Fancamp dissidents object to AGM postponement 14:09
Mr. Peter Smith, a concerned shareholder, reports
FANCAMP "CONCERNED SHAREHOLDERS" OBJECT TO POSTPONEMENT OF AGM AND DISENFRANCHISEMENT OF SHAREHOLDERS
A significant group of Fancamp Exploration Ltd. shareholders, led by Peter H. Smith, PhD, PEng, Fancamp's long-time director and former president and chief executive officer, has expressed its grave concerns in response to the company's announcement on Nov. 20, 2020, that it has obtained an extension from the B.C. Registrar of the time within which it is required to hold its annual general meeting of shareholders for the year 2020 by six months from Dec. 31, 2020, to June 30, 2021.
Failure to call AGM
On October 13, 2020, Mr. Smith, on behalf of the Concerned Shareholders, sent correspondence to incumbent directors Mark Billings, Chairman and Ashwath Mehra, enclosing a draft requisition notice for a shareholder's meeting to be held for the purposes of passing a resolution to remove Mr. Billings and Mr. Mehra as directors of the Company and electing nominees of the Concerned Shareholder to the Company's board of directors in their place. Mr. Smith advised that if Mr. Billings and Mr. Mehra did not resign, the Concerned shareholders were prepared to requisition a meeting of shareholders of the Company for the purposes of reconstituting the Company's board of directors. Instead, Mr. Billings and Mr. Mehra used poor corporate governance practices to have Rajesh Sharma appointed as a director despite the draft requisition notice delivered the previous day and the fact that the same resolution to appoint Mr. Sharma as a director had not carried in a board meeting held on October 2, 2020.
On November 10, 2020, legal counsel for Mr. Smith delivered a letter to the Company's legal counsel requesting, rather than responding to a costly and time-consuming requisitioned meeting, that the Company hold its 2020 annual general meeting (the "AGM") no later than December 31, 2020, in accordance with the British Columbia Business Corporations Act and the policies of the TSX Venture Exchange and which has consistently been held in October for the past 15 years. Other concerns were raised by Mr. Smith's counsel regarding the Company's corporate governance practices, including with respect to the questionable appointment of Mr. Sharma to the board on October 14, 2020
In response, rather than call the AGM, Mr. Billings, Mr. Mehra and Mr. Sharma (collectively "Current Management") elected to take advantage of emergency relief granted by the Registrar intended for companies impacted by the current COVID-19 pandemic and used it to their advantage to delay calling the AGM, without having obtained board approval to do so and without having even notified opposing directors Mr. Smith and Mr. Ankcorn. This serves to highlight a pattern of questionable governance practice and growing disregard for the best interests of the Company.
The Concerned Shareholders expressly reject that the pandemic relates in any way to the Company's ability to call and hold the AGM in a timely manner. A review of the Canadian junior mining market clearly demonstrates that many issuers have continued to hold meetings in due course with the efficiencies of on-line tools allowing for the holding of virtual meetings despite the pandemic. Rather, the Concerned Shareholders view the AGM extension as a self-serving tactic designed to extend Current Management's tenure as they seek ways to entrench and enrich themselves at the expense of the Company.
Excellent Exploration and Royalty Portfolio
Mr. Smith has assembled an outstanding portfolio of diverse projects for Fancamp ranging from grassroots gold properties located in key exploration plays, including the Fenelon-Grasset, Perron-Normetal and Frotet-Evans areas in Quebec, the Cote Lake area in Ontario and the Clarence Stream area in New Brunswick, to three advanced projects with NI-43-101 defined resources, including 100% interests in the Lamelee iron and the Magpie iron-titanium deposits in northeastern Quebec and a 50% interest in the Black Horse chromite deposit in the Ring of Fire area of Ontario. In addition, Mr. Smith was responsible for acquiring numerous iron ore properties that, through a series of transactions, eventually resulted in Fancamp's current portfolio of 17 iron-ore royalties, and securities holdings of five million Champion Iron Ltd. ("Champion"). Champion has a $2.2 billion market cap and operates the Bloom Lake Mining Complex, located on the south end of the Labrador Trough.
