1. business and industrial
2. company
3. merger and acquisition

COVER SHEET
6 2 3 2 3
N i HAO
MI NERAL
R E S OUR C E S
I N T E RNA T I ONA L ,
I NC
.
(Company's Full Name)
7
F
P E A K S U N
P R I N C E T O N
G R E E N H I L L S
B L D G.
S T .,
S H A W,
B R G Y .
E A S T
B L V D.,
C O R .
WA C K - WA C K
MA N D A L U Y O N G
C I T Y
(Business Address : No. Street City / Town / Province)
ARSENIO C. CABRERA, JR.
(6 3 2) 8 1 3 7 1 1 1
Contact Person
Company Telephone Number
DEFINITIVE INFORMATION STATEMENT
Month
Day
Month
FORM TYPE
Fiscal Year
Day
Annual Meeting
Secondary License Type, If Applicable
Amended Articles Number/Section
Dept. Requiring this Doc.
Total Amount of Borrowings
Domestic
Total No. of Stocholders
To be accomplished by SEC Personnel concerned
File Number
LCU
Document I.D.
Cashier
Foreign
PART I
INFORMATION REQUIRED IN INFORMATION STATEMENT
A.
GENERAL INFORMATION
Item 1. Date, time and place of meeting of security holders.
Date of Meeting
Time of Meeting
Place of Meeting
Registrant’s Mailing Address
:
:
:
:
Approximate Date on Which the
Information Statement is First Sent
Or Given to Security Holders
:
4 December 2013
12:30 p.m.
Bistro Lounge
Makati Sports Club
L.P Leviste Street corner Gallardo Street
Salcedo Village, Makati City, Metro Manila
th
7 Floor, Peaksun Building
1505 Princeton Street corner Shaw Boulevard
Barangay Wack-Wack, Greenhills East
Mandaluyong City, Metro Manila 1200
13 November 2013
Item 2. Dissenters' Right of Appraisal
A stockholder has the right to dissent and demand payment of the fair value of his shares in the following
instances:
(a)
In case any amendment to the articles of incorporation has the effect of changing or
restricting the rights of any stockholder or class of shares, or of authorizing preferences in
any respect superior to those of outstanding shares of any class, or of extending or
shortening the term of corporate existence;
(b)
In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or
substantially all of the corporate property and assets as provided in the Corporation Code;
and
(c)
In case of merger or consolidation.
The appraisal right may be exercised by any stockholder who shall have voted against the proposed corporate
action, by making a written demand on the Company within thirty (30) days after the date on which the vote
was taken, for payment of the fair value of his shares, provided that failure to make the demand within such
period shall be deemed a waiver of the appraisal right.
If the proposed corporate action is implemented or effected, the Company shall pay to such dissenting
stockholder, upon surrender of the certificate(s) of stock representing his shares within ten (10) days after
demanding payment of his shares, the fair value thereof.
In case of disagreement as to the fair value of the shares, the same shall be determined in accordance with the
procedure set forth in Section 82 of the Corporation Code. No payment shall be made to any dissenting
stockholder unless the Company has unrestricted retained earnings in its books to cover such payment. Upon
payment of the shares, the dissenting stockholder shall forthwith transfer his shares to the Company.
There are no matters to be taken up during the Annual Stockholders’ Meeting which may trigger the exercise
of a stockholder’s appraisal right.
2
Item 3. Interest of Certain Persons in or Opposition to Matters to be Acted Upon
No director or officer of the Company since the beginning of the last fiscal year, nominee for election as
director, or associate of the foregoing persons, has any substantial interest, direct or indirect, by security
holdings or otherwise, in any matter to be acted upon, other than election to office.
No director of the Company has informed it in writing that he intends to oppose any action to be taken by the
Company at the meeting.
Market Information
The Company’s common stock is traded in the Philippine Stock Exchange (PSE) under the stock symbol “NI.”
The following table sets forth NI’s high and low intra-day sales prices per share for the periods indicated on the
PSE.
High
2011:
First Quarter ............................................
Second Quarter .......................................
Third Quarter ..........................................
Fourth Quarter ........................................
2012:
First Quarter ............................................
Second Quarter .......................................
Third Quarter ..........................................
Fourth Quarter ........................................
2013:
First Quarter ............................................
Second Quarter .......................................
Third Quarter ..........................................
Source : Technistock
Low
P2.36
2.19
3.55
4.49
P2.27
2.15
3.36
2.91
P11.24
9.20
8.05
5.09
P11.10
9.00
7.77
4.99
P3.67
3.55
3.85
P3.50
2.79
2.78
As of 16 October 2013, the high share price of the Company was P2.70 whereas the low
share price was P2.63. The volume was 195,000 shares.
B.
CONTROL AND COMPENSATION INFORMATION
Item 4. Voting Securities and Principal Holders Thereof
(a)
Voting securities entitled to be voted at the meeting as of 16 October 2013
Title of Each Class
Number of Shares
Outstanding
Common Stock
913,000,000
Number of Votes
One (1) vote per share
As of 16 October 2013, the Company’s shareholders consist of the following:
Shares Owned by Filipinos
Shares Owned by Non-Filipinos
Total
835,140,663
77,859,337
913,000,000
3
(b)
Record date
Only stockholders of record in the books of the Company at the end of trading hours at the Philippine
Stock Exchange on 8 November 2013 shall be entitled to notice of and to vote at the Annual
Stockholders’ Meeting.
(c)
In the election of directors, every stockholder entitled to vote shall have the right to vote in person or
by proxy the number of common shares of stock standing in his name at record date. A stockholder
entitled to vote may vote such number of shares for as many persons as there are directors elected,
or he may accumulate said shares and give one candidate as many votes as the number of directors to
be elected multiplied by the number of his shares shall equal, or he may distribute them on the same
principle among as many candidates as he shall see fit, provided, that the total number of votes cast
by a stockholder shall not exceed the number of shares owned by him as shown in the books of the
Corporation multiplied by the whole number of directors to be elected.
(d)
Security Ownership of Certain Record and Beneficial Owners and Management
(1)
Security Ownership of Certain Record/Beneficial Owners as of 16 October 2013
The record and/or beneficial owners of more than 5% of the outstanding common shares of the
Company as of 16 October 2013 are as follows:
Title of
Class
Common
Name, Address of
Record Owner and
Relationship with
Issuer
PCD Nominee
Corporation*
37/F Tower I, The
Enterprise Center,
6766 Ayala Avenue
cor. Paseo de Roxas,
Makati City
Name of Beneficial
Owner and
Relationship with
Record Owner
Citizenship
No. of Shares
Held
Percent
PCD participants
acting for themselves
or for their
clients
Filipino
544,790,560
59.6704%
Jerry C. Angping
Filipino
285,100,000
31.2267%
Stockholder
Common
Jerry C. Angping
20F The Peak, 107
L.P. Leviste Street,
Salcedo Village,
Makati City
Stockholder
4
The owners under PCD account holding more than 5% of the outstanding capital stock of the
Corporation as of 16 October 2013 are as follows:
Title of
Class
Common
Name, Address of
Record Owner and
Relationship with Issuer
Citibank N.A.**
11/F Citibank Tower
Villar corner Valero
Streets
Makati City
Name of Beneficial
Owner and
Relationship with
Record Owner
Citizenship
No. of
Shares Held
Percent
Filipino
128,880,388
14.1161%
Angping & Associates
Securities, Inc. acting
for itself or for its
clients
Filipino
Non-Filipino
85,287,285
95,000
9.3518%
Premium Securities,
Inc. acting for itself
or for its clients
Filipino
77,317,000
8.4684%
Citibank N.A. acting
for itself or for its
clients
Stockholder
Common
Angping & Associates
Securities, Inc.***
Suites 2002/2004 The
Peak
107 L.P. Leviste Street,
Salcedo Village Makati
City
Stockholder
Common
Premium Securities,
Inc.**
Unit 1415, Tower I &
Exchange Plaza
Ayala Avenue corner
Paseo de Roxas
Makati City
Stockholder
Note:
*PCD Nominee Corporation is a wholly-owned subsidiary of the Philippine Central Depository, Inc.
(PCD), and is the registered owner of the shares in the book of the Company’s transfer agent. The
participants of the PCD (with respect to securities in the principal accounts) or the clients of such
participants (with respect to securities in the participants’ client accounts) are, as far as the PCD and
PCD Nominee Corporation are concerned, the presumed beneficial owners of such lodged shares. PCD
Nominee Corporation merely holds legal title (and not beneficial title) to the Company’s lodged
shares to facilitate the book-entry trading and settlement of the Company’s shares. Except for the
entities enumerated above, no natural person or juridical entity whose shares are lodged in the name
of PCD Nominee Corporation is known to the Company to be directly or indirectly the record or
beneficial owner of more than five percent (5%) of the Company’s voting securities.
**The Company has no information relating to the power to decide how the shares in the Company
are to be voted.
***Ms. Wilma C. Crisostomo, President of Angping & Associates Securities, Inc. (“AASI”), will vote for
the shares of AASI in the Company.
5
The following table sets forth the top 20 shareholders of the Company’s common stock, the number
of shares held, and the percentage of total shares outstanding held by each as of 16 October 2013.
Shareholder Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Shares Held
PCD Nominee Corp. – Filipino
Angping, Jerry C.
PCD Nominee Corp. - Non-Filipino
Macquarie Bank Limited
Chia Kim Teck
Angping, Diana Kaye
Angping, Jerry C. ITF: John Isaac V. Angping
Angping, Jerry C. ITF: Christian Daniel V. Angping
Angping, Ma. Rhodora V.
Defensor, Michael T.
Crisostomo, Jose Mariano
Saavedra, Howard C.
Fong, Fe G.
Miranda, Ma. Carla Remedios E.
Evangelista, Leoben Luis T.
Jorge, Nicanor S.
Perez, Leonardo
Lee, Roxanne
Tolarbas, Luzelle Ann R.
Gonzales, Bobby S.
544,790,560
285,100,000
42,503,605
33,000,000
2,349,732
1,000,000
1,000,000
1,000,000
1,000,000
160,000
100,000
100,000
100,000
100,000
100,000
80,000
50,000
50,000
50,000
50,000
Ownership (%)
59.6704
31.2267
4.6554
3.6145
0.2574
0.1095
0.1095
0.1095
0.1095
0.0175
0.0110
0.0110
0.0110
0.0110
0.0110
0.0088
0.0055
0.0055
0.0055
0.0055
912,652,997
As of 16 October 2013, there were 98 shareholders of the Company’s outstanding common stock.
(2)
Security Ownership of Management as of 16 October 2013
The aggregate shareholdings in the Company of the Company’s directors and executive
officers and the percentage of their shareholdings as of 16 October 2013 are as follows:
Title of
Class
Name of Beneficial Owner
Citizenship
Antonio Victoriano F.
Gregorio III
Filipino
10,000/Direct
0/Indirect
0.0011%/Direct
0.0000%/Indirect
Common
David O. Chua
Filipino
100/Direct
500/Indirect
0.0000%/Direct
0.0001%/Indirect
Common
Chi Ho Co
Filipino
1,000/Direct
2,913,900/Indirect
0.0001%/Direct
0.3192%/Indirect
Common
Job Adrian M. Ambrosio
Filipino
1,000/Direct
0/Indirect
0.0001%/Direct
0.0000%/Indirect
Common
Jong-Dae Lee
Korean
1,000/Direct
0/Indirect
0.0001%/Direct
0.0000%/Indirect
Common
6
Amount & Nature of
Beneficial
Ownership
Percent of Class
Title of
Class
Name of Beneficial Owner
Citizenship
Common
Manuel G. Ong
Filipino
1,000/Direct
0/Indirect
0.0001%/Direct
0.0000%/Indirect
Common
Jose Francisco E. Miranda
Filipino
1,000/Direct
0/Indirect
0.0001%/Direct
0.0000%/Indirect
Common
Delfin S. Castro, Jr.
Filipino
1,000/Direct
0/Indirect
0.0001%/Direct
0.0000%/Indirect
Common
Arsenio C. Cabrera, Jr.
Filipino
0/Direct
200,000/Indirect
0.0000%/Direct
0.0219%/Indirect
All Directors and Executive
Officers as a group
Amount & Nature of
Beneficial
Ownership
3,130,500
Percent of Class
0.3429%
All of the above named directors and officers of the Company are the record and/or
beneficial owners of the shares of stocks set forth opposite their respective names.
(3)
Voting Trust Holders of 5% Or More
No person holds at least 5% or more than 5% of a class under a voting trust or similar
agreement.
(4)
Changes in Control
No change in control in the Company has occurred since the beginning of its last fiscal year.
There is no existing arrangement which may result in a change of control in the Company.
(5)
Dividends
The Board has not declared any cash dividends in the last two (2) fiscal years. There is no
restriction that limits the payment of dividends on common shares.
Item 5. Directors and Executive Officers
(a)
Incumbent Directors, Including Independent Directors and Executive Officers
The incumbent directors, including independent directors and officers of the Company, with their
corresponding ages and citizenships are the following:
Name of Director/Executive Officer
Antonio Victoriano F. Gregorio III
David O. Chua
Chi Ho Tan Co
Job Adrian M. Ambrosio
Jose Francisco E. Miranda
Jong-Dae Lee
Manuel G. Ong
Delfin S. Castro, Jr.
Position
President/Chairman
Director
Director
Director
Director
Independent Director
Independent Director
Chief Finance Officer / Treasurer /
7
Age
40
44
41
40
35
53
55
47
Citizenship
Filipino
Filipino
Filipino
Filipino
Filipino
Korean
Filipino
Filipino
Arsenio C. Cabrera, Jr.
(b)
Compliance Officer
Corporate Secretary and Corporate
Information Officer
52
Filipino
Term of Office
The term of office of the directors of the Company is one (1) year and they are to serve as such until
the election and qualification of their successors. Officers are appointed annually by the Board of
Directors at its first meeting following the Annual Stockholders’ Meeting, each to hold office until the
corresponding meeting of the Board of Directors in the next year or until a successor shall have been
appointed or shall have qualified.
Pursuant to Rule 38 of the Securities Regulations Code, and Article IV of the Company’s By-Laws, the
nomination of all of the members of the Company’s Board of Directors, including independent
directors, shall be conducted by the Nomination Committee prior to the Annual Stockholders’
Meeting in accordance with the following procedure:
(c)
(1)
All recommendations shall be signed by the nominating stockholders together with
the acceptance and conformity of the would-be nominees and shall be submitted to
the Nomination Committee and the Corporate Secretary at least 45 days before the
date of the actual meeting.
(2)
The Nomination Committee shall pre-screen the qualifications and prepare a Final
List of all Candidates.
(3)
After the nomination, the Nomination Committee shall prepare a Final List of
Candidates to be submitted to the Board of Directors, which shall contain all the
information regarding the background and the experience of the nominees required
to be ascertained and made known under the Securities Regulation Code and
relevant rules and regulations.
(4)
Said Final List of Candidates shall be disclosed in the reports required by law, rules
and regulations to be submitted to the Securities Exchange Commission, Philippine
Stock Exchange and to all stockholders.
(5)
Only nominees whose names appear on the Final List of Candidates shall be eligible
for election as directors. No other nominations shall be entertained after the Final
List of Candidates shall have been prepared. No further nomination shall be
entertained or allowed on the floor during the actual Annual Stockholders’ Meeting.
Business Experience of Directors and Officers during the past five (5) years
Atty. Antonio Victoriano F. Gregorio III was elected Director and President of the Company on 21
December 2011, and became Chairman of the Board, Chairman of the Compensation Committee and
member of the Audit and Nomination Committees on 29 October 2012. He likewise became a
member of the Risk Management Committee of the Company on 20 June 2013. He graduated Second
Honors, with a Juris Doctor from the Ateneo de Manila University in 1998 and passed the bar
examinations of 1998. He also has a Bachelor of Science Major in Management Engineering and a
Bachelor of Arts, Major in Economics-Honors, both from the Ateneo de Manila University, Magna
Cum Laude. He was a valedictorian of his high school class in the Ateneo. Atty. Gregorio is a Partner
at Gregorio Law Offices and sits as director and officer of various public and private companies,
including Lodestar Investment Holdings Corporation (Chairman from 2009 to present), Asiabest Group
International Inc. (Chairman and President from 2011 to present and Corporate Secretary/Director
from 2008 to 2011), Dizon Copper-Silver Mines (Treasurer/Director from 2012 to present), Abacus
Consolidated Resources and Holdings, Inc.(Director from 2009 to present), GNA Resources
International Limited (2011 to present), Cuervo Far East, Inc.(Corporate Secretary/Director from 2005
8
to present), Alta Minera, Inc., Breccia Resources, Inc., and Millionaire’s Offices and Properties, Inc.
(Chairman from 2011 to present), Beaver Q Corporation and Barnyard Realty Corporation (Corporate
Secretary from 2002 to present), Big Herald Link International Corporation (Corporate
Secretary/Treasurer/Director from 2004 to present), Tajima Yakiniku, Inc. (Director from 2005 to
present), 4A9T Scholarship foundation, Inc. (Corporate Secretary/Trustee from 1999 to present) and
World Wide Manpower Overseas, Inc. (President/Director from 2007 to present). He was formerly the
Corporate Secretary/Director of the following companies, Active Earnings, Inc. (2003 to 2011),
Buddybuds, Inc. (2003 to 2011), Cangoc, Inc. (2002 to 2011), Carellan, Inc. (2003 to 2011), Cuisine
Allurements, Inc. (2002 to 2011), Grand Pin Development Corporation (2004 to 2011), Hobbiton, Inc.
(2003 to 2011), Pinecrest Realty Corporation (2003 to 2011); Treasurer/ Director of Carom, Inc. (2003
to 2011), Los Boldos, Inc. (2003 to 2011) and Onion and Chives, Inc. (2003 to 2011), Corporate
Secretary of JMARR Realty, Inc. (2002 to 2011), PPARR Management and Holdings Corporation (2004
to 2010), Cuervo Appraisers, Inc. (2007 to 2009) and RF Cuervo, Inc. (2003 to 2008); Asst. Corporate
Secretary/Treasurer/Director of Weathertop, Inc. from 2004 to 2011 and Director of Musx
Corporation from 2007 to 2010 and Outsource Leverage Systems International, Inc. (Corporate
Secretary/Director, 2004 to 2009) and Tanba Yakiniku, Inc. (Treasurer/Director, 2011).
