Activist Peter H. Smith Sticks Fancamp Shareholders with Over $60 Million Bill
FANCAMP EXPLORATION LTD.
7290 Gray Avenue, Burnaby, British Columbia, V5J 3Z2
Telephone: 604-434-8829 | Website: www.fancamp.ca
News Release
June 14, 2021 TSX-V Trading Symbol: FNC
Activist Peter H. Smith Sticks Fancamp Shareholders with Over $60 Million Bill
Shareholders cannot afford more of Mr. Smith; losses TO ALL FANCAMP SHAREHOLDERS will rise
again if Mr. Smith and his handpicked nominees are elected to the Board and they use
Fancamp’s money to repay themselves for the costly proxy fight started by Mr. Smith.
In contrast to this history of value destruction and wasted money, Fancamp has released a new
video outlining its action-oriented, three-pronged growth strategy to create shareholder value
and returns. Watch here: fancamp.ca./thefutureisbright
Strongly recommends shareholders vote only the GOLD proxy FOR all six of Fancamp’s
exceptionally qualified and governance-focused director nominees by 1:00 p.m. ET on Friday,
June 25, 2021.
Shareholders with questions on voting should contact Kingsdale Advisors at 1-800-749-9890 or
[email protected]. Shareholders can get the latest information at
fancamp.ca./thefutureisbright.
VANCOUVER, British Columbia – Fancamp Exploration Ltd. (“Fancamp” or the “Corporation”) (TSX
Venture Exchange: FNC) today announced that as part of its ongoing investigation into the conduct of
Mr. Peter H. Smith, preliminary estimates indicate Fancamp and its shareholders have lost over $60 million
to date, due to Mr. Smith’s financial mismanagement and numerous other misconduct.
While Mr. Smith continues to stonewall and refuses to produce important information in his possession that
belongs to the Corporation, Fancamp believes that as shareholders consider their vote for the
Corporation’s Annual General Meeting (“AGM”) it is important they have a clear and transparent view of
Mr. Smith’s conduct and the negative impact of his actions on their investment.
Mr. Smith’s $60 Million Bill to Fancamp Shareholders
For over 30 years, Mr. Smith treated the Corporation and its finances as his own personal bank account,
spending without authorization and leaving YOU, the shareholders of Fancamp, with over $60 million in
expenditures, with nothing to show for it.
Mr. Smith had no vision or strategy, executed poorly, and enriched his friends and associates. Mr. Smith
operated in secret, failing to report most of his activities to the Board of Directors (the “Board”) so that
they could not stop him. When the Board did find out about the mismanagement of Fancamp’s funds
(indirectly, YOUR funds), Mr. Smith defied the Board’s instructions, and refused requests to produce a
proper budget and follow common expense and governance practices. Mr. Smith simply did as he
pleased until the Board took action to hold him accountable by having him step down as president and
CEO in August 2020.
Mr. Smith’s long list of misconduct and financial mismanagement is outlined below. Fancamp warns
shareholders that losses will likely rise again if Mr. Smith and his handpicked nominees are elected to the
Board as they have confirmed they will use the Corporation’s money to repay and reimburse themselves
for the costly proxy fight that Mr. Smith started. If this happens, Fancamp shareholders will lose value on
their investment, indirectly footing bill for Mr. Smith’s self-serving agenda.
Shareholders should also know that management believes the list below is just the tip of the iceberg.
Fancamp has very strong reason to believe there are even more cases of misconduct and self-dealing
by Mr. Smith, and its Special Committee of Directors (the “Special Committee”), assisted by KPMG as
forensic accountants, will continue the formal forensic investigation into Mr. Smith. In the course of the
investigation led by the Special Committee, the following were discovered:
Amount Lost or Not Earned Details of Mr. Smith’s Financial Mismanagement and Misconduct
$27 million Between 2010 and 2019, Mr. Smith spent $27 million on exploration and
development – with no tangible advancement of the Fancamp
properties. Over half of this amount – approximately $15 million – was
completely written off.
Over $10 million In that same time, the Board also discovered that Mr. Smith spent over
$10 million on operating expenses.
