Concerned Shareholder of Majestic Gold Corp. Outlines Objection to Proposed Non-Brokered Private Placement and Requisitions Shareholder Meeting

A major shareholder holding 12.79% of Majestic Gold Corp., Mr. Fan Zhong Kong, has publicly objected to the proposed CAD$50 million non-brokered private placement announced on May 21, 2026. In a news release dated June 2, 2026, he calls the financing “unnecessary and highly dilutive” given the company’s US$171.6 million cash position as of March 31, 2026. He calculates that the issue price of CAD$0.13 per share discounts the entire company to roughly 57% of its cash balance, meaning shareholders would effectively pay a premium for cash while giving away profitable mining operations for nothing. The shareholder has requisitioned the upcoming Annual General Meeting (which is already overdue; the last AGM was June 26, 2025) to address the expiring board mandate and urges the company to withdraw the placement and halt any management-entrenching actions until shareholder approval is obtained.

This follows the company’s May 21 announcement of the CAD$50 million placement at $0.13 – a 36.9% pro-forma dilution – with proceeds earmarked for acquisitions, joint ventures, and strategic investments. On June 1, Majestic reported Q1 2026 results: net income of US$7.0 million, revenue of $23.6 million, and a cash balance of US$171.6 million, but gold production fell 36% year-over-year due to a temporary Yantai-wide mining suspension in February. The company had already faced a series of operational interruptions (safety permit expiries, accident at an unrelated mine, a fatal accident at its own DGZ mine in July 2025) that depressed production. Cash costs and AISC have climbed sharply.

The shareholder objection is genuinely new, unexpected, and has material negative implications. The placement itself was dilutive and sparked a stock decline from $0.15 to $0.12, but the public revolt by a 12.79% holder introduces corporate governance risk, delays the AGM, and raises the spectre of a proxy fight. The objection’s core argument – that the company has ample cash ($171.6M vs. pre-placement market cap of ~$156M) yet wants to issue shares at a steep discount – is logically coherent and paints management as either wasteful or entrenching. The news could force the company to withdraw or re-price the placement, which may be positive in the long run, but the immediate uncertainty and negative signaling are detrimental. The market is likely to price in a higher probability of a messy shareholder meeting and potential board challenge, further depressing the stock. The operational context (declining production, rising costs, regulatory risks) already made the stock vulnerable; this governance shock undermines the little remaining investor confidence.

Majestic Gold Corp. is a junior gold producer operating the Songjiagou Gold Project (open-pit and underground) and the Mujin Gold Project (DGZ underground mine) in Shandong Province, China. Through its 70.5% Hong Kong-listed subsidiary Persistence Resources Group, it also owns the Yantai Mujin and Muping gold project. The company produced 29,804 ounces in 2025 (down 6.7% from 2024) and 5,276 ounces in Q1 2026 (down 36% YoY). Revenue in 2025 was $89.3 million, net income $18.3 million (per annual release) or $6.7 million (per financial statements – note discrepancy due to the financial statements including losses from non-operating items/consolidation; the “net income” in the financials is $6.74M while the press release says $18.3M; likely the financials reflect the parent-only or a more complete consolidation, but all numbers should be consistent – actually the 2025 annual results release on 2026-04-17 announced net income of $18.3 million, but the ROIC data shows $6.74M. This discrepancy is a hidden risk). The flagship Songjiagou mine has faced multiple temporary suspensions due to safety permit renewals and external accident-related shutdowns.