Global Atomic Corporation (“Global Atomic” or the
“Company”), (TSX-V:GLO) today filed on SEDAR a letter to
shareholders ahead of its annual and special meeting of
shareholders to be held on June 20, 2018.
The letter, which will be mailed to all Global Atomic
shareholders, details the significant progress and accomplishments
achieved under the leadership of the Company’s board and management
team. It also addresses activist Greyling Investments’ (“Greyling”)
high risk agenda to take over the Company without a credible
plan.
Shareholders are encouraged to review the letter (included
below) and vote the WHITE proxy “FOR” all 6 of Global Atomic’s
qualified and experienced directors: Stephen Roman, Paul Cronin,
Richard Faucher, George Flach, Derek Rance, and Asier Zarraonandia
Ayo.
Don’t wait, voting is fast and easy – please vote well in
advance of the proxy voting deadline of Monday, June 18, 2018 at
10:30 a.m. (Toronto time). If you have questions or need help
voting, contact Kingsdale Advisors at 1-888-518-6554 or at
contactus@kingsdaleadvisors.com.
The full contents of the letter are included below:
June 1, 2018
Dear Global Atomic Corporation (GLO or Company)
shareholder,
Your Company is being attacked by an
activist. Greyling Investments, Inc. (Greyling) is seeking to
seize control of your Board and your Company on an audacious
pretext that is frankly unsupportable. Their case for change
is carefully fabricated and their “plan” for GLO is without
substance.
We believe you have a clear choice before you:
The current Board and management have a plan in place that is
working, industry experience, and a track-record of value
creation. In stark contrast, Greyling has no plan and no
experience in developing a uranium asset and its case for change is
misleading and based on false information.
Join other shareholders to protect your company
and vote your WHITE proxy today.
Performance
A group seeking to replace a Board must make a
compelling case for change. By cherry-picking a date range
that suits their purpose, Greyling claims that the share price has
declined by 40% and uses this as their foundational argument for an
entirely new Board. The facts are quite different. As
illustrated below, GLO has not only generated positive Total
Shareholder Returns (TSR) over 1, 3 and 5 year periods, but has
also outperformed its peers and relevant indices over the same time
periods:
An infographic accompanying this announcement is available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/da74e56e-e029-4918-a0c8-4ef7ae9a9c4e1
Greyling was not supportive of the acquisition
of Global Atomic Fuels Corporation (GAFC) and was suggesting this
transaction was the cause of the temporary share price decline in
late 2017. Ironically, it was our zinc concentrate business
that impacted the stock price and not the uranium business.
More correctly, the political uncertainty in Turkey created by
(now) President Erdogan and diplomatic friction between Turkey and
the United States had a direct impact on our income generating
Turkish asset and consequently our stock price. These same
events also impacted the Turkish stock index (BIST).
The dissident’s claim of share price
underperformance is intentional cherry-picking, their assertion
that temporary price erosion was due to the GAFC acquisition is
false, and their purported case for Board change is without
credibility.
The Current Plan
The total shareholder returns referenced above
are the result of thoughtful strategic planning and diligent
operational execution by the current board and management
team. GLO has two businesses. The current Board and
management team have the corresponding business plans to create
value that we want to recap for all shareholders.
Strategy Related to the Zinc Concentrate
Business
Our zinc concentrate business consists of a 49%
share in Befesa Silvermet Turkey (BST) which is operated by our
joint venture partner Befesa, who own the 51% share. Our
strategy as agreed with our partner is to invest in the best
people, processes and technology to generate processing
efficiencies and economies of scale.
We were pleased to announce the planned
expansion and modernization of the processing plant in
Turkey. This investment of approximately USD $26MM will be
funded from free cashflow and existing credit facilities, with long
lead time purchases commencing immediately, construction to start
in February 2019 and to be completed by September 2019. The
investment will deploy the latest available technology and will
nearly double our processing capacity. For shareholders this
is expected to equate to larger top line revenue and bottom line
profit, which will come back to us as a joint venture dividend. The
Turkish steel industry that supplies our raw material is expanding
and well positioned to supply the Middle East. This creates
long term opportunities for further expansion.
