RX EXPLORATION INC. ("RXE" or the "Company") (TSX VENTURE:
RXE)(OTCQX: RXEXF) announced today that it has issued its Amendment
to its Proxy Circular for a contested election of directors to the
Board.
"RXE shareholders now have the facts they need to make an
important decision," said John F. O'Donnell, Chairman. "Voting the
BLUE proxy will result in some of North America's most senior gold
mining executives joining RXE to create shareholder value."
Continued Mr. O'Donnell: "As shareholders, your vote will
directly impact how much value your investment in RXE ultimately
generates and how quickly this value will be unlocked. Prior to
making a decision, I urge you to carefully review all of the facts
contained in the Amendment and on the rxexploration.com
website."
In the Amendment and an accompanying letter to shareholders
(included below), RXE sets the record straight, responds to
baseless allegations made by the dissidents and highlights why
shareholders should vote the BLUE proxy for its superior slate of
director nominees.
Voting Instructions
RXE recommends that shareholders vote only the BLUE proxy FOR
the RXE Nominees as the primary step towards real value creation. A
completed BLUE proxy will replace any previously voted proxy -
dissident or the original Management proxy mailed in May.
In order to be counted at the Annual and Special Meeting of
Shareholders, the BLUE proxy should be voted well in advance of the
proxy voting deadline of July 4, 2011 at 4:30 p.m. (Toronto Time).
Please do not attempt to mail your proxy unless you have no other
alternative. Shareholders who require assistance voting the BLUE
proxy should please contact Laurel Hill Advisory Group at
1-877-304-0211 or by e-mail at assistance@laurelhill.com.
The vote will take place at the adjourned Annual and Special
Meeting of Shareholders on July 6, 2011 at 4:30 p.m. (Toronto time)
at the Ontario Bar Association Conference Centre, Salon 3, 20
Toronto Street, Toronto, Ontario M5C 2B8.
The complete chairman's letter to shareholders follows:
VOTE THE BLUE PROXY TO PUT EXPERIENCED MINING AND CORPORATE
EXECUTIVES ON YOUR BOARD OF DIRECTORS
June 12, 2011
Fellow shareholders of RX Exploration Inc.,
RX Exploration Inc. ("RXE" or the "Company") is at a crossroads.
As you are likely aware, your Company faces a contested election
for its Board of Directors. You now have an opportunity to have
some of North America's most senior gold mining executives join and
lead RXE. Your vote will directly impact how much value your
investment in RXE ultimately generates and how quickly this value
will be unlocked. RXE will have a brighter future under the
leadership of a new team of professionals and will progress toward
the status of a world-class mining company, if you vote the BLUE
proxy FOR the RXE nominees.
But if you vote for the dissidents, RXE will remain stuck in the
minor leagues, guided by amateurs who demand excessive
compensation, engage in nepotism, dispense with budgets and ignore
safety issues. You will also be stuck with their share of the cost
of the contested election, perhaps $1 million.
The vote takes place on July 6, 2011 at the Annual and Special
Meeting of Shareholders. The voting deadline is Monday July 4, but
you should vote well in advance to be sure your proxy is counted.
Given the choice, your decision to vote the BLUE proxy FOR the RXE
nominees is one of the easiest decisions you'll ever have to
make.
The Dissidents' Attacks and Our Priority
Shareholders have endured vitriolic rhetoric from the dissidents
to which the Special Committee of the Board, established after the
proxy fight began, has not yet responded fully. As the target of
some of the most vicious attacks over many weeks, I have personally
wanted to set the record straight. But, my fellow Special Committee
members and I have restrained ourselves, until now.
We did not respond until now because of our obligation to ensure
that we first protect the interests of shareholders and enhance the
value of your Company. Our first priority has been to assemble a
superior slate of nominees under severe time pressure. This
pressure was due to the ambush tactics employed by the dissidents.
Without notice, and just six days after we mailed a Management
Information Circular in which two of the dissidents agreed to run
on our slate, they launched the proxy contest to seize control of
RXE.
Despite the dissidents' attempt to deny shareholders an
opportunity to consider the new slate of superior nominees, the
Ontario Superior Court of Justice agreed that it was important that
shareholders be given the information needed to consider the facts
and cast a vote. In this letter and the Amendment to the Management
Information Circular, our nominees, their impressive track records
and their vision for a great future are compared with the
dissidents. It is crystal clear that only the RXE nominees can
deliver sustainable value to shareholders over the long-term.
The RXE Slate of Nominees
RXE's slate has extensive mining and corporate experience and is
led by Darren Blasutti, who would serve as President and CEO. Mr.
