Andromeda_Resources Acquisition Circular.pdf

8/9/2019 Andromeda_Resources Acquisition Circular.pdf

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AC/1463772.11

WAR EAGLE MINING COMPANY INC.

ANNUAL GENERAL AND SPECIAL MEETING

TO BE HELD ON DECEMBER 8, 2011

MANAGEMENT INFORMATION CIRCULAR

IN RESPECT OF THE TRANSACTION INVOLVING WAR EAGLE MINING COMPANY INC. ANDANDROMEDA RESOURCES INC. AND CERTAIN OTHER TRANSACTIONS

Information as at the record date ofNovember 3, 2011, unless otherwise disclosed

All information contained in this management information circular with respect to AndromedaResources Inc. (“Andromeda”) was supplied by Andromeda for inclusion in this circular.

These materials require your immediate attention. If you are in doubt as to how to deal with thesematerials, or the matters referred to in this circular, please consult your investment dealer,stockbroker, bank manager or other professional advisor.

Neither the TSX Venture Exchange Inc. nor any securities regulatory authority has in any way passed

upon the merits of the Reverse Takeover described in this information circular.


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Mineral Processing and Metallurgical Testing................................................................................87 Selected Consolidated Financial Information and MD&A for Andromeda ................................................114 Description of Securities .............................................................................................................................115 Consolidated Capitalization ........................................................................................................................115 Prior Sales ...................................................................................................................................................115 Executive Compensation.............................................................................................................................116 Non-Arm’s-Length Party Transactions .......................................................................................................118 Legal Proceedings .......................................................................................................................................119 Material Contracts .......................................................................................................................................119

INFORMATION REGARDING THE RESULTING ISSUER ................................................................................120

Corporate Structure .....................................................................................................................................120 Description of Business...............................................................................................................................121 Description of Securities .............................................................................................................................121 Pro Forma Consolidated Capitalization.......................................................................................................122 Available Funds and Principal Purposes .....................................................................................................123 Principal Securityholders ............................................................................................................................124 Directors, Officers and Promoters...............................................................................................................124 Executive Compensation.............................................................................................................................131 Indebtedness of Directors and Officers .......................................................................................................131 Investor Relations Arrangements ................................................................................................................131 Options to Purchase Securities ....................................................................................................................131 ESCROWED SECURITIES .......................................................................................................................131 Auditor, Transfer Agent and Registrar........................................................................................................132

GENERAL MATTERS.............................................................................................................................................132

Sponsorship and agent relationship.............................................................................................................132 Experts ......................................................................................................................................................133 Other Material Facts....................................................................................................................................133 Board Approval...........................................................................................................................................133

ADDITIONAL INFORMATION .............................................................................................................................133

CERTIFICATE OF WAR EAGLE MINING COMPANY INC...................................................................................1

CERTIFICATE OF ANDROMEDA RESOURCES INC.............................................................................................1

ACKNOWLEDGEMENT – PERSONAL INFORMATION........................................................................................1

SCHEDULE “A” – DISSENT PROVISIONS (BCBCA).........................................................................................A-1 SCHEDULE “B” – Audited Consolidated Financial Statements for War Eagle Mining Company Inc. for the years

ended March 31, 2011, 2010 and 2009 .......................................................................................................B-1

SCHEDULE “C” Annual Management Discussion and Analysis of War Eagle Mining Company Inc. for theFinancial Years ended March 31, 2011, 2010 and 2009 .............................................................................C-1

SCHEDULE “D” Unaudited Consolidated Financial Statements for War Eagle Mining Company Inc. for the ThreeMonth Interim Period Ended June 30, 2011................................................................................................D-1

Schedule “E” Interim Management Discussion and Analysis of War Eagle Mining Company Inc. for the ThreeMonth Interim Period Ended June 30, 2011................................................................................................ E-1

Schedule “F” Audited Consolidated Financial Statements for Andromeda Resources Inc. for the Period fromIncorporation on January 11, 2010 to August 31, 2011 .............................................................................. F-1

SCHEDULE “G” Management Discussion and Analysis for Andromeda Resources Inc. for the Period from

Incorporation on January 11, 2010 to August 31, 2011 ..............................................................................G-1 SCHEDULE “H” Pro Forma Consolidated Financial Statements (Proforma balance sheet) for War Eagle, giving

effect to the Amalgamation as at June 30, 2011..........................................................................................H-1

SCHEDULE “I” Audit Committee Charter of War Eagle and the Resulting Issuer ................................................. I-1

SCHEDULE “J” Proposed By-Law of the Resulting Issuer...................................................................................... J-1


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AC/1463772.11

War Eagle Mining Company Inc. Suite 906 – 595 Howe StreetVancouver, British Columbia

V6C 2T5Telephone: 604-681-7010

Facsimile: 604-687-8678

NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS OFWAR EAGLE MINING COMPANY INC.

TO THE SHAREHOLDERS:

An Annual General and Special Meeting (the “Meeting”) of the shareholders of War Eagle MiningCompany Inc. (“War Eagle”) will be held at Suite 906 – 595 Howe Street, Vancouver, British Columbiaon Thursday, December 8, 2011 at 10:00 a.m. (Vancouver time) for the following purposes:

1. to receive the audited financial statements of War Eagle for the financial year ended March 31,2011, together with the auditor’s report thereon;

2. to appoint auditors for War Eagle for the ensuing financial year and to authorize the directors tofix the remuneration to be paid to the auditors;

3. to fix the number of directors to be elected at the Meeting at four and to elect directors to holdoffice until the next Annual General Meeting, as more particularly described in the accompanyingmanagement information circular (the “Circular”);

4. to consider and, if thought appropriate, to pass, with or without variation, an ordinary resolution(the “Acquisition Resolution”), authorizing, confirming and approving the three-corneredamalgamation of War Eagle, 2304315 Ontario Limited and Andromeda Resources Inc., as more particularly described in the accompanying Circular;

5. if the Acquisition Resolution is approved, to consider and, if thought appropriate, to pass, with orwithout variation, a special resolution (the “Continuance Resolution”) to approve thecontinuance (the “Continuance”) of War Eagle’s corporate jurisdiction to the BusinessCorporations Act (Ontario) (“OBCA”) under the new name of “Andromeda Resources Inc.”, asmore particularly described in the accompanying Circular and to adopt By-Law number 1, beinga by-law relating generally to the transaction of the business and affairs of War Eagle (as acorporation under the OBCA following the Continuance), as more particularly described in theaccompanying Circular;

6. to consider and, if thought appropriate, to pass, with or without variation, an ordinary resolutionto approve a new stock option plan (the “Resulting Issuer Stock Option Plan”), as more particularly described in the accompanying Circular; and

7. to transact such other business as may properly come before the Meeting.

The Circular and a form of Proxy accompany this Notice of Meeting. The Circular provides additionalinformation relating to the matters to be dealt with at the Meeting and forms part of this Notice ofMeeting.

A shareholder entitled to attend and vote at the Meeting is entitled to appoint a proxy holder to attend andvote in his or her place. If you are unable to attend the Meeting or any adjournment in person, please readthe notes accompanying the enclosed form of Proxy and then complete, sign, and date the Proxy andreturn it within the time and to the location set out in the notes. War Eagle’s management is soliciting the


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enclosed form of Proxy but, as set out in the notes, you may amend the Proxy if you wish by striking outthe names listed and inserting in the space provided the name of the person you want to represent you atthe Meeting.

AND TAKE NOTICE that dissenting shareholders in respect of the proposed Continuancecontemplated in paragraph 5 above are entitled to be paid the fair value of their War Eagle Shares

in accordance with sections 237 to 247 of the Business Corporations Act (British Columbia) (the“BCBCA”).

Under the BCBCA, you as a registered Shareholder may, until 10:00 a.m. (Vancouver time) onDecember 6, 2011, give War Eagle a notice of dissent by registered mail addressed to the ChiefExecutive Officer of War Eagle at Suite 906 – 595 Howe Street, Vancouver, British Columbia,Canada, V6C 2T5, with respect to the proposed Continuance Resolution. As a result of giving anotice of dissent, a shareholder may, on receiving a notice of intention to proceed under section 243of the BCBCA, require War Eagle to purchase all of the War Eagle Shares held by suchshareholder in respect of which the notice of dissent was given.

These dissent rights are further described in the accompanying Circular in respect of the Meetingand the text of sections 237 to 247 of the BCBCA are included as Schedule “A”, to this Circular.

Failure to comply strictly with the requirements may result in the loss of any right to dissent.

A non-registered Shareholder who wishes to exercise dissent rights should immediately contact theintermediary or broker with whom the non-registered Shareholder deals in respect of its WarEagle Shares and instruct the intermediary or broker in respect of its War Eagle Shares.

If you are a non-registered Shareholder and have received this notice and accompanying Circularfrom your broker or another intermediary, please complete and return the voting instruction orother authorization form provided to you by your broker or other intermediary in accordance withthe instructions provided to you.

