Fancamp Announces Termination for Cause of Mr. Peter H. Smith’s Consulting Agreement; Provides Facts on Continued Misleading Statements from Activists
FANCAMP EXPLORATION LTD.
7290 Gray Avenue, Burnaby, British Columbia, V5J 3Z2
Telephone: 604-434-8829 Facsimile: 604-434-8823 Website: www.fancamp.ca
News Release
April 1, 2021 TSX-V Trading Symbol: FNC
Fancamp Announces Termination for Cause of Mr. Peter H. Smith’s Consulting Agreement; Provides Facts
on Continued Misleading Statements from Activists
VANCOUVER, British Columbia – Fancamp Exploration Ltd. (“Fancamp” or the “Corporation”) (TSX
Venture Exchange: FNC) today announced that the Board of Directors (the “Board”) has terminated the
consulting agreement between Fancamp and Mr. Peter H. Smith for cause effective immediately. The
Board has also requested that Mr. Smith resign from his role as director promptly.
The Board has provided Mr. Smith with multiple opportunities to act in a proper manner and adhere to
appropriate governance practices, but he has refused. Notably, the Board has repeatedly tried to
engage with Mr. Smith over the last few months to address the issues that led to his termination. Mr. Smith
has not cooperated with these efforts, and instead, continued to hide and withhold information from the
Board and management, in addition to numerous other grave issues.
The Board has also made multiple attempts to reason with Mr. Smith and work with him in a cooperative
manner. Instead, Mr. Smith has continued to be disruptive and go against the best of interests of the
Corporation in order to regain his former position with Fancamp. The Corporation cannot justify spending
shareholders’ money to pay an individual who not only is refusing to do any work for the Corporation, but
instead, is actively working against shareholders’ interests. The Board has carefully considered the
situation and the context, and has determined that it is justified to terminate the consulting agreement
and that, as such, Mr. Smith is not entitled to any payouts.
As the Corporation continues to investigate and examine the conduct of Mr. Smith in relation to the
numerous issues listed below, the Corporation reserves all of its legal rights in connection with Mr. Smith
and will consider any such measures as are appropriate on behalf of its shareholders to address potential
misconduct, including through the courts if necessary.
REASONS FOR TERMINATION:
Mr. Smith was terminated for cause due to, among others, the following actions, all of which were
detrimental to the Corporation and its shareholders:
• He repeatedly ignored the instructions of the Board and acted against the Board’s specific
direction;
• He failed to comply with his duty of confidentiality and to comply with applicable legislation by
disclosing non-public material information, including information about the December 31, 2020
private placement and the proposed business combination with ScoZinc Mini ng Ltd. (“ScoZinc”)
(the “Transaction”);
• He failed to comply with his duty of loyalty by repeatedly refusing to cooperate with the Board
and management of Fancamp, and recently, by withholding information in his possession to
management following him stepping down as president and CEO in August 2020; and
• He failed to provide the services outlined in the consulting agreement; rather than acting for the
Corporation, he acted against the interests of the Corporation by withholding information and
not cooperating with management’s efforts, which resulted in delaying the technical review and
causing setbacks and unnecessary costs to the Corporation
Peter Smith: Breach of Fiduciary Duty as a Director
As a director, Mr. Smith also has a fiduciary duty to Fancamp’s shareholders and was required to follow all
applicable legislation, including ensuring the confidentiality of non-public material information. Instead,
Mr. Smith blatantly disclosed confidential information by issuing a public statement on December 22,
2020, which included, among others, details discussed during Board meetings at Fancamp as well as a
private placement that had been approved in principle by the Board, but had not yet been announced.
The Corporation closed and announced the private placement on December 31, 2020.
Mr. Smith’s unlawful disclosure on December 22, 2020 of non-public material information in connection
with the potential private placement may have jeopardized the integrity of the securities market and
affected the market price or trading of Fancamp’s securities. As such, the Board has notified the British
Columbia Securities Commission of Mr. Smith’s actions.
IN RESPONSE TO THE FALSE CLAIMS BY MR. SMITH, FANCAMP WOULD LIKE TO REMIND SHAREHOLDERS OF
THE FACTS:
The Transaction Will Unlock Value for Fancamp Shareholders; Mr. Smith’s Misleading Statements
Regarding the Transaction is to Protect Self-Interests
Mr. Smith has repeatedly made false allegations against the Corporation and spread misinformation
about the Transaction.
Contrary to Mr. Smith’s misleading statements:
• Fancamp shareholders will emerge from this Transaction with a greatly enhanced opportunity to
create value. The combination of Fancamp and ScoZinc takes two significantly undervalued
companies and creates a larger, stronger entity that will be in a better position to attract new
investments for growth and funding for strategic initiatives. The combined entity will also be we ll-
positioned to capitalize on the global demand for zinc, which is expected to double by 2050.
• The Transaction was the result of a transparent, credible and thorough process with input from
Fancamp’s independent financial and legal advisors. All members of the Board – including Mr.
