Dacha Strategic Metals Inc. (TSX VENTURE:DSM) (OTCQX:DCHAF)
today sent a letter and mailed its Management Information Circular
to all shareholders urging them to vote for its board nominees at
the annual and special meeting of shareholders to be held on
November 28, 2012.
Goodwood Inc. provided notice to Dacha that the Goodwood Fund
2.0 Ltd., with the support of Salida Capital L.P., will be
proposing its own slate of directors for election at the upcoming
annual and special meeting of the shareholders of Dacha. In the
Management Information Circular, Dacha highlights the nominees’
failed track records and complete lack of the experience necessary
to properly run a rare earth elements company. Dacha urges
shareholders to protect the company by voting for management’s
nominees – Hon. J. Trevor Eyton, Ron Hite, G. Scott Moore, Alastair
Neill, Jim Rogers, Ken Taylor and David S. Warner. This group is
comprised of incumbent directors who have built Dacha and helped it
thrive in a treacherous global economy, as well as newcomers who
will bring to an already strong Board their experience and
expertise, as well as a fresh, independent perspective.
Dacha President and CEO, Scott Moore said, “Dacha is succeeding
in a business that very few have been able to even penetrate. With
no rare earth experience and a history of destroying shareholder
value, the dissident nominees have very little, if anything, to
offer Dacha and its shareholders. We urge shareholders to take
immediate action and protect their investment.”
All shareholders of record as of October 15, 2012 are entitled
to vote at the annual meeting, regardless of the number of shares
held. Dacha encourages all shareholders to carefully review its
Management Information Circular and other materials and vote only
their BLUE Proxy by no later
than Monday, November 26, 2012 at 10:00 a.m. (Toronto time) in
advance of the proxy voting deadline. We urge you to discard any
Proxy sent to you by Goodwood or its affiliates. Even a vote
against the dissident nominees on Goodwood’s Proxy will cancel any
previous Proxy submitted by you.
Voting Instructions: If
you have any questions and/or need assistance in voting your
shares, please call Kingsdale Shareholder Services at
1-866-229-8263 toll-free in North America, or 1-416-867-2272
outside of North America (collect calls accepted).
The full text of the letter follows:
October 30, 2012
Dear Fellow Shareholders,
DISSIDENT SHAREHOLDERS
ARE ATTEMPTING A NIL PREMIUM, COERCIVETAKEOVER OF YOUR COMPANY
Last Friday we were notified that a group of four shareholders
is trying to take control of your company and the value of your
investment. The group, which includes funds managed by Goodwood
Inc. (“Goodwood”) and Salida Capital L.P. (“Salida”),
seeks to replace the entire Dacha board with eight connected
nominees at the annual and special meeting of Dacha shareholders,
to be held on November 28, 2012. In addition to Goodwood and
Salida, the group also includes Takota Asset Management Inc. and
Longford Energy Inc. Their actions have launched a costly and
distracting proxy contest to advance their own agenda rather than
the best interests of the majority of Dacha’s shareholders or
Dacha.
Your board opposes this initiative for the reasons detailed in
this Circular. Join us in voting the BLUE Proxy to stop Goodwood and Salida. We
believe Goodwood and Salida are attempting a coercive takeover of
Dacha and its valuable assets, without paying shareholders the
premium they are owed.
DISSIDENT NOMINEES
CANNOT BE TRUSTED TO RUN YOUR COMPANY
The rare earth element (REE) business is a highly specialized
and complex international market, with no open and transparent
exchange supporting REE transactions. The market relies on trusted
relationships with professionals who understand the sophisticated
chemistry associated with these metals as counterparties contract
directly with one another to purchase rare earth elements primarily
from specific plants and suppliers who have met stringent
pre-qualification. Additionally, the market has high regulatory
barriers to entry, with most of its trade being conducted primarily
via Chinese state owned enterprises that hold a limited number of
export quotas to remove rare earths from the country. Sourcing rare
earths in China for inventory is very difficult and requires a
combination of chemical expertise, relationships, knowledge and
experience that Goodwood, Salida and their director nominees
clearly lack.
