UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE
14A
Proxy Statement Pursuant to Section
14(a) of
the Securities Exchange Act of 1934 (Amendment
No.)
Filed by the Registrant
x
Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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INTERNATIONAL TOWER HILL
MINES LTD.
(Name of Registrant as Specified in its
Charter)
(Name of Person(s) Filing Proxy Statement,
if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate
box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify
the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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INTERNATIONAL TOWER HILL MINES LTD.
SUITE 2300, 1177 WEST HASTINGS STREET VANCOUVER,
BC V6E 2K3
TEL: 604-683-6332
FAX: 604-408-7499
NOTICE OF 2019 ANNUAL GENERAL MEETING
OF SHAREHOLDERS
To Be Held May 30, 2019
To the Shareholders of INTERNATIONAL TOWER
HILL MINES LTD.:
NOTICE IS HEREBY GIVEN
that the 2019 Annual General Meeting (the “Meeting”) of the shareholders of International Tower Hill Mines Ltd. (the
“Company”) will be held at the offices of McCarthy Tetrault LLP, Suite 2400 - 745 Thurlow Street, Vancouver, British
Columbia, on Thursday, May 30, 2019, at 9:00 a.m. (Pacific Daylight Time), for the following purposes:
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1.
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To receive the audited consolidated financial statements of the Company for the fiscal year ended
December 31, 2018 (with comparative statements relating to the preceding fiscal period) together with the report of the auditor
thereon;
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2.
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To fix the number of directors of the Company at seven;
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3.
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To elect the seven persons named in the Company’s Information Circular/Proxy Statement as
directors of the Company, to hold office until the next annual shareholders’ meeting or until each such Director’s
successor is elected and qualified;
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4.
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To appoint Davidson & Company LLP as auditors/independent registered public accountants of
the Company for the fiscal year ending December 31, 2019 and to authorize the Company’s board of directors to fix the auditors’
remuneration;
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5.
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To conduct an advisory vote on the compensation of the named executive officers;
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6.
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To conduct an advisory vote on the frequency of shareholders’ votes on executive compensation;
and
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7.
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To transact any other business that may properly come before the Meeting and any postponements
or adjournments thereof.
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The Company has fixed
the close of business on April 11, 2019 as the record date for the determination of shareholders who are entitled to receive notice
of, and to vote at, the Meeting. The transfer books of the Company will not be closed. Only shareholders of record as of the close
of business on April 11, 2019 are entitled to receive notice of and to vote at the Meeting and any postponements or adjournments
thereof. The accompanying Information Circular/Proxy Statement provides additional information relating to the matters to be dealt
with at the Meeting and is incorporated into this notice. It is important that your common shares are represented and voted at
the Meeting. For that reason, whether or not you expect to attend in person, please vote your common shares by mail, telephone
or through the Internet as detailed in the Information Circular/Proxy Statement, Notice and Access Notice and Proxy/Voting Instruction
Form.
BY ORDER OF THE BOARD OF DIRECTORS,
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/s/
Debbie Evans
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Debbie Evans,
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Corporate Secretary
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Vancouver, British Columbia, Canada
April 11, 2019
Important Notice Regarding the Availability
of Proxy Materials
for the Annual General Meeting of Shareholders
to be Held on May 30, 2019:
The Proxy Statement and 2018 Annual Report
to Shareholders are available at the Company’s website: www.ithmines.com
INTERNATIONAL TOWER HILL MINES LTD.
INFORMATION CIRCULAR/PROXY STATEMENT
TABLE OF CONTENTS
INTERNATIONAL TOWER HILL MINES LTD.
SUITE 2300, 1177 WEST HASTINGS STREET VANCOUVER,
BC V6E 2K3
TEL: 604-683-6332
FAX: 604-408-7499
INFORMATION CIRCULAR/PROXY STATEMENT
2019 Annual General Meeting
(Information is as at April 11, 2019 except
as indicated)
This information circular/proxy statement
(“Proxy Statement”) is furnished in connection with the solicitation of proxies by the board of directors (the “Board”)
of
INTERNATIONAL TOWER HILL MINES LTD.
(the “Company”) for use at the 2019 Annual General Meeting of Shareholders
(the “Meeting”) to be held at the offices of McCarthy Tetrault LLP, Suite 2400 - 745 Thurlow Street, Vancouver, British
Columbia, on Thursday, May 30, 2019, at the hour of 9:00 a.m. (Pacific Daylight Time), or any postponement or adjournment thereof,
for the purposes set forth in the accompanying Notice of Meeting. This Proxy Statement and the accompanying proxy/voting instruction
form are first being sent to shareholders beginning on or about April 24, 2019.
All dollar amounts used herein are in U.S.
dollars unless otherwise noted. References to C$ or CAD represent amounts denominated in Canadian dollars.
At the Meeting, shareholders will vote
on the following matters, as well as any other business properly brought before the meeting:
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Proposal One:
To fix the number of directors of the Company for the time being at seven. The Board recommends a vote FOR this proposal.
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Proposal Two
: To elect as directors of the Company the seven nominees named in this Proxy Statement. The Board recommends a vote FOR each of these nominees.
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Proposal Three
: To appoint Davidson & Company LLP as the Company’s auditors/independent registered public accountants for the fiscal year ending December 31, 2019 and to authorize the Board to fix the auditors’ remuneration. The Board recommends a vote FOR this proposal.
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Proposal Four
: To provide advisory approval of the compensation of the Company’s named executive officers. The Board recommends a vote FOR this proposal.
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Proposal Five:
To conduct an advisory vote on the frequency of shareholders’ votes on executive compensation. The Board recommends a vote for conducting future advisory votes every ONE (1) year.
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VOTING AT THE ANNUAL GENERAL MEETING
The only voting securities of the Company
are its common shares without par value (the “Common Shares”). Only holders of record of Common Shares at the close
of business on April 11, 2019 (the “Record Date”), the date selected as the record date by the Board, are entitled
to receive notice of and to vote at the Meeting. The holders of Common Shares are entitled to one vote per share on each matter
submitted to a vote of the shareholders. The Common Shares will vote together as a single class on all matters to be considered
at the Meeting. At the close of business on April 11, 2019, 187,111,857 Common Shares were outstanding and entitled to vote.
On a show of hands, every individual who
is present as a registered shareholder or as a duly appointed representative of one or more registered corporate shareholders will
have one vote, and on a poll every registered shareholder present in person or represented by a validly appointed proxyholder,
and every person who is a duly appointed representative of one or more corporate registered shareholders, will have one vote for
each Common Share registered in the name of the shareholder on the list of shareholders, which is available for inspection during
normal business hours at Computershare Investor Services Inc. and will be available at the Meeting. Shareholders represented by
proxyholders are not entitled to vote on a show of hands.
Two or more holders of an aggregate of
5% of the issued and outstanding Common Shares entitled to vote at the Meeting and who are present, in person or by proxy, will
constitute a quorum for the transaction of business at the Meeting or any adjournment or postponement thereof. Abstentions and
broker non-votes are counted as present to determine whether there is a quorum for the Meeting. A broker non-vote occurs if a shareholder
does not provide the record holder of their shares (usually a bank, broker or other nominee) with voting instructions on a matter
and the record holder does not have discretionary voting authority to vote on the matter without instructions from such shareholder.
Subject to the Company’s Majority
Voting in Director Elections Policy (see “Statement of Corporate Governance Practices – Majority Voting Policy”
on page 16):
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(a)
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if the number of directors fixed for the time being by the shareholders is the same as the number
of nominees standing for election as a director, a nominee is elected as a director by virtue of receiving at least one vote “For”;
and
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(b)
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if the number of directors fixed for the time being by the shareholders is less than the number
of nominees standing for election as a director, then the number of nominees equal to the number of directors fixed for the time
being who receive the highest proportion of votes cast will be elected as directors.
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The allowable votes with respect to the
election of directors (Proposal Two) are “For” and “Withhold”. “Withhold” votes are only relevant
in connection with the Company’s Majority Voting in Director Elections Policy (see “Statement of Corporate Governance
Practices – Majority Voting Policy” on page 16). Directors are elected individually, and cumulative voting is not permitted
in the election of directors. Abstentions and broker non-votes are not relevant to and will have no effect on this proposal regarding
the election of directors.
With respect to the appointment of the
auditors (Proposal Three), the allowable votes are “For” and “Withhold”. “Withhold” votes do
not represent “Against” votes. Accordingly, a single vote “For” will be sufficient to appoint Davidson
& Company LLP, who is proposed by the Company’s Audit Committee for appointment, as the Company’s auditors/independent
registered public accountants for the fiscal year ending December 31, 2019.
With respect to fixing the number of directors
(Proposal One), providing advisory approval of the compensation of the named executive officers (Proposal Four), and the advisory
vote on the frequency of shareholders’ votes on executive compensation (Proposal Five), a simple majority (50% +1) of the
votes eligible to vote at the Meeting and actually voted on the proposal is required to approve the matter.
With respect to conducting an advisory
vote on the frequency of shareholders’ votes on executive compensation (Proposal Five), shareholders will be able to specify
one of four choices on the proxy card: one year, two years, three years, or abstain.
For all proposals, abstentions and broker
non-votes will be counted as present at the Meeting, but will not have any effect on the outcome of these matters.
The holders of Common Shares are not entitled
to appraisal or dissenters’ rights with respect to any of the matters to be considered at the Meeting.
REVOCABILITY OF PROXY
In addition to revocation in any other
manner permitted by law, you may revoke an executed and deposited proxy by (a) except to the extent otherwise noted on such later
proxy, signing a new proxy bearing a later date and depositing it at the place and within the time required for the deposit of
proxies, (b) signing and dating a written notice of revocation (in the same manner as a proxy is required to be executed, as set
out in the notes to the proxy) and either depositing it at the place and within the time required for the deposit of proxies or
with the Chair of the Meeting on the day of the Meeting prior to the commencement of the Meeting, or (c) registering with the scrutineer
at the Meeting as a registered shareholder present in person and indicating you wish to revoke any previously deposited proxy,
whereupon any proxy previously executed and deposited by such registered shareholder will be deemed to have been revoked.
Only registered shareholders have the right
to revoke a proxy. If you are not a registered shareholder and you wish to change your vote, you must, at least seven days before
the Meeting, arrange for the intermediary which holds your Common Shares to revoke the proxy given by them on your behalf.
A revocation of a proxy does not affect
any matter on which a vote has been taken prior to the revocation.
PERSONS MAKING THE SOLICITATION AND
SOLICITATION COSTS
The
enclosed proxy is solicited by management of the Company and the Board
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Solicitations will be made by mail and
possibly supplemented by telephone or other personal contact to be made, without special compensation, by the Company’s officers
or employees. The Company may reimburse shareholders’ nominees or agents (including brokers holding shares on behalf of clients)
for their reasonable out-of-pocket expenses incurred in forwarding proxy materials and obtaining authorization from their principals
to execute proxies. No solicitation will be made by specifically engaged employees or soliciting agents. Except as detailed under
“Non-Registered Shareholders” below, all costs of the solicitation of proxies will be borne by the Company. None of
the directors have advised that they intend to oppose any action intended to be taken by the Company as set forth in this Proxy
Statement.
The contents and the sending of this Proxy
Statement have been approved by the Board.
PROXY INSTRUCTIONS
The persons named in the accompanying
proxy are current directors or officers of the Company. If a shareholder wishes to appoint some other person (who need not be a
shareholder) to represent that shareholder at the Meeting, the shareholder may do so either by (i) striking out the printed names
and inserting the desired person’s name in the blank space provided in the proxy or (ii) completing another proper proxy
and, in either case, delivering the completed and executed proxy to the Company’s transfer agent, Computershare Investor
Services Inc., Proxy Dept., 100 University Avenue, 9
th
Floor, Toronto, Ontario, Canada M5J
2Y1, by not later than 4:30 p.m. (Pacific Daylight Time) on Friday, May 24, 2019 or, in the event the Meeting is postponed or adjourned,
not less than two business days prior to the day set for the recommencement of such postponed or adjourned Meeting. Proxies delivered
after such times will not be accepted or acted upon.
To be valid, the proxy must be dated and
be signed by the shareholder or by a duly appointed attorney for such shareholder, or, if the shareholder is a corporation, it
must either be under its common seal or signed by a duly authorized officer. If a proxy is signed by a person other than the registered
shareholder, or by an officer of a registered corporate shareholder, the Chair of the Meeting may require evidence of the authority
of such person to sign before accepting such proxy.
THE SHARES REPRESENTED BY A PROXY WILL
BE VOTED OR WITHHELD FROM VOTING BY THE PROXY HOLDER IN ACCORDANCE WITH THE INSTRUCTIONS OF THE PERSON APPOINTING THE PROXYHOLDER
ON ANY BALLOT THAT MAY BE CALLED FOR AND, IF A CHOICE HAS BEEN SPECIFIED WITH RESPECT TO ANY MATTER TO BE ACTED UPON, THE SHARES
WILL BE VOTED ACCORDINGLY.
If a choice with respect to any proposal
is not specified or if more than one choice has been specified for the same proposal, the person appointed proxyholder will vote
the securities represented by the proxy as recommended by the Board. These recommendations are: FOR fixing the number of directors
at seven, FOR the election of all of the nominees for director named in this Proxy Statement, FOR the appointment of Davidson &
Company LLP as the Company’s auditor/independent registered public accountants for the fiscal year ending December 31, 2019,
FOR approval, on a non-binding advisory basis, of the compensation of the named executive officers, and FOR conducting an advisory
vote on executive compensation every one year.
The enclosed proxy, when properly completed
and delivered and not revoked, confers discretionary authority upon the person(s) appointed proxyholder(s) thereunder to vote with
respect to any amendments or variations of matters identified in the Notice of Meeting or any other matters which may properly
come before the Meeting. At the time of the printing of this Proxy Statement, the Company knows of no such amendment, variation
or other matter which may be presented to the Meeting.
NON-REGISTERED SHAREHOLDERS
The information set out in this section
is important to many shareholders as a substantial number of shareholders do not hold their Common Shares in their own name.
Only registered shareholders or duly
appointed proxyholders for registered shareholders are permitted to vote at the Meeting. Most of the shareholders of the Company
are “non-registered” shareholders because the Common Shares they own are not registered in their names but are instead
registered in the name of (or the name of a nominee of) the brokerage firm, bank or trust company through which they purchased
the shares.
More particularly, a person is not a registered shareholder in respect of Common Shares which are held on behalf
of that person (the “Non-Registered Holder”) but which are registered either (a) in the name of an intermediary (the
“Intermediary”) that the Non-Registered Holder deals with in respect of the 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 (b) in the name of a clearing agency (such as The Canadian Depository for Securities Limited
in Canada or Depositary Trust and Clearing Corporation in the United States) of which the Intermediary is a participant. In accordance
with the “Notice and Access” provisions of National Instrument 54-101
Communication with Beneficial Owners of Securities
of a Reporting Issuer
of the Canadian Securities Administrators, the Company has distributed Proxies/Voting Instruction Forms
together with a notice with information on how Non-Registered Holders may access the Notice of Meeting and Proxy Statement electronically
(collectively referred to as the “Meeting Materials”) to the clearing agencies and Intermediaries for onward distribution
to Non-Registered Holders.
Intermediaries are required to forward
the Meeting Materials to Non-Registered Holders unless a Non-Registered Holder has waived the right to receive them. Very often,
Intermediaries will use third-party independent service companies to forward the Meeting Materials to Non-Registered Holders. Generally,
if you are a Non-Registered Holder and you have not waived the right to receive the Meeting Materials you will either:
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(a)
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be given a form of
proxy which has already been signed by the Intermediary
(typically by
a facsimile, stamped signature) which is restricted to the number of Common Shares beneficially owned by you, but which is otherwise
not complete. Because the Intermediary has already signed the proxy, this proxy is not required to be signed by you when submitting
it. In this case, if you wish to submit a proxy you should otherwise properly complete the executed proxy provided and deposit
it with the
Company’s Registrar and Transfer Agent, Computershare Investor Services Inc.
, as provided above; or
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(b)
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more typically, be given a voting instruction form which is not signed by the Intermediary and
which, when properly completed and signed by the Non-Registered Holder and
returned to the Intermediary or its service company
,
will constitute voting instructions (often called a “proxy authorization form” or “voting instruction form”)
which the Intermediary must follow. Typically, the proxy authorization form will consist of a one page pre-printed form. Sometimes,
instead of the one page pre-printed form, the proxy authorization form will consist of a regular printed proxy accompanied by a
page of instructions that contains a removable label containing a bar-code and other information. In order for the proxy to validly
constitute a proxy authorization form, the Non-Registered Holder must remove the label from the instructions and affix it to the
proxy, properly complete and sign the proxy
and return it to the Intermediary or its service company (not the Company or Computershare
Investor Services Inc.)
in accordance with the instructions of the Intermediary or its service company.
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In either case, the purpose of this procedure
is to permit Non-Registered Holders to direct the voting of the Common Shares that they beneficially own.
If you are a Non-Registered
Holder and you wish to vote at the Meeting in person as proxyholder for the Common Shares owned by you, you should strike out the
names of the management-designated proxy holders named in the proxy authorization form or voting instruction form and insert your
name in the blank space provided.
In either case, you should carefully follow the instructions of your Intermediary, including
when and where the proxy authorization form or voting instruction form is to be delivered.
The Meeting Materials are being sent to
both registered shareholders and Non-Registered Holders who have not objected to the Intermediary through which their Common Shares
are held disclosing ownership information about themselves to the Company (“NOBO’s”). If you are a NOBO, and
the Company or its agent has sent these materials to you, your name and address and information about your holdings of securities
have been obtained in accordance with applicable securities regulatory requirements from the Intermediary on your behalf.
If you are a Non-Registered Holder who
has objected to the Intermediary through which your Common Shares are held disclosing ownership information about you to the Company
(an “OBO”), you should be aware that the Company does not intend to pay for Intermediaries to forward the Meeting Materials,
including proxies or voting information forms, to OBOs and therefore an OBO will not receive the Meeting Materials unless that
OBO’s Intermediary assumes the cost of delivery.
INTEREST OF CERTAIN PERSONS OR COMPANIES
IN MATTERS TO BE ACTED UPON
Other than as disclosed elsewhere in this
Proxy Statement, no director or executive officer, no proposed nominee for election as a director, no person who has been a director
or executive officer since the commencement of the Company’s last completed financial year and no associate or affiliate
of any of the foregoing persons 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.
PROPOSAL ONE – FIXING NUMBER
OF DIRECTORS
The business and affairs of the Company
are managed under the direction of the Board, which is currently composed of nine members, including Messrs. Damola Adamolekun,
Anton Drescher, Karl Hanneman, Stuart Harshaw, Marcelo Kim, Stephen Lang, Thomas Weng, John Ellis and Thomas Irwin. Messrs. John
Ellis and Thomas Irwin will not be standing for re-election at the Meeting.
Accordingly, management intends to place
before the Meeting for approval, with or without modification, Proposal One, being a resolution fixing the number of directors
of the Company for the time being at seven. It is therefore anticipated that there will be seven directors to be elected at the
Meeting.
