- Progress of the Company and its flagship Blue Moon Project
are being impeded by recent actions of the current Management and
Board of Directors.
- We, as major shareholders, are concerned that there may be
plans to sell the Blue Moon Project at a significant discount to
its fair market value.
- We are frustrated that our concerns and suggestions over the
past ten months regarding the current state of the Company and
issues pertaining to corporate and governance matters are
being ignored.
- We believe it is time for change in order to reverse the
current underperformance and to boost the value of our Company and
its main asset.
- We as the McClintock Group are fully committed and
prepared to take over leadership of the company with a solid
business and work plan to get the Company back on track.
VANCOUVER, BC, April 27,
2023 /CNW/ - The McClintock Group
(info@McclintockGroup.ca) led by Michael McClintock and John McClintock are writing an open letter to
shareholders of Blue Moon Metals Inc.
(TSXV: MOON) "Company" or "Blue Moon", in our
position as substantial shareholders of our Company, holding over
13% of the outstanding shares and representing support of an
additional 5% of the outstanding shares. We have deep concerns
regarding the current state of affairs at our Company and, as two
of the largest shareholders, we believe it is our duty to bring to
your attention the main issues causing us concern.
We are fully aligned with your interests and know from speaking
with a number of you, that many share our concerns over the recent
actions of our Company, all of which were authorized and
implemented by the current Board of Directors. We are of the view
that collectively, these actions give rise to serious concerns
regarding the governance and operation of the Company for the
benefit of its shareholders.
Over the past ten months, we have been actively working and
offering resources to assist the Company in addressing our concerns
and have tried on multiple occasions to engage the Board directly
without adequate resolution.
In addition to the declining share price, we believe that there
is a risk that the Board is not taking the necessary steps to
market and advance our Company's principal asset, the Blue Moon
Project, located in California,
USA (the "Blue Moon Project"). We communicated our concerns
directly to the Board in a letter dated March 3, 2023 to which we have not yet received a
formal response. Prior to this, on multiple occasions, we
raised a number of these concerns with the Board including the
trend of dilutive and discounted equity financings and the
potential impact of the recent coordinated and, in our view,
unnecessary roll-back on shareholders. Contact on these specific
matters with the Independent Directors has not resulted in our
concerns being taken seriously.
Potential Sale of Blue Moon at a Discount
First and foremost, we are deeply concerned the Board may be
contemplating a potential sale of the Blue Moon Project for well
below its market value. All shareholders should expect that
members of the Board will conduct themselves in a manner that
complies with their fiduciary obligations and prudent business
practices, including taking necessary steps to maintain the project
and realize maximum value from its further development or
sale. In our recent letter we advised the Board that in order
to preserve shareholder value, we would closely monitor any
proposed transaction in the event the project was marketed for sale
at a price that is below fair-market value. We believe that the
Blue Moon Project represents a critical component of our Company's
success and selling it at a low price would be a disservice to all
shareholders.
Unnecessary Share Roll-Back
We are troubled by the recent completion of the non-brokered
private placement and 1:10 rollback of outstanding shares as
detailed in the Company's press release and material change report,
dated February 13, 2023. This
action resulted in a significant dilution of shareholder value,
which was further exacerbated by a 50% drop in the share price
immediately following the announcement. In addition, the
financing completed concurrently with the roll-back issued new
voting shares to parties friendly to the Company's current CEO. It
is also important to note that our Company's share price has
declined 20% from an already low post-consolidation price of
$0.10 to a recent closing price of
$0.08 on April
25, 2023 for a market capitalization of only $1.3 million Canadian Dollars – well below any
reasonable fair-value estimate for the Blue Moon Project.
This action follows a trend of dilutive financings over the past
several years without attracting longer term strategic
investors.
Lack of Commitment by Current CEO
Furthermore, the current CEO sold a large block of seven million
shares on October 11, 2022 at a 50%
discount to the market price without providing an adequate
explanation to shareholders for the sale or information about the
purchaser. This has raised serious questions about the CEO's
commitment to the company and shareholder interests and, in our
opinion, led to further downward pressure in the share price and
loss of confidence by investors. As this sale represented about
4.7% of the outstanding shares at the time, we asked for further
disclosure on the reasons and strategy for the sale but received no
adequate response. On top this recent sale, there is limited
insider support for our Company as demonstrated by the filings on
the System for Electronic Disclosure by Insiders (SEDI).
Poor Corporate Governance
It is our view that our Company has a poor corporate governance
record, including poor Board oversight of Management, inadequate
annual budgeting and planning, and no annual review of Management's
performance. These issues are indicative of a company that is not
operating in the best interests of its shareholders.
We are also disappointed with the failure of the Board to issue
any press releases updating shareholders on company activities or
operations in a timely or consistent manner during the past
calendar year. Shareholders have a right to be informed about the
company's progress and we feel that this lack of communication is
unacceptable.