Mr. Chi Ho Co was elected Director of the Company on 14 December 2012. He is a graduate of
Bachelor of Arts in Economics at the Ateneo de Manila University. He currently serves as Director and
Officer of various publicly listed and private companies including Lodestar Investment Holdings
Corporation (Director and President, 2008 to present), Asiabest Group International Inc. (2011 to
present), Hightower, Inc. (President, 2003 to present), Glomedic Philippines, Inc. (Chairman, 2004 to
present), Banquets in Style, Inc.(Chairman, 2003 to present), Cavite Apparel Corporation (VP, 1998 to
present), Subic Bay Apparel Corporation (VP, 1998 to present), Julia Realty & Development Corp.
(Treasurer, 2006 to present), Edgeport Properties, Inc. (Treasurer/Secretary, 2006 to present),
Fasttrack Realty & Development, Inc. (Chairman, 2004 to present) and CAC Motors Corp. (President,
2002 to present) among other companies.
Atty. Job Adrian M. Ambrosio was elected Director of the Company on 14 December 2012. He is a
member of both the Philippine Bar and State Bar of California. He is a graduate of the United States
Department of Agriculture with a course on Cochran Fellow on Biofuels; the College of Law of England
and Wales/International Bar Association with a Practice Diploma on International Capital Markets and
Loans; and the University of California, Berkeley Extension, Berkeley, CA, on International Diploma in
Computer Information Systems (with distinction). He obtained his Juris Degree, and likewise holds an
AB Economics degree, from the Ateneo de Manila University.
Mr. David O. Chua was elected Director of the Company on 20 February 2008. He graduated from St.
Mary's College of California with a Bachelors of Science in Financial Services Management Honors
Program and received his Master of Business Administration from J.L. Kellogg School of Management
(Northwestern University) and the Hong Kong University of Science & Technology (HKUST) Graduate
School of Management. Mr. Chua is President of both Cathay Pacific Steel Corporation (CAPASCO) and
Asia Pacific Capital Equities and Securities Corporation. He currently serves as a director on the board
of the Philippine Stock Exchange, Philippine Savings Bank and Crown Equities Inc. He is also a trustee
of the University of the East and the University of the East Ramon Magsaysay Medical Center. Mr.
Chua is a director and Chairman of the Trade Committee of the Federation of Filipino-Chinese
Chambers of Commerce and Industry as well as Chairman of the 2008 National Employer’s
Conference of the Employers Confederation of the Philippines (ECOP), He also serves as a director of
the Galleria Corporate Center Condominium Corporation and as director and Treasurer of the
Heavenly Garden Memorial Park Development Corporation. Mr. Chua currently serves as President of
the Kellogg/Northwestern University Alumni Association of the Philippines as well as the President of
the Philippine Steelmakers Association and director of the Hardware Foundation of the Philippines.
He is also a member of the Makati Business Club, Financial Executives Institute of the Philippines
(FINEX), ECOP, Rotary Club of Makati West and the Young Presidents Organization. He was previously
a director for First Metro Investment Corporation, The Philippine Banking Corporation, PBC Capital
and Investments Corporation and Philippine Internet Service Organization.
9
Mr. Jose Francisco R. Miranda was elected Director of the Company on 21 December 2011 and
became a member of the Audit, Nomination and Compensation Committees on 29 October 2012. He
likewise became a member of the Risk Management Committee of the Company on 20 June 2013. He
is currently the Company’s Chief Operating Officer. He graduated from the University of the
Philippines, Diliman, Quezon City, with a degree in B. S. Geodetic Engineering. He has been President
of Geograce Resources Philippines, Inc. since 2011 and is also currently Director, Treasurer and Chief
Financial Officer of Lodestar Investment Holdings Corporation, Director of Dizon Copper-Silver Mines,
Inc., and Chief Executive Officer of GNA Resources (HK) Limited).
Mr. Manuel G. Ong was elected Independent Director, and Chairman of the Audit and Nomination
Committees of the Company on 18 December 2009. He became Chairman of the Company’s Risk
Management and Governance Committees on 20 June 2013. He is currently the Vice President and
Technical Director of Industrial Welding Corporation.
Mr. Jong-Dae Lee was elected Independent Director of the Company on 14 December 2012, and
became a member of the Governance Committee on 20 June 2013. He obtained his Juris Doctor
degree from Georgetown Law, received his BA in economics from Haverford College. He is currently
the Managing Director of Quadrant Management, a New York based buy out fund; Independent
Director of Mando China Inc., a subsidiary of Mando Corp., which is one of the largest auto parts
manufacturer in the world; a member of the Young Presidents’ Organization; and a member of the
executive committee and chair of education programs of the Hong Kong Chapter and regional chair of
networking for North Asia Region. He has served on the boards of both public and leading private
companies, including, Asian Logic Ltd., a gaming software company which was listed in 2008 on the
London Stock Exchange; DKoram Limited, a subsidiary of Ssangyong Paper; Morrison Express, a
Taiwanese logistics company; and Antiro Funds, a family of hedge funds, among other companies. He
was likewise an Executive Committee member of Lee International IP and Law Group, a leading
Korean law firm with particular focus on intellectual property, and was of counsel to Orrick Herrington
Sutcliffe’s Hong Kong office, a leading global law firm.
Mr. Delfin S. Castro, Jr. was appointed as CFO/Treasurer/Compliance Officer in January 2012. He was
elected Director of the Company on 14 December 2012, and became a member of the Governance
Committee on 20 June 2013. He is currently a Director/Treasurer/Chief Information Officer of
Geograce Resources Philippines, Inc. and Asiabest Group International Inc. and the Chairman and
President of Dizon Copper-Silver Mines, Inc. He holds a Masters in Business Administration and a
Bachelor of Science in Business Administration from the University of the Philippines. From June 2000
to April 2001, he was the Global Portfolio Manager for Private Equities at United Resources Asset
Management, Inc. and formerly the Engagement Director of Palo Alto Consultants Asia, Inc, and a
Senior Assistant Vice-President at Asiatrust Bank.
Atty. Arsenio C. Cabrera, Jr. has been the Corporate Secretary and Corporate Information Officer of
the Company since 30 November 2006. He was elected Director of the Company on 14 December
2012. He is a member of the Philippine Bar, holds a Bachelor of Laws (Second Honors) and a Bachelor
of Science in Legal Management from the Ateneo de Manila University. Mr. Cabrera is the Managing
Partner of Herrera Teehankee & Cabrera Law Offices. He is currently the General Counsel of STI
Education Services Group, Inc., Director and Corporate Secretary of GEOGRACE Resources Philippines,
Inc., and Corporate Secretary of STI Education Systems Holdings, Inc., Lorenzo Shipping Corporation,
Calatagan Bay Realty, Inc., Canlubang Golf and Country Club, Inc., DLS-STI College, Inc., Foundation for
Filipinos, Inc., Northcroft Lim (Philippines) Inc., People’s Shrine Foundation, Inc., PhilPlan First, Inc.,
Philhealthcare, Inc., Banclife Insurance Co., Inc., Philippines First Insurance Co., Renaissance
Condominium Corporation, Sonak Holdings, Inc., Trend Developers, Inc., Villa Development
Corporation and WVC Development Corporation.
Nominees for Election/Re-Election
The Nominations Committee has screened the nominees and prepared the Final List of Candidates for
election to the Board of Directors at the Annual Stockholders’ Meeting on 4 December 2013. The
10
nominees have been found to possess all of the qualifications and none of the disqualifications for
election as director or as independent director. In approving the nominations for independent
directors, the Nominations Committee considered the guidelines on the nomination of independent
directors under SRC Rule 38.
The Nominations Committee is composed of Mr. Manuel G. Ong as Chairman and Atty. Antonio
Victoriano F. Gregorio III and Mr. Jose Francisco E. Miranda as members.
The following are the Final List of Candidates for directors as determined by the Company’s
Nomination Committee:
Candidate for Nomination as Director
Antonio Victoriano F. Gregorio III
David O. Chua
Chi Ho Tan Co
Job Adrian M. Ambrosio
Jose Francisco E. Miranda
Delfin S. Castro, Jr.
Arsenio C. Cabrera, Jr.
Jong-Dae Lee (Independent Director)
Manuel G. Ong (Independent Director)
Nominating Stockholder
Jerry C. Angping
Jerry C. Angping
Jerry C. Angping
Jerry C. Angping
Jerry C. Angping
Jerry C. Angping
Jerry C. Angping
Jerry C. Angping
Jerry C. Angping
Relationship
None
None
None
None
None
None
None
None
None
Messrs. Manuel G. Ong and Jong-Dae Lee are the nominees for independent directors for the ensuing
year. While Messrs. Ong and Lee have been independent directors of the Company since 2009 and
2012, respectively, their re-election as such remains in accordance with the requirements of SEC
Memorandum Circular No. 9, Series of 2011 on the term limits of independent directors.
In compliance with the Notice of the Commission dated 20 October 2006, Messrs. Ong and Lee shall
submit their respective Certifications as independent directors within thirty (30) days from the date of
their election as such during the Company’s 2013 Annual Stockholders’ Meeting.
A brief summary of the background and qualifications of each nominee may be found in the above
section on “Directors and Executive Officers”.
(d)
Other Directorships held in reporting companies naming each company
Except for the following, all the other directors and officers of the Company are not directors in other
reporting companies:
Antonio Victoriano F. Gregorio
III
Director of Geograce Resources Philippines, Inc.
Chairman of Lodestar Investment Holdings Corporation
Director and Treasurer of Dizon Copper Silver Mines
Chairman and President of Asiabest Group International, Inc.
Director of Abacus Consolidated Resources and Holdings, Inc.
Jose Francisco E. Miranda
Director and President of Geograce Resources Philippines, Inc.
Director of Asiabest Group International, Inc.
Director, Treasurer and Chief Financial Officer of Lodestar
Investment Holdings Corporation
Director of Dizon Copper Silver Mines
Chi Ho Co
Director and President of Lodestar Investments Holdings
Corporation
Director of Asiabest Group International, Inc.
Delfin S. Castro, Jr.
Chairman and President of Dizon Copper Silver Mines
11
Director, Treasurer and Chief Information Officer of Geograce
Resources Philippines, Inc.
Director and Treasurer of Asiabest Group International, Inc.
Arsenio C. Cabrera, Jr.
(e)
Director and Corporate Secretary of Geograce Resources
Philippines, Inc.
Significant Employees
No person, who is not a director or an executive officer, is expected to make a significant contribution
to the business of the Company. Neither is the business highly dependent on the services of certain
key personnel.
(f)
Family Relationships
No family relationships up to the fourth civil degree either by consanguinity or affinity exist among
the directors, executive officers or persons nominated or chosen by the Company to become directors
or executive officers.
(g)
Involvement in Certain Legal Proceedings
To the knowledge and/or information of the Company, the above named directors and executive
officers of the Company are not, presently or during the last five (5) years up to the present date,
involved or have been involved in: (a) any bankruptcy petition filed by or against any business of
which such person was a general partner or executive officer; (b) any conviction by final judgment, in
a criminal proceeding, domestic or foreign, or being subject to a pending criminal proceeding,
domestic or foreign, excluding traffic violations and other minor offenses; (c) being subject to any
order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of business, securities, commodities or
banking activities; and (d) being found by a domestic or foreign court of competent jurisdiction (in a
civil action), the Commission or comparable foreign body, or a domestic or foreign Exchange or other
organized trading market or self regulatory organization, to have violated a securities or commodities
law or regulation, and the judgment has not been reversed, suspended, or vacated.
(h)
Certain Relationships and Related Transactions
The Company’s policy with respect to related-party transactions is to ensure that these transactions
are entered into on an arms-length basis and on terms which are comparable to those available from
unrelated third parties.
The following sets forth certain information relating to transactions (or series of similar transactions)
during the past two (2) years with or involving the Company or any of its subsidiaries in which a
director, executive officer, or stockholder owns ten percent (10%) or more of total outstanding shares
and members of their immediate family had or is to have a direct or indirect material interest:
(1)
Geograce Resources Philippines, Inc. (“GEOGRACE”), a corporation having common directors
and stockholders with the Company, extended non-interest bearing cash advances to
Masbate 13 Philippines, Inc. (“Masbate 13”) for working capital requirements. As of 31
December 2012, total outstanding balance to Masbate 13 amounted to Eight Hundred
Ninety Eight Thousand Forty-Three Pesos (P898,043.00). As of 31 December 2012,
Oregalore, Inc., a wholly owned subsidiary of the Company, owns eighty percent (80%) of the
outstanding capital of Masbate 13.
(2)
AU Philippines, Inc., the previous majority shareholder of Masbate 13, extended non-interest
bearing advances to Masbate 13. As of 31 December 2012, the outstanding balance of said
12
advances amounted to One Million Nine Hundred Fifty-Three Thousand Seven Hundred
Forty-One Pesos (P1,953,741.00).
(3)
(4)
(5)
On 24 March 2010, the Company acquired a thirty percent (30%) equity interest in the
privately-held mining operator Oriental Vision Mining Philippines Corporation (“ORVI”) from
various stockholders of ORVI.
(i)
On 24 March 2010, the Company entered into a non-interest bearing loan facility
agreement with ORVI amounting to One Hundred Thirty Seven Million Pesos
(P137,000,000.00) to be used by ORVI exclusively for funding its existing mining
projects. Payment of the loan can be made in cash or in shares of stock in ORVI or
in a company listed with the PSE as may be mutually agreed upon by the parties. As
of 31 December 2012, the balance of the loan is Fifty Five Million Five Hundred
Thousand Pesos (P55,500,000.00).
(ii)
The Company extended non-interest bearing advances to ORVI for working capital
requirements. As of 31 December 2012, total outstanding advances to ORVI
amounted to Eighty Thousand One Hundred Sixty Pesos (P80,160.00).
On 29 December 2010, 16 August 2011 and 21 September 2011, the Company’s Board of
Directors authorized the issuance of shares via private placement to Mr. Jerry C. Angping,
President and Member of the Board of Directors, and a stockholder of the Company.
Pursuant thereto, the Company and Mr. Angping executed the following Subscription
Agreements covering said issuance of shares via private placement:
(i)
On 5 January 2011, a Subscription Agreement was executed between the Company
and Mr. Angping for the subscription by the latter of Eighty Million (80,000,000)
common shares, at a subscription price of One Peso and Thirty Five Centavos
(P1.35) per share, or for a total consideration of One Hundred Eight Million Pesos
(P108,000,000.00). The aforesaid consideration has been fully paid to and received
by the Company, and the difference between the aggregate par value of the shares
subscribed by Mr. Angping and the total cash payment made by him for the shares
was treated as additional paid in capital in the Company.
(ii)
On 16 August 2011, a Subscription Agreement was executed between the Company
and Mr. Angping for the subscription by the latter of One Hundred Million
(100,000,000) common shares, at a subscription price of Two Pesos (P2.00) per
share, or for a total consideration of Two Hundred Million Pesos (P200,000,000.00).
The aforesaid consideration has been fully paid to and received by the Company,
and the difference between the aggregate par value of the shares subscribed by Mr.
Angping and the total cash payment made by him for the shares was treated as
additional paid in capital in the Company.
(iii)
On 21 September 2011, a Subscription Agreement was executed between the
Company and Mr. Angping for the subscription by the latter of One Hundred Million
(100,000,000) common shares, at a subscription price of Two Pesos and Twenty Five
Centavos (P2.25) per share, or for a total consideration of Two Hundred Twenty Five
Million Pesos (P225,000,000.00). Mr. Angping has fully paid for the One Hundred
Million (100,000,000) common shares, and the difference between the aggregate
par value of the shares subscribed by Mr. Angping and the total cash payment made
by him for the shares was treated as additional paid in capital in the Company.
On 27 September 2011, the Company, International AG (Glencore) and Asiabest Group
International, Inc. (“ABG”) formerly AGP Industrial Corp. (“AGPI”) executed a Heads of
Agreement (“HOA”) in Hong Kong. ABG is a corporation having common directors and
stockholders with the Company.
13
Under the HOA, the parties agreed to utilize their respective expertise in the mining industry
for purposes of investigating, identifying, acquiring, developing and operating mining claims
of economically feasible nickel deposits in the Philippines for purposes of direct shipping or
selling of ore and other related nickel mining business. Glencore shall contribute its
expertise in marketing of nickel ores in the world market as well as its network of various
institutions internationally. On the other hand, the Company and ABG shall utilize their
expertise in mining, contracting and developing mines in the Philippines and their knowledge
of relevant Philippine laws, rules and regulations and issues.
In order to accomplish the said purpose, the parties agreed to form within a period of two
months from the signing of the HOA, a joint venture company (“JVC”) under the laws of Hong
Kong. Pursuant to the Addendum to HOA dated October 28, 2011, the JVC will have an initial
authorized capital of HK$100,000 with a par value of HK$1/share. The JVC should have an
initial issued and paid-in capital of HK$10,000 to be contributed by the parties as follows: (1)
50% from Glencore; and (2) 25% each for the Parent Company and ABG.
Moreover, the parties agreed to execute the following implementing agreements of the
HOA:
 Marketing agreement whereby Glencore will act as the exclusive marketing agent for the
JVC and market and sell all material produced by the JVC;
 Management agreement;
 Contractor(s) agreement; and,
 Any other agreements agreed by the parties as being necessary or useful to facilitate the
implementation and operation of the JVC.
GNA Resources International Limited (“GNA”) is the joint venture company incorporated in
Hong Kong on November 23, 2011. The Company’s contribution of P
=13,946 to the JVC was
advanced by a related party. As of June 30, 2013, JVC has not started its main business
operation due to recent changes in mining regulations.
(6)
The Company extended non-interest bearing advances to GNA for working capital
requirements. As of 31 December 2012, total outstanding advances to ORVI amounted to
Forty-Six Thousand Eight Pesos (P46,008.00).
(7)
On 19 October 2011, the Company entered into a Contract of Lease with Angping &
Associates Securities, Inc. (“AASI”) for the lease of its office space and parking slots at NiHAO
Sun Plaza, Shaw Boulevard, corner Princeton Street, Mandaluyong City. The lease is for a
period of three (3) years beginning 9 October 2011 with option to renew for another two (2)
years. The monthly lease rental is One Hundred Three Thousand One Hundred Eighty Pesos
(P103,180.00) inclusive of taxes and association dues. The security deposit for the lease
amounting to Two Hundred Eighty Thousand One Hundred Fourteen Pesos (P280,114.00) will
be returned to the Company after the termination of the lease contract. AASI is a
stockholder of the Company.
(8)
In 2011, the Company opened an account with AASI in order for the Company to buy and sell
shares of companies listed in the stock exchange.
(9)
An Investment Agreement dated 11 February 2012 and an Amendment to Investment
Agreement dated 20 February 2012 (the “Agreement”) were executed by and among
Macquarie Bank, the Company, and one of its major shareholders, embodying a Multitranche Average Price Issuance Program (“Issuance Program”) whereby Macquarie Bank can
subscribe to up to One Hundred Fifty Million (150,000,000) shares in the Company on a
private placement basis (the “Transaction”).
