April 29, 2013

Dirty Laundry at Lake Abitibi

To: Solid Gold Resources Corp. (SLD)
Shareholders and Board of Directors

This must be the first hostile takeover of a public company in history to be engineered by some very powerful, well known people over a $100,000 market cap.

Solid Gold has accrued debt to defend the Company against illegal acts perpetrated on the Company by both the Wahgoshig First Nations (‘WFN”) and Ontario. The case is becoming a national story with significant political and economic ramifications for all Canadians, including shareholders of Solid Gold, and anyone else invested in industry operating on Crown land in Canada.

Just 30 days ago, on April 1, 2013, new mining regulations came into effect. Those regulations for the first time obligate industry operating on Crown land in Ontario to obtain consent from any Indian band named by Ontario. Now, in an effort to win consent, industry is forced to enter an agreement of economic beneficial interest to those named Indians and, in doing so, accept untold and unforeseen liability that would otherwise belong to Canada and/or Ontario, and/or the Crown.

In the Interest of Full Disclosure

1. Fasken Martineau acts for Solid Gold in an action brought by the WFN.
2. Fasken Martineau acts for Solid Gold in a related claim against Ontario in the amount of $100,000,000.
3. Fasken Martineau, the WFN, agents for Ontario, and Andre Tanguay, shareholder and former director (the “Dissident”) (together hereinafter “Agents”) are complicit in a hostile takeover of Solid Gold.

An investigation into this potential conflict and its impact on shareholders must be conducted before the meeting is allowed to go ahead.

The Special Meeting was called by the directors of Solid Gold to consider and vote on a proposal put forward by the Dissident.

The Dissident proposes to remove the entire board, except for lawyer Robbie Grossman, and to replace it with the Dissident and two of his nominees, Gary Schellenberg and Ronald Goldsack. Each of these parties and others including the WFN, is complicit in a hostile takeover of Solid Gold.

The Agents’ plan was reviewed and recommended on November 5, 2012 by James Peterson, senior counsel for Fasken Martineu.

Brief Background

I am currently a director and former CEO of Solid Gold. I had nothing whatsoever to do with the creation or the publication of the Dissident circular, and I accept no liability for it or for the results flowing from it. An explanation follows.

In the late summer of 2008, I was recruited to review a grassroots exploration project consisting of some poorly organized preliminary data on a group of mineral claims, nearing forfeiture, located in the Lake Abitibi area, Ontario, Canada. The claims were held by a startup private company named "Tangcoh" for the founders, including the Dissident. The Company had little or no financial resources and little in the way of human resources or otherwise.

I anticipated a favorable gold market and, based on the equally favorable open geology in the region of the claims together with promises made, I was persuaded to join the Company to develop a plan for exploration. It was soon clear that the Company had little real capacity and that I would be chief cook and bottle washer. Then the ‘08 crash. Thud! Initial Public Offering (“IPO”)? Assessment work? Pay check? Ha! Nonetheless, I repeat, I really liked the geology at Lake Abitibi, so with a few good supporters and investors we soldiered on.

The Dissident Circular

"Due to Andre Tanguay's actions during the Corporation’s initial public offering, where he demonstrated a complete lack of understanding of the initial public offering process and had private conversations with the agent for the initial public offering where he undermined management of the Corporation, he was removed as an officer and not nominated for a further term as a director. Mr. Tanguay’s independent actions while the Corporation was exploring its property were instrumental in creating a confrontational situation between the Corporation and Wahgoshig First Nation."

Despite the various delays and additional expenses caused by the Dissident’s destructive conduct, the Company was successful in advancing its IPO. As a result, on March 3, 2011, Solid Gold announced an important, high-grade gold discovery on its claims. Without notice to or authorization from Solid Gold, the Dissident made contact with the WFN who occupy Indian Reserve #70 located on the south shore of Lake Abitibi near Solid Gold’s Crown-granted mineral claims. A few weeks later, the Dissident prepared and distributed a circular to solicit shareholder proxies and to promise the WFN a seat on the Solid Gold board if the Dissident were elected as president and director at the next annual general meeting in 2010 (Gelinas Aff). The attempt was unsuccessful.

The public records show that the Dissident misled the WFN over many subsequent meetings with the Band. For example, he falsely stated to WFN that Solid Gold intended to develop an open pit mining operation in the area "without consulting Wahgoshig". This suggestion was ridiculous on many levels and the Dissident knew it to be false. Large open pits are to be found in this fertile geology, but the Dissident knew that at that time Solid Gold had no evidence for such a proposition on its claim block, and could promote nothing more than the potential to discover such a deposit.

Two years earlier, in July 2009, the Dissident had participated in board discussions which concluded that, despite there being no legal requirement, the Company would engage WFN after completing its obligation to shareholders, regulators and others, pursuant to the IPO. The record shows that the Dissident made false and disparaging remarks about Solid Gold, its directors and management to anyone who would listen.