Please advise War Eagle of any change in your address.

DATED at Vancouver, British Columbia, this 9th day of November, 2011.

BY ORDER OF THE BOARD OF DIRECTORS

“Simon Anderson”Simon AndersonPresident and Chief Executive Officer


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GLOSSARY OF TERMS

“AcquisitionResolution”

Means an Ordinary Resolution of Shareholders approving the Amalgamation,to the extent the Amalgamation results in an RTO of War Eagle under theRTO Policy requiring War Eagle shareholder approval

“Affiliate” Means a Company that is affiliated with another Company as described below:

A Company is an “Affiliate” of another Company if:

(a) one of them is the subsidiary of the other, or

(b) each of them is controlled by the same Person.

A Company is “controlled” by a Person if:

(a) voting securities of the Company are held, other than by way of

security only, by or for the benefit of that Person, and

(b) the voting securities, if voted, entitle the Person to elect a majority ofthe directors of the Company

A Person beneficially owns securities that are beneficially owned by:

(a) a Company controlled by that Person, or

(b) an Affiliate of that Person or an Affiliate of any Company controlled by that Person

“Amalco” Means the company resulting from the amalgamation of War Eagle Subco and

Andromeda which will carry on the business of Andromeda

“Amalgamation” Means the amalgamation of War Eagle Subco and Andromeda to formAmalco, subject to the terms and conditions of the Amalgamation Agreement

“AmalgamationAgreement”

Means the amalgamation agreement among War Eagle, War Eagle Subco andAndromeda dated November 9, 2011, under which War Eagle Subco andAndromeda will amalgamate, resulting in each Andromeda Share beingexchanged for 6.67 Resulting Issuer Shares (except for the 500,000Andromeda Shares held by War Eagle which will be cancelled without therepayment of capital in respect thereof) and each Andromeda Warrant beingexchanged for 6.67 Replacement Warrants, each Broker Option being

exchanged for 6.67 Replacement Broker Options and each Work Fee Warrant being exchanged for 6.67 Replacement Work Fee Warrants

“Andromeda” Means Andromeda Resources Inc., a private company incorporated under theOBCA

“AndromedaShareholder”

Means a holder of Andromeda Shares, and “Andromeda Shareholders” meansall such holders

“Andromeda Shares” Means common shares in the capital of Andromeda


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“Andromeda Units” Means the equity units of Andromeda to be issued pursuant to the EquityFinancing, with each Andromeda Unit comprised of one Andromeda Shareand one-half of one Andromeda Warrant at an issue price of $3.00 perAndromeda Unit

“AndromedaWarrants”

Means the transferable warrants of Andromeda comprising part of theAndromeda Units, with each whole Andromeda Warrant being exercisableinto one Andromeda Share at an exercise price of $4.00 per Andromeda Sharefor a period of 24 months from the Closing Date

“Arm’s LengthTransaction”

Means a transaction which is not a Related Party Transaction

“Associate” When used to indicate a relationship with a Person, means:

(a) an Issuer of which the Person beneficially owns or controls, directly orindirectly, voting securities entitling him to more than 10% of the

voting rights attached to outstanding securities of the Issuer,(b) any partner of the Person,

(c) any trust or estate in which the Person has a substantial beneficialinterest or in respect of which a Person serves as trustee or in a similarcapacity,

(d) in the case of a Person, who is an individual:

(i) that Person’s spouse or child, or

(ii) any relative of the Person or of his spouse who has the sameresidence as that Person;

But

where the TSXV determines that two Persons will , or will not, be deemed to be Associates with respect to a member firm of the TSXV , membercorporation of the TSXV or holding company of a member corporation, thensuch determination will be determinative of their relationships in theapplication of Rule D with respect to that member firm, member corporationor holding company

“Auditor’s Resolution” Means an Ordinary Resolution of Shareholders, as part of War Eagle’s annualgeneral meeting, to appoint auditors for War Eagle for the ensuing financial

year and to authorize the directors to fix the remuneration to be paid to theauditors

“BCBCA” Means the Business Corporations Act (British Columbia), as amended fromtime to time and including any regulations promulgated under the BCBCA

“Board” or “Board ofDirectors”

Means the Board of Directors of War Eagle


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“Closing” Means the completion of the transactions contemplated by the AmalgamationAgreement under which each Andromeda Share will be exchanged for 6.67Resulting Issuer Shares (except for the 500,000 Andromeda Shares held byWar Eagle which will be cancelled without the repayment of capital in respectthereof) and each Andromeda Warrant will be exchanged for 6.67

Replacement Warrants, each Broker Option being exchanged for 6.67Replacement Broker Options and each Work Fee Warrant being exchangedfor 6.67 Replacement Work Fee Warrants.

“Closing Date” Means the date of giving effect to the Continuance Resolution, and the datethe Amalgamation and the Equity Financing close

“Company” Unless specifically indicated otherwise, means a corporation, incorporatedassociation or organization, body corporate, partnership, trust, association orother entity other than an individual

“Computershare” Computershare Investor Services Inc., the registrar and transfer agent and

escrow agent for War Eagle

“Continuance” Means the continuance of War Eagle to the provincial jurisdiction of Ontariounder the OBCA under the new name of “Andromeda Resources Inc.” or suchother name as may be acceptable to applicable regulatory authorities

“ContinuanceResolution”

Means a Special Resolution of Shareholders approving the Continuance

“Control Person” Means any Person that holds or is one of a combination of Persons that holdsa sufficient number of any of the securities of an Issuer so as to affectmaterially the control of that Issuer, or that holds more than 20% of the

outstanding voting securities of an Issuer except where there is evidenceshowing that the holder of those securities does not materially affect thecontrol of the Issuer

“Director” Means the Director under the OBCA

“Directors’ Resolution” Means an Ordinary Resolution of Shareholders, as part of War Eagle’s annualgeneral meeting, to fix the number of directors of War Eagle at four and toelect to the board of directors of War Eagle the current directors of WarEagle, being: Simon Anderson, Anthony Dutton, Terence Schorn and DonaldPadgett, with the expectation that when the Amalgamation closes, all of thedirectors except Anthony Dutton will resign, and such vacancies will be filled by Chris Davie, Brian Murray and Rene Mladosich, and David Winfield will be additionally appointed as a director

“Equity Financing” Means the brokered private placement financing of Andromeda by which aminimum of $7,000,000 in Andromeda Units and a maximum of $10,000,000in Andromeda Units will be placed, which will be completed immediately before the Closing. Additionally, Andromeda will grant the Broker Optionsand the Work Fee Units and pay the Broker Compensation in relation to theEquity Financing


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Final ExchangeBulletin

Means the bulletin which is issued by the TSXV following the Closing of theAmalgamation and the submission of all required documents which evidencesthe final acceptance by the TSXV of the RTO

“IMC” Means Independent Mining Consultants, Inc. (Michael G. Hester, FAusIMM),

author of the Terrazas Technical Report

“Insider” includes:

(a) a director or senior officer of an Issuer;

(b) a director or senior officer of a Company that is an Insider orsubsidiary of an Issuer; and

(c) a Person that beneficially owns or controls, directly or indirectly,securities carrying more than 10% of the voting rights attached to alloutstanding securities of the Issuer

“Issuer” Means a Company and its subsidiaries which have any of its securities listedfor trading on the TSXV and, as the context requires, any applicant Companyseeking a listing of its securities on the TSXV

“Letter of Intent” Means the letter of intent between War Eagle and Andromeda datedSeptember 26, 2011 (and signed by War Eagle on September 27, 2011) whichagreement was superseded by the Amalgamation Agreement

“MD&A” Means management’s discussion and analysis

“Meeting” Means the annual general and special meeting of War Eagle

“MRT” Means Minera Rio Tinto S.A. de C.V., a corporation existing under the lawsof Mexico

“NI 43-101” Means National Instrument 43-101 Standards of Disclosure for MineralProjects

“NI 52-110” Means National Instrument 52-110 Audit Committees

“NI 58-101” Means National Instrument 58-101 Disclosure of Corporate GovernancePractices

“NP 58-201” Means National Policy 58-201 Corporate Governance Guidelines

“OBCA” Means the Business Corporations Act [SBC 2002] Chapter 57, as amendedfrom time to time and including any legislation enacted in substitutiontherefore

“Ordinary Resolution” Has the meaning ascribed to it in subsection 1(1) of the BCBCA


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“Person” Includes an individual, partnership, association, unincorporated organization,trust and corporation and a natural person acting in such person’s individualcapacity or in such person’s capacity as trustee, executor, administrator, agentor other legal representative

“Promoter” Has the definition prescribed by applicable Securities Laws

“RDM” Means RD Minerals S.A. de C.V., a corporation existing under the laws ofMexico, which is a subsidiary of Andromeda

“RegCo” BC Registrar of Companies

“Related PartyTransaction”