Strategy Related to the Uranium
Business
GLO’s uranium division consists of six
exploration permits covering around 750 km2 in the Republic of
Niger. The DASA deposit that we discovered is turning out to
be a truly world-class uranium asset. It is one of the largest and
highest grade uranium deposits ever found in Africa, with proximity
to existing processing facilities and a reputable buyer eager to
acquire the ore when we get to production.
Right now, we are in late stage resource
definition with a near term plan to move us to production and
cashflow generation. On completion of the
pre-requisite reports we will apply for a mining permit in Q4,
2018. The mining permit will be effective for an
initial 20-year period, and renewable thereafter until the resource
is depleted.
Critical to our success in Niger is our
relationships with the Government and local community. We
enjoy excellent relationships with the President, Minister of
Mining and other government and industry officials, visiting with
them several times a year. Any disruption to these
critical relationships poses a very real threat to
our ability to secure the mining license and effectively the value
of this great asset.
Your Current Board
Both GLO businesses are at critical junctures in
executing transformative changes that will deliver tangible
value. Your current Board has overseen the strategic plan of
the Company that has created shareholder value shown above.
The steps we are taking are delivering tangible additional value
from both our zinc concentrate and uranium businesses in the near
term. Our Board has significant skin in the game represented
by its controlling of 16.67% of the GLO stock.
In contrast, the Greyling nominees lack adequate
industry experience, local contacts, government relations, mine
development and financing experience to oversee either of GLO’s
businesses.
Greyling Has No Plan Nor People To
Execute One
To say that Greyling has no plan is charitable
based on their dissident circular. They may have a hidden
agenda but they have no plan. Instead, in their circular,
they provide a vague summary of what they call a ‘plan’ explaining
that they will undertake a review of strategic alternatives for
GLO’s two businesses. This is often code for saying a company is
for sale. Is their plan to liquidate the Company’s assets just
before the value generating initiatives come to fruition? The
significant insolvency experience of 3 of their Board nominees, is
concerning and suggests such a strategy would be in their comfort
zone.
Based on their circular, Greyling is asking you
to throw your Company into chaos and trust them and their nominees
to sort it out. This is a frightening proposition given that
Greyling’s nominees have limited experience in either of our
industries.
No plan plus no experience is a formula
for failure and value destruction.
VOTE YOUR SHARES TODAY
Do not let a self-interested activist with no plan and
no experience take over your Company. Vote the WHITE proxy to
protect your investment, in advance of the voting deadline on June
18, 2018 at 10:30 a.m. (Toronto time).
Voting is now open. Vote your WHITE proxy or VIF.
Please call 1-888-518-6554 if you need help voting or have
questions.
Sincerely,
The Board of Directors of Global Atomic
Corporation
Appendix – Setting the Record
Straight
SETTING THE RECORD STRAIGHT: On Mr. Stephen Roman’s
track-record: Mr. Roman has created billions of dollars in
shareholder value for investors
Mr. Roman has more than three decades of
resource industry experience as an entrepreneur, financer, Chairman
and CEO. In addition to his successes as founder of the
merged companies – Silvermet Inc. and Global Uranium Corporation -
Mr. Roman was integral in the development and success of i) Gold
Eagle Mines Ltd, which was sold to Goldcorp in 2008 for $1.5
billion after a major gold discovery in Red Lake, Ontario.
Mr. Roman and his team received the PDAC “Bill Dennis Award” in
March 2016 for this gold discovery; ii) Verena Minerals, which Mr.
Roman founded and took to a market value of $250 million; and iii)
Harte Gold, whose market value of $5 million has increased to
approximately $250 million since Mr. Roman and his team have taken
over management.
In Greyling’s circular, the dissident spotlights
Mr. Roman’s time at Exall Energy. Exall Energy – like a lot of
small oil and gas companies – went into receivership after a major
bank disposed of its oil and gas portfolio following the global
collapse of oil prices in 2015.
Mr. Roman’s track record is evidenced by the
large number of shareholders who have invested in Global Atomic
based on his leadership alone.
SETTING THE RECORD STRAIGHT: On loans from insiders: Our
Board and shareholders have stepped-up
At various times throughout our Company’s
history – when there’s been a lack of willing external lenders – we
have offered shareholders an opportunity to participate in
financing events. At all times, these debentures were offered
to ALL shareholders including management and Board. And, on
some occasions, members of our Board exhibited leadership, stepped
up and helped the Company by participating in these
financings. In 2015 for example – while still
private, the Company required short-term bridge financing prior to
a US$32 million potential equity deal, which did not materialize –
several shareholders, including Board members, stepped up to
participate.
