Persons Making This Solicitation of Proxies
INFORMATION CIRCULAR
(As at November 16, 2010 (the “Record Date”) and in Canadian dollars except where indicated)
PERSONS MAKING THIS SOLICITATION OF PROXIES
This Information Circular (“Circular”) is furnished in connection with the solicitation of proxies
(“Proxies”and which term includes ‘VIFs’, as defined below under ‘Completion and Voting of Proxies
- Unregistered Shareholders’) by the management of Solomon Resources Limited (the “Company”) for
use at the Annual General Meeting of the shareholders of the Company (the “Meeting”) to be held at
the time and place and for the purposes set forth in the accompanying Notice of Meeting and at any adjournment thereof. It is expected the solicitation will be primarily by mail. Proxies may also be solicited personally by employees of the Company. The cost of solicitation will be borne by the Company.
COMPLETION AND VOTING OF PROXIES
Voting
Voting at the Meeting will be by a show of hands, each registered shareholder and each person representing a registered or unregistered shareholder through a Proxy (a “Proxyholder”) having one vote, unless a poll is required (if the number of shares represented by Proxies that are to be voted against a motion are greater than 5% of the votes that could be cast at the Meeting) or requested, whereupon each such shareholder and Proxyholder is entitled to one vote for each share held or represented, respectively. To approve a motion proposed at the Meeting a majority of greater than 50% of the votes cast will be required (an ‘ordinary resolution’) unless the motion requires a ‘special resolution’ in which case a majority of 66-2/3% of the votes cast will be required.
Appointment of Proxyholders
The persons named in the accompanying Proxy as Proxyholders are directors or officers of the Company. A
shareholder has the right to appoint a person (who need not be a shareholder) to attend and act on the shareholder’s behalf at the Meeting other than the persons named in the Proxy as Proxyholders. To exercise this right, the shareholder must strike out the names of the persons named in the Proxy as Proxyholders and insert the name of the shareholder’s nominee in the space provided or complete another Proxy.
A shareholder completing the enclosed Proxy may indicate the manner in which the persons named in the Proxy are to vote with respect to any matter by marking an ‘X’ in the appropriate space. On any poll required (for the reason described above) or requested, those persons will vote or withhold from voting the shares in respect of which they are appointed in accordance with the directions, if any, given in the Proxy provided such directions are certain.
If a shareholder wishes to confer a discretionary authority with respect to any matter, then the space should be left blank. In such instance, the Proxyholder, if nominated by management, intends to vote the shares
represented by the Proxy in favour of the motion.
The enclosed Proxy, when properly signed, confers discretionary authority with respect to amendments or variations to the matters identified in the Notice of Meeting and with respect to other matters which may be properly brought before the Meeting. At the time of printing this Circular, the management of the Company is not aware that any such amendments, variations or other matters are to be presented for action at the Meeting. If, however, other matters which are not now known to the management should properly come before the Meeting, the Proxies hereby solicited will be exercised on such matters in accordance with the best judgement of the nominees.
The Proxy must be dated and signed by the shareholder or the shareholder’s attorney authorized in writing. In the case of a corporation, the Proxy must be dated and executed under its corporate seal or signed by a duly authorized officer or attorney for the corporation.
The completed Proxy, together with the power of attorney or other authority, if any, under which it was signed or a notarially certified copy thereof, must be deposited with the Company’s transfer agent in accordance with its instructions and before the time set out in the Proxy. Proxies received after such time may be accepted or rejected by the Chair of the Meeting in the Chair’s discretion. Unregistered shareholders must deliver their completed Proxies in accordance with the instructions given by their financial institution or other intermediary that forwarded the Proxy to them.
Registered Shareholders
Only shareholders registered as shareholders in the Company’s shareholder registry maintained by the Company’s registrar and transfer agent or duly appointed Proxyholders will be recognized, make motions or vote at the Meeting.
Unregistered Shareholders
Shareholders holding their shares of the Company through stockbrokers, intermediaries, trustees or other persons will not be recognized, may not make motions nor vote at the Meeting except as described below.
