November 25, 1998
Cusac Gold Mines Ltd.
Pursuant to our letter dated November 8, 1998, we enclose a further detailed Information Circular which you are obliged to circulate to all shareholders of Cusac Gold Mines in accordance with applicable regulations and as per guidelines specified.
We continue placing you on notice regarding any changes in the Company pending a shareholders meeting which, you have not called, as of today.
INFORMATION CIRCULAR - CUSAC GOLD MINES LTD.
To: The Shareholders, Cusac Gold Mines Ltd.
CC: As applicable (for circulation)
From: Tidewater Management Corp.
Date: November 23, 1998
Re: Extraordinary General Meeting
______________________________________________________________________
We have devised a strategy to employ a business plan geared towards CONSOLIDATION to retain and preserve shareholder value and future growth:
STRATEGY:
1. The first step to developing a strategy is to determine the base of the asset you want to build upon. To date, Cusac has never proved the reserves at the property in Cassiar.
We will, as the first step in the business plan, retain an independent geologist to the site to identify true reserves. Once completed, we will be able to place a current valuation on mineral reserves, and from that point, begin to project future revenues from production.
2. From the geological reports of the reserves, we will be able to outline the areas of highest grade and deposit. Production will not begin until an economic mining climate arrives. Until then, the asset will be kept preserved. The interim period gives the opportunity to analyze the reserve data and design an improved production schedule concentrating on methods to lower cost while increasing production.
3. Cusac supports three ‘related' companies. These companies do not benefit shareholder value, nor do they hold any properties of merit that will enhance future value.
It has become quite obvious that Cusac, as the Parent company, is burdened with the responsibility of ensuring that these dependent companies receive enough cash flow to pay their management fees and various other costs.
All current agreements with these companies will be examined in detail, and under the advice of counsel, terminated.
4. Cusac will not be producing until gold prices reflect a true profit to justify mining. Until then, all non-essential costs and expenses will be eliminated. We will terminate all employee contracts, hidden costs, and extra benefits.
The market cannot justify the exorbitant fees currently paid to management. The revenue (loss) on the recent spurt of production did not ultimately benefit the shareholders. The market sees that. How, at 15 cents, can the president justify his $90,000 a year?
The new board will elect to take a minimal fee, no benefits, and bare costs, which is reflective of the current depreciation of the mining sector and share values.
The search for suitable directors will be ongoing and specific to the property acquisitions, our initial list of proposed directors:
a. Mr. Abdul Rahman.
Mr. Rahman, a technical and management professional, lives in Sierra Leone, West Africa. With over 20 years of mineral exploration, laboratory management, and operation experience, he will bring a wealth of knowledge of low cost project development and budget management that is currently nonexistent.
b. Ms. Allison Eaton
Ms. Eaton, gained her initial market experience in the marketing and investor relations, has spent the last year developing and expanding interests and connections in Africa. She has focused primarily on acquisitions of low priced properties with low development costs through extensive due diligence and research. She has gained considerable expertise in cost ratings and development analysis. Her widespread contacts will be used at the appropriate levels.
c. Mr. Puneet Sharan, BComm.
Mr. Sharan, a mining consultant, has spent the last year in Chihuahua, Mexico building a 60 tpd floatation mill for Minera Forefront. Mr. Sharan has hands on experience dealing with acquisitions, extremely tight budget constraints, and negotiating. He is a Mining Member in Mexico and has been employed in the financial/securities business for 14 years.
d. Cheung Kwah Nee
Ms. Kwah, based in Hong Kong, has 25 years experience in gold trading and resource based asset management. She has focused primarily in finance and securities specific to forecasting risk and price fluctuations.
5. The current management's haphazard and scattered efforts to acquire new properties for diversification and future growth shows no commitment or focus.. A quick time-line analysis of past events and acquisitions demonstrates a lack of the ability to assess, rate, and attract properties of merit within the company's financial capabilities (which is nothing right now).
We cannot afford to enter into an option with a company in Mexico that requires extensive work on the properties before ever reaching a stage of production to recapture costs. Certainly, we realize that a $3.5 million dollar investment at present market conditions, and the inability to raise funds, will only lead to the further dilution of our share value. This venture serves only to further decrease value through wasted cash expenditure and increased share dilution.
Through associates, we can acquire low priced properties that require minimal expenditure to reach a level of development that can return revenue through production. This company needs a diversified project, away from gold, that will sustain shareholder value through current economic times, and at a low cost, provide a revenue potential that increases shareholder value without extreme dilution.
Is it not obvious when our shares trade at $0.15, that we benefit more by closing a financing in the region of $100,000 at $.15, rather than one at $3.5 million? We would drown in dilution if we were to ever go forward at these levels.
We will acquire a low priced property in Mexico, East Europe, or Africa. Funding in the range of $100,000 through a private placement will achieve this goal. Current shareholders will have the opportunity to participate. The dilution factor, at this financing level, is minimal.
This is still a preliminary proposal, focused specifically on extreme reductions in costs and expenses to preserve shareholder values. Additions and alterations to this base plan will be made as events and opportunities present themselves. The intent is to follow a step by step plan to reduce, revise, and develop.
Further developments to this business plan will be forthcoming. For further information or answers to questions, please email your request to:
independentestates@home.com
Yours truly,
___________________________________
for TIDEWATER MANAGEMENT CORP. |