Has the meaning ascribed to that term in TSXV Policy 5.9, and includes arelated party transaction that is determined by the TSXV, to be a RelatedParty Transaction. The TSXV may deem a transaction to be a Related PartyTransaction where the transaction involves Non Arms Length Parties, or othercircumstances exist which may compromise the independence of the Issuer

with respect to the transaction

“Related TransactionResolutions”

Means the Continuance Resolution, the By-Law Resolution and the StockOption Plan Resolution

“Replacement BrokerOptions”

Means the non-transferable options of the Resulting Issuer to be issued inexchange for the outstanding Broker Options on the basis of 6.67Replacement Broker Options for each Broker Option, with each ReplacementBroker Warrant being exercisable into one Replacement Broker Unit at anadjusted exercise price of $0.45 per Replacement Broker Unit for a period of24 months from the Closing Date

“Replacement BrokerUnits” Means the equity units of the Resulting Issuer to be issued upon exercise ofReplacement Broker Options, with each Replacement Broker Unit comprisedof one Resulting Issuer Share and one-half of one Replacement BrokerWarrant

“Replacement BrokerWarrants”

Means the non-transferable warrants of the Resulting Issuer comprising partof the Replacement Broker Units, with each whole Replacement BrokerWarrant being exercisable into one Resulting Issuer Share at an adjustedexercise price of $0.60 per Resulting Issuer Share for a period of 24 monthsfrom the Closing Date

“ReplacementWarrants”

Means the transferable warrants of the Resulting Issuer which will be issuedin exchange for the outstanding Andromeda Warrants on the basis of 6.67Replacement Warrants for each Andromeda Warrant, with each ReplacementWarrant being exercisable into one Resulting Issuer Share at an adjustedexercise price of $0.60 per Resulting Issuer Share for a period of 24 monthsfrom the Closing Date


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“Replacement WorkFee Warrants”

Means the non-transferable warrants of the Resulting Issuer which will beissued in exchange for the outstanding Work Fee Warrants on the basis of6.67 Replacement Work Fee Warrants for each Work Fee Warrant, with eachReplacement Work Fee Warrant being exercisable into one Resulting IssuerShare at an adjusted exercise price of $0.60 per Resulting Issuer Share for a

period of 24 months from the Closing Date

“Resulting Issuer” Means War Eagle with Amalco as its wholly-owned subsidiary

“Resulting IssuerShares”

Means common shares in the capital stock of the Resulting Issuer

“Resulting Issuer StockOption Plan”

Means the proposed stock option plan which will conform with therequirements of the TSXV, and will be presented to Shareholders for approvalat the Meeting

“Resulting Issuer Stock

Option PlanResolution”

Means an Ordinary Resolution of the Shareholders approving the Resulting

Issuer Stock Option Plan

“Reverse Takeover” or“RTO”

Means a series of transactions, involving an acquisition by the Issuer or of theIssuer, and a securities issuance by an Issuer that results in:

(a) new shareholders holding more than 50% of the outstanding votingsecurities of the Issuer, and

(b) a Change of Control of the Issuer. The TSXV may deem a transactionto have resulted in a Change of Control by aggregating the shares of avendor group and/or incoming management group

and in this Circular, refers to the Amalgamation

“Royalty” Means the NSR royalty Andromeda granted to MRT on the Terrazas Property

“RTO Policy” Means Policy 5.2 Changes of Business and Reverse Takeovers of the TSXV

“Securities Laws” means securities legislation, securities regulation and securities rules, asamended, and the policies, notices, instruments and blanket orders in forcefrom time to time that are applicable to a Person

“Shareholders” Means a holder of War Eagle Shares, from time to time, and “Shareholders”means all such holders

“Special Resolution” Has the meaning ascribed to such term in subsection 1(1) of the BCBCA

“Stock Option Plan” Means War Eagle’s current stock option plan dated September 30, 2008

“Terrazas Agreement” Means the purchase agreement dated May 12, 2010, as amended May 31,2010 and June 6, 2011, among Andromeda, RDM and MRT, under whichAndromeda and RDM have agreed to purchase the Terrazas Property fromMRT


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SUMMARY

The following is a summary of information related to the Amalgamation, War Eagle, Andromedaand the Resulting Issuer (assuming completion of the Amalgamation) and should be read togetherwith the more detailed information and financial data and statements contained elsewhere in this

Circular, including the Schedules, which are incorporated into and form part of this Circular.Certain capitalized words and terms used in this Summary are defined in the Glossary of Terms.

General

This Circular is prepared in accordance with applicable corporate and securities law, the RTO Policy ofthe TSXV and Form 3D1 Information Required in an Information Circular for a Reverse Takeover prescribed under the RTO Policy in connection with the Meeting being held to approve, among otherthings, the Amalgamation. The information contained in this Circular is at November 3, 2011 or therecord date of November 3, 2011, unless otherwise indicated.

The Meeting

The Meeting will be held on Thursday, December 8, 2011 at 10:00 a.m. (Vancouver time) for the purposes set forth in the Notice of Meeting for War Eagle to consider and, if deemed advisable, toapprove the items of business identified in its Notice of Meeting.

Principal Terms of the Proposed Amalgamation

At the Meeting, Shareholders will be asked to consider and, if thought fit, pass with or without variation,the Acquisition Resolution authorizing, confirming and approving the Amalgamation between War EagleSubco and Andromeda, to form Amalco, pursuant to the terms and conditions of the AmalgamationAgreement. The Resulting Issuer will be War Eagle with Amalco as its wholly-owned subsidiary, and the business of the Resulting Issuer will primarily be Andromeda’s business.

Andromeda is a private company incorporated under the laws of Ontario. Andromeda has entered into theTerrazas Agreement to purchase the Terrazas Property in Chihuahua, Mexico for cash consideration ofUS$5 million payable in instalments over two years. As of the date of this Circular, Andromeda has paidUS$1.2 million. A further US$1.8 million is due by December 15, 2011 and a further US$2 million is due by the second anniversary of the Terrazas Agreement (May 12, 2012). For more information about theTerrazas Property see “Information Regarding Andromeda – Narrative Description of the Business – TheTerrazas Property”.

Concurrently with the execution of the Letter of Intent, War Eagle advanced to Andromeda $250,000 pursuant to a one year promissory note with an interest rate of 6% per year. Upon completion of theAmalgamation, any accrued interest will be waived and the loan will be treated as an intercompany loan.

On November 9, 2011 War Eagle and War Eagle Subco entered into the Amalgamation Agreement withAndromeda. The Amalgamation Agreement provides that, among other things, each Andromeda Sharewill be exchanged for 6.67 Resulting Issuer Shares (except for the 500,000 Andromeda Shares held byWar Eagle which will be cancelled without the repayment of capital in respect thereof) and eachAndromeda Warrant will be exchanged for 6.67 Replacement Warrants, each Broker Option will beexchanged for 6.67 Replacement Broker Options and each Work Fee Warrant will be exchanged for 6.67Replacement Work Fee Warrants.

The current Shareholders are expected to own approximately 31.7% of the outstanding shares of theResulting Issuer, and Andromeda Shareholders (other than War Eagle) will own the remaining 68.3% of


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the Resulting Issuer, before giving effect to the Equity Financing described below. The Amalgamation is based on a deemed valuation of the Resulting Issuer of approximately $8.7 million at an estimated priceof $0.45 per Resulting Issuer Share post-Amalgamation.

Completion of the Amalgamation is conditional upon, among other things, receipt of all requiredregulatory and Shareholder approval of the Acquisition Resolution, Continuance Resolution and Related

Transaction Resolutions and the completion of the Equity Financing.

At the Meeting, Shareholders will be asked to:

(a) consider and, if thought fit, pass with or without variation, the Acquisition Resolution,authorizing, confirming and approving the Amalgamation and Amalgamation Agreement;

(b) consider and, if thought fit, pass with or without variation, the Auditor’s Resolution, Directors’Resolution and the Related Transaction Resolutions; and

(c) to transact such other business as may properly be brought before the Meeting or anyadjournment thereof.

If the Acquisition Resolution is not approved, the Related Transaction Resolutions (except for the StockOption Plan Resolution) will not be brought forward for consideration at the Meeting.

Under TSXV policies, completion of the transactions under the Amalgamation Agreement will constitutea Reverse Takeover of War Eagle as the former Andromeda Shareholders (including AndromedaShareholders who subscribed for Andromeda Units under the Equity Financing) will own approximately83.5% of the Resulting Issuer Shares on a non-diluted basis on the Closing Date, assuming a maximumEquity Financing. Under TSXV policies, the Acquisition Resolution requires approval by an OrdinaryResolution.