If shares of the Company are listed in an account statement provided to a shareholder by a stockbroker, those shares, in all likelihood, will not be registered in the shareholder’s name. Such shares will more likely be registered in the name of the stockbroker or a nominee or agent of that stockbroker and can only be voted through a duly completed Proxy given by the shareholder. Without specific instructions, stockbrokers and their agents and nominees are prohibited from voting shares for the stockbroker’s clients. Therefore, each
unregistered shareholder should ensure that voting instructions are communicated to the appropriate party well in advance of the Meeting.
National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer of the Canadian securities administrators require stockbrokers and other intermediaries to seek voting instructions from unregistered shareholders in advance of shareholder meetings. Stockbrokers and other intermediaries have their own mailing procedures and provide their own return instructions to clients, which should be carefully followed by unregistered shareholders to ensure their shares are voted at the Meeting. The form requesting such voting instructions (a “VIF”) supplied to the unregistered shareholder by its stockbroker (or agent) is substantially similar to the Proxy provided directly to the registered shareholders by the Company, however, it is limited to instructing the registered shareholder (that is, the stockbroker or its nominee or agent) how to vote on behalf of the unregistered shareholder.
Most stockbrokers in Canada and the United States of America delegate responsibility for obtaining instructions from clients to a third party company (or, if the shareholder has so consented, allows the Company or its transfer agent to do so directly) which sends a machine-readable VIF to unregistered shareholders and asks the shareholders to return the VIFs to them or provide instructions to them through the Internet or by telephone. The third party company (or the Company or its agent, if it has sent the VIF to the shareholder directly) then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of shares to be represented at the Meeting.
Although an unregistered shareholder may not be recognized directly at the Meeting for the purposes of voting shares registered in the name of their stockbroker, the unregistered shareholder may attend the Meeting as Proxyholder for the stockbroker and indirectly vote the shares in that capacity. Unregistered shareholders
wishing to attend the Meeting and indirectly vote their shares as their own Proxyholder, must enter their own names in the blank space on the VIF provided to them and return the VIF in accordance with the instructions provided on it. If an unregistered shareholder receives a VIF and does not wish to attend the Meeting as a Proxyholder, the VIF must be returned, or instructions respecting the voting of shares must be communicated, to the third party company (or the Company or its transfer agent) in advance of the Meeting to have the shares voted in accordance with the instructions on that VIF.
Shareholders with questions respecting the voting of shares held through a stockbroker or other financial intermediary should contact that stockbroker or other intermediary for assistance.
REVOCATION OF PROXIES
Shareholders have the power to revoke Proxies previously given by them. Revocation can be effected by an instrument in writing (which includes a Proxy bearing a later date) signed by a shareholder or the shareholder’s attorney authorized in writing and in the case of a corporation, executed under its corporate seal or signed by a duly authorized officer or attorney for the corporation, and either delivered to the registered office of the Company at Northwest Law Group (attn: Michael F. Provenzano), Suite 950, Scotia Tower, 650 West Georgia Street, Box 11587, Vancouver, BC V6B 4N8, Canada any time up to and including the last business day preceding the day of the Meeting, or any adjournment thereof, or deposited with the Chair of the Meeting prior to the hour of commencement on the day of the Meeting.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
None of the directors or executive officers of the Company, any person who has held such a position since the beginning of the Company’s last completed financial year, any proposed nominee for election as a director of the Company nor any associate or affiliate of the foregoing persons, has any substantial or material interest, directly or indirectly, by way of beneficial ownership of securities or otherwise, in any matter to be acted on at the Meeting (other than the election of directors) except for the current and future directors and executive officers of the Company, and its subsidiaries, inasmuch as in the following year they may be granted options to purchase shares of the Company pursuant to its Stock Option Plan, ratification of which will be sought at the Meeting as required by the TSX Venture Exchange (the “TSX-V”).
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The Company has only one class of shares entitled to be voted at the Meeting, namely, common shares without par value. All issued shares are entitled to be voted at the Meeting and each has one non-cumulative vote. Only those common shareholders as of the Record Date will be entitled to vote at the Meeting or any adjournment thereof. There were 22,809,805 common shares issued and outstanding as of the Record Date.
