETING?
A: No action is proposed herein for which the laws of the Yukon Territory or
By-laws of the Corporation provide a right of a shareholder to dissent and
obtain appraisal of or payment for such shareholder's Common Shares.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The TSX has implemented rules requiring annual disclosure by corporations having
shares listed on the TSX of their approach to corporate governance with specific
reference to each of the 14 guidelines established by the TSX for effective
corporate governance (the "TSX GUIDELINES"). In addition, there have been recent
regulatory developments in the United States including the Sarbanes-Oxley Act of
2002 ("SOX") as well as the AMEX listing standards and corporate governance
standards (collectively the "AMEX STANDARDS").
A detailed description on the Corporation's governance practices setting forth
the Corporation's compliance with each of the 14 TSX Guidelines and certain
requirements of the AMEX Standards is provided in SCHEDULE "A" to this Circular.
The following is an overview of the Corporation's governance policies and
practices, together with information regarding and reports of Board committees.
OVERVIEW OF CORPORATE GOVERNANCE PRACTICES
Assumption of Responsibilities by the Board of Directors
The Board participates fully in assessing and approving strategic plans and
prospective decisions proposed by management. In order to ensure that the
principal business risks borne by the Corporation are appropriate, the Board
receives and comments on periodic reports from management of the Corporation's
assessment and management of such risks. The Board regularly monitors the
financial performance of the Corporation, including receiving and reviewing
detailed financial information contained in management reports. The Board,
directly and through the Audit and Finance Committee, assesses the integrity of
the Corporation's internal control and management information systems. In 2003,
the Board adopted a Disclosure Policy and appointed a Disclosure Policy Officer
being an Assistant Secretary of the Corporation, to determine, among other
things, the appropriateness and timing of the release of information with
respect to developments at the Corporation.
Page 7
The Board regularly receives reports regarding the monitoring of senior
management of the Corporation and its subsidiaries. Input is received at both
the Compensation Committee and Board meetings regarding the performance of
senior management. Both the Compensation Committee and the Board have
specifically assumed responsibility for reviewing the performance of senior
management.
The Board meets at least four times each calendar year, and more frequently as
required. The frequency of meetings as well as the nature of the agenda items
change depending on the state of the Corporation's affairs and in light of
opportunities or risks which the Corporation faces from time to time. In 2003,
the full Board held seven meetings.
Corporate Governance Principles
In 2003, the Board formally adopted a set of corporate governance principles.
Those principles provide guidelines on Board size, independence of Board
members, nominating and orientation of new directors, retirement and resignation
of Board members, conduct of Board meetings, conflicts of interest, share
ownership by directors, compensation review, assessing Board and committee
performance, interaction with third parties and confidentiality. The principles
also require each of the Board committees to adopt a written charter approved by
the Board, as well as set out minimum numbers for committee meetings. In
addition, in 2004, the Board created a Nominating Committee to comply with the
AMEX Standards.
Composition of the Board of Directors
The TSX Guidelines define an "unrelated director" as a director who is
independent of management of a company and free from any interest, and any
business or other relationship, which could, or could reasonably be perceived
to, materially interfere with the director's ability to act with a view to the
best interests of the Corporation, other than interests and relationships
arising from shareholding; a "related director" as a director who is not an
unrelated director; and a "significant shareholder" as a shareholder with the
ability to exercise a majority of the votes for the election of the board.
Pursuant to the AMEX Standards, "independent director" means a person other than
an officer or employee of the company or any parent or subsidiary who is
affirmatively determined by the board of directors not to have a material
relationship with the listed company that would interfere with the exercise of
independent judgment. The Corporation's Board has determined that Mssrs. Hobart,
Schissler, Stott, Thompson, Vaughn and Watts are independent directors.
The TSX Guidelines states that the board of directors of every corporation
should be constituted with a majority of individuals who qualify as unrelated
directors. As at April 8, 2004, the Board consisted of seven directors. Six of
the proposed nominees for director are unrelated directors. Mr. Hobart and Mr.
Vaughan are each partners of law firms that provide legal services to the
Corporation but are otherwise "unrelated" to the Corporation. The sole related
director is R. David Russell, the President and Chief Executive Officer of the
Corporation. The AMEX Standards require that each listed company must have a
sufficient number of independent directors on its board of directors such that
at least a majority of such directors are independent directors subject to the
certain exceptions. The Board has determined that six of the proposed nominees
for directors, being all of the nominees other than R. David Russell, are
independent directors.
The Corporation does not have any "significant shareholders" as that term is
defined in the TSX Guidelines. The Board believes that the current size and
composition of the Board serves the Corporation and its shareholders well. The
Board believes that all of its directors, including its related director, make a
valuable contribution to the Board and the Corporation. As indicated above, a
majority of the Corporation's directors are unrelated. The related director
possesses an extensive knowledge of the Corporation's business and has extensive
business experience, both of which have proven to be beneficial to the other
directors, and his participation as a director contributes to the effectiveness
of the Board. The Board also believes that the directors are sensitive to
conflicts of interest and excuse themselves from deliberations and voting in
appropriate circumstances.
Page 8
Committees
The Board has four committees: an Audit and Finance Committee, a Compensation
Committee, a Technical Committee and a Nominating Committee. The Board
committees are generally composed of outside directors, a majority of whom are
unrelated directors in accordance with the provisions contained in the TSX
Guidelines and are independent directors as stated in the AMEX Standards. The
composition, mandate and certain activities of each committee are set out under
"Statement of Corporate Governance Practices - Board Committees" of this
Circular.
Board Functioning and Independence
In accordance with the TSX Guidelines and the AMEX Standards, the Corporation
provides orientation to new recruits to the Board. Such orientation consists of
orientation sessions with management, a review of prior Board activity, receipt
of documentation including the Corporation's articles, by-laws, policies and
procedures and personal meetings with directors and management of subsidiaries.
The Board has a formal policy that all acquisitions and divestitures of a
material nature require the approval of the Board. In addition, Board policy
requires that all major strategic decisions, including any change in the
strategic direction of the Corporation be presented by management to the Board
for approval. As part of its ongoing activity, the Board regularly receives and
comments upon reports of management as to the performance of the Corporation's
business and management's expectations and planned actions in respect thereto.
The Board reviews the adequacy and form of the compensation of directors to
ensure the compensation realistically reflects the responsibility and risk
involved in being an effective director. The Board has made it a priority to
continue to examine and develop the processes which it follows in its
deliberations in order that it will continue to fulfill its mandate.
The Board and the Chief Executive Officer engage in regular dialogue regarding
the performance of the senior management team, including the Chief Executive
Officer, in achieving the Corporation's strategic objectives as determined by
management and the Board. As the Board has plenary power, any responsibility
which is not delegated to management or a Board committee remains with the
Board.
The Board conducts in-camera sessions without management present as it deems
appropriate and also conducts in-camera sessions to review the recommendations
of the Compensation Committee. The Compensation Committee also conducts part of
its deliberations without management present. As well, the Audit and Finance
Committee has a policy to meet annually with the Corporation's auditors without
management present.
In accordance with the provisions of the TSX Guidelines and the AMEX Standards,
the By-laws of the Corporation provide for a system which enables an individual
director to engage an outside adviser at the expense of the Corporation in
appropriate circumstances. Prior approval of the Audit and Finance Committee is
required for the retention of such an adviser.
The Corporation has adopted a formal policy that all members of the Board are
encouraged, but not required, to attend the annual meeting of shareholders of
the Corporation. With the exception of one director who did not stand for
re-election, all Board members attended the Corporation's 2003 annual and
special meeting held on May 21, 2003.
Shareholder Communications
The Corporation endeavours to keep all shareholders well informed as to the
financial performance of the Corporation, primarily by means of its annual and
quarterly reports, and by press releases. The Board has specifically adopted a
disclosure policy in furtherance of these goals.
Management of the Corporation is receptive to shareholder feedback in any form.
It is the policy of the Corporation to receive and respond promptly to
shareholder enquiries, while being guided by legal requirements as well as the
Corporation's policies in respect to confidentiality and disclosure.
Shareholders wishing to send communications to the Board of the Corporation
should write to either the Chairman of the Board or the Secretary of the
Corporation at the following address: Apollo Gold Corporation, 4601 DTC
Boulevard, Suite 750, Denver, Colorado 80237-2571.
Page 9
All such communication shall state the type and amount of Corporation securities
held by the security holder and shall clearly state that the communication is
intended to be shared with the Board, or if applicable, with a specific
committee of the Board. The Chairman of the Board or the Secretary of the
Corporation, as applicable, will forward all such communication to the members
of the Board or specific Board committee.
The Board is satisfied that the Corporation's comprehensive governance program
is consistent with, and in many instances goes beyond, the TSX Guidelines and
the AMEX Standards. A detailed comparison of the Corporation's governance
procedures compared with the TSX Guidelines and the AMEX Standards is set forth
in SCHEDULE "A" to this Circular.
Code of Business Conduct and Ethics
In 2003, the Corporation formally adopted a Code of Business Conduct and Ethics
and related policies, which sets high standards for ethical behaviour throughout
the organization. The Code of Business Conduct and Ethics provides the entire
organization with the same frame of reference for dealing with sensitive and
complex issues such as conflicts of interest, use of information,
confidentiality of personal information, confidentiality of business
information, corporate opportunities, use of inside information, fair trading,
protection and use of company assets, accounting practices, records retention,
compliance with laws, rules and regulations, and duty to report and
consequences.
In addition, in 2004 the Corporation formally adopted a Code of Ethics (the
"CODE") pursuant to section 406 of SOX and the Rules of AMEX in order to provide
written standards and guidance to the Corporation's directors, principal
executive officer, principal financial officer, principal accounting officer or
controller or those performing similar functions and any "executive officers"
(as defined under Rule 16a-1(f) of the Securities Exchange Act of 1934, as
amended) of the Corporation not named above. The purpose of the Code is to
promote:
- honest, and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
- compliance with applicable governmental laws, rules and regulations;
- full, fair, accurate, timely and understandable disclosure in reports
and documents that the Corporation files with, or submits to, the
Securities and Exchange Commission and in other public communications
made by the Corporation;
- the prompt internal reporting of violations of the Code to an
appropriate person or persons identified in the Code; and
- accountability for adherence to the Code.
The Code is posted on the Corporation's website at www.apollogold.com.
------------------
Whistleblower Policy
The Corporation's internal controls and corporate reporting and disclosure
procedures are intended to prevent, deter and remedy any violation of the
applicable laws and regulations that relate to corporate reporting and
disclosure, accounting and auditing controls and procedures, securities
compliance and other matters pertaining to fraud against shareholders. Even the
best systems of control and procedures, however, cannot provide absolute
safeguard against such violations.
In 2004, the Audit and Finance Committee of the Corporation formally adopted a
Whistleblower Policy which governs the process through which employees and
others, either directly or anonymously, can notify the Corporation's Compliance
Officer or Audit and Finance Committee of potential violations or concerns.
The Whistleblower Policy also establishes a mechanism for responding to, and
keeping records of, complaints from employees and others regarding such
potential violations or concerns.
Page 10
BOARD COMMITTEES
AUDIT AND FINANCE COMMITTEE
The Audit and Finance Committee is responsible for the Corporation's financial
reporting process and the quality of its financial reporting. In discharging
its responsibilities, the Audit and Finance Committee meets regularly with the
Corporation's auditors and Chief Financial Officer.
The Audit and Finance Committee adopted a charter in 2002. To ensure compliance
with SOX, in March 2004 the Audit and Finance Committee amended and restated its
charter. A copy of the Audit and Finance Committee's amended and restated
charter is attached hereto as SCHEDULE "C". The amended and restated charter is
also posted on the Corporation's website at www.apollogold.com.
------------------
The Audit and Finance Committee's charter requires that all Audit and Finance
Committee members satisfy the applicable independence requirements of the TSX
and AMEX and other regulatory requirements. During the fiscal year of the
Corporation ending December 31, 2003, the Audit and Finance Committee was
comprised of Messrs. Thompson, Schissler and Watts, each meeting the
independence and the financial literacy requirements of the TSX and AMEX. Mr.
Watts was appointed as a member of the Audit and Finance Committee effective
August 19, 2003. He was appointed as Chair of the Audit and Finance Committee
effective upon the resignation of Mr. Neil Woodyer, who resigned as a director
of the Corporation on November 13, 2003. The Board has determined that Mr. Watts
serves as the Audit and Finance Committee's "financial expert" as defined in the
AMEX Standards.
Report of the Audit and Finance Committee
In the performance of its oversight function, the Audit and Finance Committee
reviewed and discussed the Corporation's audited consolidated financial
statements as of and for the year ended December 31, 2003, with management and
Deloitte & Touche LLP. Management and Deloitte & Touche LLP represented to the
Audit Committee that the Corporation's audited consolidated financial statements
as of and for the year ended December 31, 2003, were prepared in accordance with
accounting principles generally accepted in Canada (except for Note 18,
Differences Between Canadian and U.S. GAAP). The Audit and Finance Committee
also discussed with Deloitte & Touche LLP the matters required to be discussed
by Statement on Auditing Standards ("SAS") Nos. 61, 89 and 90 issued by the
Auditing Standards Board of the American Institute of Certified Public
Accountants. SAS Nos. 61, 89 and 90 set forth requirements pertaining to the
independent auditor's communications with the Audit and Finance Committee
regarding the conduct of the audit.
The Audit and Finance Committee received the written disclosures and the letter
from Deloitte & Touche LLP required by Independence Standards Board ("ISB")
Standard No. 1, Independence Discussions with Audit Committees, as amended. ISB
Standard No. 1 requires the independent auditor to disclose in writing to the
Audit and Finance Committee all relationships between the auditor and the
Corporation that, in the auditor's judgment, reasonably may be thought to bear
on independence and to discuss the auditor's independence with the Audit
Committee. The Audit and Finance Committee discussed with Deloitte & Touche LLP
its independence and considered in advance whether the provision of any
non-audit services by Deloitte & Touche LLP is compatible with maintaining its
independence.
