SASC/HDG

Overview

TSXV-listed HDG is being acquired under a joint BC plan of arrangement by TSX-listed SASC on the basis of 0.275 of a SASC share for each HDG share. However, to ensure that HDG shareholders do not share significantly in any arbitration award made as a result of the seizure of a Bolivian mine of a subsidiary of SASC, SASC first will undergo a s. 86 reorganization under which its common shares will be exchanged for Class A shares (with rights apparently identical to the common shares) and Class B shares which are redeemable and retractable for 85% of any net arbitration award or settlement, subject to an overriding call right of a SASC subsidiary (Newco) to purchase the shares for the redemption amount. Thus, the HDG shareholders will receive only Class A shares.

Continuance

Both SASC and HDG are CBCA corporations. However, SASC will be continued to BC before the arrangement, as the corporate incest rules in the CBCA would prohibit Newco from exercising the call right described below.

SASC and HDG Arrangement

1. Each SASC common share of a dissenter will be transferred to SASC.
2. Each of the other SASC common shares will be disposed of in exchange for one SASC Class A Share (essentially a common share, and to be redesignated as a common share) and one SASC Class B Share.
3. Each HDG common share of a dissenter will be transferred to HDG.
4. Each remaining HDG common share will be transferred to SASC in exchange for 0.275 of a SASC Class A Share.
5. HDG warrants will be exchanged for warrants on SASC Class A Shares.

Attributes of SASC Class B Shares/Newco call right

• non-voting
• in aggregate have a "Class B Share Total Entitlement" equal to 85% of any final award (or settlement amount) re the appropriation of a Bolivian property of a Bolivian subsidiary exceeds arbitration expenses
• all the shares will be redeemed on the "Redemption Date" (e.g., 60 days after a final award or settlement) based on the Class B Share Total Entitlement, and there also is a retraction right of the holder based on this redemption amount
• notwithstanding the foregoing, a SASC subsidiary (Newco) has an overriding "call" right to purchase all the SASC Class B Shares on the Redemption (or retraction) Date for the redemption amount

Application will be made to list the Class B shares on the TSX.

Canadian tax consequences

S. 86 reorg. No indiction that a deemed dividend could arise. As the relative fair market values of the SASC Class A Share and SASC Class B Share cannot currently be determined, SASC will advise holders on its website shortly after the closing of the Arrangement as to its views on the allocation of the ACB of the SASC common shares between the Clas A and B shares.

Holding and disposing of SASC shares

Dividends received or deemed to be received on a disposition of Class A or B shares generally will be deductible in computing a resident corporation's income.

Non-residents

Standard disclosure re dividends and taxable Canadian property disclosure.