TORONTO, ONTARIO - (Oct. 15,
2008) - Noront Resources Ltd. (TSX VENTURE:NOT) ("Noront")
today announced that its Board of Directors and a special committee of
independent directors have unanimously recommended that shareholders of the
Company vote the WHITE PROXY to re-elect the current Board of Directors and
to reject a slate of nominees proposed by dissident shareholder Rosseau
Asset Management Ltd. and certain related parties (collectively,
"Rosseau").
On October 8, 2008, Rosseau, a hedge fund manager that, together with its
officers and employees, owns or exercises control and direction over
approximately 9.2% of Noront's common shares, filed a dissident's proxy
circular (the "Dissident's Circular") asking Noront shareholders
to vote for the election of a new slate of directors, nominated by Rosseau,
at the Company's annual and special meeting scheduled for October 28, 2008.
In a letter being distributed to all shareholders today, Noront advises
that Rosseau's proposed changes are not in the best interests of the
Company's shareholders and provides its reasons to reject the dissident
nominees. The reasons include:
- Rosseau, with only a small stake in the Company, is taking advantage of
extraordinary market conditions to make an opportunistic attempt to acquire
control of Noront without offering any compensation to shareholders;
- Rosseau's hand-picked nominees have prior relationships with Rosseau -
but none with Noront and, other than Rosseau's principal, they hold no
shares in Noront and have little understanding of the Company;
- The record of value enhancement of the Rosseau nominees at other
companies is questionable;
- Rosseau is seeking 100% control of the board and summarily rejected a
compromise proposal from Noront that should have met Rosseau's stated
concerns while making the costs and disruption of a proxy contest
unnecessary;
- Noront's existing strategy is on track to deliver value for all
shareholders;
- Noront continues to strengthen the capability and independence of its
board and management..
The Board recommends that Noront shareholders vote only the WHITE proxy in
favour of the Company nominees as named in the management information
circular dated September 22, 2008. Time is short. In order to be counted at
the October 28, 2008, annual and special meeting, proxies must be submitted
no later than 10:30 a.m. (Toronto time) October 24, 2008.
Due to the limited time available, shareholders should vote using one of
the quicker options available as noted on the management form of WHITE
proxy, preferably by telephone, internet or fax, where applicable. For more
information about voting, shareholders can contact the Company's
solicitation agent, Georgeson Shareholder, toll free in North America at
1-866-682-6157.
The full text of the letter to shareholders follows:
October 14, 2008
Dear fellow Noront shareholder:
On October 8, 2008 Rosseau Asset Management Ltd. ("Rosseau"), a
hedge fund which holds 9.2% of the outstanding common shares of Noront
Resources Ltd. ("Noront" or the "Company"), issued a
dissident proxy circular seeking support for a resolution to remove
Noront's existing board of directors and replace it with Rosseau's own
slate of directors. You will decide this question at Noront's annual and
special meeting of shareholders, scheduled for October 28th in Toronto. Your
answer will be crucial to the future of your Company and your investment.