Equity Financing

Immediately before the Closing, Andromeda proposes to close the Equity Financing for aggregate gross proceeds of a minimum of $7,000,000 and a maximum of $10,000,000, consisting of Andromeda Units ata price of $3.00 per Andromeda Unit, which at the proposed ratio under the Amalgamation Agreementequates to $0.45 per War Eagle Share. Each Unit is comprised of one Andromeda Share and one-half ofone Andromeda Warrant exercisable into one Andromeda Share at an exercise price of $4.00 perAndromeda Share for a period of 24 months. The Equity Financing is a brokered private placement.Andromeda will also pay the Broker Compensation and issue the Work Fee Units and the Broker Optionsin relation to the Equity Financing. See “Information Concerning the Resulting Issuer – Available Fundsand Principal Purposes” for a description of the proposed use of the proceeds of the Equity Financing bythe Resulting Issuer.

Interests of Insiders, Promoters or Control Persons of the Resulting Issuer

The following chart sets out Insiders, Promoters and Control Persons of the Resulting Issuer and theirrespective shareholdings (on a non-diluted basis):


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War Eagle Shares Owned Beforethe Amalgamation

Resulting Issuer Shares Owned AfterGiving Effect to the Amalgamation(2)

Percentage oncompletion of the

Equity Financing (3)

Insider, Promoter orControl Person of ResultingIssuer Number Percentage (1) Number Minimum Maximum

Chris Davie Nil N/A 3,168,250 8.09% 6.91%

Andres Tinajero Nil N/A Nil N/A N/A

Rene Mladosich Nil N/A 3,335,000 8.51% 7.27%

Anthony Dutton 100,000 1.34% 100,000 0.26% 0.22%

Brian Murray Nil N/A Nil N/A N/A

David Winfield Nil N/A Nil N/A N/A

Total 100,000 1.34% 6,603,250 16.85% 14.40%(1) Based on 7,442,272 War Eagle Shares currently issued and outstanding.

(2) Assuming that no Insider, Promoter or Control Person subscribes for Andromeda Units under the Equity Financing.

(3) Assuming 7,442,272 War Eagle Shares are issued and outstanding immediately before closing the Amalgamation and2,400,000 Andromeda Shares are issued and outstanding immediately before closing the Amalgamation (whichassumes the 500,000 Andromeda Shares held by War Eagle have been cancelled). These figures also assume2,358,333 Andromeda Shares will be issued on completion of a minimum Equity Financing and 3,583,333 AndromedaShares be issued on completion of a maximum Equity Financing (which numbers include the Andromeda Sharescomprising the Work Fee Units). On completion of the Amalgamation each Andromeda Share will be exchanged for6.67 Resulting Issuer Shares (except for the 500,000 Andromeda Shares held by War Eagle).

See “Information Concerning the Resulting Issuer – Fully Diluted Share Capital”, “InformationConcerning the Resulting Issuer – Principal Securityholders” and “Information Concerning the Resulting

Issuer – Directors, Officers and Promoters”.

Arm’s Length Transaction

The Amalgamation is an Arm’s Length Transaction.

Available Funds and Principal Purposes

Available Funds

As at October 31, 2011, the pro forma consolidated working capital of War Eagle and Andromeda was$7,482,400, assuming gross proceeds of a minimum Equity Financing of $7,000,000. It is anticipated that

the available funds will be sufficient to meet the Resulting Issuer’s administrative costs for the following12 months and to achieve the Resulting Issuer’s principal purposes as described in this Circular. Thefollowing table sets forth the estimated working capital of War Eagle and Andromeda before and aftergiving effect to the Amalgamation, as at October 31, 2011:

War Eagle Andromeda Combined

Working capital (deficiency) $700,000 $(217,600) $482,400

Proposed Equity Financing N/A $7,000,000 $7,000,000

Working capital after Amalgamation N/A N/A $7,482,400


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Principal Purposes

The Resulting Issuer will use the funds available to it upon the completion of the Amalgamation for thefollowing purposes during the 12 months from Closing:

Use of Working Capital Amount

($)(1)

Phase 1 – Preliminary Economic Assessment as set out in theTerrazas Technical Report – US$220,000

220,000

Phase 2 – Drilling for Metallurgical Samples/MetallurgicalTesting – US$535,000

535,000

Phase 2 – Investigation of Alternative Process – US$100,000 100,000

Phase 2 – Mine Planning and Scheduling/Process Engineering –US$150,000

150,000

Property Payments - US$3,800,000 3,800,000

Costs of Equity Financing(2) 588,000

Administrative and Consulting Fees(3) 913,000

Unallocated Funds 1,176,400

Total $7,482,400

(1) US dollar amounts have been translated on the basis of US$1.00 = $1.00

(2) Includes the Broker Compensation but excludes the legal fees and expenses of the Brokers, which Andromeda hasagreed to pay, and the legal fees of Andromeda incurred in connection with the Equity Financing.

(3) Includes legal fees and other expenses incurred in connection with the Amalgamation and Equity Financing

There may be circumstances where, for sound business reasons, the reallocation of funds may benecessary in order for the Resulting Issuer to achieve its stated business objectives. See “Information

Concerning the Resulting Issuer – Available Funds and Principal Purposes”.

Selected Pro Forma Financial Information

The following table sets out certain financial information for each of War Eagle as at June 30, 2011, andAndromeda as at August 31, 2011, as well as pro forma consolidated financial information for theResulting Issuer, after giving effect to the Amalgamation as at June 30, 2011. The following informationshould be read in conjunction with the pro forma balance sheet of the Resulting Issuer. See Schedule “H”Pro Forma Financial Statements of the Resulting Issuer.

War Eagle (1) ($)

Andromeda (2) ($)

Adjustments($)

Pro FormaConsolidated ($)

Cash 29,485 67,092 7,105,200 7,201,777

Total assets 119,925 137,149 6,975,712 7,232,786

Total liabilities 305,730 104,583 0 410,313

(Shareholders’equity) capitaldeficit (185,805) 32,566 6,975,712 6,822,473

(1) The financial information presented in this column is a consolidated figure based on the financial condition of both WarEagle and the War Eagle Subsidiaries.


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(2) The financial information presented in this column is a consolidated figure based on the financial condition of bothAndromeda and its wholly owned subsidiary RDM.

Exchange Listing

War Eagle’s Shares are listed on the TSXV under the symbol “WAR”. The War Eagle Shares are

currently halted from trading in accordance with TSXV policies related to an RTO. It is expected that oncompletion of the Amalgamation, the Resulting Issuer will be listed on the TSXV as a Mining Issuer.

The Andromeda Shares are not listed on any stock exchange and there is currently no public market forthe Andromeda Shares, nor is one expected to develop.

Market Price of War Eagle’s Shares

The closing price of the War Eagle Shares on the TSXV on September 28, 2011, the last trading day before the announcement of the Amalgamation, was $0.445. See “Information Concerning War Eagle –Stock Exchange Price”. As of the date of this Circular, the War Eagle Shares are currently halted.

Sponsorship and Agent Relationships

War Eagle has applied for and expects to receive a waiver of the requirement to obtain a sponsor inconnection with the Amalgamation because of the Equity Financing.

It is expected that the Brokers will act as agents for the Equity Financing. Andromeda has entered into anengagement letter (the “Engagement Letter”) with Union Securities Ltd. dated November 7, 2011, underwhich Andromeda agreed to pay a cash fee equal to 8% of the gross proceeds raised under the EquityFinancing and to issue to that number of Broker Options as is equal to 8% of the Andromeda Units soldunder the Equity Financing. Each Broker Option will be exchanged for 6.67 Replacement BrokerOptions, each of which will, in turn, be exercisable into one Replacement Broker Unit at an adjustedexercise price of $0.45 per Replacement Broker Unit for a period of 24 months from the Closing Date.Each Replacement Broker Unit will be comprised of one Resulting Issuer Share and one-half of one

Replacement Broker Warrant. Each Replacement Broker Warrant will be exercisable into one additionalResulting Issuer Share at an adjusted exercise price of $0.60 per Resulting Issuer Share for a period of 24months from the Closing Date.

Andromeda has also agreed to pay Union Securities Ltd. a work fee of $25,000 (plus taxes) in cash and toissue 25,000 Work Fee Units. Andromeda and War Eagle will enter into an agency agreement with theBrokers, which agreement will supercede the Engagement Letter, prior to the Closing Date.

Each Work Fee Warrant issued as part of the Work Fee Units will be exchanged for 6.67 Work FeeWarrants, each of which will, in turn, be exercisable into one Resulting Issuer Share at an adjustedexercise price of $0.60 per Resulting Issuer Share for a period of 24 months from the Closing Date.

See “Sponsorship and Agent Relationship” for more information.

Conflicts of Interest

Conflicts of interest may arise as a result of the proposed directors, officers and Promoters of theResulting Issuer also holding positions as directors or officers of other Companies. Some of theseindividuals have been and will continue to be engaged in the identification and evaluation of assets, businesses and Companies on their own behalf and on behalf of other Companies, and situations mayarise where the directors and officers of the Resulting Issuer will be in direct competition with the


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Resulting Issuer. See “Information Concerning the Resulting Issuer – Directors, Officers and Promoters –Conflicts of Interest”.