Vote Required for Approval
The affirmative vote of a simple majority
(50% +1) of the votes eligible to vote at the Meeting and actually voted on the proposal is required to fix the number of directors
of the Company for the time being at seven. The allowable votes with respect to Proposal One are “For,” “Against”
and “Withhold”. Abstentions (withholds) and broker non-votes are not relevant to and will have no effect on Proposal
One.
THE BOARD UNANIMOUSLY RECOMMENDS A
VOTE “FOR” PROPOSAL ONE.
PROPOSAL TWO – ELECTION OF DIRECTORS
The directors of the Company are elected
at each annual meeting of the shareholders to hold office until the next annual general meeting or until their successors are duly
elected or appointed, unless their office is earlier vacated in accordance with the
Business Corporations Act
(British Columbia)
(“BCBCA”). Since the 2018 Annual General Meeting of Shareholders, no fees have been paid to any third party to identify
or evaluate a potential director nominee.
Information concerning the nominees for
election as directors is set forth below under “Directors and Officers – Nominees for the Board.” In the absence
of instructions to the contrary, the Common Shares represented by proxies will be voted FOR each of the nominees listed below.
Management does not contemplate that any of the nominees will be unable to serve as a director. All nominees are current directors
of the Company.
Vote Required for Approval
Subject to the Company’s Majority
Voting in Director Elections Policy (see “Statement of Corporate Governance Practices – Majority Voting Policy”
on page 16):
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(a)
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if the number of directors fixed for the time being by the shareholders is the same as the number
of nominees standing for election as a director, a nominee is elected as a director by virtue of receiving at least one vote “For”;
and
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(b)
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if the number of directors fixed for the time being by the shareholders is less than the number
of nominees standing for election as a director, then the number of nominees equal to the number of directors fixed for the time
being who receive the highest proportion of votes cast will be elected as directors.
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The allowable votes with respect to the
election of directors (Proposal Two) are “For” and “Withhold”. “Withhold” votes are only relevant
in connection with the Company’s Majority Voting in Director Elections Policy (see “Statement of Corporate Governance
Practices – Majority Voting Policy” on page 16). Directors are elected individually, and cumulative voting is not permitted
in the election of directors. Abstentions and broker non-votes are not relevant to and will have no effect on this proposal regarding
the election of directors.
The director nominees are: Messrs. Damola
Adamolekun, Anton Drescher, Karl Hanneman, Stuart Harshaw, Marcelo Kim, Stephen Lang and Thomas Weng.
THE BOARD UNANIMOUSLY RECOMMENDS
A VOTE “FOR” EACH OF THE DIRECTOR NOMINEES.
DIRECTORS AND OFFICERS
The following table sets forth certain
information with respect to current directors, nominees for director and executive officers of the Company as of April 11, 2019.
Name and Residence
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Age
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Position
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Director Since
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Current or Former Public
Company Directorships
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Stock Exchange
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Damola Adamolekun
New York, USA
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30
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Director, Director Nominee
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March 22, 2018
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None
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-
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Anton Drescher
British Columbia, Canada
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62
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Director, Director Nominee
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October 1, 1991
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CENTR Brands Corp. (formerly River Wild Exploration Inc.) (current)
Corvus Gold Inc. (current)
Oculus VisionTech Inc. (current)
RavenQuest Biomed Inc. (formerly RavenQuest Resources Inc.)
(current)
Trevali Mining Corporation (current)
Xiana Mining Inc. (current)
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CSE
TSX
TSXV
CSE
TSX
TSXV
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John Ellis
Nevada, USA
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83
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Director
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February 1, 2014
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Mexivada Mining Corp. (former)
Sunshine Silver Mines Corp. (former)
Hycroft Mining Corporation (current)
Jaguar Mining Inc. (current)
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TSXV
Unlisted
Unlisted
TSX
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Stuart Harshaw
Ontario, Canada
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51
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Director, Director Nominee
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April 1, 2018
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PT Vale Indonesia TBK (former)
Constantine Metal Resources Ltd. (current)
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IDX
TSXV
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Thomas Irwin
Alaska, USA
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72
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Director
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May 24, 2017
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None
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-
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Marcelo Kim
New York, USA
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32
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Director (Chair), Director Nominee
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December 28, 2016
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Midas Gold Corp. (current)
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TSX
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Stephen Lang
Missouri, USA
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63
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Director (Lead Independent Director), Director Nominee
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February 1, 2014
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Allied Nevada Gold Corp. (former)
Alio Gold Inc. (current)
Bear Creek Mining (current)
Centerra Gold Corp. (current)
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TSX, NYSE American
TSX, NYSE American
TSXV
TSX
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Thomas Weng
New Jersey, USA
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50
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Director, Director Nominee
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August 5, 2013
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East Asia Minerals Corporation (former)
Scorpio Mining Corporation (former)
Jaguar Mining Inc. (current)
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TSXV
TSXV
TSX
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Karl Hanneman
Alaska, USA
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61
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Director, Director Nominee, CEO
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May 30, 2018
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Northrim BanCorp, Inc.
(current)
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NASDAQ
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David Cross
British Columbia, Canada
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43
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CFO
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N/A
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Advantage Lithium Corp. (current)
CENTR Brands Corp. (former)
Crystal Lake Mining Corp. (formerly Sierra Iron Ore Corporation)
(former)
Northern Lights Resources Corp. (former)
Victory Resources Corporation (current)
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TSXV
CSE
TSXV
CSE
CSE
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Nominees for the Board:
The directors of the Company are elected
at each annual meeting of the shareholders and hold office until the next annual general meeting or until their successors are
duly elected or appointed, unless their office is earlier vacated in accordance with the BCBCA. The following is a brief biographical
description of each director nominee, which includes a discussion of the skills and attributes of each director, and that, in part,
led the Corporate Governance and Nominating Committee (“CGNC”) to conclude that each respective director should continue
to serve as a member of the Board.
Pursuant to an Investor Rights Agreement
dated December 28, 2016 between Paulson & Co. Inc. (“Paulson”) and the Company (“IRA”), the Company
has agreed with Paulson that, so long as Paulson, together with its affiliates, owns in the aggregate 20% or more of the issued
and outstanding Common Shares, Paulson is entitled to designate two nominees for election to the Board. Paulson and its affiliates
currently own 59,593,314 Common Shares, representing approximately 31.85% of the currently outstanding Common Shares, and Paulson
is therefore entitled to nominate two persons for election to the Board. Paulson has determined to nominate Marcelo Kim, the current
Chair of the Board, and Damola Adamolekun for election to the Board.
Damola Adamolekun
–
Mr. Adamolekun is a Vice President at Paulson, where he has played a vital role in the sourcing and subsequent management of a
number of the firm’s largest investments since 2016. Prior to joining Paulson, Mr. Adamolekun worked in the Investment Banking
Division of Goldman Sachs since 2011 and as a Private Equity Associate in TPG Capital’s North American Buyout Group since
2013. Mr. Adamolekun received a Bachelor of Arts in Economics and Urban Studies from Brown University and a Masters of Business
Administration from the Harvard Business School. Mr. Adamolekun is one of the two nominees entitled to be put forward by Paulson
under the IRA.
Anton Drescher –
Mr.
Drescher has been a Certified Management Accountant since 1981. He is currently (since 2007) a director of Trevali Mining Corporation,
a public mining company listed on the TSX, a director (since 2010) of Corvus Gold Inc., a public mineral exploration company listed
on the TSX, a director (since 1996) and Chief Financial Officer (since 2012) of Xiana Mining Inc. (formerly Dorato Resources Inc.),
a public mineral exploration company listed on the TSXV, Director of RavenQuest BioMed Inc., a public mineral exploration company
listed on the CSE, and the Chief Financial Officer and a director (since 1994) of Oculus VisionTech Inc., a public company involved
in watermarking of film and data and listed on the TSXV and the OTC Bulletin Board. Mr. Drescher is also the President (since 1979)
of Westpoint Management Consultants Limited, a private company engaged in tax and accounting consulting for business reorganizations,
and the President (since 1998) of Harbour Pacific Capital Corp., a private company involved in regulatory filings for businesses
in Canada. Mr. Drescher has served on the Board since 1991. The CGNC recommended that the Company nominate Mr. Drescher for re-election
to the Board due to his significant financial and accounting experience, together with his director experience with other mining
and mineral exploration companies.
Karl Hanneman
– Mr.
Hanneman has been the Chief Executive Officer of the Company since January 31, 2017. Prior to that he was the Chief Operating Officer
of the Company since March 26, 2015 and was, prior to that, the General Manager for the Company. Mr. Hanneman has been with the
Company since May 2010, during which time he was responsible for assembling the Alaska team and served as Manager of the Company’s
Livengood Gold Project (the “Livengood Gold Project”). Mr. Hanneman has more than 35 years of Alaska-based mining industry
experience including 12 years for Teck Resources Limited, where he served as Alaska Regional Manager throughout the period of underground
exploration, feasibility study, project design, and permitting at Pogo, and then as Director, Corporate Affairs, Alaska for Teck,
serving as the senior corporate representative in Alaska supporting both the Red Dog and Pogo Mines. Mr. Hanneman has been involved
in industry leadership positions throughout his career as President, Council of Alaska Producers; President, Alaska Miners Association;
Governor’s appointee to the Alaska Minerals Commission; Director, Resource Development Council; and Director, Fairbanks Chamber
of Commerce. Mr. Hanneman has a B. Sc. Degree in Mining Engineering, magna cum laude, from the University of Alaska. The CGNC recommended
that the Company nominate Mr. Hanneman for re-election to the Board due to his knowledge of the Company and the Livengood Gold
Project and his extensive experience with other mining and mineral exploration companies.
Stuart Harshaw
– Mr.
Harshaw is a seasoned mining executive with over 25 years’ experience at Inco and Vale. Most recently, as Vice President
of Ontario Operations for Vale, Mr. Harshaw was responsible for the Base Metal operations of Vale in Ontario, which includes 6
mines, a mill, smelter, nickel refinery, cobalt refinery, precious metal refinery and hydroelectric production facilities. Previously,
he was Vice-President, Marketing & Sales, Base Metals for Vale International, where he was responsible for the marketing and
sales of base metals in the Asia Pacific region and the management of Nickel Refineries in Asia, specifically in Japan, China,
Taiwan and a joint venture in Korea. Mr. Harshaw earned a BSc in Metallurgical Engineering from Queen’s University and an
MBA from Laurentian University. The CGNC recommended that the Company nominate Mr. Harshaw for election to the Board due to his
extensive executive experience and experience with other mining and mineral exploration companies.
Marcelo Kim
– Mr.
Kim is a Partner at Paulson since 2011, where he oversees natural resource investments, specializing in gold, base metals, bulk
commodities and oil & gas. Prior to that, commencing in 2009, he was a generalist analyst covering event arbitrage investment
opportunities across broad sectors and capital structures. Mr. Kim is a board member of Templar Energy and Midas Gold. He is a
graduate of Yale University, where he received his BA in Economics with honors. Mr. Kim has served as Chair of the Board since
his appointment in December 2016, and is one of the two individuals nominated for election to the Board by Paulson under the IRA.
Mr. Kim’s extensive experience in the gold industry and position with Paulson, the Company’s largest shareholder, enable
him to provide valuable counsel to the Company.
Stephen Lang
– Mr.
Lang is a Mining Engineer with over 30 years of experience in the mining industry. He currently serves as Chair of Centerra Gold
Inc. (since May 2012). Previously, Mr. Lang was President, Chief Executive Officer and a member of the board of directors of Centerra
Gold Inc. (from 2008 to 2012) and of Allied Nevada Gold Corporation (from 2013 to 2015). Prior to that, he held senior positions
at Stillwater Mining Company, Barrick Gold Corporation, Rio Algom and Kinross Gold/Amax. Mr. Lang earned a Bachelor and Masters
of Science in Mining Engineering from the University of Missouri-Rolla. Mr. Lang has served on the Board since February 2014. The
CGNC recommended that the Company nominate Mr. Lang for re-election to the Board due to his significant experience in the mining
industry, together with his director and leadership experience with other mining companies.
Thomas Weng
– Mr.
Weng has more than 25 years of experience in the financial services sector. Mr. Weng is currently Co-Founding Partner with Alta
Capital Partners, a provider of investment banking services (since February 2011). From February 2007 to January 2011, Mr. Weng
was a Managing Director at Deutsche Bank and Head of Equity Capital Markets for Metals and Mining throughout the Americas and Latin
America, across all industry segments. Prior to 2007, Mr. Weng held various senior positions at Pacific Partners, an alternative
investment firm, and Morgan Stanley and Bear Stearns. Mr. Weng graduated from Boston University with a Bachelor of Arts in Economics.
Mr. Weng has served on the Board since August 2013. The CGNC recommended Mr. Weng for re-election to the Board due to his significant
financial experience together with his advisory experience in the metals and mining space.
Executive Officers:
The executive officers of the Company are
appointed by and serve at the pleasure of the Board and hold office until the expiration of their employment agreement, if such
officer has entered into an employment agreement with the Company or one of its affiliates, or their earlier death, retirement,
resignation or removal. The following is a brief biographical description of each current executive officer of the Company.
Karl Hanneman, Chief Executive
Officer
– See “Directors and Officers – Nominees for the Board ” above.
David Cross, Chief Financial
Officer
– Mr. Cross has been the Chief Financial Officer of the Company since May 11, 2015. Mr. Cross is a partner in
the firm of Cross Davis & Company, LLP, Chartered Professional Accountants (“Cross Davis”), an accounting firm
focused on providing accounting, management services and guidance related to accounting policies, corporate governance and financial
regulatory requirements for publicly listed companies reporting under both IFRS and US GAAP. Cross Davis provides corporate accounting
support to the Company under a consulting agreement. Mr. Cross began his accounting career at a Chartered Accountant firm in 1997
and obtained his CGA designation in 2004. Mr. Cross’ past experience consists of officer, director and senior management
positions, including five years at Davidson & Company LLP, where he spent time as a Manager, a member of their Technical Accounting
Committee and a member of their IFRS Committee. He is also the Chief Financial Officer of Interconnect Ventures Corporation, Colombian
Mines Corporation and Wealth Minerals Ltd., all public junior natural resource exploration companies listed on the TSXV. Mr. Cross
holds a BCIT diploma in Financial Management and is a Chartered Professional Accountant and a Certified General Accountant.
Involvement in Certain Legal Proceedings/Cease
Trade Orders, Bankruptcies, Penalties or Sanctions
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1.
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No director, nominee or executive officer of the Company has been involved in any of the events
described by Item 401(f) or Item 103 of Regulation S-K during the past ten years.
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2.
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Except as disclosed below, no director nominee is, as at the date of this Proxy Statement, or has
been within ten years before the date of this Proxy Statement, a director, chief executive officer or chief financial officer of
any company (including the Company) that:
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(a)
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was subject to an order that was issued while the proposed director was acting in the capacity
as director, chief executive officer or chief financial officer; or
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(b)
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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.
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For the purposes hereof,
the term “order” means:
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(b)
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an order similar to a cease trade order; or
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(c)
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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.
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John Ellis was a director of
Royal Coal Corp., a public natural resource company listed on the TSXV. On May 9, 2012, after Mr. Ellis ceased as a director, the
British Columbia Securities Commission issued a cease trade order against Royal Coal Corp. for failure to file audited financial
statements for the period ended December 31, 2011, during which period Mr. Ellis served as a director. Subsequently, similar cease-trade
orders were also issued by the Alberta, Manitoba and Ontario Securities Commissions. The cease trade orders all remain in effect.
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3.
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Except as disclosed below, no proposed director:
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(a)
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is, as at the date of this Proxy Statement, or has been within the ten years before the date of
this Proxy Statement, a director or executive officer of any company (including the Company) that, while such person was acting
in such 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
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(b)
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has, within ten years before the date of this Proxy Statement, 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 has a receiver, receiver manager or trustee appointed to hold the assets of the proposed director.
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Stephen Lang was a director of
Allied Nevada Gold Corp. (now “Hycroft Mining Corporation”) which, together with certain of its domestic direct and
indirect subsidiaries, filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy
Court for the District of Delaware on March 10, 2015. Effective October 22, 2015, Allied Nevada Gold Corp has completed its financial
restructuring process and has emerged from Chapter 11. Mr. Lang resigned as a director of Allied Nevada Gold Corp on October 8,
2015.
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4.
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Except as disclosed below, no proposed director has been
subject to:
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(a)
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any penalties or sanctions imposed by a court relating to securities legislation or by a securities
regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or
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(b)
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any other penalties or sanctions imposed by a court or regulatory body that would likely be considered
important to a reasonable investor in deciding whether to vote for a proposed director.
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On March 10, 2010, the TSX Venture
Exchange, Inc. (“TSXV”) rendered a decision with respect to a review concerning certain unauthorized loans by Xiana
Mining Inc. (formerly “Dorato Resources Inc.”) to Trevali Mining Corporation. As part of its decision, the TSXV required
Mr. Drescher (who was a director of Xiana at the relevant time) to seek prior written approval from the TSXV should he propose
to be involved with any other TSXV listed issuer as a director and/or officer. On May 14, 2010, the TSX, upon review of the TSXV’s
decision, required Mr. Drescher to seek approval from the TSX should he propose to be involved with any other TSX listed issuers
as a director and/or officer. In addition, the TSX required Mr. Drescher to inform the TSX of any future actions commenced against
him by any regulatory entity. Subsequently, Mr. Drescher applied to the TSX for reconsideration of the abovementioned restrictions
and, on May 1, 2013, the TSX agreed to remove all such restrictions.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
NYSE American Corporate Governance
The Common Shares are listed on the NYSE
American (formerly NYSE MKT). Section 110 of the NYSE American Company Guide permits the NYSE American to consider the laws, customs
and practices of foreign issuers in relaxing certain NYSE American listing criteria, and to grant exemptions from NYSE American
listing criteria based on these considerations. Currently, in respect to certain matters discussed below, the Company follows Canadian
practices that differ from the requirements of the NYSE American. The Company posts on its website at www.ithmines.com a description
of the significant ways in which the Company’s governance practices differ from those followed by domestic companies pursuant
to NYSE American standards. The contents of the Company’s website are not incorporated into this report and the reference
to such website is intended to be an inactive textual reference only.
A description of the significant ways in
which the Company’s governance practices differ from those followed by U.S. domestic companies pursuant to NYSE American
standards is as follows:
Shareholder Meeting Quorum Requirement
:
The NYSE American minimum quorum requirement for a shareholder meeting is one-third of the outstanding shares of common stock.
In addition, a company listed on NYSE American is required to state its quorum requirement in its bylaws. The Company’s quorum
requirement is set forth in its articles. The Company’s articles provide that the quorum for the transaction of business
at a meeting of shareholders is two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least
5% of the issued shares entitled to be voted at a meeting. The Company obtained an exemption from the quorum requirements of the
NYSE American (then NYSE MKT) upon its initial listing.
