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

Fancamp Exploration Ltd. (“Fancamp” or the “Corporation”) (TSX Venture Exchange: FNC) today announced that the Board of Directors (the “Board”) has terminated the consulting agreement between Fancamp and Mr. Peter H. Smith for cause effective immediately. The Board has also requested that Mr. Smith resign from his role as director promptly.

The Board has provided Mr. Smith with multiple opportunities to act in a proper manner and adhere to appropriate governance practices, but he has refused. Notably, the Board has repeatedly tried to engage with Mr. Smith over the last few months to address the issues that led to his termination. Mr. Smith has not cooperated with these efforts, and instead, continued to hide and withhold information from the Board and management, in addition to numerous other grave issues.

The Board has also made multiple attempts to reason with Mr. Smith and work with him in a cooperative manner. Instead, Mr. Smith has continued to be disruptive and go against the best of interests of the Corporation in order to regain his former position with Fancamp. The Corporation cannot justify spending shareholders’ money to pay an individual who not only is refusing to do any work for the Corporation, but instead, is actively working against shareholders’ interests. The Board has carefully considered the situation and the context, and has determined that it is justified to terminate the consulting agreement and that, as such, Mr. Smith is not entitled to any payouts.

As the Corporation continues to investigate and examine the conduct of Mr. Smith in relation to the numerous issues listed below, the Corporation reserves all of its legal rights in connection with Mr. Smith and will consider any such measures as are appropriate on behalf of its shareholders to address potential misconduct, including through the courts if necessary.

REASONS FOR TERMINATION:

Mr. Smith was terminated for cause due to, among others, the following actions, all of which were detrimental to the Corporation and its shareholders:

• He repeatedly ignored the instructions of the Board and acted against the Board’s specific direction;
• He failed to comply with his duty of confidentiality and to comply with applicable legislation by disclosing non-public material information, including information about the December 31, 2020 private placement and the proposed business combination with ScoZinc Mining Ltd. (“ScoZinc”) (the “Transaction”);
• He failed to comply with his duty of loyalty by repeatedly refusing to cooperate with the Board and management of Fancamp, and recently, by withholding information in his possession to management following him stepping down as president and CEO in August 2020; and
• He failed to provide the services outlined in the consulting agreement; rather than acting for the Corporation, he acted against the interests of the Corporation by withholding information and not cooperating with management’s efforts, which resulted in delaying the technical review and causing setbacks and unnecessary costs to the Corporation

Peter Smith: Breach of Fiduciary Duty as a Director

As a director, Mr. Smith also has a fiduciary duty to Fancamp’s shareholders and was required to follow all applicable legislation, including ensuring the confidentiality of non-public material information. Instead, Mr. Smith blatantly disclosed confidential information by issuing a public statement on December 22, 2020, which included, among others, details discussed during Board meetings at Fancamp as well as a private placement that had been approved in principle by the Board, but had not yet been announced. The Corporation closed and announced the private placement on December 31, 2020.

Mr. Smith’s unlawful disclosure on December 22, 2020 of non-public material information in connection with the potential private placement may have jeopardized the integrity of the securities market and affected the market price or trading of Fancamp’s securities. As such, the Board has notified the British Columbia Securities Commission of Mr. Smith’s actions.

IN RESPONSE TO THE FALSE CLAIMS BY MR. SMITH, FANCAMP WOULD LIKE TO REMIND SHAREHOLDERS OF THE FACTS:

The Transaction Will Unlock Value for Fancamp Shareholders; Mr. Smith’s Misleading Statements Regarding the Transaction is to Protect Self-Interests

Mr. Smith has repeatedly made false allegations against the Corporation and spread misinformation about the Transaction.

Contrary to Mr. Smith’s misleading statements:

• Fancamp shareholders will emerge from this Transaction with a greatly enhanced opportunity to create value. The combination of Fancamp and ScoZinc takes two significantly undervalued companies and creates a larger, stronger entity that will be in a better position to attract new investments for growth and funding for strategic initiatives. The combined entity will also be well-positioned to capitalize on the global demand for zinc, which is expected to double by 2050.

• The Transaction was the result of a transparent, credible and thorough process with input from Fancamp’s independent financial and legal advisors. All members of the Board – including Mr. Smith – received a copy of the final fairness opinion from Ernst & Young LLP, which stated that the consideration to be paid in connection with the Transaction is fair for Fancamp.

Shareholders can read all the facts about the Transaction here.

There will be No New Controlling Positions on the Board After the Close of the Transaction

Contrary to Mr. Smith’s misleading statements, there will be no new controlling positions after the Transaction closes.

The composition of the Board after the Transaction will also be up to Fancamp shareholders. As stated in the February 18, 2021 and March 18, 2021 press releases, as well as in the Transaction agreement (a copy of which is available on SEDAR), after the Transaction closes, Messrs. Mark Haywood (president and chief executive officer of ScoZinc) and Christopher Hopkins (director of ScoZinc) will be nominated to join the Fancamp Board of Directors at the Corporation’s next annual general meeting (“AGM”). Shareholders will be able to vote on these nominees in due course.

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.

Mr. Smith has and continues to refuse to abide with the Board’s instructions and to cooperate with current management. Despite his obligations under his consulting agreement and repeated requests, he withheld company information, causing significant challenges and delays in conducting technical reviews which would help advance the Corporation forward. Instead, due to Mr. Smith’s self-serving actions, the Corporation was forced to incur additional costs and delays.

FANCAMP REMAINS FOCUSED ON THE FUTURE

Despite Mr. Smith’s self-serving actions to initiate an unnecessary, costly and time-consuming proxy contest against the Corporation, Fancamp remains focused on executing its three-pronged strategy for growth and completing the transformational Transaction to create significant value for Fancamp shareholders.

Fancamp believes the Transaction will create tremendous value and sustainable growth for the Corporation and to its shareholders over the medium to long-term. Among the many benefits, the Transaction will enable Fancamp to plan the restart of the commercial production of ScoZinc’s Scotia Mine, a high-quality, past-producing facility with a fully built infrastructure in a stable, premier jurisdiction near Halifax, Nova Scotia, which is expected to create significant cashflow for the Corporation.

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 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 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 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 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, notably in connection with the termination of Mr. Smith’s consulting agreement, 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. 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.

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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