Interest of Experts

Except as disclosed in this Circular, no Insider, Promoter or Control Person of War Eagle and no

Associate or Affiliate of the same, has any interest in the proposed Amalgamation other than that whicharises from their holding of War Eagle Shares.

Summary of Risk Factors

Following completion of the Amalgamation, the business of the Resulting Issuer will be to explore,develop and operate the Terrazas Property. The Resulting Issuer Shares are a risky and speculativeinvestment. The Resulting Issuer is subject to certain risks including but not limited to the following: (i)exploration, development and production risks; (ii) risks relating to the price of zinc, copper and otherminerals/metals; (iii) risks relating to the Resulting Issuer’s substantial capital requirements; (iv)competitive risks; (v) environmental risks; (vi) currency exchange risks; (vii) political, economic andsocial risks of operating in Mexico; and (viii) directors and officers conflicts of interest risks. See the

heading “Risk Factors” for a more detailed description of the risk factors.

Exchange Listing

War Eagle and Andromeda have applied to the TSXV for the listing of the Resulting Issuer on the TSXV.

Accompanying Documents

This Circular is accompanied by several Schedules which are incorporated by reference into, form anintegral part of, and should be read in conjunction with this Circular. It is recommended that Shareholdersread this Circular and the attached Schedules in their entirety.

GENERAL PROXY INFORMATION

MANAGEMENT SOLICITATION OF PROXIES

This Circular is furnished to you in connection with the solicitation of proxies by management ofWar Eagle for use at the Meeting of Shareholders to be held on Thursday, December 8, 2011, andat any adjournment of the Meeting. War Eagle will conduct its solicitation by mail and its officers,directors and employees may, without receiving special compensation, contact Shareholders by telephone,electronic means or other personal contact. War Eagle will not specifically engage employees or solicitingagents to solicit proxies. War Eagle does not reimburse Shareholders, nominees or agents (including brokers holding shares on behalf of clients) for their costs of obtaining authorization from their principalsto sign forms of proxy. War Eagle will pay the expenses of this solicitation.

APPOINTMENT OF PROXY HOLDER

The persons named as proxy holders in the enclosed form of proxy are War Eagle’s directors or officers.As a Shareholder, you have the right to appoint a person (who need not be a Shareholder) in placeof the persons named in the form of proxy to attend and act on your behalf at the Meeting. Toexercise this right, you must either insert the name of your representative in the blank spaceprovided in the form of proxy and strike out the other names or complete and deliver anotherappropriate form of proxy.


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A proxy will not be valid unless it is dated and signed by you or your attorney duly authorized in writingor, if you are a corporation, by an authorized director, officer, or attorney of the corporation.

VOTING BY PROXY

The persons named in the accompanying form of proxy will vote or withhold from voting the War

Eagle Shares represented by the proxy in accordance with your instructions, provided yourinstructions are clear. If you have specified a choice on any matter to be acted on at the Meeting,your War Eagle Shares will be voted or withheld from voting accordingly. If you do not specify achoice or where you specify both choices for any matter to be acted on, your War Eagle Shares willbe voted in favour of all matters.

The enclosed form of proxy gives the persons named as proxy holders discretionary authorityregarding amendments or variations to matters identified in the respective Notice of Meeting andany other matter that may properly come before the Meeting. As of the date of this Circular, WarEagle’s management is not aware of any such amendment, variation or other matter proposed orlikely to come before the Meeting. However, if any amendment, variation or other matter properlycomes before the Meeting, the persons named in the form of proxy intend to vote on such other

business in accordance with their judgement.

You may indicate the manner in which the persons named in the enclosed proxy are to vote on any matter by marking an “X” in the appropriate space. If you wish to give the persons named in the proxy adiscretionary authority on any matter described in the proxy, then you should leave the space blank. Inthat case, the management nominated proxy holders will vote the War Eagle Shares represented byyour proxy in accordance with their judgment.

RETURN OF PROXY

Shareholders are invited to complete the attached form of proxy and to send it to Computershare, 9thFloor, 100 University Avenue, Toronto, Ontario M5J 2Y1 or to War Eagle’s head office at the address

listed on the Notice of Meeting, not less than 48 hours, excluding Saturdays, Sundays and holidays, preceding the Meeting or any adjournment of the Meeting.

ADVICE TO NON-REGISTERED SHAREHOLDERS

Only Shareholders whose names appear on the records of our registrar and transfer agent, Computershare,or validly appointed proxy holders are permitted to vote at the Meeting. Most of our Shareholders are“non-registered” Shareholders because their War Eagle Shares are registered in the name of a nominee,such as a brokerage firm, bank, trust company, trustee or administrator of a self-administered RRSP,RRIF, RESP or similar plan or a clearing agency such as CDS Clearing and Depository Services Inc. (a“Nominee”). If you purchased your War Eagle Shares through a broker, you are likely a non-registeredShareholder.

Non-registered Shareholders who have not objected to their Nominee disclosing certain ownershipinformation about themselves to us are referred to as “NOBOs”. Those non-registered Shareholders whohave objected to their Nominee disclosing ownership information about themselves to us are referred toas “OBOs”.

In accordance with the securities regulatory requirements, we will have distributed copies of the MeetingMaterials, being the Notice of Meeting, this Circular, and the form of proxy directly to NOBOs and to the Nominees for onward distribution to OBOs.


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Nominees are required to forward the Meeting Materials to each OBO unless the OBO has waived theright to receive them. War Eagle Shares held by Nominees can only be voted in accordance with theinstructions of the non-registered Shareholder. Meeting Materials sent to non-registered Shareholders whohave not waived the right to receive Meeting Materials are accompanied by a request for votinginstructions (a “VIF”). This form is instead of a proxy. By returning the VIF in accordance with theinstructions noted on it, a non-registered Shareholder is able to instruct the registered Shareholder (or

Nominee) how to vote on behalf of the non-registered Shareholder. VIFs, whether provided by War Eagleor by a Nominee, should be completed and returned in accordance with the specific instructions noted onthe VIF.

In either case, the purpose of this procedure is to permit non-registered Shareholders to direct the votingof the War Eagle Shares which they beneficially own. Should a non-registered Shareholder who receivesa VIF wish to attend the Meeting or have someone else attend on his/her behalf, the non-registeredShareholder may request a legal proxy as set forth in the VIF, which will grant the non-registeredShareholder or his/her nominee the right to attend and vote at the Meeting. Non-registered Shareholdersshould carefully follow the instructions set out in the VIF including those regarding when and where theVIF is to be delivered.

REVOCATION OF PROXY

If you are a registered Shareholder who has returned a proxy, you may revoke your proxy at any time before it is exercised. In addition to revocation in any other manner permitted by law, a registeredShareholder who has given a proxy may revoke it by either:

(a) signing a proxy bearing a later date; or

(b) signing a written notice of revocation in the same manner as the form of proxy is required to besigned as set out in the notes to the proxy.

The later proxy or the notice of revocation must be delivered to the office of War Eagle’s registrar and

transfer agent, Computershare, or to War Eagle’s head office at any time up to and including the last business day before the scheduled time of the Meeting or any adjournment, or to the Chairman of theMeeting on the day of the Meeting or any adjournment.

If you are a non-registered Shareholder who wishes to revoke a VIF or to revoke a waiver of your right toreceive Meeting Materials and to give voting instructions, you must give written instructions to your Nominee at least seven days before the Meeting.

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

None of War Eagle’s directors or executive officers, nor any person who has held such a position sincethe beginning of the last completed financial year of War Eagle, nor any Associate or Affiliate of theforegoing persons, has any substantial or material interest, direct or indirect, by way of beneficialownership of securities or otherwise, in any matter to be acted on at the Meeting other than the adoptionof the Resulting Issuer Stock Option Plan, approval of which will be sought at the Meeting. Directors andexecutive officers of War Eagle may participate in the Resulting Issuer Stock Option Plan, andaccordingly have an interest in its approval. See “Particulars of Matters to be Acted On”.

VOTING SHARES AND PRINCIPAL SHAREHOLDERS

War Eagle is authorized to issue an unlimited number of common shares without par value, of which7,442,272 War Eagle Shares are issued and outstanding as of November 3, 2011. There is one class ofshares only.


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Persons who are registered Shareholders at the close of business on November 3, 2011 will be entitled toreceive notice of, attend, and vote at the Meeting. On a show of hands, every Shareholder and proxyholder will have one vote and, on a poll, every Shareholder present in person or represented by proxy willhave one vote for each share. In order to approve a motion proposed at the Meeting, a majority of at least50% plus one vote of the votes cast will be required to pass an Ordinary Resolution, and a majority of atleast two-thirds of the votes cast will be required to pass a Special Resolution.

