Concerned Shareholders respond to the inaccurate statements contained in the Management Information Circular of Fancamp and differentiate fact from fiction.
Concerned Shareholders wish to thank shareholders who have contacted us to provide continued support.
Montreal, Quebec--(Newsfile Corp. - June 14, 2021) - Incumbent director of Fancamp, Dr. Peter H. Smith, who, together with joint actors James Hunter and his affiliates, Mark Fekete and Heather Hannan, (the "Concerned Shareholders") hold in aggregate, directly and indirectly an aggregate of 22,285,597 shares, representing approximately 12.63% of Fancamp Exploration Ltd.'s ("Fancamp" or the "Company") issued and outstanding common shares, regards the Company's management information circular (the "MIC") dated June 2, 2021 as continued evidence of their inability to accurately state the truth/facts and to continue to disregard your sensibilities by filing a MIC that is rife with inaccurate statements as an attempt to misdirect the true owners of Fancamp from focusing on the real issues at hand. Fancamp's MIC does nothing more than propagate falsehoods and tries to twist the narrative in favour of the entrenched board and management to justify their actions in a manner which is disingenuous, misleading and insulting to Fancamp shareholders.
Throughout the MIC, Fancamp's entrenched board and management continue to focus on Dr. Peter Smith as opposed to addressing the real issues at hand, which is why they would enter into such a highly dilutive, self-serving and non-arm's length transaction (the "Transaction") with ScoZinc Mining Ltd. ("ScoZinc"). Dr. Peter Smith is the reason why we are here and that shareholders of Fancamp have the ability to have a say on this Transaction, which the entrenched board and management fought against having their own shareholders have a say. The entrenched board and management felt that they could dilute the true owners of Fancamp 6:1 and get away with it. Dr. Peter Smith thought otherwise. He demanded that the entrenched board and management seek shareholder approval. Dr. Smith felt the entrenched board and management had forgotten their fiduciary duties and were focused only on lining their own pockets and entrenching themselves further by having their handpicked board and placing Fancamp shares into friendly hands. Instead of acknowledging that the deal is highly dilutive, they attack Dr. Smith and try to tell you that the Transaction has pure upside potential when even outside parties reviewing the Transaction ask how is this Transaction accretive to Fancamp shareholders?
The Concerned Shareholders wish to address a few inaccurate statements made in the MIC to set the record straight so that all shareholders of Fancamp have a true and accurate picture from which to make a decision on which slate they wish to support when armed with all the facts.
Inaccurate statement #1: What you need to know about Mr. Smith's Nominees "Not only is Mr. Smith hiding information, but his slate of nominees (the "Smith Nominees") are now helping him as well. Since Mr. Smith has refused to hand over the information in his possession, when his notice of nomination of directors was received, Fancamp was forced to ask the Smith Nominees to confirm…"
The entrenched board and management have failed to be truthful about this comment in the MIC. First of all, their requests are outside of what is generally accepted under advanced notice policies, and they are adhering to their outdated policy of 2013. The entrenched board are misusing the advanced notice policy as a sword to fight against the fair nomination of the Concerned Shareholders nominees, rather than as what is meant to be used for which is as a shield to protects shareholder interests. To ensure that the entrenched board and management do not use this outdated archaic policy to invalidate our nominees we, the Concerned Shareholders, requested our nominees to respond to their questions which we highlighted in our press release dated May 28, 2021, and contained the responses in the final advance notice of nominations submitted to the Company, a copy of which was publicly filed on Fancamp's SEDAR profile on May 31, 2021. However, the entrenched board and management continue to mislead Fancamp shareholders by not changing the narrative of their story when they were in possession of our responses well in advance of them filing their MIC on SEDAR.
Inaccurate statement #2: What Else is Mr. Smith hiding? "Fancamp has strong reason to believe there are even more examples of misconduct by Mr. Smith and has filed a civil claim (the "Claim") with the British Columbia Supreme Court on behalf of shareholders. Fancamp has also launched a formal independent forensic investigation, led by world renowned accounting firm KPMG International Limited, into Mr. Smith and may amend the Claim to address any further wrongdoing it uncovers during the process of the independent investigation."