If Rosseau's interests are truly aligned with the best interests of all
shareholders, it would not insist on complete control of the board through
a slate of 100% Rosseau nominees, only one of whom owns any shares of
Noront. Rosseau is attempting to take over your Company without
compensation to the current shareholders.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU:
- VOTE FOR NORONT MANAGEMENT'S NOMINEES TO THE BOARD OF DIRECTORS
USING THE ENCLOSED WHITE PROXY
- REJECT ROSSEAU'S NOMINEES. DO NOT USE THE YELLOW DISSIDENT PROXY
Your board of directors, a special committee of independent directors, and
management have all considered the dissident's proposal and have concluded
that it is not in the best interests of Noront shareholders. The current
difficult economic times will place even greater demands on Noront's
experienced and knowledgeable board and management. The dissident's
nominees have not shown they are up to the task. The current board and management
of Noront have a proven track record with your Company, delivering tangible
results on which you can rely, as evidenced by:
- four significant discoveries made in the past 12 months: the Eagle One
and Eagle Two copper-nickel-PGM deposits; and two significant chrome
deposits, Blackbird One and Blackbird Two;
- control of the largest land position in the "Ring of Fire"
area, including a large number of identified and drill-ready
copper-nickel-PGM and chromite targets;
- $29.3 million in cash in the treasury as at October 10, 2008;
- additional accounts receivable of $3.3 million from the Quebec
government's rebate program in respect of the Windfall Lake project;
- in-the-money warrants totaling $3.3 million due in December, 2008;
We believe that Rosseau's action is unwarranted and unnecessary:
- Rosseau is taking advantage of extraordinary market conditions to attempt
to acquire control of Noront without offering any compensation to
shareholders;
- Rosseau, a hedge fund with a small minority position, is seeking to take
100% control of Noront's board of directors and effectively Noront itself,
without making any offer to the other shareholders;
- Rosseau's hand-picked nominees for the replacement board have prior
relationships with Rosseau - but no financial interest in Noront;
- Rosseau's nominees (other than Rosseau's principal) have little or no
knowledge of Noront and a dubious record at other companies;
- Rosseau summarily rejected a compromise proposal from Noront that should
have met its needs and avoided the unnecessary costs and disruptive effect
of this proxy contest;
- Noront's existing strategy is on track to deliver value for all
shareholders and not just select shareholders;
- Noront continues to strengthen the capability and independence of its
board and management;
How to vote - Use Only the WHITE Proxy
Rosseau announced its intention to force a contested vote on the
composition of the Noront board after the Company had already mailed its
management information circular and form of proxy for the October 28th
annual and special shareholder meeting. To ensure that you have the fullest
opportunity to consider your vote, we are now providing you with a
duplicate WHITE proxy, which you may use to vote in advance of the meeting,
and this letter which provides important information for shareholders in
response to Rosseau's dissident proxy circular. If you have voted using the
dissident proxy, you have every right to change your vote, by simply voting
the WHITE proxy. It is the later dated proxy that will be counted. Noront's
management information circular is also available on www.sedar.com and
additional copies of the circular can also be obtained by calling Noront's
proxy solicitation agent, Georgeson, toll free at 1-866-682-6157.
Reasons to Vote the WHITE Proxy for Your Incumbent Board of Directors
Rosseau Wants Control of Noront - But Does Not Want to Pay for It
Like most public companies in the junior mining market, Noront's shares
have fallen dramatically under current conditions. Rosseau is
opportunistically seizing this moment to attempt to take control of the
Company. It intends to fill the board with its own nominees and turn a 9.2%
interest in Noront into effective control. It proposes to gain control
without making an offer to all shareholders or payment of a control
premium. Under the Rosseau "plan", the dissident gets the board
and the shareholders get nothing.
Rosseau Rejected a Fair Solution for All Shareholders
The dissident's motives were made clear by its almost immediate rejection
of Noront's compromise proposal made to Rosseau on October 6th, which
addressed Rosseau's stated concerns.
This compromise proposed a board of directors of Noront composed of two
nominees from Rosseau and two nominees from Noront, with the remaining
three nominees being independent and mutually agreed between Noront and
Rosseau. This would have achieved a balance between the need for continued
evolution in the governance of Noront, as the Company has itself
acknowledged and pursued for some time, and preserving the continuity of
institutional knowledge and expertise, which is responsible for the many
successes that Noront has enjoyed over the past year. Rosseau summarily
rejected this fair solution.
The Dissident's Nominees Do Not Represent the Best Interests of ALL NORONT
SHAREHOLDERS
As evidenced by the proposed compromise it made to Rosseau, your board of
directors remains open to modifying its composition to reflect Noront's
changing needs. Rosseau does not share this commitment. Rosseau's proposed
slate includes Rosseau's principal and his legal advisor in addition to
four individuals who are currently, or were, management or directors of
companies in which Rosseau has or had investments. The proposed slate does
not represent all shareholders' interests and is seen to be self serving of
the hedge fund's motives. We do not believe that the proposed slate will
enhance shareholder value and based on past record may in fact destroy it.