To the knowledge of War Eagle’s directors and executive officers, no person or company beneficiallyowns, directly or indirectly, or exercises control or direction over, War Eagle Shares carrying more than10% of all voting rights, other than as set forth below:

Name Number of War Eagle Shares Percentage of Outstanding WarEagle Shares(1)

FG2 Advisors, LLC 1,195,150(2) 16.06%

FGS Advisors, LLC 416,667(3) 5.60%

(1) Based on 7,442,272 War Eagle Shares issued and outstanding as of November 3, 2011. War Eagle believes that all persons hold legal title and it has no knowledge of actual common share ownership.

(2) The registered holder of these War Eagle Shares is Firebird Global Master Fund II Ltd.

(3) The registered holder of these War Eagle Shares is Firebird Global Master Fund Ltd.

(4) Firebird Global Master Fund II Ltd. and Firebird Global Master Fund Ltd. are funds under common management.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

An “informed person” means:

(a) a director or executive officer of War Eagle;

(b) a director or executive officer of a Person or Company that is itself an informed person or

subsidiary of War Eagle;

(c) any Person or Company who beneficially owns, directly or indirectly, voting securities of WarEagle or who exercises control or direction over voting securities of War Eagle carrying morethan 10% of the voting rights attached to all outstanding voting securities of War Eagle other thanvoting securities held by the Person or Company as underwriter in the course of a distribution;and

(d) War Eagle if it has purchased, redeemed or otherwise acquired any of its securities, so long as itholds any of its securities.

No informed person of War Eagle, no proposed nominee for election as a director of War Eagle, and no

Associate or Affiliate of any of these persons, has any material interest, direct or indirect, in anytransaction since the commencement of the last financial year or in any proposed transaction, which ineither case has materially affected or will materially affect War Eagle or the War Eagle Subsidiaries.

CORPORATE GOVERNANCE

National Policy 58-201 Corporate Governance Guidelines provides non-prescriptive guidelines oncorporate governance practices for reporting issuers. National Instrument 58-101 Disclosure of CorporateGovernance Practices prescribes certain disclosure by a reporting issuer of its corporate governance


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practices. The following sets out War Eagle’s approach to corporate governance and includes thedisclosure required Form 58-101F2 of NI 58-101.

Board of Directors

The Board of Directors facilitates its exercise of independent supervision over management through

frequent communication with the Board.

As of the date of this Circular, the following persons are directors of War Eagle:

Simon Anderson Not Independent (1)

Anthony Dutton Independent

Donald Padgett Independent

Terence Schorn Not Independent (1)

(1) War Eagle considers a member of the Board as “Not Independent” if he has a direct or indirect “material relationship”with the issuer as set out in NI 52-110. Simon Anderson is the President and CEO of War Eagle and Terence Schorn is

the Corporate Secretary and former President.

Directorships

Certain directors of War Eagle, or persons who are expected to become directors on closing of theAmalgamation, are also directors of other reporting issuers (or equivalent in a foreign jurisdiction) asfollows:

Name of Director or Nominee Name of Reporting Issuer

Simba Gold Corp.Simon Anderson

Sinovac Biotech Ltd.

Josephine Mining Corp.Anthony Dutton

IBC Advanced Alloys Corp.

Josephine Mining Corp.

Vangold Resources Ltd.

Donald Padgett

Vanoil Energy Ltd.

Terence Schorn Yankee Hat Minerals Ltd.

Chris Davie (proposed director on Closing) Quia Resources Inc.

Antioquia Gold Inc.

Sea Green Capital Corp.

Nebu Resources Inc.

Shoal Point Energy Ltd.

Rainbow Resources Inc.

Brian Murray (proposed director on Closing)

Process Capital Corp.


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Orientation and Continuous Education

War Eagle does not currently have a formal orientation program for new board members nor does it provide continuing education for its directors. The Board is currently composed of four directors, two ofwhom are officers of War Eagle, all whom are experienced business persons. All directors have previousexperience with public companies. As a result, War Eagle does not intend to provide orientation or

continuing education programs at this time.

Ethical Business Conduct

The Board has not, to date, adopted a formal written Code of Ethical Business Conduct. To date, theBoard has found that the fiduciary duties placed on individual directors by War Eagle’s governingcorporate legislation and the common law and the restrictions placed by applicable corporate legislationon an individual director’s participation in decisions of the Board in which the director has an interesthave been sufficient to ensure that the Board operates independently of management and in the bestinterests of War Eagle. Additionally, the Board expects that such persons will treat each other, securityholders and all other persons with goodwill, fairness and respect. The Board strives to create a culture inthe company that values honesty, high ethical standards and compliance with laws rules and regulations.

The Board is aware of the recommendation in NP 58-201 to adopt a written code of business conduct andethics and is reviewing different standards that may be appropriate for War Eagle to adopt.

Nomination of Directors

War Eagle does not have a nominating committee and does not currently have any formalized processesfor identifying new candidates for Board nomination. New candidates are proposed by the Board as awhole.

Compensation

The Board periodically reviews the compensation paid to directors, management and other employees

based on such factors as time commitment and level of responsibility, comparative fees paid by othercompanies in the industry in North America and War Eagle’s current position as an exploration companywith no operating revenue.

The Board does not have a compensation committee, and these functions are currently performed by theBoard as a whole. However, this policy may be reviewed in the future depending on the circumstances ofWar Eagle.

Other Board Committees

The Board has no other committees other than the Audit Committee. The Board as a whole addressesexecutive compensation, corporate governance and Board nominations.

Assessments

The Board collectively conducts informal annual assessments of the Board’s effectiveness, its individualdirectors and its Audit Committee.

AUDIT COMMITTEE REQUIREMENTS

War Eagle is including the disclosure required by Form 52-110F2 of National Instrument 52-110 AuditCommittees under this heading. As at its most recently completed financial year end of March 31, 2011,


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War Eagle was a “venture issuer” under NI 52-110 and is relying on the exemption in section 6.1 of NI52-110.

Audit Committee Charter

The Audit Committee Charter of War Eagle is attached to this Circular as Schedule “I”.

Composition of the Audit Committee

Name of Member Independent under NI 52-110 Financially Literate under NI 52-110

Terence Schorn No – Corporate Secretary of WarEagle and former President

Yes

Donald Padgett Yes Yes

Anthony Dutton Yes Yes

Relevant Education and Experience

Terence P. Schorn, P. Geo

Mr. Schorn is a graduate of Haileybury School of Mines and brings over 50 years’ experience in mineralexploration, development and production to War Eagle. Mr. Schorn currently serves on the auditcommittee of Yankee Hat Minerals Ltd. His work experience provides relevant experience in accounting,understanding of financial statements and significant appreciation for internal controls and procedures.

Donald Padgett

Mr. Padgett holds a law degree (Dalhousie University), an MBA (McMaster) and a BSc (University ofToronto). He has served as Chairman, President and director of several public and private companies. He

currently serves on the audit committees of Vangold Resources Ltd. and Vanoil Energy Ltd.

Anthony Dutton

Mr. Dutton is a seasoned business executive and entrepreneur with a successful track record as an earlystage investor and business founder. His areas of expertise are corporate finance, business developmentand strategic management. He is regularly engaged in developing strategic and financial plans for earlystage and high growth companies. Mr. Dutton holds a BA in Economics from the University of BritishColumbia and an MBA from the Cranfield School of Management in the United Kingdom. He is a principal at Delu Corp. and is also a director of other private and public companies.

Audit Committee Oversight

At no time since the commencement of War Eagle’s most recently completed financial year was arecommendation of the Audit Committee to nominate or compensate an external auditor not adopted bythe War Eagle’s Board of Directors.

Reliance on Certain Exemptions

At no time since the commencement of War Eagle’s most recently completed financial year has WarEagle relied on the exemption in section 2.4 of NI 52-110 (De Minimis Non-Audit Services) or anexemption from NI 52-110, in whole or in part, granted under Part 8 of NI 52-110.


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Pre-Approval Policies and Procedures

The Audit Committee has adopted specific policies and procedures for the engagement of non-auditservices as described under the heading “Relationship with External Auditor” of the Audit CommitteeCharter.

External Auditor Service Fees (By Category)

Financial YearEnded

Audit Fees(1) Audit RelatedFees(2)

Tax Fees(3) All Other Fees(4)

March 31, 2011 $19,890 7,000 $1,020 Nil

March 31, 2010 $28,000 Nil $1,000 Nil

(1) The aggregate fees billed by War Eagle’s auditor for audit fees.

(2) The aggregate fees billed for assurance and related services by War Eagle’s auditor that are reasonably related to the performance of the audit or review of financial statements and are not disclosed in the Audit Fees column.

(3) The aggregate fees billed for profession services rendered by War Eagle’s auditor for tax compliance, tax advice, tax planning. These services include War Eagle’s annual tax returns.

