ff_ex993
TSX:
FF | OTCQX: FFMGF | FRANKFURT: FMG
NOTICE OF MEETING
and
MANAGEMENT INFORMATION CIRCULAR
for the
ANNUAL GENERAL & SPECIAL
MEETING OF SHAREHOLDERS
to be held on
JUNE 30, 2021
Dated
as of May 18, 2021
|
Suite
2070 – 1188 West Georgia Street, Vancouver, British Columbia
V6E 4A2 www.firstmininggold.com
| 1-844-306-8827
|
{5095-001/01637
51254535.10
About First Mining
Headquartered
in Vancouver, British Columbia, First Mining Gold Corp.
(“First Mining”
or, the “Company”) is a Canadian-focused
gold exploration and development company that was created in 2015
by Mr. Keith Neumeyer, founding President and CEO of First Majestic
Silver Corp. and a co-founder of First Quantum Minerals
Ltd.
We are a Canadian gold developer, with our primary focus being the
development and permitting of our Springpole Gold Project (the
“Springpole
Project” or
“Springpole”) in northwestern Ontario.
Springpole is one of the largest undeveloped gold
projects in Canada. We announced the results of a positive
Pre-Feasibility Study for the Springpole Project in January 2021,
and permitting activities are on-going with submission of
an Environmental Impact Statement for Springpole targeted
by the end of 2021. We also hold a large equity position in
Treasury Metals Inc. (“Treasury
Metals”) which is
advancing the Goliath Gold Complex project towards construction.
Our portfolio of gold projects in eastern Canada also includes the
Pickle Crow (being advanced in
partnership with Auteco Minerals Ltd.), Cameron, Hope Brook, Duparquet, Duquesne,
and Pitt gold projects.
We are
publicly listed on the Toronto Stock Exchange (“TSX”) under the trading symbol
“FF”, in the US on the OTCQX under the trading symbol
“FFMGF”, and on the Frankfurt Stock Exchange under the
symbol “FMG”. Our management team has decades of
experience in evaluating, exploring and developing mineral
assets.
Contents
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Page
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Letter to Shareholders
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ii
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Notice of 2021 Annual General & Special Meeting of
Shareholders
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iv
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2021 Management Information Circular
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6
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Questions and Answers
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6
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Glossary
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13
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Notice & Access Process
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22
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About the Meeting
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22
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Voting
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25
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Particulars of the Matters to be Acted
Upon
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34
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Corporate Governance
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71
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Statement of Executive Compensation
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78
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Equity Compensation Plan Information
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96
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Indebtedness of Directors and Executive
Officers
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97
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Management Contracts
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97
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Additional Information
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97
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Board Approval
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97
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Appendix A – Board Mandate
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A-1
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Appendix B – Material Terms of Share-Based Compensation
Plan
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B-1
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Appendix C – Distribution Resolution
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C-1
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Appendix D – Plan of Arrangement
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D-1
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Appendix E – Interim Order
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E-1
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Appendix F – Notice of Hearing of
Petition
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F-1
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Appendix G – BCBCA Dissent
Provisions
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G-1
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Dear
Shareholder:
It is
my pleasure to invite you to our 2021 annual general & special
meeting of shareholders to be held on Wednesday, June 30, 2021 at
10:00 a.m. (Pacific Time) (the “Meeting”). Due to the current
COVID-19 pandemic, we will be holding the Meeting as a completely
virtual
meeting, which will be conducted via live webcast, where all
shareholders regardless of geographic location and equity ownership
will have an equal opportunity to participate at the Meeting and
engage with directors and management of First Mining.
As the
Meeting will be completely virtual, shareholders will not
be able to attend the Meeting in
person. Registered shareholders and duly appointed
proxyholders will be able to attend, participate and vote at the
Meeting online at https://agm.issuerdirect.com/ff.
Non-registered shareholders (being shareholders who hold their
shares through a broker, investment dealer, bank, trust company,
custodian, nominee or other intermediary) who have not duly
appointed themselves as proxyholder will be able to attend and
listen to the Meeting, but will not be
able to vote at the Meeting.
At the
Meeting, shareholders will be asked to, among other things, pass a
special resolution approving a statutory plan of arrangement (the
“Plan of
Arrangement”) whereby First Mining will distribute
23,333,333 common shares (each, a “Treasury Metals Share”) of
Treasury Metals Inc. (“Treasury Metals”) and 35,000,000 common share purchase
warrants (each, a “Treasury
Metals Warrant”) of Treasury Metals to shareholders of
First Mining on a pro rata basis, by way of a reduction in the
capital of the common shares (“Common Shares”) of First Mining
(the “Distribution”). Pursuant to the
Plan of Arrangement, for each Common Share issued and outstanding
on the Distribution Record Date (as defined in the Plan of
Arrangement), the holder of such Common Share shall receive: (i)
that portion of a Treasury Metals Share determined by dividing the
23,333,333 Treasury Metals Shares by the number of Common Shares
issued and outstanding on the Distribution Record Date; and (ii)
that portion of a Treasury Metals Warrant determined by dividing
the 35,000,000 Treasury Metals Warrants (such number of Treasury
Metals Warrants subject to adjustment in connection with a proposed
amendment to the Warrant Indenture dated August 7, 2020 between
Treasury Metals and TSX Trust Company (the “Warrant Indenture”), as described
below) by the number of Common Shares issued and outstanding on the
Distribution Record Date.
First
Mining agreed to complete the Distribution as part of the terms of
the transaction completed on August 7, 2020 whereby Treasury
Metals acquired the Goldlund Gold
Project from First Mining for consideration that included the
Treasury Metals Shares and Treasury Metals Warrants. First Mining
previously announced that 70,000,000 Treasury Metals Shares would
be distributed to shareholders; however, such number has been
adjusted to 23,333,333 Treasury Metals Shares as a result of a
three for one consolidation (the “Consolidation”) of
the Treasury Metals Shares that became effective on August 11,
2020. In addition, as a result of the Consolidation, (i) the number
of Treasury Metals Shares issuable upon exercise of each Treasury
Metals Warrant was adjusted from one Treasury Metals Share to 0.33
of a Treasury Metals Share, and (ii) the exercise price of the
Treasury Metals Warrants was adjusted from $0.50 per Treasury
Metals Share to $1.50 per Treasury Metals Share, all in accordance
with the terms of the Warrant Indenture.
Prior
to the Distribution, the Company intends to work with Treasury Metals and TSX Trust Company to amend the
terms of the Warrant Indenture, such that there will be 11,666,666
Treasury Metals Warrants issued and outstanding, each being
exercisable for one Treasury Metals Share at an exercise price of
$1.50 per Treasury Metals Share. If such amendment takes place, for
each Common Share issued and outstanding on the Distribution Record
Date, the holder of such Common Share shall receive that portion of
a Treasury Metals Warrant determined by dividing the 11,666,666
(rather than 35,000,000) Treasury Metals Warrants by the number of
Common Shares issued and outstanding on the Distribution Record
Date.
After
careful consideration, the board of directors of the Company (the
“Board”) has
unanimously determined that the Distribution is fair to
shareholders and is in the best interests of the Company and its
shareholders. Further information regarding the Distribution is
contained in the enclosed management information circular (the
“Circular”). The
Board has unanimously approved the Distribution and recommends that
shareholders vote in favour of the special resolution approving the
Distribution.
To be
effective, the Distribution must be approved by a special
resolution passed by at least 66⅔% of the votes cast by
shareholders present in person or represented by proxy at the
Meeting, which shareholders are entitled to one vote for each
Common Share held. The Distribution is not subject to the minority
approval requirements of Multilateral Instrument 61-101
Protection of Minority Security
Holders in Special Transactions.
The
Meeting is your opportunity to vote on various items of business
(including the Distribution), meet our Board and management team
virtually via the webcast,
and learn more about our project developments, our performance over
the past year and our future plans. Please take some time to read
the Circular because it includes important information about the
Meeting, voting, the nominated directors, our governance practices
and how we compensate our executives and directors.
Your vote is very important. You can vote online before the proxy
cut-off date and time of Monday, June 28, 2021 at 10:00 a.m.
(Pacific Time) or by phone, fax or mail.
If you have any questions and/or need assistance in voting your
shares, please contact our strategic shareholder advisor and proxy
solicitation agent, Kingsdale Advisors, either by toll-free
telephone in North America at 1-877-659-1822 or collect call
outside North America at 416-867-2272, or by e-mail at contactus@kingsdaleadvisors.com.
Thank
you for your continued support as we move our business
forward.
Yours
sincerely,
/s/
Daniel W. Wilton
Daniel W. Wilton
Chief
Executive Officer and Director
Vancouver,
British Columbia
May 18,
2021
Notice of 2021 Annual
General & Special Meeting of Shareholders
When
Wednesday,
June 30, 2021 at 10:00 a.m. (Pacific Time)
Where
Due to
the current COVID-19 pandemic, we will be holding the Meeting as a
completely virtual
meeting, which will be conducted via live webcast at
https://agm.issuerdirect.com/ff.
Shareholders will
not
be able to attend the Meeting in
person.
We will
cover six items of business at our 2021 annual general &
special meeting (the “Meeting”):
1.
Receive our audited
consolidated financial statements for the financial year ended
December 31, 2020 and the auditor’s report
thereon;
2.
Fix the number of
directors to be elected at the Meeting at five;
3.
Elect five
directors to our board of directors to hold office until the next
annual general meeting of shareholders;
4.
Re-appoint
PricewaterhouseCoopers LLP, Chartered Professional Accountants, as
our independent auditor for the ensuing year and authorize our
directors to set the auditor’s pay;
5.
Consider and, if
deemed appropriate, pass, with or without variation, a special
resolution of the shareholders (the “Distribution Resolution”), the
full text of which is attached as Appendix “C” to the
enclosed management information circular (the “Circular”) approving a statutory
plan of arrangement under section 288 of the Business Corporations Act (British
Columbia) which will effect the distribution (the
“Distribution”)
on a pro rata basis of 23,333,333 common shares of Treasury Metals
Inc. (“Treasury
Metals”) and 35,000,000 common share purchase warrants
of Treasury Metals (such number of common share purchase warrants
subject to adjustment in connection with a proposed amendment to
the Warrant Indenture dated August 7, 2020 between Treasury Metals
and TSX Trust Company, as described in the Circular under the
heading “Particulars of the
Matters to be Acted Upon – 5. Distribution of Treasury Metals
Securities Pursuant to the Plan of Arrangement – Details of
the Distribution”) to shareholders of First Mining, by
way of a reduction in capital of the common shares
(“Common
Shares”) of First Mining; and
6.
Transact such other
business that is properly brought before the Meeting or any
adjournment or adjournments thereof.
Registered
shareholders have a right of dissent in respect of the proposed
Distribution and to be paid the fair value of their Common Shares.
The dissent rights are described in the accompanying Circular and
are attached to the Circular as Appendix “G”. Failure
to strictly comply with the required procedures may result in the
loss of any right of dissent.
Record date
The
record date for the Meeting is May 3, 2021. The record date is the
date for the determination of the registered holders of our Common
Shares entitled to receive notice of, and to vote at, the Meeting
and any adjournment or postponement of the Meeting.
Your vote is important
This
notice is accompanied by the Circular and either a form of proxy
for registered shareholders or a voting instruction form for
beneficial (i.e. non-registered) shareholders. If previously
requested, a copy of our audited consolidated annual financial
statements and management’s discussion and analysis
(“MD&A”) for
the year ended December 31, 2020 will also accompany this notice
(collectively, the “Meeting
Materials”). Copies of our annual and/or interim
financial statements and MD&A are also available◦under◦our◦SEDAR◦profile◦at◦www.sedar.com,◦on◦our◦website◦at
www.firstmininggold.com/investors/reports-filings/financials,
or by request made to First Mining Gold Corp. As described in the
notice and access notification that we have mailed to our
shareholders, we are using the notice and access method for
delivering this notice and the Meeting Materials to our
shareholders, which substantially reduces the paper used in
printing this notice and the Meeting Materials, as well as printing
and mailing costs. This notice and the Meeting Materials will be
available on our website at www.firstmininggold.com/investors/AGM
and under our SEDAR profile at www.sedar.com.
The Circular contains important information about the Meeting, who
can vote and how to vote.
If you
will not be attending the Meeting virtually via the live webcast,
we request that you read, date and sign the accompanying proxy or
voting instruction form, and deliver it according to the
instructions set out therein. Your vote must be received by our
transfer agent, Computershare Investors Services Inc.
(“Computershare”) by 10:00 a.m.
(Pacific Time) on Monday, June 28, 2021 (or before 48 hours,
excluding Saturdays, Sundays and holidays, before any adjournment
of the Meeting at which the proxy is to be used).
Shareholders
who wish to appoint a third-party proxyholder to represent them
virtually at the Meeting must
submit their proxy or voting instruction form (if applicable) prior
to registering their third-party proxyholder with Computershare.
Registering your proxyholder is an additional step once you have
submitted your proxy or voting instruction form. Failure to
register your third-party proxyholder will result in the
proxyholder not receiving a 15-digit Control Number from
Computershare, and therefore not being able to vote during the
virtual Meeting.
To
register a proxyholder, shareholders MUST visit
http://www.computershare.com/FirstMiningGold
by 10:00 a.m. (Pacific Time) on Monday, June 28, 2021 and provide
Computershare with their proxyholder’s contact information,
so that Computershare may provide the proxyholder with a 15-digit
Control Number via e-mail.
Without a Control Number, your third-party proxyholder will not be
able to vote at the Meeting.
If you
would like us to send you a paper copy of the Meeting Materials,
please contact Janet Meiklejohn, our Vice President, Investor
Relations, at 1.844.306.8827 or by e-mail: info@firstmininggold.com.
In order for you to receive the Meeting Materials in advance of the
proxy deposit deadline date and the date of the Meeting, we must
receive requests for printed copies of the Meeting Materials at
least seven business days in advance of the proxy deposit deadline
date and time.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/
Daniel W. Wilton
Daniel W. Wilton
Chief
Executive Officer and Director
Vancouver,
British Columbia
May 18,
2021
|
Throughout this
document, the terms we, us, our,
the Company and First
Mining mean First Mining Gold Corp. and its subsidiaries, in
the context.
|
2021 Management
Information Circular
You
have received this management information circular (the
“Circular”)
because our records indicate you held common shares
(“Common
Shares”) of First Mining as of the close of business
on May 3, 2021 (the “Record
Date”) and we are sending this Circular to you in
connection with the 2021 annual general & special meeting of
our shareholders to be held on Wednesday, June 30, 2021 (the
“Meeting”).
Due to
the current COVID-19 pandemic, we will be holding the Meeting as a
completely virtual
meeting, which will be conducted via live webcast at
https://agm.issuerdirect.com/ff.
Shareholders will
NOT
be able to attend the Meeting in
person.
We encourage you to submit your vote by proxy prior to the Meeting
by the proxy deposit deadline, which is 10:00 a.m. (Pacific Time)
on Monday, June 28, 2021. On behalf of management of the
Company, we will be soliciting votes for this Meeting and any
meeting that is reconvened if it is postponed or adjourned. The
cost of solicitation will be borne by the Company.
This
Circular is dated May 18, 2021. Unless otherwise stated, all
information in this Circular is current as of May 18, 2021, and all
dollar figures are in Canadian dollars.
The
notice and access notification regarding the Meeting is being
mailed to you on May 21, 2021 with a proxy or voting instruction
form, in accordance with applicable laws.
The following briefly addresses some questions that you may have
regarding the Meeting, the proposed distribution of common shares
(the “Treasury Metals
Shares”) of Treasury Metals Inc. (“Treasury Metals”) and common share
purchase warrants of Treasury Metals (the “Treasury Metals Warrants” and,
together with the Treasury Metals Shares, the “Treasury Metals Securities”) to
shareholders, pursuant to a court-approved plan of arrangement and
certain other related matters described in this Circular. These
answers are only a summary and are qualified in their entirety by
the more detailed information that follows. In addition, they may
not address all of the questions that may be important to you as a
shareholder. Accordingly, we urge you to review the more detailed
information contained elsewhere in this Circular.
1.
Who
is entitled to vote at the Meeting?
Shareholders
as of the close of business on May 3, 2021, or their duly appointed
proxies will be entitled to attend the Meeting virtually or
register to vote on all matters to be voted on at the
Meeting.
2.
Who
is soliciting my proxy?
On
behalf of management of the Company, we will be soliciting votes
for this Meeting and any meeting that is reconvened if it is
postponed or adjourned. The cost of solicitation will be borne by
the Company.
The
Company has also engaged Kingsdale Advisors (“Kingsdale”) as strategic
shareholder advisor and proxy solicitation agent and will pay fees
of approximately C$45,000 to Kingsdale for the proxy solicitation
services in addition to certain out-of-pocket expenses.
Shareholders can contact Kingsdale either by toll-free telephone in
North America at 1-877-659-1822or collect call outside North
America at 416-867-2272, or by e-mail at contactus@kingsdaleadvisors.com.
The
Company may utilize the Broadridge QuickVote service to assist
non-objecting beneficial shareholders with voting their Common
Shares. Non-objecting beneficial shareholders may be contacted by
Kingsdale Advisors to conveniently obtain voting instructions
directly over the telephone. Broadridge then tabulates the results
of all instructions received and provides the appropriate
instructions respecting the voting of such Common Shares to be
represented at the Meeting.
3.
If
I am a registered shareholder, how do I vote my
shares?
If you
are a registered shareholder, you may vote on the internet, by
telephone, by fax or by mail. Computershare must receive your proxy
by 10:00 a.m. (Pacific Time) on Monday, June 28, 2021 or at least
48 hours (excluding Saturdays, Sundays and statutory holidays in
the province of British Columbia) prior to the time set for any
adjournment or postponement of the Meeting.
Voting
your proxy using the internet is the most efficient and convenient
way to vote your Common Shares. Go to www.investorvote.com and
follow the instructions on the screen. You will need to input your
15-digit control number, which appears on the first page of your
proxy form.
You may
vote your Common Shares using the telephone by dialling the
following toll-free number from a touch tone telephone:
1.866.732.8683. If you vote using the telephone, you will need your
15-digit control number, which appears on the first page of your
proxy form.
You may
also complete your proxy form, sign and date it, and send it to
Computershare by fax to 1.866.249.7775 (within North America) or
1.416.263.9524 (outside North America) or mail it to: Computershare
Investor Services Inc., Attention: Proxy Department, 100 University
Avenue, 8th Floor, Toronto, ON
M5J 2Y1.
See the
section in this Circular entitled “Voting – How to vote? – Registered
Shareholders”.
4.
How
will my Common Shares be voted if I return my proxy?
The
persons named in the form of proxy will vote your Common Shares in
accordance with your instructions. In the absence of such
instructions, however, your Common Shares will be voted FOR the
Distribution Resolution and the other matters being voted on at the
Meeting.
5.
If
my Common Shares are not registered in my name but are held in the
name of an Intermediary (a bank, trust company, securities broker,
trustee or otherwise), how do I vote my Common Shares?
Generally,
non-registered shareholders who have not waived the right to
receive the Notice of Meeting, this Circular, the audited
consolidated annual financial statements of First Mining for the
year ended December 31, 2020 and the accompanying
management’s discussion and analysis thereon (the
“Meeting Materials”) will either (i) be
given a voting instruction form which is not signed by the
Intermediary and which, when properly completed and signed by the
non-registered shareholder and returned to the Intermediary or its
service company, will constitute your voting instructions (often
called a “voting instruction
form” or a “VIF”) which the Intermediary must
follow, or (ii) be given a proxy form which has already been signed
by the Intermediary (typically by a facsimile, stamped signature),
which is restricted as to the number of Common Shares beneficially
owned by the non-registered shareholder but which is otherwise not
completed by the Intermediary.
If you
are a non-registered shareholder, you should carefully follow the
instructions of your Intermediary in order to submit the voting
instructions for your Common Shares, including those regarding when
and where the completed VIF or proxy form (as applicable) is to be
delivered.
Your
Intermediary may have also provided you with the option of voting
by telephone or through the internet. Your Intermediary must
receive your voting instructions in sufficient time for your
Intermediary to act on them. We strongly encourage all
non-registered shareholders to submit their voting instructions to
their Intermediary online at www.proxyvote.com with
plenty of time before the cut-off. Computershare must receive proxy
vote instructions from your Intermediary by no later than 10:00
a.m. (Pacific Time) on Monday, June 28, 2021, or at least 48 hours
(excluding Saturdays, Sundays and statutory holidays in the
Province of British Columbia) prior to the time set for any
adjournment or postponement of the Meeting.
See the
section in this Circular entitled “Voting – How to vote? –
Non-Registered Shareholders”.
6.
If
I change my mind, can I take back my proxy once I have given
it?
Yes. If
you are a registered shareholder, you can revoke your proxy by
sending a new completed proxy form with a later date, or a written
notice of revocation signed by you, or by your attorney if he or
she has your written authorization. You can also revoke your proxy
in any manner permitted by law.
If you
represent a registered shareholder who is a corporation or
association, your written notice of revocation must have the seal
of the corporation or association, and it must be executed by an
officer or an attorney who has their written authorization. The
written authorization must accompany the written notice of
revocation.
We must
receive the written notice of revocation any time up to and
including the last business day before the day of the Meeting, or
the day the Meeting is reconvened if it was postponed or
adjourned.
If
you’ve sent in your completed proxy form and subsequently
decide to attend the virtual Meeting and vote your Common Shares
online during the Meeting using your 15-digit Control Number, you
will revoke any and all previously submitted proxies. In such a
case, you will be provided the opportunity to vote by ballot on the
matters put forth virtually at the Meeting. If you DO NOT wish to
revoke all previously submitted proxies, please do not vote again
during the virtual Meeting, and instead just join the live webcast
by registering and not clicking on the “Vote My Shares”
button.
If you
are a non-registered shareholder, you can revoke your prior voting
instructions by providing new instructions on a VIF or proxy form
with a later date, or at a later time in the case of voting by
telephone or through the internet, provided that your new
instructions are received by your Intermediary in sufficient time
for your Intermediary to act on them before 10:00 a.m. (Pacific
Time) on Monday, June 28, 2021, or at least 48 hours (excluding
Saturdays, Sundays and statutory holidays in the Province of
British Columbia) prior to the time set for any adjournment or
postponement of the Meeting.
7.
What
am I being asked to vote on at the Meeting?
In
addition to the typical matters to be approved at an annual
meeting, shareholders
will be voting on the approval of the Distribution Resolution which
provides for the distribution of 23,333,333 Treasury Metals Shares
and 35,000,000 Treasury Metals Warrants (such number of Treasury
Metals Warrants subject to adjustment in connection with a proposed
amendment to the Warrant Indenture dated August 7, 2020 between
Treasury Metals and TSX Trust Company (the “Warrant Indenture”), as described
under the heading “Particulars of the Matters to be Acted Upon
– 5. Distribution of Treasury Metals Securities Pursuant to
the Plan of Arrangement – Details of the
Distribution”) to the shareholders, by way of a
reduction in capital of the Common Shares. See the section in this
Circular entitled “Particulars of the Matters to be Acted
Upon”.
8.
Why
is the Distribution being proposed?
First
Mining agreed to complete the Distribution as part of the terms of
the transaction (the “Treasury Metals Transaction”)
completed on August 7, 2020 whereby Treasury Metals acquired the
Goldlund Gold Project from First Mining for consideration that
included the Treasury Metals Shares and Treasury Metals
Warrants.
Our
Board is recommending that shareholders vote FOR the Distribution
Resolution, as it believes the Distribution provides a number of
benefits to shareholders, including, among others:
●
allowing
shareholders to directly benefit from the value-enhancing Treasury
Metals Transaction, by returning value to the shareholders through
a substantial distribution of equity consideration;
and
●
providing
shareholders with the opportunity to participate in the future
success of the Goldlund Gold Project by becoming direct
shareholders of Treasury Metals.
See the
section in this Circular entitled “Particulars of the Matters to be Acted Upon
– 5. Distribution of Treasury Metals Securities pursuant to
the Plan of Arrangement – Reasons for the
Distribution”.
9.
What
approvals are required for the Distribution to become
effective?
For the
Distribution to proceed, the Distribution Resolution must be
approved by at least 66⅔% of the votes cast by shareholders
present in person or represented by proxy at the Meeting, which
shareholders are entitled to one vote for each First Mining Share
held. The Distribution is not subject to the minority approval
requirements of MI 61-101.
In
addition to the necessary shareholder approval, the principal
approval required will be that of the Supreme Court of British
Columbia (the “Court”), which, under the
Business Corporations Act
(British Columbia) (“BCBCA”), must approve the Plan of
Arrangement. It is expected that, assuming the requisite
shareholder approval is received at the Meeting, the hearing of the
Court on the Plan of Arrangement will be held, by teleconference or
by any other manner as the Court may require, on or about July 5,
2021 at 9:45 a.m. (Pacific Time), or as soon thereafter as counsel
may be heard, at 800 Smithe Street, Vancouver, British Columbia, or
at any other date, time and location as the Court may direct. The
Notice of Hearing Petition for the Final Order (the
“Notice of Hearing of
Petition”) in connection with the Final Order is
included as Appendix “F”.
10.
What
are the tax consequences to me if the Distribution is
effected?
For a
more detailed description of the Canadian federal income tax
consequences to shareholders as a result of the Distribution, see
the section in this Circular entitled “Certain Canadian Federal Income Tax
Considerations”. Shareholders should consult their own tax
advisors with respect to their particular
circumstances.
For a
description of the U.S. federal income tax consequences to
shareholders as a result of the Distribution, see the section in
this Circular entitled “Certain United States Federal Income Tax
Considerations”. Shareholders should consult their own tax
advisors with respect to their particular
circumstances.
11.
When
is the Distribution likely to occur?
It is
presently anticipated that, if all required approvals are obtained,
the Distribution Record Date (as defined in the Plan of
Arrangement) will occur on or about July 14, 2021 and the Effective
Date (as defined in the Plan of Arrangement) will occur on or about
July 15, 2021. The Distribution will take place on the Effective
Date.
The
Board will determine the Distribution Record Date and the Effective
Date, and notice of such dates will be made through one or more
news releases issued by First Mining.
12.
If
the Distribution is effected, what will Shareholders
receive?
Shareholders
of record as of the Distribution Record Date will receive, for each
one Common Share held, (i) that portion of a Treasury Metals Share
determined by dividing the 23,333,333 Treasury Metals Shares by the
number of Common Shares issued and outstanding on the Distribution
Record Date; and (ii) that portion of a Treasury Metals Warrant
determined by dividing the 35,000,000 Treasury Metals Warrants
(such number of Treasury Metals Warrants subject to adjustment in
connection with a proposed amendment to the Warrant Indenture, as
described under the heading in this Circular entitled
“Particulars of the Matters
to be Acted Upon – 5. Distribution of Treasury Metals
Securities Pursuant to the Plan of Arrangement – Details of
the Distribution”) by the number of Common Shares
issued and outstanding on the Distribution Record
Date.
First Mining previously announced that 70,000,000 Treasury Metals
Shares would be distributed to shareholders; however, such number
has been adjusted to 23,333,333 Treasury Metals Shares as a result
of a three for one consolidation (the “Consolidation”) of
the Treasury Metals Shares that became effective on August 11,
2020. In addition, as a result of the Consolidation, (i) the number
of Treasury Metals Warrant Shares issuable upon exercise of each
Treasury Metals Warrant was adjusted from one Treasury Metals
Warrant Share to 0.33 of a Treasury Metals Warrant Share, and (ii)
the exercise price of the Treasury Metals Warrants was adjusted
from $0.50 per Treasury Metals Warrant Share to $1.50 per Treasury
Metals Warrant Share, all in accordance with the terms of
the Warrant Indenture.
13.
If
the Distribution is effected, what do Shareholders need to do in
order to receive the Treasury Metals Securities to which they are
entitled?
If you
are a registered shareholder, a Direct Registration System Advice
Statement (“DRS
Advice”) or certificates representing the number of
Treasury Metals Shares and Treasury Metals Warrants (each rounded
down to the nearest whole number) that you are entitled to receive
pursuant to the Plan of Arrangement will be delivered to you
following the Effective Date. If you wish to have your Treasury
Metals Securities deposited into a brokerage account, please
contract your broker for instructions and assistance in this
regard.
Non-registered
shareholders should contact their broker or other intermediary for
instructions and assistance in receiving their Treasury Metals
Securities.
14.
When
must I be a shareholder in order to receive Treasury Metals
Securities?
You
must be a shareholder of record as of the Distribution Record
Date.
Any
shareholder who duly exercises Dissent Rights (as defined herein)
and, following the dissent process under the BCBCA, is ultimately
entitled to be paid the fair value for his, her or its Common
Shares, will instead be entitled to the fair value of such shares
and will not receive Treasury Metals Securities. See the section in
this Circular entitled “Dissent Rights”.
15.
Will
the Treasury Metals Warrants be listed on any stock
exchange?
Pursuant
to the investor rights agreement (the “Investor Rights
Agreement”) dated August 7, 2020 between First
Mining and Treasury Metals, Treasury Metals is required to use
commercially reasonably efforts to list the Treasury Metals
Warrants for trading on the TSX and the OTCQX in the United States.
As of the date of this Circular, neither the TSX nor the OTCQX have
approved the listing of the Treasury Metals Warrants and there is
no assurance that the TSX and/or the OTCQX will approve the listing
of the Treasury Metals Warrants on their respective
exchanges.
16.
What
should I do with the IRS Form W-9 that was sent to me with the
materials for the Meeting?
If you
are a U.S person (as defined below) or acting on behalf of a U.S.
person, in order to assist the Company in satisfying its
obligations with respect to backup withholding of U.S. Federal
income tax, the Company requests that you please complete an IRS
Form W-9 (enclosed with this Circular) and return it to the Company
by e-mail (info@firstmininggold.com)
or by mailing the completed Form W-9 to:
First
Mining Gold Corp.
Attention: Office
Administrator
Suite
2070 – 1188 West Georgia Street
Vancouver, British
Columbia V6E 4A2
A
“U.S. person”
means: a beneficial owner of Common Shares that, for United States
federal income tax purposes, is (a) a citizen or resident of the
United States, (b) a corporation, or other entity classified as a
corporation for United States federal income tax purposes, that is
created or organized in or under the laws of the United States or
any state in the United States, including the District of Columbia,
(c) an estate if the income of such estate is subject to United
States federal income tax regardless of the source of such income,
(d) a trust if (i) such trust has validly elected to be treated as
a U.S. person for United States federal income tax purposes or (ii)
a United States court is able to exercise primary supervision over
the administration of such trust and one or more U.S. persons have
the authority to control all substantial decisions of such trust,
or (e) a partnership, limited liability company or other entity
classified as a partnership for United States tax purposes that is
created or organized in or under the laws of the United States or
any state in the United States, including the District of
Columbia.
If you
are not a U.S.
person, you can ignore that IRS Form W-9 that was sent to
you.
17.
Who
should I contact if I have questions regarding the Distribution or
voting?
Answers
to many of your questions may be found in the accompanying
Circular. If after reviewing the Circular you have questions about
voting your proxy or about the Distribution, please contact our
strategic shareholder advisor and proxy solicitation agent,
Kingsdale Advisors, either by toll-free telephone in North America
at 1-877-659-1822 or collect call outside North America at
416-867-2272, or by e-mail at contactus@kingsdaleadvisors.com.
18.
How
can I get more information about Treasury Metals?
Additional
information about Treasury Metals can be found on its SEDAR profile
at www.sedar.com.
Glossary
In this
Circular, unless there is something in the subject matter
inconsistent therewith, the following terms will have the
respective meanings set out below, words imparting the singular
number will include the plural and vice versa and words importing
any gender will include all genders.
“1933
Act” means the U.S. Securities Act of 1933, as
amended, and all rules and regulations thereunder.
“ACB”
has the meaning given to it under the heading “Material Income Tax Considerations –
Certain Canadian Federal Income Tax Considerations – Holders
Resident in Canada – Distribution of Treasury Metals Shares
and Treasury Metals Warrants by Reduction of
Capital”.
“allowable
capital loss” has the meaning given to it under the
heading “Material Income Tax
Considerations – Certain Canadian Federal Income Tax
Considerations – Holders Resident in Canada – Taxation
of Capital Gains and Capital Losses”.
“Articles”
means the articles of incorporation of First Mining.
“Audit
Committee” means the Company’s audit
committee.
“BCBCA”
means the Business Corporations
Act (British Columbia), as amended.
“Board”
or “Board of
Directors” means the board of directors of the
Company, as constituted from time to time.
“Business
Day” means a day which is not a Saturday, Sunday or
statutory holiday in Vancouver, British Columbia,
Canada.
“CEO”
means chief executive officer.
“CFO”
means chief financial officer.
“Change
of Control” has the meaning given to it under the
heading “Executive
Compensation – Incentive Plan Awards – Termination and
Change of Control Benefits”.
“Circular”
means this management information circular dated May 18, 2021,
together with all schedules, appendices and exhibits hereto, as
amended, supplemented or otherwise modified from time to
time.
“Code”
means the Company’s Code of Business Conduct and
Ethics.
“Common
Shares” means the common shares in the capital of
First Mining.
“Company”
or “First
Mining” means First Mining Gold Corp., a corporation
existing under the BCBCA.
“Compensation
Committee” means the Company’s compensation
committee.
“Compensation
Committee Chairperson” means the chairperson of the
Compensation Committee.
“Computershare”
means Computershare Trust Company of Canada, at its offices in
Vancouver, British Columbia, in its capacity as registrar and
transfer agent of the Common Shares.
“Consolidation”
means the three for one consolidation of the Treasury Metals Shares
that became effective on August 11, 2020.
“COO”
means chief operating officer.
“Corporate
Governance & Nominating Committee” means the
Company’s corporate governance & nominating
committee.
“Corporate
Governance & Nominating Committee Chairperson”
means the chairperson of the Corporate Governance & Nominating
Committee.
“Court”
means the Supreme Court of British Columbia.
“CPC”
means Capital Pool Company, as defined in Policy 2.4 of the TSX-V
Corporate Finance Manual.
“CRA”
means the Canada Revenue Agency.
“Director
Compensation Plan” has the meaning given to it under
the heading “Statement of
Executive Compensation – Director
compensation”.
“Dissenting
Resident Holder” means a Resident Holder who validly
exercises Dissent Rights.
“Dissenting
Shares” means the Common Shares held by Dissenting
Shareholders in respect of which such Dissenting Shareholders have
given Notice of Dissent.
“Dissenting
Shareholder” mean a registered holder of Common Shares
who duly and validly exercises their Dissent Rights in respect of
the Distribution in strict compliance with the Dissent Procedures
and who has not withdrawn or been deemed to have withdrawn such
exercise of Dissent Rights.
“Dissenting
U.S. Holder” has the meaning given to it under the
heading “Material Income Tax
Considerations – Certain United States Federal Income Tax
Considerations – Dissenting U.S.
Holders”.
“Dissent
Procedures” has the meaning given to it under the
heading “Dissent
Rights”.
“Dissent
Rights” means the right of registered holders of
Common Shares to exercise a right of dissent under the BCBCA in
strict compliance with the Dissent Procedures.
“Distribution”
means the distribution of the Treasury Securities on the terms and
conditions set out in the Plan of Arrangement.
“Distribution
Record Date” means the close of business on the
Business Day immediately preceding the Effective Date for the
purpose of determining the shareholders entitled to receive
Treasury Metals Shares and Treasury Metals Warrants pursuant to the
Plan of Arrangement or such other date as the Board of Directors
may select.
“Distribution
Resolution” means the special resolutions of the
shareholders to approve the Distribution, as required by the
Interim Order and the BCBCA and which shall be in, or substantially
in, the form set out at Appendix “C”.
“Diversity
Policy” has the meaning given to it under the heading
“Corporate Governance
– Director term limits and Board renewal –
Diversity”.
“DRS”
means Direct Registration System.
“DRS
Advice” means Direct Registration System Advice
Statement.
“DSUs”
means deferred share units.
“Effective
Date” shall be the effective date of the Plan of
Arrangement.
“Effective
Time” means 12:01 a.m. (Pacific Time) on the Effective
Date or such other time on the Effective Date as determined by
First Mining.
“Electing
First Mining Shareholder” has the meaning given to it
under the heading “Material
Income Tax Considerations – Certain United States Federal
Income Tax Considerations – Potential Application of the PFIC
Rules to the Distribution”.
“Engquist
Agreement” means the employment agreement dated April
23, 2019 between Kenneth Engquist and First Mining.
“Excess”
has the meaning given to it under the heading “Material Income Tax Considerations –
Certain Canadian Federal Income Tax Considerations – Holders
Resident in Canada – Distribution of Treasury Metals Shares
and Treasury Metals Warrants by Reduction of
Capital”.
“First
Mining Options” means options to purchase the Common
Shares.
“First
Mining Warrants” means share purchase warrants of
First Mining exercisable to acquire the Common Shares.
“Final
Order” means the final order of the Court pursuant to
section 291 of the BCBCA, in a form acceptable to First Mining,
approving the Plan of Arrangement, as such order may be amended by
the Court (with the consent of First Mining) or, if appealed, then
unless such appeal is withdrawn or denied, as affirmed or as
amended on appeal (provided that any such amendment is acceptable
to First Mining).
“Guidelines”
has the meaning given to it under the heading “Corporate
Governance”.
“Holder”
has the meaning given to it under the heading “Material Income Tax Considerations –
Certain Canadian Federal Income Tax
Considerations”.
“IFRS”
means international financial reporting standards as adopted by the
International Accounting Standards Board from time to
time.
“Investor
Rights Agreement” means the investor rights agreement
dated August 7, 2020 between First Mining and Treasury Metals
entered into in connection with the Treasury Metals
Transaction.
“Interim
Order” means the interim order of the Court providing
advice and directions in connection with the Meeting and the Plan
of Arrangement, a copy of which is attached as Appendix
“E”.
“Intermediary”
means an intermediary with which a non-registered shareholder may
deal, including banks, trust companies, securities dealers or
brokers and trustees or administrators of self-directed trusts
governed by registered retirement savings plans, registered
retirement income funds, registered education savings plans (each,
as defined in the Tax
Act) and similar plans, and their nominees.
“IRS”
means the Internal Revenue Service.
“Kingsdale”
means Kingsdale Advisors.
“Lane
Caputo” means Lane Caputo Compensation
Inc.
“Lane
Caputo Report” means the report of Lane Caputo with
respect to executive and Board compensation at the
Company.
“Lines
Agreement” means the employment agreement dated
November 9, 2020 between Stephen Lines and First
Mining.
“MD&A”
means management’s discussion and analysis.
“Mark-to-Market
Election” has the meaning given to it under the
heading “Material Income Tax
Considerations – Certain United States Federal Income Tax
Considerations – Potential Application of the PFIC Rules to
the Distribution”.
“Marshall
Agreement” means the employment agreement dated May
29, 2015 between Andrew Marshall and First Mining.
“Meeting”
means the annual general and special meeting of shareholders to be
held June 30, 2021, and any adjournment(s) or postponement(s)
thereof, held in order to (i) receive the First Mining’s
audited consolidated annual financial statements for the financial
year ended December 31, 2020 and the auditor’s report
thereon, (ii) fix the number of directors to be elected at the
Meeting at five, (iii) elect five directors to the Board to hold
office for the ensuing year, (iv) re-appoint PWC as First
Mining’s independent auditor for the ensuing year and
authorize First Mining’s directors to set the auditor’s
pay, and (v) consider, and if thought fit, approve the Plan of
Arrangement.
“Meeting
Materials” means the Notice of Meeting, this Circular,
the audited consolidated annual financial statements of First
Mining for the year ended December 31, 2020 and the accompanying
MD&A.
“MI
61-101” means Multilateral Instrument 61-101
Protection of Minority
Shareholders in Special Transactions.
“NEOs”
means named executive officers.
“New
Engquist Agreement” means the amended and restated
employment agreement dated January 1, 2021 between Kenneth Engquist
and First Mining.
“New
Marshall Agreement” means the amended and restated
employment agreement dated January 1, 2021 between Andrew Marshall
and First Mining.
“New
Patel Agreement” means the amended and restated
employment agreement dated January 1, 2021 between Samir Patel and
First Mining.
“New
Wilton Agreement” means the amended and restated
employment agreement dated January 1, 2021 between Daniel W. Wilton
and First Mining.
“NI
45-102” means National Instrument 45-102 Resale of Securities of the Canadian
Securities Administrators.
“NI
52-110” means National Instrument 52-110 Audit Committees of the Canadian
Securities Administrators.