Based on the reviews and discussions of the Audit and Finance Committee
described above, in reliance on the unqualified opinion of Deloitte & Touche LLP
dated March 5, 2004, regarding the Corporation's audited consolidated financial
statements as of and for the year ended December 31, 2003, the Audit and Finance
Committee recommended to the Board of Directors, and the Board of Directors
approved, that such financial statements be included in the Corporation's annual
report on Form 10-K for the year ended December 31, 2003, to be filed with the
Securities and Exchange Commission.
In fulfilling its responsibilities in respect of monitoring compliance with laws
and regulations and business conduct, the Audit and Finance Committee
recommended the formal adoption of the Corporation's Code of Business Conduct
and Ethics. Its mandate also includes monitoring among other things, related
party transactions.
The Audit and Finance Committee met seven times in 2003 and is satisfied that it
appropriately fulfilled its mandate to the best of its ability during the year
ended December 31, 2003.
Page 11
Submitted by:
Audit and Finance Committee
Robert A. Watts, Chairperson
Gerald Schissler
G.W. Thompson
COMPENSATION COMMITTEE
The Compensation Committee was established by the Corporation in 2002 and
formally adopted its charter at that time. To ensure compliance with SOX, on
March 10, 2004, the Compensation Committee replaced its charter with a new
charter. The charter is posted on the Corporation's website at
www.apollogold.com.
------------------
Under its new charter, the main purposes of the Compensation Committee are:
- to establish, administer and evaluate the compensation philosophy,
policies and plans for non-employee directors and executive officers;
and
- to make recommendations to the board regarding director and executive
compensation; and
- to review the performance and determine the compensation of the
President and Chief Executive Officer, based on criteria including the
Corporation's performance and accomplishment of long-term strategic
objectives.
During the fiscal year of the Corporation ending December 31, 2003, the
Compensation Committee was comprised of Messrs. Hobart, Schissler, Stott,
Thompson and Vaughan, each meeting the independence requirements of the TSX and
the AMEX Standards.
Report of the Compensation Committee
Compensation Philosophy
The Corporation's executive officer compensation policies are intended to
provide an appropriate overall compensation package that will permit the
Corporation to attract and retain highly qualified and experienced senior
executive officers and to encourage superior performance by such senior
executive officers. The Corporation's compensation policies are intended to
motivate individuals to achieve results at the specific subsidiary at which they
are employed as well as overall corporate results. In addition, the Corporation
believes that directors, officers and employees should have their benefits
aligned with both the short and long term interests of the shareholders.
The compensation of the Corporation's executive officers is comprised of three
components: base salary, annual cash bonus, and long-term incentives in the form
of stock options. It is structured to be competitive with a select group of
comparative producing gold mining companies. The annual cash bonus is
discretionary based on factors including attaining or exceeding certain budgeted
goals for gold sales and the related cash production costs of such gold sales at
each of the Florida Canyon and Montana Tunnels mines and targets an increase in
the proven and probable gold reserves of the Corporation.
Cash bonuses and stock options are directly related to company performance and
the individual's contribution thereto.
Base Salary
The base salary for the President and Chief Executive Officer and each Named
Executive Officer is reviewed annually by the Compensation Committee within the
context of individual and corporate performance and market competitiveness. The
market assessment is based primarily on the compensation practices of producing
gold mining companies for comparable positions.
Page 12
Stock Options
The Corporation has two stock option plans; a regular employee incentive stock
option plan, as amended (the "INCENTIVE STOCK OPTION PLAN") and a stock option
plan authorized by the shareholders pursuant to the terms of the Plan of
Arrangement, (the "PLAN OF ARRANGEMENT STOCK OPTION PLAN"). The purpose of
these stock option plans is to develop the interest and incentive of eligible
employees, officers and directors in the Corporation's growth and development by
giving an opportunity to purchase Common Shares on a favourable basis, thereby
advancing the interests of the Corporation, enhancing the value of the Common
Shares for the benefit of all shareholders and increasing the ability of the
Corporation to attract and retain skilled and motivated individuals.
Stock options are granted in accordance with the Incentive Stock Option Plan at
not less than the closing price of the Common Shares on the business day
immediately prior to the date of grant. Stock options granted pursuant to the
Plan of Arrangement Stock Option Plan have an exercise price of US$0.80 per
share, as approved by a special resolution of shareholders pursuant to the terms
and conditions of the Plan of Arrangement effective June 25, 2002 whereby
International Pursuit Corporation and Nevoro Gold Corporation amalgamated to
form the Corporation.
President and Chief Executive Officer
The Compensation Committee and the Board continue to be of the view that Mr.
Russell provides the leadership that permitted the Corporation to grow in 2003.
In making their compensation decision they considered this as well as other
factors, including his contribution to the business performance and anticipated
future performance of the Corporation.
The President and Chief Executive Officer's compensation consists of a base
salary, an annual cash bonus and various perquisites. In 2003, the base salary
accounted for approximately 74% of all cash compensation paid to the President
and Chief Executive Officer. Pursuant to the Corporation's bonus policies,
bonus awards may be made to the President and Chief Executive Officer and other
senior executives based upon several factors, including the Corporation's return
on equity, the performance of the subsidiary with respect to which such senior
executive has responsibility and the achievement of stipulated individual goals
of such senior executive.
Going forward, the Compensation Committee and, as appropriate, the Board, will
address other issues relating to executive compensation, including the relative
emphasis on the components of executive compensation, including compensation for
the Corporation's President and Chief Executive Officer.
In 2003 the Compensation Committee met on four occasions and is satisfied that
it appropriately fulfilled its mandate to the best of its ability during the
year ended December 31, 2003.
Compensation Committee Interlocks and Insider Participation
There are no members of the Compensation Committee who were officers or
employees of the Corporation or any of its subsidiaries during the fiscal year,
formerly officers of the Corporation, or had any relationship otherwise
requiring disclosure hereunder.
Submitted by:
Compensation Committee
Gerald J. Schissler, Chairperson
G. Michael Hobart
Charles F. Stott
G.W. (Bill) Thompson
W.S. (Steve) Vaughan
Page 13
TECHNICAL COMMITTEE
The Technical Committee was established in 2002 by the Corporation and formally
adopted its charter at that time. The charter is posted on the Corporation's
website at www.apollogold.com. Under its charter, the primary objectives of the
------------------
Technical Committee are:
- to review and to approve the methodology and procedure for calculating
the resource and ore reserve estimates of the Corporation and its
subsidiaries;
- to review and to report on the Corporation's environmental compliance
program and its effectiveness; and
- to review and to report on the Corporation's safety program and its
effectiveness.
During the fiscal year of the Corporation ended December 31, 2003, the Technical
Committee was comprised of Messrs. Russell, Stott, and Watts. Mr. Watts was
appointed to the Technical Committee on November 13, 2003.
During 2003, the Technical Committee met on seven occasions, one of such times
at the Montana Tunnels Mine, located near Helena, Montana. In addition, in 2003
the Technical Committee conducted a tour of the Corporation's Black Fox Project
near Timmins, Ontario. The Technical Committee reported to the Board on its
findings and recommendations with respect to ore reserves, exploration
initiatives, land acquisitions and environmental and safety affairs of the
Corporation. The Technical Committee is satisfied that it appropriately
fulfilled its mandate to the best of its ability during the year ended December
31, 2003.
NOMINATING COMMITTEE
The Nominating Committee was established in March 2004 by the Corporation and
formally adopted its charter at that time. Under its charter, a copy of which
is posted on the Corporation's website at www.apollogold.com, the primary
------------------
objectives of the Nominating Committee are to assist the Board by:
- identifying individuals qualified to become Board members and
recommending to the Board proposed nominees for Board membership and
recommending to the Board directors to serve on each committee.
- ensuring that the Audit and Finance Committee, Compensation Committee,
Technical Committee and Nominating Committee of the Board have the
benefit of qualified and experienced "independent directors".
The charter of the Nominating Committee requires that all committee members
satisfy the applicable independence requirements of the TSX and the AMEX
Standards. The Nominating Committee is comprised of Messrs. Schissler, Hobart,
Stott, Thompson and Vaughan, all of whom satisfy the independence requirements
of the TSX Guidelines and the AMEX Standards. The Nominating Committee met once
in 2004.
Director Nominations.
The Board will consider all potential candidates for nomination by the Board for
election as directors who are recommended by the Corporation's shareholders,
directors, officers, and employees. The Committee has adopted written
procedures to be followed by shareholders in submitting such recommendations.
Candidates proposed by shareholders will be evaluated by the Nominating
Committee in the same manner as candidates which are not proposed by
shareholders. While shareholders may propose director nominees at any time, the
Company must receive the required notice (described below) on or before the date
set forth in the prior year's annual proxy statement under the heading
"Shareholder Proposals" in order to be considered by the Nominating Committee in
connection with the Corporation's next annual meeting of shareholders.
Shareholders wishing to recommend a director candidate to serve on the board may
do so by providing advance written notice to the Chairman of the Nominating
Committee which identifies the candidate and includes the information described
below. The notice should be sent to the following address by the dates set forth
under "Shareholder Proposals": Apollo Gold Corporation, 4601 DTC Boulevard,
Suite 750, Denver, Colorado 80237-2571.
Page 14
The notice shall contain the following information:
- The name of the nominating shareholders and the address, phone number
and e-mail address at which the nominating shareholders can be
contacted.
- Evidence of the number of the Company's Common Shares held by the
nominating shareholders, a statement of how long the nominating
shareholders has held those Shares, and a statement that the
nominating shareholders will continue to hold those Shares at least
through our next annual meeting of shareholders.
- The candidate's full name, together with the address, phone number and
e-mail address at which the candidate can be contacted.
- A statement of the candidate's qualifications and experiences, and any
other qualities that the nominating shareholders believes that the
candidate would bring to the Board.
- A description of all arrangements or understandings, if any, between
the shareholders and the candidate and any other person or persons
with respect to the candidate's proposed service on the board.
- The candidate's resume, which must include at a minimum a detailed
description of the candidate's business, professional or other
appropriate experience for a least the last ten (10) years, a list of
other boards of directors of public companies on which the candidate
currently serves or on which he or she served in the last ten (10)
years, and undergraduate and post-graduate educational information.
- A written statement, signed by the candidate, agreeing that if he or
she is selected by the Committee and the board, he or she will (i) be
a nominee for election to the board, (ii) provide all information
necessary for us to include in our proxy statement under applicable
SEC or AMEX rules, and (iii) serve as a director if he or she is
elected by shareholders.
- Any additional information that the nominating shareholders believes
is relevant to the Committee's consideration of the candidate.
The Nominating Committee may employ any of the following procedures in
identifying nominees to serve as directors of the Corporation: (a) evaluating
persons suggested by shareholders or others, (b) conducting inquiries into
background and qualifications; (c) retaining a search firm, (c) obtaining advice
and assistance from internal or external legal, accounting, or other advisors,
and (d) other procedures appropriate to the character of the expertise or other
director characteristic needed on the Board in any specific situation.
The Board has adopted the following series of minimum qualifications and
specific qualities and skills for the Company's directors, which will serve as
the basis upon which potential director candidates are evaluated by the
Nominating Committee:
- integrity;
- commitment to devoting necessary time and attention to his or her
duties to the Corporation;
- independence;
- business experience;
- specialized skills or experience;
- diversity of background and experience (including race, ethnicity,
international, gender and age);
- possible conflicts of interest; and
- other criteria appropriate to the character of the expertise or other
director characteristic needed on the Board in any specific situation
Page 15
The Nominating Committee did not receive any recommendations from shareholders
regarding candidates to serve on the Board of the Corporation for this Meeting.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
How was the Board Compensated in 2003?
- Number of directors at April 8, 2004: 7 (6 non-employee, 1 management)
- Directors' compensation is paid only to non-employee directors
- Annual retainer: US$7,500 per year in 2003, payable as to US$1,875 per
calendar quarter
- Board meeting fee: US$1,000 per meeting; if attended telephonically US$500
per meeting
- Annual retainer of Chairman: US$5,000, payable as to US$1,250 per calendar
quarter
- Committee meeting fee: US$750 per meeting; if attended telephonically
US$500 per meeting
- Committee Chair retainers: Nil for 2003; commencing January 1, 2004,
US$3,000 per year, payable as to US$750 per calendar quarter
- Travel fee: US$250 per travel day, other than a day on which a meeting
occurs
- Reimbursements: related travel and out-of-pocket expenses
The compensation entitlements referred to above were adopted by the Board
effective July 1, 2002. Directors of the Corporation are also eligible to
receive options to acquire shares of the Corporation. The number of options is
determined by the Board after reviewing the recommendations of the Compensation
Committee.
Shareholdings of Board Members
- Total outstanding Common Shares held by non-employee directors: 3,000 (1)
- Total value of outstanding Common Shares held by non-employee directors:
US$6,390.00 (2)
_____________________
(1) Shareholdings of the non-employee directors as at March 26, 2004.
(2) Based on the closing price of the Common Shares on the AMEX as of
March 26, 2004: US$2.13 per share.
Summary of Board and Committee Meetings Held
FOR THE 12-MONTH PERIOD ENDED DECEMBER 31, 2003
----------------------------------------------------
Board 6
Audit and Finance Committee 7
Compensation Committee 4
Technical Committee 7
----------------------------------------------------
Total number of meetings held 24
Summary of Attendance of Directors
FOR THE 12-MONTH PERIOD ENDED DECEMBER 31, 2003
-----------------------------------------------------------------------------------
Director Board meetings attended Committee meetings attended
-----------------------------------------------------------------------------------
G. Michael Hobart 6 of 6 4 of 4
R. David Russell 6 of 6 7 of 7
Gerald J. Schissler 6 of 6 11 of 11
Charles Stott 6 of 6 11 of 11
G. W. (Bill) Thompson 6 of 6 11 of 11
W. S. (Steve) Vaughan 5 of 6 4 of 4
Robert A. Watts 2 of 2 2of 2
Page 16
EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION
Executive Officers
Set forth below is certain information concerning the Named Executive Officers
and other executive officers of the Corporation.