Blasutti was formerly Senior Vice President of Corporate
Development for the world's largest gold producer, Barrick Gold
Corporation. He is intimately familiar with what needs to happen at
RXE and has demonstrated an ability to get the job done and create
billions of dollars in value for shareholders.
Another key member of the new team, Lorie Waisberg, would become
Chairman of RXE if elected. I welcome Mr. Waisberg to the new role
and have readily agreed to step down as Chairman in his favour. I
also welcome the other new members of our slate: Hugh Agro, Alex
Davidson, Louis Dionne and Paul Parisotto. Mr. Davidson is a
world-class geologist with extensive experience in gold and
precious metal exploration and Mr. Dionne is a pre-eminent expert
in underground mining. Mr. Agro and Mr. Parisotto bring a wealth of
experience in mergers and acquisitions and investment banking.
The six new RXE nominees (the "New RXE Nominees") have joined
with incumbent directors John Ryan and me to move RXE forward. I
urge shareholders to carefully review the Amendment to the
Management Information Circular and the extensive qualifications of
RXE's new proposed slate of directors.
Following their election to your Board, the New RXE Nominees
have agreed to participate in a non-brokered private placement for
up to 5 million units of RXE. The New RXE Nominees will purchase
these units at a price equal to the 20 day weighted average price
of the common shares of RXE as of June 6, 2011. Consistent with
when other directors joined the Board, the New RXE Nominees will
also be granted options to purchase 7.2 million shares of RXE at a
strike price of $0.485, the closing price of RXE shares on June 3,
2011. The non-brokered private placement and the stock option grant
will only be completed if the new team is elected by shareholders,
and will help to align the interests of the team with those of all
shareholders. The implications of this arrangement are clear - the
new proposed members of RXE's leadership team have demonstrated
their belief in the potential of RXE with a financial commitment
that aligns their interests with yours. If through their hard work
the value of RXE shares appreciate, we will reap the rewards
together.
A Value Creation Plan
At the forefront of the RXE nominees' business plan is a
commitment to continue test mining, while at the same time moving
aggressively to complete the exploration and development work
required to make Drumlummon a large-scale gold producer.
Safety will be an operational imperative, as will producing a
mine plan and independent feasibility study. Assuming the study is
supportive, RXE will apply for a commercial production permit,
develop a mine capable of delivering for the long-term, establish
an appropriate market valuation sustained by strong investor
relations, and search for acquisitions to grow further and
faster.
This is not an idea that the RXE nominees invented; it is the
standard industry approach. Laying the proper foundation up-front
will produce greater, sustainable value in the future. The members
of RXE's new team know the ropes. They have done it before, time
and again. From developing and executing the right strategy, to
forging integral relationships with key government officials, to
world-class operations management, the New RXE Nominees have been
involved in transactions whose value is in the billions of dollars.
Now they will be doing it for all of us.
Simply stated, the RXE slate of nominees is far superior to the
dissident slate in mining and corporate experience. The RXE slate
represents the most direct path to value creation.
The Dissident Slate of Directors
The dissidents have proposed a slate that includes CEO Murray
Nye, Vice-President of Mining Operations Harold (Mike) Gunsinger
and former CFO Max Polinsky. The dissident slate also includes four
purportedly independent director nominees: Ben Porterfield, a
Drumlummon consultant; Bob Bannerman, a car dealer; Patrick Gorman,
a consultant; and Franco Cazzola, a transportation manager.
Setting aside for a moment their collectively limited track
record of value creation and their responsibility for stagnation in
the value of RXE shares, there are, unfortunately, more troubling
issues with this slate, as noted in the Amendment to the Management
Information Circular. The dissident executives, Messrs. Nye,
Polinsky and Gunsinger:
-- Allowed unsafe work practices, which they concealed from the Board, and
engaged in nepotism;
-- Failed to deliver a business plan and a budget, despite repeated
requests;
-- Were responsible for a disclosure reprimand from IIROC, the regulator
which oversees equity trading activity; and
-- Have acted recklessly with shareholders' money.
To the last point, the dissidents have admitted their intention
to seek reimbursement from RXE for their massive proxy contest
expenditures that include $500,000 in proxy solicitation expenses
as well as ongoing legal expenses.
The dissident executives' amateurish approach to mining has no
long-term future and does not provide the market with the kind of
information required to properly value a serious mining company.
Shareholders deserve and should demand much more from RXE's
management team.
How did we get to this point?
It is my belief that the proxy contest was triggered when RXE's
Compensation Committee refused to give in to outlandish
compensation demands by the dissident executives. Put simply, they
wanted a more compliant board that would compensate them far beyond
industry standards, with no questions asked. For your information,
we have posted copies of their proposed compensation contracts on
our website at rxexploration.com.