“Non-Electing
First Mining Shareholder” has the meaning given to it
under the heading “Material
Income Tax Considerations – Certain United States Federal
Income Tax Considerations – Potential Application of the PFIC
Rules to the Distribution”.
“Non-Electing
U.S. Holder” has the meaning given to it under the
heading “Material Income Tax
Considerations – Certain United States Federal Income Tax
Considerations – U.S. Federal Income Tax Consequences Related
to the Ownership and Disposition of Treasury Metals Securities
– Passive Foreign Investment Company Rules – Default
PFIC Rules Under Section 1291 of the Tax
Code”.
“Non-Resident
Holder” has the meaning given to it under the heading
“Material Income Tax
Considerations – Certain Canadian Federal Income Tax
Considerations – Holders Not Resident in
Canada”.
“non-U.S.
Holder” has the meaning given to it under the heading
“Material Income Tax
Considerations – Certain United States Federal Income Tax
Considerations”.
“Notice
and Access” has the meaning given to it under the
heading “Notice & Access
Process”.
“Notice
of Dissent” has the meaning given to it under the
heading “Dissent
Rights”.
“Notice
of Hearing of Petition” means the Notice of Hearing
Petition for the Final Order, a copy of which is attached as
Appendix “F”.
“Notice
of Meeting” means the notice of annual general and
special meeting in respect of the Meeting.
“Notice
Shares” has the meaning given to it under the heading
“Dissent
Rights”.
“order”
has the meaning given to it under the heading “Particulars of the Matters to be Acted Upon
– 3. Election of Directors for the ensuing year–
Corporate Cease Trade Orders or Bankruptcies, Penalties or
Sanctions”.
“Patel
Agreement” means the employment agreement dated June
2, 2016 between Samir Patel and First Mining.
“Peer
Group” means the group of 19 comparator companies
established in the Lane Caputo Report.
“PFIC”
has the meaning given to it under the heading “Material Income Tax Considerations –
Certain United States Federal Income Tax Considerations –
Receipt of Treasury Metals Securities Pursuant to the
Distribution”.
“PFIC
Asset Test” has the meaning given to it under the
heading “Material Income Tax
Considerations – Certain United States Federal Income Tax
Considerations – U.S. Federal Income Tax Consequences Related
to the Ownership and Disposition of Treasury Metals Securities
– Passive Foreign Investment Company
Rules”.
“PFIC
Income Test” has the meaning given to it under the
heading “Material Income Tax
Considerations – Certain United States Federal Income Tax
Considerations – U.S. Federal Income Tax Consequences Related
to the Ownership and Disposition of Treasury Metals Securities
– Passive Foreign Investment Company
Rules”.
“Plan
of Arrangement” means the plan of arrangement, set
forth in Appendix “D” hereto, and any amendments or
variations thereto made in accordance with the Plan of Arrangement
or upon the direction of the Court in the Final Order.
“Proposed
Amendments” has the meaning given to it under the
heading “Material Income Tax
Considerations – Certain Canadian Federal Income Tax
Considerations”.
“PUC”
has the meaning given to it under the heading “Material Income Tax Considerations –
Certain Canadian Federal Income Tax Considerations – Holders
Resident in Canada – Distribution of Treasury Metals Shares
and Treasury Metals Warrants by Reduction of
Capital”.
“PwC”
means PricewaterhouseCoopers LLP.
“QEF”
has the meaning given to it under the heading “Material Income Tax Considerations –
Certain United States Federal Income Tax Considerations –
Potential Application of the PFIC Rules to the
Distribution”.
“QEF
Election” has the meaning given to it under the
heading “Material Income Tax
Considerations – Certain United States Federal Income Tax
Considerations – Potential Application of the PFIC Rules to
the Distribution”.
“QFC”
means a “qualified foreign corporation”.
“Record
Date” means the record date for notice of and voting
at the Meeting, being fixed as May 3, 2021.
“Registrar”
means the Registrar of Companies appointed pursuant to Section 400
of the BCBCA.
“Regulation
S” means Regulation S promulgated under the 1933
Act.
“Regulations”
has the meaning given to it under the heading “Material Income Tax Considerations –
Certain Canadian Federal Income Tax
Considerations”.
“Resident
Holder” has the meaning given to it under the heading
“Material Income Tax
Considerations – Certain Canadian Federal Income Tax
Considerations – Holders Resident in
Canada”.
“RSUs”
means restricted share units.
“SEDAR”
means the System for Electronic Document Analysis and Retrieval of
the Canadian Securities Administrators, accessible at www.sedar.com.
“Springpole”
or “Springpole
Project” means the Company’s Springpole Gold
Project in northwestern Ontario.
“Subsidiary
PFIC” has the meaning given to it under the heading
“Material Income Tax
Considerations – Certain United States Federal Income Tax
Considerations – U.S. Federal Income Tax Consequences Related
to the Ownership and Disposition of Treasury Metals Securities
– Passive Foreign Investment Company
Rules”.
“Sundance
Acquisition” has the meaning given to it under the
heading “Statement of
Executive Compensation – Compensation discussion and
analysis”.
“taxable
capital gain” has the meaning given to it under the
heading “Material Income Tax
Considerations – Certain Canadian Federal Income Tax
Considerations – Holders Resident in Canada – Taxation
of Capital Gains and Capital Losses”.
“Tax
Act” means the Income
Tax Act (Canada), as amended.
“Tax
Code” means the U.S. Internal Revenue Code of 1986, as
amended.
“third-party
proxyholder” has the meaning given to it under the
heading “Voting –
Voting by Proxy”.
“Treasury
Metals” means Treasury Metals Inc., a company existing
under the laws of Ontario.
“Treasury
Metals Purchase Agreement” means the share purchase
agreement between First Mining and Treasury Metals dated June 3,
2020 pursuant to which the Treasury Metals Transaction was
completed.
“Treasury
Metals Securities” means, together, the Treasury
Metals Shares and Treasury Metals Warrants.
“Treasury
Metals Shares” means 23,333,333 common shares in the
capital of Treasury Metals, which are held by First
Mining.
“Treasury
Metals Transaction” means the transaction completed on
August 7, 2020 whereby Treasury Metals acquired the Goldlund Gold
Project from First Mining for consideration that included the
Treasury Metals Shares and Treasury Metals Warrants.
“Treasury
Metals Warrant Shares” means the common shares in the
capital of Treasury Metals issuable upon exercise of the Treasury
Metals Warrants.
“Treasury
Metals Warrants” means 35,000,000 common share
purchase warrants (such
number of common share purchase warrants subject to adjustment in
connection with a proposed amendment to the Warrant Indenture, as
described under the heading “Particulars of the Matters to be Acted Upon
– 5. Distribution of Treasury Metals Securities Pursuant to
the Plan of Arrangement – Details of the
Distribution”), each exercisable to acquire 0.33 of a
Treasury Metals Warrant Share at an exercise price of $1.50 per
Treasury Metals Warrant Share until August 7, 2023, which are held
by First Mining. The Treasury Metals Warrant Indenture contemplates
that the Treasury Metals Warrants shall be exercisable solely by
means of a “cashless exercise” whereby the holder of
the Treasury Metals Warrants will be entitled to receive a number
of whole Treasury Metals Warrant Shares (rounded down to the
nearest whole number) that will be determined by (a) subtracting
the exercise price from the current market price of Treasury
Metals’ common shares, (b) multiplying such difference by the
number of Treasury Metals Warrant Shares that otherwise would be
issuable upon exercise of the Treasury Metals Warrants if such
exercise were by means of a cash exercise rather than a cashless
exercise, and (c) dividing the resulting product by the current
market price of Treasury Metals’ common shares. For these
purposes the current market price of Treasury Metals’ common
shares will be the volume weighted average price at which the
shares will have traded on the TSX during the five (5) consecutive
trading days ending on the trading day immediately prior to the
date on which the Treasury Metals Warrants are
exercised.
“Treasury
Metals Warrant Indenture” means the Common Share
Purchase Warrant Indenture dated August 7, 2020, between Treasury
Metals and TSX Trust Company, as warrant agent, pursuant to which
the Treasury Metals Warrants have been created and
issued.
“Treasury
Regulations” has the meaning given to it under the
heading “Material Income Tax
Considerations – Certain United States Federal Income Tax
Considerations”.
“Treaty”
means the Canada-US Tax Convention
(1980), as amended.
“TSX”
means the Toronto Stock Exchange.
“TSX-V”
means the TSX Venture Exchange.
“United
States” or “U.S.” means, as the context
requires, the United States of America, its territories and
possessions, any state of the United States, and the District of
Columbia.
“U.S.
Holder” has the meaning given to it under the heading
“Material Income Tax
Considerations – Certain United States Federal Income Tax
Considerations”.
“U.S.
person” means a beneficial owner of Common Shares
that, for United States federal income tax purposes, is (a) a
citizen or resident of the United States, (b) a corporation, or
other entity classified as a corporation for United States federal
income tax purposes, that is created or organized in or under the
laws of the United States or any state in the United States,
including the District of Columbia, (c) an estate if the income of
such estate is subject to United States federal income tax
regardless of the source of such income, (d) a trust if (i) such
trust has validly elected to be treated as a U.S. person for United
States federal income tax purposes or (ii) a United States court is
able to exercise primary supervision over the administration of
such trust and one or more U.S. persons have the authority to
control all substantial decisions of such trust, or (e) a
partnership, limited liability company or other entity classified
as a partnership for United States tax purposes that is created or
organized in or under the laws of the United States or any state in
the United States, including the District of Columbia.
“VIF”
or “voting instruction
form” means a voting instruction form which is not
signed by the Intermediary and which, when properly completed and
signed by a non-registered shareholder and returned to the
Intermediary or its service company, will constitute such
non-registered shareholder’s voting
instructions.
“Wilton
Agreement” means the employment agreement dated
December 20, 2018 between Daniel W. Wilton and First
Mining.
We are
using the notice and access model (“Notice and Access”) provided under
National Instrument 54–101 Communication with Beneficial Owners of
Securities of a Reporting Issuer for the delivery to our
shareholders of the Meeting Materials. We have adopted the Notice
and Access delivery model in order to further our commitment to
environmental sustainability and to reduce our printing and mailing
costs.
Under
Notice and Access, instead of receiving printed copies of the
Meeting Materials, shareholders receive a Notice and Access
notification containing details regarding the date, location and
purpose of the Meeting, as well as information on how they can
access the Meeting Materials electronically. Shareholders with
existing instructions on their account to receive printed materials
will receive a printed copy of the Meeting Materials.
How to request printed Meeting Materials
Shareholders
can request that printed copies of the Meeting Materials be sent to
them by postal delivery at no cost to them up to one year from the
date of the filing of this Circular on SEDAR.
Registered shareholders may make their request by contacting
Janet Meiklejohn, our Vice President, Investor Relations, at
1.844.306.8827 or by e-mail: info@firstmininggold.com.
Non-registered shareholders may make their request online at
www.proxyvote.com
or by telephone at 1.877.907.7643 (North America) or Direct:
1.303.562.9305 (English) or 1.303.562.9306 (French) (outside of North America) by entering the
16-digit control number located on their voting instruction form
and following the instructions provided.
To
receive the Meeting Materials in advance of the proxy deposit
deadline date and the date of the Meeting, First Mining must
receive requests for printed copies of the Meeting Materials at
least seven business days in advance of the proxy deposit deadline
date and time.
|
Our
transfer agent and registrar is Computershare Investor Services
Inc. (“Computershare”).
They
will act as scrutineer of the Meeting and will be responsible for
counting the votes on our behalf.
|
Items of business
1.
Receive our audited consolidated annual financial statements for
the financial year ended December 31, 2020 and the auditor’s
report thereon (see page 31).
Our
audited consolidated annual financial statements for the financial
year ended December 31, 2020, and the auditor’s report
thereon are available on our website at www.firstmininggold.com/investors/reports-filings/financials
and under our SEDAR profile at www.sedar.com.
2.
Fix the number of directors to be elected at the Meeting at five
(see page 31).
Our
board of directors (the “Board”) currently consists of five
directors and we propose to fix the number of directors at five for
the ensuing year.
3.
Elect five directors to our Board to hold office for the ensuing
year (see page 32).
We have
nominated the following individuals as directors for the ensuing
year:
Each of
the above five director nominees is well qualified to serve on our
Board and has expressed his or her willingness to do so. Our
directors are elected for a one-year term, which expires at the end
of our 2022 annual general meeting, unless the person ceases to be
a director before then.
4.
Re-appoint PricewaterhouseCoopers LLP, Chartered Professional
Accountants, as our independent auditor for the ensuing year and
authorize our directors to set the auditor’s pay (see page
37).
We have
recommended that PricewaterhouseCoopers LLP (“PwC”) be re-appointed as our
independent auditor and serve until the end of our 2022 annual
general meeting.
5.
Approve the distribution of the Treasury Metals Securities to
shareholders pursuant to the Plan of Arrangement (see page
37).
The
purpose of the Plan of Arrangement is to distribute the Treasury
Metals Securities to shareholders of First Mining. The Board
recommends that shareholders vote FOR the Distribution Resolution
to be passed at the Meeting.
6.
Transact such other business that is properly brought before the
Meeting (see page 67).
We’ll
also consider other matters that properly come before the Meeting.
As of the date of this Circular, we are not aware of any other
items of business to be considered at the Meeting, other than as
set forth above.
Quorum and approval
We need
a quorum of shareholders to transact business at the Meeting. Under
our articles, a quorum is two or more persons who are, or represent
by proxy, shareholders holding, in the aggregate, at least 5% of
the Common Shares entitled to be voted at the Meeting.
To be
effective, the Plan of Arrangement must be approved by a special
resolution passed by at least 66⅔% of the votes cast by
shareholders present in person or represented by proxy at the
Meeting, which shareholders are entitled to one vote for each
Common Share held.
We
require a simple majority (50% plus 1) of the votes cast at the
Meeting to approve all other items of business, unless otherwise
stated.
Record date
We have
fixed May 3, 2021 as the Record Date for determining the registered
shareholders who will be entitled to notice of the Meeting, and any
adjournment or postponement of the Meeting, and who will be
entitled to vote at the Meeting.
Shares and outstanding principal holders
Our
authorized capital consists of an unlimited number of Common Shares
without par value, each carrying the right to one vote, and an
unlimited number of Preferred Shares issuable in series. There are
no Preferred Shares outstanding. On a vote by show of hands, every
person present at the Meeting who is a shareholder or proxyholder
and entitled to vote on the matter has one vote and, on a poll,
every shareholder entitled to vote on the matter has one vote in
respect of each Common Share entitled to be voted on the matter and
held by that shareholder and may exercise that vote either in
person or by proxy.
We had
a total of 697,717,158 Common Shares outstanding at the close of
business on the Record Date.
To the
knowledge of our directors and executive officers, no persons or
companies beneficially own, or control or direct, directly or
indirectly, Common Shares carrying 10% or more of the voting rights
attached to all outstanding Common Shares as of the Record
Date.
Our
Common Shares are listed on:
●
the TSX under the
symbol “FF”;
●
the US OTCQX market
under the symbol “FFMGF”; and
●
the Frankfurt Stock
Exchange under the symbol “FMG”.
Interest of certain persons in matters to be acted
upon
Other
than as described elsewhere in this Circular, none of the following
individuals has any material interest, direct or indirect, by way
of beneficial ownership of securities or otherwise, in any matter
to be acted upon at the Meeting other than the election of
directors:
●
each person who has
been a director or executive officer of the Company at any time
since January 1, 2020;
●
the nominees for
director; or
●
any associate or
affiliate of any of the above.
Interest of informed persons in material transactions
We are
not aware of any informed person (as defined in National Instrument
51-102 Continuous Disclosure
Obligations) of the Company, or any proposed director, or
any associate or affiliate of the foregoing, who has a direct or
indirect material interest in any transaction we entered into since
January 1, 2020 or any proposed transaction, which has materially
affected or would materially affect the Company or its
subsidiaries.
Who can vote?
You are
entitled to receive notice of and vote at the Meeting if you held
Common Shares as of the close of business on May 3, 2021, the
Record Date for the Meeting.
How to vote?
You can
vote by proxy or you can attend the Meeting virtually and vote your
Common Shares online during the Meeting (if you are a registered
shareholder or a duly appointed and registered third party
proxyholder, or you are a non-registered shareholder and have
appointed yourself as a proxyholder). Voting by proxy is the
easiest way to vote because you’re appointing someone else
(called your proxyholder) to attend the Meeting virtually and vote
your Common Shares for you.
There
are different ways to submit your voting instructions, depending on
whether you are a registered or non-registered shareholder. If you
have any questions and/or need assistance in voting your Common
Shares, please contact our strategic shareholder advisor and proxy
solicitation agent, Kingsdale Advisors, either by toll-free
telephone in North America at 1-877-659-1822 or collect call
outside North America at 416-867-2272, or by e-mail at contactus@kingsdaleadvisors.com.
Registered Shareholders
You are a registered
shareholder if you hold Common
Shares registered in your name and evidenced by either a share
certificate or direct registration statement.
Voting by proxy
Keith Neumeyer, Chairman of the Board, or failing him, Daniel W.
Wilton, Chief Executive Officer, have agreed to act as the First
Mining proxyholders.
You can appoint someone (a “third-party
proxyholder”) other than
First Mining’s proxyholders to represent you virtually at the
Meeting and vote on your behalf. If you want to appoint someone
else, print the name of the person you want as your third-party
proxyholder in the space provided on the enclosed proxy form (this
person need not be a shareholder) and submit your proxy prior to
registering your third-party proxyholder. Registering your third-party proxyholder is an
additional step once you have submitted your proxy. Failure to
register your third-party proxyholder will result in the
third-party proxyholder not receiving a Control Number from
Computershare, and therefore not being able to vote during the
virtual Meeting. Any shareholder who wishes to register a
third-party proxyholder MUST visit
the following website, www.computershare.com/FirstMiningGold,
by Monday, June 28, 2021 at 10:00 a.m. (Pacific Time) and provide
Computershare with their third-party proxyholder’s contact
information, so that Computershare may provide the third-party
proxyholder with a Control Number via e-mail. See the section in
this Circular entitled “Appointment of a third party as
proxy” for further details.
Without a Control Number, your third-party proxyholder will not be
able to vote at the Meeting.
Your proxyholder must vote your Common Shares or withhold your
vote, as applicable, according to your instructions on any ballot
that may be called for and, if you specify a choice on any matter
to be acted upon, your Common Shares will be voted
accordingly. If there are other
items of business that properly come before the Meeting, or
amendments or variations to the items of business, your proxyholder
has the discretion to vote as he or she sees
fit.
If you appoint the First Mining proxyholders but do not tell them
how to vote your Common Shares, your Common Shares will be voted as
follows:
●
FOR fixing the number of directors at
five;
●
FOR electing the five nominated directors listed on
the proxy
form
and in this Circular;
●
FOR re-appointing PwC as the independent auditor,
and
FOR authorizing the Board to set the auditor’s
pay; and
●
FOR the approval of the Distribution
Resolution.
This
is consistent with the voting recommendations by management
and the Board. If there are other items of
business that properlycome before
the Meeting, or amendments or
variations to theitems of business,
the First Mining proxyholders will
voteaccording to
management’s
recommendation.
If you appoint a third-party proxyholder, that person must
attend
the Meeting virtually and cast their vote online during the Meeting
for your
vote to be counted. If you are going to appoint such a
third-party
proxyholder, please ensure you visit
www.computershare.com/FirstMiningGold by Monday, June 28,
2021 at
10:00
a.m. (Pacific Time) and provide Computershare with
your
proxyholder’s
contact information, so that Computershare may provide
the
proxyholder with a Control Number via e-mail.
Without a Control Number, proxyholders will not be able to vote at
the meeting. See the section in this Circular entitled
“Appointment of a
third-party as proxy” for further
details.
A proxy will not be valid unless it is signed by the registered
shareholder, or by the registered shareholders’ attorney with
proof that they are authorized to sign. If you represent a
registered shareholder who is a corporation or association, your
proxy should have the seal of the corporation or association, and
it must be executed by an officer or an attorney who has written
authorization. If you execute a proxy as an attorney for an
individual registered shareholder, or as an officer or attorney of
a registered shareholder who is a corporation or association, you
must include the original or a notarized copy of the written
authorization for the officer or attorney, with your proxy
form.
If you are voting by proxy, you may vote:
Computershare must receive your proxy by 10:00 a.m. (Pacific Time)
on Monday, June 28, 2021 or at
least 48 hours (excluding Saturdays, Sundays and statutory holidays
in the province of British Columbia) prior to the time set for any
adjournment or postponement of the Meeting. The chairman of the
Meeting has the discretion to extend or waive the time limit for
the deposit of proxies without notice.
Voting your proxy using the internet
This is the most efficient and convenient way to vote your Common
Shares.
Go to
www.investorvote.com and
follow the instructions on the screen. You will need to input your
15-digit control number, which appears on the first page of your
proxy form.
Voting your proxy by telephone
You may
vote your Common Shares using the telephone by dialling the
following toll-free number from a touch tone telephone:
1.866.732.8683. If you vote using the telephone, you will need your
15-digit control number, which appears on the first page of your
proxy form.
Voting your proxy by fax or mail
Complete
your proxy form, sign and date it, and send it to Computershare by
fax to 1.866.249.7775 (within North America) or 1.416.263.9524
(outside North America) or mail it to:
Computershare
Investor Services Inc.
Attention: Proxy
Department
100
University Avenue, 8th Floor
Toronto, ON M5J
2Y1
Non-Registered Shareholders
Only
registered shareholders of First Mining and duly appointed and
registered third party proxyholders who have received a 15-digit
Control Number from Computershare, are permitted to submit their
votes online during the virtual Meeting. Most shareholders of First
Mining are non-registered shareholders because the Common Shares
they own are not registered in their names and appear on an account
statement provided by their bank, broker or financial advisor.
Common Shares beneficially owned by a non-registered shareholder
are registered either:
(i)
in the name of an
intermediary (“Intermediary”) that the
non-registered shareholder deals with regarding the non-registered
shareholder’s Common Shares (Intermediaries include, among
others, banks, trust companies, securities dealers or brokers, and
trustees or administrators of self-administered RRSPs, RRIFs, RESPs
and similar plans); or
(ii)
in the name of a
clearing agency (such as CDS Clearing and Depository Services Inc.
or The Depository Trust & Clearing Corporation) of which the
Intermediary is a participant.
In
accordance with applicable securities law requirements, First
Mining has distributed copies of the Notice and Access
notification, the Meeting Materials and the form of proxy (which
includes a place to request copies of this Circular and annual
and/or interim financial statements and MD&A or to waive the
receipt of such documents) to the Intermediaries and clearing
agencies for distribution to non-registered
shareholders.
Intermediaries
are required to forward the Notice and Access notification to
non-registered shareholders unless a non-registered shareholder has
requested paper copies (in which case the Intermediary will forward
the Meeting Materials to the non-registered shareholder).
Intermediaries often use service companies to forward the Notice
and Access notification and Meeting Materials to non-registered
shareholders.
Voting using the voting instruction form or proxy form
Generally, non-registered shareholders who have not waived the
right to receive the Meeting Materials will either:
(i)
be given a voting instruction form which is not
signed by the Intermediary and which, when properly completed and
signed by the non-registered shareholder and returned to the
Intermediary or its service company, will constitute your voting
instructions (often called a “voting instruction
form” or a
“VIF”) which the Intermediary must follow.
Typically, the voting instruction form will consist of a one or
two-page pre-printed form; or
(ii)
be given a proxy form which has already been signed
by the Intermediary (typically
by a facsimile, stamped signature), which is restricted as to the
number of Common Shares beneficially owned by the non-registered
shareholder but which is otherwise not completed by the
Intermediary. Because the Intermediary has already signed the form
of proxy, this form of proxy is not required to be signed by the
non-registered shareholder when submitting the
proxy.
In either case, the purpose of these procedures is to enable
non-registered shareholders to direct the voting of the Common
Shares of First Mining that they beneficially own.
If you are a non-registered shareholder, you should carefully
follow the instructions of your Intermediary in order to submit the
voting instructions for your Common Shares, including those
regarding when and where the completed VIF or proxy form (as
applicable) is to be delivered.
Your Intermediary may have also provided you with the option of
voting by telephone or through the internet. Your Intermediary must
receive your voting instructions in sufficient time for your
Intermediary to act on them. We strongly encourage all
non-registered shareholders to submit their voting instructions to
their Intermediary online at www.proxyvote.com
with plenty of time before the
cut-off. Computershare must receive proxy vote instructions from
your Intermediary by no later than 10:00 a.m. (Pacific Time) on
Monday, June 28, 2021, or at least 48 hours (excluding Saturdays,
Sundays and statutory holidays in the Province of British Columbia)
prior to the time set for any adjournment or postponement of the
Meeting.
If you
have any questions and/or need assistance in voting your Common
Shares, please contact our strategic shareholder advisor and proxy
solicitation agent, Kingsdale Advisors, either by toll-free
telephone in North America at 1-877-659-1822 or collect call
outside North America at 416-867-2272, or by e-mail at contactus@kingsdaleadvisors.com.
Appointment of a third-party as proxy
The
following applies to shareholders who wish to appoint a third-party
proxyholder (i.e. a person other than the management nominees set
forth in the form of proxy or voting instruction form) as
proxyholder, including non-registered shareholders who wish to
appoint themselves as proxyholder to attend the virtual Meeting and
submit their votes online during the Meeting.
Shareholders who wish to appoint a third-party proxyholder to
attend the virtual Meeting and submit their votes online during the
Meeting MUST submit
their proxy or voting instruction form (as applicable) appointing
such third-party proxyholder AND register the third-party
proxyholder, as described below. Registering your proxyholder is an
additional step to be completed AFTER you have submitted your
proxy or voting instruction form. Failure to register the
proxyholder will result in the proxyholder not receiving a 15-digit
Control Number from Computershare, and therefore not being able to
vote online during the virtual Meeting.
●
Step 1: Submit your proxy or voting instruction
form: To appoint a third-party proxyholder, insert the
person’s name in the blank space provided in the proxy or
voting instruction form (if permitted) and follow the instructions
for submitting the proxy or voting instruction form. This step must
be completed prior to registering your third-party proxyholder,
which is an additional step to be completed once you have submitted
your proxy or voting instruction form. If you are a non-registered
shareholder located in the United States, you must also provide
Computershare with a duly completed legal proxy if you wish to
attend, participate or vote at the Meeting or, if permitted,
appoint a third-party as your proxyholder. See below under this
section for additional details.
●
Step 2: Register your third party
proxyholder: To register a third-party proxyholder,
shareholders MUST visit
www.computershare.com/FirstMiningGold by
10:00 a.m. (Pacific Time) on Monday, June 28, 2021 and provide
Computershare with the required proxyholder contact information, so
that Computershare may provide your third party proxyholder with a
15-digit Control Number via email. Without this Control Number,
your third-party proxyholder will not be able to vote your Common
Shares online during the virtual Meeting.
If you are a non-registered shareholder and wish to vote your
Common Shares online during the virtual Meeting, you have to insert
your own name
in the space provided on the voting
instruction form sent to you by your Intermediary, follow all of
the applicable instructions provided by your Intermediary AND
register yourself as your proxyholder, as described in Step 2
above. By doing so, you are instructing your Intermediary to
appoint you as proxyholder. It is important that you comply with
the signature and return instructions provided by your
Intermediary. Please also see further instructions below under the
heading “How to attend, ask
questions and vote online during the virtual
Meeting?”.
If you are a non-registered shareholder located in the United
States and wish to vote your Common Shares online during the
virtual Meeting or, if permitted, appoint a third-party
proxyholder, in addition to the steps described above and
below under “How to attend,
ask questions and vote online during the virtual
Meeting?”, you must obtain a valid legal proxy from
your Intermediary then register with Computershare in advance of
the Meeting.
Follow
the instructions from your Intermediary included with these proxy
materials, or contact your Intermediary (i.e. your broker, bank or
financial advisor) to request a legal proxy form if you have not
received one. After obtaining a valid legal proxy from your
Intermediary, you must submit your registration request by sending
your legal proxy to Computershare by email USlegalproxy@computershare.com or
by courier to:
Computershare
Investor Services Inc.
100
University Avenue
8th Floor
Toronto, Ontario
M5J 2Y1
Canada
All
registration requests sent to Computershare must be labelled as
“Legal Proxy” and must be received by Computershare by
no later than 10:00 a.m. (Pacific time) on Monday, June 28, 2021.
Computershare will send you a confirmation of your registration by
email after they have received your registration
materials.
How to attend, ask questions and vote online during the virtual
Meeting?
Due to the COVID-19 pandemic, we are holding the Meeting as
a completely
virtual meeting, which will be
conducted via a live webcast at https://agm.issuerdirect.com/ff
at 10:00 a.m. (Pacific Time)
on Wednesday, June 30, 2021.
Shareholders will
NOT be able to attend the Meeting in person.
Registered shareholders or third-party proxyholders
In order to attend the virtual Meeting and vote your Common Shares
online during the Meeting, you will need a 15-digit Control Number
from Computershare (this will be given to registered shareholders
and third-party proxyholders duly appointed and registered in
accordance with the steps outlined above under
“Appointment of a third
party as proxy”.
If you will be attending the Meeting virtually, you can submit your
vote online during the Meeting rather than completing and
submitting the enclosed proxy form in advance of the Meeting. If
you wish to do this, simply join the live webcast of the Meeting by
visiting https://agm.issuerdirect.com/ff
at 10:00 a.m. (Pacific Time)
on Wednesday, June 30, 2021, click on
“Vote My Shares” and enter your 15-digit Control Number
from your proxy to submit your vote.
If you use your 15-digit Control Number to submit your vote online
during the virtual Meeting, you will revoke any and all previously
submitted proxies. In such a case, you will be provided the
opportunity to vote by ballot on the matters put forth
virtually at the Meeting. If you DO NOT wish to revoke all
previously submitted proxies, please do not vote again during the
virtual Meeting, and instead just join the live webcast without
clicking on “Vote My Shares”. If you are eligible to
vote online during the virtual Meeting, it is important that you
are connected to the internet at all times during the Meeting in
order to vote when balloting commences. It is your responsibility
to ensure connectivity for the duration of the Meeting, and ensure
your system is compatible with the virtual Meeting platform (which
can be assessed at https://agm.issuerdirect.com/ff.
You should allow yourself ample time to check into the Meeting
online and complete any registration and sign-up procedures. If you
require technical support, please call the virtual Meeting
provider, Issuer Direct, at 844-399-3386 or
919-744-2718.
Non-registered shareholders
If you
are a non-registered shareholder and wish to submit your votes
online during the virtual Meeting, you have to: (i) appoint a third
party proxyholder or appoint yourself as proxyholder (by inserting
your name in the space provided for the proxyholder appointment in
the proxy or voting instruction form (as applicable)); (ii)
return the duly completed proxy or
voting instruction form as instructed by your
Intermediary; and (iii)
register the proxyholder with
Computershare. See “Appointment of a third party as
proxy” above for further details. You do not need to
complete the voting section of the proxy or voting instruction form
(as applicable), since you vote your Common Shares online during
the virtual Meeting.
Non-registered
shareholders who have not duly appointed and registered themselves
as proxyholder and who therefore do not have a 15-digit Control
Number will only be able to attend the Meeting virtually as a
guest, which will only allow the non-registered shareholder to
listen to the Meeting – as a non-registered
shareholder, you will not be able to vote your Common Shares online
during the virtual Meeting if do not have a 15-digit Control Number
from Computershare. This is because First Mining and its
transfer agent Computershare, do not have a record of the
non-registered shareholders of the Company, and, as a result, will
have no knowledge of your shareholdings or entitlement to vote,
unless you appoint yourself as proxyholder or appoint a third-party
proxyholder.
If you
are a non-registered shareholder located in the United States and
wish to vote online during the virtual Meeting or, if permitted,
appoint a third party as your proxyholder, you MUST
also submit your legal proxy to
Computershare. See “Appointment of a third-party as
proxy” above for further details.
Asking Questions
The Company believes that the ability to participate in the Meeting
in a meaningful way remains important despite the decision to hold
the Meeting virtually. It is anticipated that shareholders and
proxyholders (including non-registered shareholders who have
appointed themselves as proxyholders) will have substantially the
same opportunity to ask questions on matters of business before the
Meeting as in past years when the shareholder meetings were held in
person. Registered shareholders and non-registered shareholders who
have appointed themselves as proxyholders will have the opportunity
to submit questions during the Meeting by submitting them in
writing through the using the online chat feature on the virtual
platform. Questions received from shareholders which relate to the
business of the meeting or to the affairs of the Company will be
read by the Chair of the Meeting or a designee of the Chair and
responded to by a representative of the Company as they would be at
a shareholder meeting that was being held in person at a physical
location. As at a shareholder meeting in person at a physical
location, to ensure fairness for all attendees, the Chair of the
Meeting will decide on the amount of time allocated to each
question and will have the right to limit or consolidate questions
and to reject questions that do not relate to the business of the
meeting or to the affairs of the Company or which are determined to
be inappropriate or otherwise out of order.
How to change your vote?
The
process for changing your vote after it has been submitted differs
for registered and non-registered shareholders.
Registered Shareholders
You can
revoke your proxy by sending a new completed proxy form with a
later date, or a written notice of revocation signed by you, or by
your attorney if he or she has your written authorization. You can
also revoke your proxy in any manner permitted by law.
If you
represent a registered shareholder who is a corporation or
association, your written notice of revocation must have the seal
of the corporation or association, and it must be executed by an
officer or an attorney who has their written authorization. The
written authorization must accompany the written notice of
revocation.
We must
receive the written notice of revocation any time up to and
including the last business day before the day of the Meeting, or
the day the Meeting is reconvened if it was postponed or
adjourned.
Send
the signed written notice to:
First
Mining Gold Corp.
Suite
2070 – 1188 West Georgia Street
Vancouver, British
Columbia V6E 4A2
Attention: Samir
Patel, General Counsel & Corporate Secretary
If
you’ve sent in your completed proxy form and subsequently
decide to attend the virtual Meeting and vote your Common Shares
online during the Meeting using your 15-digit Control Number, you
will revoke any and all previously submitted proxies. In such a
case, you will be provided the opportunity to vote by ballot on the
matters put forth virtually at the Meeting. If you DO NOT wish to
revoke all previously submitted proxies, please do not vote again
during the virtual Meeting, and instead just join the live webcast
by registering and not clicking on the “Vote My Shares”
button.
If you
have any questions and/or need assistance in voting your Common
Shares, please contact our strategic shareholder advisor and proxy
solicitation agent, Kingsdale Advisors, either by toll-free
telephone in North America at 1-877-659-1822 or collect call
outside North America at 416-867-2272, or by e-mail at contactus@kingsdaleadvisors.com.
Non-Registered Shareholders
You can
revoke your prior voting instructions by providing new instructions
on a VIF or proxy form with a later date, or at a later time in the
case of voting by telephone or through the internet, provided that
your new instructions are received by your Intermediary in
sufficient time for your Intermediary to act on them before 10:00
a.m. (Pacific Time) on Monday, June 28, 2021, or at least 48 hours
(excluding Saturdays, Sundays and statutory holidays in the
Province of British Columbia) prior to the time set for any
adjournment or postponement of the Meeting.
If you
have any questions and/or need assistance in voting your Common
Shares, please contact our strategic shareholder advisor and proxy
solicitation agent, Kingsdale Advisors, either by toll-free
telephone in North America at 1-877-659-1822 or collect call
outside North America at 416-867-2272, or by e-mail at contactus@kingsdaleadvisors.com.
Who processes the votes?
Our
transfer agent, Computershare, or its authorized agents count and
tabulate the votes on our behalf.
Particulars of the
Matters to be Acted Upon
1.
Receipt of audited consolidated financial statements
Our
audited consolidated annual financial statements for the financial
year ended December 31, 2020, and the auditor’s report
thereon will be presented to
the Meeting. A copy is available on our website at www.firstmininggold.com/investors/reports-filings/financials◦and◦under◦our◦SEDAR◦profile◦at
www.sedar.com.
The
audited consolidated annual financial statements, auditor’s
report thereon and MD&A for the financial year ended December
31, 2020 have been mailed to registered shareholders who have
indicated to us that they wish to receive these
documents.
2.
Fix the number of directors to be elected at the Meeting at
five
Our
Board presently consists of five directors and we propose to fix
the number of directors at five for the ensuing year. If there are
more nominees for election then there are vacancies to fill, those
nominees receiving the greatest number of votes will be elected
until all such vacancies have been filled.
In the absence of instructions to the contrary, the First Mining
proxyholders will vote the Common Shares represented by each form
of proxy, properly executed, FOR fixing the number of
directors at five for the ensuing year.
3.
Election of directors for the ensuing year
We have
nominated the five current directors of the Company as the five
individuals to stand for re-election as directors, based on their
mix of skills and experience that we believe are necessary to
effectively fulfill the Board’s duties and
responsibilities.
Each of
our directors is elected annually and holds office until the end of
the next annual general meeting of shareholders, unless that person
ceases to be a director before then. Each of the nominated
directors has confirmed his willingness to serve on the Board for
the next year.
In the absence of instructions to the contrary, the First Mining
proxyholders will vote the Common Shares represented by each form
of proxy, properly executed, FOR each of the five nominees
for director listed in this Circular.
About the Nominated Directors
The
following three pages provide information on the five director
nominees as of the date of this Circular, including:
●
their province or
state and country of residence;
●
their position with
the Company;
●
the period or
periods during which each has served as a director of the
Company;
●
their membership on
committees of the Board;
●
their principal
occupation, business or employment; and
●
the current equity
ownership consisting of Common Shares beneficially owned, or
controlled or directed, directly or indirectly, of each director
and of each director’s associates or affiliates (certain of
the aforementioned information has been provided to us by the
nominees themselves).
|
Director
|
Board
committees
|
Principal
occupation or employment
for
past five years
|
|
Keith
Neumeyer
Zug,
Switzerland
Chairman
since
March
30, 2015
|
Audit
Committee
Compensation
Committee
(chair)
Corporate
Governance
&
Nominating Committee
|
Director and
Chairman of First Mining since March 2015
November 2001 to
present – Founder, President and Chief Executive Officer of
First Majestic Silver Corp. (mining company)
December 1998 to
present – Director of First Majestic Silver Corp. (mining
company)
|
|
Ownership of Securities:
15,730,313
shares
6,852,500
options
750,000
warrants NIL
DSUs
|
|
Director
|
Board
committees
|
Principal
occupation or employment
for
past five years
|
|
Raymond
L. Polman, CPA, CA
British
Columbia, Canada
Director
since
March
30, 2015
|
Audit
Committee
(chair)
Compensation
Committee
Corporate
Governance
&
Nominating Committee
|
Director of First
Mining since March 2015
February 2007 to
present – Chief Financial Officer of First Majestic Silver
Corp. (mining company)
|
|
Ownership of Securities:
500,333
shares
2,512,500 options
NIL
warrants NIL
DSUs
|
|
Director
|
Board
committees
|
Principal
occupation or employment
for
past five years
|
|
Daniel
W. Wilton
British
Columbia, Canada
Director
since
January
7, 2019
|
None
|
Chief
Executive Officer and a Director of First Mining since January 7,
2019
August
2020 to present – Director of Treasury Metals Inc. (mining
company)
December 2018 to
present – Director of South Star Mining Corp. (mining
company)
September 2010 to
present – Director of Providence Health Care (non-profit
health care provider)
February 2013 to
April 2018 – Partner of Pacific Road Capital Management Pty
Ltd (global private equity investment firm)
|
|
Ownership of Securities:
4,600,000
shares
6,750,000 options
2,000,000
warrants 500,000
RSUs
|
|
Director
|
Board
committees
|
Principal
occupation or employment
for
past five years
|
|
Richard
Lock
Montana,
USA
Director
since
April
1, 2020
|
Audit
Committee
Corporate
Governance
&
Nominating Committee
(chair)
|
Director of First
Mining since April 2020
January
2020 to present – Senior Vice President and Project Director
(NorthMet Project) of Poly Met Mining, Inc., a wholly-owned
subsidiary of PolyMet Mining Corp. (mining company)
March
2019 to October 2019 – Construction Director of the Peschanka
open pit copper mine owned by KAZ Minerals Projects BV (mining
company)
September 2018 to
December 2019 – Senior Vice President of Arizona Mining Inc.