To the knowledge of the directors and executive officers of the Company, as of the Record Date, only the following beneficially own, directly or indirectly, or exercise control or direction over shares carrying more than 10% of the voting rights attached to all outstanding shares of the Company which have the right to vote in all circumstances.
| Name | Number of Shares | Percentage of Outstanding Shares |
|---|---|---|
| Joe Dwek Management Consultants 2007 Inc. | 2,650,790 (1) | 11.65% |
(1) Includes shares owned by various MineralFields and Pathway limited partnerships the investments of which are directed by this shareholder.
ELECTION OF DIRECTORS
The Board of Directors of the Company (the “Board”) presently consists of four directors. It is proposed to set the number of directors for the following year at the same number. This requires the approval of the shareholders of the Company by an ordinary resolution, which approval will be sought at the Meeting.
The Company’s management proposes to nominate the persons named in the following table for election as directors of the Company to fill such positions. Each director elected will hold office until the next Annual General Meeting or until the director’s successor is duly elected or appointed, unless the director’s office is earlier vacated in accordance with the Company’s Articles or the director becomes disqualified to act as a director.
The following information concerning the proposed nominees has been furnished by each of them.
| Name, Province or State & Country of Residence & Present Position in Company | Present Principal Occupation (1) | Director Since | Number of Shares (2) |
|---|---|---|---|
| MAARSCHALK, Paul S. British Columbia, Canada CFO, Secretary & Director | Chartered Accountant & Chartered Business Valuator CFO of the Company CFO of Mediative Performance LP (digital marketing advisory firm; since October 2008) Owner & Principal Consultant of Maarschalk Valuations & Planning (business valuations and planning consulting firm; since March 2008) Formerly consultant at Meyers Norris Penny LLP (chartered accounting firm; February 2002 to March 2008) and CFO of 2020 IT Solutions (information technology consultants; August 2006 to December 2007) | November 30, 2009 | 39,000 |
| NETOLITZKY, Ronald K. (3) British Columbia, Canada Director | Geologist President of Keewatin Consultants (private geological consulting firm); Chairman of the Board of Directors of Boss Power Corp. (publicly traded (TSX-V) uranium exploration company), Golden Band Resources Inc. (publicly traded (TSX-V) gold exploration company) and Skeena Resources Inc. (publicly traded (TSX-V) gold and other precious and base metals exploration company) | August 1, 1989 | 728,643 |
| ROGERS, R. (Randy) S.(3) British Columbia, Canada President, CEO & Director | Geologist President and CEO of the Company and Boss Power Corp. (publicly traded (TSX-V) uranium exploration company) | April 20, 2009 | 111,000 |
| Name, Province or State & Country of Residence & Present Position in Company | Present Principal Occupation (1) | Director Since | Number of Shares (2) |
|---|---|---|---|
| VAUGHAN, W. S. (Steve) (3) Ontario, Canada Director | Lawyer Partner, Heenan Blaikie LLP (law firm) | June 19, 2009 | 0 |
(1) Includes occupations for preceding five years unless the director was elected at the previous Annual General Meeting and was shown as a nominee for election as a director in the Circular for that meeting.
(2) The approximate number of shares of the Company carrying the right to vote in all circumstances beneficially owned, directly or indirectly, or over which control or direction is exercised by each proposed nominee as of the Record Date. No director, together with the director’s associates and affiliates beneficially owns, directly or indirectly, or exercises control or direction over more than 10% of the Company’s shares.
(3) Member of Audit Committee.
(4) None of the proposed directors is to be elected under any arrangement or understanding between the proposed director and a third party (other than the directors and executive officers of the Company acting as in that capacity).
Pursuant to the provisions of the Company’s governing corporate legislation the Company is required to have an Audit Committee whose members are indicated above. The Company does not have an Executive Committee.
