Sasco Partners Sends Follow-up Letter to Shareholders

HOUSTON, Dec. 22, 2011 /PRNewswire/ -- Sasco Partners, LP (together with its affiliates, "Sasco"), the largest shareholder of Samex Mining Corp. ("Samex" or the "Company") (TSX-V: SXG.V)(OTC.BB: SMXMF), today announced that it has delivered a follow-up letter to Samex shareholders responding to numerous false and misleading statements from yesterday's public statement issued by the Company.

The full text of the letter follows:

December 22, 2011

Dear Fellow Samex Shareholders,

We have reviewed the statement released yesterday by Samex Mining Corp. ("Samex" or the "Company").  Sadly, management and the Board of Samex have decided to conveniently omit numerous facts and misdirect shareholders yet again.  This is precisely what happens when a group with a track record of numerous failures is confronted with reality.  The fact is that Sasco has openly expressed to management its repeated disappointments with their recent performance via emails, conference calls and through in-person visits. 

Recently, upon receiving our list of demands aimed at advancing shareholder interests and enhancing shareholder value, the Board decided to form an "independent committee" consisting of four current Samex directors.  According to Samex's most recently filed information circular, two of these individuals are non-independent directors and thus, this so-called "independent committee" is not even composed of a majority of independent directors.  This is yet another example of the corporate governance issues plaguing the Board and Samex.  We do not have trust that this committee is capable of independent reflection and judgment on the serious concerns and demands we have raised.      

Unfortunately, present management is growing ever more desperate to maintain the status quo and consequently appears willing to stoop to new lows at the expense of shareholders.  Without further ado, we will examine the six main points raised by the Company in its "Samex Answers Sasco" press release  dated December 21, 2011 and show you why the current Board is not to be trusted:

1) The Company would have you believe that Sasco "may" have breached a confidentiality agreement. 

This disingenuous attempt by management to imply that I have somehow violated a recent confidentiality agreement is extremely dishonest.  This standard agreement that management is alluding to was signed before my visit to Chile in November.  As management knows well, upon Samex's recent press release detailing all exploration activities, all material information learned during my trip became publicly disclosed.  Therefore the Board's unfair allegation that I "may now be in breach" of this agreement was a deliberately deceitful use of words to misdirect the public, while not taking responsibility for a false accusation.  Then, in yet a further display of legal ineptitude, the Board claimed my letter's assertion of a non-independent board was both "utterly false and completely slanderous".  Unfortunately, the term slander applies to spoken words, while libel is the correct term for written words.  Clearly, our Board is unaware of even the most basic legal considerations, much less the definition of the word "independent," as noted above.

2) The Company criticizes Sasco for not agreeing to enter into highly uncustomary and restrictive lock-up agreements that would have insulated and entrenched the Board and management.

We find it laughable that the Company is actually criticizing Sasco for not agreeing to guarantee Jeffrey Dahl's job security for the next 5 years. On an equally misguided note, the Board has also decided to raise the issue of their so-called voting agreement.  As my private placement was being completed, Jeffrey Dahl's main concern was whether or not his job would remain safe and secure in the future.  He brazenly asked for a written guarantee that this would in fact be the case.  I informed him that while I did not anticipate removing management or the Board, I would need to see them perform for some time before even considering signing any document of the sort.  We then exchanged a few ideas in drafts, but nothing was ever executed.  Ask yourself why Mr. Dahl did not make signing such a highly restrictive and uncustomary document a prerequisite for the private placement if it had already been agreed upon. Clearly, Jeffrey Dahl and the Board were trying to avoid accountability for their failures. Unfortunately as 2011 progressed, I realized that management was not keeping their word on even the most basic of considerations.  As a result, I eventually decided it would not be in the best interests of shareholders to sign such a document guaranteeing management and the Board's job security regardless of actual performance.  In fact, I even made this very comment to Jeffrey Dahl in person during my September visit.  If he had any issues with my position on this matter, then why was I allowed to return to the property again in November?    

3) The Company's statement that Sasco thinks it "can run our drill programs better than our professional geological team" does not make any sense.

How would this allegation make any sense when I have had nothing but praise for Rob Kell and his team in Chile?  Our primary issue has been with management not allocating the adequate and appropriate resources in a timely manner to assist our geological team in the field.  This is so critical because we are strongly of the opinion that once enough drilling is completed at Los Zorros, a legendary discovery can be made. 

The Company also states that Sasco has "no experience or qualifications in geology," thereby somehow implying that we are not welcome to voice our concerns with the direction of Samex.  How ironic is this statement considering the Company's entrenched CEO is a former stockbroker and fruit farmer without a college degree?  Our position has always been that Samex needs a qualified industry veteran to manage its affairs.  My firm has been working diligently via industry contacts to find accomplished executives and Board candidates with proven track records of success.  In this respect, we are presently evaluating several strong candidates who have had long tenure with major mining companies and started successful junior mining ventures. 