NAME AGE POSITION
---- --- --------
R. David Russell 48 President and Chief Executive
Officer
R. Llee Chapman 47 Vice President - Finance, Chief Financial
Officer, Treasurer and Controller
David Young 50 Vice President - Business
Development
Richard F. Nanna 54 Vice President - Exploration
Donald W. Vagstad 52 Vice President - Legal, General
Counsel and Secretary
Wade W. Bristol 45 Vice President - U.S. Operations
Melvyn Williams __ Senior Vice President - Finance and
Corporate Development
Donald O. Miller 57 Vice President - Human Resources
and Administration
R. DAVID RUSSELL
David Russell has been the Corporation's President and Chief Executive Officer
since June 2002. Prior to the amalgamation of International Pursuit Corporation
and Nevoro Gold Corporation in June 2002, Mr. Russell was a founder in January
2002 of Nevoro Gold Corporation, a private Ontario company, and served as its
President from February to June 2002. Mr. Russell was an independent mining
consultant from December 1999 to 2002. From January 1995 to December 1999, he
was Vice President and Chief Operating Officer of Getchell Gold, a Nevada gold
producer. At Getchell, Mr. Russell oversaw the Getchell open pit as well as the
development of two underground mechanized mines and a complex pressure oxidation
mill for ore processing. Mr. Russell was also a very involved team member in
Getchell's initial public offering and secondary offerings as well as the
evaluation and negotiations associated with Placer Dome's US$1.1 billion
acquisition of Getchell in May 1999. Prior to Getchell, Mr. Russell was General
Manager of U.S. operations for LAC Minerals and after its acquisition by Barrick
Gold, he served in the same capacities for Barrick. His responsibilities
included operations at various mines in the western U.S. including the Bullfrog
Mine in Nevada; the Richmond Hill Mine located near Lead, South Dakota; the
Ortiz Project near Santa Fe, New Mexico; and the Coliseum reclamation project in
California. Prior to LAC/Barrick, Mr. Russell was Manager Underground Mining for
Independence Mining in Nevada, Project Manager for Hecla Mining in Idaho,
Manager of the Lincoln Project in California for FMC/Meridian Gold and Mine
Manager for ASARCO in Idaho and Colorado. Mr. Russell is a mining engineer from
Montana Tech. Mr. Russell also serves as a director of Idaho General Mines.
R. LLEE CHAPMAN
R. Llee Chapman has been our Chief Financial Officer, Vice President-Finance,
Treasurer and Controller since September 2002. From September 2002 to March
2004, Mr. Chapman held the additional office of Vice President-Administration.
From June 2002 to September 2002, Mr. Chapman served as our Vice President -
Administration and Controller, and from April 2002 to June 2002 he was the Vice
President, Administration and Controller for Apollo Gold, Inc. prior to its
becoming the Corporation's subsidiary. Mr. Chapman was the Chief Financial
Officer for Knight Piesold & Company, a specialty engineering company, from
January 2001 to April 2002, an __________ from October to December 2000, and
served as the Administrative Manager of the Goldstrike Mine for Barrick Gold
Corporation from June 1989 to October 2000. Mr. Chapman has been in the
Page 17
natural resources business for 21 years. He has worked with some of the world's
largest and most successful natural resource and engineering companies. He has
been involved in all aspects of financial management as well as safety, human
resources and political/community affairs. Mr. Chapman is a former Elko County
Commissioner, has CPA designations in two states (Idaho and Montana), and is a
current foundation board member of Great Basin Community College and The Desert
Research Institute in Nevada. He is also a trustee for the Northwest Mining
Association.
DAVID K. YOUNG
David K. Young has been our Vice President-Business Development since May 2003.
From June 2002 to May 2003, Mr. Young was our Vice President-Mining and
Engineering. From March 2002 to June 2002, Mr. Young served as Vice
President-Operations of Apollo Gold, Inc. From March 2000 to March 2002, he was
an independent consultant to U.S. mining companies and consulting firms on
precious and base metal projects in the western U.S. and South America. From
1984 to March 2000, Mr. Young worked for ASARCO, Inc. in senior operating roles
at the Troy mine and its other underground silver projects in Montana. Mr.
Young has also worked as a research and development chemist. Mr. Young is a
mining engineer, P.E., from the Colorado School of Mines.
RICHARD F. NANNA
Richard F. Nanna has been our Vice President-Exploration since our Plan of
Arrangement in June 2002. Mr. Nanna was a founder of Nevoro Gold Corporation in
January 2002 and served as its Vice President - Exploration from February to
June 2002. From 1999 to 2002 Mr. Nanna __________. From 1983 to 1999, Mr. Nanna
served as Vice President of Getchell Gold, where he was involved with the
Getchell property from its initial development in 1983 to the property's sale to
Placer Dome in 1999. Mr. Nanna is credited with leading the team that discovered
18.5 million ounces on the property, 2.5 of which was mined, 6.5 in reserves and
9.5 in resources. Prior to Getchell, Mr. Nanna worked as a geologist for
precious and base metals, industrial minerals and uranium. Mr. Nanna has also
worked as an engineer and instructor. He received a MS in Geology from Akron
University in Ohio.
DONALD W. VAGSTAD
Donald W. Vagstad has served as our Vice President-Legal, General Counsel and
Secretary since our Plan of Arrangement in June 2002. From February 1999 to
June 2002, Mr. Vagstad was the Vice President-Legal, General Counsel and
Secretary of Apollo Gold, Inc., prior to its becoming Apollo Gold Corporation's
subsidiary. From 1996 to February 1999, he served as the Associate General
Counsel and Assistant Secretary for Pegasus Gold Inc. From 1993 to 1996, Mr.
Vagstad operated a private law practice. From 1987 to 1993, Mr. Vagstad served
in several positions, ending as General Counsel-Corporate Division, for Collin &
Aikman Co. and its predecessor companies in Santa Monica, California. He began
his career by serving as an attorney with Sheppard, Mullin, Richter & Hampton, a
California law firm, from 1980 to 1987. From 1982 to 1983, Mr. Vagstad served
on detached assignment with Anderson, Mori & Rabinowitz in Tokyo, Japan, under
that law firm's foreign attorney exchange program. Mr. Vagstad has been
admitted to practice law in the States of California, Colorado, Oregon and
Washington. He graduated summa cum laude from the University of Minnesota School
of Liberal Arts with a BA in Geography in 1977 and from the University of
Minnesota School of Law, cum laude, with a Juris Doctor degree in 1980.
WADE W. BRISTOL
Wade W. Bristol has been our Vice President-United States Operations since May
2003. From December 2002 to May 2003 Mr. Bristol served as our Vice
President-Investor Relations and Corporate Development. From May 2000 to
November 2002, Mr. Bristol was a financial advisor for Prudential Securities,
from January to April 2000 he was __________, and from 1997 to 1999, Mr. Bristol
was the general manager of Getchell Gold's Nevada mining operations. He received
a B.S. in mining engineering from Montana Tech in Montana.
MELVYN WILLIAMS
Melvyn Williams has served as our Senior Vice President-Finance and Corporate
Development since March 2004. From 2000 to 2003, he served as Chief Financial
Officer of TVX Gold Inc., a gold mining company with five
Page 18
operating mines and an advanced development project in Greece, with an annual
gold production of 250,000 ounces. From 1997 to 2000, Mr. Williams served as
Vice President - Finance of TVX Gold Inc., where he was primarily responsible
for the company's Greek operations and developments. In 1995, he served as a
financial executive for Star Mining Corporation, an Australian-listed company
with a 35% interest in Lenzoloto JSC, a Russian gold producer, where he was
responsible for overseeing the development of all aspects of a gold mining joint
venture. In 1994, Mr. Williams served as Vice President - Finance of LAC North
America, a gold mining company with annual gold production of 800,000 ounces,
where he created and managed a new financial and management team. From 1989 to
1994, he was the Executive Director of Riominas LDA, a subsidiary of The RTZ
Corporation (a multinational mining house), and was a Chief Accountant for
Rossing Uranium, a subsidiary of The RTZ Corporation, from 1977 to 1989. Mr.
Williams is a Chartered Certified Accountant, and received an MBA from Cranfield
in 1988.
DONALD O. MILLER
Donald O. Miller has served as our Vice President-Human Resources and
Administration since March 2004. From January 2000 to October 2003, he owned and
operated a family business in Henderson, Nevada. Mr. Miller held the position of
Vice President and Chief Administrative Officers with Getchell Gold Corporation
from April 1995 to December 1999. Prior to this assignment, from April 1992 to
April 1995, he was Principal for GEM 2000, an international management
consulting firm specializing in Latin America. Mr. Miller was Vice President,
Employee Relations with Newmont Mining Company from April 1990 to April 1992. He
served in the capacity of Vice President Human Resources, Cyprus Coal Company
and General Manager, Compensation and Benefits, Cyprus Minerals Company from
September 1985 to April 1990. From January 1980 to September 1985, Mr. Miller
served as Manager, Developing Properties and as Manager, Labor Relations with
Anaconda Mining Company, a wholly-owned subsidiary of Atlantic Richfield
Company. Mr. Miller held various positions in minesite operations, labor
relations and new mine development from 1972 to 1980 with Anaconda Copper
Company. Mr. Miller is a veteran of the Vietnam War, having served in the US
Army from 1968 to 1971. Mr. Miller graduated from the University of Arizona with
a BS in Business and Labor Relations in 1968 and received his MBA from the
University of Phoenix in 1985.
Summary Compensation Table for Named Executive Officers
The following table sets forth all compensation paid in respect of the
individuals who were, at December 31, 2003, the Chief Executive Officer and the
other Named Executive Officers whose total salary and bonus was in excess of
US$100,000 per annum. Securities legislation provides that the Named Executive
Officers are determined on the basis of the total cash compensation (salary and
annual bonus) earned in the year ended December 31, 2003.
ANNUAL COMPENSATION LONG-TERM
COMPENSATION(1)
---------------------------------- ------------------
OTHER ANNUAL SECURITIES UNDER
COMPENSATION OPTIONS ALL OTHER
SALARY BONUS (2) (3) GRANTED(4) (5) COMPENSATION)(6)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
------------------------------------------------ ---- -------- --------- ------------- ----------------- -----------------
R. David Russell (7) 2003 285,385 100,000 15,000 250,000 197,000 (8)
President and Chief Executive Officer 2002 202,702 50,000 15,000 425,403 360,000 (9)
------------------------------------------------ ---- -------- --------- ------------- ----------------- -----------------
R. Llee Chapman (10) 2003 181,923 50,000 10,000 250,000 Nil
Vice President and Chief Financial Officer 2002 88,112 40,000 10,000 215,829 Nil
------------------------------------------------ ---- -------- --------- ------------- ----------------- -----------------
Richard F. Nanna (11) 2003 160,000 80,000 15,000 200,000 162,525(12)
Vice-President, Exploration 2002 157,973 30,000 15,000 444,868 297,000(13)
------------------------------------------------ ---- -------- --------- ------------- ----------------- -----------------
Donald W. Vagstad (14) 2003 158,014 15,000 10,000 100,000 Nil
Vice-President, Legal, General
Counsel and Secretary 2002 155,613 15,000 10,000 142,009 78,472(15)
------------------------------------------------ ---- -------- --------- ------------- ----------------- -----------------
David Young (16) 2003 135,577 35,000 10,000 100,000 Nil
Vice-President, Business Development 2002 93,701 30,000 10,000 167,659 Nil
------------------------------------------------ ---- -------- --------- ------------- ----------------- -----------------
Page 19
(1) The Corporation has not granted any stock appreciation rights (SAR) or
other long term incentive plan (LTIP) awards.
(2) Includes bonuses earned for the fiscal year whether or not paid in the
fiscal year.
(3) Unless otherwise stated, the figures disclosed in this column represent an
annual automobile allowance for each individual provided in his employment
agreement.
(4) Options granted in the 2002 fiscal year refer to options granted pursuant
to the Plan of Arrangement Stock Option Plan to purchase Common Shares at a
price of US$0.80 per share, of which 50% vested on December 31, 2002 and
the balance, after certain deductions were made for failure to meet certain
goals and objectives, vested effective on December 31, 2003. The amount of
options shown reflect the net number of options which vested, after all
applicable deductions were made. See "Plan of Arrangement Stock Option
Plan".
(5) Options granted in the 2003 fiscal year refer to options granted pursuant
to the Incentive Stock Option Plan to purchase Common Shares at a price of
US$2.24, vesting over a two year period at the rate of 50% on each of the
first and second anniversaries of the date of grant.
(6) The following amounts shown as all other compensation represent employer
contributions to the Corporation's 401(k) Plan for 2003 and 2002,
respectively: $_____ and $_____ for Mr. Russell; $_____ and $_____ for Mr.
Chapman; $_____ and $_____ for Mr. Nanna; $_____ and $_____ for Mr.
Vagstad; and $_____ and $_____ for Mr. Young.
(7) Mr. Russell served as President and Chief Executive Officer of Nevoro Gold
Corporation from January 1, 2002 and has served in a similar capacity with
the Corporation since June 25, 2002.
(8) This figure is expressed in U.S. dollars and represents the value of
100,000 Common Shares which vested effective December 31, 2003 and were
issuable to Mr. Russell effective March 10, 2004 pursuant to the terms of
the Plan of Arrangement. The closing price of the Common Shares on the AMEX
on March 10, 2004 was US$1.97.