(mining company)
February 2016 to
September 2017 – Project Director of Yara
International’s Dallol project
|
|
Ownership of Securities:
NIL
shares
500,000 options
NIL
warrants NIL
DSUs
|
|
Director
|
Board
committees
|
Principal
occupation or employment
for
past five years
|
|
Leanne
Hall
Ontario,
Canada
Director
since
October
30, 2020
|
Compensation
Committee
|
Director of First
Mining since October 30, 2020
December 2019 to
present – Chief Executive Officer of Creative Fire (100%
owned Indigenous strategy, engagement, research and data analytics
firm)
August
2019 to present – Vice President of Des Nedhe Development
Corporation (Indigenous economic development
corporation)
February 2016 to
August 2019 – Partner and National Leader of Indigenous
practice group at Deloitte Canada (professional services
firm)
|
|
Ownership of Securities:
NIL
shares
425,000 options
NIL
warrants 40,000
DSUs
|
No
proposed director is being elected under any arrangement or
understanding between the proposed director and any other person or
company.
Corporate Cease Trade Orders or Bankruptcies, Penalties or
Sanctions
No
proposed director:
●
is, as of the date
of this Circular, or has been within 10 years before the date of
this Circular, a director, chief executive officer or chief
financial officer of any company (including ours) that: (a) was
subject to a cease trade order, an order similar to a cease trade
order or an order that denied the relevant company access to any
exemption under securities legislation, that was in effect for a
period of more than 30 consecutive days (an “order”) that was issued while the
proposed director was acting in the capacity as director, chief
executive officer or chief financial officer; or (b) was subject to
an order that was issued after the proposed director ceased to be a
director, chief executive officer or chief financial officer and
which resulted from an event that occurred while that person was
acting in the capacity as director, chief executive officer or
chief financial officer;
●
is, as of the date
of this Circular, or has been within 10 years before the date of
this Circular, a director or executive officer of any company
(including ours) that, while that person was acting in that
capacity, or within a year of that person ceasing to act in that
capacity, became bankrupt, made a proposal under any legislation
relating to bankruptcy or insolvency or was subject to or
instituted any proceedings, arrangement or compromise with
creditors or had a receiver, receiver manager or trustee appointed
to hold its assets; or
●
has within 10 years
before the date of this Circular, become bankrupt, made a proposal
under any legislation relating to bankruptcy or insolvency, or
become subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver manager or
trustee appointed to hold the assets of the proposed
director.
None of
the proposed directors:
●
has been subject to
any penalties or sanctions imposed by a court relating to
securities legislation or by a securities regulatory
authority;
●
has been subject to
any penalties or sanctions imposed by a court or regulatory body
that would likely be considered important to a reasonable
securityholder in deciding whether to vote for a proposed director;
or
●
has entered into a
settlement agreement with any securities regulatory
authority.
Skills and Experience
We
believe it is important for directors to have experience in senior
management, governance, compensation, finance, environment, health
and safety, and to participate with public company boards as an
advisor, director or member of management to effectively fulfill
their duties and responsibilities as a member of our
Board.
Our
Board reviews the slate of nominated directors every year to
determine whether it still reflects the mix of skills, background
and experience it believes is necessary for fulfilling its duties
and responsibilities in overseeing First Mining’s strategic
direction, management and affairs.
We
believe that the directors who have been nominated for election at
the Meeting are well qualified to represent the interests of
shareholders and appropriately address our business needs, and
we recommend that our shareholders
vote FOR
the five director nominees set out
herein.
Advance Notice Provisions
Pursuant
to Article 14.2 of First Mining’s Articles, any additional
director nominations for an annual general meeting must be received
by the Company, not less than 30 nor more than 65 days prior to the
date of the meeting. Unless nominations are received in accordance
with our Articles by May 30, 2021, being the date which is 30 days
prior to the Meeting, management’s nominees for election as
directors set forth above shall be the only nominees eligible to
stand for election at the Meeting.
Majority Voting Policy
Our
Board has adopted a majority voting policy. Unless there is a
contested election, a director who receives more withhold votes
than votes “for”, will immediately submit his or her
resignation to the Board. The corporate governance and nominating
committee of the Board (the “Corporate Governance & Nominating
Committee”) will review the matter and recommend to
the Board whether to accept the resignation. The resignation will
be effective once it has been accepted by the Board. The director
will not participate in any deliberations on the matter. We expect
to accept the resignation unless there is some special circumstance
that warrants the director stay on the Board. In any case, the
Board shall determine whether or not to accept the resignation
within 90 days of the relevant annual shareholders’ meeting
and the Company will promptly issue a news release communicating
the Board’s decision. If the Board determines not to accept a
resignation, the news release will fully state the reasons for that
decision.
4.
Appointment of auditor
At the
Meeting, shareholders will be asked to appoint First Mining’s
auditor for the ensuing year. Our current auditor, PwC, will be
nominated at the Meeting for re-appointment as the Company’s
auditor at such remuneration to be fixed by the Board.
In the absence of instructions to the contrary, the First Mining
proxyholders will vote the Common Shares represented by each form
of proxy, properly executed, FOR re-appointing PwC as our
independent auditor for the ensuing year, and FOR authorizing the directors
to fix the auditor’s pay.
5.
Distribution of Treasury Metals Securities pursuant to the Plan of
Arrangement
General
The
purpose of the Plan of Arrangement is to distribute the Treasury
Metals Securities to shareholders of First Mining.
Reasons for the Distribution
First
Mining agreed to complete the Distribution as part of the terms of
the Investor Rights Agreement entered into with Treasury Metals in
connection with the closing of the Treasury Metals
Transaction.
The
Board believes that the distribution of Treasury Metals Securities
to shareholders of First Mining will provide a number of benefits
to shareholders, including:
●
allowing
shareholders to directly benefit from the value-enhancing Treasury
Metals Transaction, by returning value to the shareholders through
a substantial distribution of equity consideration;
and
●
providing
shareholders with the opportunity to participate in the future
success of the Goldlund Gold Project by becoming direct
shareholders of Treasury Metals.
Recommendation of the Board
The
Board approved the Distribution and recommended and authorized the
submission of the Distribution to the shareholders and the Court
for approval. The Board has
concluded that the Distribution is in the best interests of First
Mining and its shareholders and recommends that shareholders vote
FOR the Distribution Resolution proposed to be passed at the
Meeting.
Fairness of the Distribution
The
Distribution was determined to be fair to the shareholders by the
Board based upon the following factors, among others:
●
the procedures by
which the Distribution will be approved, including the requirement
for: (i) approval at the Meeting by at least 66⅔% of the
votes cast by shareholders in person or by proxy; and (ii) approval
by the Court after a hearing at which the fairness of the
Distribution will be considered;
●
each shareholder at
the Distribution Record Date (other than Dissenting Shareholders)
will receive, upon completion of the Distribution, the same portion
of a Treasury Metals Share and Treasury Metals Warrants per Common
Share held; and
●
the opportunity for
shareholders who are opposed to the Distribution, upon compliance
with certain conditions, to exercise Dissent Rights under the
BCBCA, as modified by the Interim Order.
Details of the Distribution
The
following description is qualified in its entirety by reference to
the full text of the Plan of Arrangement, a copy of which is
attached as Appendix “D” to this Circular. Capitalized
terms used in the following description but not otherwise defined
in this Circular have the meanings ascribed thereto in the Plan of
Arrangement. Shareholders are urged to carefully read the Plan of
Arrangement in its entirety.
At the
Effective Time and pursuant to the Plan of Arrangement, the
following transactions, among others, will occur and will be deemed
to occur sequentially in the following order:
(a)
each Common
Share outstanding in respect of which a Dissenting Shareholder has
validly exercised his, her or its Dissent Rights (each, a
“Dissenting
Share”) shall be directly transferred and assigned by
such Dissenting Shareholder to First Mining, without any further
act or formality and free and clear of any liens, charges and
encumbrances of any nature whatsoever, and will be cancelled and
cease to be outstanding and such Dissenting Shareholders will cease
to have any rights as Shareholders other than the right to be paid
the fair value for their Common Shares by First
Mining;
(b)
First Mining
shall reduce the paid-up capital of the Common Shares by an amount
equal to the fair market value of the Treasury Metals Shares and
Treasury Metals Warrants to be distributed to the shareholders as
set out in paragraph (c) below;
(c)
the Treasury
Metals Shares and Treasury Metals Warrants shall be distributed to
the shareholders in satisfaction of the reduction in paid-up
capital in paragraph (b) above, on the basis that for each Common
Share issued and outstanding on the Distribution Record Date, the
holder of such Common Share shall receive: (i) that portion of a
Treasury Metals Share determined by dividing the 23,333,333
Treasury Metals Shares by the number of Common Shares issued and
outstanding on the Distribution Record Date; and (ii) that portion
of a Treasury Metals Warrant determined by dividing the 35,000,000
Treasury Metals Warrants (such number of Treasury Metals Warrants
subject to adjustment in connection with a proposed amendment to
the Warrant Indenture, as described below) by the number of Common
Shares issued and outstanding on the Distribution Record Date, and
the Treasury Metals Shares and Treasury Metals Warrants transferred
to such holders of the Common Shares will be registered in the name
of such holders of the Common Shares and First Mining will provide
Treasury Metals and its registrar and transfer agent notice to make
the appropriate entries in the central securities register of
Treasury Metals; and
(d)
the capital account
in respect of the Common Shares shall be adjusted to reflect the
reduction in paragraph (b) above.
Prior
to the Distribution, the Company intends to work with Treasury
Metals and TSX Trust Company to amend the terms of the Warrant
Indenture, such that there will be 11,666,666 Treasury Metals
Warrants issued and outstanding, each being exercisable for one
Treasury Metals Warrant Share at an exercise price of $1.50 per
Treasury Metals Warrant Share. If such amendment takes place, for
each Common Share issued and outstanding on the Distribution Record
Date, the holder of such Common Share shall receive that portion of
a Treasury Metals Warrant determined by dividing the 11,666,666
(rather than 35,000,000) Treasury Metals Warrants by the number of
Common Shares issued and outstanding on the Distribution Record
Date.
Adjustments to Convertible Securities
As a
result of the Distribution, First Mining’s issued and
outstanding warrants will be adjusted in accordance with their
terms, with the exercise price and/or number of Common Shares
issuable upon the exercise of each warrant being adjusted. Such
adjustments will depend in part on the fair market value of the
Treasury Metals Securities being distributed. For the purposes of
such valuation, the Treasury Metals Shares will be valued using the
closing price of the Treasury Metals Shares on the TSX on the
Distribution Record Date and the Treasury Metals Warrants will be
valued using a Black-Scholes valuation model.
Authority of the Board
By
passing the Distribution Resolution, the shareholders will also be
giving authority to the Board to, without any requirement to seek
or obtain any further approval of the shareholders, amend the terms
of the Plan of Arrangement and/or use its judgment to proceed with
and cause First Mining to complete the Distribution or to abandon
the Distribution. The Board shall only have such authority prior to
the date upon which First Mining provides notice to shareholders of
the Effective Date and Distribution Record Date through one or more
press releases. Although the Board has no current intention to
amend the terms of the Plan of Arrangement, it is possible that the
Board may determine that certain amendments are appropriate,
necessary or desirable.
Court Approval of the Distribution
The
Distribution requires the approval of the Court under the BCBCA.
Prior to mailing this Circular, First Mining obtained the Interim
Order authorizing and directing First Mining to call, hold and
conduct the Meeting and submit the Distribution to the shareholders
for approval. The Interim Order is attached as Appendix
“E”. The Notice of Hearing of Petition in respect of
the Final Order is attached as Appendix
“F”.
Assuming
approval of the Distribution Resolution by the shareholders at the
Meeting in the manner required by the Interim Order, First Mining
intends to make an application to the Court for the Final Order.
The Interim Order provides for a Final Order approving the
Distribution to be heard on July 5, 2021 at 9:45 a.m. (Pacific
Time), or as soon thereafter as counsel may be heard, by
teleconference at 800 Smithe Street, Vancouver, British Columbia,
or at any other date, time and location as the Court may direct. At
the hearing, any shareholder or other interested party who wishes
to participate or be represented or present arguments or evidence
must file and serve a response to petition no later than 4:00 p.m.
(Pacific Time) on June 30, 2021 along with any other documents
required, all as set out in the Interim Order and Notice of Hearing
of Petition, copies of which are attached as Appendix
“E” and “F”, respectively, and satisfy any
other requirement of the Court.
The
Court has broad discretion under the BCBCA when making orders in
respect of arrangements, and the Court may approve the Distribution
as proposed or as amended in any manner the Court may direct,
subject to compliance with such terms and conditions, if any, as
the Court thinks appropriate. The Court, in hearing the application
for the Final Order, will consider, among other things, the
fairness of the terms and conditions of the Distribution to
shareholders. The Court may approve the Distribution, either as
proposed or as amended, on the terms presented or substantially on
those terms. Depending upon the nature of any required amendments,
First Mining may determine not to proceed with the Distribution.
The Court has been advised that if the terms and conditions of the
Distribution are approved by the Court, such approval will be
relied upon as the basis for an exemption from the registration
requirements of the 1933 Act, pursuant to Section 3(a)(10) thereof,
with respect to the distribution of the securities to be
distributed pursuant to the Distribution.
For
further information regarding the Court hearing and your rights in
connection with the Court hearing, see the Notice of Hearing of
Petition attached as Appendix “F” this Circular. The
Notice of Hearing of Petition constitutes notice of the Court
hearing of the application for the Final Order and is your only
notice of the Court hearing.
Shareholder Approval of the Distribution
Subject
to any further order(s) of the Court, the Distribution must be
approved by at least 66⅔% of the votes cast by shareholders
present, in person or by proxy, and entitled to vote at the
Meeting. The Distribution is not subject to the minority approval
requirements of MI 61-101.
In the
absence of any instruction to the contrary, the Common Shares
represented by proxies appointing the management designees named in
the form of proxy will be voted in favour of the Distribution
Resolution.
Proposed Timetable for the Plan of Arrangement
The
anticipated timetable for the completion of the Plan of Arrangement
and the key dates proposed are as follows:
|
Special
Meeting:
|
June 30,
2021
|
|
Final Court
Approval:
|
July 5,
2021
|
Distribution Record
Date:
|
on
or about July 14, 2021
|
|
Effective
Date:
|
on
or about July 15, 2021
|
The
Board will determine the Effective Date and Distribution Record
Date and notice of such dates will be made through one or more news
releases issued by First Mining.
Distribution of Treasury Metals Share and Warrant
Certificates
If you
are a registered shareholder, a DRS Advice or certificates
representing the number of Treasury Metals Shares and Treasury
Metals Warrants (each rounded down to the nearest whole number)
that you are entitled to receive pursuant to the Plan of
Arrangement will be delivered to you following the Effective Date.
If you wish to have your Treasury Metals Securities deposited into
a brokerage account, please contract your broker for instructions
and assistance in this regard.
Non-registered
shareholders should contact their broker or other intermediary for
instructions and assistance in receiving their Treasury Metals
Securities.
Expenses of the Distribution
The
costs relating to the Plan of Arrangement and Distribution,
including, without limitation, accounting and legal fees, will be
borne by First Mining.
Risk Factors Relating to the Distribution
The
following risk factors should be considered by shareholders in
evaluating whether to approve the Distribution. These risk factors
should be considered in conjunction with the other information
included in this Circular.
Failure to Obtain Required Approvals
The
completion of the Distribution is subject to a number of
conditions, certain of which are outside the control of First
Mining, including shareholders approving the Distribution and the
required Court approval, being obtained. There is no certainty, nor
can First Mining provide any assurance, that these conditions will
be satisfied. If for any reason the Distribution is not completed,
the market price of the Common Shares may be adversely affected and
shareholders will lose the benefits of the
Distribution.
Approval of the Distribution may be delayed due to the ongoing
COVID-19 Pandemic
The
completion of the Distribution is subject to the approval of the
Court. Due to the ongoing COVID-19 pandemic in Canada, obtaining
the Interim Order and Final Order may be delayed.
There is No Guarantee that the Treasury Metals Warrants will be
Listed on a Stock Exchange
Pursuant
to the Investor Rights Agreement, Treasury Metals is required to
use commercially reasonable efforts to list the Treasury Metals
Warrants for trading on the TSX and the OTCQX in the United States.
As of the date of this Circular, the TSX has not approved the
listing of the Treasury Metals Warrants and there is no assurance
that the TSX will approve the listing of the Treasury Metals
Warrants on the TSX.
There is No Guarantee that the Proposed Amendment to the Warrant
Indenture will Occur
Prior
to the Distribution, the Company intends to work with Treasury Metals and TSX Trust Company to amend the
terms of the Warrant Indenture, such that there will be 11,666,666
Treasury Metals Warrants issued and outstanding, each being
exercisable for one Treasury Metals Share at an exercise price of
$1.50 per Treasury Metals Share. There is no guarantee that such
amendment will occur and that all necessary approvals, including
the approval of the board of directors of Treasury Metals, will be
obtained to effect the amendment.
Income Tax
The
Distribution may give rise to adverse tax consequences to
shareholders, and each shareholder is urged to consult with his,
her or its own tax advisor. See “Material Income Tax
Considerations”.
Costs of the Distribution
There
are certain costs related to the Distribution, such as legal and
accounting fees incurred, that must be paid even if the
Distribution is not completed.
Exercise of Dissent Rights
Registered
shareholders have the right to exercise Dissent Rights and demand
payment equal to the fair value of their Common Shares in cash. If
Dissent Rights are exercised in respect of a significant number of
Common Shares, a substantial cash payment may be required to be
made to such shareholders, which could have an adverse effect on
First Mining’s financial condition and cash resources. First
Mining may elect, in its sole discretion, not to complete the
Distribution if a significant number of shareholders exercise
Dissent Rights.
Dissent Rights
The
following is a summary of the provisions of the BCBCA relating to a
shareholder’s dissent and appraisal rights in respect of the
Distribution Resolution. Such summary is not a comprehensive
statement of the procedures to be followed by a Dissenting
Shareholder who seeks payment of the fair value of its Common
Shares and is qualified in its entirety by reference to the full
text of sections 237 to 247 of the BCBCA, as modified by the Plan
of Arrangement, the Interim Order and the Final Order
(collectively, the “Dissent
Procedures”).
The
statutory provisions dealing with the right of dissent are
technical and complex. Any Dissenting Shareholders should seek
independent legal advice, as failure to comply strictly with the
Dissent Procedures may result in the loss of all Dissent Rights.
The Court hearing the application for the Final Order also has the
discretion to alter the Dissent Rights described herein based on
the evidence presented at such hearing.
The
Interim Order expressly provides registered shareholders with the
right to dissent with respect to the Distribution Resolution. Each
Dissenting Shareholder is entitled to be paid the fair value
(determined as of the close of business on the day before the
Effective Date of all but not less than all, of the holder’s
Common Shares), provided that the holder duly and validly dissents
to the Distribution Resolution and the Distribution becomes
effective.
Only
registered holders of Common Shares are entitled to dissent. In
many cases, Common Shares beneficially owned by a holder are
registered either (a) in the name of an Intermediary with whom the
non-registered shareholder deals in respect of such Common Shares,
such as, among others, banks, trust companies, securities brokers,
trustees and other similar entities, or (b) in the name of a
depositary, such as CDS & Co., of which the Intermediary is a
participant. A beneficial shareholder will not be entitled to
exercise his, her or its rights of dissent directly (unless the
Common Shares are re-registered in the beneficial
shareholder’s name). Accordingly, a non-registered
shareholder who desires to exercise the right of dissent must make
arrangements for the Common Shares beneficially owned by such
holder to be registered in the holder’s name prior to the
time the written objection to the Distribution Resolution is
required to be received by First Mining or, alternatively, make
arrangements for the registered holder of such Common Shares to
dissent on the holder’s behalf.
With
respect to Common Shares in connection to the Distribution,
pursuant to the Interim Order, a registered shareholder may
exercise rights of dissent under sections 237 to 247 of the BCBCA,
as modified by the Plan of Arrangement, the Interim Order and the
Final Order, provided that, notwithstanding section 242(2) of the
BCBCA, the written objection to the Distribution Resolution must be
sent to First Mining c/o Blake, Cassels & Graydon LLP, 2600
– 595 Burrard Street, Vancouver, British Columbia V7X 1L3,
Canada, Attention: Alexandra Luchenko, by no later than 1:00 p.m.
(Pacific Time) on June 28, 2021, or two Business Days prior to any
adjournment or postponement of the Meeting.
To
exercise Dissent Rights, a registered shareholder must dissent with
respect to all Common Shares of which it is the registered and
beneficial owner. A registered shareholder who wishes to dissent
must deliver written notice of dissent (“Notice of Dissent”) to First
Mining as set forth above and such Notice of Dissent must strictly
comply with the requirements of section 242 of the BCBCA. Any
failure by a shareholder to fully comply with the provisions of the
BCBCA, as modified by the Plan of Arrangement, the Interim Order
and the Final Order, may result in the loss of that holder’s
Dissent Rights. Non-registered shareholders who wish to exercise
Dissent Rights must cause each registered shareholder holding their
Common Shares to deliver the Notice of Dissent, or, alternatively,
make arrangements to become a registered shareholder. A vote
against the Distribution Resolution, an abstention, or the
execution of a proxy to vote against the Distribution Resolution,
does not constitute a Notice of Dissent.
A
registered shareholder must prepare a separate Notice of Dissent
for himself, herself or itself, if dissenting on his, her or its
own behalf, and for each other non-registered shareholder who
beneficially owns Common Shares registered in the
shareholder’s name and on whose behalf the shareholder is
dissenting; and must dissent with respect to all of the Common
Shares registered in his, her or its name or if dissenting on
behalf of a non-registered shareholder, with respect to all of the
Common Shares registered in his, her or its name and beneficially
owned by the non-registered shareholder on whose behalf the
shareholder is dissenting. The Notice of Dissent must set out the
number of Common Shares in respect of which the Dissent Rights are
being exercised (the “Notice Shares”) and: (a) if such Common
Shares constitute all of the Common Shares of which the shareholder
is the registered and beneficial owner and the shareholder owns no
other Common Shares beneficially, a statement to that effect; (b)
if such Common Shares constitute all of the Common Shares of which
the shareholder is both the registered and beneficial owner, but
the shareholder owns additional Common Shares beneficially, a
statement to that effect and the names of the registered
shareholders, the number of Common Shares held by each such
registered shareholder and a statement that written notices of
dissent are being or have been sent with respect to such other
Common Shares; or (c) if the Dissent Rights are being exercised by
a registered shareholder who is not the beneficial owner of such
Common Shares, a statement to that effect and the name of the
non-registered shareholder and a statement that the registered
shareholder is dissenting with respect to all Common Shares of the
non-registered shareholder registered in such registered
holder’s name.
If the
Distribution Resolution is approved by shareholders, and First
Mining notifies a registered holder of Notice Shares of First
Mining’s intention to act upon the Distribution Resolution
pursuant to section 243 of the BCBCA, in order to exercise Dissent
Rights such registered shareholder must, within one month after
First Mining gives such notice, send to First Mining a written
notice that such holder requires the purchase of all of the Notice
Shares in respect of which such holder has given Notice of Dissent.
Such written notice must be accompanied by the certificate or
certificates representing those Notice Shares (including a written
statement prepared in accordance with section 244(1)(c) of the
BCBCA if the dissent is being exercised by the shareholder on
behalf of a non-registered shareholder), whereupon, subject to the
provisions of the BCBCA relating to the termination of Dissent
Rights, the shareholder becomes a Dissenting Shareholder, and is
bound to sell and First Mining is bound to purchase those Common
Shares. Such Dissenting Shareholder may not vote, or exercise or
assert any rights of a shareholder in respect of such Notice
Shares, other than the rights set forth in sections 237 to 247 of
the BCBCA, as modified by the Plan of Arrangement, the Interim
Order and the Final Order.
Dissenting
Shareholders who are:
(a)
ultimately entitled
to be paid fair value for their Common Shares will be deemed to
have transferred such Common Shares as of the Effective Time to
First Mining, without any further act or formality, and free and
clear of all liens, claims and encumbrances, and will not be
entitled to any other payment or consideration, including any
payment that would be payable under the Distribution had such
holders not exercised their Dissent Rights in respect of such
Common Shares; or
(b)
ultimately not
entitled, for any reason, to be paid fair value for such Common
Shares shall be deemed to have participated in the Distribution on
the same basis as a non-dissenting holder of Common Shares; but in
no case will First Mining be required to recognize such persons as
holding Common Shares on or after the Effective Date.
If a
Dissenting Shareholder is ultimately entitled to be paid for their
Dissent Shares, such Dissenting Shareholder may enter into an
agreement for the fair value of such Dissent Shares. If such
Dissenting Shareholder does not reach an agreement, such Dissenting
Shareholder, or First Mining, may apply to the Court, and the Court
may determine the payout value of the Dissent Shares and make
consequential orders and give directions as the Court considers
appropriate. There is no obligation on First Mining to make an
application to the Court. The Dissenting Shareholder will be
entitled to receive the fair value that the Common Shares had as of
the close of business on the day before the Effective Date. After a
determination of the fair value of the Dissent Shares, First Mining
must then promptly pay that amount to the Dissenting
Shareholder.
In no
case will First Mining or any other person be required to recognize
Dissenting Shareholders as shareholders after the Effective Time,
and the names of such Dissenting Shareholders will be deleted from
the central securities register as shareholders at the Effective
Time.
In no
circumstances will First Mining or any other person be required to
recognize a person as a Dissenting Shareholder: (i) unless such
person is the holder of the Common Shares in respect of which
Dissent Rights are purported to be exercised immediately prior to
the Effective Time; (ii) if such person has voted or instructed a
proxy holder to vote such Notice Shares in favour of the
Distribution Resolution; or (iii) unless such person has strictly
complied with the procedures for exercising Dissent Rights set out
in sections 237 to 247 of the BCBCA, as modified by the Plan of
Arrangement, the Interim Order and the Final Order and does not
withdraw such Notice of Dissent prior to the Effective
Time.
Dissent
Rights with respect to Notice Shares will terminate and cease to
apply to the Dissenting Shareholder if, before full payment is made
for the Notice Shares, the Distribution in respect of which the
Notice of Dissent was sent is abandoned or by its terms will not
proceed, a court permanently enjoins or sets aside the corporate
action approved by the Distribution Resolution, or the Dissenting
Shareholder withdraws the Notice of Dissent with First
Mining’s written consent. If any of these events occur, First
Mining must return the share certificates or DRS statements
representing the Common Shares to the Dissenting Shareholder and
the Dissenting Shareholder regains the ability to vote and exercise
its rights as a shareholder, and the Dissenting Shareholder must
return any money paid to them in respect of the Notice Shares
under, or in purported compliance with sections 237 to 247 of the
BCBCA, as modified by the Plan of Arrangement, the Interim Order
and the Final Order.
Each
shareholder wishing to avail himself, herself or itself of the
Dissent Rights should carefully consider and comply with the
provisions of the Interim Order and sections 237 to 247 of the
BCBCA, which are attached to this Circular as Appendices
“E” and “G”, respectively, and seek his,
her or its own legal advice. There can be no assurance that the
amount a Dissenting Shareholder will receive as fair value for
their Common Shares will be more than or equal to the consideration
under the Arrangement.
The above is only a summary of the Dissent Procedures which are
technical and complex. If you are a registered shareholder and wish
to exercise your Dissent Rights, you should seek your own legal
advice as failure to strictly comply with the Dissent Procedures
may result in the loss of your Dissent Rights. For a general
summary of certain Canadian income tax implications to a Dissenting
Shareholder, see “Material
Income Tax Considerations – Certain Canadian Federal Income
Tax Considerations – Holders Resident in Canada –
Dissenting Resident Holders” and “Material Income Tax Considerations –
Certain Canadian Federal Income Tax Considerations – Holders
Not Resident in Canada – Dissenting Non-Resident
Holders”.
Canadian Securities Laws
Treasury
Metals is a reporting issuer in the following jurisdictions in
Canada: British Columbia, Alberta and Ontario. The Treasury Metals
Shares currently trade on the TSX in Canada. The Treasury Metals
Warrants are not currently listed on any stock exchange. However,
pursuant to the Investor Rights Agreement, Treasury Metals is
required to use commercially reasonably efforts to list the
Treasury Metals Warrants for trading on the TSX and the OTCQX in
the United States.
The
distribution of the Treasury Metals Securities pursuant to the Plan
of Arrangement will constitute a distribution of securities which
is exempt from prospectus requirements of Canadian securities
legislation. The Distribution is a “control
distribution” as defined in National Instrument 45-102
Resale of Securities of the
Canadian Securities Administrators (“NI 45-102”); however, at the time
of the Distribution, Treasury Metals will have been a
“reporting issuer” for the four months preceding the
Distribution, First Mining has held the Treasury Metals Securities
for more than four months, no unusual effort is made to prepare the
market or create a demand for the Treasury Metals Securities, no
extraordinary commission or consideration is paid in respect of the
Distribution and First Mining has no reasonable grounds to believe
Treasury Metals is in default of securities
legislation.
With
certain exceptions, once First Mining has effected the
Distribution, the Treasury Metals Securities may generally be
resold in each of the provinces of Canada by the shareholders
provided the trade is not a “control distribution” as
defined in NI 45-102 , no unusual effort is made to prepare the
market or create a demand for those securities, no extraordinary
commission or consideration is paid to a person or company in
respect of the trade and, if the selling security holder is an
insider or officer of Treasury Metals, the insider or officer has
no reasonable grounds to believe that Treasury Metals is in default
of securities legislation.
To the
extent that a shareholder resides in a non-Canadian jurisdiction,
the Treasury Metals Securities received by the shareholder may be
subject to additional trading restrictions under the applicable
securities laws of that jurisdiction.
U.S. Securities Laws
The
Treasury Metals Securities distributed to shareholders pursuant to
the Distribution have not been and will not be registered under the
1933 Act or the securities laws of any state of the United States,
and will be distributed in reliance upon the exemption from
registration under the 1933 Act provided by Section 3(a)(10)
thereof and available exemptions from applicable U.S. state
registration requirements.
Section
3(a)(10) of the 1933 Act provides an exemption from registration
under the 1933 Act for offers and sales of securities issued in
exchange for one or more bona fide outstanding securities, claims
or property interests, or partly in such exchange and partly for
cash, where the terms and conditions of the issuance of the
securities in such exchange have been approved by a court
authorized to grant such approval after a hearing upon the fairness
of the terms and conditions of the issuance and exchange at which
all persons to whom the securities will be issued have the right to
appear and receive timely notice thereof. The Court is authorized
to conduct a hearing at which the fairness of the terms and
conditions of the Distribution will be considered. First Mining
expects the Court to issue the Interim Order on May 17, 2021 and,
subject to the approval of the Distribution by the shareholders at
the Meeting, it is expected that a hearing in respect of the Final
Order will take place at 800 Smithe Street, Vancouver, British
Columbia, by teleconference or by any other manner as the Court may
require, on or about July 5, 2021 at 9:45 a.m. (Pacific Time) or as
soon thereafter as counsel may be heard. All shareholders are
entitled to appear and be heard at this hearing. The Final Order
will constitute the basis for an exemption from the registration
requirements of the 1933 Act, provided by Section 3(a)(10) thereof,
with respect to the distribution of the Treasury Metals Securities
to be distributed pursuant to the Distribution. The Court has been
informed of this effect of the Final Order.
The
hearing in respect of the Final Order is expected to take place at
800 Smithe Street, Vancouver, British Columbia, by teleconference
or by any other manner as the Court may require, on or about July
5, 2021 at 9:45 a.m. (Pacific Time) or as soon thereafter as
counsel may be heard.
The
Treasury Metals Securities distributed to shareholders pursuant to
the Distribution will be freely tradable under the 1933 Act, except
by persons who are “affiliates” of Treasury Metals
after the Distribution or were affiliates of Treasury Metals within
90 days prior to completion of the Distribution. Persons who may be
deemed to be “affiliates” of an issuer include
individuals or entities that control, are controlled by, or are
under common control with, the issuer, whether through ownership of
voting securities, by contract or otherwise, and generally include
executive officers and directors of the issuer as well as principal
shareholders of the issuer.
The
Section 3(a)(10) exemption does not exempt the subsequent issuance
of securities issued upon conversion or exercise of securities of
securities issued pursuant to the Section 3(a)(10) exemption.
Therefore, the Treasury Metals Warrant Shares issuable upon
exercise of the Treasury Metals Warrants may not be issued pursuant
to the Section 3(a)(10) exemption and may be issued only in
transactions that do not require registration under the 1933 Act.
The Treasury Metals Warrant Indenture contemplates that the
Treasury Metals Warrants shall be exercisable solely by means of a
“cashless exercise”, with the result that the issuance
of the underlying Treasury Metals Warrant Shares should be eligible
for the exemption from the registration requirements of the 1933
Act provided by Section 3(a)(9) thereof. Under the 1933 Act, as
interpreted by Staff at the U.S. Securities and Exchange
Commission, Treasury Metals Warrant Shares issued pursuant to that
exemption will be freely tradable under the 1933 Act, except by
persons who are then affiliates of Treasury Metals.
Any
resale of Treasury Metals Securities or Treasury Metals Warrant
Shares by an affiliate of Treasury Metals (or, if applicable,
former affiliate, and including, with reference to the Treasury
Metals Securities, any person who was an affiliate of Treasury
Metals within 90 days prior to completion of the Distribution) may
be subject to the registration requirements of the 1933 Act, absent
an exemption therefrom. Subject to certain limitations, such
affiliates (and former affiliates) may immediately resell such
securities outside the United States without registration under the
1933 Act pursuant to and in accordance with Regulation S under the
1933 Act. Such securities may also be resold in transactions
completed in accordance with Rule 144 under the 1933 Act, if
available.
The
foregoing discussion is only a general overview of certain
requirements of the 1933 Act applicable to the resale of the
securities distributed to shareholders pursuant to the
Distribution. All holders of such securities are urged to consult
with counsel to ensure that the resale of their securities complies
with applicable securities legislation.
The
solicitation of proxies is not subject to the requirements of
Section 14(a) of the United States Securities Exchange Act of 1934,
as amended. The solicitation of proxies is being made by or on
behalf of a Canadian issuer in accordance with Canadian securities
laws, and this Circular has been prepared in accordance with
disclosure requirements applicable in Canada, including, without
limitation, disclosure with respect to mining operations.
Shareholders should be aware that requirements under such Canadian
laws and such disclosure requirements differ from requirements
under United States corporate and securities laws relating to
United States corporations. The financial statements and other
financial information included in this Circular have been prepared
in accordance with IFRS, and are subject to Canadian auditing
standards, and thus may not be comparable to financial statements
of United States corporations. Likewise, information concerning
First Mining and Treasury Metals and their respective current or
expected businesses, properties and operations, as applicable,
contained or incorporated herein by reference has been prepared in
accordance with disclosure requirements applicable in Canada and
such disclosure requirements may be materially different from those
applicable in the United States.
The
enforcement by shareholders of civil liabilities under the
securities laws of the United States may be affected adversely by
the fact that First Mining is organized under the laws of a
jurisdiction other than the United States, that some or all of its
officers and directors are residents of countries other than the
United States, and that some or all of the experts named in this
Circular may be residents of countries other than the United
States. As a result, it may be difficult or impossible for
shareholders to effect service of process within the United States
First Mining or its officers or directors or the experts named
herein, or to realize against them upon judgments of the courts of
the United States predicated upon civil liabilities under the
securities laws of the United States. In addition, shareholders
should not assume that the courts of Canada: (a) would enforce
judgments of United States courts obtained in actions against such
persons predicated upon civil liabilities under the securities laws
of the United States; or (b) would enforce, in original actions,
liabilities against such persons predicated upon civil liabilities
under the securities laws of the United States.
THE DISTRIBUTION AND THE SECURITIES DISTRIBUTABLE PURSUANT TO THE
DISTRIBUTION HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES REGULATORY
AUTHORITY OF ANY STATE OF THE UNITED STATES, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY SUCH STATE SECURITIES REGULATORY
AUTHORITY PASSED ON THE ADEQUACY OR ACCURACY OF THIS CIRCULAR. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
IRS Form W-9 for U.S. Shareholders
ALL
U.S. SHAREHOLDERS ARE ENCOURAGED TO READ AND COMPLY WITH THE
FOLLOWING INSTRUCTIONS:
If you
are a U.S person (as defined below) or acting on behalf of a U.S.
person, in order to assist the Company in satisfying its
obligations with respect to backup withholding of U.S. Federal
income tax, the Company requests that you please complete an IRS
Form W-9 (enclosed with this Circular) and return it to the Company
at the following address:
First
Mining Gold Corp.
Suite
2070 – 1188 West Georgia Street
Vancouver, British
Columbia V6E 4A2
Attention: Samir
Patel, General Counsel & Corporate Secretary
A
“U.S. person”
means: a beneficial owner of Common Shares that, for United States
federal income tax purposes, is (a) a citizen or resident of the
United States, (b) a corporation, or other entity classified as a
corporation for United States federal income tax purposes, that is
created or organized in or under the laws of the United States or
any state in the United States, including the District of Columbia,
(c) an estate if the income of such estate is subject to United
States federal income tax regardless of the source of such income,
(d) a trust if (i) such trust has validly elected to be treated as
a U.S. person for United States federal income tax purposes or (ii)
a United States court is able to exercise primary supervision over
the administration of such trust and one or more U.S. persons have
the authority to control all substantial decisions of such trust,
or (e) a partnership, limited liability company or other entity
classified as a partnership for United States tax purposes that is
created or organized in or under the laws of the United States or
any state in the United States, including the District of
Columbia.
Material Income Tax Considerations
Certain Canadian Federal Income Tax Considerations
The
following summarizes certain Canadian federal income tax
considerations under the Income
Tax Act (Canada) (the “Tax Act”) generally applicable to
First Mining shareholders in respect of the distribution of
Treasury Metals Shares and Treasury Metals Warrants to First Mining
shareholders pursuant to the Distribution.
Comment
is restricted to First Mining shareholders who, for purposes of the
Tax Act, (i) hold their Common Shares solely as capital property,
and (ii) deal at arm’s length with and are not affiliated
with the First Mining or Treasury Metals (each such shareholder, a
“Holder”).
Generally,
Common Shares will be considered to be capital property to a Holder
thereof provided that the Holder does not use the Common Shares in
the course of carrying on a business of trading or dealing in
securities and such Holder has not acquired such shares in one or
more transactions considered to be an adventure or concern in the
nature of trade.
This
summary does not apply to a Holder that:
(a)
is a
“financial institution” for the purposes of the
mark-to-market rules in the Tax Act or a “specified financial
institution” as defined in the Tax Act;
(b)
is a person or
partnership an interest in which is a “tax shelter
investment” for purposes of the Tax Act;
(c)
has elected to
report its Canadian federal income tax results in a currency other
than Canadian currency;
(d)
has entered into or
will enter into a “derivative forward agreement”, a
“synthetic disposition arrangement”, or a
“synthetic equity arrangement” as those terms are or
are proposed to be defined in the Tax Act;
(e)
has acquired Common
Shares, on the exercise of an employee stock option;
or
(f)
is otherwise a
Holder of special status or in special circumstances.
All
such Holders should consult their own tax advisors with respect to
the consequences of the Distribution.
Additional
considerations, not discussed herein, may be applicable to a Holder
that is a corporation resident in Canada or a corporation that does
not deal at arm’s length, for purposes of the Tax Act, with a
corporation resident in Canada, and is, or becomes as part of a
transaction or event or series of transactions or events,
controlled by a non-resident person, or a group of non-resident
persons not dealing with each other at arm’s length, for
purposes of the “foreign affiliate dumping” rules in
section 212.3 of the Tax Act. Such Holders should consult their tax
advisors.
Holders should consult their own tax advisors and the publicly
available documents of Treasury Metals with respect to the holding
and disposition of the Treasury Metals Shares and the Treasury
Metals Warrants acquired pursuant to the Distribution.
In
addition, this summary does not address the income tax
considerations to holders of First Mining Options and First Mining
Warrants.
This
summary assumes that the Treasury Metals Shares and Treasury Metals
Warrants were proceeds realized by First Mining from a transaction
that occurred (a) outside the ordinary course of business of First
Mining; and (b) within 24 months of the Effective Date.
No tax ruling or legal opinion has
been sought or obtained in this regard, or with respect to any of
the assumptions made throughout this summary of Certain Canadian Federal
Income Tax Considerations,
and the summary below is qualified accordingly.
