Fancamp Special Committee Formally Launches Forensic Investigation Into Breaches of Fiduciary Duty and Multiple Apparent Incidents of Misconduct by Disgruntled Director Mr. Peter H. Smith
FANCAMP EXPLORATION LTD.
7290 Gray Avenue, Burnaby, British Columbia, V5J 3Z2
Telephone: 604-434-8829 | Website: www.fancamp.ca
News Release
May 12, 2021 TSX-V Trading Symbol: FNC
Fancamp Special Committee Formally Launches Forensic Investigation Into Breaches of Fiduciary Duty
and Multiple Apparent Incidents of Misconduct by Disgruntled Director Mr. Peter H. Smith
• Special Committee Intends to Engage Third Party Forensic Accountant to Assist with
Investigation
• Shareholders Have a Right to Know the Extent of Mr. Smith’s Misconduct and Potential
Securities Law Violations Before They Vote
VANCOUVER, British Columbia – Fancamp Exploration Ltd. (“Fancamp” or the “Corporation”) (TSX
Venture Exchange: FNC) today announced that its special committee of directors (the “Special
Committee”), who are disinterested in the proposed business combination with ScoZinc Mining Ltd.
(“ScoZinc”) (the “Transaction”) and independent from Mr. Peter H. Smith, has formally launched a
forensic investigation into numerous and apparent ongoing incidents of misconduct by Mr. Smith, a
disgruntled director and former President and CEO, who recently had his consulting agreement
terminated for cause by the Corporation.
In anticipation of the successful defense against Mr. Smith’s costly and wasteful proxy fight, the Special
Committee is conducting an investigation into Mr. Smith’s past conduct, both disclosed and undisclosed,
that it believes will shed light on significant misconduct to benefit Mr. Smith to the detriment of Fancamp
shareholders. As part of this process, the Special Committee intends to engage a third -party forensic
accountant to assist with this investigation. The Special Committee also intends to report its findings as
they become available.
While the Corporation is disappointed that it has had to take this step, the seriousness of these issues and
Mr. Smith’s continued obstruction and refusal to hand over information belonging to the Corporation
despite several requests, has left it no choice. The Corporation believes that Mr. Smith’s continued
stonewalling is a blatant self-serving attempt to conceal damaging facts about his actions and hinder
the progress of the Corporation until the Corporation has held its AGM.
The Special Committee has not limited the scope of the investigation in any way and directed all current
officers and directors to cooperate with the investigation. Additionally, through its legal counsel, the
Corporation has sent a notice to Mr. Smith, requesting that he fully cooperate with the investigation. The
Corporation has also demanded that Mr. Smith ensures none of the informati on in question is destroyed,
and to preserve all records – hard copies and electronic – and to provide the Corporation with
confirmation of his cooperation.
Need for Special Investigation Caused by Mr. Smith’s Continued Disregard for Proper Governance and
Obstruction
Mr. Smith was asked to step down as President and CEO in August 2020 for failing to create any
shareholder value under his tenure and for taking several actions which were not in the best interest of
Fancamp or its shareholders. Since his departure, Fancamp has both uncovered and faced a string of
gravely serious and problematic actions taken by Mr. Smith against the Corporation, including but not
limited to:
1. Obstructing business by withholding information and corporate materials in his possession from
management
• For 30 years, Mr. Smith personally kept all of the Corporation’s documents and took personal
possession of Fancamp’s office rather than enter into a proper lease agreement. When he
was asked to step down, Mr. Smith prevented access to both the office and documents by
any Fancamp personnel.
• This caused delays in the technical review process, forced Fancamp to incur additional
expenses, and prevented the Corporation from providing proper updates to shareholders.
• To this day, despite multiple requests to hand over information, management and
shareholders still do not know what Mr. Smith is hiding.
2. Failing to comply with applicable legislation by disclosing non-public material information
• Mr. Smith blatantly disclosed confidential information on the December 31, 2020 private
placement, the Transaction, and information regarding Ernst & Young LLP’s (“Ernst & Young”)
fairness opinion (the “Opinion”) on the Transaction, despite the agreement with Ernst & Young
stating that the Opinion may not be disclosed in public filings.
• Read how Mr. Smith breached his fiduciary duty to Fancamp shareholders here and here.
3. Defying common governance and accountability practices, such as obtaining Board approval prior
to spending shareholders’ money, initiating multi-million-dollar projects, and providing budgets
• Mr. Smith spent C$600,000 on an expenditure in Virginia, U.S. – without the knowledge or
approval of the Board – for geological activities which had no underlying mineral property,
forcing the Corporation to write off all of the expenses.
• Mr. Smith also refused to follow due process or exercise caution while selling shares of
Champion Iron Limited (“Champion”). Instead, Mr. Smith incurred excessive, value-destroying
expenses. Between May 2018 and July 2020, Mr. Smith sold over 4.8 million shares of Champion
at low prices for C$6.8 million, then quickly squandered the proceeds, leaving the Corporation
with net current liabilities of $564,597 when he departed as President and CEO.
4. Repeatedly making false assertions against the Corporation
• Mr. Smith falsely asserted there were conflicts of interest with Messrs. Ashwath Mehra and Mark
Billings, when Mr. Mehra disclosed his interest in ScoZinc in a timely manner and recused
himself from voting, and Mr. Billings resigned from ScoZinc’s board and was not involved in the
negotiations around the Transaction while he was a director of ScoZinc .
• Mr. Smith also falsely asserted that Messrs. Mark Haywood (President and CEO of ScoZinc) and
Christopher Hopkins (director at ScoZinc) will control the Board once the Transaction closes .
• Shareholders should read the facts here.
5. Failing to keep the Board and the market informed of the results of the Corporation’s previous
exploration programs
• In a clear contrast to the unfocused approach by Mr. Smith, and in line with industry best
practices, on April 27, 2021, Fancamp provided the previously undisclosed results of past
exploration programs.
The Corporation is disappointed in the actions of Mr. Smith and troubled by his continued refusal to
cooperate with the Corporation’s efforts to move its business forward and investigate his actions . Under
corporate law, a director has a duty to act honestly and in good faith, with a view of the best interests of
the Corporation. Rather, these initial discoveries, coupled with his ongoing apparent misconduct, have
forced the Corporation to pursue a formal forensic investigation.
The Corporation also has strong reason to believe there are even further instances of misconduct and
self-dealing by Mr. Smith, including but not limited to:
• Numerous excessive staking exercises without proper agreements or prior knowledge and
approval of the Board
• Working with a close associate who lied on invoices to provide payments to their spouse and
personal vehicle
• Hiring and directly paying an assistant who was privy to significant and valuable information of the
Corporation, then preventing access to the employee
• Disclosing non-public material information to supporting shareholders to fuel a smear campaign
against the Corporation and its management
With a formal forensic investigation underway, the Corporation continues to reserve all of its legal rights in
connection with Mr. Smith and will consider any such measures as are appropriate on behalf of its
shareholders, including through the courts if necessary and claim from Mr. Smith all damages incurred by
the Corporation as a result of his misconduct.
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. 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 devel opment 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 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 t heir 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”, “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 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 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 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. 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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the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.