14
Pursuant to the Investment Agreement, Macquarie Bank agreed to subscribe to up to an
aggregate amount of One Hundred Fifty Million (150,000,000) common shares in the
Company (the “Subscriber Shares”), which shall be purchased in tranches.
Each Tranche Period shall consist of ten (10) individual trading days selected by Macquarie
Bank (the “Subscriber Days”), provided that such Subscriber Days shall occur within a sixty
(60) consecutive calendar period. However, the Tranche Period shall be shortened in the
event that (i) the total number of shares of the Company traded on the PSE on the Subscriber
Days (subject to certain adjustments) reaches an aggregate of Two Hundred Million
(200,000,000), or (ii) the shares of the Company close below the floor price of Four Pesos and
Fifty Centavos (P4.50) per share.
The subscription price for the Subscriber Shares by Macquarie Bank for a particular Tranche
Period shall be an amount equivalent to ninety percent (90%) of the Volume Weighted
Average Price (“VWAP”) of the shares of the Company, rounded down to the nearest centavo
during that Tranche Period (“Subscription Price”). The Subscription Price for each Tranche
Period is payable in cash and in full. The VWAP for a Tranche Period shall refer to the VWAP
for the Subscriber Days. VWAP refers to the VWAP of the shares of the Company as displayed
under the heading “Bloomberg VWAP” on Bloomberg page “NI PM Equity VWAP” for OnMarket Trades (but excluding Off-Market Trades, regular or special block sales, negotiated
transactions, or a single cross transaction exceeding five percent (5%) of the total traded
volume of Shares for the day). In the event that the Bloomberg VWAP for On-Market Trades
for a Tranche Period is not available, the VWAP covering On-Market Trades and Off-Market
Trades shall be adjusted by the Company and Macquarie Bank to arrive at a mutually
acceptable VWAP for purposes of computing the Subscription Price for that Tranche Period.
Macquarie Bank’s right to subscribe to the Subscriber Shares shall expire (1) year from the
execution of the Agreement, or upon Macquarie Bank having subscribed to and been issued
One Hundred Fifty Million (150,000,000) Subscriber Shares, whichever event occurs earlier.
The Company shall make available to Macquarie Bank, through one of its major shareholders
(the “Transferor”) up to One Hundred Fifty Million (150,000,000) shares of the Company that
are registered under the Securities Regulation Code and listed on the PSE (the “Block
Shares”), which Macquarie Bank can utilize or trade during the Issuance Program. The
transfer of the Block Shares to Macquarie Bank shall be made in tranches and executed
through block sales using the facilities of the PSE.
The Transaction and/or the Issuance Program may however be suspended or terminated by
the Parties under certain terms and conditions.
The first tranche of the Issuance Program culminated in the subscription by Macquarie Bank,
on 2 March 2012, to Thirty Three Million (33,000,000) common shares at the subscription
price of Nine Pesos and Forty Six Centavos (P9.46), for a total amount of Three Hundred
Twelve Million One Hundred Eighty Thousand Pesos (P312,180,000.00). On 6 March 2012,
the Company filed a SEC Form 10-1 (“Notice of Exempt Transaction”) with the SEC in
accordance with the SRC and its Implementing Rules and Regulations, covering the issuance
of Thirty Three Million (33,000,000) shares in favor of Macquarie Bank.
On 12 April 2012, the stockholders approved the private placements of Macquarie Bank of
up to One Hundred Fifty Million (150,000,000) shares. The majority of the minority
shareholders waived the conduct of a rights or public offering with respect to the private
placement shares of Macquarie Bank. The stockholders likewise approved the Use of
Proceeds of the private placement of Macquarie Bank which was presented by the
Corporation’s Management during the Special Stockholders’ Meeting.
15
(10)
On 16 June 2011, Mina Tierra Gracia, Inc., a wholly-owned subsidiary of the Company, sold
all of its existing shares in the following companies to Mr. Jose Francisco Miranda, a director
and officer of the Company:
(i)
Minedomain, Inc., equivalent to Twenty Five Thousand (25,000) common shares, at
a par value of One Hundred Pesos (P100.00) per share for a total consideration of
Two Million Five Hundred Thousand Pesos (P2,500,000.00); and
(ii)
Companhia Minera Tierra, Inc., equivalent to Twenty Five Thousand (25,000)
common shares, at a par value of One Hundred Pesos (P100.00) per share for a total
consideration of Two Million Five Hundred Thousand Pesos (P2,500,000.00).
The above companies were previously issued small-scale mining permits within the Botolan
and Manticao mining claims of the Company, at which small-scale mining operations have
been suspended since 2009.
(11)
On 3 November 2011, the Company sold the following assets to Mr. Francisco E. Miranda, a
director and officer of the Company:
(i)
Twenty Five Thousand (25,000) common shares of Comphania Nube Minerale, Inc.,
owned by Mina Tierra Gracia, Inc., a wholly owned subsidiary of NiHAO representing
100% of its outstanding capital stock at par value of One Hundred Pesos (P100.00)
per share, or for a total consideration of Two Million Five Hundred Thousand Pesos
(P2,500,000.00); and
(ii)
Twenty Five Thousand (25,000) common shares of Visayas Ore Philippines, Inc.,
owned by HiHAO, representing 100% of its outstanding capital stock at par value of
One Hundred Pesos (P100.00) per share, or for a total consideration of Two Million
Five Hundred Thousand Pesos (P2,500,000.00).
The Company decided to dispose of these assets as such are still in the early exploration
stage and moved to focus on projects that have more potential to be developed, mined and
eventually generate income in the future. The Company would like to concentrate on the
development of its mining claims in Botolan, Zambales which is covered by a Mineral
Production Sharing Agreement (MPSA) as well as its mining claim in Manticao, Misamis
Oriental.
(12)
On March 5, 2012, the Board of Directors of the Company approved the execution, delivery
and performance of a General Contractor Agreement with Geogen Corporation (“Geogen”), a
corporation with a common director with the Company.
Under the General Contractor Agreement, the Company is appointed as Geogen’s general
contractor over Geogen’s mineral property consisting of a total area of 2,391.4081 hectares
located at Dinapigue, Isabela, which is covered by MPSA No. 258-2007-II dated July 30, 2007
(the “Mineral Property”).
On June 13, 2012, the General Contractor Agreement discussed above was superseded by an
Operating Agreement, under which the Company was granted the exclusive right to explore,
operate, mine, develop, utilize and process any minerals found within the contract area of
the Mineral Property.
Pursuant to the Operating Agreement, Geogen shall pay the Company an amount equivalent
to 90% of the invoice value of the nickel ore, nickel by-products, chromite and other minerals
sold by Geogen to third parties. The Company will pay for its own account, management
fees to ABG in accordance with the Management Agreement with Option to Buy executed
between Geogen and ABG on 14 October 2011.
16
(13)
Pursuant to the Operating Agreement with Geogen, the Company shall pay management
fees to ABG equivalent to 5% of the revenue from the shipment of nickel ore. As of 31
December 2012, the management fees due to ABG from the Company is in the amount of
Three Million Four Hundred Fifty Three Thousand Two Hundred Forty Four Pesos
(P3,453,244.00).
There has been no transactions with parties that fall outside the definition “related parties” under
SFAS/IAS No. 24, with whom the Company or its related parties have a relationship that enables the
parties to negotiate terms of material transactions that may not be available from other, more clearly
independent parties on an arm’s length basis.
Item 6. Compensation of Directors and Executive Officers
(a)
Executive Compensation
The aggregate total compensation of the Chief Executive Officer and four (4) most highly
compensated executive officers of the Company is shown below:
Year
Name & Principal Position
1
2013
1
2
3
4
5
6
2012
1
2
3
4
5
6
2011
1
2
3
4
Bonus
Other Annual
Compensation
P 3,134,681.00
—
—
0
0
0
P 3,134,681.00
—
—
0
0
0
—
—
Salary
2
3
Antonio Victoriano F. Gregorio III
President
3
Jose Francisco E. Miranda
Chief Operations Officer
3
Delfin S. Castro, Jr.
Treasurer/CFO/Compliance Officer
4
Michael T. Defensor
Head of Isabela Operations
Alex R. Gonzales
Permitting Manager
All Other Officers as a Group unnamed
2
4
Michael T. Defensor
Chairman
3
Antonio Victoriano F. Gregorio III
President
3
Jose Francisco E. Miranda
Chief Operations Officer
3
Delfin S. Castro, Jr.
Treasurer/CFO/Compliance Officer
Alex R. Gonzales
Permitting Manager
All Other Officers as a Group unnamed
2
P 2,891,000.00
4
Michael T. Defensor
Chairman
3
Jerry C. Angping
President
3
Jose Francisco E. Miranda
Chief Operations Officer
3
Delfin S. Castro, Jr.
Treasurer/CFO/Compliance Officer
17
5
6
Alex R. Gonzales
Permitting Manager
All Other Officers as a Group unnamed
0
0
0
(1) Estimate.
(2) Sum of the annual cash compensation of the named executive officers.
(3) No compensation for services rendered.
(4) By end of the year 2012, Mr. Defensor resigned as Chairman of the Board and was appointed as
Head of Isabela Operations. Previously, his compensation in the form of management fee is subject
to expanded withholding tax.
For the years 2011, 2012 and 2013, the Board and Management of the Company decided that, except
for the above-named executive officers, the salaries of the directors and officers of the Company are
waived until such time that the Company is able to generate revenues and income that will ensure
continuous operations.
(b)
Compensation of Directors and Chairman
Other than per diems in the amount of Five Thousand Pesos (P5,000.00) for each Board meeting
attended, the Directors of the Company are not compensated, directly or indirectly, for any services
provided as such including committee participation or any special assignments. There are no other
arrangements pursuant to which any director of the Company was compensated, or is to be
compensated, directly or indirectly, for any services provided as a director.
The By-Laws of the Company provide that the officers of the Company shall be paid such salaries as
the Board of Directors may determine.
(c)
Employment Contracts and Termination of Employment and Change-in-control Arrangement
There are no special arrangements as to the employment contract of any executive officer such that
said officer will be compensated upon his resignation, retirement or other termination from the
Company or its subsidiaries, or as may result from a change-in-control except as provided by law.
(d)
Warrants and Options Outstanding
There are no outstanding warrants and options outstanding held by the Company’s President, the
named executive officers and all officers and directors as a group.
Item 7. Independent Public Accountants
SyCip Gorres Velayo & Co. (“SGV”) has been the Company’s independent auditor since 2010 up to the present.
The 2009 audit was performed by Punongbayan & Araullo (P&A). SGV has been selected by the Board of
Directors as the Company’s independent auditor for the fiscal year ending 31 December 2013. A
representative of SGV is expected to be present at the Annual Stockholders’ Meeting and will have an
opportunity to make a statement if he or she so desires. The representative will also be available to respond
to appropriate questions from the stockholders.
Audit and Audit Related Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the external
auditors amounted to One Million Five Hundred Ninety Eight Thousand Seven Hundred Seventy Three Pesos
(P1,598,773.00) for 2012, and One Million Seven Hundred Eighty One Thousand Four Hundred Fifty Pesos
(P1,781,450.00) for 2011, inclusive of Value Added Tax.
18
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There was no event in the past where SGV had any disagreement with the Company with regard to any matter
relating to accounting principles or practices or financial statement disclosure or auditing scope or procedure.
The Board of Directors of the Company recommends a vote for ratification of the appointment of SGV as the
independent auditor for the current year.
Mr. Renato J. Galve of SGV was the partner in charge of the Company’s 2012, 2011 and 2010 audit whereas
Ms. Mylene Bisnar of P&A was the partner in charge of the Company’s 2009 audit. The handling audit partner
is rotated every five (5) years in compliance with SEC Memorandum Circular No. 8, Series of 2003 and the
provisions of SRC Rule 68(3)(b)(iv).
The Audit Committee of the Company reviewed, evaluated and approved the policies and procedures for the
professional services rendered by SGV. The Company’s Audit Committee is composed of Mr. Manuel G. Ong, as
Chairman, and Messrs. Antonio Victoriano F. Gregorio III and Jose Francisco E. Miranda, as members.
Item 8. Compensation Plans
There is no action to be taken with respect to any plan pursuant to which cash or non-cash compensation may
be paid or distributed.
The Company does not have any stock option, warrants or rights plan or any other type of compensation plan.
C.
ISSUANCES AND EXCHANGE OF SECURITIES
Item 9. Authorization or Issuance of Securities Other than for Exchange
No action will be taken with respect to the authorization or issuance of any securities otherwise for exchange
for outstanding securities of the Company.
Item 10. Modification of Exchange of Securities
No action will be taken with respect to the modification of any class of securities of the Company or the
issuance or authorization for issuance of one class of securities of the Company in exchange for outstanding
securities of another class.
Item 11. Financial and Other Information
None, inasmuch as no action is to be taken with respect to any matter specified in Items 9 or 10 above.
Item 12. Mergers, Consolidation, Acquisition and Similar Matters
No action will be taken with respect to any of the following: (a) the merger or consolidation of the Company
into or with any other person or of any other person into or with the Company; (b) the acquisition by the
Company or any of its security holders of securities of another person; (c) the acquisition by the Company of
any other ongoing business or of the assets thereof; (d) the sale or other transfer of all or substantially all of
the assets of the Company; or (e) the liquidation or dissolution of the Company.
Item 13. Acquisition or Disposition of Property
No action will be taken with respect to the acquisition or disposition by the Company of any property.
19
Item 14. Restatement of Accounts
No action will be taken with respect to the restatement of any asset, capital or surplus account of the
Company.
D.
OTHER MATTERS
Item 15. Action with Respect to Reports
The Board of Directors of the Company recommends a vote for confirmation, ratification and approval of the
following:
(1)
Minutes of the Annual Stockholders’ Meeting held on 14 December 2012
The Minutes of the Annual Stockholders’ Meeting held on 14 December 2012 contain the
following items:
(i)
Call to Order
(ii)
Certification of Notice and Quorum
(iii)
Approval of the Minutes of the Special Stockholders’ Meeting held on 12 April 2012
(iv)
Management Report
(v)
Approval of the Audited Financial Statements as of 31 December 2011
(vi)
Ratification of all legal acts, resolutions and proceedings of the Board of Directors
and of Management, done in the ordinary course of business since the 9 December
2011 Annual Stockholders’ Meeting up to 14 December 2012
(vii)
Election of Directors
(viii)
Appointment of External Auditor
(ix)
Adjournment
(2)
Management Report
(3)
Audited Financial Statements for the fiscal year ending 31 December 2012
Item 16. Matters Not Required to be Submitted
The Board of Directors and Management have the power to act as agents of the Company based on statute,
charter, by-laws or in delegation of authority to an officer from the acts of the Board, formally expressed or
implied from a habit or custom of doing business. In this regard, where an officer has been entrusted with the
general management and control of the Company’s business, that officer is considered to possess an implied
authority to enter into any contract or do any other act which is necessary or appropriate for the conduct of
the ordinary business of the Company.
The Board of Directors recommends a vote for approval, confirmation and ratification of all acts and
resolutions of the Board of Directors and of Management since the Annual Stockholders’ Meeting on 14
December 2012 up to 4 December 2013. Said acts and resolutions of the Board of Directors and of
Management since the Annual Stockholders’ Meeting on 14 December 2012 up to 4 December 2013 include,
among others:
(1)
(2)
(3)
appointment of bank signatories;
execution of a Sale Share Agreement by and among the Company, Oregalore, Inc. and
Welcome Stranger Mining Ltd. (“Welcome Stranger”), for the acquisition by Welcome
Stranger and Capital Gold Pty Ltd of 40% of the issued share capital of Masbate 13
Philippines, Inc.;
postponement of Annual Stockholders’ Meeting;
20
(4)
(5)
(6)
(7)
(8)
adoption of an Amended Corporate Governance Manual, Code of Business Conduct and
Ethics and Performance Evaluation Procedure for the Board of Directors, Board Committees,
Individual Directors and Chief Executive Officer/President;
creation of the Risk Management and Governance Committees;
appointment of the members of the Risk Management and Governance Committees;
appointment of Pilipinas Shell Petroleum Corporation as supplier; and
change of office address.
Once the ratification has been given, all acts or transactions entered into by the Board of Directors and of
Management since the Annual Stockholders’ Meeting on 14 December 2012 up to 4 December 2013 become
finally and absolutely binding and neither the Company nor individual stockholders nor strangers can
afterwards sue to set them aside or otherwise attack their validity.
Item 17. Amendment of Charter, By-laws or Other Documents
No action will be taken at the Annual Stockholders’ Meeting for any amendment of the Company’s Articles of
Incorporation, By-laws or other charter documents.
Item 18. Other Proposed Action
There is no action to be taken at the Annual Stockholders’ Meeting with respect to any matter not specifically
referred to above.
Item 19. Voting Procedures
•
Each share of the Common Stock outstanding on the record date will be entitled to one (1) vote on all
matters.
•
For the election of directors, the Company’s Corporate Secretary, Atty. Arsenio C. Cabrera, Jr., is
instructed to count all votes represented at the meeting in favor of the nominees. Cumulative voting
shall be followed.
•
For all matters subject to a vote of the stockholders, the Chairman can ask that voting be conducted
by raising of hands or viva voce.
•
The following shall require the affirmative vote of stockholders holding at least a majority of the
Company’s issued and outstanding capital stock present or represented and entitled to vote at the
Annual Stockholders’ Meeting:
(1)
the approval of the Minutes of the Annual Stockholders’ Meeting held on 14 December 2012;
(2)
the approval of the Management Report;
(3)
the approval of the Audited Financial Statements for the fiscal years ending 31 December
2012;
(4)
all acts and resolutions of the Board of Directors and Management, done in the ordinary
course of trade or business, since the 14 December 2012 Annual Stockholders’ Meeting up to
4 December 2013;
(5)
the election of directors; and
(6)
the appointment of the Company’s external auditor for the current year.
21
Corporate Governance
(a)
Evaluation system established by the Company to measure or determine the level of compliance of the
Board of Directors and top-level management with its Manual of Corporate Governance
(i) The Company has adopted the Self Rating Form (SRF) of the Securities and Exchange Commission
as a tool to evaluate the level of compliance of the Board of Directors and top level management
with its Manual on Corporate Governance (the “Manual”).
(ii) The Compliance Officer is responsible for determining violation/s and shall recommend to the
Chairman of the Board the imposable penalty for such violation, for further review and approval
of the Board.