Immediately after preliminary discussions with the Dissident, WFN adopted a plan to use "any means necessary" to protect a 10 km buffer zone around Reserve #70 (Sackaney Aff). Such a plan would deny access to the Solid Gold mineral claims, including the new high-grade gold discovery, but Ontario and WFN made no disclosure to Solid Gold about that plan. The evidence shows that Ontario knew of the plan and assisted the WFN, but Solid Gold was not notified. Over the following months, the Dissident encouraged, cooperated with, and assisted the WFN in an illegal initiative to deny the Company access to work its claim block and the new high-grade gold discovery without first obtaining consent from the Band. These actions resulted in the termination of a pending $1,000,000 financing and worse, an illegal court order stopping Solid Gold from accessing the new discovery and working the claims. About 25 families lost jobs, and it crushed the Company, its shareholders, potential investors and creditors.

I believe the Dissident’s actions have shown complete disregard for the wellbeing of the Company's shareholders. He has contributed to the hostile standoff between WFN, Ontario and Solid Gold over constitutional rights and obligations. A turf war ensued.

The other directors state that the Dissident’s actions:

"… appear to have been due to his personal grievances against the Corporation subsequent to his removal as a director."

Two weeks ago, the Dissident complained publicly that Solid Gold:

"… incurred legal fees pursuing speculative litigation with the Wahgoshig First Nation.”

Nothing could be further from the truth. While the Company has incurred the legal fees, it is the WFN that pursued the litigation which left Solid Gold no choice but to defend shareholder rights to access the mineral claims and the new high-grade gold discovery.

Such debt may prove very inexpensive to shareholders who understand the true economic potential laying in wait just below the surface on those mineral claims at Lake Abitibi.

Pursuant to the Ontario Business Corporations Act, the other directors were not required to circulate the Dissident’s proposal because the primary purpose of the proposal is to enforce a personal claim or redress a personal grievance against the Company or its directors, officers or security holders.

Potential for conflict is rife within the Dissident proposal and results of a preliminary investigation may move a Court to protect minority shareholders and creditors from irreparable harm.

When the Agents’ first bid was declined by Solid Gold, “Plan B" kicked in. Plan “B” is the Dissident. He is an accomplice to the Agents’ takeover scheme described in more detail at the link on the bottom of this document.

The Dissident circular failed to disclose the very high risk to shareholders because the Dissident's proposal will almost certainly derail Solid Gold's $100,000,000 claim advanced against Ontario by Fasken Martineau on behalf of Solid Gold shareholders.

In addition, the Dissident circular failed to disclose that Terra Resource ETF Fund and Marquest-Mineralfields and Pinetree Resource Partnership had entered a lock-up agreement on December 5, 2012, effecting to the Dissident control or discretion over the voting rights to approximately 33% of Solid Gold’s issued and outstanding Common shares.

The Dissident group represents a potential conflict of interest, as further outlined below. If you accept that the other Solid Gold directors are correct with respect to their analysis of the Dissident, why would those fund managers throw their support to him? Is it for his business acumen? I don’t think so. I know him.

Believe me, I would much rather be reporting on the very exciting and important discovery that Solid Gold has made. While the Agents have made several disclosures about their intentions toward Solid Gold, they have remained virtually silent in their promotion of the potential acquisition of the significant assets controlled by Solid Gold. Why?

If a director has a material interest in a contract or proposed agreement that is material to the issuer, the director must disclose his interest in such contract or agreement and must refrain from voting on any matter in respect of such contract or agreement. It is for this reason that I believe an amalgamation document spelling out the Agents’ business, dated February 15, 2013 and filed on Sedar under “Sheltered Oak” is materially deficient. Apparently, the BCSC, the OSC and the TSXV did not see a problem with it, nor did the Agents named in the document. Obviously, Robbie Grossman and the other directors for Solid Gold had no problem with it because they did not disclose such matters in the special meeting circular or elsewhere.

Based on a relationship with the WFN, the “Agents” made two wholly inadequate and opportunistic bids to acquire Solid Gold. They chose to come in the back door, and Solid Gold’s counsel and the directors were content to co-operate. That appears to conflict with their responsibility to all shareholders.

My preliminary investigation of the Agents suggested, among other things, perceptions of a destabilizing conflict, so I encouraged the directors to ignore the wholly inadequate, improper and unsolicited Agents’ bid. Disagreement took hold among the Solid Gold board, led by director Robbie Grossman. Mr. Grossman, also a lawyer for the Company, strenuously argued for consideration of the said offer.

Mr. Grossman specifically denied that he had a conflict. Such a conflict might explain his unreasonable position. Subsequently, Robbie Grossman, his associate Barry Polisuk, and the law firm Garfinkle Biderman failed to disclose that they act for Mr. Tim Peterson, brother of James Peterson of Fasken Martineau, both of whom are associated with the Agents and other competitors in the Lake Abitibi area.

Notwithstanding, a majority of the directors agreed to proceed with an earlier agreed financing, and on November 19, 2012 Solid Gold announced a non-brokered private placement to raise gross proceeds of up to $300,000. Solid Gold further agreed to issue 1.47 million Common shares and 1.47 million warrants in satisfaction of a small portion of the outstanding fees owed to me, and to issue 1.17 million Common shares in satisfaction of debt accrued by other service providers.