No proposed director:
(a) is, as at the date of this Circular, or has been, within 10 years before the date of this Circular, a director, chief executive officer (“CEO”) or chief financial officer (“CFO”) of any corporation (including the Company) that was subject to a ‘cease trading’ or similar order (including a voluntary or involuntary Cease Trading Order applying to some or all of the management of a corporation) or an order that denied the relevant corporation access to any exemption under securities legislation, for a period of more than 30 consecutive days, that was issued
(i) while the proposed director was acting as a director, CEO or CFO of that corporation, or
(ii) after the proposed director ceased to be a director, CEO or CFO of that corporation but resulted from an event that occurred while acting in such capacity;
(b) is, as at the date of this Circular, or has been, within 10 years before the date of this Circular, a director or executive officer of any corporation (including the Company) that while acting in that capacity or within a year of 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;
(c) has, within the 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 their assets;
(d) has entered into, at any time, a settlement agreement with a securities regulatory authority; or
(e) has been subject to, at any time, any penalties or sanctions imposed by
(i) a court relating to securities legislation or a securities regulatory authority, or
(ii) a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed director.
other than the following.
Ronald K. Netolitzky: Consolidated Trillion Resources Ltd. (TSX-V, director from 1987 to October 30, 2003) – issued Cease Trading Orders by the Alberta Securities Commission on December 8, 2000 (revoked on December 13, 2001) and Ontario Securities Commission on December 11, 2000 (revoked on August 14, 2002) for failing to file financial statements.
William. S. Vaughan: Copper Mesa Mining Corporation (TSX, director since June 2, 2006) – issued Cease Trade Orders by the British Columbia Securities Commission on April 8, 2009 (revoked on June 3, 2009) and August 24, 2009 (revoked on September 9, 2009) for failing to file financial statements and related Management’s Discussion & Analysis and, in respect of the April 8, 2009 order, an Annual Information Form.
Windy Mountain Mineral Explorations Ltd.(TSX-V, a director and the secretary from June 28, 1990 to May 5, 2003) – issued Cease Trade Orders by the British Columbia Securities Commission on July 10, 2003 (not revoked), Alberta Securities Commission on October 10, 2003 (not revoked) and Ontario Securities Commission on June 26, 2003 (not revoked) for failing to file financial statements. Windy Mountain filed for voluntary bankruptcy on July 3, 2003.
CORPORATE GOVERNANCE
National Instrument 58-101 Disclosure of Corporate Governance Practices of the Canadian securities administrators requires the Company to annually disclose certain information regarding its corporate governance practices. That information is disclosed below.
Mandate of the Board of Directors
The Board has responsibility for the stewardship of the Company. That stewardship includes responsibility for strategic planning, identification of the principal risks of the Company’s business and implementation of appropriate systems to manage these risks, succession planning (including appointing, training and monitoring senior management), communications with investors and the financial community and the integrity of the Company’s internal control and management information systems.
Independence of the Directors
A director is ‘independent’ if the director is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director’s ability to act with the best interests of the Company, other than interests and relationships arising from shareholding.
The following table describes whether the directors are independent and, if not independent, sets out the reasons:
| Director | Independent | Reason why the Director is not Independent |
| Maarschalk, Paul S.* | No | Is the CFO of the Company |
| Director | Independent | Reason why the Director is not Independent |
|---|---|---|
| Netolitzky, Ronald K. | Yes | – |
| Rogers, Randall S. | No | Is the President and CEO of the Company |
| Vaughan, W. S. (Steve) | Yes | – |
The Board facilitates its exercise of independent supervision over the Company’s management through regular meetings of the Board. The meetings are held both with and without members of the Company’s management in attendance. The Board does not hold regularly scheduled meetings without directors who are not independent and members of management being in attendance nor, since the beginning of the Company’s last financial year, have the independent members of the Board held any other meetings without the presence of non-independent directors or management. However, when consideration of a matter affecting nonindependent directors occurs at a meeting, the non-independent directors recuse themselves from the meeting so that the independent directors can have an open and candid discussion of, and vote on, the matter.