(iii) The Company has a Corporate Governance Committee tasked to undertake an annual
performance assessment of the Board, its committees and the individual directors, through a
Performance Assessment Guideline and Scorecard.
(iv) The Company ensures that it has at least two (2) independent directors, or such number of
independent directors that constitutes twenty percent (20%) of the members of the Board,
whichever is higher, but in no case less than two (2). The Company, through its Nominations
Committee, likewise makes certain that its independent directors are independent from
management and free from any business or other relationship which could, or could reasonably
be perceived to materially interfere with the exercise of independent judgment in carrying out
their respective responsibilities as director.
(v) The Company, through its Nominations Committee, ensures that all the nominees to the Board
possess all the qualifications and none of the disqualifications provided for in the Company’s ByLaws and Manual, the Corporation Code, Securities Regulation Code and other relevant laws,
rules and regulations.
(vi) The Company also has an Audit Committee, which is tasked to review the Audited Financial
Statements of the Company. The Chairman of the Audit Committee is an independent director,
and each member thereof has at least an adequate understanding or competence of most of the
Company’s financial management systems and environment.
(b)
Measures being undertaken by the Company to fully comply with the adopted leading practices on good
corporate governance
(i) The Company’s Governance Committee is tasked to review policies of the Board and its
committees insofar as they relate to governance matters. The Governance Committee is likewise
tasked to review governance standards published by other Philippine listed companies with a
view of assessing their relevance and developing a more current set of standards for the
Company.
(ii) The Company’s Manual on Corporate Governance is likewise subject to periodic review.
(iii) In January 2008, the Company amended the Manual to state that the Company shall require all of
its directors to attend a seminar on corporate governance before assuming office as such.
(c)
Any deviation from the company’s Manual of Corporate Governance.
There was no deviation from the Company’s Manual on Corporate Governance warranting sanction on
any individual.
22
(d)
Any plan to improve corporate governance of the company.
(i) On 4 October 2012, the Company adopted an Audit Committee Charter in accordance with SEC
Memorandum Circular No. 4, Series of 2012, entitled Guidelines for the Assessment of the
Performance of Audit Committees of Companies Listed on the Exchange.
(ii) On 20 June 2013, the Company amended its Corporate Governance Manual, to provide for the
creation of a Risk Management Committee and a Corporate Governance Committee, among
others.
(iii) Likewise on 20 June 2013, the Company adopted a Code of Business Conduct and Ethics and a
Performance Evaluation Procedure for the Board of Directors, Board Committees, Individual
Directors and Chief Executive Officer/President.
(iv) The Company will continue to develop and strengthen its corporate governance structures and
mechanisms in line with relevant SEC circulars/memoranda and good global corporate
governance principles and practices.
UNDERTAKING TO PROVIDE ANNUAL REPORT
UPON THE WRITTEN REQUEST OF THE STOCKHOLDER, THE COMPANY UNDERTAKES TO FURNISH SECURITY
HOLDERS WITHOUT CHARGE, AND UPON THEIR WRITTEN REQUEST, A COPY OF THE COMPANY’S ANNUAL
REPORT (SEC FORM 17-A). COPIES OF OTHER EXHIBITS MAY BE PROVIDED UPON WRITTEN REQUEST AND
UPON THE PAYMENT OF NOMINAL CHARGES TO DEFRAY ADMINISTRATIVE COSTS AND EXPENSES SUBJECT
TO CONDITIONS AS THE BOARD OF DIRECTORS MAY PROMULGATE.
SUCH WRITTEN REQUEST FOR A COPY OF SEC FROM 17-A SHALL BE DIRECTED TO: ATTY. ARSENIO C.
TH
CABRERA, JR., CORPORATE INFORMATION OFFICER, 5 FLOOR SGV II BUILDING, 6758 AYALA AVENUE,
MAKATI CITY, METRO MANILA, PHILIPPINES 1229.
ALL STOCKHOLDERS OF RECORD AND THOSE ACTING AS FIDUCIARIES, NOMINEES, TRUSTEES OR SIMILAR
CAPACITIES IN BEHALF OF BENEFICIAL OWNERS WHO ARE NOT OF RECORD, MAY ALSO REQUEST IN
WRITING TO THE PERSON AND AT THE ADDRESS PROVIDED ABOVE, AS MANY COPIES OF THIS
INFORMATION STATEMENT AND/OR SEC FORM 17-A FOR DISTRIBUTION TO SUCH BENEFICIAL OWNERS,
AND UPON RECEIPT OF SUCH WRITTEN REQUEST, THE COMPANY UNDERTAKES TO SUPPLY THE REQUESTED
MATERIAL IN A TIMELY MANNER.
PART II
INFORMATION REQUIRED IN A PROXY FORM
The Company is not soliciting proxies and the stockholders are not required to send proxies.
23
MANAGEMENT REPORT
GENERAL NATURE AND SCOPE OF THE BUSINESS
Business Overview
NiHAO Mineral Resources International, Inc. (“NiHAO” or the “Company”) is a mining company engaged in
exploring, developing, and operating nickel properties. The Company aims to create an integrated mining
company using its expertise in nickel exploration, access to processing technology, and the prospectivity of its
projects. The Company’s vision is to become a leading nickel mining and processing company in the
Philippines.
The Company’s name, “NiHAO,” stands for “Bountiful Nickel”, the primary mineral which the Company intends
to discover and mine. It derived its name by combining the element symbol for Nickel, “Ni,” and the Chinese
character for noble or bountiful, “HAO.”
As of 15 October 2013, the Company has three (3) mining claims located in the provinces of Zambales,
Misamis Oriental and Masbate and operates another active mining claim in Dinapigue, Isabela. The Company’s
mining claims and operations area cover a total of approximately 17,792.3998 hectares.
th
The Company’s headquarters is located at the 7 Floor, Peaksun Building, 1505 Princeton Street corner Shaw
Boulevard Barangay Wack-Wack, Greenhills East, Mandaluyong City, Metro Manila 1550.
Products
In the foreseeable future, the Company plans to ship nickel ore directly to its customers, similar to most nickel
mining companies in the Philippines.
Brief Corporate History
The Company was incorporated in the Philippines on 9 July 1975 as a mining company under the name Summit
Minerals, Inc. On 3 October 1990, the Company’s shares were offered to the public and listed on the PSE.
On 10 December 1993, the Company changed its primary purpose to that of a holding company. On 24
February 1994, the Company changed its corporate name to Magnum Holdings, Inc.
On 28 June 2007, the Company changed its corporate name to “NiHAO Mineral Resources International, Inc.”
and its primary purpose to that of a mining company.
The Company has no record of any bankruptcy, receivership or similar proceedings during the past three (3)
years.
Subsidiaries
The following table presents certain information related to these acquisitions.
Name of Acquired Company
Acquisition Date
Mina Tierra Gracia, Inc. ............................... 16 October 2007
Bountiful Geomines, Inc. ............................. 9 January 2008
Oregalore, Inc. ............................................. 10 March 2011
Masbate 13 Philippines, Inc. ........................ 25 February 2011
Name of Acquiring
Company
NiHAO
NiHAO
NiHAO
Oregalore, Inc.
Acquisition
Cost
(millions)
P
61.469
12.500
3.000
108.000
P
184.969
On October 16, 2007, the Company acquired for cash all of the outstanding shares of Mina Tierra Gracia, Inc.
(“Mina Tierra”), a mining company, pursuant to a Deed of Absolute Sale between the Company and the
shareholders of Mina Tierra. The total consideration paid by the Company for the acquisition of said shares
amounted to P61,469,586.00, representing the valuation of the Botolan Mining Claim made by Minercon
International, Inc. On 23 September 2008, the Mines and Geosciences Bureau (“MGB”) issued an “Order”
approving the transfer of the Exploration Permit (“EP”) for the Botolan Mining Claim from Saprolite Mining,
Inc. to Mina Tierra. Pursuant to the aforementioned MGB “Order”, Mina Tierra enjoys exploration rights to
5,081 hectares of land in Botolan, Zambales. Mina Tierra acquired the exploration rights over the Botolan
Mining Claim through a Deed of Assignment executed with Saprolite Mining on 31 July 2007.
On January 9, 2008, the Company acquired all of the outstanding shares of two mining companies, Bountiful
Geomines, Inc. (“Bountiful Geomines”) and Visayas Ore Philippines, Inc. (“Visayas Ore”), pursuant to Deeds of
Absolute Sale between the Company and the shareholders of Bountiful Geomines and Visayas Ore,
respectively. The Company acquired the shares of Bountiful Geomines and Visayas Ore at par value amounting
to a total consideration of P12,500,000.00 for the Bountiful Geomines shares and a total consideration of
P2,500,000.00 for the Visayas Ore shares. Bountiful Geomines has an EP application with the MGB covering
the Manticao Mining Claim with an area of 1,944 hectares. Visayas Ore has an EP application covering the
Cotabato Mining Claim with an area of approximately 11,441 hectares and another EP application covering the
Antique Mining Claim with an area of approximately 2,374 hectares. On November 3, 2011, the Company sold
its equity holdings in Visayas Ore Philippines, Inc. for a total consideration of P 2,500,000.00.
On March 10, 2011, the Company acquired all the outstanding shares of another mining company, Oregalore,
Inc. (“OREGALORE”), pursuant to Deeds of Absolute Sale between the Company and the previous shareholders
of OREGALORE. The Company acquired the shares of OREGALORE at par value for a total consideration of
P3,000,000. The Company also acquired the stockholder advances of OREGALORE amounting to
P125,478,304.62 for the discounted price of P105,000,000. In August 2012, these advances were converted
into equity equivalent to 1,250,000 common shares of OREGALORE.
OREGALORE owns eighty percent (80%) of the outstanding capital stock of another mining company, Masbate
13 Philippines, Inc. (Masbate 13). Masbate 13 is the owner of a gold mining claim described as follows:



License
:
Location
:
Coverage / Area :
Exploration Permit No. V-2008-005 issued on December 2011
Municipalities of Milagros and Mandaon, Province of Masbate
8,357.3509 hectares
There is currently no bankruptcy, receivership or any similar proceedings involving the Company or its
subsidiaries.
Affiliates
(1)
30% Equity in Oriental Vision Mining Philippines, Inc.
On March 24, 2010, the Company acquired from various stockholders thirty percent (30%) equity interest in
the privately-held mining operator Oriental Vision Mining Philippines Corporation (“ORVI”). The Company
paid Three Million Pesos (P 3,000,000.00) as full payment of purchase of 3,000 shares of ORVI valued at its par
of P 1,000 per share and a down payment of Thirty Million Pesos (P30,000,000.00) for the subscription of
additional 60,000 shares from the current ORVI shareholders for a purchase price of Sixty Million Pesos
(P60,000,000.00). Full payment was made in December 2010 upon approval of the increase in authorized
capital stock to Four Hundred Million Pesos (P400,000,000.00). The increase in authorized capital stock of
ORVI was approved by the SEC on November 26, 2010.
In addition, the Company has agreed to extend shareholder advances in favor of ORVI for the purpose of
funding the existing mining projects of ORVI, which shareholder advances are payable either in cash or in
shares of stock. Out of the total One Hundred Fifty Million Five Hundred Thousand Pesos (P150,500,000.00)
loan advances extended by the Company, ORVI has paid Ninety Five Million Pesos (P 95,000,000.00) leaving a
balance of Fifty Five Million Five Hundred Thousand ( P55,500,000.00) as of December 31, 2012.
2
In December 2012, NiHAO sold 31,500 shares or 50% of its holdings with ORVI at par resulting to 15% of
ORVI’s equity.
(2)
25% Equity in GNA Resources International Limited
On December 12, 2011, the Company together with Asiabest Group International, Inc., formerly AGP Industrial
Corporation (“ABG”), and Glencore International AG established GNA Resources International Limited under
the laws of Hong Kong, which is the group’s joint venture corporation, pursuant to the Heads of Agreement
dated September 27, 2011 entered into by the Company, ABG and Glencore. Under the HOA, the Company,
Glencore, and ABG agreed to utilize their respective expertise in the mining industry for purposes of
investigating, identifying, acquiring developing and operating mining claims of economically feasible nickel
deposits in the Philippines for purposes and Direct Shipping/ Selling Ore (DSO) and other related nickel mining
business. Glencore shall contribute its expertise in marketing of nickel ores in the world market as well as its
network of various institutions internationally. On the other hand, the Company and ABG shall utilize their
expertise in mining, contracting and developing of mines in the Philippines and their knowledge of relevant
Philippine laws, rules and regulations and issues. In order to accomplish said purpose, the parties have
formed and established GNA Resources under the laws of Hong Kong.
Mining Claims and Permits
The following table sets forth certain information related to the Company’s Mining Claims and their
corresponding permits or permit applications as of 15 October 2012.
Location
Zambales
Name of Claim
Botolan and Iba
Botolan Mining
Claim
MPSA No. 3152010-III
Mina Tierra
Gracia, inc.
5,081.6408
Manticao Mining
Claim
EPA-000093-X
Bountiful
Geomines
1,944.0000
Masbate 13
8,375.3509
Misamis Oriental
Opol, Manticao
Masbate
Milagros and
Mandaon
Masbate 13 Mining EP-V2008-5
Claim
Validity
Permittee/
Applicant
Area
Covered
(in hectares)
Permit
Description
15,400.9917
Botolan Project
The Botolan Mining Claim covers approximately 5,081 hectares located in the town of Botolan, Zambales. The
Botolan Mining Claim was originally staked by Saprolite Mining pursuant to an EPA filed on January 10, 2007.
On December 26, 2007, the NCIP issued a Certification Precondition in the form of a Certificate of Non-Overlap
for the Botolan Mining Claim, attesting to the fact that the area covered by the Botolan Mining Claim does not
affect or overlap with any ancestral domain. On February 12, 2008, the Mines and Geosciences Bureau of the
Department of Environment and Natural Resources (“MGB”) issued an Exploration Permit in the name of
Saprolite Mining for the Botolan Mining Claim.
On July 31, 2007, Saprolite Mining assigned its rights and interests in the Botolan Mining Claim to Mina Tierra
pursuant to a Deed of Assignment (the “Deed of Assignment”). The Deed of Assignment provided that all
expenses to be incurred in relation to the execution and registration of the Deed of Assignment as well as the
transfer of the EPA from Saprolite Mining to Mina Tierra would be for Mina Tierra’s account.
3
On April 9, 2008, Mina Tierra registered the Deed of Assignment with the MGB. On May 20, 2008, Saprolite
Mining filed an application with the MGB to upgrade/convert approximately 2,739 hectares of the 5,081
hectares covered by EP-001-2008-III to a Mineral Production Sharing Agreement (“MPSA”) (the “Application
for Upgrade/Conversion”). The Application for Upgrade/Conversion was made since the approval of the
registration of the Deed of Assignment for the transfer of EP-001-2008-III to the name of Mina Tierra is still
pending with the MGB.
In view of the filing of the Application for Upgrade/Conversion and in order to clarify and affirm the intent of
the Deed of Assignment and the parties’ respective rights and obligations thereunder, Saprolite Mining and
Mina Tierra executed a Supplemental Agreement on July 1, 2008. The Supplemental Agreement confirmed
that Mina Tierra would be the sole, absolute and legitimate owner of: (a) EP-001-2008-III; (b) the Application
for Upgrade/Conversion; and (c) any MPSA covering the Botolan Mining Claim upon approval by the DENR
Secretary and/or the MGB of the transfer of the foregoing permits or applications in favor of Mina Tierra.
Pursuant to the Supplemental Agreement, Mina Tierra agreed to assume all the responsibilities, duties and
liabilities imposed by law in relation to the aforementioned permits and applications upon the approval by the
relevant government agencies of the transfers thereof to its name. The Supplemental Agreement was
registered with the MGB on September 4, 2008.
On September 23, 2008, the MGB issued an “Order” approving the assignment of EP-001-2008-III in favor of
Mina Tierra. The “Order” further provided that EP-001-2008-III would now be recorded in the name of Mina
Tierra as a result of said “Order”.
On October 13, 2008, Mina Tierra applied for the full conversion of the entire 5,081 hectares covered by EP001-2008-III to MPSA.
On February 10, 2010, the MGB approve the application for MPSA of Mina Tierra and issued MPSA No. 3152010-111 in the name of Mina Tierra covering the Botolan Mining Claim.
Manticao Project
The Manticao Mining Claim covers a total area of 1,944 hectares and is located in Manticao, Misamis Oriental,
a coastal town north of Mindanao Island. As of December 31, 2012, the Company has conducted limited
exploration work that includes preliminary field reconnaissance and sampling.
Masbate Projects
The Masbate Mining Claim covers a total area of 8,357 hectares and is located in Milagros and Mandaon,
Masbate.
Description of Property
th
The Company leases office space with a total floor area of 325.27 square meters located at 6 Floor, NiHAO
SunPlaza Building, 1505 Shaw Blvd. corner Princeton St. Barangay Wack-wack, Greenhills East, Mandaluyong
City from Angping and Associates Securities, Inc. The lease is for a period of 2 years and shall expire on 19
October 2013. Monthly lease rental amounts to P103,108.00 inclusive of association dues and 7 parking slots.
The contract requires a deposit amounting to P280,114.00.
The group has no commitments of acquiring real properties for the next twelve months.
The Company has three (3) mining claims- (1) Mineral Production Sharing Agreement (MPSA) for the
Company’s wholly owned subsidiary, Mina Tierra Gracia, Inc. was released on 10 February 2010. The MPSA
have a term of twenty five (25) years and maybe renewed thereafter for another term not exceeding twenty
five (25) years; (2) Exploration Permit issued to Masbate 13 Philippines, Inc. located at Milagros and Mandaon
province of Masbate and (3) Exploration Permit Application by Bountiful Geomines, Inc. located at Opol,
Manticao province of Misamis Oriental. The group has plans to expand its mining portfolio.
4
The Company and its subsidiaries do not have any mortgage, lien or encumbrance over any of the Mining
Claims.
Legal Proceedings
The Company and its subsidiaries are not involved as plaintiffs or defendants in any material legal proceedings.
There are also no threatened material legal proceedings against the Company and its subsidiaries or involving
the properties of the Company.
Business Risks
The Company and its subsidiaries are engaged in a very competitive business. Numerous other factors beyond
the Company’s control may affect the marketability of any substances discovered. These factors include
market fluctuations, the proximity and capacity of natural resource markets and processing equipment,
government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use,
importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be
accurately predicted, but the combination thereof may result in the Company not receiving an adequate
return on invested capital.
MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND RELATED
MATTERS
STOCKHOLDER
Market Information
The Company’s common stock is traded in the Philippine Stock Exchange (PSE) under the stock symbol “NI.”