This
summary is based on the current provisions of the Tax Act, the
regulations thereunder (the “Regulations”), and our
understanding of the current published administrative practices and
policies of the Canada Revenue Agency (the “CRA”). This summary takes into
account all specific proposals to amend the Tax Act and Regulations
(the “Proposed
Amendments”) announced by the Minister of Finance
(Canada) prior to the date hereof. It is assumed that the Proposed
Amendments will be enacted as currently proposed and that there
will be no other change in law or administrative or assessing
practice, whether by legislative, governmental, or judicial action
or decision, although no assurance can be given in these respects.
This summary does not take into account provincial, territorial or
foreign income tax considerations, which may differ materially from
the Canadian federal income tax considerations discussed
below.
This summary is of a general nature only and is not and should not
be construed as legal or tax advice to any particular person
(including a Holder as defined above). Each person who may be
affected by the Distribution should consult the person’s own
tax advisors with respect to the person’s particular
circumstances.
HOLDERS RESIDENT IN CANADA
This
portion of this summary applies only to Holders who are or are
deemed to be resident solely in Canada for the purposes of the Tax
Act and any applicable income tax treaty or convention (each, a
“Resident
Holder”).
A
Resident Holder whose Common Shares might not otherwise qualify as
capital property may be entitled to make an irrevocable election
permitted by subsection 39(4) of the Tax Act to deem such shares,
and every other “Canadian security” (as defined in the
Tax Act), held by such person, in the taxation year of the election
and each subsequent taxation year to be capital
property.
Distribution of Treasury Metals Shares and Treasury Metals Warrants
by Reduction of Capital
The
distribution of Treasury Metals Shares and Treasury Metals Warrants
pursuant to the Distribution (the “Distribution”) will be deemed to
be a dividend paid by First Mining to the extent the fair market
value of the Treasury Metals Shares and Treasury Metals Warrants
distributed exceeds the “paid-up capital” (as defined
in the Tax Act) (“PUC”) of the Common Shares,
determined at the Effective Time (the “Excess”). A Resident Holder will
be deemed to have received a dividend equal to their pro rata
portion of the Excess at the Effective Time. Any such taxable
dividend will be taxable as described below under
“Holders Resident in Canada
‒ Taxation of Dividends”. However, First Mining expects that the fair
market value of all Treasury Metals Shares and Treasury Metals
Warrants distributed pursuant to the Distribution under the
Distribution will not exceed the PUC of the Common
Shares. Accordingly, First Mining
does not expect that any Resident Holder will be deemed to receive
a taxable dividend on the Distribution.
A
Resident Holder who receives Treasury Metals Shares and Treasury
Metals Warrants on the Distribution will realize a capital gain
equal to the amount, if any, by which the Distribution, less the
amount of any taxable dividend deemed to be received by the
Resident Holder as described in the preceding paragraph, exceeds
the “adjusted cost base” (as defined in the Tax Act)
(“ACB”) of the
Resident Holder’s Common Shares determined immediately before
the Distribution. Any capital gain so realized will be taxable as
described below under “Holders Resident in Canada ‒ Taxation of
Capital Gains and Capital Losses”.
The
Resident Holder will acquire the Treasury Metals Shares and
Treasury Metals Warrants received on the Distribution at a cost
equal to their fair market value as at the Effective Time. The ACB
of a Resident Holder’s Common Shares after the Distribution
will be equal to the amount, if any, by which the ACB of the
Resident Holder’s Common Shares immediately before the
Distribution exceeds the aggregate fair market value of the
Treasury Metals Shares and Treasury Metals Warrants as at the
Effective Time.
Taxation of Dividends
A
Resident Holder who is an individual (other than certain trusts)
and receives or is deemed to receive a taxable dividend in a
taxation year on the Resident Holder’s Common Shares will be
required to include the amount of the dividend in income for the
year, subject to the dividend gross-up and tax credit rules
applicable to taxable dividends received by a Canadian resident
individual from a taxable Canadian corporation, including the
enhanced dividend gross-up and tax credit that may be applicable if
and to the extent that the First Mining designates the taxable
dividend to be an “eligible dividend” in accordance
with the Tax Act. There may be limitations on the ability of First
Mining to designate dividends as “eligible dividends”
and First Mining has made commitments in this regard.
A
Resident Holder that is a corporation and receives or is deemed to
receive a taxable dividend in a taxation year on its Common Shares
must include the amount in its income for the year, but generally
will be entitled to deduct an equivalent amount from its taxable
income, subject to all restrictions under the Tax Act.
In
certain circumstances, subsection 55(2) of the Tax Act will treat a
taxable dividend received by a Resident Holder that is a
corporation as proceeds of disposition or capital gain. Resident
Holders that are corporations are urged to consult their own tax
advisers having regard to their particular circumstances. A
Resident Holder that is a “private corporation” or a
“subject corporation” (as defined in the Tax Act) may
also be liable under Part IV of the Tax Act to pay a special tax
(refundable in certain circumstances) on any such dividends to the
extent that the dividend is deductible in computing the
corporation’s taxable income.
Taxation of Capital Gains and Capital Losses
A
Resident Holder who realizes a capital gain or capital loss in a
taxation year on the actual or deemed disposition of a First Mining
Share generally will be required to include one half of any such
capital gain (a “taxable
capital gain”) in income for the year, and entitled to
deduct one half of any such capital loss (an “allowable capital loss”) against
taxable capital gains realized in the year and, to the extent not
so deductible, in any of the three preceding taxation years or any
subsequent taxation year, to the extent and in the circumstances
specified in the Tax Act.
The
amount of any capital loss realized by a Resident Holder that is a
corporation may be reduced by the amount of dividends received or
deemed to have been received by it on the share (or on a share
substituted therefor) to the extent and in the circumstances
described in the Tax Act. Similar rules may apply where the
corporation is a member or beneficiary of a partnership or trust
that held the share, or where a partnership or trust of which the
corporation is a member or beneficiary is itself a member of a
partnership or a beneficiary of a trust that held the share.
Resident Holders should consult their own tax advisors in this
regard.
A
Resident Holder that is a “Canadian-controlled private
corporation” (as defined in the Tax Act) throughout the
relevant taxation year may be liable to pay an additional tax
(refundable in certain circumstances) on its “aggregate
investment income”, which includes taxable capital gains, for
the year.
Minimum Tax on Individuals
A
Resident Holder who is an individual (including certain trusts) and
receives a taxable dividend on, or realizes a capital gain on the
disposition of a First Mining Share may thereby be liable for
minimum tax to the extent and within the circumstances set out in
the Tax Act.
Dissenting Resident Holders
A
Resident Holder who validly exercises Dissent Rights (a
“Dissenting Resident
Holder”) and who consequently transfers or is deemed
to transfer Common Shares to First Mining for payment by First
Mining will be deemed to receive a taxable dividend in the taxation
year of payment equal to the amount, if any, by which the payment
(excluding interest) exceeds the PUC of the Dissenting Resident
Holder’s Common Shares determined immediately before the
Distribution. Any such taxable dividend will be taxable as
described above under “Holders Resident in Canada – Taxation of
Dividends”.
The
Dissenting Resident Holder will also realize a capital gain (or
capital loss) equal to the amount, if any, by which the payment
(excluding interest), less any such deemed taxable dividend,
exceeds (is exceeded by) the ACB of the Dissenting Resident
Holder’s Common Shares determined immediately before the
Distribution. Any such capital gain or loss will generally be
taxable or deductible as described above under “Holders Resident in Canada – Taxation of
Capital Gains and Capital Losses”.
The
Dissenting Resident Holder will be required to include any portion
of the payment that is on account of interest in income in the year
received.
HOLDERS NOT RESIDENT IN CANADA
This
portion of this summary applies only to Holders each of whom at all
material times for the purposes of the Tax Act (i) has not been and
is not resident or deemed to be resident in Canada for purposes of
the Tax Act, and (ii) does not and will not use or hold First
Mining Share in connection with carrying on a business in Canada
(each, a “Non-Resident
Holder”).
Special
rules, which are not discussed in this summary, may apply to a
Non-Resident Holder that is an insurer carrying on business in
Canada and elsewhere, or an “authorized foreign bank”
as defined in the Tax Act. Such Non-Resident Holders should consult
their own tax advisers with respect to the
Distribution.
Distribution of Treasury Metals Shares and Treasury Metals Warrants
by Reduction of Capital
The
discussion of the tax consequences of the Distribution for Resident
Holders under the heading “Holders Resident in Canada ‒ Distribution of Treasury Metals Shares and
Treasury Metals Warrants by Reduction of Capital”
generally will also apply to Non-Resident Holders in respect of the
Distribution. The general taxation rules applicable to Non-Resident
Holders in respect of a deemed taxable dividend or capital gain
arising on the Distribution are discussed below under the headings
“Holders Not Resident in
Canada – Taxation of Dividends” and
“Holders Not Resident in
Canada – Taxation of Capital Gains and Capital
Losses” respectively.
Taxation of Dividends
A
Non-Resident Holder to whom First Mining pays or credits (or is
deemed to pay or credit) an amount as a dividend in respect of the
Distribution (if at all), or otherwise in respect of the
Non-Resident Holder’s Common Shares, will be subject to
Canadian withholding tax equal to 25% (or such lower rate as may be
available under an applicable income tax convention, if any) of the
gross amount of the dividend. In general, in the case of a
Non-Resident Holder who is a resident of the United States for the
purposes of the Canada-US Tax Act
Convention (1980), as amended (the “Treaty”), who is the beneficial
owner of the dividend, and who qualifies for full benefits of the
Treaty, the rate of such withholding tax will be reduced to
15%.
Taxation of Capital Gains and Capital Losses
A
Non-Resident Holder will not be subject to Canadian federal income
tax in respect of any capital gain arising on a deemed disposition
of a First Mining Share (as a result of the ACB of the share
becoming negative on the Distribution) unless, at the time of such
deemed disposition, the share is “taxable Canadian
property” as defined in the Tax Act and is not
“treaty-protected property” as so defined. Generally, a
First Mining Share of the Non-Resident Holder will not be taxable
Canadian property of the Non-Resident Holder at any time at which
the share is listed on a “designated stock exchange” as
defined in the Tax Act (which includes the TSX and FSE) unless, at
any time during the 60 months immediately preceding the disposition
of the share:
(a)
the Non-Resident
Holder, one or more persons with whom the Non-Resident Holder did
not deal at arm’s length, partnerships in which the
Non-Resident Holder or persons with whom the Non-Resident Holder
did not deal at arm’s length held membership interests
(directly or indirectly), or any combination of the foregoing,
owned 25% or more of the issued shares of any class of the capital
stock of First Mining, as applicable; and
(b)
the share derived
more than 50% of its fair market value directly or indirectly from,
or from any combination of, real property situated in Canada,
“Canadian resource properties”, “timber resource
properties” (as those terms are defined in the Tax Act), and
interest, rights or options in or in respect of any of the
foregoing.
Common
Shares may also be deemed to be “taxable Canadian
property” under other provisions of the Tax Act.
Non-Resident Holders who may hold shares as “taxable Canadian
property” should consult their own tax advisors in this
regard, including with respect to the potential Canadian income tax
filing requirements of owning and disposing of such
shares.
Dissenting Non-Resident Holders
The
discussion above applicable to Resident Holders under the heading
“Holders Resident in Canada
– Dissenting Resident Holders” will generally
also apply to a Non-Resident Holder who validly exercises Dissent
Rights in respect of the Distribution. In general terms, the
Non-Resident Holder will be subject to Canadian federal income tax
in respect of any deemed taxable dividend arising as a consequence
of the exercise of Dissent Rights generally as discussed above
under the heading “Holders
Not Resident in Canada – Taxation of Dividends”
and subject to the Canadian federal income tax treatment in respect
of any capital gain or loss arising as a consequence of the
exercise of Dissent Rights generally as discussed above under the
heading “Holders Not
Resident in Canada – Taxation of Capital Gains and Capital
Losses”.
Certain United States Federal Income Tax
Considerations
The
following discussion summarizes certain material U.S. federal
income tax consequences to a U.S. Holder, as defined below, of the
receipt of Treasury Metals Shares and Treasury Metals Warrants
pursuant to the Distribution and the ownership and disposition of
such Treasury Metals Shares and Treasury Metals Warrants, and the
acquisition, ownership, and disposition of Treasury Metals Shares
received upon exercise of the Treasury Metals Warrants
(“Treasury Metals Warrant
Shares”). This summary does not address the U.S.
federal income tax consequences to holders of First Mining Options
or First Mining Warrants regarding the Distribution.
This
summary is based on the U.S. Internal Revenue Code of 1986, as
amended (the “Tax
Code”), Treasury regulations promulgated
under the Tax Code (“Treasury
Regulations”), administrative pronouncements,
rulings or practices, and judicial decisions, all as of the date of
this Circular. Future legislative, judicial, or administrative
modifications, revocations, or interpretations, which may or may
not be retroactive, and may result in U.S. federal income tax
consequences significantly different from those discussed in this
Circular. No legal opinion from U.S. legal counsel has been or will
be sought or obtained regarding the U.S. federal income tax
consequences of the Distribution. In addition, this summary is not
binding on the U.S. Internal Revenue Service (the
“IRS”), and no ruling has been or will be
sought or obtained from the IRS with respect to any of the U.S.
federal income tax consequences discussed in this Circular. There
can be no assurance that the IRS will not challenge any of the
conclusions described in this Circular or that a U.S. court will
not sustain such a challenge.
This
summary is for general informational purposes only and does not
address all possible U.S. federal tax issues that could apply with
respect to the Distribution. This summary does not take into
account the facts unique to any particular U.S. Holder that could
impact its U.S. federal income tax consequences with respect to the
Distribution. This discussion is not, and should not be, construed
as legal or tax advice to a U.S. Holder. Except as provided below,
this summary does not address tax reporting requirements. Each U.S.
Holder should consult its own tax advisors regarding the U.S.
federal income, the Medicare contribution tax on certain net
investment income, the alternative minimum, U.S. state and local,
and non-U.S. tax consequences of the Distribution and the ownership
and disposition of Treasury Metals Shares, Treasury Metals Warrants
and Treasury Metals Warrant Shares.
This
summary does not address the U.S. federal income tax consequences
to U.S. Holders subject to special rules, including, but not
limited to, U.S. Holders that: (i) are banks, financial
institutions, or insurance companies; (ii) are regulated investment
companies or real estate investment trusts; (iii) are brokers,
dealers, or traders in securities or currencies; (iv) are
tax-exempt organizations; (v) hold First Mining Shares (or after
the Distribution, Treasury Metals Shares, Treasury Metals Warrants
or Treasury Metals Warrant Shares) as part of hedges, straddles,
constructive sales, conversion transactions, or other integrated
investments; (vi) except as specifically provided below, acquire
First Mining Shares (or after the Distribution, Treasury Metals
Shares, Treasury Metals Warrants or Treasury Metals Warrant Shares)
as compensation for services or through the exercise or
cancellation of employee stock options or warrants; (vii) have a
functional currency other than the U.S. dollar; (viii) own or have
owned directly, indirectly, or constructively 10% or more of the
voting power of all outstanding shares of First Mining (and after
the Distribution, Treasury Metals); (ix) are U.S. expatriates or
former long-term residents of the U.S.; (x) are subject to special
tax accounting rules; (xi) are subject to the alternative minimum
tax; (xii) are deemed to sell First Mining Shares (or after the
Distribution, Treasury Metals Shares, Treasury Metals Warrants or
Treasury Metals Warrant Shares) under the constructive sale
provisions of the Tax Code; (xiii) own or will own First Mining
Shares, Treasury Metals Shares, Treasury Metals Warrants or
Treasury Metals Warrant Shares that it acquired at different times
or at different market prices or that otherwise have different per
share cost bases or holding periods for U.S. tax purposes; or (xiv)
are subject to taxing jurisdictions other than, or in addition to,
the U.S. In addition, this discussion does not address U.S. federal
tax laws other than those pertaining to U.S. federal income tax
(such as U.S. federal estate or gift tax, U.S. federal alternative
minimum tax, and the Medicare contribution tax on certain net
investment income), nor does it address any aspects of U.S. state,
local or non-U.S. taxes. U.S. Holders that are subject to special
provisions under the Tax Code, including U.S. Holders described
immediately above, should consult their own tax advisors regarding
the U.S. federal income tax consequences of the Distribution and
the ownership and disposition of Treasury Metals Shares, Treasury
Metals Warrants and Treasury Metals Warrant Shares.
For the
purposes of this summary, “U.S. Holder” means a beneficial
owner of First Mining Shares, Treasury Metals Shares, Treasury
Metals Warrants or Treasury Metals Warrant Shares (as applicable)
that is: (i) an individual who is a citizen or resident of the U.S.
for U.S. federal income tax purposes; (ii) a corporation (or other
entity taxable as a corporation for U.S. federal income tax
purposes) created or organized under the laws of the U.S., any U.S.
state, or the District of Columbia; (iii) an estate, the income of
which is subject to U.S. federal income tax regardless of its
source; or (iv) a trust that (a) is subject to the primary
jurisdiction of a court within the U.S. and for which one or more
U.S. persons have authority to control all substantial decisions or
(b) has a valid election in effect under applicable Treasury
Regulations to be treated as a U.S. person.
If a
pass-through entity, including a partnership or other entity
taxable as a partnership for U.S. federal income tax purposes,
holds First Mining Shares, Treasury Metals Shares, Treasury Metals
Warrants or Treasury Metals Warrant Shares, the U.S. federal income
tax treatment of an owner or partner generally will depend on the
status of such owner or partner and on the activities of the
pass-through entity. This summary does not address any U.S. federal
income tax consequences to such owners or partners of a partnership
or other entity taxable as a partnership for U.S. federal income
tax purposes holding First Mining Shares, Treasury Metals Shares,
Treasury Metals Warrants or Treasury Metals Warrant Shares and such
persons should consult their own tax advisors.
For the
purposes of this summary, “non-U.S. Holder” means a
beneficial owner of First Mining Shares, Treasury Metals Shares,
Treasury Metals Warrants or Treasury Metals Warrant Shares (as
applicable) other than a U.S. Holder and a partnership. This
summary does not address the U.S. federal income tax consequences
of the Distribution to non-U.S. Holders. Accordingly, non-U.S.
Holders should consult their own tax advisors regarding the U.S.
federal income, other U.S. federal, U.S. state and local, and
non-U.S. tax consequences (including the potential application and
operation of any income tax treaties) of the
Distribution.
This
summary assumes that the First Mining Shares, Treasury Metals
Shares, Treasury Metals Warrants and Treasury Metals Warrant Shares
are or will be held as capital assets (generally, property held for
investment), within the meaning of the Tax Code, in the hands of a
U.S. Holder at all relevant times.
Receipt of Treasury Metals Securities Pursuant to the
Distribution
Subject
to the “passive foreign investment company”
(“PFIC”) rules
discussed below under “Potential Application of the PFIC
Rules to the Distribution”, a U.S. Holder that receives
Treasury Metals Securities pursuant to the Distribution will be
treated as receiving a distribution of property in an amount equal
to the fair market value of the Treasury Metals Securities received
on the distribution date (without reduction for any Canadian income
or other tax withheld from such distribution). Such distribution
would be taxable to the U.S. Holder as a dividend to the extent of
First Mining’s current and accumulated earnings and profits
as determined under U.S. federal income tax principles. To the
extent the fair market value of the Treasury Metals Securities
distributed exceeds First Mining's adjusted tax basis in such
securities (as calculated for U.S. federal income tax purposes),
the Distribution can be expected to generate additional earnings
and profits for First Mining in an amount equal to the extent the
fair market value of the Treasury Metals Securities distributed by
First Mining exceeds First Mining's adjusted tax basis in those
securities for U.S. federal income tax purposes. To the extent that
the fair market value of the Treasury Metals Securities exceeds the
current and accumulated earnings and profits of First Mining, the
distribution of the Treasury Metals Securities pursuant to the
Distribution will be treated first as a non-taxable return of
capital to the extent of a U.S. Holder's tax basis in the First
Mining Shares, with any remaining amount being taxed as a capital
gain. However, First Mining does not intend to calculate its
earnings and profits in accordance with U.S. federal income tax
principles, and each U.S. Holder therefore should assume that the
full fair market value of the Treasury Metals Securities will
constitute ordinary dividend income. Any such dividend generally
will not be eligible for the “dividends received
deduction” in the case of U.S. Holders that are corporations.
Preferential tax rates apply to long-term capital gains of a U.S.
Holder that is an individual, estate, or trust. There are currently
no preferential tax rates for long-term capital gains of a U.S.
Holder that is a corporation. U.S. Holders will have a tax basis in
the Treasury Metals Securities received in the Distribution in
amount equal to the fair market value of the Treasury Metals
Securities on the distribution date.
A
dividend paid by First Mining to a U.S. Holder who is an
individual, estate or trust generally will be taxed at the
preferential tax rates applicable to long-term capital gains if
First Mining is a “qualified foreign corporation”
(“QFC”) and
certain holding period and other requirements for the First Mining
Shares are met. First Mining generally will be a QFC as defined
under Section 1(h)(11) of the Tax Code if First Mining is eligible
for the benefits of the Treaty or its shares are readily tradable
on an established securities market in the U.S. However, even if
First Mining satisfies one or more of these requirements, First
Mining will not be treated as a QFC if First Mining is a PFIC (as
defined below) for the tax year during which it pays a dividend or
for the preceding tax year. See the section below under the heading
“Potential Application of
the PFIC Rules to the Distribution”.
If a
U.S. Holder is not eligible for the preferential tax rates
discussed above, a dividend paid by First Mining to a U.S. Holder
generally will be taxed at ordinary income tax rates (rather than
the preferential tax rates applicable to long-term capital gains).
The dividend rules are complex, and each U.S. Holder should consult
its own tax advisors regarding the application of such
rules.
Dissenting U.S. Holders
Subject
to the PFIC rules discussed below under “Potential
Application of the PFIC Rules to the Distribution” a U.S.
Holder that exercises Dissent Rights in connection with the
Distribution (a “Dissenting
U.S. Holder”) and receives cash for such U.S.
Holder’s First Mining Shares generally will recognize gain or
loss in an amount equal to the difference, if any, between (a) the
amount of cash received by such U.S. Holder in exchange for the
First Mining Shares (other than amounts, if any, that are or are
deemed to be interest for U.S. federal income tax purposes, which
amounts will be taxed as ordinary income) and (b) the adjusted tax
basis of such U.S. Holder in the First Mining Shares surrendered,
provided such U.S. Holder does not actually or constructively own
any First Mining Shares after the Distribution. Such gain or loss
generally will be capital gain or loss, which will be long-term
capital gain or loss if the First Mining Shares are held for more
than one year. Preferential tax rates apply to long-term capital
gains of a U.S. Holder that is an individual, estate, or trust.
There are currently no preferential tax rates for long-term capital
gains of a U.S. Holder that is a corporation. Deductions for
capital losses are subject to complex limitations under the Tax
Code.
If a
U.S. Holder that exercises Dissent Rights in connection with the
Distribution and receives cash for such U.S. Holder's First Mining
Shares actually or constructively owns First Mining Shares after
the Distribution, all or a portion of the cash received by such
U.S. Holder may be taxable as a distribution under the same rules
as discussed under “Receipt of Treasury Metals Securities
Pursuant to the Distribution” above.
Potential Application of the PFIC Rules to the
Distribution
The tax
considerations of the Distribution to a particular U.S. Holder will
depend on whether First Mining was a PFIC during any year in which
a U.S. Holder owned First Mining Shares. For more detailed
information regarding the PFIC rules, see below under "U.S. Federal Income Tax
Consequences Related to the Ownership and Disposition of Treasury
Metals Securities – Passive Foreign Investment Company
Rules".
The
determination of PFIC status is inherently factual and generally
cannot be determined until the close of the taxable year in
question. Additionally, the analysis depends, in part, on the
application of complex U.S. federal income tax rules, which are
subject to differing interpretations. U.S. Holders should consult
their own U.S. tax advisors regarding the application of the PFIC
rules to the Distribution. Certain subsidiaries and other entities
in which a PFIC has a direct or indirect interest could also be
PFICs with respect to a U.S. person owning an interest in the
first-mentioned PFIC. First Mining believes that it was a PFIC for
certain prior tax years and based on current business plans and
financial projections, First Mining expects to be a PFIC for its
current tax year. No opinion of legal counsel or ruling from the
IRS concerning the status of First Mining as a PFIC has been
obtained or is currently planned to be requested. The determination
of whether any corporation was, or will be, a PFIC for a tax year
depends, in part, on the application of complex U.S. federal income
tax rules, which are subject to differing interpretations. In
addition, whether any corporation will be a PFIC for any tax year
depends on the assets and income of such corporation over the
course of each such tax year and, as a result, cannot be predicted
with certainty as of the date of this Circular. Accordingly, there
can be no assurance that the IRS will not challenge whether First
Mining was a PFIC in a prior year or whether First Mining is a PFIC
in the current or future years. Each U.S. Holder should consult its
own tax advisors regarding the PFIC status of First
Mining.
If
First Mining is a PFIC or was a PFIC at any time during a U.S.
Holder’s holding period for its First Mining Shares, the
effect of the PFIC rules on a U.S. Holder receiving Treasury Metals
Shares pursuant to the Distribution will depend on whether such
U.S. Holder has made a timely and effective election to treat First
Mining as a qualified electing fund (a “QEF”) under Section 1295 of the
Tax Code (a “QEF
Election”) or has made a mark-to-market
election with respect to its First Mining Shares under Section 1296
of the Tax Code (a “Mark-to-Market
Election”). In this summary, a U.S. Holder
that has made a timely QEF Election or Mark-to-Market Election with
respect to its First Mining Shares is referred to as an
“Electing First Mining
Shareholder” and a U.S. Holder that has not
made a timely QEF Election or a Mark-to-Market Election with
respect to its First Mining Shares is referred to as a
“Non-Electing First Mining
Shareholder”. For a description of the QEF
Election and Mark-to-Market Election, U.S. Holders should consult
the discussion below under "U.S.
Federal Income Tax Consequences Related to the Ownership and
Disposition of Treasury Metals Securities –
Passive Foreign Investment Company
Rules – QEF
Election" and “– Mark-to-Market Election".
An
Electing First Mining Shareholder generally would not be subject to
the default rules of Section 1291 of the Tax Code discussed below
upon the receipt of the Treasury Metals Securities pursuant to the
Distribution. Instead, the Electing First Mining Shareholder
generally would be subject to the rules described below under
"U.S. Federal Income Tax
Consequences Related to the Ownership and Disposition of Treasury
Metals Securities - Passive
Foreign Investment Company Rules – QEF Election" and "– Mark-to-Market Election".
With
respect to a Non-Electing First Mining Shareholder, if First Mining
is a PFIC or was a PFIC at any time during a U.S. Holder’s
holding period for its First Mining Shares, the default rules under
Section 1291 of the Tax Code will apply to gain recognized on any
disposition of First Mining Shares and to “excess
distributions” from First Mining (generally, distributions
received in the current taxable year that are in excess of 125% of
the average distributions received during the three preceding years
(or during the U.S. Holder's holding period for the First Mining
Shares, if shorter)). Under Section 1291 of the Tax Code, any such
gain recognized on the sale or other disposition of First Mining
Shares and any excess distribution must be rateably allocated to
each day in a Non-Electing First Mining Shareholder’s holding
period for the First Mining Shares. The amount of any such gain or
excess distribution allocated to the tax year of disposition or
distribution of the excess distribution and to years before First
Mining became a PFIC, if any, would be taxed as ordinary income.
The amounts allocated to any other tax year would be subject to
U.S. federal income tax at the highest tax rate applicable to
ordinary income in each such prior year without regard to the
Non-Electing First Mining Shareholder’s U.S. federal income
tax net operating losses or other attributes and an interest charge
would be imposed on the tax liability for each such year,
calculated as if such tax liability had been due in each such prior
year. Such Non-Electing First Mining Shareholders that are not
corporations must treat any such interest paid as “personal
interest”, which is not deductible.
If the
distribution of the Treasury Metals Securities pursuant to the
Distribution constitutes an “excess distribution” or
results in the recognition of capital gain as described above under
"Receipt of Treasury Metals
Securities Pursuant to the Distribution" with respect to a
Non-Electing First Mining Shareholder, such Non-Electing First
Mining Shareholder will be subject to the rules of Section 1291 of
the Tax Code discussed above upon the receipt of the Treasury
Metals Securities. In addition, the distribution of the Treasury
Metals Securities pursuant to the Distribution may be treated,
under proposed Treasury Regulations, as the “indirect
disposition” by a Non-Electing First Mining Shareholder of
such Non-Electing First Mining Shareholder’s indirect
interest in Treasury Metals, which generally would be subject to
the rules of Section 1291 of the Tax Code discussed
above.
U.S. Federal Income Tax Consequences Related to the Ownership and
Disposition of Treasury Metals Securities
Passive
Foreign Investment Company Rules
If
Treasury Metals is considered a PFIC within the meaning of Section
1297 of the Tax Code at any time during a U.S. Holder’s
holding period, the following sections will generally describe the
potentially adverse U.S. federal income tax consequences to U.S.
Holders of the acquisition, ownership, and disposition of Treasury
Metals Shares, Treasury Metals Warrants or Treasury Metals Warrant
Shares.
Treasury
Metals has advised First Mining that based on current business
plans and financial expectations, Treasury Metals anticipates that
it may be a PFIC for the current tax year and future tax
years. No opinion of
legal counsel or ruling from the IRS concerning the status of
Treasury Metals as a PFIC has been obtained or is currently planned
to be requested. The determination of whether any corporation was,
or will be, a PFIC for a tax year depends, in part, on the
application of complex U.S. federal income tax rules, which are
subject to differing interpretations. In addition, whether any
corporation will be a PFIC for any tax year depends on the assets
and income of such corporation over the course of each such tax
year and, as a result, Treasury Metals’ PFIC status for the
current year and future years cannot be predicted with certainty as
of the date of this document. Accordingly, there can be no
assurance that the IRS will not challenge any PFIC determination
made by Treasury Metals (or by one of Treasury Metals’
subsidiaries). Each U.S. Holder should consult its own tax advisor
regarding Treasury Metals’ status as a PFIC and the PFIC
status of each non-U.S. subsidiary of Treasury Metals.
In any
year in which Treasury Metals is classified as a PFIC, a U.S.
Holder will be required to file an annual report with the IRS
containing such information as Treasury Regulations and/or other
IRS guidance may require. In addition to penalties, a failure to
satisfy such reporting requirements may result in an extension of
the time period during which the IRS can assess a tax. U.S. Holders
should consult their own tax advisors regarding the requirements of
filing such information returns under these rules, including the
requirement to file an IRS Form 8621.
Treasury
Metals generally will be a PFIC for any tax year in which (a) 75%
or more of the gross income of Treasury Metals for such tax year is
passive income (the “PFIC
Income Test”) or (b) 50% or more of the value of the
assets of Treasury Metals either produce passive income or are held
for the production of passive income, based on the quarterly
average of the fair market value of such assets (the
“PFIC Asset
Test”). “Gross income” generally includes
sales revenues less the cost of goods sold, plus income from
investments and from incidental or outside operations or sources,
and “passive income” generally includes, for example,
dividends, interest, certain rents and royalties, certain gains
from the sale of stock and securities, and certain gains from
commodities transactions. Active business gains arising from the
sale of commodities generally are excluded from passive income if
substantially all of a foreign corporation’s commodities are
stock in trade or inventory, depreciable property used in a trade
or business, or supplies regularly used or consumed in the ordinary
course of its trade or business, and certain other requirements are
satisfied.
For
purposes of the PFIC Income Test and PFIC Asset Test described
above, if Treasury Metals owns, directly or indirectly, 25% or more
of the total value of the outstanding shares of another
corporation, Treasury Metals will be treated as if it (a) held a
proportionate share of the assets of such other corporation and (b)
received directly a proportionate share of the income of such other
corporation. In addition, for purposes of the PFIC Income Test and
PFIC Asset Test described above, “passive income” does
not include any interest, dividends, rents, or royalties that are
received or accrued by Treasury Metals from a “related
person” (as defined in Section 954(d)(3) of the Tax Code), to
the extent such items are properly allocable to the income of such
related person that is not passive income.
Under
certain attribution rules, if Treasury Metals is a PFIC, U.S.
Holders will be deemed to own their proportionate share of any of
Treasury Metals’ subsidiaries which is also a PFIC (a
“Subsidiary
PFIC”), and will generally be subject to U.S. federal
income tax under the “U.S.
Federal Income Tax Consequences Related to the Ownership and
Disposition of Treasury Metals Securities –
Passive Foreign Investment Company
Rules – Default PFIC Rules Under Section 1291 of the Tax
Code” discussed below on their proportionate share of
any (i) distribution on the shares of a Subsidiary PFIC and (ii)
disposition or deemed disposition of shares of a Subsidiary PFIC,
both as if such U.S. Holders directly held the shares of such
Subsidiary PFIC. Accordingly, U.S. Holders should be aware that
they could be subject to tax under the PFIC rules even if no
distributions are received and no redemptions or other dispositions
of Treasury Metals Shares, Treasury Metals Warrants or Treasury
Metals Warrant Shares are made. In addition, U.S. Holders may be
subject to U.S. federal income tax on any indirect gain realized on
the stock of a Subsidiary PFIC on the sale or disposition of
Treasury Metals Shares, Treasury Metals Warrants or Treasury Metals
Warrant Shares.
Default PFIC Rules Under Section 1291 of the Tax Code
If
Treasury Metals is a PFIC, the U.S. federal income tax consequences
to a U.S. Holder of the acquisition, ownership, and disposition of
Treasury Metals Shares, Treasury Metals Warrants and Treasury
Metals Warrant Shares will depend on whether such U.S. Holder makes
a QEF Election or makes a Mark-to-Market Election with respect to
Treasury Metals Shares or Treasury Metals Warrant Shares. A U.S.
Holder that does not make either a timely QEF Election or a timely
Mark-to-Market Election (a “Non-Electing U.S. Holder”) will be
taxable as described below.
A
Non-Electing U.S. Holder will be subject to the rules of Section
1291 of the Tax Code with respect to (a) any gain recognized on the
sale or other taxable disposition of Treasury Metals Shares,
Treasury Metals Warrants and Treasury Metals Warrant Shares and (b)
any excess distribution received on the Treasury Metals Shares and
Treasury Metals Warrant Shares. A distribution generally will be an
“excess distribution” to the extent that such
distribution (together with all other distributions received in the
current tax year) exceeds 125% of the average distributions
received during the three preceding tax years (or during a U.S.
Holder’s holding period for the Treasury Metals Shares and
Treasury Metals Warrant Shares, if shorter).
Under
Section 1291 of the Tax Code, any gain recognized on the sale or
other taxable disposition of Treasury Metals Shares, Treasury
Metals Warrants and Treasury Metals Warrant Shares of a PFIC
(including an indirect disposition of shares of a Subsidiary PFIC),
and any excess distribution received on such Treasury Metals Shares
and Treasury Metals Warrant Shares (or a distribution by a
Subsidiary PFIC to its shareholder that is deemed to be received by
a U.S. Holder) must be rateably allocated to each day in a
Non-Electing U.S. Holder’s holding period for the Treasury
Metals Shares or Treasury Metals Warrant Shares. The amount of any
such gain or excess distribution allocated to the tax year of
disposition or distribution of the excess distribution and to years
before the entity became a PFIC, if any, would be taxed as ordinary
income (and not eligible for certain preferential tax rates, as
discussed below). The amounts allocated to any other tax year would
be subject to U.S. federal income tax at the highest tax rate
applicable to ordinary income in each such year, and an interest
charge would be imposed on the tax liability for each such year,
calculated as if such tax liability had been due in each such year.
A Non-Electing U.S. Holder that is not a corporation must treat any
such interest paid as “personal interest,” which is not
deductible.
If
Treasury Metals is a PFIC for any tax year during which a
Non-Electing U.S. Holder holds Treasury Metals Shares, Treasury
Metals Warrant Shares or Treasury Metals Warrants, it will continue
to be treated as a PFIC with respect to such Non-Electing U.S.
Holder, regardless of whether it ceases to be a PFIC in one or more
subsequent tax years. If Treasury Metals ceases to be a PFIC, a
Non-Electing U.S. Holder may terminate this deemed PFIC status with
respect to Treasury Metals Shares and Treasury Metals Warrant
Shares by electing to recognize gain (which will be taxed under the
rules of Section 1291 of the Tax Code as discussed above) as if
such Treasury Metals Shares and Treasury Metals Warrant Shares were
sold on the last day of the last tax year for which Treasury Metals
was a PFIC. No such election, however, may be made with respect to
the Treasury Metals Warrants.
Under
proposed Treasury Regulations, if a U.S. holder has an option,
warrant, or other right to acquire stock of a PFIC (such as the
Treasury Metals Warrants), such option, warrant or right is
considered to be PFIC stock subject to the default rules of Section
1291 of the Tax Code. Under rules described below, the holding
period for the Treasury Metals Warrant Shares will begin on the
date a U.S. Holder acquires the Treasury Metals Warrants. This will
impact the availability of the QEF Election and Mark-to-Market
Election with respect to the Treasury Metals Warrant Shares. Thus,
a U.S. Holder will have to account for Treasury Metals Warrant
Shares and Treasury Metals Shares under the PFIC rules and the
applicable elections differently.
QEF Election
A U.S.
Holder that makes a QEF Election for the first tax year in which
its holding period of its Treasury Metals Shares begins generally
will not be subject to the rules of Section 1291 of the Tax Code
discussed above with respect to its Treasury Metals Shares.
However, a U.S. Holder that makes a QEF Election will be subject to
U.S. federal income tax on such U.S. Holder’s pro rata share
of (a) Treasury Metals’ net capital gain, which will be taxed
as long-term capital gain to such U.S. Holder, and (b) Treasury
Metals’ ordinary earnings, which will be taxed as ordinary
income to such U.S. Holder. Generally, “net capital
gain” is the excess of (a) net long-term capital gain over
(b) net short-term capital loss, and “ordinary
earnings” are the excess of (a) “earnings and
profits” over (b) net capital gain. A U.S. Holder that makes
a QEF Election will be subject to U.S. federal income tax on such
amounts for each tax year in which Treasury Metals is a PFIC,
regardless of whether such amounts are actually distributed to such
U.S. Holder by Treasury Metals. However, for any tax year in which
Treasury Metals is a PFIC and has no net income or gain, U.S.
Holders that have made a QEF Election would not have any income
inclusions as a result of the QEF Election. If a U.S. Holder that
made a QEF Election has an income inclusion, such a U.S. Holder
may, subject to certain limitations, elect to defer payment of
current U.S. federal income tax on such amounts, subject to an
interest charge. If such U.S. Holder is not a corporation, any such
interest paid will be treated as “personal interest”,
which is not deductible.
A U.S.
Holder that makes a timely QEF Election generally (a) may receive a
tax-free distribution from Treasury Metals to the extent that such
distribution represents “earnings and profits” that
were previously included in income by the U.S. Holder because of
such QEF Election and (b) will adjust such U.S. Holder’s tax
basis in the Treasury Metals Shares to reflect the amount included
in income or allowed as a tax-free distribution because of such QEF
Election. In addition, a U.S. Holder that makes a QEF Election
generally will recognize a capital gain or loss on the sale or
other taxable disposition of Treasury Metals Shares.
The
procedure for making a QEF Election, and the U.S. federal income
tax consequences of making a QEF Election, will depend on whether
such QEF Election is timely. A QEF Election will be treated as
“timely” for purposes of avoiding the default PFIC
rules discussed above if such QEF Election is made for the first
year in the U.S. Holder’s holding period for the Treasury
Metals Shares in which Treasury Metals was a PFIC. A U.S. Holder
may make a timely QEF Election by filing the appropriate QEF
Election documents at the time such U.S. Holder files a U.S.
federal income tax return for such year.
A QEF
Election will apply to the tax year for which such QEF Election is
made and to all subsequent tax years, unless such QEF Election is
invalidated or terminated or the IRS consents to revocation of such
QEF Election. If a U.S. Holder makes a QEF Election and, in a
subsequent tax year, Treasury Metals ceases to be a PFIC, the QEF
Election will remain in effect (although it will not be applicable)
during those tax years in which Treasury Metals is not a PFIC.
Accordingly, if Treasury Metals becomes a PFIC in another
subsequent tax year, the QEF Election will be effective and the
U.S. Holder will be subject to the QEF rules described above during
any subsequent tax year in which Treasury Metals qualifies as a
PFIC.