Shareholder Approval Requirements
:
NYSE American requires a listed company to obtain the approval of its shareholders for certain types of securities issuances, including
private placements that may result in the issuance of common shares (or securities convertible into common shares) equal to 20%
or more of presently outstanding shares for less than the greater of book or market value of the shares. Under the rules of the
TSX, shareholder approval is not generally required for a private placement unless (i) the proposed issued price is lower than
the allowable discount to the market price, (ii) if the issue price is less than the market price, the aggregate number of shares
issued in the private placement is greater than 25% of the number of shares outstanding, on a non-diluted basis, prior to completion
of the private placement or (iii) during any six-month period, securities are issued to insiders entitling them to purchase more
than 10% of the number of listed securities outstanding, on a non-diluted basis, prior to the completion of the first private placement
to an insider during such period. The Company will seek, and has previously obtained, a waiver from NYSE American’s shareholder
approval requirements in circumstances where the securities issuance does not trigger such a requirement under the rules of the
TSX.
The NYSE American Company Guide also provides
that shareholder approval is required for the participation of directors and officers in a private placement pursuant to which
the issuance of common shares to such officers and directors at a discount to market is considered an equity compensation arrangement.
Under the rules of the TSX, shareholder approval is not generally required in respect of a private placement to directors and officers
of the issuer unless, during any six-month period, securities are issued to insiders entitling them to purchase more than 10% of
the number of listed securities outstanding, on a non-diluted basis, prior to the completion of the first private placement to
an insider during such period.
Statement of Corporate Governance Practices
The Board is committed to sound corporate
governance practices that are both in the interest of its shareholders and contribute to effective and efficient decision making.
The Company has reviewed its corporate governance practices in light of National Policy 58- 201
Corporate Governance Guidelines
(“NP 58-201”) of the Canadian Securities Administrators. In certain cases, the Company’s practices comply with
the guidelines; however, the Board considers that some of the guidelines are not suitable for the Company at its current stage
of development and therefore these guidelines have not been adopted. National Instrument 58-101 (“NI 58-101”) of the
Canadian Securities Administrators mandates disclosure of corporate governance practices for non-Venture Issuers in Form 58-101F1,
which disclosure is set out below.
Board Mandate and Oversight of Risk
Management
The Board has not adopted a written mandate.
At this stage of the Company’s development, the Board does not believe it is necessary to adopt a written mandate as sufficient
guidance is found in the applicable corporate legislation and regulatory policies. The mandate of a board of directors, as prescribed
by the BCBCA, is to manage or supervise the 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 the Company’s affairs directly and through
the operation of its standing committees. In fulfilling its mandate, the Board, among other matters, is responsible for reviewing
and approving the Company’s overall business strategies and its annual business plan; reviewing and approving the annual
corporate budget and forecast; reviewing and approving significant capital investments outside the approved budget; reviewing major
strategic initiatives to ensure that the Company’s proposed actions are in accordance with its stated shareholder objectives;
reviewing succession planning; assessing management’s performance; reviewing and approving the financial statements, reports
and other disclosures issued to shareholders; ensuring the effective operation of the Board; and safeguarding shareholders’
equity interests through the optimum utilization of the Company’s capital resources. The Board also takes responsibility
for identifying the principal risks of the Company’s business and for ensuring these risks are effectively monitored and
mitigated to the extent reasonably practicable.
The Board has overall responsibility for
risk oversight with a focus on the most significant risks facing the Company. The Board relies upon its Chief Executive Officer
(the “CEO”) to supervise day-to-day risk management. The CEO reports directly to the Board and certain Board committees
on such matters, as appropriate.
The Board delegates certain oversight responsibilities
to its committees. For example, the Audit Committee is primarily responsible for the integrity of the Company’s internal
controls over financial reporting and management information systems and for the Company’s policies regarding corporate disclosure
and communications.
Director Independence
A director of a company is considered “independent”
of an issuer within the meaning of NP 58-201 if he or she has no direct or indirect “material relationship” with that
issuer. A “material relationship” is a relationship which could, in the view of the issuer’s board of directors,
reasonably interfere with the exercise of a director’s independent judgment. Under Section 803 of the NYSE American Company
Guide, a director of an issuer is considered “independent” if he or she is not an executive officer or employee of
the issuer (and has not been so in the past three years), and the issuer’s board of directors affirmatively determines that
the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director. The Board has determined that each current director, other than Mr. Irwin (the former CEO) and Mr. Hanneman (the
current CEO), is independent under both NYSE American listing standards and NP 58-201.
The independent directors routinely meet
as a group without members of management or non-independent directors and exercise their responsibilities for independent oversight
of management with the guidance of the Chair, who is independent.
Position Descriptions
The Board has not developed a written position
description for the Chair of the Board, for the chair of any of its standing committees or for the CEO. To date, given the size
of the Company and its stage of development, the Board does not believe that formal written descriptions of these positions are
required, and that good business practices and the common law provide guidance as to what is expected of each position. Although
the Board has not developed a formal position description for the Chair, it considers that the Chair’s role is to provide
independent leadership to the Board.
The positions of Chair and CEO are separate.
Under the IRA, a nominee of Paulson is to be the Chair. Marcelo Kim, one of Paulson’s nominees, is the current Chair. Although
the Board has determined that Mr. Kim is independent, in light of the relationship of Mr. Kim with Paulson, the Company’s
largest shareholder, the Board has appointed Mr. Stephen Lang, the former Chair, as Lead Independent Director.
Director Term Limits and Other Mechanisms
of Board Renewal
The Company does not have a policy with
respect to director term limits, director retirement or board renewal. Since the Company commenced its current operations in 2006,
there has been an ongoing renewal of the Board as the skill sets required on the Board have changed over time. As a result of such
renewal, four of seven director nominees have served on the Board for less than five years (including one director who has served
on the Board for less than three years and three directors who have served on the Board for less than two years). Each year, the
CGNC reviews the current make-up of the Board and the existing skill sets and experience of the directors to determine if the current
directors are appropriate for re-election and will continue to make an effective contribution and whether or not additional or
replacement directors are required, given the Company’s anticipated activities and the requirements of the IRA. The Board
considers that the adoption of a fixed policy with respect to board renewal or age or term related retirement is not appropriate
for the Company, and that the yearly review is a more appropriate and effective way of addressing the issue of the correct composition
of the Board and Board renewal.
Policies Regarding the Representation
of Women on the Board
The Board has not adopted a written policy
relating to the identification and nomination of women directors. Instead, the charter of the CGNC provides, with respect to the
nomination of directors, that the responsibility of the CGNC in identifying and recommending qualified candidates is to take into
consideration such factors as it deems appropriate, including judgement, skill, diversity, experience with businesses and other
organizations of comparable size, and the need for particular expertise on the Board. Neither the Board nor the CGNC specifically
considers the level of representation of women on the Board when considering candidates for election or re-election as the intent
of the CGNC is to recommend what it considers to be the “best” candidates, and it does so by reviewing qualifications
of prospective Board nominees and determines their relevance taking into consideration the then current Board composition and the
anticipated skills required to round out the capabilities of the Board.
Similarly, the Board does not consider
the level of representation of women in executive officer positions when making executive officer appointments. At the present
time, the Company has a very small management team reflective of its current operations and financial resources, and does not anticipate
a material expansion in its management ranks until such time as the Company may proceed with construction of the Livengood Gold
Project. The Company is committed to the fundamental principles of equal employment opportunities and treating people fairly, with
respect and dignity, and to offering equal employment opportunities based upon an individual’s qualifications and performance
– free from discrimination or harassment because of race, color, ancestry, place of origin, religion, gender, sexual orientation,
age, marital status, family status, or physical or mental disability. The Company’s policy is to select candidates for employment,
including executive officer positions, based solely upon experience, skill and ability of candidates.
The Company does not currently have any
women directors and has not adopted any targets regarding women on its Board. As noted above, in evaluating potential nominees
to the Board, the CGNC focuses on the current Board composition and the anticipated skills required to round out the capabilities
of the Board, including the knowledge and diversity of its membership.
The Company does not presently have any
women executive officers and has not adopted any targets regarding women in executive officer positions. As noted above, the Company
is an equal opportunity employer, whereby candidates for employment as executive officers are selected based upon primary considerations
such as experience, skill and ability.
Orientation and Continuing Education
At the current time, the Board provides
ad hoc orientation for new directors. New directors are briefed on strategic plans, short, medium and long term corporate objectives,
the history and current status of the Company’s Livengood Gold Project (the Company’s sole mineral property) and the
ongoing work programs concerning the Livengood Gold Project, business risks and mitigation strategies, corporate governance guidelines
and existing company policies. There is no formal orientation for new members of the Board. This is considered to be appropriate
given the Company’s size and current level of operations. If warranted by the growth of the Company’s operations, the
Board would consider implementing a formal orientation process.
The skills and knowledge of the Board are
such that no formal continuing education process is deemed necessary, as the Board is comprised of individuals with extensive experience
in the mineral exploration and mining industry, as well as in running and managing public companies in the natural resource sector.
Several directors are also directors of other natural resource companies. Board members are encouraged to communicate with management,
auditors and technical consultants to keep themselves current with industry trends and developments and changes in legislation.
They also have full access to the Company’s records. The Company will pay the reasonable costs of attendance by directors
at continuing education courses and seminars with respect to corporate governance, director’s duties and obligations and
similar matters.
Ethical Business Conduct
The Board expects management to enhance
shareholder value by executing the Company’s business plan and meeting performance goals and objectives according to the
highest ethical standards. To this end, in September 2006 the Board adopted a Code of Business Conduct and Ethics (the “Code”)
for its directors, officers, employees and, in appropriate cases, consultants. Copies of the Code are available on the Company’s
website at www.ithmines.com under “Company – Corporate Governance” or at www.sedar.com. Training with respect
to the Code is included in the orientation of new employees. To ensure familiarity with the Code, directors, officers and employees
are asked to read the Code and sign a compliance certificate annually. Directors, officers and employees are required to report
any known violations of the Code to the Chair of the Audit Committee or to the Company’s outside U.S. or Canadian counsel.
Since the beginning of the Company’s
most recent fiscal year there have not been any material change reports or current reports on Form 8-K filed that pertain to any
conduct of a director or executive officer that constitutes a departure from the Code or a waiver of the Code by the Board. In
addition to the provisions of the Code, directors and senior officers are bound by the provisions of the Company’s Articles
and the BCBCA, which set forth the manner of dealing with any conflicts of interest. Specifically, any director who has a material
interest in a particular transaction is required to disclose such interest and to refrain from voting with respect to the approval
of any such transaction.
In September 2006, the Board also adopted
a “Share Trading Policy” (revised November 5, 2013) which prescribes rules with respect to trading in securities of
the Company when there is any undisclosed material information or a pending material development. Strict compliance with the provisions
of this policy is required, with a view to enhancing investor confidence in the Company’s securities and contributing to
ethical business conduct by the Company’s personnel. In 2006, the Board also created the Health, Occupational, Safety &
Environmental Committee (renamed the “Technical Committee” in 2014) in order to focus on reviewing project design and
operational aspects of any proposed mine development and to reflect the Company’s continuing commitment to improving the
environment and ensuring that its activities are carried out in a safe, sustainable and environmentally sound manner.
Anti-Hedging Policy
The Company does not currently have an
anti-hedging policy in place for directors, officers or employees and such persons may therefore purchase financial instruments,
including, for greater certainty, prepaid variable forward contracts, equity swaps, collars or units of exchange funds that are
designed to hedge or offset a decrease in market value of equity securities granted as compensation. The Board will assess the
need and consider implementing such a policy in the future, if warranted.
Communications with the Board
Interested parties, including shareholders
of the Company, desiring to communicate with members of the Board, any non-management director or the independent directors as
a group, may do so by mailing a request to the Corporate Secretary of International Tower Hill Mines Ltd. at 2300-1177 West Hastings
Street, Vancouver, British Columbia, Canada, V6E 2K3. Any such communication should state the number of shares beneficially owned,
if any, by the interested party making the communication. The Secretary will forward any such communication to the Chair of the
CGNC and will forward such communication to other members of the Board, as appropriate, provided that such communication addresses
a legitimate business issue. Any communication relating to accounting, internal controls, auditing or fraud will be forwarded to
the chair of the Audit Committee.
Majority Voting Policy
On April 25, 2013, the Board adopted a
majority voting policy (the “Majority Voting Policy”). The Majority Voting Policy was subsequently modified on April
13, 2016. Pursuant to the Majority Voting Policy, the form of proxy for meetings of the shareholders of the Company at which directors
are to be elected provides the option of voting in favor, or withholding from voting, for each individual nominee to the Board.
If, with respect to any particular nominee, the number of shares withheld from voting exceeds the number of shares voted in favor
of the nominee, then the nominee will be considered to have not received the support of the shareholders, and such nominee is expected
to submit his or her resignation to the Board, to take effect on acceptance by the Board.
Following receipt of a resignation submitted
pursuant to the Majority Voting Policy, the CGNC is to consider whether or not there are exceptional circumstances which would
justify not accepting such Resignation. Absent such exceptional circumstances, the CGNC shall recommend to the Board that the Board
accept the resignation. If the CGNC determines that exceptional circumstances exist that would justify not accepting the resignation,
the CGNC will prepare a report to the Board containing a recommendation to the Board not to accept the resignation, and clearly
identifying and setting out the basis for determining such exceptional circumstances exist.
Within 90 days following the applicable
shareholders’ meeting, the Board shall make its decision whether or not to accept a resignation pursuant to the Majority
Voting Policy, based upon the CGNC’s recommendation. Absent such exceptional circumstances as may be set forth in the report
of the CGNC, the Board shall accept the resignation. Following the Board’s decision, the Company shall publicly disclose
by news release the Board’s decision whether to accept the resignation, including the reasons for rejecting the resignation,
if applicable. A copy of the applicable news release shall be provided to each stock exchange on which the Company’s securities
are then listed.
If a resignation pursuant to the Majority
Voting Policy is accepted, subject to any corporate law restrictions, the Board may:
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(a)
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leave the resultant vacancy unfilled until the next annual meeting of shareholders of the Company;
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(b)
|
fill the vacancy by appointing a director whom the Board considers to merit the confidence of the
shareholders; or
|
|
(c)
|
call a special meeting of the shareholders of the Company to consider the election of a nominee
recommended by the Board to fill the vacant position.
|
Directors who do not submit their resignation
in accordance with the Majority Voting Policy will not be re-nominated for election at the next shareholders’ meeting. The
Majority Voting Policy applies only in the case of an uncontested shareholders’ meeting, meaning a meeting where the number
of nominees for election as directors is equal to the number of directors to be elected. A copy of the Majority Voting Policy is
available at the Company’s website at www.ithmines.com.
COMMITTEES OF THE BOARD
Committees of the Board are an integral
part of the Company’s governance structure. At the present time, the Board has four standing committees: the Audit Committee,
the Compensation Committee, the Corporate Governance and Nominating Committee, and the Technical Committee. Current details of
the composition of the standing committees of the Board are as follows:
Director
|
Audit Committee
|
Compensation
Committee
|
Corporate Governance
and Nominating
Committee
|
Technical Committee
|
Damola Adamolekun
|
|
X
|
|
X
|
Anton Drescher
|
Chair
|
|
X
|
|
John Ellis
|
|
X
|
|
Chair
|
Karl Hanneman
|
|
|
|
|
Stuart Harshaw
|
X
|
|
|
X
|
Marcelo Kim
|
|
|
X
|
X
|
Thomas Irwin
|
|
|
|
X
|
Stephen Lang
|
|
|
Chair
|
X
|
Thomas Weng
|
X
|
Chair
|
|
|
Audit Committee
Members:
Anton Drescher (Chair), Stuart
Harshaw and Thomas Weng
The Board has a standing Audit Committee
of three members. All members of the Audit Committee are independent within the meaning of National Instrument 52-110
Audit
Committees
of the Canadian Securities Administrators, the NYSE American listing standards and Rule 10A-3(b)(1) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and satisfy the composition requirements of Section 803(B)(2)(a)
of the NYSE American Company Guide. The Board has determined that Anton Drescher is an “audit committee financial expert”
as that term is defined in Item 407(d) of Regulation S-K. As an “audit committee financial expert,” Mr. Drescher satisfies
the NYSE American financial literacy and sophistication requirements. The Audit Committee has adopted a charter that describes
its responsibilities in detail. The charter is available on the Company’s website at www.ithmines.com.
The primary responsibility for financial
reporting, internal controls over financial reporting, compliance with laws and regulations, and ethics rests with the management
of the Company. The Audit Committee’s primary purpose is to oversee the integrity of the Company’s financial statements,
the Company’s compliance with legal and regulatory requirements and corporate policies and controls, the independent auditor’s
selection, retention, qualifications, objectivity and independence and the performance of the Company’s internal controls
on financial reporting function. The Audit Committee reviews the financial information that will be provided to the shareholders
and others, the systems of internal controls that management and the Board have established and the audit process. The Audit Committee
also reviews the audited financial statements and management’s discussion and analysis thereof and discusses them with the
management of the Company. Additional information about the Audit Committee’s role in corporate governance can be found in
the committee’s charter.
Compensation Committee
Members:
Thomas Weng (Chair), Damola
Adamolekun and John Ellis
The Board has a standing Compensation Committee
of three members. All members of the Compensation Committee are independent directors. As set out in its written charter, the purpose
of the Compensation Committee is to implement and oversee human resources and compensation policies and best practices for recommendation
to the Board for approval and implementation. The Compensation Committee charter is available on the Company’s website at
www.ithmines.com. The Compensation Committee has the duty and responsibility to ensure that the Company has in place programs to
attract and develop management of the highest caliber and a process to provide for the orderly succession of management. It also
has the duty to assess and report to the Board, on an annual basis, on the performance of the CEO for the prior year, and to review,
on an annual basis, the salary, bonus and other benefits, direct and indirect, of the CEO and make recommendations in respect thereof
for approval of the Board. Additionally, the Compensation Committee reviews, on an annual basis, the proposed compensation for
all other officers of the Company after considering the recommendations of the CEO, and makes recommendations in respect thereof
for approval by the Board. The Compensation Committee may not delegate these duties and responsibilities, however, the Compensation
Committee may, in its sole discretion, retain, at the expense of the Company, such legal, financial, compensation or other advisors
or consultants as it may deem necessary or advisable in order to properly and fully perform its duties and responsibilities.
Corporate Governance and Nominating
Committee
Members:
Stephen Lang (Chair), Anton
Drescher and Marcelo Kim
The Board has a standing Corporate Governance
and Nominating Committee of three members. All members of the CGNC are independent directors. As set out in its written charter,
the primary roles of the CGNC include developing and monitoring the effectiveness of the Company’s corporate governance system
and ensuring the Company is in line with the proper delineation of the roles, duties and responsibilities of the Company, the Board
and its committees. The CGNC charter is available on the Company’s website at www.ithmines.com. The CGNC also establishes
procedures for the identification of new nominees to the Board, leads the candidate selection process, and develops and implements
orientation procedures for new directors. Currently, the CGNC does not have a policy allowing for the consideration of director
candidates recommended by security holders, but would consider such nominees if presented to the CGNC on a timely basis in the
same manner as any other potential candidates. The CGNC is also responsible for assessing the effectiveness of directors, the Board
and the various committees of the Board and assisting the Board in setting the objectives of the CEO and evaluating the performance
of the CEO.