The following table sets forth NI’s high and low intra-day sales prices per share for the periods indicated on the
PSE.
High
2013:
First Quarter ............................................
Second Quarter .......................................
Third Quarter ..........................................
2012:
First Quarter ............................................
Second Quarter .......................................
Third Quarter ..........................................
Fourth Quarter ........................................
2011:
First Quarter ............................................
Second Quarter .......................................
Third Quarter ..........................................
Fourth Quarter ........................................
Source : Technistock
Low
P3.67
3.55
3.85
P3.50
2.79
2.78
P11.24
9.20
8.05
5.09
P11.10
9.00
7.77
4.99
P2.36
2.19
3.55
4.49
P2.27
2.15
3.36
2.91
As of 16 October 2013, the high share price of the Company was P2.70 whereas the low share price was P2.63.
The volume was 195,000 shares.
Holders
The following table sets forth the top 20 shareholders of the Company’s common stock, the number of shares
held, and the percentage of total shares outstanding held by each as of 16 October 2013.
5
Shareholder Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Shares Held
PCD Nominee Corp. - Filipino
Angping, Jerry C.
PCD Nominee Corp. - Non-Filipino
Macquarie Bank Limited
Chia Kim Teck
Angping, Diana Kaye
Angping, Jerry C. ITF: John Isaac V. Angping
Angping, Jerry C. ITF: Christian Daniel V. Angping
Angping, Ma. Rhodora V.
Defensor, Michael T.
Crisostomo, Jose Mariano
Saavedra, Howard C.
Fong, Fe G.
Miranda, Ma. Carla Remedios E.
Evangelista, Leoben Luis T.
Jorge, Nicanor S.
Perez, Leonardo
Lee, Roxanne
Tolarbas, Luzelle Ann R.
Gonzales, Bobby S.
Ownership (%)
544,790,560
285,100,000
42,503,605
33,000,000
2,349,732
1,000,000
1,000,000
1,000,000
1,000,000
160,000
100,000
100,000
100,000
100,000
100,000
80,000
50,000
50,000
50,000
50,000
59.6704
31.2267
4.6554
3.6145
0.2574
0.1095
0.1095
0.1095
0.1095
0.0175
0.0110
0.0110
0.0110
0.0110
0.0110
0.0088
0.0055
0.0055
0.0055
0.0055
912,652,997
As of 16 October 2013, there were 98 shareholders of the Company’s outstanding common stock.
Dividends
The Company’s Board is authorized to declare dividends out of the Company’s retained earnings, in cash, in
stocks and/or in property. The declaration and payment of stock dividends must be approved by at least a
majority of the Company’s Board of Directors and by the stockholders representing at least two-thirds (2/3) of
the Company’s outstanding capital stock at a meeting duly called for the purpose.
Since the Company’s incorporation on 9 July 1975 through the date hereof, the Company has not paid any cash
dividends on its common stock. The Company has not set a minimum dividend rate and its ability to pay
dividends will depend on the existence of retained earnings, its financial condition and various other factors,
including its business, capital requirements and investment opportunities. Except (a) when justified by definite
corporate expansion projects or programs approved by the Board of Directors; or (b) when it is prohibited
under any loan agreement with any financial institution or creditor from declaring dividends without the
latter’s consent, and such consent has not yet been secured; or (c) when it can be clearly shown that such
retention is necessary under special circumstances, the Company shall declare dividends from its unrestricted
retained earnings.
Recent Sales of Unregistered or Exempt Securities, Including Recent Issuance of Securities Constituting an
Exempt Transaction
(a)
Private Placement of Eighty Million (80,000,000) shares at One Peso and Thirty Five Centavos (P1.35)
Per Share
The Company and Mr. Angping executed a Subscription Agreement for the Private Placement of Eighty Million
(80,000,000) shares at the subscription price of P1.35 per share on 5 January 2011. The subscription price was
based on a 90-day moving average of the market price of the Company’s shares with a discount of around
59.34%. The determination of the discount rate and the issue price was based on several factors including:
the funding requirements of the Company, volatility of the market, price fluctuations of the share, the time
value of the money insofar as it concerns the long waiting period entailed of the investor for his shares to be
6
listed, and the fact that the Company is still in its pre-operating stage. The Company has received in cash the
aggregate amount of P108 Million as consideration for the shares.
The offering of the shares via the aforesaid private placement qualifies as an exempt transaction under Section
10.1(e) and (k) of the Securities Regulation Code, i.e., the sale of capital stock to its own stockholders
exclusively, and sale of securities to fewer than twenty (20) persons in the Philippines during any twelve (12)month period. On 6 January 2011, the Company filed SEC Form 10-1 with the Securities and Exchange
Commission in accordance with the Securities Regulation Code and its Implementing Rules and Regulations.
Proceeds from the private placement was used to fund business expansion for 2011, including the acquisition
of equity in Ore Galore, Inc. and Oriental Vision Mining Philippines, Inc., which are companies with mining
tenements and mining rights.
(b)
Private Placement of One Hundred Million (100,000,000) shares at Two Pesos (P2.00) Per Share
The Company and Mr. Angping executed a Subscription Agreement for the Private Placement of One Hundred
Million (100,000,000) shares at P2.00 per share on 16 August 2011. The subscription price of P2.00 per share,
which represents a discount of 20% over the weighted average of P2.60, was based on a 90-day moving
average of the market price of the Company’s shares. The Company has received in cash the aggregate
amount of P200 Million Pesos as consideration for the shares.
The offering of the shares via the aforesaid private placement qualifies as an exempt transaction under Section
10.1(e) and (k) of the Securities Regulation Code, i.e., the sale of capital stock to its own stockholders
exclusively, and sale of securities to fewer than twenty (20) persons in the Philippines during any twelve (12)month period. On 26 August 2011, the Company filed SEC Form 10-1 with the Securities and Exchange
Commission in accordance with the Securities Regulation Code and its Implementing Rules and Regulations.
Proceeds from the private placement were used to purchase listed shares of Oriental Peninsula Resources
Group, Inc. (“ORE”) in the Philippine Stock Exchange open market at various prices.
(c)
Private Placement of One Hundred Million (100,000,000) shares at Two Pesos and 25/100 Centavos
(P2.25) Per Share
The Company and Mr. Angping executed a Subscription Agreement for the Private Placement of One Hundred
Million (100,000,000) shares at P2.25 per share on 21 September 2011. The subscription price of P2.25 per
share represents a reasonable discount on the weighted average transaction prices of the Company’s stock
with the Philippine Stock Exchange for 90 trading days. The Company has received in cash the aggregate
amount of P 200 Million Pesos as consideration for the shares.
The offering of the shares via the aforesaid private placement qualifies as an exempt transaction under Section
10.1(e) and (k) of the Securities Regulation Code, i.e., the sale of capital stock to its own stockholders
exclusively, and sale of securities to fewer than twenty (20) persons in the Philippines during any twelve (12)month period. On 23 September2011, the Company filed SEC Form 10-1 with the Securities and Exchange
Commission in accordance with the Securities Regulation Code and its Implementing Rules and Regulations.
Proceeds from the private placement were used for the acquisition of equity in mining companies for strategic
business purposes and mining equipment to further enhance the mining assets portfolio of the Company.
(d)
Private Placement of Thirty Three Million (33,000,000) common shares at the subscription price of
Nine Pesos and Forty Six Centavos (P9.46)
An Investment Agreement dated 11 February 2012 and an Amendment to Investment Agreement dated 20
February 2012 (the “Agreement”) were executed by and among Macquarie Bank, the Company, and one of its
major shareholders, embodying a Multi-tranche Average Price Issuance Program (“Issuance Program”)
whereby Macquarie Bank can subscribe to up to One Hundred Fifty Million (150,000,000) shares in the
Company on a private placement basis (the “Transaction”).
7
Pursuant to the Investment Agreement, Macquarie Bank agreed to subscribe to up to an aggregate amount of
One Hundred Fifty Million (150,000,000) common shares in the Company (the “Subscriber Shares”), which
shall be purchased in tranches.
The first tranche of the Issuance Program culminated in the subscription by Macquarie Bank, on 2 March 2012,
to Thirty Three Million (33,000,000) common shares at the subscription price of Nine Pesos and Forty Six
Centavos (P9.46), for a total amount of Three Hundred Twelve Million One Hundred Eighty Thousand Pesos
(P312,180,000.00).
The offering of the Subscriber Shares to Macquarie Bank qualifies as an exempt transaction from the
registration of securities with the Securities and Exchange Commission (“SEC”) pursuant to Section 10.1(k) of
the Securities Regulation Code (“SRC”), i.e., the sale of securities to fewer than twenty (20) persons in the
Philippines during any twelve (12)-month period.
On 6 March 2012, the Company filed a SEC Form 10-1 (“Notice of Exempt Transaction”) with the SEC in
accordance with the SRC and its Implementing Rules and Regulations, covering the issuance of Thirty Three
Million (33,000,000) shares in favor of Macquarie Bank.
MANAGEMENT AND CERTAIN SECURITY HOLDERS
Directors and Executive Officers
The Board of Directors of the Company consists of nine (9) members. The Board is responsible for the overall
management and supervision of the Company. The term of office of the directors of the Company is one (1)
year and they are to serve as such until the election and qualification of their successors.
The Executive Officers of the Company cooperate with the Board of Directors by preparing appropriate
information and documents concerning the Company’s business operations, financial condition and results of
its operations for the review of the Board. The Executive Officers are appointed annually by the Board of
Directors at its first meeting following the Annual Meeting of Stockholders, each to hold office until the
corresponding meeting of the Board of Directors in the next year or until a successor shall have been
appointed or shall have qualified.
The Company’s directors, executive officers, and key employees as of the date hereof are set forth below:
Name of Director/Executive Officer
Antonio Victoriano F. Gregorio III
David O. Chua
Chi Ho Tan Co
Job Adrian M. Ambrosio
Jose Francisco E. Miranda
Jong-Dae Lee
Manuel G. Ong
Delfin S. Castro, Jr.
Arsenio C. Cabrera, Jr.
Position
President/Chairman
Director
Director
Director
Director
Independent Director
Independent Director
Chief Finance Officer / Treasurer /
Compliance Officer
Corporate Secretary and Corporate
Information Officer
Age
40
44
41
40
35
53
55
47
Citizenship
Filipino
Filipino
Filipino
Filipino
Filipino
Korean
Filipino
Filipino
52
Filipino
Please see Item 5. Directors and Executive Officers of the Company’s Information Statement on SEC Form 20-IS
for the business experience of the Company’s directors and officers during the past five (5) years.
FINANCIAL STATEMENTS
Please see Exhibit A.
8
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Audit Fees
Sycip Gorres Velayo & Co. (“SGV”) has been the group’s independent auditor since 2010 up to present. The
2009 audit was performed by Punongbayan & Araullo (“P & A”). SGV fees for the group covering year 2012
amounted to P 1,460,000, P1,781,450 for year 2011, P 1,889,734 in 2010 and for 2009, P&A’s fees amounted
to P1,280,000.
Except for annual audit of financial statements, SGV & Company was not commissioned to perform any special
audit for the group.
Audit Committee’s Approval Policies and Procedures
The Audit Committee and SGV meet to discuss its audit plan, new accounting standards for adoption by the
group, timetable, professional staff assigned to perform the engagement and service fees to be charged by the
auditor, among others. Before the audit report is finalized, the SGV will present with the Audit Committee and
secure its approval for release of the audited financial statements of the parent, its subsidiaries and
consolidated reports.
The Company’s Audit Committee is composed of Mr. Manuel G. Ong, as Chairman, and Messrs. Antonio
Victoriano F. Gregorio III and Jose Francisco E. Miranda, as members.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
There was no event in the past where SGV had any disagreement with the Company with regard to any matter
relating to accounting principles or practices or financial statement disclosure or auditing scope or procedure.
Pursuant to the General Requirements of SRC Rule 68, Section 3.b.iv (Qualifications of Independent
Auditors), the external auditors shall be rotated every after five (5) years of engagement. In case of a firm, the
signing partner shall be rotated every after said period. The Company is in compliance with SRC Rule 68,
Section 3.b.iv.
Mr. Renato J. Galve of SGV was the partner in charge of the Company’s 2012, 2011 and 2010 audit whereas
Ms. Mylene Bisnar of P&A was the partner in charge of the Company’s 2009 audit. The handling audit partner
is rotated every five (5) years in compliance with SEC Memorandum Circular No. 8, Series of 2003 and the
provisions of SRC Rule 68(3)(b)(iv).
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Performance and Results of Operation
June 30, 2013 vs. December 31, 2012
In June 2012, the Company inked an Operating Agreement with Geogen Corporation covering the Dinapigue
Nickel Project located in Dinapigue, Isabela with 2,391.8041 hectares. The project with an approved Mineral
Purchase and Sharing Agreement (“MPSA”) is already in the development and operating stage. NiHAO upon its
assumption as operator of the project, rehabilitated existing roads and built new arterial road networks to
increase efficiency in moving ore, and developed other mine infrastructure to comply with regulatory
requirements for the development of an efficient mining operations. In addition, existing extensive activities
such as further development of infrastructures, maintenance of new laboratory, hiring of additional
manpower among others, are being conducted.
For the Group’s nickel mining claims; the Botolan Nickel Project and the Manticao Nickel Project, NiHAO has
focused on community development and community relations while exploration activities are still suspended.
On the Masbate Gold project, the Group is currently concentrating on compliance with conditions set forth in
EP-V-2008-005 and will soon start implementation of the National Greening Program. On December 31, 2012,
9
the Parent Company, Oregalore, Inc. (a wholly owned subsidiary of the Parent Company) and Welcome
Stranger entered into a Sale and Purchase agreement involving 1,000,000 shares of stock of Masbate 13.
Resulting income from this transaction amounts to P315.46 million as of June 30, 2013 and thus consolidated
into the Parent Company.
For calendar year 2013, the Company has started its nickel mining and shipping operations in Dinapigue,
nd
Isabela beginning the 2 quarter of that year. The group was able to ship 109,178 WMT of nickel ore
amounting to P68.01 million. The Company could have made more shipments were it not for unfavorable
weather conditions. Consequently, revenues could not cover cost of sales amounting to P 252.16 million
resulting in a gross loss of P184.15 million. Management sees this as typical of similar mining operations
considering this is only the second season and first full year of operations of the Isabela mines.
General and administrative expenses incurred during the six-month period amounts to P39.73 million while
interest income earned amounted to P1.57 million. The Company resumed liquidating its remaining shares
listed in the stock market and posted a net loss of P 25.34 million. Net income from Isabela operations and
from sale of Masbate 13 shares amounted to P67.81 million. A change in fair value of available-for-sale
financial assets amounting to P16.03 million increased the net comprehensive income to P83.84 million.
Cash as of June 30, 2013 amounting to P 538.23 million was 13.18% or P 81.73 million lower than the P619.95
million cash as at December 31, 2012. The decrease is brought about by (a) partial settlement of payables, (b)
operating expenses incurred during the period, and (c) costs related to Isabela operations.
Receivables of P 78.62 million, was 57.49% or P106.32 million lower from P 184.94 million as of December 31,
2012 due to collection of trade receivables and reclassification of deposits made to various suppliers relative to
its Isabela operations to expense accounts.
Other current assets went down by 33.06% or P14.55 million due to reclassification to expense accounts.
An increase of 446.25% or P350.80 million in available-for-sale financial assets from P 78.61 million in June
2012 to P 429.41 million in June 2013 was due to (a) acquisition of 50 million shares in Welcome Stranger as
payment for the 1 million shares of Masbate 13; and (b) market cost per share of ORE shares went down from
P3.10 as of December 31, 2012 to P1.19 per share as of June 30, 2013.
There were mine and road development costs incurred during the period thereby increasing property and
equipment by 42.91% or P 27.10 million from P 63.14 million as of December 31, 2012 to P 90.24 million as of
June 30, 2013.
Total consolidated assets stood at P1,438.36 million, a 13.96% or P 176.22 million increase from recorded
consolidated assets of P1,262.15 million as of December 31, 2012. The increase in total assets was due to net
effect of (a) decrease in cash due to expenses incurred in connection with its Isabela operations; (b) reclass to
expense account deposits made to various suppliers; (c) increase in property and equipment account; and (d)
acquisition of shares in exchange of Masbate 13 shares.
Total liabilities as of June 30, 2013 amounted to P53.45 million which was 229.98% or P 37.25 million higher
than the P 16.20 million recorded liabilities as of December 31, 2012. The increase in total liabilities was
mainly due to accrual of expenses incurred relative to its Isabela operations and the acquisition of shares as
consideration for disposal of 40% investment in Masbate 13.
Total deficits of P 48.42 million as of December 31, 2012 were totally wiped out by the gain on sale of Masbate
13 shares. Retained earnings as of June 30, 2013 amounts to P 20.35 million.
Increase in equity attributable to non-controlling interest is due to the liquidation of 40% ownership in
Masbate 13.
10
June 30, 2013 vs. June 30, 2012
a.
Net operating income for the first two quarters of 2013; net comprehensive income:
As of June 30, 2013, the Company recognized a consolidated net income of P67.81 million, 43.81% or P 20.66
million higher as compared to the recorded income covering the same period last year of P47.15 million. The
increase was brought about by net effect of gain on sale of investment in Masbate 13 and costs and expenses
incurred from its Isabela operations. Other comprehensive income representing income on change in market
value of available-for-sale financial assets was recorded at P16.03 million and P81.25 million as of June 30,
2013 and June 30, 2012 respectively. Closing price amounts to P 1.19 per share as of June 30, 2013 and P5.45
per share as of June 30, 2012.
b.
Increase in Assets:
Cash of P 662.72 million was P 124.51 million or 18.79% lower than balances of P 538.21 million on June 30,
2013. The decrease is due to costs and expenses incurred relative to Isabela operations.
P 58.30 million or 42.58% decrease in receivables from P 136.92 million in June 2012 to P 78.62 million in June
2013 is mainly due to reclassification of deposits made to various suppliers relative to the Company’s
operations in Isabela to expense accounts.
P 23.11 million increase in other current assets from P6.36 million in June 2012 to P29.46 million in June 2013.
The increase is attributable to input taxes and creditable taxes earned from its Isabela operations.
P 209.04 million or 94.86% increase in available-for-sale financial assets from P 220.37 million in June 30, 2012
to P 429.41 million as of June 30, 2013 attributed to the 50 million shares in Welcome Stranger and the
reclassification of the remaining investment in an associate.
100% decrease in Investment in Associate was due to disposal of 50% of its investment to a third party, thus,
the Group lost its significant influence. The remaining investment was reclassified to “AFS financial asset”
account and carried at cost.