(9) This figure is expressed in Canadian dollars and represents the value of
100,000 Common Shares issuable to Mr. Russell effective December 31, 2002
pursuant to the terms of the Plan of Arrangement. The closing price of the
Common Shares on the TSX on December 31, 2002 was Cdn.$3.60.
(10) Mr. Chapman served as Vice President, Accounting and Administration with
Nevoro Gold Corporation from April 15, 2002 and was appointed to serve in a
similar capacity with the Corporation effective June 25, 2002. Mr. Chapman
was appointed as Chief Financial Officer of the Corporation on August 28,
2002. Accordingly, Mr. Chapman's 2002 compensation reflects approximately 9
months employment.
(11) Mr. Nanna served as Vice President, Exploration of Nevoro Gold Corporation
from January 1, 2002 and has served in a similar capacity with the
Corporation since June 25, 2002.
(12) This figure is expressed in U.S. dollars and represents the value of 82,500
Common Shares which vested effective December 31, 2003 and were issuable to
Mr. Nanna effective March 10, 2004 pursuant to the terms of the Plan of
Arrangement. The closing price of the Common Shares on the AMEX on March
10, 2004 was US$1.97.
(13) This figure is expressed in Canadian dollars and represents the value of
82,500 Common Shares issuable to Mr. Nanna effective December 31, 2002
pursuant to the terms of the Plan of Arrangement. The closing price of the
Common Shares on the TSX on December 31, 2002 was Cdn.$3.60.
(14) Mr. Vagstad served as Vice President, Legal, General Counsel and Secretary
of Apollo Gold, Inc. from January 1, 2002 and has served in a similar
capacity with the Corporation since June 25, 2002.
(15) This figure represents direct payments and reimbursements of relocation
costs associated with Mr. Vagstad's and his family's relocation to the
Corporation's new executive offices in Denver, Colorado, including gross-up
of United States Federal and Colorado State income tax obligations incurred
as a result of actual or constructive receipt of those payments and
reimbursements.
(16) Mr. Young served as Vice President, Mine Operations of Nevoro Gold
Corporation from March 17, 2002 and served in a similar capacity with the
Corporation from June 25, 2002 to May 2003 whereupon he was appointed as
Vice President, Business Development. Accordingly, Mr. Young's compensation
for the 2002 fiscal year reflects approximately 9 months employment.
STOCK OPTION PLANS
Incentive Stock Option Plan
Following completion of the Plan of Arrangement and the amalgamation between
International Pursuit Corporation and Nevoro Gold Corporation to form the
Corporation, the Corporation reconfirmed and adopted the incentive stock option
plan, as amended (the "INCENTIVE STOCK OPTION PLAN") of International Pursuit
Corporation. The purpose of the Incentive Stock Option Plan is to develop the
interest of the senior officers, directors and key employees of the Corporation
and its subsidiaries and affiliates, as well as any other person or company
engaged to provide ongoing management and consulting services to the Corporation
or to its subsidiaries and affiliates ("PARTICIPANTS").
Page 20
The Compensation Committee that administers the Incentive Stock Option Plan has
broad authority to fix the terms and conditions of individual agreements with
Participants, including the duration of the award and any vesting requirements.
Options to purchase 4,805,904 Common Shares are issuable pursuant to the
Incentive Stock Option Plan. The number of Common Shares reserved for issuance
to any one person pursuant to the grant of options under the Incentive Stock
Option Plan may not exceed 5% of the Corporation's issued and outstanding
shares. In addition, the issuance of Common Shares to any insider and his or
her associates under the Incentive Stock Option Plan, within a one-year period,
shall not exceed 5% of the Corporation's issued and outstanding shares. The
exercise price of any option granted under the Incentive Stock Option Plan may
not be less than the fair market value (e.g., the prevailing market price) of
the Common Shares at the time the option is granted. Options issued under the
Incentive Stock Option Plan may be exercised during a period determined by the
Board which cannot exceed ten years and are subject to earlier termination upon
the termination of the optionee's employment, upon the optionee ceasing to be an
officer and/or director of the Corporation or upon the retirement, permanent
disability or death of an optionee. Subject to compliance with applicable
corporate and securities laws, the Board may at any time authorize the
Corporation to loan money to a Participant in order to assist him or her to
exercise options granted under the Incentive Stock Option Plan. Such loan shall
be provided on a non-recourse basis, shall be non-interest bearing and shall be
on such other terms and conditions to be determined from time to time by the
Board. The Board has not loaned any money to Participants and has no intention
to do so in the future. The options are non-transferable.
Plan of Arrangement Stock Option Plan
Pursuant to the Plan of Arrangement, the Corporation established an arrangement
stock option plan, (the "PLAN OF ARRANGEMENT STOCK OPTION PLAN"). The purpose of
the Plan of Arrangement Stock Option Plan is to develop the interest of the
senior officers, directors and key employees of the Corporation and its
subsidiaries and affiliates, as well as any other person or company engaged to
provide ongoing management and consulting services to the Corporation or to its
subsidiaries and affiliates.
The Plan of Arrangement Stock Option Plan authorizes the issuance of up to
2,780,412 Common Shares at an exercise price of U.S.$0.80 per share. In 2002,
all of such 2,780,412 options were granted to eligible persons, at an exercise
price of US$0.80 per share, for a term of five years expiring on June 25, 2007.
The options granted pursuant to the terms of the Plan of Arrangement Stock
Option Plan vest over a period of two years and are subject to deduction if
certain goals and objective are not attained. Such goals and objectives,
include but are not limited to, attaining or exceeding certain budgeted goals
for gold sales, cash production costs and increasing the proven and probable
gold reserves of the Corporation. For the year ended December 31, 2002, such
goals and objectives were met. Accordingly, an aggregate of 1,390,206 options,
representing 50% of the options granted under the Plan of Arrangement Stock
Option Plan vested effective December 31, 2002.
For the year ended December 31, 2003, all of the goals and objectives
established for the Florida Canyon Mine and the Exploration department were met.
Accordingly, an aggregate of 271,091 options, representing 100% of the
previously unvested options granted to Florida Canyon Mine and Exploration
department employees under the Plan of Arrangement Stock Option Plan, vested
thereunder effective December 31, 2003. Some, but not all of the goals and
objectives established for the Montana Tunnels Mine for the year ended December
31, 2003 were met, resulting in the cancellation of 10,252 options granted to
Montana Tunnels Mines employees. Accordingly, an aggregate of 29,368 options,
representing 75% of the previously unvested options granted to Montana Tunnels
Mine employees under the Plan of Arrangement Stock Option Plan, vested
thereunder effective December 31, 2003. In addition, an aggregate of 120,392
options granted to directors and senior officers of the Corporation were
cancelled effective December 31, 2003 for failure of the Corporation to meet
certain goals and objectives. Accordingly, an aggregate of 556,082 options,
representing 80% of the previously unvested options granted to such officers and
directors under the Plan of Arrangement Stock Option Plan, vested thereunder
effective December 31, 2003.
2003 Stock Option Grants
The following table sets forth individual grants of options to purchase Common
Shares pursuant to the Incentive Stock Option Plan to the Named Executive
Officers during the year ended December 31, 2003.
Page 21
% OF TOTAL
NUMBER OF OPTIONS MARKET VALUE OF
SECURITIES GRANTED TO SECURITIES ON THE GRANT DATE
UNDER OPTIONS EMPLOYEES IN EXERCISE PRICE DATE OF GRANT PRESENT VALUE
NAME GRANTED(1) FISCAL 2003 ($/SECURITY) ($/SECURITY) EXPIRATION DATE ($)(2)
----------------- -------------- ------------- --------------- ------------------ --------------- -------------
R. David Russell 250,000 11.3% US$2.24 US$2.24 Feb. 18, 2013 US$367,500
R. Llee Chapman 250,000 11.3% US$2.24 US$2.24 Feb. 18, 2013 US$367,500
Richard F. Nanna 200,000 9.0% US$2.24 US$2.24 Feb. 18, 2013 US$294,000
Donald W. Vagstad 100,000 4.5% US$2.24 US$2.24 Feb. 18, 2013 US$147,000
David K. Young 100,000 4.5% US$2.24 US$2.24 Feb. 18, 2013 US$147,000
(1) Stock options granted pursuant to the Incentive Stock Option Plan. Options
vest over two years at a rate of 50% on each of the first and second
anniversaries of the date of grant. See "Stock Option Plans - Incentive
Stock Option Plan".
(2) The Grant Date Present Value was determined using the Black-Scholes
methodology and the following weighted average assumptions: risk free
interest rate of 3.5%; option life equals 5 years; volatility of 79.0%; and
dividend yield of 0%. The ultimate value of the options, if any, will
depend on the future value of the common stock and the optionee's
investment decisions, neither of which can be accurately predicted.
Aggregated Options Exercised During Most Recently Completed Financial Year
And Option Values At Financial Year-End
The following table shows the aggregate number of options each Named Executive
Officer now holds and the value of these options based on the closing price of
the Common Shares as at December 31, 2003, which was US$2.30.
SECURITIES AGGREGATE VALUE OF UNEXERCISED IN-THE-
ACQUIRED ON VALUE UNEXERCISED OPTIONS AT DECEMBER 31, MONEY OPTIONS AT DECEMBER 31,
EXERCISE REALIZED 2003 (#) 2003 ($)(1)
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------- ------------ ---------- ------------------- ---------------- ------------- --------------
R. David Russell Nil Nil 425,403 250,000 638,104 15,000
R. Llee Chapman Nil Nil 215,829 250,000 323,743 15,000
Richard F. Nanna Nil Nil 444,868 200,000 667,302 12,000
Donald W. Vagstad Nil Nil 142,009 100,000 213,013 6,000
David Young Nil Nil 167,659 100,000 251,488 6,000
(1) On December 31, 2003, the last trading day of the year, the closing price
of the Common Shares on the AMEX was US$2.30. The value of unexercised in
the money options was calculated based on the difference between the market
value of the Common Shares underlying the options at December 31, 2003,
being US$2.30 and the exercise price of the options.
MANAGEMENT AGREEMENTS WITH EXECUTIVE OFFICERS
R. DAVID RUSSELL, PRESIDENT AND CHIEF EXECUTIVE OFFICER
David Russell was President and Chief Executive Officer of Nevoro Gold
Corporation from April 1, 2002, until June 25, 2002 (the "EFFECTIVE DATE")
whereupon he was appointed President and Chief Executive Officer of the
Corporation. The Corporation has assumed the terms and conditions of an
employment agreement dated as of the 1st day of April, 2002, between Mr. Russell
and Nevoro Gold Corporation. Pursuant to such employment agreement, as amended,
Mr. Russell receives a minimum annual base salary of US$285,385 and a
discretionary annual cash bonus based on the Corporation's performance. Mr.
Russell is entitled to receive an automobile allowance of US$15,000 per annum
and an allowance for social/sports club membership of US$5,000 per annum. Mr.
Russell was entitled to receive, pursuant to the terms of the Plan of
Arrangement and his employment agreement, 200,000 Common Shares of the
Corporation of which 50% vested effective December 31, 2002 and the remaining
50% vested effective December 31, 2003.
Page 22
Mr. Russell's employment agreement provides that in the event of the termination
of his employment without cause or upon a change of control of the Corporation,
he will be entitled to receive 36 months salary, together with a payment equal
to 50% of the bonus entitlement for each year and any other compensation to
which he would otherwise have been entitled during such 36-month period, such
payments to be calculated on a grossed-up basis. Pursuant to the terms of Mr.
Russell's employment agreement, any options granted to Mr. Russell shall
immediately vest if his employment is terminated without cause or upon a change
of control.
R. LLEE CHAPMAN, VICE PRESIDENT - FINANCE AND CHIEF FINANCIAL OFFICER
Llee Chapman was Vice President, Accounting and Administration, Treasurer and
Controller of Nevoro Gold Corporation from May 24, 2002, until the Effective
Date whereupon he was appointed to similar positions with the Corporation. On
August 28, 2002, he was promoted to the position of Vice President and Chief
Financial Officer of the Corporation. The Corporation has assumed the terms and
conditions of an employment agreement dated as of the 24th day of May, 2002,
between Mr. Chapman and Nevoro Gold Corporation. Pursuant to such employment
agreement, as amended, Mr. Chapman receives a minimum annual base salary of
US$181,923 and a discretionary annual cash bonus based on the Corporation's
performance. Mr. Chapman is entitled to receive an automobile allowance of
US$10,000 per annum.
Mr. Chapman's employment agreement provides that in the event of the termination
of his employment without cause or upon a change of control of the Corporation,
he will be entitled to receive 24 months salary, together with a payment equal
to 50% of the bonus entitlement for each year and any other compensation to
which he would otherwise have been entitled during such 24-month period, such
payments to be calculated on a grossed-up basis. Pursuant to the terms of Mr.
Chapman's employment agreement, any options granted to Mr. Chapman shall
immediately vest if his employment is terminated without cause or upon a change
of control.
RICHARD F. NANNA, VICE PRESIDENT - EXPLORATION
Richard Nanna was Vice President, Exploration of Nevoro Gold Corporation from
April 1, 2002, until the Effective Date whereupon he was appointed Vice
President, Exploration of the Corporation. The Corporation has assumed the
terms and conditions of an employment agreement dated as of the 1st day of
April, 2002, between Mr. Nanna and Nevoro Gold Corporation. Pursuant to such
employment agreement, as amended, Mr. Nanna receives a minimum annual base
salary of US$160,000 and a discretionary annual cash bonus based on the
Corporation's performance. Mr. Nanna is entitled to receive an automobile
allowance of US$15,000 per annum and an allowance for social/sports club
membership of US$5,000 per annum. Mr. Nanna was entitled to receive, pursuant
to the terms of the Plan of Arrangement and his employment agreement, 165,000
Common Shares of the Corporation of which 50% vested effective December 31, 2002
and the remaining 50% vested effective December 31, 2003.
