Fancamp Sets the Record Straight and Corrects the Misleading and Baseless Statements by Activist Peter H. Smith and His Associates
FANCAMP EXPLORATION LTD.
7290 Gray Avenue, Burnaby, British Columbia, V5J 3Z2
Telephone: 604-434-8829 Facsimile: 604-434-8823 Website: www.fancampexplorationltd.ca
News Release
March 18, 2021 TSX-V Trading Symbol: FNC
Fancamp Sets the Record Straight and Corrects the Misleading and Baseless Statements
by Activist Peter H. Smith and His Associates
Fancamp Exploration Ltd. (“Fancamp” or the “Corporation”) (TSX Venture Exchange: FNC) today sets the
record straight and corrects the misleading and baseless statements made by Mr. Peter H. Smith, a
disgruntled director of Fancamp, and his associates (together, the “Activists”).
The proxy fight that Mr. Smith, former President and C hief Executive Offer, has initiated has nothing to do
with the proposed business combination with ScoZinc Mining Ltd. (the “Transaction”) or the governance
practices of the Fancamp Board of Directors (the “Board”).
Mr. Smith has a self-serving agenda to t ake over the Corporation and destroy shareholder value . The
unnecessary and expensive proxy fight he is forcing on the Corporation is simply about advancing his own
agenda that would enable him to install a Board of handpicked friends and associates, and to continue
treating Fancamp’s finances as his own.
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 March 4 , 2021 investor call, the new management of the Corporation has a focused,
three-pronged strategy to grow the Corporation:
• Focus on select quality exploration targets to enhance value (a stark contrast to the ill-defined
approach of Mr. Smith);
• Support titanium technology strategy; and
• Seek strategic alternatives that have the potential for near-term cash flow.
ScoZinc’s Scotia Mine is a high -quality asset that has the potential to provide near-term cash flow, while
Fancamp’s strong balance sheet should enable the Corporation to secure attractive financing of the
Scotia Mine to bring it to production. The cash flows expected after the Scotia Mine restart should provide
the combined company with future funding for exploration and other activities.
The Scotia Mine asset has a potential for a combined value creation of over C$100 million, and is located
in a premier, mining-friendly jurisdiction, as demonstrated by the contribution of C$150,000 made by the
Government of Nova Scotia to the Scotia Mine pre-feasibility study.
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 M essrs. Mark Haywood (President and CEO of ScoZinc) and Chris Hopkins
(director at ScoZinc) will control the Board once the Transaction closes.
As stated in the Transaction agreement available on SEDAR, M essrs. 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 Allocati ng
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 propert y groups . One 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 propert y. Since there was no underlying property associated
with these expenses in Virginia , the Corporation was forced to write off all of it. This expenditure was
committed without the knowledge and approval of the Board.
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 Mehra was the only Fancamp
director who had a disclosable interest. Mr. Mehra disclosed his interest in a timely manner and
recused himself from all discussions and voting on the Transaction.
• Mr. Mehra has a proven track record of delivering value to shareholders, as recently proven by his
work with GT Gold Corp. (TSX-V: GTT), where shareholders are set to receive a 62% premium1 as a
result of a proposed acquisition by Newmont Corporation (NYSE: NEM, TSX: NGT) , valued at C$456
million on 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. Mark Billings is conflicted.
1 To the closing price on March 9, 2021, the day prior to the transaction was announced.
2 Value increase is reflective of the enterprise value as of December 1, 2016 relative to the proposed acquisition by
Newmont Corporation valued at C$456 million on a fully diluted basis ; Mr. Mehra joined the board on November 22,
2016 in conjunction with GT Gold Corp.’s initial public listing.
• Mr. Billings did 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. Billings resigned from ScoZinc’s Board of Directors and was not involved in the neg otiations
around the Transaction while he was a director of ScoZinc.
2. Fancamp is Eager to Hold its AGM; ScoZinc Shareholders to Vote on Transaction April 12 , 2021
As indicated in a press release on March 10, 2021, despite the ongoing impacts of the COVID-19 pandemic
and certain associated limitations, the Corporation is eager to move forward with its annual general
meeting (“ AGM”) in a timely fashion. Consistent with the extension provided by the B.C. Registries an d
Online Services, the Corporation intends to hold its AGM by June 30, 2021 and looks forward to starting a
new, value-creating chapter in the Corporation’s history.
While the Activists have demanded that the Corporation incur additional expenses by condu cting 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 (British Columbia). It is clear they want Fancamp to spend
shareholders’ money on their disruptive goose -chase rather than spend any of their own. Even though he
is no longer President and CEO, Mr. Smith continues to find ways for Fancamp to spend money
unnecessarily and with no results.
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 Ernst & Young LLP, a leading and independent financial advisor. The
financial advisor opined that the consideration to be paid in connection with the Transaction is fair.
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
Scotia Mine in Nova Scotia, which is expected to create significant cashflow for the Corporation.
Mr. Smith’s Business Judgment Cannot Be Trusted; His Interests are Not Shareholder Interests
Mr. Smith was asked to step down as President and CEO in response to several actions he undertook, which
were not in the best interest of Fancamp or its shareholders; rather, they were self -serving. He repeatedly
disregarded the Board’s guidance on several issues of importance , including, among others:
• To be transparent with the Board about ongoing negotiations with third parties.
• To s top 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 Champion Iron Limited (TSX: CIA)
(“Champion”). Instead, Mr. Smith incurred excessive, value -destroying expenses. Between May
2018 and July 2020, Mr. Smith sold off over 4.8 million shares of Champion for C$6.8 million at 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, t he 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 $564,597 when 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 C$10 million
which is reserved for strategic purposes, in line with Fancamp’s recently announced strategy.
Even after stepping down as President and CEO, Mr. Smith has continued to take a series of actions
detrimental to the Corporation and its shareholders, such as violating his duty to act in the best interest of
the Corporation , disclosing confidential information privy to him as a Board member, and engaging in
selective and self-serving disclosure with respect to the Transaction. This is all despite the fact that he is still
a director of Fancamp.
Mr. Smith still has no strategy, a complete disregard for proper governance practices and accountability,
and a pattern of using shareholder money as his own. The Corporation belongs to its shareholders, not Mr.
Smith. Fancamp shareholders cannot risk undoing the progress achieved since Mr. Smith departed.
Fancamp is disappointed that Mr. Smith has chosen to spread misinformation about the Corporation and
the Transaction, and initiate an unnecessary and time -consuming proxy contest against the Corporation
at a time when Fancamp’s future is bright and the Corporation is finally set to deliver significant value to
shareholders. The Board remains focused on value creation and has reached out several times to Mr. Smith
to address his grievances within the forum of a Board meeting. Each time, Mr. Smith has declined to engage
in any meaningful dialogue and has continued his disruptive behaviour.
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 Br unswick, 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 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 explorat ion 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 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 mana gement
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 s uch 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 esti mation 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, politi cal, 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 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, the inability of both companies to achieve the synergies excepted from the
Arrangement, 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 accuracy of this news release.