VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 06/17/13 -- Formation Metals Inc. (TSX: FCO)
Dear Fellow Shareholder:
As you know, Formation Metals Inc. ("Formation") is under attack by a dissident shareholder, Dundee Corporation ("Dundee"). At the upcoming meeting on Friday June 21, 2013 we ask for your support to re-elect the current directors for the ensuing year. Your board and management team have a clear and realistic vision that we believe puts Formation in the best position to create long-term shareholder value.
Dundee, in what seems to be a spiteful campaign, is attempting to blame management for the decline in world commodity pricing, the world financial crisis and its devastating effect across the entire mining sector. Your highly qualified and experienced board and management team have been through tough times before and have successfully managed economic turnarounds - and are doing the same now. However, Dundee is attempting to halt the execution of our strategy, remove the two most experienced executives from the board and replace them with candidates who lack the credentials or the track record to guide Formation through this difficult time. Dundee's assertions are riddled with contradictions and false claims yet they want to replace Formation's strategic plan with a "we'll figure it out - trust us" strategy. They have no plan at all, outside of preventing a non-dilutive injection of significant cash to the treasury by attempting to block the sale of a money losing operation, while considering permanently divesting your company of its core asset, the Idaho Cobalt Project.
Formation's Track Record With Market Challenges
All junior mining companies face similar challenges in finding a prospect, managing it through exploration, development, scoping, pre-feasibility, bankable feasibility, permitting, construction and finally into production. Mining is a long lead-time business and permitting alone can take 7-10 years. As a result, all junior mining companies are capital intensive and operate at a loss until they reach production. Along the way, we all are very much exposed to world demand, world commodity prices and the availability and cost of raising the necessary capital. Formation is no different in facing these fundamental challenges. We have shown tremendous achievements in light of these challenges. We have the absolute right asset - the only primary cobalt deposit in the US with the US representing 60% of the demand for high purity cobalt. We have taken the company from a grass roots prospect through to construction, which is now fundamentally prepared for the exciting pre-production phase of underground development.
Your current management has a track record for weathering storms with strong recoveries; for example, in October 2008 the fall of Lehman Brothers resulted in our high yield note debt financing having no market at the same time as our cobalt project permit was overturned. This resulted in us being unable to market the debt financing prospectus. However, by the middle of 2009, under the stewardship of your management and board Formation had recovered to a share price of $2.60. At that time we began to bear witness to the onset of the world financial crisis; however, again your management and board acted and the share price reached the $2.60 level by the end of 2010.
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