Mr. Nanna's employment agreement provides that in the event of the termination
of his employment without cause or upon a change of control of the Corporation,
his employment will be deemed to have been terminated and he will be entitled to
receive 36 months salary, together with a payment equal to 50% of the bonus
entitlement for each year and any other compensation to which he would otherwise
have been entitled during such 36-month period, such payments to be calculated
on a grossed-up basis. Pursuant to the terms of Mr. Nanna's employment
agreement, any options granted to Mr. Nanna shall immediately vest if his
employment is terminated without cause or upon a change of control.
DONALD W. VAGSTAD, VICE PRESIDENT - LEGAL, SECRETARY AND GENERAL COUNSEL
Donald Vagstad was Vice President, Legal, Secretary and General Counsel of
Apollo Gold, Inc., a subsidiary of Nevoro Gold Corporation prior to the
Effective Date whereupon he was appointed to similar positions with the
Corporation. The Corporation has assumed the terms and conditions of an
employment agreement dated as of the 24th day of May, 2002 between Mr. Vagstad
and Nevoro Gold Corporation and Apollo Gold, Inc. Pursuant to such employment
agreement, as amended, Mr. Vagstad receives a minimum annual base salary of
US$158,014 and a discretionary annual cash bonus based on the Corporation's
performance. Mr. Vagstad is entitled to receive an automobile allowance of
US$10,000 per annum.
Page 23
Mr. Vagstad's employment agreement provides that in the event of the termination
of his employment without cause or upon a change of control of the Corporation,
his employment will be deemed to have been terminated and he will be entitled to
receive 24 months salary, together with a payment equal to 50% of the bonus
entitlement for each year and any other compensation to which he would otherwise
have been entitled during such 24-month period, such payments to be calculated
on a grossed-up basis. Pursuant to the terms of Mr. Vagstad's employment
agreement, any options granted to Mr. Vagstad shall immediately vest if his
employment is terminated without cause or upon a change of control.
DAVID YOUNG, VICE PRESIDENT - CORPORATE DEVELOPMENT AND TECHNICAL SERVICES
David Young was Vice President, Mining Operations of Nevoro Gold Corporation
from May 24, 2002, to the Effective Date whereupon he was appointed Vice
President, Mining Operations of the Corporation. He assumed that position until
May, 2003 when he was appointed as Vice President - Corporate Development and
Technical Services. The Corporation has assumed the terms and conditions of an
employment agreement dated as of the 24th day of May, 2002, between Mr. Young
and Nevoro Gold Corporation. Pursuant to such employment agreement, as amended,
Mr. Young receives a minimum annual base salary of US$135,577 and a
discretionary annual cash bonus based on the Corporation's performance. Mr.
Young is entitled to receive an automobile allowance of US$10,000 per annum.
Mr. Young's employment agreement provides that in the event of the termination
of his employment without cause or upon a change of control of the Corporation,
his employment will be deemed to have been terminated and he will be entitled to
receive 24 months salary, together with a payment equal to 50% of the bonus
entitlement for each year and any other compensation to which he would otherwise
have been entitled during such 24-month period, such payments to be calculated
on a grossed-up basis. Pursuant to the terms of Mr. Young's employment
agreement, any options granted to Mr. Young shall immediately vest if his
employment is terminated without cause or upon a change of control.
INDEBTEDNESS OF DIRECTORS AND OFFICERS
No director or officer of the Corporation, and no associate of any director or
officer of the Corporation, was indebted to the Corporation at any time during
the year ended December 31, 2003.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about the shares of our Common
Stock that may be issued upon the exercise of options or warrants under all of
our existing equity compensation plans as of December 31, 2003, including the
Incentive Stock Option Plan and the Plan of Arrangement Stock Option Plan.
(c)
NUMBER OF
SECURITIES
REMAINING
(a) AVAILABLE FOR
NUMBER OF (b) FUTURE ISSUANCE
SECURITIES TO WEIGHTED- UNDER EQUITY (d)
BE AVERAGE COMPENSATION TOTAL
ISSUED UPON EXERCISE PLANS (EXCLUDING SECURITIES
EXERCISE OF PRICE OF SECURITIES REFLECTED IN
OUTSTANDING OUTSTANDING REFLECTED IN COLUMNS (a)
PLAN CATEGORY OPTIONS (#) OPTIONS ($) COLUMN (a)) (#) AND (c) (#)
----------------------------------------- -------------- ------------- ----------------- -------------
Equity compensation plans approved by
security holders:
Incentive Stock Option Plan . . . . . 1,887,300 $ 2.20 4,805,904 2,918,604
Plan of Arrangement Stock Option Plan 2,780,412 $ 0.80 2,780,412 0
Equity compensation plans not approved by
security holders. . . . . . . . . . . . . 0 N/A 0 0
-------------- ------------- ----------------- -------------
TOTAL . . . . . . . . . . . . . . . . . . 4,667,712 - 7,586,316 2,918,604
Page 24
PERFORMANCE GRAPH
The following graph compares the total cumulative shareholder return for $100
invested in Common Shares with the cumulative total return of the S&P/TSX
Composite Index and the S&P/TSX Gold & Precious Minerals Index during the five
most recently completed financial years of the Corporation. During the period,
the total cumulative shareholder return for $100 invested in Common Shares was
$32 as compared to $127 for the S&P/TSX Composite
Five Year Cumulative Total Return on $ 100 Investment
Assuming Re-Investment of Distributions
(January 1, 1999-December 31, 2003)
[CHART OMITTED]
Jan. 1, 1999 Dec. 31, 1999 Dec. 31, 2000 Dec. 31, 2001 Dec. 31, 2002 Dec. 31, 2003
Apollo Gold Corporation 100.00 85.71 61.90 11.90 39.35 32.35
S&P/TSX Composite 100.00 131.71 141.47 123.69 108.30 137.25
TSX Gold & Precious Minerals 100.00 83.01 74.74 88.40 122.41 132.91
Index and $127 for the S&P/TSX Gold & Precious Minerals Index.
(1) Effective June 25, 2002, International Pursuit Corporation consolidated its
common shares on a 1:43.57 basis and amalgamated with Nevoro Gold
Corporation to form Apollo Gold Corporation, the shares of which commenced
trading on the TSX on July 3, 2002.
DIRECTORS' AND OFFICERS' INSURANCE
The Corporation has directors' liability insurance for the directors and
officers of the Corporation and its subsidiaries. The aggregate annual premium
is US$191,192.40. The annual insurance coverage under the applicable policies
is limited to US$10,000,000 per policy year.
There is a US$250,000 deductible provision for any claim made by the
Corporation. The limit does not apply claims by any director or officer.
Page 25
INTERESTS OF INSIDERS AND OTHERS IN MATERIAL TRANSACTIONS
Except as set forth hereafter and in the employment agreements and stock option
grants described elsewhere in this Circular, no director, senior officer or
associate of a director or senior officer nor, to the best knowledge of the
directors or senior officers of the Corporation after having made reasonable
inquiry, any person or company who beneficially owns, directly or indirectly,
voting securities of the Corporation carrying more than ten (10%) percent of the
voting rights attached to any class of voting securities of the Corporation
outstanding at the date hereof, or any associate or affiliate thereof, has any
interest in any material contracts to which the Corporation is a party.
In 2003, the Corporation paid US$60,577 for consulting services comprised of the
following: US$41,317 to Robert L. Russell, the father of R. David Russell, the
President and Chief Executive Officer of the Corporation and US$19,260 to
Surradial, an entity owned by the brother of R. David Russell. In 2003, the
Corporation paid Fogler, Rubinoff LLP US$407,411 and McMillan Binch LLP
US$387,774 in respect of legal services provided to the Corporation. Mr. Hobart,
a director of the Corporation, is a partner at Fogler, Rubinoff LLP and Mr.
Vaughan, a director of the Corporation, is a partner at McMillan Binch LLP. In
addition, in 2003, the Corporation paid Silicon Valley Law Group US$463,000 in
respect of legal services provided to the Corporation. A shareholder of Silicon
Valley Law Group is the brother of Mr. R. Llee Chapman, the Corporation's Vice
President and Chief Financial Officer.
The Corporation is of the view that all of the transactions set forth above were
made on terms no less favourable to the Corporation than could have been
obtained from unaffiliated third parties. The Corporation intends that all
material transactions be approved by a majority of the Board, including a
majority of the independent directors and be on terms no less favourable to the
Corporation than could be obtained from unaffiliated third parties.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's officers and
directors, and persons who own more than 10% of the Corporation's Common Shares,
to file reports of ownership and changes of ownership of such securities with
the United States Securities and Exchange Commission. Based on a review of the
Corporation's records, management believes that all filing requirements
applicable to the Corporation's officers, directors and holders of more than 10%
of the Corporation's Common Shares were complied with during the 2003 fiscal
year, except that: with respect to Mr. Bristol, a Form 3 was filed late; with
respect to Mr. Vaughan, a Form 4 was filed late concerning an exercise of his
stock options followed by the sale of his Common Shares; with respect to Mr.
Woodyer, a Form 4 was filed late concerning an exercise of his stock options
followed by the sale of his Common Shares; with respect to Mr. Russell, a Form 4
was filed late concerning a purchase of Common Shares.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Arthur Andersen LLP was the Corporation's independent auditor; however,
effective June 3, 2002, Arthur Andersen LLP, ceased practicing public
accounting. The Corporation engaged Deloitte & Touche LLP as its new
independent certified public accountants effective June 17, 2002. Deloitte &
Touche LLP independently reaudited the Corporation's historical financial
statements and did not rely on any of Arthur Andersen LLP's work product.
Our Board of Directors, with the recommendation of the Audit and Finance
Committee of the Board of Directors and with the approval of our shareholders,
authorized and approved the engagement of Deloitte & Touche LLP. During our two
most recent fiscal years and the subsequent period prior to such appointment, we
did not consult Deloitte & Touche LLP regarding the application of accounting
principles to a specific completed or contemplated transaction, or the type of
audit opinion that might be rendered on our financial statements, nor on any
matter that was either the subject of a disagreement, as that term is defined in
Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of
Regulation S-B, or a reportable event, as that term is defined in Item
304(a)(1)(v) of Regulation S-B.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No person who was a director or senior officer of the Corporation at any time
since the beginning of the Corporation's last completed financial year, no
person who is a proposed nominee for election as a director of the Corporation
and no associate or affiliate of any such director, senior officer or proposed
nominee has any material
Page 26
interest, direct or indirect, in any matter to be acted upon at the Meeting
other than the election of directors of this Circular.
PARTICULARS OF MATTERS TO BE ACTED UPON
FINANCIAL STATEMENTS
The shareholders will receive and consider the audited consolidated financial
statements of the Corporation for the fiscal year ended December 31, 2003,
together with the auditor's report thereon.
PROPOSAL #1 - ELECTION OF DIRECTORS
The Board consists of seven directors to be elected annually. All seven
nominees are members of the Board and have been since the dates indicated below.
Management does not contemplate that any of the nominees will be unable to serve
as a director. However, if a nominee should be unable to so serve for any
reason prior to the Meeting, the persons named in the enclosed form of proxy
reserve the right to vote for another nominee in their discretion. Each
director elected will hold office until the next annual meeting or until his
successor is appointed, unless his office is earlier vacated in accordance with
the Business Corporations Act (Yukon), and the by-laws of the Corporation. THE
PERSONS NAMED IN THE ENCLOSED FORM OF PROXY INTEND TO VOTE FOR THE ELECTION OF
ALL OF THE NOMINEES WHOSE NAMES ARE SET FORTH BELOW.
The following table and the notes thereto state the names of all persons
proposed to be nominated for election as directors, all other positions or
offices with the Corporation and its subsidiaries now held by them, their
principal occupations or employment, the year in which they became directors of
the Corporation, the approximate number of Common Shares beneficially owned,
directly or indirectly, by each of them, or over which they exert control or
direction as of March 26, 2004, and the number of options held as of March 26,
2004.
COMMON SHARES
BENEFICIALLY OWNED,
DIRECTLY OR
YEAR FIRST INDIRECTLY, OR
NAME AND MUNICIPALITY OF BECAME CONTROLLED OR NUMBER OF
RESIDENCE PRESENT PRINCIPAL OCCUPATION DIRECTOR DIRECTED(1) OPTIONS HELD
-------------------------------- ------------------------------ ---------- -------------------- ------------
G. Michael Hobart(3) (5) Partner, Fogler, Rubinoff LLP,
Toronto, Ontario a law firm 2002 1,000 145,071
R. David Russell (4) President and Chief Executive
Aurora, Colorado Officer of the Corporation 2002 1,024,525(6) 675,403
Gerald J. Schissler(2) (3) (5) Retired Natural Resources
Denver, Colorado Executive 2003 Nil 70,000
Charles E. Stott (3) (4) (5) Independent Mining Consultant 2002 2,000 145,071
Evergreen, Colorado
G. W. (Bill) Thompson(2) (3) (5) Independent Investor 2002 Nil 175,071
Seattle, Washington
W. S. (Steve) Vaughan (3) (5) Partner, McMillan Binch LLP,
Toronto, Ontario a law firm 2002 Nil 103,365
Robert A. Watts (2) Independent Business
Victoria, British Columbia Consultant 2003 Nil 70,000
(1) Information supplied by nominees.
(2) A current member of the Audit and Finance Committee.
(3) A current member of the Compensation Committee.
(4) A current member of the Technical Committee.
Page 27
(5) A current member of the Nominating Committee.
(6) 100 Common Shares are held indirectly by Mr. Russell for the benefit of his
minor child.
