As a concerned and committed shareholder Dundee believes it is time to change the composition of the Board of Directors so that Formation Metals can begin realizing on its potential and adjusting to the current reality of the mining industry so as to deliver appropriate returns for all shareholders.
Election of Directors:
Formation Metals currently has a Board of Directors consisting of eight members, including three who are senior officers of the Company. Effective December 31, 2012, the Toronto Stock Exchange mandated that all TSX listed companies must modify the procedure to elect directors so that all directors must be elected annually. Leniency is permitted if a company requires shareholder approval to modify its charter documents to enable the annual election of all directors, in which case such company must seek shareholder approval to the modification of its charter documents this year. Dundee sought legal advice from one of Canada's most prominent law firms who advised us that Formation Metal's Articles allow for its Board of Directors to amend its Articles, so it is entirely within the power of Formation Metals' Board of Directors to amend its Articles now and to allow for its shareholders to vote upon the election of the entire board at the AGM on June 21st. Accordingly, the staggered class voting employed by the Company must be changed so that all directors must be elected annually, commencing immediately.
However, in order to extend its mismanagement of the Company for another year, Formation Metal's management has chosen to put the amendment of its Articles in doubt by requiring an unnecessary special resolution at the AGM which will need the approval of a 2/3 majority of Formation Metals' shareholders voting at the meeting. If this special resolution passes, it would unnecessarily defer the implementation of election of the full board until 2014, thus further entrenching current management's nominated directors. Dundee is opposed to this election deferral and believes that all Formation Metals shareholders should be opposed to this as well. However, we are voting for the special resolution amending the Articles even though we would have preferred that the election change take place immediately at this AGM.
While we think a Board of eight is too large for a company of the current stature of Formation, we are forced to stay with that number for the time being. At the AGM, shareholders are being asked to re-elect two management Class III director nominees, being Mari-Ann Green and Scott Bending, currently the Chairman and CEO and President, respectively. These highly-paid executives were co-founders of Formation and have been responsible for the mismanagement of the Company for several years, including the imprudent proposed sale of the Sunshine Refinery. In light of Dundee's significant concerns in respect of the governance of Formation Metals, it is Dundee's intention to withhold the vote of its substantial share interest in the Company in respect of the election of these two nominees and to vote in favour of two alternate candidates.
We ask you to vote the enclosed BLUE form of proxy in favour of our two nominees.
While two members of an eight member Board of Directors cannot expect to forcibly redirect the fate of the Company, our nominees, if elected, intend to make every effort possible to carry out our plan. Dundee, with its relationships in the mining and financial sectors will be available to assist.
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