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RELATED PARTY TRANSACTIONS
 3 Months Ended
Mar. 31, 2012
RELATED PARTY TRANSACTIONS  
RELATED PARTY TRANSACTIONS

NOTE 10   RELATED PARTY TRANSACTIONS

 

Ending in 2011, the Company had a management services agreement (“Services Agreement”) with 2083089 Ontario Inc. (“208”) pursuant to which the Company agreed to reimburse 208 for rent, personnel, office expenses and other administrative services on a cost recovery basis.  208 is owned by Robert McEwen, the Chairman and Chief Executive Officer of the Company and beneficial owner of more than 5% of its voting securities.  Mr. McEwen is also the Chief Executive Officer and Director of 208.   Effective January 2012, the Company no longer requires the services agreement with 208 as those costs are now paid directly by the Company.  During the three months ended March 31, 2011, the Company incurred and paid $23,353 under the agreement.

 

Beginning in the second quarter of 2010, an aircraft owned and operated by Lexam L.P. (of which Mr. McEwen is a limited partner and beneficiary) has been made available to the Company in order to expedite business travel. In his role as Chairman and Chief Executive Officer of the Company, Mr. McEwen must travel extensively and frequently on short notice.

 

Mr. McEwen is able to charter the aircraft from Lexam L.P. at a preferential rate. The Company’s independent board members have approved a policy whereby only the variable expenses of operating this aircraft for business related travel are eligible for reimbursement by the Company.  The hourly amount that the Company has agreed to reimburse Lexam L.P. is well under half the full cost per hour of operating the aircraft or equivalent hourly charter cost and in any event less than even Mr. McEwen’s preferential charter rate. Where possible, trips also include other company personnel, both executives and non-executives, to maximize efficiency.

 

For the three months ended March 31, 2012, the Company incurred and paid $39,893 (2011 - $48,643) to Lexam L.P. for the use of this aircraft.

 

Each of the above agreements were approved or ratified by the independent members of the Company’s Board of Directors.