The principal occupation for the past five years for each of the nominees is set
out below.
G. MICHAEL HOBART
Michael Hobart is a partner at Fogler, Rubinoff LLP, Toronto, Ontario where he
has practiced corporate and securities law since September 2002. Prior thereto
he was a partner of Aylesworth Thompson Phelan O'Brien LLP from 1998 to 2002.
He earned a B.A. at McGill University (1982) and a LL.B. at the University of
New Brunswick (1985). He has held directorships and senior officer positions
with several junior mineral exploration companies in Canada. Mr. Hobart was
called to the Ontario Bar in 1987 and is a member of the Canadian Bar
Association.
R. DAVID RUSSELL
David Russell has been the Corporation's President and Chief Executive Officer
since June 2002. Prior to the amalgamation of International Pursuit Corporation
and Nevoro Gold Corporation in June 2002, Mr. Russell was a founder in January
2002 of Nevoro Gold Corporation, a private Ontario company, and served as its
President from February to June 2002. Mr. Russell was an independent mining
consultant from December 1999 to 2002. From January 1995 to December 1999, he
was Vice President and Chief Operating Officer of Getchell Gold, a Nevada gold
producer. At Getchell, Mr. Russell oversaw the Getchell open pit as well as the
development of two underground mechanized mines and a complex pressure oxidation
mill for ore processing. Mr. Russell was also a very involved team member in
Getchell's initial public offering and secondary offerings as well as the
evaluation and negotiations associated with Placer Dome's US$1.1 billion
acquisition of Getchell in May 1999. Prior to Getchell, Mr. Russell was General
Manager of U.S. operations for LAC Minerals and after its acquisition by Barrick
Gold, he served in the same capacities for Barrick. His responsibilities
included operations at various mines in the western U.S. including the Bullfrog
Mine in Nevada; the Richmond Hill Mine located near Lead, South Dakota; the
Ortiz Project near Santa Fe, New Mexico; and the Coliseum reclamation project in
California. Prior to LAC/Barrick, Mr. Russell was Manager Underground Mining for
Independence Mining in Nevada, Project Manager for Hecla Mining in Idaho,
Manager of the Lincoln Project in California for FMC/Meridian Gold and Mine
Manager for ASARCO in Idaho and Colorado. Mr. Russell is a mining engineer from
Montana Tech. Mr. Russell also serves as a director of Idaho General Mines.
GERALD J. SCHISSLER
Gerald Schissler is a retired natural resources executive. Since 1998, Mr.
Schissler has been an independent consultant on natural resources exploration,
development and production matters. From December 1993 until his retirement in
July 1998, he held various executive positions at Burlington Resources Inc. At
his retirement, Mr. Schissler held the position of Executive Vice President, Law
& Administration, and had responsibility for the law, human resources,
environment and safety, corporate secretary and governmental affairs functions
of Burlington Resources. Mr. Schissler also served as Senior Vice President and
General Counsel of Meridian Minerals Company, a Burlington subsidiary. Prior to
joining the Burlington family of entities in 1987, he was a partner in the
Denver law firm of Holland & Hart, where he served as Chairman of the Natural
Resources, Environment and Real Estate Department and on the firm's Management
Committee.
CHARLES E. STOTT, JR.
Charles Stott has been since 1995 an independent mining consultant with T.P.
McNulty and Associates which provides consulting services to the mineral, metal
and chemical industries. Since 2002, he has also served as a member of the
Board of Directors of Hazen Research, Inc. Mr. Stott was a director of Getchell
Gold Corporation from 1996 to 1999. He was President and Chief Executive
Officer of Gold Capital Corporation from 1994 to 1995 and was President and
Chief Executive Officer of Horizon Resources Corporation from 1990 to 1993. Mr.
Stott served as President and Chief Executive Officer of Amax Gold Inc. from
1986 to 1989.
Page 28
G. W. (BILL) THOMPSON
Bill Thompson is a retired mining executive. From 1997 to 1999 Mr. Thompson
served as President and Chief Executive Officer and a director of Getchell Gold
Corporation. From 1999 to 2000, he served as a member of the board of directors
of Placer-Dome, Inc. He also serves as a director of Kenor, ASA, a Norwegian
company.
W.S. (STEVE) VAUGHAN
Steve Vaughan has been a partner of McMillan Binch LLP since February 2002 and
is the Chair of its Natural Resources Group. Prior thereto he was a partner of
Aird & Berlis LLP from 1974 until February 2002. He has a B.Sc. and a M.Sc.
degree in geology as well as a law degree and has worked in or been closely
associated with all facets of the mineral exploration, mine finance and
securities industries since 1955. Mr. Vaughan is a director and member of the
Securities Committee of the Prospectors and Developers Association of Canada, a
former director of the Toronto Branch of the Canadian Institute of Mining,
Metallurgy and Petroleum and was a member of the joint Toronto Stock
Exchange/Ontario Securities Commission Mining Standards Task Force. Mr. Vaughan
also serves as a director of Algoma Central Corporation, Consolidated Tanager
Limited and Platte River Gold Inc.
ROBERT A. WATTS
Robert A. Watts has served on the Corporation's Board of Directors since August
19, 2003. Mr. Watts is a Chartered Accountant and has operated as an
independent financial and business consultant to the mining industry since 1993.
He has acted as a director of First Quantum Minerals Ltd. since 1999 and
Southern Rio Resources Ltd. since 2003, both of which are listed on the TSX
Toronto Exchange. In addition, he has acted as a Director of First Point
Minerals Corp. since 1996 and Dynasty Gold Corp. since 2001, both of which are
listed on the TSX Venture Exchange. Mr. Watts also acted as Chief Financial
Officer of First Point Minerals Corp. from 1996 until July of 2003 when he
retired. He is a member of the Audit Committee for each of the above companies.
The Corporation does not have an Executive Committee. The Board has established
an Audit and Finance Committee, a Compensation Committee, a Technical Committee
and a Nominating Committee, details of which are provided under the heading
"Overview of Corporate Governance Practices".
PROPOSAL #2 - APPOINTMENT OF AUDITORS
Management recommends the re-appointment of Deloitte & Touche LLP Chartered
Accountants, of Vancouver, British Columbia, the present auditors, as the
auditors of the Corporation to hold office until the close of the next annual
meeting of the shareholders. Deloitte & Touche LLP has served as the
Corporation's auditors continuously since 2002. The Corporation believes that a
representative of Deloitte & Touche LLP will attend this Meeting.
The following table shows the aggregate fees billed to the Corporation for
professional services by Deloitte & Touche LLP for fiscal years 2003 and 2002
(in Cdn$):
FISCAL 2003 FISCAL 2002(1)
------------ ---------------
Audit Fees $ 348,145 $ 119,917
Audit-Related Fees $ 439,757 $ 284,330
Tax Fees $ 9,600 $ 0
All Other Fees $ 0 $ 0
TOTAL $ 797,502 $ 404,247
(1) Deloitte & Touche LLP was not engaged as our independent auditors until
June 17, 2002. Therefore, the 2002 fees represent only a partial year.
Audit Fees. This category includes the aggregate fees billed for professional
services rendered for the audits of our consolidated financial statements for
fiscal years 2003 and 2002, for the reviews of the financial statements included
Page 29
in our quarterly reports on Form 10-Q during fiscal 2003 and 2002, and for other
services that are normally provided by the independent auditors in connection
with statutory and regulatory filings or engagements for the relevant fiscal
years.
Audit-Related Fees. This category includes the aggregate fees billed in each of
the last two fiscal years for assurance and related services by the independent
auditors that are reasonably related to the performance of the audits or reviews
of the financial statements and are not reported above under "Audit Fees," and
generally consist of fees for other engagements under professional auditing
standards, accounting and reporting consultations, internal control-related
matters, and audits of employee benefit plans.
Tax Fees. This category includes the aggregate fees billed in each of the last
two fiscal years for professional services rendered by the independent auditors
for tax compliance, tax planning and tax advice. Of these amounts, $0 was
related to tax compliance services for review of federal and state tax returns
for both 2003 and 2002.
All Other Fees. This category includes the aggregate fees billed in each of the
last two fiscal years for products and services provided by the independent
auditors that are not reported above under "Audit Fees," "Audit-Related Fees,"
or "Tax Fees."
In the past, the Board has reviewed and approved the fees to be paid to the
auditors. Such fees have been based upon the complexity of the matters in
question and the time incurred by the auditors. Management believes that the
fees negotiated in the past with the auditors of the Corporation were reasonable
in the circumstances and would be comparable to fees charged by other auditors
providing similar services.
As discussed in the "Report of the Audit and Finance Committee" in this
Circular, the Audit and Finance Committee has reviewed and considered whether
the provision of services other than audit services is compatible with
maintaining the auditors' independence. Commencing in 2003, the Audit and
Finance Committee considered and pre-approved expenditure limits for the
Corporation's auditors and reviewed and pre-approved the provision of non-audit
services by the Corporation's auditors to ensure they are consistent with
maintaining the auditor's independence.
IT IS INTENDED THAT ON ANY BALLOT THAT MAY BE CALLED RELATING TO THE APPOINTMENT
OF AUDITORS, THE SHARES REPRESENTED BY PROXIES IN FAVOUR OF THE MANAGEMENT
NOMINEES WILL BE VOTED IN FAVOUR OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS
AUDITORS OF THE CORPORATION AND THE RESOLUTION AUTHORIZING THE DIRECTORS TO FIX
REMUNERATION OF THE AUDITORS, UNLESS A SHAREHOLDER HAS SPECIFIED IN HIS PROXY
THAT HIS SHARES ARE TO BE WITHHELD FROM VOTING ON THE APPOINTMENT OF AUDITORS.
PROPOSAL #3 - ADVANCED SHAREHOLDER APPROVAL
FOR THE ISSUANCE OF COMMON SHARES BY PRIVATE PLACEMENT
It is anticipated that the Corporation may need additional funds to conduct its
ongoing activities in the coming year. The Corporation from time to time
evaluates opportunities to raise financing on advantageous terms. The
Corporation may undertake one or more such financings over the next year which
may include private placement equity financings. The terms of the equity
financings, if any, to be authorized , including dividend or interest rates,
conversion prices, voting rights, redemption prices, maturity dates, and similar
matters will be determined by the Board. Under the rules of the TSX, the
aggregate number of shares of a listed company which may be issued or made
subject to issuance (i.e. issuable under a share purchase warrant or option or
other convertible security) by way of one or more private placement transactions
during any particular six month period must not exceed 25% of the number of
shares outstanding (on a non-diluted basis) prior to giving effect to such
transactions (the "TSX 25% RULE"), unless there has been shareholder approval of
such transactions.
The application of the TSX 25% Rule may restrict the availability to the
Corporation of funds which it may wish to raise in the future by private
placement of its securities.
In particular, management of the Corporation considers it to be in the best
interests of the Corporation to solicit private placement funds for working
capital and its operations. The TSX has a working practice that it will accept
Page 30
advance approval by shareholders in anticipation of private placements that may
exceed the TSX 25% Rule, provided such private placements are completed within
12 months of the date such advance shareholder approval is given. In the event
the Corporation conducts private placement equity financings, the existing
shareholders will experience dilution of their equity interest.
The Corporation's issued and outstanding share capital as of March 26, 2004 was
79,017,575 Common Shares and the Corporation proposes that the maximum number of
Common Shares which either would be issued or made subject to issuance under one
or more private placements in the 12-month period commencing on May 20, 2004,
would not exceed 79,017,575 Common Shares in the aggregate, or 100% of the
Corporation's issued and outstanding shares.
Any private placement proceeded with by the Corporation under the advance
approval being sought at the Meeting would be subject to the following
additional restrictions:
(a) it must be substantially with parties at arm's length to the
Corporation;
(b) it cannot materially affect control of the Corporation;
(c) it must be completed within a 12 month period following the date the
shareholder approval is given; and
(d) it must comply with the private placement pricing rules of the TSX
which generally require that the issue price per common share must not
be lower than the closing market price of such common shares on the
TSX on the trading date prior to the date notice of the private
placement is given to the TSX (the "MARKET PRICE"), less the
applicable discount, which generally is as follows:
Market Price Maximum Discount
-------------- -----------------
Over $2.00 15%
$0.51 to $2.00 20%
Up to $0.50 25%
(for these purposes, a private placement of unlisted convertible securities is
deemed to be a private placement of the underlying securities at an issue price
equal to the lowest possible price at which the securities are convertible by
the holders thereof).
In any event, the TSX retains the discretion to decide whether or not a
particular placement is "substantially" at arm's length or will materially
affect control, in which case specific shareholder approval may be required.
In anticipation that the Corporation may wish to enter into one or more private
placements in the next 12 months that will result in it issuing and/or making
issuable 79,017,575 Common Shares taking into account any Common Shares that may
be issued upon exercise of any warrants, options or other rights granted in
connection with the private placements, that will exceed the TSX 25% Rule,
management is requesting shareholders to pass, with or without variation, the
resolution set forth in SCHEDULE "B" attached hereto (the "PRIVATE PLACEMENT
RESOLUTION").
The directors of the Corporation believe the passing of the Private Placement
Resolution is in the best interests of the Corporation and recommends that the
shareholders vote in favour of the resolution. In the event the resolution is
not passed, the TSX will not approve any private placements that result in the
issuance or possible issuance of a number of Common Shares which exceed the TSX
25% Rule without specific shareholder approval. Such restriction could impede
the Corporation's timely access to required funds on favourable terms.
In order to approve the Private Placement Resolution, a majority of the votes
cast at the Meeting must be voted in favour thereof. THE BOARD HAS UNANIMOUSLY
APPROVED THE PRIVATE PLACEMENT RESOLUTION AND RECOMMENDS THAT SHAREHOLDERS VOTE
FOR SUCH RESOLUTION. PROXIES RECEIVED IN FAVOUR OF MANAGEMENT WILL BE VOTED IN
FAVOUR OF THE PRIVATE PLACEMENT RESOLUTION, UNLESS THE SHAREHOLDER HAS SPECIFIED
IN THE PROXY THAT HIS OR HER COMMON SHARES ARE TO BE VOTED AGAINST THE
RESOLUTION.