Your board and management team understands the intricacies of
this highly specialized international marketplace and has the
proven expertise and experience to maximize shareholder value
through investment in REE. Very few individuals in the world can do
this type of work and that is the competitive advantage of Dacha’s
current management team. Goodwood, Salida and their nominees do not
have the experience, expertise or relationships to manage or grow
the assets that have been diligently built by Dacha’s
highly-experienced management team.
DISSIDENT NOMINEES ARE
NOT QUALIFIED TO CREATE YOUR SHAREHOLDER VALUE
Members of the dissident slate have in the past demonstrated
self-serving activism, value destruction, and strategic miscues.
Unsuccessful investment strategies have left Goodwood and Salida
with a limited ability to raise investor funds and with a
motivation to instead raid cash rich public companies. We fear that
Goodwood, Salida and the other members of the dissident group
intend to do the same with Dacha, and seize the value that rightly
belongs to our shareholders without paying anything. To advance
this goal, Mr. Puccetti, Goodwood’s founder, Chairman and Chief
Investment Officer, with the support of Salida, has put forward a
slate of connected nominees with no track record in the REE
industry, with demonstrated underperformance and who are not
necessarily motivated to act in the best interests of the
shareholders of Dacha as a whole.
Notably:
- Mr. Tye W. Burt was terminated
as Chief Executive Officer of Kinross Gold Corp. after presiding
over a reported US$2.49 billion loss related to the acquisition of
Red Back Mining, the largest single loss in the company’s
history.
- Mr. Ian W. Delaney has several
connections with Goodwood and is reportedly currently barred from
entering the United States because of dealings with a
dictatorship.
- Mr. Peter H. Puccetti is the
founder, Chairman and Chief Investment Officer of Goodwood Inc., a
Toronto-based hedge fund whose Goodwood Fund A, B, Capital and 2.0
each have negative returns for the three and five year period,
underperforming the S&P/TSX composite TRI, which has yielded
positive returns for those periods.
- Mr. Timothy E. Thorsteinson
presided over 97.2% stock price decline as CEO of Enablence
Technologies, a former Goodwood portfolio investment.
We do not believe that the members of the dissidents’ slate
possess the expertise to lead Dacha into the future and enhance
total shareholder value within the dynamic nature of the REE
industry.
DISSIDENTS HAVE
ACQUIRED SHARES WITHOUT DISCLOSURE
Following a good faith settlement with Goodwood and certain
dissident nominees over Longford, Forbes & Manhattan Inc.
(“Forbes & Manhattan”) was prepared to work
constructively with Goodwood for the benefit of all shareholders.
Unfortunately, Goodwood put up a false front of cooperation while
simultaneously and secretly, along with Salida, acquiring shares of
Dacha. Apparently, the dissident group rapidly accumulated a stake
of 31.5% without any disclosure of its purchase.
DACHA AND FORBES &
MANHATTAN – A TRACK RECORD OF CREATING VALUE
Dacha, a Forbes & Manhattan company, has a history of
creating value for shareholders in a volatile market. Dacha has
posted a 93% return on sales transactions and a 135% return on
investment capital since January 2010, and has done so while
aggressively managing SG&A to levels that are comparable with
its peers.
Together with Forbes & Manhattan, whose investment model
combines industry leading expertise, exceptional capital markets
access and the strongest deal flow for resource assets to produce
consistently strong returns, Dacha is focused on building on this
record to generate incremental value for all shareholders.
Forbes & Manhattan’s active management approach, which
mitigates risk through hands-on involvement competitively positions
its partner companies through more efficient approaches to general
and administrative expenses. Forbes & Manhattan’s strategies
significantly decrease costs, such that G&A of those companies
are in line with, if not better than, their competitors. The track
record shows that by bringing deep, hands-on expertise in geology
and mining engineering, capital markets expertise, and by providing
portfolio companies with economies of scale, Forbes & Manhattan
enables the development of assets that might not have been
developed as stand-alone companies with traditional management
structures.