This statement is almost laughable. After being an officer of this Company from 1986 to August 2020, during which the entrenched board and management have overlapped with Dr. Smith for the last eight years (or 35 years in the case of the CFO), it is amazing that all of these alleged breaches have occurred without the entrenched board and management either being either (a) willfully blind or (b) complicit with the fraudulent nature of these alleged claims. Regardless of which category they fall into it is clear that if any of their allegations are in fact true, change would be needed at the board level of Fancamp, as if anything alleged is, true, which the Concerned Shareholders emphatically deny, the entrenched board and management would clearly be either "asleep at the wheel" or complicit.
The truth is we need to turn the question on to the entrenched board and management to ask them and, in particular, Mr. Aswath Mehra what they are hiding? As was stated in our initial press release dated February 22, 2021, we noted that Mr. Mehra and Mr. Billings failed to disclose the true extent to which they are conflicted with respect to the Transaction. Mr. Mehra disclosed his position as a director of both the Company and ScoZinc but had neglected to disclose his significant shareholdings in ScoZinc. Mr. Billings, a director of both the Company and ScoZinc when the Transaction was being negotiated, still refuses to admit any conflict at all.
Now, inconspicuously, buried in the back of the MIC there is now a line that Mr. Mehra stands to gain $1.4MM from the Transaction. Even more interesting is the entrenched board and management's claim that while Dr. Smith was a part of Fancamp's management that the total shareholder return (the "TSR") was -59.4%% but somehow the entrenched board and management inexplicably present surprisingly high individual TSR's when, as stated earlier, have their tenure has overlapped with Dr. Smith's for the last eight years. We are struggling to reconcile the entrenched board and management's convenient cherry-picked successes during the same tenure for nearly the last decade, at the same time as Dr. Smith.
Truth be told, the most recent increase in the share price of Fancamp is not due to anything the entrenched board or management has done but solely because of the purchases made by Mr. James Hunter, one of the Concerned Shareholders as well as a Concerned Shareholder nominee. Mr. James Hunter first invested in Fancamp in 2016 and has been purchasing shares in the open market and has invested to date over $2,000,000. Mr. Hunter aggressively started purchasing Fancamp in November 2020 which has caused the stock price to increase from $0.09 on November 12, 2020 to $0.14 at the end of business on May 31, 2021 (the record date). Amazingly Mr. Mehra and Mr. Billing will try to say the increase is solely due to them when in essence it has nothing to do with them when, in fact, any increases have everything to do with the Concerned Shareholders.
What Mr. Mehra and the entrenched board and management should be doing is thanking Dr. Smith and Mr. James Hunter for the share price increase which allowed them to exercise their recently issued options the day before the record date to be able to vote their shares in favour of themselves at the upcoming meeting. Again, the entrenched board and management did not use their own personal funds to enter the market, but exercised Company issued options that were in the money for the sole benefit to attempt to entrench themselves further. Furthermore, the Options they exercised were announced in the entrenched board and management's press release dated March 15, 2021, where they granted each member of the Company's board and senior management, excluding Dr. Smith even though he was and is a director, two million stock options under Fancamp's rolling stock option plan, notwithstanding that the plan had not received required annual shareholder approval because the entrenched board had refused to call and hold the Company's long overdue annual general meeting. To the best of our knowledge, the entrenched board and management has not used any of their personal funds to purchase share of Fancamp to align themselves with the true owners of the company. So, we ask you this Mr. Mehra: since you are so keen to highlight all that you have done for shareholders why are you so quiet on your time at Glencore International AG. or why was your term at the International School of Zug and Luzern as Chair so short? What are you hiding?
False/misleading statement #3: Mr. Smith is Now Trying to Block Fancamp Shareholders from an Opportunity to Create Value.