Page 31
APPROVAL
The contents and the sending of this Circular have been approved by the
directors of the Corporation.
OTHER MATTERS
Management knows of no amendment, variation or other matter to come before the
Meeting other than the matters referred to in the Notice. However, if any other
matter properly comes before the Meeting, the accompanying proxy will be voted
on such matter with the best judgement of the person or persons voting the
proxy.
SHAREHOLDER PROPOSALS
SHAREHOLDER PROPOSALS FOR INCLUSION IN PROXY STATEMENT FOR 2005 ANNUAL MEETING
OF SHAREHOLDERS
To be considered for inclusion in the Corporation's proxy statement for the 2005
annual meeting of shareholders, a shareholder proposal must be received by the
Corporation no later than the close of business on February 21, 2005.
Shareholder proposals must be sent to the Secretary of the Corporation at the
following address: Apollo Gold Corporation, 4601 DTC Boulevard, Suite 750,
Denver, Colorado 80237-2571. The Corporation will not be required to include in
its proxy statement any shareholder proposal that does not meet all the
requirements for such inclusion established by applicable law.
OTHER SHAREHOLDER PROPOSALS FOR PRESENTATION AT 2005 ANNUAL MEETING OF
SHAREHOLDERS
For any proposal that is not submitted for inclusion in the Corporation's proxy
statement for the 2005 annual meeting of shareholders, but is instead sought to
be presented directly at the meeting, the SEC's rules permit management to vote
proxies in its discretion if: (1) the Corporation receives notice of the
proposal before the close of business on March 2, 2005, and advises shareholders
in the proxy statement about t he nature of the matter and how management
intends to vote on such matter; or (2) the Corporation does not receive notice
of the proposal prior to the close of business on March 2, 2005. Notices of
intention to present proposals at the 2005 annual meeting of shareholders should
be sent to Secretary of the Corporation at the following address: Apollo Gold
Corporation, 4601 DTC Boulevard, Suite 750, Denver, Colorado 80237-2571.
ADDITIONAL INFORMATION
Shareholders may, upon request made to the secretary of the Corporation, receive
the following documents from the Corporation free of charge:
(1) the Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 2003 and any document incorporated by reference therein;
(2) the Corporation's audited consolidated comparative annual financial
statements for the fiscal years ended December 31, 2002 and 2003, together
with reports of auditors thereon; and
(3) the Corporation's Management Information and Proxy Circular dated April 8,
2004.
DATED at Denver, Colorado this 8th day of April, 2004.
By Order of the Board of Directors
(Signed) R. DAVID RUSSELL
President and
Chief Executive Officer
Page 32
SCHEDULE "A"
CORPORATE GOVERNANCE PROCEDURES
In this Schedule, the Corporation's governance procedures are compared with the
TSX Guidelines for effective corporate governance.
Further, the Board has been reviewing its governance practices in response to
SOX. The United States Securities and Exchange Commission ("SEC") is in the
process of issuing rules and regulations to give effect to the provisions of
SOX. As provisions of SOX come into effect, the Board will review and amend as
necessary or applicable its governance practices on an ongoing basis in response
to these standards. Where indicated below, the Corporation's existing
governance procedures are also compared to certain AMEX Standards which differ
or are in addition to the TSX Guidelines.
CORPORATION'S
TSX GUIDELINES ALIGNMENT CORPORATION'S GOVERNANCE PROCEDURES
--------------------------------------------------- ------------- --------------------------------------------------------
1. The board should explicitly assume Yes The Board, either directly or through Board
responsibility for stewardship of the committees, is responsible for management or
Corporation and specifically for: supervision of management of the business and affairs
of the Corporation with the objective of enhancing
shareholder value.
(i) Adoption of a strategic planning Yes The Board approves strategic plans of the
process Corporation. A significant portion of each regular
Board meeting is devoted to strategic plans and
opportunities available to the Corporation. Such
discussions enable directors to gain a fuller
appreciation of planning priorities and provide the
opportunity for directors to give constructive
feedback to management.
(ii) Identification of the principal Yes The Board considers risk issues and approves
risks of the Corporation's business and ensuring corporate policies addressing the management of the
implementation of appropriate systems to risk including environmental and safety issues. The
manage those risks Board also reviews the methods and procedures
established by management with respect to the control
of key risks.
(iii) Succession planning, including Yes The Board and the Compensation Committee is
appointing, training and monitoring senior mandated to review succession planning for senior
management management, including monitoring the performance
of senior management and assessing the depth of
management at the Corporation and its material
subsidiaries.
(iv) Communications policy Yes The Board has approved a Disclosure Policy covering
the timely dissemination of all material information.
The policy establishes consistent guidelines for
determining what information is material, how it is to
be disclosed and, to avoid selective disclosure,
making all material disclosures on a widely
disseminated basis. An officer has been mandated
with the responsibility to monitor events at the
Corporation to ensure timely disclosure. The
Corporation seeks to communicate with its
shareholders and other stakeholders through a variety
of channels, including its annual report, Form 8-K's
quarterly reports, Form 10-K, news releases, web site,
briefing sessions and group meetings.
A-1
(v) Integrity of internal control and Yes The Audit and Finance Committee of the Board
management information systems requires management to implement and maintain
appropriate systems of internal control. The Audit
and Finance Committee meets with the Corporation's
auditor and management to assess the adequacy and
effectiveness of these systems. As required by SOX,
the Chief Executive Officer and Chief Financial
Officer have provided certificates relating to the
contents of the annual statutory reports and have
evaluated and reported on the effectiveness of the
Corporation's internal controls and procedures.
2. A majority of directors should be Yes All directors nominated by management for re-
"unrelated". Under the AMEX standards, there election, with the exception of the President and Chief
is also a requirement for a majority of Executive Officer, Mr. Russell, (subject to the
"independent" directors. See item 3 below. disclosure regarding the relationship between the
Corporation and Messrs. Hobart and Vaughan
disclosed in the Corporation's Information Circular
and Proxy dated April 8, 2004) are unrelated based on
the criteria contained in the TSX Guidelines.
3. The board has responsibility for applying Yes Based on information provided by directors as to their
the definition of "unrelated director" to each individual circumstances, the Board has determined
individual director and for disclosing annually that only one of the seven persons proposed for
the analysis of the application of the principles election to the Board for 2004 is "related". The board
supporting this definition and whether the board is developing categorical standards for determining
has a majority of unrelated directors. Under the the independence of members of the board and its
AMEX standards, "independent director" committees based on the AMEX "independence"
means a person other than an officer or standards in addition to the "related" standards of the
employee of the company or any parent or TSX. Based on information provided by directors as
subsidiary. In addition, certain relationships are to their individual circumstances, the Board has
deemed to render a director as not determined that all directors standing for election to
"independent". In addition, no director the Board for 2004, with the exception of Mr. Russell
qualifies as "independent" unless the Board are "independent" under the AMEX Standards.
affirmatively determines that the director has no
material relationship with the listed company
(either directly or as a partner, shareholder or
officer of an organization that has a relationship
with the company). Disclosure must be made
of the basis for each determination.
4. The board should appoint a committee of Yes The Nominating Committee is responsible for
directors composed exclusively of outside, i.e., identifying and recommending to the Board suitable
non-management directors, a majority of whom director candidates. The Nominating Committee is
are "unrelated" directors, with responsibility for also responsible for ensuring that each member of the
proposing new nominees to the board and for Board is assessed against appropriate standards. All
assessing directors on an ongoing basis. members of the Nominating Committee are
"unrelated" directors (subject to the disclosure
regarding the relationship between the Corporation
and Messrs. Hobart and Vaughan disclosed in the
Corporation's Management Information and Proxy
Circular dated April 8, 2004).
A-2
5. The board should implement a process, to Yes The Compensation Committee conducts an annual
be carried out by an appropriate committee, for evaluation of the effectiveness of the Board, its
assessing the effectiveness of the board, its committees and the contribution of individual
committees and the contribution of individual directors. The Compensation Committee reviews the
directors. operation of the Board and committees, adequacy of
information provided to directors, Board structure,
agenda planning for Board meetings, and the
effectiveness of the Chairman in managing Board
meetings.
6. The board should provide an orientation and Yes New directors are provided with details of the
education program for new directors. Corporation's organizational structure, the structure of
the Board and its committees, compliance
requirements for directors, corporate policies and by-
laws. They also meet with a number of directors and
senior management personnel of the Corporation and
its material subsidiaries to learn of the functions and
activities of the Corporation. On an ongoing basis,
presentations are made to the Board on various
aspects of the Corporation's operations.
7. The board should examine its size with the Yes The Board has considered the matter of Board size
view to determining the impact upon and is of the view that the current Board membership
effectiveness and should undertake, where has the necessary breadth and diversity of experience
appropriate, a program to reduce the number of and is of an adequate size to provide for effective
directors to a number which facilitates more decision-making and staffing of Board committees.
effective decision-making.
8. The board of directors should review the Yes The Compensation Committee of the Board annually
adequacy and form of compensation of reviews the compensation paid to directors to ensure
directors in light of the risks and that it is competitive and aligns the interests of
responsibilities involved in being an effective directors with those of shareholders. The
director. Compensation Committee recommendations are
submitted to the Board for consideration and
approval.
9. Committees of the board should generally Yes All Board committees are composed solely of outside
be composed of outside directors, a majority of directors who are "unrelated" (subject to the
whom are unrelated. AMEX requires that, disclosure regarding the relationship between the
barring exceptional circumstances, the audit, Corporation and Messrs. Hobart and Vaughan
compensation and nominating committees be disclosed in the Corporation's Management
composed solely of "independent" directors. Information and Proxy Circular dated April 8, 2004),
except for the Technical Committee of which Mr.
Russell is a member.
10. The board should assume responsibility Yes The Board has mandated the Audit and Finance
for, or assign to a committee of directors Committee monitor governance practices and review
responsibility for developing the approach to the Corporation's governance practices to ensure the
corporate governance issues. Corporation continues to exemplify high standards of
corporate governance. The Board reviews its
corporate governance practices regularly.
11. The board of directors, together with the Yes The Board has given a mandate to the Compensation
chief executive officer, should develop position Committee to develop position descriptions for senior
descriptions for the board and for the chief management. Guidelines have been developed and
executive officer, involving the definition of the approved by the Board which set out those matters
limits to management's responsibilities. requiring Board approval.
A-3
12. The board should have in place Yes The Board has appointed a chair, Mr. Thompson, who
appropriate structures and procedures to ensure is not a member of management.
that it can function independently of
management. An appropriate structure would
be (i) appoint a chair of the board who is not a
member of management with responsibility to
ensure that the board discharges its
responsibilities or (ii) adopt alternate means
such as assigning this responsibility to a
committee of the board or to a director,
sometimes referred to as the "lead director".
Appropriate procedures may involve Yes The Board has adopted a policy that it meet as
the board meeting on a regular basis without necessary in an in-camera session at which only non-
management present or may involve expressly management directors are present. It is the Board's
assigning responsibility for administering the policy to also meet in-camera at the regular Board
board's relationship to management to a meeting during which the report of the Compensation
committee of the board. Committee is considered. During their meetings, the
Audit and Finance Committee and the Compensation
Committee also hold sessions with only non-
management directors present.
13. The Finance and Audit Committee should Yes The Audit and Finance Committee is composed
be composed only of outside directors. AMEX entirely of outside directors and independent
requires a different standard for members of the directors.
audit committee, disallowing any compensation
to such members other than directors' fees
received from the company.
All of the members of the Finance Yes All members of the Audit and Finance Committee are
and Audit Committee should be financially financially literate and at least one member has
literate and at least one member should have accounting or related financial expertise. In
accounting or related financial expertise. The considering criteria for determinations of financial
board should determine the definition of and literacy, the Board looks at the ability to read and
criteria for "financial literacy" and "account or understand a balance sheet, an income statement and a
related financial expertise". cash flow statement of a mining company.
SEC rules recently published in response to SOX, The Board has determined that each Audit and Finance
require each issuer to disclose the number Committee member is independent and that Mr. Watts
and names of "financial experts" serving on serves as the Audit and Finance Committee's
the issuer's Finance and Audit Committee and "financial expert".
confirm that they are independent of management.
The roles and responsibilities of the Yes The roles and responsibilities of the Audit and
Finance and Audit Committee should be Finance Committee are set out in the Committee's
specifically defined so as to provide appropriate charter and are detailed in the Audit and Finance
guidance to Finance and Audit Committee Committee Report presented in the Circular.
members as to their duties.
14. The Finance and Audit Committee should Yes The Audit and Finance Committee meets separately
have direct communication channels with the with the auditor, the Corporation's actuary and
internal and the external auditors to discuss and management to discuss the state of internal controls.
review specific issues as appropriate.
A-4
The Finance and Audit Committee Yes As outlined in its mandate, the Audit and Finance
duties should include oversight responsibility Committee requires management to implement and
for management reporting on internal control. maintain appropriate internal controls.
While it is management's responsibility to
design and implement an effective system of
internal control, it is the responsibility of the
Finance and Audit Committee to ensure that
management has done so.
15. The board should implement a system to Yes Individual directors may, with the concurrence of the
enable an individual director to engage an Audit and Finance Committee engage outside
outside advisor at the Corporation's expense in advisors at the expense of the Corporation.
appropriate circumstances. The engagement of
the outside advisor should be subject to the
approval of an appropriate committee of the
board.