In addition, we have concerns about the lack of consistent board
meetings to ensure that company operations and marketing in respect
of the Blue Moon Project are progressing. This lack of oversight is
a major issue and we believe it is essential that the Board take
immediate action to address this.
It is Time for a Change
We believe the actions of the current Management and Board
outlined above will continue to limit Blue Moon's ability to be
advanced and financed in the future.
Furthermore, it is our opinion that the current Management and
Board do not have the necessary qualifications to advance the Blue
Moon Project from resource stage through to completion of a
feasibility study or to the point of eventual development,
partnership or sale.
In light of these concerns, and in the best interests of
shareholders, we are prepared to step in and take the
necessary steps to facilitate a change in the Company's Management
and Board of Directors and execute on several key initiatives to
re-establish market and project credibility.
New Leadership
The first step is to replace the current CEO and remove him from
the Board of Directors. We as the McClintock Group are fully
committed and prepared to take over leadership of the company for
an annual salary of $1 per year with
lead investor and engineer Michael
McClintock, P.Eng as interim CEO and John McClintock, P.Eng as Chairman. This first
step is critical towards addressing and stabilizing the corporate
share structure and tackling the current issues pertaining to
corporate and governance matters.
New Business and Marketing Plan
With new leadership in place, the next step will be to initiate
and execute a detailed Business and Marketing Plan centred on
advancing Blue Moon as a premium pre-development zinc project over
the next eighteen months. This plan will leverage existing drill
data, technical work and targeted engineering to de-risk the
project and enhance value.
Low-Cost Work to Add Value in the Short Term
There are a number of low-cost initiatives that we plan on
undertaking to advance the project that will add immediate value to
Blue Moon. The first will be completion of an updated independent
National Instrument (NI) 43-101 resource estimate utilizing recent
drill data to determine the revised size and grade of the deposit
and the portion of Inferred Resources that can be upgraded to the
Indicated category. The second will be to carry out
metallurgical test work on available sample material and, the
third, will be to de-risk the project with targeted engineering
studies.
Bottom Line - Blue Moon Metals Needs a New Vision
The Blue Moon Project is located in an excellent mining region
with supportive stakeholders and communities and first-world
accessible infrastructure. There are only a small number of
high-quality zinc projects in North
America held by junior companies and as such, a small pool
of opportunities available for what we believe is a wide selection
of buyers, partners or financiers to develop good projects in good
jurisdictions.
The McClintock Group and all shareholders require a change in
the Company's Management and Board of Directors in order to reverse
the current underperformance and to boost the value of our Company
and its main asset.
The McClintock Group is ready to take immediate action to make
our Company a great success story. We are committed to taking the
necessary steps to aggressively advance the Blue Moon project
technically while re-establishing credibility with shareholders and
the general market. We will ensure that we maintain a strong focus
on corporate governance while building and maintaining positive
relationships with stakeholders and communities.
For further information regarding our plan and vision please
contact us at info@McclintockGroup.ca
About the McClintock Group
Comprised of experienced investors and junior and major mining
professionals, The McClintock Group is dedicated to advocating for
the interests of fellow shareholders. Our primary goal is to ensure
that management and boards fulfill their fiduciary duties and
safeguard the rights of shareholders. With a focus on advancing
flagship projects, we possess the expertise and capacity to enhance
and promote mineral projects within the mining industry.
Expertise: Business Development, Operations,
Commission, Metallurgy, Exploration, Engineering, Marketing &
Communications, Project Scoping to Feasibility, with a network to
vendors & investors.
Leads
Michael McClintock, PEng,
MASc
Michael has played a crucial role in driving successful
turnarounds in the past including NorthIsle Copper & Gold,
where his involvement led to a significant increase in shareholder
value. Despite limited budgets (e.g. $100k program), his efforts resulted in a boost
of more than $500M in the NPV
compared to the previous PEA study, which has since helped to
facilitate capital raises of over $15M and attract strategic investors to the
Company. Furthermore, Michael oversaw Operations and played a
pivotal role in the successful relaunch of CanMag Inc. (previously
known as Craigmont Industries Ltd). Under his operational
leadership from 2019 to 2021, CanMag emerged as a top profitable
division of JDS Group of Companies.
John (Jack) McClintock, P.Eng.
MBA
A winner of the PDAC Prospector of the Year award with over
four decades of experience in mineral exploration, Jack has held
management positions in both large exploration organizations and
junior resource companies. In addition to his lead role in the
discovery of the Spence deposit and satellite deposit at Cerro
Colorado in Chile. He also has
extensive experience in acquisitions and mergers including as part
of the teams that successfully acquired the Bajo de la Alumbrera
deposit Argentina, Antamina Peru
and WMC. The deposits Jack discovered or were acquired with
his participation currently contribute to a significant portion of
BHP's copper production. Jack was a founder and former CEO of
Savant Explorations Ltd., (predecessor company to Blue Moon).
More recently, he successfully advanced NorthIsle Copper's
North Island project from the exploration stage to a preliminary
economic assessment (PEA).
SOURCE Mcclintock Group