Equity Portfolio and Trading at Significant Discount to Net Asset Value
Fancamp's equity portfolio of Champion shares is worth $23.65 million based on the December 18, 2020 Champion closing price of $4.73. Mr. Smith, as the architect of Fancamp's iron portfolio, must be accorded most of the credit for Fancamp's strong royalty portfolio and healthy securities account. Current Management in contrast were not part of the Company in any capacity when Fancamp acquired its iron ore assets and therefore cannot claim any credit for Fancamp's current strong financial condition. At the close of trading on December 18, 2020, Fancamp's $19.92 million market capitalization is significantly below the cash value of its Champion shareholdings and places no value on its extensive portfolio of exploration and royalty assets.
Destruction of Shareholder Value
The Concerned Shareholders believe that Current Management has destroyed considerable shareholder value by failing to pursue exceptional exploration, spin-out and joint venture opportunities within the Company's established asset base during what is possibly one of the strongest exploration markets in over a decade. Exploration programs proposed by Mr. Smith have all been actively discouraged, diminished or outright blocked by Current Management. Instead of pursuing these opportunities, Current Management is undertaking "... a strategic review of its mineral properties ... [that will] ... enable the Corporation to focus its resources more effectively and will position Fancamp to take advantage of new opportunities." as stated in the Company's November 20, 2020 press release.
The Concerned Shareholders have lost faith in Current Management, led by Mr. Billings and Mr. Mehra both of whom have failed to abide by basic corporate governance practices and appear unconcerned with the best interests of the Company.
Possible Dilutive Financing or Transaction
Current Management holds only 1,460,000 shares or less than 1% of the issued and outstanding share capital of Fancamp. The Concerned Shareholders are troubled by the possibility and warn against any private placement or business transaction that may be initiated by Current Management that would cause dilution at a material discount to the current share price to the detriment of current shareholders and that would place shares in hands supportive of entrenching Current Management. The existing value of the Company's present Champion shareholdings makes any dilutive private placement or non-arm's length business transaction suspect as to its value or motive especially in the absence of an AGM.
Disenfranchisement of Shareholders
The Concerned Shareholders have tried to engage with Current Management to make their voices heard but have been largely ignored to date. The Concerned Shareholders are frustrated with the current impasse at the board level. They agree with and support longtime directors Mr. Smith and Mr. Ankcorn who believe Fancamp should continue as a mineral exploration company, and that shareholders' rights should be respected in all matters. On the other side, entrenched directors Mr. Billings and Mr. Mehra, arbitrarily appointed Mr. Sharma who has little or no grassroots exploration experience to the position of Interim CEO, and appointed him as a director effectively stacking the board in their favour. These actions were all executed with suspect corporate governance practices and were opposed by directors Smith and Ankcorn.
AGM to Elect New Board of Directors
The Concerned Shareholders believe that the mandate of Current Management has expired, and that the board needs be properly reconstituted with a strategy to create shareholder value by initiating aggressive exploration programs on its existing key exploration projects, leveraging the value of its NI 43-101 defined resource interests, spinning off non-core assets including its iron-ore royalties and de-risking its balance sheet through timely sales of its Champion shares to fund non-dilutive exploration work thereby accruing refundable tax credits and utilizing capital losses in place.
The Concerned Shareholders believe that Current Management must be replaced by a vote of shareholders at an AGM to resolve the present situation. Incumbent directors Mr. Smith and Mr. Ankcorn are the longest serving Directors of Fancamp and bring historical knowledge and continuity to the board. The Concerned Shareholders have approached and secured a diverse group of several highly qualified mineral exploration executives and capital markets professionals to join a newly constituted board as truly independent directors with Mr. Smith and Mr. Ankcorn (together, the "Nominees"). They bring a broad range of experience not only with exploration and technical evaluation but also with corporate governance, capital markets, investor relations, business negotiations and transactions. Once an AGM is called, the Nominees names and profiles will be put forward with a detailed business plan to create immediate shareholder value.