The Dissident Nominees' Track Record is Questionable
There is little evidence that Rosseau's proposed slate of directors would
add value to Noront. None of them (other than Rosseau's principal) has any
prior interest or ownership in Noront, raising concerns about their lack of
knowledge of the Company and its operations. Consider the results for
companies in which Rosseau's nominees are directors:
(Note: Share price performance charts are included in the letter. To see
these, visit http://media3.marketwire.com/docs/Comparative_stock_charts.pdf.)
Hedge funds typically have no operational experience; they trade stocks
both long and short and seek to maximize cash flow to their unit holders. This
poses a potential major risk to shareholders.
Noront's Strategic Plan Is On Track; the Dissident Has No New Plan
As stated in its management information circular, Noront's board and
management understand the need for Noront to grow and evolve. We also
acknowledge the importance of that growth being sustainable, measured and
disciplined. It is too easy in these difficult markets to presume that
wholesale change is an answer. Rosseau's "plan" for Noront as
articulated in its dissident proxy circular consists entirely of objectives
and initiatives that current Noront management already has underway.
Unlike Noront, Rosseau provides no concrete action plan to underpin its
proposed initiatives.
Maximization of Shareholder Value
In November, 2007, Noront retained financial advisors J.P. Morgan
Securities and IBK Capital Corp. to assist Noront in examining and
advancing its strategic priorities, including the realization of value for
non-strategic assets, development options for its key assets, and continued
dominance in the "Ring of Fire".
The Right Senior Management Team
Your board of directors has always recognized the need for management of
your Company to evolve as Noront transitioned from a junior exploration
company. Since the discovery of Eagle One, one short year ago, we have made
significant additions to the Noront management team both on the geological
and the corporate side. This strengthening also recognizes the need for
succession planning and demonstrates your board's commitment to building
for the Company's future:
- Dr. Jim Mungall, a leading authority on chromium and copper-nickel-PGM
deposits, leads the design and implementation of Noront's exploration
efforts in the "Ring of Fire". In addition, Jim Atkinson has been
added to the geological management team in recognition of the need for more
specialized knowledge and insight into Noront's exciting chrome discoveries
and for additional field management bench-strength;
- Kevin Feeney and Carmen Diges have been added to the corporate management
team in direct response to the need for sophisticated financial and legal
experience.
Reducing Cash Burn While Maintaining Development Opportunities at McFaulds
Lake
Your board and management reiterate their commitment to balancing
exploration and development programs and budgets with the prudent
management of Noront's treasury. The dissident shareholder wants Noront to
reduce its burn rate. Management continues to consistently implement
procedures to minimize necessary exploration costs. Furthermore, the
dissident criticizes the Company's options agreements with other companies
in the Ring of Fire area. These option agreements make money available to
Noront to explore property and test drill targets that the Company might
not be able to attend to in the near future given the limits of its
resources. Rosseau cannot have it both ways.
- In order to maintain Noront's control over more than 300,000 acres in the
McFaulds Lake area, Noront must annually file minimum amounts of assessment
work in respect of each claim to keep each claim current. This maintenance
cost is significant. Estimated annual costs for assessment work on Noront's
claims at McFaulds Lake are $2.8 million.
- With the largest land position in the "Ring of Fire" and
limited resources, prioritizing targets is essential in order to support
shareholder value. Noront therefore retained sole ownership of its highest
priority targets.
- Noront signed various option agreements with other junior miners to
accelerate exploration. Noront has never relinquished operating control
within these option agreements in order to ensure it maintains exploration
and drilling control. These are all earn-in agreements in which Noront will
maintain a 50% interest or more upon successful earn-in.
- This method of prioritizing targets has been extremely effective: Three
discrete nickel, copper and PGM occurrences and two chromite discoveries
have been made to date on Noront's 100% controlled land while a number of
high priority targets still require exploration.
- Notwithstanding Noront's own success, any new joint venture programs have
been placed on hold until assessment work has been filed and evaluated for
this year so that Noront can evaluate its exploration requirements for the
coming years.