A significant increase of P 87.96 million in property and equipment from P 2.27 million as of June 30, 2012 to P
90.24 million as of June 30, 2013 was due to road and mine development costs and acquisition of heavy
equipment during the period relative to its Isabela operations net of depreciation.
An increase of P10.59 million of other non-current assets from P 0.28 million in June 2012 to P10.87 million in
June 2013 is attributable mainly to (a) purchase of a right to use a 10-hectare land located in Brgy. Dicabasan,
Dilasag, Aurora for P5.0 million to be used in its mining operation and (b) long term deposit given to a supplier.
As a result, given the above-mentioned transactions, total consolidated assets as of June 30, 2013 were
recorded at P1,438.36 million, while total assets as of the same period last year amounted to P1,362.82 million
or a 5.54% equivalent to P75.54 million increase.
c.
Increase in Total Liabilities:
Total liabilities increased by 420.89% or by P43.19 million as of June 30, 2013, mainly due to unpaid
management fees and other accrued expenses relative to its Isabela operations and capital gains tax on sale of
40% investment in Masbate 13.
d.
Increase in Total Stockholders’ Equity:
Total stockholders’ equity amounted to P 1,384.91 million as of June 30, 2013, an increase by 2.39% or by
P32.35 million from P1,352.56 million in the same period last year. The increase was due to the following:
a) net income incurred during the period
b) Decrease in unrealized gains on available-for-sale financial assets of P 67.58 million; and
11
c)
Application of additional paid in capital of P150 million to eliminate the Parent Company’s deficit
Financial Soundness Indicators:
June 30, 2013
Net Income (loss)
Total Current Assets
Total Assets
Current Liabilities
Total Liabilities
Stockholders’ Equity
June 30, 2012
P 67,806,363
706,198,130
1,438,364,673
53,454,069
53,454,069
1,384,910,604
(1) Current Ratio
P 706,198,130 / 53,454,069
P 864,663,112 / 10,262,089
13.21:1
(2) Debt to Equity Ratio
P 53,454,069 /1,384,910,604
P 10,262,089 /1,352,556,694
0.04:1
(3) Debt Ratio
P 53,454,069 /1,438,364,673
P 10,262,089 /1,362,818,782
0.04:1
(4) Asset to Equity Ratio
P 1,438,364,673/1,384,910,604
P 1,362,818,782/1,352,556,694
1.04:1
(5) Book Value per share
P 1,384,910,604/ 913,000,000
P 1,352,556,694/ 913,000,000
1.52
(6) Income (loss) per share
P 67,806,363 / 913,000,000
P 47,150,345 / 913,000,000
P0.07
P 47,150,345
864,663,112
1,362,818,782
10,262,089
10,262,089
1,352,556,694
84.26:1
0.008:1
0.008:1
1.01:1
1.48
NA
P 0.05
(7) Interest Coverage Ratio
No interest expense incurred
NA
(8) Return on Asset
P 67,806,363 /1,438,364,673
P 47,150,345 /1,362,818,782
NA
0.05:1
0.03:1
(9) Gross Profit Margin
NA
NA
(10) Net Profit Margin
NA
NA
Current Ratio/Liquidity Ratio:
The ratio is computed by dividing the current assets into the current liabilities.
The ratio measures the company’s ability to pay maturing obligations.
Debt to Equity Ratio/Solvency Ratio:
This ratio is determined by dividing the total liabilities into the total stockholders equity.
The ratio measures the leverage on borrowed capital.
12
Debt Ratio:
This ratio is determined by dividing the total liabilities into the total assets.
The ratio indicates the percentage of a company’s assets that are provided via debt.
Asset to Equity Ratio:
This ratio is determined by dividing the total assets into the total stockholders’ equity.
The ratio measures the financial leverage and long term solvency of the Company.
Book value per share:
This ratio is determined by dividing the stockholders’ equity by the total number of shares.
This is used to calculate the per share value of the company based on its equity available to
shareholders.
Income Per Share:
Income per share is computed by dividing the net income by weighted average number of common
shares subscribed.
Interest Coverage Ratio:
The interest coverage ratio is used to determine how easily a company can pay interest
expenses on outstanding debt. The ratio is calculated by dividing a company’s earnings
before interest and taxes (EBIT) by the company’s interest expenses for the same period
Return on Asset
This ratio is determined by dividing the net income by the total assets.
This ratio indicates how profitable a company’s assets are in generating revenue.
Gross Profit Margin:
The gross profit tells the percentage of revenue/sales left after subtracting the cost of goods
sold. The gross profit margin is computed by dividing Gross Profit over Net Service Income.
Net Profit Margin:
The net profit margin shows how much of each sales shows up as net income after all
expenses are paid. The Company calculated this by dividing the net income before other
income (expenses) by total service income.
Discussion and analysis of material events and uncertainties known to management that would address the
past and would have an impact on future operation of the following:
a.
Any known trends, demands, commitments, events or uncertainties that will result in or that are
reasonably likely to result in the registrant’s liquidity increasing or decreasing in any material way.
INVESTMENT IN SHARES OF STOCKS
100% Equity in OREGALORE, Inc. (“OREGALORE”)
On March 10, 2011, the Company acquired all the outstanding shares of OREGALORE pursuant to Deeds of
Absolute Sale between the Company and the previous shareholders of OREGALORE. The Company
acquired the shares of OREGALORE at par value for a total consideration of P
=3,000,000. The Company also
acquired the stockholder advances of OREGALORE amounting to P125,478,304.62 for the discounted price
of P105,000,000. In August 2012, these advances were converted into equity equivalent to 1,250,000
common shares of OREGALORE.
OREGALORE is the owner of eighty percent (80%) of the outstanding capital stock of Masbate 13
Philippines, Inc. (“Masbate 13”), a corporation duly organized and existing under Philippine laws. Masbate
13 is the owner of a gold mining claim denominated as Exploration permit No. V-2008-005 located at the
13
Municipalities of Milagros and Mandaon, Masbate with a total coverage area of 8,357.3509 hectares. The
claim which was presented as part of the “Mining Asset” account amounting to P152,136,833 was based on
the valuation report as prepared by Engineer Graciano Calanog. (Engineer Calanog is a practicing Mining
Engineer with thirty four (34) years experience in the mining industry. He finished his undergraduate
studies and his Master Degree in Business Administration in the University of the Philippines)
On June 2013, 1 million shares of Masbate 13 were sold by Oregalore, Inc. to Welcome Stranger.
Consideration is in the form of 50 million shares of Welcome Stranger plus USD250,000 cash. This exercise
has resulted in an income of P315.46 million.
Investment in a Joint Venture
International AG (Glencore) executed a Heads of Agreement (“HOA”) in Hong Kong. Under the HOA, the
parties agreed to utilize their respective expertise in the mining industry for purposes of investigating,
identifying, acquiring, developing and operating mining claims of economically feasible nickel deposits in
the Philippines for purposes of direct shipping or selling of ore and other related nickel mining business.
Glencore shall contribute its expertise in marketing of nickel ores in the world market as well as its
network of various institutions internationally. On the other hand, the Parent Company and Asiabest
Group International, Inc. (“ABG”) formerly AGP Industrial Corp. (“AGPI”) shall utilize their expertise in
mining, contracting and developing mines in the Philippines and their knowledge of relevant Philippine
laws, rules and regulations and issues.
In order to accomplish the said purpose, the parties agreed to form within a period of two months from
the signing of the HOA, a joint venture company (“JVC”) under the laws of Hong Kong. Pursuant to the
Addendum to HOA dated October 28, 2011, the JVC will have an initial authorized capital of HK$100,000
with a par value of HK$1/share. The JVC should have an initial issued and paid-in capital of HK$10,000 to
be contributed by the parties as follows: (1) 50% from Glencore; and (2) 25% each for the Parent Company
and ABG.
Moreover, the parties agreed to execute the following implementing agreements of the HOA:
 Marketing agreement whereby Glencore will act as the exclusive marketing agent for the JVC and
market and sell all material produced by the JVC;
 Management agreement;
 Contractor(s) agreement; and,
 Any other agreements agreed by the parties as being necessary or useful to facilitate the
implementation and operation of the JVC.
The JVC under the name of GNA Resources International Limited (“GNA”) was incorporated in Hong Kong
on November 23, 2011. The Company’s contribution of P
=13,946 to the JVC was advanced by a related
party. As of June 30, 2013, JVC has not started its main business operation due to recent changes in
mining regulations.
MINING CLAIMS AND PERMITS
The operations of the Company’s subsidiaries are primarily conducted under Mining Claims described
below. The following table sets forth certain information related to the Company’s Mining Claims and
their corresponding permits or permit applications as of June 30, 2013.
Location
Zambales
Botolan and Iba
Name of Claim
Permit Description
Botolan Mining
Claim
MPSA No. 315-2010III
14
Validity
Permittee/
Applicant
Mina Tierra
Gracia, inc.
Area
Covered
(in
hectares)
5,081.6408
Location
Misamis Oriental
Opol, Manticao
Masbate
Milagros and
Mandaon
Validity
Permittee/
Applicant
Area
Covered
(in
hectares)
Name of Claim
Permit Description
Manticao Mining
Claim
EPA-000093-X
Bountiful
Geomines
1,944.0000
Masbate 13 Mining
Claim
EP-V2008-5
Masbate 13
8,375.3509
15,400.9917
On February 10, 2010, the MGB has approved the MPSA application of Mina Tierra Gracia, Inc. and issued
MPSA no. 315-2010-III in the name of Mina Tierra Gracia, Inc, covering the Botolan Mining Claim.
Agreements entered into by the Group during the last three (3) years:
1. Marketing Agency Agreement with Glencore International AG
On March 13, 2012, the Company executed a “Marketing Agency Agreement” with Glencore International AG
(“Glencore”) at Hong Kong.
Under the agreement, NIHAO appointed Glencore as its marketing agent for the purpose of providing
marketing and sales agency service relating to the sale of Nickel produced, or which may be produced from
any of the mines owned or operated by NiHAO, together with its subsidiaries, affiliates, suppliers, and any
person or entity selling Nickel through NiHAO (the “NiHAO Group”). Both parties agreed that the sale of Nickel
under the Agreement shall be under the brand name of GNA Resources International Limited, the HongKong
joint venture company involving the parties.
As marketing agent, Glencore has authority to market and sell Nickel, both as a principal for its own account
and as agent for third parties other than NiHAO, in all markets where Nickel is imported, exported, bought
and/or sold throughout the world (the “Territory”) on a non-exclusive basis. In respect of each potential sale,
Glencore shall advise the best prices achievable at which it intends to offer or sell Nickel.
In addition, Glencore has authority to conclude Sales Contracts on behalf of NiHAO on terms and conditions
deemed commercially reasonable to Glencore, it being understood and acknowledged that such terms and
conditions may be in variance or verbal approval from NiHAO in concluding such diverging Sales Contracts.
For and in consideration of the services of Glencore, NiHAO shall pay a commission at the rate of Twenty Five
Cents ($0.25) per wet metric tonne of the Sales Value of any Nickel sold on an Agency Basis and Twenty Five
Cents ($0.25) per wet metric tonne, in case sold on a Principal basis.
The agreement shall take effect upon its execution by the parties and continue for a term of one (1) year,
unless terminated in accordance with the terms and conditions of the Agreement.
2. Operating Agreement with Geogen Corporation / General Contractor Agreement with Geogen Corporation
(“Geogen”)
On March 5, 2012, the Board of Directors of the Parent Company approved the execution, delivery and
performance of a General Contractor Agreement with Geogen. Under the agreement, the Parent Company is
appointed as Geogen’s general contractor over Geogen’s mineral property consisting of a total area of
2,391.4081 hectares located at Dinapigue, Isabela, which is covered by MPSA No. 258-2007-II dated July 30,
2007 (the “Mineral Property”).
15
Pursuant to the agreement, Geogen shall pay the NiHAO an amount equivalent to 90% of the invoice value of
the nickel ore sold by Geogen to third parties in consideration of the following contractor services to be
performed by the Parent Company:
(a) Mining services relating to or arising from mining activities within the Mineral Property;
(b) Hauling services for the nickel ore extracted from the Mineral Property to designated areas;
(c) Barging and stevedoring services for the shipside loading of the nickel ore extracted from the Mineral
Property;
(d) Road and causeway maintenance services; and
(e) Environmental maintenance services of the Mineral Property.
On June 13, 2012, the agreement discussed above was superseded by an operating agreement. Pursuant to
the operating agreement, NiHAO shall have the exclusive right to explore, operate, mine, develop, utilize and
process any minerals found within the Contract Area of the Mineral Property, subject to the following
limitations:
(a) NiHAO shall abide by all the terms and conditions of relevant licenses and permits covering the
contract Area or relating to the conduct of mining operations therein;
(b) NiHAO shall abide by and comply with all of its obligations and undertakings under the Operating
Agreement, and;
(c) NiHAO may build improvements and install machineries and equipment and other facilities, and do
such other things in the Contract Area as may be necessary and proper to carry out exploration,
mining development works and operations, utilization, processing, environmental protection and
rehabilitation of the Contract Area.
Pursuant to the operating agreement, Geogen shall pay the Company an amount equivalent to 90% of the
invoice value of the nickel ore, nickel by-products, chromite and other minerals sold by Geogen to third
parties. NiHAO will pay for its own account, Asiabest Group International, Inc. (“ABG”) management fees
pursuant to Management Agreement with Option to Buy executed between GEOGEN and ABG on 14 October
2011.
3. Memorandum of Agreement with Capital Gold Pty Ltd. and Welcome Stranger Mining Ltd. / Memorandum
of Understanding with Capital Gold Pty Ltd.(“Capital Gold”) and Capital Resources Corporation Plc
(“Capital Resources”)
On January 10, 2012, the Board approved the execution, delivery and performance of a Memorandum of
Understanding (“MOU”) by and among NiHAO, Capital Gold and Capital Resources, for the acquisition by
Capital Gold and Capital Resources of shares of stock in (a) Oregalore, Inc. (“Oregalore”), a wholly-owned
subsidiary of NiHAO; or (b) Masbate 13 Philippines, Inc. (“Masbate 13’), a subsidiary of Oregalore; or (c) a new
company incorporated under the laws of the Philippines, (in each case hereinafter referred to as the “NiHAO
target”) for the purpose of obtaining equity interest in the registered holder of the exploration license of the
Mandaon tenement situated in the Municipality of Milagros and Mandaon, Masbate, Philippines (the
“Masbate License”).
Capital Gold is a corporation organized and existing under the laws of the State of New South Wales, Australia,
while Capital Resources is a corporation organized and existing under the laws of the Isle of Man.
On September 17, 2012, the Board approved the execution, delivery and performance of Memorandum of
Agreement (“MOA”) by and among NiHAO, Capital Gold Pty Ltd. (“Capital Gold”), and Welcome Stranger
Mining Ltd. (“Welcome Stranger”), for the acquisition by Capital Gold and Welcome Stranger from NiHAO of
forty percent (40%) of the issued share capital of Masbate 13 Philippines, Inc. (“Masbate 13”) a subsidiary of
NiHAO’s wholly-owned subsidiary, Oregalore, Inc. (“OI”).
The MOA supersedes the MOU executed. Supervening events have transpired which prevented Capital
Resources from performing commercial undertakings, deliveries and covenants as outlined in the MOU.
However, despite the expiration of the MOU, Capital Gold, on its own, continued to negotiate, with NiHAO
16
with a view of concluding a mutually beneficial commercial transaction under terms and conditions acceptable
to the parties.
Subject to the satisfaction of certain conditions, the Parties to the MOA have agreed that:
(a) Welcome Stranger shall acquire forty percent (40%) of the entire issued and outstanding share capital of
Masbate 13 in consideration for which NiHAO/Oregalore shall receive Fifty million (50,000,000) shares in
Welcome Stranger at an indicative listing market value of twenty Australian cents (AUD0.20 / share) per
share ;
(b) Welcome Stranger will pay to NiHAO/Oregalore a cash consideration of two hundred fifty thousand USD
dollars (US250,000.00);
(c) At the end of the transaction, the Parties shall have shareholdings in Welcome Stranger in accordance
with the following ownership structure
Company /Entity
Original shareholders
Capital Gold
Dizon Copper-Silver Mines,
Inc.
NiHAO
New shareholder after
capital raising
TOTAL
d)
Number of shares
9,120,452.00
80,000,000.00
90,000,000.00
50,000,000.00
25,000,000.00
254,120,452.00
Percentage of ownership
3.59%
31.48%
35.42%
19.68%
9.84%
100.00%
Welcome Stranger shall have the option to buy an additional forty percent (40%) of the entire issued and
outstanding share capital of Masbate 13 upon terms and conditions acceptable to NiHAO.
The rights and obligations of the Parties to the MOA is subject to the following conditions being satisfied (or
waived by the appropriate Party, in its absolute discretion).
(a) The Parties entering into a formal share sale agreement, subscription agreement and shareholders
agreement (the “Formal Agreement”) relating to the Transaction on terms and conditions acceptable to
all Parties (acting reasonably). Among other things, Parties shall change the name of Welcome Stranger
Mining Ltd. to NoA Mines Ltd. or such other names which the Parties may hereinafter agree to subject to
approval by the appropriate Australian body ;
(b) NiHAO being satisfied that Capital Gold and Welcome Stranger have the financial, legal, operational and
technical capabilities to undertake the Transaction;
(c) Capital Gold receiving a satisfactory legal opinion from its Philippines counsel as to the validity and
enforceability of the formal Agreements under applicable Philippines laws;
(d) Welcome Stranger shareholders approving the transactions in a general/special meeting that will be
called for the purpose;
(e) Welcome Stranger obtaining all other regulatory and shareholder approvals in accordance with the
Corporations Act 2001 (Australia), the ASX Listing Rules and Welcome Stranger’s constitutions;
(f) ASX providing Welcome Stranger with a list of conditions, following Welcome Stranger obtaining all
required shareholder approvals which, when satisfied, will result in the ASX lifting the suspension on the
Welcome Stranger’s Shares trading on ASX; and
(g) The agreement between Capital Gold, Welcome Stranger, and Dizon Copper-Silver Mines, Inc. is likewise
fulfilled with respect to the capital raising activities and the corresponding vending-in of the property at
Dizon Copper-Silver Mines, Inc. into Welcome Stranger as stated under said Agreement.
Requesting Party, shall provide the other Party with all reasonable assistance and relevant information as may
be required by the Other Party for the purposes of enabling completion of a Due Diligence in accordance with
the terms of the MOA.