As
discussed above, under proposed Treasury Regulations, if a U.S.
holder has an option, warrant or other right to acquire stock of a
PFIC (such as the Treasury Metals Warrants), such option, warrant
or right is considered to be PFIC stock subject to the default
rules of Section 1291 of the Tax Code. However, a U.S. Holder of an
option, warrant or other right to acquire stock of a PFIC may not
make a QEF Election that will apply to the option, warrant or other
right to acquire PFIC stock. In addition, under proposed Treasury
Regulations, if a U.S. Holder holds an option, warrant or other
right to acquire stock of a PFIC, the holding period with respect
to shares of stock of the PFIC acquired upon exercise of such
option, warrant or other right will include the period that the
option, warrant or other right was held.
Consequently,
under the proposed Treasury Regulations, if a U.S. Holder of
Treasury Metals Shares makes a QEF Election, such election
generally will not be treated as a timely QEF Election with respect
to Treasury Metals Warrant Shares and the rules of Section 1291 of
the Tax Code discussed above will continue to apply with respect to
such U.S. Holder’s Treasury Metals Warrant Shares. However, a
U.S. Holder of Treasury Metals Warrant Shares should be eligible to
make a timely QEF Election if such U.S. Holder makes a
“purging” or “deemed sale” election to
recognize gain (which will be taxed under the rules of Section 1291
of the Tax Code discussed above) as if such Treasury Metals Warrant
Shares were sold for fair market value. As a result of the
“purging” or “deemed sale” election, the
U.S. Holder will have a new basis and holding period in the
Treasury Metals Warrant Shares acquired upon the exercise of the
Treasury Metals Warrants for purposes of the PFIC rules. In
addition, gain recognized on the sale or other taxable disposition
(other than by exercise) of the Treasury Metals Warrants by a U.S.
Holder will be subject to the rules of Section 1291 of the Tax Code
discussed above. Each U.S. Holder should consult its own tax
advisor regarding the application of the PFIC rules to the Treasury
Metals Shares, Treasury Metals Warrants, and Treasury Metals
Warrant Shares.
U.S.
Holders should be aware that, for each tax year, if any, that
Treasury Metals is a PFIC, there are no assurances that Treasury
Metals will satisfy the record keeping requirements of a PFIC, or
that it will make available to U.S. Holders the information such
U.S. Holders require to make a QEF Election with respect to
Treasury Metals or any Subsidiary PFIC, and, as a result, a QEF
Election may not be available to U.S. Holders. U.S. Holders should
consult with their own tax advisors regarding the potential
application of the PFIC rules to the ownership and disposition of
Treasury Metals Shares, Treasury Metals Warrants and Treasury
Metals Warrant Shares, and the availability of certain U.S. tax
elections under the PFIC rules.
A U.S.
Holder makes a QEF Election by attaching a completed IRS Form 8621,
including a PFIC Annual Information Statement, to a timely filed
U.S. federal income tax return. However, if Treasury Metals does
not provide the required information with regard to Treasury Metals
or any of its Subsidiary PFICs, U.S. Holders will not be able to
make a QEF Election for such entity and will continue to be subject
to the rules of Section 1291 of the Tax Code discussed above that
apply to Non-Electing U.S. Holders with respect to the taxation of
gains and excess distributions.
Mark-to-Market Election
A U.S.
Holder may make a Mark-to-Market Election with respect to Treasury
Metals Shares and Treasury Metals Warrant Shares only if the
Treasury Metals Shares and Treasury Metals Warrant Shares are
marketable stock. The Treasury Metals Shares and Treasury Metals
Warrant Shares generally will be “marketable stock” if
the Treasury Metals Shares and Treasury Metals Warrant Shares are
regularly traded on (a) a national securities exchange that is
registered with the SEC, (b) the national market system established
pursuant to Section 11A of the U.S. Exchange Act or (c) a foreign
securities exchange that is regulated or supervised by a
governmental authority of the country in which the market is
located, provided that (i) such foreign exchange has trading
volume, listing, financial disclosure, and other requirements and
the laws of the country in which such foreign exchange is located,
together with the rules of such foreign exchange, ensure that such
requirements are actually enforced and (ii) the rules of such
foreign exchange ensure active trading of listed stocks. If such
stock is traded on such a qualified exchange or other market, such
stock generally will be considered “regularly traded”
for any calendar year during which such stock is traded, other than
in de minimis quantities, on at least 15 days during each calendar
quarter. Provided that the Treasury Metals Shares and Treasury
Metals Warrant Shares are “regularly traded” as
described in the preceding sentence, the Treasury Metals Shares and
Treasury Metals Warrant Shares are expected to be marketable stock.
However, there can be no assurance that the Treasury Metals Shares
will be “regularly traded” in subsequent calendar
quarters. U.S. Holders should consult their own tax advisors
regarding the marketable stock rules.
A U.S.
Holder that makes a Mark-to-Market Election with respect to its
Treasury Metals Shares generally will not be subject to the rules
of Section 1291 of the Tax Code discussed above with respect to
such Treasury Metals Shares. However, if a U.S. Holder does not
make a Mark-to-Market Election beginning in the first tax year of
such U.S. Holder’s holding period for the Treasury Metals
Shares and such U.S. Holder has not made a timely QEF Election, the
rules of Section 1291 of the Tax Code discussed above will apply to
certain dispositions of, and distributions on, the Treasury Metals
Shares.
Any
Mark-to-Market Election made by a U.S. Holder for the Treasury
Metals Shares will also apply to such U.S. Holder’s Treasury
Metals Warrant Shares. As a result, if a Mark-to-Market Election
has been made by a U.S. Holder with respect to Treasury Metals
Shares, any Treasury Metals Warrant Shares received will
automatically be marked-to-market in the year of exercise. Because,
under the proposed Treasury Regulations, a U.S. Holder’s
holding period for Treasury Metals Warrant Shares includes the
period during which such U.S. Holder held the Treasury Metals
Warrants, a U.S. Holder will be treated as making a Mark-to-Market
Election with respect to its Treasury Metals Warrant Shares after
the beginning of such U.S. Holder’s holding period for the
Treasury Metals Warrant Shares unless the Treasury Metals Warrant
Shares are acquired in the same tax year as the year in which the
U.S. Holder acquired its Treasury Metals Warrants. Consequently,
the default rules under Section 1291 of the Tax Code described
above generally will apply to the mark-to-market gain realized in
the tax year in which Treasury Metals Warrant Shares are received.
However, the general mark-to-market rules will apply to subsequent
tax years.
A U.S.
Holder that makes a Mark-to-Market Election will include in
ordinary income, for each tax year in which Treasury Metals is a
PFIC, an amount equal to the excess, if any, of (a) the fair market
value of the Treasury Metals Shares and any Treasury Metals Warrant
Shares, as of the close of such tax year over (b) such U.S.
Holder’s tax basis in the Treasury Metals Shares and any
Treasury Metals Warrant Shares. A U.S. Holder that makes a
Mark-to-Market Election will be allowed a deduction in an amount
equal to the excess, if any, of (i) such U.S. Holder’s
adjusted tax basis in the Treasury Metals Shares and any Treasury
Metals Warrant Shares, over (ii) the fair market value of such
Treasury Metals Shares and any Treasury Metals Warrant Shares (but
only to the extent of the net amount of previously included income
as a result of the Mark-to-Market Election for prior tax
years).
A U.S.
Holder that makes a Mark-to-Market Election generally also will
adjust such U.S. Holder’s tax basis in the Treasury Metals
Shares and Treasury Metals Warrant Shares to reflect the amount
included in gross income or allowed as a deduction because of such
Mark-to-Market Election. In addition, upon a sale or other taxable
disposition of Treasury Metals Shares and Treasury Metals Warrant
Shares, a U.S. Holder that makes a Mark-to-Market Election will
recognize ordinary income or ordinary loss (not to exceed the
excess, if any, of (a) the amount included in ordinary income
because of such Mark-to-Market Election for prior tax years over
(b) the amount allowed as a deduction because of such
Mark-to-Market Election for prior tax years).
A U.S.
Holder makes a Mark-to-Market Election by attaching a completed IRS
Form 8621 to a timely filed U.S. federal income tax return. A
timely Mark-to-Market Election applies to the tax year in which
such Mark-to-Market Election is made and to each subsequent tax
year, unless the Treasury Metals Shares and Treasury Metals Warrant
Shares cease to be “marketable stock” or the IRS
consents to revocation of such election. Each U.S. Holder should
consult its own tax advisor regarding the availability of, and
procedure for making, a Mark-to-Market Election.
Although
a U.S. Holder may be eligible to make a Mark-to-Market Election
with respect to the Treasury Metals Shares and Treasury Metals
Warrant Shares, no such election may be made with respect to the
stock of any Subsidiary PFIC that a U.S. Holder is treated as
owning because such stock is not marketable. Hence, the
Mark-to-Market Election will not be effective to eliminate the
interest charge and other income inclusion rules described above
with respect to deemed dispositions of Subsidiary PFIC stock or
distributions from a Subsidiary PFIC to its
shareholder.
Other PFIC Rules
Under
Section 1291(f) of the Tax Code, the IRS has issued proposed
Treasury Regulations that, subject to certain exceptions, would
cause a U.S. Holder that had not made a timely QEF Election to
recognize gain (but not loss) upon certain transfers of Treasury
Metals Shares and Treasury Metals Warrant Shares that would
otherwise be tax-deferred (e.g., gifts and exchanges pursuant to
corporate reorganizations). However, the specific U.S. federal
income tax consequences to a U.S. Holder may vary based on the
manner in which Treasury Metals Shares, Treasury Metals Warrants,
or Treasury Metals Warrant Shares are transferred.
If
finalized in their current form, the proposed Treasury Regulations
applicable to PFICs would be effective for transactions occurring
on or after April 1, 1992. Because the proposed Treasury
Regulations have not yet been adopted in final form, they are not
currently effective, and there is no assurance that they will be
adopted in the form and with the effective date proposed.
Nevertheless, the IRS has announced that, in the absence of final
Treasury Regulations, taxpayers may apply reasonable
interpretations of the Tax Code provisions applicable to PFICs, and
that it considers the rules set forth in the proposed Treasury
Regulations to be reasonable interpretations of those Tax Code
provisions. The PFIC rules are complex, and the implementation of
certain aspects of the PFIC rules requires the issuance of Treasury
Regulations which in many instances have not been promulgated and
which, when promulgated, may have retroactive effect. U.S. Holders
should consult their own tax advisors about the potential
applicability of the proposed Treasury Regulations.
Certain
additional adverse rules will apply with respect to a U.S. Holder
if Treasury Metals is a PFIC, regardless of whether such U.S.
Holder makes a QEF Election. For example under Section 1298(b)(6)
of the Tax Code, a U.S. Holder that uses Treasury Metals Shares,
Treasury Metals Warrants or Treasury Metals Warrant Shares as
security for a loan will, except as may be provided in Treasury
Regulations, be treated as having made a taxable disposition of
such Treasury Metals Shares, Treasury Metals Warrants or Treasury
Metals Warrant Shares.
In
addition, a U.S. Holder who acquires Treasury Metals Shares,
Treasury Metals Warrants or Treasury Metals Warrant Shares from a
decedent will not receive a “step up” in tax basis of
such Treasury Metals Shares, Treasury Metals Warrants or Treasury
Metals Warrant Shares to fair market value.
Special
rules also apply to the amount of foreign tax credit that a U.S.
Holder may claim on a distribution from a PFIC. Subject to such
special rules, foreign taxes paid with respect to any distribution
in respect of stock in a PFIC are generally eligible for the
foreign tax credit. The rules relating to distributions by a PFIC
and their eligibility for the foreign tax credit are complicated,
and a U.S. Holder should consult with their own tax advisor
regarding the availability of the foreign tax credit with respect
to distributions by a PFIC.
The
PFIC rules are complex, and each U.S. Holder should consult its own
tax advisor regarding the PFIC rules (including the applicability
and advisability of a QEF Election and Mark-to-Market Election) and
how the PFIC rules may affect the U.S. federal income tax
consequences of the acquisition, ownership, and disposition of
Treasury Metals Shares, Treasury Metals Warrants and Treasury
Metals Warrant Shares.
U.S. Federal Income Tax Consequences of the Exercise and
Disposition of Treasury Metals Warrants
The
following discussion describes the general rules applicable to the
ownership and disposition of the Treasury Metals Warrants but is
subject in its entirety to the special rules described above under
the heading “U.S. Federal
Income Tax Consequences Related to the Ownership and Disposition of
Treasury Metals Securities – Passive Foreign Investment Company
Rules”.
Exercise of Treasury Metals Warrants
A U.S.
Holder should not recognize a gain or loss on the exercise of a
Treasury Metals Warrant and the related receipt of a Treasury
Metals Warrant Share (unless cash is received in lieu of the
issuance of a fractional Treasury Metals Warrant Share). A U.S.
Holder’s initial tax basis in the Treasury Metals Warrant
Share received on the exercise of a Treasury Metals Warrant should
be equal to the sum of (a) such U.S. Holder’s tax basis in
such Treasury Metals Warrant plus (b) the exercise price paid by
such U.S. Holder on the exercise of such Treasury Metals Warrant.
It is unclear whether a U.S. Holder’s holding period for the
Treasury Metals Warrant Share received on the exercise of a
Treasury Metals Warrant would commence on the date of exercise of
the Treasury Metals Warrant or the day following the date of
exercise of the Treasury Metals Warrant. If Treasury Metals is a
PFIC, a U.S. Holder’s holding period for the Treasury Metals
Warrant Shares for PFIC purposes will begin on the date on which
such U.S. Holder acquired its Treasury Metals
Warrants.
Disposition of Treasury Metals Warrants
A U.S.
Holder will recognize a gain or loss on the sale or other taxable
disposition of a Treasury Metals Warrant in an amount equal to the
difference, if any, between (a) the amount of cash plus the fair
market value of any property received and (b) such U.S.
Holder’s tax basis in the Treasury Metals Warrant sold or
otherwise disposed of. Subject to the PFIC rules discussed above,
any such gain or loss generally will be a capital gain or loss,
which will be long-term capital gain or loss if the Warrant is held
for more than one year. Deductions for capital losses are subject
to complex limitations under the Tax Code.
Expiration of Treasury Metals Warrants Without
Exercise
Upon
the lapse or expiration of a Treasury Metals Warrant, a U.S. Holder
will recognize a loss in an amount equal to such U.S.
Holder’s tax basis in the Treasury Metals Warrant. Any such
loss generally will be a capital loss and will be long-term capital
loss if the Treasury Metals Warrants are held for more than one
year. Deductions for capital losses are subject to complex
limitations under the Tax Code.
Certain Adjustments to the Treasury Metals Warrants
Under
Section 305 of the Tax Code, an adjustment to the number of
Treasury Metals Warrant Shares that will be issued on the exercise
of the Treasury Metals Warrants, or an adjustment to the exercise
price of the Treasury Metals Warrants, may be treated as a
constructive distribution to a U.S. Holder of the Treasury Metals
Warrants if, and to the extent that, such adjustment has the effect
of increasing such U.S. Holder’s proportionate interest in
the “earnings and profits” or Treasury Metals’
assets, depending on the circumstances of such adjustment (for
example, if such adjustment is to compensate for a distribution of
cash or other property to the shareholders). Adjustments to the
exercise price of Treasury Metals Warrants made pursuant to a bona
fide reasonable adjustment formula that has the effect of
preventing dilution of the interest of the holders of the Treasury
Metals Warrants should generally not be considered to result in a
constructive distribution. Any such constructive distribution would
be taxable whether or not there is an actual distribution of cash
or other property (see more detailed discussion of the rules
applicable to distributions made by Treasury Metals at “General Rules Applicable to U.S.
Federal Income Tax Consequences of the Acquisition, Ownership, and
Disposition of Treasury Metals Shares and Treasury Metals Warrant
Shares – Distributions on Treasury Metals Shares and Treasury
Metals Warrant Shares” below).
General
Rules Applicable to U.S. Federal Income Tax Consequences of the
Acquisition, Ownership, and Disposition of Treasury Metals Shares
and Treasury Metals Warrant Shares
The
following discussion describes the general rules applicable to the
ownership and disposition of the Treasury Metals Shares and
Treasury Metals Warrant Shares but is subject in its entirety to
the special rules described above under the heading “U.S. Federal Income Tax Consequences
Related to the Ownership and Disposition of Treasury Metals
Securities – Passive
Foreign Investment Company Rules”.
Distributions on Treasury Metals Shares and Treasury Metals Warrant
Shares
A U.S.
Holder that receives a distribution, including a constructive
distribution, with respect to a Treasury Metals Share or Treasury
Metals Warrant Share (as well as any constructive distribution of a
Treasury Metals Warrant as described above) will be required to
include the amount of such distribution in gross income as a
dividend (without reduction for any Canadian income tax withheld
from such distribution) to the extent of Treasury Metals’
current and accumulated “earnings and profits”, as
computed under U.S. federal income tax principles. A dividend
generally will be taxed to a U.S. Holder at ordinary income tax
rates if Treasury Metals is a PFIC for the tax year of such
distribution or the preceding tax year. To the extent that a
distribution exceeds the current and accumulated “earnings
and profits” of Treasury Metals, such distribution will be
treated first as a tax-free return of capital to the extent of a
U.S. Holder’s tax basis in the Treasury Metals Shares or
Treasury Metals Warrant Shares and thereafter as a gain from the
sale or exchange of such Treasury Metals Shares or Treasury Metals
Warrant Shares (see “General
Rules Applicable to U.S. Federal Income Tax Consequences of the
Acquisition, Ownership, and Disposition of Treasury Metals Shares
and Treasury Metals Warrant Shares – Sale or Other Taxable
Disposition of Treasury Metals Shares and/or Treasury Metals
Warrant Shares” below). However, Treasury Metals may
not maintain the calculations of earnings and profits in accordance
with U.S. federal income tax principles, and each U.S. Holder may
be required to assume that any distribution by Treasury Metals with
respect to the Treasury Metals Shares or Treasury Metals Warrant
Shares will constitute ordinary dividend income. Dividends received
on Treasury Metals Shares or Treasury Metals Warrant Shares
generally will not be eligible for the “dividends received
deduction” generally applicable to corporations. Subject to
applicable limitations and provided Treasury Metals is eligible for
the benefits of the Convention Between Canada and the United States
of America with Respect to Taxes on Income and on Capital, signed
September 26, 1980, as amended, or the Treasury Metals Shares are
readily tradable on a United States securities market, dividends
paid by Treasury Metals to non-corporate U.S. Holders, including
individuals, generally will be eligible for the preferential tax
rates applicable to long-term capital gains for dividends, provided
certain holding period and other conditions are satisfied,
including that Treasury Metals not be classified as a PFIC in the
tax year of distribution or in the preceding tax year. The dividend
rules are complex, and each U.S. Holder should consult its own tax
advisor regarding the application of such rules.
Sale or Other Taxable Disposition of Treasury Metals Shares and/or
Treasury Metals Warrant Shares
Upon
the sale or other taxable disposition of Treasury Metals Shares or
Treasury Metals Warrant Shares, a U.S. Holder generally will
recognize capital gain or loss in an amount equal to the difference
between (a) the amount of cash plus the fair market value of any
property received and (b) such U.S. Holder’s tax basis in
such Treasury Metals Shares or Treasury Metals Warrant Shares sold
or otherwise disposed of. Gain or loss recognized on such sale or
other taxable disposition generally will be long-term capital gain
or loss if, at the time of the sale or other taxable disposition,
the Treasury Metals Shares or Treasury Metals Warrant Shares have
been held for more than one year. Preferential tax rates may apply
to long-term capital gain of a U.S. Holder that is an individual,
estate, or trust. There are no preferential tax rates for long-term
capital gain of a U.S. Holder that is a corporation. Deductions for
capital losses are subject to significant limitations under the Tax
Code.
Additional Considerations
Receipt of Foreign Currency
The
amount of any distribution paid to a U.S. Holder in foreign
currency or on the sale, exchange or other taxable disposition of
Treasury Metals Shares, Treasury Metals Warrants or Treasury Metals
Warrant Shares generally will be equal to the U.S. dollar value of
such foreign currency based on the exchange rate applicable on the
date of receipt (regardless of whether such foreign currency is
converted into U.S. dollars at that time). If the foreign currency
received is not converted into U.S. dollars on the date of receipt,
a U.S. Holder will have a tax basis in the foreign currency equal
to its U.S. dollar value on the date of receipt. Any U.S. Holder
who receives payment in foreign currency and engages in a
subsequent conversion or other disposition of the foreign currency
may have a foreign currency exchange gain or loss that would be
treated as ordinary income or loss, and generally will be U.S.
source income or loss for foreign tax credit purposes. Different
rules apply to U.S. Holders who use the accrual method of tax
accounting. Each U.S. Holder should consult its own U.S. tax
advisor regarding the U.S. federal income tax consequences of
receiving, owning, and disposing of foreign currency.
Foreign Tax Credit
Subject
to the PFIC rules discussed above, a U.S. Holder that pays (whether
directly or through withholding) Canadian income tax with respect
to dividends paid on the Treasury Metals Shares or Treasury Metals
Warrant Shares (or with respect to any constructive dividend on the
Treasury Metals Warrants) generally will be entitled, at the
election of such U.S. Holder, to receive either a deduction or a
credit for such Canadian income tax paid. Generally, a credit will
reduce a U.S. Holder’s U.S. federal income tax liability on a
dollar-for-dollar basis, whereas a deduction will reduce a U.S.
Holder’s income subject to U.S. federal income tax. This
election is made on a year-by-year basis and applies to all foreign
taxes paid or accrued (whether directly or through withholding) by
a U.S. Holder during a year. The foreign tax credit rules are
complex and involve the application of rules that depend on a U.S.
Holder’s particular circumstances. Accordingly, each U.S.
Holder should consult its own tax advisor regarding the foreign tax
credit rules.
Information Reporting; Backup Withholding Tax
Under
U.S. federal income tax laws, certain categories of U.S. Holders
must file information returns with respect to their investment in,
or involvement in, a foreign corporation. For example, U.S. return
disclosure obligations (and related penalties) are imposed on U.S.
Holders that hold certain specified foreign financial assets in
excess of certain threshold amounts. The definition of specified
foreign financial assets includes not only financial accounts
maintained in foreign financial institutions, but also, unless held
in accounts maintained by a financial institution, any stock or
security issued by a non-U.S. person. U. S. Holders may be subject
to these reporting requirements unless their Treasury Metals
Shares, Treasury Metals Warrants, and Treasury Metals Warrant
Shares are held in an account at certain financial institutions.
Penalties for failure to file certain of these information returns
are substantial. U.S. Holders should consult their own tax advisors
regarding the requirements of filing information returns, including
the requirement to file IRS Form 8938.
Payments
made within the U.S., or by a U.S. payor or U.S. middleman, of the
Distribution and of dividends on, and proceeds arising from the
sale or other taxable disposition of, the Treasury Metals Shares,
Treasury Metals Warrants and Treasury Metals Warrant Shares
generally may be subject to information reporting and backup
withholding tax, currently at the rate of 24%, if a U.S. Holder (a)
fails to furnish its correct U.S. taxpayer identification number
(generally on IRS Form W-9), (b) furnishes an incorrect U.S.
taxpayer identification number, (c) is notified by the IRS that
such U.S. Holder has previously failed to properly report items
subject to backup withholding tax, or (d) fails to certify, under
penalty of perjury, that it has furnished its correct U.S. taxpayer
identification number and that the IRS has not notified such U.S.
Holder that it is subject to backup withholding tax. However,
certain exempt persons, such as U.S. Holders that are corporations,
generally are excluded from these information reporting and backup
withholding tax rules. Any amounts withheld under the U.S. backup
withholding tax rules will be allowed as a credit against a U.S.
Holder’s U.S. federal income tax liability, if any, or will
be refunded, if such U.S. Holder furnishes required information to
the IRS in a timely manner.
The
discussion of reporting requirements set forth above is not
intended to constitute a complete description of all reporting
requirements that may apply to a U.S. Holder. A failure to satisfy
certain reporting requirements may result in an extension of the
time period during which the IRS can assess a tax and, under
certain circumstances, such an extension may apply to assessments
of amounts unrelated to any unsatisfied reporting requirement. Each
U.S. Holder should consult its own tax advisors regarding the
information reporting and backup withholding rules.
THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS
OF ALL TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT
TO THE ACQUISITION, OWNERSHIP, AND DISPOSITION OF TREASURY METALS
SHARES, TREASURY METALS WARRANTS AND TREASURY METALS WARRANT
SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO
THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR OWN PARTICULAR
CIRCUMSTANCES.
As of
the date of this Circular, we are not aware of any other items of
business to be considered at the Meeting other than as set forth
above. If other items of business are properly brought before the
Meeting, the First Mining proxyholders intend to vote on such items
in accordance with management’s recommendation.
National
Policy 58-201 Corporate Governance
Guidelines establishes corporate governance guidelines that
apply to all public companies (the “Guidelines”) and has been used by
First Mining in adopting its corporate governance practices.
National Instrument 58-101 Disclosure of Governance Practices
requires us to disclose in this Circular certain information
regarding our corporate governance guidelines.
Our
Board and management consider good corporate governance to be an
integral part of the effective and efficient operation of Canadian
corporations. Our approach to corporate governance is set out
below.
Our Board
Management
is nominating five individuals to the Board, all of whom are
current directors of the Company.
The
Guidelines suggest that the board of directors of every public
company should be constituted with a majority of individuals who
qualify as “independent” directors under National
Instrument 52-110 Audit
Committees (“NI
52-110”), which provides that a director is
independent if he or she has no direct or indirect “material
relationship” with the Company. The “material
relationship” is defined as a relationship which could, in
the view of the Company’s Board, reasonably interfere with
the exercise of a director’s independent
judgement.
All
current members of the Board, including the Chairman of our Board,
are considered “independent” within the meaning of NI
52-110, except for Daniel W. Wilton, who is the Chief Executive
Officer (“CEO”)
of First Mining.
Our
Board has a stewardship responsibility to supervise the management
of and oversee the conduct of the business of the Company, provide
leadership and direction to management, evaluate management, set
policies appropriate for First Mining’s business and approve
corporate strategies and goals. The day-to-day management of the
business and affairs of First Mining is delegated by the Board to
the CEO. The Board will give direction and guidance through the CEO
to management and will keep management informed of its evaluation
of First Mining’s senior officers in achieving and complying
with goals and policies established by the Board.
Our
Board recommends nominees to the shareholders for election as
directors, and immediately following each annual general meeting
appoints an Audit Committee, a Compensation Committee, a Corporate
Governance & Nominating Committee and a chairperson for each
committee. The Board establishes and periodically reviews and
updates the committee mandates, duties and responsibilities of each
committee, elects a chairperson of the Board and establishes his or
her duties and responsibilities, appoints the CEO of First Mining
and establishes his or her duties and responsibilities, and on the
recommendation of the CEO, appoints First Mining’s senior
officers and approves the senior management structure of the
Company.
The
mandate of our Board is to manage or supervise management of the
business and affairs of the Company and to act with a view to the
best interests of the Company. In doing so, the Board oversees the
management of First Mining’s business and affairs directly
and through its committees. A copy of the Board mandate is set out
at Appendix “A”.
The
Chairman of the Board plays a critical role in managing and
supervising the business and affairs of First Mining, and in
overseeing management. The Chairman is responsible for ensuring
that the Board focuses on our strategic performance, ensuring the
Board represents and protects the Company’s long term best
interests, helping set the tone and culture of the Company,
managing relationships, and ensuring the Board adopts and complies
with procedures enabling it to effectively and efficiently conduct
its work independently from management. For a copy of the position
description of the Chairman of the Board, visit First
Mining’s website at www.firstmininggold.com.
Our
Board exercises its independent supervision over management by its
policies whereby: (a) periodic meetings of the Board are held to
obtain an update on significant corporate activities and plans; and
(b) all material transactions of the Company are subject to prior
approval of the Board. Our Board meets at least four times each
year, and endeavours to hold at least one meeting in each fiscal
quarter. In addition, the independent members of the Board meet
regularly each year, at which meetings the non-independent
directors and members of management are not in attendance. The
Board will also meet at any other time at the call of the CEO, or
subject to our Articles, of any director. In addition, in order to
facilitate open and candid discussion among the independent
directors of the Board, at the end of each Board meeting, the
Chairman asks if any director would like to hold an in camera session of independent
directors only, and if an in
camera session of independent directors is requested as a
result, all non-independent directors and members of management
leave the meeting prior to the commencement of the in camera session unless any such
persons are requested by the Board to remain for the in camera session. Since January 1,
2020, in camera sessions of
independent directors have been held after four Board meetings,
with the CEO requested by the Board to attend two of these
in camera
sessions.
Other directorships
The
following is a list of each current and proposed director of the
Company who is also a director of other reporting issuers (or
equivalent) in a Canadian or foreign jurisdiction:
|
Name of Director
|
|
Name of other reporting issuer
|
|
Keith
Neumeyer
|
|
First
Majestic Silver Corp. (director)
|
|
Daniel
W. Wilton
|
|
South
Star Mining Corp. (director)
Treasury
Metals Inc. (director)
|
Meeting attendance
As set
out in the Board Mandate, each director is expected to attend all
Board meetings. The following table below shows current director
attendance at Board and Board committee meetings held between
January 1, 2020 and the date of this Circular:
|
Director
|
Board
Meetings
|
Committee Meetings (1)
|
|
Audit
Committee
|
Corporate
Governance & Nominating Committee
|
Compensation
Committee
|
|
Keith
Neumeyer
|
14 of
14
|
6 of
6
|
1 of
1
|
3 of
3
|
|
Raymond
Polman
|
14 of
14
|
6 of
6
|
1 of
1
|
N/A
|
|
Daniel
Wilton
|
14 of
14
|
N/A
|
N/A
|
N/A
|
|
Richard
Lock
|
14 of
14
|
6 of
6
|
1 of
1
|
3 of
3
|
|
Leanne
Hall (2)
|
6 of
6
|
N/A
|
N/A
|
2 of
2
|
Notes:
(1)
The following
directors have served as Board committee chairs since the last
AGM:
●
Raymond Polman
– chair of the Audit Committee;
●
Keith Neumeyer
– chair of the Compensation Committee;
●
Keith Neumeyer
– chair of the Corporate Governance & Nominating
Committee (from April 1, 2020 to November 13, 2020);
and
●
Richard Lock
– chair of the Corporate Governance & Nominating
Committee (from November 13, 2020 to current).
(2)
Ms. Hall’s
attendance record in the table above only reflects the Board
meetings that have been held since Ms. Hall first became a director
of the Company on October 30, 2020.
Orientation and continuing education
Our
Board’s practice is to recruit for the Board only persons
with extensive experience in the mining and mining exploration
business and in public company matters. Prospective new board
members are provided a reasonably detailed level of background
information, verbal and documentary, on First Mining’s
affairs and plans prior to obtaining their consent to act as a
director.
Our
Board provides training courses to the directors as needed, to
ensure that the Board is complying with current legislative and
business requirements.
Ethical business conduct
Our
Board encourages and promotes a culture of ethical business conduct
through communication and supervision as part of their overall
stewardship responsibility. In addition, our Board has adopted a
Code of Business Conduct and Ethics (the “Code”) to be followed by First
Mining’s directors, officers, employees and principal
consultants and those of its subsidiaries. The Code is also to be
followed, where appropriate, by the Company’s agents and
representatives, including consultants where specifically required.
The purpose of the Code is to, among other things, promote honest
and ethical conduct, avoid conflict of interest, protect
confidential information and comply with the applicable government
laws and securities rules and regulations.
A copy
of the Code is available on our website at www.firstmininggold.com.
Director term limits and Board renewal
We have
not adopted term limits for directors on our Board or other formal
mechanisms of Board renewal. The Company and the Board have
considered term limits and believe that:
●
longer tenure does
not impair a director’s ability to act independently of
management;
●
imposing term
limits could result in the loss of contributions of longer serving
directors who have developed significant depth of knowledge and
understanding of the Company;
●
regular evaluation
of Board skills and experience, as set out in our Board Mandate,
rather than arbitrary term limits, will result in better Board
performance; and
●
experience of Board
members is a valuable asset to shareholders because of the complex
issues that the Board faces.
Our
Board currently assesses each director in order to ensure that the
Board is balanced between highly experienced directors with
long-term knowledge and those with a fresh perspective. None of the
current directors has served on the Board for a lengthy
term.
Diversity
In May
2019 our Board adopted a policy to reflect its commitment to
diversity and inclusion in all levels in the workplace and on the
Board (the “Diversity
Policy”). The Diversity Policy sets out the guidelines
by which First Mining and our Board will endeavour to achieve
diversity throughout the Company. To this end, our Board is
dedicated to cultivating an environment where individual
differences are respected, the ability to contribute and access
employment opportunities is based on performance, skill and merit,
and appropriate attitudes, behaviours and stereotypes are
confronted and eliminated. While First Mining does not support the
adoption of quotas, management and the Board will consider
diversity as an element of the overall selection criteria of
candidates and our Board will proactively monitor the
Company’s performance in meeting the standards outlined in
the Diversity Policy. In addition, we will attempt to interview at
least one female and/or minority candidate for each vacancy on the
Board.
Our Diversity Policy requires that, each year, First Mining report
on the proportion of female and minority personnel in senior
executive positions and on our Board in the Company’s
management information circular. As of the date of this Circular,
one of our five directors (1/5), Leanne Hall, is female. In
addition, two of the members of First Mining’s management
team, namely Janet Meiklejohn, the Company’s Vice President,
Investor Relations, and Hazel Mullin, the Company’s Director,
Data Management and Technical Services, are
female.
Equity Ownership Policy
We have
adopted an Equity Ownership Policy in order to align the interests
of our officers and directors with those of our shareholders by
requiring such persons to own a significant number of Common
Shares. Each of the non-executive directors is required to hold
Common Shares having a value of at least three times the value of
the annual base retainer. The CEO is required to hold Common Shares
having a value of at least three times his or her annual base
salary, while the COO, CFO and General Counsel & Corporate are
required to hold Common Shares having a value of at least one times
his or her annual base salary. The ownership guidelines will be
deemed to be satisfied following the date on which the price paid
by the director or officer for Common Shares or the fair market
value of the Common Shares equals or exceeds the ownership
threshold. For the purpose of calculating the value of the Common
Shares held, RSUs, whether vested or not vested are included;
however, unexercised stock options (whether vested or not vested)
and Common Shares issuable upon the exercise of share purchase
warrants or any other convertible securities of First Mining are
not counted toward the share ownership guidelines set out in the
Equity Ownership Policy. Individuals are required to comply with
the share ownership guidelines by the fifth anniversary of the date
of the individual’s date of hire or appointment. If a
participant fails to comply with the policy, a retention ratio
requirement would apply to the participant on future vesting of
stock options or RSUs. The full text of the Equity Ownership Policy is available on
the Company’s website at www.firstmininggold.com.
|
Name
|
|
Number of
RSUs
|
Value of Common
Shares and RSUs
(1)
|
Share Ownership
Requirement
(2)
|
Requirement
Met?
(3)
|
|
|
|
Daniel
W. Wilton
CEO
|
4,600,000
|
500,000
RSUs
|
$2,040,000
|
$885,000
|
Yes
|
|
Kenneth
Engquist
COO
|
500,000
|
350,000
RSUs
|
$340,000
|
$245,000
|
Yes
|
|
Andrew
Marshall
CFO
|
229,500
|
350,000
RSUs
|
$231,800
|
$205,000
|
Yes
|
|
Samir
Patel
General Counsel & Corporate Secretary
|
220,000
|
350,000
RSUs
|
$228,000
|
$195,000
|
Yes
|
|
Non-Executive
Directors
|
|
Keith
Neumeyer
|
15,730,313
|
Nil
|
$6,292,125
|
$150,000
|
Yes
|
|
Raymond
Polman
|
500,333
|
Nil
|
$200,133
|
$150,000
|
Yes
|
|
Richard
Lock
|
|
Nil
|
|
$150,000
|
No
|
|
Leanne
Hall
|
|
Nil
|
|
$150,000
|
No
|
Notes:
(1)
Calculated as at
December 31, 2020. In the case of Common Shares, calculated using
$0.40 and, in the case of the RSUs, the value attributed to such
RSUs on the award date.
(2)
Each of the
non-executive directors is required to hold Common Shares having a
value of at least three times the value of the annual base
retainer. The CEO is required to hold Common Shares having a value
of at least three times his or her base salary, while the COO, CFO
and General Counsel & Corporate Secretary are required to hold
Common Shares having a value of at least one times his or her base
salary. For the purpose of calculating the value of the Common
Shares, RSUs, whether vested or not vested, are
included.
Nomination of directors
The
Corporate Governance & Nominating Committee, comprised of
independent directors, has primary responsibility for the
nomination of new directors. New candidates are identified to the
Board for nomination by an informal process of discussion and
consensus – building on the need for additional directors,
the specific attributes being sought, likely prospects, and timing.
Prospective directors are not approached until consensus among the
Board is reached. This process takes place among the Chairman and a
majority of the non-executive directors.
Compensation Committee
The
Compensation Committee is a committee comprised of at least three
directors whose primary purpose is to enable First Mining to
recruit, retain and motivate employees and ensure conformity
between compensation and other corporate objectives and review and
recommend for Board consideration, all compensation packages, both
present and future, for the Company’s management and
directors (including annual retainer, meeting fees, bonuses and
option grants) including any severance packages. A majority of the
members shall not be officers or employees of First Mining and
shall be unrelated, independent directors.
Members
of the Compensation Committee shall be appointed or reappointed at
the Board meeting which follows the Company’s annual general
meeting and from among the appointees to the Compensation
Committee, the Board shall appoint a chairperson of the committee
(the “Compensation Committee
Chairperson”). The duties of the Compensation
Committee Chairperson include overseeing the proper functioning of
the Compensation Committee to ensure the proper discharge of its
duties, to schedule meetings and to ensure timely reporting to the
Board.
The
Compensation Committee meets as often as may be necessary or
appropriate in its judgment.
In
exercising its mandate, the Compensation Committee sets the
standards for the compensation of directors, employees and officers
based on industry data and with the goal to attract, retain and
motivate key persons to ensure the long-term success of First
Mining. Compensation generally includes the three following
components: (i) base salary; (ii) annual bonus based on
performance; and (iii) grant of equity incentives. The Compensation
Committee takes into account the fact that the Company’s
operations are located in North America and that the Company is
therefore subject to increased competition in the market for its
key personnel while also taking into account the performance and
objectives set forth for the Company.
The
Compensation Committee is accountable to the Board and reports to
the Board at its next regular meeting all deliberations and actions
it has taken since any previous report. Minutes of Compensation
Committee meetings will be available for review by any member of
the Board on request to the Compensation Committee
Chairperson.
The
current members of the Compensation Committee are Keith Neumeyer
(current Compensation Committee Chairperson), Leanne Hall and
Richard Lock, all of whom are independent.
Corporate Governance & Nominating Committee
The
purpose of the Corporate Governance & Nominating Committee is
to monitor and to generally be responsible for developing the
Company’s governance and human resources policies and
guidelines and overseeing their implementation and
administration.
The
Corporate Governance & Nominating Committee is responsible for
ensuring a compensation policy and practice that is supportive of
the Company’s business strategies and that appropriately
links senior management performance and compensation. In addition,
the Corporate Governance & Nominating Committee shall ensure
the recruitment, ongoing long-term development and deployment of
high calibre senior management.
Annually,
following the annual general meeting of the Company, the Board
elects from its members not less than three directors to serve on
the Corporate Governance & Nominating Committee. Each member
holds office until the close of the next annual general meeting of
the Company or until the member resigns or is replaced, whichever
first occurs. The Board appoints one of the directors on the
Corporate Governance & Nominating Committee as the chairperson
(the “Corporate Governance
& Nominating Committee Chairperson”), whose duties
include overseeing the proper functioning of the Corporate
Governance & Nominating Committee to ensure the proper
discharge of its duties, to schedule meetings and to ensure timely
reporting to the Board.
The
Corporate Governance & Nominating Committee meets as often as
may be necessary or appropriate in its judgment.
The
members of the Corporate Governance & Nominating Committee are
Richard Lock (current Corporate Governance & Nominating
Committee Chairperson), Raymond Polman and Keith Neumeyer, all of
whom are independent.
Assessments
Our
Board annually reviews its own performance and effectiveness as
well as the effectiveness and performance of its committees.
Effectiveness is subjectively measured by comparing actual
corporate results with stated objectives. The contributions of
individual directors are informally monitored by other Board
members, bearing in mind the business strengths of the individual
and the purpose of originally nominating the individual to the
Board.
Our
Board monitors the adequacy of information given to directors,
communication between Board and management and the strategic
direction and processes of the Board and its
committees.