YOUR HIGHLY QUALIFIED
AND EXPERIENCED MANAGEMENT NOMINEES
Dacha’s highly qualified incumbent director nominees have the
necessary skills and knowledge to maximize the rare earth assets
that the company currently holds, grow net asset value and drive
share price appreciation. In addition, management has nominated for
election as a director of Dacha, Mr. Jim Rogers, a commodities
investment expert, author and a financial commentator who has been
a successful international investor since 1980. Mr. Rogers will be
appointed non-executive Chairman following the meeting, replacing
Mr. Stan Bharti who will not stand for re-election.
Mr. Rogers has frequently been featured in Time, The Washington
Post, The New York Times, Barron’s, Forbes, Fortune, The Wall
Street Journal and The Financial Times among others. He has been a
regular columnist at WORTH Magazine since 1995, and a regular
commentator on CNBC since 1998. Mr. Rogers has written four books
on investment, including 'Investment Biker: On the Road with Jim
Rogers' (1994), 'Adventure Capitalist: The Ultimate Road Trip'
(2003), 'Hot Commodities: How Anyone Can Invest Profitably in the
World's Best Market' (2005) and 'A Gift to My Children: A Father's
Lessons for Life and Investing' (2009). Mr. Rogers holds a B.A. in
History from Yale University and a B.A. and M.A. in Politics,
Economics and Philosophy from Oxford University.
Dacha also plans to nominate Hon. J. Trevor Eyton, David S.
Warner and Ken Taylor. The incumbent management nominees are G.
Scott Moore, President and Chief Executive Officer; Alastair Neill
P.Eng, MBA, Executive Vice President and Director; and General
(Ret) Ron Hite, Director.
Dacha encourages shareholders to carefully review its proxy
circular and other materials and vote only their BLUE Proxy by no later than Monday, November 26,
2012 at 10:00 a.m. (Toronto time) in advance of the proxy voting
deadline. If you have any questions and/or need assistance in
voting your shares, please call Kingsdale Shareholder Services at
1-866-229-8263 toll-free in North America, or 1-416-867-2272
outside of North America (collect calls accepted).
Do not let Goodwood and Salida’s
representatives take the value that belongs to you! The
highly-qualified and experienced Dacha board of directors is
completely dedicated to maximizing shareholder value and
strengthening the company. We encourage you to vote for
management’s nominees and look forward to your support.
“G. Scott Moore”
G. Scott MoorePresident and CEODacha Strategic Metals Inc.
About Dacha
Dacha Strategic Metals Inc. is an investment company focused on
the acquisition, storage and trading of strategic metals with a
primary focus on Rare Earth Elements. Dacha is in the unique
position of holding a commercial stockpile of Physical Rare Earth
Elements. Its shares are listed on the TSX Venture Exchange under
the symbol "DSM" and on the OTCQX exchange under the symbol
"DCHAF".
Except for statements of historical fact relating to the
Company, certain information contained herein constitutes
“forward-looking information” under Canadian securities
legislation. Forward-looking information includes, but is not
limited to, statements with respect to the Company’s ability to
trade in rare earth elements, the realization value of Dacha’s
physical inventory portfolio, proposed investment strategy of the
Company, and general investment and market trends. Generally,
forward-looking information can be identified by the use of
forward-looking terminology such as “plans”, “expects” or “does not
expect”, “is expected”, “budget”, “scheduled”, “estimates”,
“forecasts”, “intends”, “anticipates” or “does not anticipate”, or
“believes”, or variations of such words and phrases or statements
that certain actions, events or results “may”, “could”, “would”,
“might” or “will be taken”, “occur” or “be achieved”.
Forward-looking statements are based on the opinions and estimates
of management as of the date such statements are made.
Forward-looking information is subject to known and unknown risks,
uncertainties and other factors that may cause the actual results,
level of activity, performance or achievements of Dacha to be
materially different from those expressed or implied by such
forward-looking information. Although management of Dacha has
attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking information, 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 information. Dacha does not
undertake to update any forward-looking information, except in
accordance with applicable securities laws.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX
VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE
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