Over $19 million On September 24, 2015, Mr. Smith waived an area of influence clause
(the “AOI Clause”) in a royalty agreement. The AOI Clause would
have given Fancamp royalties on any claims within 10 km of a certain
property. Mr. Smith waived the AOI Clause for a mere $100,000. If the
AOI Clause had remained, Fancamp would have earned more than
$20 million between 2018 and now.
Over $3.1 million To offset the money lost because of his poor strategy and execution,
Mr. Smith sold shares of Champion, a valuable corporate asset, for
rock bottom prices between May 2018 and June 2020. If those shares
had not been sold at that time, the Corporation could have gained
over $3.1 million. The sale of these shares often defied the Board’s
instructions. Fancamp is now suing Mr. Smith for this money on behalf
of shareholders. Mr. Smith’s handpicked nominees have not confirmed
that they would continue to pursue this litigation if elected.
Over $1.9 million Mr. Smith directed Fancamp to advance a total of $1,949,200 to The
Magpie Mines Inc. (“Magpie”), a subsidiary of Fancamp that he
controlled, to fund a process and obtain patents which were
subsequently written off after Mr. Smith terminated the project. This
was on top of Mr. Smith paralyzing Magpie after issuing special shares
to himself and two individuals, which gave him personal control of the
Magpie board.
$600,000 Between February 2019 and August 2020, Mr. Smith spent $600,000 –
which represented approximately 5% of the Fancamp’s market cap at
that time – on unauthorized geological activities in Virginia, U.S., which
had no underlying mineral property. Mr. Smith never informed the
Board of these activities, and since there was no underlying property,
Fancamp was forced to write off this amount, meaning it created no
value for the Corporation or its shareholders.
$227,687 Mr. Smith continually used the services of a single geologist to conduct
various exploration activities, without providing full disclosure to the
Board. During the year ended April 30, 2018, the costs incurred for that
individual was over $227,687, which was 41% of all exploration costs
incurred by Fancamp.
A special audit, requested by the Audit Committee, later revealed
that some of those payments were to that individual’s wife and for his
personal vehicle.
Over $211,000 Mr. Smith started the Mactaquac exploration program in New
Brunswick with no formal agreement. The Board at the time had to
pass a resolution ratifying the term sheet already executed by Mr.
Smith, without having the opportunity to debate or modify its terms.
Since Mr. Smith forced Fancamp into a significant financial
commitment, the program continues today.
To date, over $211,000 in expenses has been incurred and no
discovery has been made.
$125,000 A bulk sample of taken from the Gaspe Bay group of properties by Mr.
Smith. While this sample was processed and the recovered gold was
sold, Mr. Smith did not budget properly and Fancamp lost
approximately $85,000. Mr. Smith tried to do this again, and again,
because of his poor budgeting, Fancamp lost another $40,000.
$117,532 In June 2020, Mr. Smith set out on an unauthorized staking spree using
the $110,000 payment that Fancamp received for the input tax credit
for the year-end 2019. Approximately 1,644 units were staked,
covering 17 properties, for a total of $111,532.
The Board had not approved this staking, but despite this, Mr. Smith
invoiced Fancamp an additional $6,000 in fees.
Over $102,000 Mr. Smith started the Corridor 50/50 exploration program in May 2019
with only a verbal agreement. Mr. Smith never informed the Board of
the Corridor 50/50 program, and to date, over $102,000 in expenses
has been incurred on a project with no accretive value.
PLUS….
Over $300,000 Mr. Smith and his handpicked nominees have already stated that if
they are elected to the Board, they will cancel the ScoZinc transaction
and force the Corporation to pay the $300,000 break fee.
Whatever amount Mr. Smith
wants to pay himself
Mr. Smith and his handpicked nominees have also stated that if they
are elected to the Board, they will use Fancamp’s money to repay
and reimburse themselves for the costly proxy fight that Mr. Smith
started.
TOTAL AMOUNT LOST DUE TO MR. SMITH’S NUMEROUS FINANCIAL ABUSES: OVER $60 MILLION
The Board has repeatedly tried to reason and work with Mr. Smith, but he has refused. Since Fancamp
has very strong reason to believe there is even further misconduct by Mr. Smith, it also means that the
Corporation has been forced to incur additional expenses to launch the independent forensic
investigation, and file a civil lawsuit as well as an application for a Safeguard Order. The Board will
continue to consider all of its options in furthering the best interest of the Corporation.