Our
Board believes its corporate governance practices are appropriate
and effective for the Company, given its size and operations. First
Mining’s corporate governance practices allow the Company to
operate efficiently, with checks and balances that control and
monitor management and corporate functions without excessive
administrative burden.
Audit Committee
As
required by NI 52-110, information about our Audit Committee is
provided in the our most recent annual information form dated March
25, 2021, which is available under our SEDAR profile at
www.sedar.com
and on our website at www.firstmininggold.com.
Statement
of Executive Compensation
Named executive officers
During
our most recently completed financial year, we had five Named
Executive Officers (“NEOs”) being Daniel W. Wilton, our
Chief Executive Officer (the “CEO”), Kenneth Engquist, our Chief
Operating Officer (the “COO”), Andrew Marshall, our Chief
Financial Officer (the “CFO”), Samir Patel, our General
Counsel & Corporate Secretary, and Stephen Lines, our Vice
President, Environment & Community Relations.
“Named
Executive Officer” or “NEO” means: (a) our CEO;
(b) our CFO; (c) each of the three most highly compensated
executive officers of the Company; including any of its
subsidiaries, or the three most highly compensated individuals
acting in a similar capacity, other than the CEO and CFO, at the
end of our most recently completed financial year whose total
compensation was, individually, more than $150,000; and (d) each
individual who would be an NEO under (c) above but for the fact
that the individual was neither an executive officer of the
Company, nor acting in a similar capacity, at the end of our most
recently completed financial year.
Unless
stated otherwise, all of the information in this section
“Statement of Executive Compensation” is as of December
31, 2020, being the last day of First Mining’s most recently
completed financial year.
Compensation discussion and analysis
In
2005, First Mining completed its initial public offering and
listing on the TSX Venture Exchange (“TSX-V”) as a Capital Pool Company
(a “CPC”) as
defined in Policy 2.4 of the TSX-V Corporate Finance Manual. On
March 30, 2015, we acquired all of the issued and outstanding
shares of KCP Minerals Inc. (formerly Sundance Minerals Ltd.) (the
“Sundance
Acquisition”). The Sundance Acquisition constituted
First Mining’s Qualifying Transaction. Accordingly, prior to
March 30, 2015, no compensation other than the issuance of stock
options was paid to our directors or officers.
Our
executive compensation program is designed to provide competitive
levels of compensation, a significant portion of which is dependent
upon individual and corporate performance and contribution to
increasing shareholder value. The Board recognizes the need to
provide a total compensation package that will attract and retain
qualified and experienced executives as well as align the
compensation level of each executive to that executive’s
level of responsibility. In general, an NEO’s compensation is
comprised of salary and/or contractor payments, performance-based
bonuses (paid in cash and/or shares) and stock option grants. The
objectives and reasons for this system of compensation are
generally to allow First Mining to remain competitive compared to
its peers in attracting and retaining experienced personnel. All
salaries and/or consulting fees are to be set on a basis of a
review and comparison of compensation paid to executives at similar
companies.
Independent Review of Compensation
The
Compensation Committee and the Board undertake periodic reviews of
First Mining’s compensation program, internally and
externally, to assess how our program compares to industry peers,
and to assess the effectiveness of the compensation program in
attracting and retaining quality personnel. In July 2020, First
Mining retained Lane Caputo Compensation Inc. (“Lane Caputo”), an independent
compensation consulting firm, to assist the Company in reviewing
its compensation practices for non-executive directors, and
executive officers, and to make recommendations to improve the
Company’s approach to compensation.
Pursuant
to this mandate, Lane Caputo: (i) provided First Mining with a
review of current market practices regarding executive and director
compensation, (ii) assisted the Company in developing an
appropriate peer group of companies for benchmarking purposes that
reflects the Company’s current size and stage of development,
(iii) provided the Company with information regarding the executive
compensation packages and practices of both peer companies and the
broader market, and (iv) provided advice and recommendations to the
Company with respect to general trends and practices with respect
to executive and director compensation. Following the conclusion of
its review, Lane Caputo delivered a report to First Mining with
respect to executive and Board compensation at the Company (the
“Lane Caputo
Report”)
The
Lane Caputo Report established a peer group of 19 comparator
companies (the “Peer
Group”) reflecting the evolving business of the
Company. Lane Caputo used various considerations in proposing the
Peer Group, including companies of a similar size, stage of
development and industry focus, with a similar market
capitalization and operating in the same regional geography –
all as compared to the First Mining as at the date of the report.
Based on these considerations, the Peer Group was determined as the
following:
|
Almaden
Minerals Ltd.
Ascot
Resources Ltd.
Auryn
Resources Inc.
|
Integra
Resources Corp.
Kore
Mining Ltd.
Liberty
Gold Corp.
|
Orla
Mining Ltd.
O3
Mining Inc.
Sabina
Gold & Silver Corp.
|
|
Battle
North Gold Corp.
|
Marathon
Gold Corp.
|
Treasury
Metals Inc.
|
|
Chesapeake
Gold Corp.
Corvus
Gold Inc.
|
Midas
Gold Corp.
Monarch
Gold Corp.
|
Trilogy
Metals Inc.
Troilus
Gold Corp.
|
|
Gold
Standard Ventures Corp.
|
|
|
The
Compensation Committee considered the advice, guidance and
recommendations provided in the Lane Caputo Report as part of its
deliberations on its recommendations to the Board with respect to
remuneration paid to First Mining’s executive officers
(including base salary, cash bonuses and grants of Options and
RSUs) and non-executive directors (including annual retainer fees,
Options and DSUs). As a result of the recommendations in the Lane
Caputo Report, the annual base salary for Messrs. Wilton, Engquist,
Marshall and Patel for 2021 increased from the prior year to
$295,000, $245,000, $205,000 and $195,000, respectively and
amendments to the termination and Change of Control provisions in
their respective employment agreements were effected (see the
section below entitled “Narrative discussion”), and cash
bonuses were paid to each of these individuals for the calendar
year 2020 (see the section in this Circular entitled
“Summary compensation table
– 2020 Cash Bonuses Paid in Q1 2021” for a
summary of these cash bonuses).
In
connection with the engagement of Lane Caputo, the Company paid
executive compensation consulting related fees of $24,000 during
the year ended December 31, 2020.
The
Compensation Committee plans to formalize a compensation system for
its employees based on both individual performance and Company
performance by the end of this year. Our Board considers risk
management when implementing First Mining’s compensation
program, and the Board and the Compensation Committee do not
believe that our compensation program results in unnecessary or
inappropriate risk-taking including risks that are likely to have a
material adverse effect on First Mining.
Performance graph
The
following graph compares the cumulative total shareholder return
for $100 invested in our Common Shares from January 1, 2016 to
December 31, 2020 (i.e. our five most recently completed financial
years) against the cumulative total shareholder return of the
S&P/TSX Composite Index, the S&P/TSX Global Mining Index
and the Market Vectors Junior Gold Miners ETF (USD) for the same
period, assuming the reinvestment of all dividends (if
applicable).
Cumulative
Value of $100 investment from December 31, 2015 to December 31,
2020:
|
|
|
|
|
|
|
|
|
|
|
|
First
Mining Gold Corp.
|
$253
|
$182
|
$74
|
$75
|
$118
|
|
% change in fiscal
year
|
153%
|
-28%
|
-60%
|
2%
|
57%
|
|
S&P/TSX
Composite Index (1)
|
$118
|
$125
|
$110
|
$131
|
$134
|
|
% change in fiscal
year
|
18%
|
6%
|
-12%
|
19%
|
2%
|
|
S&P/TSX
Global Mining Index (1)
|
$142
|
$163
|
$153
|
$186
|
$229
|
|
% change in fiscal
year
|
42%
|
15%
|
-6%
|
22%
|
24%
|
|
Market
Vectors Junior Gold Miners ETF (USD)
|
$172
|
$186
|
$165
|
$231
|
$296
|
|
% change in fiscal
year
|
72%
|
8%
|
-11%
|
40%
|
28%
|
Notes:
(1)
The numbers for
this item assumes the reinvestment of all dividends.
Between
the financial year ended December 31, 2016 and the financial year
ended December 31, 2017, there was a 10% increase in compensation
paid to NEOs. There were no increases in salary for existing NEOs
between December 31, 2017 and December 31, 2018. There was a 21%
increase in salary paid to two existing NEOs in 2019 to align more
closely with a peer group of companies. There were no increases in
salary for existing NEOs between December 31, 2019 and December 31,
2020.
The
share price valuation of gold explorers, developers and producers
fluctuates with changes in the underlying commodity prices, ETF and
index rebalances and other external factors. Executive compensation
was not intended to directly reflect share price performance driven
by such externalities. Alignment with our shareholders is
nonetheless achieved by awarding a significant portion of
compensation in the form of long-term equity-based
incentives.
Share-based and option-based awards
We have
not granted any share-based awards as of the date of this Circular.
Our Board is responsible for granting options to the NEOs. Stock
option grants are designed to reward our NEOs for success on a
similar basis as our shareholders, but these rewards are highly
dependent upon the volatile stock market, much of which is beyond
the control of the NEOs. When new options are granted, the Board
takes into account the previous grants of options, the number of
stock options currently held, position, overall individual
performance, anticipated contribution to First Mining’s
future success and the individual’s ability to influence
corporate and business performance. The purpose of granting such
stock options is to assist the Company in compensating, attracting,
retaining and motivating our officers, directors and employees and
to closely align the personal interest of such persons to the
interests of our shareholders.
Under
our Share-Based Compensation Plan, the Board has discretion to set
the exercise price of stock options, provided that the exercise
price may not be lower than the market price of the Common Shares
as of the date of the grant of the stock option.
Risk assessment and oversight
As is
commensurate with companies of a similar size and at a similar
stage of development, during our financial year ended December 31,
2020, our Board did not actively consider the implications of the
risks associated with First Mining’s compensation policies
and practices.
Prohibitions on hedging and speculation
Pursuant
to our Securities Trading Policy, our NEOs and directors are not
permitted to take any speculative or derivative positions or
purchase financial instruments, including without limitation,
prepaid variable forward contracts, instruments for the short sale
or purchase or sale of call or put options, equity swaps, spread
bets, contracts for different, collars or units of exchange funds
or other derivative securities that are designed to or that may
reasonably be expected to have the effect of hedging or offsetting
a decrease in the market value of any of First Mining’s
securities. A copy of our Securities Trading Policy is available on
our website at www.firstmininggold.com.
Compensation governance
The
Compensation Committee consists of three members: Keith Neumeyer
(current Compensation Committee Chairperson), Richard Lock and
Leanne Hall, all of whom are considered independent. The
Compensation Committee, on behalf of the Board, monitors the
compensation of our executive officers.
The
following summary describes the mandate and responsibilities of our
Compensation Committee as it relates to NEO
compensation:
(a)
to review and
approve corporate goals and objectives relevant to NEO
compensation, including the evaluation and performance of the CEO
in light of those corporate goals and objectives, and to make
recommendations to the Board with respect to NEO compensation
levels (including the award of any cash bonuses or share ownership
opportunities);
(b)
to consider the
implementation of short and long-term incentive plans, including
equity-based plans, proposed by management, to make recommendations
to the Board with respect to these plans and to annually review
such plans after their implementation; and
(c)
to annually review
any other benefit plans proposed by management and to make
recommendations to the Board with respect to their
implementation.
All
members of the Compensation Committee have direct experience which
is relevant to their responsibilities as a member of the
Compensation Committee. All members are or have held senior
executive roles within public companies, and therefore have a good
understanding of compensation programs. They also have good
financial understanding which allows them to assess the costs
versus benefits of compensation plans. The members’ combined
experience in the resource sector provides them with the
understanding of First Mining’s success factors and risks,
which is very important when determining metrics for measuring
success.
During
the year ended December 31, 2020, we have retained a compensation
consultant, Lane Caputo Compensation, to assist the Compensation
Committee in determining compensation for our executive officers.
This consultant was retained during the third and fourth quarters
of financial year 2020. We have not retained a compensation
consultant or advisor to assist the Compensation Committee in
determining compensation for any of our directors.
Executive compensation – related fees
The
following table contains a summary of aggregate fees billed by Lane
Caputo Compensation for services related to determining
compensation for the Company’s executive officers for the two
most recently completed financial years:
|
|
|
|
|
Executive
compensation – related fees
|
N/A
|
$24,000
|
Summary compensation table
The
following table contains a summary of the compensation paid or
accrued to our NEOs during First Mining’s three most recently
completed financial years:
|
Name and
principal position
|
Year
|
Salary
(1)
($)
|
Share-based
awards ($)
|
Option-based awards (2)
($)
|
Non-equity
incentive plan compensation
($)
|
Pension value
($)
|
All other
compensation ($)
|
Total
compensation ($)
|
|
Annual Incentive plans
(3)
|
Long-term
incentive plans
|
|
Daniel
W. Wilton
CEO
|
2020
|
$250,000
|
N/A
|
$123,400
|
$225,000
|
N/A
|
N/A
|
Nil
|
$598,400
|
|
2019
|
$246,200
|
N/A
|
$1,126,400
|
$75,000
|
N/A
|
N/A
|
Nil
|
$1,447,600
|
|
2018
|
Nil
|
N/A
|
Nil
|
N/A
|
N/A
|
N/A
|
Nil
|
Nil
|
|
Kenneth
Engquist
COO
|
2020
|
$225,000
|
N/A
|
$98,700
|
$118,125
|
N/A
|
N/A
|
Nil
|
$441,825
|
|
2019
|
$151,700
|
N/A
|
$283,200
|
$30,000
|
N/A
|
N/A
|
Nil
|
$464,900
|
|
2018
|
Nil
|
N/A
|
Nil
|
N/A
|
N/A
|
N/A
|
Nil
|
Nil
|
|
Andrew Marshall
CFO
|
2020
|
$170,000
|
N/A
|
$92,600
|
$89,250
|
N/A
|
N/A
|
Nil
|
$351,850
|
|
2019
|
$170,000
|
N/A
|
Nil
|
$28,900
|
N/A
|
N/A
|
Nil
|
$198,900
|
|
2018
|
$140,000
|
N/A
|
$272,500
|
N/A
|
N/A
|
N/A
|
Nil
|
$412,500
|
|
Samir
Patel
General Counsel & Corporate Secretary
|
2020
|
$170,000
|
N/A
|
$86,400
|
$89,250
|
N/A
|
N/A
|
Nil
|
$345,650
|
|
2019
|
$170,000
|
N/A
|
Nil
|
$25,500
|
N/A
|
N/A
|
Nil
|
$195,500
|
|
2018
|
$140,000
|
N/A
|
$272,500
|
N/A
|
N/A
|
N/A
|
Nil
|
$412,500
|
|
Stephen
Lines
Vice President, Environment & Community Relations
|
2020
|
$16,700
|
N/A
|
129,120
|
$75,000
(4)
|
N/A
|
N/A
|
Nil
|
$220,820
|
|
2019
|
Nil
|
N/A
|
Nil
|
N/A
|
N/A
|
N/A
|
Nil
|
Nil
|
|
2018
|
Nil
|
N/A
|
Nil
|
N/A
|
N/A
|
N/A
|
Nil
|
Nil
|
Notes:
(1)
All dollar amounts
in the above summary compensation table and in these footnotes are
reflected in Canadian dollars.
(2)
The fair value of
option-based awards is determined by the Black-Scholes Option
Pricing Model with the following weighted average
assumptions:
|
|
|
|
|
|
Weighted average
fair value at grant date:
|
$0.14
|
$0.20
|
$0.22
|
|
Risk-free interest
rate:
|
1.74%
|
2.20%
|
1.96%
|
|
Expected dividend
yield:
|
Nil
|
|
|
|
Expected
volatility:
|
69.11%
|
71.87%
|
70.81%
|
|
Forfeiture
rate
|
5.31%
|
5.00%
|
3.04%
|
|
Expected life of
option:
|
5
years
|
|
|
The
method of calculation is in accordance with IFRS 2 and is
consistent with the method used in our annual audited consolidated
financial statements.
(3)
The amounts consist
of cash bonuses granted in respect of the Company’s
performance in 2020 that were paid in Q1 2021. See detailed
breakdown below.
(4)
This amount
consists of a signing bonus paid to Mr. Stephen Lines in February
2021. Mr. Lines joined the Company on December 1, 2020.
:
2020 Cash Bonuses Paid in Q1 2021
Subsequent
to the end of the Company’s most recently completed financial
year, on February 1, 2021, the Company granted cash bonuses to our
NEOs in respect of the Company’s performance in 2020. Each
cash bonus was a percentage of the NEO’s annual salary, and
was paid out to each NEO in mid-February 2021:
|
Name
|
|
Percentage of
Annual Salary
|
|
Daniel
W. Wilton
CEO
|
$225,000
|
90%
|
|
Kenneth
Engquist
COO
|
$118,125
|
53%
|
|
Andrew
Marshall
CFO
|
$89,250
|
53%
|
|
Samir
Patel
General Counsel & Corporate Secretary
|
$89,250
|
53%
|
|
Stephen
Lines (1)
Vice President, Environment & Community Relations
|
$75,000
|
38%
|
Notes:
(1)
Mr. Stephen Lines
joined the Company on December 1, 2020 and was paid a $75,000
signing bonus in February 2021.
Options Granted in Q1 2021
On
February 2, 2021, the Company granted the following stock options
to our NEOs:
|
Name
|
|
|
Grant
Date
|
Expiry
Date
|
|
Daniel
W. Wilton
CEO
|
750,000
|
$0.435
|
February 2,
2021
|
February 2,
2026
|
|
Kenneth
Engquist
COO
|
525,000
|
$0.435
|
February 2,
2021
|
February 2,
2026
|
|
Andrew
Marshall
CFO
|
665,000
|
$0.435
|
February 2,
2021
|
February 2,
2026
|
|
Samir
Patel
General Counsel & Corporate Secretary
|
525,000
|
$0.435
|
February 2,
2021
|
February 2,
2026
|
Each of
the above stock options is subject to the following vesting
schedule:
●
25% vested
immediately on the grant date (February 2, 2021);
●
25% will vest on
August 2, 2021;
●
25% will vest on
February 2, 2022; and
●
25% will vest on
August 2, 2022.
Restricted Share Units Granted in Q1 2021
On
February 2, 2021, the Company granted the following RSUs to our
NEOs:
|
Name
|
|
Grant
Date
|
|
Daniel
W. Wilton
CEO
|
500,000
|
February 2,
2021
|
|
Kenneth
Engquist
COO
|
350,000
|
February 2,
2021
|
|
Andrew
Marshall
CFO
|
350,000
|
February 2,
2021
|
|
Samir
Patel
General Counsel & Corporate Secretary
|
350,000
|
February 2,
2021
|
The
RSUs service year in respect of the above-mentioned grant of RSUs
is the calendar year 2021. Each of the above RSUs is subject to the
following vesting schedule:
●
one third will vest
on February 2, 2022;
●
one third will vest
on February 2, 2023; and
●
one third will vest
on February 2, 2024.
Narrative discussion
Employment Agreement with Daniel W. Wilton (CEO)
Pursuant
to an employment agreement dated December 20, 2018 entered into
between Daniel W. Wilton and First Mining (the “Wilton Agreement”), Mr. Wilton
received $250,000 per year in salary for the fiscal year ended
December 31, 2020. If Mr. Wilton is terminated for a reason other
than cause, the Company shall pay Mr. Wilton a lump sum equal to 12
months of his base salary, plus an additional 2 months for each
year of service completed after the first anniversary of his hire
date up to a maximum of 24 months’ base salary, and Mr.
Wilton’s vested options shall be exercisable until the date
that is 12 months from the date of termination of his employment.
If Mr. Wilton wishes to resign, he would need to provide the
Company with at least 2 months’ advance written notice. If
there is a Change of Control and Mr. Wilton is terminated for a
reason other than cause, the Company shall pay Mr. Wilton a lump
sum equal to 12 months of his base salary, plus an additional 2
months for each year of service completed after the first
anniversary of his hire date up to a maximum of 24 months’
base salary, and all of Mr. Wilton’s unvested options shall
immediately become fully vested. Any bonuses paid to Mr. Wilton
under the Wilton Agreement are at the sole discretion of the
Company.
On
January 1, 2021, First Mining and Mr. Wilton entered into an
amended and restated employment agreement (the “New Wilton Agreement”) which
superseded the Wilton Agreement. Pursuant to the New Wilton
Agreement, effective January 1, 2021: (i) Mr. Wilton’s annual
base salary was increased to $295,000 per year; (ii) if Mr. Wilton
is terminated for a reason other than cause, his vested options
shall be exercisable until the date that is 12 months from the date
of termination of his employment and the Company shall pay Mr.
Wilton a lump sum equal to 12 months of his base salary at the time
of termination plus an additional 2 months of base salary for each
year of service completed after the first anniversary of his hire
date up to a maximum of 24 months’ base salary, plus an
additional amount that is equal to 50% of the aggregate of the
total cash bonuses received by Mr. Wilton in the two full calendar
years immediately preceding the termination of his employment; and
(iii) if there is a Change of Control and Mr. Wilton is terminated
for a reason other than cause, the Company shall pay Mr. Wilton a
lump sum equal to 24 months of his base salary at the time of such
termination, plus an additional amount equal to the aggregate of
the total cash bonuses paid to Mr. Wilton in the two full calendar
years immediately preceding the termination of his employment, and
all unvested Awards held by Mr. Wilton at that time shall
immediately become fully vested. All other terms of the Wilton
Agreement were restated in the New Wilton Agreement and continue to
be in effect.
Employment Agreement with Kenneth Engquist (COO)
Pursuant
to an employment agreement dated April 23, 2019 entered into
between Kenneth Engquist and First Mining (the “Engquist Agreement”), Mr. Engquist
was hired as First Mining’s COO, effective April 29, 2019,
and he received $225,000 per year in salary for the fiscal year
ended December 31, 2020. If Mr. Engquist is terminated for a reason
other than cause, the Company shall pay Mr. Engquist a lump sum
equal to 6 months of his base salary, plus 1 month for each year of
service completed after the first anniversary of his hire date up
to a maximum of 24 months’ base salary, and Mr.
Engquist’s vested options shall be exercisable until the date
that is 12 months from the date of termination of his employment.
If Mr. Engquist wishes to resign, he would need to provide the
Company with at least 2 months’ advance written notice. If
there is a Change of Control and Mr. Enqguist is terminated for a
reason other than cause, the Company shall pay Mr. Engquist a lump
sum equal to 12 months of his base salary, plus an additional 1
month for each year of service completed after the first
anniversary of his hire date up to a maximum of 24 months’
base salary, and all of Mr. Engquist’s unvested options shall
immediately become fully vested. Any bonuses paid to Mr. Engquist
under the Engquist Agreement are at the sole discretion of the
Company.
On
January 1, 2021, First Mining and Mr. Engquist entered into an
amended and restated employment agreement (the “New Engquist Agreement”) which
superseded the Engquist Agreement. Pursuant to the New Engquist
Agreement, effective January 1, 2021: (i) Mr. Engquist’s
annual base salary was increased to $245,000 per year; (ii) if Mr.
Engquist is terminated for a reason other than cause, his vested
options shall be exercisable until the date that is 12 months from
the date of termination of his employment and the Company shall pay
Mr. Engquist a lump sum equal to 6 months of his base salary at the
time of termination plus an additional 1 month of base salary for
each year of service completed after the first anniversary of his
hire date up to a maximum of 24 months’ base salary, plus an
additional amount that is equal to 50% of the aggregate of the
total cash bonuses received by Mr. Engquist in the two full
calendar years immediately preceding the termination of his
employment; and (iii) if there is a Change of Control and Mr.
Engquist is terminated for a reason other than cause, the Company
shall pay Mr. Engquist a lump sum equal to 18 months of his base
salary at the time of such termination, plus an additional amount
equal to the aggregate of the total cash bonuses paid to Mr.
Engquist in the two full calendar years immediately preceding the
termination of his employment, and all unvested Awards held by Mr.
Engquist at that time shall immediately become fully vested. All
other terms of the Engquist Agreement were restated in the New
Engquist Agreement and continue to be in effect.
Employment Agreement with Andrew Marshall (CFO)
Pursuant
to an employment agreement dated May 29, 2015 entered into between
Andrew Marshall and First Mining (the “Marshall Agreement”), Mr. Marshall
received $100,000 per year in salary for the fiscal year ended
December 31, 2015 (pro-rated based on his hire date of June 6,
2015). The Marshall Agreement was amended in June 2016 to increase
Mr. Marshall’s salary to $120,000 per year and, in connection
with Mr. Marshall’s promotion from Controller to Chief
Financial Officer in September 2016, the Marshall Agreement was
further amended to increase Mr. Marshall’s salary to $140,000
per year. On December 14, 2018, the Marshall Agreement was amended
to increase Mr. Marshall’s annual salary to $170,000,
effective as of January 1, 2019. Mr. Marshall received $170,000 per
year in salary for the fiscal year ended December 31, 2020. If Mr.
Marshall is terminated for a reason other than cause, the Company
shall pay Mr. Marshall a lump sum equal to six months of his base
salary, plus one month for each year of service completed after the
first anniversary of his hire date up to a maximum of 24
months’ base salary, and Mr. Marshall’s vested options
shall be exercisable until the date that is 12 months from the date
of termination of his employment. If Mr. Marshall wishes to resign,
he would need to provide the Company with at least three
months’ advance written notice. If there is a Change of
Control and Mr. Marshall is terminated for a reason other than
cause, the Company shall pay Mr. Marshall a lump sum equal to one
year of his base salary, plus an additional one month for each year
of service completed after the first anniversary of his hire date
up to a maximum of 24 months’ base salary, and all of Mr.
Marshall’s unvested options shall immediately become fully
vested. Any bonuses paid to Mr. Marshall under the Marshall
Agreement are at the sole discretion of the Company.
On
January 1, 2021, First Mining and Mr. Marshall entered into an
amended and restated employment agreement (the “New Marshall Agreement”) which
superseded the Marshall Agreement. Pursuant to the New Marshall
Agreement, effective January 1, 2021: (i) Mr. Marshall’s
annual base salary was increased to $205,000 per year; (ii) if Mr.
Marshall is terminated for a reason other than cause, his vested
options shall be exercisable until the date that is 12 months from
the date of termination of his employment and the Company shall pay
Mr. Marshall a lump sum equal to 6 months of his base salary at the
time of termination plus an additional 1 month of base salary for
each year of service completed after the first anniversary of his
hire date up to a maximum of 24 months’ base salary, plus an
additional amount that is equal to 50% of the aggregate of the
total cash bonuses received by Mr. Marshall in the two full
calendar years immediately preceding the termination of his
employment; and (iii) if there is a Change of Control and Mr.
Marshall is terminated for a reason other than cause, the Company
shall pay Mr. Marshall a lump sum equal to 18 months of his base
salary at the time of such termination, plus an additional amount
equal to the aggregate of the total cash bonuses paid to Mr.
Marshall in the two full calendar years immediately preceding the
termination of his employment, and all unvested Awards held by Mr.
Patel at that time shall immediately become fully vested. All other
terms of the Marshall Agreement were restated in the New Marshall
Agreement and continue to be in effect.
Employment Agreement with Samir Patel (General Counsel &
Corporate Secretary)
Pursuant
to an employment agreement dated June 2, 2016 entered into between
Samir Patel and First Mining, as amended by letter agreements dated
July 12, 2017 and December 14, 2018 (collectively, the
“Patel
Agreement”), Mr. Patel received $170,000 per year in
salary for the fiscal year ended December 31, 2020. If Mr. Patel is
terminated for a reason other than cause, the Company shall pay Mr.
Patel a lump sum equal to 6 months of his base salary, plus 1 month
for each year of service completed after the first anniversary of
his hire date up to a maximum of 24 months’ base salary, and
Mr. Patel’s vested options shall be exercisable until the
date that is 12 months from the date of termination of his
employment. If Mr. Patel wishes to resign, he would need to provide
the Company with at least 1 months’ advance written notice.
If there is a Change of Control and Mr. Patel is terminated for a
reason other than cause, the Company shall pay Mr. Patel a lump sum
equal to 12 months of his base salary, plus an additional 1 month
for each year of service completed after the first anniversary of
his hire date up to a maximum of 24 months’ base salary, and
all of Mr. Patel’s unvested options shall immediately become
fully vested. Any bonuses paid to Mr. Patel under the Patel
Agreement are at the sole discretion of the Company.
On
January 1, 2021, First Mining and Mr. Patel entered into an amended
and restated employment agreement (the “New Patel Agreement”) which
superseded the Patel Agreement. Pursuant to the New Patel
Agreement, effective January 1, 2021: (i) Mr. Patel’s annual
base salary was increased to $195,000 per year; (ii) if Mr. Patel
is terminated for a reason other than cause, his vested options
shall be exercisable until the date that is 12 months from the date
of termination of his employment and the Company shall pay Mr.
Patel a lump sum equal to 6 months of his base salary at the time
of termination plus an additional 1 month of base salary for each
year of service completed after the first anniversary of his hire
date up to a maximum of 24 months’ base salary, plus an
additional amount that is equal to 50% of the aggregate of the
total cash bonuses received by Mr. Patel in the two full calendar
years immediately preceding the termination of his employment; and
(iii) if there is a Change of Control and Mr. Patel is terminated
for a reason other than cause, the Company shall pay Mr. Patel a
lump sum equal to 18 months of his base salary at the time of such
termination, plus an additional amount equal to the aggregate of
the total cash bonuses paid to Mr. Patel in the two full calendar
years immediately preceding the termination of his employment, and
all unvested Awards held by Mr. Patel at that time shall
immediately become fully vested. All other terms of the Patel
Agreement were restated in the New Patel Agreement and continue to
be in effect.
Employment Agreement with Stephen Lines (Vice President,
Environment & Community Relations)
Pursuant
to an employment agreement dated November 9, 2020 entered into
between Stephen Lines and First Mining (the “Lines Agreement”), Mr. Lines was
hired as First Mining’s Vice President, Environment &
Community Relations, effective December 1, 2020, and he received
$200,000 per year in salary for the fiscal year ended December 31,
2020, pro-rated based on his hire date of December 1, 2020. The
first three months of Mr. Lines’ employment with the Company
is a probationary period, and during this time Mr. Lines may be
terminated for any reason without notice or payment in lieu of
notice. Following the completion of the probationary period, if Mr.
Lines is terminated for a reason other than cause, the Company
shall pay Mr. Lines a lump sum equal to 6 months of his base
salary, plus 1 month for each year of service completed after the
first anniversary of his hire date up to a maximum of 24
months’ base salary, and Mr. Lines’ vested options
shall be exercisable until the date that is 12 months from the date
of termination of his employment. If Mr. Lines wishes to resign, he
would need to provide the Company with at least 1 months’
advance written notice. If there is a Change of Control and Mr.
Lines is terminated for a reason other than cause, the Company
shall pay Mr. Lines a lump sum equal to 12 months of his base
salary, plus an additional 1 month for each year of service
completed after the first anniversary of his hire date up to a
maximum of 24 months’ base salary, and all unvested Awards
held by Mr. Lines at that time shall immediately become fully
vested. Any bonuses paid to Mr. Lines under the Lines Agreement are
at the sole discretion of the Company.
Stock Options
Calculating
the value of stock options using the Black-Scholes option pricing
model is very different from a simple “in-the-money”
value calculation. In fact, stock options that are well
out-of-the-money can still have a significant “grant date
fair value” based on a Black-Scholes option pricing model,
especially where, as in the case of the Company, the price of the
share underlying the option is highly volatile. Accordingly,
caution must be exercised in comparing grant date fair value
amounts with cash compensation or an in-the-money option value
calculation.
Incentive plan awards
Outstanding Share-Based Awards and Option-Based Awards
To
date, none of our NEOs have been granted any share-based awards by
the Company. The following table sets out the outstanding
option-based awards held by the NEOs of First Mining at the end of
our most recently completed financial year:
|
|
Option-based
Awards
|
Share-based
Awards
|
|
Name
|
Number of
securities underlying unexercised options
(#)
|
Option exercise
price ($)
|
Option
expiration date
|
Value of
unexercised in-the-money options
($) (1)
|
Number of shares
or units of shares that have not vested
(#) (2)
|
Market or payout
value of share-based awards that have not
vested
($)
|
|
Daniel
W. Wilton
CEO
|
1,000,000
|
$0.25
|
31-Jan-25
|
$150,000
|
Nil
|
N/A
|
|
5,000,000
|
$0.40
|
07-Jan-24
|
Nil
|
Nil
|
N/A
|
|
Kenneth
Engquist
COO
|
800,000
|
$0.25
|
31-Jan-25
|
$98,729
|
Nil
|
N/A
|
|
2,000,000
|
$0.40
|
29-Apr-24
|
Nil
|
Nil
|
N/A
|
|
Andrew
Marshall
CFO
|
750,000
|
$0.25
|
31-Jan-25
|
$92,558
|
Nil
|
N/A
|
|
750,000
|
$0.40
|
10-Dec-23
|
Nil
|
Nil
|
N/A
|
|
500,000
|
$0.60
|
15-Jan-23
|
Nil
|
Nil
|
N/A
|
|
560,000
|
$0.85
|
10-Feb-22
|
Nil
|
Nil
|
N/A
|
|
300,000
|
$0.75
|
16-Jun-21
|
Nil
|
Nil
|
N/A
|
|
Samir
Patel
General Counsel & Corporate Secretary
|
700,000
|
$0.25
|
31-Jan-25
|
$86,387
|
Nil
|
N/A
|
|
750,000
|
$0.40
|
10-Dec-23
|
Nil
|
Nil
|
N/A
|
|
500,000
|
$0.60
|
15-Jan-23
|
Nil
|
Nil
|
N/A
|
|
450,000
|
$0.85
|
10-Feb-22
|
Nil
|
Nil
|
N/A
|
|
250,000
|
$0.91
|
06-Sep-21
|
Nil
|
Nil
|
N/A
|
|
Stephen
Lines
Vice President, Environment & Community Relations
|
600,000
|
$0.405
|
01-Dec-25
|
Nil
|
Nil
|
N/A
|
Notes:
(1)
This amount is the
aggregate dollar amount of in-the-money unexercised options held at
the end of 2020 based on the closing price of our Common Shares on
the TSX on December 31, 2020, which was $0.40. All options, with
the exception of those noted above which are due to expire on or
after December 10, 2023, were fully vested as of the grant date of
the options.
(2)
Effective December
10, 2018, the Board of Directors adopted the following vesting
criteria on all future option grants: 25% vests immediately upon
grant; 25% vests in 6 months following the date of grant; 25% vests
in 12 months following the date of the grant and 25% vests in 18
months following the date of the grant.
Incentive Plan Awards – Value Vested or Earned During the
Year
The
following table sets forth details of the value vested or earned
for all incentive plan awards during the most recently completed
financial year by each NEO and former NEO:
|
Name
|
Option-based awards - Value vested during the
year (1)
($)
|
Share-based awards
- Value vested during the year
($)
|
Non-equity
incentive plan compensation - Value earned during the year
(2)
($)
|
|
Daniel
W. Wilton
CEO
|
$322,500
|
Nil
|
$225,000
|
|
Kenneth
Engquist
COO
|
$98,000
|
Nil
|
$118,125
|
|
Andrew
Marshall
CFO
|
$91,875
|
Nil
|
$89,250
|
|
Samir
Patel
General Counsel & Corporate Secretary
|
$85,750
|
Nil
|
$89,250
|
|
Stephen Lines (1)
Vice President, Environment & Community Relations
|
Nil
|
Nil
|
$75,000
|
Notes:
(1)
This amount is
based on the aggregate dollar value that would have been realized
if the options under the option-based award had been exercised on
the vesting date. Amounts were computed using the dollar value that
would have been realized by determining the difference between the
market price of the underlying securities at exercise and the
exercise or base price of the options under the option-based award
on the vesting date.
(2)
The amounts consist
of cash bonuses granted in respect of the Company’s
performance in 2020 that were paid in Q1 2021.
Description of Equity Compensation Plans
The
shareholders of the Company approved our Share Based Compensation
Plan at the annual general meeting of shareholders that was held on
June 25, 2019. A description of the material terms of the Share
Based Compensation Plan are included in Appendix
“B”.
Termination and change of control benefits
Other
than set out below, we have not entered into any other contract,
agreement, plan or arrangement that provides for payments to a NEO
at, following or in connection with any termination (whether
voluntary, involuntary or constructive), resignation, retirement, a
change in control of First Mining or a change in an NEO’s
responsibilities.
The
NEOs in the table below have termination and change of control
benefits provided for in their respective employment/consulting
agreements. The terms of each of the NEO’s
employment/consulting agreements are described earlier in this
Circular under the heading “Summary Compensation Table – Narrative
Discussion”.
Termination Without Cause (No
Change of Control)
The
table below sets out the maximum amount First Mining could be
obligated to pay in the event that an NEO was terminated without
cause as of December 31, 2020, unrelated to a change of control. We
would also be obligated to pay the NEO’s actual accrued base
salary and expenses up to the date of termination and continue the
NEO’s option entitlements for the period set out in their
respective employment agreements.
|
Name
|
Payment on
Termination ($)
|
|
|
Total Gross Payment
on Termination ($)
|
|
Daniel
W. Wilton
CEO
|
$290,982
|
Nil
|
$24,597
|
$315,579
|
|
Kenneth
Engquist
COO
|
$125,188
|
Nil
|
$16,600
|
$141,788
|
|
Andrew
Marshall
CFO
|
$149,973
|
Nil
|
$23,120
|
$173,093
|
|
Samir
Patel
General Counsel & Corporate Secretary
|
$135,612
|
Nil
|
$17,510
|
$153,122
|
|
Stephen
Lines
Vice President, Environment & Community Relations
|
Nil
|
$75,000
|
$800
|
$75,800
|
Termination Without Cause (Following a Change of
Control)
The
table below sets out the maximum amount First Mining could be
obligated to pay in the event that an NEO was terminated without
cause as of December 31, 2020, following a change of control. We
would also be obligated to pay the NEO’s actual accrued base
salary and expenses up to the date of termination and continue the
NEO’s option entitlements for the period set out in their
respective employment agreements.
|
Name
|
Payment on
Termination ($)
|
|
|
Total Gross Payment
on Termination ($)
|
|
Daniel
W. Wilton
CEO
|
$290,982
|
Nil
|
$24,597
|
$315,579
|
|
Kenneth
Engquist
COO
|
$237,688
|
Nil
|
$16,600
|
$254,288
|
|
Andrew
Marshall
CFO
|
$234,973
|
Nil
|
$23,120
|
$258,093
|
|
Samir
Patel
General Counsel & Corporate Secretary
|
$220,612
|
Nil
|
$17,510
|
$238,121
|
|
Stephen
Lines
Vice President, Environment & Community Relations
|
Nil
|
$75,000
|
$800
|
$75,800
|
Director compensation
On July
24, 2019, our Board established and adopted a director compensation
plan for its non-executive directors (the “Director Compensation Plan”),
replacing the previous plan that had been in place since July 1,
2016. The Director Compensation Plan, which became effective as of
July 1, 2019, provides for the semi-annual payment of fees to
non-management directors who are not otherwise compensated under a
formal management agreement.
Under
the Director Compensation Plan:
●
Each non-executive
director of First Mining receives $50,000 per year for serving as a
director;
●
The Chairman of the
Board receives an additional $10,000 per year for serving as
Chairman of the Board;
●
The Chair of each
Board committee receives and additional $5,000 per year for serving
as a Chair of a Board committee;
●
Each non-executive
director receives a meeting fee of $1,000 for each Board meeting
and Board committee meeting attended by the director;
and
●
Each non-executive
director receives an additional $2,000 per year as reimbursement of
out-of-pocket expenses incurred by the director, with receipts with
respect to such expenses to be provided upon request by the
Company.
No
director fees were paid in 2020 to Mr. Daniel W. Wilton, the
Company’s CEO, for serving on the Board.