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SCHEDULE "B"
RESOLUTION APPROVING IN ADVANCE THE ISSUANCE OF
COMMON SHARES BY PRIVATE PLACEMENT
BE IT RESOLVED THAT:
(1) the issuance by the Corporation of one or more private placements during
the 12-month period commencing on May 20, 2004, of such number of
securities that would result in the Corporation issuing or making issuable
79,017,575 Common Shares in the capital of the Corporation, all as more
particularly described in and subject to the restrictions contained in the
Management Information and Proxy Circular dated April 8, 2004, is hereby
approved; and
(2) any one officer or one director of the Corporation is hereby authorized and
directed to do and perform all things, including, the execution of
documents which may be necessary or desirable to give effect to the
foregoing resolution.
B-1
SCHEDULE "C"
AUDIT COMMITTEE CHARTER
APOLLO GOLD CORPORATION
THE AUDIT AND FINANCE COMMITTEE CHARTER
(as amended and restated March 24, 2004)
OVERALL PURPOSE / OBJECTIVES
There shall be a Committee of the Board of Directors (the "Board") of Apollo
Gold Corporation (the "Corporation"), to be known as the Audit and Finance
Committee (the "Committee") whose membership, authority and responsibilities
shall be as set out in this amended and restated audit Committee charter. The
committee will provide independent review and oversight of the Corporation's
financial reporting process, the system of internal control and management of
financial risks, and the audit process, including the selection, oversight and
compensation of the Corporation's external auditors. The Committee will also
assist the Board in fulfilling its responsibilities in reviewing the
Corporation's process for monitoring compliance with laws and regulations and
its own code of business conduct. In performing its duties, the Committee will
maintain effective working relationships with the Board of directors,
management, and the external auditors and monitor the independence of those
auditors. The Committee will also be responsible for reviewing the
Corporation's financial strategies, its financing plans and its use of the
equity and debt markets.
To perform his or her role effectively, each Committee member will obtain an
understanding of the responsibilities of Committee membership as well as the
Corporation's business, operations and risks.
AUTHORITY
The Board authorizes the Committee, within the scope of its responsibilities, to
seek any information it requires from any employee and from external parties, to
retain outside legal or professional counsel and other experts and to ensure the
attendance of the Corporation's officers at meetings as appropriate.
MEMBERSHIP
1. The Committee shall have at least three (3) members at all times, each
of whom must be a member of the Board and must be independent as required by
applicable law and applicable stock exchange listing rules (the "Listing
Rules"). A member of the Committee shall be considered independent if:
(a) he or she, other than in his or her capacity as a member of the
Committee, Board or any other committee of the Board, does not accept,
directly or indirectly, any consulting, advisory or other compensatory fee
from the Corporation. The indirect acceptance of a consulting, advisory or
other compensatory fee shall include acceptance of the fee by a spouse,
minor child or stepchild, or child or stepchild sharing a home with the
Committee member, or by an entity in which such member is a partner, member
or principal or occupies a similar position and which provides accounting,
consulting, legal, investment banking, financial or other advisory services
or any similar services to the Corporation;
(b) is not currently employed, and has not been employed in the past
three years, by the Corporation or any of its affiliates;
(c) is not an "affiliated person" of the Corporation or any of its
subsidiaries as defined by rules of the Securities and Exchange Commission
(the "SEC"), including rules promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and applicable stock exchange
listing rules (the "Listing Rules"); and
(d) he or she meets all other requirements for independence imposed
by law and the Listing Rules from time to time and any requirements imposed
by any Canadian body having jurisdiction over the Corporation.
2. All members of the Committee shall have a practical knowledge of
finance and accounting and be able to read and understand fundamental financial
statements from the time of their respective appointments to the Committee. In
addition, members may be required to participate in continuing education if
required by applicable law or the Listing Rules.
3. At least one member of the Committee shall be a "financial expert" as
defined by Item 401(h) of Regulation S-K, unless otherwise determined by the
Board, and at least one member shall meet the financial sophistication standards
under the Listing Rules.
4. Each member of the Committee shall be appointed by the Board and shall
serve until the earlier to occur of the date on which he or she shall be
replaced by the Board, resigns from the Committee, or resigns from the Board.
MEETINGS
1. The Committee shall meet as frequently as required, but no less than
four times annually and at least quarterly. The Board shall name a chairperson
of the Committee, who shall prepare and/or approve an agenda in advance of each
meeting and shall preside over meetings of the Committee. In the absence of the
chairperson, the Committee shall select a chairperson for that meeting. A
majority of the members of the Committee shall constitute a quorum and the act
of a majority of the members present at a meeting where a quorum is present
shall be the act of the Committee. The Committee may also act by unanimous
written consent of its members. The Committee shall maintain minutes or other
records of meetings and activities of the Committee.
2. The Committee shall, through its chairperson, report regularly to the
Board following the meetings of the Committee, addressing such matters as the
quality of the Corporation's financial statements, the Corporation's compliance
with legal or regulatory requirements, the performance and independence of the
outside auditors, the performance of any internal audit function and other
matters related to the Committee's functions and responsibilities.
3. The Committee shall at least annually meet separately with each of the
Corporation's management, the Corporation's chief financial officer and the
Corporation's outside auditors in separate executive sessions to discuss any
matters that the Committee or each of these groups believes should be discussed
privately.
ROLES AND RESPONSIBILITIES
1. The Committee's principal responsibility is one of oversight. The
Corporation's management is responsible for preparing the Corporation's
financial statements, and the Corporation's outside auditors are responsible for
auditing and/or reviewing those financial statements. In carrying out these
oversight responsibilities, the Committee is not providing any expert or special
assurance as to the Corporation's financial statements or any professional
certification as to the outside auditors' work.
2. The designation or identification of a member of the Committee as an
"audit committee financial expert" does not impose on such person any duties,
obligations, or liability that are greater than the duties, obligations, and
liability imposed on such person as a member of the Committee and Board of
Directors in the absence of such designation or identification; and (ii) the
designation or identification of a member of the Committee as an "audit
committee financial expert" does not affect the duties, obligations, or
liability of any other member of the Committee or Board of Directors.
3. The Committee's specific responsibilities and powers are as set forth
below.
GENERAL DUTIES AND RESPONSIBILITIES
--------------------------------------
- Periodically review with management and the outside auditors the applicable
law and the Listing Rules relating to the qualifications, activities,
responsibilities and duties of audit committees and compliance therewith,
and also take, or recommend that the Board take, appropriate action to
comply with such law and rules.
- Review and evaluate, at least annually, the adequacy of this charter and
make recommendations for changes to the Board.
- Establish procedures for: (a) the receipt, retention and treatment of
complaints received by the Corporation regarding accounting, internal
accounting controls or auditing matters; and (b) the confidential,
anonymous submission by employees of the Corporation of concerns regarding
questionable accounting or auditing matters.
- Retain, at the Corporation's expense, independent counsel, accountants or
others for such purposes as the Committee, in its sole discretion,
determines to be appropriate to carry out its responsibilities.
- Prepare annual reports of the Committee for inclusion in the proxy
statements for the Corporation's annual meetings.
- Investigate any matter brought to its attention related to financial,
accounting and audit matters and have full access to all books, records,
facilities and personnel of the Corporation.
- Undertake such additional responsibilities as from time to time may be
delegated to it by the Board, required by the Corporation's articles or
bylaws or required by law or Listing Rules.
AUDITOR INDEPENDENCE
---------------------
- Be directly responsible for the appointment, compensation, retention,
termination, and oversight, subject to the requirements of Canadian law, of
the work of any outside auditor engaged by the Corporation for the purpose
of preparing or issuing an audit report or performing other audit, review
or attest services. The outside auditors shall report directly to the
Committee.
- Be vested with all responsibilities and authority required by Rule 10A-3
under the Exchange Act.
- Pre-approve all engagement letters and fees for all auditing services
(including providing comfort letters in connection with securities
underwritings) and non-audit services performed by the outside auditors,
subject to any exception under Section 10A of the Exchange Act and any
rules promulgated thereunder. Pre-approval authority may be delegated to a
Committee member or a subcommittee, and any such member or subcommittee
shall report any decisions to the full Committee at its next scheduled
meeting. The Committee shall not approve an engagement of outside auditors
to render non-audit services that are prohibited by law or the Listing
Rules.
- Obtain from the outside auditors assurance that they have complied with
Section 10A, as amended, of the Exchange Act and the rules promulgated
thereunder.
- Review with the outside auditors, at least annually, the auditors' internal
quality control procedures and any material issues raised by the most
recent internal quality peer review of the outside auditors.
INTERNAL CONTROL
-----------------
- Review annually the adequacy and quality of the Corporation's financial and
accounting staffing, the need for and scope of internal audit reviews, and
the plan, budget and the designations of responsibilities for any internal
audit.
- Review the performance and material findings of internal audit reviews.
- Review annually with the outside auditors any significant matters regarding
the Corporation's internal controls and procedures over financial reporting
that have come to their attention during the conduct of their annual audit,
and review whether internal control recommendations made by the auditors
have been implemented by management.
- Review major risk exposures (whether financial, operating or otherwise) and
the guidelines and policies that management has put in place to govern the
process of monitoring, controlling and reporting such exposures.
- Review and evaluate at least annually the Corporation's policies and
procedures for maintaining and investing cash funds and for hedging
(metals, foreign currency, etc.)
- Review annually management's report on internal controls and the auditor's
attestation regarding management's assessment of internal controls, when
and as required by Section 404 of the Sarbanes-Oxley Act.
- Evaluate whether management is setting the appropriate tone at the top by
communicating the importance of internal controls and ensuring that all
supervisory and accounting employees understand their roles and
responsibilities with respect to internal controls.
ANNUAL AND INTERIM FINANCIAL STATEMENTS
-------------------------------------------
- Review, evaluate and discuss with the outside auditors and management the
Corporation's audited annual financial statements and other information
that is to be included in the Corporation's annual report on Form 10-K,
including the disclosures under "Management's Discussion and Analysis of
Financial Condition and Results of Operations", and the results of the
outside auditors' audit of the Corporation's annual financial statement,
including the accompanying footnotes and the outside auditors' opinion, and
determine whether to recommend to the Board that the financial statements
be included in the Corporation's annual report on Form 10-K for filing with
the SEC.
- Review, evaluate and discuss the nature and extent of any significant
changes in Canadian and U.S. accounting principles or the application of
accounting principles.
- Require the outside auditors to review the Corporation's interim financial
statements, and review and discuss with the outside auditors and management
the Corporation's interim financial statements and other information to be
included in the Corporation's quarterly reports on Form 10-Q, including the
disclosures under "Management's Discussion and Analysis of Financial
Condition and Results of Operations", prior to filing such reports with the
SEC.
- Review and discuss with the Corporation's management and outside auditors
significant accounting and reporting principles, practices and procedures
applied in preparing the financial statements and any major changes to the
Corporation's accounting or reporting principles, practices or procedures,
including those required or proposed by professional or regulatory
pronouncements and actions, as brought to its attention by management
and/or the outside auditors.
- Review and discuss all critical accounting policies identified to the
Committee by management and the outside auditors.
- Review significant accounting and reporting issues, including recent
regulatory announcements and rule changes and Canadian and U.S. GAAP
matters identified to the Committee by management and the Corporation's
outside auditors, and understand their impact on the financial statements.
- Discuss alternative treatments of financial information under generally
accepted accounting principles, the ramifications of each treatment and the
method preferred by the Corporation's outside auditors.
- Review the results of any material difficulties, differences or disputes
with management encountered by the outside auditors during the course of
the audit or reviews and be responsible for overseeing the resolution of
such difficulties, differences and disputes.
- Review the matters required to be discussed by Statement on Auditing
Standards No. 61, as amended (Communications with Audit Committees),
relating to the conduct of the audit.
- Receive from the outside auditors, review and discuss a formal written
statement delineating all relationships between the outside auditors and
the Corporation, consistent with the Independence Standards Board, Standard
No. 1, regarding relationships and services, which may impact the
objectivity and independence of the outside auditors, and other applicable
standards. The statement shall include a description of all services
provided by the outside auditors and the related fees. The Committee shall
actively discuss any disclosed relationships or services that may impact
the objectivity and independence of the outside auditors.
- Review the scope, plan and procedures to be used on the annual audit and
receive confirmation from the outside auditors that no limitations have
been placed on the scope or nature of their audit scope, plan or
procedures.
RELATED PARTY TRANSACTIONS
----------------------------
- Review any transaction involving the Corporation and a related party at
least once a year or upon any significant change in the transaction or
relationship. For these purposes, a "related party transaction" includes
any transaction required to be disclosed pursuant to Item 404 of Regulation
S-K.
EARNINGS PRESS RELEASES
-------------------------
- Review and discuss with management and the outside auditors prior to
release all earnings press releases of the Corporation, as well as
financial information and earnings guidance, if any, provided by the
Corporation to analysts and rating agencies.
COMPLIANCE WITH LAW AND REGULATIONS
-----------------------------------
- Meet at least annually with management to review compliance with laws and
regulations (including insider reporting) in all operating jurisdictions,
the effectiveness of the Corporation's systems for monitoring compliance
with laws and regulations and the results of the investigation and
follow-up (including disciplinary action) on any fraudulent acts or
accounting regularities.
- Periodically obtain updates from management regarding compliance matters.
COMPLIANCE WITH CORPORATE BUSINESS CONDUCT OR ETHICS POLICIES
-------------------------------------------------------------
- Review with management, the outside auditors and legal counsel, as the
Committee deems appropriate, actions taken to ensure compliance with any
code of ethics or conduct for the Corporation established by the Board.
- Review at least annually the Corporation's Business Conduct Policy and any
other code of ethics adopted to comply with Section 406 of the
Sarbanes-Oxley Act.
- Evaluate whether management is setting the appropriate tone at the top by
communicating the importance of the Corporation's ethics and conduct codes.