Fancamp’s Plan for Growth
In contrast to Mr. Smith’s history of value destruction and wasted money, Fancamp has released a new
video outlining its action-oriented, three-pronged growth strategy to enhance shareholder value and
increased returns. Watch here: fancamp.ca./thefutureisbright
Only Your Vote Can Stop Mr. Smith from Destroying Fancamp
If Mr. Smith chose to behave this way with a Board that tried to hold him accountable for his destructive
actions, imagine what he will do if his friends and associates become members of the Board.
Shareholders have suffered long enough. Mr. Smith’s cumulative total shareholder return during his 30+
year executive tenure is –59.4%. That means if you gave Mr. Smith $100 when he first started, you would
have lost more than half of your money and be left with only $40 today. Now, he is asking for an
additional 90 days to “implement a strategy of value creation.” Mr. Smith’s 30-year record speaks for itself
– he is unable to do the job.
VOTE YOUR GOLD PROXY TODAY – Deadline: Friday, June 25, 2021 at 1:00 p.m. ET
Vote FOR Fancamp’s director nominees to move forward, create value, and give Fancamp an
opportunity to get back the previously wasted money. Voting is fast and easy – please vote well in
advance of the deadline. If you have any questions or need help voting, contact Kingsdale Advisors at 1-
800-749-9890 or [email protected].
Advisors
Lavery, de Billy, L.L.P. and Goodmans LLP are serving as legal advisor to Fancamp. Harris & Company LLP
is serving as litigation counsel to Fancamp. Kingsdale Advisors is acting as strategic shareholder and
communications advisor to Fancamp. Koffman Kalef LLP is serving as legal advisor to the Special
Committee.
About Fancamp Exploration Ltd. (TSX-V: FNC)
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 Quebec, Ontario and New Brunswick, including gold, rare earth metals,
strategic and base metals, zinc, chromium, titanium and more. Fancamp is also building on the industrial
possibilities inherent in dealing with some of these materials, notable being the development of its
Titanium technology strategy. It has recently announced the acquisition of ScoZinc, a Canadian
exploration and mining corporation that has full ownership of the Scotia Mine and related facilities near
Halifax, Nova Scotia, as well as several prospective exploration licenses in surrounding regions. The
Corporation is managed by a new and focused leadership team with decades of mining, exploration
and complementary technology experience.
Forward-looking Statements
This news release includes certain statements which are not comprised of historical facts and that
constitute "forward-looking information" and "forward-looking statements" within the meaning of
applicable Canadian and U.S. securities laws. Forward-looking statements include estimates and
statements that describe Fancamp’s future plans, objectives or goals, including words to the effect that
Fancamp or its 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”, “foresees” or “plan”. Since forward-looking statements are based on multiple factors,
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 or simply fail to materialize from
those expressed or implied by such forward-looking information. Forward-looking information includes, but
is not limited to, information and statements relating to future losses or benefits arising from the election of
certain director nominees or from future decisions of management. 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 Fancamp to raise capital or secure
necessary financing in the future, as well as factors discussed in the section entitled “Risks and
Uncertainties” in Fancamp’s management’s discussion and analysis of Fancamp’s financial statements
for the period ended January 31, 2021. Although Fancamp has attempted to identify important factors
that could cause actual results to differ materially, there may be other factors that cause results not to be
as anticipated, estimated or intended. Fancamp considers its assumptions to be reasonable based on
information currently available, but there can be no assurance that such statements will prove to be
accurate as actual results and future events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on forward-looking statements.
For Further Information
Rajesh Sharma, Chief Executive Officer
+1 (604) 434 8829
Debra Chapman, Chief Financial Officer
+1 (604) 434 8829
Media Contact
Hyunjoo Kim
Director, Communication, Marketing & Digital Strategy
Kingsdale Advisors
Phone: 416-867-2357
Cell: 416-899-6463
Email: [email protected]
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