4) The Board would have you believe that it adequately represents the best interests of shareholders.

The Samex Board's track record speaks for itself.  Do you know of any other junior mining company that still has the same board intact after 16 years of failed execution, extensive share dilution, and not even a single proven ounce of resources to speak of?  How can management be proud of this legacy of failure?  What's even more confusing is their declaration to be ethical because option grants have never reached 10% of outstanding shares.  The issue here is not one of quantity but of quality.  For example, why should the Abbotsford management have been awarded even a single option in 2009 after nearly driving Samex into bankruptcy the year before?  Jeffrey Dahl, his father Peter Dahl, Larry McLean, his wife Brenda McLean, and Allen Leschert were awarded approximately 2,100,000 options in September 2009.  Such action appears not only highly unethical to us, but also appears to be in direct disregard of their respective fiduciary duties to shareholders.  In fact, Samex presently has less than just 1% of its outstanding shares available to issue as options for new employees.  This handicap will almost certainly leave Samex at a disadvantaged position if the Company needs to further expand its operations.  Shareholders need an independent and re-constituted Board that is not composed of management and their personal friends, or the unabashed abuses of power will continue unabated.

5) Management claims that Sasco's comments on hiring new geologists and drill rigs are misleading.

Apparently, Jeffrey Dahl and his colleagues are bewildered when I quote their very own press releases.  Perhaps that is because their projections have a checkered history and are utterly unreliable.  The simple fact is that anyone can look up both their December 17, 2010 as well as July 8, 2011 press releases, which are two separate issues.  They did not drill Nora when promised, but also by their own admission, they did not even have a single rig on Los Zorros for many months in 2011.  There is nothing "confusing" about these facts as management tries to claim.    Additionally, management's claim that they had been "actively recruiting geologists throughout 2011" does not reflect reality.  From January 2011 until September 2011, Samex only hired 1 new geologist.  Then after a visit in September 2011, when I strongly urged management to put a serious effort into recruitment with new strategies, Samex managed to hire two more geologists within just two  months.  One would hardly call this a mere coincidence.   

6) The Board defends the practice of allowing its highest-paid executives to live most of the year in Abbotsford, Canada. 

It remains tremendously disappointing that the Company is still trying to justify its hands-off approach.  The simple fact is that Samex does not need to allocate the lion's share of its salary expenditures to individuals living in a small Canadian town.  Our Company is perfectly capable of having just a few administrative employees remain in Canada full-time to handle regulatory related matters.  The plain fact is that our CEO and VP of Operations choose to remain in Abbotsford because it allows for a more convenient lifestyle than does living away from their families in Chile.  Next time you are lucky enough to have management actually return your phone call, please be sure to ask them exactly how many salaried employees work in the Abbotsford office, as well as how much each one is earning annually.             

Lastly, as far as our website is concerned, Mr. Dahl once again does not have his facts straight.  His stated belief that I was content with the site is reference to a joke I made upon one of my visits.  Sadly, even Mr. Dahl admitted that the website was a "source of embarrassment" for many years.  It is truly inconceivable that anyone could have been satisfied with the stale and confusing nature of our prior site, and unfortunately our "new website" is merely a simple design modification.  Visitors cannot even see detailed maps of our projects or clear visuals of our drill results.  These are essential facets of any exploration company's website, and any management with the slightest bit of industry experience would certainly understand this.      

In conclusion, both the Board and management of Samex have wasted valuable time, have misallocated Company resources, and have further expanded upon their own legacy of poor performance.  They will do everything in their power to continue distracting the public from their abysmal track record.  You don't even have to take our word for it - their 16 year track record is out in plain view for everyone to see, and it's hardly anything to celebrate.  The reality is that Jeffrey Dahl, along with his father and friends, have run Samex as if it were their private company for the better part of two decades.  This management clearly needs to change, and the time for change is now.

Moving forward, Sasco will continue working hard to find our Company the proper management and Board team that is desperately required to unlock shareholder value and the full potential of Samex.  If incumbent management wishes to remain "suspicious" of our motives, they are welcome to do so.  We are the largest shareholder of Samex and do not receive salary or options of any kind from the Company.  Our interests are directly aligned with yours as shareholders.  Like all other shareholders, we only benefit if our Company succeeds in its exploration activities.      

We would like to thank you for taking the time to hear our viewpoints and encourage you to make your own and informed decisions about what is truly best for Samex.  Many shareholders continue to contact us and provide their valuable input during this important time.  We want to assure everyone that we are only concerned with promoting all shareholder interests and enhancing shareholder value.

Warmest Regards,

Sasan Sadeghpour
Chief Investment Officer
Sasco Investments, Manager of Sasco Partners

Contact:

Sasco Partners, LP
Sasan Sadeghpour, (713) 956-5200 (ext. 102)

SOURCE Sasco Partners, LP