Fancamp Announces Termination for Cause of Mr. Peter H. Smith’s Consulting Agreement; Provides Facts on Continued Misleading Statements from Activists - Seite 3

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.