Fancamp Provides Answers to Frequently Asked Questions on Business Combination with ScoZinc
March 29, 2021 at 08:00 AM EDT
In response to feedback from shareholders, Fancamp Exploration Ltd. (“Fancamp” or the “Corporation”) (TSX Venture Exchange: FNC) is pleased to provide answers to some of the most frequently asked questions about the proposed business combination with ScoZinc Mining Ltd. (“ScoZinc”) (the “Transaction”).
Q1: How does Fancamp benefit from the business combination with ScoZinc?
As discussed on the January 19, 2021 and March 4, 2021 investor calls, the new management team of the Corporation developed a three-pronged strategy focused on:
The Transaction fully supports the Corporation’s Strategic Alternatives pillar. 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 financing of the Scotia Mine to bring it to commercial production. The expected cash flows from the Scotia Mine restart should provide the combined company with future funding for exploration and other activities.
Q2: Will the ScoZinc Scotia Mine be profitable?
Q3: Are Fancamp shareholders being diluted?
Fancamp shareholders will continue to own the majority of the shares of the Corporation, and their slice will now come from a much larger pie. Once the ScoZinc Scotia Mine returns to successful commercial production, shareholders will benefit from a realizable, strong cash flow that would allow Fancamp to emerge as an important player in the exploration and mineral development industry. The status quo – the absence of the ScoZinc Transaction and a new cash-generating asset – leaves the Corporation on the same uncertain trajectory as before. Simply put, the many shareholders we have talked to understand that the combined company has a much greater potential to create sustained value than the status quo.
Q4: What was the process to determine that the Transaction was beneficial to Fancamp shareholders?
Shareholders should also be aware that while Fancamp was not required to obtain a fairness opinion, 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, based on all information available, also believes that the Transaction has the potential to create value and sustainable growth for the Corporation over the medium to long-term. Among other benefits, the Transaction should enable Fancamp to plan the restart of the commercial production at the Scotia Mine in Nova Scotia, which is expected to create significant non-dilutive cashflow for the Corporation.
Q5: Has the ScoZinc management tried to finance the mine without Fancamp?
Q6: If the Transaction is so accretive, why have no other larger players partnered with ScoZinc?
Q7: Why are Fancamp shareholders not able to vote on the Transaction?
Also, 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 and 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.
Q8: According to Mr. Peter H. Smith, one of the directors of Fancamp, certain directors were conflicted with regards to the Transaction; is this true?
Mr. Smith also wrongly stated that Mr. Mark Billings was conflicted. Mr. Billings resigned from the ScoZinc Board of Directors and was not involved in the negotiations around the Transaction while he was a director of ScoZinc. As Mr. Billings did not have any disclosable interest in the Transaction, he was entitled to vote on the Transaction.
Q9: Will the Fancamp Board of Directors change after the Transaction?
About Fancamp Exploration Ltd. (TSX-V: FNC)
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