(4) The aggregate fees billed for professional services other than those listed in the other three columns.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

War Eagle’s only equity compensation plan is its Stock Option Plan, which was approved byShareholders on September 30, 2008. It is a fixed number plan in accordance with the requirements ofthe TSXV, and reserves a maximum of 8,086,559 (404,327 on a post-consolidated basis) War EagleShares for issuance on the exercise of outstanding stock options. The Stock Option Plan otherwiseconforms to the requirements of the TSXV and TSXV Policy 4.4 Incentive Stock Options.

The following table sets forth information regarding the Stock Option Plan as at the year ended March 31,2011.

Plan Category

Number of securities tobe issued upon exerciseof outstanding options

under the Stock OptionPlan

(a)

Weighted averageexercise price of

outstanding options

(b)

Number of securitiesremaining available for

future issuance under theStock Option Plan

(excluding securitiesreflected in column (a))(1)

Equity compensation plansapproved by Shareholders

213,250 $3.00 191,077

Equity compensation plansnot approved by

Shareholders

- - -

Total 213,250 $3.00 191,077

(1) This figure is based on the total number of War Eagle Shares authorized for issuance under the Stock Option Plan, lessthe number of stock options outstanding as at War Eagle’s fiscal year end of March 31, 2011.


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PARTICULARS OF MATTERS TO BE ACTED ON

APPOINTMENT OF AUDITOR

At the Meeting, Shareholders will be asked to pass the Auditor’s Resolution appointing MacKay LLP, asWar Eagle’s auditor for the next ensuing year, to hold office until the close of the next annual general

meeting of Shareholders or until the firm of MacKay LLP is removed from office or resigns as provided by War Eagle’s constating documents, and authorizing War Eagle’s Board of Directors to fix thecompensation of the auditor.

The complete text of the Auditor’s Resolution which War Eagle intends to place before the Meeting forapproval, with or without modification, is as follows:

“IT IS RESOLVED, AS AN ORDINARY RESOLUTION THAT:

1. MacKay LLP, be appointed as War Eagle Mining Company Inc.’s (“War Eagle”) auditor for theensuing year, to hold office until the close of the next annual general meeting of shareholders oruntil the firm of MacKay LLP is removed from office or resigns as provided by War Eagle’s

constating documents, and authorizing War Eagle’s board of directors to fix the compensation ofthe auditor; and

2. Any one or more directors and officers of War Eagle be authorized to perform all such acts, deedsand things and execute, under seal of War Eagle or otherwise, all such documents and otherwritings, as may be required to give effect to the true intent of these resolutions.”

Recommendation of Directors

War Eagle’s Board of Directors unanimously recommends that Shareholders vote in favour of theAuditor’s Resolution.

In order to pass the Auditor’s Resolution, a simple majority of the votes cast by Shareholders,present in person or by proxy at the Meeting, is required.

Unless the Shareholder has specified in the enclosed form of proxy that the War Eagle Sharesrepresented by such proxy are to be withheld from voting on the Auditor’s Resolution, the personsnamed in the enclosed form of proxy will vote FOR the Auditor’s Resolution.

ELECTION OF DIRECTORS

Directors of War Eagle are elected at each annual general meeting and hold office until the next annualgeneral meeting or until that person sooner ceases to be a director. At the Meeting, Shareholders will beasked to pass the Directors’ Resolution, being an Ordinary Resolution setting the number of directors atfour, subject to increases permitted by War Eagle’s constating documents, and to elect directors for the

ensuing year, as more particularly described below.

If the Amalgamation completes, Simon Anderson, Donald Padgett and Terence Schorn will resign asdirectors of War Eagle and the directors of the Resulting Issuer will be as set out under the heading“Information Regarding the Resulting Issuer – Directors, Officers and Promoters”.

The information concerning the proposed nominees has been furnished by each of them.


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Name, Position &Jurisdiction ofResidence

Principal Occupationfor Past Five Years Director Since

War EagleShares OwnedBefore theAmalgamation

Resulting IssuerShares AfterCompletion oftheAmalgamation(1)

Simon AndersonPresident, CEO andDirectorBC, Canada

President of S2management Inc; Vice-President of MCSIConsulting Services Inc.

March 18, 2009 120,000 120,000

Anthony DuttonDirectorBC, Canada

President of IBCAdvanced Alloys Inc.;Principal of Delu Corp.

March 20, 2009 100,000 100,000

Donald PadgettDirectorBC, Canada

CEO of Wedge EnergyInternational Inc.President of TsarEmerald Corp.; Presidentof 1091096 Ontario Inc.

July 13, 2005 Nil Nil

Terence SchornDirector, SecretaryBC, Canada

Geoscientist and businessman

February 1, 2001 34,948(2) 34,948(2)

(1) Assuming no proposed director acquires any Andromeda Shares under the Equity Financing.

(2) 32,965 War Eagle Shares are owned by Tarbo Resources, Ltd., a company of which Terence Schorn is the principal.Mr. Schorn directly holds the balance of 1,983 War Eagle Shares.

Cease Trade Orders and Bankruptcy

Other than as described below, no individual who will be a director, officer or Promoter of War Eagle is,or has been within the past ten years, a director, officer or Promoter of any other Issuer that, while suchPerson was acting in that capacity, was:

(a) the subject of a cease trade or similar order or an order that denied the Issuer access toany statutory exemptions for a period of more than 30 consecutive days;

(b) was subject to an event that resulted, after the director or proposed management nomineeceased to be a director or officer of the relevant company in the relevant company beingthe subject of a cease trade order or similar order that denied the relevant company accessto any exemption under securities legislation, for a period of more than 30 consecutivedays; or

(c) within a year of the director or proposed management nominee ceasing to be a director orofficer of the relevant company, became bankrupt, made a proposal under any legislation

relating to bankruptcy or insolvency or was subject to or instituted any proceedings,arrangement, or compromise with creditors, or had a receiver, receiver manager, ortrustee appointed to hold its assets.

Simon Anderson was formerly a director of Wex Pharmaceuticals Inc. (“Wex”), which failed to file itsinterim financial statements and MD&A for the interim financial period ended June 30, 2007. Wex filed anotice of default dated August 17, 2007 and applied to the British Columbia Securities Commission(“BCSC”) for an order precluding management and other insiders from trading in its securities pendingthe filing of the foregoing documents. The BCSC issued a cease trade order on August 17, 2007. On


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September 17, 2007, the cease trade order was revoked following the filing of Wex’s financial statementsand MD&A.

The complete text of the Directors’ Resolution which War Eagle intends to place before the Meeting forapproval, with or without modification, is as follows:


1. The number of directors of the War Eagle Mining Company Inc. (the “ Company”) be fixedat four; and

2. The four management nominees for directors, being Simon Anderson, Anthony Dutton,Terence Schorn and Donald Padgett, be elected as directors of the Company to hold officeuntil the earlier of the election of directors at the next annual general meeting or until theirsuccessors are elected or appointed.

War Eagle’s Board of Directors unanimously recommends that Shareholders vote in favour of theDirectors’ Resolution.

In order to pass the Directors’ Resolution, a simple majority of the votes cast by Shareholders,present in person or by proxy at the Meeting, is required.

Unless the Shareholder has specified in the enclosed form of proxy that the War Eagle Sharesrepresented by such proxy are to be withheld from voting on the Directors’ Resolution, the personsnamed in the enclosed form of proxy will vote FOR the Directors’ Resolution.

APPROVAL OF THE AMALGAMATION

At the Meeting, in accordance with the requirements of the RTO Policy of the TSXV, Shareholders will be asked to consider, and if thought fit, to pass with or without variation, as an Ordinary Resolution, theAcquisition Resolution, authorizing, confirming and approving the Amalgamation.

Background to the Amalgamation

On August 16, 2010, War Eagle entered into a letter of intent with Andromeda, a private companyincorporated under the OBCA, pursuant to which War Eagle would acquire all of the issued andoutstanding Andromeda Shares. Andromeda is engaged in mineral exploration and development inMexico, and is involved in the development of the Terrazas Property. The parties attempted to reach anagreement on definitive business terms, but were unable to and Andromeda terminated the letter of intenton December 23, 2010.

The parties revisited a combined transaction and on September 27, 2011, War Eagle entered into theLetter of Intent with Andromeda. See “Information Regarding Andromeda – General Development of the

Business” for more information about Andromeda’s business and the Terrazas Property.

Reasons for the Amalgamation

War Eagle is a mineral exploration company listed on the TSXV and assuming completion of theAmalgamation, the Resulting Issuer is expected to be listed on the TSXV. War Eagle believes thatsynergies exist between Andromeda’s Terrazas Property and War Eagle’s Tres Marias project located inChihuahua, Mexico, though compatibility of other ores with the proposed process at the Terrazas Propertyhave not yet been examined.