- Budgeting for 2009 is under way to ensure that development priorities are
maintained, in light of revised market circumstances, along appropriate
cost-benefit parameters to maximize the benefit of Noront's exploration
efforts.
- Noront continues to assess direct-ship options for its nickel-copper, PGM
and chrome discoveries as a means to provide potential future cash flows to
your Company.
- Noront has commissioned an independent study to assess the economic
viability of its nickel-copper-PGM and chrome discoveries.
Rosseau's assertion that Noront has "diluted" its claim positions
is misleading. Had Noront decided to retain its entire land position, it
would have required significant additional cash in order to adequately
explore and keep these claims in good standing. Estimated annual costs for
assessment work on Noront's claims at McFaulds Lake are $2.8 million. Noront
would have needed to issue new common shares in order to fund these
expanded activities. The result would have been additional dilution for all
shareholders.
Focusing on High Value Exploration Targets
Your Company has rightly focused on its key targets over the past year. We
challenge anyone to better Noront's report card of four significant
discoveries within a twelve-month period.
- Noront recently announced the results of a National Instrument 43-101
independent technical report which disclosed a resource on the Eagle One
deposit grading 1.834 million tonnes, averaging 1.96% nickel, 1.18% copper,
1.12 g/t platinum, 3.91 g/t palladium, 0.15 g/t gold and 3.81 g/t silver in
indicated resources, and a further 1.087 million tonnes in inferred
resources averaging 2.39% nickel, 1.27% copper, 1.37 g/t platinum, 4.5 g/t
palladium, 0.13 g/t gold and 4.21 g/t silver.
- As the Eagle One project has a published copper-nickel-PGM resource rich
enough to consider direct-shipping options, we have begun a preliminary
economic evaluation of this deposit.
- We are actively reviewing the development potential of the Eagle Two
deposit, also discovered in the past year.
- Noront has made two significant chrome discoveries during the past year,
Blackbird One and Blackbird Two, which unlock the potential for Noront to
become a strategic supply source for chrome as part of a geopolitical
diversification strategy for the chrome sector's existing players.
Windfall Lake Gold Project
Rosseau complains that "Noront is distracted by Windfall Lake and
other projects". It ignores the fact that Noront raised $15 million in
December, 2006 based on exceptional drill results from the Windfall Lake
gold project in Quebec. The use of the proceeds from this private placement
was clearly outlined in Noront's press release of December 7, 2006. The
Company received a portion of these proceeds back from the Quebec
government through its rebate program. They were earmarked for the
construction of a decline (ramp) to access drill-encountered high grade
gold deposits and test continuity. The discovery of Eagle One was
incidental to the Windfall Lake program at the time.
The importance of Windfall Lake has diminished as encouraging results
continue to emerge from Noront's aggressive exploration at McFaulds Lake. Noront
continues to carefully consider alternatives, including disposition of
Windfall Lake and its other non-core assets, to ensure that full value is
realized and continue to focus on its core assets. Noront has commissioned
a National Instrument 43-101 report and an independent valuation report to
assist it in evaluating its alternatives regarding this project.
Noront - Credible Junior in Transition
Rosseau's "plan" includes "establishing Noront as a credible
junior mining company". We believe that Noront has achieved this
already. And so do many of you. Noront was named the top-ranked mining
company in the 2008 TSX Venture 50, a ranking of Canada's top emerging
public companies listed on TSX Venture Exchange.
The main measures of a junior mining company's credibility include drill
results and the ability to obtain sufficient financing from prominent
mining investors. By these measures, Noront has surpassed all expectations.
Noront has clearly shown quality drill results since its discovery; with
43,500 meters of drilling to date, Noront has made five mineral discoveries
in the short space of 15 months. Noront raised a total of $38 million in
February, 2008, from highly regarded investors in the Canadian mining
community. Few junior mining companies have achieved these goals.
We are more ambitious than the dissident. Unlike Rosseau, we believe that
Noront needs to aspire to be more than a credible junior mining company. That
is why we have been working on development and strategic initiatives with
our team and external advisors to help ensure that Noront has the funds and
expertise it needs to go to the next level.