Other Directorships
The directors are presently directors of other reporting issuers (public corporations), as follows:
| Director or Nominee | Reporting Issuers |
|---|---|
| Maarschalk, Paul S. | – |
| Netolitzky, Ronald K. | American Bonanza Gold Corp., Aurcana Corporation, Boss Power Corp., Blue Sky Uranium Corp., Copper Canyon Resources Ltd., Eagle Plains Resources Ltd., Golden Band Resources Inc., Pacific Iron Ore Corporation, Skeena Resources Limited, Strongbow Exploration Inc. & Virginia Energy Resources Inc. |
| Rogers, R. (Randy) S. | Boss Power Corp. |
| Vaughan, W. S. (Steve) | Algoma Central Corporation, Brigus Gold Corp., Consolidated Tanager Limited, Copper Mesa Mining Corporation, Ginguro Exploration Inc., Pure Nickel Inc., Silvermet Inc. & Western Troy Capital Resources Inc. |
Orientation and Continuing Education
The Board takes the following steps to ensure that all new directors receive orientation regarding the role of the Board, its committees and its directors, and the nature and operation of the Company.
The first step is to assess a new director’s set of skills and professional background. This allows the orientation to be customized to that director’s needs since different information regarding the nature and operations of the Company’s business will be necessary and relevant to each new director.
Once assessed, the second step is taken by one or more existing directors, who may be assisted by the Company’s management, to provide the new director with the appropriate orientation through meetings, telephone calls and correspondence.
To ensure the Board provides continuing information for its directors so they maintain the skill and knowledge necessary for them to meet their obligations as directors of the Company, there are technical presentations made as required at meetings of the Board. The presentations can range from a review of the Company’s financial statements to various aspects of the Company’s business. The Board believes the discussion among the directors, management and outside experts at these meetings provides a valuable learning resource for directors without expertise in the subject matter being presented.
Ethical Business Conduct
As part of its responsibility for the stewardship of the Company, the Board seeks to foster a culture of ethical conduct by striving to ensure the Company carries out its business in line with high business and moral standards and applicable legal and financial requirements. In that regard, the Board:
- has adopted a Code of Conduct setting out the guidelines for the conduct expected from directors, officers and employees of the Company. A copy of the Code has been filed on SEDAR (see ‘Additional Information’ at the end of this Circular). Compliance with the Code is achieved as follows. Each director is responsible for ensuring that they individually comply with the terms of the Code, while the Board is responsible for ensuring that the directors, as a group, and all officers comply with the Code and the executive officers of the Company are responsible for ensuring compliance with the Code by employees. Since the beginning of the Company’s last financial year, it has not filed a Material Change Report relating to any conduct of a director or executive officer that constitutes a departure from the Code.
- has established a written ‘Whistleblower Policy’ which details complaint procedures for financial concerns as further described below in ‘Audit Committee – Complaints’.
- encourages management to consult with legal and financial advisors to ensure the Company is meeting those requirements.
- is cognizant of the Company’s timely disclosure obligations and reviews material disclosure documents such as financial statements, Management’s Discussion & Analysis (MD&A) and press releases prior to distribution.
- relies on its Audit Committee to regularly discuss the Company’s systems of internal financial control with the Company’s external auditor.
- actively monitors the Company’s compliance with the Board’s directives and ensures that all material transactions are reviewed and authorized by the Board before being undertaken by management.
In addition, the Board must comply with the conflict of interest provisions of its governing corporate legislation and relevant securities regulatory instruments and stock exchange policies (which require that interested directors recuse themselves from the consideration of, and voting on, such matters), to ensure its directors exercise independent judgment in considering transactions and agreements in respect of which a director or executive officer has a material interest.
Nomination of Directors
The Board does not feel it is necessary to increase the number of directors on the Board at this time. When the Board considers it necessary to increase its size, it can also consider whether a Nominating Committee of directors, some or all of whom will be independent directors, needs to be formed to recommend appointees and assess directors on an ongoing basis.
Any new appointees or nominees to the Board must have a favourable track record in general business management, special expertise in areas of strategic interest to the Company, the ability to devote the time required and a willingness to serve as a director.
Compensation
The Board determines the appropriate compensation of the Chair of the Board, CEO, CFO, other executive officers and directors. This determination is based primarily on a comparison of the remuneration paid by the Company with the remuneration paid by other public companies that the Board feels are similarly placed within the same business.