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The Amalgamation Agreement

On November 9, 2011, War Eagle and War Eagle Subco entered into the Amalgamation Agreement withAndromeda under which War Eagle Subco and Andromeda will amalgamate to form Amalco, which will become a wholly owned subsidiary of the Resulting Issuer. The Amalgamation Agreement provides that,among other things, each Andromeda Share will be exchanged for 6.67 Resulting Issuer Shares (except

for the 500,000 Andromeda Shares held by War Eagle which will be cancelled without the repayment ofcapital in respect thereof) and each Andromeda Warrant will be exchanged for 6.67 ReplacementWarrants, each Broker Option will be exchanged for 6.67 Replacement Broker Options and each WorkFee Warrant will be exchanged for 6.67 Replacement Work Fee Warrants.

The current Shareholders are expected to own approximately 31.7% of the outstanding shares of theResulting Issuer, and Andromeda Shareholders (other than War Eagle) will own the remaining 68.3% ofthe Resulting Issuer, before giving effect to the Equity Financing described in this Circular. TheAmalgamation is based on a deemed valuation of the Resulting Issuer of approximately $8.7 million at anestimated price of $0.45 per Resulting Issuer Share post-RTO. The holders of convertible securities ofWar Eagle will receive equivalent securities in the Resulting Issuer.

Andromeda is expected to complete the Equity Financing immediately before the Closing of theAmalgamation. As a result of the Equity Financing, in addition to the issuance of Andromeda Units,Andromeda will issue Broker Options and Work Fee Units. See “Information Concerning War Eagle –General Development of the Business - Financing” for more information about the Equity Financing.Under the Amalgamation Agreement, the Resulting Issuer will issue 6.67 Replacement Broker Optionsfor each Broker Option and 6.67 Replacement Work Fee Warrants will be exchanged for each Work FeeWarrant and the exercise price of the Replacement Broker Options and Replacement Work Fee Warrantswill be adjusted accordingly.

The Resulting Issuer Shares issued to the Andromeda Shareholders, the Replacement Broker Warrants to be issued to former holders of the Broker Warrants and the Replacement Work Fee Warrants issued to theformer holders of the Work Fee Warrants pursuant to the Amalgamation Agreement will be issued in

reliance on exemptions from the prospectus requirement of applicable securities laws.

Conditions to the Amalgamation

The respective obligations of War Eagle and Andromeda to complete the Amalgamation are subject to anumber of conditions which must be satisfied or waived in order for the Amalgamation to becomeeffective. These conditions are described in the Amalgamation Agreement and include:

(a) approval of the Amalgamation by the boards of directors of War Eagle and Andromeda;

(b) approval of the Amalgamation by the Shareholders;

(c) approval of the Amalgamation by the Andromeda Shareholders;

(d) the Shareholders having passed the Related Transaction Resolutions;

(e) Andromeda obtaining a technical report on the Terrazas Property as required by theTSXV, regulatory authorities or securities law to complete the Amalgamation;

(f) Andromeda having raised at least $7 million prior to or on the effective date of theAmalgamation;


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(g) the TSXV having approved the Amalgamation and the listing of the Resulting IssuerShares, and the shares issuable on exercise of the Replacement Warrants andReplacement Broker Options, subject only to compliance with the usual requirements ofthe TSXV;

(h) all regulatory approvals and all third party consents as may be required to complete the

Amalgamation, if any, having been obtained, in form and terms satisfactory to War Eagleand Andromeda, unless otherwise provided for between the parties, or if a failure toobtain such approvals or consents would not have a Material Adverse Effect on WarEagle or Andromeda or materially impede the completion of the Amalgamation; and

(i) no action having been taken by any court or governmental body prohibiting or makingillegal the execution and delivery of the Amalgamation Agreement or any transactioncontemplated by the Amalgamation Agreement.

Consequences if the Amalgamation does not Complete

If the conditions to the Amalgamation are not satisfied, War Eagle will not complete the Amalgamation

with Andromeda and will continue to be a company listed on the TSXV with its current assets andliabilities as more particularly set out in its continuous disclosure documents filed on SEDAR atwww.sedar.com.

The Resulting Issuer

The Amalgamation will constitute a Reverse Takeover as Andromeda Shareholders (assuming amaximum Equity Financing is completed) will hold approximately 83.5% of the Resulting Issuer Shares.Andromeda has one wholly owned subsidiary, RDM, which will become a subsidiary of the ResultingIssuer. Under the Terrazas Agreement, RDM and Andromeda have agreed to purchase the TerrazasProperty from MRT.

Subject to the approval of the Continuance Resolution, War Eagle will continue its existence as theResulting Issuer under the OBCA under the name “Andromeda Resources Inc.” or such other name asmay be accepted by the relevant regulatory authorities. See “Approval of the Continuance” below. TheResulting Issuer’s primary business, through its ownership of RDM and under the Terrazas Agreement,will be the exploration, development and operation of the Terrazas Property. For a complete descriptionof the Amalgamation, Andromeda, the Terrazas Property and the Resulting Issuer, please refer tothe heading “Information Regarding Andromeda” and “Information Regarding the ResultingIssuer” and the Terrazas Technical Report filed on SEDAR in connection with the Amalgamation.

The complete text of the Acquisition Resolution which War Eagle intends to place before the Meeting forapproval, with or without modification, is as follows:


1. The amalgamation (the “Amalgamation”) between Andromeda Resources Inc. (“Andromeda”)and 2304315 Ontario Limited (“War Eagle Subco”), pursuant to the terms of an amalgamationagreement dated November 9, 2011 among War Eagle Mining Company Inc. (“War Eagle”),War Eagle Subco and Andromeda (the “Amalgamation Agreement”), as more particularlydescribed in War Eagle’s information circular dated November 3, 2011, be made effective and allmatters relating to the Amalgamation, all as contemplated in the Amalgamation Agreement, beauthorized and approved, and the Board of Directors of War Eagle is authorized to amend orrevise the terms and conditions of the Amalgamation in its discretion to the extent permitted by


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the Amalgamation Agreement without further notice to or approval of the shareholders of WarEagle;

2. The Amalgamation Agreement, and the execution and delivery of the Amalgamation Agreementis ratified, confirmed and approved and the Board of Directors of War Eagle are authorized andempowered to amend or revise the Amalgamation Agreement in its discretion to the extent

permitted therein without further notice or approval of the shareholders of War Eagle;

3. Notwithstanding that the Amalgamation has received the approval of the shareholders of WarEagle, the Board may, subject to the terms of the Amalgamation, decide not to proceed with theAmalgamation or revoke this resolution at any time before the Closing Date (as defined in theAmalgamation Agreement) without further notice to or approval of the shareholders of WarEagle; and

4. Any one director or officer of War Eagle is authorized and empowered, acting for, in the name ofand on behalf of War Eagle, to do all such acts and things and execute, deliver and file, as thecase may be, or cause to be delivered and filed all other documents and instruments necessary ordesirable to carry out and give effect to the provisions of this resolution.”

Recommendation of Directors

War Eagle’s Board of Directors believes that the Amalgamation is in War Eagle’s best interests andunanimously recommends that Shareholders vote in favour of the Acquisition Resolution.

In order to pass the above Acquisition Resolution, a simple majority of the votes cast byShareholders, present in person or by proxy at the Meeting, is required.

Unless the Shareholder has specified in the enclosed form of proxy that War Eagle Sharesrepresented by such proxy are to be voted against the Acquisition Resolution, the persons named inthe enclosed form of proxy will vote FOR the Acquisition Resolution.

APPROVAL OF THE CONTINUANCE

General

At the Meeting, conditional upon approval of the Acquisition Resolution, Shareholders will be asked toconsider and, if thought appropriate, to pass a Special Resolution (the “Continuance Resolution”)authorizing the Board of Directors of War Eagle, in their sole discretion, to apply for the Continuance ofWar Eagle under the OBCA under the new name of “Andromeda Resources Inc.” or such other name asmay be approved by the board of directors of War Eagle and applicable regulatory authorities, and toapprove, with or without amendment, the form of Articles of Continuance of War Eagle to be filed underthe OBCA as required in connection with the Continuance.

War Eagle will also seek Shareholder approval for a form of By-Laws for War Eagle which will complywith the provisions of the OBCA. The full text of the proposed Articles of Continuance and the By-Lawfor War Eagle will be available for review at War Eagle’s head office located at Suite 906 – 595 HoweStreet, Vancouver, British Columbia V6C 2T5 during regular business hours before the Meeting and atthe Meeting. The proposed By-Law of Resulting Issuer, attached as Schedule “J” to this Circular, containthe form of By-Law for War Eagle under the OBCA.

The Continuance will affect certain of the rights of Shareholders as they currently exist under theBCBCA. Shareholders should consult their legal advisors regarding implications of the Continuancewhich may be of particular importance to them.


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War Eagle’s Board may, despite receiving Shareholder approval, abandon the application for the WarEagle Continuance without further approva

Andromeda_Resources Acquisition Circular.pdf

Documents

Transcript of Andromeda_Resources Acquisition Circular.pdf