NEMI Letter to Shareholders Addresses Dissident Concerns
Shareholders urged to support the experienced incumbent board
Vancouver, BC, March 23, 2009 –NEMI Northern Energy & Mining Inc. (TSX: NNE-A) announced today that it has mailed a letter to shareholders from NEMI’s President and Chief Executive Officer, Patrick Devlin. The letter addresses concerns raised by a dissident group and urges shareholders to support the incumbent board of directors in a vote scheduled for the Annual and Special General Meeting on March 30, 2009.
“Each of the five incumbent NEMI board members have at least 20 years of experience in the resource sector, including mining, geology and securities law,” said Mr. Devlin. “Each of our members has a strong background in the coal industry, consisting of many years of service in senior positions such as chief executive or corporate board member of a coal company.”
“Contrast that with the dissident slate, which has only one person familiar with coal mining,” continued Mr. Devlin. “The background of the other three dissidents is in financial consulting, securities trading and market-making. The inexperience of the dissidents is evidenced by their failure to advise shareholders of the grave consequences to the Company if they succeed. This lack of judgment proves that they are not capable of dealing with the business issues facing NEMI.”
The letter to shareholders, a copy of which is available at www.sedar.com, follows:
Dear Shareholders,
By now you may have received proxy materials from a dissident group that wishes to take control of NEMI without making a formal takeover bid to shareholders. I am writing to address the issues raised by the dissidents, and to urge you to vote for the incumbent board, by proxy, or in person at the Annual and Special General Meeting on March 30, 2009.
The dissidents provided us with no advance notice of their concerns. If they had, NEMI would have addressed them. In fact, in February 2009 we invited dissident leader Michael Cooney to apply to join the board, after he disclosed his 10% ownership interest in the company. He ignored our request for background material on his experience and qualifications as a potential board member.
Risk of forced sale of our main asset
The dissidents have chosen a path with significant risks. Chief among these risks is the prospect of a forced sale of our main asset, a 12% interest in the Peace River Coal Limited Partnership. The dissidents failed to mention this risk in their circular, a material omission suggesting that they are unaware of the consequences of their actions, or worse, are not committed to full, plain and true disclosure.
The forced sale could occur because the election of a dissident board constitutes an “Indirect Transfer” under the Peace River Coal limited partnership agreement. Such an indirect transfer gives the other limited partners the right to acquire our interest for “fair market value.” This would likely be far below the asset’s long-term value due to unsettled current market conditions, and therefore materially detrimental to shareholders.
The incumbent board acts for you, not for Cambrian Mining
Cambrian Mining plc owns Coal International plc, which in turn owns 20.67% of NEMI. The incumbent board, at all times, acts for all NEMI shareholders. The dissidents would have you believe that I and two other incumbent board members, constituting 60% of the board, are in Cambrian’s pocket. This is simply not correct.
I have never had an association with Cambrian and I receive no benefit from Cambrian. My board colleague Randy Eppler was formerly CEO and a director of Coal International, but he resigned after it merged with Cambrian last year. The dissident’s circular, which says otherwise, is just plain wrong. Only NEMI board member John Byrne has a relationship with Cambrian, as disclosed in our circular. If there were to be a conflict involving both companies, he would recuse himself from voting.
The break fee paid to Aviva
The dissidents expressed concern about the payment of a break fee to Aviva Corporation last year. What they failed to address is the costly lawsuit we would have incurred, and lost, if we had fought over the break fee. When circumstances changed and the transaction with Aviva had to be cancelled, the payment was required. It is irresponsible for the dissidents to now suggest that we should have reneged on our legal obligations.
Compensation and expenses are aligned with industry standards
The dissidents suggest that NEMI’s compensation rates and corporate expenses are excessive. In fact, we are well aligned with industry standards. The dissidents insinuate that the royalty I received several years ago from a third party holder was an opportunity that the Company could have obtained. This is not correct. The royalty was disclosed to and approved by the company’s board of directors, including Tony Hammond, now one of the nominees of the dissident group.
Our clear and prudent strategy, compared with no strategy at all
We have a clear strategy in place--to protect NEMI’s interest in the Peace River Coal Limited Partnership during these difficult economic times, which are likely to continue through 2009. We will use NEMI’s $18 million in working capital to meet cash calls from Peace River Coal, thereby avoiding any dilution of NEMI’s ownership interest. We expect to have sufficient working capital to meet these cash calls.
If it becomes apparent that NEMI will have significant excess working capital, a prospect that is possible but by no means certain, we may consider, in the short-term buying back undervalued NEMI shares and securities and in the long-term finding investments or transactions that may improve growth prospects. This is the right strategy, and the prudent strategy, for NEMI.
The dissident circular is devoid of a coherent strategy for the company going forward, and the dissident slate of directors does not have the ability to run NEMI. Our business requires regulatory, financial and operational expertise and the careful management of the relationship with Peace River Coal and our limited partners in Peace River Coal. It is not, as the dissidents would have you believe, so simple that a ham sandwich could run it. That attitude suggests a dangerous arrogance on the part of the dissidents.
Conclusion
Please exercise your right to vote after carefully consider our proxy circular dated February 27, 2009 and the contents of this letter. Every vote is important for the future of your company. Voting is quick and easy and it empowers you to protect your investment in NEMI. Please vote the white proxy, for the incumbent board. Questions may be directed to our proxy solicitor, Laurel Hill Advisory Group, at toll-free 1-888-812-9184.
Sincerely
Patrick Devlin
President and Chief Executive Officer
Voting your White Proxy
NEMI shareholders are asked to complete and return the WHITE proxy to re-elect the incumbent board and protect their investment in NEMI. Your vote is important, no matter how many or few shares you own. Please vote the WHITE proxy today. Proxies should be completed in accordance with the instructions provided.
Your WHITE proxy should be returned prior to 10:00 am Vancouver time (being 1:00 pm Toronto time) on Thursday, March 26, 2009 in order to be deposited with the Company in time to be used at the Annual and Special General Meeting on March 30, 2009.
Cautionary Statement Regarding Forward-Looking Information.
All statements, trend analysis and other information contained in this press release relative to markets about anticipated future events or results constitute forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “believe”, “plan”, “estimate”, “expect” and “intend” and statements that an event or result “may”, “will”, “should”, “could” or “might” occur or be achieved and other similar expressions. Forward-looking statements are subject to business and economic risks and uncertainties and other factors that could cause actual results of operations to differ materially from those contained in the forward-looking statements. Forward-looking statements are based on estimates and opinions of management at the date the statements are made. The Company does not undertake any obligation to update forward-looking statements even if circumstances or management’s estimates or opinions should change. Investors should not place undue reliance on forward-looking statements.
For more information please contact:
Patrick Devlin
President and Chief Executive Officer
Tel: (604) 616-1954
Or:
Laurel Hill Advisory Group
North American toll-free 1-888-812-9184