The CGNC is responsible for reviewing proposals
for new nominees to the Board and conducting such background reviews, assessments, interviews and other procedures as it believes
necessary to ascertain the suitability of a particular nominee. In determining whether a candidate is qualified to be nominee for
a position on the Board, the committee will take into consideration factors such as it deems appropriate, including judgment, skill,
diversity, experience with businesses and other organizations of comparable size and the need for particular expertise on the Board.
The selection of potential nominees for review by the CGNC is generally the result of recruitment efforts by the individual Board
members or the CEO, including both formal and informal discussions among Board members and with the CEO, and is usually based upon
the desire to have a specific set of skills or expertise included on the Board.
The appointment of new directors, either
to fill vacancies or to add additional directors as permitted by applicable corporate legislation, or the nomination for election
as a director of a person not currently a director by the shareholders at an annual general meeting, is carried out by the Board,
based on the recommendation of the CGNC. Once the names of any suggested nominees are received by the CGNC, the CGNC carries out
such reviews as it determines to be appropriate, including interviews with the proposed nominee, to determine if the proposed nominee
possesses the required skill set being sought by the Board and would be an appropriate “fit” for election to the Board.
The CGNC then makes a recommendation to the full Board as to the nomination of the identified individual for election as a director,
for appointment as a replacement for a director who has resigned or for appointment as an additional director, as applicable. In
addition, prior to each annual general meeting of the shareholders of the Company, the CGNC carries out a review of the then current
Board composition and makes recommendations as to the individuals, whether existing directors or non-directors, it considers should
be nominated for election as a director. With respect to the seven nominees for election as a director at the Meeting disclosed
in this Proxy Statement, no holder of Common Shares, non-management director, chief executive officer, other executive officer,
third-party search firm, or other source recommended any specific nominee, except that Messrs. Kim and Adamolekun were nominated
by Paulson under the IRA. Based upon extensive mining industry experience and with a recommendation received from Electrum Strategic
Opportunities Fund II L.P. (the “Electrum Fund”), Stuart Harshaw was identified and nominated to the board to fill
the vacancy created by Gen. Hamilton’s resignation.
Technical Committee
Members:
John Ellis (Chair), Damola
Adamolekun, Stuart Harshaw, Thomas Irwin, Marcelo Kim, and Stephen Lang
The Board has a standing Technical Committee
of six members. As set out in its written charter, the overall purpose of the Technical Committee is to assist the Board in reviewing
technical matters related to project design and operations as well as fulfilling the Board’s oversight responsibilities with
respect to the Board’s and the Company’s continuing commitment to improving the environment and ensuring that activities
are carried out and facilities are operated and maintained in a safe and environmentally sound manner that reflects the ideals
and principles of sustainable development. The Technical Committee charter is available on the Company’s website at www.ithmines.com.
The Technical Committee will review technical materials prepared by management of the Company and will monitor, review and provide
oversight with respect to the Company’s policies, standards, accountabilities and programs relative to health, safety, and
environmental-related matters.
Board and Committee Meetings
The Board held seven meetings during the
fiscal year ended December 31, 2018 (“Fiscal Year 2018”). Each director attended, in person or by telephone, 100% of
the aggregate number of actual meetings held by the Board and by the committees of the Board on which he or she served during Fiscal
Year 2018. It is the Company’s policy that each director personally attends each annual meeting of the Company’s shareholders.
All of the then incumbent Directors attended the annual meeting in Fiscal Year 2018. The attendance record of each director at
full Board meetings, and at meetings of any Board committees of which the applicable director is a member for the Fiscal Year 2018
are as follows:
|
|
|
Board
Committees
|
|
|
General
Board
Meeting
|
|
Audit
|
|
Compensation
|
|
Corporate
Governance
&
Nominating
|
|
Technical
|
|
Damola Adamolekun
|
4
(1)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
2
|
|
Anton Drescher
|
7
|
|
4
|
|
2
|
|
1
|
|
N/A
|
|
John Ellis
|
7
|
|
N/A
|
|
N/A
|
|
N/A
|
|
2
|
|
Victor Flores
|
3
(2)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
Karl Hanneman
|
3
(3)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
Stuart Harshaw
|
4
(4)
|
|
1
(5)
|
|
N/A
|
|
N/A
|
|
2
|
|
Thomas Irwin
|
7
|
|
N/A
|
|
N/A
|
|
N/A
|
|
2
|
|
Marcelo Kim
|
7
|
|
N/A
|
|
N/A
|
|
N/A
|
|
2
|
|
Stephen Lang
|
7
|
|
2
(6)
|
|
2
|
|
1
|
|
2
|
|
Thomas Weng
|
7
|
|
4
|
|
2
|
|
1
|
|
N/A
|
|
Total Meetings Held in Fiscal Year 2018
|
7
|
|
4
|
|
2
|
|
1
|
|
2
|
|
|
1)
|
Mr. Adamolekun was appointed as director on March 22, 2018 and attended four of four Board meetings
held in Fiscal Year 2018 after his appointment.
|
|
2)
|
Mr. Flores attended three of three Board meetings held in Fiscal Year 2018 and subsequently resigned
on March 21, 2018.
|
|
3)
|
Mr. Hanneman was appointed as director on May 30, 2018 and attended three of three Board meetings
held in Fiscal Year 2018 after his appointment.
|
|
4)
|
Mr. Harshaw was appointed as director on April 1, 2018 and attended four of four Board meetings
held in Fiscal Year 2018 after his appointment.
|
|
5)
|
Mr. Harshaw attended one of two Audit Committee meetings while a member of the Audit Committee.
|
|
6)
|
Only two meetings of the Audit Committee were held while Mr. Lang was a member of the Audit Committee.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
HOLDERS AND MANAGEMENT
The authorized capital of the Company consists
of 500,000,000 Common Shares. As at April 11, 2019, 187,111,857 Common Shares were issued and outstanding. Each issued Common Share
carries the right to one vote at the Meeting.
The following table sets forth certain
information regarding beneficial ownership of the Common Shares, as of April 11, 2019, by each person known by the Company to be
the beneficial owner of more than 5% of the outstanding Common Shares. The percentage of beneficial ownership is based on 187,111,857
Common Shares outstanding as of April 11, 2019. Except as indicated in the footnotes to this table and pursuant to applicable community
property laws, to our knowledge, each beneficial owner named in the table has sole voting and investment power with respect to
the Common Shares set forth opposite such beneficial owner’s name. The information provided in this table is based on the
Company’s records and information filed with the SEC or the British Columbia Securities Commission, unless otherwise noted.
Name and Address of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
(1)
|
|
|
Percentage of
Common Shares
|
|
Paulson & Co., Inc.
(2)
1133 Avenue of the Americas
New York, New York 10036
|
|
|
59,593,314
|
|
|
|
31.85
|
%
|
Tocqueville Asset Management, L.P.
(3)
40 W. 57th Street, 19th Floor
New York, New York 10019
|
|
|
30,181,069
|
|
|
|
16.13
|
%
|
Electrum Strategic Opportunities Fund II L.P.
535 Madison Avenue, 12th Floor
New York, New York 10022
|
|
|
26,571,380
|
|
|
|
14.20
|
%
|
|
(1)
|
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes
voting or investment power with respect to securities. In accordance with Rule 13d-3(d)(1) under the Exchange Act, the applicable
ownership total for each person is based on the number of Common Shares held by such person as of April 11, 2019, plus any securities
to which such person has the right to acquire beneficial ownership within 60 days of April 11, 2019, including those securities
held by such person exercisable for or convertible into Common Shares within 60 days after April 11, 2019. Unless otherwise noted,
each person and group identified possesses sole voting and investment power with respect to the shares shown opposite such person’s
or group’s name.
|
|
(2)
|
Paulson is the investment advisor of a number of investment funds and managed accounts of private
clients and institutional groups (collectively, the “PC Accounts”). Paulson does not itself own any securities of the
Company, but has authority to exercise control or direction over such securities as the investment advisor of the PC Accounts.
The share information is based on Amendment No. 1 to the Schedule 13D/A filed with the SEC on March 16, 2018.
|
|
(3)
|
Tocqueville Asset Management, L.P. (“TAM”) is the investment advisor of a number of
investment funds and managed accounts of private clients and institutional groups (collectively, the “TAM Accounts”).
TAM does not itself own any securities of the Company, but has authority to exercise control or direction over such securities
as the investment advisor of the TAM Accounts. The share information is based on a Schedule 13G filed with the SEC on January 31,
2019.
|
|
(4)
|
Electrum Strategic Opportunities Fund II L.P. (the “Electrum Fund”) directly held 26,571,380
Common Shares as of March 28, 2018. Electrum Strategic Opportunities Fund II GP L.P. (the “Electrum Fund GP”) is the
general partner of the Electrum Fund, ESOF II GP Ltd. (“ESOF II GP”) is the general partner of the Electrum Fund GP,
and the Electrum Group LLC (“TEG Services”) is the registered investment advisor to the Electrum Fund. Therefore, the
Electrum Fund GP, ESOF II GP and TEG Services may be deemed to share the right to direct the disposition of and may be deemed to
share the power to vote or to direct the vote of the reported Common Shares. Each of the Electrum Fund, the Electrum Fund GP, ESOF
II GP and TEG Services disclaims beneficial ownership of the reported Common Shares except to the extent of its pecuniary interest
therein. The share information is based on a Schedule 13G/A filed with the SEC on March 29, 2018.
|
The following table sets forth certain
information regarding beneficial ownership of Common Shares as of April 11, 2019 by the Company’s directors and named executive
officers, both individually and as a group. The percentage of beneficial ownership is based on 187,111,857 Common Shares outstanding
as of April 11, 2019, plus any shares which such individual has a right to acquire within 60 days if not already issued. Except
as indicated in the footnotes to this table and pursuant to applicable community property laws, each shareholder named in the table
has sole voting and investment power with respect to the shares set forth opposite such shareholder’s name. The information
provided in this table is based on Company records and information filed with the SEC and British Columbia Securities Commission,
unless otherwise noted. The business address of each person set forth in the table below is c/o International Tower Hill Mines
Ltd., 2300-1177 West Hastings Street, Vancouver, British Columbia, Canada, V6E 2K3.
Beneficial Owner
(1)
|
|
Number of Common
Shares Owned
|
|
|
Number of Shares Beneficially
Owned as a Result of Equity
Awards Exercisable or Vesting
Within 60 Days of April 11,
2019 (Excluding DSUs)
|
|
|
Vested DSUs
(2)
|
|
|
Total
|
|
|
Percentage
of Class
(3)
|
|
Non-employee Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Damola Adamolekun
(4)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Anton Drescher
|
|
|
731,676
|
|
|
|
180,000
|
|
|
|
230,907
|
|
|
|
1,142,583
|
|
|
|
*
|
|
John Ellis
|
|
|
8,000
|
|
|
|
120,000
|
|
|
|
230,907
|
|
|
|
358,907
|
|
|
|
*
|
|
Stuart Harshaw
|
|
|
-
|
|
|
|
-
|
|
|
|
101,220
|
|
|
|
101,220
|
|
|
|
*
|
|
Thomas Irwin
|
|
|
256,024
|
|
|
|
1,150,000
|
|
|
|
230,907
|
|
|
|
1,636,931
|
|
|
|
*
|
|
Marcelo Kim
(4)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Stephen Lang
|
|
|
100,000
|
|
|
|
120,000
|
|
|
|
230,907
|
|
|
|
450,907
|
|
|
|
*
|
|
Thomas Weng
|
|
|
25,000
|
|
|
|
180,000
|
|
|
|
230,907
|
|
|
|
435,907
|
|
|
|
*
|
|
Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karl Hanneman
|
|
|
212,000
|
|
|
|
1,312,417
|
|
|
|
101,220
|
|
|
|
1,625,637
|
|
|
|
*
|
|
David Cross
|
|
|
-
|
|
|
|
30,000
|
|
|
|
-
|
|
|
|
30,000
|
|
|
|
*
|
|
TOTAL
|
|
|
1,332,700
|
|
|
|
3,092,417
|
|
|
|
1,356,975
|
|
|
|
5,782,092
|
|
|
|
3.01
|
%
|
|
(1)
|
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes
voting or investment power with respect to securities. In accordance with Rule 13d-3(d)(1) under the Exchange Act, the applicable
ownership total for each person is based on the number of Common Shares held by such person as of April 11, 2019, plus any securities
to which such person has the right to acquire beneficial ownership within 60 days of April 11, 2019, including those securities
held by such person exercisable for or convertible into Common Shares within 60 days after April 11, 2019. Unless otherwise noted,
each person and group identified possesses sole voting and investment power with respect to the shares shown opposite such person’s
or group’s name.
|
|
(2)
|
Pursuant to the DSU Plan, DSUs vest on grant but the underlying Common Shares are not issued while
the holder remains on the Board. See “Securities Authorized For Issuance Under Equity Compensation Plans – DSU Plan
– General Description of the DSU Plan” on page 37.
|
|
(3)
|
* means less than 1.0%.
|
|
(4)
|
Mr. Kim is a partner at Paulson and Mr. Adamolekun is an Associate at Paulson. Paulson has beneficial
ownership of an aggregate of 59,593,314 Common Shares, representing 31.85% of the currently outstanding Common Shares (see previous
table of greater than 5% beneficial owners).
|
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of the Exchange Act requires
the Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s
equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of Common Shares and other
equity securities. Executive officers, directors and holders of more than 10% of the Common Shares are required by regulations
of the SEC to furnish the Company with copies of all Section 16(a) reports they file.
To the knowledge of the directors of the
Company, based solely upon a review of the copies of such reports furnished to us or written representations that no other reports
were required to be filed during Fiscal Year 2018, all filing requirements under Section 16(a) applicable to officers, directors
and more than 10% shareholders were satisfied timely, except for report on Form 3 for Stuart Harshaw that was due on April 11,
2018 and filed on October 22, 2018, reports on Form 4 for each of Stuart Harshaw and Stephen Lang that were due on October 19,
2018 and filed on October 22, 2018 and reports on Form 4 for each of Anton Drescher and Karl Hanneman that were due October 19,
2018 and filed on October 24, 2018.
Certain Relationships and Related
Transactions
Procedures for Approval of
Transactions with Related Parties
In accordance with the requirements of
the NYSE American, the Board passed a resolution on June 20, 2007 requiring that, in addition to any requirements under applicable
corporate laws, all “related party transactions” are required to first be reviewed and approved by the Company’s
Audit Committee. The resolution requires approval by the Audit Committee of all transactions in which the Company is a participant
and in which any of the Company’s directors, executive officers, significant shareholders or an immediate family member of
any of the foregoing persons has a direct or indirect material interest. All related party transactions are reported for review
by the Audit Committee. The Audit Committee determines whether these transactions are in the best interests of the Company and
its shareholders. In addition, related party transactions are subject to the provisions of Multilateral Instrument 61-101 of the
Canadian Securities Administrators entitled “Protection of Minority Shareholders in Special Transactions”, which prescribes
certain conditions under which related party transactions may be carried out, and provides certain exemptions thereto. Conflicts
of interest with respect to the involvement of directors and officers in transactions with the Company are also subject to the
provisions of the BCBCA and the Company’s articles.
Transactions Involving Related Parties
There were no reportable transactions with
related persons during Fiscal Years 2017 or 2018 other than:
|
1.
|
In March 2018, the Company closed a non-brokered private placement financing through the issuance
of 4,105,472 shares of Common Stock to Paulson and 19,894,528 shares to the Electrum Fund at a price of $0.50 per share. As at
December 31, 2018, Paulson, Tocqueville Asset Management, and the Electrum Fund beneficially own approximately 31.9%, 16.1%, and
14.2% respectively of the Company's 186,990,683 Common Shares.
|
|
2.
|
On May 24, 2017, the shareholders of the Company approved a proposed issuance of Common Shares
to Thomas Irwin as a one-time payment associated with his transition from CEO to senior advisor. Following receipt of such approval,
the Company issued 206,024 Common Shares to Mr. Irwin with a value of $99,492 based on the USD-CAD exchange rate (USD 1.00 = CAD
1.3460) and the closing price of the Common Shares on the TSX (CAD $0.65) on May 24, 2017.
|
|
3.
|
In December 2011, in accordance with a Stock and Asset Purchase Agreement (the “Agreement”)
between the Company, Alaska/Nevada Gold Mines, Ltd. (“AN Gold Mines”) and the Heflinger Group, the Company acquired
certain mining claims and related rights in the vicinity of the Livengood Gold Project located near Fairbanks, Alaska (“Property”).
The aggregate consideration for the Property was $13,500,000 in cash plus an additional payment based on the five-year average
daily gold price (“Average Gold Price”) from the date of the acquisition (“Additional Payment”). The Additional
Payment was to equal $23,148 for every dollar that the Average Gold Price exceeds $720 per troy ounce. If the Average Gold Price
was less than $720, there was to be no additional consideration due. As at December 12, 2016, the five-year average daily gold
price was $1,354.79 resulting in a derivative liability of $14,694,169. The obligation to make the contingent payment was secured
by a Deed of Trust over the rights of the Company in the Property in favor of the vendors. On January 12, 2017, the Company paid
$14,694,169 for the timely and full satisfaction of the final derivative payment due with respect to the acquisition of the Property.
Under the Agreement, the final payment was made 70% to AN Gold Mines and 30% to the Heflinger Group. Mr. Hanneman was appointed
Chief Operating Officer of the Company on March 26, 2015 and subsequently appointed as CEO effective January 31, 2017. Mr. Hanneman
was a partner of the general partner, as well as a limited partner, of AN Gold Mines and held an 11.9% net interest in AN Gold
Mines.
|
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Committee
The members of the Compensation Committee
are Thomas Weng (Chair), Damola Adamolekun and John Ellis, each of whom is an independent director.
The overall purpose of the Compensation
Committee is to implement and oversee human resources and compensation policies and best practices for recommendation to the Board
for approval and implementation. The Compensation Committee is responsible for administering the Stock Option Plan and the DSU
Plan.