This is the most outrageous statement they have made in their MIC. The question we should ask is what Dr. Smith trying to block - certainly not the rights of current true owners of Fancamp - he has fought this fight to give shareholders a chance to make a decision and vote. If anything, Dr. Smith is trying to protect current shareholders from being diluted 6:1 without their say in a Transaction that is not in the best interest of ALL shareholders. The only shareholders to potentially suffer from a negative outcome from a Concerned Shareholder victory are the entrenched board and management as they will not be able to entrench and unjustly enrich themselves further, place shares into friendly hands or continue to be in a position to disregard the voices of those that really own the company. As stated numerous times, voting for the Concerned Shareholders nominees is a vote against the highly dilutive, self-serving and non-arm's length ScoZinc Transaction and a vote for the entrenched board and management is a vote for the Transaction. This inaccurate misleading statement says so much about the entrenched board and management as it highlights that they still believe that your voice does not count and that somehow Dr. Smith's actions are intended to hurt the shareholders of Fancamp when in truth it is to help them. How can giving shareholders a vote, at a meeting of shareholders that has been delayed by over half a year, be considered contrary to shareholder interest?
False/misleading statement #4: Mr. Smith's Lacks Business Judgment and Strategy "An investigation by the Board uncovered that between 2010 and 2019, over $10 million was spent on operating expenses and $27 million was spent on exploration and development - with no tangible advancement on any of the Fancamp properties. Of the $27 million, over half ($15 million) was completely written off, meaning it added nothing for the Corporation or its shareholders."
Dr. Smith stands by his record. He co-founded the Company in 1986 and acted as its CEO from that time until he was forced to step down from that position in August 2020. During that period, hundreds perhaps thousands of other junior mineral exploration companies have come and gone. Remarkably, after almost 35 years as a publicly traded company, Fancamp has only 166.0 million shares issued and outstanding and has gone through only one consolidation. With Dr. Smith at the helm, the Company made numerous timely acquisitions, generated several significant discoveries and completed lucrative transactions. Most notably, it was Dr. Smith's early iron-ore acquisitions in the Fermont area of Quebec and subsequent agreements with Champion Iron Ltd. ("Champion") that resulted in the acquisition of the large number of Champion shares that underlie the Company's current strong balance sheet and that have for years funded exploration and administration activities of the Company with little or no dilution to shareholders. In contrast, the entrenched board and management intends to issue 84.5 million shares and significantly dilute Fancamp shareholders. Dr. Smith and his team have spent and would continue to spend money on tangible geophysical surveys, drilling projects and assay results. What is interesting is that no where in their March 18, 2021, press release do the entrenched board and management acknowledge all the good Dr. Smith has done for Fancamp and their shareholders. We note that the Company also stated in its August 13, 2020, news release that Dr. Smith had resigned due to "personal reasons" but would remain as both a consultant and a director. If the Company was so concerned about Dr. Smith's actions, why would it retain Dr. Smith as a consultant?
The statement that Dr. Smith committed exploration expenditures and negotiated with third parties, recklessly sold Champion shares and incurred excessive, value-destroying expenses without the knowledge and approval of the Board is unjustified. If these accusations were true, then directors Mr. Billings, Mr. Mehra, and Mr. Ankcorn, all of whom have been in their position for more than five years, would be equally culpable as directors of the Company, who have an obligation to oversee the actions of management. Dr. Smith's actions have always been in the interest of the Company and its shareholders.
The Concerned Shareholders would like to thank the number of shareholders that have contacted them or Gryphon Advisors Inc. to express their support and sharing stories of inappropriate behaviour exhibited by Mr. Mehra.
Farris LLP are acting as legal advisors to Dr. Peter Smith and Gryphon Advisors Inc., are acting as their strategic shareholder communications and proxy advisor. Gryphon's responsibility will include providing strategic advice and advising the Concerned Shareholders with respect to the Meeting and proxy protocol.
The registered address of Fancamp is located at 3200 - 650 West Georgia Street, Vancouver, BC, V6B 4P7. The mailing and head office address of Fancamp is 7290 Gray Avenue, Burnaby, British Columbia V5J 3Z2. A copy of this press release may be obtained on Fancamp's SEDAR profile at www.sedar.com.
For more information regarding the Concerned Shareholders' position please contact:
Gryphon Advisors Inc.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/87475