Smith – received a copy of the final fairness opinion from Ernst & Young LLP, which stated that the
consideration to be paid in connection with the Transaction is fair for Fancamp.
Shareholders can read all the facts about the Transaction here.
There will be No New Controlling Positions on the Board After the Close of the Transaction
Contrary to Mr. Smith’s misleading statements, there will be no new controlling positions after the
Transaction closes.
The composition of the Board after the Transaction will also be up to Fancamp shareholders. As stated in
the February 18, 2021 and March 18, 2021 press releases, as well as in the Transaction agreement (a copy
of which is available on SEDAR), after the Transaction closes, Messrs. Mark Haywood (president and chief
executive officer of ScoZinc) and Christopher Hopkins (director of ScoZinc) will be nominated to join the
Fancamp Board of Directors at the Corporation’s next annual general meeting (“AGM”). Shareholders
will be able to vote on these nominees in due course.
Mr. Smith Lacks Business Judgment and Strategy, and Withheld Information from the Board
Under Mr. Smith’s tenure at Fancamp, there was no focus or rigorous approach to drilling campaigns and
no discovery was ever made. Instead, Mr. Smith, often without the knowledge or approval of the Board,
or in contravention to its instructions, or not in accordance therewith, embarked on endless and, in
retrospect, often poorly executed staking exercises that, in the end, delivered nothing to shareholders.
While expensive projects were undertaken, there was no appreciation in the Corporation’s share price.
An investigation by the Board pertaining to expenditures made between 2010 and 2019 uncovered that
significant amounts were spent on operating, exploration, and development expenses, with no tangible
advancement on any of the properties of Fancamp. Furthermore, a large portion of these expenditures
had to be written off, meaning that they had no value to shareholders or to the Corporation.
To offset the poor execution of these projects, Mr. Smith sold off, between May 2018 and July 2020, 4.8
million shares of Champion Iron Limited (TSX: CIA) (“Champion”) at low prices for proceeds of C$6.8
million. Such sales were at times in direct contravention with the instructions of the Board.
A recent example of Mr. Smith’s typical approach was an expenditure of approximately C$600,000 in
Virginia, United States, on geological activities which had no underlying mineral property. This
expenditure was committed without the prior knowledge and approval of the Board. Since there was no
underlying property associated with these expenses, the Corporation was subsequently forced to write off
all of it.
Even after he stepped down, Mr. Smith continued to withhold information from the Board. Consequently,
the Corporation was unable to conduct the appropriate technical reviews of its properties, forcing the
Corporation to incur additional costs and experience setbacks in completing its review. In short, Mr.
Smith’s actions have resulted in numerous delays and unnecessary expenses.
Mr. Smith Has a Complete Disregard for Good Corporate Governance
Subsequent to numerous discussions from the Board to Mr. Smith on improving corporate governance
and to heed guidance from the Board, three directors resigned in 2018 as Mr. Smith refused to
cooperate, with the remaining directors continuing to press Mr. Smith for proper corporate governance.
Despite repeated pleas to improve its management approach, Mr. Smith did not listen and failed to
make improvements, and instead, pursued with the detrimental actions stated above. Notably, before
he stepped down, he continued to defy the Board’s repeated and reasonable requests to obtain formal
budgets and to approve expenses and projects.
Mr. Smith has and continues to refuse to abide with the Board’s instructions and to cooperate with
current management. Despite his obligations under his consulting agreement and repeated requests, he
withheld company information, causing significant challenges and delays in conducting technical
reviews which would help advance the Corporation forward. Instead, due to Mr. Smith’s self -serving
actions, the Corporation was forced to incur additional costs and delays.
FANCAMP REMAINS FOCUSED ON THE FUTURE
Despite Mr. Smith’s self-serving actions to initiate an unnecessary, costly and time-consuming proxy
contest against the Corporation, Fancamp remains focused on executing its three-pronged strategy for
growth and completing the transformational Transaction to create significant value for Fancamp
shareholders.
Fancamp believes the Transaction will create tremendous value and sustainable growth for the
Corporation and to its shareholders over the medium to long-term. Among the many benefits, the
Transaction will enable Fancamp to plan the restart of the commercial production of ScoZinc’s Scotia
Mine, a high-quality, past-producing facility with a fully built infrastructure in a stable, premier jurisdiction
near Halifax, Nova Scotia, which is expected to create significant cashflow for the Corporation.
Advisors
Lavery, de Billy, L.L.P. is serving as legal advisor to Fancamp. Kingsdale Advisors is acting as strategic
shareholder and communications advisor to Fancamp.
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 metal s,
strategic and base metal s, 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 t he 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 forward -looking statements which are not comprised of historical f acts.
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 conditio ns, 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, unc ertainties 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 annual general meeting ,
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 conditi ons, 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, notably in connection with the termination of Mr. Smith’s consulting agreement, 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 Scotia Mine, the inability of
Fancamp to realize the anticipated financial gains from the Transaction, including generating, in the near-
term, cash -flows from the Scotia Mine, 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
October 31, 2020. 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. 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, Interim CEO
+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]
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or accur acy of this news release.