Capital Gold and Welcome Stranger acknowledged the completion of legal and technical due diligence on
NiHAO, Oregalore and Masbate 13, including, without limitation, all activities carried on by Masbate 13
17
relating to the gold, copper gold prospect situated in the Municipality of
Philippines to the sole satisfaction of Capital Gold and Welcome Stranger.
Mandaon, Masbate Island,
On December 31, 2012, as and by way of partial implementation of the MOA dated 17 September 2012
between the parties, a Sale Share Agreement was executed by and among Nihao, Oregalore and Welcome
Stranger involving 1 million shares of stock (40% ownership) of Masbate 13. Pursuant to the agreement,
Oregalore shall sell its 40% ownership in Masbate 13 for a total consideration of 50,000,000 shares in
Welcome Stranger at listing value of AUD0.20 per share plus US$250,000 cash.
The sale shall become effective upon satisfaction of the following contract conditions:
(a) There shall be a written advice or confirmation from the Treasurer of the Commonwealth of Australia to
Oregalore that there is no objection, under the Foreign Acquisition and Takeovers Act 1975, to the
issuance of shares of Welcome Stranger to all Parties (acting reasonably);
(b) Where Welcome Stranger is subject to or affected by a foreign policy of the Philippine in connection with
the proposed issue of the Sale Shares or this Agreement generally, the Philippine Government, or a duly
authorized delegate of the Philippine Government, has provided written advice or confirmation to
Welcome Stranger without conditions or on conditions acceptable to the Welcome Stranger acting
reasonably that there is no objection under any law or foreign policy of the Philippines to the proposed
issue of the Sale Shares or the entering into or completion of this Agreement.
Completion of this agreement is also subject to the following significant conditions precedent:
(a) Execution of the Royalty Agreement, Shareholders Agreement Restriction Agreement and Operating
Agreements by all of the parties of this agreement;
(b) Completion of the Capital Gold Sale Agreement;
(c) Completion of the Dizon Agreement.
4. Heads of Agreement with Glencore International AG (“Glencore”) and AGP Industrial Corporation (“AGP”).
On September 27, 2011, the Company executed a Heads of Agreement (“HOA”) in Hong Kong with Glencore
and AGP. The three Companies agreed to utilize their respective expertise in the mining industry for purposes
of investigating, identifying, acquiring, developing and operating mining claims of economically feasible nickel
deposits in the Philippines for purposes of Direct Shipping/ Selling Ore (DSO) and other related nickel mining
business. Glencore shall contribute its expertise in marketing of nickel ores in the world market as well as its
network of various institutions internationally. On the other hand NiHAO and AGP shall utilize their expertise
in mining, contracting and developing of mines in the Philippines and their knowledge of relevant Philippine
laws, rules and regulations and issues.
Glencore is a company registered under the laws of Switzerland and is one of the world’s leading integral
producers and marketers of commodities with worldwide activities in the production, sourcing, processing,
refining, transporting, storage, financing and supply of metals and minerals, energy products and agricultural
products. AGP, on the other hand, is a publicly listed holding company in the Philippines with interests in real
estate and mining ventures.
On 28 October 2011, Glencore, NiHAO and AGP executed an “Addendum to Heads of Agreement”. The Joint
Venture Corporation (JVC) shall be formed with an initial authorized share capital of One Hundred Thousand
Hong Kong Dollars (HK$ 100,000) with par value of One Hong Kong Dollar per share (HK$ 1/ share) and issued
and paid-in capital of Ten Thousand Hong Kong Dollars (HK$ 10,000) equivalent to ten thousand (10,000)
shares of the JVC. Said initial issued and paid-in capital shall be contributed equally by the PARTIES in
proportion to their respective shares. Once the JVC is formed, the PARTIES (or their respective subsidiaries
designated for such purpose) shall remit to a USD dollar account of the JVC, Two Million US Dollars
(US$2,000,000.00) in such amounts of contribution as provided by the heads of Agreement, This shall
constitute the initial capitalization of the JVC to be used in accordance with the Heads of Agreement but which
amounts shall be treated as shareholders advances. Such shareholders advances shall be evidenced by an
agreement entered into between each PARTY and the JVC, each of which shall contain identical terms and
conditions (other than the identity of the PARTY to such agreement)
18
Pursuant to the Heads of Agreement dated September 27, 2011 entered into by NiHAO, AGP and Glencore,
the Company together with AGP Industrial Corporation and Glencore International AG established on
December 12, 2011, GNA Resources International Limited under the laws of Hong Kong, as the group’s joint
venture corporation. Under the HOA, Glencore, NiHAO and AGP agreed to utilize their respective expertise in
the mining industry for purposes of investigating, identifying, acquiring developing and operating mining
claims of economically feasible nickel deposits in the Philippines for purposes and Direct Shipping/ Selling Ore
(DSO) and other related nickel mining business. Glencore shall contribute its expertise in marketing of nickel
ores in the world market as well as its network of various institutions internationally. On the other hand,
NiHAO and AGP shall utilize their expertise in mining, contracting and developing of mines in the Philippines
and their knowledge of relevant Philippine laws, rules and regulations and issues. In order to accomplish said
purpose, the parties have formed and established GNA Resources under the laws of Hong Kong.
PRIVATE PLACEMENTS
On December 29, 2010, the Company entered into an agreement with one of its stockholders to subscribe a
portion of the Company’s authorized but unissued capital stock by way of a private placement transaction.
The stockholder has agreed to subscribe to 80 million shares at a subscription price of P1.35 per share for a
total consideration of P108 million. The share issuance resulted to an increase in additional paid-in capital
(APIC) amounting to P28 million. The proceeds from the said private placement transaction were used to
acquire 100% equity holdings in OREGALORE. On the same date, the Company’s Board of Directors approved
the issuance of additional shares of stocks through a 2:5 Stock Rights Offering. This is to provide other
stockholders with the same opportunity to subscribe to new shares of the Company.
On August 16, 2011, the Company entered into a second subscription agreement with the same stockholder
covering 100 million shares at a subscription price of P2.00 per share or for a total consideration of P200
million. The proceeds from this private placement transaction were initially used to acquire listed shares of
ORE thru the PSE.
On September 21, 2011, the Company has entered into its third subscription agreement with the same
stockholder covering 100 million shares at a subscription price of P2.25 per share for a total subscription price
of P225 million. The proceeds were initially earmarked for acquisition of additional ORE shares and purchase
of mining equipment.
Agreement by and among Macquarie Bank Limited (“Macquarie Bank”), Parent Company and one of its
Major Shareholders
The BOD of the Parent Company approved the execution, delivery and performance of an Investment
Agreement (the “Agreement”) by and among Macquarie Bank, the Parent Company and one of its major
shareholder, embodying a Multi-tranche Average Price Issuance Program (“Issuance Program”) resulting in
Macquarie Bank’s subscription to newly-issued common shares of stock in the Parent Company (the “NiHAO
Shares”) on a private placement basis (“Transaction”).
Pursuant to the Agreement, Macquaire Bank agreed to subscribe to the Parent Company’s shares of up to an
aggregate amount of 150,000,000, which shall be purchased in tranches, from the Parent Company’s
authorized but unissued capital stock, provided that, prior to the Parent Company’s obtaining the approvable
of its shareholders to the Transaction, Macquarie Bank shall not make any subscription that will result in
Macquarie Bank’s total shareholdings in the Parent Company exceeding 95,000,000 shares, which number is
just below ten percent (10%) of the resulting issued capital stock of the Company. The Parent Company will
raise approximately United States Dollar (US$) 25,000,000 to US$30,000,000 from the issuance of the shares.
Macquarie Bank’s right to subscribe to the Subscriber Shares shall expire (1) year from the execution of the
Agreement, or upon Macquarie Bank having subscribed to and been issued 150,000,000 Subscriber Shares,
whichever event occurs earlier.
19
In relation to the Agreement, on March 2, 2012, the Parent Company and Macquarie Bank executed a
Subscription Agreement covering the Macquarie Bank’s subscription of the 33,000,000 common shares with a
par value of P
=1.00 per share for a subscription price of P
=9.46 per share for a total consideration of P
=312.2
million. The subscription will result to an increase in the additional paid-in capital of P
=279.2 million.
No additional subscriptions were made under the Issuance Program after this first tranche since the listing
process for the 33 million shares remain pending with the PSE even after the one-year program already
expired.
MANAGEMENT PLAN OF OPERATIONS
Plan of Operations
The Company shall use the balance of the net proceeds from the 2009 SRO to maintain its Botolan and
Manticao Mining Claims, the former which has already been awarded a MPSA, and the Manticao Mining Claim,
which will have to be perfected into an Exploration permit before any work can be done on the property.
Management is also keen on the acquisition of other prospective mining claims that it can develop for
production in partnership with select foreign and local partners.
Balance of the proceeds of private placements in 2011 were initially used to purchase additional publicly listed
shares from the PSE open market and for acquisition of mining equipment. These were only interim
transactions of the Company while waiting for a better investment opportunity. To date, significant portion of
the purchased shares were liquidated thru the PSE with gains. In 2012, the Company has reported net gain
from sale of ORE shares of P 58.62 million contributing positively to the cash flows of the Company to be
devoted to operation and expansion.
Proceeds from private placements made by Macquarie in March 2012 were used relative to the Operating
Services of the Company to Geogen Corporation.
Isabela Operations
The Isabela Nickel Project commenced full commercial operations starting 2012 with a half-year shipping
season still available and was able to ship Nickel Ore to China. Full year shipping season and commercial
operation of Isabela started this 2013. The company has organically grown its operating capability and reduced
its reliance on contractors, and the company plans to increase the heavy equipment complement to further
augment production and shipping capacity. The Isabela Nickel Project will be one of the main revenue drivers
from operations and contribute recurring income and strong cash flow, eventually improving shareholder
value. The company is currently studying plans for development of an improved loading facility and its
location to further reduce hauling and transport costs of ore from the mine
Botolan Mining Claim
The Company is continuously implementing its Community Development Program (CDP) for its MPSA located
in Botolan and Iba, Zambales to create a symbiotic relationship between the Company and the community. As
nickel prices continue to improve, the Company may implement additional exploration on the property to
determine the additional commercial viability of developing the Botolan Mining Claim as a Direct Shipping Ore
(DSO) nickel mine. The Company believes that its investment in the implementation of a CDP will be easier for
the transition of the Botolan Mining Claim from exploration into development and full scale operation. Plans
for development of a loading facility as well as the options to its possible location are being studied to
minimize hauling and transport costs of ore from the mine.
20
Manticao Mining Claim
NiHAO’s subsidiary, Bountiful Geomines, Inc. has an Exploration Permit Application (“EPAs”) in Manticao.
NiHAO will evaluate their respective mineral potentials through its technical team and/or third party geological
services companies as soon as the approval of its Exploration Permit has been issued.
After awarding of the Exploration Permit (“EP”), NiHAO shall implement exploration works according to the
approved Exploration Work Program and Environmental Work Program attached to the EP.
In this interim period:
a)
There is no known trend, event or uncertainty that has or is reasonably likely to have a negative
impact on the Company’s short-term or long-term liquidity. The Company is not in default or breach
of any note, loan, lease or other indebtedness or financing arrangement requiring the Company to
make payments.
b) The liquidity of the Company is expected to be generated from the Company’s financial resources as
well as from the proceeds of equity private placements and offerings.
c)
There are no events that will trigger direct or contingent financial obligation that is material to the
Company, including any default or acceleration of an obligation.
d) There are no material commitments for capital expenditures except for those provided in the “Use of
Proceeds” from the private placements conducted by the Parent Company.
e)
There are no known trends, events or uncertainties that have had or that are reasonably expected to
have a material favorable or unfavorable impact on the Company’s financial statements.
f)
There are no significant elements of income or loss that did not arise from the Company’s continuing
operations.
Financial Performance
In Thousand Pesos
Full Fiscal Years
Year 2012
Revenues
Cost and Expenses
Net Income (Loss)
Current Assets
Current Liabilities
Total Assets
Total Liabilities
Stockholders' Equity
Current Ratio
Current Assets / Current Liabilities
Debt to Equity Ratio
Total Liabilities/Stockholders' Equity
Return on assets
Net Income / Total Assets
Asset to Equity
Total Assets/Stockholders' Equity
Earnings (Loss) Per Share
Net Income (Loss) /Weighted ave. no. of shares
Year 2011
125,951
101,800
24,151
42,638
31,897
10,741
907,780
16,199
1,262,148
16,199
1,245,949
369,234
7,948
919,921
7,948
911,973
56.04
46.46
907,780 / 16,199
369,234 / 7,948
0.01
16,199 / 1,245,949
0.01
7,948 / 911,973
0.02
24,151 / 1,262,148
1.01
1,262,148 / 1,245,949
21
24,151 /907,500
0.03
0.01
10,741 / 919,921
1.01
919,921 / 911,973
0.01
10,741 /780,000
Calendar Year 2012
Financial condition / changes in financial condition
In June 2012, the Company inked an Operating Agreement with Geogen Corporation covering a majority
portion of the Dinapigue Nickel Project located in Dinapigue, Isabela with 2,314.2018 hectares. The project
with an approved Mineral Purchase and Sharing Agreement (“MPSA”) is already in the development and
operating stage. NiHAO upon its assumption as operator of the project rehabilitated existing roads and built
new arterial road networks to increase efficiency in moving ore, and developed other mine infrastructure to
comply with regulatory requirements for the development of an efficient mining operations. In addition,
existing extensive activities are being conducted.
Pursuant to the operating agreement, Geogen shall pay the Parent Company an amount equivalent to 90% of
the invoice value of the nickel ore, nickel-by-products, chromite and other minerals sold by Geogen to third
parties. For the year, this activity posted a service income of P64.08 million with cost of services of P 52.14
million resulting to a gross profit of P11.94 million or 18.64% of service income. General and administrative
expenses incurred during the period amounted to P46.51 million while the Company reported other income of
P72.59 million. Resulting income after taxes amounted to P24.15 million. A change in fair value of availablefor-sale financial assets amounting to P2.35 million resulted to a net comprehensive income of P21.8 million.
On December 14, 2012, the Group sold 31,500 shares of Oriental Vision Mining Philippines Corporation
(“ORVI”) to a third party for a total consideration of P 31.5 million, As a result the Group lost its significant
influence over ORVI. The remaining investment in ORVI after the sale was reclassified to “AFS financial asset”
account and carried at cost. The sale resulted in a net loss amounting to P0.6 million. Prior to the sale of the
shares discussed above, the investment was accounted for as an investment in an associate using equity
method. Share in associate’s net loss in 2012 amounted to P 10.7 million. Share in associate’s net income
amounted to P9.3 million and P2.6 million in 2011 and 2010, respectively.
Since May 2012, the Parent Company has been liquidating its shares in Oriental Peninsula Resources Group,
Inc. (“ORE”). NiHAO obtained a net gain on this investment amounting to P58.62 million.
Cash and cash equivalent as of December 31, 2012 amounted to P 619.95 million 104% or P315.79 million
higher than the P 304.16 million cash as at December 31, 2011. The increase is brought about by the proceeds
of the sale of ORE shares in the stock market and the sale of 31,500 ORVI shares and revenues from
operations.
Receivables soared to P 184.95 million from P 0.46 million in December 31, 2011 mainly due to advances made
to various suppliers and sales receivable relative to the Company’s operations in Isabela.
Other current assets of P 44.02 million is P38.02 million or 634% higher as compared to P6.0 million in 2011.
The difference is due to a) an increase in input vat; b) deposits made for subscontracted services; c) deferred
costs and d) increase in creditable taxes, all in relation to its Isabela operations.
Available-for-sale financial assets of P78.61 is P 192.71 million or 71.03% lower as compared to P 271.30
million in December 31, 2011. This account is composed of ORE shares which is listed in the stock market and
ORVI shares. Investment in ORE shares went down from P271.32 million in Dec. 31, 2011 to P 46.50 million as
of December 31, 2012 attributed to the liquidation process undertaken by the Company to lock-up its gain
beginning May 2012. Investment in ORVI shares amounted to P 32.11milion.
A significant increase of P 60.64 million in property and equipment from P 2.50 million as of December 31,
2011 to P 63.14 million as of December 31, 2012 was due to acquisition of office and heavy equipment relative
to its Isabela operations.
Other non-current assets of P10.97 million is 3,815% or P10.69 million higher than P0.28 million. The increase
is composed of leasehold rights net of amortization and long-term deposits made to subcontracted services in
relation to the Geogen operations.
22
Total consolidated assets stood at P1,262.15 million, a 37% or P 342.23 million increase from recorded
consolidated assets of P919.92 million as of December 31, 2011. The significant increase in total assets was
due to the following transactions:
a)
Sale and issuance of thirty three million (33,000,000) shares of the Company at P9.46 per share by
way of a private placement transaction on March 2, 2012. Total private placement proceeds amounted to
P312.18 million.
On February 11, 2012, the Board of Directors approved the execution, delivery and performance of an
Investment Agreement (the “Agreement”) by and among Macquarie (“Macquarie Bank”), NiHAO and one of
its major shareholders, embodying a Multi-tranche Average Price Issuance Program (“Issuance Program”)
resulting in Macquarie Bank’s subscription to newly-issued common shares of stock in NiHAO on a private
placement basis (“Transaction”).
Pursuant to the Agreement, Macquarie Bank agreed to subscribe to NiHAO shares of up to an aggregate
amount of One Hundred Fifty Million (150,000,000) (the “Subscriber Shares”), which shall be purchased in
tranches, from NiHAO’s authorized but unissued capital stock, provided that, prior to NiHAO’s obtaining the
approval of its shareholders to the Transaction (including the issuances of NiHAO shares to Macquarie Bank),
Macquarie Bank shall not make any subscription that will result in Macquarie Bank’s total shareholdings in
NiHAO exceeding Ninety-Five Million (95,000,000) Shares, which number is just below ten percent (10%) of
the resulting issued capital stock of the Company.
The first tranche culminated on 02 March 2012 where Macquarie Bank Limited executed a Subscription
Agreement covering the subscription of 33 Million common shares with a par value of P1.00 per share. The
subscribed shares were payable in cash at a subscription price of P 9.46 per share or an aggregate value of
Three Hundred Twelve Million One Hundred Eighty Thousand Pesos (P 312,180,000.00). The difference
between the aggregate par value of the subscribed shares and the total cash payment made by Macquarie
Bank for the same was shown as additional paid-in capital.
Proceeds from this private placement are currently being used to fund expenses relative to the Operating
Services of the Company to Geogen Corporation.
The Company and Macquarie Bank cannot proceed to the second and subsequent tranches of this program as
the listing of the shares in the first tranche above are still pending with the Philippine Stock Exchange (PSE). To
date, the parties have complied with the requirements of the PSE listing department for this purpose.
