Fancamp Sets the Record Straight and Corrects the Misleading and Baseless Statements by Activist Peter H. Smith and His Associates
The proxy fight that
It is important that shareholders have the right facts:
FANCAMP IS ON THE RIGHT TRACK TO SIGNIFICANT VALUE CREATION
1. The Transaction will Unlock Value for Fancamp Shareholders
As discussed on the
Focus on select quality exploration targets to enhance value (a stark contrast to the ill-defined approach of
- Support titanium technology strategy; and
- Seek strategic alternatives that have the potential for near-term cash flow.
2. Significant Potential for Value Accretion for Fancamp
The Board is focused on obtaining the best value for shareholders, which is achieved through this Transaction. The combination of Fancamp and ScoZinc is expected to combine two significantly undervalued companies with complementary strengths and create a larger entity that will be in a better position to attract new investments for growth and funding for strategic initiatives.
3. Fancamp’s Experienced Board of Directors is Governance-Focused
The Activists falsely assert that Messrs.
As stated in the Transaction agreement available on SEDAR, Messrs. Haywood and Hopkins “shall be duly recommended for election by the Fancamp Board of Directors at Fancamp’s next Annual General Meeting.”
As such, shareholders will be able to vote on these nominees in due course.
4. Fancamp’s New Management Team has a New Plan for Growth and a Disciplined Rigor to Allocating Funds
Under the leadership of the current management and Board, Fancamp has completed a comprehensive strategic review of its mineral properties and finalized a focused exploration plan with clear objectives, milestones and targets. The focus on select, high-priority targets will be value accretive to Fancamp.
This is a clear departure from Mr. Smith’s past approach where no coherent strategy was presented and involved jumping from one property to another, resulting in endless staking exercises that failed to produce any discoveries and the accumulation of over 90 property groups. One recent example of Mr. Smith’s typical approach was an expenditure of approximately
IN RESPONSE TO THE CLAIMS BY MR. SMITH AND THE ACTIVISTS WHICH ARE FALSE:
1. All Measures were Taken to Ensure No Conflicts of Interest
Contrary to the Activists’ claims:
- The Transaction was the result of a transparent, credible and thorough process with input from Fancamp’s independent financial and legal advisors.
When the Transaction was presented to the Board, Mr.
Ashwath Mehrawas the only Fancamp director who had a disclosable interest. Mr. Mehradisclosed his interest in a timely manner and recused himself from all discussions and voting on the Transaction.
Mr. Mehrahas a proven track record of delivering value to shareholders, as recently proven by his work with (TSX-V: GTT), where shareholders are set to receive a 62% premium1 as a result of a proposed acquisition by GT Gold Corp. (NYSE: NEM, TSX: NGT), valued at Newmont Corporation C$456 millionon a fully diluted basis. In just four years, under Mr. Mehra’s leadership, GT Gold Corp.has increased in value by 4,397%.2
The Activists also wrongly state that Mr.
Mr. Billingsdid not have any disclosable interest in the Transaction (within the meaning of the Business Corporations Act ( British Columbia)), and as such, was entitled to vote on the Transaction.
Mr. Billingsresigned from ScoZinc’s Board of Directors and was not involved in the negotiations around the Transaction while he was a director of ScoZinc.
2. Fancamp is Eager to Hold its AGM; ScoZinc Shareholders to Vote on Transaction
As indicated in a press release on
While the Activists have demanded that the Corporation incur additional expenses by conducting an unnecessary shareholder vote on the Transaction or hold its AGM prior to completing the Transaction, under applicable securities regulations, the Transaction is an arm’s length transaction. Accordingly, no approval is required from the shareholders of the Corporation.
If the Activists are so keen to accelerate a shareholder meeting, why haven’t they requisitioned one? They could have under the Business Corporations Act (
3. Favourable Fairness Opinion Received
Shareholders should be aware Fancamp was not required to obtain a fairness opinion – but in an abundance of caution, out of a commitment to good governance and a focus on shareholder value – the Corporation chose to do so with
Not only is the consideration to be paid fair, but Fancamp also believes that the Transaction will create tremendous value and sustainable growth for the Corporation over the medium to long-term. Among other benefits, the Transaction will enable Fancamp to plan the restart of the commercial production at the
Mr. Smith’s Business Judgment Cannot Be Trusted; His Interests are Not Shareholder Interests
- To be transparent with the Board about ongoing negotiations with third parties.
- To stop defying common governance and accountability practices, such as obtaining Board approval prior to spending shareholders’ money, initiating projects, and providing formal budgets.
To follow due process and exercise caution while selling shares of
(TSX: CIA) (“Champion”). Instead, Champion IronLimited Mr. Smithincurred excessive, value-destroying expenses. Between May 2018and July 2020, Mr. Smithsold off over 4.8 million shares of Champion for C$6.8 millionat low prices. Such sales were at times in direct contravention with the instructions of the Board.
Due to his ill-defined approach and poor judgment in allocating funds, the proceeds of the shares were quickly squandered by
Mr. Smith, bringing no returns or value to the Corporation, and leaving the Corporation with net current liabilities of $564,597when he departed as President and CEO.
In contrast, since Mr. Smith’s departure, the Corporation has approached its ownership of Champion shares in a strategic, value-creating way to take advantage of the buoyant iron ore markets. The current management team has used this market opportunity and created a cash balance of over
Even after stepping down as President and CEO,
Fancamp is disappointed that
Fancamp is a growing Canadian mineral exploration corporation dedicated to its value-added strategy of advancing mineral properties through exploration and development. The Corporation owns numerous mineral resource properties in
This news release includes certain forward-looking statements which are not comprised of historical facts. Forward-looking statements include estimates and statements that describe both companies’ future plans, objectives or goals, including words to the effect that both companies or their respective management expects a stated condition or result to occur. Forward-looking statements may be identified by such terms as “believes”, “anticipates”, “expects”, “estimates”, “may”, “could”, “would”, “will”, or “plan”. Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Although these statements are based on information currently available to Fancamp, Fancamp provides no assurance that actual results will meet the management’s expectations. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Forward-looking information in this news release includes, but is not limited to, the Corporation’s AGM, objectives, goals or future plans, statements, potential mineralization, exploration and development results, the estimation of mineral resources, exploration and mine development plans, timing of the commencement of operations, estimates of market conditions, future financial results or financing opportunities. There can be no assurance that forward-looking statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Fancamp’s expectations include, among others, political, economic, environmental and permitting risks, mining operational and development risks, litigation risks, regulatory restrictions, environmental and permitting restrictions and liabilities, the inability of both companies to satisfy the conditions precedent to complete the Transaction, the inability to obtain the necessary regulatory and third-party approvals for the Transaction, the inability to start production at the
1 To the closing price on
2 Value increase is reflective of the enterprise value as of
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Director, Communication, Marketing & Digital Strategy