In addition, the Chair of the Board, CEO, CFO, other executive officers and directors are granted stock options under a stock option plan adopted by the Company (the “Option Plan”). The Board determines the terms of each stock option within the parameters set out in the Option Plan and applicable stock exchange rules and policies. While not required by the Company’s governing corporate law, each director abstains from voting on any option to be granted to himself if the options are granted at a meeting of the Board and not by a consent resolution.
Since the beginning of the Company’s last financial year, no compensation consultant or advisor was retained to assist in determining compensation for any of the Company’s directors and officers.
Board Committees
Under applicable corporate or securities legislation there are not any requirements for the Board to have any committees, except for an Audit Committee (described in the next section). Accordingly, the Board has not established any committees other than the Audit Committee.
Assessments
The Board has not established any formal procedures for regularly assessing the performance of the Board, its committees and individual directors. Generally, those responsibilities have been carried out on an informal basis by each director based on their assessment of the performance of the Board, its committees or the individual directors compared to their expectations. In doing so, the contributions of an individual director are informally monitored in light of the business strengths of the individual and the purpose of originally nominating the individual to the Board. Furthermore, it is the view of the Board that, in light of its small size and the close and open relationship among its members, the formality of a committee would not be as effective as the current arrangement and is unnecessary.
AUDIT COMMITTEE
National Instrument 52-110 Audit Committees (“NI 52-110”) of the Canadian securities administrators requires the Company’s Audit Committee to meet certain requirements. It also requires the Company to disclose in this Circular certain information regarding the Audit Committee. That information is disclosed below.
Overview
The Audit Committee of the Board is responsible for:
- recommending to the Board the external auditor to be nominated for election by the Company’s shareholders at each Annual General Meeting and approving the compensation of such external auditor;
- overseeing the work of the external auditor, including the resolution of disagreements between the auditor and management regarding the Company’s financial reporting;
- pre-approving all non-audit services to be provided to the Company, and its subsidiaries, by the auditor;
- reviewing the Company’s annual and interim financial statements, Management’s Discussion & Analysis (MD&A) and press releases regarding earnings before they are submitted for review and approval by the Board and publicly disseminated by the Company;
- confirming adequate procedures are in place for the review of the Company’s public disclosure of financial information extracted or derived from its financial statements, other than disclosure described in the previous paragraph, and periodically assessing the adequacy of those procedures; and
- reviewing and approving the Company’s hiring policies regarding current and former partners and employees of the Company’s current and former auditors.
The Company’s auditor reports directly to the Audit Committee.
The Audit Committee’s Charter
The Board has adopted a Charter for the Audit Committee which sets out the Committee’s mandate, organization, powers and responsibilities. The Charter is attached as a schedule to this Circular.
Composition of the Audit Committee
The Audit Committee consists of three directors. Unless it is a ‘Venture Issuer’ (an issuer the securities of which are not listed or quoted on any of the Toronto Stock Exchange (“TSX”), a market in the United States of America other than the over-the-counter market, or a market outside of Canada and the U.S.A.) as of the end of its last financial year, NI 52-110 requires each of the members of the Committee to be independent and financially literate. Since the Company is a ‘Venture Issuer’ (its securities are listed on the TSX-V, but are not listed or quoted on any other exchange or market, other than possibly the U.S. over-the-counter market, or a market outside of Canada and the U.S.A.), it is exempt from this requirement. In addition, the Company’s governing corporate legislation requires the Company to have an Audit Committee composed of a minimum of three directors, a majority of whom are not officers or employees of the Company. The Audit Committee complies with this requirement.
The following table sets out the names of the members of the Audit Committee and whether they are officers or employees, ‘independent’ or ‘financially literate’.
| Name of Member | Officer or Employee | Independent (1) | Financially Literate (2) |
| Netolitzky, Ronald K. | No | Yes | Yes |
| Rogers, R. (Randy) S. | Yes | No | Yes |
| Vaughan, W. S. (Steve) – Committee Chair | No | Yes | Yes |
(1) To be considered to be independent, a member of the Committee must not have any direct or indirect ‘material relationship’ with the Company. A material relationship is a relationship which could, in the view of the Board, reasonably interfere with the exercise of a member’s independent judgement.
(2) To be considered financially literate, a member of the Committee must have the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements.