The dissidents have made a number of baseless allegations,
accusing us of "treachery" and worse in the hope that this would
distract shareholders long enough to get their vote. Now is the
time to set the record straight. In the Amendment to the Management
Information Circular, we provide detailed responses to the
dissidents' personal attacks on the Special Committee.
The simple fact of the matter is that Mr. Ryan and I, along with
outgoing directors Paul Teodorovici and Edward Ellwood, have
steadfastly protected the interests of shareholders. I am proud of
our work and confident that objective shareholders will now have
the opportunity to benefit by voting the BLUE proxy for RXE's
nominees.
What's Next?
I would like to tell you that it gets better from here, but I'm
afraid that the dissidents will not go quietly. I expect we'll be
subject to further noisy barrages and that these may be as
distasteful as what we've seen to date. There may be more
litigation too - after all, the dissidents expect that you will pay
for it. Whatever the next few weeks hold, I urge fellow
shareholders to focus on what matters and to ensure that the value
of your Company is protected.
I, along with my fellow RXE nominees, am asking for your proxy.
Your completed BLUE proxy will replace any previously voted proxy -
dissident or the original management proxy mailed in May - and will
be voted at the Meeting. It is imperative that you carefully
consider the qualifications of all directors nominated. If you
conclude that the new RXE slate will best represent your interests
as a shareholder and create value on your behalf then you must
complete the BLUE proxy whether or not you previously completed the
original management proxy or the dissidents' GOLD proxy.
The RXE slate of nominees boasts individuals with the required
mining and corporate experience to deliver sustainable value to
shareholders. We're here to build RXE into a world-class mining
Company that is capable of delivering long-term, sustainable value
to shareholders. We invite you to join us to take our Company to
the next stage.
If you require assistance voting your BLUE proxy please contact
Laurel Hill Advisory Group at 1-877-304-0211 or by e-mail at
assistance@laurelhill.com. Please ensure that you vote only your
BLUE proxy well in advance of the proxy voting deadline of July 4,
2011 at 4:30 p.m. (Toronto time).
On behalf of my fellow RXE nominees,
John F. O'Donnell, Chairman of the Board
Cautionary Statement Regarding Forward Looking Information
This press release contains "forward-looking information" within
the meaning of applicable securities laws. Forward-looking
information includes, but is not limited to, the Company's
expectations, intentions, plans and beliefs with respect to, among
other things, the Drumlummon property. Often, but not always,
forward-looking information can be identified by forward-looking
words such as "anticipate", "believe", "expect", "goal", "plan",
"intend", "estimate", "may" and "will" or similar words suggesting
future outcomes, or other expectations, beliefs, plans, objectives,
assumptions, intentions or statements about future events or
performance. Forward-looking information is based on the opinions
and estimates of the Company as of the date such information is
provided and is subject to known and unknown risks, uncertainties
and other factors that may cause the actual results, level of
activity, performance or achievements of the Company to be
materially different from those expressed or implied by such
forward-looking information, including the ability to develop and
operate the Drumlummon property, risks associated with the mining
industry such as economic factors (including future commodity
prices, currency fluctuations and energy prices), failure of plant,
equipment, processes and transportation services to operate as
anticipated, environmental risks, government regulation, actual
results of current exploration activities, possible variations in
ore grade or recovery rates, permitting timelines, capital
expenditures, reclamation activities, social and political
developments and other risks of the mining industry. Although RXE
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. Readers
should be aware that this forward-looking information is subject to
known and unknown risks, uncertainties and other factors that could
cause actual results to differ materially from those suggested by
such information and are cautioned not to place undue reliance on
such information. By its nature, forward-looking information
involves numerous assumptions, inherent risks and uncertainties,
both general and specific, that contribute to the possibility that
the predictions, forecasts, projections and various future events
will not occur. The Company undertakes no obligation to update
publicly or otherwise revise any forward-looking information
whether as a result of new information, future events or other such
factors which affect this information, except as required by
law.
On Behalf of the Board
John F. O'Donnell, Chairman of the Board
John A. Ryan, Chief Financial Officer
Contacts: Shareholders: Laurel Hill Advisory Group Toll-Free
877-304-0211 or Collect: 416-304-0211 assistance@laurelhill.com
Media: Longview Communications Inc. Joel Shaffer 416.649.8006
jshaffer@longviewcomms.ca Media: Longview Communications Inc. Alan
Bayless 604.694.6035 abayless@longviewcomms.ca
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