Fancamp Exploration Ltd. (“
Fancamp” or the
“
Corporation”) (TSX Venture Exchange:
FNC) would like to provide comment on a recent
announcement made by The Canadian Chrome Co. (“
Chrome
Co.”), a registered business style
of KWG Resources Inc., with respect to Chrome Co.’s
acquisition of two thirds of the issued and outstanding special
shares in the capital of The Magpie Mines Inc. from Peter Smith and
Fouad Kamaleddine (the “
Transaction”).
Fancamp is a major shareholder of The Magpie
Mines Inc., with ninety-six percent (96%) of the issued and
outstanding common shares in the capital of Magpie Mines. In
addition, Fancamp has a two-percent (2%) net smelter return royalty
on the Magpie deposit and is the largest creditor of
Magpie Mines.
Each common share of Magpie Mines carries one
(1) vote for the election of forty-nine percent (49%) of the total
number of Directors of Magpie Mines, while each special share of
Magpie Mines carries one (1) vote for the election of fifty-one
percent (51%) of the total number of Directors of Magpie Mines. As
a result of the issuance of special shares, which were allocated to
previous Directors of Fancamp and of
Magpie Mines, holders of these special shares control
decisions relating to the election of Magpie Mines Directors and,
as a result, decisions taken by its Board of Directors.
The announcement of the Transaction came as a
surprise to Fancamp. Smith’s and Kamaleddine’s ownership of the
Magpie special shares is disputed and the subject of pending
litigation, as described in Fancamp’s news release dated May 14,
2021:
One of the self-dealing transactions that
Fancamp is aware of involves The Magpie Mines Inc. (“Magpie”), a
subsidiary of Fancamp.……Mr. Smith caused Magpie to be incorporated
with a capital structure that included a class of special shares
(the “Special Shares”). The Special Shares carried the right to
appoint 51% of Magpie’s directors and, as a result, the holder(s)
of the Special Shares could effectively control Magpie. The Special
Shares should have been issued to Fancamp, but Mr. Smith issued
them to himself and two individuals. This meant that Mr. Smith and
the two individuals personally controlled Magpie’s Board of
Directors.
Mr. Smith ultimately caused Fancamp to acquire
96% of Magpie’s common shares, but none of the Special Shares. This
scheme conferred on Mr. Smith and the two individuals’ personal
control of Fancamp’s almost wholly-owned subsidiary.To make matters
worse, Mr. Smith then had a falling out with the two individuals.
This falling out has effectively paralyzed Magpie as well as the
Corporation’s ability to unlock value from the deposit, and
destroyed value for Fancamp’s shareholders.
On May 27, 2021, the Company discontinued the
lawsuit against the third individual after the special shares
issued to that individual were returned to treasury for
cancellation.
By way of the Transaction, it appears that Smith
and Kamaleddine seek to sell their Special Shares for millions of
dollars of personal benefit to the further prejudice of Fancamp.
This is an egregious further breach of their fiduciary duties as
well as a breach of trust. If completed, the Transaction is liable
to be set aside by the Court.
On August 8, 2023, Fancamp wrote to Chrome Co.
to advise that:
- There is pending litigation with
respect to the validity and ownership of the special shares;
- In light of that information
Fancamp expects that Chrome Co. will not proceed with its
acquisition of the special shares, and that it will issue a news
release to that effect by no later than Friday, August 11, 2023;
and
- Chrome Co. now has full knowledge
of Smith’s and Kamaleddine’s breaches of fiduciary duty and of
trust, and would be proceeding as a knowing participant in those
breaches. If Chome Co. proceeds with the Transaction despite that
knowledge Fancamp anticipates it would be entitled to seek relief
directly against Chrome Co., including injunctive relief and
compensation for its damages (including legal fees).
On August 10, 2023, Fancamp received a response
from Chrome Co. in which it indicated that Fancamp’s letter “does
provide some clarifications as part of our ongoing due diligence
efforts in this matter.” It is unclear to Fancamp whether Chrome
Co. intends to proceed with the Transaction.
Fancamp will continue to take appropriate steps
to protect its interests including but not limited to the recovery
of the special shares.
Fancamp’s continues to maintain its
shareholdings and position with respect to holding the previously
announced secured convertible promissory note in the principal
amount of C$34.5 million in Chrome Co., as it relates to the sale
of Fancamp’s beneficial interests in Koper Lake-McFaulds mining
claims previously announced on July 21, 2022, August 10, 2022,
September 1, 2022, and September 2, 2022.
About Fancamp Exploration Ltd. (TSX-V:
FNC)
Fancamp is a growing Canadian mineral
exploration corporation dedicated to its value-added strategy of
progressing priority mineral properties through exploration and
innovative development. The Corporation is focused on an advanced
asset play poised for growth and selective monetization with a
portfolio of mineral claims encompassing over 147,000 hectares
across Ontario, Quebec and New Brunswick, Canada; including copper,
gold, zinc, titanium, chromium, strategic rare-earth metals and
others. The Corporation continues to identify near term cash-flow
generating opportunities and in parallel aims to advance its
investments in strategic mineral properties. Fancamp has
investments in an existing iron ore operation in the
Quebec-Labrador Trough, a rare earth elements company, NeoTerrex
Corporation, in addition to an investment in a zinc mine planned to
be restarted in Nova Scotia. The Corporation has future
monetization opportunities from its Koper Lake transaction in the
highly sought-after Ring of Fire in Northern Ontario. Fancamp is
developing an energy reduction and titanium waste recycling
technology with its advanced titanium extraction strategy. The
Corporation is managed by a focused leadership team with decades of
mining, exploration and complementary technology experience.
Further information of the Corporation can be
found at: www.fancamp.ca
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 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
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 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 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. In addition, the Corporation provides no assurance
regarding the outcome of the BCSC’s decision. 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, President
& Chief Executive Officer+1 (604) 434
8829info@fancamp.ca |
Debra Chapman, Chief Financial
Officer+1 (604) 434 8829info@fancamp.ca |
Tara Asfour, Director
of Investor Relations+1 (604) 434
8829tasfour@fancamp.ca
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.
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