The
following table sets forth the details of compensation provided to
our directors, other than the NEOs, during our most recently
completed financial year. The value disclosed under option-based
awards for directors represents the deemed dollar value of the
options granted. Except as may be noted below, no other
compensation was paid to directors in their capacity as directors
of First Mining or any of its subsidiaries, in their capacity as
members of a committee of the Board or of a committee of the board
of directors of its subsidiaries, or as consultants or experts,
during our most recently completed financial year.
|
Name
|
|
|
Option-based awards
of unexercised in-the-money options
($) (1)
|
Non-equity
incentive plan compensation
|
|
All other
compensation ($)
|
|
|
|
|
|
|
|
|
|
|
|
Keith
Neumeyer
|
$83,625
|
N/A
|
$37,023
|
N/A
|
N/A
|
Nil
|
$120,648
|
|
Raymond
Polman
|
$72,000
|
N/A
|
$24,682
|
N/A
|
N/A
|
Nil
|
$96,682
|
|
Richard
Lock
|
$77,125
|
N/A
|
$17,344
|
N/A
|
N/A
|
Nil
|
$94,469
|
|
Aoife McGrath
(2)
|
$23,667
|
N/A
|
$17,344
|
N/A
|
N/A
|
Nil
|
$41,011
|
|
Leanne
Hall
|
$36,333
|
N/A
|
$50,403
|
N/A
|
N/A
|
Nil
|
$86,736
|
|
Christopher
Osterman (3)
|
Nil
|
N/A
|
$24,682
|
N/A
|
N/A
|
Nil
|
$24,682
|
|
Michel Bouchard
(4)
|
Nil
|
N/A
|
$24,682
|
N/A
|
N/A
|
Nil
|
$24,682
|
|
David Shaw
(4)
|
Nil
|
N/A
|
$24,682
|
N/A
|
N/A
|
Nil
|
$24,682
|
(1)
The fair value of
option-based awards is determined by the Black-Scholes Option
Pricing Model with the following weighted average assumptions: (a)
weighted average fair value at grant date - $0.13; (b) expected
dividend yield – nil; (c) average risk-free interest rate -
1.68%; (d) expected life - 5 years; (e) expected volatility –
69.20%; and (f) forfeiture rate – 5.24%. The method of
calculation is in accordance with IFRS 2 and is consistent with the
method used in our annual audited consolidated financial
statements.
(2)
Ceased to be a
Director on July 1, 2020.
(3)
Ceased to be a
Director on February 11, 2020.
(4)
Ceased to be a
Director on April 1, 2020.
Options Granted in Q1 2021
On
February 2, 2021, the Company granted the following stock options
to our directors:
|
Name
|
|
|
Grant
Date
|
Expiry
Date
|
|
Keith
Neumeyer
|
437,500
|
$0.435
|
February 2,
2021
|
February 2,
2026
|
|
Raymond
Polman
|
437,500
|
$0.435
|
February 2,
2021
|
February 2,
2026
|
|
Richard
Lock
|
300,000
|
$0.435
|
February 2,
2021
|
February 2,
2026
|
|
Leanne
Hall
|
225,000
|
$0.435
|
February 2,
2021
|
February 2,
2026
|
Each of
the above stock options is subject to the following vesting
schedule:
●
25% vested
immediately on the grant date (February 2, 2021);
●
25% will vest on
August 2, 2021;
●
25% will vest on
February 2, 2022; and
●
25% will vest on
August 2, 2022.
Deferred Share Units Granted in Q1 2021
On
February 2, 2021, the Company granted the following DSUs to our
directors:
|
Name
|
|
Grant
Date
|
|
Leanne
Hall
|
40,000
|
February 2,
2021
|
Each of
the above DSUs is subject to the following vesting
schedule:
●
25% vested
immediately on the grant date (February 2, 2021);
●
25% will vest on
August 2, 2021;
●
25% will vest on
February 2, 2022; and
●
25% will vest on
August 2, 2022.
Incentive Plan Awards – Outstanding Share-Based Awards and
Option-Based Awards
As at
December 31, 2020, none of our directors have been granted any
share-based awards by the Company. The following table (which
continues on the next page) sets forth details regarding all
option-based awards that have been granted to each director of
First Mining who is not also an NEO or former NEO and that are
outstanding as at the end of our most recently completed financial
year.
|
|
Option-based
Awards
|
Share-based
Awards
|
|
Name
|
Number of
securities underlying unexercised options
(#)
|
Option exercise
price ($)
|
Option
expiration date
|
Value of
unexercised in-the-money options
($) (1)
|
Number of shares
or units of shares that have not vested
(#) (2)
|
Market or payout
value of share-based awards that have not
vested
($)
|
|
Keith
Neumeyer
Chairman
|
300,000
|
$0.25
|
31-Jan-25
|
$45,000
|
Nil
|
Nil
|
|
700,000
|
$0.40
|
10-Dec-23
|
Nil
|
Nil
|
Nil
|
|
1,000,000
|
$0.60
|
15-Jan-23
|
Nil
|
Nil
|
Nil
|
|
1,915,000
|
$0.85
|
10-Feb-22
|
Nil
|
Nil
|
Nil
|
|
2,500,000
|
$0.75
|
16-Jun-21
|
Nil
|
Nil
|
Nil
|
|
Raymond
Polman
Director
|
200,000
|
$0.25
|
31-Jan-25
|
$30,000
|
Nil
|
Nil
|
|
550,000
|
$0.40
|
10-Dec-23
|
Nil
|
Nil
|
Nil
|
|
500,000
|
$0.60
|
15-Jan-23
|
Nil
|
Nil
|
Nil
|
|
525,000
|
$0.85
|
10-Feb-22
|
Nil
|
Nil
|
Nil
|
|
300,000
|
$0.75
|
16-Jun-21
|
Nil
|
Nil
|
Nil
|
|
Richard
Lock
Director
Director
|
200,000
|
$0.25
|
01-Apr-25
|
$30,000
|
Nil
|
Nil
|
|
Leanne
Hall
Director
|
200,000
|
$0.435
|
30-Oct-25
|
Nil
|
Nil
|
Nil
|
Notes:
(1)
This amount is the
aggregate dollar amount of in-the-money unexercised options held at
the end of 2020 based on the closing price of our Common Shares on
the TSX on December 31, 2020, which was $0.40. All options, with
the exception of those noted above which are due to expire on or
after December 10, 2023, were fully vested as of the grant date of
the options.
(2)
Effective December
10, 2018, the Board of Directors adopted the following vesting
criteria on all future option grants: 25% vests immediately upon
grant; 25% vests in 6 months following the date of grant; 25% vests
in 12 months following the date of the grant and 25% vests in 18
months following the date of the grant.
Incentive Plan Awards – Value Vested or Earned During the
Year
The
following table sets forth details of the value vested or earned
for all incentive plan awards during our most recently completed
financial year by each director that was not also a former
NEO:
|
Name
|
Option-based awards - Value vested during the
year (1)
($)
|
Share-based awards
- Value vested during the year
($)
|
Non-equity
incentive plan compensation - Value earned during the
year
($)
|
|
Keith
Neumeyer
Chairman
|
$36,750
|
Nil
|
Nil
|
|
Raymond
Polman
Director
|
$24,500
|
Nil
|
Nil
|
|
Richard
Lock
Director
|
$22,000
|
Nil
|
Nil
|
|
Leanne
Hall
Director
|
$3,250
|
Nil
|
Nil
|
Notes:
(1)
This amount is
based on the aggregate dollar value that would have been realized
if the options under the option-based award had been exercised on
the vesting date. Amounts were computed using the dollar value that
would have been realized by determining the difference between the
market price of the underlying securities at exercise and the
exercise or base price of the options under the option-based award
on the vesting date.
Equity Compensation Plan Information
The
following table sets out those securities of the Company which have
been authorized for issuance under equity compensation plans, as at
the end of the most recently completed financial year:
|
Plan
Category
|
Number of
securities to be issued upon exercise of outstanding
options
(a)
|
Weighted average
exercise price of outstanding options
(b)
|
Number of
securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
(c)
|
|
Equity compensation
plans approved by our securityholders
|
45,820,000
|
$0.53
|
23,901,645
|
|
Equity compensation
plans not approved by our securityholders
|
Nil
|
Nil
|
Nil
|
|
TOTAL
|
45,820,000
|
$0.53
|
23,901,645
|
Note:
(1)
The aggregate
number of Common Shares that may be reserved for issuance under our
current stock option plan shall not exceed 10% of First
Mining’s issued and outstanding Common Shares. As at December
31, 2020, we had 697,216,453 Common Shares issued and
outstanding.
Annual burn rate
For
each of the last three financial years, the annual burn rate of our
current stock option plan relative to options issued under the plan
is:
●
1.76% for 2020
(11,350,000 options were issued in fiscal year 2020);
●
1.35% for 2019
(7,750,000 options were issued in fiscal year 2019);
and
●
4.17% for 2018
(23,220,000 options were issued in fiscal year 2018).
The
“burn rate” of our current stock option plan for any
given fiscal year is calculated by dividing the total number of
stock options granted in that fiscal year by the weighted average
number of Common Shares outstanding for that year.
Indebtedness of Directors and Executive
Officers
None of
the current or former directors, executive officers, employees of
First Mining, the proposed nominees for election to the Board, or
their respective associates or affiliates, are or have been
indebted to the Company since the beginning of our most recently
completed financial year.
Other
than as disclosed elsewhere in this Circular, no management
functions of First Mining are to any substantial degree performed
by a person or company other than the directors or NEOs of the
Company.
Additional
information relating to First Mining is available under our SEDAR
profile at www.sedar.com.
You can
find financial information relating to First Mining in our
comparative financial statements and MD&A for our most recently
completed financial year. These documents are available on our
website at www.firstmininggold.com/investors/reports-filings/financials
and under our SEDAR profile at www.sedar.com.
You can
also request copies free of charge by contacting us
at:
|
First Mining Gold
Corp.
|
info@firstmininggold.com
|
|
Suite 2070 –
1188 West Georgia Street
|
Telephone:
1.844.306.8827
|
|
Vancouver, British
Columbia V6E 4A2
|
|
Board Approval
Our
Board has approved the contents of this Circular and authorized us
to send it to you.
DATED
at Vancouver, British Columbia, this 18th day of May,
2021.
ON BEHALF OF THE BOARD,
/s/
Daniel W. Wilton
Daniel
W. Wilton
Chief
Executive Officer and Director
Appendix A
Board Mandate
BOARD OF DIRECTORS CHARTER
1.1 The First Mining
Gold Corp. (the “Company”) board of directors (the
“Board”) has the
primary responsibility to foster the short and long-term success of
the Company and is accountable to the Company’s shareholders
and other stakeholders.
1.2 The Board is
responsible under law for the management or for supervising the
management of the Company’s business and affairs. In
supervising the conduct of the business, the Board sets the
standards of conduct for the Company.
1.3 This mandate is
prepared to assist the Board and management in clarifying
responsibilities and ensuring effective communication between the
Board and management.
2.
COMPOSITION
AND BOARD ORGANIZATION
2.1 Nominees for
directors are initially considered and recommended by the
Board’s Compensation Committee in conjunction with the Chair
of the Board, approved by the entire Board and elected annually by
the shareholders.
2.2 A majority of
directors comprising the Board must qualify as independent
directors (as defined in National Instrument 58-101 Disclosure of Corporate Governance
Practices).
2.3 Certain of the
Board’s responsibilities may be delegated to Board
committees. The responsibilities of those committees will be as set
forth in their charters.
Managing the Affairs of the Board
3.1 The Board operates
by delegating certain of its authorities, including spending
authorizations, to management and by reserving certain powers to
itself. The legal obligations of the Board are described in Section
4. Subject to these legal obligations and to the articles of the
Company, the Board retains the responsibility for managing its own
affairs, including:
(a)
annually reviewing
the skills and experience represented on the Board in light of the
Company’s strategic direction and approving a Board
composition plan recommended by the Compensation and Nominating
Committee;
(b)
appointing,
determining the composition of and setting the terms of reference
for, Board committees;
(c)
determining and
implementing an appropriate process for assessing the effectiveness
of the Board, the Board Chair, committees and directors in
fulfilling their responsibilities;
(d)
assessing the
adequacy and form of director compensation;
(e)
assuming
responsibility for the Company’s governance
practices;
(f)
establishing new
director orientation and ongoing director education
processes;
(g)
ensuring that the
independent directors meet regularly without executive directors
and management present;
(h)
setting the terms
of reference for the Board; and
(i)
appointing the
Corporate Secretary to the Board.
Human Resources
3.2
The Board has the
responsibility to:
(a)
appoint the Chief
Executive Officer and plan Chief Executive Officer
succession;
(b)
set terms of
reference for the Chief Executive Officer;
(c)
provide advice and
counsel to the Chief Executive Officer in the execution of the
Chief Executive Officer’s duties;
(d)
annually approve
corporate goals and objectives that the Chief Executive Officer is
responsible for meeting;
(e)
monitor and, at
least annually, review the Chief Executive Officer’s
performance against agreed upon annual objectives;
(f)
to the extent
feasible, satisfy itself as to the integrity of the Chief Executive
Officer and other senior officers, and that the Chief Executive
Officer and other senior officers create a culture of integrity
throughout the Company;
(g)
set the Chief
Executive Officer’s compensation;
(h)
approve the Chief
Executive Officer’s acceptance of significant public service
commitments or outside directorships;
(i)
approve decisions
relating to senior management, including:
(i)
review senior
management structure including the duties and responsibilities to
be assigned to officers of the Company;
(ii)
on the
recommendation of the Chief Executive Officer, appoint and
discharge the officers of the Company who report to the Chief
Executive Officer;
(iii)
review compensation
plans for senior management including salary, incentive, benefit
and pension plans;
(iv)
review employment
contracts, termination and other special arrangements with
executive officers, or other employee groups;
(v)
approve certain
matters relating to all employees, including:
(A)
the Company’s
broad compensation strategy and philosophy;
(B)
new benefit
programs or material changes to existing programs; and
(vi)
ensure succession
planning programs are in place, including programs to train and
develop management.
Strategy and Plans
3.3
The Board has the
responsibility to:
(a)
adopt and
periodically review a strategic planning process for the
Company;
(b)
participate with
management, in the development of, and annually approve a strategic
plan for the Company that takes into consideration, among other
things, the risks and opportunities of the business;
(c)
approve annual
capital and operating budgets that support the Company’s
ability to meet its strategic objectives;
(d)
direct management
to develop, implement and maintain a reporting system that
accurately measures the Company’s performance against its
business plans;
(e)
approve the
entering into, or withdrawing from, projects that are, or are
likely to be, material to the Company; and
(f)
approve material
mergers, acquisitions, joint ventures, and
divestitures.
Financial and Corporate Issues
3.4
The Board has the
responsibility to:
(a)
take reasonable
steps to ensure the implementation and integrity of the
Company’s internal control and management information
systems;
(b)
review and approve
release by management of any materials reporting on the
Company’s financial performance or providing guidance on
future results and ensure the disclosure accurately and fairly
reflects the state of affairs of the Company, and is in accordance
with international financial reporting standards
(“IFRS”),
including quarterly and annual financial statements, information
circulars, annual information forms, annual reports, offering
memorandums and prospectuses;
(c)
declare cash or in
specie dividends subject to applicable laws and the best interests
of the Company;
(d)
approve financings,
issue and repurchase of shares, issue of debt securities, listing
of shares and other securities, issue of commercial paper, and
related prospectuses; and recommend changes in authorized share
capital to shareholders for their approval;
(e)
approve the
incurring of any material debt by the Company outside the ordinary
course of business;
(f)
approve the
commencement or settlement of litigation that may have a material
impact on the Company; and
(g)
recommend the
appointment of external auditors and approve auditors’
fees.
Business and Risk Management
3.5
The Board has the
responsibility to:
(a)
ensure management
identifies the principal risks of the Company’s business and
implements appropriate systems to manage these risks;
and
(b)
evaluate and assess
information provided by management and others about the
effectiveness of risk management systems.
Policies and Procedures
3.6
The Board has the
responsibility to:
(a)
approve and
monitor, through management, compliance with all significant
policies and procedures that govern the Company’s
operations;
(b)
approve and act as
the guardian of the Company’s corporate values, including the
implementation of a Code of Business Conduct and Ethics for the
Company and management’s procedures to monitor compliance
with the Code of Business Conduct and Ethics; and
(c)
direct management
to ensure the Company operates at all times within applicable laws
and regulations and to the highest ethical and moral
standards.
Compliance Reporting and Corporate Communications
3.7
The Board has the
responsibility to:
(a)
ensure the Company
has in place effective communication processes with shareholders
and other stakeholders and financial, regulatory and other
recipients;
(b)
approve and
periodically review the Company’s communications
policy;
(c)
ensure the Board
has measures in place to receive feedback from
shareholders;
(d)
approve interaction
with shareholders on all items requiring shareholder response or
approval;
(e)
ensure the
Company’s financial performance is adequately reported to
shareholders, other security holders and regulators on a timely and
regular basis;
(f)
ensure the
financial results are reported fairly and in accordance with
IFRS;
(g)
ensure the Chief
Executive Officer and Chief Financial Officer certify the
Company’s annual and interim financial statements, annual and
interim MD&A and, if applicable, Annual Information Form, and
that the content of the certification meets all applicable legal
and regulatory requirements; and
(h)
ensure timely
reporting of any other developments that have a significant and
material effect on the Company.
Investor Relations
3.8
The Chair of the
Board and either the Chief Executive Officer or the President of
the Company have the responsibility to approve all investor
relations materials and all such materials must be so approved
before such materials are distributed.
4.
GENERAL
LEGAL OBLIGATIONS OF THE BOARD OF DIRECTORS
4.1
The Board is
responsible for:
(a)
directing
management to ensure legal requirements have been met, and
documents and records have been properly prepared, approved and
maintained; and
(b)
recommending
changes in the articles, matters requiring shareholder approval,
and setting agendas for shareholder meetings.
4.2
The Business Corporation Act (British
Columbia) identifies the following as legal requirements for the
Board:
(a)
act honestly and in
good faith with a view to the best interests of the Company,
including the duty:
(i)
to disclose
conflicts of interest;
(ii)
not to appropriate
or divert corporate opportunities;
(iii)
to maintain
confidential information of the Company and not use such
information for personal benefit; and
(iv)
to disclose
information vital to the business of the Company in the possession
of a director;
(b)
exercise the care,
diligence and skill that a reasonably prudent individual would
exercise in comparable circumstances; and
(c)
act in accordance
with the Business Corporations
Act (British Columbia) and the articles of the
Company.
5.1
This Mandate was
implemented by the Board on June 22, 2015.
Appendix B
Material Terms of Share-Based Compensation Plan
The
material terms of our Share-Based Compensation Plan, which was
approved by our shareholders at our previous annual general meeting
that was held on June 25, 2019, are set out below. Capitalized
words used in this summary and not otherwise defined have the
meaning ascribed to them in the Share-Based Compensation
Plan.
●
Maximum Number of Shares
Issuable – The maximum number of Common Shares
issuable under the Share-Based Compensation Plan, together with the
number of Common Shares issuable under any other security-based
compensation arrangements of the Company, shall not in the
aggregate exceed 10% of the issued and outstanding Common Shares of
the Company.
●
Types of Awards –
Pursuant to the Share-Based Compensation Plan, the Company may
issue Bonus Shares, Options, Restricted Share Units, Performance
Share Units and Deferred Share Units.
●
Plan Limits – When
combined with all of the Company’s other security-based
compensation arrangements, the Share-Based Compensation Plan shall
not result in:
●
the number of
Common Shares issuable to any one person at any time exceeding 5%
of the issued and outstanding Common Shares;
●
the number of
Common Shares issued to Insiders within a one-year period exceeding
10% of the issued and outstanding Common Shares; or
●
the number of
Common Shares issuable to Insiders at any time exceeding 10% of the
issued and outstanding Common Shares.
In
addition, the Share-Based Compensation Plan shall not result in the
number of Common Shares issuable to any one non-executive director
within a one-year period exceeding an Award value of $150,000 per
such non-executive director, of which no more than $100,000 may
comprise Options based on a valuation method acceptable to the
Board.
Bonus Shares
●
Bonus Shares may be
granted to Participants as a discretionary bonus at such time or
times as will be determined by the Board by resolution, pursuant to
recommendations of the Board from time to time. All Bonus Shares
shall be issued at the Market Price in effect on the date of
grant.
Options
●
Stock Option Terms and Exercise
Price – The number of Common Shares subject to each
Option grant, the exercise price, vesting, expiry date and other
terms and conditions thereof will be determined by the Board. The
exercise price of each Option shall in no event be lower than the
Market Price of the Common Shares on the grant date.
●
Term – Unless otherwise
specified at the time of grant, Options shall expire 10 years from
the date of grant, unless terminated earlier in accordance with the
Share-Based Compensation Plan. Options that otherwise expire during
a trading blackout shall be extended until ten trading days
following the expiration of the blackout period.
●
Vesting Schedule –
Options vest and become exercisable in 25% increments on: (i) the
grant date (or the date of expiry of the probationary period for
new hires); (ii) the 6 month anniversary of the grant date; (iii)
the 12 month anniversary of the grant date; and (iv) the 18 month
anniversary of the grant date.
●
Exercise of Option – A
participant may exercise vested Options by (i) payment of the
exercise price per Share subject to each Option (which will in no
circumstances be lower than the Market Price), or (ii) if permitted
by the Board, on a cashless basis by receiving that number of
Common Shares equal to the current Market Price less the Option
Price multiplied by the number of Options exercised as the
numerator, divided by the current Market Price, as the
denominator.
●
Circumstances Causing Cessation of
Entitlement – If a Participant ceases to be a
Director, Employee or Consultant of the Company, the Options will
vest and expire in accordance with Section 5.5 of the Share-Based
Compensation Plan. A summary of these provisions is contained in
the table below:
(a) If the Participant is an Employee:
|
Reason for Termination
|
Vesting
|
Expiry of Option
|
|
Death
or Disability
|
Unvested
Options will automatically vest in full as of the date of death or
Disability and become immediately exercisable.
|
The
expiry date of the Options will be the earlier of (i) the expiry
date established under Section 5.2(c) of the Share-Based
Compensation Plan and (ii) one year from the date of death or
Disability of the Participant.
|
|
Change
in Control
|
Options
will vest in accordance with Section 12 of the Share-Based
Compensation Plan.
|
Options
expire in accordance with Section 12 of the Share-Based
Compensation Plan.
|
|
Ceasing
to be Employed for Employee Cause Event
|
Any
Options which are unvested as of the date the Participant ceases to
be an Employee will not vest, unless determined otherwise by the
Board.
|
The
expiry date of the Options will be the date the Participant ceases
to be an Employee.
|
|
Reason for
Termination
|
Vesting
|
Expiry of
Option
|
|
Mandatory
Retirement
|
All
unvested Options of the Participant will immediately vest and
become immediately exercisable
|
The
expiry date of the Options will be the earlier of (i) the expiry
date established under Section 5.2(c) of the Share-Based
Compensation Plan and (ii) one year from the date of
retirement.
|
|
Ceasing
to be Employed but continues to be engaged as a Director or
Consultant
|
The
vesting of the Options will continue as set out in the Option Award
Agreement.
|
The
expiry date of the Options will remain unchanged.
|
|
Ceasing
to be Employed other than as set out above
|
Any
Options which are unvested as of the date the Participant ceases to
be an Employee will not vest, unless determined otherwise by the
Board.
|
The
expiry date of the Options will be the earlier of (i) the expiry
date established under Section 5.2(c) of the Share-Based
Compensation Plan and (ii) the 90th day following the
date the Participant ceases to be an Employee.
|
(b) If the Participant is a Director:
|
Reason for Termination
|
Vesting
|
Expiry of Option
|
|
Death
or Disability
|
Unvested
Options will automatically vest in full as of the date of death or
Disability and become immediately exercisable.
|
The
expiry date of the Options will be the earlier of (i) the expiry
date established under Section 5.2(c) of the Share-Based
Compensation Plan and (ii) one year from the date of death or
Disability of the Participant.
|
|
Change
in Control
|
Options
will vest in accordance with Section 12 of the Share-Based
Compensation Plan.
|
Options
expire in accordance with Section 12 of the Share-Based
Compensation Plan.
|
|
Reason for Termination
|
Vesting |
Expiry of Option
|
|
Ceasing
to Hold Office but continues to be engaged as an Employee or
Consultant
|
The
vesting of the Options will continue as set out in the Option Award
Agreement.
|
The
expiry date of the Options will remain unchanged.
|
|
Ceasing
to Hold Office for Director Cause Event
|
Any
Options held by Participant on the date the Participant ceases to
be a Director which are unvested as of such date will not
vest.
|
The
expiry date of the Options will be the date the Participant ceases
to be a Director.
|
|
Mandatory
Retirement
|
All
unvested Options of the Participant will immediately vest and
become immediately exercisable
|
The
expiry date of the Options will be the earlier of (i) the expiry
date established under Section 5.2(c) of the Share-Based
Compensation Plan and (ii) one year from the date the Participant
ceases to be a Director.
|
|
Ceasing
to Hold Office other than as set out above
|
All
unvested Options of the Participant will immediately vest and
become immediately exercisable.
|
The
expiry date of the Options will be the earlier of (i) the expiry
date established under Section 5.2(c) of the Share-Based
Compensation Plan and (ii) the 90th day following the
date the Participant ceases to be a Director.
|
(c) If the Participant is a Consultant:
|
Reason for Termination
|
Vesting
|
Expiry of Option
|
|
Death
or Disability
|
Subject
to the discretion of the Board, Options held by a Participant on
the date of death or Disability and which are unvested as of such
date will not vest.
|
The
expiry date of the Options will be the earlier of (i) the expiry
date established under Section 5.2(c) of the Share-Based
Compensation Plan and (ii) one year from the date of death or
Disability of the Participant.
|
|
Reason for Termination
|
Vesting
|
Expiry of Option
|
|
Change
in Control
|
Options
will vest in accordance with Section 12 of the Share-Based
Compensation Plan.
|
Options
expire in accordance with Section 12 of the Share-Based
Compensation Plan.
|
|
Ceasing
to be a Consultant due to completion/termination of
contract
|
Any
Options which are unvested as of the date the Participant ceases to
be a Consultant will not vest, unless determined otherwise by the
Board
|
The
expiry date of the Options will be the earlier of (i) the expiry
date established under Section 5.2(c) of the Share-Based
Compensation Plan and (ii) the 90th day following the
date the Participant ceases to be a Consultant
|
|
Ceasing
to be a Consultant due to completion/termination of contract but
continues to be engaged as a Director or Employee
|
The
vesting of the Options will continue as set out in the Option Award
Agreement.
|
The
expiry date of the Options will remain unchanged.
|
|
Ceasing
to be a Consultant and concurrently hired and becomes an
Employee
|
The
Options previously granted to the Consultant will flow through to
the Employee on the same terms and conditions of the original grant
of Options.
|
The
Options previously granted to the Consultant will flow through to
the Employee on the same terms and conditions of the original grant
of Options.
|
Restricted Share Units and Performance Share Units
●
Terms – Restricted Share
Units and Performance Share Units are notional securities that
entitle the recipient to receive cash or Common Shares at the end
of a vesting period. Vesting of Performance Share Units is
contingent upon achieving certain performance criteria, thus
ensuring greater alignment with the long-term interests of
shareholders. The terms applicable to Restricted Share Units and
Performance Share Units under the Share-Based Compensation Plan
(including the vesting schedule, performance cycle, performance
criteria for vesting and whether dividend equivalents will be
credited to a participant’s account) are determined by the
Board at the time of the grant.
●
Vesting – Unless
otherwise provided, Restricted Share Units typically vest in three
equal instalments on the first three anniversaries of the date the
Restricted Share Unit was granted. Unless otherwise noted,
Performance Share Units shall vest as at the date that is the end
of their specified performance cycle, subject to any performance
criteria having been satisfied.
●
Settlement – On
settlement, the Company shall, for each vested Restricted Share
Unit or Performance Share Unit being settled, deliver to a
Participant either (a) one Share, (b) a cash payment equal to the
Market Price of one Share as of the vesting date, or (c) any
combination of cash and Common Shares equal to the Market Price of
one Share as of the vesting date, at the discretion of the
Board.
●
Dividend Equivalents – As
dividends are declared, additional Restricted Share Units and
Performance Share Units may be credited to a Participant in an
amount equal to the greatest whole number which may be obtained by
dividing (i) the value of such dividend or distribution on the
payment date therefore by (ii) the Market Price of one Share on
such date.
●
Circumstances Causing Cessation of
Entitlement – If a Participant ceases to be a
Director, Employee or Consultant of the Company, the Restricted
Share Units and Performance Share Units will be treated in
accordance with Section 7.6 and 6.6 of the Share-Based Compensation
Plan respectively. A summary of these provisions is contained in
the tables below:
(a) Restricted Share Units – If the Participant is an
Employee:
|
Reason for Termination
|
Treatment of Restricted Share Units
|
|
Death
or Disability
|
Outstanding
Restricted Share Units that were vested on or before the date of
death or Disability will be settled as of the date of death or
Disability. Outstanding Restricted Share Units that were not vested
on or before the date of death or Disability will in all respects
terminate as of the date of death or Disability.
|
|
Change
in Control
|
Restricted
Share Units vest in accordance with Section 12 of the
Share-Based Compensation Plan.
|
|
Ceasing
to be Employed for Employee Cause Event
|
Outstanding
Restricted Share Units (whether vested or unvested) will
automatically terminate on the date the Participant ceases to be an
Employee.
|
|
Mandatory
Retirement
|
Outstanding
Restricted Share Units that were vested on or before the date the
Participant ceases to be an Employee will be settled as of the date
the Participant ceases to be an Employee. Outstanding Restricted
Share Units that would have vested on the next vesting date
following the date the Participant ceases to be an Employee will
vest and be settled as of such vesting date. Subject to the
foregoing, any remaining Restricted Share Units will in all
respects terminate as of the date the Participant ceases to be an
Employee.
|
|
Reason for Termination
|
Treatment of Restricted Share Units
|
|
Ceasing
to be Employed but continues to be engaged as a Director or
Consultant
|
Outstanding
Restricted Share Units will continue to vest pursuant to the RSU
Award Agreement.
|
|
Ceasing
to be Employed other than as set out above
|
Outstanding
Restricted Share Units that were vested on or before the date the
Participant ceases to be an Employee will be settled as of the date
the Participant ceases to be an Employee. Outstanding Restricted
Share Units that would have vested on the next vesting date
following the date the Participant ceases to be an Employee will
vest and be settled as of such vesting date. Subject to the
foregoing, any remaining Restricted Share Units will in all
respects terminate as of the date the Participant ceases to be an
Employee.
|
(b) Restricted Share Units – If the Participant is a
Director:
|
Reason for Termination
|
Treatment of Restricted Share Units
|
|
Death
or Disability
|
Outstanding
Restricted Share Units that were vested on or before the date of
death or Disability will be settled as of the date of death or
Disability. Outstanding Restricted Share Units that would have
vested on the next vesting date following the date of death or
Disability will vest and be settled as of the date of death or
disability, prorated to reflect the actual period between the Grant
Date and the date of death or Disability. Subject to the foregoing,
any remaining Restricted Share Units will in all respects terminate
as of the date of death or Disability.
|
|
Change
in Control
|
Restricted
Share Units vest in accordance with Section 12 of the Share-Based
Compensation Plan.
|
|
Ceasing
to Hold Office but continues to be engaged as an Employee or
Consultant
|
Outstanding
Restricted Share Units will continue to vest pursuant to the RSU
Award Agreement.
|
|
Ceasing
to Hold Office for Director Cause Event
|
Outstanding
Restricted Share Units (whether vested or unvested) will
automatically terminate on the date the Participant ceases to be a
Director.
|
|
Reason for Termination
|
Treatment of Restricted Share Units
|
|
Ceasing
to Hold Office other than as set out above including Mandatory
Retirement
|
Outstanding
Restricted Share Units that were vested on or before the date the
Participant ceases to be a Director will be settled as of the date
of the Participant ceases to be a Director. Outstanding Restricted
Share Units that would have vested on the next vesting date
following the date the Participant ceases to be a Director will
vest and be settled as of such vesting date. Subject to the
foregoing, any remaining Restricted Share Units will in all
respects terminate as of the date the Participant ceases to be a
Director.
|
(c) Restricted Share Units – If the Participant is a
Consultant:
|
Reason for Termination
|
Treatment of Restricted Share Units
|
|
Death
or Disability
|
Outstanding
Restricted Share Units that were vested on or before the date of
death or Disability will be settled as of the date of death.
Outstanding Restricted Share Units that were not vested on or
before the date of death or Disability will in all respects
terminate as of the date of death or Disability.
|
|
Change
in Control
|
Restricted
Share Units vest in accordance with Section 12 of the Share-Based
Compensation Plan.
|
|
Ceasing
to be a Consultant due to completion/termination of
contract
|
Outstanding
Restricted Share Units (whether vested or unvested) will
automatically terminate on the date the Participant ceases to be a
Consultant.
|
|
Ceasing
to be a Consultant due to completion/termination of contract but
continues to be engaged as a Director or Employee
|
Outstanding
Restricted Share Units will continue to vest pursuant to the RSU
Award Agreement.
|
|
Ceasing
to be a Consultant and concurrently hired and becomes an
Employee
|
The
Restricted Share Units previously granted to the Consultant will
flow through to the Employee on the same terms and conditions of
the original grant of Restricted Share Units.
|
(d) Performance Share Units – If the Participant is an
Employee:
|
Reason for Termination
|
Treatment of Performance Share Units
|
|
Death
or Disability
|
Outstanding
Performance Share Units that were vested on or before the date of
death or Disability will be settled as of the date of death or
Disability. Outstanding Performance Share Units that were not
vested on or before the date of death or Disability will in all
respects terminate as of the date of death or
Disability.
|
|
Change
in Control
|
Performance
Share Units vest in accordance with Section 12 of the
Share-Based Compensation Plan.
|
|
Ceasing
to be Employed for Employee Cause Event
|
Outstanding
Performance Share Units (whether vested or unvested) will
automatically terminate on the date the Participant ceases to be an
Employee.
|
|
Mandatory
Retirement
|
Outstanding
Performance Share Units that were vested on or before the date the
Participant ceases to be an Employee will be settled as of the date
the Participant ceases to be an Employee. Outstanding Performance
Share Units that would have vested on the next vesting date
following the date the Participant ceases to be an Employee,
prorated to reflect the actual period between the commencement of
the performance cycle and the date the Participant ceases to be an
Employee, based on the Participant's performance for the applicable
performance period(s) up to the date the Participant ceases to be
an Employee, will be settled as of such vesting date. Subject to
the foregoing, any remaining Performance Share Units will in all
respects terminate as of the date the Participant ceases to be an
Employee.
|
|
Ceasing
to be Employed but continues to be engaged as a Director or
Consultant
|
Outstanding
Performance Share Units will continue to vest pursuant to the PSU
Award Agreement.
|
|
Ceasing
to be Employed other than as set out above
|
Outstanding
Performance Share Units that were vested on or before the date the
Participant ceases to be an Employee will be settled as of the date
the Participant ceases to be an Employee. Outstanding Performance
Share Units that would have vested on the next vesting date
following the date the Participant ceases to be an Employee,
prorated to reflect the actual period between the commencement of
the performance cycle and the date the Participant ceases to be an
Employee, based on the Participant's performance for the applicable
performance period(s) up to the date the Participant ceases to be
an Employee, will be settled as of such vesting date. Subject to
the foregoing, any remaining Performance Share Units will in all
respects terminate as of the date the Participant ceases to be an
Employee.
|
(e) Performance Share Units – If the Participant is a
Director:
|
Reason for Termination
|
Treatment of Performance Share Units
|
|
Death
or Disability
|
Outstanding
Performance Share Units that were vested on or before the date of
death or Disability will be settled as of the date of death or
Disability. Outstanding Performance Share Units that were not
vested on or before the date of death or Disability will vest and
be settled as of the date of death or Disability, prorated to
reflect the actual period between the commencement of the
performance cycle and the date of death or disability, based on the
Participant's performance for the applicable performance period(s)
up to the date of death or Disability. Subject to the foregoing,
any remaining Performance Share Units will in all respects
terminate as of the date of death or Disability.
|
|
Change
in Control
|
Performance
Share Units vest in accordance with Section 12 of the
Share-Based Compensation Plan.
|
|
Ceasing
to Hold Office but continues to be engaged as an Employee or
Consultant
|
Outstanding
Performance Share Units will continue to vest pursuant to the PSU
Award Agreement.
|
|
Ceasing
to Hold Office for Director Cause Event
|
Outstanding
Performance Share Units (whether vested or unvested) will
automatically terminate on the date the Participant ceases to be a
Director.
|
|
Ceasing
to Hold Office other than as set out above including Mandatory
Retirement
|
Outstanding
Performance Share Units that were vested on or before the date the
Participant ceases to be a Director will be settled as of the date
the Participant ceases to be a Director. Outstanding Performance
Share Units that would have vested on the next vesting date
following the date the Participant ceases to be a Director,
prorated to reflect the actual period between the commencement of
the performance cycle and the date the Participant ceases to be a
Director, based on the Participant's performance for the applicable
performance period(s) up to the date the Participant ceases to be a
Director, will be settled as of such vesting date. Subject to the
foregoing, any remaining Performance Share Units will in all
respects terminate as of the date the Participant ceases to be a
Director.
|
(f) Performance Share Units – If the Participant is a
Consultant
|
Reason for Termination
|
Treatment of Performance Share Units
|
|
Death
or Disability
|
Outstanding
Performance Share Units that were vested on or before the date of
death or Disability will be settled as of the date of death or
Disability. Outstanding Performance Share Units that were not
vested on or before the date of death or Disability will in all
respects terminate as of the date of death or
Disability.
|
|
Change
in Control
|
Performance
Share Units vest in accordance with Section 12 of the Share-Based
Compensation Plan.
|
|
Ceasing
to be a Consultant due to completion/termination of
contract
|
Outstanding
Performance Share Units (whether vested or unvested) will
automatically terminate on the date the Participant ceases to be a
Consultant.
|
|
Ceasing
to be a Consultant due to completion/termination of contract but
continues to be engaged as a Director or Employee
|
Outstanding
Performance Share Units will continue to vest pursuant to the PSU
Award Agreement.
|
|
Ceasing
to be a Consultant and concurrently hired and becomes an
Employee
|
The
Performance Share Units previously granted to the Consultant will
flow through to the Employee on the same terms and conditions of
the original grant of Performance Share Units.
|
Deferred Share Units
●
Terms – A Deferred Share
Unit is a notional security that entitles the recipient to receive
cash or Common Shares upon termination of the holder from all
positions with the Company The terms applicable to Deferred Share
Units under the Share-Based Compensation Plan (including whether
dividend equivalents will be credited to a Participant’s DSU
Account) are determined by the Board at the time of the
grant.
Under
the Share-Based Compensation Plan, the Board may grant
discretionary Deferred Share Units and mandatory or elective
Deferred Share Units that are granted as a component of a
non-executive director’s annual retainer or an officer or
employee’s annual incentive.
●
Vesting – Unless
otherwise provided, mandatory or elective Deferred Share Units vest
immediately and the Board determines the vesting schedule for
discretionary Deferred Share Units at the time of
grant.
●
Settlement – Deferred
Share Units may only be settled after the DSU Separation Date. At
the grant date, the Board shall stipulate whether the Deferred
Share Units are paid in cash, Common Shares, or a combination of
both, in an amount equal to the Market Price of the notional Common
Shares represented by the Deferred Share Units in the
Participant’s DSU Account.
●
Credit to Account – As
dividends are declared, additional Deferred Share Units may be
credited to a Participant in an amount equal to the greatest whole
number which may be obtained by dividing (i) the value of such
dividend or distribution on the payment date therefore by (ii) the
Market Price of one Share on such date.