Relevant Education and Experience
The education and experience of each member of the Audit Committee that is relevant to the performance of his responsibilities as an Audit Committee member and, in particular, any education or experience that would provide the member with:
- an understanding of the accounting principles used by the Company to prepare its financial statements;
- the ability to assess the general application of such accounting principles in connection with the accounting for estimates, accruals and reserves;
- experience preparing, auditing, analysing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements, or experience actively supervising one or more persons engaged in such activities; and
- an understanding of internal controls and procedures for financial reporting,
are as follows:
| Name of Member | Education | Experience |
| Netolitzky, Ronald K. | Geologist M. Sc. (Geology) (1967; University of Calgary) | Director and officer of several, and investor in numerous, publicly traded mineral exploration companies |
| Rogers, R. (Randy) S. | P. Geol. The Association of Professional Engineers, Geologists and Geophysicists of Alberta M. Sc. (Mineral Exploration) (1981; Queen’s University) | Director and officer of two, and investor in numerous, publicly traded mineral exploration companies and retired Commercial Crime Investigator with the Royal Canadian Mounted Police with experience and specialized training in preparation, review and analysis of financial statements |
| Vaughan, W. S. (Steve) Committee Chair | Barrister & Solicitor Law Society of Upper Canada B.C.L. (1965; University of New Brunswick) B.Sc. (1959; University of New Brunswick) | Director and officer of several, and investor in numerous, publicly traded mineral exploration companies Partner in a national Canadian law firm |
Audit Committee Oversight
Since the commencement of the Company’s most recently completed financial year, there has not been a recommendation of the Audit Committee to nominate or compensate an external auditor which was not adopted by the Board.
Reliance on Exemptions in NI 52-110 regarding De Minimis Non-audit Services or on a Regulatory Order Generally
Since the commencement of the Company’s most recently completed financial year, the Company has not relied on:
1. the exemption in section 2.4 (De Minimis Non-audit Services) of NI 52-110 (which exempts all nonaudit services provided by the Company’s auditor from the requirement to be pre-approved by the Audit Committee if such services are less than 5% of the auditor’s annual fees charged to the Company, are not recognized as non-audit services at the time of the engagement of the auditor to perform them and are subsequently approved by the Audit Committee prior to the completion of that year’s audit); or
2. an exemption from the requirements of NI 52-110, in whole or in part, granted by a securities regulator under Part 8 (Exemptions) of NI 52-110.
Pre-Approval Policies and Procedures
The Audit Committee has adopted specific policies and procedures for the engagement of non-audit services as described in section III.B ‘Powers and Responsibilities – Performance & Completion by Auditor of its Work’ of the Charter.
External Auditor Service Fees (By Category)
The following table discloses the fees billed to the Company by its external auditor during the last two financial years.
| Financial Year Ending July 31st | Audit Fees (1) | Audit Related Fees (2) | Tax Fees (3) | All Other Fees (4) |
|---|---|---|---|---|
| 2010 | $40,000 | 0 | $1,500 | $640 |
| 2009 | $46,000 | 0 | $3,700 | $736 |
(1) The aggregate fees billed for audit services.
(2) The aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not disclosed in the ‘Audit Fees’ column.
(3) The aggregate fees billed for tax compliance, tax advice, and tax planning services. These services involved the preparation of corporate income tax returns and related matters.
(4) The aggregate fees billed for professional services other than those listed in the other three columns. These fees are the registration fees for the Canadian Public Accountability Board.
Reliance on Exemptions in NI 52-110 regarding Audit Committee Composition & Reporting Obligations
Since the Company is a Venture Issuer, it relies on the exemption contained in section 6.1 of NI 52-110 from the requirements of Part 3 Composition of the Audit Committee (as described in ‘Composition of the Audit Committee’ above) and Part 5 Reporting Obligations of NI 52-110 (which requires certain prescribed disclosure about the Audit Committee in the Company’s Annual Information Form, if any).
Complaints
The Audit Committee has established a written ‘Whistleblower Policy’ which creates procedures for the confidential and anonymous submission by employees of complaints and concerns regarding the Company’s accounting, auditing and financial reporting procedures and obligations, without fear of retaliation of any kind.