The duties and responsibilities of the
Compensation Committee are as follows:
|
(a)
|
To recommend to the Board human resources and compensation policies and guidelines for application
to the Company;
|
|
(b)
|
to review and recommend any changes thought necessary to the Company’s domestic and international
compensation and human resources policies and procedures;
|
|
(c)
|
if required by applicable legislation or policy, to prepare, on an annual basis for inclusion in
the Company’s annual proxy statement, a report on the Company’s compensation practices;
|
|
(d)
|
to ensure that the Company has in place programs to attract and develop management of the highest
caliber and a process to provide for the orderly succession of management, such that particularly:
|
|
(i)
|
properly reflect the duties and responsibilities of members of management;
|
|
(ii)
|
are effective and competitive in attracting, retaining and motivating people of the highest quality;
and
|
|
(iii)
|
are based on established corporate and individual performance objectives;
|
|
(e)
|
to assess and report to the Board, on an annual basis, on the performance of the CEO for the prior
year;
|
|
(f)
|
to review, on an annual basis, the salary, bonus and other benefits, direct and indirect, of the
CEO and make recommendations in respect thereof for approval by the Board, provided that such Board approval will include the approval
of a majority of directors that are “independent” of the Company within the meaning of all applicable legal and regulatory
requirements (except in circumstances, and only to the extent, permitted by all applicable legal and regulatory requirements);
|
|
(g)
|
to review, on an annual basis, the proposed compensation for all other officers of the Company
after considering the recommendations of the CEO, all within the human resources and compensation policies and guidelines approved
by the Board, and make recommendations in respect thereof for approval by the Board, provided that such Board approval will include
the approval of a majority of directors that are “independent” of the Company within the meaning of all applicable
legal and regulatory requirements (except in circumstances, and only to the extent, permitted by all applicable legal and regulatory
requirements);
|
|
(h)
|
to implement and administer human resources and compensation policies approved by the Board concerning
the following:
|
|
(i)
|
executive compensation, contracts, stock plans or other incentive plans; and
|
|
(ii)
|
proposed personnel changes involving officers reporting to the CEO;
|
|
(i)
|
to review any proposed amendments to the Stock Option Plan or the DSU Plan and report to the Board
thereon;
|
|
(j)
|
to review and make recommendations to the Board concerning the CEO’s recommendations for
stock option or DSU grants to directors, senior officers, employees and consultants of the Company and its affiliates under the
Stock Option Plan or the DSU Plan;
|
|
(k)
|
from time to time, to review the Company’s broad policies and programs in relation to benefits;
|
|
(l)
|
to annually receive from the CEO recommendations concerning annual compensation policies and budgets
for all employees;
|
|
(m)
|
from time to time, to review with the CEO the Company’s broad policies on compensation for
all employees and overall labor relations strategy for employees;
|
|
(n)
|
to periodically review the adequacy and form of the compensation of directors and to ensure that
the compensation realistically reflects the responsibilities and risks involved in being an effective director, and to report and
make recommendations to the Board accordingly;
|
|
(o)
|
to report regularly to the Board on all of the committee’s activities and findings during
that year; and
|
|
(p)
|
to develop a calendar of activities to be undertaken by the committee for each ensuing year and
to submit the calendar in the appropriate format to the Board within a reasonable period of time following each annual general
meeting of shareholders.
|
The following table provides further detail
with regard to the members of the Compensation Committee and their relevant experience in executive compensation-related roles.
|
Thomas Weng
|
Damola Adamolekun
|
John Ellis
|
Experience as senior leadership of organizations similar to the Company
|
√
|
√
|
√
|
Direct operational, functional or oversight experience in executive compensation
|
√
|
√
|
√
|
Experience serving on compensation committees of organizations similar to the Company
|
√
|
-
|
√
|
The current members of the Compensation
Committee, consisting of Messrs. Weng, Adamolekun and Ellis, have over 50 years of combined experience, both as senior leadership
as well as direct operational or functional experience overseeing executive compensation at organizations similar to the Company.
Messrs. Ellis and Weng have each served on the compensation committee of similar-sized organizations, and the Compensation Committee
supports continuous training and education with respect to executive compensation. It is the opinion of the Board that the extensive
experience held by members of the Compensation Committee provides them with the ability to make sound and proper decisions on the
suitability of the Company’s compensation policies and practices.
The Chair of the Compensation Committee
is responsible for setting the priority for the work of the committee, ensuring that members have the information needed to fulfill
their responsibilities, overseeing the logistics of the committee’s operations, reporting to the Board on the committee’s
decisions and recommendations and setting the agenda for meetings of the committee.
Independent Compensation Advisors
The Compensation Committee has the authority
to engage and compensate, at the expense of the Company, any outside advisor that it determines to be necessary to permit it to
carry out its duties, including compensation consultants and advisers. The Compensation Committee did not retain the services of
any independent advisors during Fiscal Year 2018.
Executive Compensation Strategy, Philosophy
and Principles
The Company’s executive compensation
strategy is designed to attract, retain and motivate an experienced and effective key management team. The strategy focuses on
creating strong links between pay and performance and aligning the interests of executives, shareholders and other stakeholders.
The executive officers of the Company are
compensated in a manner consistent with Compensation Committee’s subjective view of their respective contributions to the
overall benefit of the Company, taking into account the criteria set out below.
The determination of executive compensation
amount and award is based on a combination of factors, including, but not limited to, information provided to the Compensation
Committee by compensation consultants (if utilized), the Compensation Committee’s subjective assessment as to market conditions,
information with respect to the compensation of peer group entities (if a peer group is determined), internal policies and practices
and the discretion of the Compensation Committee in consideration of their compensation-related experience. The compensation program
for each of the executive officers is comprised of a base salary and stock options, and may include an annual cash incentive bonus,
if deemed appropriate by the Compensation Committee.
In the case of a mineral exploration company
with a significant asset in the advanced exploration/feasibility stage such as the Company, the Compensation Committee considers
the following aspects to be of primary importance in assessing the performance of executive officers:
|
a)
|
the ability to design, implement and carry out mineral property development in a safe, environmentally
appropriate, efficient and cost-effective basis;
|
|
b)
|
the ability to scope, and effectively oversee, the carrying out of programs designed to optimize
the Livengood Gold Project, taking into account the conclusions of the 2017 Pre-Feasibility Study on the project, and to integrate
the results of such programs on an ongoing basis;
|
|
c)
|
the ability to raise the significant and necessary capital to permit the Company to carry out the
work required to advance such a project through to a stage where a production decision can be considered;
|
|
d)
|
the ability to locate and hire the appropriate personnel required to carry out a feasibility study
and permitting activities;
|
|
e)
|
should a production decision be made, the ability to finance, construct and operate a major mine
project, focus the Company’s resources and appropriately allocate such resources to the benefit of the Company as a whole;
and
|
|
f)
|
the ability to ensure compliance by the Company with applicable regulatory requirements and carry
on business in a sustainable manner.
|
Elements of Compensation
Base Salaries
Base salaries are targeted at levels that
the Compensation Committee believes, based on the experience of the members of the Compensation Committee, to be generally competitive
with the base salaries paid by mining companies of a comparable size and state of development to the Company. Base salaries are
initially set through negotiation at the time of hire. Salary for individual executives is generally assessed based on years of
experience, potential, performance, business circumstances, market demands or other factors specific to the executive role. Base
salaries are reviewed annually by the Compensation Committee to determine if adjustments are appropriate or required, based on
the Compensation Committee’s subjective assessment of corporate and individual performance over the previous year and considering
the market conditions for the gold industry, changes in the Company’s organization, inflation, and changes in responsibilities
and retention requirements. On March 12, 2018, the Board approved recommendations by management to reduce corporate overhead costs,
including a reduction in CEO salary by 50% to reflect an approximate 50% reduction in the effort needed to perform CEO duties.
The Compensation Committee typically, in
consultation with the CEO, makes recommendations to the Board regarding the base salaries for executive officers of the Company
other than the CEO. The Compensation Committee is responsible for recommending the salary level of the CEO to the Board for approval.
Annual Incentives (Short-Term Incentives
)
While the Company had previously implemented
a formal Annual Incentive Compensation Plan, the change in the focus of the Company towards the optimization program with respect
to the Company’s 2017 Pre-feasibility Study, and the significant reduction in field work and preparation for permitting and
simplification of corporate objectives has meant that the Compensation Committee has adopted an informal and subjective approach
to annual incentives, which are generally in the form of cash bonuses, when and if appropriate in the opinion of the Compensation
Committee.
Equity-Based Incentive Plans
2006 Incentive Stock Option Plan
The Stock Option Plan is designed to align
the interests of executives and those of shareholders through the opportunity of share ownership.
Recommendations for the grant of incentive
stock options are initially made by the CEO to the Compensation Committee, which is responsible for reviewing and considering any
such recommended grants and thereafter recommending the grant thereof (subject to any changes determined appropriate by the Compensation
Committee, including declining to recommend some or all of such grants, or amending the proposed terms thereof) to the Board, which
then makes the actual grants. Stock option allocations are made at the discretion of the Compensation Committee, considering the
Company’s performance and an employee’s individual performance. While the Compensation Committee aims to have individuals
with similar levels of responsibility holding approximately equivalent numbers of options, additional grants may be allocated to
those executives believed by the Compensation Committee to be in a position to more directly affect the success of the Company.
In addition, ranges are proposed for each organizational level of the Company, taking into consideration the number of shares available
for option.
In Fiscal Year 2018, the Company granted
incentive stock options to Mr. Karl Hanneman in connection with his 50% salary reduction effective on March 12, 2018. Mr. Hanneman
is entitled to purchase a total of 332,417 Common Shares in the capital stock of the Company at an issue price of C$0.61 per share.
The options vested 100% on the grant date (March 21, 2018) with an expiry date of March 21, 2024.
For a general description of the terms
and conditions of the Stock Option Plan, see “Securities Authorized For Issuance Under Equity Compensation Plans –
Stock Option Plan – General Description of the Stock Option Plan” on page 35.
Deferred Share Unit Incentive Plan
On April 4, 2017, the Company adopted a
Deferred Share Unit Plan (the “DSU Plan”). The DSU Plan was approved by the shareholders of the Company at the Company’s
annual general meeting of shareholders on May 24, 2017.
The purpose of the DSU Plan is to allow
the Company to grant deferred share units (“DSUs”), each of which is equivalent in value to a Common Share, to directors,
officers and employees of the Company and its subsidiaries (“Eligible Persons”) in recognition of their contributions
and to provide for an incentive for their continuing relationship with the Company. The granting of such DSUs is intended to promote
a greater alignment of the interests of Eligible Persons with the interests of shareholders.
On October 17, 2018, the Company granted
each director (other than directors nominated for election by Paulson) 101,220 DSUs with an aggregate grant date fair value of
C$83,000 (or C$0.82 per DSU). Each DSU vested immediately upon being granted, but the underlying Common Shares are not issuable
until the director ceases to serve as a director.
For a general description of the terms
and conditions of the Stock Option Plan, see “Securities Authorized For Issuance Under Equity Compensation Plans –
DSU Plan – General Description of the DSU Plan” on page 37.
Benefit, Perquisites and Pension Programs
Other Benefits and Perquisites
The Company’s wholly-owned U.S. subsidiary,
Tower Hill Mines (US) LLC (“Tower US”), which employs all personnel, has a benefit program in place, including medical
and dental benefits and basic life insurance, which applies to all permanent employees of Tower US. The Company believes that such
a plan is an important consideration in attracting the necessary personnel.
Executive Retirement Plan
The Company does not have a defined benefit
pension plan for any of its executive officers or other employees. However, through Tower US, the Company makes contributions to
a 401(k) plan on behalf of each of Tower US’s employees, including executive officers, equal to 3% of their base salaries
up to the contribution limit as prescribed by the U.S. Internal Revenue Service. In Fiscal Year 2018, contributions totaling $5,538
were made by Tower US on behalf of the named executive officers.
Compensation Risk Management
The Board annually reviews and approves
the Company’s strategic plan, considering business opportunities, level of risks consistent with the Company’s risk
appetite, cost implications, health, safety and environmental standards and alignment with the objectives at the Company’s
Livengood Gold Project in Alaska. At the present, these objectives are focused primarily on completing the ongoing project optimization
work plan and maintaining the baseline environmental data collection program, as required to support future permitting. In the
Compensation Committee’s view, this focus in and of itself provides a lower risk profile and reduces the risk that compensation
matters will not be consistent with prudent risk-taking. The reduction in short-term incentives, such as cash bonuses, coupled
with the continued use and emphasis on share-based compensation through longer term incentive stock options with deferred vesting
provisions is a measure of time risk, focusing on longer-term performance.
The Board’s review of the Company’s
compensation practices considers the business risk thereof to the Company in the context of the mineral resource industry. The
Board reviews and approves annual corporate objectives in the context of approved annual budgets and maintains a formal system
of corporate and financial authority levels to ensure compliance with the approved budget.
Effects of Internal Revenue Code Section
409A on Executive Compensation
Section 409A of the Internal Revenue Code
generally affects the grants of most forms of deferred compensation. The Company’s compensation program is designed to comply
with the final regulation of the U.S. Internal Revenue Service and other guidance with respect to Section 409A of the Internal
Revenue Code and the Company expects to administer its compensation programs accordingly. The provisions of the NEO employment
agreements include provisions to change the timing of payments of which may be required affecting any additional taxes or interest
and amending agreements without impairing the economic benefits to the NEO, but in no event shall the Company be liable to any
NEO for any taxes, penalties, or interest that may be due as a result of the application of Internal Revenue Code Section 409A.
Compensation Committee Report
The information contained in the following
Compensation Committee Report shall not be deemed “soliciting material” or “filed” with the SEC, nor shall
such information be incorporated by reference into a future filing under the Securities Act of 1933, as amended, or the Exchange
Act, except to the extent the Company specifically incorporates this report by reference therein.
The Compensation Committee has reviewed
and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on such
review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included
in this Proxy Statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December
31, 2018.
This Report has been submitted by the following
members of the Compensation Committee:
Thomas Weng, Chair
Damola Adamolekun
John Ellis
Total Shareholder Return Performance
– Performance Graph
The following chart compares the total
cumulative shareholder return on $100 invested in Common Shares on December 31, 2013 with the cumulative total returns of the S&P/TSX
Composite Index and S&P/TSX Global Gold Index for the five most recently completed financial years.
Cumulative Total Shareholder Return
International Tower Hill Mines vs S&P/TSX Composite Index and S&P/TSX Global Gold Index
|
|
12/31/2013
|
|
|
12/31/2014
|
|
|
12/31/2015
|
|
|
12/31/2016
|
|
|
12/31/2017
|
|
|
12/30/2018
|
|
International Tower Hill Mines
|
|
|
100.00
|
|
|
|
123.81
|
|
|
|
64.29
|
|
|
|
178.57
|
|
|
|
133.33
|
|
|
|
169.05
|
|
S&P/TSX Composite Index
|
|
|
100.00
|
|
|
|
107.42
|
|
|
|
95.51
|
|
|
|
112.23
|
|
|
|
119.00
|
|
|
|
105.15
|
|
S&P/TSX Global Gold Index
|
|
|
100.00
|
|
|
|
93.19
|
|
|
|
82.79
|
|
|
|
124.16
|
|
|
|
124.93
|
|
|
|
119.40
|
|
As can be seen from the foregoing graph,
the Company’s performance generally has directionally tracked the performance of the S&P/TSX Global Gold Index over the
last five years. Over this period, both the Company’s performance and the S&P/TSX Global Gold Index have exceeded the
performance of the S&P/TSX Composite Index. However, the volatility of the Company’s stock price over the period is greater
than either the S&P/TSX Global Gold Index or the S&P/TSX Global Gold Index. In late 2012, gold prices had a steady decline
and investor sentiment turned negative towards mining equities with projects with lower grade resources requiring large capital
expenditures. During 2014 through 2018, the Company has progressed on a number of opportunities with the potential for optimization
and reducing costs of building and operating a mine at the Livengood Gold Project. The change in shareholder return can be generally
attributed to the change in the gold price, the long-term nature of the Company’s optimization process which results in significant
periods of time without significant news flow, and the updated technical report on SEDAR entitled “NI 43-101 Technical Report
Pre-feasibility Study of the Livengood Gold Project, Livengood, Alaska, USA” dated March 8, 2017 and signed April 10, 2017.
The total compensation for NEOs decreased
38% between 2017 and 2018. Cash compensation for NEO’s (salary and bonus) decreased 44% between 2017 and 2018 as a result
of the CEO transitioning to 50% time. In 2017, options were granted in connection with the appointment of a new CEO. In March 2018,
options were granted in connection with the CEO transition to 50% time. The Company’s overall compensation to NEOs has been
generally aligned to the progress made on advancing the Livengood Gold Project. The CEO has achieved substantially all performance
objectives established by the Board while making progress in the optimization of the Livengood Gold Project. Such optimization,
while significantly benefiting the Company and the Livengood Gold Project and positioning it for potential advantage in a rising
gold market, does not translate into share price performance, which is essentially directly tied to the current gold prices.
Summary Compensation Table
The following table sets forth the compensation
for each named executive officer (“NEO”) during the years ended December 31, 2018 and 2017.
Name and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock Awards
($)
|
|
|
Option Awards
(1)
($)
|
|
|
All other
compensation
(2)
($)
|
|
|
Total
Compensation
($)
|
|
Karl Hanneman, CEO
(3)
|
|
|
2018
|
|
|
|
184,615
|
|
|
|
-
|
|
|
|
-
|
|
|
|
124,166
|
|
|
|
69,415
|
|
|
|
378,196
|
|
|
|
|
2017
|
|
|
|
291,058
|
|
|
|
-
|
|
|
|
-
|
|
|
|
79,963
|
|
|
|
8,100
|
|
|
|
379,121
|
|
David Cross CFO
(4)
|
|
|
2018
|
|
|
|
55,579
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,579
|
|
|
|
|
2017
|
|
|
|
55,585
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,585
|
|
|
(1)
|
Amount represents the grant date fair value of option awards.
The grant date fair value of option awards was calculated in accordance with Financial Accounting Standards Board Codification
Topic 718. Canadian dollar amounts were translated to U.S. dollars using the exchange rate on the date of grant.
|
|
(2)
|
Amounts in “All other compensation” represent
contributions to the Company’s 401(k) plan and, in 2018, includes $63,877, representing the fair value of the date of grant
of 101,220 DSUs issued to Mr. Hanneman as a director of the Company on October 17, 2018.
|
|
(3)
|
Mr. Hanneman was appointed CEO on January 31, 2017. Prior
to that, Mr. Hanneman had served as Chief Operating Officer since March 26, 2015 and, prior to that, as the General Manager of
the Livengood Gold Project. On May 30, 2018, Mr. Hanneman was elected to the Board.
|
|
(4)
|
Mr. Cross was appointed Chief Financial Officer on May
11, 2015.
|
Grants of Plan-Based Awards
A summary of plan-based awards granted
during the year ended December 31, 2018 to each NEO is set forth below. All grants were made under the Stock Option Plan.
Grants of Plan Based Awards
|
Name
|
|
Grant Date
|
|
|
All Other Option Awards:
Number of Securities
Underlying Options (#)
|
|
|
Exercise or Base
Price of Option
Awards
(C$/Sh)
|
|
|
Grant Date Fair
Value of Option
Awards($)
(1)
|
|
Karl Hanneman, COO/CEO
(2)
|
|
|
March 21, 2018
|
|
|
|
332,417
|
|
|
|
0.61
|
|
|
|
124,166
|
|
David Cross, CFO
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
(1)
|
Amount represents the grant date fair value of option awards.