The shares for debt should have been issued on or about November 20, 2012, and as such, would carry a vote on any business at any subsequent meeting of shareholders, including the special meeting to be held May 2, 2013. The issuance could have been relied on by the Company to promote shareholder value and to encourage new investors to purchase Solid Gold shares.

Instead, the other directors of Solid Gold, led by Robbie Grossman, decided to remove me as president of the Company, without cause, notice or explanation… and in secret. On December 3, 2012, Director Mr. Alan Myers reported that chief executive officer Darryl Stretch had been replaced by the board. Alan Myers reported that he (Alan Myers) had been appointed "as interim CEO of Solid Gold, while the board works toward finding a permanent solution."

Solution to what, exactly?

Hopefully, by the end of this information, the reader and I will understand what that statement means.

A conflict of interest may arise when a lawyer acts, not only as a legal advisor, but in another role for the client. For example, there is a dual role when a lawyer, or his or her law firm, acts for a public or private corporation and the lawyer serves as a director of the corporation. A dual role may raise a conflict of interest because it may affect the lawyer’s independent judgment and fiduciary obligations in either or both roles; it may obscure legal advice from business and practical advice; it may invalidate the protection of lawyer and client privilege; and it has the potential of disqualifying the lawyer or the law firm from acting for the organization.

I have no idea why the other directors felt that Mr. Myers might be capable of taking on my role in advancing development of Solid Gold’s mineral claims to increase shareholder value. I know him too. He is an accountant with little exposure to mineral exploration and completely uninformed about such operations. For months he has been telling shareholders that there is nothing the directors can do.

On more than one occasion over the last year, others have informed me that Mr. Grossman advised them not to invest in Solid Gold because the shares were likely to go to zero.

Upon termination of my contract, Solid Gold became obligated to pay me, within five days, all outstanding fees, plus an amount equal to 24 times my monthly fee.

The Company has acknowledged the debt in its filings, but refuses payment on the basis that there are no funds available to pay.

Shareholders and creditors are entitled to know the current disposition of the previously announced private placement and why the debt settlement shares were not issued and how the directors intend to pay the outstanding debt.

The Dissident proposal is silent on these matters and on any real go-forward plan. The only plan seems to be that the Dissident and the Agents are going to play nice to Solid Gold’s neighborhood competitor. What a plan. The next time a neighbor says “I want”… don’t hesitate; just say “yes”. It’s not the law, but do it anyway!

Shareholders are also entitled to an explanation from the directors with respect to a news release dated January 9, 2013 in which interim CEO, Mr. Alan Myers, reported that the Company has "scheduled an annual and special shareholders meeting for April 25, 2013.”

Spoiled Ballots at Solid Gold

No adjournment of the scheduled AGM has been announced. As a shareholder and director, I find that omission to be totally disrespectful. But that is nothing compared to the mess over the documentation and disclosure surrounding solicitation of proxies for the special meeting scheduled for May 2, 2013. Several shareholders brought these glaring deficiencies in writing to the attention of the Solid Gold directors, the OSC, the BCSC and the TSXV. However, neither the directors nor the regulators seemed too concerned that new proxies still containing incorrect instructions had been sent out to shareholders and were due to arrive a mere two days before the voting deadline. Not only is there mass confusion as a result but a serious and flagrant disregard for regulatory timelines. Shareholders were advised by the interim CEO that none of this mattered because the results in favour of the Dissident were inevitable.

Further, the Dissident circular states that the board of directors for Solid Gold seek proxy to voteAGAINST the proposed resolution.

However, proxies showed the directors of Solid Gold recommending shareholders to vote FOR the resolution. This is very serious. Perhaps the directors do not understand the historical political, legal and economic importance of defeating the stated resolution to be voted on at the special meeting, including the liability this imposes on directors.

I am disturbed and confused, as other shareholders must be too. This taints the entire process. On April 17, 2013, I requested an explanation for the discrepancy from the Board of Solid Gold. I advised that the shareholders needed assurance that the Company would immediately retain an independent auditor to conduct an investigation to determine how this happened, who is responsible, potential conflicts, risks or impact to shareholders, risk to the integrity of the voting process, options available to re-mediate and any other questions deemed prudent by an auditor.

In the circumstances, I recommended that the Company act immediately to set aside the May 2, 2013 Special Meeting and retain independent legal advice to protect minority shareholders. I received no response.

I now ask that the other directors set aside the May 2, 2013 meeting to allow for a full investigation and proper disclosure with respect to the matters herein. Alternatively, I ask that the shareholders reject the resolution put forward by the Dissident as it was put forward in bad faith and is not in the best interests of the Company.

Thank you to all shareholders and supporters for allowing me to speak on your behalf. Thank you especially to friends who double as support staff.

Important additional details can be found here: http://sdrv.ms/11Pi28K. It may take a moment to download.

Best wishes,

Darryl Stretch
Director, Solid Gold Resources Corp.
604-961-9795

103 Clark Avenue East Thornhill, ON L3T 1T1 | T: 905.882.4422 | F: 905.882.4435 solidGOLDcorp.com