The proceeds of the Macquarie investment was used to fund its Geogen operations.
b)
Sale of ORE shares thru the PSE resulting to a net gain of P 58.62 million.
c)
Revenues from operations.
Total liabilities as of December 31, 2012 amounted to P16.20 million which were 1,038.15% or P 8.25 million
higher than the P 7.95 million recorded liabilities as of December 31, 2011. The increase in total liabilities was
mainly due to withholding taxes on payments made to suppliers and unpaid expenses relative to its Isabela
operations.
Additional paid-in-capital increased from P253.27 million in December 31, 2011 to P382.38 million. The private
placement of Macquarie on March 2012 resulted to an APIC of P 279.180. On October 22, 2012, the Securities
and Exchange Commission has approved the application of the Parent Company to undergo restructuring to
wipe out deficit as of 31 December 2011 amounting to P 150.07 million.
Total deficits went down to P 48.42 million from P 223.26 million as of December 31, 2011. The decrease is
brought about by a) the application of APIC against the deficit was approved on October 22, 2012 by the
Securities and Exchange Commission and b) net income attributable to parent company for 2012 amounting to
P 24.76 million.
23
Operating expenses incurred in 2012 of P46.51 million were 52% or P15.9 million higher than those incurred in
2011. The increase is mainly attributable to the expenses incurred in relation to its Geogen operations.
Plan of Operations
Proceeds of 2009 Stock Rights Offering
The Company will continue to use the balance of the net proceeds from the 2009 SRO to maintain its Botolan
and perfect its Manticao Mining claims. The former which has already been awarded a Mineral Production
Sharing Agreement; and the Manticao Mining Claim, which will have to be perfected into an Exploration
permit before any detailed work can be done on the property.
Management is focused on the operation of the Isabela mine and is gearing towards more nickel ore exports
this year. It is likewise keen on the acquisition of other prospective mining claims that it can develop for
immediate production in partnership with select foreign and local partners.
Proceeds of 2011 Private Placements
Balance of the proceeds from the P225 million private placement concluded in September 2011 were initially
used to purchase additional ORE shares from the PSE open market and for acquisition of mining equipment.
The Group has started liquidating its shares to lock-in its gains resulting to a net income of P58.62 million.
Proceeds of the sale is primarily being used to fund its Isabela operations. Management is keen on this project
considering its vast potential and clear immediate cash flows that certainly enhances shareholder value.
Botolan Mining Claim
The Company is continuously implementing its Community Development Program (CDP) for its MPSA located
in Botolan and Iba, Zambales to create a strong symbiotic relationship between the Company and the
community. As nickel prices continue to improve, the Company may implement additional exploration on the
property to determine the additional commercial viability of developing the Botolan Mining Claim as a Direct
Shipping Ore (DSO) nickel mine. The Company believes that its investment in the implementation of a CDP will
be easier for the transition of the Botolan Mining Claim from exploration into development and full scale
operation. Plans for development of a loading facility as well as the options to its possible location are being
studied to minimize hauling and transport costs of ore from the mine.
Manticao Mining Claim
NiHAO’s subsidiary, Bountiful Geomines, Inc. has an Exploration Permit Application (“EPAs”) in Manticao.
NiHAO will evaluate their respective mineral potentials through its technical team and/or third party geological
services companies as soon as the approval of its Exploration Permit has been issued.
After awarding of the Exploration Permit (“EP”), NiHAO shall implement exploration works according to the
approved Exploration Work Program and Environmental Work Program attached to the EP.
c)
There is no known trend, event or uncertainty that has or is reasonably likely to have a negative
impact on the Company’s short-term or long-term liquidity. The Company is not in default or breach
of any note, loan, lease or other indebtedness or financing arrangement requiring the Company to
make payments.
d) The liquidity of the Company was generated from the Company’s financial resources as well as from
the proceeds of the private placements and the 2009 Stock Rights Offering.
e)
There are no events that will trigger direct or contingent financial obligation that is material to the
Company, including any default or acceleration of an obligation.
24
f)
There are no material commitments for capital expenditures except for those provided for in the use
of proceeds from private placements and from the 2009 Stock Rights Offering and those needed by its
Isabela operations.
g)
There are no known trends, events or uncertainties that have had or that are reasonably expected to
have a material favorable or unfavorable impact on the Company’s financial statements.
h) There are no significant elements of income or loss that did not arise from the Company’s continuing
operations.
Top Five Key Performance Indicators
The following describes the Company’s top performance indicators.
Tonnage Sold. The amount of nickel ore the Company manages to sell will be the key driver for revenues.
Another factor affecting the revenues gained from shipments is the nickel content of the ore.
Nickel Prices. The price NiHAO will receive for the nickel ore it mines and sells will be based on prevailing
world prices. Nickel is a widely traded metal and the industry's benchmark price for nickel is obtained from the
London Metal Exchange and China Metals Market.
Currency Exchange Rates. Because nickel is traded worldwide, its price is denominated in U.S. dollars and all
transactions for nickel are conducted in this currency. Even contracting costs are by practice settled in US
dollars. NiHAO's profitability as a Philippine-based company will be affected by short-term fluctuations and
long-term movement in the exchange rates of U.S. dollars and Philippine pesos.
Cost per Ton. The cost the Company incurs for mining each metric ton of nickel is a key measure of its
operation's efficiency and competitiveness. Lowering costs through economies of scale is an important
consideration for NiHAO in order to achieve maximum profit.
Earnings Per Share. The Company's earnings per share is a key measurement of its profitability especially
when benchmarked against the earnings per share of other operators in the mining industry
Calendar Year 2011
Financial condition / changes in financial condition
In 2009, the Company concluded a 5:1 Stock Rights Offering (“SRO”) of 500,000,000 common shares at an
offer price of P1.00 per share to existing qualified shareholders of record as of
October 9, 2009. The Offer was fully subscribed and generated total gross proceeds of P500.00 million. Total
disbursements made from offer proceeds amounted to P437.45 million as of December 31, 2011.
On December 29, 2010, the Board of Directors agreed to open for subscription a portion of the Company’s
authorized but unissued capital stock. Mr. Jerry C. Angping, the President of the Company and a major
stockholder, agreed to subscribe to 80,000,000 common shares at a subscription price of P 1.35 per share for a
total consideration of P 108 million. A Subscription Agreement covering this private placement transaction was
entered into by and between the Company and Mr. Angping on January 5, 2011. On March 10, 2011, proceeds
of the issuance of shares was used to acquire from the existing stockholders of OREGALORE, Inc.
(“OREGALORE”) of Thirty Thousand (30,000) shares, with a par value of One Hundred Pesos (P100.00) per
share, equivalent to one hundred percent (100%) of the outstanding capital stock thereof, for the purchase
price of Three Million Pesos (P 3,000,000.00) and the acquisition of all shareholder advances in OREGALORE
amounting to One Hundred Twenty Five Million Four Hundred Seventy Eight Thousand Three Hundred Four
and 62/100 Pesos (P 125,478,304.62).
On August 16, 2011, the Board of Directors approved the issuance of One Hundred Million (100,000,000)
shares via private placements at an issue price of Two Pesos (P 2.00) per share for a total consideration of Two
25
Hundred Million Pesos (P200,000,000.00). The proceeds were used to acquire Oriental Peninsula Resources
Group, Inc (“ORE”) shares.
On September 21, 2011, the Board of Directors approved the issuance of One Hundred Million (100,000,000)
shares via private placements at an issue price of Two Pesos and Twenty Five Centavos (P 2.25) per share for a
total consideration of Two Hundred Twenty Five Million Pesos (P225,000,000.00). Out of the total proceeds,
One Hundred Forty Five Million Pesos (P145,000,000.00) is allocated for acquisition of additional shares of ORE
and the Eighty Million Pesos is allocated for acquisition of mining equipment.
The balance from private placement and from the SRO conducted in 2009 consequently led to a
103.59 million increase in total cash from P 200.56 million in 2010 to P 304.16 million in 2011.
51.65% or P
Receivables of P0.46 million as at Dec 31, 2011 is 97.42% or P17.33 million lower as compared to P17.79
million as at Dec. 31, 2010 due to collection of non-trade receivable amounting to P15.68 million and
receivable from sold subsidiaries which were no longer posted as part of the group.
Receivables from related parties amounting to P55.58 million as at the end of 2011 is 59.45% or P81.49 million
lower as compared with 2010 balances of P137.07 million mainly due to partial payments made by ORVI on its
advances from NiHAO.
Other current assets of P6.00 million as at the end of 2011 is 76.39% or P2.60 million higher as compared with
the P3.40 million balances as of 2010 due to the creditable taxes derived from the revenues generated in 2010
and collected in 2011.
Non-current assets posted a 356.87% or P430.15 million increase from P 120.53 million in 2010 to P550.69
million in 2011. The increase is attributable to the following:
1.
2.
3.
4.
5.
Acquisition of Oriental Peninsula Resources Group, Inc (“ORE”) shares funded by private
placements. A total of 68 million ORE shares were acquired by the Company thru the PSE open
market of which market price as at December 31, 2011 is pegged at P3.99 per share or an
aggregate value of P271.32 million.
14.20% or P9.31 million increase in Investment in Associates. Nihao recorded a P9.31 million
equity equivalent to 30% of ORVI’s P31.03 million net income for the year 2011. Also, GNA
Resources International Limited was born under the laws of Hongkong on December 12, 2011 a
joint venture company with AGP Industrial Corporation and Glencore International AG.
Acquisition of two (2) units motor vehicles.
307.37% or P152.14 million increase in Mining rights. The increase is brought about by the
acquisition of Oregalore Inc. of 80% interest in Masbate 13 Philippines, Inc. who owns the
Masbate tenement.
The Company’s wholly owned subsidiary, MTGI reclassified its pre-fabricated collapsible
building from “Other non-current assets” account to “Assets held for sale” account. The sale of
the pre-fabricated collapsible building is expected to be consummated in 2012.
As a result of the foregoing, total assets grew by P440.56 million or by 91.91% from P479.36 million in 2010 to
P 919.92 million in 2011.
Total liabilities went up by 37.08% or P2.15 million from P5.80 million as of 2010 to P 7.95 million in 2011,
brought about by the advances made by Masbate 13 Philippines from non-related companies.
Capital stock increased pursuant to the private placement transaction of Mr. Jerry Angping covering 200
million shares equivalent to P425 million. The difference from par value of P225M attributed to the increase in
APIC from P28.27 million in 2010 to P253.27 million in 2011.
Deficit decreased by P 11.46 million or 4.88% from P234.71 million in 2010 to P223.26 million in 2011 due to
reported net income for 2011 net of share of non-controlling interests.
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Other Revenues for the year amounting to P 42.64 million is 79.51% or P18.88 million higher than other
revenues posted in 2010 of only P 23.75 million. The increase is attributable to the following:
1.
2.
3.
Income from acquisition of Oregalore, Inc. with 80% equity in Masbate 13 Philippines, Inc.
amounting to P 17.18 million.
Gain on disposal of subsidiaries of P 9.69 million
253.22% or P 6.67 million increase in share in equity in ORVI from P 2.64 million in 2010 to
P9.31 million in 2011.
However, the sum of the above transactions amounting to P 33.54 million is offset against the following
resulting to a net increase of P18.88 million:
1. P14.0 million service income earned in 2010. Nil in 2011.
2. Gain on disposal of property and equipment in 2010 amounting to P0.14 million.
3. 7.44% or P 0.52 million decrease in interest earned from time deposits.
Operating expenses incurred in 2011 of P31.90 million were 124.21% or P17.67 million higher than those
incurred in 2010. The increase is attributable to the following:
1.
2.
3.
4.
5.
P 1.49 million commission expense brought about by the purchased of 68M Oriental Peninsula
Resources Group, Inc. (ORE) shares at the open market of the PSE.
P5.24 million permitting expenses principally due to renewal of exploration permits of Masbate
13 Philippines, Inc. and Bountiful Geomines and for MPSA of Mina Tierra Gracia, Inc.
P4.01 million exploration expenses relative to the MPSA of Mina Tierra Gracia, Inc.
Documentary stamp taxes were paid for shares issued relative to private placements conducted
during the year.
Full settlement of deferred expenses.
The group posted a P27.245 million other comprehensive loss on change in fair value of available –for-sale
financial assets as the group started accumulating ORE shares in 2011. Closing price of ORE shares as at
December 31, 2011 is pegged at P3.99 per share. The group acquired a total of 68 million shares. This
resulted to a total comprehensive loss of P 16.50 million in 2011, a complete turn- around from
comprehensive income of P9.53 million in 2010.
a)
There is no known trend, event or uncertainty that has or is reasonably likely to have a negative
impact on the Company’s short-term or long-term liquidity. The Company is not in default or breach
of any note, loan, lease or other indebtedness or financing arrangement requiring the Company to
make payments.
b) The liquidity of the Company was generated from the Company’s financial resources as well as from
the proceeds of the private placements and the 2009 Stock Rights Offering.
c)
There are no events that will trigger direct or contingent financial obligation that is material to the
Company, including any default or acceleration of an obligation.
d) There are no material commitments for capital expenditures except for those provided for in the use
of proceeds from private placements and from the 2009 Stock Rights Offering.
e)
There are no known trends, events or uncertainties that have had or that are reasonably expected to
have a material favorable or unfavorable impact on the Company’s financial statements.
f)
There are no significant elements of income or loss that did not arise from the Company’s continuing
operations.
27
CORPORATE GOVERNANCE
(a)
Evaluation system established by the Company to measure or determine the level of compliance of the
Board of Directors and top-level management with its Manual of Corporate Governance
(i) The Company has adopted the Self Rating Form (SRF) of the Securities and Exchange Commission
as a tool to evaluate the level of compliance of the Board of Directors and top level management
with its Manual on Corporate Governance (the “Manual”).
(ii) The Compliance Officer is responsible for determining violation/s and shall recommend to the
Chairman of the Board the imposable penalty for such violation, for further review and approval
of the Board.
(iii) The Company has a Corporate Governance Committee tasked to undertake an annual
performance assessment of the Board, its committees and the individual directors, through a
Performance Assessment Guideline and Scorecard.
(iv) The Company ensures that it has at least two (2) independent directors, or such number of
independent directors that constitutes twenty percent (20%) of the members of the Board,
whichever is higher, but in no case less than two (2). The Company, through its Nominations
Committee, likewise makes certain that its independent directors are independent from
management and free from any business or other relationship which could, or could reasonably
be perceived to materially interfere with the exercise of independent judgment in carrying out
their respective responsibilities as director.
(v) The Company, through its Nominations Committee, ensures that all the nominees to the Board
possess all the qualifications and none of the disqualifications provided for in the Company’s ByLaws and Manual, the Corporation Code, Securities Regulation Code and other relevant laws,
rules and regulations.
(vi) The Company also has an Audit Committee, which is tasked to review the Audited Financial
Statements of the Company. The Chairman of the Audit Committee is an independent director,
and each member thereof has at least an adequate understanding or competence of most of the
Company’s financial management systems and environment.
(b)
Measures being undertaken by the Company to fully comply with the adopted leading practices on
good corporate governance
(i) The Company’s Governance Committee is tasked to review policies of the Board and its
committees insofar as they relate to governance matters. The Governance Committee is likewise
tasked to review governance standards published by other Philippine listed companies with a
view of assessing their relevance and developing a more current set of standards for the
Company.
(ii) The Company’s Manual on Corporate Governance is likewise subject to periodic review.
(iii) In January 2008, the Company amended the Manual to state that the Company shall require all of
its directors to attend a seminar on corporate governance before assuming office as such.
(c)
Any deviation from the company’s Manual of Corporate Governance.
There was no deviation from the Company’s Manual on Corporate Governance warranting sanction on
any individual.
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(d)
Any plan to improve corporate governance of the company.
(i) On 4 October 2012, the Company adopted an Audit Committee Charter in accordance with SEC
Memorandum Circular No. 4, Series of 2012, entitled Guidelines for the Assessment of the
Performance of Audit Committees of Companies Listed on the Exchange.
(ii) On 20 June 2013, the Company amended its Corporate Governance Manual, to provide for the
creation of a Risk Management Committee and a Corporate Governance Committee, among
others.
(iii) Likewise on 20 June 2013, the Company adopted a Code of Business Conduct and Ethics and a
Performance Evaluation Procedure for the Board of Directors, Board Committees, Individual
Directors and Chief Executive Officer/President.
(iv) The Company will continue to develop and strengthen its corporate governance structures and
mechanisms in line with relevant SEC circulars/memoranda and good global corporate
governance principles and practices.
Independent Directors
The Company has elected two (2) Independent Directors.
The SEC Code of Corporate Governance defines an independent director as a person other than an officer or
employee of a corporation, its parents or subsidiaries, or any other individual who has a relationship with the
corporation which would interfere with the exercise of independent judgment in fulfilling the duties of a
director.
The By-Laws of the Company provide that an independent director shall include, among others, any person
who: (a) is not a director or officer of the corporation or of its related companies or any of its substantial
shareholders, except when an independent director of any of the foregoing; (b) does not own more than two
percent (2%) of the shares of the Company and/or its related companies or any of its substantial shareholders;
(c) is not related to any director, officer or substantial shareholder of the corporation, any of its related
companies or any of its substantial shareholders, provided that for this purpose, relatives include a spouse,
parent, child, brother, sister and the spouse of such child, brother or sister; (d) is not acting as a nominee or
representative of any director or substantial shareholder of the Company and/or any of its related companies
and/or any of its substantial shareholders, pursuant to a Deed of Trust or under any contract or arrangement;
(e) has not been employed in any executive capacity by the Company, any of its related companies and/or by
any of its substantial shareholders within the last five (5) years; (f) is not retained, either personally or through
his firm or any similar entity, as professional adviser, by the Company, any of its related companies and/or any
of its substantial shareholders within the last five (5) years; or (g) has not engaged and does not engage in any
transaction with the Company and/or with any of its related companies or substantial shareholders, other than
transactions which are conducted at arms-length and which are immaterial. A related company shall mean
another company which is: (a) the holding company of the Company; (b) the Company’s subsidiary; or (c) a
subsidiary of the Company’s holding company. A substantial shareholder shall mean any person who is directly
or indirectly the beneficial owner of more than ten percent (10%) of any class of the Company’s equity
security.
Under the SEC Code of Corporate Governance, an independent director is required to attend board meetings
for quorum requirements, unless he has a justifiable cause for failing to attend the meeting despite due notice.
Justifiable causes are limited to grave illness or death of immediate family and serious accidents.
Any controversy or issue arising from the selection, nomination or election of independent directors shall be
resolved by the SEC by appointing independent directors from the list of nominees submitted by the
stockholders.
29