The grant date fair value of option awards was calculated in accordance with Financial Accounting Standards Board Codification
Topic 718. Canadian dollar amounts were translated to U.S. dollars using the exchange rate on the date of grant.
|
|
(2)
|
Mr. Hanneman was appointed CEO on January 31, 2017. Prior
to that, Mr. Hanneman had served Chief Operating Officer since March 26, 2015 and, prior to that, as the General Manager of the
Livengood Gold Project.
|
Outstanding Equity Awards
The following table sets forth the option-based
awards granted to the NEOs that were outstanding as at December 31, 2018 (based on vesting as it existed at December 31, 2018):
Outstanding Equity Awards at 2018 Fiscal Year End
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
# Exercisable
(1)
|
|
|
Number of
Securities
Underlying
Unexercised
Options
# Unexercisable
(1)
|
|
|
Option
Exercise
Price
(C$)
|
|
|
Option
Grant Date
|
|
Option
Expiration Date
|
Karl Hanneman
(2)
COO/CEO
|
|
|
330,000
400,000
166,667
332,417
|
|
|
|
-
-
83,333
-
|
|
|
|
1.11
1.00
1.35
0.61
|
|
|
February 25, 2014
March 16, 2015
October 23, 2017
March 21, 2018
|
|
February 25, 2022
March 16, 2023
February 1, 2025
March 21, 2024
|
David Cross
(3)
CFO
|
|
|
30,000
|
|
|
|
-
|
|
|
|
1.00
|
|
|
June 9, 2015
|
|
June 9, 2023
|
|
(1)
|
Except for the options granted to Mr. Hanneman on October 23, 2017 and March 21, 2018, all options
presented in this table vested as to one-third on the date of grant, one-third on the first anniversary of the grant date, and
one-third on the second anniversary of the grant date. The options granted to Mr. Hanneman on October 23, 2017 vested as to one-third
on the grant date, one-third on February 1, 2018, and will vest as to the remaining one-third on February 1, 2019. The options
granted to Mr. Hanneman on March 21, 2018 vested 100% on the grant date.
|
|
(2)
|
Mr. Hanneman was appointed CEO on January 31, 2017 and prior to that date, had been Chief Operating
Officer since March 26, 2015.
|
|
(3)
|
Mr. Cross was appointed CFO on May 11, 2015.
|
Except as otherwise noted, the Company
has not granted any share-based awards to NEOs, and there are no estimated future payouts under non-equity or equity incentive
plan awards
.
None of the NEOs exercised option-based
awards during the year ended December 31, 2018.
Employment
Agreements, Termination and Change of Control Benefits
Karl Hanneman (CEO)
Effective March 12, 2018, Karl Hanneman,
the Company’s CEO, entered into a new employment agreement with Tower Hill Mines (US) LLC. Under the new employment agreement,
Mr. Hanneman will continue to be responsible for all duties normally incidental to the position of CEO. However, due to a 50% reduction
in the amount of time required to perform those duties as the scope of work the Company is performing is reduced, the base salary
Mr. Hanneman is entitled to receive has been reduced by 50% from $300,000 to $150,000 per year. Mr. Hanneman continues to be eligible
for an annual performance bonus targeted at 100% of his base salary. The new employment agreement also provides for standard benefits
and contains customary confidentiality and non-competition provisions.
The employment agreement with Mr. Hanneman
is for an indefinite term and is an “at will” agreement, which means that either Tower US or Mr. Hanneman may terminate
the employment relationship without notice and without payment of any compensation (including voluntary resignation, retirement,
termination with or without cause) except as otherwise provided. Mr. Hanneman’s employment agreement specifically provides
for a severance payment upon termination under certain events. Under the terms of the employment agreement, the Company may terminate
Mr. Hanneman’s employment in its sole discretion without cause and for any reason whatsoever, in which event Mr. Hanneman
would be entitled to receive an amount equal to his annual base salary plus the portion of annual bonus earned. Under the terms
of the employment agreement, upon termination after a change of control, Mr. Hanneman would be entitled to receive an amount equal
to his annual base salary plus the annual performance bonus (at target), immediate vesting of any unvested stock options and continuation
of medical benefits for a period of one year.
“Change of Control” means:
|
(a)
|
any person or group of affiliated or associated persons acquires more than 50% of the voting power
of the Company;
|
|
(b)
|
the consummation of a sale of all or substantially all of the assets of the Company;
|
|
(c)
|
the liquidation or dissolution of the Company;
|
|
(d)
|
a majority of the members of the Board are replaced during any 12-month period by Board members
whose nomination or election was not approved by the members of the Board at the beginning of such period (the “Incumbent
Board”) (provided that any subsequent members of the Board whose nomination or election was previously approved by the Incumbent
Board shall thereafter be also deemed to be a member of the Incumbent Board); or
|
|
(e)
|
the consummation of any merger, consolidation, or reorganization involving the Company in which,
immediately after giving effect to such merger, consolidation or reorganization, less than 51% of the total voting power of outstanding
stock of the surviving or resulting entity is then “beneficially owned” (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) in the aggregate by the shareholders of the Company immediately prior to such merger,
consolidation or reorganization. Notwithstanding the foregoing, in no event shall a Change of Control be deemed to occur in the
event of a sale of Company securities or debt as part of a bona fide capital raising transaction or internal corporate reorganization.
|
David Cross (CFO)
Upon David Cross’s appointment as
CFO on May 11, 2015, the Company and Mr. Cross entered into a consulting agreement. Pursuant to the terms of this agreement, Mr.
Cross has agreed to act a Chief Financial Officer of the Company (“CFO”). As consideration for so acting, pursuant
to the agreement Mr. Cross received an initial grant of 30,000 incentive stock options on June 9, 2015 (see the “Outstanding
Equity Awards” table as at December 31, 2017 above for a description of vesting and other terms applicable to Mr. Cross’s
option grant), and will be granted such further and additional incentive stock options as the Board may from time to time in its
sole discretion determine, having regard to Mr. Cross’s position as a senior officer of the Company and his corresponding
obligations in respect thereof, and his performance of the stipulated services under the agreement. The agreement does not provide
for a fixed term, and is terminable by either the Company or Mr. Cross on 90 days’ notice, provided that the Company may
terminate the agreement at any time upon notice if Mr. Cross is guilty of conduct that would, at common law, constitute just cause
for summary dismissal of Mr. Cross if he were an employee of the Company, or if he is unwilling or unable to provide the stipulated
services, either competently and efficiently or at all, or in the case of Mr. Cross declaring bankruptcy. No severance is payable
other than as required by the notice provision (90 days).
Concurrent with the appointment of Mr.
Cross as CFO, the Company entered into a consulting agreement with Cross Davis & Company LLP (“Cross Davis”), a
general accounting firm of which Mr. Cross is a partner. Pursuant to such agreement, Cross Davis provides corporate accounting
support to the Company in exchange for a monthly fee of C$6,000 per month, plus GST. If the Company requests Cross Davis to provide
additional services not specifically set out in the agreement, then the Company will pay for such services at a fee to be agreed.
The agreement does not provide for a fixed term, and is terminable by either the Company or Cross Davis on 90 days’ notice,
provided that the Company may terminate the agreement at any time upon notice if Cross Davis becomes bankrupt, or if it is unwilling
or unable to provide the stipulated services, either competently and efficiently or at all. No payment is due upon termination
other than as required by the notice provision (90 days).
The following table shows the estimated
severance payment payable to the Company’s current NEOs if they were terminated on December 31, 2018 after a Change of Control.
Name
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock Option
Awards
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
Karl Hanneman, CEO
|
|
|
150,000
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
35,000
|
(1)
|
|
|
335,000
|
|
David Cross, CFO
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
-
|
|
|
|
C$18,000
|
(2)
|
|
|
C$18,000
|
|
|
(1)
|
Estimated based on annual salary contribution to the 401(k)
plan subject to the contribution limit as prescribed by the Internal Revenue Service and continuation of medical benefits for
a period of twelve months.
|
|
(2)
|
Represents the amount payable assuming the required 3 months’
notice is not given and therefore a payout of 3 months’ consulting fees is required.
|
Director Compensation
The Board has approved the payment of annual
retainer fees to the non-management directors of the Company in recognition of the fact that service as a director in an active
resource exploration company such as the Company requires a significant commitment of time and effort and the assumption of increasing
liability. As part of the Company’s effort to reduce corporate overhead costs beginning in 2018, the annual retainer for
non-Paulson directors was reduced to C$10,000 in 2018.
Pursuant to the IRA, the directors who
are nominees of Paulson are not entitled to receive any salary or other compensation (including directors’ fees) for their
service as directors. Accordingly, neither Mr. Kim (Chair) nor Mr. Adamolekun receive any compensation for serving on the Board.
The Company reimburses all directors (including
Paulson nominees) for their actual out-of-pocket costs incurred in attending Board and Board committee meetings. In addition, all
directors have the benefit of customary directors’ and officers’ liability insurance providing coverage in amounts
and terms satisfactory to Paulson. In addition, the Company is required to enter into indemnity agreements with each such director
substantially in a form agreed by Paulson.
Director Compensation Table
The following table discloses all amounts
of compensation provided to the Company’s directors for the Company’s most recently completed financial year.
Name
|
|
Fees Earned or
Paid in Cash
($)
|
|
|
Option Awards
($)
|
|
|
All Other
Compensation
($)
(1)
|
|
|
Total
($)
|
|
Damola Adamolekun
(2)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Anton Drescher
|
|
|
13,058
|
|
|
|
-
|
|
|
|
63,877
|
|
|
|
76,935
|
|
John Ellis
|
|
|
13,058
|
|
|
|
-
|
|
|
|
63,877
|
|
|
|
76,935
|
|
Stuart Harshaw
(3)
|
|
|
5,742
|
|
|
|
-
|
|
|
|
63,877
|
|
|
|
69,619
|
|
Thomas Irwin
|
|
|
13,058
|
|
|
|
-
|
|
|
|
63,877
|
|
|
|
76,935
|
|
Marcelo Kim
(2)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Stephen Lang
|
|
|
13,058
|
|
|
|
-
|
|
|
|
63,877
|
|
|
|
76,935
|
|
Thomas Weng
|
|
|
13,058
|
|
|
|
-
|
|
|
|
63,877
|
|
|
|
76,935
|
|
|
(1)
|
On October 17, 2018, each director other than the Paulson
nominees received 101,220 DSUs having a fair value on the date of grant of $63,877.
|
|
(2)
|
As nominees of Paulson under the IRA, neither Mr. Adamolekun
nor Mr. Kim is entitled to receive any compensation for acting as a director of the Company.
|
|
(3)
|
Mr. Harshaw was appointed to the Board effective April
1, 2018 to fill the vacancy that resulted from General Hamilton’s November 6, 2017 resignation.
|
Outstanding Option-Based Awards
The following table sets forth the option-based
awards granted to directors that were outstanding as at December 31, 2018 (based on vesting as it existed at December 31, 2018):
Option-based Awards
|
Name
|
|
|
Number of
Securities
Underlying
Unexercised
Options
# Exercisable
|
|
|
|
Number of
Securities
Underlying
Unexercised
Options
# Unexercisable
|
|
|
|
Option
Exercise Price
(C$)
|
|
|
|
Option Grant
Date
|
|
|
|
Option Expiration
date
|
|
|
|
Value of
Unexercised
in-the-money
options
($)
(1)
|
|
Damola Adamolekun
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Anton Drescher
|
|
|
60,000
60,000
60,000
|
|
|
|
-
-
-
|
|
|
|
1.11
1.11
1.00
|
|
|
|
February 25, 2014
March 10, 2014
March 16, 2015
|
|
|
|
February 25, 2022
March 10, 2022
March 16, 2023
|
|
|
|
-
-
-
|
|
John Ellis
|
|
|
60,000
60,000
|
|
|
|
-
-
|
|
|
|
1.11
1.00
|
|
|
|
February 25, 2014
March 16, 2015
|
|
|
|
February 25, 2022
March 16, 2023
|
|
|
|
-
-
|
|
Stuart Harshaw
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Thomas Irwin
|
|
|
400,000
250,000
500,000
|
|
|
|
-
-
-
|
|
|
|
1.11
1.11
1.00
|
|
|
|
February 25, 2014
March 10, 2014
March 16, 2015
|
|
|
|
February 25, 2022
March 10, 2022
March 16, 2023
|
|
|
|
-
-
-
|
|
Stephen Lang
|
|
|
60,000
60,000
|
|
|
|
-
-
|
|
|
|
1.11
1.00
|
|
|
|
February 25, 2014
March 16, 2015
|
|
|
|
February 25, 2022
March 16, 2023
|
|
|
|
-
-
|
|
Thomas Weng
|
|
|
60,000
60,000
60,000
|
|
|
|
-
-
-
|
|
|
|
1.11
1.11
1.00
|
|
|
|
February 25, 2014
March 10, 2014
March 16, 2015
|
|
|
|
February 25, 2022
March 10, 2022
March 16, 2023
|
|
|
|
-
-
-
|
|
Marcelo Kim
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
(1)
|
Valued using the closing market price of Common Shares
on the TSX on December 31, 2018 (C$0.52 per share) less the exercise price per share.
|
In addition to the options described above,
each of the Company’s directors (other than the Paulson nominees) received a grant of 101,220 DSUs during the year ended
December 31, 2018. Each DSU vests immediately and will entitle the holder to receive an equivalent number of Common Shares when
the director in question ceases to serve as a director.
SECURITIES AUTHORIZED FOR ISSUANCE
UNDER EQUITY COMPENSATION PLANS
The following table sets forth details
of all equity compensation plans of the Company as of December 31, 2018, consisting of the 2006 Incentive Stock Option Plan and
2017 Deferred Share Unit Incentive Plan.
Plan Category
|
|
Number of Securities to be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
|
|
|
Weighted-Average Exercise
Price of Outstanding
Options, Warrants and Rights
(C$)
|
|
|
Number of Securities
Remaining Available for
Future Issuance Under the
Equity Compensation Plans
|
|
Equity Compensation Plans Approved by Securityholders
|
|
|
5,012,966
|
|
|
|
0.91
|
|
|
|
13,686,102
|
|
Equity Compensation Plans Not Approved By Securityholders
|
|
|
-
|
|
|
|
-
|
|
|
|
None
|
|
Total
|
|
|
5,012,966
|
|
|
|
0.91
|
|
|
|
13,686,102
|
|
The maximum number of Common Shares issuable
pursuant to security-based compensation arrangements (including the Stock Option Plan and the DSU Plan) may not exceed 10% of the
Common Shares outstanding from time-to-time. As at December 31, 2018, the maximum aggregate number of Common Shares that could
be issued under the Stock Option Plan and the DSU Plan was 18,699,068, representing 10% of the number of issued and outstanding
Common Shares on that date (on a non-diluted basis). As at December 31, 2018, the Company had stock options to potentially acquire
3,655,991 Common Shares outstanding under the Stock Option (representing approximately 1.95% of the outstanding Common Shares)
and 1,356,975 DSUs outstanding under the DSU Plan (representing approximately 0.73% of the outstanding Common Shares, leaving up
to 13,686,102 Common Shares available for future grants under the Stock Option Plan and DSU Plan combined (based on the number
of outstanding Common Shares as at that date on a non-diluted basis (representing an aggregate of approximately 7.32% of the outstanding
Common Shares).
There were no amendments to the terms of
any previously granted options or DSUs during the financial year ended December 31, 2018.
Table of Annual Burn Rate
The following table sets forth the annual
burn rate of all equity compensation plans of the Company for the last three financial years. The annual burn rate is expressed
as a percentage of number of securities granted under all equity compensation plans of the Company during the applicable financial
year over the weighted average number of securities outstanding for the applicable financial year.
|
|
Financial Year 2018
|
|
|
Financial Year 2017
|
|
|
Financial Year 2016
|
|
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
|
|
|
1,128,625
|
|
|
|
250,000
|
|
|
|
0
|
|
Weighted Average Number of Securities Outstanding
|
|
|
182,051,570
|
|
|
|
162,284,057
|
|
|
|
116,833,893
|
|
Burn Rate
|
|
|
0.62
|
%
|
|
|
0.15
|
%
|
|
|
0.0
|
%
|
Stock Option Plan
The Stock Option Plan was approved by shareholders
of the Company in September 2006, and subsequently re-approved by shareholders of the Company in November 2007, October 2008 and
October 2009. The Stock Option Plan was subsequently amended and approved by shareholders in September 2012 and May 2015, and re-approved
by shareholders of the Company in May 2018. The Stock Option Plan is a “rolling” plan, which means that the maximum
number of Common Shares that may be issued pursuant to the exercise of options granted under the Stock Option Plan is 10% of the
number of issued and outstanding Common Shares as at the date of grant.
Purpose of the Stock Option Plan
The Stock Option Plan is intended as an
incentive to enable the Company to attract and retain qualified directors, officers, employees and consultants of the Company and
its affiliates, promote a proprietary interest in the Company and its affiliates among its employees, officers, directors and consultants,
and stimulate the active interest of such persons in the development and financial success of the Company and its affiliates.