●
Circumstances Causing Cessation of
Entitlement – If a Participant ceases to be a
Director, Employee or Consultant of the Company, the Deferred Share
Units will be treated in accordance with Section 8.6 of the
Share-Based Compensation Plan. A summary of these provisions for
Directors and Employees is contained in the table
below:
(a) If the Participant is an Employee:
|
Reason for Termination
|
Treatment of Deferred Share Units
|
|
Death
or Disability
|
Outstanding
Deferred Share Units that were vested on or before the date of
death or Disability will be settled as of the date of death or
Disability. Outstanding Deferred Share Units that were not vested
on or before the date of death or Disability will in all respects
terminate as of the date of death or Disability.
|
|
Change
in Control
|
Deferred
Share Units vest in accordance with Section 12 of the
Share-Based Compensation Plan.
|
|
Ceasing
to be Employed for Employee Cause Event
|
Outstanding
Deferred Share Units (whether vested or unvested) will
automatically terminate on the date the Participant ceases to be an
Employee.
|
|
Mandatory
Retirement
|
Outstanding
Deferred Share Units that were vested on or before the date the
Participant ceases to be an Employee will be settled as of the date
the Participant ceases to be an Employee. Outstanding Deferred
Share Units that would have vested on the next vesting date
following the date the Participant ceases to be an Employee will be
settled as of such vesting date. Subject to the foregoing, any
remaining Deferred Share Units will in all respects terminate as of
the date the Participant ceases to be an Employee.
|
|
Ceasing
to be Employed but continues to be engaged as a Director or
Consultant
|
Outstanding
Deferred Share Units will continue to vest pursuant to the DSU
Award Agreement.
|
|
Reason for Termination
|
Treatment of Deferred Share Units
|
|
Ceasing
to be Employed other than as set out above
|
Outstanding
Deferred Share Units that were vested on or before the date the
Participant ceases to be an Employee will be settled as of the date
the Participant ceases to be an Employee. Outstanding Deferred
Share Units that would have vested on the next vesting date
following the date the Participant ceases to be an Employee will be
settled as of such vesting date. Subject to the foregoing, any
remaining Deferred Share Units will in all respects terminate as of
the date the Participant ceases to be an Employee.
|
(b) If Participant is a Director:
|
Reason for Termination
|
Treatment of Deferred Share Units
|
|
Death
or Disability
|
Outstanding
Deferred Share Units that were vested on or before the date of
death or Disability will be settled as of the date of death or
Disability. Outstanding Deferred Share Units that were not vested
on or before the date of death or Disability will vest and be
settled as of the date of death, prorated to reflect the actual
period between the Grant Date and the date of death or Disability.
Subject to the foregoing, any remaining Deferred Share Units will
in all respects terminate as of the date of death or
Disability.
|
|
Change
in Control
|
Deferred
Share Units vest in accordance with Section 12 of the Share-Based
Compensation Plan.
|
|
Ceasing
to Hold Office but continues to be engaged as an Employee or
Consultant
|
Outstanding
Deferred Share Units will continue to vest pursuant to the DSU
Award Agreement.
|
|
Ceasing
to Hold Office for Director Cause Event
|
Outstanding
Deferred Share Units (whether vested or unvested) will
automatically terminate on the date the Participant ceases to be a
Director.
|
|
Ceasing
to Hold Office other than as set out above including Mandatory
Retirement
|
Outstanding
Deferred Share Units that were vested on or before the date the
Participant ceases to be a Director will be settled as of the date
the Participant ceases to be a Director. Outstanding Deferred Share
Units that would have vested on the next vesting date following the
date the Participant ceases to be a Director will be settled as of
such vesting date. Subject to the foregoing, any remaining Deferred
Share Units will in all respects terminate as of the date the
Participant ceases to be a Director.
|
(c) If the Participant is a Consultant:
|
Reason for Termination
|
Treatment of Deferred Share Units
|
|
Death
or Disability
|
Outstanding
Deferred Share Units that were vested on or before the date of
death or Disability will be settled as of the date of death or
Disability. Outstanding Deferred Share Units that were not vested
on or before the date of death or Disability will in all respects
terminate as of the date of death or Disability.
|
|
Change
in Control
|
Deferred
Share Units vest in accordance with Section 12 of the Share-Based
Compensation Plan.
|
|
Ceasing
to be a Consultant due to completion/termination of
contract
|
Outstanding
Deferred Share Units will continue to vest pursuant to the DSU
Award Agreement.
|
|
Ceasing
to be a Consultant due to completion/termination of contract but
continues to be engaged as a Director or Employee
|
Outstanding
Deferred Share Units will continue to vest pursuant to the DSU
Award Agreement.
|
|
Ceasing
to be a Consultant and concurrently hired and becomes an
Employee
|
The
Deferred Share Units previously granted to the Consultant will flow
through to the Employee on the same terms and conditions of the
original grant of Deferred Share Units.
|
General
●
Assignment – Awards under
the Share-Based Compensation Plan are non-assignable and
non-transferable other than to a Participant's Personal
Representatives.
●
Amendments Not Requiring Shareholder
Approval - The Board may amend the Share-Based Compensation
Plan or Awards at any time, provided, however, that no such
amendment may materially and adversely affect any Award previously
granted to a Participant without the consent of the Participant,
except to the extent required by applicable law (including TSX
requirements). Any such amendment will be subject to all necessary
regulatory approvals. Without limiting the generality of the
foregoing, the Board may make certain amendments to the Share-Based
Compensation Plan or Awards without obtaining the approval of the
shareholders of the Company including, but not limited
to:
(a)
altering, extending
or accelerating the terms and conditions of vesting of any
Awards;
(b)
a change to the
termination provisions of the Share-Based Compensation Plan or any
Award which does not entail an extension beyond the original expiry
date;
(c)
amending or
modifying the mechanics of exercise or settlement of
Awards;
(d)
effecting
amendments of a “housekeeping” or ministerial nature
(i.e. any amendment necessary to comply with the provisions of
applicable laws or rules, regulations and policies of the
TSX);
(e)
effecting
amendments respecting the administration of the Share-Based
Compensation Plan;
(f)
effecting
amendments necessary to suspend or terminate the Share-Based
Compensation Plan;
(g)
amending the change
of control provisions of the Share-Based Compensation Plan,
provided that any amendment does not allow Participants to be
treated any more favourably than other holders of shares with
respect to the consideration that the Participants would be
entitled to receive for their Common Shares upon a Change in
Control;
(h)
any other
amendment, whether fundamental or otherwise, not requiring
shareholder approval under applicable law (including, without
limitation, the rules, regulations and policies of the TSX) or that
is not expected to materially adversely affect the interests of the
shareholders of the Company.
●
Amendments Requiring Shareholder
Approval - Shareholder approval (or disinterested
shareholder approval, if required by the policies of the TSX) will
be required for the following types of amendments:
(a)
any increase in the
number of shares issuable under the Share-Based Compensation Plan
or the percentage limit set out in Section 4.4 of the Share-Based
Compensation Plan, except such increases by operation of Sections
4.1 or 11 of the Share-Based Compensation Plan;
(b)
with respect to
Options, any reduction in the exercise price of an Option or the
cancellation and reissue of an Option;
(c)
any extension of
(i) the term of an Option beyond its original expiry date or (ii)
the date on which a Performance Share Unit, Restricted Share Unit
or Deferred Share Unit will be forfeited or terminated in
accordance with its terms, except as may be effected in connection
with a blackout period;
(d)
any amendment to
permit the transfer or assignment of an Award other than for normal
estate settlement purposes;
(e)
any amendment to
the insider participation limits or non-executive director limits
under the Share-Based Compensation Plan or any amendment to the
amendment sections of the Share-Based Compensation Plan;
and
(f)
any amendment
required to be approved by shareholders under applicable law or
pursuant to the rules, regulations and policies of the
TSX.
●
Financial Assistance –
The Share-Based Compensation Plan provides that the Company may not
offer financial assistance in respect of the exercise of any
Award.
Appendix
C
Distribution Resolution
DISTRIBUTION RESOLUTION
RESOLUTION OF THE HOLDERS OF COMMON SHARES OF FIRST MINING GOLD
CORP.
BE IT
RESOLVED as a special resolution that:
1.
The arrangement
(the “Arrangement”) substantially as set
forth in the plan of arrangement (the “Plan of Arrangement”), as it may
be amended, modified or supplemented from time to time, attached as
Appendix “D” to the notice of annual general and
special meeting and management information circular pursuant to
Section 288 of the Business
Corporations Act (British Columbia) is hereby approved and
authorized.
2.
The actions of the
directors of First Mining Gold Corp. (“First Mining”) in approving the
Arrangement are hereby confirmed, ratified and
approved.
3.
First Mining is
hereby authorized to apply for a final order from the Supreme Court
of British Columbia to approve the Arrangement on the terms set
forth in the Plan of Arrangement (as they may be amended, modified
or supplemented from time to time).
4.
Notwithstanding
that this special resolution has been passed by the shareholders of
First Mining (the “Shareholders”), the board of
directors of First Mining may, without further approval of the
Shareholders, amend the Plan of Arrangement and/or decide not to
proceed with the Arrangement or revoke this special resolution at
any time prior to the date upon which First Mining provides notice
to Shareholders of the Effective Date and Distribution Record Date
(as such terms are defined in the Plan of Arrangement) through one
or more news releases.
5.
Any one director or
officer of First Mining is hereby authorized, for and on behalf of
First Mining, to execute and deliver, whether under the corporate
seal of First Mining or otherwise, all documents, filings and
instruments and take all such other actions as may be necessary or
desirable to implement this special resolution and the matters
authorized hereby, such determination to be conclusively evidenced
by the execution and delivery of any such documents, filings or
instruments and the taking of any such actions.
Plan of Arrangement
PLAN OF ARRANGEMENT
UNDER PART 9, DIVISION 5 OF
THE BUSINESS CORPORATIONS
ACT (BRITISH COLUMBIA)
Article
1
DEFINITIONS
AND INTERPRETATION
1.1 Definitions. In this plan of
arrangement, unless there is something in the subject matter or
context inconsistent therewith, the following capitalized words and
terms shall have the following meanings:
(a)
“Arrangement” means the arrangement
pursuant to the Arrangement Provisions on the terms and conditions
set out herein;
(b)
“Arrangement Provisions” means Part
9, Division 5 of the
BCBCA;
(c)
“Arrangement Resolutions” means the
special resolutions of the First Mining Shareholders to approve the
Arrangement, as required by the Interim Order and the
BCBCA;
(d)
“BCBCA” means the Business Corporations Act, S.B.C. 2002,
c. 57, as amended;
(e)
“Board of Directors” means the
current and existing board of directors of First
Mining;
(f)
“Business Day” means a day which is
not a Saturday, Sunday or statutory holiday in Vancouver, British
Columbia;
(g)
“Court” means the Supreme Court of
British Columbia;
(h)
“Dissent Procedures” means the
rules pertaining to the exercise of Dissent Rights as set forth in
Division 2 of Part 8 of the BCBCA and Article 4 of this Plan of
Arrangement;
(i)
“Dissent Rights” means the rights
of dissent granted in favour of registered holders of First Mining
Shares in accordance with Article 4 of this Plan of
Arrangement;
(j)
“Dissenting Share” has the meaning
given in Section 1.1(a) of this Plan of Arrangement;
(k)
“Dissenting Shareholder” means a
registered holder of First Mining Shares who dissents in respect of
the Arrangement in strict compliance with the Dissent Procedures
and who has not withdrawn or been deemed to have withdrawn such
exercise of Dissent Rights;
(l)
“Distribution Record Date” means
the close of business on the Business Day immediately preceding the
Effective Date for the purpose of determining the First Mining
Shareholders entitled to receive Treasury Metals Shares and
Treasury Metals Warrants pursuant to this Plan of
Arrangement;
(m)
“Effective Date” shall be the date
of the closing of the Arrangement;
(n)
“Effective Time” means 12:01 a.m.
(Vancouver time) on the Effective Date or such other time on the
Effective Date as determined by First Mining;
(o)
“Final Order” means the final order
of the Court approving the Arrangement;
(p)
“First Mining” means First Mining
Gold Corp., a corporation existing under the BCBCA;
(q)
“First Mining Meeting” means the
annual and special meeting of the First Mining Shareholders and any
adjournments thereof to be held to, among other things, consider
and, if deemed advisable, approve the Arrangement;
(r)
“First Mining Shareholder” means a
holder of First Mining Shares;
(s)
“First Mining Shares” means the
common shares without par value which First Mining is authorized to
issue as the same are constituted on the date hereof;
(t)
“Information Circular” means the
management information circular of First Mining, including all
schedules thereto, to be sent to the First Mining Shareholders in
connection with the First Mining Meeting, together with any
amendments or supplements thereto;
(u)
“Interim Order” means the interim
order of the Court providing advice and directions in connection
with the First Mining Meeting and the Arrangement;
(v)
“Plan of Arrangement” means this
plan of arrangement, as the same may be amended from time to
time;
(w)
“Registrar” means the Registrar of
Companies under the BCBCA;
(x)
“Tax Act” means the Income Tax Act (Canada), R.S.C. 1985
(5th
Supp.) c.1, as amended;
(y)
“Treasury Metals” means Treasury
Metals Inc., a company existing under the laws of
Ontario;
(z)
“Treasury Metals Shares” means
23,333,333 common shares in the capital of Treasury Metals, which
are held by First Mining;
(aa)
“Treasury Metals Warrants” means
35,000,000 common share purchase warrants, each exercisable to
acquire 0.33 of a Treasury Metals Share at an exercise price of
$1.50 until August 7, 2023, which are held by First
Mining;
(bb)
“TSX” means the Toronto Stock
Exchange; and
(cc)
“U.S. Securities Act” means the
United States Securities Act of 1933, as amended.
1.2 Interpretation Not Affected by Headings.
The division of this Plan of Arrangement into articles, sections,
subsections, paragraphs and subparagraphs and the insertion of
headings are for convenience of reference only and shall not affect
the construction or interpretation of this Plan of Arrangement.
Unless otherwise specifically indicated, the terms “this Plan
of Arrangement”, “hereof”,
“hereunder” and similar expressions refer to this Plan
of Arrangement as a whole and not to any particular article,
section, subsection, paragraph or subparagraph and include any
agreement or instrument supplementary or ancillary
hereto.
1.3 Number and Gender. Unless the context
otherwise requires, words importing the singular number only shall
include the plural and vice versa, words importing the use of
either gender shall include both genders and neuter and words
importing persons shall include firms and
corporations.
1.4 Meaning. Words and phrases used herein
and defined in the BCBCA shall have the same meaning herein as in
the BCBCA, unless the context otherwise requires.
1.5 Date for any Action. If any date on
which any action is required to be taken under this Plan of
Arrangement is not a Business Day, such action shall be required to
be taken on the next succeeding Business Day.
1.6 Governing
Law. This Plan of Arrangement shall be governed by and
construed in accordance with the laws of the Province of British
Columbia and the federal laws of Canada applicable
therein.
Article 2
ARRANGEMENT
EFFECTIVENESS
2.1 Arrangement Effectiveness. The
Arrangement and this Plan of Arrangement shall become final and
conclusively binding on First Mining and the First Mining
Shareholders (including Dissenting Shareholders) at the Effective
Time without any further act or formality as required on the part
of any person, except as expressly provided herein.
Article 3
THE
ARRANGEMENT
3.1 The Arrangement. Commencing at the
Effective Time, the following shall occur and be deemed to occur in
the following chronological order without further act or formality
notwithstanding anything contained in the provisions attaching to
any of the securities of First Mining or Treasury Metals, but
subject to the provisions of Article 4:
(a)
each First Mining
Share outstanding in respect of which a Dissenting Shareholder has
validly exercised his, her or its Dissent Rights (each, a
“Dissenting
Share”) shall be directly transferred and assigned by
such Dissenting Shareholder to First Mining, without any further
act or formality and free and clear of any liens, charges and
encumbrances of any nature whatsoever, and will be cancelled and
cease to be outstanding and such Dissenting Shareholders will cease
to have any rights as Shareholders other than the right to be paid
the fair value for their First Mining Shares by First
Mining;
(b)
First Mining shall
reduce the paid-up capital of the First Mining Shares by an amount
equal to the fair market value of the Treasury Metals Shares and
Treasury Metals Warrants to be distributed to the First Mining
Shareholders as set out in Section 3.1(c) below;
(c)
the Treasury Metals
Shares and Treasury Metals Warrants shall be distributed to the
First Mining Shareholders in satisfaction of the reduction in
paid-up capital in Section 3.1(b) above, on the basis that for each
First Mining Share issued and outstanding on the Distribution
Record Date, the holder of such First Mining Share shall receive:
(i) that portion of a Treasury Metals Share determined by dividing
the 23,333,333 Treasury Metals Shares by the number of First Mining
Shares issued and outstanding on the Distribution Record Date; and
(ii) that portion of a Treasury Metals Warrant determined by
dividing the 35,000,000 Treasury Metals Warrants by the number of
First Mining Shares issued and outstanding on the Distribution
Record Date, and the Treasury Metals Shares and Treasury Metals
Warrants transferred to such holders of the First Mining Shares
will be registered in the name of such holders of the First Mining
Shares and First Mining will provide Treasury Metals and its
registrar and transfer agent notice to make the appropriate entries
in the central securities register of Treasury Metals;
and
(d)
the capital account
in respect of the First Mining Shares shall be adjusted to reflect
the reduction in Section 3.1(b) above.
3.2
No Fractional Securities.
Notwithstanding any other provision of this Arrangement, no
fractional Treasury Metals Shares or Treasury Metals Warrants shall
be distributed to the First Mining Shareholders and, as a result,
all fractional amounts arising under this Plan of Arrangement shall
be rounded down to the next whole number without any compensation
therefor.
3.3
Distribution Record Date. In Section
1.1(c) the reference to a holder of a First Mining Share shall mean
a person who is a First Mining Shareholder on the Distribution
Record Date, subject to the provisions of Article 4. Any First
Mining Shares traded after the Distribution Record Date shall not
carry any rights to receive Treasury Metals Shares or Treasury
Metals Warrants.
3.4
Convertible Securities. For greater
certainty, the convertible securities of First Mining shall not
carry any rights to receive Treasury Metals Shares or Treasury
Metals Warrants.
3.5
Supplementary Actions. Notwithstanding
that the transactions and events set out in Section 3.1 shall occur
and shall be deemed to occur in the chronological order therein set
out without any act or formality, each of First Mining and Treasury
Metals shall be required to make, do and execute or cause and
procure to be made, done and executed all such further acts, deeds,
agreements, transfers, assurances, instruments or documents as may
be required to give effect to, or further document or evidence, any
of the transactions or events set out in Section 3.1, including,
without limitation, any resolutions of directors authorizing the
issue, transfer or redemption of shares, any share transfer powers
evidencing the transfer of shares and any receipt therefor, and any
necessary additions to or deletions from share
registers.
3.6
Withholding. Each of First Mining and
any transfer agent shall be entitled to deduct and withhold from
any cash payment or any issue, transfer or distribution of Treasury
Metals Shares or Treasury Metals Warrants made pursuant to this
Plan of Arrangement such amounts as may be required to be deducted
and withheld pursuant to the Tax Act or any other applicable law,
and any amount so deducted and withheld will be deemed for all
purposes of this Plan of Arrangement to be paid, issued,
transferred or distributed to the person entitled thereto under the
Plan of Arrangement. Without limiting the generality of the
foregoing, any Treasury Metals Shares or Treasury Metals Warrants
so deducted and withheld may be sold on behalf of the person
entitled to receive them for the purpose of generating cash
proceeds, net of brokerage fees and other reasonable expenses,
sufficient to satisfy all remittance obligations relating to the
required deduction and withholding, and any cash remaining after
such remittance shall be paid to the person forthwith.
3.7
No Liens. Any exchange or transfer of
securities pursuant to this Plan of Arrangement shall be free and
clear of any liens, restrictions, adverse claims or other claims of
third parties of any kind.
3.8
Securities Law Matters. The Court is
advised that the Arrangement will be carried out with the intention
that all securities issued or distributed pursuant to the
Arrangement will be: (i) exempt from the prospectus requirements of
Canadian securities laws, and (ii) issued or distributed in
reliance on the exemption from the registration requirements of the
U.S. Securities Act provided by Section 3(a)(10) of the U.S.
Securities Act.
Article 4
4.1 Dissent Right. Registered holders of
First Mining Shares may exercise Dissent Rights with respect to
their First Mining Shares in connection with the Arrangement
pursuant to the Interim Order and in the manner set forth in the
Dissent Procedures, as they may be amended by the Interim Order,
Final Order or any other order of the Court, and provided that such
dissenting Shareholder delivers a written notice of dissent to
First Mining at least two Business Days before the day of the First
Mining Meeting or any adjournment or postponement
thereof.
4.2
Dealing with Dissenting Shares. First
Mining Shareholders who duly exercise Dissent Rights with respect
to their Dissenting Shares and who:
(a)
are ultimately
entitled to be paid fair value for their Dissenting Shares by First
Mining shall be deemed to have transferred their Dissenting Shares
to First Mining for cancellation as of the Effective Time pursuant
to Section 1.1(a); or
(b)
for any reason are
ultimately not entitled to be paid for their Dissenting Shares,
shall be deemed to have participated in the Arrangement on the same
basis as a non-dissenting First Mining Shareholder and shall
receive Treasury Metals Shares and Treasury Metals Warrants on the
same basis as every other non-dissenting First Mining
Shareholder;
but in
no case shall First Mining be required to recognize such persons as
holding First Mining Shares on or after the Effective
Date.
4.3
Reservation of Treasury Metals Shares and
Warrants. If a First Mining Shareholder exercises Dissent
Rights, First Mining shall, on the Effective Date, set aside and
not distribute that portion of the Treasury Metals Shares and
Treasury Metals Warrants which is attributable to the First Mining
Shares for which Dissent Rights have been exercised. If the
dissenting First Mining Shareholder is ultimately not entitled to
be paid for their Dissenting Shares, First Mining shall distribute
to such First Mining Shareholder his or her portion of the Treasury
Metals Shares and Treasury Metals Warrants. If a First Mining
Shareholder duly complies with the Dissent Procedures and is
ultimately entitled to be paid for their Dissenting Shares, then
First Mining shall retain the portion of the Treasury Metals Shares
and Treasury Metals Warrants attributable to such First Mining
Shareholder and such Treasury Metals Shares and Treasury Metals
Warrants will be dealt with as determined by the Board of Directors
of First Mining in its discretion.
Article 5
PARAMOUNTCY
5.1 Paramountcy. From and after the
Effective Time: (i) this Plan of Arrangement shall take precedence
and priority over any and all First Mining Shares and other
securities of First Mining issued prior to the Effective Time; and
(ii) the rights and obligations of the registered holders of First
Mining Shares, and any transfer agent or other depositary therefor,
shall be solely as provided for in this Plan of
Arrangement.
Article 6
AMENDMENTS
& WITHDRAWAL
6.1 Amendments. First Mining, in its sole
discretion, reserves the right to amend, modify and/or supplement
this Plan of Arrangement from time to time at any time prior to the
Effective Time provided that any such amendment, modification or
supplement must be contained in a written document that is filed
with the Court and, if made following the First Mining Meeting,
approved by the Court.
6.2
Amendments Made Prior to or at the First Mining
Meeting. Any amendment, modification or supplement to this
Plan of Arrangement may be proposed by First Mining at any time
prior to or at the First Mining Meeting with or without any prior
notice or communication, and if so proposed and accepted by the
First Mining Shareholders voting at the First Mining Meeting, shall
become part of this Plan of Arrangement for all
purposes.
6.3
Amendments Made After the First Mining
Meeting. Any amendment, modification or supplement to this
Plan of Arrangement may be proposed by First Mining after the First
Mining Meeting but prior to the Effective Time and any such
amendment, modification or supplement which is approved by the
Court following the First Mining Meeting shall be effective and
shall become part of the Plan of Arrangement for all purposes.
Notwithstanding the foregoing, any amendment, modification or
supplement to this Plan of Arrangement may be made following the
granting of the Final Order unilaterally by First Mining, provided
that it concerns a matter which, in the reasonable opinion of First
Mining, is of an administrative nature required to better give
effect to the implementation of this Plan of Arrangement and is not
adverse to the financial or economic interests of any holder of
First Mining Shares.
6.4
Withdrawal. Notwithstanding any prior
approvals by the Court or by First Mining Shareholders, the Board
of Directors may decide not to proceed with the Arrangement and to
revoke the Arrangement Resolutions at any time prior to the
Effective Time, without further approval of the Court or the First
Mining Shareholders.
Appendix E
Interim Order
Appendix F
Notice of Hearing of Petition
Appendix
G
BCBCA Dissent Provisions
DISSENT PROVISIONS OF THE BUSINESS
CORPORATIONS ACT (BRITISH COLUMBIA)
Division 2 — Dissent Proceedings
Definitions and application
237 (1) In this Division:
“dissenter”
means a shareholder who, being
entitled to do so, sends written notice of dissent when and as
required by section 242;
“notice
shares” means, in
relation to a notice of dissent, the shares in respect of which
dissent is being exercised under the notice of
dissent;
“payout
value” means,
(a)
in the case of a
dissent in respect of a resolution, the fair value that the notice
shares had immediately before the passing of the
resolution,
(b)
in the case of a
dissent in respect of an arrangement approved by a court order made
under section 291 (2) (c) that permits dissent, the fair value that
the notice shares had immediately before the passing of the
resolution adopting the arrangement,
(c)
in the case of a
dissent in respect of a matter approved or authorized by any other
court order that permits dissent, the fair value that the notice
shares had at the time specified by the court order,
or
(d)
in the case of a
dissent in respect of a community contribution company, the value
of the notice shares set out in the regulations,
excluding
any appreciation or depreciation in anticipation of the corporate
action approved or authorized by the resolution or court order
unless exclusion would be inequitable.
(2)
This Division applies to any right of dissent exercisable by a
shareholder except to the extent that
(a)
the
court orders otherwise, or
(b)
in
the case of a right of dissent authorized by a resolution referred
to in section 238 (1) (g), the court orders otherwise or
the resolution provides otherwise.
Right to dissent
238 (1) A shareholder of a company, whether or not the
shareholder’s shares carry the right to vote, is entitled to
dissent as follows:
(a)
under
section 260, in respect of a resolution to alter the
articles
(i)
to alter
restrictions on the powers of the company or on the business the
company is permitted to carry on, or
(ii)
without limiting
subparagraph (i), in the case of a community contribution company,
to alter any of the company’s community purposes within the
meaning of section 51.91;
(b)
under
section 272, in respect of a resolution to adopt an amalgamation
agreement;
(c)
under
section 287, in respect of a resolution to approve an amalgamation
under Division 4 of Part 9;
(d)
in
respect of a resolution to approve an arrangement, the terms of
which arrangement permit dissent;
(e)
under
section 301 (5), in respect of a resolution to authorize or ratify
the sale, lease or other disposition of all or substantially all of
the company’s undertaking;
(f)
under
section 309, in respect of a resolution to authorize the
continuation of the company into a jurisdiction other than British
Columbia;
(g)
in
respect of any other resolution, if dissent is authorized by the
resolution;
(h)
n
respect of any court order that permits dissent.
(2)
A shareholder wishing to dissent must
(a)
prepare
a separate notice of dissent under section 242 for
(i)
the shareholder, if
the shareholder is dissenting on the shareholder’s own
behalf, and
(ii)
each other person
who beneficially owns shares registered in the shareholder’s
name and on whose behalf the shareholder is
dissenting,
(b)
identify
in each notice of dissent, in accordance with section 242 (4), the
person on whose behalf dissent is being exercised in that notice of
dissent, and
(c)
dissent
with respect to all of the shares, registered in the
shareholder’s name, of which the person identified under
paragraph (b) of this subsection is the beneficial
owner.
(3)
Without limiting subsection (2), a person who wishes to have
dissent exercised with respect to shares of which the person is the
beneficial owner must
(a)
dissent
with respect to all of the shares, if any, of which the person is
both the registered owner and the beneficial owner,
and
(b)
cause
each shareholder who is a registered owner of any other shares of
which the person is the beneficial owner to dissent with respect to
all of those shares.
Waiver of right to dissent
239 (1) A shareholder may not waive generally a right
to dissent but may, in writing, waive the right to dissent with
respect to a particular corporate action.
(2)
A shareholder wishing to waive a right of dissent with respect to a
particular corporate action must
(a)
provide
to the company a separate waiver for
(i)
the shareholder, if
the shareholder is providing a waiver on the shareholder’s
own behalf, and
(ii)
each other person
who beneficially owns shares registered in the shareholder’s
name and on whose behalf the shareholder is providing a waiver,
and
(a)
identify
in each waiver the person on whose behalf the waiver is
made.
(3)
If a shareholder waives a right of dissent with respect to a
particular corporate action and indicates in the waiver that the
right to dissent is being waived on the shareholder’s own
behalf, the shareholder’s right to dissent with respect to
the particular corporate action terminates in respect of the shares
of which the shareholder is both the registered owner and the
beneficial owner, and this Division ceases to apply to
(a)
the
shareholder in respect of the shares of which the shareholder is
both the registered owner and the beneficial owner,
and
(b)
any
other shareholders, who are registered owners of shares
beneficially owned by the first mentioned shareholder, in respect
of the shares that are beneficially owned by the first mentioned
shareholder.
(4)
If a shareholder waives a right of dissent with respect to a
particular corporate action and indicates in the waiver that the
right to dissent is being waived on behalf of a specified person
who beneficially owns shares registered in the name of the
shareholder, the right of shareholders who are registered owners of
shares beneficially owned by that specified person to dissent on
behalf of that specified person with respect to the particular
corporate action terminates and this Division ceases to apply to
those shareholders in respect of the shares that are beneficially
owned by that specified person.
Notice of resolution
240 (1) If a resolution in respect of which a
shareholder is entitled to dissent is to be considered at a meeting
of shareholders, the company must, at least the prescribed number
of days before the date of the proposed meeting, send to each of
its shareholders, whether or not their shares carry the right to
vote,
(a)
a
copy of the proposed resolution, and
(b)
a
notice of the meeting that specifies the date of the meeting, and
contains a statement advising of the right to send a notice of
dissent.
(2)
If a resolution in respect of which a shareholder is entitled to
dissent is to be passed as a consent resolution of shareholders or
as a resolution of directors and the earliest date on which that
resolution can be passed is specified in the resolution or in the
statement referred to in paragraph (b), the company may, at least
21 days before that specified date, send to each of its
shareholders, whether or not their shares carry the right to
vote,
(a)
a
copy of the proposed resolution, and
(b)
a
statement advising of the right to send a notice of
dissent.
(3)
If a resolution in respect of which a shareholder is entitled to
dissent was or is to be passed as a resolution of shareholders
without the company complying with subsection (1) or (2), or was or
is to be passed as a directors’ resolution without the
company complying with subsection (2), the company must, before or
within 14 days after the passing of the resolution, send to each of
its shareholders who has not, on behalf of every person who
beneficially owns shares registered in the name of the shareholder,
consented to the resolution or voted in favour of the resolution,
whether or not their shares carry the right to vote,
(a)
a
copy of the resolution,
(b)
a
statement advising of the right to send a notice of dissent,
and
(c)
if
the resolution has passed, notification of that fact and the date
on which it was passed.
(4)
Nothing in subsection (1), (2) or (3) gives a shareholder a right
to vote in a meeting at which, or on a resolution on which, the
shareholder would not otherwise be entitled to vote.
Notice of court orders
241 If a court order provides for a right of dissent,
the company must, not later than 14 days after the date on which
the company receives a copy of the entered order, send to each
shareholder who is entitled to exercise that right of
dissent
(a)
a
copy of the entered order, and
(b)
a
statement advising of the right to send a notice of
dissent.
Notice of dissent
242 (1) A shareholder intending to dissent in respect
of a resolution referred to in section 238 (1) (a), (b), (c), (d),
(e) or (f) must,
(a)
if
the company has complied with section 240 (1) or (2), send written
notice of dissent to the company at least 2 days before the date on
which the resolution is to be passed or can be passed, as the case
may be,
(b)
if
the company has complied with section 240 (3), send written notice
of dissent to the company not more than 14 days after receiving the
records referred to in that section, or
(c)
if
the company has not complied with section 240 (1), (2) or (3), send
written notice of dissent to the company not more than 14 days
after the later of
(i)
the
date on which the shareholder learns that the resolution was
passed, and
(ii)
the
date on which the shareholder learns that the shareholder is
entitled to dissent.
(2)
A shareholder intending to dissent in respect of a resolution
referred to in section 238 (1) (g) must send written notice of
dissent to the company
(a)
on
or before the date specified by the resolution or in the statement
referred to in section 240 (2) (b) or (3) (b) as the last date by
which notice of dissent must be sent, or
(a)
if
the resolution or statement does not specify a date, in accordance
with subsection (1) of this section.
(3)
A shareholder intending to dissent under section 238 (1) (h) in
respect of a court order that permits dissent must send written
notice of dissent to the company
(a)
within
the number of days, specified by the court order, after the
shareholder receives the records referred to in section 241,
or
(b)
if
the court order does not specify the number of days referred to in
paragraph (a) of this subsection, within 14 days after the
shareholder receives the records referred to in section
241.
(4)
A notice of dissent sent under this section must set out the
number, and the class and series, if applicable, of the notice
shares, and must set out whichever of the following is
applicable:
(a)
if
the notice shares constitute all of the shares of which the
shareholder is both the registered owner and beneficial owner and
the shareholder owns no other shares of the company as beneficial
owner, a statement to that effect;
(b)
if
the notice shares constitute all of the shares of which the
shareholder is both the registered owner and beneficial owner but
the shareholder owns other shares of the company as beneficial
owner, a statement to that effect and
(i)
the
names of the registered owners of those other shares,
(ii)
the
number, and the class and series, if applicable, of those other
shares that are held by each of those registered owners,
and
(iii)
a
statement that notices of dissent are being, or have been, sent in
respect of all of those other shares;
(a)
if
dissent is being exercised by the shareholder on behalf of a
beneficial owner who is not the dissenting shareholder, a statement
to that effect and
(i)
the
name and address of the beneficial owner, and
(ii)
a
statement that the shareholder is dissenting in relation to all of
the shares beneficially owned by the beneficial owner that are
registered in the shareholder’s name.
(5)
The right of a shareholder to dissent on behalf of a beneficial
owner of shares, including the shareholder, terminates and this
Division ceases to apply to the shareholder in respect of that
beneficial owner if subsections (1) to (4) of this section, as
those subsections pertain to that beneficial owner, are not
complied with.
Notice of intention to proceed
243 (1) A company that receives a notice of dissent
under section 242 from a dissenter must,
(a)
if
the company intends to act on the authority of the resolution or
court order in respect of which the notice of dissent was sent,
send a notice to the dissenter promptly after the later
of
(i)
the
date on which the company forms the intention to proceed,
and
(ii)
the
date on which the notice of dissent was received, or
(a)
if
the company has acted on the authority of that resolution or court
order, promptly send a notice to the dissenter.
(2)
A notice sent under subsection (1) (a) or (b) of this section
must
(a)
be
dated not earlier than the date on which the notice is
sent,
(b)
state
that the company intends to act, or has acted, as the case may be,
on the authority of the resolution or court order, and
(c)
advise
the dissenter of the manner in which dissent is to be completed
under section 244.
Completion of dissent
244 (1) A dissenter who receives a notice under
section 243 must, if the dissenter wishes to proceed with the
dissent, send to the company or its transfer agent for the notice
shares, within one month after the date of the
notice,
(a)
a
written statement that the dissenter requires the company to
purchase all of the notice shares,
(b)
the
certificates, if any, representing the notice shares,
and
(c)
if
section 242 (4) (c) applies, a written statement that complies with
subsection (2) of this section.
(2)
The written statement referred to in subsection (1) (c)
must
(a)
be
signed by the beneficial owner on whose behalf dissent is being
exercised, and
(b)
set
out whether or not the beneficial owner is the beneficial owner of
other shares of the company and, if so, set out
(i)
the
names of the registered owners of those other shares,
(ii)
the
number, and the class and series, if applicable, of those other
shares that are held by each of those registered owners,
and
(iii)
that
dissent is being exercised in respect of all of those other
shares.
(3)
After the dissenter has complied with subsection (1),
(a)
the
dissenter is deemed to have sold to the company the notice shares,
and
(b)
the
company is deemed to have purchased those shares, and must comply
with section 245, whether or not it is authorized to do so by, and
despite any restriction in, its memorandum or
articles.
(4)
Unless the court orders otherwise, if the dissenter fails to comply
with subsection (1) of this section in relation to notice shares,
the right of the dissenter to dissent with respect to those notice
shares terminates and this Division, other than section 247, ceases
to apply to the dissenter with respect to those notice
shares.
(5)
Unless the court orders otherwise, if a person on whose behalf
dissent is being exercised in relation to a particular corporate
action fails to ensure that every shareholder who is a registered
owner of any of the shares beneficially owned by that person
complies with subsection (1) of this section, the right of
shareholders who are registered owners of shares beneficially owned
by that person to dissent on behalf of that person with respect to
that corporate action terminates and this Division, other than
section 247, ceases to apply to those shareholders in respect of
the shares that are beneficially owned by that person.
(6)
A dissenter who has complied with subsection (1) of this section
may not vote, or exercise or assert any rights of a shareholder, in
respect of the notice shares, other than under this
Division.
Payment for notice shares
245 (1) A company and a dissenter who has complied
with section 244 (1) may agree on the amount of the payout value of
the notice shares and, in that event, the company
must
(a)
promptly
pay that amount to the dissenter, or
(b)
if
subsection (5) of this section applies, promptly send a notice to
the dissenter that the company is unable lawfully to pay dissenters
for their shares.
(2)
A dissenter who has not entered into an agreement with the company
under subsection (1) or the company may apply to the court and the
court may
(a)
determine
the payout value of the notice shares of those dissenters who have
not entered into an agreement with the company under subsection
(1), or order that the payout value of those notice shares be
established by arbitration or by reference to the registrar, or a
referee, of the court,
(b)
join
in the application each dissenter, other than a dissenter who has
entered into an agreement with the company under subsection (1),
who has complied with section 244 (1), and
(c)
make
consequential orders and give directions it considers
appropriate.
(3)
Promptly after a determination of the payout value for notice
shares has been made under subsection (2) (a) of this section, the
company must
(a)
pay
to each dissenter who has complied with section 244 (1) in relation
to those notice shares, other than a dissenter who has entered into
an agreement with the company under subsection (1) of this section,
the payout value applicable to that dissenter’s notice
shares, or
(b)
if
subsection (5) applies, promptly send a notice to the dissenter
that the company is unable lawfully to pay dissenters for their
shares.
(4)
If a dissenter receives a notice under subsection (1) (b) or (3)
(b),
(a)
the
dissenter may, within 30 days after receipt, withdraw the
dissenter’s notice of dissent, in which case the company is
deemed to consent to the withdrawal and this Division, other than
section 247, ceases to apply to the dissenter with respect to the
notice shares, or
(b)
if
the dissenter does not withdraw the notice of dissent in accordance
with paragraph (a) of this subsection, the dissenter retains a
status as a claimant against the company, to be paid as soon as the
company is lawfully able to do so or, in a liquidation, to be
ranked subordinate to the rights of creditors of the company but in
priority to its shareholders.
(5)
A company must not make a payment to a dissenter under this section
if there are reasonable grounds for believing that
(a)
the
company is insolvent, or
(b)
the
payment would render the company insolvent.
Loss of right to dissent
246
The
right of a dissenter to dissent with respect to notice shares
terminates and this Division, other than section 247, ceases to
apply to the dissenter with respect to those notice shares, if,
before payment is made to the dissenter of the full amount of money
to which the dissenter is entitled under section 245 in relation to
those notice shares, any of the following events
occur:
(a)
the corporate
action approved or authorized, or to be approved or authorized, by
the resolution or court order in respect of which the notice of
dissent was sent is abandoned;
(b)
the resolution in
respect of which the notice of dissent was sent does not
pass;
(c)
the resolution in
respect of which the notice of dissent was sent is revoked before
the corporate action approved or authorized by that resolution is
taken;
(d)
the notice of
dissent was sent in respect of a resolution adopting an
amalgamation agreement and the amalgamation is abandoned or, by the
terms of the agreement, will not proceed;
(e)
the arrangement in
respect of which the notice of dissent was sent is abandoned or by
its terms will not proceed;
(f)
a court permanently
enjoins or sets aside the corporate action approved or authorized
by the resolution or court order in respect of which the notice of
dissent was sent;
(g)
with respect to the
notice shares, the dissenter consents to, or votes in favour of,
the resolution in respect of which the notice of dissent was
sent;
(h)
the notice of
dissent is withdrawn with the written consent of the
company;
(i)
the court
determines that the dissenter is not entitled to dissent under this
Division or that the dissenter is not entitled to dissent with
respect to the notice shares under this Division.
Shareholders entitled to return of shares and rights
247 If, under section 244 (4) or (5), 245 (4) (a) or
246, this Division, other than this section, ceases to apply to a
dissenter with respect to notice shares,
(a)
the company must
return to the dissenter each of the applicable share certificates,
if any, sent under section 244 (1) (b) or, if those share
certificates are unavailable, replacements for those share
certificates,
(b)
the dissenter
regains any ability lost under section 244 (6) to vote, or exercise
or assert any rights of a shareholder, in respect of the notice
shares, and
(c)
the dissenter must
return any money that the company paid to the dissenter in respect
of the notice shares under, or in purported compliance with, this
Division.
For More Information Contact:
Janet
Meiklejohn
Vice President, Investor Relations
Toll-Free:
1-844-306-8827
Email:
info@firstmininggold.com
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