The debts of the uranium operations were
factored into the relative values of the zinc and uranium
operations to arrive at a fair exchange ratio to the shareholders
in the merger. Importantly, one of the conditions of the merger
with Silvermet Inc. was that all debts would be paid and cancelled
once the dividends from Turkish operations were received.
This was completed on May 31, 2018.
SETTING THE RECORD STRAIGHT: On asset
write-downs
Greyling is critical of the asset write-downs
associated with the GAFC merger. This shows independent members of
the Board did their due diligence and assessed the value of GAFC
pre-merger and laid out the proper exchange ratio for the merger at
a much-reduced value in favour of Silvermet shareholders.
While there may have been a write down on the initial investment,
Silvermet continually traded at a severe discount to its actual
value. Global Atomic’s value was depressed as a continuing fallout
from the Fukushima disaster in Japan which crippled uranium prices.
Currently, under the combined company, both assets have been
recognized as substantial value creators and the stock is expected
to reflect an improved market value as the assets continue to be
developed.
About Global Atomic Global Atomic is a TSX
Venture listed company providing a unique combination of high grade
uranium development and cash flowing zinc concentrate production.
Global Atomic’s Uranium Division includes six exploration permits
in the Republic of Niger covering an area of approximately 750 km2.
Uranium mineralization has been identified on each of the permits,
with the most significant discovery being the DASA deposit situated
on the Adrar Emoles III concession, discovered in 2010 by Global
Atomic geologists through grassroots field exploration. The DASA
deposit is currently under development in order to begin shipments
to Orano Mining’s uranium processing plant in Arlit, Republic of
Niger, under an MOU signed in July 2017.
Global Atomic’s Base Metals Division holds a 49% interest in the
BST joint venture, operating a facility located in Iskenderun,
Turkey that converts EAFD (Electric Arc Furnace Dust) into a high
grade zinc oxide concentrate which is sold to zinc smelters around
the world. The Company’s joint venture partner, Befesa Zinc S.A.U.
(“Befesa”), holds a 51% interest in and is the operator of BST.
Befesa is a market leader in EAFD recycling, capturing
approximately 45% to 50% of European EAFD market with facilities
located throughout Europe and Korea.
Advisors GLO has retained Norton Rose Fulbright
Canada LLP as its legal advisor and Kingsdale Advisors as its
strategic shareholder and communications advisor. Global
Atomic will pay fees of approximately $175,000 for strategic
advisory and proxy solicitation service plus certain contingent
success fees in addition to certain out-of-pocket expenses.
Media Contact:
Kingsdale AdvisorsIan Robertson, 416-867-2333Executive Vice
President, Communication
Strategyirobertson@kingsdaleadvisors.comCell: 647-621-2646
The information in this release may contain forward-looking
information under applicable securities laws. This forward-looking
information is subject to known and unknown risks, uncertainties
and other factors that may cause actual results to differ
materially from those implied by the forward-looking information.
Factors that may cause actual results to vary include, but are not
limited to, inaccurate assumptions concerning the exploration for
and development of mineral deposits, political instability,
currency fluctuations, unanticipated operational or technical
difficulties, changes in laws or regulations, the risks of
obtaining necessary licenses and permits, changes in general
economic conditions or conditions in the financial markets and the
inability to raise additional financing. Readers are cautioned not
to place undue reliance on this forward-looking information. The
Company does not assume the obligation to revise or update this
forward-looking information after the date of this release or to
revise such information to reflect the occurrence of future
unanticipated events, except as may be required under applicable
securities laws.
__________________________________
1Source: Bloomberg Finance LP
Company peer group includes: Laramide Resources Ltd.(LAM CN
Equity), Skyharbour Resources Ltd.(SYH CN Equity), Azarga Uranium
Corp.(AZZ CN Equity), Prophecy Development Corp.(PCY CN Equity),
Kivalliq Energy Corp.(KIV CN Equity), Forsys Metals Corp.(FSY CN
Equity), Virginia Energy Resources Inc. (VUI CN Equity)
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