General Description of the Stock
Option Plan
The Stock Option Plan is administered by
the Compensation Committee. Options are granted by the Board based upon the recommendations of the Compensation Committee. The
following is a brief description of the Stock Option Plan, which description is qualified in its entirety by the Stock Option Plan.
|
1.
|
Options may be granted to Employees, Officers, Directors, Non-Employee Directors, Management Company
Employees, and Consultants (all as defined in the Stock Option Plan) of the Company and its affiliates who are, in the opinion
of the Compensation Committee, in a position to contribute to the success of the Company or any of its affiliates or who, by virtue
of their service to the Company or any predecessors thereof or to any of its Affiliates, are in the opinion of the Compensation
Committee, worthy of special recognition.
|
|
2.
|
The aggregate number of Common Shares that may be made issuable pursuant to options granted under
the Stock Option Plan at any particular time, unless otherwise approved by shareholders, may not exceed that number which is equal
to 10% of the Common Shares issued and outstanding at such time. For greater certainty, in the event options are exercised, expire
or otherwise terminate, the Company may (subject to such 10% limit) grant an equivalent number of new options under the Stock Option
Plan and the Company may (subject to such 10% limit) continue to grant additional options under the Stock Option Plan as its issued
capital increases, even after the Stock Option Plan has received regulatory acceptance and shareholder approval.
|
|
3.
|
The number of Common Shares subject to each option will be determined by the Board at the time
of grant (based upon the recommendations of the Compensation Committee), provided that the maximum aggregate number of Common Shares
issued pursuant to the exercise of options granted to insiders under the Stock Option Plan (together with those Common Shares which
may be issued pursuant to any other security-based compensation plan of the Company or any other options for services granted by
the Company) within a 12 month period shall not exceed 10% of the issued and outstanding number of Common Shares. Subject to the
overall 10% limit described in 2 above, and the limitations on options to insiders as set forth above, there is no maximum limit
on the number of options which may be granted to any one person.
|
|
4.
|
The exercise price of an option will be set by the Compensation Committee in its discretion, but
such price shall be fixed in compliance with the applicable provisions of the TSX Company Manual in force at the time of grant
and, in any event, will not be less than the closing price of the Common Shares on the TSX on the day prior to the option grant.
|
|
5.
|
Options may be exercisable for a period of up to ten years from the date of grant. The Stock Option
Plan does not contain any specific provisions with respect to the causes of cessation of entitlement of any optionee to exercise
his or her option, provided, however, that the Board may, at the time of grant, determine that an option will terminate within
a fixed period (which is shorter than the option term) upon the ceasing of the optionee to be an eligible optionee (for whatever
reason) or upon the death of the optionee, provided that, in the case of the death of the optionee, an option will be exercisable
only within one year from the date of the optionee’s death.
|
|
6.
|
Notwithstanding the expiry date of an option set by the Board, the expiry date will be adjusted,
without being subject to the discretion of the Board or the Compensation Committee, to take into account any blackout period imposed
on the optionee by the Company. If the expiry date falls during, or within 10 business days after, a blackout period, then the
expiry date of such option will, without any further action by the Compensation Committee or the Board, be extended to the close
of business on the tenth business day after the end of such blackout period.
|
|
7.
|
The Stock Option Plan does not provide for any specific vesting periods. The Compensation Committee
may, at the time of grant of an option, determine when that option will become exercisable and any applicable vesting periods,
and may determine that that option will be exercisable in installments.
|
|
8.
|
On the occurrence of a takeover bid, issuer bid or going private transaction, the Board has the
right to accelerate the date on which any option becomes exercisable and may, if permitted by applicable legislation, permit an
option to be exercised conditional upon the tendering of the Common Shares thereby issued to such bid and the completion of, and
consequent taking up of such Common Shares under, such bid or going private transaction.
|
|
9.
|
Options are non-assignable (except as specifically provided in the Stock Option Plan in the event
of the death of the optionee), and may, during his or her lifetime, only be exercised by the optionee.
|
|
10.
|
The exercise price per Common Share under an option may be reduced, at the discretion of the Board
(upon the recommendation of the Compensation Committee), if (a) at least six months has elapsed since the later of the date such
option was granted and the date the exercise price for such option was last amended and (b) if required by the TSX, shareholder
approval (including disinterested shareholder approval) is obtained.
|
|
11.
|
If there is any change in the number of Common Shares outstanding through any declaration of a
stock dividend or any consolidation, subdivision or reclassification of the Common Shares, the number of Common Shares available
under the Stock Option Plan, the Common Shares subject to any granted stock option and the exercise price thereof will be adjusted
proportionately, subject to any approval required by the TSX. If the Company amalgamates, merges or enters into a plan of arrangement
with or into another corporation, and the Company is not the surviving or acquiring corporation, then, on any subsequent exercise
of such option, the optionee will receive such securities, property or cash which the optionee would have received upon such reorganization
if the optionee had exercised his or her option immediately prior to the record date.
|
|
12.
|
The Stock Option Plan provides that, subject to the policies, rules and regulations of any lawful
authority or regulatory body having jurisdiction over the Company (including the TSX), the Board may, at any time, without further
action or approval by the shareholders of the Company, amend the Stock Option Plan or any option granted under the Stock Option
Plan (or related stock option agreement) for administrative purposes or in such other respects as it may consider advisable including,
without limitation, to:
|
|
(a)
|
ensure that the options granted under the Stock Option Plan will comply with any provisions respecting
stock options in tax and other laws in force in any country or jurisdiction of which a optionee to whom an option has been granted
may from time to time be resident or a citizen;
|
|
(b)
|
correct any defect or omission or reconcile any inconsistency in the Stock Option Plan, any option
or option agreement;
|
|
(c)
|
change the vesting provisions of an option or the Stock Option Plan;
|
|
(d)
|
subject to (m) below, change termination provisions of an option;
|
|
(e)
|
add or modify a cashless exercise feature providing for payment in cash or securities upon the
exercise of options;
|
|
(f)
|
ensure compliance with applicable laws or the requirements of the TSX or any regulatory body or
stock exchange with jurisdiction over the Company;
|
|
(g)
|
add or change provisions relating to any form of financial assistance provided by the Company to
participants under the Stock Option Plan that would facilitate the purchase of securities under the Stock Option Plan;
|
provided that shareholder
approval shall be obtained for any amendment that results in:
|
(h)
|
an increase in the common shares issuable under options granted pursuant to the Stock Option Plan;
|
|
(i)
|
a change in the persons who qualify as participants eligible to participate under the Stock Option
Plan;
|
|
(j)
|
a reduction in the exercise price of an option;
|
|
(k)
|
the cancellation and reissuance of any option;
|
|
(l)
|
the extension of the term of an option;
|
|
(m)
|
a change in the insider participation limit contained in subsection 5.1(b) (see paragraph 3 above);
|
|
(n)
|
options becoming transferable or assignable other than for the purposes described in section 10;
and
|
|
(o)
|
a change in the amendment provisions contained in section 16 (the section which permits the foregoing
amendments).
|
DSU Plan
The DSU Plan was approved by the shareholders
of the Company on May 24, 2017. The DSU Plan must be re-approved by the shareholders of the Company every three years.
Purpose of the DSU Plan
The purpose of the DSU Plan is to allow
the Company to grant DSUs, each of which is equivalent in value to a Common Share, to directors, officers and employees of the
Company or a subsidiary of the Company (“Eligible Persons”) in recognition of their contributions and to provide for
an incentive for their continuing relationship with the Company. The granting of such DSUs is intended to promote a greater alignment
of the interests of Eligible Persons with the interests of shareholders.
General Description of the DSU Plan
The DSU Plan is administered by the Compensation
Committee. The following is a brief description of the DSU Plan, which description is qualified in its entirety by the DSU Plan.
|
1.
|
The Compensation Committee, from time to time in its sole discretion, may grant DSUs to Eligible
Persons (“Participants”). In respect of each grant of DSUs, the Compensation Committee will determine on the date of
any such grant (i) the number of DSUs allocated to the Participant, (ii) whether the Participant will be entitled to elect to receive
a cash payment in lieu of Common Shares in respect of such DSUs on the Distribution Date (as defined below) (such DSUs, “Cash
Option DSUs”), (iii) any vesting conditions that may be applicable to such grant, and (iv) such other terms and conditions
of the DSUs applicable to the grant.
|
|
2.
|
Unless otherwise provided at the time of grant, DSUs will be fully vested upon being granted. One
or more accounts (each, an “Account”) will be maintained by the Company in respect of each Participant and will be
credited by means of a book-keeping entry with DSU’s granted to such Participant from time to time.
|
|
3.
|
Notwithstanding any other provision of the DSU Plan:
|
|
(a)
|
the maximum number of Common Shares issuable pursuant to
outstanding DSUs at any time will be limited to 10% of the aggregate number of issued and outstanding Common Shares, provided
that the maximum number of Common Shares issuable pursuant to outstanding DSUs and all other security-based compensation arrangements
(which includes the Stock Option Plan), may not exceed 10% of the Common Shares outstanding from time to time;
|
|
(b)
|
the number of Common Shares reserved for issuance to any
one Participant under all security based compensation arrangements may not exceed 5% of the issued and outstanding Common Shares;
|
|
(c)
|
the number of Common Shares issuable to insiders (as defined
in the TSX Company Manual), at any time, under all security-based compensation arrangements, may not exceed 10% of the issued
and outstanding Common Shares; and
|
|
(d)
|
the number of Common Shares issued to insiders, within
any one year period, under all security based compensation arrangements, may not exceed 10% of the issued and outstanding Common
Shares.
|
For the purposes of the above
limitations, issued and outstanding Common Shares are computed on a non-diluted basis. Any increase in the issued and outstanding
Common Shares (whether as a result of the issue of Common Shares pursuant to DSUs or otherwise) will result in an increase in the
number of Common Shares that may be issued pursuant to DSUs outstanding at any time and any increase in the number of DSUs granted
will, upon the issue of Common Shares pursuant thereto, make new grants available under the DSU Plan. Further, if the acquisition
of Common Shares by the Company for cancellation should result in the foregoing tests no longer being met, this will not constitute
non-compliance with the above limitations for any grants outstanding prior to such purchase of Common Shares for cancellation.
DSUs that are cancelled or terminated will result in the Common Shares that were reserved for issuance thereunder being available
for a subsequent grant of DSUs pursuant to the DSU Plan to the extent of any Common Shares issuable thereunder that are not issued
under such cancelled or terminated DSUs.
|
4.
|
A Participant who ceases to hold any office as a director, officer or employee of the Company or
a subsidiary of the Company, including as a result of disability or death (the date of such cessation, the “Separation Date”),
will have the right to receive, subject to adjustment where cash dividends are paid in Common Shares, that number of Common Shares
from treasury (“Payment Shares”) equal to the number of DSUs in the Participant’s Account(s) or, in the case
of Cash Option DSUs and upon the election of the Participant, a cash payment (a “Cash Payment”) in lieu of Payment
Shares in respect of a portion or all of such DSUs, on the date (the “Distribution Date”) that the Participant may
elect by written notice delivered to the Chief Financial Officer of the Company on or before November 15 of the calendar year following
the calendar year in which the Separation Date occurs; provided however, that in no event will the Distribution Date be earlier
than the Separation Date or later than December 1 of the calendar year following the calendar year in which the Separation Date
occurs. If the Participant fails to deliver such notice, the Distribution Date will be deemed to be December 1 of the calendar
year following the calendar year in which the Separation Date occurs.
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5.
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A Cash Payment, if applicable, will be equal to (a) the number of DSUs in respect of which the
Participant has elected to receive cash in lieu of Payment Shares multiplied by (b) the Fair Market Value (as defined in the DSU
Plan) of a Common Share on the Distribution Date.
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6.
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The Payment Shares and/or, where applicable, the Cash Payment will be issued or paid within ten
(10) business days after the Distribution Date. Upon payment in full of the value of all of the DSUs in the Participant’s
Account(s) by way of Payment Shares and/or a Cash Payment, as the case may be, less any applicable withholding taxes, the DSUs
will be cancelled and no further payments will be made to the Participant under the DSU Plan.
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7.
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In the event: (a) of any change in the Common Shares through subdivision, consolidation, reclassification,
amalgamation, merger or otherwise; (b) that any rights are granted to all or substantially all shareholders to purchase Common
Shares at prices substantially below Fair Market Value as of the date of grant (other than the payment of dividends in respect
of the Common Shares); or (c) that, as a result of any recapitalization, merger, consolidation or other transaction, the Common
Shares are converted into or exchangeable for any other securities or property, the Board may make such adjustments to the DSU
Plan, the agreements documenting each grant under the DSU Plan (the “DSU Agreements”) and the DSUs outstanding under
the DSU Plan as the Board may, in its discretion, consider appropriate in the circumstances to prevent dilution or enlargement
of the rights granted to Participants and/or to provide for the Participants to receive and accept such other securities or property
in lieu of Common Shares as the Board in its discretion considers fair and appropriate in the circumstances, and the Participants
will be bound by any such determination.
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8.
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The Board may amend, suspend or discontinue the DSU Plan or amend any DSU or DSU Agreement at any
time without the consent of any Participant, provided that such amendment, suspension or termination will not adversely alter or
impair the rights of any Participant in respect of any DSU previously granted to such Participant under the DSU Plan, except as
otherwise permitted under the DSU Plan. In addition, the Board may, by resolution, amend the DSU Plan or any DSU granted under
it (together with any related DSU Agreement) without shareholder approval; provided, however, that at any time while the Common
Shares are listed for trading on the TSX, the Board will not be entitled to amend the DSU Plan or any DSU granted under it (together
with any related DSU Agreement) without shareholder and, if applicable, TSX acceptance: (a) to increase the maximum number of Common
Shares issuable pursuant to the DSU Plan; (b) to permit the assignment or transfer of a DSU other than as provided for in the DSU
Plan; (c) to add to the categories of persons eligible to participate in the DSU Plan; (d) to remove or amend the limits on issuances
to insiders under the DSU Plan; (e) to remove or amend the amendment provisions of the DSU Plan; or (f) in any other circumstances
where TSX and shareholder approval is required by the TSX.
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9.
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If the Board terminates or suspends the DSU Plan, previously credited DSUs will remain outstanding
and in effect in accordance with the terms of the DSU Plan.
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10.
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Except as required by law, the rights of a Participant under the DSU Plan are not capable of being
assigned, transferred, alienated, sold, encumbered, pledged, mortgaged or charged and are not capable of being subject to attachment
or legal process for the payment of any debts or obligations of the Participant.
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Outstanding Options and DSUs
Notwithstanding any other provision of
the Stock Option Plan or the DSU Plan, the maximum number of Common Shares issuable pursuant to security-based compensation arrangements
(including the Stock Option Plan and the DSU Plan) may not exceed 10% of the Common Shares outstanding from time to time.
As at April 11, 2019, the Company had stock
options to potentially acquire 3,534,817 Common Shares outstanding under the Stock Option Plan (representing approximately 1.89%
of the outstanding Common Shares) and 1,356,975 outstanding DSUs (representing approximately 0.73% of the outstanding Common Shares),
leaving up to 13,819,393 Common Shares available for future grants under the Stock Option Plan and the DSU Plan as at that date.
INDEBTEDNESS OF DIRECTORS AND SENIOR
OFFICERS
No individual who is, or at any time during
the last completed financial year was, a director or executive officer of the Company or who is a proposed nominee for election
as a director of the Company, or any of their respective associates or affiliates, has been, at any time since January 1, 2018,
the beginning of the Company’s last completed financial year, either (a) indebted to the Company or any of its subsidiaries
or (b) indebted to an entity where such indebtedness is the subject of a guarantee, support agreement, letter of credit or other
similar arrangement or understanding provided by the Company or any of its subsidiaries.
INTEREST OF INFORMED PERSONS IN MATERIAL
TRANSACTIONS
Other than as set forth elsewhere in this
Proxy Statement, no informed person of the Company, proposed director of the Company, or any associate of affiliate of any informed
person or proposed director has had any material interest, direct or indirect, in:
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(a)
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any transaction since January 1, 2018 (being the commencement of the Company’s last completed
financial year); or
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(b)
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any proposed transaction,
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which materially affected or
would materially affect the Company or any of its subsidiaries. As defined in National Instrument 51-102
Continuous Disclosure
Obligations
of the Canadian Securities Administrators, “informed person” means:
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(a)
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a director or executive officer of a reporting issuer;
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(b)
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a director or executive officer of a person or company that is itself an informed person or subsidiary
of a reporting issuer;
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(c)
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any person or company who beneficially owns, directly or indirectly, voting securities of a reporting
issuer or who exercises control or direction over voting securities of a reporting issuer or a combination of both carrying more
than 10% of the voting rights attached to all outstanding voting securities of the reporting issuer other than voting securities
held by the person or company as underwriter in the course of a distribution; and
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(d)
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a reporting issuer that has purchased, redeemed or otherwise acquired any of its securities, for
so long as it holds any of its securities.
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MANAGEMENT CONTRACTS
The management functions of the Company
during 2018 were not, to any substantial degree, performed by a person or persons other than the Company’s directors or senior
officers.
PROPOSAL THREE – APPOINTMENT
OF AUDITORS
The Audit Committee has recommended that
Davidson & Company LLP (“Davidson”) be nominated for appointment at the Meeting as the Company’s independent
auditors for the fiscal year ending December 31, 2019. Davidson are the current independent auditors for the Company, and were
first appointed as such on May 24, 2017.
Accordingly, unless such authority is withheld,
the persons named in the accompanying proxy intend to vote for the appointment of Davidson as auditors of the Company for the financial
year ending December 31, 2019, and to authorize the Directors to fix the auditors’ remuneration.
Representatives of Davidson are expected
to be present at the Meeting and will have the opportunity to make a statement if they desire. Also, Davidson will be available
to respond to appropriate questions from shareholders.
Independent Auditors Fees
The following table provides amounts billed
by Davidson and PriceWaterhouseCoopers LLC (“PwC”), the Company’s independent auditors for the fiscal years ended
December 31, 2018 and December 31, 2017 for professional services rendered to the Company during the last two fiscal years:
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Audit Fees
($)
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Audit-Related Fees
($)
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Tax Fees
($)
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All Other Fees
($)
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Total Fees
($)
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Fiscal Year Ended December 31, 2018
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34,745
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15,055
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-
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-
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49,800
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Fiscal Year Ended December 31, 2017
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34,977
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20,418
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-
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-
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55,395
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(1)
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Audit-related fees consisted of procedures related to interim
financial statements.
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The Audit Committee has established procedures
for engagement of an independent registered public accounting firm to perform services other than audit, review and attest services.
In order to safeguard the independence of the Company’s auditor, for each engagement to perform such non-audit service, (a)
the Company and the auditor affirm to the Audit Committee that the proposed non-audit service is not prohibited by applicable laws,
rules or regulations; (b) the Company describes the reasons for hiring the auditor to perform the services; and (c) the auditor
affirms to the Audit Committee that it is qualified to perform the services. The Audit Committee has delegated to its Chair its
authority to pre-approve such services in limited circumstances, and any such pre-approvals are reported to the Audit Committee
at its next regular meeting. All services provided by Davidson in 2018 were permissible under applicable laws, rules and regulations
and were pre-approved by the Audit Committee in accordance with its procedures.
Change in Principal Accountant
On May 24, 2017, the Company replaced PwC
as the Company’s independent registered public accounting firm. The Company’s decision to replace PwC was approved
by the Audit Committee of the Company.
The reports of PwC on the financial statements
of the Company included in the Company’s annual reports filed on Form 10-K for the fiscal years ended December 31, 2016 and
December 26, 2015 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit
scope or accounting principle.
During the fiscal years ended December
31, 2016 and December 26, 2015, and the subsequent interim period through May 24, 2017, there were no: (i) disagreements with PwC
on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements,
if not resolved to the satisfaction of PwC, would have caused PwC to make reference to the subject matter of the disagreement in
its reports on the financial statements of the Company for the periods referenced above; or (ii) “reportable events”
as defined in Item 304(a)(1)(v) of Regulation S-K.
The Company provided PwC with a copy of
the above disclosure (included on the Company’s Form 8-K filed on June 1, 2017) and requested that PwC furnish the Company
with a letter addressed to the SEC stating whether or not PwC agrees with the statements contained above. PwC provided the Company
with a letter dated May 31, 2017, addressed to the SEC stating whether or not it agrees with the above statements, a copy of which
was filed as Exhibit 16.1 to the Company’s Form 8-K filed on June 1, 2017.
The Company did not consult with Davidson
during its two most recent fiscal years or through May 24, 2017 regarding either (1) the application of accounting principles to
a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s
consolidated financial statements, and neither a written report was provided to the Company nor oral advice was provided that Davidson
concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial
reporting issue; or (2) any matter that was either the subject of a disagreement or reportable event as defined in Item 304(a)(1)(iv)
and (v) of Regulation S-K.
Vote Required for Approval
With respect to the appointment of the
auditors, the allowable votes are “For” and “Withhold”. “Withhold” votes do not represent “Against”
votes. Accordingly, a single vote “For” will be sufficient to elect Davidson, who are proposed by the Company’s
Audit Committee for appointment as the Company’s auditors for the fiscal year ending December 31, 2019.
THE BOARD UNANIMOUSLY
RECOMMENDS A VOTE “FOR” THE APPOINTMENT OF DAVIDSON & COMPANY LLP AS AUDITOR/INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
OF THE COMPANY.