Corporate Governance
During the past year, significant enhancements have been made to the
Company's governance and policies. Highlights of Noront's corporate
governance measures currently in place include:
- Development of an independent and stringent quality assurance/quality
control program for its sampling and reporting.
-
Improved policies regarding the safeguarding of technical results from the
field, including all stages of processing, until receipt and public
dissemination.
- Fully independent audit and corporate governance committees and
compensation committee.
- Disclosure policy and audit committee charter and ongoing corporate
governance audit.
Enhanced Accountability of Senior Management and the Board to Shareholders
The additions to the strength of the corporate team have resulted in
decision-making by a more broadly based management group and increased
accountability of management to your board of directors. As repeatedly
stated, we have sought to increase the independence and composition of the
board. We were pleased to be able to announce the addition of Paul
Parisotto as an independent member of the board of directors.
Your CEO and Noront's founder, Richard Nemis, has also volunteered to
relinquish his role as CEO as soon as an appropriate, qualified new leader
could be found. His goal was to facilitate a seamless transition. The
filing of the dissident's proxy circular has forced an accelerated
recruitment process, which is not necessarily in the best interests of
shareholders.
Further, your management has historically attempted to draw on the
expertise and contacts of the Company's significant shareholders to
strengthen its team. A number of months ago, Noront's CEO wrote to several
of these larger shareholders, including Rosseau, requesting suggestions for
further additions to the board or management of Noront. No suggestions were
made by any of these shareholders, including Rosseau.
Reject Rosseau's attempt to seize your Company. Vote FOR the re-election of
Noront's board of directors.
The proxy to vote is WHITE.
Noront recommends that all shareholders vote only your WHITE management
proxy in favour of Noront's directors, as listed in Noront's management
information circular. Discard any dissident proxy that you might receive.
Regardless of how many shares you own, it is important that you vote.
Proxies must be returned no later than October 24, 2008 at 10:30 a.m.
(Toronto time) for your vote to be counted at the meeting.
Due to the limited time available, shareholders should vote using one of
the quicker options available as noted on the management form of WHITE
proxy, preferably by telephone, internet or fax, where applicable.
For more information or assistance with voting your proxy call Noront's
proxy solicitor, Georgeson, toll free at 1-866-682-6157.
For your convenience, a duplicate form of proxy has been attached. A later
dated proxy automatically revokes any and all prior proxies given in
connection with the upcoming shareholders' meeting.
Forward Looking Statement
This document includes certain "forward-looking statements"
within the meaning of applicable Canadian securities legislation. All
statements, other than statements of historical facts, included in this
document that address activities, events or developments that the Company
expects or anticipates will or may occur in the future, including such
things as future business strategy, competitive strengths, goals, expansion
and growth of the Company's businesses, operations, plans and other such
matters are forward-looking statements.
When used in this document, the words "estimate",
"plan", "anticipate", "expect",
"intend", "believe" and similar expressions are
intended to identify forward-looking statements. These statements involve
known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.
Examples of such forward looking statements include statements regarding
results and expectations for 2008 and future time periods, including, but
not limited to, availability of financing, interpretation of drill results,
the geology, grade and continuity of mineral deposits and conclusions of
economic evaluations, metal prices, demand for metals, currency exchange
rates, cash operating margins, expenditures on property, plant and
equipment, increases and decreases in exploration activity, changes in
project parameters, joint venture operations, resources and anticipated
grades and recovery rates and are or may be based on assumptions and/or
estimates related to future economic, market and other factors and
conditions.
Georgeson Shareholder Communications Canada Inc. has been retained by
Noront as proxy solicitation agent. Shareholders with questions or needing
a WHITE proxy and requiring assistance in voting are encouraged to call
Georgeson, North American toll-free, 1-866-682-6157.
ON BEHALF OF THE BOARD OF DIRECTORS:
R. Nemis, President and Chief Executive Officer
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
CONTACT INFORMATION:
Noront Resources Ltd.
Paul Parisotto
Chairman of the Special Committee
(416) 864-1546
Fax: (416)367-5444
Email: info@norontresources.com
Website: www.norontresources.com