REPORT OF THE AUDIT COMMITTEE
The information contained in the following
Audit Committee Report shall not be deemed “soliciting material” or “filed” with the SEC, nor shall such
information be incorporated by reference into a future filing under the Securities Act of 1933, as amended, or the Exchange Act,
except to the extent the Company specifically incorporates this Report by reference therein.
Audit Committee Report
The Audit Committee has reviewed and discussed
with the Company and PwC, the Company’s independent auditors for the Fiscal Year 2018, the audited financial statements of
the Company for the fiscal year ended December 31, 2018. The Audit Committee has also reviewed and discussed the Company’s
compliance with Section 404 of the Sarbanes-Oxley Act of 2002.
The Audit Committee has discussed with
PwC the matters required under applicable professional auditing standards and regulations as adopted by the Public Company Accounting
Oversight Board. In addition, the Audit Committee has received and reviewed the written disclosures and letter from PwC required
by applicable requirements of the Public Company Accounting Oversight Board regarding PwC’s communications with the Audit
Committee concerning independence, and has discussed with PwC its independence.
Based on the review and discussions referred
to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2018, for filing with the Securities and Exchange Commission.
Submitted by the following members of the
Audit Committee:
Anton Drescher, Chair
Stuart Harshaw
Thomas Weng
PROPOSAL FOUR - ADVISORY VOTE ON COMPENSATION
OF THE NAMED EXECUTIVE OFFICERS
In accordance with Section 14A of the Exchange
Act, at the Meeting shareholders will be asked to approve the following advisory, non-binding resolution:
RESOLVED, that the compensation paid to
the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion
and Analysis, compensation tables and narrative discussion, is hereby approved.
The Company is asking shareholders to approve
an advisory, non-binding resolution on compensation of its named executive officers as described in the Compensation Discussion
and Analysis, the compensation tables and related narrative discussion included in this Proxy Statement. This proposal, commonly
known as a “Say on Pay” proposal, gives shareholders the opportunity to approve, reject or abstain from voting with
respect to the Company’s fiscal year 2018 executive compensation strategy and the compensation paid to the NEOs. This vote
is not intended to address any specific item of compensation, but rather the overall compensation of the Company’s NEOs as
described in this Proxy Statement.
Although the vote on this proposal is advisory
only, the Board and the Compensation Committee will review and consider the voting results when evaluating the Company’s
executive compensation program.
Vote Required for Approval
The affirmative vote of a simple majority
(50% +1) of the votes eligible to vote at the Meeting and actually voted on Proposal Four is required to approve the matter.
THE BOARD UNANIMOUSLY RECOMMENDS A
VOTE “FOR” APPROVAL OF THE ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION.
PROPOSAL FIVE - ADVISORY VOTE ON FREQUENCY
OF SHAREHOLDERS VOTES ON EXECUTIVE COMPENSATION
The Board has adopted a policy providing
for “Say on Pay” advisory votes every year. Additionally, the Board has adopted a policy of determining the frequency
of “Say on Pay” advisory votes, commonly known as a “Say on Frequency” proposal, every six years. Unless
the Board modifies these policies, the next “Say on Pay” advisory vote will be held at the 2020 annual general meeting
of shareholders, and the next “Say on Frequency” advisory vote will be held at the 2025 annual general meeting of shareholders.
In accordance with Section 14A of the Exchange
Act, at the Meeting, shareholders will be asked to vote on whether future advisory votes on executive compensation should occur
every year, every two years or every three years. Shareholders will be able to specify one of four choices for this proposal on
the proxy card: one year, two years, three years or abstain. Shareholders are not voting to approve or disapprove the Board’s
recommendation. Although this vote on the frequency of future advisory votes on executive compensation is advisory only, the Board
and the Compensation Committee value the opinion of the Company’s shareholders and will take into account the outcome of
the vote when considering the frequency of the advisory vote.
While this advisory vote on the frequency
of “say on pay” vote is non-binding, our Board and Compensation Committee will give careful consideration to the choice
that receives the most votes when considering the frequency of future “say on pay” votes.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE
FOR
CONDUCTING FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
EVERY ONE (1) YEAR.
OTHER MATTERS
The Board knows of no other matters to
be brought before the Meeting. However, if other matters should come before the Meeting each person named in the proxy is entitled
to vote such proxy in accordance with his own judgment on such matters.
Shareholder Proposals
Pursuant to the rules of the Securities
and Exchange Commission (the “SEC”), shareholder proposals intended to be presented at the 2020 Annual General Meeting
of shareholders and to be included in the Company’s proxy materials for the 2020 Annual General Meeting of shareholders must
be received by the Company at its registered office in Vancouver, British Columbia, by no later than December 26, 2019, which is
120 calendar days before the date the Company’s proxy statement is released to shareholders in connection with the previous
year’s annual meeting, if such proposals are to be considered timely and included in the proxy materials.
If the next
annual meeting is changed by more than 30 days from the date of the previous year’s meeting, then the deadline is a reasonable
time before the Company begins to print and send its proxy materials.
The inclusion of any shareholder proposal in the proxy
materials for the 2020 Annual General Meeting of shareholders will be subject to the applicable rules of the Securities and Exchange
Commission.
Proxies for the 2020 Annual General Meeting
of shareholders will confer discretionary authority to vote with respect to all proposals of which the Company does not receive
proper notice by 45 days before the date on which the Company first sent its proxy materials for the prior year’s annual
general meeting of shareholders. If the date of the meeting has changed more than 30 days from the prior year, then notice must
not have been received a reasonable time before the registrant sends its proxy materials for the current year.
The Company’s Articles do not provide
a method for a shareholder to submit a proposal for consideration at the 2020 annual general meeting of shareholders. However,
the BCBCA, in Division 7 of Part 5, “Shareholder Proposals”, sets forth the procedure by which a person who:
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(a)
|
is a registered owner or beneficial owner of one or more Common Shares; and
|
|
(b)
|
has been a registered owner or beneficial owner of one or more such Common Shares for an uninterrupted
period of at least 2 years before the date of the signing of the proposal,
|
may submit a written notice setting out
a matter that the submitter wishes to have considered at the next annual general meeting of the Company (a “proposal”).
The BCBCA also sets out the requirements for a valid proposal and provides for the rights and obligations of the Company and the
submitter upon a valid proposal being made. In general, for a proposal to be valid, it must be supported in writing by the holders
of either at least 1% of the issued Common Shares or Common Shares having an aggregate value of CAD2,000, must contain certain
information and must be submitted to the registered office of the Company at least three months before the anniversary of the Company’s
last annual general meeting.
ADDITIONAL INFORMATION
Additional information regarding the Company
and its business activities is available on the SEDAR website located at www.sedar.com under “Company Profiles – International
Tower Hill Mines Ltd.” and the SEC’s internet website at www.sec.gov. The Company’s financial information is
provided in the Company’s comparative financial statements and related management discussion and analysis for its most recently
completed financial year and may be viewed on the SEDAR website and the SEC’s website at the locations noted above. Shareholders
of the Company may request copies of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018
(filed as the Company’s 2018 Annual Report on Form 10-K) and financial statements and related management discussion and analysis
for the fiscal year ended December 31, 2018, by contacting the Corporate Secretary of the Company by mail at Suite 2300 –
1177 West Hastings Street, Vancouver, British Columbia, Canada V6E 2K3.
BY ORDER OF THE BOARD OF DIRECTORS,
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/s/Debbie Evans
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Debbie Evans, Corporate Secretary
|
Vancouver, British Columbia, Canada
|
April 11, 2019
|
|
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Suite 2300
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1177 West Hastings St.
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Vancouver, BC
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Canada V6E 2K3
|
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2019 ANNUAL GENERAL MEETING OF SHAREHOLDERS
NOTICE-AND-ACCESS NOTIFICATION TO SHAREHOLDERS
You are receiving this notification because
International Tower Hill Mines Ltd. (the “Company”) has decided to use the notice and access model for delivery of
meeting materials for its 2019 Annual General Meeting (“Meeting”) to its registered and beneficial shareholders. This
Notice and Access Notification regarding the Meeting is prepared under the notice-and-access rules that came into effect on February
11, 2013 under National Instrument 54-101
Communication with Beneficial Owners of Securities of a Reporting Issuer”
and equivalent U.S. rules
.
Under notice and access, shareholders still receive a proxy or voting instruction form enabling
them to vote at the Meeting. However, instead of a paper copy of the Notice of Meeting and Proxy Statement/Information Circular
(“Proxy Statement”), shareholders receive this notice with information on how they may access such materials electronically.
The use of this alternative means of delivery is more environmentally responsible as it will help reduce paper use and also will
reduce the cost of printing and mailing materials to shareholders.
MEETING DATE AND LOCATION
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Date & Time:
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Thursday, May 30, 2019 at 9:00 a.m. PDT
|
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Place:
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McCarthy Tetrault LLP
|
|
Suite 2400 – 745 Thurlow Street
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Vancouver, British Columbia
|
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Canada
|
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Only shareholders who own common shares
of the Company at the close of business on the record date of April 11, 2019 may vote at the Meeting or any adjournment or postponement
of the Meeting.
AT THE MEETING, SHAREHOLDERS WILL BE
ASKED TO CONSIDER AND VOTE ON THE FOLLOWING MATTERS:
|
1.
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Fixing Number of Directors
: Shareholders will be asked to fix the number of directors of
the Company at seven (7). Information can be found in the “Proposal One - Fixing Number of Directors” section of the
Proxy Statement.
|
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2.
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Election of Directors
: Shareholders will be asked to elect seven (7) directors for the ensuing
year. Information can be found in the “Proposal Two - Election of Directors” section of the Proxy Statement.
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3.
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Appointment of Auditors
: Shareholders will be asked to appoint Davidson & Company LLP
as the Company’s independent auditors for the fiscal year ending December 31, 2019, and to authorize the Company’s
directors to fix their remuneration. Information can be found in the “Proposal Three - Appointment of Independent Auditors”
section of the Proxy Statement.
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4.
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Advisory Vote on Compensation of NEO’s
: Shareholders will be asked to approve an advisory,
non-binding resolution on the compensation of the Company’s named executive officers as described in the Proxy Statement.
Information can be found in the “Compensation Discussion and Analysis” and “Proposal Four - Advisory Approval
of Executive Compensation” section of the Proxy Statement.
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5.
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Advisory Vote on Frequency of Shareholders’ Votes on Executive Compensation:
Shareholders
will be asked to vote on whether future advisory votes on executive compensation should occur every year, every two years or every
three years. Information can be found in the “Proposal Five – Advisory Vote on Frequency of Shareholders Votes on Executive
Compensation” section of the Proxy Statement.
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6.
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Other Business
: Shareholders may be asked to consider other items of business that may be
properly brought before the Meeting. Information respecting the use of discretionary authority to vote on any such other business
can be found in the “Proxy Instructions” section of the Proxy Statement.
|
SHAREHOLDERS ARE REMINDED TO
VIEW
THE MATERIALS FOR THE MEETING
PRIOR
TO VOTING
WEBSITE WHERE MEETING MATERIALS ARE
POSTED:
http://www.ithmines.com/investors/agm-materials/
Materials for the Meeting may also be viewed
online at
www.sedar.com
under the Company’s profile.
HOW TO OBTAIN PAPER COPIES OF THE MEETING
MATERIALS:
Shareholders may request that paper copies
of the materials for the Meeting be sent to them by postal delivery at no cost to them by either calling the Company at 1-855-428-2825
(toll free) or by sending a written request to our offices at the address below:
Suite 200 – 506
Gaffney Road
Fairbanks, Alaska
USA 99701
Attention: Corporate
Secretary
Shareholders may also access the materials
for the Meeting through the internet by going to the Company’s website at:
http://www.ithmines.com/investors/agm-materials/
or by sending an email to
RSolie@ithmines.com
or
DEvans@ithmines.com
and requesting a copy be sent to them by e-mail.
Requests may be made up to one (1) year
from the date the Proxy Statement was filed on SEDAR, but requests should be received at least five (5) business days in advance
of May 28, 2019, being the proxy cut-off date for voting at the Meeting, in order to receive the materials for the Meeting in advance
of the proxy cut-off date for the Meeting.
VOTING:
Registered shareholders
are
asked to return their proxies using one of the following methods at least one (1) business day in advance of May 28, 2019, being
the proxy cut-off date for the Meeting:
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INTERNET:
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www.investorvote.com
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TELEPHONE:
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1-866-732-VOTE (8683) Toll Free
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MAIL:
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Computershare Investor Services Inc., Proxy Dept.
100 University Avenue, 8th Floor, Toronto, Ontario, CANADA
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Non-registered holders
are
asked to use the Voting Instruction Form provided by Computershare or Broadridge, as applicable, and RETURN IT TO COMPUTERSHARE
OR BROADRIDGE, as applicable (
not to the Company
), or vote through the Internet or by telephone as indicated on the Voting
Instruction Form, in each case as soon as practicable to ensure that it is transmitted on time. It must be received by Computershare
or Broadridge, as applicable, with sufficient time for them to file a proxy by the proxy deadline of May 28, 2019.
Shareholders with questions about notice-and-access
can email the Company at
DEvans@ithmines.com.
INTERNATIONAL TOWER HILL MINES LTD.
(the “Company”)
Request for Annual and/or Interim Financial
Statements and related Management’s Discussion and Analysis
National Instrument 51-102 requires the
Company to send annually to the registered holders and beneficial owners of its securities (“Securityholders”) a form
to allow Securityholders to request a copy of the Company’s annual financial statements and related Management’s Discussion
and Analysis (“MD&A”), interim financial statements and related MD&A, or both. If you wish to receive such
mailings, please complete and return this form to:
INTERNATIONAL TOWER HILL MINES LTD.
Suite 2300 – 1177 West Hastings
Street
Vancouver, BC V6E 2K3
The undersigned Securityholder hereby elects to receive:
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¨
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Interim
Financial Statements for the first quarter ended March 31, 2019, second quarter ended June 30, 2019 and third quarter ended September
30, 2019, and the related MD&A;
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¨
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Annual
Financial Statements for the fiscal year ended December 31, 2019 and related MD&A; or
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¨
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BOTH
– Interim Financial Statements and related MD&A and the Annual Financial Statements and related MD&A.
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Please note that a request form will be
mailed each year and
Securityholders must return such form each year in order to receive the documents indicated above
.
Name:
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Address:
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Postal Code:
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Email:
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I confirm that I am a
registered/beneficial (circle one)
shareholder
of the Company.
Signature of
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Securityholder:
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Date:
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CUSIP: 46050R102
INTERNATIONAL
TOWER HILL MINES LTD. Security Class Holder Account Number Form of Proxy - Annual General Meeting to be held on May 30, 2019 This
Form of Proxy is solicited by and on behalf of Management. Notes to proxy 1. Every holder has the right to appoint some other
person or company of their choice, who need not be a holder, to attend and act on their behalf at the meeting or any adjournment
or postponement thereof. If you wish to appoint a person or company other than the persons whose names are printed herein, please
insert the name of your chosen proxyholder in the space provided (see reverse). 2. If the securities are registered in the name
of more than one owner (for example, joint ownership, trustees, executors, etc.), then all those registered should sign this proxy.
If you are voting on behalf of a corporation or another individual you must sign this proxy with signing capacity stated, and
you may be required to provide documentation evidencing your power to sign this proxy. 3. This proxy should be signed in the exact
manner as the name(s) appear(s) on the proxy. 4. If this proxy is not dated, it will be deemed to bear the date on which it is
mailed by Management to the holder. 5. The securities represented by this proxy will be voted as directed by the holder, however,
if such a direction is not made in respect of any matter, this proxy will be voted as recommended by Management. 6. The securities
represented by this proxy will be voted in favour or withheld from voting or voted against each of the matters described herein,
as applicable, in accordance with the instructions of the holder, on any ballot that may be called for and, if the holder has
specified a choice with respect to any matter to be acted on, the securities will be voted accordingly. 7. This proxy confers
discretionary authority in respect of amendments or variations to matters identified in the Notice of Meeting or other matters
that may properly come before the meeting or any adjournment or postponement thereof. 8. This proxy should be read in conjunction
with the accompanying documentation provided by Management. Proxies submitted must be received by 4:30 PM, Pacific Daylight Time,
on Tuesday, May 28, 2019. VOTE USING THE TELEPHONE OR INTERNET 24 HOURS A DAY 7 DAYS A WEEK! To Vote Using the Telephone •
Call the number listed BELOW from a touch tone telephone. 1-866-732-VOTE (8683) Toll Free To Vote Using the Internet • Go
to the following web site: www.investorvote.com • Smartphone? Scan the QR code to vote now. If you vote by telephone or the
Internet, DO NOT mail back this proxy. Voting by mail may be the only method for securities held in the name of a corporation
or securities being voted on behalf of another individual. Voting by mail or by Internet are the only methods by which a holder
may appoint a person as proxyholder other than the Management nominees named on the reverse of this proxy. Instead of mailing
this proxy, you may choose one of the two voting methods outlined above to vote this proxy. To vote by telephone or the Internet,
you will need to provide your CONTROL NUMBER listed below.
CONTROL NUMBER Appointment
of Proxyholder I/We being holder(s) of International Tower Hill Mines Ltd. hereby appoint(s): Marcelo Kim, the Chair of the Board,
or failing him, Karl Hanneman, the Chief Executive Officer, OR Print the name of the person you are appointing if this person
is someone other than Marcelo Kim or Karl Hanneman. as my/our proxyholder with full power of substitution and to attend, act and
to vote for and on behalf of the shareholder in accordance with the following direction (or if no directions have been given,
as the proxyholder sees fit) and all other matters that may properly come before the Annual General Meeting of shareholders of
International Tower Hill Mines Ltd. to be held at the Main Boardroom, Suite 2400, 745 Thurlow Street, Vancouver, British Columbia,
Canada, on Thursday, May 30, 2019 at 9:00 AM (Pacific Daylight Time) and at any adjournment or postponement thereof. VOTING RECOMMENDATIONS
ARE INDICATED BY T OVER THE BOXES. For Against 1. Number of Directors To fix the number of directors at seven. 2. Election of
Directors For Withhold For Withhold For Withhold 01. Damola Adamolekun 02. Anton Drescher 03. Karl Hanneman 04. Stuart Harshaw
05. Marcelo Kim 06. Stephen Lang 07. Thomas Weng For Withhold 3. Appointment of Auditors Appointment of Davidson & Company
LLP as Auditors of the Corporation for the fiscal year ending December 31, 2019 and authorizing the Directors to fix their remuneration.
For Against 4. Advisory Vote on Compensation of NEO’s To approve the compensation paid to the Company’s NEO’s
on an advisory non-binding basis. 1 Year 2 Years 3 Years Abstain 5. Advisory Vote on Frequency of Shareholders’ Votes on
Executive Compensation To approve the frequency of shareholders’ votes on executive compensation. Authorized Signature(s)
- This section must be completed for your instructions to be executed. I/We authorize you to act in accordance with my/our instructions
set out above. I/We hereby revoke any proxy previously given with respect to the Meeting. If no voting instructions are indicated
above, this Proxy will be voted as recommended by Management. Signature(s) Date I T H Q 2 9 2 4 3 3 A R 0
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